Barclays 2009 Annual Report Download - page 67

www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 65
Performance
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2008/07
Barclaycard profit before tax increased 31% (£186m) to £789m
(2007: £603m), driven by strong international income growth and lower UK
impairment charges. 2008 profit included £40m from the acquisition of, and
contribution from, Goldfish, Discover’s UK credit card business, acquired on
31st March 2008. The scale of the UK and international businesses
increased substantially with total customer numbers up 31% to 23.3m.
Income increased 27% (£689m) to £3,219m (2007: £2,530m),
reflecting strong growth in Barclaycard International and £156m from the
inclusion of Goldfish, partially offset by a decline in FirstPlus following its
closure to new business.
Net interest income increased 30% (£412m) to £1,786m (2007:
£1,374m), driven by 58% growth in international average extended credit
card balances to £5.2bn. The margin increased to 6.92% (2007: 6.51%),
due to a change in the product mix with an increased weighting to card
lending, following the decision to stop writing new business in FirstPlus.
Net fee and commission income increased 14% (£156m) to £1,299m
(2007: £1,143m), driven by growth in Barclaycard International.
Income from principal transactions increased £71m to £82m (2007:
£11m), reflecting a £64m gain from the Visa IPO and a £16m gain from the
sale of shares in MasterCard.
Other income increased £44m to £19m (2007: £25m loss), reflecting a
gain from a portfolio sale in the United States. 2007 results reflected a £27m
loss on disposal of part of the Monument card portfolio.
Impairment charges increased 33% (£270m) to £1,097m (2007:
£827m), reflecting £252m growth in charges in the international businesses
and £68m from the inclusion of Goldfish. These factors were partially offset
by £50m lower impairment in the other UK businesses with reduced flows
into delinquency and lower levels of arrears.
Operating expenses increased 30% (£329m) to £1,422m (2007:
£1,093m), reflecting continued international growth and increased
marketing investment. Operating expenses reflected Goldfish expenses
of £140m, including restructuring costs of £64m.
The acquisition of Goldfish resulted in a gain on acquisition of £92m.
Barclaycard International maintained its strong growth momentum,
delivering a 71% (£108m) increase in profit before tax to £260m (2007:
£152m). Barclaycard US profit before tax was US$249m which exceeded
delivery of the financial plan of US$150m set out at the time of acquisition.
Strong balance sheet growth in Barclaycard US included US$1.9bn of credit
card receivables acquired from FIA Card Services in August 2008, furthering
the existing partnership agreement with US Airways. The acquisition of a
majority stake in Woolworths Financial Services in October 2008, added
1.6 million customers to the existing Absa credit card business in South
Africa. The Entercard joint venture with Swedbank continued to build
presence in Norway, Sweden and Denmark.
Barclaycard 2009 2008 2007
£m £m £m
Income statement information
Net interest income 2,723 1,786 1,374
Net fee and commission income 1,271 1,299 1,143
Net trading income (1) 2–
Net investment income 23 80 11
Principal transactions 22 82 11
Net premiums from insurance contracts 44 44 40
Other income 219 (25)
Total income 4,062 3,230 2,543
Net claims and benefits incurred on insurance contracts (20) (11) (13)
Total income net of insurance claims 4,042 3,219 2,530
Impairment charges and other credit provisions (1,798) (1,097) (827)
Net income 2,244 2,122 1,703
Operating expenses excluding amortisation of intangible assets (1,412) (1,361) (1,057)
Amortisation of intangible assets (82) (61) (36)
Operating expenses (1,494) (1,422) (1,093)
Profit on disposal of subsidiaries, associates and joint ventures 8(3) (7)
Share of post-tax results of associates and joint ventures 3––
Gain on acquisition –92 –
Profit before tax 761 789 603
Balance sheet information
Loans and advances to customers £26.5bn £27.4bn £19.7bn
Total assets £30.2bn £30.9bn £22.1bn
Performance ratios
Return on average economic capital 15% 23% 20%
Cost:income ratio 37% 44% 43%
Cost:net income ratio 67% 67% 64%
Other financial measures
Economic profit £45m £335m £213m
Risk weighted assets £30.6bn £27.3bn £20.2bn
Key points
– 10.4m Barclaycard UK customers
– £10.8bn UK consumer cards – average outstanding balances
– £8.5bn UK credit cards – average extended credit balances
– 10.8m Barclaycard international customers
£4,042m£761
m
profit before taxtotal income net of
insurance claims