Barclays 2008 Annual Report Download - page 63

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Business review
Barclays PLC Annual Report 2008 61
Total assets under management remained flat at £1,040bn (2007:
£1,044bn) comprising £61bn of net new assets, £234bn of favourable
exchange movements and £299bn of adverse market movements. In US
Dollar terms assets under management decreased 28% (US$584bn) to
US$1,495bn (2007: US$2,079bn), comprising US$99bn of net new
assets, US$130bn of negative exchange rate movements and US$553bn
of negative market movements.
2007/06
Barclays Global Investors delivered solid growth in profit before tax,
which increased 3% (£20m) to £734m (2006: £714m). Very strong
US Dollar income and strong profit growth was partially offset by the
8% depreciation in the average value of the US Dollar against Sterling.
Income grew 16% (£261m) to £1,926m (2006: £1,665m).
Net fee and commission income grew 17% (£285m) to
£1,936m (2006: £1,651m). This was primarily attributable to increased
management fees and securities lending. Incentive fees increased 6%
(£12m) to £198m (2006: £186m). Higher asset values, driven by higher
market levels and good net new inflows, contributed to the growth in
income.
Operating expenses increased 25% (£241m) to £1,192m (2006:
£951m) as a result of significant investment in key product and channel
growth initiatives and in infrastructure as well as growth in the underlying
business. Operating expenses included charges of £80m (2006: £nil)
related to selective support of liquidity products managed in the US.
The cost:income ratio rose five percentage points to 62% (2006: 57%).
Headcount increased 700 to 3,400 (2006: 2,700). Headcount
increased in all geographical regions and across product groups and
the support functions, reflecting continued investment to support
further growth.
Total assets under management increased 13% (£117bn)
to £1,044bn (2006: £927bn) comprising £42bn of net new assets,
£12bn attributable to the acquisition of Indexchange Investment AG
(Indexchange), £66bn of favourable market movements and £3bn
of adverse exchange movements. In US Dollar terms assets under
management increased 15% (US$265bn) to US$2,079bn (2006:
US$1,814bn), comprising US$86bn of net new assets, US$23bn
attributable to acquisition of Indexchange, US$127bn of favourable
market movements and US$29bn of positive exchange rate movements.
Barclays Global Investors
2008 2007 2006
£m £m £m
Income statement information
Net interest (expense)/income (38) (8) 10
Net fee and commission income 1,917 1,936 1,651
Net trading income (14) 52
Net investment (expense)/income (29) (9) 2
Principal transactions (43) (4) 4
Other income 82–
Total income 1,844 1,926 1,665
Operating expenses excluding amortisation of intangible assets (1,234) (1,184) (946)
Amortisation of intangible assets (15) (8) (5)
Operating expenses (1,249) (1,192) (951)
Profit before tax 595 734 714
Balance sheet information
Total assets £71.3bn £89.2bn £80.5bn
Performance ratios
Return on average economic capital 88% 241% 228%
Cost:income ratio 68% 62% 57%
Other financial measures
Economic profit £289m £430m £376m
Risk weighted assetsa£3.9bn £4.4bn £1.4bn
Average net income generated per member of staff (’000) £512 £631 £666
Note
aRisk weighted assets for 2008 and 2007 are calculated under Basel II. 2006 is calculated under Basel I.