Barclays 2003 Annual Report Download - page 90

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Administrative expenses – other
2003 2002 2001
£m £m £m
Property and equipment
expenses
Hire of equipment 812 16
Property rentals 184 180 183
Other property and
equipment expenses 901 793 775
1,093 985 974
Other administrative expenses
Stationery, postage and
telephones 311 294 318
Advertising and market
promotion 237 238 212
Travel, accommodation and
entertainment 145 136 143
Subscriptions and publications 91 86 83
Sundry losses, provisions
and write-offs 128 121 141
Consultancy fees 56 85 133
Professional fees 159 161 137
Other expenses 184 206 162
1,311 1,327 1,329
2,404 2,312 2,303
Administrative expenses – other rose by 4% (£92m) to £2,404m
(2002: £2,312m). Property and equipment expenses increased by 11%
(£108m) to £1,093m as a result of increased outsourced processing,
information technology costs, and property repairs and maintenance.
Other administrative expenses were broadly flat at £1,311m
(2002: £1,327m). Increases across a number of expense categories
reflected higher business activity and were more than offset by
reductions in a number of other categories including consultancy
spend and other expenses.
In 2002, administrative expenses – other were broadly flat at £2,312m
(2001: £2,303m). Property and equipment expenses were £11m higher,
reflecting higher external information technology costs.
Other administrative expenses reduced by £2m to £1,327m
(2001: £1,329m). Increased advertising and market promotion
expenditure, including costs relating to the launch of Barclaycard Direct,
Openplan from Barclays and other campaigns, were offset by reductions
in other areas.
Depreciation
2003 2002 2001
£m £m £m
Property depreciation 93 93 105
Equipment depreciation 196 198 194
Loss on sale of equipment –12 9
289 303 308
Goodwill amortisation
2003 2002 2001
£m £m £m
Woolwich plc 206 206 206
Other 59 48 23
265 254 229
Other goodwill amortisation increased in 2003, primarily as a result of
the acquisition of Banco Zaragozano in July 2003.
Provisions for bad and doubtful debts
2003 2002 2001
£m £m £m
Specific charge 1,320 1,486 1,165
General charge/(release) 27 (2) (16)
1,347 1,484 1,149
Provisions fell 9% (£137m) to £1,347m (2002: £1,484m). Provisions
excluding the impact of Transition Businesses, mainly Argentina in 2002,
fell 3% (£36m) to £1,324m (2002: £1,360m). The Group's provisions
charge improved significantly to 0.73% (2002: 0.85%) of average
banking loans and advances.
Business Banking provisions increased broadly in line with portfolio
growth. Provisions fell in Barclays Capital reflecting the ongoing
improvement in the loan book and the continued recovery in the large
corporate credit environment.
Provisions fell in Personal Financial Services with an improvement in the
quality of the loan portfolio and improved risk management. The
reduction occurred in the unsecured lending portfolio. Provisions for
mortgages remained at a very low rate. Barclaycard provisions increased
in line with continued portfolio growth.
While the specific provisions balance declined, the year-end general
provision stock increased by 8% (£58m) to £795m (2002: £737m).
Improvement in the credit quality of the portfolio as a whole was offset
by portfolio growth, credit considerations relating to particular customer
segments, and acquisitions, especially Banco Zaragozano.
In 2002, the net provisions charge for bad and doubtful debts increased
by £335m to £1,484m. The greater part of this increase occurred in the
Barclays Capital (£231m), reflecting difficult economic conditions in the
telecommunications and energy sectors, particularly in the US.
Provisions also increased in South American Corporate Banking mainly
related to Argentina (£96m).
Bad debt provisions declined by 13% in Personal Financial Services –
reflecting in part improvements in risk management – and grew in
other businesses broadly in line with the growth in those portfolios.
Financial Review
Results by Nature of Income and Expense