Barclays 2008 Annual Report Download - page 65

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Business review
Barclays PLC Annual Report 2008 63
Total client assets, comprising customer deposits and client
investments, increased 10% (£12.6bn) to £145.1bn (2007: £132.5bn)
with underlying net new asset inflows of £3.2bn and the acquisition of
the Lehman Brothers North American businesses offsetting the impact
of market and foreign exchange movements and the sale of the closed
life assurance book.
2007/06
Barclays Wealth profit before tax showed very strong growth of 25%
(£62m) to £307m (2006: £245m). Performance was driven by broadly
based income growth, reduced redress costs and tight cost control,
partially offset by additional volume-related costs and increased
investment in people and infrastructure to support future growth.
Income increased 11% (£127m) to £1,287m (2006: £1,160m).
Net interest income increased 10% (£39m) to £431m (2006:
£392m), reflecting strong growth in both customer deposits and lending.
Average deposits grew 13% to £31.2bn (2006: £27.7bn). Average lending
grew 35% to £7.4bn (2006: £5.5bn), driven by increased lending to high
net worth, affluent and intermediary clients. Assets margin increased
three basis points to 1.11% (2006: 1.08%), reflecting changes in the
product mix. The liabilities margin reduced by seven basis points to
1.03% (2006: 1.10%) driven by competitive pricing of products.
Net fee and commission income grew 10% (£65m) to £739m (2006:
£674m). This reflected growth in client assets and higher transactional
income from increased sales of investment products
and solutions.
Principal transactions decreased £101m to £55m (2006: £156m) as a
result of lower growth in the value of unit linked insurance contracts.
Net premiums from insurance contracts reduced £15m to £195m (2006:
£210m). These reductions were offset by a lower charge for net claims and
benefits incurred under insurance contracts of £152m (2006: £288m).
Operating expenses increased 7% to £973m (2006: £913m) with
greater volume-related costs and a significant increase in investment
partially offset by efficiency gains and lower customer redress costs of
£19m (2006: £67m). Ongoing investment programmes included
increased hiring of client-facing staff and improvements to infrastructure
with the upgrade of technology and operations platforms. The cost:income
ratio improved three percentage points to 76% (2006: 79%).
Total client assets, comprising customer deposits and client
investments, increased 14% (£16.4bn) to £132.5bn (2006: £116.1bn),
reflecting strong net new asset inflows and the acquisition of Walbrook,
an independent fiduciary services company, which completed on
18th May 2007.
Barclays Wealth
2008 2007 2006
£m £m £m
Income statement information
Net interest income 486 431 392
Net fee and commission income 720 739 674
Net trading income (11) 32
Net investment income (333) 52 154
Principal transactions (344) 55 156
Net premiums from insurance contracts 136 195 210
Other income 26 19 16
Total income 1,024 1,439 1,448
Net claims and benefits incurred on insurance contracts 300 (152) (288)
Total income net of insurance claims 1,324 1,287 1,160
Impairment charges (44) (7) (2)
Net income 1,280 1,280 1,158
Operating expenses excluding amortisation of intangible assets (919) (967) (909)
Amortisation of intangible assets (16) (6) (4)
Operating expenses (935) (973) (913)
Profit on disposal of associates and joint ventures 326 ––
Profit before tax 671 307 245
Balance sheet information
Loans and advances to customers £11.4bn £9.0bn £6.2bn
Customer accounts £42.4bn £34.4bn £28.3bn
Total assets £13.3bn £18.2bn £15.0bn
Performance ratios
Return on average economic capital 118% 51% 40%
Cost:income ratio 71% 76% 79%
Cost:net income ratio 73% 76% 79%
Other financial measures
Risk Tendency £20m £10m £10m
Economic profit £553m £233m £130m
Risk weighted assetsa£10.3bn £8.2bn £6.1bn
Average net income generated per member of staff (’000) £176 £188 £181
Note
aRisk weighted assets for 2008 and 2007 are calculated under Basel II. 2006 is calculated under Basel I.