Barclays 2009 Annual Report Download - page 68

66 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09
Financial review
Analysis of results by business
continued
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, Italy and Russia.
What we do
GRCB – Western Europe serves approximately 2.8m retail and commercial
banking customers in France, Italy, Portugal, Spain and Russia through a
variety of distribution channels including 1,128 branches, 190 sales centres
and 1,481 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
2009/08
Global Retail and Commercial Banking – Western Europe profit before tax
fell 48% (£120m) to £130m (2008: £250m) against the backdrop of a very
challenging macroeconomic environment across all key markets, particularly
Spain. The results included a gain of £157m on the sale of Barclays Vida y
Pensiones Compañía de Seguros, Barclays Iberian life insurance and
pensions business, a restructuring charge of £24m largely concentrated in
Spain and an operating loss before tax of £67m (2008: loss before tax of
£7m) related to Barclays Russia driven by increased impairment due to the
economic environment and increased expenses incurred in positioning the
business for future growth. Excluding Russia, all businesses traded profitably
although Spain’s net profit fell significantly due to high impairment charges,
particularly in the commercial property portfolio. Profit before tax was
favourably impacted by the 13% appreciation in the average value of the
Euro against Sterling.
Income increased across all countries, improving 18% (£268m) to
£1,723m (2008: £1,455m) driven by the appreciation of the Euro and the
significant expansion in the distribution network in 2007 and 2008. The
number of distribution points increased by 137 to 1,318 (31st December
2008: 1,181) reflecting further selected organic growth and development
of the franchise.
Net interest income increased 35% (£307m) to £1,182m (2008:
£875m). The increase was principally driven by strong growth in customer
deposits of 50% to £23.4bn (2008: £15.6bn), an improvement in the
customer assets margin to 1.33% (2008: 1.19%) and an increase in
treasury interest income. This was partially offset by competitive pressures
on liability margin compression.
Net fee and commission income increased 13% (£49m) to £438m
(2008: £389m), generated from asset management and insurance
product lines.
Principal transactions fell 20% (£31m) to £123m (2008: £154m),
mainly due to the non-recurrence of the gains from both the Visa IPO
(2008: £65m) and the sale of shares in MasterCard (2008: £17m), partially
offset by profit on the sale of Government backed bonds.
Net premiums from insurance contracts increased £192m to £544m
(2008: £352m) reflecting growth in the life assurance business. Net claims
and benefits incurred increased correspondingly by £207m.
Impairment charges increased £370m to £667m (2008: £297m),
principally due to higher impairment in Spain on the commercial property,
construction and SME portfolios and, to a lesser extent, on the retail
portfolio. The impairment charge for Spain increased 107% (£235m) to
£455m (2008: £220m) of which £270m related to the corporate and SME
portfolios.
Operating expenses increased 16% (£153m) to £1,113m (2008:
£960m) due to the continued expansion of the Italian and Portuguese
networks, investment in Barclays Russia, restructuring charges of £24m and
reduced gains from the sale of property of £25m (2008: £55m). Underlying
costs were tightly controlled.
2.8
2.5
1.8
1,318
1,181
798
07 08
Number of customers
m
09
Number of distribution points
(branches and sales centres)
07 08
09
Performance indicators