BNP Paribas : 2Q21 - Press release results

RESULTS

AS AT 30 JUNE 2021

PRESS RELEASE

Paris, 30 July 2021

A SOLID MODEL AND A STRONG PERFORMANCE

SUSTAINED GROWTH IN REVENUES

REVENUES: +0.9% vs. 2Q20

(+4.9% vs. 2Q19)

DECREASE IN COSTS, POSITIVE JAWS EFFECT

COSTS: -2.3% vs. 2Q20

(-3.5% vs. 2Q19)

STRONG INCREASE IN GOI1 VS. 2Q20 AND 2Q19

GOI1: +6.2% vs. 2Q20

(+21.5% vs. 2Q19)

LOW COST OF RISK: 38 bps2

• Below the 45-55 bps range2
• With overall no release of provisions on performing loans (stages 1 & 2)

STRONG RISE IN OPERATING INCOME VS. 2Q20 AND 2Q19

2Q21 OPERATING INCOME: €3,791m, +31.2% vs. 2Q20

(+19.7% vs. 2Q19)

VERY GOOD LEVEL OF RESULTS

STRONG RISE IN NET INCOME3 VS. 2Q20 AND 2Q19

2Q21 NET INCOME3: €2,911m, +26.6% vs. 2Q20

(+17.9% vs. 2Q19)

SOLID BALANCE SHEET - TRIM finalised

CET1 RATIO4: 12.9%

AN ADDITIONAL ORDINARY DIVIDEND OF €1.55 IN CASH,

WILL BE PROPOSED AT THE GENERAL MEETING OF 24 SEPT. 2021, TO BE PAID OUT

ON 30 SEPT. 20215

1 GOI: Gross Operating Income; 2. Cost of risk / customer loans outstanding at the beginning of the period (in bps); 3. Net Income, Group share; 4.CRD4; including IFRS9 transitional arrangements; 5. Additional ordinary dividend per share on 2020 net income that would raise the pay-out ratio to 50%, in accordance with the Group's ordinary distribution policy and further to the ECB announcements of 23 July 2021 - Subject to the approval of the General Meeting of 24 Sept. 2021; detachment scheduled for 28 Sept. 2021, pay-out for 30 Sept. 2021

The Board of Directors of BNP Paribas met on 29 July 2021. The meeting was chaired by Jean Lemierre, and the Board examined the Group's results for the second quarter 2021.

Commenting on these results, Chief Executive Officer Jean-Laurent Bonnafé stated at the end of the meeting:

"On the strength of its diversified and integrated model and its robust financial structure, BNP Paribas continues to expand its activities at the service of its clients and the economy. BNP Paribas' results are solid and reflect the rebound in activity and our growth potential.

While strengthening its environmental and social commitments, and continuing its digital and industrial transformation, the Group continues to mobilise all its resources and expertise to support individual, corporate and institutional clients in putting in place the right solutions, supporting them in their transformation and contributing, alongside them, to the success of a solid and sustainable recovery.

I would like to thank BNP Paribas teams in all its entities for their constant presence at the side of our clients, who are increasingly numerous in placing their confidence in us in Europe and worldwide."

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A SOLID MODEL AND A STRONG PERFORMANCE

Business activity moved solidly back on track this quarter, as the public health situation improved, albeit with differentiated momentum from one region, one sector, and one business line to another.

Against this backdrop, BNP Paribas once again demonstrated in the first half, the strength of its diversified model and its growth potential beyond the rebound that already occurred. The Group delivered high quarterly and half-yearly performances that were far higher than in 2019.

Accordingly, the Group is well-positioned to continue its growth.

At 11,776 million euros, revenues rose by 0.9% compared to the second quarter 2020 and by 4.9% compared to the second quarter 2019, driven by the very good performance in Domestic Markets and continued high level of revenues at CIB after an exceptional second quarter 2020.

In the operating divisions, revenues decreased by 1.2% compared to the second quarter 2020. Revenues rose strongly in Domestic Markets1 (+9.5% compared to the second quarter 2020 and +3.9% compared to the second quarter 2019), driven by a sharp rebound in the networks (in particular in France) and solid growth in the specialised businesses (Arval in particular). International Financial Services' revenues decreased by 2.0% at historical scope and exchange rates compared to the second quarter 2020 but rose by 1.5% at constant scope and exchange rates, driven by the steep rise in asset management business lines, the growth at BancWest and Personal Finance, partly offset by an unfavourable basis of comparison in Insurance and a less favourable context in the Europe-Mediterranean networks. Lastly, thanks to the diversification of its businesses and the strength of its platforms, CIB achieved a very good performance after the exceptional context of the second quarter 2020. CIB revenues were down by 9.9% compared to the second quarter 2020 but rose sharply, by 19.8% when compared to the second quarter 2019.

