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Barclays PLC (BARC)

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Tuesday 16 February, 2010

Barclays PLC

Preliminary Results

RNS Number : 1844H
Barclays PLC
16 February 2010
 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Barclays PLC

Preliminary Results Announcement

 

31st December 2009

 

 

 

 

 

BARCLAYS PLC, ONE CHURCHILL PLACE, LONDON E14 5HP, UNITED KINGDOM. TELEPHONE +44 (0)2071161000. COMPANY NO. 48839.

 



 

 

Unless otherwise stated, the Performance Highlights, Group Chief Executive's Review, Group Finance Director's Review, Group Results Summary, Results by Business and Capital and Performance Management sections of this Preliminary Results Announcement provide information and discuss the Group as a whole rather than separating out discontinued operations, representing the Barclays Global Investors (BGI) business sold on 1st December 2009. These non-GAAP measures are provided because management believes that including BGI as part of group operations and separately identifying the gain on this disposal provides more useful information about the performance of the Group as a whole and better reflects how the operations were managed until the disposal of BGI. The financial statements included within the annual report and accounts will be prepared on a GAAP basis. In the Notes on pages 86 onwards, the portion of the BGI business sold is represented as discontinued operations and the Notes include only continuing operations unless otherwise indicated. The Consolidated Summary Income Statement on page 12 provides a reconciliation between continuing and total Group results.

The Listing Rules of the UK Listing Authority (LR 9.7A.1) require that preliminary unaudited statements of annual results must be agreed with the listed company's auditors prior to publication, even though an audit opinion has not yet been issued. In addition, the Listing Rules require such statements to give details of the nature of any likely modification that may be contained in the auditors' report to be included with the annual report and accounts. Barclays PLC confirms that it has agreed this preliminary statement of annual results with PricewaterhouseCoopers LLP and that the Board of Directors has not been made aware of any likely modification to the auditors' report required to be included with the annual report and accounts for the year ended
31st December 2009.

The information in this announcement, which was approved by the Board of Directors on 15th February 2010, does not comprise statutory accounts for the years ended 31st December 2009 or 31st December 2008, within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31st December 2008, which included certain information required for the Joint Annual Report on Form 20-F of Barclays PLC and Barclays Bank PLC to the US Securities and Exchange Commission (SEC) and which contained an unqualified audit report under Section 235 of the Companies Act 1985 and which did not make any statements under Section 237 of the Companies Act 1985, have been delivered to the Registrar of Companies in accordance with Section 242 of the Companies Act 1985. The 2009 Annual Review and Summary Financial Statements will be posted to shareholders together with the Group's full Annual Report and Accounts for those shareholders that request it.

Forward-looking Statements

This document contains certain forward-looking statements within the meaning of Section 21E of the US Securities Exchange Act of 1934, as amended, and Section 27A of the US Securities Act of 1933, as amended, with respect to certain of the Group's plans and its current goals and expectations relating to its future financial condition and performance. Barclays cautions readers that no forward-looking statement is a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statements. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements sometimes use words such as "may", "will", "seek", "continue", "aim", "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe" or other words of similar meaning. Examples of forward-looking statements include, among others, statements regarding the Group's future financial position, income growth, assets, impairment charges, business strategy, capital ratios, leverage, payment of dividends, projected levels of growth in the banking and financial markets, projected costs, estimates of capital expenditures, and plans and objectives for future operations and other statements that are not historical fact. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, including, but not limited to, UK domestic and global economic and business conditions, the effects of continued volatility in credit markets, market related risks such as changes in interest rates and exchange rates, effects of changes in valuation of credit market exposures, changes in valuation of issued notes, the policies and actions of governmental and regulatory authorities, changes in legislation, the further development of standards and interpretations under International Financial Reporting Standards (IFRS) applicable to past, current and future periods, evolving practices with regard to the interpretation and application of standards under IFRS, the outcome of pending and future litigation, the success of future acquisitions and other strategic transactions and the impact of competition - a number of such factors being beyond the Group's control. As a result, the Group's actual future results may differ materially from the plans, goals, and expectations set forth in the Group's forward-looking statements.

Any forward-looking statements made herein speak only as of the date they are made. Except as required by the UK Financial Services Authority (FSA), the London Stock Exchange or applicable law, Barclays expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this announcement to reflect any change in Barclays expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. The reader should, however, consult any additional disclosures that Barclays has made or may make in documents it has filed or may file with the SEC.

 

Chairman's Statement

 

I am taking the unusual step of adding a statement to today's annual results announcement.

I am writing mostly on the subject of remuneration, but my context is broader. It relates to what is expected of Barclays as the world recovers from the credit crunch and the recession.

The bond of trust between banks and their stakeholders has been significantly weakened by the events of the last three years. Our view is that the vital task of rebuilding that trust will be based on banks acknowledging the mistakes that they have made; on their working with governments, central banks and regulators to create a system which will be resilient to shock; and on their playing a full role in the stabilisation and regeneration of economic health. By being successful, banks can and should make significant contributions to society by facilitating the taking of appropriate risk by those they serve; by lending and investing; by paying dividends and taxes; by creating employment; and, by contributing to the communities in which they operate. But if trust is to be re-established, then banks have to do these things in a way that serves society.

We believe that when the behaviour of banks is assessed by their stakeholders to see whether we have genuinely learnt from the experiences of the last years, we will be judged mostly by how we conduct our business and, in particular today, by how we lend and how we pay.

We know that the impact of the credit crunch and of the subsequent recession has made the lives of millions of citizens and thousands of businesses more difficult. We know that it's our obligation to provide support in ways that are responsible.

In the area of lending in 2009, we remained focussed on responsible lending to our customers and clients around the world. Specifically in the UK, we made a commitment in April 2009 to make an additional £11bn of credit available to the UK economy during the year. We actually lent an additional £35bn, about half to UK households and about half to businesses. We lent on terms that were prudent, knowing that sound lending is in the interests of our owners and the financial system, of which we form part, and we lent because we understand that providing credit to our customers will enable them to grow and progress.

Regarding remuneration, the Board met recently to consider the year end remuneration recommendations made by the Human Resources and Remuneration Committee, which is chaired by Sir Richard Broadbent, our Deputy Chairman. These reflected the detailed review of remuneration which had been undertaken by the Committee during 2009. This established clear guidelines as to the measures by which remuneration should be determined. These include: the service of customers and clients; shareholder returns; risk adjusted profits; higher capital requirements; and reduced leverage.

The Board considers that the performance of Barclays has been strong in 2009, both on an absolute and a relative basis. Accordingly, the Board, through the Remuneration Committee, formed the view that annual bonuses for John Varley, Group Chief Executive and for Robert E Diamond Jr, Group President were merited based on both Group and personal performance. However, out of consideration of the continued impact of the economic downturn on many clients, customers and shareholders, combined with the fact that banks and bankers' pay remain matters of intense public interest and concern, both have advised the Board that they wish to decline any such awards for the second successive year.

The Board has accepted these wishes. The Board has directed its remuneration decisions relating to Mr Varley and Mr Diamond to the customary forward looking elements of remuneration which relate to future performance and alignment with shareholders interests.

The Board has determined that 100% of the 2009 discretionary remuneration for other members of the Barclays Group Executive Committee and all members of Barclays Capital Executive Committee, should be awarded over a three year period, subject to claw back.

More broadly across Barclays, deferral structures have been implemented which are consistent with the new FSA Remuneration Code and the Financial Stability Board Implementation Standards endorsed by G20.

Barclays remains committed to playing its part both in supporting the economies of the world in which it does business, and in contributing to the critical discussions currently taking place regarding the future structure and regulation of our industry. We must together safeguard the world from a recurrence of the events of the last three years. Financial services are integral to every day life, and we will strive to demonstrate, both in our words and actions, that Barclays is responsive to public concerns and to the needs of those we serve, and committed to playing its part as the banking industry rebuilds trust.

Marcus Agius, Group Chairman



Performance Highlights

 

 


Group Total1



Year Ended

Year Ended


Group Results

31.12.09

31.12.08



£m

£m

% Change

Total income net of insurance claims

30,986

23,115

34

Impairment charges and other credit provisions

(8,071)

(5,419)

49

Operating expenses

(17,852)

(14,366)

24





Profit before tax excluding sale of Barclays Global Investors

5,311

6,077

(13)





Own credit charge/(gain)

1,820

(1,663)

-

Gains on acquisitions and disposals, excluding Barclays Global Investors,
and profits from associates and joint ventures

(248)

(2,747)

(91)

Gains on debt buy-backs

(1,249)

(24)

-

Underlying profit before tax

5,634

1,643

243





Profit on disposal of Barclays Global Investors

6,331

-

-

Profit before tax

11,642

6,077

92





Profit after tax

10,288

5,287

95

Profit attributable to equity holders of the parent

9,393

4,382

114

Economic profit2

4,875

1,760

177





Basic earnings per share

86.2p

59.3p

45

Diluted earnings per share

81.6p

57.5p

42

Dividend per share

2.5p

11.5p

(78)





Performance Ratios




Return on average shareholders' equity2

23.8%

16.5%

44

Cost:income ratio2

58%

62%

(7)

Cost:net income ratio2

78%

81%

(4)





Capital and Balance Sheet

31.12.09

31.12.08

% Change

Core Tier 1 ratio2

10.0%

5.6%

79

Tier 1 ratio2

13.0%

8.6%

51

Risk asset ratio2

16.6%

13.6%

22

Total shareholders' equity

£58.5bn

£47.4bn

23

Total assets

£1,379bn

£2,053bn

(33)

Risk weighted assets2

£383bn

£433bn

(12)

Adjusted gross leverage2

20x

28x

(29)

Group liquidity pool2

£127bn

£43bn

195

Group loan:deposit ratio2

130%

138%

(6)

Group loan:deposit and long-term funding ratio2

81%

93%

(13)

Net asset value per share2

414p

437p

(5)

Net tangible asset value per share2

337p

313p

8





Number of employees (full time equivalent)

144,200

152,800

(6)

 

 

1    Includes the results of Barclays Global Investors (BGI), which was sold to BlackRock on 1st December 2009. A reconciliation of Group total and Continuing Operations is provided on page 12.

2    Defined on pages 106 to 111.

 

 "Our record income performance produced a sharp increase in underlying profitability in 2009. We have strengthened our financial position considerably over the year in the areas of capital, liquidity and leverage and are well positioned to manage further changes that may be required of us by our regulators. I thank our customers and clients for their trust in us, and our employees for their commitment and stamina in a tough and, at times, hostile environment."

John Varley, Chief Executive

- The underlying profits of the Group were very strong. Excluding movement on own credit, gains on acquisitions and disposals and gains on debt buy-backs, Group profit before tax increased 243% to £5,634m from £1,643m

- Group profit before tax was £11,642m, 92% up on 2008. Excluding the £6,331m profit on disposal of Barclays Global Investors (BGI), total Group profit before tax was £5,311m, down 13%

- Retained earnings in 2009 were £9.6bn (2008: £3.2bn)

- The results were driven by very strong income performance and cost containment creating significant positive income:cost jaws and impairment in line with expectations:

-    Record income of £30,986m, 34% up on 2008

-    Increase in income absorbed higher impairment charges of £8,071m, 49% up on 2008, with a loan loss rate of 156bps (2008: 95bps); or 135bps1 on a basis consistent with our planning assumption of 130-150bps

-    Cost:income ratio improved to 58% (2008: 62%), driven by control of underlying costs within GRCB and a reduction in the compensation:income ratio within Barclays Capital to 38% (2008: 44%)

-    Total Group 2009 discretionary cash payments of £1.5bn and a further £1.2bn of long term awards, vesting over 3 years and subject to claw back

- There was good progress on key measures of financial strength:

-    Group liquidity pool increased to £127bn (2008: £43bn)

-    Core Tier 1 ratio was 10.0% (2008: 5.6%) and Tier 1 capital ratio was 13.0% (2008: 8.6%)

-    Balance sheet reduced 33% to £1,379bn (2008: £2,053m)

-    Adjusted gross leverage reduced to 20x (2008: 28x)

- Global Retail and Commercial Banking generated higher income in a difficult economic environment:

-    Good income growth of £1,004m (7%) to £16,097m (2008: £15,093m) driven by growth in average balances partially offset by liability margin compression

-    Tight control of underlying costs, with the cost:income ratio improving to 52% (2008: 53%)

-    Significant increase in impairment to £5,413m (2008: £2,922m)

- Investment Banking and Investment Management recorded very strong income and profit growth:

-    Barclays Capital top-line income growth of £8,004m (81%) to £17,862m (2008: £9,858m), with very strong performances across client franchises in the UK and Europe and a transformation in the scale and service offering in the US

-    Profit before tax at Barclays Capital up 89% to £2,464m (2008: £1,302m) after absorbing £1,820m of own credit losses (2008: gain of £1,663m)

-    Profit on disposal of Barclays Global Investors of £6,331m. 19.9% economic interest retained in BlackRock

- Total credit market exposures reduced by £14bn

- Gross new lending to UK households and businesses totalled £35bn during 2009

- Final dividend of 1.5p per share, giving a total declared dividend of 2.5p per share

 

 

1    On consistent year end loans and advances balances and impairment at average 2008 foreign exchange rates.

 

Group Chief Executive's Review

 

Summary

Our primary objective is generating returns for shareholders. But we recognise that we can, and should, in ways consistent with that objective, contribute to the wellbeing of society by conducting our business responsibly and by performing well, on behalf of our customers, our core functions of payments and money transmission, safe storage of deposits, maturity transformation and lending, and the provision of advice and execution in underwriting and trading. These activities lie at the heart of economic activity in a modern economy, and if economies are to grow - and reap all the beneficial consequences that flow from that growth - then banks must help those they serve take appropriate risks. Getting this balance between our obligation to create returns for our owners and our need to do that in a responsible way has never been more important.

Economic slowdown last year impacted most parts of the world in which we operate. But despite that, I am pleased with the way we have performed both in 2009 and in the two tumultuous years which preceded it. That performance allows us to enter 2010 with confidence.

