2007 REGISTRATION DOCUMENT
2007 REGISTRATION DOCUMENT 2007 REGISTRATION DOCUMENT
5 NotesCONSOLIDATED FINANCIAL STATEMENTSto the financial s tatements p repared in accordance with I nternational Financial Reporting S tandards as adopted by the European Union1.m USE OF ESTIMATES IN THE PREPARATIONOF THE FINANCIAL STATEMENTSPreparation of the financial statements requires managers of corebusinesses and corporate functions to make assumptions and estimatesthat are reflected in the measurement of income and expense in the profitand loss account and of assets and liabilities in the balance sheet, and inthe disclosure of information in the notes to the financial statements.This requires the managers in question to exercise their judgement andto make use of information available at the date of preparation of thefinancial statements when making their estimates. The actual futureresults from operations in respect of which managers have made useof estimates may in reality differ from those estimates. This may have amaterial effect on the financial statements.This applies in particular to:■ impairment losses recognised to cover credit risks inherent in bankingintermediation activities;■ the use of internally-developed models to measure positions infinancial instruments that are not quoted in organised markets;< Contents >■ calculations of the fair value of unquoted financial instrumentsclassified in “Available-for-sale financial assets”, “Financial assetsat fair value through profit or loss” or “Financial liabilities at fairvalue through profit or loss”, and (more generally) calculations of thefair value of financial instruments subject to a fair value disclosurerequirement;■ impairment tests performed on intangible assets;■ the appropriateness of the designation of certain derivative instrumentsas cash flow hedges, and the measurement of hedge effectiveness;■ estimates of the residual value of assets leased under finance leases oroperating leases, and (more generally) of assets on which depreciationis charged net of their estimated residual value;■ the measurement of provisions for contingencies and charges.This is also the case for assumptions applied to assess the sensitivityof each type of market risk and the sensitivity of valuations to nonobservableparameters.1234Note 2.NOTES TO THE P ROFIT AND L OSS A CCOUNT FOR THE YEAR E NDED31 DECEMBER 200752.a NET INTEREST INCOMEThe BNP Paribas Group includes in “Interest income” and “Interestexpense” all income and expense from financial instruments measuredat amortised cost (interest, fees/commissions, transaction costs), andfrom financial instruments measured at fair value that do not meetthe definition of derivative instruments. These amounts are calculatedusing the effective interest method. The change in fair value on financialinstruments at fair value through profit or loss (excluding accruedinterest) is recognised in “Net gain/loss on financial instruments at fairvalue through profit or loss”.Interest income and expense on derivatives accounted for as fair valuehedges are included with the revenues generated by the hedged item. Inlike manner, interest income and expense arising from derivatives usedto hedge transactions designated as at fair value through profit or lossis allocated to the same accounts as the interest income and expenserelating to the underlying transactions.678910111282007 Registration document - BNP PARIBAS
CONSOLIDATED FINANCIAL STATEMENTS5Notes to the financial s tatements p repared in accordance with I nternational Financial Reporting S tandards as adopted by the European Union< Contents >Year to 31 Dec. 2007 Year to 31 Dec. 2006In millions of euros Income Expense Net Income Expense NetCustomer items 26,269 (11,970) 14,299 20,255 (8,481) 11,774Deposits, loans and borrowings 24,732 (11,731) 13,001 18,984 (8,339) 10,645Repurchase agreements 29 (157) (128) 12 (90) (78)Finance leases 1,508 (82) 1,426 1,259 (52) 1,207Interbank items 5,283 (8,137) (2,854) 4,412 (6,329) (1,917)Deposits, loans and borrowings 4,943 (7,363) (2,420) 4,202 (5,924) (1,722)Repurchase agreements 340 (774) (434) 210 (405) (195)Debt securities issued - (7,091) (7,091) - (5,634) (5,634)Cash flow hedge instruments 1,628 (899) 729 2,805 (1,455) 1,350Interest rate portfolio hedge instruments 1,028 (685) 343 452 (92) 360Trading book 20,319 (20,651) (332) 12,724 (13,467) (743)Fixed-income securities 4,285 - 4,285 2,686 - 2,686Repurchase agreements 15,944 (17,564) (1,620) 9,946 (11,234) (1,288)Loans / Borrowings 90 (194) (104) 92 (124) (32)Debt securities - (2,893) (2,893) - (2,109) (2,109)Available-for-sale financial assets 3,872 - 3,872 3,184 - 3,184Held-to-maturity