Barclays 2006 Annual Report Download - page 12

Barclays PLC
Annual Report 2006
8
Earn, invest and grow
Delivering on our strategy
John Varley Group Chief Executive Barclays PLC
start this review by thanking the 123,000 employees of the Barclays
Group, whose dedication and creativity helped us achieve record
results. Our strategy of ‘earn, invest and grow’ continued to deliver
very strong growth in profits in 2006. Our ambition is to become one
of the handful of universal banks leading the global financial services
industry. I believe that the universal banking model is helping us
drive the higher growth for shareholders that I set out to achieve three
years ago, by providing us with new options in products, services
and markets.
In our business, strategy simply stated is anticipation followed by
service: we anticipate the needs of customers and clients. We then serve
them, by helping them achieve their goals. The needs of customers and
clients are changing. The drivers of change include: the privatisation
of welfare; wealth generation and wealth transfer; explosive growth in
demand for banking products in emerging markets; the securitisation
of assets and cash flows; the use of derivatives in risk management; the
significant growth in the use of credit cards for payment and borrowing;
and the opportunity for capital markets and private equity to fund
infrastructure development around the world.
To capitalise on these sources of growth, I have put a new structure in
place by creating Global Retail and Commercial Banking (GRCB) under
the leadership of Frits Seegers, who joined Barclays in July 2006. GRCB
brings together: UK Banking, International Retail and Commercial
Banking and Barclaycard. GRCB gives Barclays a single point of strategic
direction and control to these businesses, thereby increasing our
capability to drive growth and synergies globally and to enter new
markets. We believe this will enable us to replicate success from one
part of the world in another. This GRCB structure mirrors the
organisation of Investment Banking and Investment Management
under Bob Diamond, which also gives a single point of strategic
direction and control to a group of global businesses which enjoy
substantial synergies.
My obligation as Group Chief Executive is to assemble the best team
I can. We have added significantly to our management bench strength
in 2006, particularly in GRCB, and have concentrated on supplementing
our existing talent with deep specialist retail and commercial banking
and card experience across a range of international markets.
Performance versus goals
For the three years from 31st December 2003 to 31st December 2006,
Barclays delivered a total shareholder return (TSR) of 66% and was
positioned 6th within its peer group, which is second quartile.
The TSR of the FTSE 100 Index for this period was 54%. For the year to
31st December 2006, we delivered a TSR of 25% and were positioned
5th in our peer group. The TSR for the FTSE 100 for the year was 14%.
Economic profit for 2006 was £2.7bn, which, added to the £3.3bn
generated in 2004 and 2005, delivered a cumulative total of £6.0bn for
the goal period to date. This equates to compound annual growth in
economic profit of 28% per annum over the period, which is well ahead
of our target range.
Group Chief Executive’s review
IOur strategy of ‘earn, invest and
grow’ continued to deliver strong
growth in profits.