Barclays 2012 Annual Report Download - page 223

The strategic report Governance Risk review Financial review Financial statements Risk management Shareholder information
Total assets in UK up by £0.6bn driven by solid growth in net UK
lending. Total assets down £4.9bn to £86.3bn as increases in the UK
are more than offset by reductions in Europe and Rest of the World due
to the refocusing of our international business. Customer deposits
increased 14% to £97.1bn with increased balances in the UK and
Europe due to higher currency deposits and current accounts.
Risk weighted assets decreased 7% to £68.0bn, principally reflecting
the benefit of the refocusing of our international business, partially
offset by an increased operational risk charge.
2011
Adjusted profit before tax improved to £204m (2010: loss of £314m),
reflecting significant progress in restructuring overseas operations and
improved credit impairment in Europe. Profit before tax improved to
£8m (2010: £557m loss), including £123m impairment of Spanish
goodwill and £73m loss on the disposal of Barclays Bank Russia (BBR).
UK profit before tax declined £88m to £747m including a decline in the
net valuation of fair value loans. Excluding this item, underlying UK
performance improved, reflecting increased net investment and fee and
commission income and improving credit impairment, partially offset
by an increase in costs mainly from the non-recurrence of a prior year
pension credit and continued investment in infrastructure. Europe loss
before tax reduced 24% to £647m, reflecting lower credit impairment
partially offset by the goodwill impairment in Spain. Rest of the World
loss before tax reduced 83% to £92m, principally due to the non-
recurrence of a prior year goodwill impairment in BBR, lower operating
expenses and an improvement in loan loss rates, partially offset by the
loss on disposal of BBR.
Net interest income improved 2% to £2,155m driven by increases in UK
customer liabilities and customer liability margins. Customer assets
decreased 2% to £66.9bn and customer liabilities increased 8% to
£85.2bn.
Credit impairment charges reduced 32% to £1,147m, as overall loan
loss rates improved to 156bps (2010: 219bps). UK reduced 22% to
£355m, benefiting from lower default rates and tightly controlled
exposure to commercial real estate loans. Europe reduced 33% to
£716m primarily due to lower impairment charges in Spain of £480m
(2010: £898m), reflecting proactive risk management action to reduce
exposure to the property and construction sector. Rest of the World
reduced 58% to £76m, primarily as a result of management action to
reduce risk profile of portfolios.
Operating expenses reduced by 1% to £1,759m, excluding the impact
of goodwill impairment. A decrease in restructuring charges and
benefits from streamlining operations more than offset the impact of
the non-recurrence of the prior year pension credit.
Total assets increased to £91.2bn (2010: £88.2bn) mainly driven by
higher balances in the UK. There was 8% growth in customer deposits
to £85.2bn (2010: £79.0bn), largely within the UK, benefiting from
product innovation.
Risk weighted assets decreased 2% to £72.8bn reflecting reductions in
net exposures in Europe and Rest of the World, partially offset by higher
net balances in the UK.
Note
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).
£2,918m
total income
£551m
adjusted profit before tax
AdjustedaStatutory
2012 2011 2010 2012 2011 2010
Performance Measures
Return on average equity 5.5% 1.7% (3.7%) (3.7%) (1.0%) (6.6%)
Return on average tangible equity 5.8% 1.8% (4.0%) (3.9%) (1.0%) (7.2%)
Return on average risk weighted assets 0.6% 0.2% (0.4%) (0.3%) (0.1%) (0.7%)
Loan loss rate (bps) 128 156 219 128 156 219
Cost: income ratio 52% 57% 56% 81% 61% 64%
Income Statement Information 2012 2011
UK
£m
Europe
£m
RoW
£m
Total
£m
UK
£m
Europe
£m
RoW
£m
Total
£m
Income 2,234 313 371 2,918 2,199 440 469 3,108
Credit impairment charges and other provisions (285) (542) (45) (872) (355) (716) (76) (1,147)
Operating expenses (excluding provision for interest rate hedging
products redress) (1,041) (152) (312) (1,505) (1,099) (248) (412) (1,759)
Provision for interest rate hedging redress (850) – – (850) – (123) – (123)
Other net income 2 – 8 10 2 – (73) (71)
Profit/(loss) before tax 60 (381) 22 (299) 747 (647) (92) 8
Adjusted profit/(loss) before taxa910 (381) 22 551 747 (524) (19) 204
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