84 in other comprehensive income not recyclable to income. Revenue from Contracts with Customers (IFRS 15) Fee and commission income and expenses are recognised in income based on the nature of the services to which they relate. Fees and commission that forman integral part of the yield on a financial instrument are recognised as an adjustment to the yield on that instrument and included in its effective interest rate (pursuant to IFRS 9). For other types of commissions, their recognition in the income statement must reflect the rate at which control over the good or service sold is transferred to the customer: - the result of a transaction associated with the provision of services is recognised under “Commissions” when transferring control of the service to the customer if it can be reliably estimated. This transfer may occur as the service is provided (ongoing service) or on a specific date (one-off service). a) Fees and commission for ongoing services (e.g. fees and commission for means of payment) are recognised in income according to thedegreeof progress of the service provided. b) Feesandcommissionpaidor received for one-off services are recognised in full in the Income Statement once the service has been provided. Fees and commission payable or receivable dependent on the achievement of a performance target are recognised for the amount at which it is highly probable the income thus recognisedwill not later be subject to a significant downward adjustment upon resolution of uncertainty. This estimate is updated at the end of each reporting period. In practice, this condition can have the effect of deferring recognition of certain items of performance-related fee and commission income until the expiry of the performance assessment period and until such income has been definitively acquired. Leases (IFRS 16) The Group may be the lessor or lessee of a lease. Leases under which the Group is lessor • Leases are analysed in accordance with their substance and financial reality. They are recognised in the accounts as finance leases or operating leases, as applicable. In the case of finance leases, they are classified as the sale of a fixed asset to the lessee, financed by credit extended by the lessor. Analysis of the economic substance of finance leases leads the lessor to: a) Remove the leased asset from the balance sheet; b) Record a financial receivable from the customer under “financial assets at amortised cost” for a value equal to the present value at the contract’s implicit rate of rental payments due to the lessor under the lease, plus any non-guaranteed residual value owed to the lessor; c) Recognise deferred taxes for temporary differences relating to the financial receivable and the net carrying value of the leased; d) Break down the rental income into interest and amortised capital. • In the case of operating leases, the lessor recognises the leased assets under “property, plant & equipment” on the assets side of their balance sheet and records the rental income on a straight-line basis under “income from other activities” in the Income Statement. Leases for which the Group is the lessee Leases are recognised in the balance sheet as at the date on which the leased asset was made available. The lessee records an asset representing the right of use of the leased asset under “Property, plant & equipment” over the estimated term of the contract and a liability representing the rental payment obligation under “sundry liabilities” over that same term. A contract’s term equates to the non-cancellable period of the lease, adjusted to take account of contract extension options that the lessee is reasonably certain to exercise and the termination option that the lessee is reasonably certain not to exercise. In France, the term used for “3/6/9” commercial leases is generally 9 years with an initial non-cancellable period of three years. Where the lessee believes that it is reasonably certain that it will not exercise the exit option after 3 years, the Group principle applicable to open-ended or tacitly renewable contracts (i.e. first exit option after 5 years) will be applied to French commercial leases in most cases, at the start date of the lease. Thus, the duration will be estimated at 6 years. The Group principle (first exit option after 5 years) may not be applied in certain specific cases, for example for a lease where intermediate exit options have been abandoned (e.g. in return for a reduction in rent); in this case, an initial lease term of 9 years should be used (unless a tacit extension of up to 3 years is anticipated in the general case). The lease liability is recognised for an amount equal to the present value of the rental payments over the term of the contract. Rental payments include fixed rent, variable rent basedona rateor index, andpayments that the lesseeexpects to pay as residual value guarantees, purchase options or early termination penalties. The liability is calculated excluding variable rent not based on an index or a rate and non-deductible VAT on rent, which are recognised under “operating expenses”. The discount rate applicable when calculating the right-ofuse asset and the lease liability is, by default, the lessee’s marginal debt ratio over the termof the contract on the date it was signed, where the implicit rate cannot be easily established. The marginal debt ratio takes account of the rent payment structure. It reflects the conditions of the lease (duration, guarantee, economic environment, etc.) - the Group has applied the IFRS IC decision of 17 September 2019 on this point since the implementation of FRS 16. The cost of leases is broken down into interest and
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