Barclays 2006 Annual Report Download - page 50

Barclays PLC
Annual Report 2006
46
Financial review
Results by nature of income and expense
Notes
(a) Does not reflect the application of IAS 32, IAS 39 and IFRS 4 which became effective from 1st January 2005.
(b) For 2005, this reflects the period from 27th July until 31st December 2005.
Net fee and commission income
2006 2005 2004(a)
£m £m £m
Fee and commission income 8,005 6,430 5,509
Less: fee and
commission expense (828) (725) (662)
Net fee and commission income 7,177 5,705 4,847
2006/05
Net fee and commission income increased 26% (£1,472m) to £7,177m
(2005: £5,705m). The inclusion of Absa contributed net fee and
commission income of £850m (2005(b): £334m). Group net fee and
commission income excluding Absa grew 18%, reflecting growth
across all businesses.
Fee and commission income rose 24% (£1,575m) to £8,005m (2005:
£6,430m). The inclusion of Absa contributed fee and commission
income of £896m (2005(b): £386m). Excluding Absa, fee and
commission income grew 18%, driven by a broadly based performance
across the Group, particularly within Barclays Global Investors.
Fee and commission expense increased 14% (£103m) to £828m (2005:
£725m), reflecting the growth in Barclaycard US. Absa contributed fee
and commission expense of £46m (2005(b): £52m).
Total foreign exchange income was £850m (2005: £648m) and
consisted of revenues earned from both retail and wholesale activities.
Foreign exchange income earned on customer transactions by
individual businesses is reported in those respective business units
within fee and commission income. The foreign exchange income
earned in Barclays Capital and in Treasury is reported within net
trading income.
2005/04
In 2005, net fee and commission income increased 18% (£858m) to
£5,705m (2004: £4,847m) reflecting good growth across all businesses.
The inclusion of Absa increased net fee and commission income by
£334m in the second half of 2005. Group net fee and commission
income excluding Absa grew 11%. Excluding the application of IAS 32
and IAS 39, net fee and commission income increased 20%.
Fee and commission income rose 17% (£921m) to £6,430m (2004:
£5,509m). The inclusion of Absa increased fee and commission income
by £386m. Excluding Absa, fee and commission income grew by 10%.
The growth was driven by Barclays Global Investors, reflecting strong
growth in net new assets, a strong investment performance and higher
market levels, and by Barclays Capital, as a result of increased business
volumes and higher market share. In addition, Barclaycard fee and
commission income increased as a result of higher contributions from
Barclaycard Business and FirstPlus and the inclusion of Barclaycard US
for the full year. Fee and commission expense increased 10% (£63m)
to £725m (2004: £662m), largely reflecting the inclusion of Absa which
added £52m.
Total foreign exchange income was £648m (2004: £520m) and
consisted of revenues earned from both retail and wholesale activities.
Principal transactions
2006 2005 2004(a)
£m £m £m
Rates related business 2,848 1,732 1,141
Credit related business 766 589 346
Net trading income 3,614 2,321 1,487
Cumulative gain from disposal of
available for sale assets/
investment securities 307 120 45
Dividend income 15 22 17
Net income from financial
instruments designated at
fair value 447 389 n/a
Income from assets backing
insurance policies n/a n/a 717
Other investment income 193 327 248
Net investment income 962 858 1,027
Principal transactions 4,576 3,179 2,514
2006/05
Most of the Group’s trading income is generated in Barclays Capital.
Net trading income increased 56% (£1,293m) to £3,614m (2005:
£2,321m) due to excellent performances in Barclays Capital Rates and
Credit businesses, in particular in commodities, fixed income, equities,
credit derivatives and emerging markets. This was driven by higher
volumes of client – led activity and favourable market conditions. The
inclusion of Absa contributed net trading income of £60m (2005(b):
£9m). Group net trading income excluding Absa grew 54%.
Net investment income increased 12% (£104m) to £962m (2005:
£858m). The inclusion of Absa contributed net investment income of
£144m (2005(b): £62m). Group net investment income excluding Absa
increased 3%.
The cumulative gain from disposal of available for sale assets increased
156% (£187m) to £307m (2005: £120m) driven by investment
realisations, primarily in Private Equity.
Fair value movements on certain assets and liabilities have been
reported within net trading income or within net investment income
depending on the nature of the transaction. Fair value movements on
insurance assets included within net investment income contributed
£205m (2005: £317m).
2005/04
In 2005, net trading income increased 56% (£834m) to £2,321m
(2004: £1,487m) due to strong performances across Barclays Capital
Rates and Credit businesses, in particular from commodities, foreign
exchange, fixed income and credit derivatives. This was driven by the
continued return on prior-year investments and higher volumes of
client-led activity across a broad range of products and geographical
regions. Group net trading income excluding £9m of Absa income,
grew 55%.
Net investment income decreased 16% (£169m) to £858m (2004:
£1,027m). The inclusion of Absa increased net investment income
by £62m in the second half of 2005. Group net investment income
excluding Absa decreased 22%.