2018 Registration document and annual fi nancial report - BNP PARIBAS124

3 2018 REVIEW OF OPERATIONS

3

Core business results

For the whole of 2018, Insurance and Wealth and Asset Management s businesses continued their growth. Assets under management(1) reached EUR 1,028 billion as at 31 December 2018. They were down by 2.2% compared to 31 December 2017 due in particular to a very negative performance effect (-EUR 51.1 billion) as a result of the sharp fall in the markets at the end of the year, and despite a good level of net asset infl ows at EUR 13.4 billion (very good asset infl ows at Wealth Management in particular in Asia, France, Italy, Germany and the United States; asset outfl ows at Asset Management concentrated on a bond mandate following the in-sourcing by a client of its fund management, partly offset by asset infl ows into money market funds; good asset infl ows in Insurance in particular in unit-linked policies), a +EUR 10.7 billion scope effect due in particular to the integration of ABN Amro s activities in Luxembourg(2) and a +EUR 3.9 billion foreign exchange effect.

As at 31 December 2018, assets under management(1) broke down as follows: Asset Management (EUR 399 billion), Wealth Management (EUR 361 billion), Insurance (EUR 239 billion) and Real Estate Services (EUR 29 billion).

Insurance continued its good business development with in particular good performance of protection insurance in Asia. The new property and casualty insurance offering in the FRB network via Cardif IARD (joint venture with Matmut) has gotten off to a good start with already 100,000 contracts sold and the new partnership with Orange (cell phone insurance) is a success. The business signed new partnerships with Seloger.com in France, Sumitomo Mitsui in Japan and Sainsbury s in the UK.

Revenues of Insurance, at EUR 2,680 million, rose by 6.6% compared to 2017 due to a good business drive but refl ected at the end of the year the impact of the fall in the markets due to the booking of part of the

assets at market value(3). Operating expenses, at EUR 1,406 million, rose by 12.4%, as a result of good business development. Other non-operating items were negligible but included during the same period last year a +EUR 326 million capital gain from the sale of a 4.0% stake in SBI Life. After taking into account decreased income of the associated companies, pre-tax income was thus down by 20.8% at historical scope and exchange rates compared to 2017, at EUR 1,479 million. It is virtually stable at constant scope and exchange rates (-0.3%), including the spot impact of the fall in the markets at the end of the year.

Wealth and Asset Management continued its business development: Wealth Management integrated ABN Amro s activities in Luxembourg(2) thereby strengthening its positioning on the large entrepreneur segment; Asset Management continued its industrialisation with in particular the roll out of Blackrock s Aladdin IT outsourcing solution; Real Estate Services reported good growth in its business, in particular in real estate fund management in Germany and in advisory business in France, Italy and Germany.

Wealth and Asset Management s revenues (EUR 3,286 million) grew by 2.9% compared to 2017, driven by Real Estate Services, but were impacted this year by MiFID II regulation and the unfavourable movements in the fi nancial markets at the end of the year. Operating expenses totalled EUR 2,636 million, up by 10.4% compared to 2017 due to specific transformation projects at Asset Management, costs related to the acquisition of Strutt & Parker at Real Estate Services and continuous business development. The cost of risk was -EUR 6 million (it was a net write-back of EUR 24 million in 2017). At EUR 681 million, Wealth and Asset Management s pre-tax income, after receiving one-third of the net income of Private Banking in the domestic markets, in Turkey and in the United States, was down by 24.2% compared to 2017 (-18.1% excluding non-recurring items(4).

(1) Including distributed assets.

(2) Closing of the acquisition on 3 September 2018 (+EUR 7.7 billion in assets under management at Wealth Management and +EUR 2.7 billion at Insurance).

(3) -EUR 180 million in the fourth quarter.

(4) Provision write-back in the 1st quarter 2017; capital gain from the sale of a building in the second quarter 2017, specifi c transformation projects in Asset Management and costs related to the acquisition of Strutt & Parker in Real Estate Services: -EUR 56 million in 2018 (-EUR 2 million in 2017).

CORPORATE AND INSTITUTIONAL BANKING (CIB)

In millions of euros 2018 2017 2018/2017

Revenues 10,829 11,704 -7.5%

Operating Expenses and Dep. (8,163) (8,273) -1.3%

Gross Operating Income 2,666 3,431 -22.3%

Cost of Risk (43) (81) -47.1%

Operating Income 2,623 3,350 -21.7%

Share of Earnings of Equity-Method Entities 59 24 n.s.

Other Non Operating Items 0 22 n.s.

Pre-Tax Income 2,681 3,395 -21.0%

Cost/Income 75.4% 70.7% +4.7 pt

Allocated Equity ( bn) 20.8 21.1 -1.4%