Barclays 2012 Annual Report Download - page 161

The strategic report Governance Risk review Financial review Financial statements Risk management Shareholder information
Net interest margin
The net interest margin for Retail and Business Banking, Corporate Banking and Wealth and Investment Management decreased to 1.85% (2011:
2.03%), reflecting the reduction in contribution from Group hedging activities. Consistent with prior periods the net interest margin is expressed
as a percentage of the sum of average customer assets and liabilities, to reflect the impact of the margin generated on retail and commercial
banking liabilities.
The net interest margin, expressed as a percentage of average customer assets only, declined to 3.50% (2011: 3.77%).
An analysis is provided below for Retail and Business Banking, Corporate Banking and Wealth and Investment Management for each of the
component parts of net interest income.
Net interest margin
UKRBB
%
Europe RBB
%
Africa RBBa
%
Barclaycard
%
Corporate
Bankinga
%
Wealth and
Investment
Management
%
Total
%
2012
Customer asset margin 1.07 0.83 3.26 9.39 1.14 0.65 2.11
Customer liability margin 0.97 0.38 2.34 (0.60) 1.09 1.12 1.09
Customer net interest margin 1.03 0.71 2.90 9.01 1.11 0.99 1.63
Non-customer generated margin 0.34 0.37 0.22 (0.55) 0.13 0.23 0.22
Net interest margin 1.37 1.08 3.12 8.46 1.24 1.22 1.85
Average customer assets (£m) 124,275 40,790 34,108 32,452 67,494 19,670 318,789
Average customer liabilities (£m) 111,753 14,824 22,085 1,286 83,149 50,155 283,252
2011
Customer asset margin 1.22 0.87 2.92 9.52 1.46 0.77 2.19
Customer liability margin 0.87 0.65 2.76 – 0.94 0.99 1.06
Customer net interest margin 1.05 0.81 2.86 9.52 1.19 0.93 1.67
Non-customer generated margin 0.46 0.47 0.36 (0.08) 0.27 0.36 0.36
Net interest margin 1.51 1.28 3.22 9.44 1.46 1.29 2.03
Average customer assets (£m) 118,503 43,749 37,944 30,289 70,398 17,546 318,429
Average customer liabilities (£m) 107,761 17,702 23,531 – 77,372 44,536 270,902
The 2012 decrease in customer asset and liability margins partially reflects a year on year increase in the Group’s average internal funding rates.
The increase in funding rates has had an adverse impact on customer asset margins and a benefit to customer liability margins, resulting in a
reduction of 3bps (2011: 2bps) in the net interest margin.
The Group uses a range of internal funding rates which price intra-group funding and liquidity to give credit to businesses with net surplus
liquidity and to charge those businesses in need of wholesale funding at a rate that is driven by prevailing market rates and includes term
premiums. The objective is to price internal funding for assets and liabilities in line with the cost of alternative external funding, which ensures
there is consistency between retail and wholesale sources. Rates are applied to all entities within the Group on a consistent basis. There have been
no material changes to the methodologies used during 2012.
Note
a 2011 comparatives have been revised to reflect certain corporate banking activities previously reported in Africa RBB which are now included within Corporate
Banking. Corporate Banking average customer assets, average customer liabilities and net interest income have therefore been adjusted by £1,731m, £6,740m and
£118m respectively although the net interest margin remains at 1.46%. Africa RBB comparatives have additionally been revised to include gross cheque advances
and cheque deposits of £798m within average assets and average liabilities respectively where these were previously reported net. The Africa RBB net interest margin
is therefore revised to 3.22% (previously reported as 3.07%) and the Group 2011 net interest margin is revised to 2.03% (previously reported as 2.04%).
barclays.com/annualreport Barclays PLC Annual Report 2012 I 159