bnpparibas.ru Annual Report 2010 Contents: I. INTRODUCTION The message of the Supervisory Board 3 About the BNP Paribas Group 4 Management 8 II. STRATEGY AND RESULTS 2010 Macroeconomics and Russian banking industry in 2010 12 Statutory Financial results 2010 13 Corporate investment bank 20 Consumer financing 23 Risk Management 25 Human Resources Management 27 Corporate Code of Conduct 29 III. ADDITIONAL INFORMATION State Registration Information 30 Associations participation 32 Contact Information 32 2 BNP PARIBAS ZAO · ANNUAL REPORT 2010 3 BNP PARIBAS ZAO · ANNUAL REPORT 2010 Introduction The message of the Supervisory Board After a challenging year 2009, Russia more than 52% of the Russian foreign trade, and by the fact showed again impressive GDP growth that BNP Paribas is a top player in the Eurozone (second figures in 2010. Main triggers for this largest bank by market capitalization according to The 4% growth come from high Energy & Banker magazine). This is why very logically Russia is seen as Commodities prices, huge investment a strategic market for BNP Paribas. needs and the further development of the consuming society in Russia. These are “BNP PARIBAS” ZAO results for 2010 reflect this global solid fundamentals for further economical context, with an important growth of the consumer finance growth and “BNP PARIBAS” ZAO naturally for individuals (under “Cetelem” commercial brand), a new benefited in 2010 from this Russian global context. growth of the corporate loan activity and major hedging transactions performed with Russian Corporates. 2010 “BNP PARIBAS” ZAO takes advantage of being the subsidiary of saw also the reorganization of BNP Paribas Commercial BNP Paribas S.A. which was ranked as per Dealogics in 2010: banking activity for Multinationals and Russian non-Energy & Commodities counterparts. Today, all this Commercial - № 1 MLA on the Russian loan syndication market in 2010, banking activity is concentrated in “BNP PARIBAS” ZAO under the Corporate & Transaction Banking Europe (CTBE) name, an - № 8 bookrunner on the Eurobonds Debt Capital Market for approach developed by BNP Paribas in most of the European Russian counterparts, countries in order to build an efficient continental commercial banking platform for our clients. Last but not the least, the - №6 advisor for M&A deals executed in 2010, after-crisis period sees a revival of the M&A and Cash Equity markets. - №7 Bookrunner on the Equity Cash Market for Russian counterparts. “BNP PARIBAS” ZAO posted very solid 2010 results. Net profit after tax was 656 millions RUR, increased by 33% compared This leading position on the Russian market is certainly partly to 2009. The second important point is the good balance of explained by the fact that the European Union is the first contributions from the Bank’s activities: Consumer finance commercial partner of the Russian Federation, representing increased its outstanding portfolio 4.7 times, which is a 3 BNP PARIBAS ZAO · ANNUAL REPORT 2010 substantial improvement in its results; Corporate & Investment framework, the after-crisis world is far from being certain Banking contributed very positively in 2010 by increasing its and predictable. However, we see that Russia has important portfolio of interbank loan by 103%, and corporate portfolio trump cards in its hands, such as Energy and Commodities by 30%. Finally, these results also benefited from a release of wealth, well-educated and dynamic business community, and a governmental policy dedicated to modernization and reserves in 2010. Net allocation to loan loss provisions and diversification of the economy. Along with the Standard reserves for other losses (lines 4, 14 and 16 of Statutory Profit & Poor’s, which upgraded the Bank’s local rating to BBB in and Loss Report), i.e. the cost of risk, is positive in 2010 and March 2010, we are confident in the further development of amount to 140 M RUB due to net release of reserves created in our banking activity and position in Russia. previous years. The cost of the risk stays at a very reasonable level. These very good results demonstrated a better financial balance and a significant growth by Consumer finance. The excellent results of “BNP PARIBAS” ZAO in 2010 allow us to further invest in Cetelem – the local consumer finance Laurent COURAUDON business line and be prepared for the future. Member of the Supervisory Board European sovereign debt crisis, Muslim and Arabic revolutions “BNP PARIBAS” ZAO, Moscow in North Africa and in the Gulf, Japanese crisis, USD liquidity BNP Paribas Country Manager Russia and Belarus constrains, redefinition of the international regulatory CEO “BNP PARIBAS” ZAO, Moscow. About the BNP Paribas Group “ThE BANK FOR A CHANGING WORLD” · More than 200 000 employees in 80 countries BNP Paribas boasts strong advantages, with its well-balanced and successful business portfolio, high potential of synergies · 4 domestic markets: France, Italy, Belgium, and