Barclays 2011 Annual Report Download - page 9

Your Chief Executive’s view
The Chief Executive Officer is responsible for managing the daily
operations of Barclays through working closely with the Executive
Committee and overseeing successful delivery of the Group strategy.
His priorities are a focus on four areas of execution: Capital, Funding
and Liquidity; Returns; Income Growth; and Citizenship, which he uses
to guide Barclays through the uncertain economic and regulatory
environment and deliver shareholder returns.
In this summary, he reflects on the year, giving his views on progress
towards delivery of our strategy.
2011 was marked by a challenging market and
economic environment and our solid performance
relative to global peers demonstrates the strength
of our universal banking model and our relentless
focus on clients and customers. Our focus in 2011
was firmly on delivering progress against the four
execution priorities. I’d like to give you a review of
what we achieved.
Capital, Funding and Liquidity
When I look back over the last few years, one of Barclays best decisions
came in October 2008 when regulators made clear that they wanted
banks to raise the bar for equity capital. We decided to raise capital swiftly
and in scale, to put our ratios ahead of regulatory requirements. We
wanted to put a metaphorical sign up for customers and clients saying
that Barclays was open for business. Today we’re recognised for our
strength in terms of capital, liquidity and funding, and as a result we are
seen by customers as a safe haven in times of stress.
Our capital position remains rock solid. Even after absorbing the full
impact of the third Capital Requirements Directive, our Core Tier 1 ratio
stands at 11% and we have a liquidity pool of £152bn that provides
protection against unexpected market fluctuations.
Returns
While we use many metrics to manage and measure the business,
return on equity is the financial measure that correlates most closely with
shareholder value, so it’s extremely important to us. Our 13% return target
was a vital factor in helping us make disciplined choices over the last
12 months, but we know that our returns today remain unsatisfactory
and that we have a lot more work to do.
Since we set this target last year we have faced some significant external
headwinds which are detailed over the page in our review of the market
and operating environment. Notwithstanding these, we have made a lot of
progress on the journey towards achieving our targets. Through operating
as a more integrated business we have been able to begin to drive the cost
efficiency that will be necessary to deliver that goal, and as a result have
increased our cost target to a saving of £2bn by 2013.
Our portfolio of businesses continued to evolve and strengthen, and most
of our businesses increased their return on equity in 2011.
We continue to believe that a return on equity of 13% is the right goal,
but our ability to achieve this by 2013 will depend upon economic, market
and regulatory developments. We remain fully committed to delivering
13% returns over time, by driving improved business performance,
reducing expenses, and maintaining a disciplined approach to capital
and funding costs.
Income growth
Given the difficult economic environment, we’re pleased that we were
able to grow income, underlying profit, and market share in many of our
businesses. We enter 2012 in a stronger competitive position.
In UK Retail and Business Banking net operating income grew 11%,
Barclaycard net income was up 21%, our African business net income
grew 11% in local currencies, and Wealth Management had its third
successive year of double digit income growth as we continue to build
that business.
Income and profits were down in Investment Banking in a very tough
market but we continue to have real momentum, which is particularly
evident in those areas where we’ve been actively investing, such as
Equities and Advisory. This progress was recognized by International
Financing Review (IFR) when it named Barclays Capital its “2011 Bank
of the Year” for “growing market share across the board, and becoming
an increasingly go-to investment bank”.
Citizenship
We have recognized that banks need to become better citizens and that
our ability to do this is critical to generate long term value for shareholders.
This is not philanthropy – it’s about using Barclays unique skills and
resources to deliver real commercial benefits in a way that also creates
sustainable value for society.
We have made firm progress against our Citizenship agenda in 2011,
delivering benefits to the real economy. We exceeded our Project Merlin
targets by 13% and delivered £44bn to UK business; we helped 108,000
businesses start up; we helped corporates and institutions raise $1 trillion
of financing through the capital markets globally, including almost $400bn
for governments and the public sector; we employed almost 1,500
graduates and have committed to creating over 1,000 apprenticeships;
and we will continue to do everything we can to support our customers
and clients in 2012.
We know we have a responsibility to help generate economic growth and
create jobs – and we are fully committed to playing our part.
You will find additional information relating to our Citizenship agenda in
this document and a Citizenship Report with detailed information on our
goals, our targets and our achievements will be available online from
23 April 2012.
Looking forward to 2012
As I look back at 2011, we made firm progress and right across Barclays
we entered 2012 in a stronger position. We recognise that in order to
achieve our return target we need to improve profitability substantially
going forward and we are determined to do that, using all the means
within our control to drive the business.
Turning to the external environment, while there are some positive signs
of economic recovery, particularly in the US, and increasing clarity on
regulation, the global macro-economic, political and regulatory
environment remains uncertain and we must again expect a challenging
environment in 2012.
As we have shown in the past year, however, Barclays is well positioned
to improve our competitive positioning across businesses in challenging
environments. Our universal banking model, as well as our rock solid
capital, liquidity and funding positions, give us the balance and flexibility
to meet the challenges ahead. We are confident that by putting clients
and customers at the center of everything we do, we will support
economic growth more broadly and generate the financial returns we’re
targeting over time.
When we’re at our best, we serve the real economy by doing our best for
all our stakeholders: our customers and clients, the communities we serve,
our people and our shareholders. To be anything less than our best is
letting all these people down. That’s why we aspire for Barclays to be one
of the best organised, best managed and most productive private sector
banks in the world.
Barclays PLC Annual Report 2011 www.barclays.com/annualreport 07
The strategic report Governance Risk management Financial review Financial statements Shareholder information