CONTENTS: I. INTRODUCTION 05 The message from the Supervisory Board 06 About the BNP Paribas Group 10 Management II. STRATEGY AND RESULTS 2011 Macroeconomics and the Russian banking industry in 2011 15 16 Financial results 2011 27 Corporate investment bank 31 Consumer fi nancing 33 Risk Management 35 Human Resources Management 36 Corporate Code of Conduct III. ADDITIONAL INFORMATION 38 State Registration Information 38 Participation in Associations 40 Contact Information I. INTRODUCTION BNP PARIBAS ZAO 4 ANNUAL REPORT 2011 THE MESSAGE FROM THE SUPERVISORY BOARD am pleased to present the BNP market conditions. PARIBAS ZAO annual report for In 2011, we started up a new trading 2011. and marketing activity in commodity de- The year was dominated by rivatives to meet the increasing demand global uncertainty and extremely in the Russian market. We expect this I complex fi nancial conditions product line to be an important contrib- combined with new regulatory utor to our 2012 revenues. challenges. In 2011, our work was fo- On a wider scale, 2011 was a year of cused on adapting ourselves to the new signifi cant changes to the business strat- operating environment. Now, our compa- egies for BNP Paribas Group in Russia. ny has adjusted to the new environment Corporate Investment Banking and and we have already made signifi cant Personal Finance activities were pro- progress in realignment. Thanks to the vided by the same legal entity; in 2011, efforts of our teams, we showed solid BNP Paribas ZAO decided it would stop operating performances and fi nancial its production of consumer fi nance loans stability in 2011. We can safely claim to concentrate its resources on further that both the BNP Paribas Group and its developing its corporate & investment key subsidiary in Russia, BNP PARIBAS banking activities. ZAO, managed to withstand the crisis in The Group still believes in the strong the fi nancial markets. potential of consumer fi nance activities. As a result of our efforts, today we However, under a different set-up it has are a much stronger bank than last year, decided to move its activities in the con- with a clear vision of our goals on both sumer lending market to a joint venture global and local levels and a strategy to with Sberbank, which will start up in achieve them. BNP PARIBAS ZAO’s long- September 2012. term credit rating (affi rmed by Standard To refl ect the achievements over the & Poor’s in 2011) of BBB with a stable past years and to accommodate the outlook puts us among the strongest and expanding corporate and investment best-rated banks in Russia. banking activities, BNP PARIBAS ZAO The highly successful issuance of moved in June 2011 to its new premises BNP PARIBAS ZAO bonds last year is also in the prime class White Square Business proof of our solid market position. In Center that provides all necessary facili- addition, we have increased our charter ties for effective and continuous work. capital from 4 to 5.8 billion rubles, and The solid performance in 2011 lays at year end 2011 our statutory capital a good foundation for continued suc- exceeded 10 billion rubles. cess in 2012. We will continue sustained In 2011, BNP PARIBAS ZAO’s assets value creation in the new environment increased by 58% and exceeded pre- and continue the diversifi cation of our crisis level. Loan portfolio grew by 89%, activities in the areas of capital markets, while maintaining high quality. Strong commodity derivatives and transaction performance of the corporate business banking for multinationals. Russia is and segment supported expansion of con- remains a key growth market for BNP sumer lending in 2011. Total revenue Paribas where the ambition of the group grew by 58% in 2011 YoY, while operat- is to roll out all its best-in-class busi- ing expenses increased by 41% and cost nesses, many of them occupying leading of risk by 37%. These resulted in steep positions in Europe or globally. profi t growth YoY from 56 million rubles BNP Paribas Group is one of the best- in 2010 up to 614 million rubles in 2011. equipped banks to succeed in the current Strong cost control measures imple- environment. We aim at uniting the mented by the Bank in 2010 and 2011 Group’s and the ZAO’s forces, talents and contributed to the good results of 2011. efforts to focus on achieving ambitious In 2011, we demonstrated the abil- but reachable goals. Our management ity to meet the demands of the local principles, focussing on clients, exem- market; we continued to be the key plary ethical behaviour and top-quality player in fi nancing the biggest Russian services, make me very confi dent in our corporations and largest sectors, hence joint future success. the strong position in Russia as the No. 3 Eurobonds issuer in Russia. Jean LEMIERRE