Download as PDFResults by nature of income and expense
Net interest income
Download table as excel file| 2007 | 2006 | 2005 | |||
| £m | £m | £m | |||
| Cash and balances with central banks | 145 | 91 | 9 | ||
| Available for sale investments | 2,580 | 2,811 | 2,272 | ||
| Loans and advances to banks | 1,416 | 903 | 690 | ||
| Loans and advances to customers | 19,559 | 16,290 | 12,944 | ||
| Other | 1,608 | 1,710 | 1,317 | ||
| Interest income | 25,308 | 21,805 | 17,232 | ||
| Deposits from banks | (2,720) | (2,819) | (2,056) | ||
| Customer accounts | (4,110) | (3,076) | (2,715) | ||
| Debt securities in issue | (6,651) | (5,282) | (3,268) | ||
| Subordinated liabilities | (878) | (777) | (605) | ||
| Other | (1,339) | (708) | (513) | ||
| Interest expense | (15,698) | (12,662) | (9,157) | ||
| Net interest income | 9,610 | 9,143 | 8,075 | ||
2007/06
Group net interest income increased 5% (£467m) to £9,610m (2006: £9,143m) reflecting balance sheet growth across a number of businesses.
Group net interest income reflects structural hedges which function to reduce the impact of the volatility of short-term interest rate movements on equity and customer balances that do not re-price with market rates.
The contribution of structural hedges relative to average base rates decreased to £351m expense (2006: £26m income), largely due to the smoothing effect of the structural hedge on changes in interest rates.
Other interest expense principally includes interest on repurchase agreements and hedging activity.
2006/05
Group net interest income increased 13% (£1,068m) to £9,143m (2005: £8,075m). The inclusion of Absa contributed net interest income of £1,138m
(2005
b
: £516m). Group net interest income excluding Absa grew 6%.
The contribution of the structural hedge decreased to £26m (2005: £145m), largely due to the impact of relatively higher short-term interest rates and lower medium-term rates.
Business margins
Download table as excel file| 2007 | 2006 | 2005 | |||
| % | % | % | |||
| UK Retail Banking assets | 1.20 | 1.32 | 1.43 | ||
| UK Retail Banking liabilities | 2.15 | 2.05 | 2.02 | ||
| Barclays Commercial Bank assets | 1.80 | 1.92 | 1.87 | ||
| Barclays Commercial Bank liabilities | 1.49 | 1.46 | 1.46 | ||
| Barclaycard assets | 6.59 | 7.13 | 7.11 | ||
| IRCB – ex Absa assets | 1.32 | 1.29 | 1.36 | ||
| IRCB – ex Absa liabilities | 1.91 | 2.06 | 2.03 | ||
| IRCB – Absa assets | 2.86 | 2.95 | 3.52 | ||
| IRCB – Absa liabilities a | 3.25 | 2.90 | 2.39 | ||
| Barclays Wealth assets | 1.11 | 1.08 | 0.96 | ||
| Barclays Wealth liabilities | 1.03 | 1.10 | 1.04 | ||
Average balances
Download table as excel file| 2007 | 2006 | 2005 | |||
| £m | £m | £m | |||
| UK Retail Banking assets | 78,502 | 73,593 | 74,138 | ||
| UK Retail Banking liabilities | 81,848 | 76,498 | 71,003 | ||
| Barclays Commercial Bank assets | 53,600 | 52,018 | 43,985 | ||
| Barclays Commercial Bank liabilities | 46,367 | 44,839 | 40,545 | ||
| Barclaycard assets | 19,191 | 17,918 | 16,102 | ||
| IRCB – ex Absa assets | 33,321 | 27,210 | 22,743 | ||
| IRCB – ex Absa liabilities | 12,484 | 10,423 | 8,983 | ||
| IRCB – Absa assets | 26,132 | 24,388 | 20,225 | ||
| IRCB – Absa liabilities a | 11,659 | 11,071 | 13,388 | ||
| Barclays Wealth assets | 7,403 | 5,543 | 4,712 | ||
| Barclays Wealth liabilities | 31,151 | 27,744 | 26,136 | ||
Business net interest income
Download table as excel file| 2007 | 2006 | 2005 | |||
| £m | £m | £m | |||
| UK Retail Banking assets | 939 | 970 | 1,062 | ||
| UK Retail Banking liabilities | 1,763 | 1,566 | 1,436 | ||
