Barclays 2008 Annual Report Download - page 52

50 Barclays PLC Annual Report 2008 |Find out more at www.barclays.com/annualreport08
Global Retail and Commercial Banking
Barclaycard
Barclaycard is a multi-brand international credit card, consumer lending
and payment processing business. Our credit card was the first to
be launched in the UK in 1966 and is now one of the leading credit
card businesses in Europe, with a fast growing business in the
United States and South Africa.
What we do
In the UK our activities include all Barclaycard branded credit cards,
secured lending business and Barclays Partner Finance, our retail finance
business. In addition to these activities, Barclaycard also operates
partnership cards with leading brands such as SkyCard. We continue to
lead the UK market and we strengthened our position in 2008 with the
purchase of the Goldfish portfolio, adding more than 1m customers to our
growing customer base.
Barclaycard’s international presence continues to grow very strongly,
with international customers now almost equalling the number in the UK.
We currently operate in Germany, South Africa and the United States, where
we are one of the fastest-growing credit card businesses. In Scandinavia,
we operate through Entercard, a joint venture with Swedbank.
Our payment processing business, Barclaycard Business, processes
card payments for 89,000 retailers and merchants, and issues credit and
charge cards to corporate customers and the UK Government. It is
Europe’s number one issuer of Visa Commercial Cards with over 132,000
corporate customers.
Performance
2008/07
Barclaycard profit before tax increased 31% (£186m) to £789m
(2007: £603m), driven by strong international income growth and lower
UK impairment charges. 2008 profit included £40m from the acquisition
of, and contribution from, Goldfish, Discover’s UK credit card business,
acquired on 31st March 2008. The scale of the UK and international
businesses increased substantially with total customer numbers up
31% to 23.3m.
Income increased 27% (£689m) to £3,219m (2007: £2,530m),
reflecting strong growth in Barclaycard International and £156m from the
inclusion of Goldfish, partially offset by a decline in FirstPlus following its
closure to new business.
Net interest income increased 30% (£412m) to £1,786m (2007:
£1,374m), driven by 58% growth in international average extended credit
card balances to £5.2bn. The margin increased to 6.92% (2007: 6.51%),
due to a change in the product mix with an increased weighting to card
lending, following the decision to stop writing new business in FirstPlus.
Net fee and commission income increased 14% (£156m) to £1,299m
(2007: £1,143m), driven by growth in Barclaycard International.
Investment income increased £69m to £80m (2007: £11m),
reflecting a £64m gain from the Visa IPO and a £16m gain from the sale of
shares in MasterCard.
Other income increased £44m to £19m (2007: £25m loss), reflecting
a gain from a portfolio sale in the United States. 2007 results reflected a
£27m loss on disposal of part of the Monument card portfolio.
Impairment charges increased 33% (£270m) to £1,097m (2007:
£827m), reflecting £252m growth in charges in the international
businesses and £68m from the inclusion of Goldfish. These factors were
partially offset by £50m lower impairment in the other UK businesses with
reduced flows into delinquency and lower levels of arrears.
Financial review
Analysis of results by business
Key facts
2008 2007 2006
Number of Barclaycard UK customers 11.7m 10.1m 9.8m
UK credit cards –
average outstanding balances £9.9bn £8.4bn £9.4bn
UK credit cards –
average extended credit balances £8.0bn £6.9bn £8.0bn
Number of Barclaycard
International customers 11.6m 7.7m 6.0m
International – average
outstanding balance £6.5bn £4.1bn £3.1bn
International –
average extended credit balances £5.2bn £3.3bn £2.5bn
Secured lending –
average outstanding balance £4.7bn £4.3bn £3.4bn
Number of retailer relationships 89,000 93,000 93,000
Highlights
£3,219m£789m
Income Profit before tax
Performance indicators
6.0
7.7
11.6
06 07
Number of Barclaycard
International customers m
08
9.8
10.1
11.7
06 07
Number of UK customers m
08