Barclays 2015 Annual Report Download - page 266

264 I Barclays PLC Annual Report 2015 home.barclays/annualreport
Notes to the financial statements
Performance/return
4 Net fee and commission income
Accounting for net fee and commission income
The Group applies IAS 18 Revenue. Fees and commissions charged for services provided or received by the Group are recognised as the services
are provided, for example on completion of the underlying transaction.
2015
£m
2014
£m
2013
£m
Fee and commission income
Banking, investment management and credit related fees and commissions 9,497 9,681 10,311
Foreign exchange commission 158 155 168
Fee and commission income 9,655 9,836 10,479
Fee and commission expense (1,763) (1,662) (1,748)
Net fee and commission income 7,892 8,174 8,731
2015
Net fee and commission income decreased £282m to £7,892m. This was primarily driven by lower income due to the sale of the US Wealth and
Spanish retail businesses and launch of the revised PCB overdraft proposition in mid 2014, which recognises the majority of the overdraft income as
net interest income as opposed to fee income. Investment Bank income decreased, driven by lower equity underwriting fees partially offset by higher
financial advisory and debt underwriting fees. Growth in Africa Banking was offset by adverse currency movements. These movements were partly
offset by increases in Barclaycard, driven by growth in payment volumes.
2014
Net fee and commission income decreased £557m to £8,174m. This was driven by lower fees as a result of decreased debt underwriting fees and
declines in cash commissions, reflecting lower volumes in the Investment Bank. Further decreases were caused by the launch of the revised PCB
overdraft proposition, which recognises the majority of the overdraft income as net interest income as opposed to fee income, and adverse currency
movements in Africa Banking. These movements were partly offset by increases in Barclaycard, driven by growth in payment volumes.
5 Net trading income
Accounting for net trading income
In accordance with IAS 39 Financial Instruments: Recognition and Measurement, trading positions are held at fair value, and the resulting gains
and losses are included in the income statement, together with interest and dividends arising from long and short positions and funding costs
relating to trading activities.
Income arises from both the sale and purchase of trading positions, margins which are achieved through market making and customer business
and from changes in fair value caused by movements in interest and exchange rates, equity prices and other market variables.
Own credit gains/losses arise from the fair valuation of financial liabilities designated at fair value through profit and loss. See Note 17 Financial
liabilities designated at fair value.
2015
£m
2014
£m
2013
£m
Trading income 3,193 3,297 6,773
Own credit gains/(losses) 430 34 (220)
Net trading income 3,623 3,331 6,553
Included within net trading income were gains of £992m (2014: £1,051m loss; 2013: £914m gain) on financial assets designated at fair value and
losses of £187m (2014: £65m loss; 2013: £684m loss) on financial liabilities designated at fair value.
2015
Net trading income increased 9% to £3,623m, primarily reflecting a £396m favourable variance in own credit due to widening of credit spreads on
Barclays’ issued debt. Trading income decreased by £104m, mainly driven by the continued disposal and running down of certain businesses and fair
value movements on the ESHLA portfolio within Non-Core, and depreciation of ZAR against GBP. This was partially offset by increases in various
Investment Bank businesses driven by higher volatility and trading activity during the year.
2014
Net trading income decreased 49% to £3,331m, primarily reflecting a £2,541m decrease in trading income, as lower volatility and subdued trading
activity combined with tighter spreads reduced income across a number of businesses. Disposals and running down of certain Non-Core businesses
and the £935m fair value reduction on the ESHLA portfolio (see Note 18 for further details) also contributed to the lower income. This was partially
offset by a £254m favourable variance in own credit gains/losses.