PSA_GROUP_REGISTRATION_DOCUMENT_2017

CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2017 Notes to the consolidated financial Statements at December 2017

Pledged or mortgaged assets This item includes the French government bonds (OATs) given as collateral for loans from the European Investment Bank (EIB). When the maturities of French government bonds do not correspond to those of loans, commitments are covered in cash. The following table analyses pledged and mortgaged assets by commitment period: PLEDGES OR MORTGAGES EXPIRING IN THE YEARS INDICATED

31 December 2017

31 December 2016

(in million euros)

2017 2018 2019 2020 2021

-

435

391

16

6

44

38

- -

-

Subsequent years

43

43

TOTAL PLEDGED OR MORTGAGED ASSETS

478

538

Total assets

57,505

45,153

Percentage of total assets

0.8%

1.2%

FINANCING AND FINANCIAL INSTRUMENTS – FINANCE NOTE 13 COMPANIES

ACCOUNTING POLICIES 13.1.

Interest income is allocated by the effective interest method, with the effective interest rate being the rate that exactly discounts estimated future cash receipts through the expected life of the loan. Loans and receivables are generally hedged against interest rate risks, with the hedged portion of the loan remeasured at fair value in accordance with hedge accounting policies. Gains and losses arising from remeasurement at fair value are recognised in profit or loss and are offset by the effective portion of the loss or gain arising from remeasurement at fair value of the hedging instrument. (see Note 12.7.B). Loans and receivables are tested for impairment when a loss event occurs, corresponding in practice to default on a single instalment. Impairment is measured by comparing the carrying amount of the loan or receivable to the present value of estimated future cash flows discounted at the effective interest rate. For retail loans and receivables: an impairment loss is recognised on sound loans when the „ borrower defaults on a single instalment. Impairment is assessed based on the probability of the outstanding loan being classified as non-performing and on the discounted average loss ratio; impairment losses on non-performing loans are determined „ based on the average loss ratio discounted at the loans’ effective interest rate, which is used to calculate provisions for credit losses on non-performing and doubtful loans. For other loans and receivables (consisting mainly of wholesale loans), provisions for known credit risks are determined on a case-by-case basis, when the first instalment is missed or at the latest when the loan is reclassified as non-performing. Reclassification occurs when at least one instalment is over 91 days past due, or within a maximum of 451 days if it can be demonstrated that there is no counterparty risk. In the case of an aggravated risk, the loan may be reclassified as non-performing before the 91-day period has expired. Recognition and measurement of financial C. liabilities See Note 12.8.D.

Financial assets and liabilities - definitions A. The assets and liabilities of finance companies mainly include loans and receivables, marketable securities and debts. Recognition and measurement of financial B. assets Financial assets at fair value through (1) profit or loss Marketable securities are carried at fair value through profit or loss if they benefit from interest rate hedges. Changes in the fair value of the hedged securities are recognised directly in profit or loss, together with the offsetting change fair value of the economic hedges. Loans and receivables (2) Loans and receivables reported in the balance sheet correspond to Banque PSA Finance’s net financial commitment in respect of the loans and receivables. Their carrying amount includes the following items before the effect of hedge accounting: outstanding principal; „ accrued interest; „ unamortised commissions paid to referral agents as well as „ directly attributable administrative expenses incurred with third parties on inception of loans and receivables, which are added to the outstanding principal; unamortised contributions received from the brands, which are „ deducted from the outstanding principal; unamortised loan set-up costs, which are deducted from the „ outstanding principal; deposits received at the inception of finance leases, which are „ deducted from the amount financed.

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GROUPE PSA - 2017 REGISTRATION DOCUMENT