2020 Universal registration document and annual financial report - BNP PARIBAS140

3 2020 review of oPerations

3

Balance sheet

FINANCIAL INVESTMENTS OF INSURANCE ACTIVITIES Financial investments of insurance activities include:

■ the financial instruments that remain recognised in accordance with IAS 39 (note 1.f of the consolidated financial statements); they include investments in representation of the technical reserves of insurance activities, including unit-linked insurance policies;

■ derivatives used for hedging purposes with a positive market value;

■ investment property;

■ equity-method investments;

■ and the share of reinsurers in liabilities related to insurance and investment contracts.

Financial investments of insurance activities amounted to EUR 265.4 billion at 31 December 2020, an increase by 3% compared to 31 December 2019. This increase is mainly due to an increase by 3% in financial instruments designated as at fair value through profit or loss (EUR 119.0 billion at

31 December 2020, compared with EUR 115.3 billion at 31 December 2019), and to an increase by 3.2% in available-for-sale financial assets (EUR 130.6 billion at 31 December 2020, compared to EUR 126.6 billion at 31 December 2019).

The financial assets available for sale have an unrealised gain of EUR 17.1 billion at 31 December 2020, compared with EUR 14.7 billion at 31 December 2019, an increase of EUR 2.4 billion.

ACCRUED INCOME AND OTHER ASSETS Accrued income and other assets are divided between guarantee deposits and bank guarantees paid, collection accounts, accrued income and prepaid expenses, other debtors and miscellaneous assets.

Accrued income and other assets amounted to EUR 140.9 billion at 31 December 2020, compared with EUR 113.5 billion at 31 December 2019, up 24,1%. This increase is in particular related to guarantee deposits and bank guarantees paid, up by EUR 27.7 billion (+36,7%).

LIABILITIES

OVERVIEW The Group s liabilities (excluding equity) amounted to EUR 2,371.1 billion at 31 December 2020, up 16% from 31 December 2019 (EUR 2,052.9 billion). The Group s main liabilities consist of financial instruments at fair value through profit or loss, deposits from customers, debt securities, accrued expenses and other liabilities, and technical reserves and other insurance liabilities. These items together accounted for 98% of the Group s total liabilities (excluding shareholders equity) at 31 December 2020 (97% at 31 December 2019). The 16% increase in liabilities is mainly due to:

■ the 25% or EUR 147.3 billion increase in financial instruments at fair value through profit or loss (EUR 729.5 billion at 31 December 2020);

■ the 13% or EUR 106.3 billion rise in deposits from customers (EUR 941 billion as at 31 December 2020);

■ the 75% or EUR 63.1 billion rise in amount due to credit institution (EUR 147.7 billion as at 31 December 2020).

FINANCIAL INSTRUMENTS AT FAIR OR MODEL VALUE THROUGH PROFIT OR LOSS The trading portfolio consists mainly of sales of borrowed securities, repurchase agreements and financial derivatives. Financial liabilities designated as at fair or model value through profit or loss are mainly composed of issues originated and structured on behalf of clients, where the risk exposure is managed in combination with the hedging strategy. These types of issues contain significant embedded derivatives, whose changes in value are offset by changes in value of the hedging instrument.

Total financial instruments at fair value through profit or loss rose by 25% (+EUR 147.3 billion) compared to 31 December 2019, in link mainly with the increase in the securities by 44% (+EUR 28.8 billion to EUR 94.3 billion in 31 December 2020), the increase in pension operations by 34% (+EUR 73.5 billion to EUR 288.6 billion at 31 December 2020), and financial derivatives by 19% (+EUR 44.7 billion to EUR 282.6 billion at 31 December 2020).

DEBTS DUE TO CREDIT INSTITUTIONS Amounts due to credit institutions consist primarily of interbank borrowings, demand deposits and repurchase agreements.. Amounts due to credit institutions increased by 75% or EUR 63.1 billion to EUR 147.7 billion at 31 December 2020. This increase mainly results from the 90% or EUR 62.2 billion increase of interbank borrowings to EUR 131 billion at 31 December 2020.

DEPOSITS FROM CUSTOMERS Deposits from customers consist primarily of on-demand deposits, term accounts, savings accounts and repurchase agreements. Deposits from customers amount to EUR 941 billion, up EUR 106.3 billion from 31 December 2019. This is due to the 19% increase in on-demand accounts (a EUR 96.4 billion rise, to EUR 613.3 billion as at 31 December 2020).