contents - BNP Paribas

C O N T E N T S
REPORT OF THE BOARD OF DIRECTORS 50
APPENDIX
Consolidated Income Statement Analysis 56
Net Banking Income 57
Operating Expense and Depreciation 58
Increase in Gross Operating Income by the Two Core Businesses 59
Addition to the Allowance for Credit Risks and Country Risks 60
Net Income 61
Income of BNP SA 62
Appropriation of Income 63
Consolidated Balance Sheet Analysis 64
Capital Stock and Capital Adequacy 65
Capital Adequacy 66
Internal Control System 67
Principles and Organization of Risk Management 68
- Banking Activities 68
• Decision-Making Authority and Chain of Command 68
• General Procedure for Granting Loans 68
• General Procedure for Monitoring Loans 69
• General Procedure for Reporting Risks 70
- Trading Activities 70
• Separation of Functions 70
• Risk Limits 71
Credit and Counterparty Risks 72
- Credit Risks 72
- Credit Risk Coverage 72
• Specific Risks 72
• Real Estate Risks 73
• Country Risks 73
• Balance Sheet Strength 73
- Counterparty Risk 74
Market Risk 76
Asset/Liability Management 77
- Management of Liquidity Exposure 78
- Management of Interest Rate Exposure 78
- Management of Net Foreign Exchange Position 78
Operational Risk 78
- Banking Activities 78
- Trading Activities 79
Business and Results of BNP’s Main Domestic Subsidiaries 79
Banque de Bretagne 79
BNP Bail 80
Crédit Universel 80
Meunier Promotion 81
BNP Gestions 81
Natio-Vie 82
Banexi 82
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50FIFTY
REPORT
OF THE BOARD
OF DIRECTORS
Net income attributable to the Group up 55% to FRF 5,962 million.
Quadrupling of earnings per share in four years.
FRF 3,020 million of risk provisions covering five Asian countries.
Continued growth in profitability of the two core businesses: domestic banking and
wholesale banking worldwide.
Further improvements made to asset quality.
Gross dividend per share of FRF 10.50 including the dividend tax credit.
Total distribution of FRF 1.5 billion.
Nineteen ninety-seven was a very
good year for Banque Nationale
de Paris. Business benefited from
a combination of positive factors:
rising stock prices, a strengthening
dollar, restructured Peruvian and
Russian debt, and the start of
economic recovery in France. In
the second half, however, it was
affected by the impact of the Asian
crisis on provisions. On the whole,
BNP significantly increased its
profitability thanks to largely
improved performance in virtually
all areas.
With FRF 44,066 million of net
banking income, the Group’s
revenues rose 11.6% in 1997.
Growth in value-added to capital
amounted to 10.6% and
commissions increased by 13.6%.
Commissions accounted for
33.5% of net banking income,
compared with 32.9% in 1996,
confirming the Group’s ability to
offset the narrowing of lending
margins by fee-based revenues,
particularly in retail banking.
Taking into account a 6.9%
increase in operating expense and
depreciation, reflecting business
development in wholesale
banking, gross operating income
totaled FRF 13,435 million, up
23.9% (20.9% at constant
exchange rates), and the
cost/income ratio fell below the
70% threshold. The BNP Group
made FRF 6,785 million of
additions to allowances, including
FRF 3,020 million on five
sensitive Asian countries.
Excluding the specific Asian
provisions, the net addition to
allowances was similar to that in
1996. The other income
statement items—the net gain on
disposals of long-term
investments, net of provisions; net
nonrecurring nonoperating
expenses; and the share of
earnings of companies carried
under the equity method—
amounted to a FRF 1,566 million
gain, bringing pretax income up
60.7%, to FRF 8,216 million.
The income tax charge doubled
compared with 1996, to FRF
1,997 million. Consolidated net
income totaled FRF 6,219
million, up 50.6%, and net
income attributable to the BNP
Group amounted to FRF 5,962
million, up 54.6% from 1996 and
representing a sixfold increase over
the result in 1993, the year of
privatization.
The two core businesses
continued to grow according to
their strategy, while affirming
their commercial vitality
and substantially increasing
profitability.
R E P O R T O F T H E

DOMESTIC BANKING
(DB)
The domestic banking business in
1997 showed commercial vitality
and increased profitability. Average
monthly loan outstandings grew
by 1.4% to FRF 396 billion. The
increase was higher for commercial
loans (up 1.9%) than for loans to
individuals (up 1.3%). Customer
funds increased by 10.2%
to FRF 637 billion, representing
a 30.4% increase in life/endowment
insurance balances, a 13.1%
increase in regulated savings
deposits, a 9.2% increase in
Gross operating income of the
Domestic Banking division rose
13.2% to FRF 5,069 million. Total
revenues were up 2.3% to FRF
24,611 million. The narrowing of
lending margins was more than
offset by an increase in commissions
related in particular to the
commercial innovations BNP
offered its customers. Productivity
increased once again: operating
expense and depreciation decreased
by 0.1%. The domestic banking
network increased its revenues by
2.4% and cut its operating expense
and depreciation by 0.3%, pushing
gross operating up by 17.9%.
Employment declined a further
demand deposits, and a 5.9%
increase in mutual fund assets.
This performance illustrates
BNP’s success in attracting new
business: 43,000 new individual
customers and 5,000 new
corporate relationships
(reestablishing BNP as the leading
bank to SMCs). It is also
indicative of BNP’s ability to sell
its new products and services, as
well as its preeminent position in
electronic and home banking.
Moreover, BNP’s agreement with
Cofinoga has opened up
promising new prospects.
3.8% in 1997 thanks to increasing
computerization and organizational
progress, and amid an ongoing
redeployment of administrative staff
to sales functions. The Domestic
Banking division controlled its costs
while adhering to investment
priorities: branch modernization,
workstation computerization,
expanding the fleet of ATMs, staff
training, and preparations for the
euro.
The Domestic Banking division
made a net FRF 2,402 million
addition to allowances for doubtful
loans, down 29.6%. This favorable
development could be ascribed to
The business of banking and
bank-related subsidiaries showed
improvement, on the whole, in
1997. Banque de Bretagne increased
its volumes and maintained its return
on equity at a high level despite
downward pressure on interest rates
and margins. BNP Bail, which is a
leading leasing company, increased its
total credit outstandings by 1.5%
thanks to an increase in new
contracts in all areas. Despite some
stagnation in its main markets,
Crédit Universel increased its
originations by 2.8% and its credit
outstandings by 7.9%, thus
improving its positions.
DB FAST-GROWING PROFITABILITY
Millions of French francs, DB Domestic network only
year ended 31 December 1997 % Change % Change
Net banking income 24,611 2.3 22,094 2.4
Operating expense and depreciation (19,542) (0.1) (18,309) (0.3)
Gross operating income 5,069 13.2 3,785 17.9
Provisions (2,402) (29.6) (1,938) (28.2)
the widespread use of techniques to
monitor lending decisions and
calculate the profitability of lending
operations, as well as to an
improvement of customers’ financial
condition.
The combination of these factors
had a strongly positive impact on
pretax earnings, which tripled for the
entire division, to FRF 2,014 million
(calculated for its subsidiaries on the
basis of their effective stockholders’
equity). Pretax income of the
domestic network, on the basis of
zero stockholders’ equity, rose
sevenfold, to FRF 1,240 million.
B O A R D O F D I R E C T O R S
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INTERNATIONAL BANKING AND FINANCE (IBF)
In a highly contrasted environment, characterized by a combination of positive factors offset in part by the
Asian crisis starting in the summer, the International Banking and Finance division greatly improved its
performance and increased its profitability.
IBF STEADILY INCREASING RESULTS
% % Change at
Millions of French francs, Change constant exchange
year ended 31 December 1997 rates
Net banking income 18,071 29.5 23.0
Operating expense and depreciation (11,434) 21.6 15.8
Gross operating income 6,637 46.0 37.8
Provisions (3,648) N/M N/M
The worldwide lines of business
had an excellent year on the whole.
The International Trade Finance
department increased its export
finance originations by 28%. The
Structured Finance department
was awarded 75 contracts as
arranger or advisor and was one
of the world’s top players in its
field. BNP Gestions increased its
assets under management by
9.8% to FRF 450 billion and
further globalized its business by
forming BNP Asset Management
Asia (Hong Kong) and BNP Asset
Management Argentina. The
Private Banking department,
with FRF 194 billion of customer
assets at year-end 1997,
strengthened its network with the
creation of a regional private
banking organization for Asia.
The Equities and Equity
Derivatives department had an
exceptional year: in origination
business, BNP Equities advised
France Télécom on its partial
privatization, and in intermediation
business, BNP Equities Du Bouzet
ranked among France’s top three
stock brokerage firms, and capacity
was increased in Europe and Asia.
BNP continued to be one of the
world’s leaders in equity derivatives.
It also had a good year for Money
Market and Foreign exchange
business, whereas the bond
business was substantially lower and
underwent restructuring. As a result
of active management, the Equity
investment and sovereign debt
portfolios made a significant
contribution to earnings.
The international network is
orienting its strategy toward
controlled growth and increased
profitability. BNP has implemented
a strict program for increasing
average weighted assets that is
nonetheless allowing for an
appreciable increase in gross
operating income in all regions.
Starting in mid-1997, the Asian
crisis introduced a major factor of
uncertainty in the markets. In a
region subject to flux, BNP carefully
selected its risks based on its longstanding
local experience. In the
five countries affected by the crisis,
BNP’s real estate risks are
immaterial, its off-balance sheet
outstandings have low risk exposure,
its trade finance receivables are selfliquidating,
and it booked no
losses on capital market business.
The Bank’s risk management
system, which has continually
been strengthened, ensures strict
monitoring of commitments. This
crisis also led to a widening of
margins and opened opportunities
that BNP seized, such as its
acquisition of Peregrine’s “Greater
China” business.
On the whole, the International
Banking and Finance division’s
pretax income, after sizable
additions to allowances, and
calculated for its subsidiaries
and branches on the basis of
their effective stockholders’
equity, amounted to FRF 5,560
million, up 22.6% compared
with 1996.
R E P O R T O F T H E

The net addition to allowances for
doubtful loans by the BNP Group
amounted to FRF 6,785 million,
representing an increase of 78.9%, or
FRF 2,992 million, compared with
1996. This sharp increase reflected a
sharp contrast between provisions
to cover exposure in the five sensitive
countries of East Asia and those for
other risks.
Excluding the coverage of risks in
the five Asian countries, the net
addition to allowances totaled
FRF 3,765 million, virtually
the same level as in 1996.
This development illustrates the
effectiveness of the risk monitoring
procedures BNP has implemented
since the time of privatization, as
well as the higher general quality of
the operating environment in most
countries.
BNP assessed all of its
commitments to the five Asian
countries at risk (Indonesia,
Thailand, the Philippines, South
Korea, and Malaysia) and valued
them at FRF 28.4 billion (USD
4.7 billion) at the end of January
1998. In precise terms, BNP’s
assessed commitments to these
five countries comprise balance
sheet and off-balance sheet
commitments, credits of all
maturities, including short-term
and trade finance, securities
investments and trading accounts,
and loans in local and foreign
currencies. They include all
operations in favor of governments,
banks, and corporates, excluding
subsidiaries of multinationals
headquartered outside the group
of sensitive countries. They
exclude the portion of risks
guarantied outside the group of
sensitive countries by French and
international institutions (such as
Coface) or by formally pledged
cash collateral.
BNP made provisions, item by
item, for all borrowers in the
five countries concerned, totaling
FRF 592 million. For reasons of
conservatism, BNP made an
additional FRF 2,428 million
provision based on a multifactor
analysis of the heightened
consequences that a possible
worsening of these countries’
economic and financial condition
would have on the Bank’s risks.
Altogether, BNP made FRF 3,020
million (USD 500 million) of
provisions to cover risks in these five
countries.
Further Improvements in Asset
Quality
Nonrecurring charges amounted
to FRF 1,391 million. These
included a FRF 611 million
addition to allowances to cover staff
commitments in France and abroad
(particularly for adjustments in
employee pension plans of
the Group’s international entities
and staff reductions of the
operational support centers due to
computerization in the domestic
network). BNP added FRF 285
million to the allowance to cover
the supplementary cost of adapting
to the year 2000 and the
introduction of the euro. BNP
completed the migration of its
computer systems to a single
database, for which it booked
a nonrecurring charge of
FRF 133 million.
Having observed the stabilization
in the commercial real estate market,
BNP readjusted the balance sheet
value of its main operating real
estate holdings in 1997. It took a
FRF 3,374 million provision charge
on the revaluation, posting the asset
value write-down (FRF 2,758
million, net of FRF 616 million of
related deferred income tax liabilities
set up in 1991-92) to stockholders’
equity. This operation impacted
net assets, in accordance with
regulations, similarly to the
procedure used for the 1991-92
revaluation.
The allowance for unforeseeable
sectoral risks stood at FRF 1,430
million, unchanged from its level at
year-end 1996, and remained
unallocated. The reserve for general
banking risks was increased slightly,
to FRF 6,718 million, reflecting
additions made by foreign
subsidiaries.
Average weighted assets rose by
3.0% in the first half of 1997 and
0.1% in the second half. BNP had
a Tier 1 and Tier 2 capital ratio of
9.9% and a Tier 1 capital ratio of
5.9% at 31 December 1997,
compared with ratios of 9.1% and
5.4%, respectively, a year earlier.
* * *
BNP crossed a new threshold in its
strategy of enhancing shareholder
value: return on equity amounted
to 10.4%. Earnings per share
increased again, to FRF 28.30,
which is four times the figure in
1993, the year of privatization.
Year after year, BNP has enhanced
its potential for achieving profitable
growth. The progress BNP has
made since privatization in 1993
confirms its in-depth performance
B O A R D O F D I R E C T O R S
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54
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gains, and its capacity to create value
augurs well for the future.
The Board of Directors will
recommend that the 13 May 1998
Stockholders’ Meeting declare a net
dividend per share of FRF 7.00
(FRF 10.50 per share including the
dividend tax credit), up 30%
from 1996. The total dividend
distribution would amount to
FRF 1,493 million, up 33%.
Stockholders will be offered the
choice of a cash dividend or a stock
dividend between 26 May and
15 June inclusive. The Board of
Directors intends to eliminate this
option in 1999 for the 1998
dividend.
* * *
The Board of Directors will submit
a total of 16 resolutions for the
approval of the Annual and Special
Meeting of Stockholders on
13 May 1998.
The first eight resolutions will be
submitted to the Annual Meeting
of Stockholders:
• The first resolution is to
approve the balance sheet at
31 December 1997, and the
income statement for the year
then ended, after stockholders
have heard the Statutory
Auditors’ Report.
• The second resolution is to
appropriate income for 1997. Net
income of BNP SA, amounting
to FRF 2,099.873 million plus
FRF 1,508.426 million taken
from unappropriated retained
earnings, form a total of
FRF 3,608.299 million available
for distribution. The dividend
distributed to stockholders would
amount to FRF 1,492.719
million corresponding to a net
dividend of FRF 7.00 per share
which, combined with the
dividend tax credit of FRF 3.50
per share, would form a gross
dividend of FRF 10.50 per share.
After the appropriation of
FRF 14.523 million to the legal
reserve and FRF 774.032 million
to the special reserve for long-term
capital gains and other reserves,
FRF 1,327.025 million would be
carried forward as unappropriated
retained earnings.
The Board of Directors will propose
that the Stockholders’ Meeting
grant stockholders the option to
receive their dividend in the form
of shares of the Company. The
new shares created by this option
would have rights to income
earned from 1 January 1998 and
would be issued at a price representing
90% of the average
opening price for the period of
twenty consecutive trading days
preceding the date of the
Stockholders’ Meeting, less the
amount of the net dividend and
rounded up to the nearest whole
franc. Stockholders wishing to
receive the payment of their dividend
in the form of shares would
have to exercise this option between
26 May and 15 June 1998,
inclusive. As of 30 June 1998, dividends
will be payable in cash only.
• The third resolution is to approve
agreements governed by Sections
101 to 106 of the 1966 French
Companies Act, once stockholders
have heard the Statutory Auditors’
Special Report.
• The fourth resolution is to
authorize the Board of
Directors to make openmarket
purchases and sales of
BNP’s shares for the purpose
of moderating price fluctuations,
at a maximum purchase
price of FRF 550 and a minimum
selling price of FRF 200
a share. This authorization
would be given for a period to
expire at the close of the
Stockholders’ Meeting called
to approve the financial statements
for the year ended
31 December 1998.
• The fifth resolution is to authorize
the Board of Directors to issue
bonds with a face value of up to
FRF 40 billion in French francs
or the equivalent in euros or
foreign currencies, within a period
of five years.
• The sixth, seventh, and eighth
resolutions are to elect Lindsay
Owen-Jones, Louis Schweitzer, and
David Peake to the Board
of Directors. The elections of Messrs.
Owen-Jones and Schweitzer fall
within the framework of partial
elections to the Board of Directors
at regular intervals.
The remaining eight resolutions will
be submitted to the Special Meeting
of Stockholders.
• The ninth resolution is to
authorize the Board of Directors
to take all appropriate measures
to convert BNP’s capital stock
into euros in preparation for the
upcoming transition to the single
European currency.
• The tenth resolution is to renew the
authorizations given in the
R E P O R T O F T H E

fourteenth, fifteenth, and sixteenth
resolutions of the Special Meeting of
Stockholders of 22 May 1997, which
maintain the authorizations granted
to the Board of Directors during a
cash or stock-for-stock public tender
offer for the Company’s shares:
- to create and offer shares of the
Company and transferable
securities of any nature
whatsoever that are immediately
and/or subsequently convertible
into shares of the Company, with
or without the waiver of
preemptive rights
- to increase the Company’s capital
stock by incorporating into the
capital stock all or part of reserves,
net income, additional paid-in
capital in excess of par, premiums
on merger, or premiums on
acquisition.
• The eleventh resolution is to
propose that the stockholders
maintain the conditions for
determining the issue price of
transferable securities convertible
into shares of the Company, with
waiver of preemptive rights, whose
issue was authorized by the
fifteenth resolution of the Special
Meeting of Stockholders of
22 May 1997.
• Privatization offered an
opportunity for a large number
of BNP’s employees to become
stockholders of their company.
In this connection, the twelfth
resolution is to authorize the
Board of Directors to increase
the capital stock by a par value
of FRF 300 million through the
issue of shares reserved for
employees of Banque Nationale
de Paris and some of
its subsidiaries, who had
subscribed to BNP’s company
savings plan (Plan d’Epargne
Entreprise), with waiver of
preemptive rights.
• Similarly, in the thirteenth
resolution, the stockholders are
asked to renew the authorization
given to the Board of Directors
by the Special Meeting of
Stockholders of 14 December
1993, in accordance with the
law, to grant stock options to
Company directors and some
or all staff members of Banque
Nationale de Paris or some of
its subsidiaries, increasing the
capital stock through the
exercise of stock options by a
maximum par value of FRF 300
million. Authorization would
entail the express waiver of
preemptive rights.
• In preparation for the upcoming
transition to the euro, the
Special Meeting of Stockholders
will be asked:
- to maintain the authorizations
given by the Special Meeting of
Stockholders of 22 May 1997
to create and offer transferable
securities convertible into shares
after the conversion of the
capital stock into euros
(fourteenth resolution).
- to authorize the Company to
express the French franc
amounts stipulated in the
fourteenth, fifteenth, sixteenth,
eighteenth, and nineteenth
resolutions of the Special
Meeting of Stockholders of
22 May 1997, as well as the
eleventh, twelfth, thirteenth,
and fourteenth resolutions
being submitted for the approval
of the Special Meeting of
Stockholders of 13 May 1998,
to be expressed in euros once
that currency becomes legal
tender in France (fifteenth
resolution).
• The sixteenth resolution is to give
power of attorney for the purpose
of carrying out such registrations,
publications, and formalities as
may be required by law.
B O A R D O F D I R E C T O R S
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APPENDIX
TO THE REPORT OF THE
BOARD OF DIRECTORS
CONSOLIDATED INCOME STATEMENT ANALYSIS
SUMMARIZED CONSOLIDATED INCOME STATEMENT
% Change
Millions of French francs, in
year ended 31 December 1997 1996 1995 1994 1993 1997 (a)
Net banking income 44,066 39,502 37,708 39,311 41,675 11.6
Operating expense and depreciation (30,631) (28,658) (28,208) (28,920) (29,218) 6.9
Gross operating income 13,435 10,844 9,500 10,391 12,457 23.9
Net addition to allowance for
credit risks and country risks (6,785) (3,793) (5,533) (7,374) (10,808) 78.9
Net gain (loss) on disposals of
long-term investments, net of provisions 2,380 (704) 8 (124) (487) N/M
Net nonrecurring nonoperating expenses (1,526) (1,684) (828) (295) (24) N/M
Share of earnings of companies carried
under equity method 815 537 36 636 556 51.8
Amortization of goodwill (103) (88) (84) (126) (142) 17.0
Pretax income 8,216 5,112 3,099 3,108 1,552 60.7
Income taxes (1,997) (983) (1,174) (1,347) (580) 103.2
Consolidated net income 6,219 4,129 1,925 1,761 972 50.6
Net income attributable to Group 5,962 3,856 1,784 1,656 1,018 54.6
(a) Acquisitions and disposals had no significant impact on income captions in 1997.
Net income attributable to the
BNP Group rose 54.6% to nearly
FRF 6 billion, which is almost six
times the amount in 1993, the year
of privatization.
Consolidated net banking income
totaled FRF 44,066 million, up
11.6%. Commissions (up 13.6%)
rose faster than value added to
capital (up 10.6%). Gross operating
income increased 23.9% to
FRF 13,435 million. BNP made
FRF 6,785 million of net additions
to allowances, including FRF 3,020
million to cover risks in the five
Asian countries considered to be
sensitive. Net nonrecurring
nonoperating items and other
amounted to FRF 1,566 million.
Taking into account a doubling of
income taxes, to FRF 1,997 million,
consolidated net income amounted
to FRF 6,219 million, up 50.6%.
R E P O R T O F T H E

NET BANKING INCOME
% Change
Millions of French francs, in
year ended 31 December 1997 1996 1995 1994 1993 1997
Value added to capital (a) 29,396 26,586 25,967 26,200 30,037 10.6
Commissions and other (a) 14,670 12,916 11,741 13,111 11,638 13.6
Net banking income 44,066 39,502 37,708 39,311 41,675 11.6
(a) Economic definitions.
Consolidated net banking income
rose 11.6% in 1997 (up 9.5%
excluding the impact of currency
fluctuations). This result reflected
increases of 10.6% in value added
to capital and 13.6% in
commissions.
All lines of business contributed to
the increase in revenues. Asset
management (including that of the
international private banking
business) rose by more than 25%.
Financial activities excluding asset
management – which mainly covers
capital market business and
management of BNP’s equity
investment and sovereign debt
Total revenues of the Domestic
Banking division were up 2.3% to
FRF 24,611 million. Revenues of
the domestic branch network rose
by 2.4% to FRF 22,094 million,
buoyed by a further increase in
service commissions (up FRF 1,018
portfolios – rose sharply, mostly
thanks to capital market business,
with the exception of bond market
business; the results of BNP’s
management of its equity and other
investments are reflected at another
level of the income statement. The
specialized finance business recorded
no interest on Eurotunnel debt
in 1997 due to rescheduling.
million), while the lending margin
narrowed by 13 basis points (down
FRF 669 million).
Total revenues of the International
Banking and Finance division were
up 29.5% to FRF 18,071 million.
IBF STEADILY INCREASING RESULTS IN THE VARIOUS LINES OF BUSINESS
Net banking income, % Change
millions of French francs, in
year ended 31 December 1997 1997
Asset management 1,002 25.9
Financial activities excluding asset management 6,207 63.4
Specialized finance 1,572 11.7
Wholesale banking 5,496 19.4
International retail banking 3,794 13.4
Total 18,071 29.5
The wholesale banking business
continued to grow, with strong
control over average weighted assets.
The international retail banking
business continued to advance
favorably, particularly at Bank of the
West, in California, and at the
network managed by Banque
Nationale de Paris Intercontinentale.
B O A R D O F D I R E C T O R S
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COMMISSIONS
% Change
Millions of French francs, in
year ended 31 December 1997 1996 1995 1994 1993 1997
On securities transactions 3,871 3,377 2,775 4,053 3,862 14.6
On customer transactions and other 3,151 2,792 2,210 2,299 2,250 13.1
On payment systems 2,093 1,960 1,869 1,745 1,680 6.7
On life/endowment insurance 854 734 713 546 417 15.5
Commission income (“BAFI” definition) 9,969 8,863 7,567 8,643 8,209 12.5
Other (a) 4,701 4,053 4,174 4,468 3,429 16.0
Total commissions (economic approach) 14,670 12,916 11,741 13,111 11,638 13.6
Total commissions as a percentage of
net banking income 33.5% 32.9% 30.5% 32.8% 29.0%
(a) These figures essentially correspond to income that is not recorded as commissions according to “BAFI” criteria but which is
economically related to commissions (such as foreign exchange commissions, software sales, and re-invoiced expenses).
Commission income rose 12.5% in accounting terms to FRF 9,969 million, and 13.6% in economic terms
to FRF 14,670 million. Total commissions, calculated according to the economic approach, accounted for
one-third of net banking income.
OPERATING EXPENSE AND DEPRECIATION
% Change
Millions of French francs, in
year ended 31 December 1997 1996 1995 1994 1993 1997
Salaries and employee benefits,
including profit sharing 18,991 17,920 17,640 17,825 17,946 6.0
Other operating expense 9,538 8,677 8,618 8,978 8,965 9.9
Depreciation, amortization, and provisions 2,102 2,061 1,950 2,117 2,307 2.0
Operating expense and depreciation 30,631 28,658 28,208 28,920 29,218 6.9
Operating expense and depreciation
rose by 6.9% in 1997 (up
5.2% excluding the impact of
exchange rate fluctuations), reflecting
the following tendencies:
• Operating expense and
depreciation of the Domestic
Banking division decreased
by 0.1%. BNP pursued its
policy of steadily reducing
employment in France by
means of voluntary departures.
Employment at the Domestic
Banking division decreased by
1,175 persons in 1997, and
employment in the domestic
branch network totaled
30,754 full-time equivalent
employees at year-end.
Adjustments reflected increasing
computerization, organizational
progress, and greater emphasis
on increasing the sales force.
R E P O R T O F T H E

EMPLOYMENT
% Change
Full-time equivalent, in
at 31 December 1997 1996 1995 1994 1993 1997
Domestic Banking division:
BNP France 30,754 31,984 33,094 33,961 34,891 (3.8)
French subsidiaries 2,163 2,108 2,109 2,088 2,019 2.6
Total Domestic Banking division 32,917 34,092 35,203 36,049 36,910 (3.4)
International Banking and Finance division:
In France 1,618 1,623 1,620 1,579 1,667 (0.3)
French subsidiaries 1,069 816 790 757 671 31.0
French overseas areas
Total International Banking
1,142 1,157 1,209 1,244 1,259 (1.3)
and Finance division 16,671 15,913 15,693 15,505 16,189 4.8
Outside France:
Europe 3,636 3,507 3,527 3,565 4,026 3.7
The Americas 3,331 3,204 3,144 3,021 3,130 4.0
Asia/Pacific 3,288 2,554 2,338 2,267 2,259 28.7
Africa/Middle East 2,587 3,052 3,065 3,072 3,177 (15.2)
Total Outside France 12,842 12,317 12,074 11,925 12,592 4.3
Other 2,832 2,757 2,704 2,915 3,042 2.7
Total BNP Group 52,420 52,762 53,600 54,469 56,141 (0.6)
• The International Banking and Finance division’s operating expense and depreciation rose 15.8% at constant
exchange rates; the increase was 21.6% due to exchange rate fluctuations. This increase could be ascribed
to the impact of local inflation, exchange rate fluctuations, business development expenditure (to strengthen
teams and resources, particularly in information technology), primarily in Europe (at the London group,
at BNP Arbitrage, and at BNP Finance), but also in Asia (at BNP Hong Kong and BNP Singapore).
INCREASE IN GROSS OPERATING INCOME
AT THE DOMESTIC BANKING AND INTERNATIONAL BANKING AND FINANCE DIVISIONS
Analysis of gross operating income according % Change
to core business, millions of French francs, in
year ended 31 December
Domestic Banking division:
1997 1996 1997
Domestic network 3,785 3,211 17.9
Domestic subsidiaries 1,284 1,267 1.3
Total Domestic Banking division
International Banking and Finance division:
International network:
5,069 4,478 13.2
Wholesale banking 2,263 1,743 29.8
International retail banking 1,430 1,113 28.5
Total international network
Financial activities in France and abroad:
3,693 2,856 29.3
Asset management 500 369 35.8
Financial activities excluding asset management 1,834 617 x 3.0
Total financial activities in France and abroad 2,334 986 x 2.4
International specialized finance 610 703 (13.2)
Total International Banking and Finance division 6,637 4,547 46.0
Other activities 1,729 1,819 (4.9)
Total BNP Group gross operating income 13,435 10,844 23.9
B O A R D O F D I R E C T O R S
59FIFTY-
NINE

60
SIXTY
Consolidated gross operating
income amounted to FRF 13,435
million in 1997, up 23.9% (or
20.9% excluding the impact of
exchange rate fluctuations), and
contributions could be analyzed as
follows:
• 37.8% from the Domestic
Banking division, whose gross
operating income rose 13.2% to
FRF 5,069 million (representing
a 17.9% increase in the domestic
Gross operating income of the
international network (all lines of
business) amounted to FRF 5,383
million in 1997, up 39.9%. The
branch network and a 1.3%
increase from domestic
subsidiaries).
• 49.3% from the International
Banking and Finance division,
whose gross operating income rose
by 46.0% to FRF 6,637 million
thanks in part to the good
performance of the international
network excluding capital market
activities (or a 29.8% increase from
wholesale banking and a 28.5%
breakdown between the various
continents was relatively even.
The relatively large share of the
Americas could be ascribed to
increase from international retail
banking); the contribution of
financial activities excluding asset
management was three times the
1996 figure.
• 12.9% from Other Activities
(including Asset/Liability
Management and management of
the Bank’s working capital), which
reported gross operating income
of FRF 1,729 million, down
4.9%.
ANALYSIS OF GROSS OPERATING INCOME OF THE INTERNATIONAL AND FRENCH OVERSEAS AREAS
NETWORK (ALL LINES OF BUSINESS), ACCORDING TO GEOGRAPHIC AREA
Millions of French francs,
year ended 31 December 1997 %
Europe (excluding France) 1,458 27.1
The Americas 1,802 33.5
Asia/Pacific 1,434 26.6
Africa/Middle East 689 12.8
Total 5,383 100.0
ADDITION TO THE ALLOWANCE FOR CREDIT RISKS AND COUNTRY RISKS
Bank of the West in California,
whose retail banking network has
continued to grow.
Millions of French francs,
% Change
in
year ended 31 December 1997 1996 1995 1994 1993 1997
Addition to allowance for specific risks 3,965 (a)
Addition to (deduction from) allowance
4,599 5,828 7,172 10,632 (13.8)
for country risks and related 2,820 (b)
(806) (295) 202 176 N/M
Addition to allowance for credit risks
and country risks 6,785 (c)
(a) Including five Asian countries: FRF 592 million.
(b) Including five Asian countries: FRF 2,428 million.
(c) Including five Asian countries: FRF 3,020 million.
3,793 5,533 7,374 10,808 78.9
R E P O R T O F T H E

• Excluding the coverage of risks in
the five Asian countries, the net
addition to allowances totaled
FRF 3,965 million, virtually
the same level as in 1996.
This development illustrates the
effectiveness of the risk
monitoring procedures BNP has
implemented since the time of
privatization, as well as the higher
general quality of the operating
environment in most countries.
BNP assessed all of its
commitments to the five Asian
countries at risk (Indonesia,
Thailand, the Philippines, South
Korea, and Malaysia) and valued
them at FRF 28.4 billion (USD 4.7
billion) at the end of January 1998.
In precise terms, BNP’s assessed
commitments to these five countries
comprise balance sheet and offbalance
sheet commitments, credits
of all maturities, including shortterm
and trade finance, securities
investments and trading accounts,
and loans in local and foreign
currencies. They include all
operations in favor of governments,
banks, and corporates, excluding
subsidiaries of multinationals
headquartered outside the group of
sensitive countries. They exclude
the portion of risks guarantied
outside the group of sensitive
countries by French and
international institutions (such as
Coface) or by formally pledged cash
collateral.
BNP made provisions, item by
item, for all borrowers in the
five countries concerned, totaling
FRF 592 million. For reasons of
conservatism, BNP made an
additional FRF 2,428 million
provision based on a multifactor
analysis of the heightened
consequences that a possible
worsening of these countries’
economic and financial condition
would have on the Bank’s risks.
Altogether, BNP made FRF 3,020
million (USD 500 million) of
provisions to cover risks in these
five countries.
• A FRF 1.3 billion addition was
made to the country-risk
allowance in relation to the
securitization of Peruvian and
Russian debt. BNP pursued its
program of making sovereign debt
sales, taking advantage of high
prices in the secondary markets
and enabling it to deduct FRF 1.1
billion from allowances.
NET INCOME
NET GAIN ON DISPOSALS OF
LONG-TERM INVESTMENTS
NET OF PROVISIONS
Thanks to its active management
of equity investments, BNP
realized a net gain of FRF 2,380
million on disposals of long-term
investments net of provisions. It
realized a sizable capital gain on
the disposal of its investment in
Compagnie de Suez.
NONRECURRING
NONOPERATING ITEMS AND
OTHER
Nonrecurring charges amounted
to FRF 1,391 million. These
included a FRF 611 million
addition to allowances to cover staff
commitments in France and
abroad (particularly for adjustments
in employee pension plans of the
Group’s international entities
and staff reductions of the
operational support centers due
to computerization in the domestic
network). BNP added FRF 285
million to the allowance, set up
with FRF 600 million in 1996, to
cover the supplementary cost of
adapting to the year 2000 and the
introduction of the euro. BNP
completed the migration of its
computer systems to a single
database, for which it booked
a nonrecurring charge of FRF 133
million.
SHARE OF EARNINGS OF
COMPANIES CARRIED UNDER
THE EQUITY METHOD
The share of earnings of companies
carried under the equity method
rose 51.8% to FRF 815 million,
thanks to Meunier Promotion’s
return to profitability and to Natio-
Vie’s good results (net income of
FRF 398 million, up 4.2%).
PRETAX INCOME
Pretax income rose 60.7% to
FRF 8,216 million:
• The Domestic Banking division
had pretax income of FRF 2,014
million (calculated for its
subsidiaries on the basis of their
actual stockholders’ equity), which
is more than three times the figure
in 1996: net banking income rose
2.3%, operating income and
depreciation declined by 0.1%,
and net additions to allowances
fell by 29.6%. The domestic
branch network increased its
pretax income by a factor of seven.
• The International Banking and
Finance division reported pretax
income of FRF 5,560 million
(calculated for its subsidiaries
on the basis of their actual
stockholders’ equity), up 22.6%,
or 16.9% at constant exchange
rates. Net banking income rose
29.5% (23.0% at constant
exchange rates), and operating
expense and depreciation
rose 21.6% (15.8% at constant
exchange rates). The net
addition to allowances rose
FRF 2,870 million to FRF
3,648 million, largely to cover
risks on the five sensitive Asian
countries.
B O A R D O F D I R E C T O R S
61SIXTY-
ONE

62
SIXTY-
TWO
• Other Activities showed pretax
income of FRF 642 million
(compared with a pretax loss of
FRF 44 million in 1996) related
to asset/liability management
and the management of the
Bank’s working capital. This
figure reflected the securitization
of Russian and Peruvian debt,
which had virtually no impact
on net income.
INCOME TAXES
The income tax charge for 1997
amounted to FRF 1,997 million,
NET INCOME OF BNP SA
BNP SA, the parent company,
had net banking income of
FRF 34,148 million, up 12.5%.
Operating income and depreciation
rose 5% to FRF 24,193 million.
Gross operating income totaled
FRF 9,955, up 36.1%.
Nonrecurring nonoperating items
were affected by BNP SA’s
transformation in 1997 of its
up 103.2%. The effective tax rate,
which is equal to income taxes
divided by pretax income (after
the share of earnings of companies
carried under the equity method
and the amortization of goodwill),
stood at 24.3%.
CONSOLIDATED NET
INCOME
Consolidated net income
amounted to FRF 6,219 million.
Net income attributable to the
BNP Group rose 54.6% to FRF
5,962 million, which is nearly six
portfolio management business
into a subsidiary, BNP Gestions.
In remuneration for the net
contribution valued at FRF 753
million, BNP Gestions issued
599,787 new shares with a par
value of FRF 100, for a total of
FRF 59,978,700, and recognized
a premium on contribution of
FRF 693 million. The remuneration
of this contribution is reflected in
times the amount in 1993, the year
of privatization. The return on
equity (ratio of net income
attributable to the BNP Group to
average stockholder’s equity,
Group’s share, after appropriations
of income for the year) amounted
to 10.4%, compared with 7.4% in
1996 an 2.2% in 1993.
% Change
Millions of French francs, in
year ended 31 December 1997 1996 1995 1994 1993 1997
Net banking income 34,148 30,346 30,296 31,727 32,868 12.5
Operating expense and depreciation (24,193) (23,032) (22,935) (23,522) (23,606) 5.0
Gross operating income 9,955 7,314 7,361 8,205 9,262 36.1
Net addition to allowance for credit
risks and country risks (5,506) (2,008) (3,154) (5,201) (8,141) N/M
Nonrecurring nonoperating items and other (2,680) (3,252) (2,268) (1,365) (1,207) 17.6
Pretax income (loss) 1,769 2,054 1,939 1,639 (86) (13.9)
Net income 2,100 2,375 1,777 1,320 58 (11.6)
BNP SA’s financial statements as a
nonrecurring capital gain.
Despite an increase in gross
operating income, and due to the
impact of covering its risks on five
Asian countries and revaluing its
operating real estate, BNP SA
reported net income of
FRF 2,100 million in 1997, down
11.6% from 1996.
R E P O R T O F T H E

APPROPRIATION OF
INCOME
The Board of Directors is
recommending that the Annual
Stockholders’ Meeting on 13 May
1998 appropriate 1997 net
income of 2,099,873,372.74,
APPROPRIATION OF INCOME FOR 1997
plus FRF 1,508,425,777.99 of
unappropriated retained earnings,
giving an amount available for
distribution of 3,608,299,150.73,
as follows:
• appropriation to the legal reserve
of FRF 14,522,987.50
Debit (in French francs) Credit (in French francs)
Taking into account a 2.8%
increase in the number of shares
outstanding, earnings per share
(net income attributable to
Group divided by the average
number of shares outstanding
during the period) amounted to
FRF 28.26 in 1997, compared
• appropriation to other
reserves and carry-forward
as retained earnings of
FRF 2,101,057,047.23
• distribution of a dividend of
FRF 1,492,719,116.00 to the
stockholders of BNP SA.
To the legal reserve 14,522,987.50 Unappropriated retained earnings,
prior years 1,508,425,777.99
Transfer to other reserves 774,031,912.20 Net income after operating expense,
Dividend distribution 1,492,719,116.00 depreciation, and provisions for
Retained earnings carried forward 1,327,025,135.03 general risks and commitments 2,099,873,372.74
Total debits 3,608,299,150.73 Total credits 3,608,299,150.73
with FRF 18.69 in 1996,
FRF 9.31 in 1995, FRF 8.95
in 1994, and FRF 6.65 in 1993,
the year of privatization.
1997 1996 1995 1994 1993
Net income attributable to Group,
millions of French francs 5,962 3,856 1,784 1,656 1,018
Total net dividend, millions of
French francs 1,493 1,120 694 608 552
Payout ratio 25.0% 29.0% 38.9% 36.7% 54.2%
Number of shares outstanding
at 31 December (a) 213,244,188 207,434,993 192,183,938 190,046,159 184,008,556
Earnings per share, French francs 28.26 18.69 9.31 8.95 6.65
Net dividend per share, French francs 7.00 (c) 5.40 3.60 (b) 3.20 3.00
(a) Including nonvoting shares until 1993.
(b) Paid to 192,904,218 shares, taking into account the 720,280 new shares created on 27 February 1996 following the public tender
offer for BNP España.
(c) Paid to 213,245,588 shares, taking into account the 1,400 new shares with rights from 1 January 1997 subscribed under the
1995-2002 stock option plan.
The net dividend per share (excluding the dividend tax credit) is FRF 7.00, up 29.6% from the previous year’s
dividend.
B O A R D O F D I R E C T O R S
63SIXTY-
THREE

64
SIXTY-
FOUR
CONSOLIDATED BALANCE SHEET ANALYSIS
SUMMARIZED CONSOLIDATED BALANCE SHEET
% Change
Billions of French francs, in
at 31 December 1997 1996 1995 1994 1993 1997
Interbank and money market items 752.3 713.1 567.9 487.6 459.7 5.5
Customer items 888.1 794.0 747.7 731.4 761.2 11.8
Securities portfolio 173.1 186.2 135.0 116.6 132.0 (7.1)
Other assets 207.5 150.6 125.7 99.4 106.2 37.8
Tangible and intangible assets 13.9 17.2 17.4 17.2 17.4 (19.1)
Total assets 2,034.9 1,861.1 1,593.7 1,452.2 1,476.5 9.3
Interbank and money market items 668.2 623.4 510.8 446.1 461.6 7.2
Customer deposits 717.8 638.1 578.1 523.2 510.6 12.5
Negotiable certificates of deposit 240.3 255.3 270.7 276.5 283.2 (5.9)
Other liabilities 271.6 224.7 126.7 99.7 115.5 20.9
Allowance for liabilities and charges 13.9 12.4 11.6 12.1 9.8 11.4
Subordinated debt and equity equivalents 52.5 43.1 36.6 35.9 36.0 21.7
Reserve for general banking risks 6.7 6.6 8.4 8.2 10.8 2.1
Stockholders’ equity
(after appropriation of income) 63.9 57.5 50.8 50.5 49.0 11.3
Total liabilities and stockholders’ equity 2,034.9 1,861.1 1,593.7 1,452.2 1,476.5 9.3
Consolidated assets of the BNP
Group amounted to FRF 2,034.9
billion at 31 December 1997, up
9.3% from 31 December 1996.
This development reflects the
following tendencies.
UNDER ASSETS
• There was an increase in interbank
and money market assets (up
5.5% to FRF 752.3 billion),
resulting on the one hand from
sizable increases in repurchase
transactions (up 73.3%, to
FRF 245.3 billion) and the
portfolio of Treasury bills and
money market instruments (up
60.6%, to FRF 248.5 billion), and
on the other, from a sharp decrease
in other interbank items (down
38.0%, to FRF 258.5 billion,
resulting primarily from a
FRF 149 billion decrease in loans
to other credit institutions). In
light of the very low risk weighting
of Treasury bills and securities
received under resale agreements,
and the decrease in interbank
loans, interbank outstandings
accounted for a sharply lower
proportion of weighted assets.
• Customer assets increased by
11.8% to FRF 888.1 billion
(representing 43.6% of total assets
at 31 December 1997, compared
with 42.7% a year earlier)
following the increase in loan
originations by the international
network.
• “Other items” rose 37.8%, to FRF
207.5 billion, due largely to the
strong increase in operations on
derivatives conducted within the
specialized lines of business.
UNDER LIABILITIES
• There was a 7.2% increase in
interbank and money market
liabilities, as well as a 20.9%
increase in “Other items” that was
caused by an increase in operations
on derivatives.
• Customer deposits rose 12.5%, to
FRF 717.8 billion.
R E P O R T O F T H E

