Barclays 2012 Annual Report Download - page 226

2012
Adjusted total expense net of insurance claims reduced to £152m
(2011: £223m) principally due to changes in the value of hedges
relating to employee share awards which were closed out during the
first quarter of 2012.
Operating expenses increased 31% to £1,031m mainly from higher
regulatory costs, including a charge relating to the allocation to Head
Office and Other Operations of the penalty of £97m (2011: £nil) arising
from the industry wide investigation into the setting of interbank
offered rates, Financial Services Compensation Scheme of £135m
(2011: £45m), the increase in the UK bank levy to £345m (2011:
£325m) and increased strategic initiative costs.
Adjusted loss before tax increased by 8% to £1,088m. Statutory loss
before tax increased to £5,440m (2011: profit £947m) including an own
credit charge of £4,579m (2011: £2,708m gain) and non-recurrence of
gains on debt buy-backs, partially offset by the impact of BlackRock, Inc.
investment disposal and income from changes in the value of hedges
relating to employee share awards that were closed out during the first
quarter of 2012.
Total assets increased to £39.4bn (2011: £31.9bn) reflecting growth in
the liquidity bond portfolio held at Head Office and Other Operations,
partially offset by the sale of the strategic investment in BlackRock, Inc.
Risk weighted assets have increased £3.2bn to £5.7bn, principally
reflecting increases in sovereign bonds held for liquidity purposes
and the application of a more conservative approach to risk weighting
these exposures.
2011
Total income improved to £3,557m (2010: £291m). Own credit gains,
increased to £2,708m (2010: £391m) and gains on debt buy-backs of
£1,130m (2010: £nil) were recognised resulting from the retirement of
Tier 1 capital, which will not qualify as Tier 1 capital under Basel 3. This
was partially offset by the non-recurrence in 2011 of £265m income
from currency translation reserves following the repatriation of capital
from overseas operations that was recognised in 2010.
Operating expenses increased to £788m (2010: £590m) principally due
to the UK bank levy of £325m and higher Financial Services
Compensation Scheme (FSCS) costs, partially offset by non recurrence
of a 2010 provision of £194m in relation to resolution of the
investigation into Barclays compliance with US economic sanctions.
The loss on disposal of £23m reflects losses from currency translation
reserves recognised in the income statement following the disposal of
Barclays Bank Russia.
The £1,800m impairment in of the Group’s investment in BlackRock, Inc.
reflects the recycling through the income statement of the cumulative
reduction in market value of the Group’s investment in BlackRock, Inc.
as at 30 September 2011 previously recognised in equity.
Adjusted loss before tax increased 46% to £1,010m, principally as a
result of a £325m charge arising from the UK bank levy that came into
force during 2011. Profit before tax improved to £947m (2010: loss of
£301m), reflecting own credit gains and gains on debt buy-backs
partially offset by the impairment of the Group’s investment in
BlackRock, Inc.
Total assets increased 25% to £31.9bn due to purchases of
government bonds to support the Group’s hedging and liquidity
management activities.
Head Office and Other Operations
Notes
a Includes net interest expense of £134m (2011: £965m).
b Adjusted performance measures and profit before tax exclude the impact of an own credit charge of £4,579m (2011: gain of £2,708m, 2010: gain of £391m), gains
on debt buy-backs (retirement of non-qualifying Tier 1 Capital under Basel 3) of £nil (2011: £1,130m, 2010: £nil), gain on disposal of strategic investment in
BlackRock, Inc. of £227m (2011: loss of £58m, 2010: £nil), impairment of investment in BlackRock, Inc. of £nil (2011: £1,800m, 2010: £nil) and loss on disposals of
£nil (2011: £23m, 2010: £nil).
2012
£m
2011
£m
2010
£m
Adjusted total expense net of insurance claimsa(75) (223) (100)
Own credit (charge)/gain (4,579) 2,708 391
Gains on debt buy-backs –1,130 –
Gain/(loss) on disposal of investment in BlackRock, Inc. 227 (58) –
Total income net of insurance claims (4,427) 3,557 291
Credit impairment (charge)/release and other provisions (4) 1 (2)
Impairment of investment in BlackRock, Inc. – (1,800) –
Net operating income/(loss) (4,431) 1,758 289
Operating expenses (excluding UK bank levy) (686) (463) (590)
UK bank levy (345) (325) –
Operating expenses (1,031) (788) (590)
Other net income/(expense) 22 (23) –
Profit/(loss) before tax (5,440) 947 (301)
Adjusted loss before taxb(1,088) (1,010) (692)
Balance Sheet Information
Total assets £39.4bn £31.9bn £25.5bn
Risk weighted assets £5.7bn £2.5bn £0.7bn
Number of employees (full time equivalent) 1,600 1,400 1,400
barclays.com/annualreport224 I Barclays PLC Annual Report 2012
Financial review
Analysis of results by business continued