Barclays 2009 Annual Report Download - page 65

www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 63
Performance
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Impairment as a percentage of period end gross loans and advances
to customers and banks increased to 1.58% (2008: 0.60%).
Operating expenses fell 3% to £1,030m (2008: £1,063m), reflecting
tightly managed discretionary costs and a £100m one-off credit for the
closure of the UK final salary pensions scheme partially offset by an
incremental increase in pension costs of £69m and the non-recurrence
of property credits.
The number of customers fell 6% primarily as a result of reductions in
exposures to high risk sectors within Barclays Asset and Sales Finance.
2008/07
Barclays Commercial Bank profit before tax decreased 7% (£91m)
to £1,266m (2007: £1,357m) reflecting a resilient performance in
challenging market conditions in 2008. The impact of growth in net fee and
commission income and continued strong growth in customer lending was
offset by increased impairment charges and higher operating expenses.
Income increased 7% (£181m) to £2,745m (2007: £2,564m).
Net interest income improved 1% (£10m) to £1,757m (2007:
£1,747m). There was strong growth in average customer assets,
particularly term loans, which increased 14% to £61.7bn (2007: £53.9bn)
reflecting the continued commitment to lend to viable businesses. The
assets margin decreased 25 basis points to 1.55% (2007: 1.80%) due, in
part, to a continued focus on lower risk term lending. Average customer
accounts grew 3% to £47.6bn (2007: £46.4bn), and the deposit margin
declined slightly to 1.47% (2007: 1.49%) partly reflecting the reductions
in UK base rates in the second half of 2008.
Non-interest income increased to 36% of total income (2007: 32%)
partly reflecting continued focus on cross sales and efficient balance sheet
utilisation. Net fee and commission income increased 15% (£111m) to
£861m (2007: £750m) due to increased income from foreign exchange,
derivative sales and debt fee income.
Income from principal transactions fell to £22m (2007: £56m) due to
lower equity realisations.
Other income of £105m (2007: £11m) included a £39m gain arising
from the restructuring of Barclays interest in a third party finance operation.
This gain was offset by a broadly similar tax charge. Other income also
included £29m (2007: £7m) rental income from operating leases.
Impairment charges increased 42% (£122m) to £414m (2007:
£292m) primarily reflecting higher impairment losses in Larger Business,
particularly in the final quarter of 2008 as the UK corporate credit
environment deteriorated. Impairment as a percentage of period-end loans
and advances to customers and banks increased to 0.60% (2007: 0.45%).
Operating expenses increased 14% (£134m) to £1,063m (2007: £929m)
reflecting lower gains on the sale of property of £10m (2007: £40m),
investment in a new payments capability (2008: £69m, 2007: £42m),
growth in the operating lease business (2008: £31m, 2007: £7m) and
investment in
risk and operations infrastructure, sales force capability
and product specialists.
Barclays Commercial Bank 2009 2008 2007
£m £m £m
Income statement information
Net interest income 1,741 1,757 1,747
Net fee and commission income 926 861 750
Net trading income 25 39
Net investment income (51) 19 47
Principal transactions (26) 22 56
Other income 112 105 11
Total income 2,753 2,745 2,564
Impairment charges and other credit provisions (974) (414) (292)
Net income 1,779 2,331 2,272
Operating expenses excluding amortisation of intangible assets (1,009) (1,048) (924)
Amortisation of intangible assets (21) (15) (5)
Operating expenses (1,030) (1,063) (929)
Share of post-tax results of associates and joint ventures –(2) –
Profit on disposal of subsidiaries, associates and joint ventures ––14
Profit before tax 749 1,266 1,357
Balance sheet information
Loans and advances to customers £59.6bn £67.5bn £63.7bn
Loans and advances to customers including those designated at fair value £72.7bn £80.5bn £70.7bn
Customer accounts £62.7bn £60.6bn £60.8bn
Total assets £75.5bn £84.0bn £74.6bn
Performance ratios
Return on average economic capital 16% 26% 30%
Cost:income ratio 37% 39% 36%
Cost:net income ratio 58% 46% 41%
Other financial measures
Economic profit £90m £544m £635m
Risk weighted assets £60.3bn £63.1bn £57.0bn
Key points
– 113,500 Customers
– 9,100 Colleagues
£2,753m£749m
profit before taxtotal income net of
insurance claims