Barclays 2007 Annual Report Download - page 10

Group Chief Executive’s review
8 Barclays PLC Annual Report 2007
Barclays delivered a resilient financial performance in 2007 in a year of
contrasting market conditions. The excellent results of the first half were
achieved in a relatively benign environment; in the second half we were
not immune from the impact of the credit market turbulence, but profit
before business disposals for the year still increased 3%. I am pleased to
report profits again above £7bn, which is well ahead of the average level
of the previous three years.
At a time of significant market turbulence, it is important to be clear and
confident about strategy. The strategy of Barclays is to achieve superior
growth through time by diversifying our profit base. The precondition of
successful growth is relevance to customers. We seek to maximise the
alignment between the sources of growth in the financial services industry
(in particular anticipating what customers want and need) with what
we have in Barclays (in terms of brand, capability and physical footprint).
We recommit to our strategy following our bid for ABN AMRO, and in the
light of the market volatility and because of our confidence that our
strategy offers the best route to strong growth in the years ahead.
The structure of the Group, which comprises two business groupings,
Global Retail and Commercial Banking (‘GRCB’) and Investment Banking
and Investment Management (‘IBIM’), is designed both to enable us to be
well positioned for the significant growth which we anticipate in the global
financial services industry and to help us serve customers and clients well.
We continued to invest heavily across the Group in 2007, increasing the
number of employees who serve customers and clients and developing
our distribution networks.
In IBIM I believe that we handled well the stress test of market turbulence
in the second half of 2007. Both Barclays Capital and Barclays Global
Investors ended 2007 with profits ahead of 2006, which was a year
of rapid growth and record profitability for both. We have benefited
significantly from the business diversification that we have pursued
in recent years: the development of capabilities by Barclays Capital in
commodities, foreign exchange and equity products enabled us to deliver
excellent income growth in those areas. The cost flexibility that we have
built into the business model here has also served shareholders well,
enabling us to reduce expenses year on year, and improve the cost:net
income and compensation ratios. In Barclays Global Investors, iShares’
assets under management grew over $100bn to $408bn, and this growth
illustrates the significant diversification of Barclays Global Investors
earnings base that we have engineered in recent years. Meanwhile
Barclays Wealth is making good progress towards the achievement of its
profit goal of £500m in the medium term, benefiting as it is from proximity
to the structuring and manufacturing capabilities of Barclays Capital and
Barclays Global Investors.
“Barclays delivered a resilient
performance in 2007, with profits
broadly in line with the record
prior year results. The strength of
our diversified businesses gives us
confidence for the period ahead”