| Barclays Commercial Bank assets | 963 | 999 | 823 | ||
| Barclays Commercial Bank liabilities | 693 | 655 | 592 | ||
| Barclaycard assets | 1,266 | 1,278 | 1,144 | ||
| IRCB – ex Absa assets | 439 | 349 | 310 | ||
| IRCB – ex Absa liabilities | 238 | 216 | 183 | ||
| IRCB – Absa assets | 746 | 719 | 308 | ||
| IRCB – Absa liabilities a | 379 | 321 | 138 | ||
| Barclays Wealth assets | 82 | 60 | 45 | ||
| Barclays Wealth liabilities | 320 | 306 | 273 | ||
| Business assets total net | |||||
| interest income | 4,435 | 4,375 | 3,692 | ||
| Business liabilities total net | |||||
| interest income | 3,393 | 3,064 | 2,622 | ||
| Business net interest income | 7,828 | 7,439 | 6,314 | ||
Reconciliation of business interest income to Group net interest income
Download table as excel file| 2007 | 2006 | 2005 | |||
| £m | £m | £m | |||
| Business net interest income | 7,828 | 7,439 | 6,314 | ||
| Other: | |||||
| – Barclays Capital | 1,179 | 1,158 | 1,065 | ||
| – Barclays Global Investors | (8) | 10 | 15 | ||
| – Other | 611 | 536 | 681 | ||
| Group net interest income | 9,610 | 9,143 | 8,075 | ||
Notes
Business net interest income is derived from the interest rate earned on average assets or paid on average liabilities relative to the average Bank of England base rate, local equivalents for international businesses or the rate managed by the bank using derivatives. The margin is expressed as annualised business interest income over the relevant average balance. Asset and liability margins cannot be added together as they are relative to the average Bank of England base rate, local equivalent for international businesses or the rate managed by the bank using derivatives. The benefit of capital attributed to these businesses is excluded from the calculation of business margins and business net interest income.
Average balances are calculated on daily averages for most UK banking operations and monthly averages elsewhere.
Within the reconciliation of Group net interest income, there is an amount captured as Other. This relates to the benefit of capital excluded from the business margin calculation, Head office functions and other operations and net funding on non-customer assets and liabilities.
2007/06
UK Retail Banking assets margin decreased 12 basis points to 1.20% (2006: 1.32%) principally due to the increased proportion of mortgages and the contraction in unsecured loans. UK Retail Banking liabilities margin increased 10 basis points to 2.15% (2006: 2.05%) due to pricing initiatives and changes in the product mix.
Barclays Commercial Bank assets margin decreased by 12 basis points to 1.80% (2006: 1.92%) due to changes in the product mix. Barclays Commercial Bank liabilities margin remained broadly stable at 1.49% (2006: 1.46%).
Barclaycard assets margin decreased 54 basis points to 6.59% (2006: 7.13%) due to higher average base rates across core markets and an increased weighting to secured lending.
International Retail and Commercial Banking – excluding Absa assets margin of 1.32% (2006: 1.29%) was broadly stable. International Retail and Commercial Banking – excluding Absa liabilities margin decreased 15 basis points to 1.91% (2006: 2.06%) primarily driven by changes in the product and country mix.
International Retail and Commercial Banking – Absa assets margin decreased 9 basis points to 2.86% (2006: 2.95%) due to increased competition, increases in interest rates and changes in the product mix. The liabilities margin increased 35 basis points to 3.25% (2006: 2.90% a ) driven by a re-pricing of customer deposits and higher interest rates.
