Barclays 2008 Annual Report Download - page 31

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Business review
Barclays PLC Annual Report 2008 29
2007/06
Total assets increased 23% to £1,227.4bn (2006: £996.8bn). Risk
weighted assets increased 19% to £353.5bn (2006: £297.8bn). Loans
and advances to customers that have been securitised increased £4.3bn
to £28.7bn (2006: £24.4bn).
UK Retail Banking total assets increased 8% to £88.5bn (2006:
£81.7bn). This was mainly attributable to growth in mortgage balances.
Risk weighted assets increased by 7% to £46.1bn (2006: £43.0bn) with
growth in mortgages partially offset by an increase in securitised balances
and other reductions.
Barclays Commercial Bank total assets grew 13% to £74.6bn (2006:
£66.2bn) driven by good growth across lending products. Risk weighted
assets increased 8% to £54.3bn (2006: £50.3bn), reflecting asset growth
partially offset by increased regulatory netting and an increase in
securitised balances.
Barclaycard total assets increased 11% to £22.1bn (2006: £20.0bn).
Risk weighted assets increased 17% to £19.7bn (2006: £16.9bn),
primarily reflecting the increase in total assets, redemption of
securitisation transactions, partially offset by changes to the treatment of
regulatory associates and the sale of part of the Monument card portfolio.
GRCB – Western Europe total assets grew 31% to £43.7bn
(2006: £33.5bn). This growth was mainly driven by increases in retail
mortgages and unsecured lending. Risk weighted assets increased 39%
to £24.5bn (2006: £17.6bn), reflecting asset growth.
GRCB – Emerging Markets total assets grew by 76% to £9.2bn
(2006: £5.2bn). This growth was driven by increases in unsecured lending.
Risk weighted assets increased 86% to £6.1bn (2006: £3.3bn), reflecting
asset growth.
GRCB – Absa total assets increased 23% to £36.4bn (2006: £29.6bn),
primarily driven by increases in mortgages, credit cards and commercial
property finance. Risk weighted assets increased 13% to £22.4bn (2006:
£19.8bn), reflecting balance sheet growth.
Barclays Capital total assets rose 28% to £839.9bn (2006: £657.9bn).
Derivative assets increased £109.7bn primarily due to movements across a
range of market indices. This was accompanied by a corresponding increase in
derivative liabilities. The increase in non-derivative assets reflects an expansion
of the business across a number of asset classes, combined with an increase in
drawn leveraged loan positions and mortgage-related assets. Risk weighted
assets increased 23% to £169.1bn (2006: £137.6bn) reflecting growth in fixed
income, equities and credit derivatives.
Barclays Global Investors total assets increased 11% to
£89.2bn (2006: £80.5bn), mainly attributable to growth in certain asset
management products recognised as investment contracts. The majority of
total assets relates to asset management products with equal and offsetting
balances reflected within liabilities to customers. Risk weighted assets
increased 45% to £2.0bn (2006: £1.4bn) mainly attributable to overall
growth in the balance sheet and the mix of securities lending activity.
Barclays Wealth total assets increased 21% to £18.2bn (2006:
£15.0bn) reflecting strong growth in lending to high net worth, affluent
and intermediary clients. Risk weighted assets increased 27% to £7.7bn
(2006: £6.1bn) reflecting the increase in lending.
Head office functions and other operations total assets decreased
20% to £5.7bn (2006: £7.1bn). Risk weighted assets decreased 15% to
£1.6bn (2006: £1.9bn).
Adjusted gross leverage
The adjusted gross leverage ratio is defined as the multiple of adjusted total
tangible assets over total qualifying Tier 1 capital.
Volatility in reference rates and yield curves used for pricing have led to
significantly higher values for derivative assets and liabilities. Limited netting
is permitted under IFRS, even for receivables and payables with the same
counterparty where there are contractually agreed netting arrangements.
Derivative assets and liabilities would be £917bn (2007: £215bn) lower than
reported under IFRS if netting were permitted for assets and liabilities with
the same counterparty or for which we hold cash collateral.
Assets and liabilities also include amounts held under investment
contracts with third parties of a further £69bn as at 31st December 2008
(2007: £93bn). These constitute asset management products offered to
institutional pension funds which are required to be recognised as financial
instruments. Changes in value in these assets are entirely to the account of
the beneficial owner of the asset.
Excluding these items, settlement balances, goodwill and
intangible assets, our adjusted total tangible assets were £1,026bn at
31st December 2008 (2007: £888bn). On this basis we define adjusted
gross leverage, being the multiple of adjusted total tangible assets over
total qualifying Tier 1 capital. At 31st December 2008 adjusted gross
leverage was 28x (2007: 33x).
On a pro forma basis, reflecting the conversion of Mandatorily
Convertible Notes and inclusion of all innovative instruments in Tier 1
capital, our adjusted gross leverage would be 24x. We expect adjusted
gross leverage to improve further over time.
Adjusted gross leverage
2008 2007
£m £m
Total assets 2,052,980 1,227,361
Counterparty net/
collateralised derivatives (917,074) (215,485)
Financial assets designated at fair value
and associated cash balances – held in
respect of linked liabilities to customers
under investment contracts (69,183) (92,639)
Net settlement balances (29,786) (22,459)
Goodwill and intangible assets
(10,402) (8,296)
Adjusted total tangible assets 1,026,535 888,482
Total qualifying Tier 1 capital 37,250 26,743
Adjusted gross leverage 28 33