BPCE - 2018 Registration document

5 FINANCIAL REPORT

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

Consequently, the following simplified assumptions were used: The carrying amount of the assets and liabilities is deemed to be their fair value in certain cases. These notably include: short-term financial assets and liabilities (whose initial term is one ● year or less) provided that sensitivity to interest-rate risk and credit risk is not material during the period; demand liabilities; ● variable-rate loans and borrowings; ● transactions in a regulated market (particularly regulated savings ● products), whose prices are set by the public authorities. The fair value of loans is measured using internal valuation models that discount future payments of recoverable capital and interest over the remaining loan term. Except in special cases, only the interest rate component is remeasured, as the credit margin is established at the outset and not subsequently remeasured. Prepayment options are Fair value of loans to retail customers

factored into the model via an adjustment to loan repayment schedules. Fair value of loans to large corporates, local authorities and credit institutions The fair value of loans is measured using internal valuation models that discount future payments of recoverable capital and interest over the remaining loan term. The interest rate component is remeasured, as is the credit risk component (where it is an observable piece of data used by the customer relationship managers). Failing that, the credit risk component is established at the outset and not subsequently remeasured, as with loans to retail customers. Prepayment options are factored into the model via an adjustment to loan repayment schedules. Fair value of debt The fair value of fixed-rate debt owed to credit institutions and customers with a term of over one year is deemed to be equal to the present value of future cash flows discounted at the interest rate observed at the balance sheet date. Own credit risk is not generally taken into account.

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Registration document 2018