2018 Registration document and annual fi nancial report - BNP PARIBAS 129

32018 REVIEW OF OPERATIONS

3

Balance sheet

Debt securities at fair value through equity

These assets are measured at market or model value through equity at each balance sheet date. They fall by EUR 0.1 billion between 1 January 2018 and 31 December 2018, amounting to EUR 53.8 billion.

Debt securities at fair value through equity posted an unrealised gain of EUR 0.1 billion at 31 December 2018, compared with EUR 0.6 billion at 1 January 2018, a decrease of EUR 0.5 billion.

FINANCIAL INVESTMENTS OF INSURANCE ACTIVITIES Financial investments of insurance activities include:

■ the fi nancial instruments that remain recognised in accordance with IAS 39 (cf. note 1.a.1 of the consolidated fi nancial statements); they include investments in representation of the technical reserves of insurance activities, including unit-linked insurance policies;

■ derivatives used for hedging purposes with a positive market value;

■ investment property;

■ equity-method investments;

■ and the share of reinsurers in liabilities related to insurance and investment contracts.

Financial investments of insurance activities amounted to EUR 232.3 billion at 31 December 2018, an increase of 2% compared to 1 January 2018. This increase is mainly due to the 7% increase in fi nancial instruments designated as at fair value through profi t or loss (EUR 102.9 billion at 31 December 2018, compared with EUR 96.2 billion at 1 January 2018), partly offset by a 2% decrease in available-for-sale fi nancial assets (EUR 112.0 billion at 31 December 2018, compared to EUR 114.2 billion at 1 January 2018).

The financial assets available for sale have an unrealised gain of EUR 9.1 billion at 31 December 2018, compared with EUR 13.2 billion at 1 January 2018, a decrease of EUR 4.1 billion.

ACCRUED INCOME AND OTHER ASSETS Accrued income and other assets are divided between guarantee deposits and bank guarantees paid, collection accounts, accrued income and prepaid expense, other debtors and miscellaneous assets.

Accrued income and other assets amounted to EUR 103.3 billion at 31 December 2018, compared with EUR 93.0 billion at 1 January 2018, up 11%. This increase is in particular related to guarantee deposits and bank guarantees paid, up by EUR 8.5 billion (+15%).

LIABILITIES

GENERAL The Group s liabilities (excluding equity) amounted to EUR 1,935.1 billion at 31 December 2018, up 5% from 1 January 2018 (EUR 1,845.2 billion). The Group s main liabilities consist of fi nancial instruments at fair value through profi t or loss, deposits from customers, debt securities, accrued expense and other liabilities, and technical reserves and other insurance liabilities. These items together accounted for 94% of the Group s total liabilities (excluding shareholders equity) at 31 December 2018 (93% at 1 January 2018). The 5% increase in liabilities is mainly due to:

■ the 8% or EUR 40.1 billion increase in fi nancial instruments at fair value through profi t or loss (EUR 559.9 billion at 31 December 2018);

■ the 5% or EUR 35.6 billion rise in deposits from customers (EUR 796.5 billion as at 31 December 2018).

FINANCIAL INSTRUMENTS AT FAIR OR MODEL VALUE THROUGH PROFIT OR LOSS The trading portfolio consists mainly of sales of borrowed securities, repurchase agreements and fi nancial derivatives. Financial liabilities designated as at fair or model value through profi t or loss are mainly composed of issues originated and structured on behalf of clients, where

the risk exposure is managed in combination with the hedging strategy. These types of issues contain signifi cant embedded derivatives, whose changes in value are offset by changes in value of the hedging instrument.

Total fi nancial instruments at fair value through profi t or loss rose by 8% compared to 1 January 2018, mainly in relation to the 17% increase in repurchase agreements (a EUR 29.4 billion increase, to EUR 204.0 billion at 31 December 2018) and to the 12% increase in securities portfolios (a EUR 8.1 billion rise at 31 December 2018) .

DEPOSITS FROM CUSTOMERS Deposits from customers consist primarily of on-demand deposits, term accounts, savings accounts and repurchase agreements. Deposits from customers amount to EUR 796.5 billion, up EUR 35.6 billion from 1 January 2018. This is due to the 5% increase in on-demand accounts (a EUR 23.6 billion rise, to EUR 474.0 billion as at 31 December 2018) and the 8% rise in term accounts by (a EUR 13.0 billion increase, to EUR 175.7 billion at 31 December 2018 ).