Barclays delivered a resilient financial performance in 2007 in a year of contrasting market conditions. The excellent results of the first half were achieved in a relatively benign environment; in the second half we were not immune from the impact of the credit market turbulence, but profit before business disposals for the year still increased 3%. I am pleased to report profits again above £7bn, which is well ahead of the average level of the previous three years.

At a time of significant market turbulence, it is important to be clear and confident about strategy. The strategy of Barclays is to achieve superior growth through time by diversifying our profit base. The precondition of successful growth is relevance to customers. We seek to maximise the alignment between the sources of growth in the financial services industry (in particular anticipating what customers want and need) with what we have in Barclays (in terms of brand, capability and physical footprint). We recommit to our strategy following our bid for ABN AMRO, and in the light of the market volatility. We are confident that our strategy offers the best route to strong growth in the years ahead.

This has been a demanding year for our staff, and we have them to thank for delivering the results we have achieved despite multiple distractions in difficult market circumstances. I am proud of their commitment to putting our customers first and I am confident that we enter our new four year goal period (where we seek to grow economic profit during the period 2008-2011 at a compound rate of between 5% and 10%) with a team as good as any in the banking industry.

Our experience of 2007 gives us confidence, and we enter 2008 with a strong capital base, a consistent strategic direction, a well diversified set of businesses and significant opportunities for growth in the medium term.

Financial highlights

John Varley

Group Chief Executive

“Barclays delivered a resilient
performance in 2007. The strength
of our diversified business gives
us confidence for the period ahead.”

Global Retail and Commercial Banking

Note

a

Head office functions and other operations segment has been excluded.

Barclays financial performance in 2007 demonstrated the benefits of the successful execution of our strategic priorities in recent years. We delivered profit before tax of £7,076m broadly in line with the record results of 2006 and up 3% excluding gains from business disposals. Earnings per share were 68.9p and we increased the full year dividend payout to 34p, a rise of 10%.

We are building significant momentum in Global Retail and Commercial Banking (GRCB). In particular, we have been growing our distribution channels to create a much broader business base for the years ahead.

During 2007, we opened over 600 new branches and sales centres outside the United Kingdom, increasing by over one third the number of distribution points across these parts of our GRCB business. This growth is feeding through powerfully into activity levels.

Absa performed well, including delivering on its synergy target 18 months ahead of schedule.

The turnaround of UK Retail Banking continued during 2007, with strong income growth in core product areas, including mortgages.

Investment Banking and Investment Management

In Barclaycard, we have made excellent progress towards our goal of re-establishing a leadership position in the United Kingdom and in the aggressive expansion of our International Cards business.

In Investment Banking and Investment Management I believe that we handled well the stress test of market turbulence in the second half of 2007. Both Barclays Capital and Barclays Global Investors ended 2007 with profits ahead of 2006, which itself was a year of rapid growth and record profitability for both. We have benefited significantly from the business diversification that we have pursued in recent years: the development of capabilities by Barclays Capital in commodities, foreign exchange and equity products enabled us to deliver excellent income growth in 2007 in those areas. The cost flexibility that we have built into the business model here has also served shareholders well, enabling us to reduce expenses year on year, and improve the cost:net income and compensation ratios.

In Barclays Global Investors, iShares’ assets under management grew over $100bn to $408bn. Barclays Wealth is making good progress towards the achievement of its profit goal of £500m in the medium term.