BPCE - 2018 Registration document

5 FINANCIAL REPORT

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

9.1.1.2 Financial assets at fair value through profit or loss

Accounting principles This asset category includes: financial assets held for trading, i.e. securities acquired or issued ● principally for the purpose of selling them in the near term; financial assets that the Group has chosen to recognize at fair ● value through profit or loss at inception using the fair value option available under IAS 39. These assets are measured at fair value at the date of initial recognition and at each balance sheet date. Changes in fair value over the period, interest, dividends, gains or losses on disposals on these instruments are recognized in “Net income from insurance businesses.” Financial assets and liabilities designated at fair value through profit or loss The amendment to IAS 39 adopted by the European Union on November 15, 2005 allows entities to designate financial assets and liabilities at fair value through profit or loss on initial recognition. However, an entity’s decision to designate a financial asset or liability at fair value through profit or loss may not be reversed. Compliance with the criteria stipulated by the standard must be verified prior to any recognition of an instrument using the fair value option. In practice, this option may be applied only under the specific circumstances described below: Elimination of or significant reduction in an accounting mismatch Applying the option eliminates accounting mismatches stemming from the application of different valuation rules to instruments

managed under a single strategy. This treatment applies in particular to unit-linked policy assets and liabilities. Harmonization of accounting treatment for performance management and measurement The option applies for a group of assets and/or liabilities managed and measured at fair value, provided that it is based on a formally documented risk management or investment strategy, and information about the Group is also reported internally on a fair value basis. Hybrid financial instruments containing one or more embedded derivatives An embedded derivative is a component of a financial or non-financial hybrid (combined) instrument that qualifies as a derivative. It must be separated from the host contract and accounted for as a derivative if the hybrid instrument is not measured at fair value through profit or loss, and if the economic characteristics and risks associated with the derivative are not closely related to those of the host contract. The fair value option may be applied when the embedded derivative(s) substantially modify the cash flows of the host contract and when the separate recognition of the embedded derivative(s) is not specifically prohibited by IAS 39 ( e.g. an early redemption option at cost embedded in a debt instrument). The option allows the entire instrument to be measured at fair value, and therefore avoids the need to extract, recognize or separately measure the embedded derivative. This treatment applies in particular to certain financial instruments containing material embedded derivatives (convertible bonds, indexed bonds and structured securities).

12/31/2018

01/01/2018

in millions of euros

Bonds UCITS

30

4,810 4,810

4,310 4,340

Financial assets held for trading

Trading derivatives Hedging derivatives

18

214

1

Bonds Equities

1,528

228 625

602 171

UCITS

1,137 2,011

Loans and receivables due from customers Investments backed by unit-linked policies

16,469 18,770 23,598

15,035 19,036 23,591

Financial assets designated at fair value through profit or loss TOTAL FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

336

Registration document 2018