Barclays 2009 Annual Report Download - page 35

www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 33
Principal transactions
2009/08
Principal transactions comprise net trading income and net investment
income. Net trading income increased £5,662m to £7,001m (2008:
£1,339m). The majority of the Group’s trading income arises in Barclays
Capital. Fixed Income, Currency and Commodities drove the very strong
increase in trading income as the expansion of the business and client
flows more than absorbed gross credit market losses of £4,417m
(2008: £6,290m) and losses relating to own credit of £1,820m
(2008: £1,663m gain).
Net investment income decreased 92% (£624m) to £56m
(2008: £680m) driven by realised losses in commercial real estate equity
investments and losses in the principal investments business, partially
offset by gains on disposal of available for sale investments within
Barclays Capital.
2008/07
Net trading income decreased 64% (£2,415m) to £1,339m (2007:
£3,754m). The majority of the Group’s net trading income arose in Barclays
Capital. There was growth in fixed income, prime services, foreign exchange,
commodities and emerging markets. There were net losses from credit
market dislocation partially offset by the benefits of widening credit spreads
on structured notes issued by Barclays Capital.
Net investment income decreased 44% (£536m) to £680m (2007:
£1,216m) reflecting the lower profits realised on the sale of investments, the
continued decrease in value of assets backing customer liabilities in Barclays
Life Assurance and fair value decreases of a number of investments
reflecting the current market condition. This was offset by a £170m increase
in dividend income reflecting the Visa IPO dividend received by GRCB –
Western Europe, GRCB – Emerging Markets and Barclaycard.
Net premiums from insurance contracts
2009/08
Net premiums from insurance contracts increased 8% (£82m) to £1,172m
(2008: £1,090m) primarily reflecting expansion in GRCB – Western Europe
and GRCB – Absa, partially offset by the impact of the sale of the closed life
assurance business in the second half of 2008.
2008/07
Net premiums from insurance contracts increased 8% (£79m) to £1,090m
(2007: £1,011m), primarily due to expansion in GRCB – Western Europe
reflecting a full year’s impact of a range of insurance products launched in
late 2007, partially offset by lower net premiums following the sale of the
closed life assurance business in the second half of 2008.
Other income
2009/08
Other income includes £1,170m gains on debt buy-backs relating to Upper
Tier 2 perpetual debt and its corresponding hedge and £85m (2008: £24m)
from the repurchase of securitised debt issued by Barclays Commercial Bank.
2008/07
Certain asset management products offered to institutional clients by Absa
are recognised as investment contracts. Accordingly, the invested assets and
the related liabilities to investors are held at fair value and changes in those
fair values are reported within other income. Other income in 2008 includes
a £46m gain from the Visa IPO.
Principal transactions 2009 2008 2007
£m £m £m
Net trading income 7,001 1,339 3,754
Net gain from disposal
of available for sale assets 349 212 560
Dividend income 6196 26
Net gain from financial
instruments designated at
fair value (208) 33 293
Other investment income (91) 239 337
Net investment income 56 680 1,216
Principal transactions 7,057 2,019 4,970
Other income 2009 2008 2007
£m £m £m
Increase/(decrease) in fair value
of assets held in respect of linked
liabilities to customers under
investment contracts 102 (1,219) 23
(Increase)/decrease in liabilities
to customers under investment
contracts (102) 1,219 (23)
Property rentals 64 73 53
Gain on debt buy backs
and extinguishments 1,255 24 –
Other 70 270 133
Other income 1,389 367 186
Net premiums from insurance 2009 2008 2007
contracts £m £m £m
Gross premiums from
insurance contracts 1,224 1,138 1,062
Premiums ceded to reinsurers (52) (48) (51)
Net premiums from
insurance contracts 1,172 1,090 1,011