Barclays 2014 Annual Report Download - page 241

barclays.com/annualreport Barclays PLC Annual Report 2014 I 239
Net credit impairment release of £14m (2013: £22m) arose from a
number of single name exposures.
Total operating expenses decreased 6% to £6,225m reflecting a 9%
reduction in compensation costs to £3,620m, savings from Transform
programmes, including business restructuring, continued rationalisation
of the technology platform and real estate infrastructure, and
depreciation of average USD against GBP. This was partially offset by
increased costs to achieve Transform of £374m (2013: £190m) and
litigation and conduct charges.
Loans and advances to customers and banks increased 2% to £106.3bn
driven by an increase in cash collateral and lending, partially offset by a
reduction in settlement balances due to reduced activity.
Derivative financial instrument assets and liabilities increased 40% to
£152.6bn and 38% to £160.6bn respectively, driven by decreases in
predominantly GBP, USD and EUR forward interest rates, and
strengthening of USD against major currencies.
Reverse repurchase agreements and other similar secured lending
decreased 18% to £64.3bn due to decreased match book trading and
funding requirements.
Total assets increased 4% to £455.7bn due to an increase in derivative
financial instrument assets, partially offset by a decrease in reverse
repurchase agreements and other similar secured lending, and financial
assets at fair value.
RWAs decreased 2% to £122.4bn primarily driven by risk reductions in
the trading book, partially offset by the implementation of a revised
credit risk model for assessing counterparty probability of default.
2013 compared to 2012
Profit before tax decreased 21% to £2,020m.
Total income decreased 6% to £8,596m, including the impact of
appreciation of average USD against GBP.
Banking income increased 16% to £2,485m. Within Banking, Investment
Banking fee income increased 6% to £2,160m driven by increased equity
underwriting fees, with debt underwriting and financial advisory largely
in line. Lending income increased to £325m (2012: £109m) driven by
lower fair value losses on hedges and higher net interest and fee income.
Markets income decreased 12% to £6,134m. Credit and Macro income
decreased 10% to £1,257m and 28% to £2,580m respectively, driven by
securitised products and rates as market uncertainty around central
banks tapering of quantitative easing programmes impacted activity.
Europe and the US were particularly impacted, while Asia benefited from
improved currency income. The prior year benefitted from the European
Long Term Refinancing Operation (LTRO) in H112, the ECB bond buying
programme and reduced benchmark interest rates in H212. Equities
increased 13% to £2,297m reflecting higher commission income and
increased client volumes.
Net credit impairment release of £22m (2012: charge of £50m) arose
from a number of single name exposures.
Total operating expenses increased 2% to £6,598m, including an
increase due to higher UK bank levy of £236m (2012: £139m) following
an increase in the rate, appreciation of average USD against GBP, costs
to achieve Transform of £190m (2012: £nil), partly offset by lower
litigation and conduct charges.
Notes
a 2012 returns calculated using average allocated equity based on CRD III RWAs and capital deductions.
b 2013 adjusted income and profit before tax have been restated to exclude the Q213 £259m gain relating to assets not yet received from the US Lehman acquisition to aid
comparability given its material nature in the current year. In addition, December 2013 and December 2012 US Lehman acquisition assets and RWAs of £1.6bn and £1.9bn respectively,
have been restated for the reclassification of these assets from the Investment Bank to Head Office to more accurately reflect responsibility for the resolution of this matter.
2014
£m
2013
£m
2012
£m
Key facts
Number of employees (full time equivalent) 20,500 22,600 22,100
Performance measures
Return on average tangible equitya2.8% 8.5% 10.1%
Return on average equitya2.7% 8.2% 9.6%
Cost: income ratio 82% 77% 71%
Analysis of total income
Investment banking fees 2,111 2,160 2,042
Lending 417 325 109
Banking 2,528 2,485 2,151
Credit 1,044 1,257 1,402
Equities 2,046 2,297 2,025
Macro 1,950 2,580 3,559
Markets 5,040 6,134 6,986
Banking and Markets 7,568 8,619 9,137
Otherb20 (23) (33)
Total income 7,588 8,596 9,104
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