2012 Registration document and annual financial report - BNP Paribas

32012REVIEW OF OPERATIONSCore business resultsINVESTMENT SOLUTIONSIn millions of euros 2012 2011 2012/2011Revenues 6,204 5,922 +4.8%Operating Expenses and Dep. (4,319) (4,258) +1.4%Gross Operating Income 1,885 1,664 +13.3%Cost of Risk 54 (64) n.s.Operating Income 1,939 1,600 +21.2%Associated Companies 136 (134) n.s.3Other Non Operating Items 23 58 -60.3%Pre-Tax Income 2,098 1,524 +37.7%Cost/Income 69.6% 71.9% -2.3 ptAllocated Equity (€bn) 8.1 7.5 +7.8%For the whole of 2012, Investment Solutions posted, in all ofthe business units, a good rise in assets under management (1) ,up 5.6% compared to 31 December 2011, at EUR 889 billion(EUR 842 billion as at 31 December 2011). This growth comesprimarily from a favourable performance effect driven by the risein financial markets, especially in the second half of the year.Net asset outflows for the year were EUR -6.1 billion, but waspenalised in the third quarter by a client’s (fund manager) decisionto insource a distribution contract. Excluding this effect, net assetinflows were EUR +5.2 billion in 2012.Thus, asset flows were positive in all the business units in 2012, saveAsset Management: Wealth Management had good asset inflows,especially in the domestic markets and in Asia, good contributions fromInsurance outside of France, in particular in Asia (Taiwan, South Korea),as well as from Personal Investors, especially in Germany. Asset inflowsinto Asset Management’s money market and bond funds were more thanoffset by asset outflows in all other asset classes.As at 31 December 2012, Investment Solutions’ assets undermanagement (1) broke down as follows: EUR 405 billion for AssetManagement, EUR 266 billion for Wealth Management, EUR 170 billionfor Insurance, EUR 35 billion for Personal Investors, and EUR 13 billionfor Real Estate Services.Investment Solutions’ revenues, which totalled EUR 6,204 million, wereup 4.8% compared to 2011. Wealth and Asset Management’s revenueswere down 4.1% due in particular to Asset Management’s lower averageoutstandings and despite good growth by Wealth Management.Insurance’s revenues rose 21.2% (+13.4% at constant scope and exchangerates) due to the strong growth of protection insurance and savingsoutside of France. Securities Services’ revenues grew by 4.4% compared to2011 as a result of a rise in asset under custody and under administration.Operating expenses, which totalled EUR 4,319 million, were up 1.4%compared to 2011 but were down 0.6% at constant scope and exchangerates. Operating expenses were down 10.1% (2) in Asset Managementas a result of the adaptation plan whilst investments in the businessdevelopment of Insurance, Wealth Management and Securities Servicescontinued, especially in Asia. The business unit’s cost/income ratio thusimproved by 1.6 point (2) compared to last year, to 69.6%.After receiving one-third of the net income of domestic private banking,the Investment Solutions division therefore generated EUR 2,098 millionin pre-tax income, up 16.3% (3) compared to 2011, reflecting very goodoverall performance and improved operating efficiency.(1) Including assets under advisory on behalf of external clients, distributed assets and Personal Investors.(2) At constant scope and exchange rates.(3) Excluding the impact of Greek sovereign debt provisions on the Insurance business unit.842012 Registration document and annual financial report - BNP PARIBAS