BNP Paribas : 2021 Integrated report

NEW BRINGINGS LUTIONSYOU

SUSTAINABLEO W RLD

FOR O# P O S I T I V E B A N K I N G

2021 INTEGRATED REPORT

The bank for a changing world

CONTENTS

Message from Jean Lemierre	04
Interview with Jean-Laurent Bonnafé	06
Our GTS 2025 strategic plan	10
A diversified and integrated model
that creates value	16
3 divisions that support all our customers	18
Strengthening our operational performance	24
Identifying risks to better anticipate them	25
Listening to our stakeholders	26

P. 28

DESIGNING INNOVATIVE SOLUTIONS

Thinking about innovation
for the benefit of all	30
A year of innovations	32

P. 38

COMMITTING

TO A SUSTAINABLE ECONOMY

Supporting the transition	40
A year of acceleration	42

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P. 48

CONTRIBUTING TO A

MORE INCLUSIVE SOCIETY

Promoting inclusion
and equal opportunities	50
A year of commitments	52

P. 54

BUILDING

A COLLECTIVE DYNAMIC

People at the heart of our strategy	56
Our governance bodies
and their missions	60
Nurturing the relationship with
our shareholders and investors	61
Role and composition
of our Board of Directors	62
Our Executive Committee proposes
and implements the Group's strategy	64
Our indicators and ratings	66
BNP Paribas around the world	68

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various metals. Likewise, international trade with Russia is largely affected following the sanctions imposed by the international community. Inflation, which is already high, will probably continue to increase and affect essential goods such as food. It is safe to assume that the situation will have a negative impact on GDP, the magnitude of which will depend on the course of events in the coming months*. This could lead to the return of stagflation (1) and an increase in unemployment.

2021, A YEAR OF STRONG ECONOMIC RECOVERY

This change in context comes after 2021,

• BASED ON THE STRENGTH OF ITS DIVERSIFIED AND INTEGRATED MODEL, BNP PARIBAS INTENDS TO CONSOLIDATE ITS EUROPEAN LEADERSHIP AND TO BE A DRIVING FORCE FOR A SUSTAINABLE AND INCLUSIVE ECONOMY.

THE RECOVERY

OF THE ECONOMY

JEAN LEMIERRE

Chairman of the Board of Directors

a year that was marked by strong economic recovery despite the many uncertainties related to the pandemic. All major economies resumed high growth rates: +5.5% in the United States, +7.9% in China, +7.1% in the United Kingdom, +5% in the eurozone, and +6.7% in France. This rebound is due to the uptake in demand after a year of sharp contraction in consumption, the support measures taken by governments and the Central European Bank, and the banking industry's role in financing the economy. BNP Paribas played its full part in this recovery by supporting all economic players - corporate clients, professionals, individuals - in their investment, financing and development projects to promote a more responsible business model.

FINANCING THE TRANSITION TO A SUSTAINABLE ECONOMY

We are convinced that the issues related to the climate, the ecological transition

sector has a leading role to play in this area. Sustainable finance continues to gain momentum, as demonstrated by the taxonomy project that was partially put into effect in the European Union in January 2022. I would like for the progress made on our continent to contribute towards building a global standard that is measurable, comparable and understood by all investors. Financial players must now accelerate the pace of financing and strongly support projects that "green" the economy and make it possible to achieve carbon neutrality by 2050. BNP Paribas is continuing its mobilisation in this direction, and this fundamental commitment is at the heart of our strategic plan, GTS 2025.

of our innovation capabilities. Lastly, it places the advent of a sustainable economy at the heart of its priorities by redirecting financial flows towards the investments necessary for the ecological transition.

