a Net interest income

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  (1,348) (708) (513)
Interest expense  (15,707) (12,662) (9,157)
Net interest income  9,601  9,143  8,075 

Interest income includes £113m (2006: £98m, 2005: £76m) accrued on impaired loans.

Other interest income principally includes interest income relating to reverse repurchase agreements. Similarly, other interest expense principally includes interest expense relating to repurchase agreements and hedging activity.

Included in net interest income is hedge ineffectiveness as detailed in Note .

b Net fee and commission income

2007  2006  2005 
£m  £m  £m 
Fee and commission income 
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  6,367  6,031  4,805 
Foreign exchange commissions  178  184  160 
Fee and commission income  8,682  8,005  6,430 
Brokerage fees paid  (970) (828) (725)
Fee and commission expense  (970) (828) (725)
Net fee and commission income  7,712  7,177  5,705 

c Principal transactions

2007  2006  2005 
£m  £m  £m 
Rates related business  4,162  2,866  1,732 
Credit related business  (403) 766  589 
Net trading income  3,759  3,632  2,321 
Gain from disposal of available for sale assets/investment securities  560  307  120 
Dividend income on equity investments  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  4,594  3,179 

Net trading income includes the profits and losses arising both on the purchase and sale of trading instruments and from the revaluation to market value, together with the interest income and expense from these instruments and the related funding cost.

Of the total net trading income, a £756m loss (2006: £947m gain, 2005: £498m gain) was made on securities and £640m gain (2006: £480m, 2005: £340m) was earned in foreign exchange dealings.

The net gain on financial assets designated at fair value included within principal transactions was £78m (2006: £489m, 2005: £391m) of which losses of £215m (2006: £42m gain, 2005: £2m gain) were included in net trading income and gains of £293m (2006: £447m, 2005: £389m) were included in net investment income.

The net loss on financial liabilities designated at fair value included within principal transactions was £231m (2006: £920m, 2005: £666m) all of which was included within net trading income.

The net gain from widening of credit spreads relating to Barclays Capital issued notes held at fair value was £658m (2006: £nil, 2005: £nil).

d Other income

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 
Other income  171  202  124 
Other income  224  257  178 

Included in other income are sub-lease receipts of £18m (2006: £18m, 2005: £18m).

Included in other income in 2007 is a loss on the part disposal of Monument credit card portfolio and gains on reinsurance transactions in 2007 and 2006.

e Trading portfolio assets

2007  2006 
£m  £m 
Trading portfolio assets 
Treasury and other eligible bills  2,094  2,960 
Debt securities  152,778  140,576 
Equity securities  36,342  31,565 
Traded loans  1,780  1,843 
Commodities  732  940 
Trading portfolio assets  193,726  177,884 

f Available for sale financial investments

2007  2006 
£m  £m 
Debt securities  38,673  47,912 
Treasury bills and other eligible bills  2,723  2,420 
Equity securities  1,860  1,620 
Available for sale financial investments  43,256  51,952 
2007  2006 
Movement in available for sale financial investments  £m  £m 
At beginning of year  51,952  53,703 
Exchange and other adjustments  1,499  (3,999)
Acquisitions and transfers  26,950  47,109 
Disposals (sale and redemption) (37,498) (44,959)
Gains from changes in fair value recognised in equity  391  182 
Impairment  (13) (86)
Amortisation of discounts/premium  (25) 2 
At end of year  43,256  51,952 

g Other assets

2007  2006 
£m  £m 
Sundry debtors  4,045  4,298 
Prepayments  551  658 
Accrued income  400  722 
Reinsurance assets  157  172 
Other assets  5,153  5,850 

Included in the above Group balances are £4,541m (2006: £5,065m) expected to be recovered within no more than 12 months after the balance sheet date; and balances of £612m (2006: £785m) expected to be recovered more than 12 months after the balance sheet date.

Other assets comprise £3,966m (2006: £4,097m) of receivables which meet the definition of financial assets.

h Other liabilities

2007  2006 
£m  £m 
Accruals and deferred income  6,075  6,127 
Sundry creditors  4,356  4,118 
Obligations under finance leases  83  92 
Other liabilities  10,514  10,337 

Included in the above are balances of £9,058m (2006: £9,265m) expected to be settled within no more than 12 months after the balance sheet date; and balances of £1,456m (2006: £1,072m) expected to be settled more than 12 months after the balance sheet date.

Accruals and deferred income included £102m (2006: £107m) in relation to deferred income from investment contracts and £677m (2006: £822m) in relation to deferred income from insurance contracts for the Group.

i Called up share capital

Ordinary Shares

The authorised ordinary share capital of the Bank, as at 31st December 2007, was 3,000 million (2006: 3,000 million) ordinary shares of £1 each.

