2018 Registration document and annual fi nancial report - BNP PARIBAS134

3 2018 REVIEW OF OPERATIONS

3

Profi t and loss account

This line item represents the net amount of impairment losses recognised for credit risks inherent in the Group s intermediation activities, as well as any impairment loss relating to counterparty risks on over-the-counter derivative instruments.

The Group s cost of risk amounts to EUR 2,764 million, down 5% from 2017.

The decrease in the cost of risk in 2018 is mainly due to the contribution of Domestic Markets, with net allowances of EUR 1, 044 million in 2018 (compared with EUR 1, 353 million in 2017). This 23% decrease is linked in particular to BNL banca commerciale, whose cost of risk is EUR 593 million (EUR 870 million for the year ended 31 December 2017).

As at 31 December 2018, the total amount of loans, securities and commitments, net of collateral, is EUR 26.2 billion (compared to EUR 28.6 billion as at 1 January 2018) and the related impairment amounts to EUR 19.9 billion (EUR 22.9 billion at 1 January 2018). The coverage ratio is 76% at 31 December 2018, compared to 80% at 1 January 2018.

More detailed information on the cost of risk per business line is available in the Core business results section.

NET INCOME ATTRIBUTABLE TO EQUITY HOLDERS

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

OPERATING INCOME 9,169 10,310 -11%

Share of earnings of equity-method entities 628 713 -12%

Net gains on non-current assets 358 488 -27%

Change in value of goodwill 53 (201) n.s.

Corporate income tax (2,203) (3,103) -29%

Net income attributable to minority interests (479) (448) 7%

NET INCOME ATTRIBUTABLE TO EQUITY HOLDERS 7,526 7,759 -3%

SHARE OF EARNINGS OF EQUITY-METHOD ENTITIES The share of earnings of equity-method entities decreased from EUR 713 million in 2017 to EUR 628 million in 2018.

NET GAINS ON NON-CURRENT ASSETS This item includes net realised gains or losses on sales of tangible and intangible assets used in operations, and on sales of investments in consolidated entities.

Net gains on other fixed assets decreased by EUR 130 million (EUR 358 million in 2018 compared with EUR 488 million in 2017). The main capital gains realised relate to the sale of 4% of SBI Life in 2017 for EUR 326 million and of 30.4% of First Hawaiian Bank in 2018 for EUR 286 million.

CHANGE IN VALUE OF GOODWILL Changes in the value of goodwill amounted to +EUR 53 million in 2018 (including a EUR 68 million negative goodwill on the Core bank activity of Raiffeisen Polska), compared with -EUR 201 million in 2017 (including the full goodwill impairment of Turk Ekonomi Bankasi for EUR 172 million).

CORPORATE INCOME TAX The Group recorded a tax expense on of EUR 2,203 million in 2018, down from the amount of EUR 3,103 million recorded in 2017.

MINORITY INTERESTS

Minority interests increased by EUR 31 million (EUR 479 million in 2018, compared to EUR 448 million in 2017).