Barclays 2010 Annual Report Download - page 31

Returns KPIs continued
Definition Why it’s important to the business and management
Profit before tax
Profit before tax and adjusted profit before
tax are the two primary profitability measures
used to assess performance. Profit before tax
represents total income less impairment charges
and operating expenses. Adjusted profit before
tax represents profit before tax adjusted for
movements on own credit, gains on acquisitions
and disposals, and gains on debt buy-backs,
for comparative purposes.
Profit before tax is a key indicator of financial performance to
many of our stakeholders.
Adjusted profit before tax increased 11% to £5,464m from £4,942m.
Profit before tax
10 – £6,065m
09 – £4,585m
08 – £5,136m
Adjusted profit
before tax
10 – £5,464m
09 – £4,942m
08 – £716m
Cost: income ratio
Group cost: income ratio is defined as operating
expenses compared to total income net of
insurance claims.
This is a measure management uses to assess the productivity
of the business operations. Restructuring the cost base is a key
execution priority for management and includes a review of all
categories of discretionary spending and an analysis of how we
can run the business to ensure that costs increase at a slower
rate than income. We have set a target is to take £1bn off our
run-rate cost base on a full year basis by 2013.
10 – 64%
09 – 57%
08 – 63%
Loan loss rate
The loan loss rate represents the impairment
charge on loans and advances as a proportion
of the period end balances.
The granting of credit is one of Barclays major sources of income
and its most significant risk. The loan loss rate is an indicator of
the cost of granting credit.
During 2010 impairment continued to improve across all our
businesses with one exception, the corporate portfolio in Spain,
resulting in a loan loss rate of 118bps compared to 156bps
reported in 2009.
10 – 118 bps
09 – 156 bps
08 – 95 bps
Dividend
It is the Group’s policy to declare and pay
dividends on a quarterly basis. In a normal year
there will be three equal payments in June,
September and December and a final variable
payment in March.
The ability to pay dividends demonstrates the financial strength
of the Group. Whilst recoginising the market’s desire for us to
maintain strong capital ratios, in light of the regulatory and economic
uncertainty, we have taken a prudent approach of prioritising capital
retention and significantly reducing the distribution through
dividends from historical levels of 50% whilst seeking to ensure that
pay-outs also increase progressively from their low point in 2009.
10 – 5.5p
09 – 2.5p
08 – 11.5p
Barclays PLC Annual Report 2010 www.barclays.com/annualreport10 29
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