Barclays 2011 Annual Report Download - page 168

Financial review
Income statement commentary continued
Non-interest income
2011
£m
2010
£m
2009
£m
Net fee and commission income 8,622 8,871 8,418
Net trading income 7,660 8,078 7,001
Net investment income 2,305 1,477 56
Net premiums from insurance
contracts
1,076 1,137 1,172
Gains on debt buy-backs and
extinguishments
1,130 – 1,249
Other income 39 118 140
Net claims and benefits incurred
on insurance contracts
(741) (764) (831)
Non-interest income 20,091 18,917 17,205
2011
Net fee and commission income declined £249m to £8,622m, primarily
due to financial advisory and debt underwriting income within Barclays
Capital being impacted by lower deal activity.
Net trading income decreased £418m to £7,660m. Trading income, which
principally arises in Barclays Capital decreased 36% to £4,952m reflecting
lower contributions from Commodities and Fixed income Rates and Credit,
partially offset by an increase in currency benefiting from market volatility
and strong client volumes. The impact from difficult trading conditions
was partially offset by a gain on own credit of £2,708m (2010: £391m).
Net investment income increased £828m to £2,305m driven by the gains
on the sale of hedging instruments held as part of the economic structural
hedge portfolio together with gains on disposals of other available for sale
assets and increases in other investment income.
Net premiums from insurance contracts less claims and benefits received
reduced 10% to £335m.
Gains on debt buy-backs and extinguishments were £1,130m (2010: £nil)
resulting from the retirement of Tier 1 capital, which will not qualify as
Tier 1 capital under Basel 3.
2010
Net fee and commission income increased £453m to £8,871m, primarily
due to Barclays Capital performance across Investment Banking and
Equities.
Net trading income increased £1,077m to £8,078m. Trading income
decreased 13% to £7,687m reflecting a more challenging market
environment compared with the very strong prior year. The impact from
difficult trading conditions was more than offset by a £4,293m reduction
in credit market fair value losses to £124m (2009: £4,417m) and a gain
on own credit of £391m (2009: £1,820m loss).
Net investment income increased £1,421m to £1,477m driven by the
gains on the sale of hedging instruments held as part of the economic
structural hedge portfolio together with realised gains on principal
investments, the disposal of available for sale assets and a reduction
in fair value losses within Barclays Capital.
Net premiums from insurance contracts less claims and benefits incurred
increased 9% to £373m.
Gains on debt buy-backs and extinguishments were £nil (2009: £1,249m).
Credit impairment charges and impairment on available for sale assets
2011
£m
2010
£m
2009
£m
Loan impairment 3,790 5,625 7,358
Impairment charges on available
for sale assets (excluding
BlackRock, Inc.)
60 51 670
Impairment charges/(writebacks)
on reverse repurchase agreements
(48) (4) 43
Credit impairment charges and
other provisions
3,802 5,672 8,071
Impairment of investment in
BlackRock, Inc.
1,800 – –
2011
Loan impairment fell 33% to £3,790m, reflecting generally improving
underlying trends across the majority of retail and wholesale businesses.
Retail impairment charges reduced 27%, principally relating to Barclaycard,
UKRBB and Africa RBB. Wholesale impairment charges reduced 41%,
principally reflecting lower charges in Spain and in Barclays Capital,
including a release of £223m relating to the loan to Protium which has
now been repaid.
As at 30 September 2011, an impairment charge of £1,800m was
recognised resulting from an assessment that there was objective
evidence that the Group’s investment in BlackRock, Inc. was impaired.
The impairment reflects the recycling through the income statement
of the cumulative reduction in market value previously recognised in
the available for sale reserve since the Group’s acquisition of its holding
in BlackRock, Inc. as part of the sale of Barclays Global Investors on
1 December 2009.
2010
Loan impairment fell 24% to £5,625m, reflecting improving credit
conditions in the main sectors and geographies in which Barclays lends,
which led to lower charges across the majority of businesses. The largest
reduction was in the wholesale portfolios, due to lower charges against
credit market exposures and fewer large single name charges. In the retail
portfolios, impairment performance improved as delinquency rates fell
across Barclays businesses, most notably the UK, US, Spanish, Indian and
African portfolios.
The impairment charges against available for sale assets and reverse
repurchase agreements fell by 93% to £47m, principally driven by lower
impairment against credit market exposures.
166 Barclays PLC Annual Report 2011 www.barclays.com/annualreport