Notes to the accounts

For the year ended 31st December 2007

1 Dividends per share

The Directors have recommended the final dividends in respect of 2007 of 22.5p per ordinary share of 25p each and 10p per staff share of £1 each, amounting to a total of £1,485m, which will be paid on 25th April 2008. The financial statements for the year ended 31st December 2007 do not reflect these dividends, which will be accounted for in shareholders’ equity as an appropriation of retained profits in the year ending 31st December 2008. The financial statements to 31st December 2007 include the 2006 final dividend of £1,307m.

2 Net interest income

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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 

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 .

3 Net fee and commission income

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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  6,363  6,031  4,805 
Foreign exchange commissions  178  184  160 
Fee and commission income  8,678  8,005  6,430 
Brokerage fees paid  (970) (828) (725)
Fee and commission expense  (970) (828) (725)
Net fee and commission income  7,708  7,177  5,705 

4 Principal transactions

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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 

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).

5 Insurance premiums and insurance claims and benefits

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2007  2006  2005 
£m  £m  £m 
Gross premiums from insurance contracts  1,062  1,108  909 
Premiums ceded to reinsurers  (51) (48) (37)
Net premiums from insurance contracts  1,011  1,060  872 


2007  2006  2005 
£m  £m  £m 
Gross claims and benefits incurred on insurance contracts  520  588  694 
Reinsurers’ share of claims incurred  (28) (13) (49)
Net claims and benefits incurred on insurance contracts  492  575  645 

6 Other income

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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  135  159  93 
Other income  188  214  147 

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.

Notes to the accounts

For the year ended 31st December 2007


7 Impairment charges and other credit provisions

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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 
Charge/(release) in respect of provision for undrawn 
contractually committed facilities and guarantees provided  476  (6) (7)
Impairment charges on loans and advances and other credit provisions  2,782  2,068  1,567 
Impairment on available for sale assets  13  86  4 
Impairment charges and other credit provisions  2,795  2,154  1,571 

An analysis of the impairment charges by class of financial instrument is included in Note ‘Credit risk’.

8 Staff costs

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2007  2006  2005 
£m  £m  £m 
Salaries and accrued incentive payments  6,993  6,635  5,036 
Social security costs  508  502  412 
Pension costs – defined contribution plans  141  128  76 
Pension costs – defined benefit plans (Note ) 150  282  271 
Other post-retirement benefits (Note ) 10  30  27 
Other  603  592  496 
Staff costs  8,405  8,169  6,318 

Included in salaries