2018 Registration document and annual fi nancial report - BNP PARIBAS114
3 2018 REVIEW OF OPERATIONS
3
BNP Paribas consolidated results
3.1 BNP Paribas consolidated results
In millions of euros 2018 2017 2018/2017
Revenues 42,516 43,161 -1.5%
Operating Expenses and Dep. (30,583) (29,944) +2.1%
Gross Operating Income 11,933 13,217 -9.7%
Cost of Risk (2,764) (2,907) -4.9%
Operating income 9,169 10,310 -11.1%
Share of Earnings of Equity-Method Entities 628 713 -11.9%
Other Non Operating Items 411 287 +43.2%
Non Operating Items 1,039 1,000 +3.9%
Pre-Tax Items 10,208 11,310 -9.7%
Corporate Income Tax (2,203) (3,103) -29.0%
Net Income Attributable to Minority Interests (479) (448) +6.9%
Net Income Attributable to Equity Holders 7,526 7,759 -3.0%
Cost/Income 71.9% 69.4% +2.5 pt
GOOD RESILIENCE OF INCOME
The business of BNP Paribas was up in 2018 with higher outstanding loans in the context of economic growth in Europe. The revenue evolution was however penalised by the still low interest rate environment and an unfavourable fi nancial market context with particularly challenging conditions at the end of the year.
Revenues totalled EUR 42,516 million, down by 1.5% compared to 2017 which included exceptional items: +EUR 233 million in capital gains from the sale of Shinhan and Euronext shares and -EUR 175 million in Own Credit Adjustment (OCA) and own credit risk included in derivatives (DVA).
In the operating divisions, revenues were down by 0.9% (-0.4% at constant scope and exchange rates): they were down slightly at Domestic Markets(1) (-0.2%) due to the low interest rate environment partly offset by good business development, in particular in the specialised businesses; up at International Financial Services (+3.4%), despite an unfavourable foreign exchange effect (+6.6% at constant scope and exchange rates(2); but down at CIB (-7.5%) due to a lacklustre market context and very challenging conditions at the end of the year, notwithstanding good development with targeted customers.
At EUR 30,583 million, the Group s operating expenses were up by 2.1% compared to 2017. They included the exceptional EUR 1,235 million impact of businesses transformation costs and acquisitions restructuring costs(3) (EUR 957 million in 2017). Excluding these exceptional items, they rose by only 1.2%.
The operating expenses of the operating divisions rose by 1.7% compared to 2017 (+1.7% at constant scope and exchange rates): they were up by 0.8% for Domestic Markets(1) with a rise in the specialised businesses due to business development but down in the domestic networks; up by 5.4% for International Financial Services as a result of business growth support and new product development; but down by 1.3% for CIB due to cost saving measures.
The gross operating income of the Group thus totalled EUR 11,933 million, down by 9.7%. It was down by 6.0% for the operating divisions (-4.7% at constant scope and exchange rates).
The cost of risk was down at EUR 2,764 million (EUR 2,907 million in 2017). It was 35 basis points of outstanding customer loans. This low level refl ects in particular the good control of risk at loan origination, the low interest rate environment and the continued improvement in Italy.
(1) Including 100% of Private Banking in the domestic networks (excluding PEL/CEL effects).
(2) Excluding the impact of the drop in markets at the end of the year in Insurance on assets at market value.
(3) In particular, LaSer, DAB Bank, GE LLD, ABN Amro Luxembourg and Raiffeisen Bank Polska.
