Barclays 2004 Annual Report Download - page 108

106
Financial review
Analysis of results by business
Analysis of Results by Business
The following section analyses the Group’s performance within the
businesses. Inter-business activities are included within these figures.
The total income and expenditure for the businesses therefore does
not necessarily equate to the amounts reported in the Group’s results.
The analysis of results by business includes goodwill amortisation.
This differs from the announcement of results dated 10th February
2005, where the analysis of results by business excludes goodwill
amortisation.
UK Banking
2004 2003 2002
£m £m £m
Net interest income 3,466 3,301 3,226
Net fees and commissions 1,930 1,807 1,708
Other operating income 250 397 291
Operating income 5,646 5,505 5,225
Goodwill amortisation (176) (172) (184)
Other operating expenses (3,019) (2,903) (2,811)
Operating expenses (3,195) (3,075) (2,995)
Operating profit before
provisions 2,451 2,430 2,230
Provisions for bad and
doubtful debts (199) (326) (324)
Operating profit 2,252 2,104 1,906
Profit from associated
undertakings 410 3
Exceptional items 42 (11) (5)
Profit on ordinary activities
before tax 2,298 2,103 1,904
UK Banking managed its portfolio of businesses to deliver good profit
growth in a year of extensive business reorganisation. UK Banking
profit before tax increased 9% (£195m) to £2,298m (2003: £2,103m)
as a result of a very strong performance from UK Business Banking and
a broadly flat contribution from UK Retail Banking.
UK Banking profit before tax in 2003 increased 10% to £2,103m
(2002: £1,904m).
Operating income increased 5% to £5,505m (2002: £5,225m), whilst
operating expenses increased 3% to £3,075m (2002: £2,995m).
UK Retail Banking
2004 2003 2002
£m £m £m
Net interest income 2,059 2,000 1,979
Net fees and commissions 1,117 1,074 1,036
Other operating income 239 365 292
Operating income 3,415 3,439 3,307
Goodwill amortisation (158) (158) (158)
Other operating expenses (2,270) (2,188) (2,082)
Operating expenses (2,428) (2,346) (2,240)
Operating profit before
provisions 987 1,093 1,067
Provisions for bad and
doubtful debts (60) (107) (138)
Operating profit 927 986 929
Profit from associated
undertakings –75
Exceptional items 42 (10) (11)
Profit on ordinary activities
before tax 969 983 923
UK Retail Banking profit before tax decreased 1% (£14m) to £969m
(2003: £983m).
Operating income was broadly flat at £3,415m (2003: £3,439m).
There were strong performances in current accounts and UK Premier.
The performance in the mortgage business was impacted by margin
pressure. Net revenue (operating income less provisions) was also
broadly flat at £3,355m (2003: £3,332m).
Net interest income increased 3% (£59m) to £2,059m (2003:
£2,000m). Growth was driven by higher customer deposit balances
particularly in Personal Customer current accounts and UK Premier
deposits, together with an increase in the retail savings margin.
This growth was partially offset by a reduced contribution from
the mortgage business. The favourable impact of higher average UK
mortgage balances was more than offset by margin pressure, due
to a fall in the proportion of the mortgage portfolio on the standard
variable rate, the impact of successive base rate increases and a
reduction in early redemption income.
UK residential mortgage balances ended the period at £61.7bn
(2003: £59.8bn). Gross advances were £17.5bn (2003: £18.3bn) and net
lending was £1.9bn (2003: £2.0bn). The loan to value ratio within the
mortgage book on a current valuation basis averaged 35% (2003: 40%).
Average overdraft balances within Personal Customers increased by
9%. Average customer deposit balances increased 5% to £68.5bn
(2003: £65bn). Personal Customer average current account balances
increased 10%. There was strong growth in UK Premier with average
deposits up 15%, and in Small Business where average deposit
balances were 7% higher. Retail average savings balances increased
by 1% in a highly competitive market.