On behalf of the Board of Directors, I would like to express my confidence in the relevance of the strategic orientations of this plan and in the ability of the Executive Committee, along with all the teams,

to implement this plan in the coming years. Based on the strength of its diversified and integrated model, BNP Paribas intends to consolidate its European leadership and, with the support of its shareholders,

to be a driving force for a sustainable and inclusive economy.

of BNP Paribas

and the protection of biodiversity are

A PROACTIVE STRATEGY

Before providing an overview of our activities in 2021, I would like to mention the geopolitical crisis that is affecting Europe following the attack on Ukraine on 24 February 2022. This war on the European continent has upset a strategic balance and put the West, and the European Union (EU) in particular, to the test. The reaction of the EU's twenty-sevenmember states, which unanimously condemned this aggression and adopted a

series of economic and financial sanctions, puts defence issues at the heart of the EU's challenges and seals the foundation of democratic values upon which Europe is built. At BNP Paribas, we are particularly attentive to this human tragedy and its devastating consequences. The Group mobilised quickly to ensure the safety of the 5,000 employees and their families of its subsidiary UKRSIBBANK, and to provide the population and economy of Ukraine

with critical banking services to the extent possible. We also expressed our full solidarity by supporting several partner charities and organisations and by activating the BNP Paribas Foundation's Rescue & Recover Fund.

The economic impact of this conflict is consequential. Energy prices, which have been under pressure for several months, have risen sharply, as have the prices of certain commodities such as wheat and

a matter of priority for all: public authorities and citizens, as well as private operators that have an essential role to play in this transition. The latest reports from the Intergovernmental Panel

on Climate Change (IPCC) once again underline the importance of immediately implementing a more resilient model and of decarbonising our economies. The current geopolitical crisis linked to Ukraine also illustrates the need to reduce the European Union's energy vulnerability and to emerge from its excessive dependence on fossil fuels. The financial

Designed with the involvement of the Group's business lines and functions, and in the wake of the previous plan, this roadmap charts the Group's ambitions in terms of growth, the ramping up of technology and the widespread deployment of sustainable finance.

Our GTS 2025 plan embodies the vision of a Group that aspires to pursue responsible development for the benefit of its customers, the economy and society. It also expresses our ambition to optimise the experience of our customers and employees by making the most of technology and

* Text written on 5 April 2022.

1. Stagflation: refers to an economy that suffers simultaneously from low or no economic growth and high inflation.

	ECONOMYJEAN-
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	WE ARE ACCELERATI G OUR TRANSFOR	ATION
	TO C LLECTIVELY SUCCEED IN
	THE TRANSITION TO A SUSTAINABLE

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OUR COMMERCIAL

"PERFORMANCE AND RESULTS

CONFIRM THE FORCE AND

DISTINCTIVENESS OF OUR DIVERSIFIED

AND INTEGRATED MODEL.

LAURENT BONNAFÉ

Director and Chief Executive Officer of BNP Paribas

THE WAR IN UKRAINE,

A COUNTRY IN WHICH BNP PARIBAS IS PRESENT WITH 5,000 EMPLOYEES,

HAS BEEN RAGING FOR SEVERAL WEEKS*. WHAT ARE THE IMPACTS OF THIS CONFLICT?

The attack on Ukraine is a major crisis that the world is facing and, as we speak, we are seeing serious humanitarian, economic and geopolitical consequences. Above all, I would like to salute the courage of our colleagues who are suffering the full brunt of the conflict and its repercussions, and first and foremost our teams

at UKRSIBBANK, who are fully mobilised to ensure, to the extent possible,

the continuity of banking activity which is vital to the functioning of the country's economy. Since the first hours of the conflict our priority has been to guarantee their safety and that of their loved ones; I would also like to thank our employees who live and work at the frontiers of the conflict in Poland, Hungary and Romania, and those who, throughout the world, have come to their aid and show solidarity with the people of Ukraine.

This tragedy affects the whole of Europe, which has been unanimous in expressing its unwavering support for Ukraine. We have naturally responded to the European appeal for solidarity by supporting the United Nations High Commissioner for Refugees (UNHCR) and several partner organisations,

and by activating the BNP Paribas Rescue

• Recover Fund, for which we match all the donations made by our employees and customers. We will continue to do everything in our power to help our employees, their families and loved ones, and to maintain the continuity of essential banking services to support the people of Ukraine.

