1332019 Universal registration document and annual financial report - BNP PARIBAS

32019 review of oPerations

3

Profit and loss account

Net Interest income increased by 0.3% to EUR 21,127 million for the year ended 31 December 2019. This variation is mainly attributable to the decrease in income from loans, deposits and borrowings (EUR 18,707 million for the year ended 31 December 2019, compared with EUR 18,888 million for the year ended 31 December 2018) and to the increase in net expense on debt issued by the Group (EUR 3,021 million for the year ended 31 December 2019, compared with EUR 2,281 million for the year ended 31 December 2018), partially offset by the increase in net income from debt securities at amortised cost and at fair value through equity (EUR 2,417 million in 2019, compared with EUR 1,659 million in 2018).

Besides, expense on financial instruments designated as at fair value through profit or loss decreased from EUR 442 million in 2018 to EUR 347 million in 2019, net revenues of cash flow hedge instruments increased by EUR 15 million compared with the year ended 31 December 2018, and net revenues of interest rate portfolio hedge instruments increased by EUR 86 million.

NET COMMISSION INCOME Net commission income includes commissions on customer transactions, securities and derivatives transactions, financing and guarantee commitments, and asset management and other services. Net commission income increased by 1.7%, from EUR 9,207 million in 2018 to EUR 9,365 million in 2019.

Insurance activity fees are included in Net income from insurance activities .

NET GAIN ON FINANCIAL INSTRUMENTS AT FAIR OR MODEL VALUE THROUGH PROFIT OR LOSS This line item includes all profit and loss items relating to financial instruments managed in the trading book, to financial instruments designated as at fair value through profit or loss by the Group under the fair value option and to non-trading debt securities that do not meet the IFRS 9 criteria required to be recognised at amortised cost or at fair value through equity (other than interest income and expense on the last two categories, which are recognised under Net interest income as presented above). It also includes gains and losses on non-trading equity instruments that the Group did not choose to measure at fair value through equity. This includes both capital gains and losses on the sale and the marking to fair value of these instruments, along with dividends from equity securities.

This line item also includes gains and losses due to the ineffectiveness of fair value hedges, cash flow hedges, and net foreign investment hedges.

The gains and losses resulting from cash flows and the remeasurement of financial instruments, either cash or derivatives, must be appreciated as a whole in order to give a fair representation of the profit or loss resulting from trading activities.

Net gains on financial instruments as at fair value through profit or loss increase by 22.4% from EUR 5,808 million for the year ended 31 December 2018 to EUR 7,111 million for the year ended 31 December 2019.

The income from items designated as at fair value through profit or loss are partly offset by changes in value of the derivative instruments hedging these assets.

Since 2018, this line item also includes gains and losses on equity securities that the Group did not choose to classify as at fair value through equity under IFRS 9. The net gains represent EUR 580 million for the year ended 31 December 2019 and EUR 571 million for the year ended 31 December 2018.

NET GAIN ON FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH EQUITY For the year 2019, net gains on financial instruments at fair value through equity correspond to gains and losses realised on debt securities recognised at fair value through equity and to dividends from equity securities that the Group chose to recognise at fair value through equity.

Changes in fair value of these assets are initially recognised under Changes in assets and liabilities recognised directly in equity . Upon sale of these assets, realised gains or losses are recognised in the profit or loss account under Net gains on financial instruments at fair value through equity for debt securities, or transferred to retained earnings for equity securities.

Net gains on financial instruments at fair value through equity amounted to EUR 350 million in 2019 and EUR 315 million in 2018.

NET INCOME FROM INSURANCE ACTIVITIES Net income from insurance activities rose by 9.2% compared to 2018, amounting to EUR 4,437 million. Its main components are: gross written premiums, net income from financial investments, technical charges related to contracts, policy benefit expenses and net charges from ceded reinsurance.

The change in net income from insurance activities is due to increase of net gains from financial investments which correspond to a net gain of EUR 14,858 million in 2019 and to a net loss of -EUR 2,133 million in 2018, offset by a 75.4% an increase of in technical charges which amount to -EUR 32,423 million for the year ended 31 December 2019, compared to -EUR 18,487 million for the year ended 31 December 2018.

NET INCOME FROM OTHER ACTIVITIES This item includes, among other things, net income from investment property, assets held under operating lease and property development activities. Net income from other activities increased by 7%, from EUR 2,065 million in 2018 to EUR 2,204 million in 2019. This change is mainly due to a EUR 119 million increase in net income from assets held under operating lease.