1 Including 100% of Private Banking in the domestic networks (excluding the PEL/CEL effects)

2	RESULTS AS AT 30 JUNE 2021

The Group's operating expenses, at 7,172 million euros, decreased by 2.3% compared to the second quarter 2020 and by 3.5% compared to the second quarter 2019. The jaws effect was very positive, at 3.1 points. Operating expenses this quarter included the exceptional impact of restructuring1 and adaptation costs2 (24 million euros) and IT reinforcement costs (47 million euros) for a total of 71 million euros (161 million euros of total exceptional operating expenses in the second quarter 2020).

In the operating divisions, operating expenses decreased by 0.8% compared to the second quarter 2020. They rose by 2.3% at Domestic Markets3, driven by the growth in the specialised businesses and by the rebound in activity in the networks. The increase was contained by cost-savings measures. Operating expenses rose by 2.6%4 at International Financial Services, due to the recovery in business activity, and fell by 8.0% at CIB from a high basis of comparison in the second quarter 2020.

The Group's gross operating income thus rose, to 4,604 million euros, a rebound of 6.2% compared to the second quarter 2020 and a very strong increase of 21.5% compared to the second quarter 2019.

The cost of risk, at 813 million euros, was down by 634 million euros compared to the second quarter 2020. At 38 basis points of customer loans outstanding, it was at a low level and below the range of 45 to 55 basis points. Provisions on non-performing loans (stage 3) were low, and there were overall no release of provisions on performing loans (stages 1 and 2).

The Group's operating income, at 3,791 million euros, was up sharply, by 31.2% compared to the second quarter 2020 and rose strongly by 19.7% compared to the second quarter 2019.

Non-operating items came to 403 million euros (236 million euros in the second quarter 2020). They included the exceptional impact of the +300 million euro capital gain on the sale of Allfunds' shares5. For the second quarter 2020, they reflected the +83 million euro capital gain on the sale of a building.

Pre-tax income rose very sharply, by 34.2%, to 4,194 million euros from 3,126 million euros in the second quarter 2020. It was strongly up by 24.2% compared to the second quarter 2019.

The average corporate income tax rate was 29.1%.

Net income amounted to 2,911 million euros, up very strongly by 26.6% compared to the second quarter 2020 and by 17.9% compared to the second quarter 2019. Excluding the effect of exceptional items6, it would have come to 2,748 million euros, an increase of 16.5% compared to the second quarter 2020 and of 4.9% compared to the second quarter 2019.

As at 30 June 2021, the Group's common equity Tier 1 ratio was 12.9%7, an increase of 10 basis points compared to 31 March 2021. The Group's immediately available liquidity reserve amounted to 488 billion euros, equivalent to over one year of room to manoeuvre in terms of wholesale funding. The leverage ratio8 stood at 4.0%.

Tangible net book value9 per share amounted to 76.3 euros, translating into a compound annual growth rate of 7.2% since 31 December 2008 and illustrating ongoing value creation throughout economic cycles.

1. Related in particular to the discontinuation or restructuring of certain businesses (in particular at CIB)
2. Adaptation measures in particular at BancWest and CIB
3. Including 100% of Private Banking in the domestic networks (excluding PEL/CEL effects)
4. +6.8% at constant scope and exchange rates
5. Disposal of 6.7% stake in Allfunds; BNP Paribas still holds a 15.77% stake in Allfunds.
6. Effects of after-taxone-off items: +162 million euros in the second quarter 2021, -61 million euros in the second quarter 2020, and -151 million euros in the second quarter 2019
7. CRD4; including IFRS9 transitional arrangements
8. Calculated in accordance with Regulation (EU) 2019/876, without opting for the temporary exclusion related to deposits with Eurosystem central banks authorised by the ECB decision of 18 June 2021
9. Revaluated

3	RESULTS AS AT 30 JUNE 2021

The Board of Directors will propose to shareholders at the Shareholder's Meeting to pay an ordinary cash dividend of 1.55 euros per share1. This dividend is in addition to the ordinary dividend of 1.11 euros per share paid out in cash on 26 May 2021 and raises the total ordinary cash dividends paid out in 2021 to 2.66 euros, hence a pay-out ratio of 50% of the Group's 2020 net income.

The Group's distribution policy will be reviewed upon the closing of its 2021 full-year accounts, in particular as part of its 2025 strategic plan. The Group's new distribution policy will be announced when it will present its full-year results in February 2022.

The Group continued to strengthen its internal control framework.

