Barclays 2008 Annual Report Download - page 22

20 Barclays PLC Annual Report 2008 |Find out more at www.barclays.com/annualreport08
Financial review
Income statement commentary
Principal transactions
2008/07
Principal transactions decreased 60% (£2,966m) to £2,009m
(2007: £4,975m).
Net trading income decreased 65% (£2,430m) to £1,329m
(2007: £3,759m). The majority of the Group’s net trading income arises
in Barclays Capital. Growth in the Rates related business reflected growth
in fixed income, prime services, foreign exchange, commodities and
emerging markets. The Credit related business included net losses from
credit market dislocation partially offset by the benefits of widening credit
spreads on structured notes issued by Barclays Capital.
Net investment income decreased 44% (£536m) to £680m (2007:
£1,216m). The cumulative gain from disposal of available for sale assets
decreased 62% (£348m) to £212m (2007: £560m) reflecting the lower
profits realised on the sale of investments. The £212m gain in 2008
included the £47m gain from sale of shares in MasterCard.
The dividend income increased £170m to £196m (2007: £26m)
reflecting the Visa IPO dividend received by GRCB – Western Europe,
GRCB – Emerging Markets and Barclaycard in the current year. The GRCB –
Absa gain on the Visa IPO of £47m has been recognised in other income.
Net gain from financial instruments designated at fair value decreased
89% (£260m) to £33m (2007: £293m), driven by the continued decrease
in value of assets backing customer liabilities in Barclays Life Assurance;
and fair value decreases of a number of investments reflecting the current
market condition.
Other investment income decreased 29% (£98m) to £239m (2007:
£337m) due to a number of non-recurring disposals in the prior year.
2007/06
Principal transactions increased 9% (£399m) to £4,975m
(2006: £4,576m).
Net trading income increased 4% (£145m) to £3,759m (2006:
£3,614m). The majority of the Group’s net trading income arose from
Barclays Capital. Growth in the Rates related business reflected very strong
performances in fixed income, commodities, foreign exchange, equity and
prime services. The Credit related business included net losses from credit
market turbulence and the benefits of widening credit spreads on structured
notes issued by Barclays Capital.
Net investment income increased 26% (£254m) to £1,216m (2006:
£962m). The cumulative gain from disposal of available for sale assets
increased 82% (£253m) to £560m (2006: £307m) largely as a result of a
number of private equity realisations and divestments. Net income from
financial instruments designated at fair value decreased by 34% (£154m)
largely due to lower growth in the value of linked insurance assets within
Barclays Wealth.
Fair value movements on insurance assets included within net
investment income contributed £113m (2006: £205m).
Net premiums from insurance contracts
2008/07
Net premiums from insurance contracts increased 8% (£79m) to
£1,090m (2007: £1,011m), primarily due to expansion in GRCB – Western
Europe reflecting a full year’s impact of a range of insurance products
launched in late 2007, partially offset by lower net premiums following the
sale of the closed life assurance book.
2007/06
Net premiums from insurance contracts decreased 5% (£49m) to
£1,011m (2006: £1,060m), primarily due to lower customer take
up of loan protection insurance.
Other income
2008/07
Certain asset management products offered to institutional clients by
Barclays Global Investors are recognised as investment contracts.
Accordingly, the invested assets and the related liabilities to investors are
held at fair value and changes in those fair values are reported within other
income. Other income in 2008 includes a £47m gain from the Visa IPO.
2007/06
Certain asset management products offered to institutional clients by
Barclays Global Investors are recognised as investment contracts. Accordingly,
the invested assets and the related liabilities to investors are held at fair value
and changes in those fair values are reported within other income. Other
income in 2007 includes a loss on the part disposal of Monument credit card
portfolio and gains on reinsurance transactions in 2007 and 2006.
Principal transactions
2008 2007 2006
£m £m £m
Rates related business 4,751 4,162 2,848
Credit related business (3,422) (403) 766
Net trading income 1,329 3,759 3,614
Net gain from disposal
of available for sale assets 212 560 307
Dividend income 196 26 15
Net gain from financial
instruments designated at
fair value 33 293 447
Other investment income 239 337 193
Net investment income 680 1,216 962
Principal transactions 2,009 4,975 4,576
Net premiums from insurance contracts
2008 2007 2006
£m £m £m
Gross premiums from
insurance contracts
1,138 1,062 1,108
Premiums ceded to reinsurers (48) (51) (48)
Net premiums from
insurance contracts 1,090 1,011 1,060
Other income
2008 2007 2006
£m £m £m
(Decrease)/increase in fair value of
assets held in respect of linked
liabilities to customers under
investment contracts (10,422) 5,592 7,417
Decrease/(increase) in liabilities to
customers under investment contracts 10,422 (5,592) (7,417)
Property rentals 73 53 55
Loss on part disposal of Monument
credit card portfolio –(27) –
Other 304 162 159
Other income 377 188 214
Net claims and benefits incurred on insurance contracts
2008 2007 2006
£m £m £m
Gross claims and benefits incurred
on insurance contracts
263 520 588
Reinsurers’ share of claims incurred (26) (28) (13)
Net claims and benefits incurred
on insurance contracts 237 492 575