Barclays 2010 Annual Report Download - page 57

£616m
profit before tax
£2,899m
total income net of insurance claims
to £30.4bn (2009: £21.4bn), due to the impact of exchange rate
movements, enhancements to the retail model and wholesale credit
remediation plan.
Return on average equity increased 1% as the improved profit before tax
more than offset the increased allocation of equity from the Group which,
in turn, reflected an increase in risk weighted assets. This increase led to a
decline in the return on average risk weighted assets. Return on average
tangible equity decreased due to the effect of the equity allocation and an
increase in non-controlling interests.
2009
Impact of Absa Group Limited on Barclays results
Absa Group Limited profit before tax of R9,842m (2008: R15,305m), a
decrease of 36%, is translated in Barclays results at an average exchange
rate of R13.14/£ (2008: R15.17/£), a 15% appreciation in the average value
of the Rand against Sterling. Consolidation adjustments reflected the
amortisation of intangible assets of £61m (2008: £58m) and internal
funding and other adjustments of £83m (2008: £155m). The resulting
profit before tax of £605m (2008: £796m) is represented within the
Barclays Group business segments as follows: Absa £528m (2008: £563m),
Barclays Capital £16m loss (2008: £175m profit), Barclaycard £95m
(2008: £58m) and Barclays Wealth £2m loss (2008: £nil).
Absa Group Limited’s total assets were R710.8bn (2008: R773.3bn),
a decline of 8%. This is translated into Barclays results at a period-end
exchange rate of R11.97/£ (2008: R13.74/£).
Performance
Profit before tax decreased 6% to £528m (2008: £563m) owing to
challenging market conditions. Modest Rand income growth and tight
cost control were offset by increased impairment.
Income increased 17% to £2,553m (2008: £2,187m) predominantly
reflecting the impact of exchange rate movements.
Net interest income improved 18% to £1,300m (2008: £1,104m) reflecting
the appreciation in the average value of the Rand against Sterling and
modest balance sheet growth. Average customer assets increased 17% to
£32.5bn (2008: £27.7bn) driven by appreciation of the Rand against
Sterling and modest growth in loans and advances. Retail and commercial
mortgages remained relatively flat in 2009 while instalment finance
showed a slight decline with the run-off outweighing new sales. The
assets margin decreased to 268bps (2008: 279bps) as a result of the
higher cost of wholesale funding and significant reductions in interest
recognised on delinquent accounts. Average customer deposits increased
29% to £17.4bn (2008: £13.5bn), primarily driven by the appreciation of
the Rand and the increase in the number of customers. Retail and
commercial deposits increased 3.9% and 4.6% respectively. The liabilities
margin was down to 243bps (2008: 306bps) reflecting stronger growth in
lower margin retail deposits, pricing pressure from competitors and the
impact of margin compression due to the decrease in interest rates.
Net fee and commission increased 24% to £943m (2008: £762m),
reflecting pricing increases, volume growth and the impact of exchange
rate movements.
Net investment income increased to £128m (2008: £105m) reflecting the
impact of exchange rate movements and gains of £17m from the sale of
shares in MasterCard, slightly offset by lower gains on economic hedges.
Net premiums from insurance contracts increased 26% to £294m (2008:
£234m) reflecting volume growth in short-term insurance contracts and
the impact of exchange rate movements. Other income decreased to
£64m (2008: £102m) reflecting the non-recurrence of the gain of £46m
recorded on the Visa IPO in 2008.
Impairment charges increased to £567m (2008: £347m) due to high
delinquency levels in the retail portfolios as a result of continued consumer
indebtedness, despite the decline in interest and inflation rates during the
first half of the year. There was a slight improvement in impairment ratios
in the second half of 2009.
Operating expenses increased 13% to £1,451m (2008: £1,283m)
reflecting the impact of exchange rate movements. Costs were tightly
controlled in Rand.
Total assets increased 14% to £45.8bn (2008: £40.3bn) and risk weighted
assets increased 14% to £21.4bn (2008: £18.8bn), reflecting the impact of
exchange rate movements.
2010 2009 2008
Performance Measures
Return on average equity a 11% 10% n/a
Return on average tangible equity b 20% 24% n/a
Return on average risk weighted assets 1.7% 1.9% n/a
Loan loss rate (bps) 112 152 n/a
Cost: income ratio 62% 57% 59%
Cost: net income ratio 75% 73% 70%
Key Facts
Number of corporate customers 83,000 89,000 107,000
Number of retail customers 11.6m 11.4m 10.4m
Number of ATMs 8,578 8,560 8,719
Number of branches 840 857 877
Number of sales centres 167 205 300
Number of distribution points 1,007 1,062 1,177
Notes
a The return on average equity differs from the return on equity reported by Absa Group Ltd
of 15.1% as the latter does not include goodwill arising from Barclays acquisition of Absa
and does include other Absa Group businesses that Barclays Group reports within
Barclaycard, Barclays Capital and Barclays Wealth.
b Including non-controlling interests
Barclays PLC Annual Report 2010 www.barclays.com/annualreport10 55
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