2018 Registration document and annual fi nancial report - BNP PARIBAS128

3 2018 REVIEW OF OPERATIONS

3

Balance sheet

3.3 Balance sheet

ASSETS

GENERAL The BNP Paribas Group implemented the IFRS 9 accounting standard as of 1 January 2018, which led to a review of the principles for the classifi cation, measurement and impairment of fi nancial assets. This change, as well as previous presentation changes - including the reclassifi cation of investments of insurance activities on a separate balance sheet line - are presented in note 2 to the consolidated fi nancial statements.

As at 31 December 2018, the total consolidated balance sheet of the BNP Paribas Group amounted to EUR 2,040.8 billion, up 5% from 1 January 2018 (EUR 1,949.8 billion). The Group s main assets include cash and balances at central banks, fi nancial instruments at fair value through profi t or loss, loans and advances to customers, debt securities at amortised cost or at fair value through equity, fi nancial investments of insurance activities and accrued income and other assets, which, together, account for 96% of total assets at 31 December 2018 (95% at 1 January 2018). The 5% increase in assets is mainly due to the increase of:

■ fi nancial instruments at fair value through profi t or loss, which increase by EUR 33.4 billion, or 7%, mainly as a result of the increase in reverse repurchase agreement operations;

■ loans and advances to customers, up 5% (+EUR 34.7 billion to EUR 766 billion at 31 December 2018).

CASH AND BALANCES AT CENTRAL BANKS Cash and central banks account for EUR 185.1 billion at 31 December 2018, up 4% from 1 January 2018 (EUR 178.4 billion).

FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS Financial assets recognised at market or model value through profi t or loss are composed of trading portfolios, of fi nancial derivatives and certain assets not held for trading purposes whose characteristics do not permit recognition at amortised cost or at fair value through equity . Financial assets in the trading portfolio include securities, loans and reverse repurchase agreements.

These assets are measured at market or model value at each balance sheet date.

Total fi nancial instruments at fair value through profi t or loss are up 7% (EUR +33.4 billion) compared to 1 January 2018. This increase is mainly due to the 27% increase in loans and reverse repurchase agreements (EUR +38.8 billion to EUR 183.7 billion as at 31 December 2018), partly offset by the decrease in the portfolio of securities of 6% (EUR -8.4 billion, at EUR 122.0 billion as at 31 December 2018).

LOANS AND ADVANCES TO CUSTOMERS Loans and advances to customers are divided into ordinary accounts, customer loans, reverse repurchase agreements and fi nance leases.

Loans and advances to customers (net of impairment) amounted to EUR 765.9 billion at 31 December 2018, compared with EUR 731.2 billion at 1 January 2018, up 5%. This is due to the increase in loans to customers (+5%, i.e. EUR 695.6 billion at 31 December 2018 compared to EUR 664.0 billion at 1 January 2018), as well as the increase in fi nance leases, which amount to EUR 32.1 billion at 31 December 2018, increasing by 10% compared to 1 January 2018. Impairment provisions were down to EUR 24.1 billion at 31 December 2018, compared with EUR 27.4 billion at 1 January 2018.

DEBT SECURITIES AT AMORTISED COST OR AT MARKET OR MODEL VALUE THROUGH EQUITY Debt securities that are not held for trading purposes and which meet the cash fl ow criterion established by IFRS 9 are recognised:

■ at amortised cost if managed to collect cash flows by collecting contractual payments over the life of the instrument; or

■ at fair value through equity if held in a business model whose objective is achieved through both the collection of contractual cash fl ows and the sale of fi nancial assets.

Thus, in the context of the implementation of IFRS 9, the analysis of the management modalities of debt securities that were essentially classifi ed as available-for-sale assets under IAS 39 led to the division of the portfolio between the two business models.

Debt securities at amortised cost

Debt securities at amortised cost are measured using the effective interest rate method. They totalled EUR 75.1 billion at 31 December 2018 (net of impairment), compared with EUR 69.4 billion at 1 January 2018, thus increasing by 8%.