Barclays 2010 Annual Report Download - page 60

2010
£m
2009
£m
2008
£m
Income statement information
Net interest income 2,004 2,083 1,934
Net fee and commission income 910 1,002 904
Net trading income 80 18 11
Net investment income/(loss) (32) (46) 23
Gains on debt buy-backs and extinguishments – 85 –
Other income 12 39 120
Total income 2,974 3,181 2,992
Impairment charges and other credit provisions (1,696) (1,558) (593)
Net income 1,278 1,623 2,399
Operating expenses excluding amortisation of intangible assets and goodwill impairment (1,616) (1,430) (1,310)
Amortisation of intangible assets (48) (36) (19)
Goodwill impairment (243) – –
Operating expenses (1,907) (1,466) (1,329)
Share of post-tax results of associates and joint ventures (2) – (2)
(Loss)/profit before tax (631) 157 1,068
Balance sheet information
Loans and advances to customers at amortised cost £65.7bn £70.7bn £79.8bn
Loans and advances to customers at fair value £14.4bn £13.1bn £13.0bn
Customer accounts £71.0bn £66.3bn £60.9bn
Total assets £85.7bn £88.8bn £98.5bn
Risk weighted assets £70.8bn £76.9bn £82.8bn
Barclays Corporate
Barclays Corporate provides integrated banking solutions
to large corporates, financial institutions and multinationals
in the UK & Ireland, Continental Europe and New Markets.
Performance
2010
Barclays Corporate recorded a loss before tax of £631m (2009: profit of
£157m). An improvement in the result of the profitable UK & Ireland
business was more than offset by increased losses in Continental Europe,
notably Spain, and New Markets.
Profit before tax in the UK & Ireland increased 16% to £851m. Performance
was primarily driven by significantly reduced impairment. Loss before tax
in Continental Europe increased £728m to a loss of £870m mainly due
to impairments on property and construction exposures in Spain. New
Markets recorded a loss before tax of £612m (2009: £433m loss) reflecting
the write down of the £243m goodwill relating to Barclays Bank Russia
and restructuring costs totalling £119m, including £25m relating to
restructuring of the Russian business. These were partially offset by
a substantial reduction in impairment charges and tight control of
operating expenses.
Total income decreased 7% to £2,974m mainly as a result of lower
treasury management income and reduced risk appetite outside the UK.
Excluding the 2009 gains on buy-backs of securitised debt of £85m and
fair value adjustments in 2010, UK income remained resilient.
Net interest income fell 4% to £2,004m (2009: £2,083m) reflecting lower
treasury management income and higher funding charges in Continental
Europe and reduced average asset balances in New Markets. UK & Ireland
net interest income increased 3% (£36m), with higher deposit income
reflecting strong growth in balances, offset by reduced demand for lending
and higher funding costs. Barclays Corporate net interest margin
decreased 12bps to 153bps (2009: 165bps).
Non-interest related income decreased 12% to £970m. Net fees and
commissions fell 9% to £910m (2009: £1,002m) driven by lower debt
fees and treasury income.
Net trading income increased to £80m (2009: £18m) mainly as a result
of loan fair value adjustments in the UK. Net investment loss decreased
to £32m (2009: £46m) reflecting reduced write downs in venture capital
investments.
Other income decreased to £12m (2009: £39m) due to lower operating
lease income.
Impairment charges increased to £1,696m (2009: £1,558m), primarily
in Spain where a £630m increase to £898m was driven by depressed
market conditions in the property and construction sector, including
some significant single name cases. This was partly offset by an
improvement of £302m in UK & Ireland reflecting lower default rates
and fewer insolvencies; and an improvement in New Markets of £206m,
including £130m in the retail book. Loan loss rates increased to 226bps
(2009: 211bps).
Operating expenses grew 30% to £1,907m (2009: £1,466m), 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), higher pension costs in the
UK, and increased investment spend as Barclays Corporate continues to
invest in its infrastructure to deliver leading product and superior client
service capabilities.
Total average lending fell 8% to £69.8bn (2009: £75.7bn). In the UK, this
was due to reduced utilisation of overdraft facilities and reduced demand
in asset based lending. There was strong growth in total average customer
accounts which grew 21% to £60.9bn, mostly within the UK & Ireland, as
a result of significant increases in current account balances and deposits
benefiting from product innovation. As a result, the balance between loans
and deposits, including banks, in the UK & Ireland moved by £8bn to
surplus deposits of £2.4bn.
Risk weighted assets fell 8% to £70.8bn (2009: £76.9bn) reflecting lower
levels of customer assets across the business and improvements in the
credit quality of the UK portfolio.
Financial review
Analysis of results by business continued
58 Barclays PLC Annual Report 2010 www.barclays.com/annualreport10