2012 Registration document and annual financial report - BNP Paribas

2012 REVIEW OF OPERATIONSCore business results3For the whole of 2012, the strong sales and marketing drive in DomesticMarkets translated into growth in deposits in all the networks. WithEUR 275 billion, Domestic Markets’ deposits grew 4.7% compared to 2011.Outstanding loans rose 1.2% even if a gradual slowdown in demand forloans was observed during the course of the year.At EUR 15,730 million, revenues (1) were virtually flat (-0.1% (2) ) comparedto 2011 despite a persistently low interest rate environment and aslowdown in volumes of activity during the year. Operating expenses (1)were down 1.5% (2) compared to 2011, reflecting very good cost controlacross all the business units and helped improve the cost/income ratio (2)in each of the four domestic markets.Gross operating income therefore came to EUR 5,749 million, up 2.5% (2)compared to 2011.With a moderate overall cost of risk and after allocating one-third ofPrivate Banking’s net income from Domestic Markets to the InvestmentSolutions division, pre-tax income (3) came to EUR 4,006 million, down1.0% (2) compared to 2011. Thanks to improved operating efficiency,Domestic Markets delivered solid results at a high level.FRENCH RETAIL BANKING (FRB)In millions of euros 2012 2011 2012/2011Revenues 6,939 7,037 -1.4%Incl. Net Interest Income 4,128 4,166 -0.9%Incl. Commissions 2,811 2,871 -2.1%Operating Expenses and Dep. (4,496) (4,573) -1.7%Gross Operating Income 2,443 2,464 -0.9%Cost of Risk (315) (315) +0.0%Operating Income 2,128 2,149 -1.0%Non Operating Items 4 3 +33.3%Pre-Tax Income 2,132 2,152 -0.9%Income Attributable to Investment Solutions (122) (124) -1.6%Pre-Tax Income of French Retail Banking 2,010 2,028 -0.9%Cost/Income 64.8% 65.0% -0.2 ptAllocated Equity (€bn) 7.7 7.6 +1.4%Including 100% of French Private Banking for the Revenues to Pre-T ax I ncome line items.3For the whole of 2012, FRB’s active efforts to support its clientsresulted in a good sales and marketing drive in deposits (up4.7% compared to 2011), in particular thanks to strong growthin savings accounts (+9.6%). Despite a deceleration in demandfor loans at the end of the year, outstanding loans rose onaverage by 1.5% compared to 2011. The continued support ofVSEs & SMEs and the success of the Small Business Centreswere reflected in particular by increased outstanding loans inthis customer segment (+2.7% (4) ). The sales and marketing driveis also illustrated by 10.5% growth in the number of protectioninsurance policies during the year as well as the number of mobileservice users, which increased 42% to over 630,000 monthly users.Revenues (5) were EUR 6,939 million (-1.4% compared to 2011). In anenvironment with persistently low interest rates and given the slowdownin demand for loans, net interest income declined by 0.9%. Fees weredown 2.1% in line with unfavourable financial markets.Thanks to continued effort to improve operating efficiency, operatingexpenses (5) contracted by 1.7% compared to 2011 and the cost/incomeratio (5) improved by 0.2 points to 64.8%.Gross operating income (4) thereby came to EUR 2,443 million, down 0.9%compared to last year.The cost of risk (5) , at EUR 315 million, or 21 basis points of outstandingcustomer loans, remained at a low level.After allocating one-third of French Private Banking’s net income to theInvestment Solutions division, FRB posted EUR 2,010 million in pre-taxincome (3) , down 0.9% compared to 2011, a good performance in a contextof economic slowdown.(1) Including 100% of Private Banking of the domestic markets in France (excluding PEL/CEL effects), Italy, Belgium and Luxembourg.(2) At constant scope and exchange rates.(3) Excluding PEL/CEL effects.(4) Source: Banque de France (independent VSEs & SMEs) on a sliding annual basis.(5) Excluding PEL/CEL effects, with 100% of French Private Banking.2012 Registration document and annual financial report - BNP PARIBAS 79