2007 REGISTRATION DOCUMENT
2007 REGISTRATION DOCUMENT 2007 REGISTRATION DOCUMENT
4 Core2007 REVIEW OF OPERATIONSbusiness results< Contents >BNL BANCA COMMERCIALE (BNL bc)In millions of euros 2007 2006 2007/2006Net banking income 2,634 2,473 +6.5%Operating expenses and depreciation (1,744) (1,746) -0.1%Gross operating income 890 727 +22.4%Cost of risk (318) (318) +0.0%Operating income 572 409 +39.9%Non-operating items 0 (12) nmPre-tax net income 572 397 +44.1%Income attributable to AMS (6) (6) +0.0%Pre-tax income of BNL bc 566 391 +44.8%Cost/income ratio 66.2% 70.6% -4.4 ptsAllocated equity (€bn) 3.0 2.2 +39.5%Pre-tax ROE 19% 14% +5 ptsFigures include 100% of French Private Banking for the lines net banking income to pre-tax income.1234BNL made a significant contribution to the Group’s growth performancefor the year. One year after the launch of the 2007-2009 plan, integrationefforts continue to yield very satisfactory results, and 70% of the expectedsynergies have already been implemented .2007 was the first year covered by the integration plan and sawconsiderable progress in terms of organisational and commercialefficiency. BNL’s image in Italy was boosted by a number of innovativeadvertising campaigns and a new-look range of current accounts, loansand savings products, drawing particularly on the expertise of the Group’sAsset Management and Services arm. New applications have been rolledout to front-office sales staff, while sales personnel from the retailbanking network were given training on the new marketing approach.The full benefit of these initiatives should be felt as from 2008.Gross operating income came in at EUR 572 million (1) for the year, upa remarkable 39.9% on 2006 (2) . This performance was powered by6.5% growth in net banking income and stable operating expenses anddepreciation charges compared with the year-earlier period (2) .Cost of risk remained stable at EUR 318 million.Pre-tax income totalled EUR 566 million for the year, up 44.8% on2006 (4) . Pre-tax return on allocated equity climbed 5 points to 19%.Thanks to BNL’s successful integration within the Group, the Italianmarket is already confirmed as a key driver of value creation for BNPParibas, in only the first year of the plan.5678910(1) Including 100% of revenues from Italian Private Banking.(2) Full-year pro forma.11902007 Registration document - BNP PARIBAS
2007 REVIEW OF OPERATIONSCore business results 4< Contents >INTERNATIONAL RETAIL BANKING AND FINANCIAL SERVICESIn millions of euros 2007 2006 2007/2006Net banking income 7,955 7,374 +7.9%Operating expenses and depreciation (4,625) (4,205) +10.0%Gross operating income 3,330 3,169 +5.1%Cost of risk (1,228) (722) +70.1%Operating income 2,102 2,447 -14.1%Share of earnings of associates 79 55 +43.6%Other non-operating items 94 45 +108.9%Pre-tax net income 2,275 2,547 -10.7%Cost/income ratio 58.1% 57.0% +1.1 ptsAllocated equity (€bn) 8.0 7.2 +11.6%Pre-tax ROE 28% 35% -7 ptsThe International Retail banking and Financial Services business (IR FS)continued to enjoy fast-paced growth in emerging countries andconsumer lending. BancWest was hit by the US subprime crisis, butremains largely profitable for the year as a whole.Despite the negative currency impact stemming from a weak dollar, netbanking income for the IR FS business delivered robust 7.9% growth(9.9% growth at constant scope and exchange rates), coming in atEUR 7,955 million for the year. This vigorous performance fuelled a 10.0%CETELEMrise in operating expenses and depreciation (9.8% at constant scope andexchange rates), while gross operating income advanced 5.1% (9.0% atconstant scope and exchange rates), to EUR 3,330 million. After factoringin the cost of risk, notably higher for BancWest due to the subprime crisis,pre-tax income for the core business came in at EUR 2,275 million in2007, down 10.7% on 2006. Pre-tax return on allocated equity remainedat a high 28%. This represents a slight fall on the year-earlier figure of35%, which had benefited from an exceptionally low cost of risk.In millions of euros 