Barclays 2004 Annual Report Download - page 104

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Net fees and commissions
2004 2003 2002
£m £m £m
Fees and commissions
receivable 5,672 4,896 4,454
Less: fees and commissions
payable (706) (633) (529)
4,966 4,263 3,925
Group net fees and commissions increased 16% (£703m) to £4,966m
(2003: £4,263m), reflecting good growth across all businesses.
Fees and commissions receivable rose 16% (£776m) to £5,672m in
2004 (2003: £4,896m) driven by increases in: Barclays Global Investors,
reflecting strong income generation across both the active and index
businesses; Barclays Capital, with good contributions from origination
and advisory activities; and Private Clients, as a result of stronger
business volumes and the acquisition of Gerrard. Good growth was
also achieved in UK Banking and in Barclaycard.
In 2003, net fees and commissions increased by £338m to £4,263m
primarily driven by increases in: Barclays Global Investors, reflecting
growth of investment management fees; Barclaycard as a result of
higher cardholder activity and good volume growth within the
merchant acquiring business and Barclays Capital, with good
performances across the Credit businesses.
Dealing profits
2004 2003 2002
£m £m £m
Rates related business 1,141 909 876
Credit related business 352 145 (43)
1,493 1,054 833
Almost all the Group’s dealing profits are generated in Barclays Capital.
Dealing profits increased 42% (£439m) to £1,493m (2003: £1,054m),
with very strong performances in both the Rates and Credit
businesses. This reflected higher volumes of client led activity
throughout the year across a broad range of products and the
continued benefit of headcount investments to broaden product
depth and geographical reach. The very strong growth in the Rates
businesses was across equity related activities, foreign exchange and
fixed income. The very strong performance in the Credit businesses
reflected an increase in the contribution from credit derivatives.
2002 2003 2004£m
5,122
5,807
7,103
8,000
6,000
4,000
2,000
0
Dealing
profits
Other operating
income
Net fees and
commissions
Non-interest income
Total foreign exchange income was £520m (2003: £498m) and
consisted of revenues earned from both retail and wholesale activities.
The foreign exchange income earned on customer transactions by
UK Banking, Private Clients and International and Barclaycard, both
externally and within Barclays Capital, is reported in those business
units, within fees and commissions.
Dealing profits in 2003 grew 27% to £1,054m (2002: £833m) driven
by significant growth in client transaction volumes, particularly in
continental Europe. There were strong performances in the Credit
business and good contributions from Rates.
Other operating income
2004 2003 2002
£m £m £m
Net premium income on
insurance underwriting 211 264 178
Gain on disposal of
investment securities 181 73 58
Income/loss from the
long-term assurance business 58 (33) (51)
Property rentals 915 20
Dividend income from
equity shares 17 67
Other income 168 165 152
644 490 364
Other operating income increased 31% (£154m) to £644m
(2003: £490m).
Net premium income on insurance underwriting decreased 20%
(£53m) to £211m (2003: £264m), primarily due to a provision relating
to the early termination of contracts.
Gain on disposal of investment securities rose by £108m to £181m
(2003: £73m), predominantly due to a number of realisations in the
private equity business within Barclays Capital.
Virtually all the Group’s long-term assurance activity is based in the UK
and was the main component of the £58m contribution. This included
costs of redress for customer claims in respect of endowment policies
of £97m (2003: £95m).
Dividend income increased by £11m to £17m (2003: £6m) as a result
of a significant dividend received from an investment.
Other income was flat at £168m (2003: £165m). This reflected a
reduction of £98m in income, primarily in UK Retail Banking, from the
revision of estimated amounts expected to be repaid on banking liabilities.
This was offset by realisations on structured capital market transactions.
Other operating income in 2003 increased by 35% (£126m) to £490m
(2002: £364m). This was primarily due to premium income on insurance
underwriting which rose by £86m to £264m as a result of a good increase
from consumer lending activities, a favourable claims experience and a
one-off income gain of £43m from an adjustment to insurance reserves.
In addition, profits on disposal of investment securities rose by £15m
primarily reflecting realisations in the private equity business within
Barclays Capital.
Financial review
Results by nature of income and expense