LET'S COME TO YOUR VIEW AND THE CONCLUSIONS YOU HAVE DRAWN ON 2021…

Despite the persistence of the pandemic, 2021 was marked by a clear economic recovery. Most companies have returned to growth, and the trend has also been positive for individuals. The good health of the economy, the rebound in activity and the confidence of our customers are reflected in our results, which are higher than those of 2020, and especially those of 2019 before the health crisis. We have been able to guide our customers in their development after supporting them through the difficult times of 2020. In this context, in which our usefulness at the service of the economy and society was fully expressed, we gained market share in several business lines and regions.

Thanks to the exceptional mobilisation of our teams around the world and the trust shown by our customers, the Group posted a very solid performance in 2021: our revenues stood at more than €46bn, with an increase of 4.4% compared to 2020 and 3.7% compared to 2019. Our net income, Group share amounted to €9.5bn, up by more than 34% compared to 2020 and by

more than 16% compared to 2019, enabling us to reach a return on equity of 10% and further reinforce our financial strength with a CET1 ratio of 12.9%.

Overall, our 2021 results are in line with the ambition of our 2017-2020 plan and all our financial objectives were achieved. This is a source of satisfaction and an advantage for us, after the brutal shock of the pandemic for families, businesses and economies. It is also a strength and a guarantee of resilience in a geopolitical, environmental, social and economic context that is still fraught with uncertainty.

HOW DO YOU EXPLAIN

THESE STRONG RESULTS FROM BNP PARIBAS?

Our commercial performance and results confirm the force and distinctiveness

of our diversified and integrated model: our three operating divisions have each drawn on their strengths and expertise to continue to grow. These results reflect excellent cohesion and cross-functionality that continue to build across all

BNP Paribas business lines.

They also demonstrate the relevance of our long-term strategy and the approach taken as part of our 2017-2020 plan in terms of transformation. We have deeply digitalised the Bank to improve the experience of our clients and the efficiency of our activities. The leading European platforms that we have built allow us to best support individuals, businesses and institutions in their development and their ecological transition.

* Interview conducted on 5 April 2022.

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OUR LEITMOTIF IS TO

"SUPPORT ALL CORPORATE CLIENTS COMMITTED

TO A TRAJECTORY THAT WILL MAKE IT POSSIBLE TO ACHIEVE CARBON NEUTRALITY.

IN A CONTEXT MARKED BY GROWING UNCERTAINTY LINKED TO INTERNATIONAL TENSIONS, WHAT DIRECTION DO YOU INTEND TO SET FOR

BNP PARIBAS?

The period we are going through is complex with heightened geopolitical tensions adding to the growing urgency of the climate transition. And although it is in the process of returning to normal,

the risk related to the health situation continues to require vigilance. In this context, our solidity and our ability to move forward with cohesion, flexibility and responsiveness in facing adverse winds, is an important asset for BNP Paribas and a strong factor in our clients' trust. This is the strength of our model:

be at the heart of the challenges of the coming years. We will have to support all our clients by activating our credit, market and savings levers. A deep transformation of the entire finance sector is underway: we were among the pioneers to take into account the climate challenge and this is an incentive to go further.

Our leitmotif is to support all corporate clients committed to a trajectory that will make it possible to achieve this objective of carbon neutrality. Our know-how and our positioning as the leading European bank must be put at the service of a more responsible and inclusive economy.

We must ensure that we always make decisions with socially sustainable consequences.