CAPITAL STOCK AND CAPITAL ADEQUACY
CHANGES IN CAPITAL STOCK FROM 1992 TO 1997
Number of shares Amount in
outstanding French francs
Situation at 31 December 1992 70,739,443 3,536,972,150
1993
Two-for-one stock split bringing the
par value from FRF 50 to FRF 25 141,478,886 3,536,972,150
Exercise of subscription warrants
for nonvoting shares issued in 1990 12,048,924 301,223,100
Exercise of rights to subscribe to
common and nonvoting shares issued in 1993 30,480,746 762,018,650
Situation at 31 December 1993 184,008,556 4,600,213,9000
1994 (a)
Payment of the dividend in the form of shares of the company 1,685,603 42,140,075
Capital contribution of shares of Compagnie Financière Gamma 4,352,000 108,800,000
Situation at 31 December 1994 190,046,159 4,751,153,975
1995
Payment of the dividend in the form of shares of the company 2,137,779 53,444,475
Situation at 31 December 1995 192,183,938 4,804,598,450
1996
Stock-for-stock public tender offer for BNP España 720,280 18,007,000
Payment of the dividend in the form of shares of the company 1,675,995 41,899,875
Stock-for-stock public tender offer for Compagnie
d’Investissements de Paris 12,202,336 305,058,400
Private placement reserved for staff members 652,444 16,311,100
Situation at 31 December 1996 207,434,993 5,185,874,825
1997
Stock-for-stock public tender offer for BNPI 1,315,122 32,878,050
Payment of the dividend in the form of shares of the company 3,574,073 89,351,825
Private placement reserved for staff members 920,000 23,000,000
Situation at 31 December 1997 213,244,188 5,331,104,700
1998
Subscription to the 1995-2002 stock option plan 1,400 35,000
Situation at 31 March 1998 213,245,588 5,331,139,700
(a) The Special Stockholders’ Meeting of 7 December 1994 voted to convert nonvoting shares into common shares.
B O A R D O F D I R E C T O R S
65SIXTY-
FIVE

66
SIXTY-
SIX
At 31 December 1997 BNP SA had
capital stock of FRF 5,331,104,700
represented by 213,244,188 shares
with a par value of FRF 25. These
shares are fully paid up and held in
registered or bearer form, at the
stockholders’ discretion, in
accordance with applicable laws and
regulations. None of these shares has
double voting rights.
Increases in the number of shares
outstanding since 1 January 1997
STOCKHOLDERS’ EQUITY
The BNP Group’s consolidated
stockholders’ equity including
minority interests amounted to
FRF 63.9 billion, which is FRF 6.5
billion higher than the figure at 31
December 1996. The BNP Group’s
share of consolidated stockholders’
equity amounted to FRF 59.0 billion
at 31 December 1997, representing
a FRF 3.5 billion increase from 31
December 1996. This increase
reflected the following movements:
• FRF 1.2 billion of capital increases
during the year, FRF 4.5 billion of
occurred as a result of the
following three operations:
• the creation of 1,315,122 new
common shares on 28 June
1997 at the close of the stockfor-stock
public tender offer for
BNPI
• payment on 7 July 1997 of part
of the 1996 dividend in shares,
entailing the creation of
3,574,073 new shares
appropriations to reserves of
undistributed earnings in 1997,
and FRF 0.6 billion of effects of
exchange rate fluctuations and
other.
• A FRF 2.8 billion reduction
of the item “Capital gains on
restructuring” resulting from
BNP’s transfer of operating real
estate to its subsidiary Compagnie
Immobilière de France. The
amount of the item “Capital gains
on restructuring” at 31 December
1997 takes into account a
• the private placement on 17 July
1997 of 920,000 new shares
reserved for subscribers to BNP’s
company savings plan.
Following the subscription on
29 January 1998 to the 1995-
2002 stock option plan, entailing
the creation of 1,400 new shares,
BNP SA had capital stock of
FRF 5,331,139,700 represented
by 213,245,588 shares.
Millions of French francs, % Change
after appropriation of income, in
at 31 December 1997 1996 1995 1994 1993 1997
Consolidated stockholders’ equity, BNP Group’s share 59,040 55,552 48,642 48,160 46,833 6.3
Minority interests 4,884 1,882 2,212 2,297 2,155 N/M
Consolidated stockholders’ equity,
including minority interests 63,924 57,434 50,854 50,457 48,988 11.3
CAPITAL ADEQUACY
INTERNATIONAL CAPITAL RATIO
FRF 2,758 million asset value
write-down in order to reflect the
decline in real estate prices, which
is now considered to be durable.
Minority interests in BNP’s
consolidated stockholders’ equity
increased by FRF 3 billion primarily
due to the impact of the issue of
USD 500 million of noncumulative
preferred securities on the US
market by BNP US Funding LLC,
a subsidiary wholly controlled by
the BNP Group.
Millions of French francs, % Change
except as indicated, in
at 31 December 1997 1996 1995 1994 1993 1997
Weighted risks
Tier 1 and Tier 2 capital:
1,164.7 1,129.3 1,022.1 969.7 1,033.4 3.1
Tier 1 capital 69.0 60.8 56.1 55.7 57.4 13.4
Tier 2 capital 46.7 42.1 36.7 38.9 40.4 11.0
Total Tier 1 and Tier 2 capital 115.7 102.9 92.8 94.6 97.8 12.4
Tier 1 and Tier 2 capital ratio 9.9% 9.1% 9.1% 9.8% 9.5%
Tier 1 capital ratio 5.9% 5.4% 5.5% 5.7% 5.6%
R E P O R T O F T H E

At 31 December 1997, BNP’s Tier
1 and Tier 2 capital ratio stood at
9.9%, compared with 9.1% a year
earlier. At that same date, the Tier
1 capital ratio amounted to 5.9%,
up from 5.4% at 31 December
1996. This sizable increase could
be ascribed to the following
developments:
• a 12.4% (FRF 12.8 billion)
increase in total Tier 1 and Tier
2 capital, of which FRF 8.2 billion
corresponded to Tier 1 capital and
FRF 4.6 billion corresponded
to Tier 2 capital, mainly through
BNP’s ratio of available own funds
to required own funds, as defined
under the new regulations, stood at
123% at 31 December 1997 (115%
a year earlier), not including supercomplementary
own funds, and
130% taking super-complementary
own funds into account (120% at
31 December 1996).
INTERNAL CONTROL
SYSTEM
In order to optimize the
management of the risks inherent
in its operations, the BNP Group
has redefined its system of internal
controls according to four main
principles that underlie the Bank’s
organization:
• Hierarchy — The director of
each head office division defines
his internal control system in
the issue of undated floating-rate
subordinated notes and other
subordinated debt securities.
• an increase of only 3.1% (FRF
35.4 billion) in average weighted
assets, due to a sharp, intentional
reduction in interbank items
(down 22.3%, representing a
FRF 28 billion decrease in
weighted outstandings, or a
FRF 127 billion decrease in
unweighted outstandings) and a
6.0% increase in weighted
customer items. Weighted assets,
which rose by 3.0% during the
coordination with the Bank’s
other entities. He must ensure
that it functions correctly and
monitor effectively the activities
for which he is responsible.
• Separation of functions — This
principle applies primarily to
trading rooms and the
administrative departments that
settle completed transactions.
Separation of functions ensures
ongoing, independent monitoring
of business.
• Delegation — This is the
fundamental concept on which
the Bank’s decision-making
framework is based. Each
delegator must monitor the
implementation of his decisions.
• Instructions — Printed copies
of the Bank’s general policy,
first half of 1997, remained stable
(up 0.1%) in the second half.
CAPITAL ADEQUACY
At 31 December 1997, the BNP
Group’s total need for “own
funds”, determined in accordance
with the French regulation
and implementing instruction
corresponding to the European
Directive on the capital adequacy
of investment companies and
credit institutions, could be
analyzed as follows:
Billions of French francs
For credit risk exposure (excluding the trading account portfolio)
For market risk exposure:
86.2
For interest-rate risk exposure 3.6
For stock price risk exposure 1.5
For payment/counterparty risk exposure 1.8
For currency risk exposure 0.4
For large risk exposure —
Total 93.5
procedures, and controls are
distributed throughout the
entire BNP Group.
The BNP Group has created an
internal control database. It is
organized according to eight risk
families and four monitoring
levels, and takes existing
supervisory and service
relationships between BNP
Group entities into account. It
defines each individual’s internal
control responsibilities in the
form of rules and regulations
that state the scope and types of
responsibilities delegated, the
organization of monitoring
procedures, and reporting
requirements for each risk
family.
The internal control system is run
by a bank officer in charge of
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coordination and monitoring, and
it is evaluated by the Management
Audit and Inspection division,
which reports directly to the
Chairman and Chief Executive
Officer.
The BNP Group’s internal control
system, which is a major tool
guiding all of the company’s
decision-makers, complies with
French Banking Commission
(CRB) regulation 97-02, effective
1 October 1997.
PRINCIPLES AND
ORGANIZATION OF RISK
MANAGEMENT
Through its banking and trading
activities, BNP is exposed to
various types of risk: credit risk,
counterparty risk, market risk,
liquidity risk, transformation risk,
and operational risk (accounting,
administration, computer
processing).
BNP has created, and continually
improves upon, a set of standards
and procedures intended to identify,
measure, and manage its various
risks. This system operates
according to three demanding
principles: strict separation between
sales and risk analysis, individual
responsibility for lending decisions,
and attribution of the financial
consequences of decisions to the
operational entities that make them.
All of the Bank’s entities take part in
control procedures and work
together to ensure strict compliance,
particularly of ceilings imposed on
profit centers. New activities and
major changes to existing activities
are presented to BNP’s authorized
representatives so that the most
significant risks can be accurately
identified and the appropriate
standards and procedures procedures
implemented.
BANKING ACTIVITIES
Responsibility for managing the
Bank’s commitments rests with
its two core business divisions:
D omestic Banking and
International Banking and
Finance.
• Decision-Making Authority
and Chain of Command
The Chairman and Chief Executive
Officer delegates authority, with the
faculty of subdelegating to the
directors of the two core business
divisions. Delegations are defined
according to customer category,
credit rating, and in some cases,
business sector.
Subdelegations are organized in such a
way that lending decisions rest solely
with head office divisions for banks
and sovereign borrowers, and with
specialized units, which report to the
two core business divisions, for certain
operations requiring specific techniques
or expertise (such as international
commodity finance, specialized
finance, and structured finance).
Any staff member vested with the
authority to commit the Bank has
the right and the obligation to
reduce the amount of credit granted
to a customer if he feels that the risk
is deteriorating and warrants a
reduction, even if the credit file does
not fall within his powers.
The General Management
Credit Committee is the decision-making
authority for commitments
whose amount exceeds
the delegation given to the directors
of the two core business divisions.
This Committee, headed
by the Chief Operating Officer,
has permanent members (including
the director of the Risk
Policy and Industry Research
division, who holds veto power,
as well as the directors of the two
core business divisions), non-per-
manent members, representatives
of the Management Audit and
Inspection division, the Legal
and Tax Affairs division, and
credit application “sponsors”. This
Committee meets twice a week.
Decisions pertaining to impaired
assets – setting up allowances,
write-downs and write-offs of
receivables, closing of accounts –
are handled according to the same
procedure as that used to delegate
authority. However, the General
Management Impaired Credits
Committee has decision-making
power for loans of over
FRF 2.5 million. This Committee,
headed by the Chairman and
Chief Executive Officer of BNP,
has permanent members (including
the director of either the
Legal and Tax Affairs unit or the
Special Affairs and Collection unit,
as well as the director of the Risk
Policy and Industry Research division,
or their representatives), nonpermanent
members (including
representatives of the Management
Audit and Inspection division), and
application “sponsors”. This
Committee meets once a month.
In the specific area of country
risks, BNP’s authorized representatives
delegate authority to officers
of the International Banking
and Finance division. This delegation
is limited to a ceiling that
is set as a function of a country’s
risk rating. Responsibility for
amounts above that ceiling rests
with the General Management
Credit Committee.
• General Procedure for
Granting Loans
Decisions pertaining to new
originations must take into
account all of the BNP Group’s
commitments to the borrower or its
group, regardless of whether the
commitments were made by one of
BNP’s divisions or subsidiaries. Under
R E P O R T O F T H E

the principle of separation of powers,
a relationship manager must always
justify his position before a credit
analyst or risk auditor. In all cases,
both parties may decide of a
common accord to seek arbitrage at
a higher hierarchical level.
The Bank conducts a
comprehensive risk analysis for all
lending decisions and rates
borrowers according to probability
of default. The complete rating
system applies to corporations and
banks. A simplified system is used
for self-employed professionals, and
credit scoring is used as a decisionmaking
aid for individuals.
There are six distinct categories of
healthy risks, two of which are
considered “sensitive” or
“préoccupant ” (to be watched) under
certain circumstances or special
assessments. There are also two
categories of impaired assets: the first
includes doubtful loans (such as
receivables in arrears, whether or not
destined to be provisioned) and all
receivables that warrant allowances;
the second corresponds to receivables
in the process of collection and
applies to customers with which the
Bank has broken off commercial
relations, having reverted to the status
of simple creditor.
Country-risk ratings come under
the responsibility of the International
Banking and Finance
division, which cooperates closely
with the Economic Research
division. During bi-annual assessments
– the frequency of which
may be altered as needed – the
Bank rates all countries with which
it has relations.
The Risk Policy and Industry
Research division, reporting to
BNP’s authorized representatives,
designs the methods used
to identify and measure the risks
the Bank incurs in banking and
trading activities. This same
division participates in commitment
decisions in three ways: its
prior consent is mandatory for
applications falling under the
responsibility of the General
Management Credit Committee
and for applications coming
from a certain number of business
sectors, whether or not they
are presented to the Credit
Committee, and it consults
BNP’s various units, explaining
decisions or helping to define
upon request the Bank’s lending
policies.
• General Procedure for
Monitoring Loans
BNP monitors its loans at
different levels, as defined by
its general internal control
procedure.
The first level concerns the profit
centers. They monitor operations
carried in their books, conduct
periodic checks, and watch for
warning signals that determine
the Bank’s reaction to major
events that affect the security of
its commitments.
D omestic branches and
international subsidiaries and
branches following exactly the
same procedures. International
units also take into account local
customs and banking regulations
applicable in the countries in
which they operate.
Every day, branches receive a list
of customers that have exceeded
their limits. Every month the
Bank prepares an operations
summary of each customer
account, containing such
information as highest overdraft
and frequency of credit limit
overruns, which it forwards to the
branches. Every quarter, all
branches are required to prepare a
list of commitments that may be
downgraded and a list of impaired
assets. Depending on the warning
indications he receives, the
director of the entity concerned,
or his hierarchical superior,
decides whether or not to change
the customer’s risk rating.
All commitments are reviewed by
the qualified authority every
18 months (for the best ratings)
or every year (for other ratings).
For example, the General
Management Credit Committee
periodically reviews all commitments
for which it is responsible.
Once a customer is rated
“préoccupant ” or impaired, it is
specifically monitored by a dedicated
account manager, with or
without the assistance of either
the Legal and Tax Affairs or the
Special Affairs and Collection
unit depending on the size of
the commitments.
The collection channel in
France is run and monitored by
the Special Affairs and
Collection unit, which operates
directly or delegates its authority
to the domestic network and
domestic subsidiaries or to outside
service providers if needed.
Commitments classified as impaired
assets are reviewed annually
by the qualified authority. For
example, once a year, the General
Management Impaired Credits
Committee examines all affairs
involving commitments of more
than FRF 100 million.
At the second level, the commitment
authorities of the
D omestic Banking and
International Banking and
Finance divisions perform periodic
on-site or remote checks to
ensure that any authority they
have subdelegated is being used
correctly.
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The third level is ensured by the
Risk Policy and Industry Research
division, in order to identify
excessive concentrations of risk.
The fourth level is handled by the
Management Audit and Inspection
division, which reports directly to
the Chairman and Chief Executive
Officer. The purpose of this
monitoring level is to ensure that
General Management directives are
applied correctly, and to evaluate
the risks incurred on missions it
undertakes and the coherence of the
risk management system at the
various BNP entities.
• General Procedure for
Reporting Risks
Every month the Group’s General
Management receives a reporting
statement listing the risks at each
rating level and for each customer
category. Risk monitoring statements
covering corporate groups, banks, and
specific economic sectors are prepared
to enable General Management to
monitor developments affecting
them. Every half-year, the General
Management “Préoccupant” Credits
Committee, which is headed by the
Chief Operating Officer of BNP and
whose operation is analogous to that
of the General Management Credit
Committee, examines all
commitments rated as “préoccupant ”.
Every half-year, the General
Management Impaired Credits
Committee examines all
commitments rated as “doubtful” as
well as those in the process of
collection.
TRADING ACTIVITIES
The main risks the Bank incurs
and manages as part of trading
activities are risk of counterparty
default, risk of loss on balancesheet
and off-balance sheet
instruments due to market price
fluctuations, liquidity risk, and
operational risks.
BNP continues to implement
Group of Thirty recommendations
concerning the management of risks
related to derivatives traded over the
counter, valuing positions and
reporting revenues related to these
risks, measuring these risks
(counterparty risks and price risks
incurred on exposure to interest rates,
exchange rates, equities, options,
etc.), and the major operational
aspects of managing these risks.
The main recommendations apply
to two aspects of trading activities:
• Separation of Functions
BNP has made this an operating
principle for all activities that
incur risk. There is a complete
separation of functions and
responsibilities between sales staff
and risk analysts, as well as
between trading rooms, on the
one hand, and auditors, the
administrative departments that
settle completed transactions, and
the accounting departments that
monitor the accounts, on the
other hand. Risk control, which is
carried out independently of the
Capital Markets unit’s worldwide
lines of business, created several
years ago, has developed into a
system based on four basic levels
of internal monitoring:
At the first level, monitoring is
carried out by the Middle Office
(Business Monitoring), which is
responsible for detailed reporting
on utilizations and reports to
the General Secretariat of the
International Banking and Finance
division.
At the second level, monitoring
is entrusted to the Central Market
Risks Monitoring Unit, a specialized
department of the International
Banking and Finance division that
centralizes market risks, conducts
on-site inspections to ensure
compliance with limits set by
trading room managers and the
dispatch of various reports to the
appropriate hierarchical levels,
centralized reporting (now weekly
but soon daily, once the Bank has
installed its internal model),
auditing, and field support.
At the third level, monitoring is
ensured both by the Risk Policy
and Industry Research division,
which identifies, defines, and
measures trading activity risks the
same as it does for banking activity
risks, and by the Market Risk
Committee (the general authority
supervising the BNP Group’s
market risks), which defines BNP
Group policy concerning trading
activities, validates market risk
identification methods and
valuation standards proposed by the
Risk Policy and Industry Research
division and market risk monitoring
procedures, and sets limits for each
main business category. Members
of the Market Risk Committee are
representative of all of the Bank’s
functional and operational expertise,
so that its decisions apply to the
entire BNP Group, and the Risk
Policy and Industry Research
division acts as secretary for its
meetings.
At the fourth level, monitoring is
entrusted to the Management Audit
and Inspection division, which
ensures the coherence and
performance of every type of
monitoring procedure and regularly
reports to BNP’s authorized
representatives.
This separation of functions,
between departments that incur
risks and those in charge of
administration and risk
monitoring, prevails at all sites and
at all levels of the Bank’s worldwide
lines of business. Local staff
members in charge of monitoring
market risks report to their local
director and to the Central Market
Risks Monitoring Unit. Back offices
R E P O R T O F T H E

and accounting departments
report to the General Secretariat of
the International Banking and
Finance division, which acts as
central coordinator. In this way,
administrative and operational risks
can be identified and handled in the
appropriate manner. When BNP
organized its capital market activities
into worldwide lines of business, it
arranged to give managers real-time
information on positions taken by
the various profit centers.
The separation of functions,
combined with the appropriate
reporting systems, enables the
Bank’s General Management to stay
abreast of risks incurred and all
noteworthy events, on a regular and
objective basis.
• Risk Limits
In accordance with Group of Thirty
recommendations, the Bank
imposes aggregate and individual
risk limits that correspond to
measurements and that are clearly
understood both Management and
traders alike.
Counterparty risk is controlled
by applying authorizations per
counterparty. The Capital Markets
unit, with its worldwide lines of
business, has not been delegated
authority concerning risk of loss on
the Bank’s counterparties, with the
exception of specific authority
concerning the most solvent equity
and debt securities issuers. The head
office divisions and profit centers
in charge of relations with
counterparties submit their requests
at the appropriate decision-making
level. Authorized credit lines are
determined within the general
framework of credit risk control.
BNP’s computer system, which
can handle more than 150,000
operations in progress, nearly 30,000
authorizations, and roughly 16,000
counterparties, is now capable of
performing global centralization and
continuous monitoring of authorized
credit utilizations. It can centralize
counterparty risk authorizations,
issue reports on trading room and
site operations and positions,
calculate counterparty risk
utilizations (including risks related
to issuers and delivery), manage
overruns and abnormalities on
request for connected sites, directly
or indirectly mark trades to market,
and generate reports on capital
market operations from trading
room and site back offices in order to
satisfy regulatory requirements
(regulation 95-02 and the EU
Capital Adequacy Directive, or
“CAD”).
In order to ensure that its derivatives
transactions are legally protected,
BNP systematically signs legal
agreements (using either the ISDA
or AFB model), which allow it to
use netting in the event of default by
a counterparty, thereby mitigating
counterparty risk. The Group will
only trade in long-term or highly
volatile derivatives with the most
creditworthy counterparties. To
date, BNP has signed multi-product
agreements with 278 of the 450
most prominent counterparties,
which together account for 84% of
all outstanding off-balance sheet
commitments reported.
BNP places aggregate risk
exposure and operational limits
on market risk. Once a year, the
Market Risk Committee gives
BNP’s authorized representatives
a recommended amount of
market risk limit authorizations
for the Group’s capital market
activities for the year. That
amount is also broken down
according to type of business and
risk class: exposure to interest
rates, exchange rates, equities,
options, and commodities. It also
gives the delegating entities their
profitability targets.
The Market Risk Committee
ensures that limit authorization
requests correspond to a satisfactory
balance and diversification of
market risks, particularly among
the largest financial markets and
the regions in which the Bank’s
capital market units and sites
operate. As part of the decisionmaking
process, it weighs the
Bank’s expertise in the proposed
risk areas, its monitoring and
reporting logistics, and profitability
statistics and forecasts for the risks
proposed. Individual and aggregate
limit authorization requests are
expressed in the form that is best
suited to the transactions and risks
concerned. The statistical approach
known as Notional Risk of Loss
(RNP) is currently used, though
in the case of specific activities or
instruments where it is not suitable,
requests may be expressed as
position and/or revenue amounts,
or else as standard unit amounts.
At this point, BNP is paying
particularly close attention to
liquidity risk.
At 31 December 1997, the total
market risk authorization was
FRF 4 billion and around 56% of
that amount was being used.
Twice a year, the Market Risk
Committee submits a report on
the utilization of market risk
authorization to BNP’s authorized
representatives, who relay the
information to the Board of
Directors.
The Market Risk Committee
exercises general supervision over
market risks. Every month it
monitors the use and results of market
risk authorizations. It analyzes market
risk authorization use by each site
and worldwide line of business,
and it checks up on secondary
monitoring performed by the Central
Market Risks Monitoring Unit in the
trading rooms. Once a month, this
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Committee also examines significant
gains and losses declared by sites and
worldwide line of business.
Among other things, the rules for
reporting significant gains and
losses contain thresholds above
which gains and losses must be
reported as soon as they are
detected, the Bank entities to
which reports must be submitted,
the conditions under which these
entities may issue instructions to
the reporting site, if necessary, and
the nature of supporting
information needed to explain the
gains or losses reported.
Significant gains and losses declared to
the Market Risks and Activities
Committee must be classified under
one of the following four categories:
those related to ordinary trading
activities which undergo more or less
sizable variations caused by
fluctuations in risk factors; those,
related to model risk, resulting from
a methodological error caused by a
lack of applicable standard or the
incompatibility between an existing
standard and the prevailing situation
in the markets; those related to
personnel risks, caused by
dysfunctions such as limit overruns
and noncompliance with established
procedures; and those, related
to operational risks, such as
those inherent in accounting,
administrative, and computer systems.
CREDIT AND
COUNTERPARTY RISKS
CREDIT RISKS
Failure by a borrower to meet its
obligations exposes the Bank to a
risk of loss, referred to as credit risk.
The loss is potential when default
has not occurred; it materializes
when the borrower defaults.
The probability of default and
subsequent developments may be
measured in terms of factors that
are specific to the borrower (e.g.,
financial condition, quality of
management, competitive
environment) and that are used to
ascertain the actual risk of default.
BNP currently measures its credit
risk on a transaction, company,
portfolio of companies, or business
sector on a conservative basis that
only reflects its exposure to the
transaction, company, portfolio of
companies, or business sector,
in other words, the total amount
of credit utilizations (temporary
bank overdrafts and financing
commitments) and off-balance sheet
commitments and confirmed lines
of credit given.
The “RECORD” program, introduced
in July 1997 and intended to assess
the economic profitability of risks
to borrowers, will enable BNP to
assess credit risk more accurately. It
will first be applied to SMCs and
self-employed professionals, followed
by major corporations and other
customer categories. This program,
which complies with internal control
requirements, is a management aid
for use in identifying yield/risk
optimization parameters and a
management tool used to assess risk
of concentration and measure
business performance through credit
portfolios.
CREDIT RISK COVERAGE
By applying credit risk management
principles and organization, BNP
further improved the quality of its
assets in 1997.
• Specific Risks
Provisioning of specific risks in France
and abroad amounted to 53% of
exposure at year-end 1993. At yearend
1997 that figure stood at 64%.
COVERAGE OF ALL (a) OF THE BNP GROUP’S DOUBTFUL SPECIFIC RISKS
Billions of French francs, except as
indicated, at 31 December 1997 1996 1995 1994 1993
Doubtful loans outstanding 61.8 63.5 63.2 68.4 67.9
Allowances (b) 39.5 40.1 38.0 37.2 35.8
Total coverage 64% 63% 60% 54% 53%
(a) Including credit risks (receivables, securities, and off-balance sheet commitments) on customers (including real estate risks) and credit
institutions.
(b) Excluding the reserve for unforeseeable sectoral risks.
Doubtful specific risks amounted to FRF 61.8 billion, or 6.7% of gross customer loans outstanding at yearend
1997, compared with 7.6% at year-end 1996 and 8.5% at year-end 1993. The ratio of allowances for
specific risks to gross customer loans stood at 4.2%, compared with 4.8% at year-end 1996.
R E P O R T O F T H E

RATIO OF DOUBTFUL SPECIFIC RISKS TO CONSOLIDATED GROSS CUSTOMER LOANS
Billions of French francs,
except as indicated,
at 31 December 1997 1996 1995 1994 1993
Gross customer loans 929.5 834.1 786.2 771.1 799.9
Doubtful specific risks as a percentage
of gross customer loans 6.7% 7.6% 8.0% 8.9% 8.5%
Allowances for specific risks as a percentage
of gross customer loans 4.2% 4.8% 4.8% 4.8% 4.5%
• Real Estate Risks
BNP has set up allowances to cover all risks on loans to real estate professionals (REPs), as and when
needed. The provision charge in 1997 amounted to FRF 101 million, bringing risk coverage to 70% of
exposure. Coverage of doubtful loans to REPs worldwide by specific allowances was brought up to 61% of
exposure. Real estate has once again become an ordinary risk.
COVERAGE OF REAL ESTATE RISKS IN FRANCE
Billions of French francs,
except as indicated,
at 31 December 1997 1996 1995 1994 1993
Loans outstanding (a) 12.5 12.9 13.1 14.0 15.4
Doubtful loans and related 6.2 6.7 6.5 6.0 6.8
Specific allowances 4.3 4.6 4.4 4.0 3.5
Coverage of doubtful loans 70% 69% 67% 66% 51%
Loans outstanding as a percentage
of gross customer loans 1.3% 1.5% 1.7% 1.8% 1.9%
(a) Excluding risks on operators whose business is not exclusively in real estate.
• Country Risks
In 1997 the Bank actively pursued
its disposition program of sovereign
assets. As a result of that program,
it was able to deduct FRF 1.1
billion from allowances.
Rescheduling of Peruvian and
Russian debt had practically no
impact on net income.
For reasons of conservatism, BNP
made a FRF 2,428 million
provision to cover its
commitments to Indonesia,
Thailand, the Philippines, South
Korea, and Malaysia based on a
multifactor analysis of the
heightened consequences that a
possible worsening of these
countries’ economic and financial
condition would have on the
Bank’s risks.
The differential between the book
value of BNP’s sovereign loans
and their market value rose
further in 1997. BNP’s valuation
of these assets is particularly
conservative compared with
their discount in the secondary
market.
At 31 December 1997, the countryrisk
allowance stood at FRF 14.5
billion, up from FRF 13.1 billion
at 31 December 1996.
• Balance Sheet Strength
Reserve for general banking
risks — In accordance with a
French Banking Commission
regulation, BNP set up a reserve
for general banking risks in 1993
containing general risk reserves
and an additional sum
corresponding to the general risk
related to the expected imbalance
between BNP’s active and retired
staff members. At 31 December
1997 the reserve for general
banking risks stood at
FRF 6,718 million, up FRF 138
million from 31 December 1996,
following additions by subsidiaries
of the international network.
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Pensions and benefits — The
various BNP Group units are
committed to pay statutory or
contractual benefits, such as
pensions and seniority bonuses,
to staff members. In addition, the
Bank is encouraging voluntary
departures or early retirement
among eligible staff members in
France. The allowances set up
to cover these benefits amounted
to FRF 4,522 million at
31 December 1997.
Allowance for unforeseeable
sectoral risks — At the end of
1994, the BNP Group set up a
FRF 2.6 billion allowance to cover
sectoral risks that might arise. At
31 December 1997 the allowance
for unforeseeable sectoral risks
contained FRF 1,430 million,
unchanged from 31 December
1996. No portion of this
allowance is allocated to cover any
specific risks.
Asset-value adjustment of
operating real estate — Having
taken note of the stabilization
in the commercial real estate
market, BNP readjusted the
balance sheet value of its main
operating real estate holdings
in 1997. This adjustment had
no impact on consolidated
earnings, in the same way
as the initial adjustment in
1991-92. It took a FRF 3,374
million provision charge on
the revaluation, posting to
stockholders’ equity the asset value
write-down (FRF 2,758 million),
net of related deferred income tax
liabilities (FRF 616 million).
COUNTERPARTY RISK
In capital market business,
counterparty risk is the risk of loss
caused when a counterparty fails
to honor an obligation. It is
considered a credit risk when the
counterparty’s principal
obligation is the repayment of a
loan. Delivery-versus-payment
risk occurs when the Bank has
honored its side of an obligation
without being able to determine
whether the counterparty has
done the same.
The Bank manages these two
types of counterparty risk in the
same way as credit risk, though it
uses a specific procedure for
monitoring delivery-versuspayment
risk that entails breaking
down transaction flows with each
counterparty according to
maturity.
By holding negotiable securities
(mainly stocks and bonds), the
Bank incurs another type of
counterparty risk: issuer risk,
which is the risk of loss caused by
market price fluctuations
reflecting factors specific to an
issuer, such as its business sector
and the markets’ perception of its
creditworthiness. BNP measures
issuer risk continuously by
marking to market the inventory
of the issuer’s securities and its
forward positions in those
securities. Once the internal
market risk model is in use, BNP
will also be able to measure
specific risk, a larger view than
issuer risk, on the basis of
circumstantial factors related to
business sector or geographical
location, liquidity of securities, or
risk of credit rating downgrade or
default, that could affect the
issuer.
Capital market transactions with
counterparties lead to funds
flows that are either certain or
conditional between the Bank and
its counterparties. The amount
and direction of those flows
depend on the prices of the
underlying instruments.
Contingent credit risk is the
Bank’s risk of loss when a
counterparty defaults and market
prices move in the Bank’s favor in
the interval between contract
execution and default. The Bank
is thus deprived of future funds
flows which, when marked to
market, give the instantaneous
replacement value of the
transaction. Contingent credit risk
may be measured at any moment
as the replacement value of the
transaction plus add-ons reflecting
market price movements between
the time of valuation and the time
of possible default. BNP currently
values add-ons for each
instrument and as a function of
market price volatility over the
time remaining until the contract
matures or expires.
The widespread use of multiproduct
legal agreements for
netting all of the Bank’s positions,
counterparty by counterparty, has
raised the need for tools that are
more effective than this unitamount
measurement based on
add-ons, which have the
advantage of being productspecific
but also the drawback of
being static and difficult to
aggregate.
BNP has developed the
“Valrisk” project to measure
contingent credit risk. Valrisk
generates a risk profile for the
interval between the valuation
date and the expiration of the
longest transaction outstanding,
in real time and for each
counterparty.
• Assessment of Counterparty
Risk
The Bank’s exposure to
counterparty risks on forward and
options contracts, before and after
the impact of netting arrangements,
is shown below:
R E P O R T O F T H E

CREDIT RISK ON FORWARD AND OPTIONS CONTRACTS
Millions of French francs, 1997 1996
at 31 December Positive Weighted Positive Weighted
replacement risk replacement risk
cost equivalent cost equivalent
Risks on government administrations and related 492 — 854 —
Risks on credit institutions headquartered in Zone A (a) 94,565 28,422 60,766 18,511
Risks on credit institutions headquartered in Zone B (a) 17,648 13,706 11,204 9,140
Total, before impact of netting arrangements 112,705 42,128 72,824 27,651
Risks on interest-rate contracts 50,772 15,956 43,066 13,055
Risks on foreign exchange and other contracts 61,993 26,172 29,758 14,596
Total, before impact of netting arrangements 112,705 42,128 72,824 27,651
Impact of netting arrangements (29,415) (8,963) — —
Total, after impact of netting arrangements 83,290 33,165 72,824 27,651
(a) Zone A consists of the member states of the European Union (EU), other member states of the Organization for Economic Cooperation
and Development (OECD) provided that they have not rescheduled any external sovereign debt within the previous five years, and
countries that have negotiated special borrowing agreements with the International Monetary Fund (IMF) within the
framework of the IMF’s General Agreements to Borrow (GAB). Zone B consists of all other countries.
Weighted risk equivalent determined on forward and options contracts represented 0.38% of the sum of
the notional amounts for over-the-counter transactions alone (excluding sales of options) of the BNP
Group at 31 December 1997, compared with 0.42% at 31 December 1996.
The analysis according to credit rating (Standard & Poor’s) of forward and options contracts traded over
the counter for which weighted risk equivalent is computed, is shown below:
Analysis according Face value (%), maturing
to credit rating within one after one year after five
at 31 December 1997 year but within five years years Total
AAA,AA 41.7 15.0 6.6 63.3
A 17.3 5.2 1.7 24.2
BBB 2.3 1.4 0.6 4.3
BB or lower 5.6 2.0 0.6 8.2
Total 66.9 23.6 9.5 100.0
B O A R D O F D I R E C T O R S
75SEVENTY-
FIVE

76
SEVENTY-
SIX
MARKET RISK
BNP measures its market risks in
terms of RNP, which is defined as
sensitivity (of a position, portfolio,
book, etc.) to very large assumed
innovations in market prices. BNP’s
current in-house RNP model uses
five years of underlying data to
estimate the impact of these adverse
market fluctuations on the Group’s
interest rate, foreign exchange, and
equity positions over a five-day
holding period, assuming a 95%
confidence level. It also examines
the underlying data of the previous
12 months to determine whether
volatility, measured according to
the same criteria, has not varied in
even greater proportions.
Since adverse market price
changes are very large, they relate
to the one or two most extreme
fluctuations in very broad risk
factors (e.g., short- and long-term
interest rates; euro-zone
currencies, other freely floating
currencies, and centrally
administered currencies), which
apply to each class of risk.
RNP limits for interest rate,
foreign exchange, and equity
positions and for each currency
are applied to each book and
trader at each decision-making
center. Each site is also given
volume position limits, which
are easier to monitor on a daily
basis. Additional rules for
The BNP Group has the following notional risk exposure:
second-order risks (such as
decorrelation between two
similar but not identical
instruments) round out the limit
framework. BNP uses a scenario
based method to perform specific
checks on options due to the
complexity of the non-linear risks
they present. For reasons of
conservatism, all authorizations
for market risk limits, qualified as
a maximum RNP, imposed by
BNP’s authorized representatives
based on a proposal by the
Market Risk Committee, and
presented to the Board of
Directors, are currently spread
over the various books without
taking any offsetting correlations
into account.
Millions of French francs, 1997 1996
at 31 December BNP Including BNP Including
BNP BNP
Group France Group France
Interest-rate risk exposure:
On French franc and foreign currency
money market instruments and bonds .. 119 .. 84
On derivatives .. 779 .. 543
Total interest-rate risk exposure 1,735 898 1,417 626
Currency risk exposure:
On foreign exchange forward instruments .. 18 .. 2
On foreign exchange options .. 24 .. 32
Total currency risk exposure 66 42 45 34
Stock price risk exposure 485 76 429 67
R E P O R T O F T H E

Notional risk exposure may be broken down according to worldwide line of business, as shown below:
Millions of French francs, 1997 1996
at 31 December Including Including
Including worldwide Including worldwide
BNP BNP option line BNP BNP option line
Group France of business Group France of business
Money market and
foreign exchange 621 248 24 492 201 32
Bonds 488 — — 377 — —
Swaps and derivatives 692 692 85 456 456 47
Equities 409 — 345 421 52 360
Other 76 76 — 147 19 —
In order to ensure effective risk
management during major crises,
the Bank performs historical
simulations on its notional risks
of loss.
Under the “Internal Model”
project for measuring market
risks, the Risk Policy and Industry
Research division has prepared
the methodological shift from
RNP to “Value at Risk” (VaR),
which expresses an amount of loss
and the probability of sustaining
that loss over a given time period,
while complying with qualitative
and quantitative criteria dictated
by the supervisory authorities for
the validation – in progress – of
the internal model developed by
the Bank. In addition to its
regulatory framework, and unlike
RNP, VaR enables the Bank to
compare and aggregate market
risks. VaR also takes into account
actual conditions prevailing in the
markets, such as the possibility of
changes in the value of risk
factors, which may be usual or
extreme, and for which two
approaches to measuring risks are
better than one based on RNP
alone. Whether market conditions
are usual or extreme, market risk
measurement will reflect both
uncertainty in risk factors, over
which the Bank has no control,
and the Bank’s exposure to that
uncertainty, which it can control
by applying limits and allocating
total capital to specific trading
activities. Thus, BNP will measure
its market risks through a
combination of two criteria:
actual risk (measured in terms of
actual VaR) incurred through
exposure to uncertainty in risk
factors, and maximum authorized
risk (measured in terms of VaR
limit) deriving from management
decisions. The order of magnitude
of uncertainty in risk factors
makes the difference between
actual risk and risk exposure. This
difference of magnitude ensures
that the internal model’s
measurement of exposure to risk
is coherent with its measurement
of the risk itself, in compliance
with French Banking Commission
(CRB) Regulation 97-02
concerning internal controls. On
the one hand, Management
must authorize a maximum
amount of uncertainty, and on
the other, it must continuously
measure actual uncertainty
prevailing in the markets. VaR
expresses an amount and the
probability of losing that amount
in an environment defined in
terms of various parameters. In
its internal model, BNP defines
three different sets of conditions
to describe the environment:
• one for actual risk, which refers
to all yields and correlations
observed
• another for risk exposure, which
refers to yields and correlations
defining a maximum authorized
dispersion
• a third for analyzing stress
scenarios, which refers only to
yields observed under extreme
market conditions and is used
to define an extreme degree of
dispersion beyond which the
Bank may not commit itself.
ASSET/LIABILITY
MANAGEMENT
In 1997, the combination of
continued sluggish demand for
credit and an appreciable increase
in regulated savings deposits
entailed very active asset/liability
management in order to limit the
structural interest rate risk associated
with French franc operations.
B O A R D O F D I R E C T O R S
77SEVENTY-
SEVEN

