1192019 Universal registration document and annual financial report - BNP PARIBAS

32019 review of oPerations

3

Core Business results

Gross operating income(1) thus came in at EUR 978 million, down 1.7% year-on-year.

The cost of risk(1), at EUR 490 million (-EUR 102 million compared to 2018), continued its improvement. It stood at 64 basis points of outstanding customer loans.

Thus, after allocating one-third of Italian Private Banking s net income to the Wealth Management business (International Financial Services division), BNL bc posted pre-tax income of EUR 443 million, up sharply (+24.3%) compared to 2018.

(1) Including 100% of Italian Private Banking.

(2) Including 100% of Belgian Private Banking.

BELGIAN RETAIL BANKING (BRB)

In millions of euros 2019 2018 2019/2018

Revenues 3,524 3,595 -2.0%

Operating Expenses and Dep. (2,480) (2,521) -1.6%

Gross Operating Income 1,044 1,074 -2.8%

Cost of Risk (55) (43) +29.0%

Operating Income 989 1,031 -4.1%

Other Non Operating Items 10 18 -43.9%

Pre-Tax Income 999 1,049 -4.8%

Income Attributable to Wealth and Asset Management (70) (70) -0.1%

Pre-Tax Income of Belgian Retail Banking 929 980 -5.1%

Cost/Income 70.4% 70.1% +0.3pt

Allocated Equity ( bn) 5.8 5.7 +0.3%

Including 100% of Belgian Private Banking for the Revenues to Pre-tax income line items.

For the whole of 2019, BRB reported sustained business activity. Loans were up 4.4% compared to 2018 with good growth in loans to corporates and an increase in loans to individuals. Deposits rose by 5.1% and off balance sheet savings grew 8.2% compared to 2018, with in particular a strong rise in mutual fund outstandings (+12.8% compared to 2018) and an increase in life insurance outstandings.

The business continued to evolve its operational model, with in particular the conclusion of an agreement between the Belgian main banks to set up an integrated network of ATMs that provides better coverage around the country in order to be ever closer to customers.

BRB s revenues(2) were down 2.0% compared to 2018, at EUR 3,524 million. Net interest income(2) was down 3.1%, as the impact of the low interest rate environment was only partially offset by higher loan volumes. Fees(2) were up 1.4% compared to 2018.

Operating expenses(2), at EUR 2,480 million, were down (-1.6%) compared to 2018 thanks to the effect of cost reduction measures. The business closed 88 branches in 2019.

Gross operating income(2) thus came in at EUR 1,044 million, down 2.8% compared to 2018.

The cost of risk(2) totalled EUR 55 million compared to EUR 43 million in 2018. At 5 basis points of outstanding customer loans, it was very low.

After allocating one-third of Belgian Private Banking s net income to the Wealth Management business (International Financial Services division), BRB thus posted pre-tax income of EUR 929 million, down 5.1% compared to 2018.