134 2019 Universal registration document and annual financial report - BNP PARIBAS

3 2019 review of oPerations

3

Profit and loss account

OPERATING EXPENSES, AMORTISATION AND DEPRECIATION OF FIXED AND INTANGIBLE ASSETS

In millions of euros Year to 31

December 2019 Year to 31

December 2018 Change

(2019/2018)

Salary and employee benefit expense (17,553) (16,617) 6%

Other operating expenses (11,339) (12,290) -8%

Depreciation, amortisation and impairment of property, plant and equipment and intangible assets (2,445) (1,676) 46%

TOTAL OPERATING EXPENSES, DEPRECIATION, AND AMORTISATION (31,337) (30,583) 2%

Operating expenses, depreciation and amortisation are increasing by 2%, from EUR 30,583 million in 2018 to EUR 31,337 million in 2019.

GROSS OPERATING INCOME

The Group s gross operating income rose by 11% to EUR 13,260 million for the year ended 31 December 2019 (compared with EUR 11,933 million for the year ended 31 December 2018), mainly due to the 5% increase in revenues.

COST OF RISK

In millions of euros Year to 31

December 2019 Year to 31

December 2018 Change

(2019/2018)

Net allowances to impairment (2,649) (2,490) 6%

Recoveries on loans and receivables previously written off 429 483 -11%

Irrecoverable loans and receivables not covered by impairment provisions (983) (757) 30%

TOTAL COST OF RISK FOR THE PERIOD (3,203) (2,764) 16%

This line item represents the net amount of impairment losses recognised for credit risks inherent in the Group s intermediation activities, as well as any impairment loss relating to counterparty risks on over-the-counter derivative instruments.

The Group s cost of risk amounts to EUR 3,203 million, an increase of 16% compared to 2018.

The increase of cost of risk in 2019 is mainly due to the contribution of IFS activities, with net allowances of EUR 1,911 million in 2019 (compared to EUR 1,566 million in 2018), increasing by 22%, mainly linked to Personal Finance, whose cost of risk amounts to EUR 1,354 million (compared to EUR 1,186 million in 2018).

As at 31 December 2019, the total amount of doubtful loans, securities and commitments, net of collateral, amounts to EUR 23.1 billion (compared to EUR 26.2 billion as at 31 December 2018), and the related impairment amounts to EUR 17.1 billion, compared to EUR 19.9 billion as at 31 December 2018. The coverage ratio is 74% at 31 December 2019, compared to 76% at 31 December 2018.

More detailed information on the cost of risk per business line is available in the Core business results section.