During 2009, we increased our income substantially. Barclays Capital had a very strong year across all global franchises, in particular as its businesses in North America started to reap the benefits of the Lehman acquisition and integration. We have invested during 2009 in building out our equities and advisory platforms in Europe and Asia, which will be sources of income growth in Barclays Capital in the years ahead. Barclaycard also produced good income growth. The steadiness of our profit performance over the past three years, even after absorbing the impact of higher impairments and the continued legacy of credit market writedowns, is attributable to the diversification of income that we have built during recent years.

It was clear as we came into 2009 that the regulatory balance sheet should be an area of considerable focus during the year. So we have strengthened our capital position, reduced leverage and added to our liquidity buffer. We are, by consequence, both well prepared for any future economic weakness and also able to continue to execute on our strategy as opportunities arise.

In March, we decided not to participate in the UK Government's Asset Protection Scheme, following the application of a detailed stress test by the UK Financial Services Authority to determine our resilience to stressed credit risk, market risk and economic conditions. This test confirmed our expectation that we would continue to be able to meet our regulatory capital obligations.

In April, we announced our intention to sell the iShares business of Barclays Global Investors (BGI). Following unsolicited interest for the whole of BGI, and strategic analysis of the optimal ownership structure within the future asset management industry given the direction of regulation, we agreed in June to sell the whole of BGI to BlackRock, Inc. (BlackRock). We completed this transaction in December for an aggregate consideration of $15.2bn (£9.5bn), realising a profit on disposal of £6.3bn. Our shareholders will be able to participate in the institutional asset management sector through our continuing holding of 37.567m new BlackRock shares. This gives us an economic interest of 19.9% in the enlarged BlackRock group, and also provides a strong basis for a new commercial relationship between Barclays and BlackRock, which will be particularly relevant to Barclays Capital as a provider, and Barclays Wealth as a consumer. Bob Diamond and I look forward to contributing to the progress of this new global leader in asset management as members of the BlackRock Board of Directors.

Across our retail and commercial banking activities we continued to consolidate our position in our core markets through organic revenue, cost and risk management measures. We took advantage of inorganic opportunities as they arose. In September, we established a long-term life insurance joint venture with CNP Assurances (CNP) in Spain, Italy and Portugal. In the same month, we agreed to acquire the Portuguese credit card business of Citibank International plc, adding some 400,000 new credit card customers to our Portuguese business as we continued to invest in the expansion of our GRCB - Western European retail operations. And in October we agreed to acquire Standard Life Bank Plc from Standard Life Plc, adding an attractive mortgage and savings book to our UK Retail business. This acquisition completed in early January 2010.

2009 Priorities

In my review a year ago, I said that we had three priorities for 2009: staying close to customers and clients, managing our risks and maintaining strategic momentum. How did we fare in these areas?

 

 

Staying Close to Customers and Clients: In the dense fog that was brought down on the industry by the credit crunch, it was clear that we needed a powerful magnetic north - customers. The rapid economic slowdown of 2008 and 2009 has complicated the lives of many of those that we serve. Our job in 2009 was to stay close to them as they sought to navigate the risks and the opportunities thrown up by the crisis. The income line is a good proxy for customer activity levels and customer relationships. And our income generation in 2009 achieved record levels.

I am pleased with the number of new mortgage, savings, Premier accounts and Local Business customers we have added in UK Retail Banking and with the increase in customer account balances. In Barclays Commercial Bank, we were able to increase average asset and deposit balances in a difficult business environment. In Barclaycard, we rolled out a number of initiatives to offer support to customers in financial difficulties whilst limiting our exposure to the most at risk segments of the market.

There is a lot of focus from stakeholders on the willingness of banks to lend, and of course availability of credit is a critical component of economic stabilisation and regeneration. In April 2009, we said that we would make an additional £11bn of lending available to UK households and businesses. In fact, our gross new lending to UK households and businesses in 2009 totalled some £35bn, indicating both that we were open for business, and that we were able to extend credit on terms which we regard as prudent.

Our retail and commercial banking businesses in GRCB - Western Europe, where we now serve almost 3m customers, have continued to grow. In addition to the CNP joint venture and cards acquisition in Portugal, we added nearly 100 new branches in Italy and 50 in Portugal and attracted almost £8bn of new customer deposits as we increased our focus on the asset:liability mix of our business flows in these markets. Our task looking forward is to ensure this business produces sustainable profits, which will require it to be less reliant on one-offs than it has been in the past two years.

 

 

In the developing countries of the world in which we operate, our performance in the 10 mature markets of Africa and the Indian Ocean where we are present has been strong. GRCB - Emerging Markets as a whole made a loss. We now serve almost 4m customers across these markets, but we have been too aggressive in our approach to business expansion here over the past two years. This business must now convert investments made in the last three years (in terms of people, customer recruitment and sales outlets) into sustainable profits.

GRCB - Absa performed resiliently in a very difficult economic environment. Notable during the year was its ability to continue to grow customer deposit balances, particularly for the South African consumer.

Our success in Barclays Capital is reflected both in the exceptional revenue progress across 2009 and also in some of the client and market-nominated awards which it has won over the year. These included Primary Debt House of the Year from Euromoney, IFR Bond House of the Year, Derivative House of the Year from Risk magazine and the Number 1 Ranking for US Equity Research and US Fixed Income Research in the Annual Institutional Investor All-America Team surveys.

In Barclays Wealth we continued to attract client assets at a time of great uncertainty. Our intention for 2010 and beyond is to accelerate growth in the High Net Worth businesses.

Managing Our Risks: As we expected, 2009 was another year of vicious testing of our risk management. In February, we shared with the market our planning assumption for loan loss rates for 2009, indicating that we expected them to be in the range of 130 to 150 basis points, predicated on certain macroeconomic assumptions. The economies of the world in which we do business performed worse in 2009 than our central planning case had projected at the beginning of the year. Despite that, our loan loss rate was 135bps on a consistent basis1, towards the bottom end of the 130-150bps range we planned for. This is evidence of the robust risk management and planning procedures we have in place. And although impairment rose significantly in 2009 versus 2008 (and in certain areas of our business could rise further in 2010), a combination of strong income and good cost control enabled us, through substantial profit generation, to enter 2010 with our Core Tier 1 capital ratio at 10.0%. At the same time, we reduced our leverage to 20x, from 28x, and our total assets by 33%, and we increased the surplus of liquid assets in the balance sheet by £84bn.

Governments, regulators and banks are currently focused on many of these metrics of financial and risk management health as they seek to ensure that the excesses of the previous economic cycle, and the costs of financial failure that have resulted from it, are not repeated. We support these moves and are committed to adapting our business to the changes that result.

 

 

1    On consistent year end loans and advances balances and impairment at average 2008 foreign exchange rates.

 

Those reforms need to balance three things: the need for a safer financial system, the importance of economic growth and the ability of the suppliers of bank capital to earn appropriate returns. The achievement of these objectives, which is so important to the world over the course of the next decade, will be facilitated by a strong and supportive banking system providing credit, managing risk and supporting innovation. An important dimension of the reform agenda is that decisions about investment banking are based on science and experience, not on rhetoric. There has been much talk about "gambling by investment banks". Barclays Capital no more gambles in the work it does on behalf of its clients than the clients do themselves. Its work is the work of risk management and financing. Its job is to help governments, companies and investors around the world raise money, stimulate economic growth, create employment, and manage pensions and other savings. This is a real economy role.

Investment banking plays an important part in the universal banking model that we have built in Barclays because many of those that we serve need to have access to the capital markets, and because we cannot meet their financing and risk management needs without having a strong advisory, execution and trading capability within the Group. History and the current crisis demonstrate that the performance of the capital markets businesses and retail and commercial businesses is naturally asymmetrical. The asymmetry of their respective income and impairment cycles provides a strong source of resilience. The effects and benefits of that are very clear in the performance of Barclays during this cycle. That is one of the principal benefits of the universal banking model; the others include: capital and funding efficiencies; and business and risk diversification. Forcing banks to adopt "narrow" business models, as some have suggested as part of the on-going reform dialogue, will not make the system safer. There has been no correlation so far in this crisis between "failure" and the popular dichotomies drawn of bank business models: big or small; narrow or broad; domestic or international.

Maintaining Strategic Momentum: Despite the regulatory uncertainty that will continue to confront the industry this year, our strategic path remains clear - to increase the growth potential of Barclays by continuing to diversify our business by customer, product and geography. That strategy lay behind the broadening of our Executive Committee1 and changes to senior management responsibilities that I announced in November 2009. The Executive Directors of the Group, Bob Diamond, Group President, Chris Lucas, Group Finance Director, and myself, have been joined on the Executive Committee by the leaders of a number of Barclays business units and control and governance functions. We have also regrouped our activities to form:

- Global Retail Banking (GRB), comprising UK Retail Banking, Barclaycard and the former GRCB - Western Europe and Emerging Markets businesses, led by Antony Jenkins

- Corporate and Investment Banking (CIB), comprising Barclays Capital and Barclays Commercial Bank (now called Barclays Corporate); Jerry del Missier and Rich Ricci are Co-Chief Executives of Corporate and Investment Banking

GRB focuses on mass consumers, mass affluent consumers and small business customers. We have significantly changed the footprint here over the past three years, and we intend to push that forward, increasing, through time, the ratio of non-UK to UK business whilst strengthening our UK franchises. We will place particular emphasis on creating appropriate scale in the markets in which we have a presence. As we do that, our objectives will be four-fold: profit growth; an improved loan-to-deposit ratio; further international diversification through deepening existing presences; and the generation of net equity.

Barclays Corporate, as part of CIB, focuses on the high end of what we used to call Barclays Commercial, particularly financial institutions, public sector entities and corporate clients. We brought this business alongside Barclays Capital within CIB because we see significant synergy in sharing relationship management and sector expertise across the two. Realisation of that synergy is enabled by the increasing fungibility of client requirements between traditional corporate banking and investment banking product needs within our client base. This is a global opportunity with significant income growth potential for CIB in the years ahead. Our early work has only reinforced that strongly held belief.

In the area of wealth management, the competitive landscape in the global industry has gone through a sea change over the course of the last three years. That creates opportunity, and we intend to seize that by investing to change the scale of this business over the next five years.

 

1    The following have been promoted to the Group Executive Committee: Antony Jenkins, Chief Executive of Global Retail Banking; Tom Kalaris, Chief Executive of Barclays Wealth; Rich Ricci, Co-Chief Executive of Corporate and Investment Banking; Jerry del Missier, Co-Chief Executive of Corporate and Investment Banking; Maria Ramos, Chief Executive of Absa; Mark Harding, Group General Counsel; Robert Le Blanc, Group Risk Director; Cathy Turner, Group Head of Human Resources and Corporate Affairs.

 

Remuneration

Recognising the political and regulatory focus on remuneration practices, and the interest of both our shareholders and our staff in the topic, it is important for me to say that we see compensation as a means of supporting the implementation of strategy in a way that best serves the interests of our shareholders. We want to be able to do four things simultaneously; pay dividends to shareholders, invest in the business, strengthen our capital ratios, and pay staff appropriate compensation. I don't pretend that achieving this is always easy, or that the judgements involved are straightforward. The market for the best people is both global and intensely competitive. Banking is a service industry and, if we are to remain successful, we must attract and retain the best people. We have to pay for performance but, I emphasise, we seek to pay no more than the amount consistent with competitiveness.

Our compensation framework is determined by the Board HR and Remuneration Committee, a sub-committee of the Group Board which is chaired by our Deputy Chairman, Sir Richard Broadbent. The Remuneration Committee makes its decisions after appropriate input from the Board Risk Committee and the Group Chief Risk Officer to ensure that the level of risk within the business and the quality of underlying profits generated are taken properly into account. The Remuneration Committee has also considered the impact on profits of our usage of Government and Central Bank schemes, higher liquidity requirements and the shape of the yield curve.

Our discretionary pay awards for 2009 are fully compliant with the FSA Remuneration Code and the Financial Stability Board Implementation Standards, endorsed by the G20. This has resulted in an increase in the deferred awards by approximately 70% and greater use of equity in deferral structures, particularly to senior staff. 100% of the discretionary pay awards for 2009 to our Executive Committee will be deferred.

The overall quantum of compensation we pay is designed to ensure that we exceed the FSA's minimum capital requirements at all times. We understand how important it is to our shareholders that we maintain Core Tier 1 ratio well in excess of regulatory minima. A direct and intended consequence of our decisions on pay has been the further strengthening of this ratio. Meanwhile, we have been able to meet the commitment that we announced in April 2009 to resume dividend payments and we seek to ensure that we manage the business in such a way (including in relation to compensation) as facilitates the adoption of a conservative but progressive dividend policy.

Our approach to the UK Bank Payroll Tax since the tax was announced in December last year has been to manage the compensation pool in such a way that the cost of the tax to the Group broadly equates to a reduction in the size of the pool, with the reduction being borne by senior executives. The cost to the Group of the UK Bank Payroll Tax in respect of 2009 cash compensation is £190m, and £35m in respect of certain prior year awards which may fall within the proposed legislation. Where a liability arises in subsequent years, we will follow the same approach.

2010 Strategic Framework

The economic outlook remains uncertain. The worst of the financial crisis is behind us, but the environment remains unpredictable, and for that reason, we have to be very clear about the strategic framework in which we will be doing business in 2010 and beyond. The principal components are as follows:

1.   We will continue to act as responsible corporate citizens. We will ensure that our wider responsibilities to society are reflected in how we act. To the extent consistent with what is required of us by our regulators and with our obligations to shareholders, we will continue to play our part as a source, via service to customers and clients, of economic growth and job creation in the geographies in which we operate. We must behave constructively to help our customers and clients as they cope with the economic downturn and to support governments and supervisors as they deal with the effects of the financial crisis.

2.   We will ensure that we maintain a sound financial and organisational footing that anticipates and adapts to the regulatory changes that will be required from us. The Basel authorities announced a package of proposed reforms in December on which they are consulting. We are working hard to advocate regulatory consistency; to ensure that the cumulative impact of intended reforms on the economy is well understood; and to ensure the reforms are implemented over sufficiently extended transitional periods to enable the banking industry to support economic growth and job creation. We will be obliged to accommodate such changes as are finally enacted over the coming years and we will have the ability over the period to take mitigating actions. Meanwhile, we are seeking to anticipate many of the changes that may be required of us in the areas of capital, leverage and liquidity. It is within our power to be net generators, rather than consumers, of capital, which our performance in 2009 demonstrates. We will maintain high levels of liquidity, and we will be very attentive to the size and composition of our balance sheet. In particular, we will manage leverage tightly, and we will seek to bring down, over time, our loan to deposit ratio. Stress testing has been institutionalised across Barclays in recent years. This is also now part of the FSA supervision cycle. We will ensure that we continue to monitor regularly our responsiveness to changing economic, market and operational environments and align our views with those of our regulator.

