Barclays 2009 Annual Report Download - page 79

www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 77
Performance
ce
an
ma
orm
rfo
Pe
P
2008/07
Barclays Wealth profit before tax grew 119% (£364m) to £671m (2007:
£307m). Profit before gains on disposal increased 12% (£38m) driven
by solid income growth and tight cost control, offset by an increase in
impairment charges. The closed life assurance business contributed
profit before tax of £104m (2007: £110m) prior to its sale in October
2008, which generated a profit on disposal of £326m.
Income increased 3% (£37m) to £1,324m (2007: £1,287m).
Net interest income increased 13% (£55m) to £486m (2007:
£431m) reflecting strong growth in both customer deposits and
lending. Average deposits grew 19% to £37.2bn (2007: £31.2bn).
Average lending grew 31% to £9.7bn (2007: £7.4bn). The assets margin
decreased seven basis points to 1.04% (2007: 1.11%) reflecting changes
in the product mix. The liabilities margin reduced by eight basis points
to 0.95% (2007: 1.03%) driven by changes in the product mix and
compression of margins as interest rates reduced during the second
half of 2008.
Net fee and commission income decreased 3% (£19m) to £720m
(2007: £739m) driven by falling equity markets partially offset by
increased client assets.
Net investment income, net premiums from insurance contracts
and net claims and benefits paid on insurance contracts related wholly
to the closed life assurance business. Their overall net impact on income
increased marginally to £103m (2007: £95m). The decrease in net
investment income, driven by a fall in the value of unit linked contracts
and reduced premium income, were offset by reduced net claims and
benefits as a result of a fall in the value of linked and non-linked liabilities.
Impairment charges increased £37m to £44m (2007: £7m) from a
very low base. This increase reflected both the substantial increase in the
loan book over the three years from 2006 to 2008 and the impact of the
current economic environment on client liquidity and collateral values.
Operating expenses decreased 4% to £935m (2007: £973m) with
significant cost savings including a reduction in performance related
costs partially offset by increased expenditure in upgrading technology
and operating platforms and continued hiring of client-facing staff.
Total client assets, comprising customer deposits and client
investments, increased 10% (£12.6bn) to £145.1bn (2007: £132.5bn)
with underlying net new asset inflows of £3.2bn and the acquisition of
the Lehman Brothers North American businesses offsetting the impact
of market and foreign exchange movements and the sale of the closed
life assurance book.
Barclays Wealth 2009 2008 2007
£m £m £m
Income statement information
Net interest income 504 486 431
Net fee and commission income 802 720 739
Net trading income 7(11) 3
Net investment income 13 (333) 52
Principal transactions 20 (344) 55
Net premiums from insurance contracts –136 195
Other income 726 19
Total income 1,333 1,024 1,439
Net claims and benefits incurred on insurance contracts –300 (152)
Total income net of insurance claims 1,333 1,324 1,287
Impairment charges (51) (44) (7)
Net income 1,282 1,280 1,280
Operating expenses excluding amortisation of intangible assets (1,114) (919) (967)
Amortisation of intangible assets (24) (16) (6)
Operating expenses (1,138) (935) (973)
Profit on disposal of associates and joint ventures 1326 –
Profit before tax 145 671 307
Balance sheet information
Loans and advances to customers £13.1bn £11.4bn £9.0bn
Customer accounts £38.5bn £42.4bn £34.4bn
Total assets £15.1bn £13.3bn £18.2bn
Performance ratios
Return on average economic capital 22% 118% 51%
Cost:income ratio 85% 71% 76%
Other financial measures
Economic profit £49m £553m £233m
Risk weighted assets £11.4bn £10.3bn £8.2bn
Average net income generated per member of staff (’000) £169 £176 £188
Key points
– £151.3bn Total client assets
– Operating in 25 countries
£1, 3 3 3 m£145 m
profit before taxtotal income net of
insurance claims