Barclays 2010 Annual Report Download - page 52

2010
£m
2009
£m
2008
£m
Income statement information
Net interest income 679 868 642
Net fee and commission income 421 352 327
Net trading income 20 14 4
Net investment income 67 118 161
Net premiums from insurance contracts 479 544 352
Other income/(loss) 9 (6) 38
Total income 1,675 1,890 1,524
Net claims and benefits incurred under insurance contracts (511) (572) (365)
Total income net of insurance claims 1,164 1,318 1,159
Impairment charges and other credit provisions (314) (338) (172)
Net income 850 980 987
Operating expenses excluding amortisation of intangible assets (1,001) (865) (794)
Amortisation of intangible assets (32) (22) (13)
Operating expenses (1,033) (887) (807)
Share of post-tax results of associates and joint ventures 15 4 –
Profit on disposal of subsidiaries, associates and joint ventures – 157 –
Gains on acquisition 29 26 52
(Loss)/profit before tax (139) 280 232
Balance sheet information
Loans and advances to customers at amortised cost £43.4bn £41.1bn £42.1bn
Customer accounts £18.9bn £17.6bn £13.2bn
Total assets £53.6bn £51.0bn £52.0bn
Risk weighted assets £17.3bn £16.8bn £19.3bn
Global Retail Banking
Western Europe Retail Banking
Western Europe Retail Banking provides retail banking
and credit card services in Spain, Italy, Portugal and France.
The business is building a differentiated proposition
providing banking services to retail and mass affluent
customers through a variety of distribution channels.
Performance
2010
Western Europe Retail Banking incurred a loss before tax of £139m
(2009: profit of £280m). The deterioration in performance was largely
driven by the challenging economic environment and continued
investment in the franchise. In addition, the 2009 result benefited notably
from a £157m gain on the sale of 50% of Barclays Iberian life insurance
and pensions business.
Income fell 12% to £1,164m (2009: £1,318m), due to lower net interest
income and the 3% decline in the average value of the Euro against
Sterling, partially offset by higher net fee and commission income.
Net interest income fell 22% to £679m (2009: £868m), mainly reflecting
a decline in treasury interest income and continued underlying liability
margin compression due to the highly competitive market, partially offset
by the benefit from growth in credit cards. As a result, the net interest
margin reduced to 116bps (2009: 166bps). The risk adjusted net interest
margin fell to 62bps (2009: 102bps).
Net fee and commission income increased 20% to £421m (2009: £352m).
The growth reflects the investment in the network in previous years and
the growth in the credit card business.
Net premiums from insurance contracts decreased 12% to £479m
(2009: £544m) and net claims and benefits fell correspondingly 11%
to £511m (2009: £572m).
Despite the challenging economic conditions, impairment charges
improved 7% to £314m (2009: £338m) reflecting focused credit risk
management. Delinquency trends improved with the overall 30-day
delinquency rate falling to 1.8% (2009: 2.1%).
Operating expenses increased 16% to £1,033m (2009: £887m) due to
investment in developing the franchise, in Portugal and Italy in particular,
with a net increase of 101 distribution points in 2010, and costs associated
with the expansion of the credit card businesses in these countries.
The £29m gain on acquisition was generated on the purchase of
Citigroup’s Italian card business in March 2010. This resulted in the
addition of approximately 200,000 customers and loans and advances
to customers of £0.2bn. The £26m gain in 2009 arose on the acquisition
of Citigroup’s Portuguese card business.
Loans and advances to customers increased 6% to £43.4bn (2009: £41.1bn)
and customer accounts increased 7% to £18.9bn (2009: £17.6bn) due to
continued growth in the businesses more than offsetting the negative
impact of the value of the Euro against Sterling. Risk weighted assets
increased 3% to £17.3bn (2009: £16.8bn) in line with the growth in loans
and advances to customers.
Negative returns on average equity, average tangible equity and
average risk weighted assets in 2010 were the result of the deterioration
in profitability.
Customer numbers increased 13% to 2.7 million (2009: 2.4 million)
reflecting the growth in the underlying business and the benefit of
the purchase of Citigroup’s Italian cards business.
Financial review
Analysis of results by business continued
50 Barclays PLC Annual Report 2010 www.barclays.com/annualreport10