3.   We have recommenced dividend payments in accordance with our prior commitments. We will make 3 quarterly fixed payments in 2010 and a final variable payment relating to the calendar year 2010 in March 2011. Given uncertainty about the full consequences of regulatory reform, prudence dictates that our dividend policy should be conservative. But, subject to that caveat, we intend our dividend policy to be progressive relative to a 2009 annualised dividend of 4.5 pence per share.

4.   Our allocation of capital across the Group will continue to be made on both an economic and strategic basis, reflecting our goal of increasing the international diversification of our income sources in the pursuit of medium term growth. So we will nurture Barclays Wealth, Barclays Corporate, Absa and GRB, whilst ensuring that Barclays Capital takes advantage of the structural changes in the investment banking sector. 2010 will be another year, however, in which we put returns before growth, and where prudence will determine our approach to balance sheet size.

5.   Notwithstanding the regulatory uncertainty which colours the goals I have described so far, we must deliver another year of substantial profitability. The balance of earnings is also important to us, and we continue over time to target two thirds of our profits coming from GRB, Absa, Barclays Wealth and Barclays Corporate and one third from Barclays Capital.

Goals

As I stated at the time of our Interim Results last August, our key output goal is to produce top quartile total shareholder returns (TSR) over time. We achieved that goal for 2009, generating a TSR of 80% for 2009, at the upper end of our peer group1. But I recognise that for many shareholders the starting point from which this return was generated was unacceptably low. We will continue to measure our performance against this output goal.

We will carefully manage multiple input goals. These include: economic profit; overall balance sheet size and leverage; risk weighted assets (RWAs) and the returns they generate; the level of our Core Tier 1 capital; our return on equity; our overall funding and liquidity positions, and our loan to deposit ratio as part of this; our comparative income and cost performance (the "jaws"); and dividend payments.

Our medium term goal is to generate an average return on equity that exceeds our cost of equity over the cycle. In 2009 and again in 2010, the combination of very high levels of capital and the relatively high cost of capital make this a very stretching target. But we are well aware of the direction in which our shareholders expect us to be moving in this context and we have constructed our medium term plans accordingly.

Conclusion

We have over 144,000 employees worldwide who have helped us weather the economic storm of the last two and a half years. They have not allowed the events in the market place to distract them from attending to the needs of those they serve; on behalf of the Board, I thank them warmly. They are as determined as I am that we shall meet the expectations of our owners in the year ahead, by putting the resources of the Group to work on behalf of our customers and clients.

 

John Varley, Group Chief Executive

 

 

1    Peer group: Banco Santander, BBVA, BNP Paribas, Citigroup, Deutsche Bank, HSBC, JP Morgan Chase, Lloyds Banking Group, Royal Bank of Scotland, UBS and Unicredit.

 

Group Finance Director's Review

 

Group Performance

Barclays delivered profit before tax of £11,642m in 2009, an increase of 92% on 2008. Excluding a gain of £6,331m realised on the sale of Barclays Global Investors, profit before tax was £5,311m. This was achieved after absorbing: £6,086m in writedowns on credit market exposures (including impairment of £1,669m), other Group impairment of £6,402m and a charge of £1,820m relating to the tightening of own credit spreads. Profit included £1,249m of gains on debt buy-backs and extinguishment.

Income grew 34% to £30,986m, with particularly strong growth in Barclays Capital. Within Global Retail and Commercial Banking (GRCB), Barclaycard and GRCB - Western Europe also reported good income growth. The aggregate revenue performance of GRCB businesses was, however, affected by the impact of margin compression on deposit income as a result of the very low absolute levels of interest rates. Barclays Capital income was up 122% compared to 2008. Top-line income rose by £8,004m reflecting the successful integration of the acquired Lehman Brothers North American businesses, buoyant market conditions observed across most financial markets in the first half of 2009 and a good relative performance in the second half of 2009 despite weaker markets. Income in Barclays Capital was impacted by writedowns of £4,417m (2008: £6,290m) relating to credit market exposures held in its trading books and by a charge of £1,820m (2008: gain of £1,663m) relating to own credit.

Impairment charges against loans and advances, available for sale assets and reverse repurchase agreements increased 49% to £8,071m, reflecting deteriorating economic conditions, portfolio maturation and currency movements. The impairment charge against credit market exposures included within this total reduced 5% to £1,669m. Impairment charges as a percentage of Group loans and advances as at 31st December 2009 increased to 156bps from 95bps, or 135bps on constant 2008 year end balance sheet amounts and average foreign exchange rates.

Operating expenses increased 24% to £17,852m, but by 10% less than the rate of increase in Group total income. Underlying expenses in GRCB were well controlled, with the cost:income ratio improving from 53% to 52%. Operating expenses in Barclays Capital increased by £2,818m to £6,592m reflecting the significant increase in the size of the business and an uplift in volumes. The cost:income ratio improved from 72% to 57%. At Barclays Capital the compensation:income ratio improved from 44% to 38%.

Business Performance - Global Retail and Commercial Banking

UK Retail Banking profit before tax decreased 55% to £612m as economic conditions remained challenging. Income was down 11% reflecting the impact of deposit margin compression net of hedges, partially offset by good growth in Home Finance. Total loans and advances to customers increased £4.7bn to £99.1bn. Gross new mortgage lending was £14.2bn during 2009 and net new mortgage lending was £5.7bn. The average loan to value ratio of the mortgage book remained conservative at 43%. Impairment charges increased 55% due to the deteriorating economic environment. Operating expenses continued to be tightly controlled and decreased 3% reflecting a one-off credit from the closure of the UK final salary pension scheme offset by a year on year increase in pension costs and the non-recurrence of gains from the sale of property.

Barclays Commercial Bank profit before tax decreased 41% to £749m. Income was broadly flat on 2008 with good growth in net fees and commissions offset by lower income from principal transactions. Net interest income was broadly flat as margin compression on the deposit book was offset by higher lending and deposit volumes. New term lending extended to UK customers during 2009 was £14bn. Operating expenses were tightly controlled and fell 3% driven by a one-off credit from the closure of the UK final salary pension scheme partially offset by an increase in pensions and share-based payment costs and the non-recurrence of gains from the sale of property. Impairment charges increased to £974m reflecting the impact of the weak business environment with rising default rates and falling asset values across all business segments.

Barclaycard profit before tax decreased 4% to £761m. Income growth of 26% reflected strong growth across the businesses driven by increased lending and improved margins. Average customer assets increased 19% to £28.1bn. Impairment charges increased 64% due to the deteriorating global economic environment, although the rate of growth in the second half of the year was lower than in the first half. Impairment grew across both the international and UK businesses. Cost growth of 5% was largely driven by appreciation of the average value of the US Dollar and the Euro against Sterling and growth in the card portfolios including acquisitions made in 2008.

Global Retail and Commercial Banking - Western Europe profit before tax fell 48% to £130m. Results included Barclays Russia, which incurred a loss of £67m and reflected a gain of £157m on the sale of Barclays life insurance and pensions business in Iberia. Income grew in all countries, improving 18% as the expanded network continued to mature with customer deposits increasing £7.8bn to £23.4bn. Costs increased 16% reflecting the expansion of the Portuguese and Italian networks, the addition of Barclays Russia, restructuring charges of £24m and reduced gains from the sale of property. Impairment charges increased £370m to £667m, largely driven by losses in Spain in commercial property, construction and SME portfolios. However, delinquency trends improved throughout the second half of 2009 in both retail and commercial portfolios.

Global Retail and Commercial Banking - Emerging Markets loss before tax of £254m compared to a profit of £141m in 2008. Income increased 5% with significant growth across Africa and the UAE, partially offset by lower income in India. Impairment charges increased £306m to £471m with significant increases in India and the UAE, reflecting the impact of the economic recession across the business with continued pressure on liquidity, rising default rates and lower asset values. Operating expense growth of 24% reflected continued investment in Indonesia and Pakistan and investment in infrastructure across other markets.

Global Retail and Commercial Banking - Absa profit before tax decreased 8% to £506m. Income growth of 16% was driven by solid balance sheet growth, the appreciation in the average value of the Rand against Sterling and higher fees and commissions. Operating expenses increased at a lower rate of 13% which led to an improvement in the cost:income ratio to 58% (2008: 59%). Impairment charges rose £220m to £567m as a result of higher delinquency levels in the retail portfolios reflecting high consumer indebtedness.

Business Performance - Investment Banking and Investment Management

Barclays Capital profit before tax increased 89% to £2,464m as a result of very strong performances in the UK, Europe and the US, partially offset by a charge of £1,820m relating to own credit (2008: £1,663m gain). Top-line income increased 81% to £17.9bn reflecting excellent results across the client franchise and a resilient fourth quarter with top-line income of £3.6bn. Fixed Income, Currency and Commodities (FICC) was up £5.6bn to £13.0bn following the expansion of the business and increased client flows. Top-line income in Equities and Prime Services increased 147% and Investment Banking income more than doubled. Total credit market exposures were reduced by £14.1bn. In addition £5.1bn of credit market assets (and £2.4bn of other assets) were sold to Protium Finance LP. Operating expenses were 75% higher than 2008 given the substantial increase in the overall scale of the business. The cost:income ratio improved to 57% (2008: 72%). Compensation expenses as a proportion of income reduced to 38%, down from 44% in 2008. Total assets reduced 37% driven by initiatives to reduce derivative balances.

On 1st December 2009 Barclays completed the sale ofBarclays Global Investors to BlackRock, Inc. Included in the consideration were 37.567 million new BlackRock shares giving Barclays an economic interest of 19.9% of the enlarged BlackRock group. The profit on disposal before tax was £6,331m. Profit before tax, excluding the profit on disposal, increased 26% to £748m (2008: £595m) following a recovery on liquidity support charges and an 18% appreciation in the average value of the US Dollar against Sterling.

Barclays Wealth profit before tax reduced 78% to £145m principally as a result of the impact of the sale of the closed life business in 2008 and the cost of the integration of Barclays Wealth Americas during 2009. Income was in line with 2008. Excluding the impact of these transactions there was solid growth in income due to growth in the client franchise and the product offering. Operating expenses grew by 22%, reflecting the integration of the US business, partially offset by the disposal of the closed life business. Total client assets increased by 4% (£6bn) to £151bn.

Business Performance - Head Office Functions and Other Operations

Head Office Functions and Other Operations loss before tax was £550m, an improvement of £308m compared to 2008. The increase was the result of gains on debt extinguishment of £1,164m partially offset by increased costs in central funding activity due to money market dislocation, in particular LIBOR resets, and the cost of the announced UK bank payroll tax charge of £190m in respect of 2009 cash compensation, and £35m in respect of certain prior year awards which may fall within the proposed legislation.

Balance Sheet and Capital Management

Shareholders' Equity

Shareholders' equity, including non-controlling interests, increased 23% to £58.5bn in 2009 driven by profit after tax of £10.3bn. Net tangible asset value increased by 47% to £38.5bn. Net tangible asset value per share increased to 337p (2008: 313p).

Balance Sheet

Total assets decreased by £674bn to £1,379bn in 2009, primarily reflecting movements in market rates and active reductions in derivative balances. Balances attributable to derivative assets and liabilities would have been £374bn lower (31st December 2008: £917bn lower) than reported under IFRS if netting were permitted for assets and liabilities with the same counterparty or for which we hold cash collateral.

Excluding this, assets and liabilities held under investment contracts, settlement balances, goodwill and intangible assets, our adjusted total tangible assets were £969bn at 31st December 2009 (31st December 2008: £1,027bn). On this basis, we calculate adjusted gross leverage, being the multiple of adjusted total tangible assets over total qualifying Tier 1 capital, as 20x as at 31st December (31st December 2008: 28x).

Assets and risk weighted assets were affected by the depreciation in value of various currencies relative to Sterling during 2009. As at 31st December 2009, the US Dollar and the Euro had depreciated 10% and 7% respectively, relative to Sterling.

Capital Management

At 31st December 2009, on a Basel II basis, our Core Tier 1 ratio was 10.0% (31st December 2008: 5.6%) and our Tier 1 ratio was 13.0% (31st December 2008: 8.6%). Capital ratios reflect a 12% decrease (£51bn) in risk weighted assets to £383bn in 2009. Key drivers included a reduction in the overall size of the balance sheet and foreign exchange movements.

Liquidity

The liquidity pool held by the Group increased to £127bn at 31st December 2009 from £43bn at the end of 2008. Whilst funding markets were difficult, particularly in the first half of 2009, we were able to increase available liquidity and we extended the average term of unsecured liabilities from at least 14 months to 26 months. We completed senior benchmark transactions totalling £15bn equivalent in the senior unsecured debt markets across multiple currencies and raised €2bn equivalent in the secured covered bond market and issued £21bn equivalent of structured notes. We have continued to manage liquidity prudently in the light of market conditions and in anticipation of ongoing regulatory developments.

Dividends

As previously announced, it is now our policy to declare and pay dividends on a quarterly basis. We will pay a final cash dividend for 2009 of 1.5p per share on 19th March 2010 giving a total declared dividend for 2009 of 2.5p per share. We are committed to maintaining strong capital ratios and so our dividend policy is intended to be both conservative and progressive.

Outlook

We had a good start to 2010 with Group profit before tax well ahead of first half and full year 2009 run rates.

Overall impairment levels in the second half of 2009 were 23% lower than in the first half. Whilst we expect 2010 impairment levels to rise in certain books of business, particularly in our commercial lending portfolios, our planning assumption is for a moderate decline in impairment.

The evolution of our balance sheet and, in particular risk weighted assets, capital ratios and liquidity reserves, will depend upon the outcome of multiple regulatory reviews underway. It is our intention to remain conservatively positioned in anticipation of developments in the overall regulatory framework.

