BPCE_REGISTRATION_DOCUMENT_2017

FINANCIAL REPORT IFRS Consolidated Financial Statements of BPCE SA group as at December 31, 2017

DEFERRED TAX ASSETS AND LIABILITIES 4.12 Deferred tax assets and liabilities are recognized when temporary differences arise between the carrying amount of assets and liabilities on the balance sheet and their tax base, irrespective of when the tax is expected to be recoveredor settled. Deferred tax assets and liabilities are measuredat the tax rates that are expectedto apply to the period when the asset is realized or the liability settled based on tax rates (and tax laws) that have been enactedor substantively enactedby the balance sheet date. Deferred tax liabilities and assets are offset at the level of each tax entity. The tax entity may either be a single entity or a tax consolidationgroup. Deferred tax assets are recognized only to the extent that it is probablethat the entity will be able to recover them in the foreseeable future. Deferred tax assets and liabilities are recognizedas a tax benefit or expense inthe income statement,exceptfor: revaluation differenceson post-employment benefits; ● unrealizedgains or losses onavailable-for-sale assets; and ● changes inthe fair valueof derivativesused as cash flow hedges; ● for which the corresponding deferred tax assets and liabilities are recognized as unrealized gains and losses directly in other comprehensive income. Deferredtax assets and liabilitiesare not discountedto their present value. INSURANCE BUSINESSES 4.13 Financialassets and liabilitiesof insurancebusinessesare recognized in accordancewith the provisionsof IAS 39. They are classified into categories defined by this standard, which calls for specific approachesto measurement andaccounting treatment. Pending amendmentsto IFRS 4, insurance liabilities continue to be measured broadly in line with FrenchGAAP. In accordance with Phase I of IFRS 4, insurance contracts are classified into threecategories: policies that expose the insurer to a significant insurance risk ● within the meaning of IFRS 4: this category comprises policies covering provident insurance, pensions, property and casualty and unit-linked savings carrying a minimum guarantee. These policies will continue to be measuredunder the rules provided under local GAAP formeasuringtechnical reserves; financialcontractssuch as savingsschemesthat do not expose the ● insurer to a significantinsurancerisk are recognizedin accordance with IFRS 4 if they contain a discretionaryprofit sharing feature, and will continue to be measuredin accordancewith the rules for measuringtechnical reserves provided under local GAAP; financial contracts without a discretionary profit-sharing feature ● such as contracts invested exclusively in units of accounts and without a minimum guarantee, are accounted for in accordance with IAS39. Most financial contracts issued by Group entities contain discretionary profit-sharing features.

The amount of the provision under liabilities in the balance sheet corresponds tothe net total commitment. Post-employment benefits are divided into defined-contribution

plans and defined-benefit plans. Defined-contribution plans

The employer is only committedto paying pre-definedcontributions to an insurer or an external entity. The resulting advantages for employees depend on the contributions paid and the yield on investments made using these contributions. The employer is not obliged to finance complementsif there are insufficientfunds to pay the benefits expected by employees. Actuarial risk (the risk that benefits will be less than expected) – and investment risk (that assets investedwill be insufficientto meet expectedbenefits)fall on employees. Defined-contributionplans are recognized as short-term employee benefits.The expense is equal to the contributiondue for the period. There is nocommitmentto evaluate. Defined-benefit plans With defined-benefitplans, the actuarialrisk and investmentrisk fall on the company. The company’s obligation is not limited to the amountof contributionsto which it has committedto paying. This is notably the case when the amount of benefits that employees will receive is defined using a formula and not by the amount of funds available for these benefits. This is also the case when the company either directly or indirectly guarantees a specific yield on contributions, or when it has made an explicit or implied commitmentto revalue the benefitspaid. The resultingcost and obligationfor the companymust be evaluated on a discountedbasis, as benefitsmay be paid several years after the members of staffcarry out thecorresponding services. SHARE-BASED PAYMENTS 4.11 Share-based payments are those based on shares issued by the Group, regardless of whether transactionsare settled in the form of equity or cash, the value of which fluctuates in line with the share price. The cost to the Group is calculatedon the basis of the fair value at the grant date of the share purchaseor subscriptionoptions granted by certain subsidiaries. The total cost of the plan is determined by multiplyingthe unit value of the option by the estimatednumber of options that will have vested at the end of the vesting period, taking account of the likelihoodthat the grantees will still be employedby the Group, and of any non-marketperformanceconditionsthat may affect the plan. The cost to the Group is recognized in income from the date the employees are notified of the plan, without waiting for the vesting conditions, if any, to be satisfied (for example, in the case of a subsequent approval process), or for the beneficiaries to exercise their options. The corresponding adjustment for the expense recorded under equity-settled plans is an increase inequity. The Group recognizes a liability for cash-settled plans. The related cost is taken to income over the vesting period and a corresponding fair valueadjustmentis bookedto a debt account.

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Registration document 2017