130 2019 Universal registration document and annual financial report - BNP PARIBAS

3 2019 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 257.8 billion at 31 December 2019, an increase by 11% compared to 31 December 2018. This increase is mainly due to an increase by 12% in financial instruments designated as at fair value through profit or loss

(EUR 115.3 billion at 31 December 2019, compared with EUR 102.9 billion at 31 December 2018), and to an increase by 13% in available-for-sale financial assets (EUR 126.6 billion at 31 December 2019, compared to EUR 112.0 billion at 31 December 2018).

The financial assets available for sale have an unrealised gain of EUR 14.7 billion at 31 December 2019, compared with EUR 9.1 billion at 31 December 2018, an increase of EUR 5.6 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 113.5 billion at 31 December 2019, compared with EUR 103.3 billion at 31 December 2018, up 10%. This increase is in particular related to guarantee deposits and bank guarantees paid, up by EUR 10.5 billion (+16%).

LIABILITIES

OVERVIEW The Group s liabilities (excluding equity) amounted to EUR 2,052.9 billion at 31 December 2019, up 6% from 31 December 2018 (EUR 1,935.1 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 93% of the Group s total liabilities (excluding shareholders equity) at 31 December 2019 (94% at 31 December 2018). The 6% increase in liabilities is mainly due to:

■ the 4% or EUR 22.3 billion increase in financial instruments at fair value through profit or loss (EUR 582.2 billion at 31 December 2019);

■ the 5% or EUR 38.1 billion rise in deposits from customers (EUR 834.7 billion as at 31 December 2019);

■ the 11% or EUR 23.2 billion rise in technical reserves and other insurance liabilities (EUR 236.9 billion as at 31 December 2019).

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 issuances contain significant embedded derivatives, which 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 4% (EUR +22.3 billion 31 December 2019) compared to 31 December 2018. This increase is mainly due to the increase in debt securities of 16% (EUR +9 billion to EUR 64 billion in 31 December 2019), the increase in repurchase agreement operations by 5.4% (EUR +11 billion to EUR 215.1 billion at 31 December 2019), and financial derivatives of 5.4% (EUR +12.1 billion to EUR 237.9 billion at 31 December 2019), partially offset by a decrease in the securities portfolios of -13% (EUR -9.7 billion at 31 December 2019).

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 834.7 billion, up EUR 38.1 billion from 31 December 2018. This is due to the 9% increase in on-demand accounts (a EUR 42.9 billion rise, to EUR 516.9 billion as at 31 December 2019) and the 6,1% decrease in term accounts by (a EUR 10.6 billion decrease, to EUR 165.0 billion at 31 December 2019).

DEBT SECURITIES This category includes negotiable certificates of deposit and bond issues, but does not include debt securities classified as financial liabilities at fair value through profit or loss (see note 5.a of the consolidated financial statements). Debt securities are increasing from EUR 151.5 billion at 31 December 2018 to EUR 157.6 billion at 31 December 2019.