through cross-selling, true control over costs, good command Luxembourg of risk, and strong dynamic towards innovation, all directed · Leading European bank for corporates and institutionals at serving its clients. In each of its business lines, the bank · One of the 6 most solid banks in the world strives to maintain a position among leading establishments, · 3 core businesses: Retail Banking, Investment Solutions, both in terms of product quality and effectiveness. BNP and Corporate & Investment Banking Paribas is bank number 2 in Euro Zone. BNP Paribas ranks as the world’s 11th largest company in the BNP Paribas Group is one of the largest banking groups head- rating of the world largest companies by sales, profits, assets quartered in Europe and one of the six strongest banks in the and market value, and 7th in the banking sector worldwide. world (S&P). In Europe, the Group has four domestic markets (‘Global 2000 Forbes’ 2010) (Belgium, France, Italy and Luxembourg) and BNP Paribas Personal Finance is the leader in consumer lending. BNP Paribas ranks as France’s bank number one and the 6th most valuable international banking brand, 3rd in Europe (Brand Finance February 2010). Its brand value in 2010 BNP Paribas is rolling out its integrated retail banking model was estimated by Interbrand/Challenge Magazine as 14.060 across the Europe-Mediterranean zone and boasts a large million USD. network in the western part of the United States. In its Corporate & Investment Banking and Investment Solutions The Group has one of the highest ratings assigned by all three activities, BNP Paribas also enjoys top positions in Europe, a leading rating agencies: long-term rating АА by Standard & strong presence in the Americas and solid and fast-growing Poor’s, Аa2 by Moody’s and АА- by Fitch, which perform a businesses in Asia. stable and positive outlook. 4 BNP PARIBAS ZAO · ANNUAL REPORT 2010 5 BNP PARIBAS ZAO · ANNUAL REPORT 2010 BNP Paribas operates in 80 countries, and has over 200 000 employees, including 160 000 in Europe. The Group constantly demonstrates high growth rates of key business indicators. In 2010, the Group generated 43,880 million euros in revenues, up 9.2% compared to 2009 (-0.1% at constant scope and exchange rates). Operating expenses totalled 26,517 million euros (+13.6%; +3.3% at constant scope and exchange rates). Gross operating income was therefore virtually stable at 17,363 million euros (+3.0%; -5.1% at constant scope and exchange rates). Thanks to the sharp decline in the cost of risk (-42.6% at 4,802 million euros; -50.0% at constant scope and exchange rates) due to the improved economic environment, pre-tax income soared to 13,020 million euros, up 44.7% (+36.5% at constant scope and exchange rates). BNP PARIBAS AND TENNIS Long-standing partner to the sport of tennis since 1973, BNP Paribas is actively involved in the game at both local and international level, and in club, schools and social tennis as well as professional events. BNP Paribas has gradually become the number one sponsor in world tennis: official sponsor of Roland Garros since 1973 and sponsor of five ATP Masters events - the BNP Paribas Masters since 1986, Monte Carlo Masters since 2005, Internazionali BNL d’Italia in Rome since 2006, BNP Paribas Open in Indian Wells since 2009 and the Shanghai Masters since 2010. The Group is also title sponsor of the Davis Cup by BNP Paribas since 2001 and the Fed Cup by BNP Paribas since 2005, as well as being actively involved in many other international competitions including the Bank of the West Classic in California, the Grand Prix Hassan II in Casablanca, the Open 13 in Marseille and the BNP Paribas Showdown in Мы - этоЛЮБИТЕЛИ теннис • ВОСХОДЯЩИЕ ЗВЕЗДЫ • ПРОФЕССИОНАЛЫ New York. The Group’s new sponsorship slogan ‘We are tennis’ ИГРЫ ДОБРОЙ ВОЛИ • underlines the fact that BNP Paribas promotes tennis for all, at all levels. 5 BNP PARIBAS ZAO · ANNUAL REPORT 2010 ищение , чтобы ого из ных и Теннис – это достижение результатов, создание новых возможностей, предвосх - это событий, способность оказываться в нужном месте в нужное время и делать все nte- быть первым. Это основные принципы банковского бизнеса BNP Paribas - одн ее 500 международных лидеров в сферах Розничных банковских услуг, Корпоратив инвестиционных банковских услуг и Инвестиционных решений. BNP Paribas официальный спонсор турниров Roland Garros, Кубка Дэвиса и Кубка Федерации, Mo Carlo Masters Series, турниров BNP Paribas Masters и Internazionali BNL d’Italia и бол других теннисных соревнований во всем мире. BNP Paribas – это и есть теннис. www.tennis.bnpparibas.com BNP PARIBAs GRouP IN RussIA BNP Paribas was one of the first foreign banks to come Paribas never stopped its activity in Russia even during in Russia, it started its activity in Moscow through a the 1998 crisis and accompanied the largest Russian Representative Office opened in 1974.I n the 1990’s BNP companies from their start until now.