Barclays 2006 Annual Report Download - page 43

Barclays PLC
Annual Report 2006 39
Operating review
1
2006/05
Barclays Wealth profit before tax showed very strong growth of 28%
(£47m) to £213m (2005: £166m). Performance was driven by broadly
based income growth and favourable market conditions. This was
partially offset by additional volume related costs and a significant
increase in investment in people and infrastructure to support
future growth.
Income increased 12% (£114m) to £1,036m (2005: £922m).
Net interest income increased 11% (£37m) to £366m (2005: £329m)
reflecting growth in both customer deposits and customer lending.
Average customer deposits grew 6% (£1.3bn) to £24.7bn (2005:
£23.4bn). Average loans to customers grew 16% to £5.1bn (2005:
£4.4bn), driven by increased lending to offshore and private banking
clients. Asset and liability margins were higher relative to 2005.
Net fee and commission income increased 13% (£76m) to £665m
(2005: £589m). This reflected growth in client assets and higher
transactional income, including increased sales of investment
products to private banking and financial planning clients, and
higher stockbroking volumes.
Operating expenses increased 9% (£67m) to £821m (2005: £754m)
with greater volume related and investment costs more than offsetting
efficiency gains. Investment costs included increased hiring of client-
facing staff and improvements to infrastructure with the upgrade of
technology and operations platforms. The cost:income ratio improved
three percentage points to 79% (2005: 82%).
Total client assets, comprising customer deposits and client
investments, increased 19% (£14.7bn) to £93.0bn (2005: £78.3bn)
reflecting good net new asset inflows and favourable market conditions.
Multi-Manager assets increased 68% (£4.1bn) to £10.1bn (2005:
£6.0bn); this growth included transfers of existing client assets.
2005/04
Barclays Wealth profit before tax increased 54% (£58m) to £166m
(2004: £108m), driven by broad-based income growth and
improved cost efficiency. Income increased 10% (£85m) to £922m
(2004: £837m).
Net interest income increased 9% (£28m) to £329m (2004: £301m)
reflecting strong growth in loans and deposits. Average customer
deposits increased 14% to £23.4bn (2004: £20.6bn), driven by strong
growth from offshore and private banking clients. Average loans
increased 22% to £4.4bn (2004: £3.6bn), reflecting growth from
corporate clients in the offshore business.
Net fee and commission income increased 11% (£60m) to £589m
(2004: £529m). The increase was driven principally by sales of
investment products to private banking and financial planning clients,
stronger equity markets and higher client transaction volumes.
Operating expenses increased 3% (£24m) to £754m (2004: £730m).
The cost:income ratio improved five percentage points to 82%
(2004: 87%).
Total client assets, increased to £78.3bn. Multi-Manager assets
increased to £6.0bn; this growth included existing customer assets.