78
SEVENTY-
EIGHT
MANAGEMENT OF LIQUIDITY
EXPOSURE
The BNP Group’s funding
requirements stagnated again due
to weakness in the demand for
credit in France. The Group had
increasingly comfortable short-term
liquidity, and transformation
in French francs and foreign
currencies was kept within strict
prudential limits set by the Group.
The increase in stable French
franc resources, particularly home
savings deposits, enabled BNP to
suspend its issues of French franc
denominated medium- and longterm
debt. By contrast, the BNP
Group added USD 2.8 billion to its
long-term foreign currency
denominated funding, including
USD 1.3 billion of subordinated
debt and USD 500 million of
noncumulative preferred securities.
These issues enabled BNP to increase
its Tier 1 and Tier 2 capital while
reducing the sensitivity of its capital
ratios to fluctuations in the dollar.
Customer deposits at 31 December
1997, all currencies combined,
including retail certificates of
deposit and negotiable certificates
of deposit, exceeded customer
loans, including leasing and related
transactions, net of allowances.
Moreover, BNP’s supply of funds
is stable. Demand, savings, and
time deposits come from the more
than 10 million accounts held by
individuals and companies.
Liquidity is also provided by liquid
assets such as demand deposits,
Treasury bills, securities received
under repurchase agreements,
negotiable certificates of deposit,
government securities, and stocks
and bonds in various currencies.
The Group’s strong financial
condition ensures it easy access to
the capital markets on excellent
terms.
MANAGEMENT OF INTEREST
RATE EXPOSURE
BNP takes into account all balance
sheet and off-balance sheet
operations, including futures and
options, in its analysis of interest
rate risk.
Interest rate exposure on foreign
currency denominated operations
is small. Changes in interest rates
have a similar impact on sources
and uses of funds, which for the
most part are indexed to the same
official rates. Fixed-rate foreign
currency debenture issues are
generally swapped to eliminate
interest rate risk.
By contrast, interest rate risk on
French franc operations in the
domestic network is a structural
feature of universal banking, which
consists in transforming part of
customer deposits into medium
and long-term loans to individuals
and corporations.
In 1997, changes in the balance
sheet profile of customer items
continued to take place. Customers
shifted a considerable portion of
their deposits away from products
paying market interest rates (time
deposits and negotiable certificates
of deposit) and toward fixed or
quasi-fixed-rate instruments (home
savings, passbook and Codevi
savings accounts, and demand
deposits). Similarly, there was an
acceleration in the movement, that
began in mid-1996, of customers
making early repayments to
amortize loans and renegotiating
loans with lower interest rates,
causing a further decline in fixed
rate loan outstandings despite an
appreciable increase in originations.
In order to offset the increase in
net fixed-rate customer funds, the
Asset/Liability Management
division actively reinvested its
portfolio. It made large purchases
of securities maturing between
three and eight years. In order
to take advantage of interest rate
differentials, and in preparation
for European monetary union,
BNP arranged a sizable portion
of its hedges in D-marks and
ECUs, on which the exchange
rate risk happens to be covered.
MANAGEMENT OF NET
FOREIGN EXCHANGE
POSITION
BNP’s management of its net foreign
exchange position follows fixed
guidelines. This position is small with
respect to the BNP Group’s earnings
and stockholders’ equity.
OPERATIONAL RISK
At BNP, operational risk covers
administrative, accounting, and
computer risks, as well as the risk
of fraud, which the Bank’s internal
auditing system classifies as staff
related.
BANKING ACTIVITIES
In 1997 BNP validated qualitative
procedures based on locating and
implementing basic checkpoints,
local audit plans based on the
“KEOPS” (kit for assessing on site
operations) methodology used
by both the Domestic Banking
division and the Management
Audit and Inspection division,
and consolidated reporting per
operating group and network
division and by the Domestic
Network division.
R E P O R T O F T H E

TRADING ACTIVITIES
Operational risk control is based
on several principles: accountability
of the hierarchy, written procedures
describing monitoring channels
and audit trails, continuous
rationalization of processing
software, a system for reporting and
handling incidents, and inspection
assignments by the specialized audit
departments. All of BNP’s banking
and computer organization teams,
from the Organization and
Information Systems division
(which plays a general role) to
the Systems and Back Office
Engineering departments of the
International Banking and Finance
division (in charge of organizing
execution services), help ensure
the security of procedures. These
entities have undertaken a major
quality certification program that
is now in progress. As the
foreseeable part of operational risk
is to be considered as an expense,
this program will enable BNP to
look into the possibility of insurance
coverage.
Due to rapid changes occurring in
the markets, continuous adjustments
must be made to control systems,
reporting procedures, and computer
applications in order to put these
principles into operation. BNP
develops new products and
businesses taking operational risk
into account.
BUSINESS AND RESULTS OF BNP’S MAIN DOMESTIC SUBSIDIARIES
BANQUE DE BRETAGNE
This regional bank mainly serves
Brittany (60 of its 66 offices), but
also has branches in the neighboring
départements of Loire Atlantique and
Mayenne and in the greater Paris
area. Its firm establishment in
Brittany’s economic fabric, the
permanence and competence of its
staff, and its decision-making
proximity earned it the title of
“leading bank to SMCs in Brittany”
(Dun & Bradstreet survey, published
in the February 1998 issue of
Challenge du Management). For the
past several years, the bank has also
been putting its business and
revenues back into balance through
a structured, offensive retail banking
approach to individuals and selfemployed
professionals.
In 1997 Banque de Bretagne
continued to innovate, launching
the linked product Duo Jeune
with Carte Plus. This event was a
premiere in France involving
Visa cards. It also updated its
videotex services and Duo
Sauvegarde (an IT vault for corporate
clients). It offered individual
customers a mortgage simulation
tool and began to market a
mortgage loan with rate cap. It
strengthened its product offering by
Model risk, arising from potential
gaps between a price or risk
model’s representation of reality
and the actual situation, has now
been integrated into operational
risk. Starting in 1998 it will be
covered by procedures aimed at
making the following processes
systematic:
• evaluating the robustness of model
calibrations, introducing new
variables and extensions to cover
new products,
• implementing a research and
maintenance program designed
to detect drops in quality,
incorporate the latest data, and
handle computer system updates.
% Change
Millions of French francs 1997 1996 1995 1994 1993 1997 1996 1995 1994
Customer loans
(average outstandings) 5,779 5,356 5,083 4,303 4,218 7.9 5.4 18.1 2.0
Originations 1,813 1,387 1,458 1,530 693 30.7 (4.9) (4.7) x 2.2
Customer deposits
(average balances) 5,185 4,876 4,866 4,324 4,076 6.3 0.2 12.5 6.1
continuing to market BNP Group
life/endowment insurance, mutual
funds, and other products.
Banque de Bretagne further
modernized its branch network by
renovating and repositioning certain
branches and by virtually doubling
its ATM fleet.
Positive developments in business,
and growth in volumes, enabled
Banque de Bretagne to keep its
financial performance and return on
equity at high levels despite
downward pressure on interest rates
and margins.
B O A R D O F D I R E C T O R S
79SEVENTY-
NINE

80
EIGHTY
BNP BAIL
% Change
Millions of French francs
Credits outstanding
at 31 December:
1997 1996 1995 1994 1993 1997 1996 1995 1994
Equipment 13,672 13,213 13,030 13,962 15,827 3.5 1.4 (6.7) 11.8
Real estate
Total credits outstanding
21,417 21,365 20,846 20,432 20,111 0.2 2.5 2.0 1.6
at 31 December
Originations:
35,089 34,578 33,876 34,394 35,938 1.5 2.1 (1.5) (4.3)
Equipment 6,765 6,189 5,582 5,262 5,064 9.3 10.9 6.1 3.9
Real estate 2,608 2,064 3,432 2,356 2,136 26.4 (39.9) 45.7 10.3
Total originations 9,373 8,253 9,014 7,618 7,200 13.6 (8.4) 18.3 5.8
BNP Bail is a leading equipment
and real estate leasing company.
B usiness in 1997 was
characterized by continued
sluggishness in equipment
leasing for companies and a high
level of internal financing,
though some signs of an upturn
became visible at the end of the
year.
CRÉDIT UNIVERSEL
Equipment and real estate leasing
originations advanced by 9.3% and
26.4%, respectively.
Total outstandings increased for the
second consecutive year, to FRF 35.1
billion (up 1.5%). Significantly, this
increase could be ascribed to the
equipment sector, where outstandings
rose by 3.5% to FRF 13.7 billion.
Real estate outstandings remained
stable, totaling FRF 21.4 billion at
year-end 1997, following a 2.5%
increase in 1996 that was a direct
consequence of the start-up of the
large number of contracts signed in
1995 in relation to the elimination
of the “sicomi” commercial and
industrial real estate tax status on
31 December 1995.
% Change
Millions of French francs 1997 1996 1995 1994 1993 (a) 1997 1996 1995 1994
Average credits outstanding 17,312 15,987 14,641 14,031 13,759 8.3 9.2 4.3 2.0
Originations 10,499 10,217 8,231 8,013 7,201 2.8 24.1 2.7 11.3
(a) Excluding Universal Factor, which was sold to Natiocrédit.
Crédit Universel, a wholly-owned
subsidiary of Natiocrédit, finances
capital goods for individuals
(lending and lease financing) and
for companies (investment loans
and leasing) through a network of
partner/vendors.
During the course of the year,
Crédit Universel consolidated its
positions in its main lines of
business and began to rearrange
its organization in order to
facilitate specialization by its
network and its management
centers. Moreover, it undertook a
major investment program to
modernize its computer system,
for the purpose of lowering
operating costs and improving
service quality.
Originations rose once again in
1997, to FRF 10.5 billion, up
2.8%, following a 24.1% increase
in 1996.
Financings for individuals rose
thanks to good performance in
the car, motorcycle, and motor
home markets. Crédit Universel
strengthened its positions in the
corporate market despite a stagnation
in productive investment. Its real
estate financings rose 56% from what
were admittedly low levels.
Crédit Universel’s average credits
outstanding rose by 8.3% in 1997,
compared with 9.2% in 1996.
R E P O R T O F T H E

MEUNIER PROMOTION
% Change
Millions of French francs
Commercial and industrial
1997 1996 1995 1994 1993 1997 1996 1995 1994
real estate 1,019 954 1,574 2,561 949 6.8 (39.4) (38.5) N/M
Including client representation
contracts 978 662 1,431 1,729 520 47.7 (53.7) (17.2) N/M
Residential real estate
Revenues of real estate
1,020 517 520 1,007 1,061 97.3 (0.6) (48.4) (5.1)
partnerships 2,039 1,471 2,094 3,568 2,010 38.6 (29.8) (41.3) 77.5
The Meunier group operates in
real estate development and
management.
In 1997 Meunier Promotion
accentuated its presence in the
residential market with the
launching of roughly 1,000 housing
units. It maintained commercial real
BNP GESTIONS
Billions of French francs 1997 1996 % Change
in
1997
Fund management 177 175 1.1
Institutional management 189 167 13.2
Private asset management under management contract 84 68 23.5
Total 450 410 9.8
The domestic institutional and
fund management activities, which
had previously been part of BNP,
were transformed into a subsidiary
at the beginning of the year in
order to adjust to international
standards of organization and to
recommendations issued by France’s
Commission des Opérations de
Bourse (COB). The subsidiary
estate business at a high level,
launching 31,000 m 2 of office
programs under client representation
contracts in which it assumes only
the technical risks, as all financial
risks have been eliminated. The
Meunier group continued to expand
its property management business
through specialized subsidiaries,
BNP Gestions, which employs a
staff of 220 persons, posted
satisfactory results.
Its staff members enjoy an excellent
reputation, which was crowned by
a number of awards in 1997. It is
in the process of globalizing its
business, with the development of
new management centers: BNP
which manage office buildings and
apartment buildings for ownerinvestors,
as well as condominium
owners associations.
Meunier Promotion returned to a
good level of profitability thanks
to operations in all its lines of
business.
Asset Management Asia (located
in Hong Kong and Singapore) and
BNP Asset Management Argentina
(located in Buenos Aires). Total
assets under management by the
BNP Group, including assets
managed by Natio-Vie and private
banking assets, amounted to nearly
FRF 450 billion at year-end 1997,
up 9.8% from 1996.
B O A R D O F D I R E C T O R S
81EIGHTY-
ONE

82
EIGHTY-
TWO
NATIO-VIE
Millions of French francs, % Change
except as indicated
Assets under management
1997 1996 1995 1994 1993 1997 1996 1995 1994
at 31 December
Premiums written
132,072 102,880 78,532 59,682 47,586 28.4 31.0 31.6 25.4
(including Assu-Vie)
Number of policies
29,306 23,792 20,841 16,070 12,277 23.2 14.2 29.7 30.9
(thousands) 1,490 1,387 1,320 1,244 1,102 7.4 5.1 6.1 12.9
Market share (%)
• Banks, financial institutions,
and insurance companies 5.7 5.1 4.9 4.0 3.6
• Banks and financial institutions 9.3 8.6 8.6 7.1 7.0
Natio-Vie had another excellent year
in 1997, with consolidated written
premiums of FRF 29.3 billion, up
23.2%. Its assets under management
amounted to FRF 132.1 billion (up
28.4%). This growth, well ahead of
the market, helped Natio-Vie
consolidate its position as France’s
fifth-largest life insurance company in
terms of written premiums. Natio-
Vie’s products are distributed by BNP
BANEXI
1997 1996 1995 1994 1993
Number of companies in the equity investment
portfolio at 31 December 362 380 362 (a) 566 565
Portfolio value, millions of French francs at 31 December 4,627 4,427 4,694 3,749 3,653
Excluding funds managed for clients 3,801 3,553 3,880 3,089 3,115
Investments during year, millions of French francs 721 383 2,344 655 617
Number of merger and acquisition operations 62 57 72 84 90
(a) After the removal of BNP Développement from Banexi’s scope of consolidation and the addition of CFJPE.
Banexi operates in both fields of
merchant banking: equity investment
and fund management, on the one
hand, and financial advisory and
mergers and acquisitions, on the
other hand.
Banexi profited from the upturn in
business opportunities in 1997. It
made FRF 721 million of
investments for its own account
(FRF 324 million in 1996),
corresponding to FRF 637 million
of direct equity investments mainly
in the telecommunications,
and its French banking subsidiaries,
which regularly offer customers a
range of appropriate products. This
sharp increase was facilitated by
substantial transfers from “PEP” plans
and by changes in tax law, which led
to an inflow of subscriptions at the
end of the year. Natio-Vie launched
a “group pension fund” line of
business, which generated FRF 1.5
billion of written premiums during
agribusiness, automotive, and
electronics/computer industries, as
well as FRF 84 million of
investments in funds. At the same
time, it realized FRF 669 million of
capital gains on FRF 1,502 million
of exits: its highest figures ever.
Merger and acquisition business
was characterized by an increase
in restructurings in France: they
were more numerous, more
complex, and higher in value. There
was also stiff competition from
firms in the English-speaking
the year. In 1997 it increased its sales
of unit-linked contracts enabling
customers to take advantage of the
bull market for equities.
The company appreciably
strengthened its balance sheet. It
lifted its capitalization reserve to over
FRF 1 billion, which enhances its
protection against interest rate
increases.
countries. Under these conditions,
Banexi maintained its leadership
position in mergers and acquisitions,
in terms of number of operations
(62), and it was the sixth
ranked merchant bank in terms
of transaction volume (FRF 89
billion, excluding privatizations;
source: Fusions-Acquisitions magazine).
Moreover, Banexi ranked eighteenth
worldwide, with an aggregate
transaction value of FRF 30 billion,
and as such, was the only French
merchant bank to make it into the
top 20.
REPORT OF THE BOARD OF DIRECTORS

C O N T E N T S
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheet 84
Consolidated Income Statement 86
Consolidated Financial Statements in ECUs 87
Consolidated Statement of Changes in Financial Position 89
Notes to the Consolidated Financial Statements 90
The BNP Group at 31 December 1997 and BNP Group Offices Outside France 148
Joint Statutory Auditors’ Report on the Consolidated Financial Statements 151
83EIGHTY-
THREE

84
EIGHTY-
FOUR
CONSOLIDATED
BALANCE SHEET
ASSETS
Millions of French francs, 1997 1996 1995
at 31 December
Interbank and money market items (Note 3):
Cash and due from central banks and post office banks 11,863 15,115 8,286
Treasury bills and money market instruments (Note 5) 248,496 154,692 85,848
Due from credit institutions 491,905 543,260 473,736
Total interbank and money market items
Customer items (Notes 4 and 7):
752,264 713,067 567,870
Due from customers 832,432 741,513 698,723
Leasing receivables 55,651 52,473 49,003
Total customer items 888,083 793,986 747,726
Bonds and other fixed-income instruments (Note 5) 113,450 119,319 85,851
Equities and other non-fixed-income instruments (Note 5)
Equity securities held for investment
and other stock investments (Note 6):
32,639 36,470 16,895
Equity securities held for investment 10,398 6,619 7,417
Other stock investments
Total equity securities held for investment
11,298 19,316 11,099
and other stock investments
Investments in companies carried
under equity method (Notes 8 and 9):
21,696 25,935 18,516
Financial companies 1,193 1,032 689
Nonfinancial companies
Total investments in companies carried
4,163 3,518 13,111
under equity method 5,356 4,550 13,800
Tangible and intangible assets (Note 10) 13,883 17,168 17,391
Accrued income and other assets (Note 11) 114,229 90,392 80,279
Other assets (Note 11) 92,753 59,988 45,223
Goodwill (Note 12) 518 178 172
Total assets 2,034,871 1,861,053 1,593,723
Commitments given:
Financing commitments given (Note 23) 397,044 324,530 305,141
Guaranties and endorsements given (Note 23) 189,316 174,641 126,750
Commitments given on securities (Note 23) 63,593 55,543 20,122
Commitments incurred on forward and options contracts (Note 24) 14,490,145 11,516,390 8,890,853
The accompanying notes are an integral part of the financial statements.
B N P

LIABILITIES AND STOCKHOLDERS’ EQUITY
Millions of French francs, 1997 (a) 1996 1995
at 31 December Before appropriation After appropriation After appropriation
of income of income* of income
Interbank and money market items (Note 13)
Due to central banks and post office banks 23,926 23,926 12,721 5,304
Due to credit institutions
Total interbank and
644,313 644,313 610,657 505,493
money market items 668,239 668,239 623,378 510,797
Customer deposits (Note 14)
Bonds and negotiable debt instruments:
717,741 717,741 638,049 578,062
Retail certificates of deposit (Note 14) 17,647 17,647 17,164 17,766
Interbank market securities (Note 13) 1,753 1,753 2,224 3,220
Negotiable certificates of deposit (Note 14) 169,208 169,208 176,854 183,378
Bonds, including short-term portion (Note 15) 50,881 50,881 58,154 65,583
Other debt instruments 759 759 880 790
Total bonds and negotiable debt instruments 240,248 240,248 255,276 270,737
Accrued expense (Note 16) 87,345 87,345 71,971 67,722
Other liabilities (Note 16) 182,691 184,294 152,777 59,008
Allowance for liabilities and charges (Note 17) 13,889 13,889 12,468 11,568
Subordinated debt (Note 18) 52,473 52,473 43,120 36,622
Reserve for general banking risks (Note 20)
Stockholders’ equity (Note 21):
6,718 6,718 6,580 8,353
Capital stock
Additional paid-in capital in excess of par
5,331 5,331 5,186 4,742
and premium on acquisition
Consolidated retained earnings, revaluation surplus,
translation adjustment, equity method adjustments:
20,877 20,877 19,853 17,447
Group’s share 28,363 32,832 30,513 26,453
Minority interests in consolidated subsidiaries 4,737 4,884 1,882 2,212
Total stockholders’ equity
Net income:
59,308 63,924 57,434 50,854
Net income attributable to Group 5,962 - - -
Minority interests 257 - - -
Consolidated net income 6,219 - - -
Total liabilities and stockholders’ equity 2,034,871 2,034,871 1,861,053 1,593,723
Commitments received:
Financing commitments received (Note 23) 9,909 9,410 12,170
Guaranties and endorsements received (Note 23) 158,759 118,284 116,701
Commitments received on securities (Note 23) 52,172 55,856 21,320
(a) Based on proposed appropriation of income submitted to the stockholders’ meetings of BNP and its consolidated subsidiaries.
The accompanying notes are an integral part of the financial statements.
G R O U P
85EIGHTY-
FIVE

86
EIGHTY-
SIX
CONSOLIDATED INCOME
STATEMENT
Millions of French francs, year ended 31 December 1997 1996 1995
Net interest and assimilated income:
Net interest and assimilated income on interbank items (Note 26) (64) (1,096) (240)
Net interest and assimilated income on customer items (Note 27) 26,124 28,577 30,845
Net interest and assimilated income on lease transactions 4,196 4,326 4,471
Interest expense on bonds and negotiable debt instruments (Note 25)
Interest income on bonds and
(18,612) (19,258) (21,422)
other fixed-income instruments (Note 28) 11,605 11,263 8,905
Income on equities and other non-fixed-income instruments (Note 28) 902 1,028 934
Net interest and assimilated income 24,151 24,840 23,493
Net commissions (Note 29) 9,969 8,863 7,567
Net gains (losses) on financial operations (Note 25) 8,489 4,467 4,948
Other net income from banking operations 1,457 1,332 1,700
Net banking income (Notes 25 and 34)
Operating expense:
44,066 39,502 37,708
Salaries and employee benefits, including profit sharing (Note 30) (18,991) (17,920) (17,640)
Other expense (9,538) (8,677) (8,618)
Total operating expense
Depreciation, amortization, and provisions
(28,529) (26,597) (26,258)
on tangible and intangible assets (Note 10) (2,102) (2,061) (1,950)
Gross operating income (Note 34) 13,435 10,844 9,500
Net addition to allowance for credit risks and country risks (Note 7) (6,785) (3,793) (5,533)
Net operating income 6,650 7,051 3,967
Gains (losses) on disposals of long-term investments, net of provisions (Note 32)
Net (addition to) deduction from reserve
2,380 (704) 8
for general banking risks and miscellaneous risks (135) 1,733 (128)
Nonrecurring items (Note 33)
Income before taxes, share of earnings of companies carried
(1,391) (3,417) (700)
under equity method, and amortization of goodwill 7,504 4,663 3,147
Income taxes (Note 35) (1,997) (983) (1,174)
Share of earnings of companies carried under equity method 815 537 36
Amortization of goodwill (Note 12) (103) (88) (84)
Consolidated net income 6,219 4,129 1,925
Minority interests 257 273 141
Net income attributable to Group 5,962 3,856 1,784
Earnings per share (a) (French francs) 28.26 18.69 9.31
(a) Based on the following weighted average numbers of shares outstanding: 210,951,379 in 1997, 206,264,600 in 1996,
and 191,680,120 in 1995.
Based on shares outstanding at 31 December, consolidated net income per share is FRF 27.96 for 213,244,188 shares outstanding
as of 31 December 1997, FRF 18.59 for 207,434,993 shares outstanding as of 31 December 1996 and FRF 9.28 for
192,183,938 shares outstanding as of 31 December 1995.
The accompanying notes are an integral part of the financial statements.
B N P

PRESENTATION OF THE
CONSOLIDATED BALANCE
SHEET AND INCOME
STATEMENT IN ECUS
In recognition of an environment
that is more than ever
marked by the drive and the
imminence of implementing the
single European currency, and
the need to facilitate comparisons
among European credit
institutions, BNP presents
below its consolidated financial
statements in ECUs.
The principles and basis of
consolidation are given in Note 1
(“Accounting Policies”) to the
consolidated financial statements
in French francs. The closing rate
method was used to translate all
balance sheet items, and income
statement items were translated
on the basis of the average
exchange rate for the year accor-
CONSOLIDATED BALANCE SHEET IN ECUS
ding to the accounting method
specified in French regulations.
At year-end 1995, 1996, and
1997 ECU exchange rates were
6.28, 6.51, and 6.61 French
francs, respectively. The average
ECU exchange rates in 1995,
1996, and 1997 were 6.44,
6.41, and 6.59 French francs,
respectively.
ASSETS
Millions of ECUs,
at 31 December 1997 1996 1995
Interbank and money market items 113,807 109,534 90,447
Customer items 134,355 121,964 119,093
Bonds and other fixed-income instruments 17,163 18,329 13,673
Equities and other non-fixed-income instruments 4,938 5,602 2,691
Equity securities held for investment and other stock investments 3,282 3,984 2,949
Investments in companies carried under equity method 810 699 2,198
Tangible and intangible assets 2,100 2,637 2,770
Accrued income 17,281 13,675 12,783
Other assets 14,032 9,425 7,206
Goodwill 79 27 28
Total assets 307,847 285,876 253,838
LIABILITIES AND STOCKHOLDERS’ EQUITY After appropriation of income
Millions of ECUs,
at 31 December 1997 1996 1995
Interbank and money market items 101,095 95,757 81,357
Customer deposits 108,584 98,010 92,070
Bonds and negotiable debt instruments 36,346 39,213 43,121
Accrued expense 13,214 11,055 10,784
Other liabilities 27,881 23,469 9,401
Allowance for liabilities and charges 2,101 1,915 1,843
Subordinated debt 7,939 6,624 5,833
Reserve for general banking risks 1,016 1,011 1,330
Stockholders’ equity (including net income) 9,671 8,822 8,099
Total liabilities and stockholders’ equity 307,847 285,876 253,838
G R O U P
87EIGHTY-
SEVEN

88
EIGHTY-
EIGHT
CONSOLIDATED INCOME STATEMENT IN ECUS
Millions of ECUs 1997 1996 1995
Net interest and assimilated income 3,664 3,875 3,651
Net commissions 1,513 1,383 1,176
Net gains (losses) on financial operations 1,288 697 769
Other net income from banking operations 221 208 264
Net banking income 6,686 6,163 5,860
Operating expense:
Salaries and employee benefits, including profit sharing (2,882) (2,795) (2,741)
Other expense (1,447) (1,354) (1,339)
Total operating expense (4,329) (4,149) (4,080)
Depreciation, amortization, and provisions
on tangible and intangible assets (319) (322) (304)
Gross operating income 2,038 1,692 1,476
Net addition to allowance for credit risks and country risks (1 029) (592) (860)
Net operating income 1,009 1,100 616
Gains (losses) on disposals of long-term investments, net of provisions 361 (110) 1
Net (addition to) deduction from reserve for general banking
risks and miscellaneous risks (20) 270 (20)
Nonrecurring items (211) (533) (108)
Income before taxes, share of earnings of companies
carried under equity method, and amortization of
goodwill 1,139 727 489
Income taxes (303) (153) (183)
Share of earnings of companies carried under equity method 124 84 6
Amortization of goodwill (16) (14) (13)
Consolidated net income 944 644 299
Net income attributable to Group 905 601 277
Minority interests 39 43 22
B N P

CONSOLIDATED STATEMENT
OF CHANGES IN FINANCIAL POSITION
Millions of French francs, year ended 31 December 1997 1996 1995
Funds provided:
Funds provided from stockholders’ equity and equivalents:
From stockholders’ equity:
From operations:
Consolidated net income 6,219 4,129 1,925
Depreciation and amortization 2,102 2,061 1,950
Net addition to allowances 3,655 7,047 5,667
Share of earnings of companies carried under equity method (815) (537) (36)
Total funds provided from operations 11,161 12,700 9,506
Cash dividend (1,603) (1,197) (779)
Change related to operations involving capital stock and reserves:
Share attributable to BNP Group (1,321) 4,168 (525)
Minority interests 2,855 (526) (163)
Increase in funds provided from stockholders’ equity 11,092 15,145 8,039
Increase (decrease) in reserve for general banking risks 138 (1,773) 172
Increase in subordinated debt 9,353 6,498 752
Total funds provided from stockholders’ equity and equivalents 20,583 19,870 8,963
Funds provided from other sources:
Increase in interbank items 44,861 112,581 64,751
Increase in customer deposits 79,692 59,987 54,824
Increase (decrease) in bonds and negotiable debt instruments (15,028) (15,461) (5,775)
Increase (decrease) in other financial items (8,353) 72,836 143
Increase in funds provided from other sources 101,172 229,943 113,943
Total increase in funds provided: 121,755 249,813 122,906
Funds used:
Increase (decrease) in interbank loans (52,326) 75,529 57,922
Increase in customer loans 99,521 51,660 22,164
Increase in securities transactions 11,064 101,274 30,386
Increase in long-term investments 64,679 19,512 10,280
Increase (decrease) in tangible and intangible assets (1,183) 1,838 2,154
Total increase in funds used 121,755 249,813 122,906
G R O U P
89EIGHTY-
NINE

90
NINETY
NOTE 1 - ACCOUNTING
POLICIES
BASIS OF
PRESENTATION
The consolidated financial
statements include the accounts
of Banque Nationale de Paris and
its main subsidiaries and affiliates.
Accounting policies applied in
preparing the consolidated balance
sheet and income statement comply
with the accounting principles
established for the French banking
industry. The financial statements
of foreign subsidiaries and
affiliates, prepared in accordance
with accounting policies applied
in their respective countries,
have been restated prior to
consolidation to conform to
Group accounting policies.
PRINCIPLES AND BASIS
OF CONSOLIDATION
The consolidated financial
statements include the accounts
of BNP and its subsidiaries and
affiliates with total assets in excess
of 10 million ECUs in which
BNP holds a direct and/or
indirect interest of 20% or more.
• Fully Consolidated
Subsidiaries
In order to reflect the predominance
of the BNP Group’s banking
activity, only financial institutions,
bank holding companies, and
companies whose activities are a
direct extension of the banking
activity are fully consolidated when
BNP has a direct or indirect
ownership interest of at least 50%,
when the BNP Group exercises
exclusive control over their
management on statutory or
contractual grounds, or through its
power to appoint a majority of their
management board, and when the
total assets of these units exceed
FRF 100 million (approximately
15 million ECUs).
• Proportionally Consolidated
Subsidiaries
Affiliates that the BNP Group
controls jointly with other
stockholders are proportionally
consolidated. When no exclusive
control exists, joint control is
deemed to exist when a small
number of stockholders can jointly
appoint the members of their board
of directors in order to define and
apply a joint strategy.
• Companies Carried Under the
Equity Method
Affiliates that are less than 50%owned
and in which the BNP Group
exercises significant influence over
financial policy and management,
which is deemed to exist when the
Group holds at least 20% of their
voting rights, are carried under the
equity method unless the BNP
Group exercises dominant or joint
influence (see above). Majority-owned
financial institutions with total assets
of 10 million to 15 million ECUs, as
well as nonbanking subsidiaries
(insurance and bank-related service
companies) are also carried under the
equity method.
• Other Stock Investments
Whenever the BNP Group’s ability
to control the operations or assets
of a subsidiary or affiliate is severely
and durably impaired, the
investment is neither consolidated
nor carried under the equity
method, but is posted to “Other
stock investments”.
• Change in Group Ownership
Interest in a Consolidated Subsidiary
or Equity-Method Affiliate
In the event that the BNP Group’s
ownership interest in a consolidated
subsidiary or equity method affiliate
changes, the proportionate change
in BNP’s ownership interest is reflected
in consolidated stockholders’ equity.
FOREIGN CURRENCY
TRANSLATIONS
Foreign currency denominated
assets, liabilities, and off-balance sheet
commitments of foreign branches,
subsidiaries, and affiliates have been
translated into French francs at
official year-end exchange rates,
except nonmonetary assets and
liabilities of the entities in countries
with high inflation, which were
translated at historical rates to correct
for high inflation in those countries.
Income statements are translated at
average exchange rates for the year
for foreign branches, subsidiaries,
and affiliates, except in countries
with high inflation, which are
translated at year-end exchange rates.
Exchange differences calculated on
the basis of year-end exchange rates
for capital, reserves, retained
earnings, net income and the equity
base of branches are posted to equity.
GOODWILL
Goodwill represents the excess of
the book value of the parent
B N P

company’s shares in consolidated
subsidiaries or equity-method
companies over their net assets at
the date of acquisition, for the
portion of the purchase price not
allocated to specific assets or
liabilities. Goodwill is shown as
such in the balance sheet and is
amortized on a straight-line basis
over a maximum period of seven
years. The portion allocated to
specific assets is recognized using
the accounting policies that apply
to the corresponding assets.
The portion allocated to specific
assets or liabilities of companies
carried under the equity method is
posted to the item “Investments in
companies carried under equity
method”.
INTERCOMPANY BALANCES
AND TRANSACTIONS
Securities issued by a fully
consolidated BNP Group company,
purchased by the BNP Group, and
held on a long-term basis are
eliminated in consolidation, with
the exception of those issued by
BNP and held in accordance with
French regulations concerning the
BNP Group’s employee stock
option plan. Intercompany balances,
as well as income and expense on
material intercompany transactions
between fully or proportionally
consolidated companies, are
eliminated in consolidation.
LEASE FINANCING
Income from finance leases is
recorded as financial revenue.
Assets leased to others are carried
in the balance sheet at cost less
accumulated depreciation. Such
depreciation is adjusted to reflect
the financial amortization of the
invested capital. The resulting
amortization expense is included
in “Lease transaction income”.
G R O U P
Deferred tax is recorded for only
half of the tax liability attributable
to book-vs-tax timing differences.
INCOME AND EXPENSE
RECOGNITION
Interest income and related
commissions are recognized on an
accrual basis. Fees for services (not
interest-related) are recorded when
the services are rendered.
FOREIGN CURRENCY
TRANSACTIONS
Foreign exchange positions are
generally valued at official yearend
exchange rates. Currency gains
and losses on ordinary transactions
denominated in a foreign currency
are recorded in income and
expense. Translation adjustments
calculated on the basis of official
year-end exchange rates for assets
denominated in foreign currencies
and held on a long-term basis,
including debt securities held for
investment, equity securities held
for investment, the equity base of
BNP branches outside France, and
investments in foreign affiliates,
are not reflected in the income
statement.
BOND ISSUES
Issuing costs are prorated over the
term of the bond.
SECURITIES
The term “securities” covers interbank
market securities (mainly promissory
notes and mortgage notes); Treasury
and other negotiable debt
instruments; bonds and other fixedincome
instruments (whether fixedor
floating-rate); and equities and
other non-fixed-income instruments.
Securities are classified as “Trading
account assets”, “Investment
securities held for sale”, “Debt
securities held for investment”,
“Equity securities held for
investment”, and “Other stock
investments”. Investments in
companies carried under the equity
method are isolated as a separate
asset class.
• Trading Account Assets
Securities held for up to three
months are recorded under “Trading
account assets” and valued
individually at market. Changes
in market values are posted to
income.
• Investment Securities Held for
Sale
This category includes securities held
for at least three months, but which
the BNP Group does not intend to
hold on a long-term basis. Bonds
and other fixed-income instruments
are valued at the lower of cost
(excluding accrued interest) or their
probable market value, which is
generally determined on the basis
of market prices. Accrued interest
is posted to income under
“Interest income on bonds and
other fixed-income instruments”.
Stocks are valued at the lower of cost
or their probable market value,
which is generally determined on
the basis of stock market prices, for
listed stocks, or the BNP Group’s
share in net assets calculated on the
basis of the most recent financial
statements available, for unlisted
stocks. Dividends received are posted
to income under “Income on
equities and other non-fixed-income
instruments” at the time of their
payment.
The cost of sale of investment
securities held for sale is determined
on a first in, first out (FIFO) basis.
Capital gains on disposal are
reflected in the income statement
91NINETY-
ONE

92
NINETY-
TWO
under “Net gains (losses) on
financial operations”, as are
provisions for market value writedowns
or recoveries.
• Debt Securities Held for
Investment
Fixed-income securities (mainly
bonds, interbank market securities,
Treasury securities, and other
negotiable debt securities) are
recorded under “Debt securities
held for investment” to reflect the
BNP Group’s intention of holding
them on a long-term basis. Bonds
classified under this heading are
financed by matching funds or
hedged against interest rate exposure
to maturity.
The difference between cost and the
redemption price of these securities
is prorated over the life of the
securities and posted to “Interest
income on bonds and other fixedincome
instruments” in the income
statement. In the balance sheet, their
carrying value is amortized to their
redemption value.
Interest on debt securities held for
investment is posted to income under
“Interest income on bonds and other
fixed-income instruments”.
A provision is made when a
decline in the credit standing of
an issuer jeopardizes redemption
at maturity.
• Equity Securities Held for
Investment
This category includes shares and
related instruments that the BNP
Group intends to hold on a longterm
basis, without taking an
active part in the management of
the issuing companies. “Equity
securities held for investment”
are recorded individually at the
lower of cost or fair market value.
Fair market value of listed
securities is primarily determined
according to the average market
price over the previous two fiscal
years, or according to a more
recent market price when a
decrease in value of the
underlying security is likely to
endure. Fair market value of
unlisted securities is determined
according to net asset value per
share (consolidated, if applicable).
Dividends received are posted to
income under “Income on equities
and other non-fixed-income
instruments” at the time of their
payment.
• Other Stock Investments
This category includes affiliates
in which the BNP Group
exercises significant influence over
management or investments
considered as strategic for the
Group’s business development.
Influence over management is
deemed to exist when the Group
holds an ownership interest
of at least 10%. “Other stock
investments” are recorded
individually at the lower of cost
or fair market value. Fair market
value of listed securities is
primarily determined according
to the average market price over
the previous two fiscal years, or
according to a more recent market
price when a decrease in value of
the underlying security is likely
to endure. Fair market value of
unlisted securities is determined
according to net asset value per
share (consolidated, if applicable).
Capital gains or losses on
disposals are recorded as “Gains
(losses) on disposals of longterm
investments, net of provisions”
in the income statement.
Dividends on other stock
investments are posted to income
when the stockholders of those
companies have voted to
distribute the dividends during
the year. They are posted to
“Income on equities and other
non-fixed-income instruments”.
• Investments in Companies
Carried Under the Equity
Method
Changes in net assets of companies
carried under the equity method
are posted to assets under
“Investments in companies carried
under equity method” and
to consolidated reserves under
“Retained earnings”. The
difference between the book value
of the parent company’s shares and
its share of net assets at the date of
acquisition is also posted to the
item “Investments in companies
carried under equity method” for
the portion allocated to specific
assets or liabilities.
FORWARD FINANCIAL
INSTRUMENTS
The BNP Group operates in
interest rate and foreign exchange
forward financial instruments,
optional and non optional, both
on organized exchanges and in
over-the-counter transactions. It
engages in interest rate and
currency swaps to manage its
interest rate and exchange rate
risk exposure, as well as for
the purposes of arbitrage and
trading.
• Forward Interest Rate
Instruments
Interest rate futures and options
contracts traded on organized
exchanges are valued at market at
the balance sheet date. Realized and
unrealized gains and losses are taken
to income under “Net gains (losses)
on financial operations”.
Gains and losses on certain
contracts, which are traded over
the counter on narrow markets,
or which are isolated open
positions, are taken to income
B N P

either when the contracts are
unwound or on a prorated basis
depending on the nature of the
instruments. Provisions for risks
are made to cover unrealized
losses.
Gains and losses on interest rate
contracts designated as hedging
operations are recognized similarly
to gains and losses on the hedged
instrument.
• Forward Foreign Exchange
Instruments
Options contracts are marked to
market and valuation differences
are posted to income. Identical
treatment is used for forward
exchange contracts bought and
sold for trading purposes. As a
general rule, when these
transactions are hedged, the
hedging contracts are valued at the
cash price prevailing at the end of
the period. Premiums and
discounts on contracts designated
as a hedge are recognized on an
accrual basis and posted to the
income statement over the life of
the hedged transaction.
• Equity and Equity Index
Derivatives
BNP buys and sells equity and
equity index options for trading
and hedging purposes. In the case
of trading operations, unrealized
gains and losses on contracts that
have not been unwound by the
balance sheet date are carried
directly to income. Gains and
losses on settled equity and equity
index contracts designated as
hedging operations are recognized
similarly to gains and losses on
the hedged instrument.
CUSTOMER LOANS
“Customer loans” cover credits to
entities other than credit
institutions and are broken down
G R O U P
into commercial and industrial
loans, customer overdrafts, and
other credits. Customer loans are
carried in the balance sheet at
principal amount plus accrued
interest. Whenever management
determines that borrowers may not
be able to repay their loans, a
provision for credit risk is charged
to income. Provisions are calculated
on a case-by-case basis, taking into
account guaranties held by the
bank, except in the case of small
receivables, on which the risk is
calculated taking into account the
bank’s loan loss experience on this
category of receivables.
In the case of real estate
professionals, potential losses are
computed on the basis of the fair
market value of the assets
financed, guaranties, and losses
on unfinished developments
(reflecting income and expenses
pending). The fair market value
of assets financed takes into
account rental values, prices of
recent transactions involving
comparable operations, and any
possible capital losses. Expenses
pending take into account all
interest expenses that will be due
until complete exit of the building
program, construction costs, fees
for professional services pending,
and operating expenses.
Allowances for credit risks on
items carried under assets in the
consolidated balance sheet are
deducted from the corresponding
asset items. Allowances reported
under liabilities consist of
allowances for guaranties and
endorsements, allowances for
losses on unfinished real estate
developments in which equity
investments have been made,
allowances for legal proceedings
pending, and allowances deemed
necessary to cover potential risks
related to certain commitments
or business sectors (allowances for
risks not specifically identified and
allowances for unforeseeable
sectorial risks).
Additions to and deductions from
allowances, loan losses, and
recoveries of loans written off are all
carried under “Net addition to
allowance for credit risks and
country risks” in the income
statement. Additions to allowances
for unforeseeable sectorial risks made
by means of transfers from the
reserve for general banking risks are
recorded as nonrecurring expenses.
These allowances are utilized to
cover substantial risks identified by
the income statement heading under
which the corresponding allowance
was recorded.
COUNTRY RISK PROVISIONS
BNP determines its country risk
coverage on the basis of the
future solvency of each of the
countries at risk and the nature
of the loans outstanding to those
countries. Country risk provisions
and write-backs are
reflected in the consolidated
income statement under “Net
addition to allowance for credit
risks and country risks”.
RESERVE FOR GENERAL
BANKING RISKS
For reasons of conservatism, the
BNP Group has set up a reserve
for general banking risks.
Specific additions to, and
deductions from, this reserve are
reflected in the consolidated
income statement under “Net
(addition to) deduction from
reserve for general banking risks
and miscellaneous risks”. This
reserve was originally set up
through transfers from other
reserves under the conditions
described in Note 20.
93NINETY-
THREE

