2018 Registration document and annual fi nancial report - BNP PARIBAS 121
32018 REVIEW OF OPERATIONS
3
Core business results
International Financial Services reported this year an unfavourable foreign exchange effect (depreciation of the Turkish lira and the US dollar) partially offset by several scope effects.
At EUR 16,434 million, revenues were up by 3.4% compared to 2017. Excluding the impact of the fall in the markets at the end of the year on assets at market value at Insurance(1), they rose by 6.6% at constant scope and exchange rates, refl ecting the good business drive.
Operating expenses, which totalled EUR 10,242 million, were up by 5.4% compared to the same period last year, as a result of business development and new product launches (+5.5% at constant scope and exchange rates and excluding non-recurring items(2).
Gross operating income came to EUR 6,192 million, up by 0.2% compared to 2017 (+4.7% at constant scope and exchange rates).
The cost of risk, at EUR 1,579 million, rose by 228 million compared to a weak base in 2017 given provision write-backs. It recorded the effect of the IFRS 9 application at Personal Finance where performing loans, which grow at a sustained level, are now provisioned.
Other non-operating items totalled EUR 208 million (EUR 433 million in 2017). They refl ected the exceptional impact of the EUR 151 million capital gain(3) from the sale of First Hawaiian Bank shares. They included in the same period last year a EUR 326 million capital gain realised from the initial public offering of SBI Life.
International Financial Services pre-tax income thus totalled EUR 5,310 million, down by 8.8% compared to 2017 but up by 3.3% at constant scope and exchange rates and excluding the impact of the fall in the markets at the end of the year at Insurance(4).
PERSONAL FINANCE
In millions of euros 2018 2017 2018/2017
Revenues 5,533 4,923 +12.4%
Operating Expenses and Dep. (2,764) (2,427) +13.9%
Gross Operating Income 2,768 2,496 +10.9%
Cost of Risk (1,186) (1,009) +17.5%
Operating Income 1,583 1,487 +6.4%
Share of Earnings of Equity-Method Entities 62 91 -31.9%
Other Non Operating Items 2 29 -93.9%
Pre-Tax Income 1,646 1,607 +2.5%
Cost/Income 50.0% 49.3% +0.7 pt
Allocated Equity ( bn) 7.3 5.8 -25.9%
For the whole of 2018, Personal Finance continued its strong organic growth drive while integrating General Motors Europe s financing activities(5): outstanding loans were up by +12.6% at constant scope and exchange rates compared to 2017, driven by an increase in demand in a favourable context in Europe and the effect of new partnerships. The business signed new commercial agreements with Hyundai and Uber in France, Carrefour in Poland and Dixons Carphone in the United Kingdom. It continued to expand its digital footprint and new technologies with 97 robots already deployed and more than 31 million selfcare transactions done by clients, or 73.9% of the total.
The revenues of Personal Finance were up by 12.4% compared to 2017, at EUR 5,533 million. They were up by 9.1% at constant scope and exchange rates as a result of the rise in volumes and the positioning on products with a better risk profi le. They were driven in particular by a good drive in Italy, Spain and Germany.
Operating expenses were up by 13.9% compared to 2017, at EUR 2,764 million. They were up by 7.9% at constant scope and exchange rates, as a result of business development. The cost income ratio was 50.0%.
Gross operating income thus came to EUR 2,768 million, up by 10.9% compared to 2017 (+10.3% at constant scope and exchange rates).
The cost of risk came to EUR 1,186 million (EUR 1,009 million in 2017). At 141 basis points of outstanding customer loans, it was at a low level despite the effect of the IFRS 9 adoption.
Personal Finance s pre-tax income thus came to EUR 1,646 million, up by 2.5% compared to 2017 (+5.9% at constant scope and exchange rates and excluding the step effect of the IFRS 9 adoption).
(1) -EUR 180 million.
(2) Non-recurring items at Asset Management, Real Estate Services and at BancWest (EUR 34 million in 2018).
(3) In addition, EUR 135 million exchange difference booked in the P&L in the Corporate Centre.
(4) Excluding non-recurring items: -EUR 33 million in 2018 (+EUR 40 million in 2017).
(5) Acquisition closed on 31 October 2017.