 

Chris Lucas, Group Finance Director



Consolidated Summary Income Statement

 

 



Year Ended 31.12.09


Year Ended 31.12.08


Notes1

Continuing Operations

Discon-tinued Operations

Total


Continuing Operations

Discon-tinued Operations

Total



£m

£m

£m


£m

£m

£m

Net interest income

1

11,918

33

11,951


11,469

-

11,469

Net fee and commission income

2

8,418

1,759

10,177


6,491

1,916

8,407










Net trading income/(loss)


7,001

1

7,002


1,339

(10)

1,329

Net investment income


56

66

122


680

-

680

Principal transactions

3

7,057

67

7,124


2,019

(10)

2,009










Net premiums from insurance contracts

4

1,172

-

1,172


1,090

-

1,090

Other income

5

1,389

4

1,393


367

10

377

Total income


29,954

1,863

31,817


21,436

1,916

23,352










Net claims and benefits incurred on insurance contracts

6

(831)

-

(831)


(237)

-

(237)

Total income net of insurance claims


29,123

1,863

30,986


21,199

1,916

23,115

Impairment charges and other credit provisions

7

(8,071)

-

(8,071)


(5,419)

-

(5,419)

Net income


21,052

1,863

22,915


15,780

1,916

17,696










Operating expenses

8

(16,715)

(1,137)

(17,852)


(13,391)

(975)

(14,366)










Share of post-tax results of associates and joint ventures

9

34

-

34


14

-

14

Profit on disposal of subsidiaries, associates and joint ventures

10

188

-

188


327

-

327

Gains on acquisitions

15

26

-

26


2,406

-

2,406

Profit before tax and disposal of discontinued operations


4,585

726

5,311


5,136

941

6,077

Profit on disposal of discontinued operations

29

-

6,331

6,331


-

-

-

Profit before tax


4,585

7,057

11,642


5,136

941

6,077

Tax

11

(1,074)

(280)

(1,354)


(453)

(337)

(790)

Profit after tax


3,511

6,777

10,288


4,683

604

5,287










Profit for the year attributable to









Equity holders of the parent


2,628

6,765

9,393


3,795

587

4,382

Non-controlling interests

12

883

12

895


888

17

905



3,511

6,777

10,288


4,683

604

5,287

Earnings per Share









Basic earnings per share

13

24.1p

62.1p

86.2p


51.4p

7.9p

59.3p

Diluted earnings per share

13

22.7p

58.9p

81.6p


49.8p

7.7p

57.5p

 

 

 

1    Notes start on page 86 and relate to continuing operations.

 

Consolidated Statement of Comprehensive Income

 

 


Year Ended

Year Ended


31.12.09

31.12.08


£m

£m

Profit after tax

10,288

5,287




Other Comprehensive Income



Continuing operations



Currency translation differences

(861)

2,274

Available for sale financial assets

1,236

(1,561)

Cash flow hedges

165

376

Other

-

(5)

Tax relating to components of other comprehensive income

(26)

851

Other comprehensive income for the year, net of tax from continuing operations

514

1,935

Other comprehensive income for the year, net of tax from discontinued operations

(58)

114

Total comprehensive income for the year

10,744

7,336




Attributable to:



Non-controlling interests

1,188

1,123

Equity holders of the parent

9,556

6,213

Total comprehensive income for the year

10,744

7,336

 

Consolidated Summary Balance Sheet

 

 



As at

As at

Assets

Notes1

31.12.09

31.12.08



£m

£m

Cash and balances at central banks


81,483

30,019

Items in the course of collection from other banks


1,593

1,695

Trading portfolio assets


151,344

185,637

Financial assets designated at fair value:




- held on own account


41,311

54,542

- held in respect of linked liabilities to customers under investment contracts


1,257

66,657

Derivative financial instruments

16

416,815

984,802

Loans and advances to banks

19

41,135

47,707

Loans and advances to customers

20

420,224

461,815

Available for sale financial investments


56,483

64,976

Reverse repurchase agreements and cash collateral on securities borrowed


143,431

130,354

Goodwill and intangibles


8,795

10,402

Property, plant and equipment


5,626

4,674

Deferred tax assets


2,303

2,668

Other assets


7,129

7,032

Total assets


1,378,929

2,052,980







As at

As at

Liabilities

Notes1

31.12.09

31.12.08



£m

£m

Deposits from banks


76,446

114,910

Items in the course of collection due to other banks


1,466

1,635

Customer accounts


322,429

335,505

Trading portfolio liabilities


51,252

59,474

Financial liabilities designated at fair value


86,202

76,892

Liabilities to customers under investment contracts


1,679

69,183

Derivative financial instruments

16

403,416

968,072

Debt securities in issue


135,902

149,567

Repurchase agreements and cash collateral on securities lent


198,781

182,285

Subordinated liabilities


25,816

29,842

Deferred tax liabilities


470

304

Other liabilities


16,592

17,900

Total liabilities


1,320,451

2,005,569





Shareholders' Equity




Shareholders' equity excluding non-controlling interests


47,277

36,618

Non-controlling interests


11,201

10,793

Total shareholders' equity


58,478

47,411





Total liabilities and shareholders' equity


1,378,929

2,052,980

 

1    For notes, see pages 86 to 103.

 

Consolidated Statement of Changes in Equity

 

 

2009

Share Capital and Share Premium1

Other Reserves

Retained Earnings

Total

Non-controlling Interests

Total Equity


£m

£m

£m

£m

£m

£m

Balance at 1st January 2009

6,138

6,272

24,208

36,618

10,793

47,411

Profit after tax

-

-

9,393

9,393

895

10,288

Other comprehensive income:







Currency translation differences

-

(1,138)

-

(1,138)

277

(861)

Available-for-sale financial assets

-

1,250

-

1,250

(14)

1,236

Cash flow hedges

-

194

-

194

(29)

165

Tax relating to components of other comprehensive income

-

(256)

171

(85)

59

(26)

Other comprehensive income net of tax from discontinued operations

-

(75)

17

(58)

-

(58)

Total comprehensive income

-

(25)

9,581

9,556

1,188

10,744

Issue of new ordinary shares

749

-

-

749

-

749

Issue of shares under employee share schemes

35

-

298

333

-

333

Net purchase of treasury shares

-

(47)

-

(47)

-

(47)

Transfers

-

80

(80)

-

-

-

Dividends

-

-

(113)

(113)

(767)

(880)

Net increase/decrease in non-controlling interest arising on acquisitions, disposals and capital issuances

-

-

-

-

(82)

(82)

Conversion of Mandatorily Convertible Notes

3,882

(3,652)

(230)

-

-

-

Other

-

-

181

181

69

250

Balance at 31st December 2009

10,804

2,628

33,845

47,277

11,201

58,478








2008







Balance at 1st January 2008

1,707

614

20,970

23,291

9,185

32,476

Profit after tax

-

-

4,382

4,382

905

5,287

Other comprehensive income:







Currency translation differences

-

2,174

-

2,174

100

2,274

Available-for-sale financial assets

-

(1,559)

-

(1,559)

(2)

(1,561)

Cash flow hedges

-

271

-

271

105

376

Other

-

-

(5)

(5)

-

(5)

Tax relating to components of other comprehensive income

-

882

(46)

836

15

851

Other comprehensive income net of tax from discontinued operations

-

124

(10)

114

-

114

Total comprehensive income

-

1,892

4,321

6,213

1,123

7,336

Issue of new ordinary shares

4,422

-

-

4,422

-

4,422

Issue of shares under employee share schemes

19

-

463

482

-

482

Issue of shares and warrants

-

-

1,410

1,410

-

1,410

Repurchase of shares

(10)

10

(173)

(173)

-

(173)

Net purchase of treasury shares

-

(350)

-

(350)

-

(350)

Transfers

-

437

(437)

-

-

-

Dividends

-

-

(2,344)

(2,344)

(703)

(3,047)

Net increase/decrease in non-controlling interest arising on acquisitions, disposals and capital issuances

-

-

-

-

1,338

1,338

Issue of Mandatorily Convertible Notes

-

3,652

-

3,652

-

3,652

Other

-

17

(2)

15

(150)

(135)

Balance at 31st December 2008

6,138

6,272

24,208

36,618

10,793

47,411

 

1    Details of share capital is shown in note 24.

 

Consolidated Summary Cash Flow Statement

 

 


Year Ended

Year Ended


31.12.09

31.12.08


£m

£m

Continuing Operations



Profit before tax

4,585

5,136

Adjustment for non-cash items

13,637

4,950

Changes in operating assets and liabilities

24,799

24,510

Tax paid

(1,177)

(1,404)

Net cash from operating activities

41,844

33,192

Net cash from investing activities

11,888

(8,662)

Net cash from financing activities

(661)

12,634

Net cash from discontinued operations

(376)

286

Effect of exchange rates on cash and cash equivalents

(2,864)

(6,018)

Net increase in cash and cash equivalents

49,831

31,432

Cash and cash equivalents at beginning of period

64,509

33,077

Cash and cash equivalents at end of period

114,340

64,509

 

Group Results Summary

 

Set out below is a summary of the Group's results by quarter since the start of 2008 and business segments' income and profit before tax:

Group Results


Q409

Q309

Q209

Q109


Q408

Q308

Q208

Q108


£m

£m

£m

£m


£m

£m

£m

£m

Top-line income

7,888

8,682

10,923

9,730


7,642

6,884

6,815

6,401

Credit market writedowns

(166)

(744)

(1,648)

(1,859)


(3,069)

(996)

(844)

(1,381)

Own credit

(522)

(405)

(1,172)

279


(288)

1,099

149

703

Total income net of insurance claims

7,200

7,533

8,103

8,150


4,285

6,987

6,120

5,723

Impairment charges and other credit provisions

(1,612)

(1,404)

(1,831)

(1,555)


(1,454)

(862)

(648)

(692)

Impairment charges - credit market writedowns

(245)

(254)

(416)

(754)


(203)

(452)

(510)

(598)

Net Income

5,343

5,875

5,856

5,841


2,628

5,673

4,962

4,433

Operating expenses

(4,626)

(4,479)

(4,286)

(4,461)


(3,275)

(4,338)

(3,506)

(3,247)

Share of results of JVs & associates

16

5

24

(11)


(15)

6

15

8

Profit on disposal of subsidiaries, associates & JVs

6,341

157

19

2


327

-

-

-

Gains on acquisitions

26

-

(1)

1


817

1,500

89

-

Profit before tax

7,100

1,558

1,612

1,372


482

2,841

1,560

1,194











Profit after tax

6,875

1,075

1,282

1,056


824

2,329

1,209

925











Cost:income ratio

64%

59%

53%

55%


76%

62%

57%

57%

Cost:net income ratio

87%

76%

73%

76%


125%

76%

71%

73%

Basic earnings per share

60.9p

7.8p

9.8p

7.7p


2.9p

29.4p

15.5p

11.5p

 

Business Segments Results

 


Total Income net of Insurance Claims


Profit Before Tax


Year Ended

Year Ended



Year Ended

Year Ended



31.12.09

31.12.08



31.12.09

31.12.08



£m

£m

% Change


£m

£m

% Change

UK Retail Banking

3,985

4,482

(11)


612

1,369

(55)

Barclays Commercial Bank

2,753

2,745

0


749

1,266

(41)

Barclaycard

4,042

3,219

26


761

789

(4)

GRCB - Western Europe

1,723

1,455

18


130

250

(48)

GRCB - Emerging Markets

1,045

994

5


(254)

141

(280)

GRCB - Absa

2,549

2,198

16


506

552

(8)

Barclays Capital

11,625

5,231

122


2,464

1,302

89

Barclays Global Investors1

1,903

1,844

3


7,079

595

-

Barclays Wealth

1,333

1,324

1


145

671

(78)

Head Office Functions

28

(377)

107


(550)

(858)

36

 

1    Continuing and discontinued operations including profit on disposal.

 

Results by Business

 

UK Retail Banking


Year Ended

Year Ended

Income Statement Information

31.12.09

31.12.08


£m

£m

Net interest income

2,624

2,996

Net fee and commission income

1,225

1,299

Net premiums from insurance contracts

198

205

Other income

6

17

Total income

4,053

4,517

Net claims and benefits incurred under insurance contracts

(68)

(35)

Total income net of insurance claims

3,985

4,482

Impairment charges and other credit provisions

(936)

(602)

Net income

3,049

3,880




Operating expenses excluding amortisation of intangible assets

(2,400)

(2,499)

Amortisation of intangible assets

(40)

(20)

Operating expenses

(2,440)

(2,519)




Share of post-tax results of associates and joint ventures

3

8

Profit before tax

612

1,369




Balance Sheet Information



Loans and advances to customers at amortised cost

£99.1bn

£94.4bn

Customer accounts

£92.5bn

£89.6bn

Total assets

£105.2bn

£101.4bn




Performance Ratios



Return on average economic capital1

12%

27%

Cost:income ratio1

61%

56%

Cost:net income ratio1

80%

65%




Other Financial Measures



Economic (loss)/profit1

(£64m)

£633m

Risk weighted assets

£32.2bn

£30.5bn




Key Facts



Number of UK current accounts2

11.2m

11.7m

Number of UK savings accounts

13.2m

12.0m

Number of UK mortgage accounts

834,000

816,000

LTV of mortgage book

43%

40%

LTV of new mortgage lending

48%

47%

Number of Local Business customers

686,000

660,000

Number of branches

1,698

1,724

Number of ATMs

3,394

3,455

 

1    Defined on pages 106 to111.

2    Number of accounts at 31st December 2009 is after a reduction of 0.9m due to the closure of dormant accounts.

 

Results by Business

 

UK Retail Banking

In the continued challenging economic environment, UK Retail Banking profit before tax decreased 55% (£757m) to £612m (2008: £1,369m), impacted by low interest rates resulting in margin compression on the deposit book and increased impairment charges which together more than offset well controlled costs and an improved assets margin.

The number of savings accounts increased 10% to 13.2m (31st December 2008: 12.0m) and mortgage accounts increased 18,000 to 834,000 (31st December 2008: 816,000). Local Business customer numbers increased 26,000 to 686,000 (31st December 2008: 660,000) with gross new lending of £1,047m. Total loans and advances to customers increased £4.7bn to £99.1bn (31st December 2008: £94.4bn).

