Barclays 2014 Annual Report Download - page 21

barclays.com/annualreport Barclays PLC Annual Report 2014 I 19
Market environment and risks
The external market and environment in which PCB operates is
constantly changing with emerging regulation, ongoing economic
uncertainty, an evolving competitive landscape, and increasing
customer expectations. The changing economic climate could impact
interest rates or property prices, therefore closely review our credit risk
indicators and appetite. Given our advances in technological solutions,
we actively test the resilience of our infrastructure. We continue to
monitor and manage our risks to ensure any of these changes are
mitigated and within our risk appetite, and focus closely on adapting
and evolving with the market, for example:
Q Embracing technological innovation to enable our existing customers
to do more with us
Q Reshaping the way we interact with our customers so that we
increase customer satisfaction and deepen customer engagement
2014 performance review
Profit before tax increased 29% to £2,885m driving a 2.2% increase
in return on average equity to 11.9%. Personal and Mortgages income
grew £119m to £4,159m due to balance growth and improved savings
margins, partially offset by lower fee income. Corporate income was
broadly in line at £3,592m (2013: £3,620m) as balance growth in
lending and deposits was offset by margin compression. Wealth
income was also broadly in line at £1,077m (2013: £1,063m) as growth
in UK business and higher savings margins were offset by the effects of
a substantial reorganisation to reduce the number of target markets
whilst simplifying operations.
Impairment improved 22% to £482m and loan loss rate reduced
7bps to 21bps due to the improving economic environment in the UK,
particularly impacting Corporate which benefited from one-off releases
and lower defaults from large UK Corporate clients.
Continued reduction in operating expenses down 7% to £5,475m
due to savings realised from the net closure of 72 branches as part
of ongoing branch network optimisation, as well as investment in
the customer experience across multiple channels and technology
improvements to increase automation. PCB has made significant
progress not only in identifying growth opportunities, but also in
achieving operational efficiency. There is a strong and continuing
internal focus on realising synergies, rationalising and automating
systems and processes to reduce cost and improve controls.
Loans and advances to customers increased 2% to £217.0bn due to
mortgage growth and Corporate loan growth, also increasing RWAs 2%
to £120.2bn. Customer deposits increased to £299.2bn (2013: £295.9bn).
How we are doing
Becoming ‘Go-To’
Our future priorities for Personal & Corporate Banking
We seek to:
Q Facilitate and create connections between our PCB customers
and clients
Q Automate manual processes to ensure a better control
environment and reduce cost
Q Develop instant and transparent customer journeys to improve
customer experience and satisfaction
Q Extend our existing capabilities, technology and knowledge across
our business
Q Continue to innovate for our customers and clients, with a focus
on new technology and transforming customer interactions
Barclaycard
‘Barclaycard is a top 10 consumer
payments provider globally.
In a business where winning is
dependent on scale, innovation,
analytics and risk management,
we have strength across the board.’
Valerie Soranno Keating
Chief Executive, Barclaycard
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How Barclaycard contributes to our Balanced Scorecard
Customer and client
Q 3.6m new customers gained
Q £257bn payments volume in 2014
Q Continued to drive payments innovation, introducing
wearable payment forms in the UK and supporting the
launch of Apple Pay in the US
Colleague
Q 94% high performers retained
Q Recognised as a leader in Diversity and Inclusion with
34% of senior leaders female
Citizenship
Q £18.5bn new and renewed lending to households
Q Launched Penny for London, an innovative way of
charitable giving, powered by Barclaycard in partnership
with the Mayor’s Fund for London
Q Supporting ‘5 Million Young Futures’ through Yes2Chess
and Apps for Good
Conduct
Q Year on year complaints volume reduced by c.20% in
2014 in the context of an increasing customer base
Company
Contribution to the Group 2014 2013 2012
Income (£m) 4,356 4,103 3,816
Adjusted profit before tax (£m) 1,339 1,183 1,161
Adjusted ROE (%) 16.0 15.5 18.0
Loan loss rate (bps) 308 332 328
Loans and advances to
customers (£bn) 36.6 31.5 28.8
Customer deposits (£bn) 7.3 5.1 2.7
Contribution to the Group’s total income
£m
£4,356m
Total income increased 6% on prior year
driven by asset growth across all
geographies.
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