94
NINETY-
FOUR
PROVISIONS FOR
MISCELLANEOUS RISKS
The BNP Group makes provisions
for miscellaneous risks to
cover specific risks that are
uncertain and not quantifiable.
These provisions may be written
back in the case of individual
risks which become certain and
quantifiable and which are
covered by specific provisions.
FIXED ASSETS
In 1991 and 1992, as allowed by
French regulations, BNP
transferred its main operating real
estate holdings to its subsidiary
Compagnie Immobilière de France.
This transaction covered wholly
owned buildings and buildings
leased to BNP SA (the parent
company) by one of its specialized
subsidiaries. BNP intends to hold
these buildings on a long-term
basis. The revaluation arising from
this transaction has been posted to
consolidated stockholders’ equity,
net of the related deferred tax effect.
A deferred tax allowance has been
provided for. The resulting capital
gain is now posted to the
consolidated income statement in
proportion to the additional
depreciation charge taken by
Compagnie Immobilière de France.
In order to reflect what now appears
to be a lasting decline in the real
estate market, the BNP group wrote
down in 1997 the book value of the
above referred real estate. The impact
of this adjustment, net of the related
deferred income tax effect,
was posted to consolidated
stockholders’equity, consistently
with the initial adjustment. This
adjustment has therefore no impact
on consolidated net income.
Other premises and equipment
are stated at cost or valued in
accordance with France’s
appropriation laws of 1977 and
1978 or, for certain foreign
subsidiaries, in accordance with
local rules (see below).
Assets leased by BNP from its
specialized subsidiaries are
recorded as premises, equipment,
and other under “Tangible and
intangible assets”.
The restructured real estate
portfolio is depreciated over a
fifty-year period starting from the
date of transfer using the straightline
method. Depreciation of other
fixed assets is computed using the
straight-line method over their
estimated functional lives. Furniture
and fixtures are depreciated over a
period of eight to 12 years,
equipment is depreciated over a
period of five to eight years, and
vehicles are depreciated over a period
of two to six years.
BNP and its French subsidiaries
have adopted accelerated
depreciation for their individual
company accounts. In the
consolidated financial statements,
depreciation is restated (in most
cases using the straight-line
method) to allocate the cost of
the assets concerned over their
estimated functional lives.
Deferred taxes have been
calculated on the restatement.
Amortization of assets leased
by BNP from its leasing subsidiaries
is reflected in the income
statement under “Depreciation and
amortization”.
STATUTORY REVALUATION
In 1978, in accordance with
applicable tax laws, BNP and some
of its French subsidiaries revalued
land and buildings owned at
31 December 1976 and still carried
in their balance sheets at the date of
revaluation. The revalued amounts,
computed at 31 December 1976,
were established by independent
appraisers.
At the same time, investments in
affiliates and subsidiaries were also
revalued either at 31 December
1976 market values for companies
listed on the Paris Stock Exchange,
or on the basis of their net asset value
as taken from the 31 December
1976 balance sheet after
appropriation of income.
BNP has included in stockholders’
equity the portion of the revaluation
surplus relating to nondepreciable
assets arising from this operation.
INCOME TAXES
BNP Group companies are subject
to income tax based on rules and
rates prevailing in the countries in
which they operate. In France, the
standard income tax rate is 33.33%.
Long-term capital gains are taxed at
a rate of 19%. Capital gains and
losses on securities in the various
portfolios losses are taxed at the
standard income tax rate of 33.33%,
with the exception of “Other stock
investments”, which are subject to
long-term capital gains taxation.
Dividends received from companies
in which the BNP Group has an
ownership interest of more than
10% or more than FRF 150 million
are nontaxable.
In 1995 the French government
imposed a 10% surtax on
corporate income for an
unspecified period of time, and
in 1997 it imposed a
15% surtax on corporate income,
which will be lowered to 10% for
fiscal year 1999 and expire at yearend
1999. BNP has taken these
surtaxes into account to
determine income taxes for each
B N P

subsequent period that are
currently payable, and has used
the liability method to adjust the
amount of deferred taxes for cases
where they would be subject to
the surtax when the timing
differences reverse themselves at
any time in the future. This
position is in accordance with the
September 15, 1997 option of the
French National Accounting
Council.
A charge for income taxes is taken
in the year in which the respective
taxable income and expense are
booked, regardless of the time
when the tax is actually paid. As
a result, BNP Group companies
book deferred taxes calculated on
the basis of timing differences
between profit and loss items for
accounting and tax purposes,
under the liability method.
However, the deferred income tax
provision on reserves related to
leasing operations is determined
on the basis of the portion of the
reserves that might be taxed in the
foreseeable future; this portion
may not be less than one-half of
the existing related reserve.
In accordance with international
accounting principles, the BNP
Group now records defered tax
benefits based on the probability
of their utilization, regardless of
the amount of offsetting deferred
tax liabilities.
G R O U P
PROFIT-SHARING PLAN
As required by French law, BNP
and its French subsidiaries provide
for profit sharing in the year in
which the profit arises, and report
the provision under salaries in
“Operating expense” in the
consolidated income statement.
RETIREMENT AND PENSIONS
FOR FORMER EMPLOYEES
Upon retirement, BNP Group
employees receive pensions
according to the laws and customs
prevailing in the countries where
BNP Group companies operate.
Outside France, BNP Group
companies and their employees
contribute to mandatory pension
plans managed by independent
organizations.
Retired employees of the BNP
Group’s French subsidiaries and
affiliates belonging to the banking
industry are entitled to the following
pension system starting 1 January
1994, pursuant to a new industrywide
agreement on pensions:
• Retirees receive pension benefits
from the social security system and
two nationwide organizations,
which are financed by
contributions received from
employers and employees.
• Retirees receive additional benefits
from the pension fund of BNP and
its French subsidiaries relative to
services rendered prior to
31 December 1993. Funding for
these additional benefits is provided
by transfers from the pension funds’
existing reserves and by employer
contributions, which are limited to
a percentage of payroll costs. The
amount of such additional benefits
is adjusted to reflect the funding
level of the pension funds and may
consequently be reduced in due
proportion.
The working capital contributions
made to the two nationwide
pension organizations in 1994 are
treated as prepaid expenses and
amortized over the average number
of years left to retirement of BNP’s
affiliated employees, which is
currently twenty years.
EMPLOYEE BENEFITS
Under various agreements, the
bank is committed to pay early
retirement, retirement, and
seniority bonuses. Each year, the
Group estimates the net current
value of these commitments and
adjusts the related allowance. The
net current value of these
commitments is determined on
the basis of a market rate that
corresponds to expected yields on
funds invested for the long term.
95NINETY-
FIVE

96
NINETY-
SIX
NOTE 2 - SUBSIDIARIES
AND AFFILIATES
OF THE BNP GROUP
FULLY CONSOLIDATED COMPANIES
Financial Institutions Group Group
voting ownership
interest (%) interest (%)
IN FRANCE
Credit Institutions
Banexi (1) 100.00 100.00
Banque Arabe et Internationale d’Investissements “ BAII “ (1) 100.00 100.00
Banque de Bretagne (1) 100.00 100.00
Banque de la Cité (1) 99.95 99.95
Banque de Wallis et Futuna 51.00 51.00
BNPI 81.91 81.91
BNP Bail (1) 100.00 100.00
BNP Factor (France) (1) 100.00 100.00
BNP Finance (1) 100.00 100.00
BNP Guadeloupe (1) 100.00 100.00
BNP Guyane 100.00 100.00
BNP Martinique (1) 100.00 100.00
BNP Nouvelle-Calédonie 100.00 100.00
Crédit Universel (1) 100.00 100.00
Locafinance 100.00 100.00
Natiobail 71.59 71.59
Natiocrédibail 100.00 100.00
Natiocrédimurs 100.00 100.00
Natioénergie 100.00 100.00
Natiolocation
Other Financial Institutions
(1) 100.00 100.00
Arius Finance 67.62 67.62
Banexi Communication SA (1) 100.00 100.00
Banexi Société de Capital Risque 100.00 100.00
BNP Arbitrage (1) 100.00 100.00
BNP Développement SA 100.00 100.00
BNP Gestions (1) 100.00 100.00
BNP Immobilier (1) 100.00 100.00
Compagnie d’Investissement de Paris “CIP” 100.00 100.00
Codexi 99.91 99.91
Du Bouzet SA (1) 99.52 99.52
Financière BNP (1) 100.00 100.00
Immo Investissements BNP (1) 100.00 100.00
Natiocrédit (1) 100.00 100.00
Natioinformatique 100.00 100.00
Promopart BNP (1) 100.00 100.00
Société Auxiliaire de Participations et de Gestion “SAPEG” (1) 100.00 100.00
Société Bridoise de Participations 100.00 100.00
Société Cristolienne de Participations (1) 100.00 100.00
Société Française Auxiliaire “SFA”
Other
(1) 100.00 100.00
Arius SA 67.62 67.62
Compagnie Immobilière de France “CIF” (1) 100.00 100.00
Fleurantine de Participations (1) 100.00 100.00
Négocéquip 100.00 100.00
SNC Goya 100.00 100.00
SNC Immobilier Haussmann 1 100.00 100.00
SNC Meunier Barjac
OUTSIDE FRANCE
Credit Institutions
Europe
100.00 100.00
BNP Bank NV (Netherlands) 100.00 100.00
BNP Espana (Spain) 99.05 99.05
BNP Finans A/S Norge (Norway) 100.00 100.00
BNP Ireland Ltd (Group) 100.00 100.00
BNP KB Norge (Norway) 100.00 100.00
BNP Luxembourg 100.00 91.77
BNP Plc Londres (United Kingdom) 100.00 100.00
BNP Suisse (Switzerland) 97.66 94.04
(1) Companies included within the entity considered as a group for tax reporting in France at 31 December 1997.
B N P

Financial Institutions Group Group
voting ownership
The Americas
interest (%) interest (%)
Banco BNP Brasil SA (Brazil) 100.00 100.00
Bank of the West (United States) 100.00 100.00
BNP (Canada) 100.00 97.99
BNP (Mexico) SA 100.00 100.00
BNP (Panama) SA 91.80 84.77
BNP (Uruguay) SA 100.00 100.00
BNP Private Bank & Trust Cie Bahamas Ltd
Asia
100.00 100.00
BNP Arbitrage Hong Kong Ltd 100.00 100.00
BNP Primeeast Labuan Holding (Malaysia) 70.00 70.00
BNP Primeeast Securities (Hong Kong)
Africa
100.00 70.00
Banque Malgache de l’Océan Indien “BMOI” (Madagascar) 55.64 48.85
Banque pour l’Industrie et le Commerce (Comoros) 51.00 41.77
BCI Mer Rouge (Djibouti) 51.00 41.77
Banque Marocaine pour le Commerce et l’Industrie “BMCI” (Morocco) 50.00 40.96
UBCI (Tunisia)
Other Financial Institutions
Europe
50.00 40.96
BAII Asset Management Ltd (United Kingdom) 100.00 100.00
BNP Capital Finance Ltd (Ireland) 100.00 100.00
BNP Factor (Portugal) 95.00 95.00
BNP Leasing Limited (United Kingdom) 100.00 100.00
BNP Leasing Spa (Italy) 100.00 100.00
BNP SIM SA Milan (Italy) 100.00 100.00
BNP UK Holdings Ltd (United Kingdom) 100.00 100.00
Cipango Ltd (United Kingdom) 50.00 50.00
Interconti - Finance (Ireland)
The Americas
100.00 100.00
BNP Cooper Neff (United States) 100.00 100.00
BNP Leasing Corporation Dallas (United States) 100.00 100.00
BNP Mexico Holding (Mexico) 100.00 100.00
BNP Securities Inc. (United States) 100.00 100.00
BNP US Funding LLC (United States) 100.00 100.00
French American Banking Corporation “FABC” (United States)
Asia/Pacific
100.00 100.00
BNP Equities Australia Ltd 80.00 80.00
BNP Finance Hong Kong Ltd 100.00 100.00
BNP IFS Hong Kong Ltd 100.00 100.00
BNP IFS Singapour Ltd (Singapore) 100.00 100.00
BNP Pacific Ltd (Australia) 100.00 100.00
BNP Vila Ltd (Vanuatu) 100.00 100.00
Pt BNP Lippo Indonesia (Indonesia) 70.00 70.00
Pt BNP Lippo Utama Leasing (Indonesia)
Africa
80.00 56.00
BMCI Offshore (Morocco) 100.00 40.96
Interleasing Maroc (Morocco) 71.76 29.39
Union Tunisienne de Leasing (Tunisia)
Other
Asia/Pacific
56.64 31.78
90 William Street Pty Ltd (Australia) 100.00 100.00
G R O U P
SEVEN
97NINETY-

98
NINETY-
EIGHT
PROPORTIONALLY CONSOLIDATED COMPANIES
Financial Institutions Group Group
voting ownership
interest (%) interest (%)
IN FRANCE
Other
CFJPE 50.00 50.00
Europcar Lease
OUTSIDE FRANCE
Credit Institutions
Europe
50.00 50.00
BNP AK Dresdner Bank AS (Turkey) 30.00 27.47
BNP Dresdner Bank ZAO (Russia) 50.00 50.00
BNP Dresdner Bank (CR) a.s. (Czech Republic) 50.00 50.00
BNP Dresdner Bank (Polska) SA (Poland) 50.00 50.00
BNP KH Dresdner Bank Rt (Hungary) 50.00 50.00
United European Bank (Switzerland)
The Americas
50.00 50.00
Dresdner Banque Nationale de Paris Chile (Chile) 44.15 44.15
Inversiones Dresdner BNP Chile (Chile)
Asia/Pacific
50.00 50.00
International Bank of Paris and Shanghai (China)
Other
Europe
50.00 50.00
BNP AK Dresdner Finansal Kiralama (Turkey) 30.00 27.47
Société Financière pour les Pays d’Outre Mer “SFOM” (Switzerland)
The Americas
48.36 48.36
Dresdner BNP Chile Corredores de Bolsa (Chile) 27.50 27.50
COMPANIES CARRIED UNDER THE EQUITY METHOD
Financial Institutions Group Group
voting ownership
interest (%) interest (%)
IN FRANCE
Other
Béarnaise de Participations 100.00 100.00
Chinonaise de Participations (1) 100.00 99.52
DGC Participations 100.00 100.00
Euromezzanine SCA 28.29 28.29
Euromezzanine SCA 2
OUTSIDE FRANCE
Credit Institutions
Europe
27.83 27.83
BNP Dresdner Bank (Bulgaria) AD
Africa
40.00 40.00
Banque du Caire et de Paris (Egypt) 76.00 76,00
Banque Internationale pour le Commerce et l’Industrie “BICI”, Côte d’Ivoire (Group)
Banque Internationale pour le Commerce, l’Industrie
34.54 34.54
et l’Agriculture du Burkina Faso “BICIA” (Burkina Faso) 29.38 29.38
Banque Internationale pour le Commerce et l’Industrie du Gabon “BICI” 34.86 34.86
Banque Internationale pour le Commerce et l’Industrie du Sénégal “BICI” (Senegal) 35.69 35.69
BTCI Togo 35.75 35.75
International Bank of Southern Africa “SFOM” Ltd (South Africa) 39.46 39.46
The Commercial Bank of Namibia Ltd “CBON” 21.20 21.20
Union Africaine de Crédit “UFAC” (Morocco)
Asia
63.58 26.04
BNP PrimeEast Indonesia 85.00 48.99
(1) included within the entity considered as a group for tax reporting in France at 31 December 1997.
B N P

Financial Institutions Group
voting
Group
ownership
Other
The Americas
interest (%) interest (%)
BNP Canada - Valeurs mobilières
Europe
100.00 97.99
Financière du Régent (Belgium) 100.00 100.00
Nonfinancial Institutions Group Group
voting ownership
interest (%) interest (%)
IN FRANCE
Insurance
Natio-vie (Group)
Real Estate
(1) 100.00 100.00
Cimoxi (1) 100.00 100.00
Meunier Promotion (Group) (1) 100.00 100.00
Société Française de Développement Immobilier
Services
(1) 100.00 100.00
Société Française du Chèque de Voyage
OUTSIDE FRANCE
Insurance
21.00 21.00
BNP Ré Luxembourg 100.00 99.24
(1) Companies included within the entity considered as a group for tax reporting in France at 31 December 1997.
The list of subsidiaries and affiliates
changed as follows in
the twelve months prior to
31 December 1996:
• The following companies
are now fully consolidated:
Haumontoise de Participations,
BNP Securities Hong Kong Ltd.,
BNP SIM (Italy), BNP
Securities Ltd. (Australia), and
BNP Equities Ltd. (Australia),
which are newly created
subsidiaries; as well as Fleurantine
de Participations, SNC Goya,
SNC Meunier Barjac, and SNC
Immobilière Haussmann 1,
which now satisfy the criteria for
full consolidation.
• The following companies are now
carried under the equity method:
BNP Asset Finance BV
(Netherlands), which was
previously fully consolidated; as
well as BNP Dresdner Chile,
BNP Dresdner Bulgaria, La
Financière du Régent (Belgium),
G R O U P
and Société Française pour le
Développement de l’Immobilier,
the criteria for being carried under
the equity method.
• The following companies are
proportionally consolidated:
Compagnie Financière de
Participations and BNP Dresdner
Polska, which are newly created
companies; as well as Compagnie
Financière Jean Paul Elkann,
which was acquired.
• The following companies are
no longer consolidated:
Promonegocios (Spain), BAII
Securities Inc. (Panama), BNP
Jersey Trust (Jersey), and BNP
US Finance Corporation
(United States), which no
longer satisfy the criteria for
consolidation.
• The following companies are
no longer carried under the
equity method: Epicea,
Sofidema (Macao), and UAP
Group (see Note 21), which no
longer satisfy the criteria for
being carried under the equity
method.
• Financière Gamma, which was
previously fully consolidated, and
Orgepro, which was carried under
the equity method, have been
merged with Banexi and Banexi
Communication, respectively.
The list of subsidiaries and
affiliates changed as follows
in the twelve months prior to
31 December 1997:
• The following companies are now
fully consolidated: Banco BNP
Brazil, BNP Primeeast Labuan
Holding, BNP US Funding LLC
(United States), BNP Arbitrage
Hong Kong, and Arius Finance,
which are newly created
subsidiaries; BNP PrimeEast
Securities Hong Kong and BNP
Private Bank Trust Bahamas, which
were acquired; and BNP Gestions,
NINE
99NINETY-

100
ONE HUNDRED
BNP Mexico Holding, BMCI
Offshore (Morocco), Codexi, and
Arius SA which now satisfy the
criteria for full consolidation.
• The following companies are now
carried under the equity method:
Euromezzanine SCA 2, newly
created subsidary; BNP PrimeEast
Indonesia; and BNP Canada
Valeurs Mobilières, which now
satisfies the criteria for being carried
under the equity method.
• The following companies are
proportionally consolidated:
Dresdner BNP Chile and
Europcarlease, which were
previously carried under the equity
method; Inversiones Dresdner
BNP Chile, Dresdner BNP Chile
Corredores Bolsa, and UEB Trust
Bahamas, which now satisfy the
criteria for being proportionally
consolidated.
• The following companies are no
longer consolidated: Delloise de
Participations, BNP Securities
Hong Kong, BNP Securities
Australia, and BNP Capital
Markets, which no longer satisfy
the criteria for consolidation.
• The following company is no
longer carried under the equity
method: BNP Asset Finance
BV, which no longer satisfies
the criteria for being carried
under the equity method.
• Compagnie Financière Jean-
Paul Elkann and Société
Hautmontoise de Participations
were merged with Société
Financière de Participations
(renamed CFJPE) and BNP
Finance, respectively.
• Crédifimo and Mauritius
Leasing Company, which were
previously carried under the
equity method, were sold
during the period.
B N P

NOTE 3 - INTERBANK
AND MONEY
MARKET ITEMS
Millions of French francs, 1997 1996 1995
at 31 December Gross Allowance Net Net Net
Cash and due from central banks
and post office banks:
Cash and due from post office banks 3,966 (19) 3,947 2,876 ..
Due from central banks 7,904 — 7,904 12,227 ..
Related receivables 12 — 12 12 ..
Total cash and due from
central banks and post office banks
Treasury bills and money market
11,882 (19) 11,863 15,115 8,286
instruments (Note 5)
Due from credit institutions:
248,537 (41) 248,496 154,692 85,848
Demand deposits 26,609 (68) 26,541 28,394 29,487
Term loans and time deposits (a) :
Central banks 10,429 — 10,429 16,810 ..
Other credit institutions 205,984 (5,910) 200,074 349,067 ..
Related receivables 9,809 (717) 9,092 7,088 ..
Total term loans and time deposits 226,222 (6,627) (b) 219,595 372,965 359,690
Securities and bills purchased firm
or under resale agreements:
Securities received under resale
agreements 234,338 — 234,338 132,602 67,561
Bills purchased firm or under
resale agreements:
Central banks — — — 77 ..
Other credit institutions 10,918 — 10,918 8,827 ..
Related receivables 42 — 42 37 ..
Total securities and bills purchased
firm or under resale agreement 245,298 — 245,298 141,543 84,266
Subordinated loans 474 (3) 471 358 293
Total due from credit institutions 498,603 (6,698) 491,905 543,260 473,736
Total interbank and money
market items 759,022 (6,758) 752,264 713,067 567,870
Including: accrued interest on interbank
and money market items .. .. 11,511 8,013 7,433
(a) The item “ Term loans and time deposits” includes overnight and term loans which are not materialized in a bill or security, particularly
financial credits. Commercial loans with an initial term of more than one year granted to credit institutions, where the ultimate borrowers
are business entities other than financial sector companies, generally entities from developing countries on which cross-border exposure
has been provisioned (Note 7), are considered financial credits.
(b) Allowances for cross-border exposure on sovereign debt.
G R O U P
101
ONE HUNDRED
ONE

102
ONE HUNDRED
TWO
NOTE 4 - CUSTOMER
ITEMS
Millions of French francs, 1997 1996 1995
at 31 December Gross Allowance Net Net Net
Customer items:
Due from customers:
Commercial and industrial loans:
Discounting and related 18,090 — 18,090 22,293 ..
Acceptances 2,421 — 2,421 1,653 ..
Other commercial and industrial loans 15,713 — 15,713 10,434 ..
Total commercial and industrial loans 36,224 — 36,224 34,380 40,533
Overdrafts 70,576 — 70,576 62,834 61,657
Other credits:
Short-term loans 150,206 — 150,206 144,844 ..
Mortgage loans 134,264 — 134,264 128,101 ..
Investment loans 103,430 — 103,430 95,335 ..
Export loans 24,650 (4,540) 20,110 17,935 ..
Other customer loans 243,619 (49) 243,570 215,156 ..
Total other credits 656,169 (4,589) (a) 651,580 601,371 561,259
Doubtful customer loans 51,313 (34,857) 16,456 19,457 19,658
Receivables related to customer loans
Securities and bills purchased firm or under
4,423 — 4,423 3,686 5,062
resale agreements 52,367 — 52,367 18,707 9,374
Subordinated loans (b) 1,002 (196) 806 1,078 1,180
Total due from customers (c) 872,074 (39,642) 832,432 741,513 698,723
Leasing receivables 57,448 (1,797) 55,651 52,473 49,003
Total customer items 929,522 (41,439) 888,083 793,986 747,726
Including: accrued interest on customer items .. .. 5,602 4,393 5,766
(a) Allowance for cross-border exposure on sovereign debt.
(b) Participating loans granted to BNP customers, included under “Subordinated loans”, amounted to FRF 509 million at 31 December
1997, compared with FRF 684 million at 31 December 1996 and FRF 806 million at 31 December 1995.
(c) Customer items eligible for rediscounting by the Bank of France amounted to FRF 65,510 million at 31 December 1997, compared
with FRF 82,120 million at 31 December 1996 and FRF 89,606 million at 31 December 1995.
B N P

NOTE 5 - TRADING ACCOUNT
ASSETS, INVESTMENT SECURITIES
HELD FOR SALE, AND DEBT
SECURITIES HELD FOR INVESTMENT
Millions of French francs, 1997 1996 1995
at 31 December Gross Allowance Net book Market Net book Market Net book Market
value value value value value value value
Trading account assets:
Treasury bills and money
market instruments
Bonds and other
119,181 — 119,181 119,181 93,561 93,561 30,913 30,913
fixed-income instruments
Equities and other
46,186 — 46,186 46,186 45,311 45,311 25,124 25,124
non-fixed-income instruments 31,392 — 31,392 31,392 31,544 31,544 14,542 14,542
Own stock held within Group
Total trading
11 — 11 11 44 44 105 105
account assets
Including: unlisted equities
196,770 — 196,770 196,770 170,460 170,460 70,684 70,684
and bonds
Investment securities
held for sale:
Treasury bills and money
3,898 — 3,898 3,898 99 99 456 456
market instruments
Bonds and other
fixed-income instruments
8,888 (41) 8,847 8,927 12,418 12,482 19,913 20,059
Public-sector issuers 5,166 (1,767) 3,399 4,360 4,114 4,835 6,680 6,681
Other issuers
Total bonds and other
25,849 (292) 25,557 25,977 31,841 32,253 22,216 22,609
fixed-income instruments
Equities and other
31,015 (2,059) 28,956 30,337 35,955 37,088 28,896 29,290
non-fixed-income instruments 1,387 (151) 1,236 1,537 4,576 4,948 2,234 2,452
Own stock held within Group
Total investment securities
306 342 14 27
held for sale:
Including: unlisted equities
41,290 (2,251) 39,039 40,801 53,255 54,860 51,057 51,828
and bonds
Debt securities held
for investment:
Treasury bills and money
4,129 (119) 4,010 4,131 5,286 5,338 2,978 3,214
market instruments
Bonds and other
fixed-income instruments:
120,468 — 120,468 121,974 48,713 50,303 35,022 35,180
Public-sector issuers 10,982 — 10,982 10,959 8,374 7,460 7,949 6,109
Other issuers
Total bonds and other
27,397 (71) 27,326 27,972 29,679 29,863 23,882 23,986
fixed-income instruments
Total debt securities
38,379 (71) 38,308 38,931 38,053 37,323 31,831 30,095
held for investment
Including: unlisted equities
158,847 (71) 158,776 160,905 86,766 87,626 66,853 65,275
and bonds
Total trading account assets,
2,001 (13) 1,988 1,986 1,941 1,948 899 805
investment securities held for
sale, and debt securities
held for investment (a) Including:Treasury bills and
396,907 (2,322) 394,585 398,476 310,481 312,946 188,594 187,787
money market instruments
Bonds and other
248,537 (41) 248,496 250,082 154,692 156,346 85,848 86,152
fixed-income instruments 115,580 (2,130) 113,450 115,454 119,319 119,722 85,851 84,509
Including: unlisted bonds
Equities and other
8,935 (101) 8,834 8,947 5,211 5,235 4,143 4,233
non-fixed-income instruments 32,790 (151) 32,639 32,940 36,470 36,878 16,895 17,126
Including: unlisted equities 1,093 (31) 1,062 1,068 2,115 2,151 190 242
(a) Mutual fund shares held by the BNP Group amounted to FRF 742 million at 31 December 1997 (FRF 1,580 million at 31 December
1996 and FRF 964 million at 31 December 1995). This amount includes FRF 347 million in shares of growth funds, of which
FRF 278 million corresponded to shares of funds incorporated in France (compared with FRF 992 million at 31 December 1996, of
which FRF 912 million corresponded to shares of funds incorporated in France, and FRF 631 million at 31 December 1995, of which
FRF 621 million corresponded to shares of funds incorporated in France).
G R O U P
103
ONE HUNDRED
THREE

104
ONE HUNDRED
FOUR
In 1995, 1996, and 1997, securities were reclassified among the various portfolios as follows:
Former classification Amount transferred
during year
Net premiums on debt securities
held for investment, reflecting an
acquisition price higher than the
redemption price, totaled
FRF 1,798 million at 31 December
1997 (compared with FRF 465
million at 31 December 1996 and
FRF 547 million at 31 December
1995). They are amortized over the
remaining life of the securities.
Receivables corresponding to
securities lent amounted to
FRF 2,379 million at 31 December
1997 (FRF 3,991 million at
31 December 1996 and FRF 1,091
million at 31 December 1995).
Accrued interest on fixed-income
instruments totaled FRF 4,256
million at 31 December 1997,
compared with FRF 2,822 million
at 31 December 1996 and
FRF 2,068 million at 31 December
1995.
A number of developing countries
have obtained troubled debt
restructuring from their bankers.
Since 1990, the BNP Group has
swapped a number of loans for 15to
30-year fixed- and floating-rate
bonds. Some of these bonds,
received in exchange for loans that
were rescheduled with lower interest
rates, are guarantied at maturity by
zero-coupon bonds issued by the
(millions of French francs)
New classification 1997 1996 1995
Trading account assets Investment securities held for sale 2,235 10,108 902
Investment securities held for sale Debt securities held for investment 36 611 224
Debt securities held for investment Investment securities held for sale 516 24 1,307
Trading account assets Debt securities held for investment 1,909 5,005 —
US and French Treasuries with
a revolving guarantee of 14 to
18 months of interest payments.
The BNP Group held FRF 6,156
million of “Brady bonds” (gross)
outstanding at 31 December 1997
(FRF 7,658 million at 31 December
1996 and FRF 8,668 million
at 31 December 1995). At 31
December 1997, FRF 3,202 million
of these bonds were recorded under
“ Investment securities held for sale “
(compared with FRF 3,672 million
at 31 December 1996 and
FRF 4,710 million at 31 December
1995). FRF 2,954 million of these
bonds (FRF 3,986 million at
31 December 1996 and FRF 3,958
at 31 December 1995) were
recorded under “Debt securities held
for investment”.
Net unrealized capital gains,
calculated as the difference between
fair value and book value for
investment securities held for sale and
debt securities held for investment,
totalled FRF 3,433 million at
31 December 1997 excluding
“Brady bonds” (FRF 3,891 million
net unrealized capital gains including
“Brady bonds”), compared with
FRF 2,603 million at 31 December
1996 (FRF 2,465 million net
unrealized capital gains including
“Brady bonds”) and FRF 1,037
million at 31 December 1995
(FRF 807 million net unrealized
capital losses including “Brady
bonds”).
Pursuant to stockholder
authorization, BNP SA has made
open-market purchases and sales
of its shares for the purpose of
moderating price fluctuations. In
1997 BNP sold 589,607 shares
at an average price of FRF 216.74
and bought 492,267 shares at an
average price of FRF 233.64. In
the first half of 1997, the three
BNP Group subsidiaries that
exchanged the shares they held
of Compagnie d’Investissement
de Paris prior to BNP’s stock-forstock
public tender offer for CIP
(see Note 21) sold 1,572,905
BNP shares carried as “Investment
securities held for sale” at
31 December 1996. At
31 December 1997, the BNP
Group held 3,490 shares issued
by BNP SA carried as
“Investment securities held for
sale”. Part of the shares held by
BNP are intended for distribution
as part of employee stock option
plans. In addition, one BNP
subsidiary engaged in arbitraging
on stock market indexes held
34,797 shares issued by BNP SA
at 31 December 1997 and carried
as “Trading account assets”.
B N P

NOTE 6 - EQUITY SECURITIES
HELD FOR INVESTMENT AND
OTHER STOCK INVESTMENTS
Millions of French francs, 1997 1996 1995
at 31 December Gross Net Fair Net Fair Net Fair
book book market book market book market
value value value value value value value
Equity securities held
for investment:
Unlisted securities:
Portfolio valued according to net assets
Portfolio valued according to fair
548 191 263 145 225 174 255
market value 2,670 1,309 1,490 1,423 1,556 1,478 1,675
Portfolio valued at cost
Listed securities
457 446 452 464 530 502 503
(a) :
Portfolio valued according to
year-end market prices
Portfolio valued according to average
254 194 286 280 423 391 491
market prices of previous two years 8,771 8,258 10,701 4,307 5,079 4,872 5,771
Total equity securities held
for investment
Other stock investments:
Securities issued by affiliates neither
12,700 10,398 13,192 6,619 7,813 7,417 8,695
consolidated nor carried under
equity method (b) Other stock investments, other:
1,789 1,389 1,509 1,305 1,382 1,086 1,261
Unlisted securities (b) Listed securities
4,275 2,843 3,283 2,243 2,849 2,660 3,538
(a) :
Portfolio valued according
to year-end market prices
Portfolio valued according to average
242 203 400 930 1,085 310 384
market prices of previous two years
Portfolio valued according to
932 869 1,182 5,257 5,754 7,043 7,676
other methods 6,072 5,994 5,997 9,581 9,607 — —
Total other stock investments, other 11,521 9,909 10,862 18,011 19,295 10,013 11,598
Total other stock investments
Total equity securities held
13,310 11,298 12,371 19,316 20,677 11,099 12,859
for investment and other stock
investments 26,010 21,696 25,563 25,935 28,490 18,516 21,554
(a) Fair market value is determined according to the average stock market price over the previous two fiscal years or according to a mor
recent market price when a decrease in value of the underlying security is likely to endure.
(b) Fair market value is determined according to the BNP Group’s share of the companies’ net assets.
Shareholdings in subsidiary and
affiliated credit institutions classified
as “Other stock investments”
amounted to FRF 253 million and
FRF 1,329 million, respectively, at
31 December 1997, compared
with FRF 314 million and
G R O U P
FRF 1,070 million at 31 December
1996 and FRF 181 million and
FRF 1,125 million at 31 December
1995.
In 1997 the BNP Group
reclassified FRF 5,743 million of
investments (see Note 9)
previously carried under “Other
stock investments” as “Equity
securities held for investment” in
recognition of the fact that they
are managed more actively.
105
ONE HUNDRED
FIVE

106
ONE HUNDRED
SIX
The main companies included under “Equity securities held for investment and other stock investments” with
a net book value of more than FRF 250 million in the BNP Group’s accounts are listed below:
Millions of French francs Consolidated Consolidated Net book
stockholders’ net income value in
Head equity (loss) BNP Group’s
office in 1996 (a) in 1996 accounts
Shareholding interests of less than
5% of the investee’s capital stock
Axa-UAP Paris, France 44,836 3,809 5,994
Saint-Gobain La Défense-Courbevoie, France 47,355 4,323 1,472
Elf Aquitaine Courbevoie, France 79,655 6,977 1,189
Compagnie Générale des Eaux Paris, France 33,682 1,953 795
Havas Neuilly-sur-Seine, France 12,894 1,000 771
Rhône-Poulenc La Défense-Courbevoie, France 37,478 (4,991) (c) 626
Pechiney Courbevoie, France 13,734 (2,977) 593
Dresdner Bank Frankfurt, Germany 51,315 5,182 551
Renault Boulogne-Billancourt, France 37,770 (5,248) 477
Bouygues St. Quentin-en-Yvelines, France 7,041 654 333
Lagardère Groupe Paris, France 7,216 1,038 308
Peugeot Paris, France 55,501 734 288
Air France Roissy, France 7,161 394 )(d) 286
AGF Paris, France 24,420 1,536 270
Lafarge Paris, France 24,160 1,846 254
Shareholding interests of between
5% and 10% of the investee’s capital stock
Cofinoga Paris, France 1,795 338 310
Shareholding interests of more than
10% of the investee’s capital stock
ACEC Union Minière Méxique SCS Brussels, Belgium 283 (b) 280
(a) Including net income of 1996, before appropriation.
(b) Unconsolidated.
(c) Consolidated figures for 1997.
(d) Consolidated figures as at 31 March 1997.
Net unrealized capital gains on
equity securities held for
investment and other stock
investments (calculated by
reference to year-end market
prices for listed securities) totaled
FRF 7,723 million at
31 December 1997 (FRF 2,847
million at 31 December 1996 and
FRF 989 million at 31 December
1995).
Net unrealized capital gains on
total portfolio detailed in notes
5 and 6 represent FRF 11,614
million at 31 December 1997
as compared with FRF 5,312
million at 31 December 1996 and
FRF 182 million at 31 December
1995.
B N P

NOTE 7 - ALLOWANCE FOR
CREDIT RISKS
AND COUNTRY RISKS
Allowance at Net additions Write-offs Other Allowance at
31 December (deductions) adjustments 31 December
Millions of French francs
Allowances reflected
under assets
1996 (a) 1997
(b) :
On interbank items (c) 7,573 2,666 (559) (2,963) 6,717
On customer items (Note 4) 40,082 2,973 (4,351) 2,735 41,439
On securities (c) Total allowances reflected
2,784 87 (1,129) 1,198 2,940
under assets 50,439 5,726 (6,039) 970 51,096
Allowances reflected
under liabilities (Note 17):
On off-balance sheet commitments 2,108 (21) (94) 560 2,553
For other credit risks
Total allowances reflected
2,851 169 (475) 2,545
under liabilities 4,959 148 (94) 85 5,098
Total allowance for credit
risks and country risks
Allowances reflected
under assets
55,398 5,874 (6,133) 1,055 56,194
(b) :
Designated to cover country risks 12,830 2,305 (1,853) 111 13,393
Designated to cover specific risks
Total allowances reflected
37,609 3,421 (4,186) 859 37,703
under assets
Allowances reflected
under liabilities:
50,439 5,726 (6,039) 970 51,096
Designated to cover country risks
Designated to cover specific risks
308 838 1,146
and banking risks
Total allowances reflected under
4,651 148 (94) (753) 3,952
liabilities
Total allowance for credit risks
4,959 148 (94) 85 5,098
and country risks 55,398 5,874 (6,133) 1,055 56,194
(a) The impact of variations in exchange rates amounted to FRF 1,498 million.
(b) As receivables purchased or swapped are carried at their face value, premiums and differences between purchase price and face value
are recorded as allowances.
(c) Allowances on loans to credit institutions mainly concern financial credits exposed to country risk (see Note 3). Allowances on securities
shown in this table cover the country risk affecting securities held by the BNP Group.
Credit-risk allowances relating to
on balance sheet exposures are
recorded under assets in the
allowance for credit losses account.
Allowances for off-balance sheet
commitments are reflected under
liabilities, as are allowances for legal
G R O U P
proceedings pending, allowances
for risks not specifically identified,
and allowances for unforeseeable
sectoral risks.
Outstanding allowances on
principal and interest, premiums
and discounts in relation
to sovereign loans totaled
FRF 14,539 million at 31
December 1997 (FRF 13,138
million at 31 December 1996
and FRF 13,113 million at
31 December 1995).
107
ONE HUNDRED
SEVEN

108
ONE HUNDRED
EIGHT
Millions of French francs
Net addition to allowance for credit risks
1997 1996 1995
and country risks
Addition to allowance for unforeseeable
sectoral risks (Note 33) reflected under
5,874 5,380 4,901
nonrecurring items
Net (addition to) deduction from allowance
for interest arrears reflected under net
— (1,788) —
banking income 505 (193) (145)
Loan losses
Utilizations of allowances to cover loan losses
6,982 5,128 5,548
and losses on debt sales (6,133) (4,260) (4,269)
Recoveries of amounts written off
Net credit risk and country risk provision
(443) (474) (502)
charge for year 6,785 3,793 5,533
Provision charge for specific risks 3,965 4,599 5,828
Provision charge (write-back) for country risks 2,820 (806) (295)
REAL ESTATE
OPERATIONS
Real estate operations comprise all
forms of financing for operations
conducted by real estate
professionals (REPs), as well as
guaranties and endorsements carried
as off-balance sheet commitments.
REPs include developers engaged in
building or renovating buildings for
subsequent sale, transfer, or rental,
brokers, and all other nonfinancial
agents engaged in real estate
development on a regular basis.
Commitments given to the real
estate sector amounted to
FRF 31,986 million at 31
December 1997. This amount does
not include real estate commitments
given to major industrial
corporations whose main business
is not real estate and on which risk
is not related to developments in
the real estate sector (FRF 5,633
million at 31 December 1997,
including FRF 2,507 million of offbalance
sheet commitments,
compared with FRF 6,440 million
at 31 December 1996, including
FRF 3,081 million of off-balance
sheet commitments, and FRF 5,593
million at 31 December 1995,
including FRF 2,175 million of offbalance
sheet commitments).
Millions of French francs, 1997 1996 1995
at 31 December France Outside France Total Total Total
Securities (stocks and bonds) 3,075 — 3,075 2,294 1,671
Loans granted 9,457 11,461 20,918 21,935 21,347
Total cash outstanding 12,532 11,461 23,993 24,229 23,018
Off-balance sheet commitments 5,404 2,589 7,993 7,864 8,739
Total commitments outstanding 17,936 14,050 31,986 32,093 31,757
B N P

In France, 80.6% of loans were
committed to real estate
development, 16.4% to financing
for brokers and 3.0% to financing of
real estate proprietary investments.
On balance sheet outstandings are
analyzed according to region and
type of asset financed in the table
below:
Millions of French francs, 1997 1996 1995
at 31 December Amount % Amount Amount
Paris metropolitan area 9,730 77.6 9,336 9,488
Rest of France 2,802 22.4 3,515 3,634
Commercial and industrial real estate 6,052 48.3 6,056 5,695
Residential real estate 4,271 34.1 4,542 4,940
Multiuse real estate and other (a) 2,209 17.6 2,253 2,487
(a) Financing for retail stores and urban development programs is included under “Other”.
Risk coverage on loans to REPs is shown in the table below:
Millions of French francs,
at 31 December 1997 1996 1995
Troubled or doubtful loans 9,820 10,963 10,795
Allowances for troubled or doubtful loans 5,971 6,440 6,305
Coverage by specific allowances for troubled or doubtful loans 60.8% 58.7% 58.4%
Allowance for nonspecific real estate risks — 307 490
CREDIT EXPOSURE
TO ASIA
As a result of the recent
developments in Asia, characterized
by a depreciation of local currencies
and a sharp drop in the regional
stock markets, BNP has reassessed
all of its risks in the region. The crisis
focuses on five countries (South
Korea, Indonesia, Thailand, the
Philippines, and Malaysia), which
are affected to varying degrees.
BNP’s on and off balance sheet
credit exposures identified in these
five countries comprise short to long
term credit facilities, including short
term and trade financing, and
securities portfolios including
trading securities, and are
denominated in both local and
foreign currencies. They include all
above described transactions with
sovereign, banking and corporate
counterparties excluding subsidiaries
of multinational companies
headquartered outside the region.
The portion of the above described
credit facilities guarantied outside
of the region by government or
international agencies (such as
Coface) or by formally pledged
cash collateral are also excluded.
Direct risks on At 31 December 1997 At 31 January 1998
resident borrowers, Net exposures
millions of French francs considered as Other Total net
sensitive or subject net Total exposures
to country risk exposures exposures (unaudited figures)
South Korea 7,884 2,403 10,287 10,077
Indonesia 2,441 3,730 6,171 6,062
Thailand 3,355 2,775 6,130 5,617
Malaysia — 3,764 3,764 3,744
Philippines 697 2,879 3,576 2,889
Total exposure 14,377 15,551 29,928 28,389
Commitments given to customers 5,540 9,973 15,513 15,365
Commitments given to banks 8,837 5,578 14,415 13,024
Total exposure 14,377 15,551 29,928 28,389
G R O U P
109
ONE HUNDRED
NINE