Income decreased 11% (£497m) to £3,985m (2008: £4,482m) reflecting the impact of margin compression, which more than offset good income growth in Home Finance.

Net interest income decreased 12% (£372m) to £2,624m (2008: £2,996m) driven by margin compression of £755m on liabilities after taking into account gains on product hedges implemented to protect income on current accounts and managed rate deposits. This was partially offset by increases in asset driven net interest income. Total average customer deposit balances increased 4% to £89.0bn (2008: £85.9bn), reflecting good growth in Personal Customer Current Account balances. The average liabilities margin declined to 1.36% (2008: 2.01%) reflecting reductions in UK base rates.

Average mortgage balances grew 10%, reflecting strongly positive net lending. Mortgage balances were £87.9bn at the end of the period (31st December 2008: £82.3bn), a market share of 7% (2008: 7%). Gross advances reduced to £14.2bn (2008: £22.9bn) reflecting a continued conservative approach to lending, with redemptions of £8.5bn (2008: £10.4bn). Net new mortgage lending was £5.7bn (2008: £12.5bn). The average loan to value ratio of the mortgage book (including buy-to-let) on a current valuation basis was 43% (2008: 40%). The average loan to value ratio of new mortgage lending was 48% (2008: 47%) and the assets margin increased to 1.32% (2008: 1.25%) reflecting increased returns from mortgages and consumer loans.

Net fee and commission income decreased 6% (£74m) to £1,225m (2008: £1,299m) reflecting changing customer usage together with lower mortgage application and redemption fees. Overall sales productivity resulted in fee income growth in investments.

Total impairment charges represented 0.93% (2008: 0.63%) of total gross loans and advances to customers and banks. Impairment charges increased 55% (£334m) to £936m (2008: £602m), reflecting lower expectations for recoveries in line with the current economic environment. Impairment charges within Consumer Lending increased 56% to £573m (2008: £368m) with impairment charges increasing 75% to £183m (2008: £105m) in Personal Customer Current Accounts. Mortgage impairment charges remained low at £26m (2008: £24m).

Operating expenses remained well controlled and decreased 3% (£79m) to £2,440m (2008: £2,519m). This reflected the receipt of a one-off credit of £175m resulting from the closure of the UK final salary pension scheme to existing members, offset by a year on year increase in pension costs of £115m and the non-recurrence of gains of £75m from the sale of property.

Total assets increased 4% to £105.2bn (31st December 2008: £101.4bn) driven by growth in mortgage balances. Risk weighted assets increased 6% (£1.7bn) to £32.2bn (31st December 2008: £30.5bn), a significant contributor being the growth in the mortgage book.

Barclays Commercial Bank


Year Ended

Year Ended

Income Statement Information

31.12.09

31.12.08


£m

£m

Net interest income

1,741

1,757

Net fee and commission income

926

861




Net trading income

25

3

Net investment (loss)/income

(51)

19

Principal transactions

(26)

22




Other income

112

105

Total income

2,753

2,745

Impairment charges and other credit provisions

(974)

(414)

Net income

1,779

2,331




Operating expenses excluding amortisation of intangible assets

(1,009)

(1,048)

Amortisation of intangible assets

(21)

(15)

Operating expenses

(1,030)

(1,063)




Share of post-tax results of associates and joint ventures

-

(2)

Profit before tax

749

1,266




Balance Sheet Information



Loans and advances to customers at amortised cost

£59.6bn

£67.5bn

Loans and advances to customers at fair value

£13.1bn

£13.0bn

Customer accounts

£62.7bn

£60.6bn

Total assets

£75.5bn

£84.0bn




Performance Ratios



Return on average economic capital1

16%

26%

Cost:income ratio1

37%

39%

Cost:net income ratio1

58%

46%




Other Financial Measures



Economic profit1

£90m

£544m

Risk weighted assets

£60.3bn

£63.1bn




Key Fact



Total number of customers2

113,500

120,500

 

1    Defined on pages 106 to111.

2    Includes 37,000 (2008: 39,000) customers incorporated through a 51% owned subsidiary (Iveco Finance Holdings Limited).

 

Barclays Commercial Bank

Barclays Commercial Bank profit before tax decreased 41% (£517m) to £749m (2008: £1,266m), primarily driven by significantly higher impairment. Income was flat, with strong performance from net fees and commissions offset by lower principal transactions.

Income totalled £2,753m (2008: £2,745m).

Net interest income fell 1% (£16m) to £1,741m (2008: £1,757m) with the benefit of increased average lending balances and higher deposit volumes offset by margin compression in the deposit book of £220m. Average lending grew 3% (£1.6bn) to £63.3bn (2008: £61.7bn) reflecting our continuing commitment to lend to viable businesses. The asset margin increased 5 basis points to 1.60% (2008: 1.55%). Average customer deposits grew 3% (£1.4bn) to £49.0bn (2008: £47.6bn) benefiting from ongoing product initiatives. Deposit margin fell 25 basis points to 1.22% (2008: 1.47%) reflecting the fall in UK base rate.

Non interest income comprised 37% of total income (2008: 36%). Net fees and commissions income increased 8% (£65m) to £926m (2008: £861m), driven by strong debt fees, trade guarantees and other fee income.

Principal transactions income decreased £48m to a loss of £26m (2008: gain of £22m) as a result of investment writedowns and fewer opportunities for equity realisation within the current market environment.

Other income grew 7% (£7m) to £112m (2008: £105m) reflecting increased income from the repurchase of securitised debt issued of £85m (2008: £24m), partially offset by lower rental income from operating leases of £21m (2008: £29m). 2008 income included a £39m gain from the restructuring of Barclays interest in a third party finance operation.

Impairment charges rose to £974m (2008: £414m), reflecting the impact of the economic recession across the business with continued pressure on corporate liquidity, rising default rates and lower asset values. Impairment as a percentage of period end gross loans and advances to customers and banks increased to 1.58% (2008: 0.60%).

Operating expenses fell 3% to £1,030m (2008: £1,063m); reflecting tightly managed discretionary costs and a £100m one-off credit for the closure of the UK final salary pensions scheme partially offset by an incremental increase in pension costs of £69m and the non-recurrence of property credits.

Total assets fell 10% (£8.5bn) to £75.5bn (2008: £84.0bn) driven by reduced overdraft borrowings and lower volumes in Barclays Asset and Sales Finance business. New term lending was £14bn. Risk weighted assets fell 4% (£2.8bn) to £60.3bn (2008: £63.1bn) largely reflecting a reduction in net balance sheet exposures offset by the impact of deteriorating credit conditions.

The number of customers fell 6% primarily as a result of reductions in exposures to high risk sectors within Barclays Asset and Sales Finance.

 

Barclaycard


Year Ended

Year Ended

Income Statement Information

31.12.09

31.12.08


£m

£m

Net interest income

2,723

1,786

Net fee and commission income

1,271

1,299




Net trading (loss)/income

(1)

2

Net investment income

23

80

Principal transactions

22

82




Net premiums from insurance contracts

44

44

Other income

2

19

Total income

4,062

3,230

Net claims and benefits incurred under insurance contracts

(20)

(11)

Total income net of insurance claims

4,042

3,219

Impairment charges and other credit provisions

(1,798)

(1,097)

Net income

2,244

2,122




Operating expenses excluding amortisation of intangible assets

(1,412)

(1,361)

Amortisation of intangible assets

(82)

(61)

Operating expenses

(1,494)

(1,422)




Share of post-tax results of associates and joint ventures

8

(3)

Profit on disposal of subsidiaries, associates and joint ventures

3

-

Gain on acquisition

-

92

Profit before tax

761

789




Balance Sheet Information



Loans and advances to customers at amortised cost

£26.5bn

£27.4bn

Total assets

£30.2bn

£30.9bn




Performance Ratios



Return on average economic capital1

15%

23%

Cost:income ratio1

37%

44%

Cost:net income ratio1

67%

67%




Other Financial Measures



Economic profit1

£45m

£335m

Risk weighted assets

£30.6bn

£27.3bn




Key Facts



Number of Barclaycard UK customers

10.4m

11.7m

Number of Barclaycard International customers

10.8m

11.8m

Total number of Barclaycard customers2

21.2m

23.5m

UK credit cards - average outstanding balances

£10.8bn

£10.2bn

International - average outstanding balances

£9.7bn

£6.5bn

Total - average outstanding balances

£20.5bn

£16.7bn

UK credit cards - average extended credit balances

£8.5bn

£8.0bn

International - average extended credit balances

£7.9bn

£5.2bn

Total - average extended credit balances

£16.4bn

£13.2bn

Loans - total outstandings

£6.0bn

£5.9bn

Number of retailer relationships

87,000

89,000

 

 

 

1    Defined on pages 106 to 111.

2    Number of customers at 31st December 2009 is after a reduction of 1.5m due to the closure of dormant accounts.

 

Barclaycard

Barclaycard profit before tax decreased 4% (£28m) to £761m (2008: £789m). Strong income growth across the portfolio driven by increased lending, improved margins and foreign exchange gains, was offset by higher impairment charges, driven by the deterioration in the global economy.

International businesses' profit before tax decreased 59% to £107m (2008: £261m) driven by the US business. Strong income growth driven by higher average extended credit balances was more than offset by impairment growth, especially in the US and South African businesses, and increased operating expenses. In the UK our businesses benefited from an improvement in margins and growth in average extended balances leading to income increasing 18% to £2,494m (2008: £2,111m). Income growth was partially offset by the growth in impairment as worsening economic conditions impacted delinquencies.

Income increased 26% (£823m) to £4,042m (2008: £3,219m) reflecting strong growth across the portfolio, especially in the international businesses through higher extended credit balances, lower funding rates and the appreciation of the average values of the US Dollar and the Euro against Sterling.

Net interest income increased 52% (£937m) to £2,723m (2008: £1,786m) driven by strong growth in international average extended credit card balances, up 52% to £7.9bn (2008: £5.2bn), and lower funding rates as margins improved to 8.97% (2008: 6.92%).

Net fee and commission income decreased 2% (£28m) to £1,271m (2008: £1,299m) through lower volumes in FirstPlus due to the decision taken to stop writing new business in 2008 and lower volumes in the UK card portfolios partially offset by growth in the international businesses.

Principal transactions of £22m (2008: £82m) included a £20m gain from the sale of MasterCard shares (2008: £16m). Investment income in 2008 included a £64m gain from the Visa IPO.

Other income in 2008 included an £18m gain on the sale of a portfolio in the US.

Impairment charges increased £701m (64%) to £1,798m (2008: £1,097m). The rate of growth in the second half of the year was lower than that in the first half. Impairment charges in the international businesses increased £444m, driven by higher delinquencies due to deteriorating economic conditions, growth in average receivables and the appreciation of the average values of the US Dollar and the Euro against Sterling. UK portfolio charges were higher as a result of rising delinquencies due to the economic deterioration, especially in the loan portfolios, and the inclusion of Goldfish in UK Cards.

Operating expenses increased 5% (£72m) to £1,494m (2008: £1,422m), due to the appreciation in the average value of the US Dollar and the Euro against Sterling and growth in the portfolios including the acquisitions made in the UK, US and South Africa in 2008.

The purchase of Goldfish resulted in a gain on acquisition of £92m in 2008.

Total assets decreased 2% to £30.2bn (31st December 2008: £30.9bn) reflecting the depreciation in the US Dollar and Euro against Sterling, the decision to stop writing new business in FirstPlus and tighter lending criteria. Risk weighted assets increased 12% (£3.3bn) to £30.6bn (31st December 2008: £27.3bn) due to higher volumes and the impact of moving toward an advanced risk measurement methodology offset by favourable foreign exchange and lower secured lending balances in FirstPlus.

 

Global Retail and Commercial Banking - Western Europe


Year Ended

Year Ended

Income Statement Information

31.12.09

31.12.083


£m

£m

Net interest income

1,182

875

Net fee and commission income

438

389




Net trading loss

-

(7)

Net investment income

123

161

Principal transactions

123

154




Net premiums from insurance contracts

544

352

Other income

8

50

Total income

2,295

1,820

Net claims and benefits incurred under insurance contracts

(572)

(365)

Total income net of insurance claims

1,723

1,455

Impairment charges and other credit provisions

(667)

(297)

Net income

1,056

1,158




Operating expenses excluding amortisation of intangible assets

(1,075)

(941)

Amortisation of intangible assets

(38)

(19)

Operating expenses

(1,113)

(960)




Share of post-tax results of associates and joint ventures

4

-

Profit on disposal of subsidiaries, associates and joint ventures

157

-

Gain on acquisition

26

52

Profit before tax

130

250




Balance Sheet Information



Loans and advances to customers at amortised cost

£52.7bn

£53.9bn

Customer accounts

£23.4bn

£15.6bn

Total assets

£64.2bn

£65.5bn




Performance Ratios



Return on average economic capital1

4%

18%

Cost:income ratio1

65%

66%

Cost:net income ratio1

105%

83%




Other Financial Measures



Economic (loss)/profit1,2

(£234m)

£155m

Risk weighted assets

£32.4bn

£37.0bn




Key Facts



Number of customers

2.8m

2.5m




Number of branches

1,128

997

Number of sales centres

190

184

Number of distribution points

1,318

1,181

 

 

1    Defined on pages 106 to 111.

2    2008 includes £139m release of a deferred tax liability.

3    2008 figures have been restated to include Barclays Russia, which was transferred to GRCB - Western Europe during 2009.

 

Global Retail and Commercial Banking - Western Europe

Global Retail and Commercial Banking - Western Europe profit before tax fell 48% (£120m) to £130m (2008: £250m) against the backdrop of a very challenging macroeconomic environment across all key markets, particularly Spain. The results included a gain of £157m on the sale of Barclays Vida y Pensiones Compania de Seguros, Barclays Iberian life insurance and pensions business, a restructuring charge of £24m largely concentrated in Spain and an operating loss before tax of £67m (2008: loss before tax of £7m) related to Barclays Russia driven by increased impairment due to the economic environment and increased expenses incurred in positioning the business for future growth. Excluding Russia, all businesses traded profitably although Spain's net profit fell significantly due to high impairment charges, particularly in the commercial property portfolio. Profit before tax was favourably impacted by the 13% appreciation in the average value of the Euro against Sterling.

