2018 Registration document and annual fi nancial report - BNP PARIBAS 133

32018 REVIEW OF OPERATIONS

3

Profi t and loss account

NET INCOME FROM INSURANCE ACTIVITIES Net income from insurance activities rose by 6.6% compared to 2017, amounting to EUR 4,064 million. Its main components are: gross written premiums, net income from fi nancial investments, technical charges related to contracts, policy benefi t expenses and net expense from ceded reinsurance.

The change in net income from insurance activities is due to an 8.3% increase in gross written premiums (EUR 27, 026 million in 2018, compared with EUR 24, 964 million in 2017) and to the decrease of net gains from fi nancial investments which correspond to a net loss of EUR 2,133 million in 2018 and to a net gain of EUR 9,031 million in 2017. The latter is partially offset by the 34% decrease in technical charges that amount to -EUR 18,487 million for the year ended 31 December 2018, compared to -EUR 28,130 million for the year ended 31 December 2017.

NET INCOME FROM OTHER ACTIVITIES This item includes, among other things, net income from investment property, assets held under operating lease and property development activities. Net income from other activities increased by 28%, from EUR 1,615 million in 2017 to EUR 2,065 million in 2018. This change is mainly due to a EUR 278 million increase in other net income, as well as a EUR 88 million increase in net income from assets held under operating lease.

OPERATING EXPENSES, AMORTISATION AND DEPRECIATION OF FIXED AND INTANGIBLE ASSETS

In millions of euros Year to 31 Dec. 2018 Year to 31 Dec.2017 Change (2018/2017)

Salary and employee benefi t expense (16,617) (16,496) 1%

Other operating expenses (12,290) (11,729) 5%

Depreciation, amortisation and impairment of property, plant and equipment and intangible assets (1,676) (1,719) -3%

OPERATING EXPENSES, AMORTISATION AND DEPRECIATION OF FIXED AND INTANGIBLE ASSETS (30,583) (29,944) 2%

Operating expenses, amortisation and depreciation of fi xed and intangible assets increased from EUR 29,944 million in 2017 to EUR 30,583 million in 2018.

GROSS OPERATING INCOME

The Group s gross operating income decreased by -9.7% to EUR 11,933 million for the year ended 31 December 2018 (compared to EUR 13,217 million for the year ended 31 December 2017) due to the decrease in net banking income (-1%) and to the increase in operating expense (+2%).

COST OF RISK

In millions of euros Year to 31 Dec. 2018 Year to 31 Dec.2017 Change (2018/2017)

Net allowances to impairment (2,490) (2,852) -13%

Recoveries on loans and receivables previously written off 483 537 -10%

Loss on irrecoverable loans (757) (592) 28%

TOTAL COST OF RISK FOR THE PERIOD (2,764) (2,907) -5%