Barclays 2014 Annual Report Download - page 240

238 I Barclays PLC Annual Report 2014 barclays.com/annualreport
Analysis of results by business
Financial review
Investment Bank
£7,588m
total income
£1,377m
profit before tax
2014 compared to 2013
Profit before tax decreased 32% to £1,377m. The Investment Bank
continues to make progress on its origination-led strategy, building on
leading positions in its home markets of the UK and US, while driving
cost savings and RWA efficiencies. The business is focused on a simpler
product set in Markets, which will enable it to build on existing strengths
and adapt to regulatory developments. The business continued to
execute this strategy despite difficult market-making conditions and
continued low levels of activity. This has particularly impacted credit and
interest rate products, resulting in an income decline across the Markets
businesses. This decline was partially offset by improved banking
performance and significant cost reductions as a result of savings from
Transform programmes.
Total income decreased 12% to £7,588m, including the impact of
depreciation of average USD against GBP. Banking income increased 2%
to £2,528m. Investment Banking fee income decreased 2% to £2,111m
driven by lower debt underwriting fees, partially offset by higher financial
advisory and equity underwriting fees. Lending income increased to
£417m (2013: £325m) due to lower fair value losses on hedges and
higher net interest and fee income.
Markets income decreased 18% to £5,040m. Credit decreased 17% to
£1,044m driven by reduced volatility and client activity, with lower
income in distressed credit, US high yield and US high grade products.
Equities decreased 11% to £2,046m due to declines in cash equities and
equity derivatives, reflecting lower client volumes, partially offset by
higher income in equity financing. Macro decreased 24% to £1,950m
reflecting subdued client activity in rates and lower volatility in currency
markets in the first half of the year.
Notes
a 2013 adjusted income and profit before tax have been restated to exclude the Q213 £259m gain relating to assets not yet received from the US Lehman acquisition to aid
comparability given its material nature in the current year. In addition, December 2013 and December 2012 US Lehman acquisition assets and RWAs of £1.6bn and £1.9bn respectively,
have been restated for the reclassification of these assets from the Investment Bank to Head Office to more accurately reflect responsibility for the resolution of this matter.
b As at 31 December 2014 loans and advances included £86.4bn (2013: £84.1bn) of loans and advances to customers (including settlement balances of £25.8bn (2013: £33.2bn)
and cash collateral of £32.2bn (2013: £25.6bn)) and loans and advances to banks of £19.9bn (2013: £20.4bn) (including settlement balances of £2.7bn (2013: £4.4bn) and cash
collateral of £6.9bn (2013: £6.4bn)).
c RWAs are on a CRD IV fully loaded basis. CRD IV rules came into effect in 2013; therefore no 2012 comparatives are available.
d 2012 returns calculated using average allocated equity based on CRD III RWAs and capital deductions.
2014
£m
2013a
£m
2012
£m
Income statement information
Net interest income 647 393 209
Net fee and commission income 3,087 3,232 3,024
Net trading income 3,735 4,969 5,903
Net investment income 119 2 (37)
Other income – – 5
Total income 7,588 8,596 9,104
Credit impairment releases/(charges) and other provisions 14 22 (50)
Net operating income 7,602 8,618 9,054
Operating expenses (5,633) (6,172) (6,361)
UK bank levy (218) (236) (139)
Costs to achieve Transform (374) (190) –
Total operating expenses (6,225) (6,598) (6,500)
Profit before tax 1,377 2,020 2,554
Attributable profit 397 1,308 1,235
Balance sheet information
Loans and advances to banks and customers at amortised costb£106.3bn £104.5bn £93.2bn
Trading portfolio assets £94.8bn £96.6bn £94.8bn
Derivative financial instrument assets £152.6bn £108.7bn £116.9bn
Derivative financial instrument liabilities £160.6bn £116.6bn £123.2bn
Reverse repurchase agreements and other similar secured lending £64.3bn £78.2bn £70.5bn
Total assetsa£455.7bn £438.0bn £398.5bn
Risk weighted assetsa,c £122.4bn £124.4bn n/a
Average allocated tangible equityd£14.6bn £15.3bn £12.0bn
Average allocated equityd£15.4bn £15.9bn £12.6bn