Income increased across all countries, improving 18% (£268m) to £1,723m (2008: £1,455m) driven by the appreciation of the Euro and the significant expansion in the distribution network in 2007 and 2008. The number of distribution points increased by 137 to 1,318 (31st December 2008: 1,181) reflecting further selected organic growth and development of the franchise.

Net interest income increased 35% (£307m) to £1,182m (2008: £875m). The increase was principally driven by strong growth in customer deposits of 50% to £23.4bn (2008: £15.6bn), an improvement in the customer assets margin to 1.33% (2008: 1.19%) and an increase in treasury interest income. This was partially offset by competitive pressures on liability margin compression.

Net fee and commission income increased 13% (£49m) to £438m (2008: £389m), generated from asset management and insurance product lines.

Principal transactions fell 20% (£31m) to £123m (2008: £154m), mainly due to the non-recurrence of the gains from both the Visa IPO (2008: £65m) and the sale of shares in MasterCard (2008: £17m), partially offset by profit on the sale of Government backed bonds.

Net premiums from insurance contracts increased £192m to £544m (2008: £352m) reflecting growth in the life assurance business. Net claims and benefits incurred increased correspondingly by £207m.

Impairment charges increased £370m to £667m (2008: £297m), principally due to higher impairment in Spain on the commercial property, construction and SME portfolios and, to a lesser extent, on the retail portfolio. The impairment charge for Spain increased 107% (£235m) to £455m (2008: £220m) of which £270m related to the corporate and SME portfolios.

Operating expenses increased 16% (£153m) to £1,113m (2008: £960m) due to the continued expansion of the Italian and Portuguese networks, investment in Barclays Russia, restructuring charges of £24m and reduced gains from the sale of property of £25m (2008: £55m). Underlying costs were tightly controlled.

In September 2009, Barclays established a long-term life insurance joint venture in Spain, Portugal and Italy with CNP Assurances SA (CNP). As part of this transaction Barclays sold a 50 per cent stake in Barclays Vida y Pensiones Compania de Seguros to CNP. The transaction gave rise to a gain of £157m. Barclays share of the results of the joint venture with CNP are reported within share of post-tax results of associates and joint ventures.

Barclays acquired the Citigroup cards business in Portugal in December 2009. This resulted in the acquisition of approximately 400,000 customers and loans and advances to customers of £550m. The transaction generated a gain on acquisition of £26m.

Total assets remained stable at £64.2bn (2008: £65.5bn), as underlying asset growth was offset by depreciation in the period end value of the Euro against Sterling. Risk weighted assets decreased 12% (£4.6bn) to £32.4bn (31st December 2008: £37.0bn) driven by active management and the migration of certain retail portfolios onto the advanced credit risk approach.

 

Global Retail and Commercial Banking - Emerging Markets


Year Ended

Year Ended

Income Statement Information

31.12.09

31.12.082


£m

£m

Net interest income

743

597

Net fee and commission income

232

217




Net trading income

61

88

Net investment income

7

91

Principal transactions

68

179




Other income

2

1

Total income

1,045

994

Impairment charges and other credit provisions

(471)

(165)

Net income

574

829




Operating expenses excluding amortisation of intangible assets

(846)

(685)

Amortisation of intangible assets

(6)

(3)

Operating expenses

(852)

(688)




Profit on disposal of subsidiaries, associates and joint ventures

24

-

(Loss)/Profit before tax

(254)

141




Balance Sheet Information



Loans and advances to customers at amortised cost

£7.3bn

£9.7bn

Customer accounts

£8.5bn

£9.3bn

Total assets

£11.9bn

£13.9bn




Performance Ratios



Return on average economic capital1

(18%)

10%

Cost:income ratio1

82%

69%

Cost:net income ratio1

148%

83%




Other Financial Measures



Economic (loss)1

(£379m)

(£2m)

Risk weighted assets

£12.4bn

£14.6bn




Key Facts



Number of customers

3.7m

3.8m




Number of branches

514

500

Number of sales centres

169

300

Number of distribution points

683

800

 

 

1    Defined on pages 106 to 111.

2    2008 figures have been restated to exclude Barclays Russia which was transferred from GRCB - Emerging Markets during 2009.

 

Global Retail and Commercial Banking - Emerging Markets

Global Retail and Commercial Banking - Emerging Markets made a loss before tax of £254m in 2009 versus a profit before tax of £141m in 2008. Good income growth across Emerging Markets was offset by significantly increased impairment in India and UAE and continued investment across new and existing markets. Profit before tax in the established markets in Africa and the Indian Ocean decreased to £109m (2008: £182m) primarily due to the allocation of gains from the Visa IPO and sale of shares in MasterCard during 2008.

Income increased 5% to £1,045m (2008: £994m) driven by strong growth in UAE, Africa and the Indian Ocean, partially offset by lower income in India.

Net interest income increased 24% (£146m) to £743m (2008: £597m), driven by retail and commercial balance sheet growth with average customer assets up 19% to £8.3bn (2008: £7.0bn) and customer deposits up 11% to £8.2bn (2008: £7.4bn). The assets margin increased 31 basis points to 5.20% (2008: 4.89%) driven by a change in the product mix. The liabilities margin increased 14 basis points to 2.26% (2008: 2.12%) driven by a change in product mix and higher returns from funding assets.

Net fee and commission income increased 7% (£15m) to £232m (2008: £217m) primarily driven by growth in retail fee income.

Principal transactions decreased £111m to £68m (2008: £179m). 2008 included a gain of £82m from the sale of shares in MasterCard and Visa. Excluding this gain, principal transactions decreased £29m driven by lower fees from foreign exchange income transactions.

Impairment charges increased to £471m (2008: £165m) including an increase of £255m across India and UAE due to the deterioration in the credit environment in 2009 reflecting the impact of the economic recession across the business with continued pressure on liquidity, rising default rates and lower asset values.

Operating expenses increased 24% (£164m) to £852m (2008: £688m) reflecting continued investment in Indonesia and Pakistan and investment in infrastructure across other markets.

Profit on disposal of subsidiaries, associates and joint ventures of £24m represented the sale of a 7% stake in the GRCB - Emerging Markets Botswana business. The residual holding of Barclays in Barclays Bank of Botswana Limited following the sale is 68%.

Total assets decreased 14% (£2.0bn) to £11.9bn (2008: £13.9bn), and risk weighted assets decreased 15% (£2.2bn) to £12.4bn (2008: £14.6bn) due to the business pro-actively managing down portfolio exposures driven by a realignment of lending strategy in light of the economic downturn and the impact of exchange rate movements. Customer assets decreased 25% (£2.4bn) to £7.3bn (2008: £9.7bn) and customer deposits decreased 9% (£0.8bn) to £8.5bn (2008: £9.3bn).

 

Global Retail and Commercial Banking - Absa


Year Ended

Year Ended

Income Statement Information

31.12.09

31.12.08


£m

£m

Net interest income

1,300

1,104

Net fee and commission income

943

762




Net trading (loss)/income

(5)

6

Net investment income

128

105

Principal transactions

123

111




Net premiums from insurance contracts

294

234

Other income

60

113

Total income

2,720

2,324

Net claims and benefits incurred under insurance contracts

(171)

(126)

Total income net of insurance claims

2,549

2,198

Impairment charges and other credit provisions

(567)

(347)

Net income

1,982

1,851




Operating expenses excluding amortisation of intangible assets

(1,418)

(1,255)

Amortisation of intangible assets

(51)

(50)

Operating expenses

(1,469)

(1,305)




Share of post-tax results of associates and joint ventures

(4)

5

Profit on disposal of subsidiaries, associates and joint ventures

(3)

1

Profit before tax

506

552




Balance Sheet Information



Loans and advances to customers at amortised cost

£36.4bn

£32.7bn

Customer accounts

£19.7bn

£17.0bn

Total assets

£45.8bn

£40.4bn




Performance Ratios



Return on average economic capital1

11%

20%

Cost:income ratio1

58%

59%

Cost:net income ratio1

74%

71%




Other Financial Measures



Economic (loss)/profit1

(£37m)

£70m

Risk weighted assets

£21.4bn

£18.8bn




Key Facts



Number of corporate customers

100,000

107,000

Number of retail customers

11.4m

10.4m

Number of ATMs

8,560

8,719




Number of branches

857

877

Number of sales centres

205

300

Number of distribution points

1,062

1,177

 

 

1    Defined on pages 106 to 111.

 

Global Retail and Commercial Banking - Absa

Impact of Absa Group Limited on Barclays Results

Absa Group Limited profit before tax of R9,842m (2008: R15,305m), a decrease of 36%, is translated in Barclays results at an average exchange rate of R13.14/£ (2008: R15.17/£), a 15% appreciation in the average value of the Rand against Sterling. Consolidation adjustments reflected the amortisation of intangible assets of £51m (2008: £50m) and internal funding and other adjustments of £115m (2008: £174m). The resulting profit before tax of £583m (2008: £785m) is represented within Global Retail and Commercial Banking - Absa £506m (2008: £552m), Barclays Capital £16m loss (2008: £175m profit), Barclaycard £95m (2008: £58m) and Barclays Wealth £2m loss (2008: £nil).

Absa Group Limited's total assets were R717,740m (31st December 2008: R774,157m), a decline of 7%. This is translated into Barclays results at a period end exchange rate of R11.97/£ (2008: R13.74/£).

Global Retail and Commercial Banking - Absa

Global Retail and Commercial Banking - Absa profit before tax decreased 8% (£46m) to £506m (2008: £552m) owing to challenging market conditions. Modest Rand income growth and tight cost control were offset by increased impairment.

Income increased 16% (£351m) to £2,549m (2008: £2,198m) predominantly reflecting the impact of exchange rate movements.

Net interest income improved 18% (£196m) to £1,300m (2008: £1,104m) reflecting the appreciation in the average value of the Rand against Sterling and modest balance sheet growth. Average customer assets increased 17% to £32.5bn (2008: £27.7bn) driven by appreciation of the Rand against Sterling and modest growth in loans and advances. Retail and commercial mortgages remained relatively flat in 2009 while instalment finance showed a slight decline with the run-off outweighing new sales. The assets margin decreased to 2.68% (2008: 2.79%) as a result of the higher cost of wholesale funding and significant reductions in interest recognised on delinquent accounts. Average customer deposits increased 29% to £17.4bn (2008: £13.5bn), primarily driven by the appreciation of the Rand and the increase in the number of customers. Retail and commercial deposits increased 3.9% and 4.6% respectively. The liabilities margin was down 63 basis points to 2.43% (2008: 3.06%) reflecting stronger growth in lower margin retail deposits, pricing pressure from competitors and the impact of margin compression due to the decrease in interest rates.

Net fee and commission increased 24% (£181m) to £943m (2008: £762m), reflecting pricing increases, volume growth and the impact of exchange rate movements.

Principal transactions increased £12m to £123m (2008: £111m) reflecting the impact of exchange rate movements and gains of £17m from the sale of shares in MasterCard, slightly offset by lower gains on economic hedges.

Net premiums from insurance contracts increased 26% (£60m) to £294m (2008: £234m) reflecting volume growth in short-term insurance contracts and the impact of exchange rate movements.

Other income decreased £53m to £60m (2008: £113m) reflecting the non-recurrence of the gain of £46m recorded on the Visa IPO in 2008.

Impairment charges increased £220m to £567m (2008: £347m) due to high delinquency levels in the retail portfolios as a result of continued consumer indebtedness, despite the decline in interest and inflation rates during the first half of the year. There was a slight improvement in impairment ratios in the second half of 2009.

Operating expenses increased 13% (£164m) to £1,469m (2008: £1,305m) reflecting the impact of exchange rate movements. Costs were tightly controlled in Rand.

Total assets increased 13% to £45.8bn (31st December 2008: £40.4bn) and risk weighted assets increased 14% (£2.6bn) to £21.4bn (31st December 2008: £18.8bn), reflecting the impact of exchange rate movements.

 

Barclays Capital


Year Ended

Year Ended

Income Statement Information

31.12.09

31.12.08


£m

£m

Net interest income

1,598

1,724

Net fee and commission income

3,001

1,429




Net trading income

7,185

1,506

Net investment (loss)/income

(164)

559

Principal transactions

7,021

2,065




Other income

5

13

Total income

11,625

5,231

Impairment charges and other credit provisions

(2,591)

(2,423)

Net income

9,034

2,808




Operating expenses excluding amortisation of intangible assets

(6,406)

(3,682)

Amortisation of intangible assets

(186)

(92)

Operating expenses

(6,592)

(3,774)




Share of post-tax results of associates and joint ventures

22

6

Gain on acquisition

-

2,262

Profit before tax

2,464

1,302




Balance Sheet Information



Loans and advances to banks and customers at amortised cost

£162.6bn

£206.8bn

Total assets

£1,019.1bn

£1,629.1bn

Assets contributing to adjusted gross leverage

£618.2bn

£681.0bn

Group liquidity pool

£127bn

£43bn




Performance Ratios



Return on average economic capital1

15%

20%

Cost:income ratio1

57%

72%

Cost:net income ratio1

73%

134%

Compensation:income ratio1

38%

44%




Other Financial Measures



Economic profit1

£195m

£825m

Risk weighted assets

£181.1bn

£227.4bn

Average DVaR (95%)

£77m

£53m

Average total income per employee (000s)

£515

£281

 

 

1    Defined on pages 106 to 111.

 

 

Barclays Capital

Barclays Capital profit before tax increased 89% to £2,464m (2008: £1,302m). The substantial increase in income and profit reflected very strong performances in the UK and Europe, and a transformation in the scale and service offering in the US through the integration of the Lehman businesses acquired in September 2008. Profit before tax was struck after credit market writedowns of £6,086m (2008: £8,053m), including £4,417m credit market losses (2008: £6,290m) and £1,669m of impairment (2008: £1,763m). The loss on own credit was £1,820m (2008: £1,663m gain).

