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BNP Paribas Group: 1st Quarter 2006 Results

A powerful growth drive in a very good global economic and business environment

Unprecedented growth of the business:
Net Banking Income (excluding BNP Paribas Capital):
6.7 billion euros (+28.1%/1Q05)

Sharp rise in operating profitability:
- Gross operating income (excluding BNP Paribas Capital):
2.9 billion euros (+35.7%/1Q05)
- Operating Income (excluding BNP Paribas Capital):
2.7 billion euros (+36.6%/1Q05)

Sharp rise in pre-tax income in all core businesses:
- French Retail Banking: +31%
- International Retail Banking & Financial Services: +39%
- Asset Management and Services: +46%
- Corporate and Investment Banking: +49%

Net profit after tax:
2.0 billion euros (+17%/1Q05)

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On 17 May 2006, the Board of Directors of BNP Paribas, in a meeting chaired by Michel Pébereau, reviewed the accounts for the first quarter of the year.


BNP Paribas further extended its growth drive and posted quarterly net banking income of €6,817 million in the first quarter 2006, up 21.7% from the first quarter 2005. Excluding BNP Paribas Capital (1), net banking income grew 28.1%. This strong growth is the result of a combination of vigorous organic growth (+20.7% excluding BNP Paribas Capital and at constant scope and exchange rates) and the selective acquisition strategy implemented by the Group.

Changes in operating expenses and depreciation trailed this trend, at +22.9%, compared to the first quarter 2005 (+15.4% at constant scope and exchange rates, excluding BNP Paribas Capital, due in part to increased bonuses paid out by the Corporate and Investment Banking businesses). Since the beginning of 2006, the Group has recruited 2,000 people world-wide, including 1,200 in France. However, at constant scope and exchange rates, operating expenses and depreciation rose less than revenues, both for the Group, excluding BNP Paribas Capital, and for each of the core businesses (positive jaws effect). The cost/income ratio, at 57.4% excluding BNP Paribas Capital, thus also improved by 2.4 points, confirming the extremely competitive position of the Group within the Eurozone.

Gross operating income reached €2,955 million, a rise of 20.1% from the first quarter 2005 (+35.7% excluding BNP Paribas Capital).

The cost of risk (€116 million, +12.6%) was down 18.9% from the first quarter 2005 at constant scope and exchange rates, excluding BNP Paribas Capital, against a backdrop of a still very favourable environment in terms of credit risk.

Net income group share rose 17.0% compared to the first quarter 2005 to €2,013 million, a particularly high benchmark due to BNP Paribas Capital's exceptionally high capital gains at that time. This result places BNP Paribas ahead of all the Eurozone banks.

All the Group's core businesses contributed to this buoyant growth:

French Retail Banking had an excellent quarter, which lead to a re-estimation of the projected average rise in net banking income to a level close to +6% in 2006.

International Retail Banking and Financial Services combined sustained organic growth (+8.3%) and selective acquisitions to achieve over 30% revenue growth.

The sales and marketing drive carried out by Asset Management and Services generated substantial asset inflows (annualised rate of over 10% of assets under management) and 27.8% revenue growth – remarkably fast-paced growth enhanced by bullish stock markets.

Corporate and Investment Banking, capitalising on a very favourable environment, achieved one of the industry's best performances with revenues up 45.7%.

(1) According to IFRS accounting standards, capital gains realised on non consolidated investments, notably private equity investments, are included in net banking income. Since BNP Paribas Capital records capital gains that vary widely from one quarter to the next, it is relevant to analyse changes in accounting aggregates excluding BNP Paribas Capital.