Barclays 2010 Annual Report Download - page 35

2010
Barclays delivered profit before tax of £6,065m in 2010, an increase of
32% (2009: £4,585m). Excluding movements on own credit, gains on
debt buy-backs and gains on acquisitions and disposals, Group profit
before tax increased 11% to £5,464m (2009: £4,942m).
Income increased 8% to £31,440m (2009: £29,123m). Barclays Capital
reported a 17% increase in total income to £13,600m (2009: £11,625m).
This reflected a substantial reduction in losses taken through income
relating to credit market exposures which fell to £124m (2009: £4,417m)
and a gain relating to own credit of £391m (2009: loss of £1,820m).
Top-line income at Barclays Capital, which excludes these items, declined
25% to £13,333m relative to the exceptionally strong levels seen in 2009.
Overall activity levels improved towards the end of the year, with top-line
income in the fourth quarter of 2010 increasing 20% on the third quarter
to £3,380m. Global Retail Banking income increased 1% to £10,507m,
with good growth in UK Retail Banking and Barclays Africa, with income
flat in Barclaycard, and a decline in Western Europe Retail Banking. Income
was up 14% in Absa. Barclays Corporate reported a decrease in income of
7% and income was up 18% in Barclays Wealth.
Impairment charges and other credit provisions improved 30% to
£5,672m (2009: £8,071m). This was after an increase of £630m in
impairment on the Spanish loan book in Barclays Corporate –
Continental Europe and impairment of £532m relating to the Protium
loan in Barclays Capital. All businesses other than Barclays Corporate
reported improvements in impairment charges. Overall impairment
charges as a proportion of Group loans and advances as at
31st December 2010 was 118bps, compared to 156bps for 2009.
As a result, net income for the Group after impairment charges
increased 22% to £25,768m (2009: £21,052m).
Operating expenses increased £3,256m to £19,971m, a 19% rise
compared to the 22% growth in net income. Costs at Barclays Capital
increased £1,703m, largely reflecting investment in the business across
sales, origination, trading and research functions, investment in technology
and infrastructure and increased charges relating to prior year deferrals.
Across the Group, restructuring charges totalled £330m (2009: £87m)
particularly in Barclays Corporate (£119m) and Barclays Capital (£90m)
focusing on delivering future cost and business efficiencies. Goodwill of
£243m was written off in Barclays Corporate – New Markets to reflect
impairment to the carrying value of Barclays Bank Russia business as
our activities there are refocused. As a result, the Group’s cost: income
ratio increased to 64% (2009: 57%). The cost: net income ratio improved
from 79% to 78%, reflecting the reduced impairment charges compared
with 2009.
Staff costs increased 20% to £11.9bn (2009: £9.9bn), of which
performance costs amounted to £3.5bn (2009: £2.8bn). Within this total,
2010 charges relating to prior year deferrals increased by £0.7bn relative
to 2009. The Group 2010 performance awards (which exclude charges
relating to prior year deferrals but include current year awards vesting in
future years) were down 7% on 2009 at £3.4bn. Within this, the Barclays
Capital 2010 performance awards were down 12% at £2.6bn, compared
to an increase in headcount of 7%.
2009
Barclays delivered profit before tax of £4,585m in 2009 (2008: £5,136m),
a decrease of 11% on 2008, after absorbing £6,086m in write downs on
credit market exposures (including impairment of £1,669m), other Group
impairment of £6,402m and a charge of £1,820m relating to the tightening
of own credit spreads. Profit also included £1,249m of gains on debt
buy-backs and extinguishment.
Total income net of insurance claims grew 37% to £29,123m, with
particularly strong growth in Barclays Capital. Within Global Retail Banking,
Barclaycard and Western Europe Retail Banking also reported good income
growth. The aggregate revenue performance of the Global Retail Banking
businesses was, however, affected by the impact of margin compression
on deposit income as a result of the very low absolute levels of interest
rates. Barclays Capital income was up 122% compared to 2008. Top-line
income rose by £8,004m reflecting the successful integration of the
acquired Lehman Brothers North American businesses, buoyant market
conditions observed across most financial markets in the first half of 2009
and a good relative performance in the second half of 2009 despite weaker
markets. Income in Barclays Capital was impacted by write downs of
£4,417m (2008: £6,290m) relating to credit market exposures held in its
trading books and by a charge of £1,820m (2008: gain of £1,663m)
relating to own credit.
Impairment charges against loans and advances, available for sale assets
and reverse repurchase agreements increased 49% to £8,071m, reflecting
deteriorating economic conditions in 2009, portfolio maturation and
currency movements. The impairment charge against credit market
exposures included within this total reduced 5% to £1,669m. Impairment
charges as a percentage of Group loans and advances as at 31st December
2009 increased to 156bps from 95bps, or 135bps on constant 2008 year
end balance sheet amounts and average foreign exchange rates.
Total operating expenses increased 25% to £16,715m, but by 12% less
than the rate of increase in Group total income. Expenses in GRB were
well controlled, with the cost:income ratio improving from 54% to 53%.
Operating expenses in Barclays Capital increased by £2,818m to £6,592m
reflecting the inclusion of the acquired Lehman Brothers North American
business. The Group total cost:income ratio improved from 63% to 57%.
At Barclays Capital the compensation:income ratio improved from
44% to 38%.
Financial review
Income statement commentary
Barclays PLC Annual Report 2010 www.barclays.com/annualreport10 33
Strategy Risk management and governance Financial statements Shareholder informationPerformanceAbout Barclays