The Group continued to pursue an ambitious policy of engaging with society. As such, the Group has a long-standing commitment to combat climate change, it is one of the first signatories of the Net-Zero Banking Alliance (NZBA), through which it pledged to align the greenhouse gas emissions tied to its financing activities to the trajectory required to achieve CO2-neutrality by 2050. The Group has also made a strong commitment to help protect biodiversity. Three years after joining the act4nature initiative, BNP Paribas has stepped up its commitments contributing to protecting biodiversity, including its pledge to evaluate corporate clients on biodiversity criteria by 2025.

For the first half of the year, revenues came to 23,605 million euros, up by 4.6% compared to the first half of 2020 and by 5.5% compared to the first half of 2019.

In the operating divisions, revenues were up by 2.7%2: +5.2% at Domestic Markets3, driven by the rebound in the networks (in particular in France) and solid performance by the specialised businesses, notably Arval; +3.0% at International Financial Services at constant scope and exchange rates4, due to the strong increase in asset gathering businesses, good increase at BancWest and a less favourable context in other business lines; and +4.4% at CIB (+20.9% compared to the first half of 2019), on the back of sustained growth after the exceptional performance of the second quarter 2020 and an increase in all three businesses.

The Group's operating expenses increased by 1.8% to 15,769 million euros. They included the exceptional impact of restructuring5 and adaptation6 costs (82 million euros) and IT reinforcement costs (66 million euros) for a total of 148 million euro exceptional items (240 million euros in the first half of 2020). The jaws effect was very positive (+2.8 points).

Operating expenses included almost all taxes and contributions for the year (mainly the contribution to the Single Resolution Fund) for 1,460 million euros (1,284 million euros in the first half of 2020).

Operating expenses in the operating divisions rose by 1.1% compared to the first half of 2020. At Domestic Markets, they increased by 1.5%, as they supported growth in the specialised businesses and the rebound of activity in the networks. At International Financial Services, they rose by 2.1% at constant scope and exchange rates7. And at CIB, they rose by 4.3%, due to growth in activity and the impact of taxes subject to IFRIC 21.

1. Subject to the approval of the General Meeting of 24 September 2021; detachment scheduled for 28 September 2021; pay-out for 30 September 2021
2. +5.6% at constant scope and exchange rates
3. Including 100% of Private Banking in the domestic networks (excluding PEL/CEL effects)
4. -1.3%at historical scope and exchange rates
5. Restructuring costs related in particular to the discontinuation or restructuring of certain businesses (in particular at CIB)
6. Related in particular to Wealth Management and CIB
7. -2.2%at historical scope and exchange rates

4	RESULTS AS AT 30 JUNE 2021

The Group's gross operating income came to 7,836 million euros (7,068 million euros in the first half of 2020), up by 10.9% compared to the first half of 2020 and 20.8% compared to the first half of 2019. In the operating divisions, it rose by 6.0% compared to the first half of 2020.

At 1,709 million euros, the cost of risk was down by 1,164 million euros compared to the first half of 2020, when it was impacted by provisions on performing loans (stages 1 and 2), in connection with the health crisis. It came to 40 basis points of customer loans outstanding and has normalised at a low level, below the range of 45 to 55 basis points.

The Group's operating income, at 6,127 million euros (4,195 million euros in the first half of 2020), thus rose sharply by 46.0% compared to the first half of 2020. It was up by 36.4% compared to the first half of 2020 in the operating divisions.

The Group's non-operating items came to 890 million euros (726 million euros in the first half of 2020). In the first half of 2021, they included the exceptional impacts of the +302 million euro capital gain on the sale of buildings, the +96 million euro capital gain on the sale of a BNP Paribas Asset Management stake, and the +300 million euro capital gain on the sale of Allfunds' shares1. In the first half of 2020, they included the +464 million euro exceptional impact of capital gains on the sale of several buildings.

Pre-tax income, at 7,017 million euros (4,921 million euros in the first half of 2020) thus rose sharply, by 42.6% compared to the first half of 2020, and by 15.8% compared to the first half of 2019.

The average corporate tax rate came to 31.8%, due to the impact of the first-quarter recognition of full-year taxes and contributions, in accordance with IFRIC 21 "Taxes", a large portion of which is not deductible.

Net income, group share amounted to 4,679 million euros, an increase of 30.6% compared to the first half of 2020 and of 6.7% compared to the first half of 2019.

The annualised return on tangible equity is 10.6% and reflects the BNP Paribas group's solid performances, thanks to its diversified and integrated model and confirms the rebound and growth potential of its activities.

1 Disposal of 6.7% stake in Allfunds; BNP Paribas still holds a 15.77% stake in Allfunds

5	RESULTS AS AT 30 JUNE 2021