Average balance sheet

Average balance sheet and net interest income (year ended 31st December)

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2007  2006  2005 
Average  Average  Average  Average  Average  Average 
balance a   Interest  rate  balance a   Interest  rate  balance a   Interest  rate 
£m  £m  %  £m  £m  %  £m  £m  % 
Assets 
Loans and advances to banks b  
– in offices in the United Kingdom  29,431  1,074  3.6  18,401  647  3.5  14,798  454  3.1 
– in offices outside the United Kingdom  12,262  779  6.4  12,278  488  4.0  11,063  403  3.6 
Loans and advances to customers b  
– in offices in the United Kingdom  205,707  13,027  6.3  184,392  11,247  6.1  172,398  10,229  5.9 
– in offices outside the United Kingdom  88,212  6,733  7.6  77,615  4,931  6.4  50,699  2,975  5.9 
Lease receivables: 
– in offices in the United Kingdom  4,822  283  5.9  5,266  300  5.7  6,521  348  5.3 
– in offices outside the United Kingdom  5,861  691  11.8  6,162  595  9.7  1,706  117  6.9 
Financial investments: 
– in offices in the United Kingdom  37,803  2,039  5.4  41,125  1,936  4.7  43,133  1,755  4.1 
– in offices outside the United Kingdom  14,750  452  3.1  14,191  830  5.8  10,349  467  4.5 
Reverse repurchase agreements 
and cash collateral on 
securities borrowed: 
– in offices in the United Kingdom  211,709  9,644  4.6  166,713  6,136  3.7  156,292  4,617  3.0 
– in offices outside the United Kingdom  109,012  5,454  5.0  100,416  5,040  5.0  92,407  2,724  2.9 
Trading portfolio assets: 
– in offices in the United Kingdom  120,691  5,926  4.9  106,148  4,166  3.9  81,607  2,710  3.3 
– in offices outside the United Kingdom  57,535  3,489  6.1  61,370  2,608  4.2  57,452  2,116  3.7 
Total average interest earning assets  897,795  49,591  5.5  794,077  38,924  4.9  698,425  28,915  4.1 
Impairment allowances/provisions  (4,435) (3,565) (3,105)
Non-interest earning assets  422,834  310,949  278,328 
Total average assets and 
interest income  1,316,194  49,591  3.8  1,101,461  38,924  3.5  973,648  28,915  3.0 
Percentage of total average 
interest earning assets in 
offices outside the United Kingdom  32.0%  34.3%  32.0% 
Total average interest earning assets 
related to: 
Interest income  49,591  5.5  38,924  4.9  28,915  4.1 
Interest expense  (37,892) 4.2  (30,385) 3.8  (20,965) 3.0 
11,699  1.3  8,539  1.1  7,950  1.0 
Notes
a
Average balances are based upon daily averages for most UK banking operations and monthly averages elsewhere.
b
Loans and advances to customers and banks include all doubtful lendings, including non-accrual lendings. Interest receivable on such lendings has been included to the extent to which either cash payments have been received or interest has been accrued in accordance with the income recognition policy of the Group.

Average balance sheet and net interest income (year ended 31st December)

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2007  2006  2005 
Average  Average  Average  Average  Average  Average 
balance a   Interest  rate  balance a   Interest  rate  balance a   Interest  rate 
£m  £m  %  £m  £m  %  £m  £m  % 
Liabilities and shareholders’ equity 
Deposits by banks: 
– in offices in the United Kingdom  63,902  2,511  3.9  62,236  2, 464  4.0  54,801  1,665  3.0 
– in offices outside the United Kingdom  27,596  1,225  4.4  23,438  1,137  4.9  21,921  705  3.2 
Customer accounts: 
demand deposits: 
– in offices in the United Kingdom  29,110  858  2.9  25,397  680  2.7  22,593  510  2.3 
– in offices outside the United Kingdom  13,799  404  2.9  10,351  254  2.5  6,196  88  1.4 
Customer accounts: 
savings deposits: 
– in offices in the United Kingdom  55,064  2,048  3.7  57,734  1,691  2.9  52,569  1,570  3.0 
– in offices outside the United Kingdom  4,848  128  2.6  3,124  74  2.4  1,904  39  2.0 
Customer accounts: 
other time deposits – retail: 
– in offices in the United Kingdom  30,578  1,601  5.2  34,865  1,548  4.4  33,932  1,470  4.3 
– in offices outside the United Kingdom  12,425  724  5.8  8,946  482  5.4  6,346  260  4.1 
Customer accounts: 
other time deposits – wholesale: 
– in offices in the United Kingdom  52,147  2,482  4.8  45,930  1,794  3.9  41,745  1,191  2.9 
– in offices outside the United Kingdom  24,298  1,661  6.8  23,442  1,191  5.1  12,545  590  4.7 
Debt securities in issue: 
– in offices in the United Kingdom  41,552  2,053  4.9  47,216  1,850  3.9  46,583  1,631  3.5 
– in offices outside the United Kingdom  94,271  5,055  5.4  74,125  3,686  5.0  52,696  1,695  3.2 
Dated and undated loan capital 
and other subordinated 
liabilities principally: 
– in offices in the United Kingdom  12,972  763  5.9  13,686  777  5.7  11,286  605  5.4 
Repurchase agreements and cash 
collateral on securities lent: 
– in offices in the United Kingdom  169,272  7,616  4.5  141,862  5,080  3.6  130,767  3,634  2.8 
– in offices outside the United Kingdom  118,050  5,051  4.3  86,693  4,311  5.0  80,391  2,379  3.0 
Trading portfolio liabilities: 
– in offices in the United Kingdom  47,971  2,277  4.7  49,892  2,014  4.0  44,349  1,737  3.9 
– in offices outside the United Kingdom  29,838  1,435  4.8  39,064  1,352  3.5  36,538  1,196  3.3 
Total average interest bearing 
liabilities  827,693  37,892  4.6  748,001  30,385  4.1  657,162  20,965  3.2 
Interest free customer deposits: 
– in offices in the United Kingdom  34,109  27,549  25,095 
– in offices outside the United Kingdom  3,092  2,228  2,053 
Other non-interest bearing liabilities  421,473  297,816  267,531 
Minority and other interests and 
shareholders’ equity  29,827  25,867  21,807 
Total average liabilities, 
shareholders’ equity and 
interest expense  1,316,194  37,892  2.9  1,101,461  30,385  2.8  973,648  20,965  2.2 
Percentage of total average 
interest bearing non-capital 
liabilities in offices outside the United Kingdom  39.4%  36.1%  33.3% 
Note
a
Average balances are based upon daily averages for most UK banking operations and monthly averages elsewhere.

