1152019 Universal registration document and annual financial report - BNP PARIBAS

32019 review of oPerations

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BNP Paribas consolidated results

The Group s gross operating income thus came in at EUR 13,260 million, up 11.1%. It rose by 11.2% for the operating divisions.

The cost of risk, at EUR 3,203 million, rose by EUR 439 million compared to 2018. At 39 basis points of outstanding customer loans, it remained at a low level due in particular to the good control of risk at origination, the low interest rate environment and the continued improvement of the credit portfolio in Italy.

The Group s operating income, at EUR 10,057 million, was thus up 9.7%. It was up 9.4% for the operating divisions.

Non operating items totalled EUR 1,337 million, up from 2018 (EUR 1,039 million). They reflected the exceptional impact of the capital gain from the sale of 16.8% of SBI Life in India, followed by the deconsolidation of the residual stake(1) (+EUR 1,450 million), the +101 million euro capital gain from the sale of a building, and the impairment of goodwill (-EUR 818 million). They included in 2018 the +101 million euro capital gain from the sale of a building and the EUR 286 million capital gain from the sale of 30.3% from First Hawaiian Bank.

Pre-tax income, at EUR 11,394 million (EUR 10,208 million in 2018), was up 11.6%.

The average corporate tax rate was 24.2%, due in particular to the low taxation of the capital gains with respect to SBI Life.

The Group s net income attributable to equity holders thus came at EUR 8,173 million, up 8.6% compared to 2018 and +4.7% excluding exceptional items.

The return on tangible equity not revaluated clocked in at 9.8% reflecting the Group s good overall performance.

As at 31 December 2019, the common equity Tier 1 ratio came in at 12.1%, up 40 basis points compared to 1 January 2019(2). The leverage ratio(3) came in at 4.6%. The Group s immediately available liquidity reserve amounted to EUR 309 billion, equivalent to over one year of room to manoeuvre in terms of wholesale resources.

The net book value per share reached 79.0 euros, an average annual growth rate of 5.1% since 31 December 2008. Tangible net book value per share(4) amounted to 69.7 euros, a growth rate of 7.3% since 31 December 2008 illustrating the continuous value creation throughout the cycle.

The Board of directors will propose to the shareholders at the Annual General Meeting to pay a dividend of EUR 3.10 per share (+2.6% compared to 2018) paid in cash(5), equivalent to a 50% pay-out ratio in line with the plan.

The Group is continuing its transformation and is actively delivering its 2020 plan while strengthening its internal control and compliance system.

At the end of 2019, BNP Paribas reaffirmed its ambition to be a global leader in sustainable finance. The Group is already recognized in this area, as illustrated for example, by being the number 3 participant worldwide in the green bond market at the end of 2019, with EUR 9.8 billion as joint bookrunner for its clients, and having signed EUR 3.7 billion of Sustainability Linked Loans at the end of 2019, a financing tool indexed on environmental, social and governance (ESG) criteria. This policy of engagement to have a positive impact on society is recognised through the bank s strong rankings (World s Best Bank for corporate responsibility in 2019 by Euromoney) and its presence in the major specialised indices (Dow Jones Sustainability Indices, World and Europe).

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.

(1) 5.2% residual stake in SBI Life.

(2) Reminder: -10 bps compared to 31 December 2018 due to the impact of the new IFRS 16 accounting standard.

(3) Calculated according to the delegated act of the European Commission dated 10 October 2014.

(4) Revaluated.

(5) Subject to the approval of the Annual General Meeting on 19 May 2020, shares will go ex-dividend on 25 May 2020, payment on 27 May 2020.