Barclays 2006 Annual Report Download - page 41

Barclays PLC
Annual Report 2006 37
Operating review
1
2006/05
Barclays Global Investors delivered another year of outstanding results.
Profit before tax increased 32% (£174m) to £714m (2005: £540m),
reflecting very strong income growth and higher operating margins.
The performance was broadly based across products, distribution
channels and geographies.
Net fee and commission income increased 27% (£354m) to £1,651m
(2005: £1,297m). This growth was attributable to increased
management fees, particularly in the iShares and active businesses,
and securities lending, offset by lower incentive fees. Incentive fees
decreased 9% (£18m) to £186m (2005: £204m). Higher asset values,
driven by higher market levels and good net new inflows, contributed
to the growth in income.
Operating expenses increased 22% (£172m) to £951m (2005: £779m)
as a result of significant investment in key growth initiatives, ongoing
investment in product development and infrastructure and higher
performance-based expenses. The cost:income ratio improved two
percentage points to 57% (2005: 59%).
Total headcount rose 400 to 2,700 (2005: 2,300). Headcount increased
in all regions, across product groups and the support functions,
reflecting continued investment to support strategic initiatives.
Total assets under management increased 5% (£46bn) to £927bn
(2005: £881bn) primarily due to net new inflows of £37bn. The positive
market move impact of £98bn was largely offset by £89bn of adverse
exchange rate movements. In US$ terms assets under management
increased by US$301bn to US$1,814bn (2005: US$1,513bn),
comprising US$68bn of net new assets, US$177bn of favourable market
movements and US$56bn of positive exchange rate movements.
2005/04
Barclays Global Investors delivered a year of outstanding financial
results in 2005. The performance was spread across a diverse range
of products, distribution channels and geographies. Profit before tax
increased 61% (£204m) to £540m (2004: £336m) reflecting
substantial income growth and focused investment spend.
Net fee and commission income increased 47% (£415m) to £1,297m
(2004: £882m), driven by significant increases in management,
incentive and securities lending revenues.
Investment performance remained very good for the majority of active
funds as they outperformed their respective benchmarks.
Operating expenses increased 40% (£223m) to £779m (2004: £556m)
as a result of higher performance-based expenses, significant
investment in key growth initiatives and ongoing investment in
infrastructure required to support business growth. The cost:income
ratio improved to 59% (2004: 62%).
Total assets under management increased 24% (£172bn) to £881bn
(2004: £709bn). The growth included £48bn of net new assets, £53bn
attributable to favourable exchange rate movements and £71bn as a
result of market movements. In US$ terms, the increase in assets under
management to US$1,513bn from US$1,362bn (2004) included
US$88bn of net new assets and US$121bn of market movements,
partially offset by adverse exchange rate movements of US$58bn.