110
ONE HUNDRED
TEN
“Other net exposures” are
identified and monitored in the
same way as “Net exposures
considered sensitive or subject to
country risk” but do not require
allowances based on BNP’s
assessment of their nature. More
than 70% of these commitments
are commercial facilities with an
initial maturity of less than
18 months.
BNP recorded two types of
allowances for a total amount of
FRF 3,020 million in relation to
its above described credit
exposure in the five sensitive
countries:
• specific reserves in a total
amount of FRF 592 million with
respect to individually identified
impaired assets;
• a FRF 2,428 million general
prudential reserve; this reserve
was determined based on a
multicriteria analysis designed to
assess the impact on BNP credit
portfolio of further degradation
of the economic and financial
situation in the above listed
countries.
B N P

NOTE 8 - INVESTMENTS IN
COMPANIES CARRIED UNDER
EQUITY METHOD
Millions of French Francs, BNP Group’s
at 31 December 1997 BNP share of net Net book
Group’s income for most value of shares
ownership recent financial Total in companies
interest period (a) investments of the Group
Financial institutions:
Financière du Régent (Belgium) 149 95 244 74
Banque du Caire et de Paris (Egypt) 111 4 115 154
Merone et Cita 105 8 113 133
BICI (Côte d’Ivoire) 105 1 106 47
BICI (Gabon) 83 15 98 17
Béarnaise de Participations 77 (21) 56 56
BNP Dresdner Bank (Bulgaria) AD 37 2 39 37
IBSA (South Africa) 29 3 32 29
BICI (Senegal) 11 12 23 15
BICI A (Burkina Faso) 22 — 22 8
DGC Participations 20 2 22 15
Others 305 18 323 433
Total financial institutions
Nonfinancial companies:
Insurance companies:
1,054 139 1,193 1,018
Natio-Vie 2 962 33 2 995 1 983
BNP Ré Luxembourg 677 177 854 45
Total insurance companies
Real estate companies:
3,639 210 3,849 2,028
Meunier Promotion 217 10 227 254
Cimoxi 81 (1) 80 20
Société Française de développement
Immobilier (1) (10) (11) —
Total real estate companies
Other:
Société Française
297 (1) 296 274
du Chèque de Voyage 20 (2) 18 21
Total other companies
Total nonfinancial
20 (2) 18 21
companies
Total investments in companies
3,956 207 4,163 2,323
carried under equity method 5,010 346 5,356 3,341
(a) BNP Group’s share in undistributed income.
G R O U P
111
ONE HUNDRED
ELEVEN

112
ONE HUNDRED
TWELVE
NOTE 9 - LONG-TERM
INVESTMENTS
Millions of French francs Gross amount Acquisitions Redemptions Transfers
at and and other
1 January disposals adjustments (a)
1997
Debt securities held for investment (Note 5) 86,892 95,528 (25,801) 2,228
Other stock investments (Note 6) 24,618 11,154 (16,834) (5,628)
Equity securities held for investment (Note 6) 8,591 1,809 (3,842) 6,142
Investment in companies carried
under equity method (Note 8) 4,550 25 — 781
Total long-term investments 124,651 108,516 (46,477) 3,523
(a)“Transfers and other adjustments” cover accumulated translation difference and transfers among the various portfolio categories.Transfers
NOTE 10 - TANGIBLE AND
INTANGIBLE ASSETS
Millions of French francs, 1997 1996 1995
at 31 December Depreciation,
amortization,
Gross and provisions Net Net Net
Intangible assets:
Computer software 1,895 1,198 697 661 ..
Other intangible assets 1,283 534 749 776 ..
Total intangible assets 3,178 1,732 1,446 1,437 1,398
Tangible assets:
Land and buildings 12,611 5,192 7,419 10,631 10,688
Equipment, furniture, and fixtures 14,679 10,186 4,493 4,661 4,927
Fixed assets in progress 525 — 525 439 378
Total tangible assets 27,815 15,378 12,437 15,731 15,993
Total tangible
and intangible assets 30,993 17,110 13,883 17,168 17,391
B N P

Gross amount Allowance Additions Deductions Other Total Net amount
at at to allowance from adjustments allowance at at
31 December 1 January in allowance 31 December 31 December
1997 1997 1997 in 1997 1997 1997
158,847 126 2 (53) (4) 71 158,776
13,310 5,302 321 (3,193) (418) 2,012 11,298
12,700 1,972 277 (503) 556 2,302 10,398
5,356 — — — — — 5,356
190,213 7,400 600 (3,749) 134 4,385 185,828
between the “Other stock investments” and “Equity securities held for investment” portfolios are discussed in Note 6.
Operating Assets
In 1991 and 1992, as allowed by
French regulations, BNP transferred
its main operating real estate
holdings to its subsidiary
Compagnie Immobilière de France.
The book value of the assets was
increased by FRF 7,583 million and
the corresponding capital gain was
posted to consolidated stockholders’
equity under “capital gains on
restructuring”, net of the related
income tax effect (see Note 21).
In order to reflect what now appears
to be a lasting decline in the real
G R O U P
estate market, the BNP Group
wrote down the book value of the
above described real estate assets by
FRF 3,374 million. The adjustment,
net of the related income tax effect,
was recorded in the consolidated
balance sheet under “Capital gains
on restructuring”, consistently with
the initial adjustment (see Note 21).
Consequently, this adjustment had
no impact on consolidated net
income.
Nonoperating Assets
Nonoperating land and buildings
amounted to FRF 193 million at
31 December 1997 (FRF 135
million at 31 December 1996 and
FRF 188 million at 31 December
1995).
Depreciation, Amortization,
and Provisions
The charge for depreciation,
amortization, and provisions totaled
FRF 2,102 million in 1997,
compared with FRF 2,061 million
in 1996 and FRF 1,950 million in
1995.
113
ONE HUNDRED
THIRTEEN

114
ONE HUNDRED
FOURTEEN
NOTE 11 - ACCRUALS
AND
OTHER ASSETS
Millions of French francs,
at 31 December 1997 1996 1995
Accruals:
Valuation adjustment account (a) 44,642 35,980 31,689
Accrued income 20,340 21,188 16,374
Collection account 11,331 11,801 11,563
Other accruals (b) 37,916 21,423 20,653
Total accruals 114,229 90,392 80,279
Other assets:
Premiums on purchased options (c) 44,854 28,621 18,831
Investments in Codevi 15,823 16,051 15,984
“industrial development” securities
Deferred income tax assets 3,520 2,248 2,113
Other 28,556 13,068 8,295
Total other assets 92,753 59,988 45,223
(a) Gains arising from marking transactions (foreign exchange instruments and forward instruments) to market.
(b) Includes prepaid interest for customers and financial institutions accounts and prepaid expenses.
(c) The development of the “Worldwide Options” line of business led to a significant increase in this caption.
NOTE 12 - GOODWILL
Millions of French francs 1997 1996 1995
Net amount at 1 January 178 172 233
Goodwill on acquisitions
during the year 428 87 43
Translation difference 22 7 (14)
Amortization of goodwill (110) (88) (90)
Unamortized goodwill at 31 December 518 178 172
The net amortization of the
portion of goodwill not allocated to
specific assets or liabilities totalled
FRF 103 million in 1997 after the
deduction of FRF 7 million of
negative goodwill (FRF 88 million
in 1996, and FRF 84 million in 1995
after the deduction of FRF 6
million of negative goodwill).
B N P

NOTE 13 - INTERBANK AND
MONEY MARKET ITEMS
AND SECURITIES
Millions of French francs,
at 31 December 1997 1996 1995
Interbank and money market items:
Due to central banks, credit institutions, and post office banks:
Due to central banks and post office banks 23,850 12,700 ..
Due to credit institutions 20,909 22,371 ..
Related payables 263 168 ..
Total due to central banks, credit institutions,
and post office banks 45,022 35,239 26,416
Time deposits and borrowings:
Central banks 24,904 21,466 ..
Other credit institutions 337,873 380,533 ..
Related payables 10,868 9,641 ..
Total time deposits and borrowings 373,645 411,640 377,295
Securities and bills sold firm or under repurchase agreements:
Securities given under repurchase agreements 213,181 126,832 59,172
Bills sold firm or under repurchase agreements:
Central banks 11,566 1,837 ..
Other credit institutions 24,825 47,830 ..
Total bills sold firm or under repurchase agreements 36,391 49,667 47,914
Total securities and bills sold firm or under repurchase agreements 249,572 176,499 107,086
Total interbank and money market items 668,239 623,378 510,797
Bonds and negotiable short-term debt instruments:
Interbank market securities 1,753 2,224 3,220
Total interbank items and money market securities
Including: accrued interest on interbank items and money
669,992 625,602 514,017
market securities 12,081 10,427 10,822
Interbank demand deposits amounted to FRF 20,909 million at 31 December 1997, compared with
FRF 22,371 million at 31 December 1996 and FRF 20,854 million at 31 December 1995.
G R O U P
115
ONE HUNDRED
FIVETEEN

116
ONE HUNDRED
SIXTEEN
NOTE 14 - CUSTOMER
DEPOSITS, RETAIL CERTIFICATES
OF DEPOSIT, AND NEGOTIABLE
CERTIFICATES OF DEPOSIT
Millions of French francs,
at 31 December
Customer deposits:
1997 1996 1995
Demand deposits 198,979 182,417 180,676
Time deposits 261,619 248,715 237,789
Regulated savings deposits
Securities and bills sold firm or under repurchase agreements:
209,152 191,686 157,503
Securities given under repurchase agreements 47,967 15,204 2,065
Bills sold firm or under repurchase agreements 24 27 29
Total securities and bills sold firm or under repurchase agreements 47,991 15,231 2,094
Total customer deposits
Bonds and negotiable short-term debt instruments:
717,741 638,049 578,062
Negotiable certificates of deposit 169,208 176,854 183,378
Retail certificates of deposit 17,647 17,164 17,766
Total bonds and negotiable short-term debt instruments
Total customer deposits, retail certificates of deposit,
186,855 194,018 201,144
and negotiable certificates of deposit 904,596 832,067 779,206
Including: accrued interest on customer deposits, retail certificates
of deposit, and negotiable certificates of deposit 5,378 5,387 6,985
Regulated demand savings deposits,
including unallocated savings
deposits, amounted to FRF 69,333
million at 31 December 1997,
compared with FRF 55,841 million
at 31 December 1996 and
FRF 59,546 million at 31 December
1995. Other customer demand
deposits totaled FRF 201,035
million at 31 December 1997
(FRF 184,142 million at
31 December 1996 and
FRF 180,761 million at
31 December 1995).
Customer deposits, excluding negotiable certificates of deposit, may be analyzed according to customer
category as follows:
Millions of French francs,
at 31 December 1997 1996
Financial customers
Nonfinancial customers:
66,234 54,789
Companies 228,330 190,881
Individuals 352,996 321,656
Sole proprietors 34,458 31,124
Government administrations 11,071 11,082
Other nonfinancial customers 42,299 45,681
Total nonfinancial customers 669,154 600,424
B N P

NOTE 15 - BOND ISSUES
The main bond issues for which principal outstanding exceeds 2% of total bond debt are listed below:
Millions of French francs Principal outstanding
at 31 December
Issue Matures Coupon 1997 1996 1995
Debt issued by BNP SA:
Issue of FRF 3.60 billion 1995 2006 8.50% 3,600 3,600 3,600
Issue of FRF 3.13 billion 1991 2000 9.00% 3,131 3,131 3,131
Issue of FRF 2.92 billion 1994 2006 8.50% 2,920 2,920 2,920
Issue of FRF 2.80 billion 1988 2000 9.00% 2,800 2,800 2,800
Issue of FRF 2.50 billion 1992 1997 8.625% - 2,500 2,500
Issue of FRF 2.35 billion 1988 2000 9.00% 2,355 2,355 2,355
Issue of FRF 2.10 billion 1992 1999 9.00% 2,100 2,100 2,100
Issue of FRF 1.70 billion 1989 2000 9.00% 1,700 1,700 1,700
Issue of GBP 0.20 billion 1994 1999 6.25% 1,983 1,780 1,520
Issue of FRF 1.50 billion 1991 1996 9.375% - - 1,500
Issue of FRF 1.50 billion 1992 2002 9.00% 1,500 1,500 1,500
Issue of FRF 1.50 billion 1993 2003 6.50% 1,500 1,500 1,500
Issue of FRF 1.20 billion 1989 2000 9.00% 1,200 1,200 1,200
Issue of FRF 1.20 billion 1993 2000 9.00% 1,200 1,200 1,200
Issue of FRF 1.30 billion 1989 2001 8.70% 1,300 1,300 1,300
Other issues 21,321 26,227 29,712
Total bonds issued by BNP SA 48,610 55,813 60,538
Bonds issued by consolidated subsidiaries
BNP Group bonds held by consolidated
3,363 3,918 4,451
subsidiaries (1,893) (2,957) (1,071)
BNP Group bonds outstanding 50,080 56,774 63,918
Accrued interest 801 1,380 1,665
Total bond issues 50,881 58,154 65,583
Unamortized premiums on the various BNP Group bond issues outstanding, representing the difference
between the proceeds of the issues and their redemption price, totaled FRF 327 million at 31 December
1997, compared with FRF 348 million at 31 December 1996 and FRF 408 million at 31 December 1995.
G R O U P
117
ONE HUNDRED
SEVENTEEN

118
ONE HUNDRED
EIGHTEEN
NOTE 16 - ACCRUALS
AND OTHER LIABILITIES
Millions of French francs,
at 31 December 1997 1996 1995
Accruals:
Valuation adjustment account (a) 46,511 34,769 30,650
Accrued liabilities 19,947 13,281 17,703
Funds pending collection 2,452 2,507 345
Other accruals 18,435 21,414 19,024
Total accruals
Other liabilities:
87,345 71,971 67,722
Liabilities related to securities transactions 89,377 92,569 26,530
Deferred income tax liabilities 4,598 4,365 4,222
Other payables and liabilities (b) 90,319 55,843 28,256
Total other liabilities 184,294 152,777 59,008
(a) Losses arising from marking transactions (foreign exchange instruments and forward instruments) to market.
(b) Includes premiums received on written options.
NOTE 17 - ALLOWANCE FOR
LIABILITIES AND CHARGES
Millions of French francs,
at 31 December 1997 1996 1995
Allowance for off-balance sheet commitments (Note 7) 2,553 2,108 2,041
Allowance for pension commitments and
other employee benefits (Note 19) 4,522 4,331 4,066
Allowance for other credit risks (Note 7) 2,545 2,851 3,418
Other allowances 4,269 3,178 2,043
Total allowance for liabilities and charges 13,889 12,468 11,568
Off-balance sheet commitments
covered by allowances amounted to
FRF 6,922 million at 31 December
1997, compared with FRF 5,276
million at 31 December 1996 and
FRF 5,290 million at 31 December
1995.
The allowance for other credit risks
includes allowances made for
miscellaneous risks and an allowance
set up in 1994 for unforeseeable
sectorial risks in those industries
believed to be the most heavily
exposed to a worsening of market
conditions. The allowance for
unforseeable sectorial risk was
originally set up with an allocation
of FRF 2,600 million in 1994,
followed by an addition of
FRF 1,788 million in 1996.
FRF 2,958 million was
deducted in 1996 from the
allowance to provide for specific
reserves for counterparty risks
(FRF 1,400 million) and to cover
the decrease in value of BNP’s
equity investments (FRF 1,558
million) in UAP (see Note 21) and
Pechiney. The balance of the
allowance, FRF 1,430 million, is
unallocated and intended to cover
unforeseeable sectoral risks.
B N P

NOTE 18 - SUBORDINATED
DEBT
Millions of French francs,
at 31 December 1997 1996 1995
Subordinated medium- and long-term debt outstanding
Undated subordinated debt:
41,099 34,960 29,929
Undated participating subordinated notes
Undated floating-rate subordinated notes:
2,306 2,310 2,310
French franc denominated 2,000 2,000 2,000
Foreign currency denominated 2,994 2,619 2,450
Total undated floating-rate subordinated notes 4,994 4,619 4,450
Undated floating-rate subordinated notes with call options 3,918 1,152 -
Total undated subordinated debt 11,218 8,081 6,760
Subordinated debt issued by BNP Group 52,317 43 041 36 689
Intercompany eliminations — — (140)
Total subordinated debt outstanding 52,317 43,041 36,549
Accrued interest due 156 79 73
Total 52,473 43,120 36,622
At 31 December 1995, BNP Group companies held undated subordinated debt issued by the BNP Group
with a book value of FRF 140 million and an issue value of FRF 154 million.
Subordinated Medium- and Long-Term Debt
Subordinated debt included under this heading consists of medium- and long-term debentures issued in French
francs and foreign currencies, equivalent to debt ranking last before participating debt and securities and capital
stock. The main subordinated debt issues for which principal outstanding exceeds 5% of total subordinated
liabilities are listed below:
Millions of French francs Principal outstanding
at 31 December
Issue Matures Coupon 1997 1996 1995
Debt issued by BNP SA:
Issue of FRF 3.75 billion 1990 2002 10.60% 3,750 3,750 3,750
Issue of FRF 2.50 billion 1991 2004 9.35% 2,500 2,500 2,500
Issue of FRF 2.27 billion 1988 2000 9.30% 2,270 2,270 2,270
Issue of FRF 1.50 billion 1988 1998 9.60% 1,500 1,500 1,500
Issue of FRF 1.50 billion 1988 2000 floating-rate 1,500 1,500 1,500
Issue of FRF 1.50 billion 1991 2003 9.55% 1,500 1,500 1,500
Other issues in France
Debt issued by foreign branches and other issues:
23,626 19,735 14,622
Issue of USD 350 million 1997 2007 7.20% 2,096 - -
Other 1,600 1,426 1,364
Total BNP borrowings 40,342 34,181 29,006
Total borrowings by consolidated subsidiaries 757 779 923
Subordinated medium- and long-term debt
outstanding 41,099 34,960 29,929
G R O U P
119
ONE HUNDRED
NINETEEN

120
ONE HUNDRED
TWENTY
Subordinated medium- and longterm
debt issued by the BNP Group
generally contains a call provision
authorizing BNP to buy back its
securities directly in the market or
through tender offers, or in the case
of private placements, over the
counter.
Borrowings in international markets
by BNP SA or foreign subsidiaries of
the BNP Group may be subject to
early repayment of principal and the
early payment of interest due at
maturity in the event that changes
in applicable tax laws obligate the
BNP Group issuer to compensate
debtholders for the consequences of
such changes. The debt securities
may be called on 30 to 60 days’
notice on condition that bank
supervisory authorities have notified
their approval.
UNDATED SUBORDINATED
NOTES
Pursuant to the French Law of
3 January 1983, BNP issued a first
block of 1,800,000 undated
participating subordinated notes (titres
participatifs) with a par value of
FRF 1,000, for a total of FRF 1,800
million, in July 1984. Subscription
rights to new undated participating
subordinated notes were attached to
each of these notes. In respect of rights
exercised between 1 July and 30 July
1985, 1986, 1987, and 1988 BNP
issued a total of 412,761 new undated
participating subordinated notes with
a face value of FRF 1,000 and
received an issue premium of
FRF 23 million. These notes are
redeemable only in the event of
liquidation of BNP, but may be
redeemed in accordance with the
terms of the Law.
In October 1985, BNP issued FRF
2,000 million of undated floatingrate
subordinated notes (titres
subordonnés à durée indéterminée, or
TSDI). These notes are redeemable
only in the event of liquidation.
They are subordinated to all other
company debts but senior to the
undated participating subordinated
notes issued by BNP. The Board of
Directors is entitled to postpone the
interest payments on these securities
if the stockholders’ meeting
approving the financial statements
declares that there is no income
available for distribution. In
September 1986 BNP raised a
further USD 500 million by issuing
new undated floating-rate
subordinated notes with
characteristics similar to those of the
French franc notes issued in 1985.
In 1996 and 1997 BNP SA issued
undated floating-rate subordinated
notes with call options, which may
be exercised at the issuer’s discretion,
starting from a date specified in the
issuing agreement and contingent
upon the consent of the
Commission Bancaire.
Undated participating subordinated
notes and undated floating-rate
subordinated notes qualify as Tier
2 capital under French regulations
and international guidelines on
capital adequacy.
Millions of French francs, Issued Call Coupon Outstanding
at 31 December 1997 option principal
Securities issued by BNP SA:
Undated floating-rate subordinated notes:
Issue of FRF 2 billion 1985 TMO 2,000
Issue of USD 500 million 1986 floating-rate 2,994
Undated floating-rate subordinated notes with call options:
Issue of USD 20 million 1996 2006 floating-rate 120
Issue of USD 200 million 1996 2006 floating-rate 1,198
Issue of USD 50 million 1997 2007 floating-rate 299
Issue of USD 25 million 1997 2002 floating-rate 150
Issue of FRF 1.25 billion 1997 2007 (b) 1,250
Issue of USD 50 million 1997 2007 floating-rate 299
Issue of USD 50 million 1997 2006 floating-rate 299
Issue of NLG 20 million 1997 2007 (b) 60
Issue of BEF 1.5 billion 1997 2002 floating-rate 243
Undated participating subordinated notes:
Issued by BNP SA:
Issue of FRF 1,800 million 1984 floating-rate (a) 1,800
Issue of FRF 413 million 1985/1988 floating-rate (a) 413
Issued by consolidated subsidiaries
Issue of FRF 100 million 1985 floating-rate 93
Total undated subordinated notes 11,218
(a) The minimum interest rate is equal to 85% of average TMO (average corporate bond yield).
(b) Fixed rate, switching to floating rate after the call option date.
B N P

NOTE 19 - PENSION AND
POSTEMPLOYMENT BENEFITS
• Pension Benefits
In France and in most of the
countries where BNP Group
companies operate, pensions are
financed by regular contributions
to independent pension institutions
that manage the payment of
benefits.
Since 1 January 1994, pursuant to
a new industry-wide agreement on
pensions presented in Note 1, BNP
has been making contributions to
two nationwide complementary
pension organizations in France.
BNP’s pension fund pays additional
benefits, relative to services rendered
prior to 31 December 1993. BNP
computes the actuarial value of such
pension obligations based on the
1993 mortality table recommended
by the French Insurance Code.
The difference between the
discount and inflation rates used
at 31 December 1997 is roughly
3.5%, corresponding to the constant
differential between long-term
interest rates and inflation over a
thirty-year period.
Funding is provided by transfers
from the pension funds’ existing
reserves and reserves that will
steadily become eligible for
allocation (about FRF 700 million
at 31 December 1997), and by
G R O U P
BNP SA’s annual employer
contributions, which are limited to
4% of payroll costs.
In 1993 BNP set up a guarantee
fund to cover its future employer
contributions. This fund is included
under the reserve for general
banking risks.
Aside from these arrangements,
BNP has no other pension
obligations in France that concern
all of its employees.
In addition, in 1997 BNP SA
signed an agreement establishing
a funded pension system financed
by employer and employee
contributions. Upon retirement,
BNP SA employees receive
additional benefits in addition to
those they receive from the
nationwide organizations.
• Seniority and Postemployment
Benefits
Employees of the various BNP
Group companies are entitled to
collective or contractual seniority
and postemployment benefits
such as retirement and seniority
bonuses. In France, BNP is
encouraging voluntary departures
and early retirement among
employees who meet certain
eligibility criteria.
As a general rule, actuarial
valuations of these obligations are
made using a method that takes
into account projected end-of-career
salaries in order to determine the
aggregate charge corresponding to
benefits remaining to be paid to
early retirees, retirees (if applicable),
as well as vested benefits for
employees.
Hypotheses concerning mortality,
employee turnover, and future
salaries, as well as discounting rates
(long-term market rates) and
inflation, take into account
economic conditions specific to
each country or Group company.
In France, the 1988-90 mortality
table adapted to the banking
industry is used.
As of 31 December 1997, the
discounting rate used for France
and the estimated inflation rate are
consistent with those used to assess
the risks related to additional bank
pension benefits.
BNP sets up an allowance to cover
the charges related to the voluntary
departure (Employment Adjustment
Plan) or early retirement by staff
members, once the voluntary
departure or early retirement plan
concerned has been approved or
submitted for collective approval.
121
ONE HUNDRED
TWENTY-ONE

122
ONE HUNDRED
TWENTY-TWO
Allowances set up to cover these obligations are analyzed below:
At 31 December 1997 Early retirement
and retirement
Working staff equivalent staff Total
Retirement bonuses 2,493 — 2,493
Early retirement and postemployment 215 469 684
Seniority bonuses 599 — 599
Employment Adjustment Plan 310 — 310
Other obligations to employees 261 175 436
Total (Note 17) 3,878 644 4,522
For the purpose of determining the amount of such allowances, the fair value of the assets invested within
entities responsible for their management is deducted from the gross amount of such obligation.
Gross Net
obligations Assets obligations
At 1 January 1997 4,537 206 4,331
Net charge for year:
Vesting 604 — —
Discounting 262 — —
Yield on funds and related — 78 —
Benefit payments (597) — —
At 31 December 1997 4,806 284 4,522
NOTE 20 - RESERVE FOR
GENERAL
BANKING RISKS
The reserve for general banking risks
amounted to FRF 10,761 million
at 1 January 1994. FRF 2,600
million was removed from the
reserve in 1994 and another FRF
1,788 million in 1996 (see Note
33), which was simultaneously
provided to the allowance for
unforeseeable sectorial risks (see
Note 17). At 31 December 1997,
the reserve for general banking
risks amounts to FRF 6,718
million.
This reserve includes general risk
reserves previously carried under
the “Allowance for liabilities and
charges” and a significant amount
provided to cover the general risk
related to the expected imbalance
between BNP’s active and retired
staff members.
B N P

NOTE 21 - STOCKHOLDERS’
EQUITY AFTER APPROPRIATION
OF INCOME
Millions of French francs Parent Retained
company’s earnings,
retained capital gain
earnings and resulting
Capital Statutory Group’s share from real
gain on and in retained estate Stockholders’
restructuring additional earnings restructuring, equity
Ordinary and amortization Accumulated of and attributable to
Capital capital revaluation of translation consolidated revaluation BNP Minority
stock surplus surplus investments difference subsidiaries surplus Group interest Total
Balance at 31 December 1994 4,689 17,024 5,898 479 (2,040) 22,110 26,447 48,160 2,297 50,457
Consolidated net income in 1995 1,784 1,784 1,784 141 1,925
Cash dividend (716) (716) (716) (63) (779)
Operations affecting capital stock in 1995 53 423 476 476
Transfers to reserve for general banking risks
Net effect of change in shareholding interest
(90) (90) (90) (90)
in UAP 25 25 25 25
Effect of exchange rate fluctuations in 1995 (856) (856) (856) (63) (919)
Other (57) (84) (141) (141) (100) (241)
Balance at 31 December 1995 4,742 17,447 5,841 479 (2,896) 23,029 26,453 48,642 2,212 50,854
Consolidated net income in 1996 3,856 3,856 3,856 273 4,129
Cash dividend
Operations affecting capital stock in 1996:
(1,120) (1,120) (1,120) (77) (1,197)
Stock-for-stock public tender offers 323 2,052 2,375 (805) 1,570
Other
Effect of ceasing to carry UAP under
58 354 412 412
equity method 63 329 584 913 976 976
Effect of exchange rate fluctuations in 1996 669 669 669 (16) 653
Effect of new preferred share issue 393 393
Other (205) (53) (258) (258) (98) (356)
Balance at 31 December 1996 5,186 19,853 5,636 479 (1,898) 26,296 30,513 55,552 1,882 57,434
Consolidated net income in 1997 5,962 5,962 5,962 257 6,219
Cash dividend
Operations affecting capital stock in 1997:
(1,493) (1,493) (1,493) (110) (1,603)
Stock-for-stock public tender offers 33 196 229 (229)
Other
Effect of exchange rate fluctuations in 1997:
112 828 940 940
On securities in the process of being sold 561 (420) 141 141 141
During 1997
Adjustment of capital gain on real
557 557 557 113 670
estate contribution (2,758) (2,758) (2,758) (2,758)
Effect of new preferred share issue 2,922 2,922
Other (54) (36) (90) (90) 49 (41)
Balance at 31 December 1997 5,331 20,877 2,824 479 (780) 30,309 32,832 59,040 4,884 63,924
G R O U P
123
ONE HUNDRED
TWENTY-THREE

124
ONE HUNDRED
TWENTY-FOUR
OPERATIONS
INVOLVING CAPITAL
STOCK IN 1995, 1996,
AND 1997
BNP’s capital stock at 1 January
1995, before the elimination of the
impact of reciprocal shareholding,
consisted of 190,046,159 common
shares (FRF 25 par value).
CAPITAL INCREASES
IN 1995 AND 1996
BNP’s capital was increased by the
creation of 2,137,779 shares in 1995
to pay stockholders who exercised
the option to receive their dividend
in the form of shares.
Pursuant to a resolution of the
Stockholders’ Meeting of 23 May
1995, the Board of Directors of
BNP decided on 28 June 1995 to
launch a stock-for-stock public
tender offer for BNP España SA and
on 21 May 1996 to launch a stockfor-stock
public tender offer for
Compagnie d’Investissements de
Paris. Consequently, BNP issued
720,280 new common shares
(FRF 25 par value) with rights from
1 January 1995 in remuneration for
the shares of BNP España it received,
and 12,202,336 new common shares
(FRF 25 par value) with rights from
1 January 1996 in remuneration for
the shares of Compagnie
d’Investissements de Paris it received.
In accordance with Section 180 V
of the 1966 French Companies Act,
the Stockholders’ Meeting of 21 May
1996 approved the proposal of the
Board of Directors, pursuant to its
meeting on 13 March 1996, to issue
shares reserved for subscribers to the
company savings plan via the mutual
fund BNP Actionnariat. This mutual
fund subscribed 652,444 new
common shares (FRF 25 par value)
for this purpose.
BNP’s capital was also increased by
the creation of 1,675,995 shares to
pay stockholders who exercised the
option to receive their dividend in
the form of shares.
CAPITAL INCREASES IN 1997
Pursuant to a resolution of the
Stockholders’ Meeting of 23 May
1995, the Board of Directors of
BNP decided on 5 May 1997 to
launch a stock-for-stock public
tender offer for BNP
Intercontinentale. Consequently,
BNP issued 1,315,122 new
common shares (FRF 25 par
value) with rights from 1 January
1997 in remuneration for the
shares of BNP Intercontinentale it
received.
In accordance with Section
180 V of the 1966 French
Companies Act and pursuant to
delegations received from the
Stockholders’ Meeting of
21 May 1996, the Board of
Directors decided on 6 March
1997, to issue shares reserved for
subscribers to the company
savings plan via the mutual fund
BNP Actionnariat. This mutual
fund subscribed 920,000
common shares (FRF 25 par
value) for this purpose.
BNP’s capital was also increased
by the creation of 3,574,073
shares to pay stockholders who
exercised the option to receive
their dividend in the form of
shares.
At 31 December 1997 BNP’s capital
stock consisted of 213,244,188
fully paid-up common shares
(FRF 25 par value).
During the course of 1997,
BNP employees subscribed
1,400 shares with rights from
1 January 1997 under the stock
option plan. The corresponding
capital increase took effect on
29 January 1998.
ANALYSIS OF
ADDITIONAL PAID-IN
CAPITAL IN EXCESS OF
PAR, PREMIUMS ON
ACQUISITION, AND
CAPITAL GAIN ON REAL
ESTATE RESTRUCTURING
The item “Additional paid-in capital
in excess of par” was increased in
1995 by the issue premium
(FRF 423 million in 1995) resulting
from the exercise of the option by
some stockholders for payment of
their dividend in the form of shares.
This item was increased in 1996
by the additional paid-in capital
in excess of par resulting from the
stock-for-stock public tender offers
for BNP España and Compagnie
d’Investissements de Paris, as well
as the issue premiums resulting
from the exercise of the option by
some stockholders for payment of
their dividend in the form of shares
and from the placement of shares
reserved for subscribers to the
company savings plan. These issue
premiums amounted to FRF 92
million and 1,960 million,
respectively, after charging goodwill
against additional paid-in capital in
excess of par, on the stock-for-stock
public tender offers, and FRF 354
million on the new share issues
concerning the payment of the
dividend and the shares placed with
staff members.
The item “Capital gain on real
estate restructuring” (FRF 2,755
million) relates to a restructuring
operation whereby BNP
transferred its real estate holdings
to its subsidiary Compagnie
Immobilière de France “CIF” in
1991 and 1992. The resulting
capital gain is recognized to the
consolidated income statement in
proportion to the additional
depreciation charge taken by
“CIF”. This item was written
down by FRF 2,758 million at
31 December 1997 (see Notes 1
B N P

and 10) to reflect a decline in the
real estate market that is now
considered to be lasting.
PREFERRED SHARES
In April 1996, the BNP Group
floated USD 75 million of
preferred shares through its
holding company subsidiary
BancWest Corporation. These
shares pay a contractual dividend
of 7%.
In December 1997 BNP US
Funding LLC, a wholly-owned
subsidiary of the BNP Group,
made a new USD 500 million
issue of noncumulative preferred
shares, which do not dilute
earnings per ordinary share. They
will pay a contractual dividend of
7.738% for a period of ten years.
At the end of that period, the
issuer may redeem the shares at
par at the end of any calendar
quarter. Until they are redeemed,
the shares will pay a dividend
indexed to Libor.
The proceeds of these two issues are
included in stockholders’ equity
G R O U P
under “Minority interest” and the
corresponding remuneration is
treated as a distribution to minority
stockholders.
EFFECT OF CEASING TO
CARRY UAP UNDER THE
EQUITY METHOD
In 1990 BNP and UAP conducted
a share swap which initially gave
BNP an ownership interest of 20%
of UAP at 31 December 1990.
Following a number of capital
increases by UAP, BNP’s ownership
interest decreased to 16.04% at 30
June 1996.
The UAP group was carried under
the equity method by Financière
BNP until 30 June 1996, and the
impact on the BNP Group’s financial
statements of holding its own stock
via reciprocal shareholding was
eliminated in BNP’s consolidated
stockholders’ equity.
Axa’s public tender offer for UAP,
to be paid for in shares of Axa and
price guarantee vouchers, was open
for the period from 21 November to
18 December 1996. At the close
of the operation, BNP’s
ownership interest in Axa was
7.22%, and the investment in the
new entity was no longer
sufficient for the BNP Group to
claim that it exercised significant
influence, which is a prerequisite
for carrying the entity under the
equity method according to
generally accepted accounting
principles. Accordingly, BNP
ceased to carry Compagnie UAP
under the equity method in its
financial statements in 1996 in
order to reflect the existence of a
new majority stockholder of
Compagnie UAP at 31 December
1996.
Due to the fact that the BNP
Gr oup ceased carrying
Compagnie UAP under the
equity method, the shares were
transferred to “Other stock
investments” and a provision was
recorded accordingly on the basis
of their fair market value, taking
into account Axa’s agreement to
guarantee their value as part of
the stock-for-stock public tender
offer it made for Compagnie
UAP.
125
ONE HUNDRED
TWENTY-FIVE

126
ONE HUNDRED
TWENTY-SIX
NOTE 22 - MATURITY
SCHEDULE OF LOANS,
DEPOSITS, AND INTEREST RATE
INSTRUMENTS
Millions of French francs, Maturing Maturing
at 31 December 1997 Maturing after three after one Maturing
Demand within months but but after
and three within one within five five
overnight months year years years Total
Loans (gross):
Interbank and money market
items (Note 3):
Cash and due from central banks
and post office banks 11,882 - - - - 11,882
Treasury bills and money market instruments — 144,604 9,977 48,919 45,037 248,537
Due from credit institutions 24,737 402,158 57,425 10,845 3,438 498,603
Customer items (Note 4):
Due from customers 121,656 408,852 71,100 160,296 110,170 872,074
Leasing receivables
Bonds and other fixed-income
instruments (Note 5)
— 8,294 8,765 27,092 13,297 57,448
(a)
Trading account assets — 46,186 — — — 46,186
Investment securities held for sale — 14,206 2,556 4,617 8,999 30,378
Debt securities held for investment
Deposits:
Interbank and money market
items and securities (Note 13):
— 1,623 3,307 14,480 16,535 35,945
Total interbank and money market items 95,448 483,129 71,122 11,543 6,997 668,239
Interbank market securities
Customer deposits, retail certificates
of deposit, and negotiable certificates
of deposit (Note 14):
— 820 522 411 — 1,753
Total customer deposits
Total bonds and negotiable short-term
272,331 323,300 51,534 47,855 22,721 717,741
debt instruments 2,540 93,027 51,143 24,703 15,442 186,855
BNP Group bonds outstanding (Note 15) — 1,519 2,931 32,872 12,758 50,080
Subordinated medium- and long-term
debt outstanding (Note 18) — 240 3,639 14,466 22,754 41,099
(a) Excluding related receivables, which amount to FRF 3,071 million.
The BNP Group manages its
liquidity within gap limits, all
currencies combined, that are
determined by the General
Management Committee:
• The maximum mismatch on
weighted balance sheet and offbalance
sheet commitments
maturing in more than one year
(attributing maturities to
commitments with no contractual
maturity) is set at 25% of funds
maturing in more than one year.
• The maximum mismatch on
commitments with no contractual
maturity, to which a maturity of
more than one year has been
attributed, is set at 150% of stable
funds with no contractual
maturity (customer demand
deposits and savings deposits net
of overdrafts, stockholders’ equity
net of long-term investments).
Throughout 1997, BNP continually
complied with regulatory guidelines
with respect to its short-term (onemonth)
liquidity ratio and its ratio
of stockholders’ equity to long-term
funding (funds maturing in more
than five years).
B N P

MATURITY SCHEDULE OF FORWARD AND OPTIONS COMMITMENTS
AT 31 DECEMBER 1997
Millions of French francs Maturing
after three Maturing Maturing
Maturing months but after one but after
within three within one within five five
months year years years Total
Interest-rate contracts:
On organized exchanges 4,226,560 278,510 48,989 — 4,554,059
Over the counter 1,306,218 1,248,279 1,078,166 460,521 4,093,184
Total interest-rate contracts 5,532,778 1,526,789 1,127,155 460,521 8,647,243
Foreign exchange contracts:
On organized exchanges 304,295 303,729 15,963 — 623,987
Over the counter 1,983,908 2,277,596 205,532 61,527 4,528,563
Total foreign exchange contracts 2,288,203 2,581,325 221,495 61,527 5,152,550
Other contracts:
On organized exchanges 109,853 108,744 12,916 — 231,513
Over the counter
Total other contracts
52,766
162,619
159,183 195,626
267,927 208,542
51,263 458,838
51,263 690,351 127
ONE HUNDRED
TWENTY-SEVEN
G R O U P

128
ONE HUNDRED
TWENTY-EIGHT
NOTE 23 - OFF-BALANCE SHEET
COMMITMENTS
Millions of French francs, at 31 December 1997 1996 1995
Financing commitments given:
To credit institutions
On behalf of customers:
Confirmed letters of credit:
22,378 25,319 23,125
Documentary credits 25,837 20,398 ..
Other confirmed letters of credit 251,878 192,843 ..
Other commitments given on behalf of customers 96,951 85,970 ..
Total on behalf of customers 374,666 299,211 282,016
Total financing commitments given
Financing commitments received:
Roll-over agreements (standby commitments)
397,044 324,530 305,141
received from credit institutions
Roll-over agreements (standby commitments)
7,323 8,330 12,008
received on behalf of customers 2,586 1,080 162
Total financing commitments received
Guaranties and endorsements given:
To credit institutions:
9,909 9,410 12,170
Confirmed documentary credits 4,976 5,148 ..
Other 9,342 10,696 ..
Total to credit institutions
On behalf of customers:
Guaranties and endorsements:
14,318 15,844 8,180
Real estate guaranties 3,912 3,406 ..
Administrative and tax guaranties 23,878 22,803 ..
Other 41,805 33,280 ..
Other guaranties on behalf of customers 105,403 99,308 ..
Total on behalf of customers 174,998 158,797 118,570
Total guaranties and endorsements given
Guaranties and endorsements received:
189,316 174,641 126,750
From credit institutions
On behalf of customers:
41,097 27,352 32,492
Guaranties received from government administrations and related 37,277 32,111 ..
Guaranties received from financial institutions 4,509 3,261 ..
Other guaranties received 75,876 55,560 ..
Total on behalf of customers 117,662 90,932 84,209
Total guaranties and endorsements received
Commitments given and received on securities:
Securities to be received:
158,759 118,284 116,701
Securities to be received 63,593 55,533 19,756
Securities sold under repurchase agreements to be received (a) — 10 366
Total securities to be received 63,593 55,543 20,122
Total securities to be delivered 52,172 55,856 21,320
(a) Receipt of these securities is contingent upon exercise of the repurchase option.
B N P

NOTE 24 - FORWARD AND
OPTIONS
CONTRACTS
The following transactions were entered into on different markets for micro or global hedging of assets and
liabilities and for position management.
Millions of French francs, 1997 1996
at 31 December Hedging Position Hedging Position
transactions management Total transactions management Total
Forward contracts:
On organized exchanges:
Interest rate contracts 202,124 3,878,533 4,080,657 330,630 1,998,986 2,329,616
Foreign exchange contracts 177 279 456 — 2,711 2,711
Financial assets contracts — 34,324 34,324 122 49,101 49,223
Total on organized exchanges
Over the counter:
202,301 3,913,136 4,115,437 330,752 2,050,798 2,381,550
Forward rate agreements (FRAs) 126,136 253,217 379,353 135,430 244,352 379,782
Interest rate swap contracts 278,829 3,036,522 3,315,351 160,132 1,824,929 1,985,061
Currency swap contracts 2,322,231 39,977 2,362,208 1,756,821 35,948 1,792,769
Foreign exchange forward swaps 1,406,024 673,905 2,079,929 1,282,958 765,818 2,048,776
Other forward contracts 363 35,502 35,865 1,028 23,267 24,295
Total over the counter 4,133,583 4,039,123 8,172,706 3,336,369 2,894,314 6,230,683
Total forward contracts
Options contracts:
On organized exchanges:
Interest rate options:
4,335,884 7,952,259 12,288,143 3,667,121 4,945,112 8,612,233
Bought 176 201,966 202,142 506 683,045 683,551
Sold 176 271,084 271,260 20 577,069 577,089
Total interest rate options
Foreign exchange options:
352 473,050 473,402 526 1,260,114 1,260,640
Bought — 301,989 301,989 27 389,967 389,994
Sold — 321,542 321,542 27 421,226 421,253
Total foreign exchange options
Other options:
— 623,531 623,531 54 811,193 811,247
Bought — 95,693 95,693 — 93,402 93,402
Sold 978 100,518 101,496 999 73,433 74,432
Total other options 978 196,211 197,189 999 166,835 167,834
Total on organized exchanges
Over the counter:
Caps and floors:
1,330 1,292,792 1,294,122 1,579 2,238,142 2,239,721
Bought 7,039 178,689 185,728 4,061 174,288 178,349
Sold 7,658 196,040 203,698 6,037 191,302 197,339
Total caps and floors
Swaptions and options (interest
rate, foreign exchange, and other):
14,697 374,729 389,426 10,098 365,590 375,688
Bought 30,571 244,774 275,345 19,643 118,386 138,029
Sold
Total swaptions and options
(interest rate, foreign
24,834 218,275 243,109 20,219 130,500 150,719
exchange, and other) 55,405 463,049 518,454 39,862 248,886 288,748
Total over the counter 70,102 837,778 907,880 49,960 614,476 664,436
Total options contracts 71,432 2,130,570 2,202,002 51,539 2,852,618 2,904,157
Total forward and
options contracts 4,407,316 10,082,829 14,490,145 3,718,660 7,797,730 11,516,390
G R O U P
129
ONE HUNDRED
TWENTY-NINE

