Barclays 2003 Annual Report Download - page 97

Barclays PLC Annual Report 2003 95
Barclays Global Investors
2003 2002 2001
£m £m £m
Net interest income 912 5
Net fees and commissions 662 538 518
Other operating income 1––
Operating income 672 550 523
Goodwill amortisation (12) (13) (13)
Other operating expenses (480) (439) (444)
Operating expenses (492) (452) (457)
Operating profit 180 98 66
Loss from joint ventures (1) (1) (1)
Exceptional items ––6
Profit on ordinary activities
before tax 179 97 71
Barclays Global Investors operating profit increased 84% (£82m) to
£180m (2002: £98m) and reflected very strong top-line income growth
and good control of costs.
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.
Operating expenses increased by 9% (£40m) to £492m (2002: £452m),
due to higher revenue related costs, partly offset by the impact of
foreign exchange translation movements. Operating expenses included
goodwill of £12m (2002: £13m).
Growth in income and costs was constrained by foreign exchange
translation movements. Approximately 56% of Barclays Global Investors
income was in US Dollars and 31% in Sterling.
Total assets under management increased 29% (£136bn) to £598bn
(31st December 2002: £462bn). This growth came from £67bn of net
new assets and £134bn attributable to market movements, offset by
£65bn of adverse exchange rate movements. Assets under management
comprise: £410bn (69%) indexed assets; £125bn (21%) active assets; and
£63bn (10%) managed cash assets.
Barclays Global Investors operating profit in 2002 increased 48% (£32m)
to £98m (2001: £66m) reflecting strong asset gathering, a greater
proportion of higher margin active funds business, good investment
performance across a range of products and ongoing cost management.
Fees and commissions in 2002 increased by 4% (£20m) to £538m
(2001: £518m) despite significantly lower stock market levels. The
increase reflected the continued expansion in the advanced active
business and growth of Global iShares (Exchange Traded Funds).
Operating costs in 2002 fell by 1% to £452m (2001: £457m). Increased
performance related pay was offset by improved efficiency and the
impact of exchange rate translation movements.
Head office functions and other operations
2003 2002(a) 2001(a)
£m £m £m
Head office functions (149) (121) (79)
Transition businesses (25) (119) (11)
Central items (84) (58) (15)
Loss on ordinary activities
before tax (258) (298) (105)
Note
(a) Comparative figures have been restated to reflect the aggregation of
Head office functions and other operations, which were formerly
reported separately.
Head office functions net costs increased 23% (£28m) to £149m
(2002: £121m). This increase included a pension charge of £5m
(2002: credit £4m).
The improved performance of Transition Businesses, from a loss of
£119m to a loss of £25m, primarily reflected a reduced provisions charge
of £7m (2002: £132m) in respect of various South American Corporate
Banking exposures.
Central items include internal fees charged by Barclays Capital for
structured capital markets activities of £89m (2002: £87m). Central
items increased from £58m to £84m, primarily reflecting a £16m
increase in the centrally held information technology services costs.
Head office functions net costs increased in 2002 by 53% (£42m) to
£121m. This increase relates primarily to £34m in increased expenditure
related to marketing and central system costs, relative to 2001. The
increased loss in the Transitional Businesses in 2002 relates to increased
provisioning in South America Corporate Banking of £132m.
Central items in 2002 include internal fees charged by Barclays Capital
for structured capital markets activities of £87m (2001: £61m).