BNP Paribas 2002 Results: Good Performance in a Very Difficult Environment

NET BANKING INCOME AT 16.8 BILLION EUROS (-3.8%)
3.3 BILLION EUROS IN NET INCOME GROUP SHARE (-18%)
13.5% RETURN ON EQUITY AFTER TAX
65.2% COST INCOME RATIO


- In an environment dominated by the economic slowdown and the stock market crisis, BNP Paribas delivered good performance.

- Net banking income totalled 16,793 million euros (only -3.8 %).

- The cost/income ratio remained very competitive at 65.2 % (62.7 % in 2001).

- Gross operating income came to 5,838 million euros, down 10.4%.

- Net income, group share, at 3,295 million euros (-18%), generated a 13.5 % return on equity, after tax.

- Corporate & Investment Banking (CIB) and Asset Management & Services (AMS), whose operations were hard hit by the stock market crisis, nevertheless generated substantial pre-tax income: 1,186 and 830 million euros respectively.

Retail Banking's businesses and results continued to grow and largely contributed to the Group's good performance. Its gross operating income, up 12.9% at 3,431 million euros, account for close to 60% of the total gross operating income. Its pre-tax net income totalled 2,448 million euros (+5.6 %).

On 4 February 2003 BNP Paribas' Board of Directors, in a meeting chaired by Michel Pébereau, approved the accounts for the 2002 fiscal year.


Good results in a very difficult environment

The year 2002 was marked, especially starting in June, by geopolitical uncertainties, a continued economic slowdown, and a major crisis in the equity markets. In the same spirit as the 9/11 terrorist attacks, a spate of other attacks targeted western democracies and a climate of war preparations overshadowed the entire year 2002. The economic recovery, expected in the US, came late and was stop-and-go, while Europe in turn faced a sharp slowdown. Financial markets simultaneously faced misgivings over corporate debt, against a backdrop of questions over US corporate accounting practices, considerable equity market volatility and an unprecedented crisis in the equity markets starting in June.

In this very difficult environment, BNP Paribas Group's net banking income fell 3.8% to 16,793 million euros (-4.1% at constant scope and exchange rates). This decline is due mainly to the crisis in the financial markets, which had negative repercussions, in particular on trading revenues (-21.2% at 2,550 million euros).

Operating expenses and depreciation were virtually stable (+0.2%) at 10,955 million euros. At constant scope and exchange rates, they were down 0.5% due mainly to declines in variable fees in the business lines involved in financial markets, and a good control of retail banking expenses.

Gross operating income thus fell only 10.4% to 5,838 million euros (-10.1% at constant scope and exchange rates). The cost/income ratio came to 65.2% (+2.5 points), a very competitive level given the context in 2002. Provisions rose 12% to 1,470 million euros, mainly due to increased provisions for corporate and investment banking in the US. Operating income thus totalled 4,368 million euros (-16.1%).

Capital gains from the Group's share portfolio totalled 903 million euros, down only 19.7% despite the sharp downturn in the stock market, due to the fact that the Group's private equity portfolio held up well.

Acquisitions completed at the end of 2001, and throughout 2002, practically doubled the goodwill, which soared from 188 to 366 million euros. In total, non-operating items, 445 million euros positive, were down 56.7% compared to 2001.

The purchase of 100% of BancWest, completed at the end of 2001, cut minority interests to 343 million euros (-13.6%) despite the increased weight of payments on preferred share issued to consolidate the Group's equity. The tax burden, which reflects a cut in the tax rate in certain countries where the Group is present and a tax carry-back in the US, fell 35.3% to 1,175 million euros.

Net income, group share, thus totalled 3,295 million euros (-18%), with 13.5% return on equity for the period (compared to 18.2% in 2001) after amortisation of the goodwill and 14.8% (compared to 18.9% in 2001) before this.

During the course of 2002, the Group acquired the United California Bank (2.4 billion euros), Consors (0.5 billion euros), Cogent (0.4 billion euros) and Facet (0.9 billion euros) and thereby consolidated its competitive positions and its growth capacity, in particular in retail banking. The solid balance sheet was further strengthened. The Cooke ratio (tier 1) reached 8.1% as of 31 December 2002 (compared to 7.3% as of 31 December 2001) and the total ratio 10.9% (compared to 10.6%).

In addition to continuing share buybacks in order to neutralise the effect of share issues for employees, the Group will continue in 2003 its share buyback programme to the extent possible while sticking to its capital adequacy ratio targets and adhering to its opportunistic and controlled acquisition strategy.

The decisions regarding the 16.2% holding in Crédit Lyonnais, acquired for an average share price of 54.7 euros, will be taken at the appropriate time in observance of the Group's financial discipline.

The Board of Directors shall put forward to shareholders a proposal to pay a 1.20 euro dividend per share, unchanged since last year, including a 0.60 euro tax credit, or a total of 1.80