2007 2006 2007/2006Net banking income 3,020 2,684 +12.5%Operating expenses and depreciation (1,675) (1,518) +10.3%Gross operating income 1,345 1,166 +15.4%Cost of risk (700) (520) +34.6%Operating income 645 646 -0.2%Share of earnings of associates 74 52 +42.3%Other non-operating items 0 36 nmPre-tax net income 719 734 -2.0%Cost/income ratio 55.5% 56.6% -1.1 ptsAllocated equity (€bn) 2.2 1.9 +16.3%Pre-tax ROE 33% 39% -6 ptsCetelem, France’s leading consumer lender, continued to expand itsfootprint in emerging countries through organic growth (new operationsset up in Russia) and acquisitions (Jet Finance in Bulgaria and BGN inBrazil, both currently in progress). Thanks to a strong sales and marketingdrive, outstanding loans was up 17.4% on 2006. The rise in provisionsreflects the increased share of emerging countries in Cetelem’s portfolio,as well as greater consumer lending risk in Spain.In 2007 Cetelem set up Personal Finance with UCB, the Group’sspecialty mortgage lender. The venture will look to exploit the increasingoverlap between consumer and mortgage lending and will develop acomprehensive, integrated offering encompassing home improvementloans, home equity loans and other personal finance solutions. Cetelemand UCB will pool their client bases, expand their product and serviceoffering to third-party distributors, and capitalise on their respectiveinternational footprints. The new Personal Finance business line will beEurope’s leading provider of personal financial solutions.12345678910112007 Registration document - BNP PARIBAS 91
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4 Core<strong>2007</strong> REVIEW OF OPERATIONSbusiness results< Contents >BNL BANCA COMMERCIALE (BNL bc)In millions of euros <strong>2007</strong> 2006 <strong>2007</strong>/2006Net banking income 2,634 2,473 +6.5%Operating expenses and depreciation (1,744) (1,746) -0.1%Gross operating income 890 727 +22.4%Cost of risk (318) (318) +0.0%Operating income 572 409 +39.9%Non-operating items 0 (12) nmPre-tax net income 572 397 +44.1%Income attributable to AMS (6) (6) +0.0%Pre-tax income of BNL bc 566 391 +44.8%Cost/income ratio 66.2% 70.6% -4.4 ptsAllocated equity (€bn) 3.0 2.2 +39.5%Pre-tax ROE 19% 14% +5 ptsFigures include 100% of French Private Banking for the lines net banking income to pre-tax income.1234BNL made a significant contribution to the Group’s growth performancefor the year. One year after the launch of the <strong>2007</strong>-2009 plan, integrationefforts continue to yield very satisfactory results, and 70% of the expectedsynergies have already been implemented .<strong>2007</strong> was the first year covered by the integration plan and sawconsiderable progress in terms of organisational and commercialefficiency. BNL’s image in Italy was boosted by a number of innovativeadvertising campaigns and a new-look range of current accounts, loansand savings products, drawing particularly on the expertise of the Group’sAsset Management and Services arm. New applications have been rolledout to front-office sales staff, while sales personnel from the retailbanking network were given training on the new marketing approach.The full benefit of these initiatives should be felt as from 2008.Gross operating income came in at EUR 572 million (1) for the year, upa remarkable 39.9% on 2006 (2) . This performance was powered by6.5% growth in net banking income and stable operating expenses anddepreciation charges compared with the year-earlier period (2) .Cost of risk remained stable at EUR 318 million.Pre-tax income totalled EUR 566 million for the year, up 44.8% on2006 (4) . Pre-tax return on allocated equity climbed 5 points to 19%.Thanks to BNL’s successful integration within the Group, the Italianmarket is already confirmed as a key driver of value creation for BNPParibas, in only the first year of the plan.5678910(1) Including 100% of revenues from Italian Private Banking.(2) Full-year pro forma.1190<strong>2007</strong> Registration document - BNP PARIBAS
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