Barclays 2013 Annual Report Download - page 291

Note 3: Net interest income continued
2013
Net interest income remained stable at £11,600m (2012: £11,654m). Interest income decreased by 5% to £18,315m driven by a reduction in
income from loans and advances to customers which fell £835m to £15,613m. The decrease in interest income from loans and advances to
customers is attributable primarily to a reduction of £661m in Africa RBB, driven by the adverse impact of the depreciation of the ZAR, and a
reduction of £382m in the Investment Bank due to reduced average balances. These movements were partly offset by a £303m increase in UK RBB
reflecting increased average loan balances due to organic growth and contribution from Barclays Direct. Interest expense reduced 11% to
£6,715m, driven by a reduction in interest on debt securities in issue of £745m to £2,176m due to lower average balances and lower yields.
The net interest margin for Retail and Business Banking, Corporate Banking and Wealth and Investment Management decreased by 8bps to 1.76%
(2012: 1.84%), reflecting the reduction in contribution from customer liabilities and Group hedging activities, combined with a reduced
contribution from the higher margins in Africa RBB as ZAR depreciated against GBP.
2012
Net interest income declined by 4% to £11,654m. Interest income decreased by 7% to £19,212m, driven by a reduction in income from loans and
advances to customers, which fell £823m to £16,448m, and interest income derived from available for sale investments, which fell £401m to
£1,736m. The decrease in interest income from loans and advances to customers is attributable primarily to the Investment Bank and Africa RBB
reflecting lower average loan balances. These movements were partly offset by a £110m increase in Barclaycard reflecting increased average loan
balances due to the Egg acquisition. The fall in interest from available for sale investments primarily reflects lower average balances and yield in
the Investment Bank and lower yields on government bonds held in the Liquidity Risk Appetite portfolio. Interest expense reduced by 10% to
£7,557m, driven by a reduction in interest on debt securities in issue of £603m to £2,921m due to lower average balances and lower yields, and a
reduction in interest on subordinated liabilities of £181m to £1,632m due to lower average balances.
The net interest margin for Retail and Business Banking, Barclaycard, Corporate Banking and Wealth and Investment Management decreased to
1.84% (2011: 2.03%), primarily reflecting the reduction in contribution from Group hedging activities.
Note 4: Net fee and commission income
Accounting for net fee and commission income
The Group applies IAS 18 Revenue. Fees and commissions charged for services provided or received by the Group are recognised as the
services are provided, for example on completion of the underlying transaction.
2013
£m
2012
£m
2011
£m
Fee and commission income
Banking, investment management and credit related fees and commissions 10,284 9,945 9,958
Brokerage fees 27 92 87
Foreign exchange commission 168 176 163
Fee and commission income 10,479 10,213 10,208
Fee and commission expense (1,748) (1,677) (1,586)
Net fee and commission income 8,731 8,536 8,622
2013
Net fee and commission income remained stable with a £195m increase to £8,731m. Higher fees as a result of increased volumes within
Barclaycard Business Payment and US portfolios and growth in equity underwriting activity and a strong equity capital market (ECM) deal calendar
were offset by lower commissions mainly from syndicate and advisory business following concerns about potential slowing down of quantitative
easing and the impact of adverse currency movements in Africa RBB.
2012
Net fee and commission income remained stable with an £86m decline to £8,536m. Higher fees as a result of increased volumes within the
Barclaycard Business Payment and US portfolios and growth in debt and equity underwriting activity were offset by lower commissions mainly
from Italy mortgage sales and the impact of adverse currency movements in Africa RBB.
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