Barclays 2011 Annual Report Download - page 189

£70m
loss before tax
£2,912m
total income
Total assets increased to £88.7bn (2010: £85.7bn) mainly driven by higher
balances in the UK. There was good growth in customer deposits to £77.7bn
(2010: £71.0bn), largely within the UK, benefiting from product innovation.
Risk weighted assets decreased 2% to £69.7bn reflecting reductions in net
exposures in Europe and Rest of the World, partially offset by higher net
balances in the UK.
2010
Barclays Corporate recorded a loss before tax of £631m (2009: profit of
£157m). An improvement in the result of the profitable UK business was more
than offset by increased losses in Europe, notably Spain, and Rest of the World.
Profit before tax in the UK increased 13% to £834m. Performance was
primarily driven by significantly reduced impairment. Loss before tax in
Europe increased to a loss of £853m mainly due to impairments on
property and construction exposures in Spain. Rest of the World recorded
a loss before tax of £612m reflecting the write down of the £243m
goodwill relating to Barclays Bank Russia (BBR) and restructuring costs
totalling £119m, including £25m relating to restructuring of the Russian
business. These were partially offset by a substantial reduction in
impairment charges and tight control of operating expenses.
Total income decreased 7% to £2,974m mainly as a result of lower
treasury management income and reduced risk appetite outside the UK.
Excluding the 2009 gains on buy-backs of securitised debt of £85m and
fair value adjustments in 2010, UK income remained resilient.
Net interest income fell 4% to £2,004m reflecting lower treasury
management income and higher funding charges in Europe and reduced
average asset balances in Rest of the World. UK net interest income
increased 2% (£29m), with higher deposit income reflecting strong
growth in balances, offset by reduced demand for lending and higher
funding costs. Barclays Corporate net interest margin decreased 12bps
to 153bps (2009: 165bps).
AdjustedaStatutory
2011 2010 2009 2011 2010 2009
Performance Measures
Return on average equityb1.3% (4.1%) 0.7% (1.4%) (7.1%) 1.4%
Return on average tangible equityb1.4% (4.4%) 0.8% (1.5%) (7.7%) 1.5%
Return on average risk weighted assets 0.1% (0.5%) 0.1% (0.2%) (0.8%) 0.1%
Loan loss rate (bps) 162 226 211 162 226 211
Cost: income ratio 56% 56% 46% 61% 64% 46%
Income Statement Information 2011 2010
UK
£m
Europe
£m
RoW
£m
Total
£m
UK
£m
Europe
£m
RoW
£m
Total
£m
Income 2,199 440 273 2,912
2,279 428 267 2,974
Credit impairment charges and other
provisions
(355) (716) (78) (1,149) (459) (1,072) (165) (1,696)
Operating expenses excluding goodwill
impairment
(1,099) (248) (292) (1,639) (984) (209) (471) (1,664)
Goodwill impairment – (123) – (123) – – (243) (243)
Share of post-tax results of associates
and joint ventures
2 – – 2
(2) – – (2)
Loss on disposal of subsidiaries, associates
and joint ventures
– – (73) (73) – – – –
Profit/(loss) before tax 747 (647) (170) (70) 834 (853) (612) (631)
Adjusted profit/(loss) before taxa747 (524) (97) 126 834 (853) (369) (388)
Notes
a Adjusted profit before tax and performance measures exclude the impact of loss on disposal of Barclays Bank Russia of £73m (2010: £nil; 2009: £nil) and £123m of Spain goodwill
impairment (2010: £243m: 2009: £nil). 2010 adjusted loss before tax has been revised to exclude goodwill impairment of £243m on Barclays Bank Russia. 2009 adjusted profit before tax
has been revised to exclude gains on debt buy-backs and extinguishments of £85m.
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.
Net fees and commissions fell 9% to £910m driven by lower debt fees and
treasury income. Net trading income increased to £80m mainly as a result
of loan fair value adjustments in the UK. Net investment loss decreased to
£32m reflecting reduced write downs in venture capital investments.
Credit impairment charges increased to £1,696m, primarily in Spain where
a £630m increase to £898m was driven by depressed market conditions
in the property and construction sector, including some significant single
name cases. This was partly offset by an improvement of £290m in UK
reflecting lower default rates and fewer insolvencies; and an improvement
in Rest of the World of £206m, including £130m in the retail book. Loan
loss rates increased to 226bps (2009: 211bps).
Operating expenses grew 30% to £1,907m, reflecting the write down of
the £243m of goodwill relating to BBR and associated restructuring costs
of £25m, as well as previously announced restructuring costs of £94m in
other geographies within Rest of the World (predominantly relating to
Indonesia), higher pension costs in the UK, and increased investment
spend as Barclays Corporate continued to invest in its infrastructure to
deliver leading product and superior client service capabilities.
There was strong growth in total average customer accounts which grew
21% to £60.9bn, mostly within the UK, as a result of significant increases
in current account balances and deposits benefiting from product
innovation. As a result, the balance between loans and deposits, including
banks, in the UK moved by £8bn to surplus deposits of £1.8bn.
Risk weighted assets fell 8% to £70.8bn (2009: £76.9bn) reflecting lower
levels of customer assets across the business and improvements in the
credit quality of the UK portfolio. Negative returns on average equity,
average tangible equity and average risk weighted assets in 2010 were
the result of the increased losses in Europe and Rest of the World, which
more than offset the improved profitability of UK.
Barclays PLC Annual Report 2011 www.barclays.com/annualreport 187
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