Barclays 2009 Annual Report Download - page 73

www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 71
Performance
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2008/07
Impact of Absa Group Limited on Barclays results
Absa Group Limited profit before tax of R15,305m (2007: R14,077m),
which increased 9%, is translated into Barclays results at an average
exchange rate of R15.17/£ (2007: R14.11/£), a 7% depreciation in the
average value of the Rand against Sterling. Consolidation adjustments
reflected the amortisation of intangible assets of £50m (2007: £55m) and
internal funding and other adjustments of £174m (2007: £121m). The
resulting profit before tax of £785m (2007: £822m) is represented within
GRCB – Absa £552m (2007: £597m), Barclays Capital £175m (2007: £155m)
and Barclaycard £58m (2007: £70m).
Absa Group Limited’s total assets were R774,157m (31st December
2007: R641,014m), a growth of 21%. This is translated into Barclays results
at a period end exchange rate of R13.74/£ (2007: R13.64/£).
Global Retail and Commercial Banking – Absa
GRCB – Absa profit before tax decreased 8% (£45m) to £552m (2007:
£597m), owing to challenging market conditions and the 7% depreciation
in the average value of the Rand against Sterling. Profit before tax included a
gain of £46m relating to the Visa IPO. Very strong Rand income growth was
partially offset by increased impairment and investment in the expansion of
the franchise by 176 distribution points to 1,177 (2007: 1,001).
Total income increased 10% (£211m) to £2,324m (2007: £2,113m).
Net interest income improved 5% (£49m) to £1,104m (2007:
£1,055m) reflecting strong balance sheet growth. Average customer assets
increased 9% to £27.7bn (2007: £25.3bn), primarily driven by retail and
commercial mortgages and commercial cheque accounts. The assets
margin increased to 2.79% (2007: 2.70%) as a result of a focus on pricing
for risk and a change in the composition of the book, partially offset by the
higher cost of wholesale funding. Average customer liabilities increased
17% to £13.5bn (2007: £11.5bn), primarily driven by retail savings, with
margins down 15 basis points to 3.06% (2007: 3.21%) reflecting the
emphasis on liquidity and strong growth in lower margin retail deposits.
Net fee and commission income increased 11% (£78m) to £762m
(2007: £684m), underpinned by retail transaction volume growth.
Principal transactions increased £41m to £111m (2007: £70m)
reflecting gains on economic hedges relating to the commercial property
finance and liquid asset portfolios.
Other income increased £36m to £113m (2007: £77m), reflecting
a gain of £46m from the Visa IPO.
Impairment charges increased £201m to £347m (2007: £146m) as
a result of rising delinquency levels in the retail portfolios, which have been
impacted by rising interest and inflation rates and increasing consumer
indebtedness.
Operating expenses increased 3% (£38m) to £1,305m (2007:
£1,267m). The cost:income ratio improved from 63% to 59%.
.
GRCB – Absa 2009 2008 2007
£m £m £m
Income statement information
Net interest income 1,300 1,104 1,055
Net fee and commission income 943 762 684
Net trading income/(expense) (5) 6–
Net investment income 128 105 70
Principal transactions 123 111 70
Net premiums from insurance contracts 294 234 227
Other income 60 113 77
Total income 2,720 2,324 2,113
Net claims and benefits incurred under insurance contracts (171) (126) (114)
Total income net of insurance claims 2,549 2,198 1,999
Impairment charges (567) (347) (146)
Net income 1,982 1,851 1,853
Operating expenses excluding amortisation of intangible assets (1,418) (1,255) (1,212)
Amortisation of intangible assets (51) (50) (55)
Operating expenses (1,469) (1,305) (1,267)
Share of post-tax results of associates and joint ventures (4) 56
Profit on disposal of subsidiaries, associates and joint ventures (3) 15
Profit before tax 506 552 597
Balance sheet information
Loans and advances to customers £36.4bn £32.7bn £29.9bn
Customer accounts £19.7bn £17.0bn £13.0bn
Total assets £45.8bn £40.4bn £36.4bn
Performance ratios
Return on average economic capital 11% 20% 20%
Cost:income ratio 58% 59% 63%
Cost:net income ratio 74% 71% 68%
Other financial measures
Economic profit (£37m) £70m £98m
Risk weighted assets £21.4bn £18.8bn £17.8bn
Key points
– 100,000 Corporate customers
– 11.4m Retail customers
– 8,560 ATMs
– 1,062 Distribution points
£2,549m£506m
profit before taxtotal income net of
insurance claims