Barclays 2015 Annual Report Download - page 234

232 I Barclays PLC Annual Report 2015 home.barclays/annualreport
Financial review
Analysis of results by business
2015 compared to 2014
Profit before tax decreased 1% to £979m and total income net of
insurance claims decreased 2% to £3,574m. The ZAR depreciated
against GBP by 10% based on average rates and by 28% based on the
closing exchange rate in 2015. The deterioration was a significant
contributor to the movement in the reported results of Africa Banking
and therefore the discussion of business performance below is based on
results on a constant currency basis.
Results on a constant currency basis
Profit before tax increased 11% to £979m reflecting an increase of 18%
in operations outside South Africa and an increase of 9% in South Africa
despite the challenging macroeconomic environment. Good growth was
delivered in the focus areas of Retail and Business Banking (RBB) and
corporate banking in South Africa, and Wealth, Investment Management
and Insurance (WIMI), whilst performance in the corporate business
outside South Africa was impacted by higher impairment.
Total income net of insurance claims increased 7% to £3,574m.
Net interest income increased 8% to £2,066m driven by higher average
customer advances in Corporate and Investment Banking (CIB) and
strong growth in customer deposits in RBB. Net interest margin
increased 11bps to 6.06% primarily due to improved asset margins in
retail in South Africa.
Net fee, commission and other income increased 5% to £1,668m
reflecting increased transactional income in RBB, partially offset by lower
investment banking income in South Africa.
Credit impairment charges increased 11% to £352m driven by an
increase in single name exposures and additional coverage on
performing loans. The loan loss rate increased 16bps to 109bps.
Total operating expenses increased 5% to £2,250m reflecting
inflationary impacts, partially offset by savings from strategic cost
programmes including the restructure of the branch network,
technology improvements and property rationalisation.
Loans and advances to customers increased 8% to £29.9bn driven by
strong CIB growth.
Total assets increased 14% to £49.9bn primarily due to the increase in
loans and advances to customers.
Customer deposits increased 11% to £30.6bn reflecting strong growth in
the RBB business.
RWAs increased 8% to £33.9bn primarily due to an increase in corporate
lending.
2014 compared to 2013
On a reported basis, total income net of insurance claims decreased 9%
to £3,664m and profit before tax decreased 6% to £984m. Based on
average rates, the ZAR depreciated against GBP by 18% in 2014. The
deterioration was a significant contributor to the movement in the
reported results of Africa Banking. The discussion of business
performance below is based on results on a constant currency basis
unless otherwise stated.
Results on a constant currency basis
Profit before tax increased 13% to £984m, reflecting good growth in
Corporate and Investment Banking (CIB) and Retail and Business
Banking (RBB). CIB experienced strong income growth, driven by the
corporate banking business outside South Africa and improved
investment banking trading performance across Africa. Continued
progress was made on the RBB South Africa turnaround strategy, with
increased net fee and commission income growth in the second half of
the year, and Wealth, Investment Management and Insurance (WIMI)
delivered strong growth outside South Africa due to expansion
initiatives.
Total income net of insurance claims increased 7% to £3,664m.
Net interest income increased 9% to £2,093m, primarily driven by higher
average loans and advances to customers in CIB and growth in customer
deposits in RBB in South Africa. Net interest margin on a reported basis
increased 14bps to 5.95% following the rise in the South African
benchmark interest rate and the favourable impact of higher deposit
margins, partially offset by lower rates outside South Africa.
Net fee, commission and other income increased 4% to £1,741m mainly
reflecting increased RBB transactions in South Africa.
Credit impairment charges decreased 14% to £349m and on a reported
basis the loan loss rate improved 35bps to 93bps, driven by reduced
impairments in the South Africa mortgages portfolio and business
banking, partially offset by increased impairments in the card portfolio.
Total operating expenses increased 8% to £2,342m largely reflecting
inflationary increases, resulting in higher staff costs and increased
investment spend on key initiatives, including higher costs to achieve of
£51m (2013: £23m), partially offset by savings from strategic cost
programmes.
Loans and advances to customers increased 5% to £35.2bn primarily
driven by strong corporate banking growth across Africa in CIB and
limited growth in RBB, mainly due to a modest reduction in the South
Africa mortgages portfolio.
Total assets increased 5% to £55.5bn due to the increase in loans and
advances to customers.
Customer deposits increased 5% to £35.0bn reflecting strong growth in
the South African RBB business.
RWAs increased 1% to £38.5bn on a reported basis, primarily driven by
growth in loans and advances to customers, partially offset by the
depreciation of ZAR against GBP.
£3,574m total income net
of insurance claims
£979m profit before tax
Africa Banking