2018 Registration document and annual fi nancial report - BNP PARIBAS118
3 2018 REVIEW OF OPERATIONS
3
Core business results
The business is accelerating individual customers mobile uses and developing self-care features with, for example, the option for customers to deactivate payment cards or change authorised spending limits online.
Revenues(1) totalled EUR 6,311 million, down by 0.7% compared to 2017 with a gradual improvement of the trend during the course of the year and a return to growth in the last quarter. Net interest income(1) was down by 0.6% as the volume growth was more than offset by an unfavourable base effect due to renegotiation and early repayment penalties which were high in 2017. Fees(1) were down by 0.7% with a decrease in particular in fi nancial fees.
At EUR 4,609 million, operating expenses(1) were down by 1.0% compared to 2017 as a result of cost saving measures (optimisation of the network
and streamlining of the management set-up), thereby generating a positive 0.3 point jaws effect.
Gross operating income(1) thus came to EUR 1,701 million, up by 0.4% compared to last year.
The cost of risk(1) was down, at EUR 288 million (EUR 331 million in 2017) and amounts to 16 basis points of outstanding customer loans.
Thus, after allocating one-third of French Private Banking s net income to the Wealth Management business (International Financial Services division), FRB posted EUR 1,263 million in pre-tax income(2), up by 4.2% compared to 2017.
BNL BANCA COMMERCIALE (BNL BC)
In millions of euros 2018 2017 2018/2017
Revenues 2,792 2,907 -4.0%
Operating Expenses and Dep. (1,797) (1,801) -0.2%
Gross Operating Income 995 1,106 -10.1%
Cost of Risk (592) (871) -32.0%
Operating Income 402 235 +71.3%
Non Operating Items (3) 1 n.s.
Pre-Tax Income 399 236 +69.3%
Income Attributable to Wealth and Asset Management (43) (44) -2.0%
Pre-Tax Income of BNL bc 356 192 +85.6%
Cost/Income 64.4% 62.0% 2.4 pt
Allocated Equity ( bn) 5.5 5.8 -6.1%
Including 100% of Italian Private Banking for the Revenues to Pre-tax income line items.
For the whole of 2018, the outstanding loans of BNL bc grew by 0.6% compared to 2017. Deposits, for their part, grew by 4.7% driven by a rise in current accounts. Life insurance outstandings reported a good performance (+6.8% compared to 31 December 2017).
BNL bc also continued to develop new client journeys and digital transformation with the launch this year of MyBiz, a new app for SMEs offering mobile access to a large range of banking services including applying for loans. The business also continued the automation of processes with already 70 robots operational.
Revenues(3) were down 4.0% compared to 2017, at EUR 2,792 million. Net interest income(3) was down by 6.6% due to the persistently low interest rate environment and the positioning on clients with a better risk profi le. However, margins on the loan origination tended to improve at the end of the year. Fees(3) were up by 0.5% for their part with a rise in banking fees partly offset by the decrease in fi nancial fees.
Operating expenses(3), at EUR 1,797 million, were down by 0.2% (-0.8% excluding the additional contribution to the Italian resolution fund(4) thanks to the effect of cost saving measures.
Gross operating income(3) thus totalled EUR 995 million, down by 10.1% compared to last year.
The cost of risk(3), at 75 basis points of outstanding customer loans, continued its decrease (-EUR 279 million compared to 2017).
Thus, after allocating one-third of Italian Private Banking s net income to the Wealth Management business (International Financial Services division), BNL bc confirmed its improving profitability and posted EUR 356 million in pre-tax income (+EUR 164 million compared to 2017).
(1) Including 100% of Private Banking in France (excluding PEL/CEL effects).
(2) Excluding PEL/CEL impacts of EUR + 20 million versus EUR + 19 million in 2017.
(3) Including 100% of Private Banking in Italy.
(4) EUR 11 million paid in the second quarter 2018.
