Barclays 2007 Annual Report Download - page 47

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Business review
Barclays PLC Annual Report 2007 45
2006/05
Head office functions and other operations loss before tax decreased
£64m to £259m (2005: loss £323m).
Net interest income decreased £80m to £80m (2005: £160m) reflecting
a reduction in net interest income in Treasury following the acquisition
of Absa Group Limited. Treasury’s net interest income also included the
hedge ineffectiveness for the period, which together with other related
Treasury adjustments amounted to a gain of £11m (2005: £18m) and
the cost of hedging the foreign exchange risk on the Group’s equity
investment in Absa, which amounted to £71m (2005: £37m).
The impact of such inter-segment adjustments reduced £72m to £147m
(2005: £219m). These adjustments related to internal fees for structured
capital market activities of £87m (2005: £67m) and fees paid to Barclays
Capital for capital raising and risk management advice of £23m (2005:
£39m), both of which reduce net fees and commission income.
In addition the impact of the timing of the recognition of insurance
commissions included in Barclaycard and UK Retail Banking reduced to
£44m (2005: £113m). This reduction was reflected in a decrease in net fee
and commission income of £184m (2005: £185m) and an increase in net
premium income of £140m (2005: £72m).
Principal transactions decreased £51m to £42m (2005: £93m). 2005
included hedging related gains in Treasury of £80m. 2006 included £55m
(2005: £nil) in respect of the economic hedge of the translation exposure
arising from Absa foreign currency earnings.
The impairment charge improved £12m to a release of £11m (2005: £1m
charge) as a number of workout situations were resolved.
Operating expenses decreased £78m to £269m (2005: £347m) primarily
due to the expenses of the 2005 Head office relocation to Canary Wharf
not recurring in 2006 (2005: £105m) and the gains of £26m (2005: £nil)
from the sale and leaseback of property offset by increased costs,
principally driven by major project expenditure including work related
to implementing Basel II.
2007 2006 2005
£m £m £m
Income statement information
Net interest income 128 80 160
Net fee and commission income (424) (301) (324)
Net trading (loss)/income (66) 40 85
Net investment (expense)/income (17) 28
Principal transactions (83) 42 93
Net premiums from insurance contracts 152 139 72
Other income 35 39 24
Total income (192) (1) 25
Impairment (charges)/releases (3) 11 (1)
Net income (195) 10 24
Operating expenses excluding amortisation of intangible assets (233) (259) (343)
Amortisation of intangible assets (1) (10) (4)
Operating expenses (234) (269) (347)
Profit on disposal of associates and joint ventures 1––
Loss before tax (428) (259) (323)
Balance sheet information
Total assets £7.1bn £7.1bn £9.3bn
Other financial measures
Risk Tendency £10m £10m £25m
Risk weighted assets £1.6bn £1.9bn £4.0bn