2019 Universal registration document and annual financial report - BNP PARIBAS188

4 Consolidated finanCial statements for the year ended 31 deCemBer 2019

4

Notes to the financial statements

Note 4 SEGMENT INFORMATION

The Group is composed of two operating divisions:

■ Retail Banking and Services, which covers Domestic Markets and International Financial Services. Domestic Markets include Retail Banking networks in France (FRB), Italy (BNL banca commerciale), Belgium (BRB), and Luxembourg (LRB), as well as certain specialised Retail Banking divisions (Personal Investors, Leasing Solutions, Arval and New Digital Businesses). International Financial Services is composed of all BNP Paribas Group Retail Banking businesses out of the Eurozone, split between Europe Mediterranean and BancWest in the United States, as well as Personal Finance and the Insurance and Wealth and Asset Management activities (Wealth Management, Asset Management and Real Estate);

■ Corporate and Institutional Banking (CIB), which includes Corporate Banking (Europe, Middle East, Africa, Asia, Americas, and Corporate Finance activities), Global Markets (Fixed Income, Currency and Commodities, as well as Equity and Prime Services), and Securities Services to management companies, financial institutions and other corporations.

Other activities mainly include Principal Investments, activities related to the Group s central treasury function, some costs related to cross-business projects, the residential mortgage lending business of Personal Finance (a significant part of which is managed in run-off), and certain investments.

They also include non-recurring items resulting from applying the rules on business combinations. In order to provide consistent and relevant economic information for each core business, the impact of amortising fair value adjustments recognised in the net equity of entities acquired and restructuring costs incurred in respect to the integration of entities, have been allocated to the Other Activities segment. The same applies to transformation costs relating to the Group s cross-business savings programmes.

Inter-segment transactions are conducted at arm s length. The segment information presented comprises agreed inter-segment transfer prices.

The capital allocation is carried out on the basis of risk exposure, taking into account various conventions relating primarily to the capital requirement of the business as derived from the risk-weighted asset calculations required under capital adequacy rules. Normalised equity income by segment is determined by attributing to each segment the income of its allocated equity. The equity allocation to segments is based on 11% of weighted assets. The breakdown of balance sheet by core business follows the same rules as the breakdown of the profit or loss by core business.

In order to be comparable with 2019, the segment information for 2018 has been restated of the following main effects as if these had occurred on 1st January 2018.

1. Following the sale in 2018 of 43.6% of First Hawaiian Bank (FHB), the entity was no longer fully consolidated as from 1st August 2018 and was accounted according to the IFRS 5 standard as assets held for sale. It had been booked under the Corporate Centre from 1st October 2018. As a reminder, the remaining stake has been entirely sold on 25th January 2019.

FHB s contribution to Group results has been retroactively reallocated to the Corporate Centre from 1st January 2018, including the capital gain from the sale of FHB shares which was initially allocated to BancWest.

2. The internal transfer of Correspondent Banking activities has been made within CIB from Corporate Banking to Securities Services to reflect the organisational change.

These changes do not affect Group results as a whole but only the analytical breakdown of IFS (BancWest), CIB (Corporate Banking, Securities Services), and Corporate Centre.