Barclays 2009 Annual Report Download - page 62

60 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09
Financial review
Analysis of results by business
continued
Global Retail and Commercial Banking
UK Retail Banking
UK Retail Banking comprises Personal Customers, Home Finance, Local
Business, Consumer Lending and Barclays Financial Planning. We have
one of the largest branch networks in the UK with around 1,700
branches and an extensive network of cash machines.
What we do
We are transforming Barclays to be the best bank in the UK by designing
innovative, simple and transparent propositions, streamlining operating
platforms and further leveraging Barclays Group capabilities.
Our cluster of businesses aims to build broader and deeper relationships
with customers. Personal Customers and Home Finance provide a wide
range of products and services to retail customers, including current
accounts, savings and investment products, mortgages branded Woolwich
and general insurance. Barclays Financial Planning provides banking,
investment products and advice to affluent customers.
Local Business provides banking services to small businesses. UK Retail
Banking is also a gateway to more specialised services from other parts of
Barclays such as Barclays Stockbrokers.
Our business serves 15 million UK customers.
Performance
2009/08
In the continued challenging economic environment, UK Retail Banking
profit before tax decreased 55% (£757m) to £612m (2008: £1,369m),
impacted by low interest rates resulting in margin compression on the
deposit book and increased impairment charges which together more
than offset well controlled costs and an improved assets margin.
The number of Savings Accounts increased 10% to 13.2 million
(31st December 2008: 12.0 million) and Mortgage Accounts increased
18,000 to 834,000 (31st December 2008: 816,000). Local Business
customer numbers increased 26,000 to 686,000 (31st December 2008:
660,000) with gross new lending of £1,047m. Total loans and advances to
customers increased £4.7bn to £99.1bn (31st December 2008: £94.4bn).
Income decreased 11% (£497m) to £3,985m (2008: £4,482m)
reflecting the impact of margin compression, which more than offset good
income growth in Home Finance.
Net interest income decreased 12% (£372m) to £2,624m (2008:
£2,996m) driven by margin compression of £755m on liabilities after taking
into account gains on product hedges implemented to protect income on
current accounts and managed rate deposits. This was partially offset by
increases in asset driven net interest income. Total average customer
deposit balances increased 4% to £89.0bn (2008: £85.9bn), reflecting
good growth in Personal Customer Current Account balances. The average
liabilities margin declined to 1.36% (2008: 2.01%) reflecting reductions
in UK base rates.
Average mortgage balances grew 10%, reflecting strongly positive
net lending. Mortgage balances were £87.9bn at the end of the period
(31st December 2008: £82.3bn), a market share of 7% (2008: 7%).
Gross advances reduced to £14.2bn (2008: £22.9bn) reflecting a continued
conservative approach to lending, with redemptions of £8.5bn (2008:
£10.4bn). Net new mortgage lending was £5.7bn (2008: £12.5bn). The
average loan to value ratio of the mortgage book (including buy-to-let) on
a current valuation basis was 43% (2008: 40%). The average loan to value
ratio of new mortgage lending was 48% (2008: 47%) and the assets margin
increased to 1.32% (2008: 1.25%) reflecting increased returns from
mortgages and consumer loans.
Net fee and commission income decreased 6% (£74m) to £1,225m
(2008: £1,299m) reflecting changing customer usage together with lower
mortgage application and redemption fees. Overall sales productivity
resulted in fee income growth in investments.
Total impairment charges represented 0.93% (2008: 0.63%) of total
gross loans and advances to customers and banks. Impairment charges
increased 55% (£334m) to £936m (2008: £602m), reflecting lower
expectations for recoveries in line with the current economic environment.
Impairment charges within Consumer Lending increased 56% to £573m
(2008: £368m) with impairment charges increasing 75% to £183m (2008:
£105m) in Personal Customer Current Accounts. Mortgage impairment
charges remained low at £26m (2008: £24m).
Operating expenses remained well controlled and decreased 3%
(£79m) to £2,440m (2008: £2,519m). This reflected the receipt of a one-off
credit of £175m resulting from the closure of the UK final salary pension
scheme to existing members, offset by a year on year increase in pension
costs of £115m and the non-recurrence of gains of £75m from the sale of
property.
92.5
89.6
87.1
7.4
6.9
6.0
07 08
Customer deposits
£bn
09
Market share of mortgage balances
%
07 08
09
Performance indicators