During the year, the Bank issued 7 million ordinary shares with an aggregate nominal value of £7m, for cash consideration of £111m.

Preference Shares

The authorised preference share capital of Barclays Bank PLC, as at 31st December 2007, was 1,000 Preference Shares (2006: 1,000) of £1; 400,000 Preference Shares of €100 each (2006: 400,000); 400,000 Preference Shares of £100 each (2006: 400,000); 400,000 Preference Shares of US$100 each (2006: 400,000); 150 million Preference Shares of US$0.25 each (2006: 80 million).

The issued preference share capital of Barclays Bank PLC, as at 31st December 2007, comprised 1,000 (2006: 1,000) Sterling Preference Shares of £1 each; 240,000 (2006: 240,000) Euro Preference Shares of €100 each; 75,000 (2006: 75,000) Sterling Preference Shares of £100 each; 100,000 (2006: 100,000) US Dollar Preference Shares of US$100 each; 131 million (2006: 30 million) US Dollar Preference Shares of US$0.25 each.

2007  2006 
£m  £m 
Called up share capital, allotted and fully paid 
At beginning of year  2,329  2,318 
Issued for cash  7  11 
At end of year  2,336  2,329 
Called up preference share capital, allotted and fully paid 
At beginning of year  34  30 
Issued for cash  12  4 
At end of year  46  34 
Called up share capital  2,382  2,363 

Share premium
2007  2006 
£m  £m 
At beginning of year  9,452  8,882 
Ordinary shares issued for cash  104  168 
Preference shares issued for cash  1,195  402 
At end of year  10,751  9,452 

Sterling £1 Preference Shares

1,000 Sterling cumulative callable preference shares of £1 each (the ‘£1 Preference Shares’) were issued on 31st December 2004 at nil premium.

The £1 Preference Shares entitle the holders thereof to receive sterling cumulative cash dividends out of distributable profits of Barclays Bank PLC, semi-annually at a rate reset semi-annually equal to the sterling interbank offered rate for six-month sterling deposits.

Barclays Bank PLC shall be obliged to pay such dividends if (1) it has profits available for the purpose of distribution under the Companies Act 1985 as at each dividend payment date and (2) it is solvent on the relevant dividend payment date, provided that a capital regulations condition is satisfied on such dividend payment date. The dividends shall not be due and payable on the relevant dividend payment date except to the extent that Barclays Bank PLC could make such payment and still be solvent immediately thereafter. Barclays Bank PLC shall be considered solvent on any date if (1) it is able to pay its debts to senior creditors as they fall due and (2) its auditors have reported within the previous six months that its assets exceed its liabilities.

If Barclays Bank PLC shall not pay, or shall pay only in part, a dividend for a period of seven days or more after the due date for payment, the holders of the £1 Preference Shares may institute proceedings for the winding-up of Barclays Bank PLC. No remedy against Barclays Bank PLC shall be available to the holder of any £1 Preference Shares for the recovery of amounts owing in respect of £1 Preference Shares other than the institution of proceedings for the winding-up of Barclays Bank PLC and/or proving in such winding-up.

On a winding-up or other return of capital (other than a redemption or purchase by Barclays Bank PLC of any of its issued shares, or a reduction of share capital, permitted by the Articles of Barclays Bank PLC and under applicable law), the assets of Barclays Bank PLC available to shareholders shall be applied in priority to any payment to the holders of ordinary shares and any other class of shares in the capital of Barclays Bank PLC then in issue ranking junior to the £1 Preference Shares on such a return of capital and pari passu on such a return of capital with the holders of any other class of shares in the capital of Barclays Bank PLC then in issue (other than any class of shares in the capital of Barclays Bank PLC then in issue ranking in priority to the £1 Preference Shares on a winding-up or other such return of capital), in payment to the holders of the £1 Preference Shares of a sum equal to the aggregate of: (1) an amount equal to the dividends accrued thereon for the then current dividend period (and any accumulated arrears thereof) to the date of the commencement of the winding-up or other such return of capital; and (2) an amount equal to £1 per £1 Preference Share.

After payment of the full amount of the liquidating distributions to which they are entitled, the holders of the £1 Preference Shares will have no right or claim to any of the remaining assets of Barclays Bank PLC and will not be entitled to any further participation in such return of capital. The £1 Preference Shares are redeemable at the option of Barclays Bank PLC, in whole but not in part only, subject to the Companies Act and its Articles. Holders of the £1 Preference Shares are not entitled to receive notice of, or to attend, or vote at, any general meeting of Barclays Bank PLC.

j Reserves

Other reserves 
Available  Cash flow