Barclays 2008 Annual Report Download - page 54

52 Barclays PLC Annual Report 2008 |Find out more at www.barclays.com/annualreport08
Global Retail and Commercial Banking
Western Europe
GRCB – Western Europe comprises our retail and commercial banking
operations as well as our Barclaycard businesses in Spain, Portugal,
France and Italy.
What we do
GRCB – Western Europe serves more than 2m retail and commercial
banking customers in France, Italy, Portugal and Spain through a variety
of distribution channels including 961 branches, 184 sales centres and
988 ATMs.
GRCB – Western Europe provides a variety of products and services
including retail mortgages, current and deposit accounts, commercial
lending, unsecured lending, credit cards, investments and insurance
products, serving the needs of Barclays retail, mass affluent and
corporate customers.
Performance
2008/07
GRCB – Western Europe profit before tax grew 31% (£61m) to £257m
(2007: £196m), despite challenging market conditions in Spain and
accelerated investment in the expansion of the franchise. Distribution
points increased 347 to 1,145 (2007: 798), including 149 in Italy. Strong
income growth including gains of £82m from the Visa IPO and the sale
of shares in MasterCard was partially offset by increased impairment
and higher operating costs. Profit before tax was favourably impacted
by the 16% appreciation in the average value of the Euro against Sterling.
Income increased 53% (£493m) to £1,430m (2007: £937m), reflecting
growth in both net interest income and net fee and commission income.
Net interest income increased 62% (£329m) to £856m (2007:
£527m), driven by a 63% increase in customer liabilities to £15.3bn (2007:
£9.4bn) and a 53% increase in customer assets to £53.5bn (2007: £35.0bn).
Net fee and commission income increased 19% (£61m) to £383m
(2007: £322m). Increased fees in retail and in the life insurance businesses
were offset by lower market-related investment revenue.
Principal transactions grew £59m to £165m (2007: £106m) including
gains from the Visa IPO (£65m) and the sale of shares in MasterCard
(£17m) which enabled GRCB – Western Europe to invest in the expansion
of the business.
Impairment charges increased £220m to £296m (2007: £76m). This
increase was principally due to higher charges in Spanish commercial
property (£82m) and deterioration of the Spanish credit card portfolio
(£66m) as a consequence of the rapid slowdown in the Spanish economy.
Operating expenses increased 38% (£256m) to £929m (2007:
£673m), reflecting the rapid expansion of the retail distribution network
and the strengthening of the Premier segment. Operating expenses also
included £55m (2007: £22m) gains from the sale of property.
Gain on acquisition of £52m (2007: £nil) arose from the purchase of
the Italian residential mortgage business of Macquarie Bank Limited in
November 2008.
2007/06
GRCB – Western Europe profit before tax increased 21% (£34m) to £196m
(2006: £162m). The performance reflected strong income growth driven
by an increase in distribution points of 145 to 798 (2006: 653).
Income increased 25% (£186m) to £937m (2006: £751m), reflecting
strong growth in net fee and commission income and principal transactions.
Net interest income increased 21% (£91m) to £527m (2006: £436m),
driven by a 38% increase in customer liabilities to £9.4bn (2006: £6.8bn) and
a 30% increase in customer assets to £35.0bn (2006: £26.9bn).
Net fee and commission income increased 30% (£74m) to £322m
(2006: £248m), driven by the expansion of the customer base.
Principal transactions grew 34% (£27m) to £106m (2006: £79m),
reflecting gains on equity investments.
Impairment charges grew 100% (£38m) to £76m (2006: £38m),
reflecting very strong balance sheet growth.
Operating expenses grew 22% (£123m) to £673m (2006: £550m),
driven by the expansion of the distribution network. Operating expenses
included property sales in Spain of £22m (2006: £55m).
Financial review
Analysis of results by business
Key facts
2008 2007 2006
Number of distribution points 1,145 798 653
Highlights
£1,430m£257m
Income Profit before tax
Performance indicators
1.4
2.1
06
Number of customers m
08
653
1,145
06
Number of distribution points
(branches and sales centres)
08
1.8
07
798
07