Barclays 2011 Annual Report Download - page 181

£661m
loss before tax
£1,226m
total income net of insurance claims
Operating expenses excluding the £427m Spanish goodwill impairment
increased 17% to £1,211m, primarily due to restructuring charges of
£189m. 142 branches, largely in Spain, have been closed and the number
of employees reduced by 900 during 2011.
Loans and advances to customers remained stable. Customer deposits
decreased 13% to £16.4bn, reflecting the competitive environment.
Adjusted return on average equity of negative 6.0% (2010: negative 1.0%)
reflecting the repositioning of the business during 2011.
2010
Europe RBB incurred a loss before tax of £139m (2009: profit of £280m).
The deterioration in performance was largely driven by the challenging
economic environment and continued investment in the franchise. In
addition, the 2009 result benefited notably from a £157m gain on the
sale of 50% of Barclays Iberian life insurance and pensions business.
Income fell 12% to £1,164m, due to lower net interest income and the
3% decline in the average value of the Euro against Sterling, partially offset
by higher net fee and commission income.
Net interest income fell 22% to £679m, mainly reflecting a decline in
treasury interest income and continued underlying liability margin
compression due to the highly competitive market, partially offset by the
benefit from growth in credit cards. As a result, the net interest margin
reduced to 116bps (2009: 166bps). The risk adjusted net interest margin
fell to 62bps (2009: 102bps).
Net fee and commission income increased 20% to £421m. The growth
reflects the investment in the network in previous years and the growth
in the credit card business.
AdjustedaStatutory
2011 2010 2009 2011 2010 2009
Performance Measures
Return on average equityb, c (6.0%) (1.0%) 2.6% (21.8%) (0.2%) 8.4%
Return on average tangible equityb, c (7.9%) (1.3%) 3.4% (29.0%) (0.2%) 11.0%
Return on average risk weighted assetsc(0.9%) (0.1%) 0.4% (3.3%) (0.0%) 1.2%
Loan loss rate (bps) 54 71 80 54 71 80
Cost: income ratio 99% 89% 67% 134% 89% 67%
Key Facts
30 day arrears rates – cards 5.9% 6.8% 9.0%
Number of customers 2.7m 2.7m 2.4m
Number of branches 978 1,120 1,094
Number of sales centres 250 243 168
Number of distribution points 1,228 1,363 1,262
Number of employees (full time equivalent) 8,500 9,400 9,600
Notes
a Adjusted profit before tax and adjusted performance measures excludes goodwill impairment of £427m (2010: £nil; 2009: £nil), gains on acquisition of £nil (2010: £29m; 2009: £26m)
and profit on disposal of subsidiaries, associates and joint ventures of £nil (2010: £nil; 2009: £157m).
b Return on average equity and return on average tangible equity comparatives have been revised to use 10% of average risk weighted assets (previously 2010: 9%; 2009: 8%) in the
calculation of average equity and average tangible equity.
c 2010 return on average equity, return on average tangible equity and return on average risk weighted assets reflect a deferred tax benefit of £205m.
Despite the challenging economic conditions, impairment charges
improved 7% to £314m reflecting focused credit risk management.
Delinquency trends improved with the overall 30-day delinquency rate
falling to 1.8% (2009: 2.1%).
Operating expenses increased 16% to £1,033m due to investment in
developing the franchise, in Portugal and Italy in particular, with a net
increase of 101 distribution points in 2010, and costs associated with the
expansion of the credit card businesses in these countries. The £29m gain
on acquisition was generated on the purchase of Citigroup’s Italian card
business in March 2010. This resulted in the addition of approximately
200,000 customers and loans and advances to customers of £0.2bn.
The £26m gain in 2009 arose on the acquisition of Citigroup’s Portuguese
card business.
Loans and advances to customers increased 6% to £43.4bn and customer
accounts increased 7% to £18.9bn due to continued growth in the
businesses more than offsetting the negative impact of the value of the
Euro against Sterling. Risk weighted assets increased 3% to £17.3bn
(2009: £16.8bn) in line with the growth in loans and advances to
customers.
Negative returns on average equity and average tangible equity in 2010
were the result of the deterioration in profitability.
Customer numbers increased 13% to 2.7 million (2009: 2.4 million)
reflecting the growth in the underlying business and the benefit of the
purchase of Citigroup’s Italian cards business.
Barclays PLC Annual Report 2011 www.barclays.com/annualreport 179
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