Barclays 2010 Annual Report Download - page 56

2010
£m
2009
£m
2008
£m
Income statement information
Net interest income 1,500 1,300 1,104
Net fee and commission income 1,123 943 762
Net trading (loss)/income (14) (5) 6
Net investment income 59 128 105
Net premiums from insurance contracts 399 294 234
Other income 47 64 102
Total income 3,114 2,724 2,313
Net claims and benefits incurred under insurance contracts (215) (171) (126)
Total income net of insurance claims 2,899 2,553 2,187
Impairment charges and other credit provisions (480) (567) (347)
Net income 2,419 1,986 1,840
Operating expenses excluding amortisation of intangible assets (1,753) (1,400) (1,233)
Amortisation of intangible assets (57) (51) (50)
Operating expenses (1,810) (1,451) (1,283)
Share of post–tax results of associates and joint ventures 3 (4) 5
Profit/(loss) on disposal of subsidiaries, associates and joint ventures 4 (3) 1
Profit before tax 616 528 563
Balance Sheet Information
Loans and advances to customers at amortised cost £41.8bn £36.4bn £32.7bn
Customer accounts £24.3bn £19.7bn £17.0bn
Total assets £52.4bn £45.8bn £40.3bn
Risk weighted assets £30.4bn £21.4bn £18.8bn
Absa
Absa provides a full range of retail banking services and
insurance products through a variety of distribution
channels. It also offers customised business solutions for
commercial and large corporate customers. It is part of one
of South Africa’s largest financial services organisations.
2010
Impact of Absa Group Limited on Barclays results
Absa Group Limited profit before tax of R11,851m (2009: R9,842m), an
increase of 20%, is translated in Barclays results at an average exchange
rate of R11.31/£ (2009: R13.14/£), a 16% appreciation in the average value
of the Rand against Sterling. Consolidation adjustments reflected the
amortisation of intangible assets of £69m (2009: £61m) and internal
funding and other adjustments of £52m (2009: £83m). The resulting
profit before tax of £927m (2009: £605m) is included within the following
Barclays business segments: Absa £616m (2009: £528m), Barclays Capital
£136m (2009: £16m loss), Barclaycard £176m (2009: £95m) and Barclays
Wealth £1m loss (2009: £2m loss).
Absa Group Limited’s total assets were R716.5bn (2009: R710.8bn), an
increase of 1%. This is translated into Barclays results at a year-end
exchange rate of R10.26/£ (2009: R11.97/£).
Performance
Absa profit before tax increased 17% to £616m (2009: £528m) mainly
as a result of the 16% appreciation in the average value of the Rand
against Sterling. In Rand terms, income declined 1% with 10% cost
growth, offset by 26% lower impairments.
Income increased 14% to £2,899m (2009: £2,553m) primarily reflecting
the impact of exchange rate movements.
Net interest income improved 15% to £1,500m (2009: £1,300m) reflecting
the appreciation in the average value of the Rand against Sterling. Average
customer assets increased 15% to £37.4bn (2009: £32.5bn) driven by the
appreciation of the Rand. In Rand terms, retail loans and commercial
mortgages remained stable as personal loans increased while cheque,
instalment finance and commercial property finance balances showed a
decline as a result of a slower take up of new loans by customers. The
asset margin increased to 272bps (2009: 268bps) as a result of the pricing
of new loans and a change in the product mix as higher margin products
grew faster than low margin products. Average customer liabilities
increased 21% to £21.1bn (2009: £17.4bn), primarily driven by the
appreciation of the Rand. In Rand terms, retail and commercial deposits
increased by 4.1% and 7.4% respectively. The liability margin decreased to
240bps (2009: 243bps) as a result of significant competition for deposits.
Absa’s hedging programme partly offset the impact of lower interest rates.
Net fee and commission income increased 19% to £1,123m (2009:
£943m), mainly reflecting the impact of exchange rate movements and
volume growth.
Net investment income decreased to £59m (2009: £128m) reflecting prior
year gains of £17m from the sale of shares in MasterCard and an adverse
impact of the mark to market adjustment on Visa of £12m (2009: gain of
£19m). Net premiums from insurance contracts increased 36% to £399m
(2009: £294m) reflecting good growth in new business in life and
short-term insurance in addition to the impact of exchange rate
movements. Other income decreased to £47m (2009: £64m) reflecting
lower profits on the sale of repossessed properties and lower mark to
market adjustments on investment property portfolios.
Impairment charges decreased by 15% to £480m (2009: £567m) mainly
as a result of the 26% lower impairments in Rand terms, particularly in
retail, due to an improving economy.
Operating expenses increased 25% to £1,810m (2009: £1,451m) due to
exchange rate movements and continued investment in growth initiatives,
partially offset by a one-off credit of £54m relating to the Group’s
recognition of a pension fund surplus. The cost: income ratio deteriorated
to 62% from 57%.
Total assets increased 14% to £52.4bn (2009: £45.8bn) mostly due to the
impact of exchange rate movements. Risk weighted assets increased 42%
Financial review
Analysis of results by business continued
54 Barclays PLC Annual Report 2010 www.barclays.com/annualreport10