financial assets 742 - 742 750 - 750TOTAL INTEREST INCOME/(EXPENSE) 59,141 (49,433) 9,708 44,582 (35,458) 9,124Interest income on individually impaired loans amounted toEUR 316 million at 31 December 2007 and EUR 309 million at31 December 2006.Gains and losses relating to cash flow hedges previously recorded under“Unrealised or deferred gains or losses” and taken to the profit and lossaccount in 2007 amounted to EUR 27 million and EUR 23 million in 2006.2.b COMMISSION INCOME AND EXPENSECommission income on financial assets and commission expense onfinancial liabilities which are not measured at fair value through profitor loss amounted to EUR 2,553 million and EUR 312 million respectivelyin 2007, compared with income of EUR 2,394 million and expense ofEUR 379 million in 2006.Net commission income related to trust and similar activities throughwhich the Group holds or invests assets on behalf of clients, trusts,pension and personal risk funds or other institutions amounted toEUR 2,125 million in 2007, compared with EUR 1,891 million in 2006.2.c NET GAIN/LOSS ON FINANCIALINSTRUMENTS AT FAIR VALUE THROUGHPROFIT OR LOSS“Net gain/loss on financial instruments at fair value through profit orloss” includes all profit and loss items relating to financial instrumentsmanaged in the trading book and financial instruments (includingdividends) that the Group has designated as at fair value through profit orloss under the fair value option, other than interest income and expensewhich are recognised in “Net interest income” (Note 2.a).12345678910112007 Registration document - BNP PARIBAS 129
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CONSOLIDATED FINANCIAL STATEMENTS5Notes to the financial s tatements p repared in accordance with I nternational Financial Reporting S tandards as adopted by the European Union< Contents >Year to 31 Dec. <strong>2007</strong> Year to 31 Dec. 2006In millions of euros Income Expense Net Income Expense NetCustomer items 26,269 (11,970) 14,299 20,255 (8,481) 11,774Deposits, loans and borrowings 24,732 (11,731) 13,001 18,984 (8,339) 10,645Repurchase agreements 29 (157) (128) 12 (90) (78)Finance leases 1,508 (82) 1,426 1,259 (52) 1,207Interbank items 5,283 (8,137) (2,854) 4,412 (6,329) (1,917)Deposits, loans and borrowings 4,943 (7,363) (2,420) 4,202 (5,924) (1,722)Repurchase agreements 340 (774) (434) 210 (405) (195)Debt securities issued - (7,091) (7,091) - (5,634) (5,634)Cash flow hedge instruments 1,628 (899) 729 2,805 (1,455) 1,350Interest rate portfolio hedge instruments 1,028 (685) 343 452 (92) 360Trading book 20,319 (20,651) (332) 12,724 (13,467) (743)Fixed-income securities 4,285 - 4,285 2,686 - 2,686Repurchase agreements 15,944 (17,564) (1,620) 9,946 (11,234) (1,288)Loans / Borrowings 90 (194) (104) 92 (124) (32)Debt securities - (2,893) (2,893) - (2,109) (2,109)Available-for-sale financial assets 3,872 - 3,872 3,184 - 3,184Held-to-maturity financial assets 742 - 742 750 - 750TOTAL INTEREST INCOME/(EXPENSE) 59,141 (49,433) 9,708 44,582 (35,458) 9,124Interest income on individually impaired loans amounted toEUR 316 million at 31 December <strong>2007</strong> and EUR 309 million at31 December 2006.Gains and losses relating to cash flow hedges previously recorded under“Unrealised or deferred gains or losses” and taken to the profit and lossaccount in <strong>2007</strong> amounted to EUR 27 million and EUR 23 million in 2006.2.b COMMISSION INCOME AND EXPENSECommission income on financial assets and commission expense onfinancial liabilities which are not measured at fair value through profitor loss amounted to EUR 2,553 million and EUR 312 million respectivelyin <strong>2007</strong>, compared with income of EUR 2,394 million and expense ofEUR 379 million in 2006.Net commission income related to trust and similar activities throughwhich the Group holds or invests assets on behalf of clients, trusts,pension and personal risk funds or other institutions amounted toEUR 2,125 million in <strong>2007</strong>, compared with EUR 1,891 million in 2006.2.c NET GAIN/LOSS ON FINANCIALINSTRUMENTS AT FAIR VALUE THROUGHPROFIT OR LOSS“Net gain/loss on financial instruments at fair value through profit orloss” includes all profit and loss items relating to financial instrumentsmanaged in the trading book and financial instruments (includingdividends) that the Group has designated as at fair value through profit orloss under the fair value option, other than interest income and expensewhich are recognised in “Net interest income” (Note 2.a).1234567891011<strong>2007</strong> Registration document - BNP PARIBAS 129
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