Barclays 2012 Annual Report Download - page 11

Your Chief Executive’s view
The role of the Group Chief Executive includes implementing the
Group’s strategy as agreed by the Board. Here Antony provides
his view on the events of 2012, and the ambition for Barclays
for the future, along with the strategy to get us there.
Of course, at the same time, it was essential that we delivered our
financial objectives and I believe that the results for 2012 show that
we did not lose momentum during a very difficult year.
Aside from delivering an adjusted profit before tax of over £7bn, up
26% year on year, adjusted total income increased 2% to £29bn and
impairments improved by 5% resulting in net income growth of 3%
to £25.4bn. Charges of £1.6bn and £850m were incurred for PPI and
interest rate hedging products redress respectively. Our capital, liquidity
and funding also remained strong with a Core Tier 1 ratio of 10.9% and
total capital ratio of 17.1%.
Our four largest businesses all increased returns on the previous year.
There were strong performances from UK Retail and Business Banking
and Barclaycard which reported returns of 16.0% and 22.1%
respectively. The Investment Bank delivered returns of 13.7% and
Corporate Banking continued its turnaround with returns of 5.5%,
up from 1.7% in 2011.
We have a long way to go to become the ‘Go-To’ bank and the second
element of Transform, Return Acceptable Numbers, outlines our plans
to build on these strong foundations to deliver a Group return on equity
above the Group’s cost of equity during the course of 2015 and beyond.
The economic outlook for the foreseeable future is subdued. This
means we have to prioritise our investment and our focus rather than
look to grow every business. More than ever, we need to focus on costs.
This will be the strategic battleground for the financial services industry
in the future and we must do things differently if we are to thrive.
Over the last few months, we have undertaken a comprehensive,
end-to-end review of our operations, unprecedented in scope and
detail. We have closely examined the external environment – now
and in the future – looking at the economic context, the needs of
our customers and clients, regulatory and stakeholder expectations,
and the competitive landscape.
As you will read in this report, we are reshaping Barclays. We have made
tough commercial decisions about those businesses not consistent with
our financial targets or reputational criteria. But as a result we will build
a universal bank that generates a return on equity sustainably in excess
of the cost of equity in the course of 2015, while meeting our
responsibilities to all our stakeholders.
The final part of Transform, Sustain Forward Momentum, defines how
we will reach ‘Go-To’ by creating and sustaining a culture that delivers
the right outcomes in the right way.
Purpose and Values
The notion that there must always be a choice between profits and a
values-driven business is false. Barclays will only be a valuable business
if it is a values-driven business. And we will become a valuable and
sustainable institution for all our stakeholders by aligning behind a
common purpose: ‘Helping people achieve their ambitions in the right
way’ and adhering to our new core values: Respect, Integrity, Service,
Excellence and Stewardship.
These values are not window dressing, nor are they part of an elaborate
PR campaign. They are the foundations of our future and will define the
work we will and will not do, and therefore the value we will create. For
the past 30 years, banking has been progressively too aggressive, too
focused on the short term, too disconnected from the needs of our
customers and clients, and wider society and we lost our way. This
cannot be allowed to happen again.
Our values will be the bedrock of our future success and the blueprint
to define how we work together from now on. Our balanced scorecard
(page 13) will create a holistic assessment of our performance for
all of our stakeholders. This scorecard will underpin the performance
assessment for our 125 most senior leaders this year and for all
colleagues by the middle of 2014 and we will be transparent about
the progress we are making against this scorecard.
This journey will not be easy. In 2013, overall returns will decrease as we
take the action required to reshape our portfolio of businesses. We also
see four key risks to achieving our plans – a major macroeconomic
downturn, a significant unexpected change in regulation, legacy issues
and failure to execute the plan.
We have been deliberately conservative in our planning to mitigate against
a major downturn in the global economy, in addition to any significant
and unexpected change in regulation. While a number of regulatory
reforms have not yet been finalised, we believe that the direction of
travel on the principal reforms is clear and our plans anticipate this new
landscape as much as possible. Should the final shape of regulation differ
from what we expect, Barclays track record demonstrates a clear ability
to adapt while still delivering against our commitments.
With regard to legacy issues, we have a number of on-going areas of
litigation and regulatory review and we have robust processes in place
to address them. The execution of our plans is absolutely within our
control. We know that. And we are aware of the importance of being
able to track and assess our progress which is why we have made a
series of financial and non-financial commitments with clear timescales.
See page 12 for more information.
Ultimately, we recognise that it will be for others to judge whether or
not we have succeeded in our objectives. But we have a credible plan,
a strong team and my commitment is absolute – we will do everything
in our power to achieve our objective of becoming the ‘Go-To’ bank.
Antony Jenkins
Group Chief Executive
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