Barclays 2015 Annual Report Download - page 230

228 I Barclays PLC Annual Report 2015 home.barclays/annualreport
Financial review
Analysis of results by business
2015 compared to 2014
Profit before tax improved 5% to £3,040m driven by the continued
reduction in operating expenses and lower impairment due to the
benign economic environment in the UK. The reduction in operating
expenses was delivered through strategic cost programmes including
the restructure of the branch network and technology improvements to
increase automation. Corporate performed strongly with income
increasing 5% through growth in both lending and cash management.
PCB results were significantly impacted by customer redress in, and the
sale of, the US Wealth business. Excluding the US Wealth business profit
before tax improved 12% to £3,277m.
Total income reduced 1% to £8,726m. Excluding the US Wealth
business income remained flat. Personal income decreased 3% to
£4,054m driven by a reduction in fee income and mortgage margin
pressure, partially offset by improved deposit margins and balance
growth. Corporate income increased 5% to £3,754m due to balance
growth in both lending and deposits and improved deposit margins,
partially offset by reduced margins in the lending business. Wealth
income reduced 15% to £918m primarily as a result of the impact of
customer redress in, and the sale of, the US Wealth business. Excluding
the US Wealth business income decreased 2%.
Net interest income increased 2% to £6,438m driven by growth in
Corporate balances and the change in the overdraft proposition in June
2014. Net interest margin remained broadly in line at 2.99% (2014:
3.00%) as mortgage margin pressure and lower Corporate lending
margins were partially offset by increased margins on Corporate and
Personal deposits, and the benefit of the change in the overdraft
proposition.
Net fee, commission and other income reduced 10% to £2,288m driven
primarily by the impact of the change in the overdraft proposition and
customer redress in the US.
Credit impairment charges improved 22% to £378m due to the benign
economic environment in the UK resulting in lower default rates and
charges across all businesses. The loan loss rate reduced 4bps to 17bps.
Total operating expenses reduced 4% to £5,268m reflecting savings
realised from strategic cost programmes relating to restructuring of the
branch network and technology improvements, and lower costs to
achieve, partially offset by increased litigation and conduct charges.
Loans and advances to customers increased 1% to £218.4bn due to
increased Corporate lending.
Total assets increased 1% to £287.2bn driven by the growth in loans and
advances to customers.
Customer deposits increased 2% to £305.4bn primarily driven by the
Personal and Corporate businesses.
RWAs were broadly flat at £120.4bn (2014: £120.2bn).
2014 compared to 2013
Profit before tax increased 29% to £2,885m driven by 3% growth in
Personal income, lower impairment due to the improving economic
environment in the UK, and the continued reduction in operating
expenses delivered through strategic cost programmes. This resulted in
a 2.2% increase in return on average equity to 11.9%. In Personal,
income increased £119m alongside significant cost reductions, with the
net closure of 72 branches as part of ongoing branch network
optimisation, as well as investment in the customer experience across
multiple channels. Corporate increased both loans and deposits, and
Wealth undertook a substantial reorganisation to reduce the number of
target markets while simplifying operations.
Total income increased 1% to £8,828m. Personal income increased 3%
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), with balance growth in both lending and
deposits, offset by margin compression. Wealth income was broadly in
line at £1,077m (2013: £1,063m) driven by growth in the UK business,
offset by client and market exits as part of the reorganisations in the US
and EU businesses, and lower fee income.
Net interest income increased 7% to £6,298m driven by lending and
deposit growth and margin improvement. Net interest margin improved
9bps to 3.00% primarily due to the launch of a revised overdraft
proposition, which recognises the majority of overdraft income as net
interest income as opposed to fee income, and higher savings margins
within Personal and Wealth. These factors were partially offset by lower
Corporate deposit margins.
Net fee, commission and other income reduced 11% to £2,530m due to
the launch of the revised overdraft proposition and lower transactional
income in Wealth.
Credit impairment charges improved 22% to £482m and the 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.
Total operating expenses reduced 7% to £5,475m reflecting savings
realised from strategic cost programmes relating to restructuring of the
branch network and technology improvements to increase automation.
Loans and advances to customers increased 2% to £217.0bn due to
mortgage growth and Corporate loan growth.
Total assets increased 2% to £285.0bn driven by the growth in loans
and advances to customers.
Customer deposits increased to £299.2bn (2013: £295.9bn).
RWAs increased 2% to £120.2bn primarily driven by growth in mortgage
and Corporate lending.
£8,726m total income
£3,040m profit before tax
Personal and
Corporate Banking