Barclays 2010 Annual Report Download - page 53

£139m
loss before tax
£1,164m
total income net of insurance claims
2009
Western Europe Retail Banking profit before tax increased 21% to £280m
(2008: £232m) despite a very challenging macroeconomic environment
across all geographies, particularly Spain. The results included a gain of
£157m on the sale of 50% of Barclays Vida y Pensiones Compañía de
Seguros, Barclays Iberian life insurance and pensions business and a
restructuring charge of £24m largely concentrated in Spain. All businesses
traded profitably. Profit before tax was favourably impacted by the 13%
appreciation in the average value of the Euro against Sterling.
Income increased across all countries, improving 14% to £1,318m
(2008: £1,159m) driven by the appreciation of the Euro and the significant
expansion in the distribution network in 2007 and 2008. The number
of distribution points increased to 1,262 (31st December 2008: 1,140)
reflecting further selected organic growth and development of the franchise.
Net interest income increased 35% to £868m (2008: £642m). The
increase was principally driven by strong growth in customer deposits of
33% to £17.6bn (2008: £13.2bn), an improvement in the customer assets
margin to 1.31% (2008: 1.21%) and an increase in treasury interest
income. This was partially offset by competitive pressures on liability
margin compression.
Net fee and commission income increased 8% to £352m (2008: £327m),
generated from asset management and insurance product lines.
Net Investment income fell 27% to £118m (2008: £161m), mainly due to
the non-recurrence of the gains from both the Visa IPO (2008: £65m) and
the sale of shares in MasterCard (2008: £17m), partially offset by profit on
the sale of Government backed bonds.
Net premiums from insurance contracts increased to £544m (2008:
£352m) reflecting growth in the life assurance business. Net claims and
benefits incurred increased correspondingly to £572m (2008: £365m).
Impairment charges increased to £338m (2008: £172m), principally due
to higher impairment in Spain.
Operating expenses increased 10% to £887m (2008: £807m) due to
the continued expansion of the Italian and Portuguese networks and
restructuring charges of £24m. Underlying costs were tightly controlled.
In September 2009, Barclays established a long-term life insurance joint
venture in Spain, Portugal and Italy with CNP Assurances SA (CNP).
As part of this transaction Barclays sold a 50% stake in Barclays Vida y
Pensiones Compañía de Seguros to CNP. The transaction gave rise to a
gain of £157m. Barclays share of the results of the joint venture with CNP
are reported within share of post-tax results of associates and joint ventures.
Barclays acquired the Citigroup cards business in Portugal in December
2009. This resulted in the acquisition of approximately 400,000 customers
and loans and advances to customers of £550m. The transaction
generated a gain on acquisition of £26m.
Total assets remained stable at £51.0bn (2008: £52.0bn), as underlying
asset growth was offset by depreciation in the period end value of the
Euro against Sterling. Risk weighted assets decreased 13% to £16.8bn
(2008: £19.3bn) driven by active management and the migration of
certain retail portfolios onto the advanced credit risk approach.
2010 2009 2008
Performance Measures
Return on average equity a (0.2%) 10% n/a
Return on average tangible equity a (0.3%) 13% n/a
Return on average risk weighted assets a 0.0% 1.2% n/a
Loan loss rate (bps) 71 80 n/a
Cost: income ratio 89% 67% 70%
Cost: net income ratio 122% 91% 82%
Key Facts
Number of customers 2.7m 2.4m 2.1m
Number of branches 1,120 1,094 961
Number of sales centres 243 168 179
Number of distribution points 1,363 1,262 1,140
Note
a 2010 return on average equity, return on average tangible equity and return on average
risk weighted assets reflect a deferred tax benefit of £205m.
Barclays PLC Annual Report 2010 www.barclays.com/annualreport10 51
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