Changes in net interest income – volume and rate analysis

The following tables allocate changes in net interest income between changes in volume and changes in interest rates for the last two years. Volume and rate variances have been calculated on the movement in the average balances and the change in the interest rates on average interest earning assets and average interest bearing liabilities. Where variances have arisen from changes in both volumes and interest rates, these have been allocated proportionately between the two.

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2007/2006 Change due to increase/(decrease) in: 2006/2005 Change due to increase/(decrease) in: 2005/2004 a Change due to increase/(decrease) in:
Total  Total  Total 
change  Volume  Rate  change  Volume  Rate  change  Volume  Rate 
£m  £m  £m  £m  £m  £m  £m  £m  £m 
Interest receivable 
Treasury bills and other eligible bills: 
– in offices in the UK  n/a  n/a  n/a  n/a  n/a  n/a  (68) (68) n/a 
– in offices outside the UK  n/a  n/a  n/a  n/a  n/a  n/a  (63) (63) n/a 
n/a  n/a  n/a  n/a  n/a  n/a  (131) (131) n/a 
Loans and advances to banks: 
– in offices in the UK  427  402  25  193  121  72  (237) (115) (122)
– in offices outside the UK  291  (1) 292  85  46  39  132  45  87 
718  401  317  278  167  111  (105) (70) (35)
Loans and advances to customers: 
– in offices in the UK  1,780  1,337  443  1,018  726  292  1,419  1,681  (262)
– in offices outside the UK  1,802  728  1,074  1,956  1,695  261  1,705  787  918 
3,582  2,065  1,517  2,974  2,421  553  3,124  2,468  656 
Lease receivables: 
– in offices in the UK  (17) (26) 9  (48) (70) 22  128  78  50 
– in offices outside the UK  96  (30) 126  478  413  65  96  91  5 
79  (56) 135  430  343  87  224  169  55 
Debt securities: 
– in offices in the UK  n/a  n/a  n/a  n/a  n/a  n/a  (2,129) (2,129) n/a 
– in offices outside the UK  n/a  n/a  n/a  n/a  n/a  n/a  (338) (338) n/a 
n/a  n/a  n/a  n/a  n/a  n/a  (2,467) (2,467) n/a 
Financial investments: 
– in offices in the UK  103  (165) 268  181  (85) 266  1,755  1,755  n/a 
– in offices outside the UK  (378) 32  (410) 363  202  161  467  467  n/a 
(275) (133) (142) 544  117  427  2,222  2,222  n/a 
External trading assets: 
– in offices in the UK and  n/a  n/a  n/a  n/a  n/a  n/a  (4,971) (4,971) n/a 
– outside the UK  n/a  n/a  n/a  n/a  n/a  n/a  (2,224) (2,224) n/a 
n/a  n/a  n/a  n/a  n/a  n/a  (7,195) (7,195) n/a 
Reverse repurchase agreements and 
cash collateral on securities borrowed: 
– in offices in the UK  3,508  1,865  1,643  1,519  324  1,195  4,617  4,617  n/a 
– in offices outside the UK  414  430  (16) 2,316  254  2,062  2,724  2,724  n/a 
3,922  2,295  1,627  3,835  578  3,257  7,341  7,341  n/a 
Trading portfolio assets: 
– in offices in the UK  1,760  621  1,139  1,456  907  549  2,710  2,710  n/a 
– in offices outside the UK  881  (172) 1,053  492  151  341  2,116  2,116  n/a 
2,641  449  2,192  1,948  1,058  890  4,826  4,826  n/a 
Total interest receivable: 
– in offices in the UK  7,561  4,034  3,527  4,319  1,923  2,396  3,224  3,558  (334)
– in offices outside the UK  3,106  987  2,119  5,690  2,761  2,929  4,615  3,605  1,010 
10,667  5,021  5,646  10,009  4,684  5,325  7,839  7,163  676 
Note
a
2004 figures do not reflect the applications of IAS 32 and IAS 39 and IFRS 4 which became effective from 1st January 2005.

