BPCE_REGISTRATION_DOCUMENT_2017

5 FINANCIAL REPORT

BPCE parent company financial statements

Note 2

Accounting principles and methods

2.1

MEASUREMENT AND PRESENTATION

Fixed assets and investments in associates denominated in foreign currencies but financed in euros are valued at acquisition cost. Unsettled spot foreign exchange transactions are valued at the exchange rate at year-end. Discounts or premiums on foreign exchange forward and futures contracts used for hedging purposes are recognizedin income on a proratabasis.Otherforeignexchangecontractsand forwardand futures instrumentsdenominatedin foreign currenciesare marked to market. Outright foreign exchange forward and futures contracts, and those hedged by forward and futures instruments,are revalued over the remainingterm.Foreignexchangeswapsare recognizedas coupledspot buy/sell forward transactions. Currency swaps are subject to the provisionsof ANCregulationNo.2014-07. 2.3.2 Loans and advancesto credit institutionscover all loans and advances made in connectionwith banking transactionswith the exception of those representedby a security. They also include securities received under repurchase agreements, regardless of the type of underlying, and loans and advancesrelating to securitiesrepurchaseagreements. They are broken down betweendemand loans and advancesand term loans and advances. Loans to credit institutions are recorded in the balance sheet at their nominal value, with the exceptionof buybacks of customer receivables which are recorded at cost, plus accrued interest andnet of anyimpairmentcharges recognized for credit risk. Amounts due from customers include loans to entities other than credit institutions, with the exception of debt securities issued by customers,assets purchasedunder resale agreements,and receivables corresponding to securities sold under repurchase agreements. They are broken down between business loans, current accounts with overdrafts and other facilities granted to customers. Loans to customers are recorded in the balance sheet at their nominal value, with the exception of buybacks of customer receivables which are recorded at cost, plus accrued interest and net of any impairment charges recognized for credit risk. Amortized marginal transaction costs and fees are included in the relevant loan. Amounts due to credit institutions are recorded under demand deposits and current accounts or term deposits and borrowings. Amounts due to customers are classified into regulated savings accounts and other deposits for customers. Depending on the counterpartyinvolved, these items include securitiesand other assets sold under repurchaseagreements.Accrued interest is recordedunder related payables. Guarantees received are recorded in the accounts as an off-balance sheet item. They are revalued on a regular basis. The total carrying amount of all guarantees received for a single loan is limited to the outstanding amount of the loan. Transactions with credit institutions and customers

METHODS BPCE’s parent company financial statements are prepared and presented in accordance with rules that comply with regulation No. 2014-07 of the Autorité des normes comptables (ANC – French Accounting StandardsAuthority). 2.2 There were no changesto accountingmethodsin respect of the 2017 fiscal year. The texts adopted by the ANC that had mandatory application in 2017 did not have a significant impact on the parent company financial statements. Unless otherwise stated, BPCE did not elect to apply in advance the texts adopted by theANC forwhich application isoptional. AND MEASUREMENT METHODS The financial statementsfor the fiscal year are presentedin identical format to those for the previous fiscal year. Generally accepted accounting principles have been applied in compliance with the principle of prudencebased on the followingprinciples: the going-concern principle; ● consistency of accounting methods from one period to the next; ● independence of fiscal years; ● and observance of the general rules governing the preparation and presentation of annual financial statements. The basic method for valuing accountingentries is the historicalcost method and all balance sheet items are presented,as appropriate,net of amortization, provisions and allowancesfor impairment. The principalmethods used are as follows: 2.3.1 Income and expenses relating to foreign currency transactions are determinedin accordance withANC regulation No. 2014-07. Receivables, liabilities, and off-balance sheet commitments denominatedin foreign currenciesare valued at the exchangerate at the end of the fiscal year. Definitive or unrealized foreign exchange gains and losses are recognizedin income. Income and expensespaid or received in foreign currenciesare recognizedat the exchange rate on the date of the transaction. CHANGES IN ACCOUNTING METHODS ACCOUNTING PRINCIPLES 2.3 Foreign currency transactions

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Registration document 2017