Barclays 2003 Annual Report Download - page 87

Barclays PLC Annual Report 2003 85
Yields, spreads and margins –
banking business(a)
2003 2002 2001
%%%
Gross yield(b)
Group 4.92 5.35 6.56
Domestic 5.57 5.97 7.10
International 3.75 4.06 5.38
Interest spread(c)
Group 2.33 2.42 2.50
Domestic 3.28 3.22 3.23
International 0.68 0.80 0.91
Interest margin(d)
Group 2.61 2.75 2.91
Domestic 3.64 3.61 3.75
International 0.77 0.96 1.07
Notes
(a) Domestic business is conducted primarily in the UK in sterling.
International business is conducted primarily in foreign currencies.
In addition to the business carried out by overseas branches and
subsidiaries, international business is transacted in the United
Kingdom by Barclays Capital.
The yields, spreads, and margins shown above exclude non-margin
related items including profits and losses on the repurchase of loan
capital and the unwinding of the discount on vacant leasehold
property provisions.
(b) Gross yield is the interest rate earned on average interest earning
assets.
(c) Interest spread is the difference between the interest rate earned on
average interest earning assets and the interest rate paid on average
interest bearing liabilities.
(d) Interest margin is net interest income as a percentage of average
interest earning assets.
The net interest income and average balances of the trading business are
shown separately on the average balance sheet on pages 96 to 99.
Non-interest income
0
2,000
1,000
3,000
4,000
2001 2002 2003£m
5,000
6,000
Dealing profits
Other operating income
Net fees and commissions
1,011
428
833
364
3,737 3,925
1,054
490
4,263
Net fees and commissions
2003 2002 2001
£m £m £m
Fees and commissions receivable 4,896 4,454 4,202
Less: fees and commissions
payable (633) (529) (465)
4,263 3,925 3,737
Group net fees and commissions increased by £338m (9%) to £4,263m,
reflecting increases in most businesses, partially offset by a reduction in
Barclays Private Clients.
In Personal Financial Services, net fees and commissions increased
1% (£8m) to £802m (2002: £794m). Underlying this were good
performances from fee-based current accounts and consumer finance,
largely offset by continued weakness in the independent financial adviser
(IFA) business.
In Barclays Private Clients, net fees and commissions decreased 13%
(£79m) to £515m (2002: £594m). This reflected the impact of lower
average equity market levels in 2003 on sales of investment products
and on fund management fees, together with the absence of the
contribution from the Caribbean business. The average level of the FTSE
100 Index was 12% lower than in the prior year at 4,051 (2002: 4,599).
Fee income improved significantly in the second half of 2003, reflecting
volume growth and the recovery in equity markets towards the year end.
Average daily deal volumes in UK retail stockbroking, including Charles
Schwab Europe, increased to 8,350 (2002: 6,300). The stockbroking
business maintained its leading UK position with a 19% (2002: 12%)
market share of client order business.
In Barclaycard, net fees and commissions increased 14% (£97m) to
£793m (2002: £696m), as a result of higher cardholder activity and
good volume growth within the merchant acquiring business.
In Business Banking, net fees and commissions increased 7% (£61m)
to £925m (2002: £864m), driven by lending related fees which
rose strongly, reflecting the growth in the balance sheet. Foreign
exchange commission income grew due to increased business volumes.
Money transmission income fell as a result of the alternative offer
made in response to the Competition Commission Inquiry transitional
pricing remedy and the targeted migration of transactions to
electronic channels.
Net fees and commissions in Barclays Africa rose 17% (£19m) to £133m
(2002: £114m), reflecting growth in fee-based services, treasury profits
and the impact of the acquisition of BNPI Mauritius in 2002.
In Barclays Capital, net fees and commissions increased 16% (£74m)
to £537m (2002: £463m), with good performances across the
Credit businesses.
In Barclays Global Investors, net fees and commissions increased 23%
(£124m) to £662m (2002: £538m), reflecting good income generation
across a diverse range of products, distribution channels and
geographies. The increase was largely driven by growth of investment
management fees. These resulted from strong net new sales, growth in
the sales of higher margin products, good investment performance and
the recovery in equity markets towards the year end, which more than
compensated for the adverse impact of foreign exchange translation
movements. Actively managed assets now generate over 60% of
management fees and over 50% of total income. Securities lending
income growth was good, benefiting from higher volumes.