Fixed income derivatives are playing Chairman of the Supervisory Council an increasingly important role in current BNP PARIBAS ZAO BNP PARIBAS ZAO ANNUAL REPORT 2011 5 ABOUT THE BNP PARIBAS GROUP “The bank for a changing world” BNP Paribas and Tennis • 1st BANK IN THE EUROZONE Global 2000 Forbes 2011 ust as we place people at the heart of everything we do, in the tennis world it is • 1st AMONG FRENCH ENTERPRISES the players who exemplify the positive values Global 2000 Forbes 2011 of the sport, whatever their age or level of • 11th AMONG THE TOP GLOBAL COMPANIES expertise. BNP Paribas supports both amateur Global 2000 Forbes 2011 J and professional players at the local, national • BEST BANK IN DEVELOPED EUROPE and international level, as well as junior and university Global Finance, 2011 competitions, so as to encourage the transmission of knowledge between generations. Our new sponsorship • 5th IN THE GLOBAL BANKING SECTOR slogan “We are tennis” underlines the fact that BNP Global 2000 Forbes 2011 Paribas promotes tennis for everyone and at all levels. • 200,000 EMPLOYEES, INCLUDING 150,000 IN EUROPE Since 1973, BNP Paribas has forged a deep and (01/01/2012) lasting partnership with tennis. The Group has become the sport’s number one partner in its various NP Paribas has a presence in 80 countries dimensions: from local tennis to international with nearly 200,000 employees, including competition, across amateur, social, university and more than 150,000 in Europe. It ranks professional tennis, for the disabled as well as able- highly in its three core activities: Retail bodied player. Our loyalty to this sport has remained B Banking, Investment Solutions and unchanged, yet BNP Paribas continues to pioneer new Corporate & Investment Banking. In Europe, approaches to sports sponsorship. Accordingly, in the Group has four domestic markets (Belgium, France, 2011, the Group made greater use of digital media to Italy and Luxembourg) and BNP Paribas Personal support its overall sponsoring strategy launching www. Finance is the leader in consumer lending. BNP Paribas wearetennis.com, a website entirely dedicated to tennis is rolling out its integrated retail banking model across and its many fans. During the 38 years of this joint Mediterranean basin countries, in Turkey, in Eastern venture, BNP Paribas has not merely sought to showcase Europe and a large network in the western part of the its brand; we have shown real enthusiasm in promoting United States. In its Corporate & Investment Banking the success of the events that we support. and Investment Solutions activities, BNP Paribas also Currently, BNP Paribas is the number one sponsor enjoys top positions in Europe, a strong presence in the in world tennis; we support such events as Roland Americas and solid and fast-growing businesses in Asia. Garros, fi ve ATP Masters events (BNP Paribas Masters, 80 of the 100 largest groups worldwide have already Monte Carlo Masters, Internazionali BNL d’Italia, BNP chosen to be clients of BNP Paribas! Paribas Open in Indian Wells and Shanghai Masters). The Group is also the title sponsor of the Davis Cup by In an exceptionally challenging environment, the BNP Paribas and the Fed Cup by BNP Paribas, as well Group generated 42,384 million euros in revenues, down as being actively involved in many other international 3.4% compared to 2010. Operating expenses amounted competitions including the Bank of the West Classic in to 26,116 million euros and gross operating income was California, the Grand Prix Hassan II in Casablanca, the down 6.3% to 16,268 million euros. Due to the Greek Open 13 in Marseille and the BNP Paribas Showdown in sovereign debt provision (-3,241 million euros), the cost New York. of risk is up 41.5% to 6,797 million euros. Excluding this BNP PARIBAS ZAO is a long-term and valued effect, it was down 25.9% to 3,556 million euros. After partner of the Russian Tennis Federation. The bank the impact of Greek sovereign debt impairment in the is also involved in numerous local tennis events and insurance partnerships (-213 million euros), the pre-tax championships. In 2011 alone Moscow hosted quarter- income was down 25.9% to 9,651 million euros. After the fi nal, semi-fi nal and fi nal games of the Fed Cup by BNP corporate tax charge (-2,757 million euros) and minority Paribas besides the Davis Cup play-off games in Kazan. interests (-844 million euros), net income attributable to We are looking to extend our partnership for the years equity holders came to 6,050 million euros, down 22.9% to come. compared to 2010. BNP PARIBAS ZAO 6 ANNUAL REPORT 2011 Corporate Social Pasteur Institute ver a long period of time, the BNP Paribas Responsibility Group supports the medical projects of the non-profi t Pasteur Institute.