I am convinced that our Group is very well

In an unprecedented period that

by putting technology and industrialisation

the transformation of the economy under the effects of the climate factor will be much stronger than it has been thus far. All our offers, client relationships, decision-making chains and information systems must embrace these issues. This approach is reflected in our accession to the Net-Zero Banking Alliance, which commits us to managing our loan portfolio to finance a net-zero economy by 2050.

the diversification of expertise, with leading businesses in Europe covering a broad range of client needs, and strong integration supported by increased industrialisation, enabling us to serve clients in an agile and coordinated manner. The transition to a sustainable model will

positioned to write a new chapter in its development. With a solid and increasingly virtuous model, a strategy focused on the long-term, and highly committed teams, we have everything we need to strengthen our European leadership and contribute to a sustainable economy.

required much resilience and adaptability, our teams rose to the challenge day after day with professionalism and commitment. I would like to warmly thank our teams for their contribution to this success.

2022 MARKS THE LAUNCH OF THE NEW STRATEGIC PLAN. HOW DOES BNP PARIBAS PLAN TO EXECUTE IT AND WHAT ARE ITS SALIENT POINTS?

Thanks to our financial solidity, the complementary nature of our businesses and the contribution of all our talents, we are very well positioned to continue our long-term development and write a new chapter with our new strategic plan, GTS 2025. Built around the three main priorities of Growth, Technology and Sustainability, this plan was informed by brainstorming sessions and workshops with contributions from many Group teams.

To summarise its key features, this plan will enable us to pursue profitable growth by building on the strengths of our model,

at the core of our development and by deploying sustainable finance Group-wide, which is at the heart of everything we do. With this in mind, we can count on expert and committed teams, which reflect a dynamic policy of skills development and increased diversity. This human capital is the foundation of our collective performance and an essential lever for making the goals of our strategic plan

a reality.

WHAT ARE THE GOALS OF EACH OF THE THREE MAIN COMPONENTS OF THIS PLAN?

With GTS 2025, we aim first and foremost to continue developing profitable organic growth by gaining market share at marginal cost, thereby creating new growth opportunities and generating significant economies of scale. Thanks to a highly targeted external growth strategy, via acquisitions of expertise or cutting-edge technologies, we will be able to supplement or strengthen our platforms, as we recently did with FLOA in the field of split payment.

As part of our previous plan,

we successfully completed a transformation programme focused on the use of technology and the strengthening of industrialisation in all our business lines. It has enabled us to offer an optimised experience to our clients and employees, accelerate our digitalisation and improve our operational performance. To advance in this direction, we continue to develop our information systems and invest significantly in new technologies, data and artificial intelligence.

Our plan is also organised around the strong increase in sustainable finance and CSR objectives, which we intend to take to a higher, truly industrial scale. For several years now, we have been committed to

a sharp reduction in BNP Paribas' exposure to fossil fuels, which is something we intend to accelerate. For example, we recently increased the objective of reducing our financing of oil exploration and production to 12% by 2025. In the coming decade,

Our GTS 2025 plan will enable us to step up our progress by focusing on three areas: aligning our portfolios with our commitment to carbon neutrality; engaging alongside our clients in the transition to a sustainable economy; strengthening our management tools and adapting our processes. We will deploy these strategies with five priorities that are aligned with the challenges of our customers and with the 17 United Nations Sustainable Development Goals: sustainable savings, investments and financing; transition to carbon neutrality; circular economy; natural capital and biodiversity; and fight against exclusion.

The financial objectives associated with our GTS 2025 plan are in line with our goals: between 2022 and 2025, we are aiming for average annual growth in revenues of more than 3.5% and in net income Group share of more than 7%, with a positive jaws effect of more than 2% on average and a return on tangible equity (ROTE) of more than 11%. On this basis, we are targeting a pay-out ratio of 60%.

THANKS TO OUR FINANCIAL" SOLIDITY, THE COMPLEMENTARY NATURE OF OUR BUSINESSES AND THE CONTRIBUTION OF ALL OUR TALENTS, WE ARE VERY WELL POSITIONED TO CONTINUE OUR DEVELOPMENT.