Barclays 2003 Annual Report Download - page 85

Financial performance 2003
The Group’s profit before tax in 2003 increased 20% (£640m) to
£3,845m (2002: £3,205m). Operating income increased 10% (£1,084m)
to £12,411m (2002: £11,327m) whilst operating expenses rose 9%
(£629m) to £7,253m (2002: £6,624m). A third of the increase in
operating expenses (£200m) was attributable to the move to a pensions
charge (£128m) from a pensions credit (£72m) in 2002 in respect of
the Group’s main UK Pension schemes. Restructuring costs amounted
to £209m (2002: £187m). Goodwill amortisation was £265m
(2002: £254m). Provisions for bad and doubtful debts fell 9% (£137m)
to £1,347m (2002: £1,484m). Provisions excluding the impact of
Transition Businesses fell 3% (36m) to £1,324m (2002: £1,360m).
Earnings per share rose 26% to 42.3p (2002: 33.7p).
Non-performing lendings decreased by £371m to £4,155m. Potential
problem loans increased by £173m to £1,477m. Coverage of non-
performing lendings increased from 68.0% to 74.1% while the coverage
of total potential credit risk lendings increased from 52.8% to 54.6%.
Shareholders’ funds increased by £1,272m primarily due to profit
retentions. Weighted risk assets increased by £16bn (9%) up to £189bn.
The tier 1 ratio decreased from 8.2% to 7.9% while the total risk asset
ratio remained at 12.8%. Total assets increased by £40bn to £443bn.
Personal Financial Services operating profit increased 13% to £816m
(2002: £720m). Operating income was up 7% at £3,109m
(2002: £2,919m). Stronger lending and deposit volumes and active
margin management helped drive income momentum. Operating
expenses rose 7% to £1,990m (2002: £1,865m), with almost two-thirds
of the increase attributable to the pensions charge and higher strategic
investment spend. Provisions decreased 9% to £303m (2002: £334m) as
both the quality of the loan portfolio and risk processes improved.
Barclays Private Clients operating profit for the ongoing business
decreased 16% to £270m (2002: £323m). Business activity was impacted
by significantly lower average equity markets and by lower average
interest rates than in 2002. Operating income fell 4% to £1,350m
(2002: £1,401m). Operating expenses including goodwill of £58m
(2002: £45m), increased 1% to £1,049m (2002: £1,041m). The
contribution from the closed life assurance activities was a loss of
£77m (2002: loss £87m).
Barclaycard operating profit increased 16% to £689m (2002: £593m),
with strong business volumes driving income growth of 16% to £1,830m
(2002: £1,582m). Operating expenses rose 16% to £679m (2002: 587m),
reflecting strong growth in business volumes, increased marketing
activity and higher strategic investment expenditure. Provisions
increased 15% to £462m (2002: £402m).
Business Banking operating profit increased 8% to £1,299m
(2002: £1,206m) reflecting loan volume growth and stable lending
margins, the benefits of tight cost management and well controlled risk.
Operating income grew 5% to £2,628m (2002: £2,514m) reflecting the
impact of the implementation of the Competition Commission Inquiry
transitional pricing remedy. Operating expenses of £1,080m
(2002: £1,082m) were flat relative to 2002 and included cost savings
realised in the back office.
Barclays Africa operating profit increased 27% to £112m (2002: £88m).
Operating income was up 18% at £325m (2002; £275m) driven by
strong lending growth in selected markets. Operating expenses rose 16%
to £186m (2002: £160m). Provisions were steady at £27m.
Barclays Capital operating profit increased 35% to £782m
(2002: £578m). Operating income grew 18% to a record £2,652m
(2002: £2,238m), with secondary income up 17% and primary income
up 16%. Operating expenses rose 22% to £1,618m (2002: £1,326m) and
reflected increased business as usual costs from higher business volumes
and headcount growth, performance-based revenue related costs and
increased strategic investment spend. Provisions declined 25% to £252m
(2002: £334m) reflecting continued improvements in the quality of the
loan book and in the corporate credit environment.
Barclays Global Investors operating profit increased 84% to £180m
(2002: £98m). Operating income, predominantly fees and commissions,
rose 22% to £672m (2002: £550m) reflecting growth in assets under
management, good investment performance and increased higher
margin business. Operating expenses increased 9% to £492m
(2002: £452m).
Barclays PLC Annual Report 2003 83