Barclays Wealth assets margin increased 3 basis points to 1.11% (2006: 1.08%) due to changes in the product mix. The liabilities margin decreased seven basis points to 1.03% (2006: 1.10%) due to competitive pricing.
The impact of the structural hedge on customer balances has been included within business margins and has smoothed the impact of changing interest rates before the impact of changes in product mix or product pricing.
2006/05
UK Retail Banking assets margin decreased 11 basis points to 1.32% (2005: 1.43%). The mortgage margin has been impacted by changed assumptions used in the calculation of effective interest rates, a higher proportion of new mortgages and base rate changes. This was partially offset by increased contributions from non-mortgage assets. UK Retail Banking liabilities margin was stable at 2.05% (2005: 2.02%).
Barclays Commercial Bank assets margin improved to 1.92% (2005: 1.87%). Barclays Commercial Bank liabilities margin was stable at 1.46% (2005: 1.46%).
Barclaycard assets margin was stable at 7.13% (2005: 7.11%).
International Retail and Commercial Banking – excluding Absa assets margin decreased 7 basis points to 1.29% (2005: 1.36%) partly reflecting a greater share of mortgage assets as a proportion of the total book in continental Europe. International Retail and Commercial Banking – excluding Absa liabilities margin was stable at 2.06% (2005: 2.03%).
International Retail and Commercial Banking – Absa assets margin decreased 57 basis points to 2.95% (2005 b : annualised 3.52%) reflecting a higher proportion of mortgage assets and competitive pressures in mortgages and asset finance. International Retail and Commercial Banking – Absa liabilities margin increased 51 basis points to 2.90% (2005 b : annualised 2.39%).
Barclays Wealth assets margin increased 12 basis points to 1.08% (2005: 0.96%) largely reflecting higher margins on new lending business and a small increase in mortgage margins. The liabilities margin increased 6 basis points to 1.10% (2005: 1.04%) principally due to a slight increase in currency deposit spreads.
Notes
Net fee and commission income
Download table as excel file| 2007 | 2006 | 2005 | |||
| £m | £m | £m | |||
| Brokerage fees | 109 | 70 | 64 | ||
| Investment management fees | 1,787 | 1,535 | 1,250 | ||
| Securities lending | 241 | 185 | 151 | ||
| Banking and credit related fees | |||||
| and commissions | 6,363 | 6,031 | 4,805 | ||
| Foreign exchange commission | 178 | 184 | 160 | ||
| Fee and commission income | 8,678 | 8,005 | 6,430 | ||
| Fee and commission expense | (970) | (828) | (725) | ||
| Net fee and commission income | 7,708 | 7,177 | 5,705 | ||
2007/06
Net fee and commission income increased 7% (£531m) to £7,708m (2006: £7,177m).
Fee and commission income rose 8% (£673m) to £8,678m (2006: £8,005m) reflecting increased management and securities lending fees in Barclays Global Investors, increased client assets and higher transactional income in Barclays Wealth and higher income generated from lending fees in Barclays Commercial Bank. Fee income in Barclays Capital increased primarily due to the acquisition of HomEq.
2006/05
Net fee and commission income increased 26% (£1,472m) to £7,177m (2005: £5,705m). The inclusion of Absa contributed net fee and commission income of £850m (2005 a : £334m). Group net fee and commission income excluding Absa grew 18%, reflecting growth across all businesses.
Fee and commission income rose 24% (£1,575m) to £8,005m (2005: £6,430m). The inclusion of Absa contributed fee and commission income of £896m (2005 a : £386m). Excluding Absa, fee and commission income grew 18%, driven by a broadly based performance across the Group, particularly within Barclays Global Investors.
Fee and commission expense increased 14% (£103m) to £828m (2005: £725m), reflecting the growth in Barclaycard US. Absa contributed fee and commission expense of £46m (2005 a : £52m).
