Barclays 2003 Annual Report Download - page 88

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In 2002, net fees and commissions increased by £188m to £3,925m
(2001: £3,737), primarily due to the impact of replacing annual fees with
fees based on account activity in Barclaycard and the strong
performance from primary bonds and structured capital markets in
Barclays Capital. Barclaycard and Barclays Capital contributed £696m
and £463m respectively.
Barclays Private Clients and Barclays Global Investors contributed
increases totalling £47m. Business Banking contributed an increase of
£31m. In Barclays Africa, there was a £16m reduction principally due to
the situation in Zimbabwe. In Personal Financial Services, there was a
reduction of £12m reflecting lower income from independent
financial advice.
Personal Financial Services, Barclays Private Clients and Business Banking
fees and commissions included £135m (2001: £129m) in respect of
foreign exchange income on customer transactions with Barclays Capital.
Dealing profits
2003 2002 2001
£m £m £m
Rates related business 909 876 823
Credit related business 145 (43) 188
1,054 833 1,011
Almost all the Group’s dealing profits are generated in Barclays Capital.
Dealing profits grew 27% to £1,054m, driven by significant growth in
client transaction volumes, particularly in continental Europe. The strong
performances in the Credit businesses, principally in corporate bonds,
were due to credit spreads tightening in the secondary bond markets.
The growth in Rates related businesses reflected good results from
equity related activities and money markets. Fixed income, foreign
exchange and commodities continued to make good contributions.
Total foreign exchange income was £498m (2002: £496m) and consisted
of revenues earned from both retail and wholesale activities. The foreign
exchange income earned on customer transactions by Personal Financial
Services, Barclays Private Clients, Barclaycard, Business Banking, Barclays
Africa and Barclays Global Investors, both externally and with Barclays
Capital, is reported in those business units, within fees and commissions.
Dealing profits in 2002 fell to £833m (2001: £1,011m). The fall resulted
from poor conditions in the credit and equity markets with losses in the
Credit businesses partially offset by good performances in Rates.
Other operating income
2003 2002 2001
£m £m £m
Premium income on
insurance underwriting 264 178 158
Profits on disposal of
investment securities 73 58 37
Loss/income from the
long-term assurance business (33) (51) 127
Property rentals 15 20 30
Dividend income from
equity shares 678
Other income 165 152 68
490 364 428
Other operating income increased by £126m (35%) to £490m
(2002: £364m).
Premium income on insurance underwriting rose by £86m to £264m
(2002: £178m) as a result of a good increase from consumer lending
activities, a favourable claims experience and a one-off income gain of
£43m resulting from an adjustment to insurance reserves.
Profits on disposal of investment securities primarily reflects realisations
in the private equity business within Barclays Capital.
The substantial majority of the Group’s long-term assurance activity is
based in the UK. This UK business, which closed to new business
following the Legal & General alliance in 2001, was the main contributor
to the loss of £33m for 2003 and the losses experienced in 2002.
Income from the long-term assurance business reflects an investment
gain compared to a loss in 2002 and increased income from the ongoing
life business. These were partially offset by a reduction in the benefit of
actuarial assumptions and other movements and the costs of redress
for customers in respect of sales of endowment policies of £95m
(2002: £19m).
Other operating income in 2002 decreased by 15% (£64m) to £364m
(2001: £428m). This was primarily due to a loss of £51m (2001: income
£127m) relating to the long-term assurance business mainly arising from
the impact of stock market movements during the year.
This was partially offset by a revision of estimated amounts expected to
be repaid on banking liabilities caused by the alignment of Woolwich to
Barclays practice, (£59m). In addition, premium income on insurance
underwriting increased by £20m and a restructuring of the loan
portfolio generated a further £39m.
Financial Review
Results by Nature of Income and Expense