Barclays 2007 Annual Report Download - page 30

Financial review
Analysis of results by business
28 Barclays PLC Annual Report 2007
Global Retail and Commercial Banking
Barclays Commercial Bank
Who we are
Barclays Commercial Bank comprises 8,400 colleagues
who serve 81,000 customers.
Earlier this year, we launched our new brand – Barclays
Commercial Bank – to replace UK Business Banking.
This new identity is much more than just a name change.
Instead, it more accurately reflects our current capabilities
and future aspirations, and it is scalable across markets.
To complement the new identity, we also launched a clear
customer proposition. It comprises three elements:
–relationship
–specialisation
–innovation
These encapsulate our capability to deliver distinctive
service and solutions that meet our customers’ needs.
What we do
Barclays Commercial Bank provides banking services to organisations
with an annual turnover of more than £1m. Customers are served via
a network of relationship and industry sector specialists, which provides
solutions constructed from a comprehensive suite of banking products,
support, expertise and services, including specialist asset financing and
leasing facilities.
We are a key component of the Barclays universal banking model,
delivering income in partnership with all the constituent business
units of the Barclays Group.
Key facts 2007 2006 2005
Number of customers 81,000 77,000 a86,500
Number of colleagues 8,400 8,100 7,800
Performance
2007/06
Barclays Commercial Bank profit before tax increased £6m to £1,371m
(2006: £1,365m) due to continued good income growth partially offset
by lower gains from business disposals. Profit before business disposals
increased 5% to £1,357m (2006: £1,289m).
Income increased 7% (£159m) to £2,554m (2006: £2,395m). Non-
interest income increased to 32% of total income (2006: £29%), reflecting
continuing focus on cross sales and efficient balance sheet utilisation.
There was very strong growth in net fee and commission income, which
increased 17% (£107m) to £749m (2006: £642m) due to very strong
performance in lending fees. There was also good growth in transaction
related income, foreign exchange and derivatives transactions undertaken
on behalf of clients.
Net interest income improved 2% (£36m) to £1,738m (2006: £1,702m).
Average customer lendings increased 3% to £53.6bn (2006: £52.0bn)
and 5%, excluding the impact of the vehicle leasing and European vendor
finance businesses sold in 2006. Average customer accounts grew 4% to
£46.4bn (2006: £44.8bn). The asset margin decreased by twelve basis
points to 1.80%, reflecting an increased focus on higher quality lending
and competitive market conditions. The liabilities margin remained
broadly stable at 1.49%.
Income from principal transactions primarily reflecting venture capital and
other equity realisations increased 87% (£26m) to £56m (2006: £30m).
Impairment charges increased 15% (£38m) to £290m (2006: £252m),
mainly due to a higher level of impairment losses in Larger Business as
impairment trended towards risk tendency. There was a reduction in
impairment levels in Medium Business due to a tightening of the lending
criteria.
Operating expenses increased 6% (£50m) to £907m (2006: £857m).
Operating expenses are net of gains of £39m (2006: £60m) on the sale
of property. Growth in operating expenses was focused on continuing
investment in operations, infrastructure, and new initiatives in product
development and sales capability.
Highlights
£2,554m£1, 371m
Income Profit before tax
Performance indicators
0605
0.45
07
0.46
0.33
Impairment as %
of Loans and advances
to customers
0706
1.7
1.7
0.8
0.7
05
1.50.6
Interest income:
non interest income £bn
Non interest
income
Interest income
Notes
aReduction in 2006 relates to customers transferred to Barclays Capital.