2012 Registration document and annual financial report - BNP Paribas

32012REVIEW OF OPERATIONSProfit and loss accountCOST OF RISKIn millions of euros 2012 2011Change(2012/2011)Net allowances to impairment (4,111) (3,510) +17%Recoveries on loans and receivables previously written off 714 514 +39%Irrecoverable loans and receivables not covered by impairment provisions (482) (560) -14%Loss on Greek sovereign debt (62) (3,241) -98%TOTAL COST OF RISK FOR THE PERIOD (3,941) (6,797) -42%3This line item represents the net amount of impairment lossesrecognised for credit risks inherent in the Group’s intermediationactivities, as well as any impairment losses relating to counterpartyrisks on over-the-counter derivative instruments.The Group’s cost of risk was EUR 3,941 million, 42% lower than in 2011,which included the EUR 3,241 million impact of the support plan forGreece. Excluding the impact of provisions for Greek bonds, the cost ofrisk rose by a moderate 9.2%.Excluding Greek sovereign debt, the increase in the cost of risk from2011 to 2012 was due mainly to a EUR 418 million rise in provisions forCorporate & Investment Banking (including a EUR 336 million increasefor Corporate Banking), which were unusually low in 2011 owing tosubstantial reversals. Moreover, p rovisions for the Retail Banking businessfell 2% to EUR 3,505 million in 2012 (from EUR 3,565 million in 2011),including a 43% decrease in provisions at BancWest (EUR 145 millionin 2012 vs. EUR 256 million in 2011) and a 9% decrease in provisionsfor the Personal Finance business (EUR 1,497 million in 2012 vs.EUR 1,639 million in 2011).At 31 December 2012, doubtful loans and commitments net of guaranteestotalled EUR 33 billion, down from EUR 37 billion a year earlier, andprovisions totalled EUR 28 billion, compared with EUR 30 billion a yearearlier. The coverage ratio was 83% at 31 December 2012, compared with80% at 31 December 2011.For a more detailed discussion of the net additions to provisions for eachbusiness, see the section titled “ Core business results” .NET INCOME ATTRIBUTABLE TO EQUITY HOLDERSIn millions of euros 2012 2011Change(2012/2011)OPERATING INCOME 8,581 9,471 -9%Share of earnings of associates 489 80 x6.1Net gain on non-current assets 1,792 206 x 8.7Goodwill (490) (106) x 4.6Corporate income tax (3,059) (2,757) +11%Net income attributable to minority interests (760) (844) -10%NET INCOME ATTRIBUTABLE TO EQUITY HOLDERS 6,553 6,050 +8%OVERVIEWNet income attributable to equity holders rose by 8% in 2012 as comparedto 2011.SHARE OF EARNINGS OF ASSOCIATESThe Group’s share of earnings of associates (i.e., companies accountedfor under the equity method) increased from EUR 80 million in 2011to EUR 489 million in 2012, mainly as a result of the EUR 213 millionnegative impact of the Greek sovereign debt provision recognised atinsurance companies in 2011.962012 Registration document and annual financial report - BNP PARIBAS