Barclays 2013 Annual Report Download - page 6

Chief Executive’s strategic review
2013 has been a year of significant change for Barclays.
A year ago we set out the outcome of our strategic review
and our Transform plan to make Barclays the ‘Go-To’ bank
for all our stakeholders. We continue to take steps to
de-risk the business, strengthen the balance sheet,
increase the efficiency of our operations and are making
good progress against our plan.
Our 2013 results clearly demonstrate the benefits of the diversity
we enjoy in the Group, as well as the strength of our core franchises.
While impacted by the restructuring and de-risking activity, underlying
business performance has been resilient, with adjusted income of
£28.2bn and adjusted profit before tax of £5.2bn. Our core franchises
remain strong, with UK Retail and Business Banking, Barclaycard, UK
Corporate Banking, and within the Investment Bank our Equities and
Investment Banking businesses all delivering good performances in
2013. Important progress has also been made in repositioning our
African, European and Wealth businesses, although further work is
required to get returns to acceptable levels. Our Fixed Income,
Currency and Commodities business in the Investment Bank saw
revenues fall, in line with our European peers, as market conditions
remained subdued.
We are making good headway across the financial commitments we
set out as part of our Transform plan as well as on de-leveraging to
meet the PRA’s revised target. I am pleased by our progress on RWAs
and leverage. We have been able to move more quickly than anticipated
in managing down CRD IV RWAs, bringing us a little below our
Transform target well ahead of the 2015 timeline. Through rigorous
analysis and focus, we have also virtually achieved the PRA leverage
target six months in advance of the June 2014 deadline.
We have invested considerably in transforming our businesses. In the
months ahead we expect to see the benefits of this coming through.
We narrowly missed our cost guidance for 2013, largely due to a
£331m increase at year-end in certain litigation provisions, but the true
operating performance of Barclays was on track. Costs are a key area of
focus for us and we remain committed to our 2015 Transform cost
target of £16.8bn. Compensation for key talent is one area that we
were prepared to invest in strategically. Our aim is to deliver a greater
share of the income we generate to shareholders while remaining
competitive on pay. Although profits for 2013 were down, the 38%
reduction in incentives in the previous two years had begun to cause
demonstrable damage to our business through increased attrition, with
a near doubling of resignations of senior staff in the US for example.
We concluded that a 2013 incentive pool of £2,378m was appropriate.
Whilst this is up 10% on the final 2012 incentive pool, before
adjustment for risk and conduct events it is down 18% on 2012
and remains 32% below the pool level in 2010 when we started
to reposition Barclays’ remuneration. This was a difficult decision,
but the right one for the long term interest of our shareholders.
We have also made progress against the two non-financial
commitments we made last February. The first of these, culture
change, and in particular the process of embedding our Purpose and
Values throughout the organisation, is going well. Every colleague has
completed a mandatory training programme, and we have integrated
our Purpose and Values into the day to day management processes of
the Bank. We have developed and published our new Code of Conduct
which every colleague must abide by and attest to annually.
‘We have made good
progress in 2013 and we
start 2014 in a better position
than for several years. While
recognising there is much
more to do, we have every
reason to feel positive about
our prospects and confident
that we will become the
‘Go-To’ bank for all our
stakeholders.’
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04 Barclays PLC Annual Report 2013