130
ONE HUNDRED
THIRTY
The notional amounts of the
contracts presented above should
be construed as indicators of the
BNP Group’s activity on the
financial instruments markets and
not as indicators of the market
risks attached to these
instruments. Gains and losses on
these transactions are presented
in Note 25—Net Banking
Income and in Notes 11 and 16
to the balance sheet.
ASSESSMENT OF
THE BNP GROUP’S
COUNTERPARTY RISK
EXPOSURE
The BNP Group’s exposure to
counterparty risk on forward and
options contracts is assessed according
to European Union and international
ratios calculation methodology
applicable at 31 December 1997 and,
accordingly, takes into account signed
netting agreements. Close-out netting
is used to attenuate counterparty risk
on derivatives transactions. The Bank
primarily uses the portfolio approach,
which enables it to close all positions
and mark them to market upon
default, summing all positive and
negative payments between the two
parties to arrive at the net close-out
amount payable to or receivable from
the counterparty. The net close-out
amount may be collateralized by
requiring that the counterparty post
cash, securities, or deposits as
collateral.
The Bank also uses bilateral payment
flow netting to attenuate
counterparty risk on foreign currency
payments. In this case, streams of
payment orders in a given currency
are replaced by a cumulative balance
due to or from each party,
representing the single sum, in each
currency, remaining to be settled on
a given day between the Bank and
the counterparty.
The transactions concerned are
executed according to the terms of
bilateral or multilateral master
agreement that comply with the
general provisions of national or
international master agreements. The
main bilateral agreement models used
are those of the Association Française
des Banques (AFB), or those of the
International Swaps and Derivatives
Association (ISDA) for international
agreements. BNP also participates in
EchoNetting, enabling it to use
multilateral netting for transactions
involving other participants.
CREDIT RISK ON FORWARD FINANCIAL INSTRUMENTS
Millions of French francs, 1997 1996
at 31 December Positive Weighted Positive Weighted
replacement risk replacement risk
cost equivalent cost equivalent
Sovereign exposures 492 — 854 —
Bank headquartered in zone A (a) Bank headquatered in zone B
94,565 28,422 60,766 18,511
and nonbanking counterparties (a) 17,648 13,706 11,204 9,140
Total, before impact of netting agreements
Including exposures related to:
112,705 42,128 72,824 27,651
interest rate instruments 50,772 15,956 43,066 13,055
foreign exchange and other instruments 61,933 26,172 29,758 14,596
Netting agrements effect (29,415) (8,963) — —
Total, after impact of netting agreements 83,290 33,165 72,824 27,651
(a) Zone A consists of the member states of the European Union (EU), other member states of the Organization for Economic Cooperation
and Development (OECD) provided that they have not rescheduled any external sovereign debt within the previous five years, and
countries that have negotiated special borrowing agreements with the International Monetary Fund (IMF) within the framework of
the IMF’s General Agreements to Borrow (GAB). Zone B consists of all other countries.
B N P

Weighted risk equivalent determined on over-the-counter contracts (except for sold options) represented
0.38% of the sum of the notional amounts for over-the-counter transactions alone of the BNP Group at
31 December 1997, compared with 0.42% at 31 December 1996.
Counterparty risk exposure on investments traded over the counter can also be analyzed based on counterparty
credit rating (Standard & Poor’s), as follows:
Face value, maturing
Analysis according after one
to credit rating at within one but within after five
31 December 1997 year five years years Total
AAA,AA 41.7% 15.0% 6.6% 63.3%
A 17.3% 5.2% 1.7% 24.2%
BBB 2.3% 1.4% 0.6% 4.3%
BB or lower 5.6% 2.0% 0.6% 8.2%
Total 66.9% 23.6% 9.5% 100.0%
Weighted risk equivalent
Analysis according after one
to credit rating at within one but within after five
31 December 1997 year five years years Total
AAA,AA 28.4% 19.1% 11.6% 59.1%
A 11.5% 4.4% 2.9% 18.8%
BBB 4.1% 2.1% 1.5% 7.7%
BB or lower 7.0% 6.0% 1.4% 14.4%
Total 51.0% 31.6% 17.4% 100.0%
BNP’S MARKET RISK
EXPOSURE ON
FINANCIAL
INSTRUMENTS AT
31 DECEMBER 1997
The BNP Group manages its
market risk exposure on operational
positions using a system to assess
and monitor risks that primarily
focus on interest rate, foreign
exchange, and equity markets. These
risks are assessed in terms of value
at risk (or sensitivity to notional
risks) obtained using a limited set
of risk coefficients that make it
possible to assess the maximum loss
incurred in 95% of movements
observed in the past, over a holding
period of five days.
Sensitivity to notional risks of
fluctuations in interest rates on
G R O U P
all interest-rate related financial
instruments is determined by
simulating a ±1% change in
interest rates on open positions
maturing in less than a year and
a ±0.5% change in interest rates
on open positions maturing in
more than a year. The
hypothetical fluctuation chosen
for positions resulting from
arbitrage (or related) operations
is limited to ±0.25%. For options
positions, the sensitivity to
notional risks of fluctuations in
interest rates is considered to be
equal to the highest possible
absolute value that would result
from the combination of interest
rate fluctuations of 0.25% to 1%
and volatility fluctuations
determined on the basis of
historical analyses.
Sensitivity to notional risks of
fluctuations in exchange rates on all
exchange-rate related financial
instruments (excluding options) is
determined by simulating a ±3%
change in the BNP Group’s
cumulative net foreign exchange
position, which is calculated by
adding the absolute values of the
net positions for each currency. This
variation is limited to ±1.5% for
strongly correlated EMS currencies
(DEM, BEF, and NLG) and for the
ECU. For options positions, the
sensitivity to notional risks of
fluctuations in exchange rates is
considered to be equal to the
highest possible absolute value
that would result from the
combination of exchange rate
fluctuations of 1.5% to 3% and
volatility fluctuations determined
131
ONE HUNDRED
THIRTY-ONE

132
ONE HUNDRED
THIRTY-TWO
on the basis of historical analyses,
particularly as a function of option
expiration dates.
Higher coefficients determined
on the basis of historical analyses
are used for countries with a
government-regulated currency
for both interest-rate and foreign
exchange instruments.
Sensitivity to notional risks of
fluctuations in prices of listed
equity securities is determined by
simulating a change in prices of
between ±9% and ±11.2%,
adjusted as a function of the stock
market. This simulation applies
to open positions in trading and
investment securities held for sale
portfolios, as well as to
outstanding commitments to
subscribe to share issues. The
hypothetical fluctuation chosen
for positions resulting from
arbitrage operations varies
between 0.25% and 1.25%,
depending on the nature of the
positions. Options’ sensitivity to
notional risks is determined
taking into account the highest
possible absolute value that would
result from the combination of
fluctuations between 2% and
11.2% in the price of the
underlying security or index and
The BNP Group has the following notional risk exposure:
volatility fluctuations determined
on the basis of historical analyses.
Sensitivity to notional risks is
determined per currency, per
portfolio, and per entity. The
absolute value of all individual
risks added together (see table,
below) gives an estimate of
theoretical maximum losses far
exceeding the risks actually
incurred, as offsetting positions
taken in the same currency or
market by different entities are
not taken into account, nor does
notional risk take into account
correlations between price
movements on some markets.
Millions of French francs, 1997 1996
at 31 December Including Including
BNP BNP
BNP Group France BNP Group France
Interest-rate risk exposure:
On French franc and foreign currency money
market instruments and bonds .. 119 .. 84
On derivatives .. 779 .. 543
Total interest-rate risk exposure
Currency risk exposure:
1,735 898 1,417 626
On foreign exchange forward instruments .. 18 .. 2
On foreign exchange options .. 24 .. 32
Total currency risk exposure 66 42 45 34
Stock price risk exposure 485 76 429 67
Notional risk exposure may be broken down according to worldwide line of business, as shown below:
Millions of French francs, 1997 1996
at 31 December Including Including
worldwide worldwide
BNP Including options line BNP Including options line
Group BNP France of business Group BNP France of business
Money market and foreign
exchange 621 248 24 492 201 32
Bonds 488 — — 377 — —
Swaps and derivatives 692 692 85 456 456 47
Equities 409 — 345 421 52 360
Other 76 76 — 147 19 —
B N P

NOTE 25 - NET BANKING
INCOME
Millions of French francs, Interest and related income (expense)
year ended 31 December 1997 1996 1995
Net banking revenues:
Net interest and assimilated income
on interbank items (Note 26)
Net interest and assimilated income
(64) (1,096) (240)
on customer items (Note 27)
Net interest and assimilated income
26,124 28,577 30,845
on lease transactions
Interest expense on debt issued by BNP Group:
4,196 4,326 4,471
Interbank market securities (491) (640) (896)
Negotiable certificates of deposit (8,878) (9,191) (10,619)
Bonds (4,493) (4,927) (5,322)
Subordinated debt and undated participating subordinated notes (3,616) (3,246) (3,118)
Retail certificates of deposit and term savings certificates (943) (1,000) (1,096)
Other (191) (254) (371)
Total interest expense on debt issued by BNP Group :
Interest income on bonds and
(18,612) (19,258) (21,422)
other fixed-income instruments (Note 28)
Income on equities and other
11,605 11,263 8,905
non-fixed-income instruments (Note 28)
Gains (losses) on financial operations:
902 1,028 934
On trading account assets 8,084 3,309 4,264
On investment securities held for sale 623 691 27
On foreign exchange transactions (218) 467 657
Net gains on financial operations 8,489 4,467 4,948
Net commissions (Note 29) 9,969 8,863 7,567
Total net banking revenues 42,069 38,170 36,008
Other net income from banking operations 1,457 1,332 1,700
Net banking income 44,066 39,502 37,708
Gains and losses on financial
operations include:
• gains and losses on trading
transactions, such as those
recorded when trading account
assets or borrowed securities
(recorded under liabilities) are
marked to market or sold
• gains and losses on investment
securities held for sale, representing
capital gains and losses on disposals
G R O U P
as well as movements affecting
allowances covering the investment
securities held for sale portfolio;
interest and dividends from this
portfolio are recorded under
“Interest income on bonds and
other fixed-income instruments”
and “Income on equities and other
non-fixed-income instruments” (see
Note 28)
• foreign exchange and arbitrage
gains and losses resulting from
purchases and sales of foreign
currencies, the mark-to-market
at the balance sheet date of
foreign exchange and precious
metals spot positions and
foreign exchange forwards
• gains and losses on interest rate
and foreign exchange futures
and options, with the exception
of interest rate futures entered
into for hedging purposes; gains
and losses on such operations
133
ONE HUNDRED
THIRTY-THREE

134
ONE HUNDRED
THIRTY-FOUR
are included with gains and
losses on the hedged
instruments.
The cost of funding of the various
securities portfolios is recorded
under the interest rate expense
corresponding to the liability item
used for refinancing.
The item “Net income from
banking operations” primarily
reflects fee income from computer
services and from remote banking
services, underwriting fees,
provisions for losses and expenses,
and BNP’s share in income from
operations conducted jointly with
other companies; it also includes
The analysis of net banking income by business line is shown below:
charges invoiced back to
customers and other income.
Allowances on interest arrears
related to financial credits are
deducted from “Net banking
income”.
Millions of French francs, year ended 31 December 1997 1996
Domestic Banking 24,611 24,047
International Banking and Finance 18,071 13,950
Other 1,384 1,505
Net banking income 44,066 39,502
NOTE 26 - NET INTEREST
AND ASSIMILATED INCOME ON
INTERBANK ITEMS
Expense Income Millions of French francs, Net
1997 1996 1995 1997 1996 1995 year ended 31 December 1997 1996 1995
Interest on interbank demand
(40,982) (33,729) (30,215) 39,966 32,066 29,407 deposits, loans, and borrowings (1,016) (1,663) (808)
Interest on securities held or given
(5,552) (4,744) (4,518) 5,859 4,848 4,688 under repurchase agreements 307 104 170
- - - 35 81
Interest on subordinated
14 term loans
Income from off-balance sheet
35 81 14
(63) (94) (33) 673 476 417 transactions 610 382 384
Net interest and assimilated
(46,597) (38,567) (34,766) 46,533 37,471 34,526 income on interbank items (64) (1,096) (240)
“Income from off-balance sheet transactions” reflects income and expense on refinancing agreements and on
guaranties and endorsements given and received. Gains and losses on foreign exchange transactions and on
forward financial instruments are reflected under “Net gains (losses) on financial operations” (see Note 25).
B N P

NOTE 27 - NET INTEREST
AND ASSIMILATED INCOME ON
CUSTOMER ITEMS
Expense Income Millions of French francs, Net
1997 1996 1995 1997 1996 1995 year ended 31 December 1997 1996 1995
Interest on customer loans
(24,395) (19,806) (23,761) 49,602 47,152 53,763 and deposits 25,207 27,346 30,002
Interest on securities held or given
(1,435) (736) (778) 1,038 657 287 under repurchase agreements (397) (79) (491)
Interest on subordinated
- - - 42 80 162 term loans 42 80 162
G R O U P
Income from off-balance sheet
transactions:
Income on commitments
(11) (1) (4) 878 887 882 to lend 867 886 878
Income on guaranties and
(16) (1) (19) 421 345 313 endorsements 405 344 294
Total income from off-balance
(27) (2) (23) 1,299 1,232 1,195 sheet transactions 1,272 1,230 1,172
Net interest and assimilated
(25,857) (20,544) (24,562) 51,981 49,121 55,407 income on customer items 26,124 28,577 30,845
135
ONE HUNDRED
THIRTY-FIVE

136
ONE HUNDRED
THIRTY-SIX
NOTE 28 - NET INCOME FROM
SECURITIES PORTFOLIO
Millions of French francs, year ended 31 December 1997 1996 1995
Interest on bonds and other fixed-income instruments:
From investment securities held for sale 3,257 3,282 2,752
From debt securities held for investment 6,291 4,916 4,405
From Codevi “industrial development” securities 1,337 1,334 1,038
From hedging of interest rate instruments and other 720 1,731 710
Total interest on bonds and other fixed-income instruments 11,605 11,263 8,905
Income on equities and other non-fixed-income instruments:
From investment securities held for sale 31 69 95
From equity securities held for investment 241 327 348
From other stock investments 630 632 491
Total income on equities and non-fixed-income instruments 902 1,028 934
Gains (losses) on transactions related to securities portfolio:
Gains on trading account (a) 8,094 6,668 4,640
Gains (losses) on investment securities held for sale:
Capital gains (losses) on disposals of investment securities held for sale:
Capital gains 746 703 143
Capital losses (113) (132) (119)
Net capital gains on disposals of investment securities held for sale 633 571 24
(Additions to) deductions from allowance on securities:
Additions to allowance on securities (120) (50) (180)
Deductions from allowance on securities 110 170 183
Net (addition to) deduction from allowance on securities (10) 120 3
Net gains (losses) on investment securities held for sale 623 691 27
Net gains on transactions related to securities portfolio 8,717 7,359 4,667
Gains (losses) on disposals of long-term investments,
net of provisions (Note 32):
Capital gains (losses) on disposals of long-term investments:
Capital gains 2,555 1,270 951
Capital losses (3,324) (422) (835)
Net capital gains on disposals of long-term investments (769) 848 116
(Additions to) deductions from allowance on long-term investments:
Additions to allowance on long-term investments (601) (3,573) (1,037)
Deductions from allowance on long-term investments 3,750 2,021 929
Net (addition to) deduction from allowance on long-term investments 3,149 (1,552) (108)
Total gains (losses) on disposals of long-term investments, net of provisions 2,380 (704) 8
Net income from securities portfolio 23,604 18,946 14,514
(a) Gains on trading account are grouped together with gains and losses on financial instruments in the consolidated income statement
presentation in order to reflect the association of these various categories of instruments in the management of positions taken.
Capital losses on disposals of long-term investments include a FRF 2,447 million capital loss on UAP shares
following Axa’s public tender offer, which was completed in January 1997. This capital loss was offset by a
deduction of the same amount from the allowance set up at 31 December 1996 to cover the decrease in
value of BNP’s equity investment in UAP.
B N P

NOTE 29 - NET COMMISSIONS
Expense Income Millions of French francs, Net
1997 1996 1995 1997 1996 1995 year ended 31 December 1997 1996 1995
Commissions on interbank and
(253) (320) (339) 321 324 243 money market transactions 68 4 (96)
Commissions on customer
(316) (158) (57) 3,174 2,426 2,109 transactions 2,858 2,268 2,052
Commissions on securities
(972) (672) (541) 347 238 165 transactions (625) (434) (376)
Commissions on foreign exchange
(36) (25) (24) 59 49 57 and arbitrage transactions 23 24 33
Commissions on securities
(1,047) (1,155) (225) 1,493 1,826 569 commitments 446 671 344
Commissions on forward financial
(985) (420) (196) 573 486 88 instruments (411) 66 (108)
- - - 557 499 441
Commissions on securities-related
services rendered:
On securities managed or on deposit:
Custody fees
Management of customers’
557 499 441
- - - 281 196 340 securities portfolios 281 196 340
- - - 1,315 1,103 1,140 Mutual fund management 1,315 1,103 1,140
- - - 57 55 61
Other commissions on securities
managed or on deposit
Total commissions on securities
57 55 61
- - - 2,210 1,853 1,982 managed or on deposit 2,210 1,853 1,982
Commissions on securities
transactions on behalf of customers:
For purchases and sales
- - - 1,147 787 546 of securities
For purchases and sales
1,147 787 546
- - - 380 268 99 of mutual fund shares 380 268 99
Other commissions on securities
transactions on behalf of
- - - 313 232 180 customers 313 232 180
Total commissions on securities
transactions on behalf of
- - - 1,840 1,287 825 customers 1,840 1,287 825
Commissions on customer
- - - 532 345 241 assistance and advisory services 532 345 241
- - - 2,093 1,961 1,869
Commissions on payment
systems
Commissions on other financial
2,093 1,961 1,869
- - - 936 818 801 services 936 818 801
Total commissions on securities-
- - - 7,611 6,264 5,718 related services rendered 7,611 6,264 5,718
(3,609) (2,750) (1,382) 13,578 11,613 8,949 Net commissions 9,969 8,863 7,567
G R O U P
137
ONE HUNDRED
THIRTY-SEVEN

138
ONE HUNDRED
THIRTY-EIGHT
The aggregate of “Net commissions” calculated according to the regulatory definition, commissions reflected
as interest and assimilated income (expense) and commissions recorded under “Other net income from
banking operations” offers an economic measure of the relative contribution of commissions to net banking
income.
Millions of French francs, year ended 31 December 1997 1996 1995
Net commissions
Commission-related income:
Included under value added to capital:
9,969 8,863 7,567
On commitments 1,882 1,612 1,557
On foreign exchange transactions
Included under “Other net income from banking operations”:
1,362 1,109 917
On charges invoiced back to customers 548 567 542
On other income 724 542 502
On income from other banking transactions 278 312 418
Total commissions and commission-related income 14,763 13,005 11,503
In 1997 commissions and commission-related income accounted for 33.5% of net banking income, compared
with 32.9% in 1996 and 30.5% in 1995.
NOTE 30 - SALARIES AND
EMPLOYEE BENEFITS, INCLUDING
PROFIT SHARING
Millions of French francs, year ended 31 December 1997 1996 1995
Salaries
Termination benefits and social security taxes
12,433 11,452 11,057
Retirement bonuses and retirement expenses 1,088 1,553 1,513
Social security taxes 3,698 3,526 4,096
Total termination benefits and social security taxes
Incentive plans and profit sharing
4,786 5,079 5,609
Incentive plans 260 168 76
Profit sharing 427 202 (28)
Total incentive plans and profit sharing 687 370 48
Payroll taxes 1,085 1,019 926
Total salaries and employee benefits,
including profit sharing 18,991 17,920 17,640
Total remuneration paid to members of the board of directors and of the office of the chairman for positions
they held in 1997 at the parent company and consolidated subsidiaries amounted to FRF 37.8 million in
1997 (FRF 34.1 million in 1996 and FRF 33.0 million in 1995). The amount of directors’ fees totaled
FRF 2 million.
B N P

NOTE 31 - STOCK
OPTION
PLANS
Between 1990 and 1997 the Stockholders Meeting of BNP SA authorized the Board of Directors to grant
stock options to purchase and to subscribe shares issued by BNP SA under different plans whose characteristics
are listed below:
Stock option plans 1990 Plan 1992 Plan 1994 Plan 1995 Plan 1996 Plan 1997 Plan
Date of Special Stockholders
Meeting authorizing stock
option plan 25 May 1989 25 May 1989 14 Dec. 1993 14 Dec. 1993 14 Dec.1993 14 Dec.1993
Date of Board of Directors
meeting setting conditions
for stock option plan 14 Nov. 1990 21 Jul. 1992 23 Mar. 1994 22 Mar. 1995 21 May 1996 22 May 1997
Total number of shares that
may be purchased or subscribed
under plan
Including shares that
may be purchased or subscribed
by members of General Management
64,067 97,508 803,000 215,500 1,031,000 238,000
Committee at 31 December 1997 7,418 3,919 304,000 2,000 525,000 105,000
Number of beneficiaries
Date from which stock options may
72 125 135 128 140 64
be exercised 1 Jul. 1993 21 Jul. 1995 24 Mar. 1996 (a) 23 Mar.1997 (a) 22 May 1998 (a) 23 May 2002
Expiration date 13 Nov.1995 20 Jul. 1997 23 Mar. 2001 22 Mar. 2002 21 May 2003 22 May 2007
Purchase or subscription price
Number of shares purchased or
FRF 116.35 FRF 162.76 FRF 212.00 FRF 218.00 FRF 195.00 FRF 242.00
subscribed at 31 December 1997 63,087 94,870 0 1,400 N/A N/A
(a) Half of the options may only be exercised starting one year after the date from which the stock options may be exercised.
G R O U P
139
ONE HUNDRED
THIRTY-NINE

140
ONE HUNDRED
FORTY
NOTE 32 - GAINS (LOSSES)
ON DISPOSALS OF LONG-TERM
INVESTMENTS, NET OF
PROVISIONS
Millions of French francs, year ended 31 December 1997 1996 1995
Debt securities held for investment:
Capital gains (losses) on disposal (42) 26 (3)
(Additions to) deductions from allowances 51 33 (23)
Total debt securities held for investment, net of provisions 9 59 (26)
Equity securities held for investment:
Capital gains (losses) on disposal 1,316 223 20
(Additions to) deductions from allowances 226 (140) (75)
Total equity securities held for investment, net of provisions 1,542 83 (55)
Other stock investments:
Capital gains (losses) on disposal (2,043) 600 99
(Additions to) deductions from allowances 2,872 (1,446) (10)
Total other stock investments held for investment, net of provisions 829 (846) 89
Gains (losses) on disposals of long-term
net of provisions 2,380 (704) 8
B N P

NOTE 33 - NONRECURRING
ITEMS
Millions of French francs, year ended 31 December 1997 1996 1995
(Addition) to allowance for employee benefits (611) (311) —
(Addition) to allowance for upcoming
disposal of equity investment (141)
(Addition) to allowance for unforeseeable
sectoral risks (Notes 18 and 20) — (1,788) —
(Addition) to allowance for nonrecurring
charges related to introduction of
single European currency (285) (600) —
(Addition) to allowance for restructured or
discontinued operations (85) (68) (203)
Other nonrecurring income (expense) (269) (650) (497)
Nonrecurring items (1,391) (3,417) (700)
Nonrecurring items reflect the
impact on the financial statements
of events that are infrequent and
unusual in nature for the BNP
Group’s various lines of business. If
these items were included under
other income statement headings,
the comparability of current year
operations during the year with
those of the reference years would
be impaired.
Pursuant to its decision to
restructure or discontinue some
of the operations of Banque Arabe
Internationale d’Investissements
“BAII”, BNP made a FRF 203
million provision in 1995 in
relation, in particular, to the
liquidation of Banque d’Arbitrage
et de Crédit, a shareholding of
BAII. Restructuring costs have
been assessed in accordance with
G R O U P
rules applicable to discontinued
operations and operations that
have been or are in the process of
being sold.
In recognition of the level of real
interest rates in France, BNP
decided to update the provisioned
charges resulting from employee
benefits in France using a market
interest rate that is compatible with
expected yields on long-term
investments, in conformity with
the practice among pension and
life insurance funds of calculating
employee life insurance provisions
to cover companies’ commitments.
BNP made an additional provision
of FRF 311 million in 1996.
BNP made a FRF 481 million
provision in 1997 to cover the
nonrecurring charge corresponding
to staff reductions resulting from
computer investments made to
adapt its computer systems to the
single European currency and from
the reorganization of its operational
support centers and customer
service activities within the
domestic branch network in fiscal
years 1998 and 1999. BNP also
made a FRF 130 million provision
to adjust employee pension and
post employment liabilities of the
international entities to the level
required by Group’s accounting
policies.
BNP has estimated the cost of
adapting to the introduction of the
single European currency and to
the Year 2000 to be about FRF 1.7
billion over the period 1996-2002.
France’s accounting authorities
have reiterated a series of guidelines
141
ONE HUNDRED
FORTY-ONE

142
ONE HUNDRED
FORTY-TWO
governing the provisioning of
charges made probable by events
that have been completed or are
in progress, in cases where the
nature of such charges is clearly
identifiable. In application of those
guidelines, BNP set up a FRF 600
million allowance at 31 December
1996, increased by FRF 285
million at 31 December 1997, to
cover the cost of outside assistance
to prepare for the direct
consequences of switching over to
the single European currency, which
is a nonrecurring event. That
assistance cannot be capitalized.
Provisioned charges cover the
adaptation of information systems
and the contribution to interbank
systems (FRF 574 million), as well
as the cost of Euro-related
customer relations and corporate
communication (FRF 311
million). More than half of these
costs, which have been determined
according to BNP’s commonly used
project assessment methods, will be
incurred prior to 1 January 1999, in
addition to recurrent expenses.
As BNP is considering selling its
investment in U.B.A. (Lagos), a
FRF 141 million provision was
recorded in 1997 to recognize the
impact of the continuing
depreciation of Nigeria’s currency
(the naira), now considered
irreversible, on retained earnings
accumulated over the consolidation
period of this entity.
Provisions and charges in relation to
tax audits are reflected under “Other
nonrecurring income (expense)”.
BNP was subject to a tax audit in
France for the years 1988-90 and
1992-94. It has made provisions as
needed to cover adjustments by the
French tax authorities which it may
choose not to contest, including late
payment interest.
B N P

NOTE 34 - GEOGRAPHIC
DISTRIBUTION
OF OPERATIONS
In 1997 nearly 82% of the BNP Group’s worldwide banking income came from the member states of the
European Union, compared with 85% in 1996 and 86% in 1995.
Millions of french francs, The
year ended 31 December 1997 Americas
Other EU and Other
France countries Asia countries Total
Interest and related income 16,900 2,210 4,047 994 24,151
Commissions 7,838 813 1,219 99 9,969
Gains on financial transactions 5,785 1,179 1,424 101 8,489
Other operating revenues (expense) 1,232 51 136 38 1,457
Net banking income 31,755 4,253 6,826 1,232 44,066
Gross operating income 8,244 1,458 3,109 624 13,435
Analysis of business according to region:
Millions of French francs, The
year ended 31 December 1997 Americas
Other EU and Other
France countries Asia countries Total
Loans:
Total interbank and money
market items 516,502 89,872 132,140 13,750 752,264
Customer items 542,485 116,214 213,320 16,064 888,083
Total loans 1,058,987 206,086 345,460 29,814 1,640,347
Deposits:
Total interbank and money
market items 352,374 188,254 112,287 15,324 668,239
Customer deposits 459,784 108,985 128,617 20,355 717,741
Total deposits 812,158 297,239 240,904 35,679 1,385,980
G R O U P
143
ONE HUNDRED
FORTY-THREE

144
ONE HUNDRED
FORTY FOUR
NOTE 35 - INCOME TAXES
Millions of French francs, year ended 31 December 1997 1996 1995
Income taxes for period, currently payable 2,097 981 906
Deferred income taxes recognized during period (100) 2 268
Income tax expense 1,997 983 1,174
From recurring items 2,492 1,359 ..
From nonrecurring items (495) (376) ..
Income tax expense 1,997 983 1,174
In accordance with international
accounting principles, the BNP
Group now records deferred tax
benefits based on the probability of
their utilization, regardless of the
amount of offsetting deferred tax
liabilities. The impact of this change
in the application of accounting
method amounted to FRF 238
million for the year ended
31 December 1997.
Analysis of effective tax rate:
Income taxes amounted to FRF
1,997 million for 1997 and include
the impact of the new tax measures
outlined in Note 1 for FRF 140
million (FRF 115 million for current
income taxes and FRF 25 million for
deferred taxes). Under the liability
method, the BNP Group has
adjusted the amount of deferred taxes
for the 10% surtax on corporate
income imposed by the French
government in 1995 for an
unspecified period of time, and the
15% surtax on corporate income
imposed in 1997 for fiscal years 1997
and 1998, which will be lowered to
10% for fiscal year 1999.
The 1997 tax savings resulting from
the use of tax losses carried forward
and reversal of timing differences
amounted to FRF 678 million.
(%) 1997 1996 1995
Common tax rate in France 33.3 33.3 33.3
Effect of lower income tax rate on long-term capital gains in France (5.1) (2.9) (0.9)
Share of earnings of companies carried under equity method (3.3) (3.5) (0.4)
Income non taxable and expenses non deductible according to French law (2.3) (6.2) (0.1)
Effect of tax rate differential applicable to foreign entities (4.8) (6.2) (9.9)
Separate effect of negative items 3.5 4.5 13.9
Other 3.0 0.2 2.0
Effective tax rate 24.3 19.2 37.9
Deferred taxes have been reflected in the balance sheet as shown below:
Millions of French francs, 1997 1996 1995
at 31 December Companies
included in
consolidated
tax return Other
(Note 2) companies Total Total Total
Deferred tax assets (Note 11) 2,880 640 3,520 2,248 2,113
Deferred tax liabilities (Note 16) 3,247 1,351 4,598 4,365 4,222
Net deferred tax liability 367 711 1,078 2,117 2,109
At 31 December, 1997, the deferred tax liabilities resulting from the capital gain realized upon the transfer by BNP
to its subsidiary Compagnie Immobilière de France of its buildings and leasing rights amounted to
FRF 804 million. This amount includes a FRF 615 million write-back recorded in 1997 as a result of the writedown
of the corresponding assets.
B N P

NOTE 36 - AVERAGE
EMPLOYMENT
Average employment of BNP and fully consolidated subsidiaries may be analyzed as follows:
G R O U P
1997 1996 1995
Average Including Average Including Average Including
employment ofiicers employment ofiicers employment ofiicers
BNP France 35,575 7,563 36,568 7,434 37,772 7,378
Branches outside France 4,644 1,331 4,318 1,203 3,917 981
French subsidiaries 3,163 1,159 2,909 1,026 2,861 1,003
Foreign subsidiaries 9,320 1,311 9,440 1,201 9,670 1,142
BNP Group total 52,702 11,364 53,235 10,864 54,220 10,504
France 38,738 8,722 39,477 8,460 40,663 8,381
Other countries 13,964 2,642 13,758 2,404 13,587 2,123
BNP Group total 52,702 11,364 53,235 10,864 54,220 10,504
145
ONE HUNDRED
FORTY-FIVE

146
ONE HUNDRED
FORTY-SIX
NOTE 37 - CONSOLIDATED
PROFIT AND LOSS ACCOUNT
(CRB 91-02 PRESENTATION)
Thousands of French francs 1997 1996 1995
INCOME AND CHARGES ARISING FROM BANKING OPERATIONS
Interest receivable and similar income:
Interest receivable and similar income on
124,723,139 111,912,877 112,957,903
transactions with credit institutions
Interest receivable and similar income on
46,532,927 37,470,727 34,525,429
transactions with customers
Interest receivable and similar income on
51,980,091 49,121,184 55,407,016
debt securities and other fixed-income securities
Income receivable arising from leasing and
11,604,095 11,262,390 8,903,643
similar operations 14,605,258 14,057,797 14,120,189
Other interest receivable and similar income 768 779 1,626
Interest payable and similar charges:
Interest payable and similar charges arising
(101,474,319) (88,100,391) (90,398,293)
from transactions with credit institutions
Interest payable and similar charges arising
(46,597,484) (38,566,935) (34,765,329)
from transactions with customers
Interest payable and similar charges arising
(25,856,368) (20,544,077) (24,561,660)
from debt securities and other fixed-income securities
Charges payable arising from leasing and
(18,611,656) (19,257,455) (21,422,304)
similar operations (10,408,811) (9,731,924) (9,649,000)
Income from variable yield securities 905,522 1,027,681 933,948
Commissions receivable 13,599,574 11,619,557 8,949,118
Commissions payable (3,630,089) (2,756,245) (1,382,542)
Net profit on financial operations: 8,717,267 7,826,329 5,324,039
Net profit on transactions in trading securities 8,094,402 6,668,305 4,639,862
Net profit on transactions in securities held for sale 622,865 690,702 26,643
Net profit on exchange transactions - 467,322 657,534
Net loss on financial operations: (228,997) (3,359,156) (376,373)
Net loss on transactions in securities held for sale (217,845) - -
Net loss on transactions in financial instruments (11,152) (3,359,156) (376,373)
OTHER ORDINARY INCOME AND CHARGES
Other operating income: 4,498,923 3,926,279 3,472,726
Other income from banking operations 3,023,701 3,197,939 2,811,706
Other income from nonbanking operations 1,475,222 728,340 661,020
General operating charges: (28,528,972) (26,596,551) (26,257,984)
Staff costs (18,990,631) (17,920,868) (17,640,146)
Other administrative expenses
Depreciation expenses and provisions for
(9,538,341) (8,675,683) (8,617,838)
depreciation of intangible and tangible assets (2,101,837) (2,061,359) (1,949,661)
Other operating charges: (3,153,871) (2,716,869) (1,885,916)
Other charges arising from banking operations (2,229,230) (2,413,212) (1,614,678)
Other charges arising from nonbanking operations (924 ,641) (303,657) (271,238)
B N P

Thousands of French francs 1997 1996 1995
Net loss on value adjustments in respect
of loans and advances and off-balance sheet items (6,784,810) (3,793,082) (5,533,583
Net loss on value adjustments in respect
of financial fixed assets - (704,081) -
Net profit on value adjustments in respect
of financial fixed assets 2,380,028 - 8,079
Surplus of allocation for over write-back
of funds for general banking risks (126,148) - (98,769)
Surplus of write-back of over allocations
for funds for general banking risks - 1,766,597 -
ORDINARY PRETAX PROFIT
Extraordinary income and charges
8,792,410 7,991,586 3,762,692
Extraordinary pretax income (1,391,724) (3,417,077) (699,708)
Extraordinary income 296,725 274,554 29 247
Extraordinary charges (1,688,449) (3,691,631) (728,955)
Tax on income (1,997,105) (982,439) (1,174,157)
Share of profit or loss of companies carried
under equity method 815,148 536,849 36,197
Nonfinancial 576,716 342,500 (65,589)
Financial 238,432 194,349 101,786
PROFIT FOR THE FINANCIAL YEAR 6,218,729 4,128 919 1,925 024
Group share 5,961,769 3,856,327 1,783,869
Minority interests 256,960 272,592 141,155
The consolidated profit and loss
account (CRB 91-02 presentation)
differs in the following respects from
the consolidated income statement
presented following the balance
sheet:
• Additions to, and deductions
from the allowance for
miscellaneous risks are reflected
G R O U P
under “Other operating charges”
in the CRB 91-02 presentation
(FRF 9 million in 1997,
FRF 34 million in 1996 and
FRF 29 million in 1995), whereas
they are reflected under “Net
(addition to) deduction from
reserve from general banking risks
and other risks” in the consolidated
income statement.
• The amortization charge for
goodwill is reflected under “Other
operating charges “ in the CRB 91-
02 presentation, whereas it is
reflected under “Amortization of
goodwill” in the consolidated
income statement (FRF 103
million in 1997, FRF 88 million
in 1996, and FRF 84 million in
1995).
147
ONE HUNDRED
FORTY-SEVEN

THE BNP GROUP AT 31 DECEMBER 1997
148
ONE HUNDRED
FORTY-EIGHT
FABC
10.49
SFA
100.00
SFA
1.00
100.00
FABC
10.00
T HE AMERICAS
90.00 BNP COOPER
NEFF
UNITED STATES
EUROPE
BANK OF THE WEST
UNITED STATES
FABC
UNITED STATES
100.00
BNP
URUGUAY
ASIA
PACIFIC
BNP FINANCE
HONG KONG LTD
BNP ARBITRAGE
HONG KONG
BNP IFS
HONG KONG LTD
100.00
BNP IFS
SINGAPOUR LTD
SINGAPORE
50.00
INTERNATIONAL BANK
OF PARIS & SHANGHAI
CHINA
BNP PACIFIC LTD
AUSTRALIA
89.51
100.00
BNP
SECURITIES INC.
UNITED STATES
100.00
BNP
GUADELOUPE
100.00
BNP US
FUNDING LLC
UNITED STATES
BANCO BNP
BRASIL SA
BRAZIL
99.00
100.00
100.00
100.00
BNPI
11.10
BNP
MEXICO
HOLDING
100.00
BNPI
38.87
BNP CANADA
BNP
MEXICO
BNP
PANAMA
3.00
BNP GUYANE
FRENCH GUIANA
3
80.00
BNP
MARTINIQUE
50.00
INVERSIONES
DRESDNER BNP
CHILE
BNP EQUITIES
AUSTRALIA LTD
88.90
52.93
94.00
100.00
100.00
BNP PRIVATE
BANK AND TRUST
CO. BAHAMAS
80.00
99.98
BNP
NOUVELLE-CALEDONIE
NEW CALEDONIA
70.00
PT BNP LIPPO INDONESIA
INDONESIA
PT BNP
LIPPO UTAMA LEASING
INDONESIA
Sté BRIDOISE DE PARTICIPATIONS 3.54
BNPI
0.02
BNP BANK NV
NETHERLANDS
BNP LEASING SPA
ITALY
BNP ESPAÑA
SPAIN
BNP FACTOR
PORTUGAL
BNP KB NORGE
NORWAY
A FRICA
76.00
BANQUE DU CAIRE
ET DE PARIS
EGYPT
FRANCE
BNP BAIL
BNP BAIL GROUP
• NATIOCREDIBAIL
• NATIOCREDIMURS
CREDIT
UNIVERSEL GROUP
BNP FACTOR FRANCE
99.97
COMPAGNIE
IMMOBILIERE
DE FRANCE CIF
CIP
19.90
BNP FINANCE
DU BOUZET SA
100.00
100.00
99.05
95.00
100.00
0.01
100.00
100.00
95.97
100.00
BANQUE ARABE
ET INTERNATIONALE
D'INVESTISSEMENT
BAII GROUP
SFA
5.96
BNPI
20.00
SFA
17.00
SFOM
81.60
SFOM
43.84
NATIO
CREDIT
100.00
NATIO
CREDIT
100.00
NATIO
CREDIT
80.09
0.03
0.25
60.10
BNP SUISSE
SWITZERLAND
33.00
BNP DRESDNER BANK
Z.A.O. RUSSIA
50.00
BNP DRESDNER
BANK RT. HUNGARY
50.00
BNP DRESDNER
BANK CR. PRAGUE
(CZECH REPUBLIC)
50.00
BNP DRESDNER
BANK (POLSKA) SA
POLAND
40.00
BNP DRESDNER
BANK (BULGARIA) AD
INTERNATIONAL BANK
OF SOUTHERN AFRICA
SOUTH AFRICA
THE COMMERCIAL BANK
OF NAMIBIA LTD
BNP
INTERCONTINENTALE
BANQUE
DE BRETAGNE
SFA
BANEXI
BNP IMMOBILIER
FINANCIERE BNP
SAPEG
NATIOBAIL
BNP GESTIONS
81.91
100.00
100.00
100.00
100.00
100.00
99.75
100.00
NATIO
INFORMATIQUE
11.56
BNP BAIL
71.59
B N P

BNPI
45.50
BNPI
14.00
100.00
8.89
BNP UK HOLDINGS LTD
UNITED KINGDOM
BNP RE LUXEMBOURG
BNP LUXEMBOURG
UEB HOLDING SUISSE
SWITZERLAND
16.00
BNP AK DRESDNER
BANK AS
TURKEY
100.00
BNP AK DRESDNER BANK
FINANSAL KIRALAMA
TURKEY
BMCI MOROCCO
BNP
ARBITRAGE
MEUNIER
PROMOTION
PROMOPART BNP
100.00
80.00
54,50
50.00
9.90
99.95
BANQUE DE LA CITE
11.11
100.00
BNP
PLC LONDRES
UNITED KINGDOM
BNP IRELAND LTD
IRELAND
BNP CAPITAL FINANCE
LTD IRELAND
UEB GENEVE
SWITZERLAND
SFOM
SWITZERLAND
BICI
SENEGAL
54.76 80.00
45.24
BNP
DEVELOPPEMENT SA
0.10
IMMO INVESTISSEMENTS
BNP
EUROPCAR LEASE
100.00
48.36
27.71 24.75
22.29
UBCI TUNISIA
50.00
UOB TRUST
BAHAMAS
UEB MONACO
UEB LUXEMBOURG
BICI GABON
BTCI
TOGO
BCI
MER ROUGE
DJIBOUTI
NATIO-VIE
23.78
65.00
NATIO INFORMATIQUE
23.80 18.50
50.00 50.00 51.00 37.50
90.10
49.09
100.00
50.91 99.88
G R O U P
100.00
0.02
100.00
100.00
100.00
22.87 22.50
35.00
NATIO LOCATION
20.00
18.14
BICI A
BURKINA FASO
28.00
BICI
COTE-D'IVOIRE
BMOI
MADAGASCAR
21.00
FULLY CONSOLIDATED
SUBSIDIARIES
PROPORTIONALLY
CONSOLIDATED
SUBSIDIARIES
AFFILITES CARRIED
UNDER THE EQUITY
METHOD
AFFILIATES HELD
JOINTLY WITH
DRESDNER BANK
WHOLLY-OWNED SUBSIDIARIES
OF BNP GROUP
(DIRECTLY AND / OR INDIRECTLY)
149
ONE HUNDRED
FORTY-NINE

