Barclays 2010 Annual Report Download - page 47

Barclaycard
Barclaycard profit before tax increased 9% to £791m (2009: £727m)
largely as a result of lower impairment charges. Income was £4,024m
(2009: £4,041m) with the impact of regulation offset by business growth.
Impairment charges reduced 6% to £1,688m (2009: £1,798m) as a result
of focused risk management and improving economic conditions.
Delinquency trends were lower in all major areas of the Barclaycard
business. Operating expenses increased 3% to £1,570m (2009: £1,527m).
Western Europe Retail Banking
Western Europe Retail Banking incurred a loss before tax of £139m
(2009: profit of £280m). The deterioration was driven by the challenging
economic environment, continued investment in the franchise and £157m
of profit on disposal recognised in 2009. Income fell 12% to £1,164m
(2009: £1,318m) principally due to margin compression and the decline
in the average value of the Euro against Sterling, partially offset by higher
fees and commissions and the growth in credit cards. Impairment charges
improved by 7% to £314m (2009: £338m). Operating expenses increased
16% to £1,033m (2009: £887m) mainly due to continued investment in
developing the franchise in Portugal and Italy, notably the expansion of
the credit card businesses in these countries.
Barclays Africa
Barclays Africa profit before tax increased 81% to £188m (2009: £104m).
2010 included a one-off gain of £77m from the sale of the custody
business to Standard Chartered Bank which was partially offset by
£40m of restructuring costs. 2009 included a one-off gain of £24m from
the sale of shares in Barclays Bank of Botswana Limited. Income grew 8%
to £801m (2009: £739m) as a result of improved net interest margins and
income from treasury management. Impairment charges decreased 32%
to £82m (2009: £121m) as a result of a better economic environment
and improved collections. Operating expenses increased 13% to £608m
(2009: £538m) reflecting £40m of restructuring costs, investment in
infrastructure and an increase in staff-related costs.
Absa
Absa Group Limited reported profit before tax of R11,851m (2009:
R9,842m), an increase of 20%. In Barclays segmental reporting, the
results of the Absa credit card business are included in Barclaycard, the
investment banking operations in Barclays Capital and wealth operations
in Barclays Wealth. The other operations of Absa Group Limited are
reported in the Absa segment. Absa profit before tax increased 17% to
£616m (2009: £528m), driven by the appreciation in the average value
of the Rand against Sterling. The impact of exchange rate movements
also impacted income, which increased 14%, operating expenses,
which increased 25%, and impairment charges, which decreased 15%.
Impairment charges in Rand terms improved 26% reflecting an
improvement in economic conditions.
Barclays Capital
Barclays Capital profit before tax increased to £4,780m (2009: £2,464m).
Excluding own credit, profit before tax grew 2% to £4,389m (2009:
£4,284m). Total income increased 17% to £13,600m (2009: £11,625m).
This reflected a significant reduction in losses taken through income
relating to credit market exposures which fell to £124m (2009: £4,417m)
and a gain relating to own credit of £391m (2009: loss of £1,820m).
Top-line income, which excludes these items, was £13,333m, down 25%
on the very strong prior year performance. Fixed Income, Currency and
Commodities (FICC) top-line income of £8,811m declined 35%, reflecting
lower contributions from Rates and Commodities. Equities and Prime
Services top-line income of £2,040m declined 6%, as growth in cash
equities and equity financing was more than offset by subdued market
activity in European equity derivatives. Investment Banking top-line income
of £2,243m increased 3%.
Top-line income in the fourth quarter of 2010 was £3,380m, up 20% on
the third quarter of 2010 reflecting higher activity levels and contributions
from Equities and Prime Services up 74% and Investment Banking up
45%. FICC top-line income was broadly in line with the prior quarter.
Impairment charges, including impairment of £532m relating to the
Protium loan which follows a reassessment of the expected realisation
period, improved significantly to £543m (2009: £2,591m), resulting in a
45% increase in net income to £13,057m. Operating expenses increased
26% which largely reflected the continuing investment in our sales,
origination, trading and research activities, increased charges relating to
prior year deferrals and restructuring costs. Excluding the impact of own
credit, the cost: net income ratio was 65% (2009: 61%) and compensation
costs represented 43% of income (2009: 33%).
Barclays Corporate
Barclays Corporate recorded a loss before tax of £631m (2009: profit
of £157m). An improvement in the results of the profitable UK & Ireland
business was more than offset by increased losses in New Markets
and Continental Europe, notably Spain. Total income decreased 7% to
£2,974m (2009: £3,181), reflecting lower treasury management income
and reduced risk appetite outside the UK. Impairment charges increased
£138m to £1,696m, with significant improvements in UK & Ireland and
New Markets more than offset by an increase of £630m in Spain to £898m
due to depressed market conditions in the property and construction
sector. Operating expenses increased to £1,907m, principally reflecting the
write down of the £243m of goodwill relating to Barclays Bank Russia and
associated restructuring costs of £25m, as well as previously announced
restructuring costs of £94m in other geographies within New Markets
(predominantly relating to Indonesia).
Barclays Wealth
Barclays Wealth profit before tax increased 14% to £163m (2009: £143m)
as very strong growth in income was partially offset by costs of the
strategic investment in growing the business. Income increased 18% to
£1,560m principally from strong growth in the High Net Worth businesses
and higher attributable net interest income from the revised internal funds
pricing mechanism. Impairment charges reduced slightly to £48m (2009:
£51m). Operating expenses increased 19% to £1,349m (2009: £1,129m),
principally due to the start of Barclays Wealth’s strategic investment
programme which accounted for £112m of additional costs, as well as
the impact of growth in High Net Worth business revenues on staff and
infrastructure costs.
Investment Management
Investment Management profit before tax of £67m (2009: £22m)
principally reflected dividend income from the 19.9% holding in BlackRock,
Inc. Total assets decreased to £4.6bn (2009: £5.4bn) reflecting the fair
value of the 37.567m shares held in BlackRock, Inc.
Head Office Functions and Other Operations
Head Office Functions and Other Operations loss before tax increased by
£209m to £759m (2009: loss of £550m). The results for 2009 reflected a
net gain on debt buy-backs of £1,164m, while 2010 benefited from a
significant decrease in the costs of the central funding activity as money
market dislocations eased and a reclassification of profit from the currency
translation reserve to the income statement.
In the following results by business pages, return measures for 2008 data
have not been calculated under the current business segments due to the
recalibration of our execution priorities in 2010.
Barclays PLC Annual Report 2010 www.barclays.com/annualreport10 45
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