Barclays 2010 Annual Report Download - page 48

2010
£m
2009
£m
2008
£m
Income statement information
Net interest income 3,165 2,842 3,245
Net fee and commission income 1,255 1,299 1,384
Net trading (loss) (2) – –
Net premiums from insurance contracts 130 198 205
Other income 1 5 21
Total income 4,549 4,344 4,855
Net claims and benefits incurred under insurance contracts (31) (68) (35)
Total income net of insurance claims 4,518 4,276 4,820
Impairment charges and other credit provisions (819) (1,031) (642)
Net income 3,699 3,245 4,178
Operating expenses excluding amortisation of intangible assets (2,779) (2,496) (2,606)
Amortisation of intangible assets (30) (42) (22)
Operating expenses (2,809) (2,538) (2,628)
Share of post-tax results of associates and joint ventures (1) 3 8
Gains on acquisition 100 – –
Profit before tax 989 710 1,558
Balance sheet information
Loans and advances to customers at amortised cost a £115.6bn £103.0bn £98.8bn
Customer accounts a £108.4bn £96.8bn £93.8bn
Total assets £121.6bn £109.3bn £105.9bn
Risk weighted assets £35.3bn £35.9bn £34.3bn
Global Retail Banking
UK Retail Banking
UK Retail Banking is a leading UK high street bank
providing current account and savings products and
Woolwich branded mortgages. UK Retail Banking also
provides unsecured loans, protection products and
general insurance as well as banking and money
transmission services to small and medium enterprises.
Performance
2010
UK Retail Banking profit before tax increased 39% to £989m (2009:
£710m), driven by good income growth and lower impairment charges,
more than offsetting an increase in operating expenses. The 2010 results
also reflected a gain of £100m on the acquisition of Standard Life Bank.
Income increased 6% to £4,518m (2009: £4,276m) reflecting strong
balance sheet growth.
Net interest income increased 11% to £3,165m (2009: £2,842m) reflecting
business growth. The net interest margin for UK Retail Banking remained
stable at 145bps (2009: 145bps) with the risk adjusted net interest margin
increasing to 108bps (2009: 93bps). Total average customer deposit
balances increased 12% to £104.5bn (2009: £93.6bn), reflecting good
growth in personal customer balances and the impact of Standard Life
Bank. The liability margin increased to 157bps (2009: 138bps) reflecting
the impact of the revised internal funds pricing mechanism. Total
customer account balances increased to £108.4bn (2009: £96.8bn).
Total average customer asset balances increased 11% to £113.7bn (2009:
£102.0bn), reflecting good growth in Home Finance mortgage balances
and the acquisition of Standard Life Bank. The average asset margin
decreased to 121bps (2009: 139bps) reflecting the impact of the revised
internal funds pricing mechanism. Total loans and advances to customers
increased to £115.6bn (2009: £103.0bn).
Average mortgage balances grew 16%, reflecting strongly positive net
lending and the acquisition of Standard Life Bank. As at 31st December
2010 mortgage balances were £101.2bn (2009: £87.9bn), a share by value
of 8% (2009: 7%). Gross new mortgage lending increased to £16.9bn
(2009: £14.2bn), a share by value of 13% (2009: 10%). Mortgage
redemptions increased to £11.0bn (2009: £8.5bn), resulting in net new
mortgage lending of £5.9bn (2009: £5.7bn). The average loan to value
ratio of the mortgage portfolio (including buy-to-let) on a current valuation
basis was 43% (2009: 43%). The average loan to value ratio of new
mortgage lending was 52% (2009: 48%).
Barclays Business had good income growth driven by an increase in
net interest income with customer numbers increasing to 760,000
(2009: 742,000).
Net fee and commission income decreased 3% to £1,255m (2009:
£1,299m) reflecting reduced income from Current Accounts and Barclays
Financial Planning.
Total impairment charges represented 70bps (2009: 98bps) of total gross
loans and advances to customers and banks. This translates to a reduction
in impairment charges of 21% to £819m (2009: £1,031m), reflecting
focused risk management and improved economic conditions. Impairment
charges within Consumer Lending and Current Accounts decreased 29%
to £418m (2009: £592m), and 27% to £134m (2009: £183m) respectively.
Home Finance impairment charges remained low at £29m (2009: £26m).
As a percentage of the portfolio, three-month arrears rates for the UK loans
improved to 2.6% (2009: 3.8%).
Operating expenses increased 11% to £2,809m (2009: £2,538m),
reflecting higher pension costs, increased regulatory-related costs and
the impact of the acquisition of Standard Life Bank. Excluding these
items operating expenses were in line with prior year.
Total assets increased 11% to £121.6bn (2009: £109.3bn) driven by
growth in Home Finance. Risk weighted assets remained broadly flat
at £35.3bn (2009: £35.9bn) with growth in Home Finance offset by a
decline in Consumer Lending balances and improvements in operational
risk weighted assets.
Financial review
Analysis of results by business continued
Note
a In 2010 the acquisition of Standard Life Bank contributed £5.9bn loans and advances and £5.2bn customer accounts.
46 Barclays PLC Annual Report 2010 www.barclays.com/annualreport10