Barclays 2009 Annual Report Download - page 43

www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 41
Financial review
Balance sheet commentary
Shareholders’ equity
Shareholders’ equity, including non-controlling interests, increased 23%
to £58.5bn in 2009 driven by profit after tax of £10.3bn. Net tangible asset
value increased by 47% to £38.5bn. Net tangible asset value per share
increased to 337p (2008: 313p).
Balance sheet
Total assets decreased by £674bn to £1,379bn in 2009, primarily reflecting
movements in market rates and active reductions in derivative balances.
Balances attributable to derivative assets and liabilities would have been
£374bn lower (31st December 2008: £917bn lower) than reported under
IFRS if netting were permitted for assets and liabilities with the same
counterparty or for which we hold cash collateral.
Excluding this, assets and liabilities held under investment contracts,
settlement balances, goodwill and intangible assets, our adjusted total
tangible assets were £969bn at 31st December 2009 (31st December
2008: £1,027bn). On this basis, we calculate adjusted gross leverage,
being the multiple of adjusted total tangible assets over total qualifying
Tier 1 capital, as 20x as at 31st December (31st December 2008: 28x).
Assets and risk weighted assets were affected by the depreciation
in value of various currencies relative to Sterling during 2009. As at
31st December 2009, the US Dollar and the Euro had depreciated 10%
and 7%, respectively, relative to Sterling.
Capital management
At 31st December 2009, on a Basel II basis, our Core Tier 1 ratio was
10.0% (31st December 2008: 5.6%) and our Tier 1 ratio was 13.0%
(31st December 2008: 8.6%). Capital ratios reflect a 12% decrease (£51bn)
in risk weighted assets to £383bn in 2009. Key drivers included a reduction
in the overall size of the balance sheet and foreign exchange movements.
Liquidity
The liquidity pool held by the Group increased to £127bn at 31st December
2009 from £43bn at the end of 2008. Whilst funding markets were difficult,
particularly in the first half of 2009, the Group were able to increase available
liquidity and the Group extended the average term of unsecured liabilities
from 14 months to 26 months. The Group issued £15bn equivalent in public
senior unguaranteed debt markets, across multiple currencies and
maturities. In addition, the Group raised £1.8bn equivalent in the covered
bond market and issued £21bn equivalent of structured notes. The Group
have continued to manage liquidity prudently in the light of market
conditions and in anticipation of ongoing regulatory developments.
Foreign currency translation
During 2009, US Dollar and Euro depreciated 10% and 7%, respectively,
relative to Sterling. As a result, foreign currency assets and risk weighted
assets decreased in value in Sterling terms.
The Group’s hedging strategy in respect of net investments in foreign
currencies is designed to minimise the volatility of the capital ratios caused
by changes in the Sterling value of foreign currency capital resources and
risk weighted assets due to movements in foreign currency exchange rates.
In this regard, the Group’s 31st December 2009 Core Tier 1 ratio is hedged
to approximately 75%, 25% and 80% of the movements in US Dollar, Euro
and South African Rand respectively against Sterling.
The currency translation reserve reduced by £1.2bn in 2009. This
reflected movements in foreign currency net investments which are partially
economically hedged through preference share capital (denominated in
US Dollars and Euros) that is not revalued for accounting purposes.