Changes in net interest income – volume and rate analysis

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2007/2006 Change due to increase/(decrease) in: 2006/2005 Change due to increase/(decrease) in: 2005/2004 a Change due to increase/(decrease) in:
Total  Total  Total 
change  Volume  Rate  change  Volume  Rate  change  Volume  Rate 
£m  £m  £m  £m  £m  £m  £m  £m  £m 
Interest payable 
Deposits by banks: 
– in offices in the UK  47  66  (19) 799  247  552  440  231  209 
– in offices outside the UK  88  190  (102) 432  52  380  395  121  274 
135  256  (121) 1,231  299  932  835  352  483 
Customer accounts – demand deposits: 
– in offices in the UK  178  105  73  170  68  102  200  28  172 
– in offices outside the UK  150  95  55  166  80  86  57  36  21 
328  200  128  336  148  188  257  64  193 
Customer accounts – savings deposits: 
– in offices in the UK  357  (81) 438  121  152  (31) 245  145  100 
– in offices outside the UK  54  45  9  35  28  7  18  16  2 
411  (36) 447  156  180  (24) 263  161  102 
Customer accounts – other time 
deposits – retail: 
– in offices in the UK  53  (204) 257  78  41  37  164  (23) 187 
– in offices outside the UK  242  200  42  222  125  97  142  59  83 
295  (4) 299  300  166  134  306  36  270 
Customer accounts – other time 
deposits – wholesale: 
– in offices in the UK  688  263  425  603  129  474  (653) (479) (174)
– in offices outside the UK  470  45  425  601  550  51  248  (16) 264 
1,158  308  850  1,204  679  525  (405) (495) 90 
Debt securities in issue: 
– in offices in the UK  203  (240) 443  219  22  197  398  507  (109)
– in offices outside the UK  1,369  1,063  306  1,991  850  1,141  1,359  323  1,036 
1,572  823  749  2,210  872  1,338  1,757  830  927 
Dated and undated loan capital and 
other subordinated liabilities principally 
in offices in the UK  (14) (41) 27  172  135  37  (87) (78) (9)
External trading liabilities: 
– in offices in the UK  n/a  n/a  n/a  n/a  n/a  n/a  (5,611) (5,611) n/a 
– outside the UK  n/a  n/a  n/a  n/a  n/a  n/a  (1,805) (1,805) n/a 
n/a  n/a  n/a  n/a  n/a  n/a  (7,416) (7,416) n/a 
Repurchase agreements and cash 
collateral on securities lent: 
– in offices in the UK  2,536  1,090  1,446  1,446  329  1,117  3,634  3,634  n/a 
– in offices outside the UK  740  1,402  (662) 1,932  200  1,732  2,379  2,379  n/a 
3,276  2,492  784  3,378  529  2,849  6,013  6,013  n/a 
Trading portfolio liabilities: 
– in offices in the UK  263  (80) 343  277  222  55  1,737  1,737  n/a 
– in offices outside the UK  83  (366) 449  156  85  71  1,196  1,196  n/a 
346  (446) 792  433  307  126  2,933  2,933  n/a 
Internal funding of trading businesses  n/a  n/a  n/a  n/a  n/a  n/a  2,045  2,045  n/a 
Total interest payable: 
– in offices in the UK  4,311  878  3,433  3,885  1,345  2,540  2,512  2,136  376 
– in offices outside the UK  3,196  2,674  522  5,535  1,970  3,565  3,989  2,309  1,680 
7,507  3,552  3,955  9,420  3,315  6,105  6,501  4,445  2,056 
Movement in net interest income 
Increase/(decrease) in interest 
receivable  10,667  5,021  5,646  10,009  4,684  5,325  7,839  7,163  676 
(Increase)/decrease in interest payable  (7,507) (3,552) (3,955) (9,420) (3,315) (6,105) (6,501) (4,445) (2,056)
3,160  1,469  1,691  589  1,369  (780) 1,338  2,718  (1,380)
Note
a
2004 figures do not reflect the applications of IAS 32 and IAS 39 and IFRS 4 which became effective from 1st January 2005.