Principal transactions
Download table as excel file| 2007 | 2006 | 2005 | |||
| £m | £m | £m | |||
| Rates related business | 4,162 | 2,848 | 1,732 | ||
| Credit related business | (403) | 766 | 589 | ||
| Net trading income | 3,759 | 3,614 | 2,321 | ||
| Net gain from disposal | |||||
| of available for sale assets | 560 | 307 | 120 | ||
| Dividend income | 26 | 15 | 22 | ||
| Net gain from financial | |||||
| instruments designated at | |||||
| fair value | 293 | 447 | 389 | ||
| Other investment income | 337 | 193 | 327 | ||
| Net investment income | 1,216 | 962 | 858 | ||
| Principal transactions | 4,975 | 4,576 | 3,179 | ||
2007/06
Principal transactions increased 9% (£399m) to £4,975m (2006: £4,576m).
Net trading income increased 4% (£145m) to £3,759m (2006: £3,614m). The majority of the Group’s net trading income arises in Barclays Capital. Growth in the Rates related business reflects very strong performances in fixed income, commodities, foreign exchange, equity and prime services. The Credit related business includes net losses from credit market turbulence and the benefits of widening credit spreads on the fair value of issued notes.
Net investment income increased 26% (£254m) to £1,216m (2006: £962m). The cumulative gain from disposal of available for sale assets increased 82% (£253m) to £560m (2006: £307m) largely as a result of a number of private equity realisations and divestments. Net income from financial instruments designated at fair value decreased by 34% (£154m) largely due to lower growth in the value of linked insurance assets within Barclays Wealth.
Fair value movements on insurance assets included within net investment income contributed £113m (2006: £205m).
2006/05
Net trading income increased 56% (£1,293m) to £3,614m (2005: £2,321m) due to excellent performances in Barclays Capital Rates and Credit businesses, in particular in commodities, fixed income, equities, credit derivatives and emerging markets. This was driven by higher volumes of client – led activity and favourable market conditions. The inclusion of Absa contributed net trading income of £60m (2005 a : £9m). Group net trading income excluding Absa grew 54%.
Net investment income increased 12% (£104m) to £962m (2005: £858m). The inclusion of Absa contributed net investment income of £144m (2005 a : £62m). Group net investment income excluding Absa increased 3%.
The cumulative gain from disposal of available for sale assets increased 156% (£187m) to £307m (2005: £120m) driven by investment realisations, primarily in Private Equity.
Fair value movements on certain assets and liabilities have been reported within net trading income or within net investment income depending on the nature of the transaction. Fair value movements on insurance assets included within net investment income contributed £205m (2005: £317m).
Note
Other income
Download table as excel file| 2007 | 2006 | 2005 | |||
| £m | £m | £m | |||
| Increase in fair value of assets held | |||||
| in respect of linked liabilities to | |||||
| customers under investment | |||||
| contracts | 5,592 | 7,417 | 9,234 | ||
| Increase in liabilities to customers | |||||
| under investment contracts | (5,592) | (7,417) | (9,234) | ||
| Property rentals | 53 | 55 | 54 | ||
| Loss on part disposal of Monument | |||||
| credit card portfolio | (27) | – | – | ||
| Other | 162 | 159 | 93 | ||
| Other income | 188 | 214 | 147 | ||
Certain asset management products offered to institutional clients by Barclays Global Investors are recognised as investment contracts. Accordingly the invested assets and the related liabilities to investors are held at fair value and changes in those fair values are reported within other income.
