BPCE - 2018 Registration document

5 FINANCIAL REPORT

IFRS Consolidated Financial Statements of Groupe BPCE as at December 31, 2018

Under the BMR, the interest rate benchmarks EURIBOR, LIBOR and EONIA have been declared critical, although they may be phased out or their discontinuation may become likely in the future. Work in the euro zone to propose new indices is not yet complete. It is therefore difficult at this stage to accurately predict the terms of any future substitution of existing financial instruments and contracts. In 2018, Groupe BPCE established a project structure tasked with anticipating the impact of the benchmarks’ discontinuation in the near future, from a legal, commercial, financial and accounting viewpoint. Regarding this last aspect, particularly close attention is being paid to the issues of fair value, the application of the SPPI criterion, hedging relationships and derecognition. As no specific format is required under IFRS, the presentation used by the Group for summarized statements follows Recommendation No. 2017-02 issued by the Autorité des normes comptables (ANC – French national accounting standards authority) on June 2, 2017. The consolidated financial statements are based on the financial statements at December 31, 2018. The Group’s consolidated financial statements for the period ended December 31, 2018 were approved by the Management Board on February 5, 2019. They will be presented to the Annual General Shareholders’ Meeting on May 24, 2019. The amounts presented in the financial statements and in the notes are shown in millions of euros, unless otherwise indicated. Rounding may lead to differences between the amounts shown in the financial statements and those referred to in the notes. MEASUREMENT METHODS The general accounting principles set out below apply to the main items of the financial statements. Specific accounting principles are presented in the Notes to which they refer. 2.5.1 IFRS 9 is applicable to Groupe BPCE excluding the insurance subsidiaries, which continue to apply IAS 39. On initial recognition, financial assets are classified at amortized cost, at fair value through other comprehensive income, or at fair value through profit or loss, according to the type of instrument (debt or equity), the characteristics of their contractual cash flows and how the entity manages its financial instruments (its business model). PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS AND BALANCE SHEET DATE 2.4 GENERAL ACCOUNTING PRINCIPLES AND 2.5 Classification and measurement of financial assets

provisions recorded under liabilities in the balance sheet and more ● specifically the provision for regulated home savings products (Note 5.15) and provisions for insurance policies (Note 9); calculations related to the cost of pensions and future employee ● benefits (Note 8.2); deferred tax assets and liabilities (Note 11); ● goodwill impairment testing (Note 3.5). ● Judgment must also be exercised to assess the business model and whether the financial instrument can be categorized as SPPI. The procedures are described in the relevant paragraphs (Note 2.5.1). Uncertainties related to Brexit On June 23, 2016, the UK decided to leave the European Union (Brexit) following a referendum. After the triggering of Article 50 of the treaty on European Union on March 29, 2017, the United Kingdom and the 27 other member countries of the European Union gave themselves two years to prepare for the country’s effective withdrawal. Complex negotiations are under way to redefine the new economic relations between the United Kingdom and the European Union. The political and economic consequences of Brexit are still uncertain, however, and the uncertainties are increasing as the exit date approaches and the possibility of a hard exit without a withdrawal agreement takes shape. Given this situation, Groupe BPCE has prepared for the various possible scenarios and is monitoring the progress of the negotiations and their potential consequences, to incorporate them, where necessary, in the assumptions and estimates made when preparing the consolidated financial statements. Uncertainties related to the application of certain provisions of the BMR European Regulation (EU) 2016/1011 of June 8, 2016 on the indices used as benchmarks (“the Benchmarks Regulation” or “BMR”) introduces a common framework aimed at guaranteeing the accuracy and integrity of the indices used as benchmarks for financial instruments and contracts, or to measure the performance of investment funds within the European Union. The purpose of the Benchmarks Regulation is to regulate the provision of benchmarks, the provision of data underlying benchmarks, and the use of benchmarks, within the European Union. It provides for a transition period for administrators, who have until January 1, 2020 to be approved or registered. After this date, the use by entities supervised by the EU of benchmarks whose administrators are not approved or registered (or, if they are not located in the EU, are not subject to equivalent or otherwise recognized or approved regulations) will be prohibited.

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Registration document 2018