 


Year Ended

Year Ended

Analysis of Total Income

31.12.09

31.12.08


£m

£m

Fixed Income, Currency and Commodities

12,964

7,353

Equities and Prime Services

2,846

1,153

Investment Banking

2,195

1,053

Principal Investments

(143)

299

Top-line income

17,862

9,858




Credit market losses in income

(4,417)

(6,290)

Own credit

(1,820)

1,663

Total income

11,625

5,231

 

Income of £11,625m was up 122% (2008: £5,231m), reflecting excellent growth across the client franchise. Top-line income increased 81% to £17,862m (2008: £9,858m). Fixed Income, Currency and Commodities increased 76% and drove the strong increase in trading income following the expansion of the business and the associated increase in client flows. Equities and Prime Services increased 147% driven by the acquisition of the Lehman Brothers North American businesses with particularly strong performances in cash equities and equity derivatives.

Investment Banking, which comprises advisory businesses and equity and debt underwriting, more than doubled to £2,195m (2008: £1,053m) driven by origination and advisory activity. The cash equity business, along with Investment Banking, drove a significant rise in fee and commission income.

Losses in Principal Investments of £143m (2008: income of £299m) contributed to the overall net investment loss of £164m (2008: income of £559m).

Impairment charges of £2,591m (2008: £2,423m) included credit market impairment of £1,669m (2008: £1,763m) as discussed on page 44. Non credit market related impairment of £922m (2008: £660m) principally related to charges in the portfolio management, global loans and principal investment businesses. Impairment charges declined significantly in the second half of 2009.

Operating expenses increased 75% to £6,592m (2008: £3,774m), reflecting the inclusion of the acquired Lehman business. Compensation costs represented 38% of income, a reduction of 6 percentage points on the prior year.

Total assets reduced 37% to £1,019.1bn (31st December 2008: £1,629.1bn) primarily as a result of derivative balances. There were further reductions in the trading portfolio and lending as well as depreciation in the value of other currencies relative to Sterling. These reductions contributed to an overall decrease of 9% in the adjusted gross leverage assets to £618.2bn (31st December 2008: £681.0bn). Risk weighted assets reduced 20% (£46.3bn) to £181.1bn (31st December 2008: £227.4bn) following the reductions in the balance sheet and reclassification of certain securitisation assets to capital deductions and depreciation on the value of other currencies against Sterling, partially offset by a deterioration in credit conditions which increased probabilities of default.

Barclays Capital manages the liquidity pool on behalf of the Barclays Group. The Group pool increased to £127bn (2008: £43bn). Whilst funding markets have been difficult, Barclays increased available liquidity, extended the term of unsecured liabilities, and reduced reliance on unsecured funding. Barclays completed a number of benchmark transactions in the senior debt market in the US, UK and Europe during 2009.

Average DVaR increased £24m to £77m (2008: £53m). Spot DVaR at 31st December 2009 of £55m reduced by £32m (31st December 2008: £87m).

 

Barclays Global Investors


Year Ended 31.12.09


Year Ended 31.12.08

Income Statement Information

Continuing Operations

Discon-tinued Operations1

Total


Continuing Operations

Discon-tinued Operations

Total


£m

£m

£m


£m

£m

£m

Net interest income/(expense)

10

33

43


(38)

-

(38)

Net fee and commission income

(2)

1,759

1,757


1

1,916

1,917









Net trading income/(loss)

20

1

21


(4)

(10)

(14)

Net investment income/(loss)

11

66

77


(29)

-

(29)

Principal transactions

31

67

98


(33)

(10)

(43)









Other income

1

4

5


(2)

10

8

Total income

40

1,863

1,903


(72)

1,916

1,844









Operating expenses excluding amortisation of intangible assets

(17)

(1,123)

(1,140)


(274)

(960)

(1,234)

Amortisation of intangible assets

-

(14)

(14)


-

(15)

(15)

Operating expenses

(17)

(1,137)

(1,154)


(274)

(975)

(1,249)









Profit on disposal of associates
and joint ventures

(1)

(1)


Profit/(loss) before tax and disposal
of discontinued operations

22

726

748


(346)

941

595

Profit on disposal of discontinued operations

-

6,331

6,331


-

-

-









Profit/(loss) before tax

22

7,057

7,079


(346)

941

595









Balance Sheet Information








Total assets

£5.4bn

-

£5.4bn


£0.7bn

£70.6bn

£71.3bn

 

Profit on Disposal Information

As at 01.12.09


£m

Consideration


- Cash

4,207

- BlackRock shares

5,294

Total consideration including hedging gains

9,501

Net assets disposed

(2,051)

CVC fee

(106)

Transaction costs

(433)

Amounts relating to non-controlling interests

(580)

Profit on disposal before tax

6,331

 

 

1    BGI was sold on the 1st December 2009. Figures for discontinued operations are for the period up to disposal.

 

Barclays Global Investors

Barclays Global Investors profit before tax increased £6,484m to £7,079m (2008: £595m). Profit benefited from the sale of Barclays Global Investors to BlackRock Inc., which completed on 1st December 2009. Consideration of £9,501m includes 37.567 million new BlackRock shares valued at £5,294m giving Barclays an economic interest of 19.9% of the enlarged BlackRock group. The profit on disposal before tax was £6,331m after deducting amounts relating to non-controlling interests, transaction costs and a break fee relating to the termination of CVC Capital Partners' proposed purchase of the iShares business. Further information on the disposal is set out on note 29 on page 103.

Profit before tax excluding profit on disposal increased 26% to £748m (2008: £595m) reflecting a recovery on liquidity support of £25m during 2009 (2008: charge of £263m) and an 18% appreciation in the average value of the US Dollar against Sterling. The 2009 results included 11 months of discontinued operations compared to 12 months for 2008. Total income grew 3% (£59m) to £1,903m (2008: £1,844m).

Net fee and commission income declined 8% (£160m) to £1,757m (2008: £1,917m) largely reflecting 11 months' activity in the year.

Principal transactions increased £141m to a gain of £98m (2008: £43m loss) driven by sales of assets excluded from the disposal to BlackRock.

Operating expenses decreased 8% (£95m) to £1,154m (2008: £1,249m), benefiting from a recovery on liquidity support of £25m during 2009 (2008: charge of £263m), partially offset by exchange rate movements.

The continuing operations of BGI represent residual obligations under the cash support arrangements and associated liquidity support charges and, from 1st December 2009, included the Group's 19.9% ongoing interest in BlackRock. This investment is accounted for as an available for sale equity investment, with no dividends being received during 2009. Profit before tax on continuing operations for 2009 increased by £368m to £22m (2008: £346m loss) primarily due to lower liquidity support charges.

Total assets as at 31st December 2009 reflect shares to the value of £5,386m held in BlackRock, with total assets as at 31st December 2008 representing residual assets excluded from the disposal to BlackRock.

 

Barclays Wealth


Year Ended

Year Ended

Income Statement Information

31.12.09

31.12.08


£m

£m

Net interest income

504

486

Net fee and commission income

802

720




Net trading income/(loss)

7

(11)

Net investment income/(loss)

13

(333)

Principal transactions

20

(344)




Net premium from insurance contracts

-

136

Other income

7

26

Total income

1,333

1,024

Net claims and benefits incurred under insurance contracts

-

300

Total income net of insurance claims

1,333

1,324

Impairment charges and other credit provisions

(51)

(44)

Net income

1,282

1,280




Operating expenses excluding amortisation of intangible assets

(1,114)

(919)

Amortisation of intangible assets

(24)

(16)

Operating expenses

(1,138)

(935)




Profit on disposal of subsidiaries, associates and joint ventures

1

326

Profit before tax

145

671




Balance Sheet Information



Loans and advances to customers at amortised cost

£13.1bn

£11.4bn

Customer accounts

£38.5bn

£42.4bn

Total assets

£15.1bn

£13.3bn




Performance Ratios



Return on average economic capital1

22%

118%

Cost:income ratio1

85%

71%




Other Financial Measures



Economic profit1

£49m

£553m

Risk weighted assets

£11.4bn

£10.3bn

Average net income generated per member of staff (000s)1

£169

£176




Key Fact



Total client assets

£151.3bn

£145.1bn

 

 

1    Defined on pages 106 to 111.

 

Barclays Wealth

Barclays Wealth profit before tax reduced 78% (£526m) to £145m (2008: £671m). The reduction in profit was principally due to the sale of the closed life assurance business in 2008 (2008: profit before tax of £104m and profit on disposal of £326m). Results were also affected by the integration of Lehman Brothers North American businesses (Barclays Wealth Americas), which made a loss of £39m.

Total income net of insurance claims increased 1% (£9m) to £1,333m (2008: £1,324m). Excluding the impact of the sale of the closed life business and the integration of Barclays Wealth Americas, income grew 3% as growth in the client franchise and the product offering offset the impact of adverse economic conditions.

Net interest income increased 4% (£18m) to £504m (2008: £486m) reflecting growth in customer lending. Average lending grew 27% to £12.3bn (2008: £9.7bn). Assets margin reduced to 1.01% from 1.04%. Average 2009 deposits were in line with the prior year (2008: £37.2bn) with a stable liabilities margin of 0.96% (2008: 0.95%).

Net fee and commission income increased by 11% (£82m) to £802m (2008: £720m) driven by Barclays Wealth Americas.

The movements in principal transactions, net premiums from insurance contracts and net claims and benefits incurred under insurance contracts were due to the sale of the closed life assurance business in October 2008.

Impairment charges increased 16% (£7m) to £51m (2008: £44m). This increase reflected the impact of the current economic environment on client liquidity and collateral values and the substantial increase in the loan book over the last four years.

Operating expenses increased 22% to £1,138m (2008: £935m) principally reflecting the impact of the acquisition of Barclays Wealth Americas partially offset by the impact of the disposal of the closed life business in 2008.

Total client assets, comprising customer accounts and client investments were £151.3bn (31st December 2008: £145.1bn) with underlying net new asset inflows of £3bn.

Risk weighted assets increased 10% (£1.1bn) to £11.4bn (2008: £10.3bn) reflecting growth in loans and advances.

 

Head Office Functions and Other Operations


Year Ended

Year Ended

Income Statement Information

31.12.09

31.12.08


£m

£m

Net interest (loss)/income

(507)

182

Net fee and commission expense

(418)

(486)




Net trading (loss)

(291)

(245)

Net investment (loss)/income

(34)

27

Principal transactions

(325)

(218)




Net premiums from insurance contracts

92

119

Other income

1,186

26

Total income/(loss)

28

(377)

Impairment charges and other credit provisions

(16)

(30)

Net income/(loss)

12

(407)




Operating expenses

(570)

(451)




Share of post-tax results of associates and joint ventures

1

-

Profit on disposal of associates and joint ventures

7

-

Loss before tax

(550)

(858)




Balance Sheet Information



Total assets

£6.4bn

£3.1bn




Other Financial Measures



Risk weighted assets

£0.9bn

£0.4bn

 

 

Head Office Functions and Other Operations

Head Office Functions and Other Operations loss before tax reduced £308m to £550m (2008: loss of £858m).

Total income increased £405m to £28m (2008: loss of £377m).

Group segmental reporting is performed in accordance with Group accounting policies. This means that inter-segment transactions are recorded in each segment as if undertaken on an arm's length basis. Adjustments necessary to eliminate inter-segment transactions are included in Head Office Functions and Other Operations.

Net interest income decreased £689m to a loss of £507m (2008: profit of £182m) primarily due to an increase in costs in central funding activity due to the money market dislocation, increased liquidity requirements and lower income on shareholders' funds due to the lower interest rate environment. This was partially offset by a £170m gain from a reclassification on consolidation for hedging derivatives with the corresponding expense being recorded in principal transactions.

Net fees and commission expense decreased £68m to £418m (2008: £486m) reflecting adjustments to eliminate inter-segmental transactions, offset by increases in fees for structured capital market activities to £191m (2008: £141m) and in fees paid to Barclays Capital for debt and equity raising and risk management advice to £174m (2008: £151m).

Losses associated with principal transactions increased £107m to £325m (2008: loss of £218m) predominantly due to a £170m increase in the consolidation reclassification adjustment on hedging derivatives.

Other income increased £1,160m to £1,186m (2008: £26m). During 2009, certain upper Tier 2 perpetual debt was exchanged for new issuances of lower Tier 2 dated loan stock resulting in a net gain of £1,164m. £1,170m of this gain was reflected in other income.

Operating expenses increased £119m to £570m (2008: £451m) reflecting a UK bank payroll tax charge of £190m (2008: £nil) in respect of 2009 cash compensation and £35m in respect of certain prior years awards which may fall within the proposed legislation, partially offset by a reduction of £55m in the costs relating to an internal review of Barclays compliance with US economic sanctions to £33m (2008: £88m).

Risk Management

 

Overview of Barclays Risk Exposures

As a consequence of adverse economic conditions in most of the parts of the world in which Barclays operates, the overall market and risk environment has been challenging for all of Barclays businesses during 2009.

Barclays continues to actively manage its businesses to mitigate this risk and address these challenges and there have been no material changes to the risk management processes as described in the Risk Management section of our Annual Report and Accounts for the year ended 31st December 2008.

Pages 40 to 74 of this Results Announcement provide details with respect to Barclays risk exposures:

- Pages 40 to 69 provide an analysis of the key credit risks faced by Barclays across a number of asset classes and businesses, referencing significant portfolios and including summary measures of asset quality. Additional information referenced in this section is to be found in the notes to the financial statements. Further information on the detail within this section is as follows:

-    Analysis of total assets by valuation basis and underlying asset class (pages 40 to 41)

-    Detailed disclosures and analysis of Barclays Capital's credit market assets by asset class, covering current exposures, losses in the year, sales and paydowns, foreign exchange movements and, where appropriate, details of collateral held, geographic spread, vintage and credit quality (pages 42 to 53)

-    Quality of loans and advances to banks and customers with further information being provided on:

›     Loans and advances, impairment charges and segmental analyses (pages 54 to 57)

›     Potential Credit Risk Loans and Coverage Ratios (pages 58 to 59)

›     Wholesale Credit Risk (pages 60 to 63)

›     Retail Credit Risk (pages 64 to 66)

-    Statistical measure of credit losses using expected loss (pages 67 to 68)

-    Analysis of the credit quality of debt and similar securities, other than loans held within Barclays (page 69)

- Pages 70 to 71 provide an analysis of market risk and, in particular, Barclays Capital's DVaR

- Pages 72 to 74 set out the key measures of liquidity risk, including the Group liquidity pool, GRCB and Barclays Wealth funding, Barclays Capital funding and commentary on unsecured and secured funding

Barclays is also affected by legal risk and regulatory compliance risk through the extensive range of legal obligations, regulations and codes in force in the territories in which Barclays operates. The principal uncertainties regarding these risks are further discussed on pages 101 to 102.

