La banque d'un monde qui change 2004 - BNP Paribas

Parent company fInancial statementsA charge for corporate income tax is taken in the periodin which the related taxable income and expenses are booked,regardless of the period in which the tax is actually paid.BNP Paribas SA recognises deferred taxes for all temporarydifferences between the book value of assets and liabilitiesand their tax basis according to the liability method.Recognition of deferred tax assets depends on the probabilityof recovery.Profit-sharingAs required by French law, BNP Paribas SA provides forprofit sharing in the year in which the profit arises,and reports the provision under salaries in the profit andloss account.Pensions and Other Post-retirement Benefit ObligationsProvision is made for long-service awards, supplementarypension benefits and other awards payable to active andretired employees, except where employer contributionsare in full discharge of any future liabilities, in which casethe contributions are charged to the profit and loss accountin the period of payment.Pension Obligations Towards Retired EmployeesUpon retirement, BNP Paribas SA employees receive pensionsaccording to the laws and customs prevailing in the countrieswhere the Bank operates.In France, retired employees of BNP Paribas SA are entitledto the following pension benefits starting 1 January 1994,pursuant to an industry-wide agreement on pensions signedin September 1993 between the Association Française desBanques and employee representatives:- retired employees receive pension benefits from the socialsecurity system and two nation-wide organisations, whichare financed by contributions received from employers andemployees. The systems operate on a pay-as-you-go basis.- retired employees receive additional benefits from theBNP Paribas pension fund and the banking industry pensionfunds to which the Bank contributes, relative to servicesrendered prior to 1 January 1994. Funding for these additionalbenefits is provided by transfers from the pension funds’existing reserves and, if necessary, by employer contributions,which are limited to a percentage of payroll costs. The amountof such additional benefits is adjusted to reflect the fundinglevel of the pension funds and may consequently be reducedin proportion.The contributions paid by BNP Paribas SA to these schemesare recorded in expenses for the period.The working capital contributions made to the two nationwidepension organisations in 1994 are treated as prepaidexpenses and amortised over the average number of yearsleft to retirement of BNP SA participating employees,which is currently twenty years. For Paribas employees,the contribution has been deducted from the reservesof the Paribas pension fund.Outside France, BNP Paribas SA and its employees contributeto mandatory pension plans which are generally managed byindependent organisations.For defined benefit plans, BNP Paribas SA records provisionsfor benefit obligations where the present value of theobligation exceeds the market value of the plan assets.Benefit obligations are determined on an actuarial basisat each year end. The year-on-year increase or decreasein the net funded obligation, corresponding to actuarialdifferences arising from changes in demographic andfinancial assumptions or in estimated yields on plan assets,is recognised over the expected average remaining servicelives of employees covered by the plans, net of an amountequal to a certain percentage of the discounted benefitobligation, set by convention at 10%. In the interest ofprudence, the deferred portion of the actuarial differenceis limited in all cases to an amount equivalent to thatof the net change in the benefit obligation over the year.For defined contribution plans, BNP Paribas SA recordscontributions as an expense in the period they are paid.Other Employee BenefitsUnder various agreements, BNP Paribas SA is committedto pay early retirement, retirement and seniority bonuses,healthcare costs and other benefits to its employees.Each year, BNP Paribas estimates the net present value ofthese commitments and adjusts the related provision, applyingthe same method as for pension benefits.279BNP PARIBAS - ANNUAL REPORT 2004