BPCE - 2018 Registration document

5 FINANCIAL REPORT

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

ACCRUED EXPENSES AND OTHER LIABILITIES 5.12

12/31/2018

01/01/2018

in millions of euros

Collection accounts Prepaid income Accounts payable

6,568 1,476 2,741 5,113

4,857 1,420 2,696 4,841

Other accruals

Accrued expenses and other liabilities

15,898

13,814

Settlement accounts in credit on securities transactions

919

751

Other payables Other liabilities

15,884 16,803 32,701

14,393 15,144 28,958

TOTAL ACCRUED EXPENSES AND OTHER LIABILITIES

PROVISIONS 5.13

Accounting principles Provisions other than those relating to employee benefit commitments and similar, regulated home savings products, off-balance sheet commitments, and insurance policies mainly consist of provisions for restructuring, claims and litigation, fines and penalties, and tax risks. Provisions are liabilities of which the timing or amount is uncertain, but which can be reliably estimated. They correspond to current obligations (legal or implicit), resulting from a past event, and for which an outflow of resources will probably be necessary to settle them. The amount recognized in provisions is the best estimate of the expense required to extinguish the present commitment at the balance sheet date. Provisions are discounted when the impact of discounting is material. Changes in provisions are recognized in the income statement on the line items corresponding to the nature of future expenditure. Provisions on regulated home savings products Regulated home savings accounts ( Comptes d’Epargne Logement – CEL) and regulated home savings plans ( Plans d’Epargne Logement – PEL) are retail products marketed in France governed by the 1965 law on home savings plans and accounts, and subsequent implementing decrees. Regulated home savings products generate two types of commitments for the Group: a commitment to provide a loan to the customer in the future at ● a rate set on inception of the contract (for PEL products) or at a rate contingent upon the savings phase (for CEL products); a commitment to pay interest on the savings in the future at a ● rate set on inception of the contract for an indefinite period (for PEL products) or at a rate set on a half-yearly basis according to an indexing formula regulated by law (for CEL products).

Commitments with potentially unfavorable consequences for the Group are measured for each generation of regulated home savings plans and for all regulated home savings accounts. A provision is recognized for the associated risks by discounting future potential earnings from at-risk outstandings: at-risk saving deposit outstandings correspond to the uncertain ● future level of savings for plans in existence at the date the provision is calculated. This is estimated on a statistical basis for each future period taking account of historical investor behavior patterns, and corresponds to the difference between the probable outstandings and the minimum expected outstandings; at-risk loans correspond to the loan outstandings granted but ● not yet due at the calculation date plus statistically probable loan outstandings based on historical customer behavior patterns as well as earned and future rights relating to regulated home savings accounts and plans. Earnings for future periods from the savings phase are estimated, for a given generation of contracts, as the difference between the regulated rate offered and the expected interest accruing on a comparable savings product on the market. Earnings for future periods from the loan phase are estimated as the difference between the fixed rate agreed at inception for PEL contracts or a rate contingent on the savings phase for CEL contracts, and the expected interest rate accruing on home loans in the non-regulated sector. Where the algebraic sum of the Group’s estimated future commitments in respect of the savings and loan phases of any generation of contracts indicates a potentially unfavorable situation for the Group, a provision is recognized, with no offset between the different generations. The commitments are estimated using the Monte Carlo method in order to reflect the uncertainty of future interest rate trends and their impact on customer behavior models and at-risk outstandings. The provision is recognized under liabilities in the balance sheet and changes are recorded in net interest income and expenses.

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Registration document 2018