150
ONE HUNDRED
FIFTY
BNP GROUP OFFICES OUTSIDE FRANCE AT 31 DECEMBER 1997
This list includes the 500 offices of BNP’s fully consolidated subsidiaries, as well as those of affiliates carried
under the equity method, associated banks, and representative offices.
EUROPE
BELGIUM 3
BULGARIA 1
CYPRUS 1
CROATIA 1
CZECH REPUBLIC 3
GERMANY 4
GREECE 7
HUNGARY 2
IRELAND 3
ITALY 7
JERSEY 2
LUXEMBOURG 3
NETHERLANDS 7
NORWAY 2
POLAND 4
PORTUGAL 5
ROMANIA 1
RUSSIA 3
SPAIN 80
SWITZERLAND 12
TURKEY 4
UKRAINE 1
UNITED KINGDOM 5
TOTAL 161
THE AMERICAS
ARGENTINA 6
BAHAMAS 1
BRAZIL 2
CANADA 5
CAYMAN ISLANDS 2
CHILE 2
COLOMBIA 1
COSTA RICA 1
MEXICO 2
PANAMA 3
PERU 1
UNITED STATES 114
URUGUAY 1
VENEZUELA 2
TOTAL 143
ASIA
CHINA 11
HONG KONG 12
INDIA 7
INDONESIA 4
JAPAN 3
MACAO 3
MALAYSIA 2
MYANMAR 1
PHILIPPINES 1
SINGAPORE 1
SOUTH KOREA 1
TAIWAN 4
THAILAND 2
VIETNAM 2
TOTAL 54
PACIFIC
AUSTRALIA 7
NEW ZEALAND 1
TOTAL 8
AFRICA
ALGERIA 1
BURKINA FASO 11
BURUNDI 8
COMOROS 2
CONGO 14
COTE D'IVOIRE 41
DJIBOUTI 7
GABON 10
GUINEA 12
MADAGASCAR 7
MAURITIUS 8
MOROCCO 85
NAMIBIA 6
NIGERIA 1
RWANDA 5
SENEGAL 15
SOUTH AFRICA 2
TOGO 7
TUNISIA 40
ZIMBABWE 2
TOTAL 284
MIDDLE EAST
BAHRAIN 2
EGYPT 5
IRAN 1
ISRAEL 1
LEBANON 5
UNITED ARAB EMIRATES 1
TOTAL 15
FRENCH OVERSEAS AREAS
FRENCH GUIANA 5
GUADELOUPE 12
MARTINIQUE 12
NEW CALEDONIA 9
REUNION 11
WALLIS AND FUTUNA 1
TOTAL 50
B N P

JOINT STATUTORY
AUDITORS’ REPORT
ON THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR
ENDED DECEMBER 31, 1997
To the shareholders of Banque
Nationale de Paris
As statutory auditors appointed by
the Shareholders’ Meeting we have
audited the accompanying
consolidated financial statements
of the BNP Group for the year
ended December 31, 1997.
These consolidated financial
statements are the responsability of
the Company’s Board of Directors.
Our responsability is to express an
opinion on these consolidated
financial statements based on our
audit.
We conducted our audit in
accordance with French auditing
standards. Those standards require
BARBIER
FRINAULT & AUTRES
Christian Chiarasini,
Radwan Hoteit
G R O U P
that we perform appropriate
procedures to obtain reasonable
assurance about whether the
consolidated financial statements
are free of material misstatement.
An audit includes examining, on a
test basis, evidence supporting the
amounts and disclosures in the
consolidated financial statements.
An audit also includes assessing the
accounting principles used and
significant estimates made by
management, as well as evaluating
the overall consolidated financial
statements presentation. We believe
that our audit provides a reasonable
basis for our opinion.
In our opinion, the consolidated
financial statements present fairly,
in all material respects, the financial
Neuilly-sur-Seine and Paris, April 10, 1998
The statutory auditors
BEFEC-PRICE
WATERHOUSE
Etienne Boris
position of the BNP Group at
December 31, 1997 and the results
of its operations for the year then
ended.
We have also carried out the
specific verifications required
by law on the information
given in the Board of Directors’
management report of the BNP
Group. We have no observation to
make on its fairness and conformity
with the consolidated financial
statements.
SALUSTRO REYDEL
Edouard Salustro,
Michel Savioz
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C O N T E N T S
PARENT COMPANY FINANCIAL STATEMENTS [EXCERPTS (a) ]
Parent Company Balance Sheet 154
Parent Company Income Statement 156
Accounting Policies 157
Profit and Loss Account (CRB 91-01 Presentation) 163
Five-Year Parent Company Financial Summary 165
Information on Subsidiaries and Associated Companies of BNP 166
Main Changes in the Equity Investment Portfolio of BNP SA in 1997 169
Statutory Auditors’ Special Report on Regulated Transactions and Agreements 170
(a) The complete parent company financial statements, including the notes to the financial statements, are available upon request from BNP.
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BALANCE SHEET BNP SA
ASSETS
Millions of French francs at 31 December 1997 1996 1995
Interbank and money market items:
Cash and due from central banks and post office banks 6,717 10,219 4,041
Treasury bills and money market instruments 124,239 67,571 48,705
Due from credit institutions 510,602 552,811 517,308
Total interbank and money market items 641,558 630,601 570,054
Customer items:
Due from customers 683,014 615,020 585,705
Leasing receivables 1,605 960 1,021
Total customer items 684,619 615,980 586,726
Bonds and other fixed-income instruments 77,886 83,868 62,267
Equities and other non-fixed-income instruments 5,583 9,823 4,028
Equity securities held for investment
and other stock investments:
Equity securities held for investment 4,713 1,808 1,895
Other stock investments 34,577 34,974 33,376
Total equity securities held for investment
and other stock investments 39,290 36,782 35,271
Tangible and intangible assets 14,302 14,525 14,780
Accrued income 105,685 74,473 77,165
Other assets 76,269 44,903 34,948
Total assets 1,645,192 1,510,955 1,385,239
Commitments given:
Financing commitments given 355,004 294,886 270,279
Guaranties and endorsements given 220,917 206,841 160,228
Commitments given on securities 6,770 5,211 3,112
Commitments incurred on forward and options contracts 14,573,349 11,467,660 8,938,014
B N P

LIABILITIES AND STOCKHOLDERS’ EQUITY
Millions of French francs at 31 December 1997 1997 (a) 1996 1995
Before appropriation After appropriation
of income of income
Interbank and money market items:
Due to central banks and post office banks 23,731 23,731 12,503 4 853
Due to credit institutions 567,276 567,276 545,887 492 506
Total interbank and money market items 591,007 591,007 558,390 497 359
Customer deposits 560,436 560,436 510,739 471 459
Bonds and negotiable debt instruments:
Retail certificates of deposit 5,595 5,595 7,081 9,437
Interbank market securities 768 768 655 631
Negotiable certificates of deposit 148,325 148,325 157,594 164,804
Bonds, including short-term portion 49,271 49,271 57,083 62,015
Other debt instruments 20 20 130 88
Total bonds and negotiable debt instruments 203,979 203,979 222,543 236,975
Accrued expense 92,794 92,794 63,970 63,622
Other liabilities 80,376 81,869 56,650 26,563
Allowance for liabilities and charges 16,019 16,019 10,805 10,154
Subordinated debt 51,553 51,553 42,180 35,683
Reserve for general banking risks 6,013 6,013 6,026 7,791
Stockholders’ equity:
Capital stock 5,331 5,331 5,186 4,805
Capital surplus 20,970 20,970 19,885 17,447
Retained earnings 14,614 15,221 14,581 13,381
Total stockholders' equity 40,915 41,522 39,652 35,633
Net income 2,100 — — —
Total liabilities and stockholders’ equity 1,645,192 1,645,192 1,510,955 1,385,239
Commitments received:
Financing commitments received - 9,893 9,931 13,444
Guaranties and endorsements received - 153,820 119,812 110,823
Commitments received on securities - 6,420 5,825 3,994
(a) Based on proposed appropriation of income of BNP.
S A
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INCOME STATEMENT
BNP SA
Millions of French francs,
year ended 31 December 1997 1996 1995
Net interest and assimilated income:
Net interest and assimilated income on interbank items 2,119 2,310 2,219
Net interest and assimilated income on customer items 23,332 24,190 27,192
Interest expense on bonds and negotiable debt instruments (16,614) (17,170) (18,949)
Interest income on bonds and other fixed-income instruments 8,508 8,396 7,176
Income on equities and other non-fixed-income instruments 3,505 2,025 2,044
Net interest and assimilated income 20,850 19,751 19,682
Net commissions 8,188 7,587 6,403
Net gains (losses) on financial operations 4,107 1,956 2,622
Other net income from banking operations 1,003 1,052 1,589
Net banking income 34,148 30,346 30, 296
Operating expense:
Salaries and employee benefits, including profit sharing (15,129) (14,531) (14,533)
Other expense (7,416) (6,912) (6,823)
Total operating expense (22,545) (21,443) (21,356)
Depreciation, amortization, and provisions
on tangible and intangible assets (1,648) (1,589) (1,579)
Gross operating income 9,955 7,314 7,361
Net addition to allowance for credit risks and country risks (5,506) (2,008) (3,154)
Net operating income 4,449 5,306 4,207
Gains (losses) on disposals of long-term investments, net of provisions 1,687 (1,533) (1,192)
Net (addition to) deduction from reserve
for general banking risks and miscellaneous risks 31 1,708 (52)
Nonrecurring items (4,398) (3,427) (1,024)
Income taxes (benefits) 331 321 (162)
Net income 2,100 2,375 1,777
B N P

ACCOUNTING POLICIES
BASIS OF PRESENTATION
Accounting policies applied in
preparing the balance sheet and
income statement comply with the
accounting principles established
for the French banking industry.
The financial statements of foreign
branches, prepared in accordance
with accounting policies applied in
their respective countries, have
been restated to conform to BNP’s
accounting policies.
BASIS FOR COMPARISON
BETWEEN THE FINANCIAL
STATEMENTS
Accounting policies were applied
on a consistent basis with those of
the preceding three years.
INCOME AND EXPENSE
RECOGNITION
Interest income and related
commissions are recognized on an
accrual basis. Fees for services (not
interest-related) are recorded when
the services are rendered.
FOREIGN CURRENCY
TRANSACTIONS
Foreign exchange positions are
generally valued at official year-end
exchange rates. Currency gains and
losses on ordinary transactions
denominated in a foreign currency
are recorded in income and expense.
Exchange differences calculated on
S A
the basis of year-end exchange rates
for assets denominated in foreign
currencies and held on a long-term
basis, including debt securities held
for investment, equity securities
held for investment, the equity base
of branches, and other stock
investments in foreign units are
posted to equity.
FOREIGN CURRENCY
TRANSLATIONS
Foreign currency denominated
assets, liabilities, and off-balance
sheet commitments of foreign
branches have been translated into
French francs at official year-end
exchange rates, except
nonmonetary assets and liabilities
of the branch in Argentina, which
were translated at historical rates
to correct for high inflation in that
country. Income statements have
been translated at average
exchange rates for the year for
foreign branches, except in
Argentina (a country with high
inflation), for which the year-end
exchange rate was used.
Translation adjustments regarding
the equity base of BNP branches
outside France are included in
“Accrued income and other assets”
and “Accrued expense ”.
BOND ISSUES
Issue costs are prorated over the
term of the bond.
SECURITIES
The term “securities” covers
interbank market securities (mainly
promissory notes and mortgage
notes); Treasury and other
negotiable debt instruments; bonds
and other fixed-income instruments
(whether fixed- or floating-rate); and
equities and other non-fixed-income
instruments.
Securities are classified as “Trading
account assets”, “Investment securities
held for sale”, “Debt securities held
for investment”, “Equity securities
held for investment”, and “Other
stock investments”.
• Trading Account Assets
Securities held for up to three
months are recorded under
“Trading account assets” and
valued individually at market.
Changes in market values are
posted to income.
• Investment Securities Held
for Sale
This category includes securities
held for at least three months, but
which BNP SA does not intend
to hold on a long-term basis.
Bonds and other fixed-income
instruments are valued at the lower
of cost (excluding accrued interest)
or their probable market value,
which is generally determined on
the basis of market prices. Accrued
interest is posted to income under
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“Interest income on bonds and
other fixed-income instruments”.
Stocks are valued at the lower of
cost (excluding accrued interest)
or their probable market value,
which is generally determined on
the basis of stock market prices,
for listed stocks, or BNP SA’s
share in net assets calculated on
the basis of the most recent
financial statements available, for
unlisted stocks. Dividends
received are posted to income
under “Income on equities and
other non-fixed-income
instruments” at the time of their
payment.
The cost of sale of investment
securities held for sale is
determined on a first in, first out
(FIFO) basis. Capital gains on
disposal are reflected in the income
statement under “Net gains
(losses) on financial operations”,
as are provisions for market value
write-downs or recoveries.
• Debt securities held for
investment
Fixed-income securities (mainly
bonds, interbank market securities,
Treasury securities, and other
negotiable debt securities) are
recorded under “Debt securities
held for investment” to reflect
BNP's intention of holding them
on a long-term basis. Bonds
classified under this heading are
financed by matching funds or
hedged against interest rate exposure
to maturity.
The difference between cost and
the redemption price of these
securities is prorated over the life
of the securities and posted to
“Interest on bonds and other
fixed-income instruments” in the
income statement. In the balance
sheet, their carrying value is
amortized on a straight-line basis
to their redemption value.
Interest on debt securities held for
investment is posted to income
under “Interest on bonds and other
fixed-income instruments”.
A provision is made when a
decline in the credit standing of
an issuer jeopardizes redemption
at maturity.
• Equity securities held for
investment
This category includes shares
and related instruments that
BNP intends to hold on a longterm
basis, without taking an
active part in the management
of the issuing companies.
“Equity securities held for
investment” are recorded individually
at the lower of cost or fair
market value. Fair market value
is determined as follows: according
to the average market price
over the previous two fiscal years
for listed securities or according
to a more recent market price
when a decrease in value of the
underlying security is likely to
endure, and according to net
asset value per share (consolidated,
if applicable) for unlisted
securities.
Dividends received are posted to
income under “Income on equities
and other non-fixed-income
instruments” at the time of their
payment.
• Other Stock Investments
This category includes affiliates
in which the BNP Group exercises
significant influence over
management, as well as those
affiliates that are considered strategic
to the Group’s business
development. Significant
influence is deemed to exist
when the Group holds an ownership
interest of at least 10%.
Other stock investments are
recorded individually at the
lower of cost or fair market
value. Fair market value is determined
as follows: according to
the average market price over
the previous two fiscal years for
listed securities or according to a
more recent market price when a
decrease in value of the underlying
security is likely to endure,
and according to net asset value
per share (consolidated, if applicable)
for unlisted securities.
Capital gains or losses on disposals
are recorded as “Gains
(losses) on disposals of longterm
investments, net of provisions”
in the income statement.
Dividends on other stock investments
are posted to income
when the stockholders of those
companies have voted to distribute
the dividends during the
year. They are posted to
“Income on equities and other
non-fixed-income instruments”.
FINANCIAL FUTURES
BNP SA operates in the interest
rate and currency futures and
B N P

options markets, both on organized
exchanges and in over-thecounter
transactions. It engages
in interest rate and currency
swaps to manage its interest rate
and exchange rate risk exposure,
as well as for the purposes of
arbitrage and trading.
• Interest Rate Futures
Interest rate futures and options
contracts traded on organized
exchanges are valued at market at
the balance sheet date. Realized and
unrealized gains and losses are taken
to income under “Net gains (losses)
on financial operations”.
Gains and losses on certain
contracts, which are traded over
the counter on narrow markets or
which are isolated open positions,
are taken to income either when
the contracts are unwound or on a
pro rata temporis basis, depending
on the nature of the instruments.
Provisions for risks are made to
cover unrealized losses.
Gains and losses on settled interest
rate contracts designated as hedging
operations are recognized similarly
to the underlying instrument.
• Currency Futures
Options contracts are marked to
market and valuation differences are
posted to income. Identical
treatment is used for forward
exchange contracts bought and sold
for trading purposes. As a general
rule, when these transactions are
hedged, the hedging contracts are
valued at the cash price prevailing at
the end of the period. Premiums and
discounts on contracts designated as
a hedge are recognized on an accrual
S A
basis and posted to the income
statement over the life of the
underlying transaction.
• Equity and Equity Index
Derivatives
BNP buys and sells equity and
equity index options for trading
and hedging purposes. In the case
of trading operations, unrealized
gains and losses on contracts that
have not been unwound by the
balance sheet date are carried
directly to income. Gains and losses
on settled equity and equity index
contracts designated as hedging
operations are recognized similarly
to the underlying instrument.
CUSTOMER LOANS
“Customer loans” cover credits to
entities other than credit
institutions and are broken down
into commercial and industrial
loans, customer overdrafts, and
other credits. Customer loans are
carried in the balance sheet at
principal amount plus accrued
interest.
Whenever management
determines that borrowers may not
be able to repay their loans, a
provision for credit risk is charged
to income. Provisions are calculated
on a case-by-case basis, taking into
account guaranties held by the
bank, except in the case of small
receivables, on which the risk is
calculated statistically, taking into
account the bank's loan loss
experience on this category of
receivables.
In the case of real estate
professionals, potential losses are
computed on the basis of the fair
market value of the assets financed,
guaranties, and losses on unfinished
developments (reflecting income
and expenses pending). The fair
market value of assets financed
takes into account rental values,
prices of recent transactions
involving comparable operations,
and any possible capital losses.
Expenses pending take into
account all interest expense that
will be due until complete disposal
of the building program,
construction costs, fees for
professional services pending, and
operating expenses.
Allowances for credit risks on items
carried under assets in the balance
sheet are deducted from the
corresponding asset items.
Allowances reported under liabilities
consist of allowances for guaranties
and endorsements, allowances for
losses on real estate developments in
which equity investments have been
made, allowances for legal
proceedings pending, allowances for
risks not specifically identified, and
allowances for unforeseeable sectoral
risks.
Additions to and deductions from
allowances, loan losses, and
recoveries of loans written off are
all carried under “Net addition to
allowance for credit risks and
country risks” in the income
statement.
Additions to allowances for
unforeseeable sectoral risks made
by means of transfers from the
reserve for general banking risks are
recorded as nonrecurring expenses.
These allowances are utilized to
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cover substantial risks identified by
the income statement heading
under which the corresponding
allowance was recorded.
COUNTRY RISK
PROVISIONS
BNP determines its country risk
coverage on the basis of the future
solvency of each of the countries at
risk and the nature of the loans
outstanding to those countries.
Country risk provisions and writebacks
are reflected in the income
statement under “Net addition to
allowance for credit risks and
country risks”.
RESERVE FOR GENERAL
BANKING RISKS
For reasons of conservatism, BNP
SA has set up a reserve for general
banking risks. Specific additions
to, and deductions from, this
reserve are reflected in the
consolidated income statement
under “Net (addition to)
deduction from reserve for general
banking risks and other risks”.
This reserve was originally set up
through transfers from other
reserves.
PROVISIONS FOR OTHER
RISKS
BNP SA makes provisions for
other risks to cover specific risks
that are uncertain and not
quantifiable. These provisions
may be written back in the case
of individual risks which become
certain and quantifiable and
which are covered by specific
provisions.
LEASE FINANCING
Assets leased to others are carried
in the balance sheet under
“Customer items—Leasing
receivables” net of accumulated
depreciation.
FIXED ASSETS
In 1991 and 1992, as allowed by
French regulations, BNP
transferred its main operating real
estate holdings to its subsidiary
Compagnie Immobilière de
France “CIF”. This transaction
covered wholly owned buildings
and buildings leased to BNP SA
(the parent company) by
specialized subsidiaries. BNP
intends to hold these buildings
on a long-term basis.
In order to reflect the decline in
the real estate market, which is
now considered to be durable, the
BNP Group in 1997 readjusted
the value of the assets concerned
by the above real estate
restructuring. It wrote down the
value of the Group’s tangible assets
for the amount net of the related
income tax effect, in the
consolidated balance sheet under
“Capital gains on restructuring”,
in the same way as it recorded the
initial adjustment. Consequently,
this readjustment had no impact
on consolidated net income.
The revaluation arising from this
transaction has been posted to
stockholders’ equity net of the
related deferred tax effect. A
deferred tax allowance has been
provided for.
Other premises and equipment
are stated at cost or valued in
accordance with France’s
appropriation laws of 1977 and
1978 or, for certain foreign
branches, in accordance with local
rules (see below).
The restructured real estate
portfolio is depreciated over a
fifty-year period starting from the
date of transfer using the straightline
method. Depreciation of
other fixed assets is computed on
the straight-line method over their
estimated useful lives in
accordance with rules applicable
in France and the countries where
BNP’s foreign branches operate.
The difference between tax
depreciation (accelerated
methods) and book depreciation
(generally straight-line methods)
is recorded under “Regulated
deductions—Accelerated
depreciation” in liabilities. No
deferred income tax is calculated
on the difference between book
and tax depreciation.
Intangible assets essentially
comprise software, which is
amortized over a three-year period.
STATUTORY
REVALUATION
In 1978, in accordance with
applicable tax laws, BNP revalued
land and buildings owned at
31 December 1976 and still
carried in its balance sheet at the
date of revaluation. The revalued
amounts, computed at
31 December 1976, were
established by independent
appraisers.
B N P

At the same time, investments in
consolidated subsidiaries and
equity-method companies were
also revalued either at
31 December 1976 market values
for companies listed on the Paris
Stock Exchange, or on the basis
of their net asset value as taken
from the 31 December 1976
balance sheet after appropriation
of income.
BNP has included within stockholders’
equity the portion of
the revaluation surplus relating
to nondepreciable assets arising
from this transaction.
INCOME TAXES
In France, the standard income
tax rate is 33.33%. Long-term
capital gains are taxed at a rate
of 19%. Capital gains and losses
on securities in the various
portfolios losses are taxed at the
standard income tax rate of
33.33%, with the exception of
“Other stock investments”,
which are subject to long-term
capital gains taxation.
Dividends received from
companies in which the BNP
Group has an ownership
interest of more than 10% or
more than FRF 150 million are
nontaxable.
In 1995 the French government
imposed a 10% surtax on corporate
income for an unspecified period
of time, and in 1997 it imposed a
15% surtax on corporate income,
which will be lowered to 10% for
fiscal year 1999 and expire at yearend
1999. BNP has taken these
S A
surtaxes into account to
determine income taxes for each
subsequent period that are
currently payable, and it has used
the liability method to adjust the
amount of deferred taxes for cases
where they would be subject to
the surtax when the timing
differences reverse themselves at
any time in the future, as
reiterated in the opinion issued
by the Conseil National de la
Comptabilité on 15 September
1997.
A charge for income taxes is taken
in the year in which the respective
taxable income and expense are
booked, regardless of the time
when the tax is actually paid. As a
result, BNP SA books deferred
taxes calculated on the basis of
timing differences between profit
and loss items for accounting and
tax purposes, under the liability
method.
In accordance with internationally
accepted acounting principles, the
BNP Group now records deferred
tax benefits taking into account
the probability that they will be
utilized, for amounts that may
exceed deferred tax liabilities.
PROFIT-SHARING PLAN
As required by French law, BNP
provides for profit sharing in the year
in which the profit arises, and reports
the provision under salaries in
“Operating expense” in the income
statement. The provision is
subsequently reversed and recorded
as “Profit sharing” in the following
year, after approval of the financial
statements by the stockholders.
RETIREMENT AND
PENSIONS FOR FORMER
EMPLOYEES
Upon retirement, BNP employees
receive pensions according to the
laws and customs prevailing in
the countries where BNP
operates.
Outside France, BNP and
its employees contribute to
mandatory pension plans
managed by independent
organizations.
Retired employees of BNP in
France are entitled to the
following pension system starting
1 January 1994, pursuant to a
new industry-wide agreement on
pensions:
• Retirees receive pension benefits
from the social security system
and two nationwide organizations,
which are financed by
contributions received from
employers and employees.
• Retirees receive additional
benefits from the pension fund
of BNP SA and its French
subsidiaries relative to services
rendered prior to 31 December
1993. Funding for these
additional benefits is provided
by transfers from the pension
funds’ existing reserves and by
employer contributions, which
are limited to a percentage of
payroll costs. The amount of
such additional benefits is
adjusted to reflect the funding
level of the pension funds and
may consequently be reduced
in due proportion.
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The working capital contributions
made to the two nationwide
pension organizations in 1994 are
treated as prepaid expenses and
amortized over the average
number of years left to retirement
of BNP’s affiliated employees,
which is currently twenty years.
EMPLOYEE BENEFITS
Under various agreements, BNP
SA is committed to pay early
retirement and seniority bonuses.
Each year, BNP estimates the
net current value of these
commitments and adjusts
the related allowance. The
net current value of these
commitments is determined on
the basis of a market rate that
corresponds to expected yields on
funds invested for the long term.
B N P

PROFIT AND LOSS
ACCOUNT OF BNP SA
(CRB 91-01 PRESENTATION)
Thousands of French francs, year ended 31 December 1997 1996 1995
INCOME AND CHARGES ARISING FROM BANKING OPERATIONS
Interest receivable and similar income: 97,106,735 85,003,297 87,453,380
Interest receivable and similar income on transactions with credit institutions 45,110,063 36,708,352 33,846,225
Interest receivable and similar income on transactions with customers
Interest receivable and similar income on debt securities
43,488,663 39,898,883 46,431,611
and other fixed-income securities 8,508,009 8,396,062 7,175,544
Other interest receivable and similar income - - -
Interest payable and similar charges: (79,866,238) (67,345,810) (69,882,752)
Interest payable and similar charges arising from transactions
with credit institutions (42,991,297) (34,398,763) (31,627,708)
Interest payable and similar charges arising from transactions with customers (20,260,985) (15,777,078) (19,305,684)
Interest payable and similar charges arising from debt securities
and other fixed-income securities (16,613,956) (17,169,969) (18,949,360)
Income from leasing operations 119,875 89,988 96,943
Charges arising from leasing operations (15,287) (22,117) (30,557)
Income from rental operations 20,826 12,863 -
Charges arising from rental operations (18,023) (9,037) -
Income from variable-yield securities 3,505,522 2,025,024 2,044,278
Commissions receivable 10,586,711 9,637,076 7,316,458
Commissions payable (2,398,867) (2,049,494) (913,021)
Net profit on financial operations: 4,700,716 2,935,898 3,013,632
Net profit on transactions in trading securities 1,709,963 2,604,457 2,591,851
Net profit on transactions in securities held for sale 35,269 124,977 -
Net profit on exchange transactions - 206,464 421,781
Net profit on transactions in financial instruments 2,955,484 - -
Net loss on financial operations: (593,685) (979,499) (391,710)
Net loss on transactions in trading securities - - -
Net loss on transactions in securities held for sale - - (150)
Net loss on foreign exchange transactions (593,685) - -
Net loss on transactions in financial instruments - (979,499) (391,560)
S A
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Thousands of French francs, year ended 31 December 1997 1996 1995
OTHER ORDINARY INCOME AND CHARGES
Other operating income: 3 258 570 3 414 412 3 192 018
Other income from banking operations 2,530,060 2,709,355 2,417,951
Other income 2,530,060 2,709,355 2,417,951
Other income from nonbanking operations 728,510 705,057 774,067
General operating charges: (22,544,618) (21,443,636) (21,355,667)
Staff costs (15,128,752) (14,530,952) (14,533,225)
Other administrative expenses
Depreciation expenses and provisions for depreciation
(7,415,866) (6,912,684) (6,822,442)
of intangible and tangible assets (1,648,478) (1,589,038) (1,578,754)
Other operating charges: (2,265,807) (2,422,045) (1,610,651)
Other charges arising from banking operations (1,996,545) (2,113,926) (1,300,484)
Other charges arising from nonbanking operations
Net loss on value adjustments in respect of loans
(269,262) (308,119) (310,167)
and advances and off-balance sheet items
Net loss on value adjustments in respect
(5 505 800) (2 008 569) (3 154 291)
of financial fixed assets
Net gain on value adjustments in respect
- (1,532,670) (1,192,007)
of financial fixed assets
Surplus of allocation for over write-back
1,687,333 - -
of funds for general banking risks - - (43,983)
Surplus of write-back of over allocation for funds
or funds for general banking risks 37,788 1,763,541 -
ORDINARY PRETAX PROFIT 6,167,273 5,480,184 2,963,316
EXTRAORDINARY INCOME AND CHARGES
Extraordinary pretax loss: (4,398,019) (3,426,599) (1,023,551)
Extraordinary income 230,368 26,809 1
Extraordinary charges (4,628,387) (3,453,408) (1,023,552)
Tax on income 330,619 321,442 (162,464)
PROFIT FOR THE FINANCIAL YEAR 2,099,873 2,375,027 1,777,301
The profit and loss account (CRB
91-01 presentation) differs in the
following respects from the income
statement presented following the
balance sheet: additions to, and
deductions from, the allowance for
miscellaneous risks are reflected
under “Other operating charges”
in the CRB 91-01 presentation
(FRF 7 million in 1997,
FRF 56 million in 1996, and
FRF 9 million in 1995), whereas
they are reflected under “Net
(addition to) deduction from
reserve for general banking risks
and other risks” in the income
statement.
B N P

FIVE-YEAR PARENT COMPANY
FINANCIAL SUMMARY BNP SA
French francs, except share
data and employment 1997 1996 1995 1994 1993
Capital at year-end
Capital stock 5,331,104,700 (a) 5,185,874,825 (b) 4,804,598,450 (c) 4,751,153,975 (d) 4,600,213,900 (f)
Common and nonvoting shares issued 213,244,188 (a) 207,434,993 (b) 192,183,938 (c) 190,046,159 (d,e) 184,008,556 (f,g)
Registered beneficiary shares
(parts bénéficiaires) outstanding
- Former BNCI — — 22,100 44,202 66,304
- Former CNEP — — 16,840 33,682 50,524
Results of operations for the year
Total revenues, excluding VAT
Income before tax, nonrecurring
nonoperating items, profit sharing,
118,564,568,666 102,036,211,395 102,628,056,297 94,891,304,883 117,842,996,720
depreciation, and provisions 13,243,961,291 9,237,139,910 8,672,714,814 9,837,997,523 10,903,429,397
Income taxes (benefits) (330,618,810) (321,442,607) 162,465,361 318,927,280 (144,272,494)
Profit sharing for year 375,000,000 (h) Income after tax, nonrecurring
nonoperating items, profit sharing,
164,380,906 — 81,324,354 —
depreciation, and provisions 2,099,873,373 2,375,026,870 1,777,301,169 1,320,036,417 57,664,442
Earnings distributed 1,492,719,116 1,120,148,962 694,513,727 608,264,800 552,201,308
Earnings per share
Earnings (excluding nonrecurring
nonoperating items) after tax and
profit sharing, but before depreciation
and provisions
Earnings after tax, nonrecurring
nonoperating items, profit sharing,
62.89 46.08 43.86 49.39 60.04
depreciation, and provisions 9.85 11.45 9.25 6.95 0.31
Dividend per share 7.00 (i) 5.40 3.60 (j) 3.20 3.00
Employment
Employment at year-end (k) 40,002 40,705 41,364 42,400 43,811
Total salaries 9,577,822,860 8,955,840,550 8,715,581,128 8,562,568,218 8,647,932,340
Staff benefits (including health care) 3,954,666,310 4,350,229,752 4,947,409,654 4,922,195,162 4,964,648,954
(a) Common stock was increased to FRF 5,331,104,700 from FRF 5,185,874,825 by the FRF 32,878,050 stock-for-stock public tender
offer for BNPI, the FRF 23,000,000 private placement reserved for BNP staff members, and the payment of a stock dividend amounting
to FRF 89,351,825.
(b) Common stock was increased to FRF 5,185,874,825 from FRF 4,804,598,450 by the FRF 18,007,000 stock-for-stock public tender
offer for BNP España, the FRF 305,058,400 stock-for-stock public tender offer for Compagnie d’Investissement de Paris “CIP”, the FRF
16,311,100 private placement reserved for BNP staff members, and the payment of a stock dividend amounting to FRF 41,899,875.
(c) Common stock was increased to FRF 4,804,598,450 from FRF 4,751,153,975 by the payment of the dividend in shares.
(d) Common stock was increased to FRF 4,751,153,975 from FRF 4,600,213,900 following the contribution of FRF 108,800,000 from
Financière Gamma and the payment of a stock dividend amounting to FRF 42,140,075.
(e) Nonvoting shares were converted into common shares.
(f) Common stock was increased to FRF 4,600,213,900 from FRF 3,536,972,150 by the exercise of 23,455,548 rights for common shares
and 19,074,122 warrants for nonvoting shares. In addition, 42,478,145 nonvoting shares were exchanged for common shares, bringing
to 183,212,579 the number of common shares issued and leaving 795,977 nonvoting shares issued.
(g) On 4 October 1993 a two-for-one split lowered the par value of BNP stock to FRF 25.
(h) Provision made during the year.
(i) Paid to 213,245,588 shares, taking into account the 1,400 new shares with rights from 1 January 1997 created pursuant to the 1995
2002 stock option plan and recorded on 29 January 1998.
(j) Paid to 192,904,218 shares, taking into account the 720,280 new shares with rights from 1 January 1995 created on 27 February
1996 following the stock-for-stock public tender offer for BNP España.
(k) For France, part-time employment is prorated according to the length of time worked.
S A
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INFORMATION ON SUBSIDIARIES AND
Financial information on subsidiaries Reserves and Total revenues Net income
and associated companies French retained for last (loss) for last
francs earnings before completed completed
exchange Capital appropriation of fiscal year fiscal year
Currency rate stock (a) income (a) (excl. tax) (a) (a)
INFORMATION ON SUBSIDIARIES AND ASSOCIATED COMPANIES
WHOSE BOOK VALUE EXCEEDS 1% OF BNP’S CAPITAL STOCK
A - Subsidiaries (>50% ownership interest)
FINANCIERE BNP FRF _ 7,596,818 1,027,350 172,358 145,561
BNP INTERCONTINENTALE FRF _ 190,769 1,136,202 1,619,950 280,850
BANEXI FRF _ 598,597 1,671,404 343,841 315,336
BNP FINANCE FRF _ 100,000 475,667 10,549,711 (379,159)
NATIOCREDIT FRF _ 978,681 590,112 124,590 123,113
BANQUE DE BRETAGNE FRF _ 325,667 101,305 673,927 83,996
DU BOUZET SA FRF _ 11,852 136,400 447,386 92,407
SFA FRF _ 36,557 4,594,629 692,890 636,133
NATIOINFORMATIQUE FRF _ 192,096 17,463 119,367 42,180
CIP FRF _ 2,465,647 2,316,567 186,843 734,908
BNP IMMOBILIER FRF _ 1,166,000 (789,964) 8,571 (104,116)
CRISTOLIENNE DE PARTICIPATIONS FV _ 123,000 _ _ (4,990)
BNP GESTIONS FV _ 65,080 16,367 500,013 115,397
BNP SUISSE SA (SWITZERLAND) CHF 4.118400 84,000 174,144 279,759 31,676
BNP CANADA (CANADA) CAD 4.178200 180,637 (46,325) 149,089 10,545
KASSINE HOLDING (IRELAND) GBP 9.917000 2,100 _ _ _
KASSINE HOLDING (IRELAND) ITL 0.003405 15,000,000 _ _ _
BNP UK HOLDING LTD (UNITED KINGDOM) GBP 9.917000 130,000 5,313 3,828 3,125
BNP KB NORGE (NORWAY) NOK 0.815000 52,772 182,605 13,232 12,427
BNP IFS SINGAPOUR LTD (SINGAPORE) SGD 3.559000 27,500 10,959 6,549 1,335
BNP LUXEMBOURG LUF 0.162190 1,300,000 3,816,720 10,796,162 796,375
BNP IRLANDE LTD (IRELAND) IEP 8.565500 15,562 1,248 24,098 11,964
HOLDING BANCWEST (UNITED STATES) USD 5.988100 198,667 194,339 457,662 58,312
BNP MEXICO HOLDING USD 5.988100 22,500 57 _ _
PT BNP LIPPO INDONESIA IDR 0.001130 50,000,000 26,899,056 133,627,871 16,290,554
ACEC UNION MINIERE (BELGIUM) BEF 0.162190 1,746,110 _ _ (14,434)
BNP ESPAÑA (SPAIN) ESP 0.039500 20,956,000 (7,045,000) 24,764,000 71,000
BNP IFS HONG KONG HKD 0.772900 100,022 195,045 89,042 32,594
BANQUE DU CAIRE ET DE PARIS (EGYPT) EGP 1.750700 50,493 20,184 127,363 16,016
BNP PRIME EAST LABUAN (MALAYSIA) USD 5.988100 25,200 0 2,921 804
BNP PRIVATE BANK AND TRUST USD 5.988100 14,000 5 8,354 950
BANCO BNP BRASIL (BRAZIL) BRL 5.365200 62,450 587 19,720 1,121
BNP SECURITIES INC.
(FORMERLY BNP FUTURES INC.) (UNITED STATES) USD 5.988100 21,482 19,901 55,645 1,576
B - Associated companies (10%-50% ownership interest)
SA 3 S CADRES FRF _ 59,841 186,057 N/A 304
CREDIT LOGEMENT DEVELOPPEMENT FRF _ 1,750,000 6,985 154,238 19,536
CAISSE REFINANCEMENT HYPOTHECAIRE FRF _ 500,000 14,255 8,048,727 8,840
NATIOVIE (PARIS) (b) FRF _ 719,950 3,239,971 29,090,873 405,432
BNP DEVELOPPEMENT FRF _ 425,000 27,453 23,973 41,456
INVERSIONES DRESDNER BNP PARIS LTDA (CHILE) CLP 0.01360 22,000,000 0 518,355 543,309
SFOM (GENEVA) CHF 4.11840 39,892 11,626 9,368 5,234
BNP KH DRESDNER BANK RT (HUNGARY) HUF 0.02946 3,500,000 1,418,227 5,154,764 969,128
BNP DRESDNER BK CSFR (CZECH REPUBLIC) CZK 0.17388 1,000,000 249,658 1,172,980 2,086,305
BNP AK DRESDNER BANK (TURKEY) TRL 0.00003 2,750,000,000 445,137,000 4,316,305,000 1,648,658
BNP DRESDNER BK POLOGNE (POLAND) PLN 1.70210 193,400 20,979 41,136 13,769
I.B.P.S. (CHINA) USD 5.98810 63,638 1,601 8,630 104
(a) Thousands of French francs or local currency units.
(b) Figures for Natio-Vie only (figures for Assu-Vie are not available).
B N P

ASSOCIATED COMPANIES OF BNP SA
Dividends Outstanding Guaranties
Book value of shares held BNP received by loans and and
BNP’s ownership BNP advances endorsment
interest Gross Net Including during granted by given by
(%) revaluation surplus year BNP (a) BNP (a)
100.00% 10,746,162 8,769,676 _ _ _ _
81.90% 769,161 769,161 144,447 24,179 1,245,513 106,033
100.00% 1,756,941 1,756,941 39,333 682,396 3,141,006 3,412
100.00% 137,015 137,015 _ 39,999 49,998,190 100,000
66.56% 1,132,449 1,132,449 _ 113,338 _ _
100.00% 465,868 465,868 _ 95,665 272,551 2,426
95.97% 139,383 139,383 _ 71,092 _ 86,380
100.00% 2,361,443 2,361,443 _ 1,061,943 _ _
65.00% 226,756 164,088 _ _ _ _
100.00% 3,922,496 3,922,496 _ 121,529 _ _
100.00% 1,465,999 513,040 _ _ _ _
100.00% 324,761 115,515 _ _ 176,957 _
99.75% 776,945 776,945 84 23,629 _ _
60.14% 453,256 453,256 43,107 28,866 570,225 65,502
88.90% 876,129 710,213 1,244 _ 22,002 3,006,846
100.00% 20,826 20,826 _ 2,668 _ _
100.00% 51,067 51,067 _ 4,033 _ _
100.00% 1,070,068 1,070,068 106,136 _ _ _
100.00% 172,320 172,320 _ _ _ _
100.00% 85,327 85,327 _ _ 608 14,639
54.50% 249,036 249,036 2,236 69,124 12,614,720 1,185,687
100.00% 219,308 162,108 _ 27,500 _ 39,340
100.00% 1,865,621 1,554,537 _ 194,805 62,858 27,922
100.00% 134,732 99,967 _ _ _ _
70.00% 124,972 124,972 _ _ 539,773,216 260,559,351
98.04% 279,985 279,985 _ _ _ _
97.41% 980,561 657,366 _ _ 3,305,075 12,751,779
100.00% 88,864 88,864 _ 11,942 762,531 _
76.00% 153,574 153,574 _ _ _ _
70.00% 135,810 135,810 _ _ 51,632 _
100.00% 185,631 185,631 _ 8,977 _ _
99.00% 331,250 331,250 _ _ 171,584 8,392
100.00% 136,261 136,261 _ _ _ _
30.00% 97,220 97,220 _ _ _ _
10.00% 175,000 175,000 _ 1,858 _ _
16.15% 82,040 82,040 _ 1,393 _ _
20.00% 396,686 396,686 _ 67,207 572,994 _
45.24% 194,068 194,068 _ 5,100 _ 7,000
50.00% 126,602 126,602 _ 2,751 _ _
48.34% 108,184 72,203 27,816 _ 2,657 _
50.00% 74,948 74,948 _ 3,933 8,290,197 _
50.00% 92,392 92,392 _ 6,151 106,438 148,896
16.00% 56,823 56,823 _ 7,228 _ _
50.00% 189,292 189,292 _ _ _ _
50.00% 181,074 181,074 _ _ 27,508 44,323
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INFORMATION ON OTHER SUBSIDIARIES AND ASSOCIATED COMPANIES
I - Subsidiaries not included under (A)
Book value of shares held by BNP
Gross Net Including revaluation
surplus
French companies 1,850,811 865,067 7,265
Foreign companies 696,746 264,493 28,606
II - Subsidiaries not included under (A)
French companies 390,999 112,008 430
Foreign companies 836,647 270,408 103,583
B N P

MAIN CHANGES IN THE EQUITY
INVESTMENT PORTFOLIO OF
BNP SA IN 1997
ACQUISITIONS OF SIGNIFICANT EQUITY INTERESTS
Pursuant to Section 356 of the 1966 French Companies Act, stockholders are hereby informed of acquisitions
during 1997 of equity interests in companies headquartered in France that have brought BNP’s equity
interest in those companies above the following thresholds:
Over 5%: Over 50%:
Cofinoga Medi Europe group
Over 10%: Over 66 2/3%:
E. Comm, Soparsico Snc Lille Centre d’Affaires, Hesdinoise de
Participations, Héricourtaine de Participations,
Over 33 1/3%: Casiband, Gessienne de Participations, Vocation
Natio Retraite Maritime
PRINCIPAL ACQUISITIONS AND DISPOSALS OF EQUITY INTERESTS
IN FRANCE AND ABROAD
IN FRANCE
Acquisitions Disposals
New investments: Total:
Cofinoga, Soparsico, Medi Europe group, Sphère, BDDP, BCEOM, CPR Billets,
Natio Retraite Immobilière du Parvis, Lordex, SDR Picardie,
Sicovam, Téléservice Ile-de-France
Follow-on investments (acquisitions):
Compagnie d’Investissements de Paris, BNPI Partial:
Elf Aquitaine, Lagardère, Péchiney, Renault,
Follow-on investments (subscriptions): Rhône-Poulenc, Compagnie de Suez, Accor,
Sofaris, Lucia, Immobilière et Foncière Laffite, Bouygues Télécom, Caisse de Refinancement
Natio-Vie Hypothécaire
OUTSIDE FRANCE
Acquisitions Disposals
New investments: Total:
CLS Services Ltd (United Kingdom), BNP Dresdner Argentina Private Developement Trust
Croatia (Croatia), BNP PrimeEast Labuan Holding (Argentina), Egyptian Tourism Investment
(Malaysia), BNP Private Bank and Trust Cie Bahamas Co (Egypt), Leasinvest (Portugal), Banco
Ltd (Bahamas), Wah Kwong (Hong Kong) Nacional Brasileiro Metropolitano de
Investimentos (Brazil)
Follow-on investments (acquisitions):
Banque du Caire et de Paris (Egypt) Partial:
Kassine Holding (United Kingdom)
Follow-on investments (subscriptions):
BNP Dresdner Bank Polska (Poland), Banco BNP
Brasil (Brazil), Echo Netting (United Kingdom),
International Bank of Paris and Shanghai (China),
Elf Oil Deutschland (Germany), Dresdner Bank
(Germany), BNP Dresdner Bank Bulgaria (Bulgaria)
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STATUTORY AUDITORS’
SPECIAL REPORT ON REGULATED
TRANSACTIONS AND
AGREEMENTS FOR THE YEAR
ENDED DECEMBER 31, 1997
To the shareholders of Banque
Nationale de Paris,
In accordance with section 103
of the 1966 French Companies
Act, it is the responsability of the
Statutory Auditors of corporations
to present to the Annual Meeting
of Stockholders a special report
indicating agreements subject to
section 101 of that act which
require previous authorization
from the Board of Directors.
AGREEMENTS
MADE IN 1997
PARTICIPATING LOANS
- BNP Canada.
AGREEMENTS MADE IN
PREVIOUS YEARS WHICH
WERE STILL IN EFFECT IN
1997
BANK DEPOSIT GUARANTIES
In accordance with the industrywide
agreement established by the
Association Française des Banques
in 1980, Banque Nationale de
Paris has been guarantying the
customer deposits of the following
companies of the consolidated
group:
- Banque Nationale de Paris
Intercontinentale “BNPI”,
- Banque pour l’Expansion
Industrielle “Banexi”,
- BNP Guyane,
- BNP Finance,
- Crédit Universel,
- Banque de Bretagne,
- Banque de la Cité,
- Banque Arabe et
Internationale
d’Investissement - BAII,
- BNP Martinique,
- BNP Guadeloupe.
PARTICIPATING LOANS
GRANTED IN PREVIOUS
YEARS
Participating loans granted in
previous years to the following
subsidiaries remained outstanding
in 1997:
- BNP Suisse,
- UEB Genève,
- BNP IFS Hong Kong,
- BNP UK Holding Ltd
London,
- Bank of the West
(United States),
- BNP Dresdner Bank Rt
(Hungary),
- BNP España,
- BNP Dresdner Bank (Polska).
GUARANTIES GIVEN TO
SUBSIDIARIES
Guaranties previously given to
the following companies were
maintained in 1997:
- Natiobail,
- Natiocrédimurs,
- Natioénergie,
- Natiolocation,
- Natiocrédibail,
- Locafinance,
- BNP Bail,
- BNP Plc London,
- BNP IFS Singapore Ltd,
- BNP IFS Hong Kong
(Comfort letter),
- BNP Finance HK (Comfort
letter).

