Barclays 2010 Annual Report Download - page 36

Financial review
Income statement commentary continued
Net interest income
2010
Group net interest income increased £605m to £12,523m (2009:
£11,918m) and includes the impact of the acquisitions of Standard Life
Bank and the Portuguese and Italian credit card businesses of Citigroup
in Western Europe Retail Banking, and currency translation gains in Absa.
These impacts have been partly off-set by the continued effects of liability
margin compression being felt across the Group.
Group net interest income includes the impact of economic equity structural
hedges used to manage the volatility in earnings on the Group’s equity.
The impact is allocated to the businesses as part of the share of the
interest income benefit on Group equity through net interest income.
Equity structural hedges generated a gain of £1,788m in 2010 (2009: gain
£1,162m) including net gains on disposal of gilts of approximately £500m.
2009
Group net interest income increased £449m to £11,918m (2008: £11,469m)
reflecting growth in average customer balances primarily in Barclaycard
and Western Europe Retail Banking, and net funding costs and hedging
recognised in Head Office Functions and Other Operations.
Group net interest income includes the impact of structural hedges
which function to reduce the impact of the volatility of short-term interest
rate movements on equity and customer balances that do not re-price
with market rates. In total, equity structural hedges generated a gain of
£1,162m (2008: £21m gain).
Further discussion of margins is included in the analysis of results
by business.
Non-interest income
2010
Net fee and commission income increased £453m to £8,871m (2009:
£8,418m). Banking and credit related fees and commissions increased
£485m to £10,063m (2009: £9,578m), primarily due to Barclays Capital
performance across Investment Banking and Equities.
Net trading income increased £1,077m to £8,078m (2009: £7,001m).
The majority of the Group’s trading income arises in Barclays Capital.
Trading income decreased 14% to £7,017m (2009: £8,139m) reflecting
a more challenging market environment compared with the very strong
prior year performance. The impact from difficult trading conditions
was more than offset by a £4,293m reduction in credit market fair value
losses to £124m (2009: £4,417m) and a gain on own credit of £391m
(2009: £1,820m loss).
Net investment income increased £1,421m to £1,477m (2009: £56m)
driven by the disposal of Gilts held as part of the economic structural
hedge portfolio together with realised gains on principal investments,
the disposal of available for sale assets and a reduction in fair value
losses held at fair value within Barclays Capital.
Net premiums from insurance contracts remained stable at £1,137m
(2009: £1,172m).
Gains on debt buy-backs and extinguishments were £nil (2009: £1,249m).
Net interest income 2010
£m
2009
£m
2008
£m
Cash and balances with central
banks 271 131 174
Available for sale investments 1,483 1,937 2,355
Loans and advances to banks 440 513 1,267
Loans and advances to customers 17,677 18,456 23,754
Other interest income 164 199 460
Interest income 20,035 21,236 28,010
Deposits from banks (370) (634) (2,189)
Customer accounts (1,410) (2,716) (6,697)
Debt securities in issue (3,632) (3,889) (5,910)
Subordinated liabilities (1,778) (1,718) (1,349)
Other interest expense (322) (361) (396)
Interest expense (7,512) (9,318) (16,541)
Net interest income 12,523 11,918 11,469
Non-interest income 2010
£m
2009
£m
2008
£m
Net fee and commission income 8,871 8,418 6,491
Net trading income 8,078 7,001 1,339
Net investment income 1,477 56 680
Net premiums from insurance
contracts 1,137 1,172 1,090
Gains on debt buy-backs and
extinguishments – 1,249 24
Other income 118 140 343
Non-interest income 19,681 18,036 9,967
Net fee and commission income 2010
£m
2009
£m
2008
£m
Banking and credit related fees
and commissions 10,063 9,578 7,208
Brokerage fees 77 88 56
Investment management fees 79 133 120
Foreign exchange commission 149 147 189
Fee and commission income 10,368 9,946 7,573
Fee and commission expense (1,497) (1,528) (1,082)
Net fee and commission income 8,871 8,418 6,491
34 Barclays PLC Annual Report 2010 www.barclays.com/annualreport10