Barclays 2015 Annual Report Download - page 35

home.barclays/annualreport Barclays PLC Annual Report 2015 I 33
Performance commentary:
2015 results were characterised by further the continued execution of the strategy.
Group capital and leverage ratios continued to strengthen. The fully loaded common equity tier 1 (CET1) ratio increased 110 basis points to 11.4%
driven by a reduction in risk weighted assets of £44bn to £358bn. The leverage ratio increased 80 basis points to 4.5% driven by a reduction in
leverage exposure of £205bn to £1,028bn.
Strong progress on the rundown of the Non-Core business continued, with a further reduction in risk weighted assets of £29bn to £47bn
contributing to the increase in the CET1 ratio. Non-Core leverage exposure decreased to £121bn (2014: £277bn). The announced sales of the
Portuguese and Italian retail businesses in H215, due to be completed in H116, are expected to result in a further £2.5bn reduction in Non-Core risk
weighted assets. Non-Core period end allocated equity reduced to £7bn (2014: £11bn).
The accelerated rundown of the Non-Core business resulted in a 2% reduction in Group adjusted profit before tax to £5,403m due to a 24% increase
in the Non-Core loss before tax to £1,459m.
The Core business performed well reflecting continued strategic progress. This resulted in a 3% increase in profit before tax to £6,862m, with
improvements in all Core operating businesses, including Africa Banking on a constant currency basis.
The improved profit before tax in the Core business was driven by positive cost to income jaws across all Core operating businesses. Combined with
the increase in average allocated equity of £5bn to £47bn, this resulted in a return on average equity for the Core business of 9.0% (2014: 9.2%) and
a the return on average tangible equity of 10.9% (2014: 11.3%). Group adjusted return on average equity was 4.9% (2014: 5.1%).
Driving efficiency remains a significant focus for the Group, with total adjusted operating expenses reducing 6% to £16,998m. Adjusted operating
expenses excluding costs to achieve reduced 4% to £16,205m, driven by savings from strategic cost programmes.
Statutory profit before tax reduced 8% to £2,073m after absorbing net losses on adjusting items of £3,330m (2014: £3,246m).
A final dividend for 2015 of 3.5p per share will be paid, resulting in a total 6.5p dividend per share for the year
2015 Adjusting items to income statement
In order to provide a more consistent basis for comparing business performance between periods, management assess performance on both an
adjusted and statutory basis. Adjusted measures exclude items considered to be significant but not representative of the underlying business
performance and are detailed below.
Adjusted profit reconciliation
2015
£m
2014
£m
Adjusted profit before tax 5,403 5,502
Provisions for UK customer redress (2,772) (1,110)
Provisions for ongoing investigations and litigation including Foreign Exchange (1,237) (1,250)
Losses on sale relating to the Spanish, Portuguese and Italian businesses (580) (446)
Gain on US Lehman acquisition assets 496 461
Own credit 430 34
Gain on valuation of a component of the defined retirement benefit liability 429 –
Impairment of goodwill and other assets relating to businesses being disposed (96) –
Revision of ESHLA valuation methodology – (935)
Statutory profit before tax 2,073 2,256
These financial highlights provide an overview of 2015
performance. For further information on the results of the
Group, please see our Financial review on page 217 of the
Annual Report 2015 at home.barclays/annualreport
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