Barclays 2009 Annual Report Download - page 61

www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 59
Performance
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income in India. Impairment charges increased £306m to £471m with
significant increases in India and the UAE, reflecting the impact of the
economic recession across the business with continued pressure on
liquidity, rising default rates and lower asset values. Operating expense
growth of 24% reflected continued investment in Indonesia and Pakistan
and investment in infrastructure across other markets.
Global Retail and Commercial Banking – Absa profit before tax
decreased 8% to £506m. Income growth of 16% was driven by solid
balance sheet growth, the appreciation in the average value of the Rand
against Sterling and higher fees and commissions. Operating expenses
increased at a lower rate of 13% which led to an improvement in the
cost:income ratio to 58% (2008: 59%). Impairment charges rose £220m
to £567m as a result of higher delinquency levels in the retail portfolios
reflecting high consumer indebtedness.
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Business performance – Investment Banking
and Investment Management
Barclays Capital profit before tax increased 89% to £2,464m as a result of
very strong performances in the UK, Europe and the US, partially offset by
a charge of £1,820m relating to own credit (2008: £1,663m gain). Top-line
income increased 81% to £17.9bn reflecting excellent results across the
client franchise and a resilient fourth quarter with top-line income of £3.6bn.
Fixed Income, Currency and Commodities (FICC) was up £5.6bn to £13.0bn
following the expansion of the business and increased client flows. Top-line
income in Equities and Prime Services increased 147% and Investment
Banking income more than doubled. Total credit market exposures were
reduced by £14.1bn to £27.6bn. In addition £5.1bn of credit market assets
(and £2.4bn of other assets) were sold to Protium Finance LP. Operating
expenses were 75% higher than 2008 given the substantial increase in
the overall scale of the business. The cost:income ratio improved to 57%
(2008: 72%). Compensation expenses as a proportion of income reduced
38%, down from 44% in 2008. Total assets reduced 37% driven by
initiatives to reduce derivative balances.
On 1st December 2009 Barclays completed the sale of Barclays Global
Investors to BlackRock, Inc. Included in the consideration were 37.567 million
new BlackRock shares giving Barclays an economic interest of 19.9% of the
enlarged BlackRock group. The profit on disposal before tax was £6,331m.
Profit before tax, excluding the profit on disposal, increased 26% to £748m
(2008: £595m) following a recovery on liquidity support charges and an
18% appreciation in the average value of the US Dollar against Sterling.
Barclays Wealth profit before tax reduced 78% to £145m principally
as a result of the impact of the sale of the closed life business in 2008 and
the cost of the integration of Barclays Wealth Americas during 2009. Income
was in line with 2008. Excluding the impact of these transactions there was
solid growth in income due to growth in the client franchise and the product
offering. Operating expenses grew by 22%, reflecting the integration of the
US business, partially offset by the disposal of the closed life business. Total
client assets increased by 4% (£6bn) to £151bn.