Barclays 2011 Annual Report Download - page 163

Returns KPIs continued
Definition Why is it important to the business and management
Return on average risk weighted assets (RoRWA) RoRWA
RoRWA is calculated as profit after tax for the
year divided by average risk weighted assets,
which is a risk based measure of assets
defined by the UK Financial Services Authority.
11 – 1.0%
10 – 1.1%
09 – 0.9%
Adjusted RoRWA
11 – 1.1%
10 – 1.1%
09 – 0.9%
Profit before tax (PBT) PBT
PBT is stated in accordance with IFRS and
represents total income less impairment
charges and operating expenses. Adjusted
PBT represents PBT adjusted to exclude the
impact of own credit, gains on debt buy-
backs, loss on disposal of a portion of, and
impairment of the remainder of the Group’s
investment in, BlackRock, Inc., the provision
for Payment Protection Insurance (PPI)
redress, goodwill impairments, and gains
and losses on acquisitions and disposals of
subsidiaries, associates and joint ventures.
PBT and adjusted PBT are the two primary profitability measures
used by management to assess performance. PBT is a key indicator
of financial performance to many of our stakeholders.
Adjusted PBT is presented to provide a more consistent basis
for comparing business performance between periods.
11 – £5,879m
10 – £6,065m
09 – £4,585m
Adjusted PBT
11 – £5,590m
10 – £5,707m
09 – £4,942m
Cost income ratio
Cost: income ratio is defined as operating
expenses compared to total income net of
insurance claims.
This is a measure management uses to assess the productivity of the
business operations. Restructuring the cost base is a key execution
priority for management and includes a review of all categories of
discretionary spending and an analysis of how we can run the business
to ensure that costs increase at a slower rate than income. In 2011 we
set a target to take £1bn off our run-rate cost base on a full year basis
by 2013. We have now increased the target to £2bn.
11 – 64%
10 – 64%
09 – 57%
Loan loss rate
The loan loss rate is quoted in basis points
and represents the impairment charge on
loans and advances divided by gross loans
and advances held at amortised cost at the
balance sheet date.
The granting of credit is one of Barclays major sources of income and
its most significant risk. The loan loss rate is an indicator of the cost of
granting credit.
During 2011 impairment continued to improve across all our businesses
and a 2% increase in loans and advances resulted in a lower overall
Group loan loss rate of 77bps (2010: 118bps).
11 – 77bps
10 – 118 bps
09 – 156 bps
Dividend per share
It is the Group’s policy to declare and pay
dividends on a quarterly basis. In a normal
year there will be three equal payments in
June, September and December and a final
variable payment in March.
The ability to pay dividends demonstrates the financial strength of the
Group. Whilst recognising the market’s desire for us to maintain strong
capital ratios, in light of the regulatory and economic uncertainty,
we have taken a prudent approach of prioritising capital retention and
significantly reducing the distribution through dividends from historical
levels of 50% whilst seeking to ensure that pay-outs also increase
progressively from their low point in 2009.
11 – 6.0p
10 – 5.5p
09 – 2.5p
Barclays PLC Annual Report 2011 www.barclays.com/annualreport 161
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