Barclays 2012 Annual Report Download - page 212

Financial review
Analysis of results by business continued
2012
Income declined 5% to £4,421m reflecting higher funding costs and
reduced contribution from structural hedges, including non recurrence
of gains from the disposal of hedging instruments in 2011.
Net interest income declined 5% to £3,227m with net interest margin
down 14bps to 137bps principally due to reduced contributions from
structural hedges. Customer asset margin decreased 15bps to 107bps
reflecting higher funding costs. Average customer assets increased 5%
to £124.3bn driven by mortgage growth. Customer liability margin
increased 10bps to 97bps reflecting an increase in funding rates and
therefore the value generated from customer liabilities. Average
customer liabilities increased 4% to £111.8bn due to personal savings
deposit growth. Non-interest income declined 4% to £1,194m
reflecting lower net insurance income.
Credit impairment charges decreased 50% to £269m reflecting
improvements across all portfolios, principally in personal unsecured
lending. Loan loss rate reduced to 21bps (2011: 44bps). 90 day arrear
rates improved 33bps on UK personal loans to 1.3% and deteriorated
4bps on UK mortgages to 0.3%. Adjusted operating expenses remained
broadly flat at £2,684m (2011: £2,702m).
Adjusted profit before tax improved 4% to £1,472m. Statutory profit
before tax declined 71% to £292m after £1,180m (2011: £400m)
provision for PPI redress.
Adjusted return on average equity improved to 16.0% (2011: 14.9%).
Statutory return on average equity declined to 3.1% (2011: 10.6%).
Total loans and advances to customers increased 6% to £128.2bn
driven by growth in mortgage balances. Mortgage balances of
£114.7bn at 31 December 2012 (2011: £107.8bn). Gross new mortgage
lending of £18.2bn (2011: £17.2bn) and mortgage redemptions of
£11.3bn (2011: £10.7bn), resulted in net new mortgage lending of
£6.9bn (2011: £6.5bn). Average LTV ratio for the mortgage portfolio
(including buy-to-let) on a current valuation basis was 46%
(31 December 2011: 44%). Average LTV of new mortgage lending
was 56% (31 December 2011: 54%). Total customer deposits increased
4% to £116.0bn primarily driven by growth in savings from ISAs and
retail bonds.
Risk weighted assets increased 14% to £38.8bn principally due
to mortgage balance growth, an increased operational risk charge
and adoption of a more comprehensive approach to loans subject
to forbearance.
UK Retail and Business Banking
Note
a Adjusted profit before tax excludes the impact of the provision for PPI redress of £1,180m (2011: £400m; 2010: £nil) and gains on acquisitions of £nil (2011: £nil;
2010: £100m).
2012
£m
2011
£m
2010
£m
Income Statement Information
Net interest income 3,227 3,413 3,165
Net fee and commission income 1,154 1,157 1,255
Net trading loss – – (2)
Net investment income – 17 –
Net premiums from insurance contracts 74 92 130
Other (expense)/income (1) (1) 1
Total income 4,454 4,678 4,549
Net claims and benefits incurred under insurance contracts (33) (22) (31)
Total income net of insurance claims 4,421 4,656 4,518
Credit impairment charges and other provisions (269) (536) (819)
Net operating income 4,152 4,120 3,699
Operating expenses (excluding provision for PPI redress) (2,684) (2,702) (2,809)
Provision for PPI redress (1,180) (400) –
Operating expenses (3,864) (3,102) (2,809)
Share of post-tax results of associates and joint ventures 4 2 (1)
Gains on acquisition –– 100
Profit before tax 292 1,020 989
Adjusted profit before taxa1,472 1,420 889
Balance Sheet Information
Loans and advances to customers at amortised cost £128.2bn £121.2bn £115.6bn
Customer accounts £116.0bn £111.8bn £108.4bn
Total assets £136.7bn £127.8bn £121.6bn
Risk weighted assets £38.8bn £34.0bn £35.3bn
barclays.com/annualreport210 I Barclays PLC Annual Report 2012