Barclays 2007 Annual Report Download - page 28

Financial review
Analysis of results by business
26 Barclays PLC Annual Report 2007
Global Retail and Commercial Banking
UK Retail Banking
Who we are
UK Retail Banking comprises Personal Customers,
Home Finance, Local Business, Consumer Lending and
Barclays Financial Planning. We have one of the largest
branch networks in the UK with around 1,700 branches
and an extensive network of cash machines.
What we do
We are transforming Barclays to be the best bank in the UK by designing
innovative, simple and transparent propositions, streamlining operating
platforms and further leveraging Barclays Group capabilities.
Our cluster of businesses aims to build broader and deeper relationships
with customers. Personal Customers and Home Finance provide a wide
range of products and services to retail customers, including current
accounts, savings and investment products, mortgages branded
Woolwich and general insurance. Barclays Financial Planning provides
banking, investment products and advice to affluent customers.
Local Business provides banking services to small businesses. UK Retail
Banking is also a gateway to more specialised services from other parts
of Barclays such as Barclays Stockbrokers.
Our business serves 15 million UK customers.
Key facts 2007 2006 2005
Personal Customers
Number of UK current accounts a11.3m 11.5m 11.1m
Number of UK savings accounts 11.1m 11.0m 10.8m
Total UK mortgage balances £69.8bn £61.7bn £59.6bn
Local Business
Number of Local Business customers 643,000 630,000 630,000
Performance
2007/06
UK Retail Banking profit before tax increased 9% (£101m) to £1,282m
(2006: £1,181m) due to reduced costs and a strong improvement in
impairment.
Income grew 2% (£67m) before the impact of settlements on overdraft
fees in relation to prior years (£116m). This was driven by very strong
growth in Personal Customer retail savings and good growth in Personal
Customer current accounts, Home Finance and Local Business. Including
the impact of settlements on overdraft fees, income decreased £49m to
£4,297m (2006: £4,346m).
Net interest income increased 3% (£93m) to £2,858m (2006: £2,765m).
Growth was driven by a higher contribution from deposits, through a
combination of good balance sheet growth and an increased liability
margin. Total average customer deposit balances increased 7% to £81.9bn
(2006: £76.5bn), supported by the launch of new products.
Mortgage volumes increased significantly, driven by an improved mix of
longer term value products for customers, higher levels of retention and
continuing improvements in processing capability. Mortgage balances
were £69.8bn at the end of the period (2006: £61.7bn), an approximate
market share of 6% (2006: 6%). Gross advances were 25% higher at
£23.0bn (2006: £18.4bn). Net lending was £8.0bn (2006: £2.4bn),
representing market share of 8% (2006: 2%). The average loan to value
ratio of the residential mortgage book on a current valuation basis was 33%.
The average loan to value ratio of new residential mortgage lending in
2007 was 54%. Consumer Lending balances decreased 4% to £7.9bn
(2006: £8.2bn), reflecting the impact of tighter lending criteria.
Overall asset margins decreased as a result of the increased proportion
of mortgages and contraction in unsecured loans.
Net fee and commission income reduced 4% (£49m) to £1,183m (2006:
£1,232m). There was strong Current Account income growth in Personal
Customers and good growth within Local Business. This was more than
offset by settlements on overdraft fees.
Net premiums from insurance underwriting activities reduced 26%
(£90m) to £252m (2006: £342m), as there continued to be lower
customer take-up of loan protection insurance. Net claims and benefits
on insurance contracts increased to £43m (2006: £35m).
Impairment charges decreased 12% (£76m) to £559m (2006: £635m)
reflecting lower charges in unsecured Consumer Lending and Local
Business. This was driven by improvements in the collection process which
led to reduced flows into delinquency, lower levels of arrears and stable
charge-offs. Mortgage impairment charges remained negligible.
Operating expenses reduced 3% (£69m) to £2,463m (2006: £2,532m),
reflecting strong and active management of all expense lines, targeted
processing improvements and back office consolidation. Gains from
the sale of property were £193m (2006: £253m). Increased investment
was focused on improving the overall customer experience through
converting and improving the branch network; revitalising the product
offering; increasing operational and process efficiency; and meeting
regulatory requirements.
The cost:income ratio improved one percentage point to 57%. Excluding
the impact of settlements on overdraft fees, the cost:income ratio improved
two percentage points to 56%.
Highlights
£4,297m£1,28 2 m
Income Profit before tax
Performance indicators
Customer deposits £bn
Mortgages –
Net lending market share %
05 06 07
76.3
82.3
87.1
05 06 07
(2.8)
2.2
7.7
Note
aDecrease reflects the consolidation of Woolwich and Barclays current accounts.