Barclays 2012 Annual Report Download - page 220

2012
Profit before tax increased 37% to £4,063m driven by strong income
growth and reduced operating expenses.
Total income increased 13% to £11,722m. Fixed Income, Currency and
Commodities (FICC) income improved 17% to £7,403m in an uncertain
but more favourable trading environment. Increased liquidity and
higher client volumes across a number of product areas resulted in
increased contributions from the Rates, Emerging Markets,
Commodities, Securitised Products and Credit businesses, partially
offset by lower contributions from Currency driven by subdued
volumes and lower volatility. Equities and Prime Services income
increased 14% to £1,991m, reflecting global market share gains which
resulted in improved performance in cash equities and equity
derivatives, despite subdued market volumes. Investment Banking
income increased 5% to £2,123m, reflecting global market share gains
and increases in revenues across global financial advisory and
underwriting businesses more than offsetting the impact of increased
internal sales concessions. Debt underwriting activity and equity
underwriting in the Americas grew particularly strongly and were
primary contributors to the 8% increase in total net fees and
commission income.
Credit impairment charges of £460m (2011: £93m) primarily related to
£232m on ABS CDO Super Senior positions as a result of model
changes to calibrate to current market data sources, and higher losses
on single name exposures. The prior year included a non recurring
release of £223m.
Operating expenses decreased 1% to £7,249m, driven by a 3%
reduction in total performance costs to £1,693m including £210m
increase in deferred bonus charges. Non-performance costs remained
in line at £5,556m (2011: £5,571m) despite absorbing £193m charge
relating to the setting of inter-bank offered rates.
Cost to net operating income ratio of 64% (2011: 71%) within target
range of 60% to 65%. The compensation to income ratio improved to
39% (2011: 47%).
Return on average equity of 13.7% (2011: 10.4%) and return on
average risk weighted assets of 1.5% (2011: 1.2%).
Assets contributing to adjusted gross leverage decreased 6% to
£567.9bn reflecting decreases in cash and balances at central banks,
trading portfolio assets, and loans and advances to banks and
customers, partially offset by an increase in reverse repurchase
agreements.
Investment Bank
2012
£m
2011
£m
2010
£m
Income Statement Information
Net interest income 619 1,177 1,121
Net fee and commission income 3,262 3,026 3,347
Net trading income 7,315 5,264 7,986
Net investment income/(loss) 526 873 752
Other income –(5) 3
Total income 11,722 10,335 13,209
Credit impairment charges and other provisions (460) (93) (543)
Net operating income 11,262 10,242 12,666
Operating expenses (7,249) (7,289) (8,295)
Share of post-tax results of associates and joint ventures 50 12 18
Profit before tax 4,063 2,965 4,389
Adjusted profit before tax 4,063 2,965 4,389
Balance Sheet Information
Loans and advances to banks and customers at amortised cost £145.0bn £158.6bn £149.7bn
Customer deposits £76.2bn £83.1bn £70.3bn
Total assets £1,074.8bn £1,158.4bn £1,094.8bn
Assets contributing to adjusted gross leverage £567.9bn £604.0bn £668.1bn
Risk weighted assets £178.0bn £186.7bn £191.3bn
barclays.com/annualreport218 I Barclays PLC Annual Report 2012
Financial review
Analysis of results by business continued