Barclays 2015 Annual Report Download - page 226

224 I Barclays PLC Annual Report 2015 home.barclays/annualreport
Financial review
2015 compared to 2014
Total assets
Total assets decreased £238bn to £1,120bn.
Cash and balances at central banks and items in the course of collection
from other banks increased £10bn to £51bn, as the cash contribution to
the Group liquidity pool was increased.
Trading portfolio assets decreased £37bn to £77bn primarily driven by
balance sheet deleveraging resulting in lower securities positions,
consistent with client demand in the Investment Bank, and exiting of
positions in Non-Core.
Financial assets designated at fair value increased by £39bn to £77bn.
During the period, new reverse repurchase agreements in certain
businesses have been designated at fair value to better align to the way
the business manages the portfolio’s risk and performance. This has
resulted in an increase of £44bn in this account line. Across fair value
and amortised cost classifications, total reverse repurchase agreements
have decreased £59bn due to a reduction in matched book trading and
general firm financing due to balance sheet deleveraging. Additionally,
within financial assets designated at fair value, there was a partial offset
by decreases in loans and advances and debt securities.
Derivative financial instrument assets decreased £112bn to £328bn,
consistent with the decrease in derivative financial instrument liabilities.
This included a £79bn decrease in interest rate derivatives due to net
trade reductions and increases in major forward interest rates and a
£19bn decrease in foreign exchange derivatives reflecting trade
reductions.
Available for sale investments increased £4bn to £90bn due to an
increase in government bonds held in the liquidity pool.
Total loans and advances decreased by £29bn to £441bn driven by a net
£20bn decrease in settlement and cash collateral balances, a £6bn
reclassification of loans to other assets, relating to the Portuguese retail
business and Italian retail banking branch network which are now held
for sale and a £5bn decrease in Africa reflecting the depreciation of ZAR
against GBP. This was partially offset by lending growth of £5bn in
Barclaycard.
Reverse repurchase agreements and other similar secured lending
decreased £104bn to £28bn reflecting a reduction in matched book
trading and general firm financing due to balance sheet deleveraging
and as a result of the designation to fair value described in the financial
assets designated at fair value comment above.
Total liabilities
Total liabilities decreased £238bn to £1,054bn.
Deposits from banks decreased £11bn to £47bn primarily driven by a
£9bn decrease in cash collateral due to lower derivative mark to market.
Customer accounts decreased £10bn to £418bn as a result of
reclassification of £4bn to other liabilities relating to the Portuguese retail
business and Italian retail banking branch network which are now held
for sale, a £7bn reduction in settlement balances, a £3bn decrease in
cash collateral due to lower derivative mark to market and a £7bn
decrease due to depreciation of ZAR. This is partially offset by £13bn
growth within PCB, Barclaycard and Africa.
Trading portfolio liabilities decreased £11bn to £34bn primarily driven by
balance sheet deleveraging resulting in lower securities positions,
consistent with client demand in the Investment Bank, and exiting of
positions in Non-Core.
Financial liabilities designated at fair value increased by £35bn to £92bn.
In line with financial assets designated at fair value, the designation of
repurchase agreements to fair value resulted in an increase of £45bn
during the year. Across fair value and amortised cost classifications, total
repurchase agreements have decreased £54bn due to a reduction in
matched book trading and general firm financing due to balance sheet
deleveraging. Additionally, within financial liabilities designated at fair
value, there was a partial offset in debt securities due to reduced
funding requirements.
Derivative financial instrument liabilities decreased £115bn to £324bn in
line with the decrease in derivative financial assets.
Debt Securities in issue decreased by £17bn to £69bn primarily driven by
a decrease in Certificate of Deposits and Bonds and MTNs due to
reduced funding requirements.
Subordinated liabilities increased £0.3bn to £21.5bn due to issuances of
dated subordinated notes, partially offset by the redemptions of dated
and undated subordinated notes, and fair value hedge movements.
Repurchase agreements and other similar secured borrowings decreased
£99bn to £25bn reflecting a reduction in matched book trading and
general firm financing due to balance sheet deleveraging and as a result
of the designation to fair value described in the financial assets
designated at fair value comment above.
Shareholders’ equity
Total shareholders’ equity remained flat at £66bn.
Share capital and share premium increased by £0.8bn to £22bn due to
the issuance of shares under employee share schemes and the Barclays
PLC scrip dividend programme. Other equity instruments increased by
£1.0bn to £5.3bn due to issuance of equity accounted AT1 securities to
investors.
The available for sale reserve decreased £0.2bn to £0.3bn driven by
£0.4bn of losses from changes in the fair value of government bonds,
predominantly held in the liquidity pool, £0.1bn of losses from related
hedging, £0.4bn of net gains transferred to net profit, partially offset by
£0.4bn gains from changes in fair value of equity investments in Visa
Europe and an £0.1bn change in insurance liabilities. A tax credit of
£0.1bn was recognised in the period relating to these items.
The cash flow hedging reserve decreased £0.6bn to £1.3bn driven by a
£0.4bn decrease in the fair value of interest rate swaps held for hedging
purposes as interest rate forward curves increased, and £0.2bn of gains
recycled to the income statement in line with when the hedged item
affects profit or loss, partially offset by a tax credit of £0.1bn.
The currency translation reserve remained stable as the effect of ZAR
depreciating against GBP was offset by the appreciation of USD against
GBP.
Net tangible asset value per share decreased to 275p (2014: 285p). The
decrease was primarily attributable to dividends paid and a decrease in
the cash flow hedging reserve as explained.
Balance sheet commentary