2020 Universal registration document and annual financial report - BNP PARIBAS124
3 2020 review of oPerations
3
Core Business results
Capital allocation
Revenue from the capital allocated to each division is included in the division s profit and loss account. The capital allocated to each division corresponds to the amount required to comply with CRD IV regulation, also known as Basel 3, and is based on 11% of risk- weighted assets.
Risk-weighted assets are calculated as the sum of:
■ the risk-weighted assets for credit and counterparty risk, calculated using the standard approach or the Internal Ratings Based Approach (IRBA) depending on the particular entity or business activity;
■ the regulatory capital requirement for market risks, for adjustment of credit valuation and for operational risk, multiplied by 12.5.
Moreover, elements that are deducted from Tier 1 capital are allocated to each division.
Last, the capital allocated to the insurance business is based on the minimum solvency capital requirement as defined by Solvency II.
3.2 Core Business results
RETAIL BANKING & SERVICES
In millions of euros 2020 2019 2020/2019
Revenues 30,867 32,433 -4.8%
Operating Expenses and Dep. (20,384) (20,946) -2.7%
Gross Operating Income 10,483 11,488 -8.7%
Cost of Risk (4,221) (2,927) +44.2%
Operating Income 6,262 8,561 -26.8%
Share of Earnings of Equity-Method Entities 358 489 -26.9%
Other Non Operating Items 72 (26) n.s.
Pre-Tax Income 6,692 9,024 -25.8%
Cost/Income 66.0% 64.6% +1.4 pt
Allocated Equity ( bn) 55.3 54.9 +0.8%
Including 100% of Private Banking in France (excluding PEL/CEL effects), in Italy, Belgium, Luxembourg, at BancWest and TEB for the Revenues to Pre-tax income line items.