Impairment charges and other credit provisions
Download table as excel file| 2007 | 2006 | 2005 | |||
| £m | £m | £m | |||
| Impairment charges on loans and advances | |||||
| – New and increased impairment | |||||
| allowances | 2,871 | 2,722 | 2,129 | ||
| – Releases | (338) | (389) | (333) | ||
| – Recoveries | (227) | (259) | (222) | ||
| Impairment charges on loans | |||||
| and advances | 2,306 | 2,074 | 1,574 | ||
| Other credit provisions | |||||
| Charges/(credits) in respect of undrawn | |||||
| contractually committed facilities | |||||
| and guarantees | 476 | (6) | (7) | ||
| Impairment charges on loans and | |||||
| advances and other credit provisions | 2,782 | 2,068 | 1,567 | ||
| Impairment charges on available | |||||
| for sale assets | 13 | 86 | 4 | ||
| Impairment charges and other | |||||
| credit provisions | 2,795 | 2,154 | 1,571 | ||
| Impairment charges and other credit | |||||
| provisions on ABS CDO Super Senior | |||||
| and other credit market exposures | |||||
| included above: | |||||
| Impairment charges on loans | |||||
| and advances | 313 | – | – | ||
| Charges in respect of undrawn facilities | 469 | – | – | ||
| Impairment charges and other credit | |||||
| provisions on ABS CDO Super senior | |||||
| and other credit market positions | 782 | – | – | ||
2007/06
Total impairment charges and other credit provisions increased 30% (£641m) to £2,795m (2006: £2,154m).
Impairment charges on loans and advances and other credit provisions increased 35% (£714m) to £2,782m (2006: £2,068m) reflecting charges of £782m against ABS CDO Super Senior and other credit market positions.
Impairment charges on loans and advances and other credit provisions as a percentage of Group total loans and advances increased to 0.71% (2006: 0.65%); total loans and advances grew 23% to £389,290m (2006: £316,561m).
Retail
Retail impairment charges on loans and advances fell 11% (£204m) to £1,605m (2006: £1,809m). Retail impairment charges as a percentage of period end total loans and advances reduced to 0.98% (2006: 1.30%); total retail loans and advances increased 18% to £164,062m (2006: £139,350m).
Barclaycard impairment charges improved 21% (£229m) to £838m (2006: £1,067m) reflecting reduced flows into delinquency, lower levels of arrears and lower charge-offs in UK Cards. We made changes to our impairment methodologies to standardise our approach and in anticipation of Basel II. The net positive impact of these changes in methodology was offset by the increase in impairment charges in Barclaycard International and secured consumer lending.
Impairment charges in UK Retail Banking decreased by £76m (12%) to £559m (2006: £635m), reflecting lower charges in unsecured Consumer Lending and Local Business driven by improved collection processes, reduced flows into delinquency, lower arrears trends and stable charge-offs. In UK Home Finance, asset quality remained strong and mortgage charges remained negligible. Mortgage delinquencies as a percentage of outstandings remained stable and amounts charged off were low.
Impairment charges in International Retail and Commercial Banking – excluding Absa rose by £38m (93%) to £79m (2006: £41m) reflecting very strong balance sheet growth in 2006 and 2007 and the impact of lower releases in 2007.
Arrears in some of International Retail and Commercial Banking – Absa’s retail portfolios deteriorated in 2007, driven by interest rate increases in 2006 and 2007 resulting in pressure on collections.
Wholesale and corporate
Wholesale and corporate impairment charges on loans and advances increased £436m to £701m (2006: £265m). Wholesale and corporate impairment charges as a percentage of period end total loans and advances increased to 0.31% (2006: 0.15%); total loans and advances grew 27% to £225,228m (2006: £177,211m).
Barclays Capital impairment charges and other credit provisions of £846m included a charge of £782m against ABS CDO Super Senior and other credit market exposures and £58m net of fees relating to drawn leveraged finance positions.
The impairment charge in Barclays Commercial Bank increased £38m (15%) to £290m (2006: £252m), primarily due to higher impairment charges in Larger Business, partially offset by a lower charge in Medium Business due to a tightening of the lending criteria.
Impairment charges (continued)
2006/05
Total impairment charges increased 37% (£583m) to £2,154m (2005: £1,571m).
Impairment charges on loans and advances and other credit provisions increased 32% (£501m) to £2,068m (2005: £1,567m). Excluding Absa, the increase was 2