Barclays 2012 Annual Report Download - page 222

2012
Adjusted profit before tax improved £347m to £551m including a gain
of £71m (2011: loss of £111m) in the net valuation of fair value items,
primarily driven by improved credit impairment in Europe and UK and
lower operating expenses. Statutory loss before tax was £299m (2011:
profit £8m) including a £850m provision for interest rate hedging
products redress.
 UK adjusted profit before tax improved 22% to £910m reflecting a
£182m improvement in the net valuation of fair value items,
improved operating expenses and credit impairment. UK statutory
profit before tax decreased £687m to £60m including a £850m
provision for interest rate hedging products redress.
 Europe loss before tax improved £266m to £381m principally due to
improved credit impairment charges in Spain of £337m (2011:
£480m) and improved operating expenses benefitting from progress
in restructuring, partially offset by reduced income from exited
businesses and non-core clients.
 Rest of the World statutory profit before tax improved £114m to
£22m reflecting the non-recurrence of prior year loss on disposal of
Barclays Bank Russia. Rest of the World adjusted profit before tax
improved £41m to £22m reflecting lower operating expenses as a
result of refocusing of our international business.
Net interest income decreased 13% to £1,870m reflecting increased
funding costs, non-recurring income from exited businesses and gains
on the disposal of hedging instruments. Net interest margin down
22bps to 124bps principally due to higher funding costs and non-
recurring gains from the sale of hedging instruments. Customer asset
margin decreased 32bps to 114bps reflecting higher funding costs and
reduced balances due to the refocusing of our international business.
Customer liability margin increased 15bps to 109bps principally due to
higher balances in the UK driven by currency deposits and current
accounts, and reflecting an increase in funding rates and therefore the
value generated from customer liabilities.
Credit impairment charges reduced 24% to £872m. Loan loss rate
improved to 128bps (2011: 156bps). Impairment charges in Europe
reduced by £174m to £542m, primarily as a result of ongoing action to
reduce exposure within the property and construction sector in Spain.
Adjusted operating expenses improved 14% to £1,505m, reflecting the
benefits of prior year restructuring and cost control initiatives. Adjusted
cost to income ratio improved to 52% (2011: 57%). Adjusted return on
average equity improved to 5.5% (2011: 1.7%). Statutory return on
average equity is negative 3.7% (2011: negative 1.0%).
Corporate Banking
Notes
a Adjusted profit before tax and adjusted performance measures exclude the impact of goodwill impairment of £nil (2011: £123m, 2010: £243m), provision for interest
rate hedging products redress of £850m (2011: £nil, 2010: £nil) and loss on disposal of £nil (2011: £73m, 2010: £nil).
b Certain corporate banking activities in Africa, previously reported under Africa RBB, are now included within Corporate Banking. The 2010 and 2011 comparatives
have been restated. This restatement has no impact on the Group’s overall results.
2012
£m
2011b
£m
2010b
£m
Income Statement Information
Net interest income 1,870 2,155 2,123
Net fee and commission income 955 1,005 983
Net trading (expense)/income 65 (99) 81
Net investment income/(loss) 23 29 (32)
Other income 5 18 7
Total income 2,918 3,108 3,162
Credit impairment charges and other provisions (872) (1,147) (1,699)
Net operating income 2,046 1,961 1,463
Operating expenses excluding goodwill impairment (1,505) (1,759) (1,775)
Provision for interest rate hedging products redress (850) – –
Goodwill impairment –(123) (243)
Operating expenses (2,355) (1,882) (2,018)
Share of post-tax results of associates and joint ventures 10 2 (2)
Loss on disposal of subsidiaries, associates and joint ventures (73) –
(Loss)/profit before tax (299) 8 (557)
Adjusted profit/(loss) before taxa551 204 (314)
Balance Sheet Information and Key Facts
Loans and advances to customers at amortised cost £62.9bn £66.9bn £68.1bn
Loans and advances to customers at fair value £17.6bn £17.2bn £14.4bn
Customer deposits £97.1bn £85.2bn £79.0bn
Total assets £86.3bn £91.2bn £88.2bn
Risk weighted assets £68.0bn £72.8bn £74.2bn
Number of employees (full time equivalents) 10,300 11,200 12,900
barclays.com/annualreport220 I Barclays PLC Annual Report 2012
Financial review
Analysis of results by business continued