Guaranties given to BNP
Canada and BNP Pacific
(Australia) Ltd concerning the
following operations continued
to have effect in 1997:
- BNP Canada
Issue of, or trading in,
promissory notes up to a limit
of 1.5 billion Canadian dollars.
Issue of commercial paper notes
up to a limit of 750 million US
dollars.
Issue of a 40 million Canadian
dollar debenture loan.
BARBIER
FRINAULT & AUTRES
Christian Chiarasini,
Radwan Hoteit
- BNP Pacific (Australia) Ltd
Issue of a 100 million Australian
dollar debenture loan.
Issue of commercial paper notes
up to a limit of 1.5 billion
Australian dollars.
GUARANTIES
GIVEN TO DIRECTORS
Banque Nationale de Paris
subscribed insurance contracts
with AIG Europe and Chubb to
protect the Directors of its
subsidiaries from their liability in
the normal exercise of their duties.
Neuilly-sur-Seine and Paris, April 10, 1998
The statutory auditors
BEFEC-PRICE
WATERHOUSE
Etienne Boris
This guaranty amounts to 200
million French francs.
Your Board of Directors agreed to
idemnify a member of the Board
of Directors for his liability as a
member of the Board of Directors
of the Eurotunnel Group.
SALUSTRO REYDEL
Edouard Salustro,
Michel Savioz
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LEGAL INFORMATION
CONCERNING
BANQUE NATIONALE DE PARIS
CORPORATE NAME AND
PRINCIPAL OFFICE
Banque Nationale de Paris
16 Boulevard des Italiens
75009 PARIS
The Corporation’s official documents
may be consulted at its principal office.
Trade and Companies
Register, Primary Business
Sector
BNP is registered under the number
B 662 042 449 in the Paris Trade
and Companies Register (Registre
du Commerce et des Sociétés). Its
Primary Business Sector Code (Code
APE) is 651C.
Duration and Fiscal Year
The duration of the Corporation is
99 years from 17 September 1993.
Each fiscal year begins on 1 January
and ends on 31 December.
Legal Form, Regulatory
Framework, and Corporate
Purpose
Banque Nationale de Paris (BNP) is
a French société anonyme registered
as a credit institution and commercial
bank (établissement de crédit, agréé en
qualité de banque) under the 1984
Banking Act (loi n° 84-46 du
24 janvier 1984). It was founded
pursuant to a decree dated 26 May
1966.
BNP is governed by the 1966
French Companies Act (loi modifiée
n° 66-537 du 24 juillet 1966 sur les
sociétés commerciales), its Articles of
Incorporation, and specific
regulations pertaining to its status
as a credit institution. It engages in
the full range of investment and
related services as construed by the
1996 Investment Services Act (loi
n° 96-597 du 2 juillet 1996 ),
banking and related operations, and
all equity investments.
In accordance with regulations
applicable to banks, BNP may also
conduct business in all other areas or
carry out operations other than those
referred to above, particularly all
arbitrage, brokerage, and commission
operations.
Generally speaking, BNP may
conduct for its own account, for
others, or in participation, all
financial, commercial, industrial, or
agricultural activities, as well as all
activities concerning securities and
real estate, that may be directly or
indirectly related to the activities
referred to above or that may facilitate
their execution.
PATENTS, LICENSES,
CONTRACTS
Banque Nationale de Paris is not
dependent upon any patent or
license, nor any contract for
industrial, commercial, or financial
supplies for its conduct of business.
EXTRAORDINARY
EVENTS, LEGAL
PROCEEDINGS PENDING
At present, there are no extraordinary
events nor legal proceedings pending
which would have a material adverse
effect on the financial position, results,
or operations of Banque Nationale
de Paris or the BNP Group.

RESOLUTIONS PRESENTED
TO THE STOCKHOLDERS’
MEETING -13 MAY 1998
ANNUAL MEETING
FIRST
Approving the financial statements
The Annual Meeting of Stockholders,
satisfying quorum and majority rules
for annual meetings of stockholders,
and having heard the Board of
Directors’ and Statutory Auditors’
Reports for the year ended
31 December 1997, approves the
balance sheet at 31 December 1997
and the income statement for the year
then ended, showing net income after
taxes of FRF 2,099,873,372.74.
SECOND
Appropriating income and declaring
the dividend (option for payment
of the dividend in shares)
The Annual Meeting of
Stockholders, satisfying quorum and
majority rules for annual meetings of
stockholders, and pursuant to Article
20 of the Articles of Incorporation,
resolves to appropriate net income
after taxes amounting to FRF
2,099,873,372.74 as follows:
• Appropriation to the legal reserve
of FRF 14,522,987.50, or the
fraction of 5% of net income
needed to bring the legal reserve
up to 10% of the capital stock.
To the net balance of FRF
2,085,350,385.24 shall be added
FRF 1,508,425,777.99 of
unappropriated retained earnings,
forming a total of FRF
3,593,776,163.23 available for
distribution, to be appropriated
as follows:
1. A ppropriation of FRF
740,830,524.50 to the special
reserve for long-term capital
gains, bringing that reserve to
FRF 4,629,921,153.21.
2. Transfer of FRF 33,201,387.70
to other reserves, comprising a
transfer of FRF 32,383,211.00
to the investment reserve upon
the recovery of the investment
reserve for 1991, and a transfer of
FRF 818,176.70 to other reserves,
bringing total other reserves to
FRF 34,110,000,000.00.
3. Distribution of a dividend of
FRF 1,492,719,116.00 to the
stockholders of BNP SA,
corresponding to a net dividend
of FRF 7.00 per FRF 25 par value
share outstanding at 31 December
1997 or with rights to income
earned from 1 January 1997 under
the 1995-2002 Stock Option
Plan, and providing a dividend tax
credit of FRF 3.50 (for a gross
dividend of FRF 10.50). Full
power is given to the Board of
Directors to carry forward as
retained earnings the portion of
the dividend payable to shares of
treasury stock.
In compliance with Section 47 of the
1965 Finance Act (65-566), the Board
of Directors reminds the Annual
Meeting of Stockholders that a net
dividend of FRF 3.20 per common
share (FRF 25 par value) was
R E S O L U T I O N S
distributed for 1994 (gross dividend of
FRF 4.80 including the dividend tax
credit of FRF 1.60), a net dividend
of FRF 3.60 per common share
(FRF 25 par value) was distributed
for 1995 (gross dividend of FRF 5.40
including the dividend tax credit of
FRF 1.80), and a net dividend of
FRF 5.40 per common share
(FRF 25 par value) was distributed
for 1996 (gross dividend of FRF 8.10
including the dividend tax credit of
FRF 2.70).
As proposed by the Board of Directors,
the Annual Meeting of Stockholders
resolves to grant stockholders the
option to receive their dividend in the
form of shares of the Company.
Stockholders exercising this option
must do so for the entire dividend to
which they are entitled under any
given securities account.
The new shares created by this option
shall be issued at a price representing
90% of the average opening share
prices for the period of twenty
consecutive trading days preceding
the date of the Annual Meeting of
Stockholders, less the amount of the
net dividend and rounded up to the
nearest whole franc.
If the dividend amount to which a
stockholder is entitled corresponds to
a fractional number of shares, he may
either receive the lower whole number
of shares plus a cash balance for the
remainder of the dividend due, or
acquire the higher whole number of
shares above his entitlement by paying
the cash difference when he files to
exercise his option.
173
ONE HUNDRED
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174
ONE HUNDRED
SEVENTY-FOUR
Stockholders shall be able to exercise
their option for payment of the
dividend in shares between 26 May
and 15 June 1998 inclusive. After that
date, dividends shall be payable in cash
only. The dividend shall be paid as of
30 June 1998. Shares thus issued shall
have rights to income earned from
1 January 1998.
The Annual Meeting of
Stockholders grants the Board full
power, including the right to
subdelegate the Chairman, to
execute the above decisions, set
the terms and conditions for their
execution, and amend Article 4
of the Articles of Incorporation
concerning the capital stock and
number of shares it comprises.
4. FRF 1,327,025,135.03 carried
forward as unappropriated
retained earnings.
THIRD
Approving agreements governed
by Sections 101 to 106 of the
1966 French Companies Act
The Annual Meeting of
Stockholders, satisfying quorum
and majority rules for annual
meetings of stockholders, has
considered the Statutory Auditors’
Special Report on transactions
and agreements governed by
Sections 101 to 106 of the 1966
French Companies Act and
approves the transactions and
agreements mentioned therein.
FOURTH
Authorizing the Board of Directors
to purchase and sell BNP SA shares
in the market
Satisfying quorum and majority
rules for annual meetings of
stockholders, and having heard
the Board of Directors’
Report:
• The Annual Meeting of
Stockholders authorizes the
Company to make open-market
purchases and sales of shares for
the purpose of moderating price
fluctuations, under the conditions
provided for in Section 217-2 et
seq. of the 1966 French
Companies Act and within the
following limitations:
- for such time as the price of the
Company’s shares is quoted in
French francs, the maximum
purchase price shall be FRF 550
(five hundred fifty French
francs) and the minimum selling
price FRF 200 (two hundred
French francs) per share,
notwithstanding changes
affecting BNP’s capital stock.
- once the price of the Company’s
shares is quoted in euros, the
maximum purchase price and
minimum selling price shall be
equal to the aforementioned
amounts converted into euros and
rounded off to the nearest cent.
- this authorization is given for a
period that shall expire at the close
of the Annual Meeting of
Stockholders called to approve the
financial statements for the year
ended 31 December 1998.
- the Company may not
hold more than 10% of its shares
as a result of purchases
made pursuant to this
authorization.
- any means may be used to transfer
or sell the shares thus acquired.
• The Annual Meeting of Stockholders
grants the Board of Directors or its
legal representatives full power to issue
trading instructions and to enter into
any agreements for the purpose
of carrying out such declarations
and formalities as may be required
by law.
FIFTH
Authorizing the Board of
Directors to issue bonds
The Annual Meeting of
Stockholders, satisfying quorum
and majority rules for annual
meetings of stockholders, and in
accordance with the proposal
of the Board of Directors,
authorizes the Board of Directors,
upon its own deliberations, to create
and offer bonds up to a maximum
face value of FRF 40 billion or the
equivalent in the single European
currency, the “euro”, once it becomes
legal tender in France, or in any
other currency on the basis of French
franc exchange rates prevailing at
the dates of issue, in one or more
issues in France or abroad, within
the five-year period provided by
law, in such proportions and
forms, at such times, and with
such interest rates as it sees fit, with
or without a redemption premium.
The Annual Meeting of
Stockholders grants the Board of
Directors full power, including
the right to subdelegate others, to
initiate such borrowings and to
carry out all related formalities as
required by law. It specifies, moreover,
that the Board of Directors
shall be free to determine the
characteristics of the bonds to be
issued, including the choice of fixed
or floating rates and fixed or variable
redemption premiums, to be
calculated as it sees fit. If redemption
premiums are provided for, their
amount shall be in addition to the
above FRF 40 billion limitation.
SIXTH
Electing a member of the Board of
Directors
The Annual Meeting of
Stockholders, satisfying quorum
and majority rules for annual
R E S O L U T I O N S

meetings of stockholders, elects
Lindsay Owen-Jones to the Board
of Directors for a six-year term that
shall expire at the close of the
Annual Meeting of Stockholders
called in 2004 to approve the financial
statements for the year ended 31
December 2003.
SEVENTH
Electing a member of the Board of
Directors
The Annual Meeting of
Stockholders, satisfying quorum
and majority rules for annual
meetings of stockholders, elects
Louis Schweitzer to the Board of
Directors for a six-year term that
shall expire at the close of the
Annual Meeting of Stockholders
called in 2004 to approve the
financial statements for the year
ended 31 December 2003.
EIGHTH
Electing a member of the Board of
Directors
The Annual Meeting of
Stockholders, satisfying quorum
and majority rules for annual
meetings of stockholders, elects
David Peake to the Board of
Directors for a six-year term that
shall expire at the close of the
Annual Meeting of Stockholders
called in 2004 to approve the
financial statements for the year
ended 31 December 2003.
SPECIAL MEETING
NINTH
Converting the capital stock into euros
The Special Meeting of
Stockholders, satisfying quorum
and majority rules for special
meetings of stockholders and
having heard the Board of
Directors’ Report:
• delegates full power to the
Board of Directors to convert
BNP’s capital stock into the
single European currency, the
“euro”, by whatever means it
considers most appropriate,
once the euro becomes
legal tender in France, in
accordance with applicable laws
and regulations
• resolves that the Board of
Directors shall have full power,
including the right to subdelegate
the Chairman, in accordance
with applicable laws and
regulations, to implement this
delegation for the purpose of
determining the date and means
of the conversion. Subject to
applicable laws and regulations,
the Board of Directors shall be
authorized to delete the stated
par value of the shares of the
Company and amend the
Articles of Incorporation
accordingly, if applicable.
TENTH
Authorizing the Board of
Directors to increase the
Company’s capital stock during a
public tender offer for the
Company’s shares
The Special Meeting of
Stockholders, satisfying quorum
and majority rules for special
meetings of stockholders
• having recalled that the Special
Meeting of Stockholders of 22
May 1997 granted the Board of
Directors full power, including
the right to subdelegate the
Chairman, in accordance with
Section 180-III of the 1966
French Companies Act:
- to create and offer shares of the
Company and transferable
R E S O L U T I O N S
securities of any nature
whatsoever that are immediately
and/or subsequently convertible
into shares of the Company,
without waiver of preemptive
rights (fourteenth resolution)
- to create and offer shares
of the Company and
transferable securities of
any nature whatsoever that
are immediately and/or
subsequently convertible into
shares of the Company, with
waiver of preemptive rights
(fifteenth resolution).
- to increase the Company’s
capital stock in one or more
operations, by simultaneously
or successively incorporating
into the capital stock all or
part of reserves, net income,
additional paid-in capital in
excess of par, premiums on
merger, or premiums on
acquisition, and/or by
increasing the par value of the
shares (sixteenth resolution).
On condition that the par value
of shares to be issued pursuant
to the above three authorizations
not exceed FRF 1.5 billion
for capital increases, and that
the face value of debt securities
that may be issued pursuant to
the above authorization not
exceed FRF 15 billion or the
equivalent in foreign currencies
or currency-basket account
units.
• having heard the Board of
Directors’ Report, and in
accordance with Section 180-IV
of the 1966 French Companies
Act:
- expressly resolves that the
delegations given to the Board of
Directors by the Special Meeting
of Stockholders of 22 May 1997
in the fourteenth, fifteenth, and
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176
ONE HUNDRED
SEVENTY-SIX
sixteenth resolutions, the texts of
which are appended hereto, for
the purpose of increasing the
Company’s capital stock, shall be
maintained during a public tender
offer for the Company’s shares.
The delegations given to the
Board of Directors during a
public tender offer for the
Company’s shares shall remain
valid until the next Special
Meeting of Stockholders called to
approve the financial statements
for the year ended 31 December
1998. If applicable, delegations
may be used following the
conversion of the Company’s
capital stock into euros. The
transferable securities may be
denominated in euros.
ELEVENTH
Maintaining the conditions for
determining the issue price of various
types of transferable securities convertible
into shares whose issue was
authorized by the fifteenth resolution
of the Special Meeting of Stockholders
of 22 May 1997
The Special Meeting of
Stockholders, satisfying quorum
and majority rules for special
meetings of stockholders,
having heard the Board of
Directors’ Report and the
Statutory Auditors’ Special
Report, and pursuant to Section
186-2, of the 1966 French
Companies Act, resolves to
maintain the conditions for
determining the issue price as
stipulated in the fifteenth
resolution of the Special
Meeting of Stockholders of 22
May 1997, the text of which is
appended hereto, authorizing
the Board of Directors,
including the right to subdelegate
the Chairman, to create
and offer transferable securities
convertible into shares of the
Company with waiver of
preemptive rights.
Consequently, the Special
Meeting of Stockholders resolves
that the proceeds of shares issued
pursuant to the aforementioned
delegation, after taking into
account the issue price of any
separately issued rights or
warrants, shall be equal to the
average of the opening stock
market prices of the Company’s
shares for ten consecutive days
chosen from among the twenty
trading days preceding the start
of the issue of the aforementioned
securities, after correction of this
average to take into account the
date from which the shares confer
rights to dividends, if applicable.
TWELFTH
Authorizing the Board of
Directors to increase the
Company’s capital stock by issuing
shares reserved for subscribers
to the Company savings plan
(Plan d’Epargne Entreprise) with
waiver of preemptive rights.
The Special Meeting of
Stockholders, satisfying quorum
and majority rules for special
meetings of stockholders, pursuant
to Section L.443-5 of the
French Labor Code, having heard
the Board of Directors’ Report
and the Statutory Auditors’
Special Report prepared in
accordance with Sections 186
and 186-3 of the 1966 French
Companies Act, authorizes the
Board of Directors, at its
discretion, to increase the
Company’s capital stock, in one
or more operations, by up to a
maximum par value of FRF 300
million, through the issue of
shares placed exclusively with
subscribers to the company
savings plan (Plan d’Epargne
Entreprise) of the Company and
affiliated companies as construed
under Section 208-4 of the 1966
French Companies Act.
The stockholders expressly waive
their preemptive rights in favor of
subscribers to the aforementioned
Company savings plan (Plan
d’Epargne Entreprise).
This authorization shall be valid
for five years starting from the
date of this meeting. If applicable,
the Board of Directors may use
this authorization after the
conversion of BNP’s capital stock
into euros. Shares to be issued
may be denominated in euros.
The price of shares issued to
subscribers of the company
savings plan (Plan d’Epargne
Entreprise) of the Company and
affiliated companies as construed
under Section 208-4 of the 1966
French Companies Act, subscribed
in application of this
authorization, may not be more
than 20% lower than the average
prices of listed shares of the
Company for the period of
twenty consecutive trading days
preceding the date of the Board
of Directors’ decision setting the
date for the opening of the
subscription, nor may it be greater
than that average.
Under the conditions set forth in
Section 180-V of the 1996 French
Companies Act, within the limits
and under the conditions stipulated
above, the Special Meeting of
Stockholders grants the Board of
Directors, including the right to
delegate the Chairman, full power to
determine all terms and conditions
of such operations, and in particular:
- to determine whether
subscribers must subscribe to
increases of capital stock via a
closed-end mutual fund (fonds
commun de placement) whose
portfolio must consist exclusively
of shares of the Company;
R E S O L U T I O N S

- to determine the conditions of
seniority that must be satisfied
by beneficiaries of new shares
issued as a result of increases of
capital stock referred to under
this resolution;
- to set opening and closing dates
for subscriptions;
- to determine the amount of
time allotted to subscribers to
pay for their shares, up to a
maximum of three years;
- to take note of the
implementation of the increase
of capital stock for the amount
of shares actually to be
subscribed;
- to determine the BNP affiliated
companies, as construed under
Section 208-4 of the 1966
French Companies Act, whose
employees may subscribe to
increases of capital stock decided
pursuant to the conditions
indicated above;
- to take all steps to implement
the increase of capital stock, carry
out all formalities ensuing from
these measures, and make the
necessary changes to the Articles
of Incorporation related to such
increases of the capital stock.
THIRTEENTH
Giving authorization to grant stock
options to Company directors and
some staff members
The Special Meeting
of Stockholders, satisfying
quorum and majority rules for
special meetings of stockholders,
and having heard the
Board of Directors’ Report and
the Statutory Auditors’ Special
Report authorizes the Board of
Director to grant Company
executives directors and some
staff members of Banque
Nationale de Paris and related
companies as construed under
Section 208-4 of the 1966
French Companies Act stock
options for new shares of BNP,
in one or more operations, in
accordance with Section 208-1
et seq. of the 1966 French
Companies Act and Sections
174-8 et seq. of order #67-236
of 23 March 1967 concerning
commercial companies.
The Board of Directors may use
this authorization, in one or more
operations, over a period of five
years from the date of this
Stockholders’ Meeting. If applicable,
the Board of Directors may
use this authorization after the
conversion of BNP’s capital stock
into euros. Shares to be issued
may be denominated in euros.
The maximum amount of the
capital increase pursuant to the
exercise of stock options is set
at FRF 300 million.
The exercise period for the stock
options is limited to ten years from
the date they are granted by the
Board of Directors.
The stockholders expressly
waive their preemptive rights to
shares that shall be issued as stock
options are exercised, in favor of
the beneficiaries of the stock
options.
The subscription price of shares
issued in exercise of stock options
shall be set by the Board of Directors
the day the stock options are granted.
Their price may not be lower than
the legal minimum, and no options
may be granted less than twenty
trading days after a dividend is paid
or a subscription right exercised.
This price may not be changed unless
the Company conducts a financial
R E S O L U T I O N S
operation during the period in which
the stock options may be exercised. In
this case, BNP shall adjust the
number of shares and their price in
accordance with the law.
Full power is given to the Board of
Directors, acting under the
conditions described above, to grant
the aforementioned stock options,
set the terms and conditions for their
exercise in accordance with the law
and the Articles of Incorporation,
carry out all the necessary formalities,
and amend Article 4 of the Articles of
Incorporation concerning the
amount of capital stock.
The Board of Directors will
subsequently have to set the
conditions governing this new stock
option plan.
FOURTEENTH
Maintaining authorizations to
create and offer transferable
securities convertible into shares
after conversion of the capital
stock into euros
The Special Meeting of
Stockholders, satisfying quorum
and majority rules for special meetings
of stockholders, having
heard the Board of Directors’
Report and the Statutory
Auditors’ Special Report, and pursuant
to Section 180-III,
Paragraph 3 of the 1966 French
Companies Act, resolves that the
power delegated to the Board of
Directors to create and offer transferable
securities convertible into
shares of the Company, with or
without waiver of preemptive
rights, and by incorporating into
the capital stock all or part of
reserves, net income, additional
paid-in capital in excess of par,
premiums on merger, or premiums
on acquisition, as authorized
by the fourteenth, fifteenth,
and sixteenth resolutions of the
177
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SEVENTY-SEVEN

178
ONE HUNDRED
SEVENTY-EIGHT
Special Meeting of Stockholders
of 22 May 1997, the text of which
is appended hereto, may be used
following the conversion of
BNP’s capital stock into euros, if
applicable. Capital increases
executed under the conditions
stipulated in these resolutions
may be made in euros, in
accordance with applicable laws
and regulations. Subject to the
same conditions, the transferable
securities may be denominated in
euros.
FIFTEENTH
Converting into euros authorizations
given in French francs
The Special Meeting of
Stockholders, satisfying quorum
and majority rules for special
meetings of stockholders and
having heard the Board of
Directors’ Report, resolves that
amounts expressed in French
francs in the fourteenth, fifteenth,
sixteenth, eighteenth, and
nineteenth resolutions adopted
by the Special Meeting of
Stockholders of 22 May 1997,
the text of which is appended
hereto, as well as in the tenth,
eleventh, twelfth, and thirteenth
resolutions submitted to this
Special Meeting of Stockholders,
subject to adoption, may be
expressed in euros.
SIXTEENTH
Power of attorney
The Annual Meeting of
Stockholders declares that
holders of the original, a copy,
or a certified extract of the
minutes of this meeting have
power of attorney for the
purpose of carrying out such
registrations, publications, and
formalities as may be required
by law.
APPENDIX
FOURTEENTH, FIFTEENTH,
SIXTEENTH, EIGTHTEENTH
AND NINETEENTH
RESOLUTIONS OF THE
STOCKHOLDERS’ SPECIAL
MEETING OF 22 MAY 1997
FOURTEENTH
Issuing securities convertible into
shares with preemptive rights
Satisfying quorum and majority
rules for special meetings of
stockholders, having heard the
Board of Directors’ Report and
the Statutory Auditors’ Special
Report, and pursuant to Section
180-III, Paragraph 3 of the 1966
French Companies Act:
1. The Stockholders’ Meeting
grants the Board of Directors
full power to create and offer
shares of the Company
and securities of any nature
whatsoever that are immediately
and/or subsequently convertible
into shares of the Company, in
one or more issues in France
or abroad, in such proportions
and forms, and at such times
as it sees fit.
2. The Stockholders’ Meeting resolves
that the par value of shares to be
issued pursuant to the above
authorization may not exceed FRF
1.5 billion. If additional shares are
to be issued in order to protect the
rights of holders of securities
convertible into shares, in
accordance with the law, their par
value shall be in addition to the
FRF 1.5 billion limitation.
3. The Stockholders’ Meeting
resolves that the face value of
debt securities that may be
issued pursuant to the above
authorization may not exceed
FRF 15 billion.
4. The Stockholders’ Meeting
resolves that stockholders may
exercise their preemptive rights,
under conditions provided
by law, unless their exercise
would result in the
acquisition of a fractional
number of shares. Moreover,
the Board of Directors
may give stockholders the
right to subscribe to a number
of shares that is greater than
the amount to which they
would be entitled in proportion
to the number of subscription
rights they hold, up to and
including the amount of shares
of stock they request.
If an offering is not fully
subscribed after the exercise of
preemptive rights under the
conditions stated above, the Board
may:
• limit the offering to the amount
of subscriptions exercised if
the offering has been at least
three-fourths subscribed,
• allocate all or part of the
securities not subscribed, or
• offer to the public all or part of
the securities not subscribed.
5. The Stockholders’ Meeting
resolves that warrants or
rights to subscribe to shares
of the Company may be
offered by subscription
under the conditions
provided for above, or else
simply granted to existing
stockholders.
6. The stockholders acknowledge
that their waiver of preemptive
rights in this offering could
give holders of the new
convertible securities priority
over existing stockholders
when such securities are
converted.
R E S O L U T I O N S

The Stockholders’ Meeting
resolves to waive the
stockholders’ preemptive right
to shares issued upon the
conversion of bonds or the
exercise of warrants or rights.
7. The Stockholders’ Meeting
resolves that the amount receivable
by the Company for each share
issued under the terms of the
aforementioned authorization
may not be less than the par value
of the shares.
8. The Stockholders’ Meeting
grants the Board of Directors full
power, including the right to
delegate the Chairman as
provided by law, to implement
this authorization. Specifically,
the Board or Chairman may
determine the dates, terms, price,
and quantity of the offering as
well as the form and
characteristics of the securities
to be issued, including ex- or
cum dividend dates (even
retroactive). The Board or
Chairman may set relevant
redemption terms and, if
necessary, may suspend the
exercise of attached rights for up
to three months, while protecting
the legal interests of holders of
convertibles. It may charge costs,
particularly issuance costs, against
additional paid-in capital in
excess of par if appropriate. Full
powers are given to the Board to
take into account the issue price
of new shares, to carry out
all operations consequent to
the increase in capital stock
resulting from implementation
of this authorization, and to
modify the articles of
incorporation accordingly.
In the event that debt securities
are issued, the Stockholders’
Meeting grants the Board of
Directors full power, including
the right to delegate to the
Chairman, as provided by law.
Under this authorization, the
Board may determine whether
the securities are to be
subordinated, set the coupon
and maturity, establish a fixed
or variable redemption price
(with or without premium),
specify the means of redemption
in accordance with market
conditions, and determine the
conditions under which the
securities may be converted into
shares of the Company.
9. The Stockholders’ Meeting
resolves that this authorization
shall invalidate any prior
authorization relating to the
immediate and/or subsequent
issue of shares of the
Company with preemptive
rights.
The authorization thus given to
the Board of Directors shall be
valid starting from the date of this
Stockholders’ Meeting and for
the period stipulated in Section
180-III, Paragraph 3 of the 1966
French Companies Act.
FIFTEENTH
Issuing securities convertible into
shares without preemptive rights
Satisfying quorum and majority
rules for special meetings of
stockholders, having heard the
Board of Directors’ Report and
the Statutory Auditors’ Special
Report, and pursuant to Section
180-III, Paragraph 3 of the 1966
French Companies Act:
1. The Stockholders’ Meeting
grants the Board of Directors
full power to create and offer
shares of the Company and
securities of any nature
whatsoever that are convertible
into shares of the Company, in
one or more issues in France
R E S O L U T I O N S
or abroad, in such proportions
and forms, and at such times
as it sees fit, even if these
securities are issued pursuant
to Section 339-3 of the
aforementioned 1966 French
Companies Act.
2. The Stockholders’ Meeting
resolves that the par value of
shares to be issued pursuant to
the above authorization may
not exceed FRF 1.5 billion. If
additional shares are to be
issued in order to protect the
rights of holders of securities
convertible into shares, in
accordance with the law, their
par value shall be in addition
to the FRF 1.5 billion limitation.
3. The Stockholders’ Meeting
resolves that the face value of
debt securities that may be
issued pursuant to the
above authorization may not
exceed FRF 15 billion or the
equivalent in foreign currencies
or currency-basket account
units.
4. The Stockholders’ Meeting
resolves to waive existing
stockholders’ preemptive rights
regarding the securities to be
issued, on the understanding
that the Board of Directors
may allow priority for existing
stockholders on all or part of
the offering under conditions
to be determined by the Board.
Subscription priority thus
granted shall not be freely
transferable. The Board is
hereby authorized to determine
whether priority in fractional
shares shall be forfeited or shall
allow the holder to purchase a
full share.
5. The Stockholders’ Meeting
resolves that if an offering is
not fully subscribed after the
179
ONE HUNDRED
SEVENTY-NINE

180
ONE HUNDRED
EIGHTY
exercise of preemptive rights
under the conditions stated
above, the Board may either:
• limit the offering to the amount
of subscriptions exercised if the
offering has been at least threefourths
subscribed, or
• allocate all or part of the securities
not subscribed.
6. The Stockholders’ Meeting
acknowledge that their waiver
of preemptive rights in this
offering could give holders of
the new convertible securities
priority over existing
stockholders when such
securities are converted.
The Stockholders’ Meeting
r esolves to waive the
stockholders’ preemptive right
to shares issued upon the
conversion of bonds or the
exercise of warrants or rights.
7. The Stockholders’ Meeting
resolves that the amount
receivable by the Company for
each share issued under the
terms of the aforementioned
authorization, after deduction
of issuing costs for warrants or
rights, where warrants or rights
alone are issued, may not be
less than the average opening
price of the shares on the Paris
Stock Exchange for ten
consecutive trading days within
the twenty days preceding the
first day of their issue, after
adjustment for the effect of
whether the shares are issued
cum dividend or ex-dividend.
8. The Stockholders’ Meeting
grants the Board of Directors
full power, including the right
to delegate the Chairman as
provided by law, to implement
this authorization. Specifically,
the Board or Chairman may
determine the dates, terms,
price, and quantity of the
offering as well as the form
and characteristics of the
securities to be issued,
including ex- or cum dividend
dates (even retroactive). The
Board or Chairman may set
relevant redemption terms and,
if necessary, may suspend the
exercise of attached rights for
up to three months, while
protecting the legal interests of
holders of convertibles. It may
charge costs, particularly
issuance costs, against
additional paid-in capital in
excess of par if appropriate. Full
powers are given to the Board
to take into account the issue
price of new shares, to carry
out all operations consequent
to the increase in capital stock
resulting from implementation
of this authorization, and to
modify the articles of
incorporation accordingly.
In the event that debt securities
are issued, the Stockholders’
Meeting grants the Board of
Directors full power, including
the right to delegate to the
Chairman as provided by law.
Under this authorization, the
Board may determine whether
the securities are to be
subordinated, set the coupon
and maturity, establish a fixed
or variable redemption price
(with or without premium),
specify the means of redemption
in accordance with market
conditions, and determine the
conditions under which the
securities may be converted into
shares of the Company.
9. The Stockholders’ Meeting
resolves that this authorization
shall invalidate any prior
authorization relating to the
immediate and/or subsequent
issue of shares of the Company
with waiver of preemptive rights
as well as the choice of establishing
a time period during which
preemptive rights shall exist.
The authorization thus given to
the Board of Directors shall be
valid starting from the date of this
Stockholders’ Meeting and for
the period stipulated in Section
180-III, Paragraph 3 of the 1966
French Companies Act.
SIXTEENTH
Increasing the Company’s capital
stock by capitalization of reserves,
net income, additional paid-in
capital in excess of par, or premiums
on acquisition
The Stockholders’ Meeting, satisfying
quorum and majority rules
for special meetings of stockholders
and having heard the Board
of Directors’ Report, authorizes
the Board of Directors to increase
the Company’s capital stock by a
maximum par value of FRF 4 billion,
in one or more operations by
simultaneously or successively
incorporating into the capital
stock of all or part of reserves, net
income, additional paid-in capital
in excess of par, premiums on
merger, or premiums on acquisition,
and by increasing the par
value of the shares and/or granting
stock dividends.
The Stockholders’ Meeting resolves
that rights to fractional shares shall
not be freely transferable, and that
the corresponding shares shall be
sold. The proceeds from sales of
such shares shall be allocated to
holders of the corresponding rights
no more than thirty days after the
date at which they have received
the number of full shares to which
they are entitled. The Stockholders’
Meeting grants the Board of
Directors full power, including the
right to delegate the Chairman as
provided by law, to implement this
R E S O L U T I O N S

authorization. Specifically, the
Board or Chairman may
determine the dates, terms, price,
and quantity of the offering, carry
out all operations consequent to
the increase in capital stock
resulting from implementation
of this authorization, and modify
the articles of incorporation
accordingly.
This authorization is granted for
the period stipulated in Section
180-III, Paragraph 3 of the 1966
French Companies Act starting
from the date of this Meeting.
EIGHTEENTH
Authorizing the Board of Directors
to increase the Company’s capital
stock in order to make a stockfor-stock
public tender offer
The Stockholders’ Meeting,
satisfying quorum and majority
rules for special meetings of
stockholders, having heard the
Board of Directors’ Report,
and the Statutory Auditors’
Report, and in accordance
with to Section 193-I of the
1966 French Companies Act,
authorizes the Board of
Directors to increase the
Company’s capital stock by up
to a maximum par value of
FRF 500 million by
the simultaneous or successive
offering, in one or more
operations, of new shares of
the Company in remuneration
for securities exchanged under
a public tender offer for the
shares of another company listed
on the Official List or the
Second Market of the Paris
Stock Exchange or on the official
market of any other country
that is part of the European
Economic Space, or the official
market of a member state of
the Organization for Economic
Cooperation and Development.
In accordance with Section 180
of the 1966 French Companies
Act, such an issue of new shares to
be exchanged under a public
tender offer may result from the
issue of transferable securities of
any nature that are immediately
and/or subsequently convertible
into shares of the Company.
The stockholders shall waive their
preemptive rights, as needed, to
shares issued upon the exercise of
any rights whatsoever that may
be attached to the aforementioned
transferable securities.
The face value of debt securities
issued under the terms of this
authorization, if applicable, may
not exceed FRF 15 billion.
The Stockholders’ Meeting grants
the Board of Directors full power,
including the right to delegate to
the Chairman as provided by law,
to implement this authorization,
in particular for the purposes of:
• determining the exchange ratio and
the amount of the cash difference
to be paid, if applicable
• taking note of the number of
securities exchanged
• determining the dates and
conditions of the offerings,
particularly the price and date
from which the new shares or
convertible securities issued
confer rights to income earned
• recording the difference between
the issue price of new shares and
their par value as “additional
paid-in capital in excess of
par”, under stockholders’ equity
• deducting issuing costs from
“additional paid-in capital in
excess of par”, if applicable
• taking all necessary measures,
R E S O L U T I O N S
generally speaking, and entering
into any agreements to ensure
the proper execution of the
offerings planned, taking note
of the number and par value of
shares subscribed under the
terms of this authorization, and
amending the Articles of
Incorporation accordingly.
This authorization shall be valid
starting from the date of this
Stockholders’ Meeting and for the
period stipulated in Section
180-III, Paragraph 3 of the 1966
French Companies Act.
NINETEENTH
Placing an aggregate limit on
authorizations
Satisfying quorum and majority
rules for special meetings of
stockholders, having heard the
Board of Directors’ Report, and
contingent upon the adoption
of resolutions fourteen, fifteen,
sixteen, and seventeen:
• The Stockholders’ Meeting
resolves that the face value of the
debt securities that may
be issued pursuant to the
authorizations granted under the
aforementioned resolutions may
not exceed FRF 15 billion or the
equivalent in foreign currencies
of currency-basket account units.
• The Stockholders’ Meeting
resolves that the par value of
shares to be issued immediately
and/or subsequently pursuant to
the authorization granted under
the aforementioned resolutions
may not exceed FRF 1.5 billion.
If additional shares are to be
issued in order to protect the
rights of holders of securities
convertible into shares, in
accordance with the law, their par
value shall be in addition to the
above FRF 1.5 billion limitation.
181
ONE HUNDRED
EIGHTY-ONE

182
ONE HUNDRED
EIGHTY-TWO
NOTES

NOTES
183
ONE HUNDRED
EIGHTY-THREE

The English-language version of this annual report is a free translation of the original
French text. It is not a binding document. In the event of conflict in interpretation,
reference should be made to the French version, which is the authentic text.
The auditors’ reports apply to the French version of the financial review
and the financial statements.
CONCEPT AND DESIGN
BNP
PHONE : 33 1 40 14 45 46
INTERNET : http://www.bnp.fr
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