 

Analysis of Total Assets




Accounting Basis

Assets as at 31.12.09

Total Assets


Fair Value

 Cost
Based Measure


£m


£m

£m

Cash and balances at central banks

81,483


-

81,483






Items in the course of collection from other banks

1,593


-

1,593






Treasury & other eligible bills

9,926


9,926

-

Debt securities

116,594


116,594

-

Equity securities

19,602


19,602

-

Traded loans

2,962


2,962

-

Commodities6

2,260


2,260

-

Trading portfolio assets

151,344


151,344

-






Financial assets designated at fair value





Loans and advances

22,390


22,390

-

Debt securities

4,007


4,007

-

Equity securities

6,256


6,256

-

Other financial assets7

8,658


8,658

-

Held for own account

41,311


41,311

-






Held in respect of linked liabilities to customers under investment contracts8

1,257


1,257

-






Derivative financial instruments

416,815


416,815

-






Loans and advances to banks

41,135


-

41,135






Loans and advances to customers

420,224


-

420,224






Debt securities

43,888


43,888

-

Equity securities

6,676


6,676

-

Treasury & other eligible bills

5,919


5,919

-

Available for sale financial instruments

56,483


56,483

-






Reverse repurchase agreements and cash collateral on securities borrowed

143,431


-

143,431






Other assets

23,853


1,207

22,646






Total assets as at 31.12.09

1,378,929


668,417

710,512






Total assets as at 31.12.08

2,052,980


1,356,614

696,366

 

 

1    Further analysis of loans and advances is on pages 54 to 66.

2    Further analysis of debt securities and other bills is on page 69.

3    Reverse repurchase agreements comprise primarily short-term cash lending with assets pledged by counterparties securing the loan.

4    Equity securities comprise primarily equity securities determined by available quoted prices in active markets.

 

Analysis of Total Assets


Sub Analysis

Derivatives

Loans and Advances1

Debt Securities and Other Bills2

Reverse Repurchase Agreements3

Equity Securities4

Other


Credit Market Assets5

£m

£m

£m

£m

£m

£m


£m

-

-

-

-

-

81,483


-









-

-

-

-

-

1,593


-









-

-

9,926

-

-

-


-

-

-

116,594

-

-

-


1,186

-

-

-

-

19,602

-


-

-

2,962

-

-

-

-


-

-

-

-

-

-

2,260


-

-

2,962

126,520

-

19,602

2,260


1,186

















-

22,390

-

-

-

-


6,941

-

-

4,007

-

-

-


-

-

-

-

-

6,256

-


-

-

557

-

7,757

-

344


-

-

22,947

4,007

7,757

6,256

344


6,941









-

-

-

-

-

1,257


-









416,815

-

-

-

-

-


2,304









-

41,135

-

-

-

-


-









-

420,224

-

-

-

-


15,186









-

-

43,888

-

-

-


535

-

-

-

-

6,676

-


-

-

-

5,919

-

-

-


-

-

-

49,807

-

6,676

-


535









-

-

-

143,431

-

-


-









-

-

-

-

-

23,853


1,200









416,815

487,268

180,334

151,188

32,534

110,790


27,352









984,802

542,118

224,692

137,637

39,173

124,558


41,208

 

 

5    Further analysis of Barclays Capital credit market exposures is on pages 42 to 53. Undrawn commitments of £257m (2008: £531m) are off-balance sheet and therefore not included in the table above. This is a change in presentation from 31st December 2008, which reflected certain loan facilities originated post 1st July 2007.

6    Commodities primarily consists of physical inventory positions.

7    These instruments consist primarily of loans with embedded derivatives and reverse repurchase agreements designated at fair value.

8    Financial assets designated at fair value in respect of linked liabilities to customers under investment contracts have not been further analysed as the Group is not exposed to the risks inherent in these assets.

 

Analysis of Barclays Capital Credit Market Assets by Asset Class


As at
31.12.09

ABS CDO
Super
Senior

Other US
Sub-prime

Alt-A

RMBS
Monoline
Wrapped
US RMBS


£m

£m

£m

£m

£m

Debt securities

1,186

-

3

323

-

Trading portfolio assets

1,186

-

3

323

-







Loans and advances

6,941

-

52

-

-

Financial assets designated at fair value

6,941

-

52

-

-







Derivative financial instruments

2,304

-

244

211

6







Loans and advances to customers

15,186

1,931

24

-

-







Debt securities

535

-

209

326

-

Available for sale financial instruments

535

-

209

326

-







Other assets

1,200

-

-

-

-







Assets as at 31.12.09

27,352

1,931

532

860

6







Assets as at 31.12.08

41,208

3,104

3,441

4,288

1,639

 

 

1    Further analysis of Barclays Capital credit market exposures is on pages 44 to 53. Undrawn commitments of £257m (2008: £531m) are off-balance sheet and therefore not included in the table above. This is a change in presentation from 31st December 2008, which reflected certain loan facilities originated post 1st July 2007.

 

Commercial Real Estate Loans

Commercial Real Estate Properties

Commercial Mortgage Backed Securities

Monoline
Wrapped
CMBS

Leveraged Finance1

SIVs and
SIV-lites

CDPCs

Monoline
Wrapped
CLO and Other

Loan to
Protium

£m

£m

£m

£m

£m

£m

£m

£m

£m

-

-

860

-

-

-

-

-

-

-

-

860

-

-

-

-

-

-










6,534

-

-

-

-

355

-

-

-

6,534

-

-

-

-

355

-

-

-










-

-

(389)

30

-

53

23

2,126

-










-

-

-

-

5,250

122

-

-

7,859










-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-










-

1,200

-

-

-

-

-

-

-










6,534

1,200

471

30

5,250

530

23

2,126

7,859










11,578

-

735

1,854

8,517

963

150

4,939

-

 

Barclays Capital Credit Market Exposures

Barclays Capital's credit market exposures as at 31st December 2009 primarily relate to commercial real estate and leveraged finance. These include positions subject to fair value movements in the profit and loss account and positions that are classified as loans and advances and as available for sale.

The balances at and gross writedowns to 31st December 2009 are set out by asset class below:









Year Ended 31.12.09

 US Residential Mortgages

Notes

As at 31.12.09

As at 31.12.08


As at 31.12.09

As at 31.12.08


Fair Value Losses

Impair-ment Charge

Gross Losses



$m1

$m1


£m1

£m1


£m

£m

£m

ABS CDO Super Senior

A1

3,127

4,526


1,931

3,104


-

714

714

Other US sub-prime & Alt-A

A2

2,254

11,269


1,392

7,729


531

555

1,086

Monoline wrapped US RMBS

A3

9

2,389


6

1,639


282

-

282












Commercial Mortgages











Commercial real estate loans and properties

B1

12,525

16,882


7,734

11,578


2,466

-

2,466

Commercial mortgage-backed securities

B1

762

1,072


471

735


44

-

44

Monoline wrapped CMBS

B2

49

2,703


30

1,854


497

-

497












Other Credit Market











Leveraged Finance2

C1

8,919

13,193


5,507

9,048


-

396

396

SIVs, SIV-Lites and CDPCs

C2

896

1,622


553

1,113


69

4

73

Monoline wrapped CLO and other

C3

3,443

7,202


2,126

4,939


528

-

528












Total exposures


31,984

60,858


19,750

41,739
















Total gross writedowns








4,417

1,669

6,086












Loan to Protium

D

12,727

-


7,859

-





 

During the year ended 31st December 2009, these positions have been reduced by £14,130m to £27,609m (31st December 2008: £41,739m), including net sales and paydowns of £6,590m, gross writedowns of £6,086m and a decrease of £4,226m due to currency and other movements. In addition, on 16th September 2009, £5,087m credit market assets and £2,367m other assets were sold to Protium Finance LP, funded by a £7,669m loan extended by Barclays. The loan balance at 31st December 2009 of £7,859m includes accrued interest.

In the year ended 31st December 2009, gross writedowns comprised £4,417m (2008: £6,290m) of fair value losses through income and £1,669m (2008: £1,763m) of impairment charges. Gross writedowns included £2,082m (2008: £5,584m) against US residential mortgage positions, £3,007m (2008: £1,488m) against commercial mortgage positions, and £997m (2008: £981m) against other credit market positions.

 

 

1    As the majority of positions are denominated in US Dollars, the positions above are shown in both US Dollars and Sterling.

2    Includes undrawn commitments of £257m (2008: £531m).

 

A.      US Residential Mortgages

A1.      ABS CDO Super Senior


As at

As at


As at

As at


31.12.09

31.12.08


31.12.09

31.12.08


Total

Total


Marks1

Marks1


£m

£m


%

%

2005 and earlier

1,048

1,226


77%

90%

2006

422

471


7%

37%

2007 and 2008

22

25


34%

69%

Sub-prime

1,492

1,722


57%

75%







2005 and earlier

761

891


43%

77%

2006

230

269


59%

75%

2007 and 2008

55

62


14%

37%

Alt-A

1,046

1,222


45%

74%







Prime

421

520


83%

100%

RMBS CDO

351

402


6%

-

Sub-prime second lien

110

127


-

-

Total US RMBS

3,420

3,993


49%

68%







CMBS

37

44


89%

100%

Non-RMBS CDO

400

453


35%

56%

CLOs

32

35


100%

100%

Other ABS

37

51


100%

100%

Total Other ABS

506

583


48%

66%







Total notional collateral

3,926

4,576




Subordination

(385)

(459)




Gross exposure pre-impairment

3,541

4,117




Impairment allowances

(1,610)

(1,013)




Total

1,931

3,104


49%

68%

 

ABS CDO Super Senior positions at 31st December 2009 comprised five high grade liquidity facilities which were fully drawn and classified within loans and receivables (31st December 2008: five facilities).

During the year, ABS CDO Super Senior positions reduced by £1,173m to £1,931m (31st December 2008: £3,104m). Positions are stated after writedowns and charges of £714m incurred in 2009 (2008: £1,461m). There was a decline of £290m resulting from depreciation in the value of the US Dollar against Sterling and amortisation of £169m in the year.

 

 

 

1    Marks above reflect the gross positions after impairment and subordination.

 

A2.      Other US Sub-Prime and Alt-A


As at

As at


Marks at

Marks at


31.12.09

31.12.08


31.12.09

31.12.08

Other US Sub-prime

£m

£m


%

%

Whole loans

-

1,565


-

72%







Sub-prime securities (net of hedges)

212

929


38%

25%

Other positions with underlying sub-prime collateral:






- Derivatives

244

643


96%

87%

- Loans

76

195


22%

70%

- Real Estate

-

109


-

46%







Total Other US Sub-Prime

532

3,441










Alt-A






Whole Loans

-

776


-

67%

Alt-A Securities

649

3,112


40%

16%

Residuals

-

2


-

6%

Derivative positions with underlying Alt-A collateral

211

398


99%

100%

Total

860

4,288










Total Other US Sub-Prime and Alt-A

1,392

7,729




 

 

The majority of Other US sub-prime and Alt-A positions are measured at fair value through profit and loss. The balance reduced by £6,337m to £1,392m (31st December 2008: £7,729m), driven by the Protium sale of £2,319m, other net sales, paydowns and other movements of £2,398m and gross losses of £1,086m. Depreciation of the US Dollar against Sterling resulted in a decline of £534m.

Counterparty derivative positions relating to vehicles which hold sub-prime collateral was £455m (31st December 2008: £1,041m). These positions largely comprise the most senior obligation of the vehicles.

A3.      US Residential Mortgage Backed Securities Wrapped by Monoline Insurers

The table below shows RMBS assets where Barclays Capital held protection from monoline insurers at 31st December 2009. These are measured at fair value through profit and loss.

By rating of the monoline

Notional

Fair Value
of Underlying
Asset

Fair Value Exposure

Credit
Valuation
Adjustment

Net
Exposure

As at 31.12.09

£m

£m

£m

£m

£m

Non-investment grade

56

6

50

(44)

6

Total

56

6

50

(44)

6







As at 31.12.08






A/BBB

2,567

492

2,075

(473)

1,602

Non-investment grade

74

8

66

(29)

37

Total

2,641

500

2,141

(502)

1,639

 

The balance reduced by £1,633m to £6m (31st December 2008: £1,639m), reflecting the Protium sale of £1,164m, a credit valuation adjustment of £282m, and currency and other movements of £187m.

Barclays would review claims in the event of default of the underlying assets. There have been no claims under the monoline insurance contracts as none of the underlying assets defaulted in the year.

The notional value of the assets split by the rating of the underlying asset is shown below.


As at 31.12.09


As at 31.12.08

By Rating of Underlying Asset

A/BBB

Non-Investment Grade

Total


AAA/AA

A/BBB

Non-Investment Grade

Total


£m

£m

£m


£m

£m

£m

£m

2005 and earlier

-

-

-


143

-

-

143

2006

-

-

-


-

-

1,240

1,240

2007 and 2008

-

-

-


-

-

510

510

High Grade

-

-

-


143

-

1,750

1,893

Mezzanine - 2005 and earlier

-

56

56


31

330

338

699

CDO2 - 2005 and earlier

-

-

-


-

-

49

49

US RMBS

-

56

56


174

330

2,137

2,641

 

 

B.      Commercial Mortgages

B1.      Commercial Real Estate and Mortgage-Backed Securities

Commercial mortgages held at fair value include commercial real estate loans of £6,534m (31st December 2008: £11,578m), commercial real estate properties of £1,200m (31st December 2008: £nil), and commercial mortgage-backed securities of £471m (31st December 2008: £735m).

Commercial Real Estate Loans and Properties

In the year ended 31st December 2009, the commercial real estate loans and properties balance reduced by £3,844m to £7,734m (31st December 2008: £11,578m). There were gross losses of £2,466m, of which £1,541m related to the US, £843m to UK and Europe, and £82m to Asia. There were gross sales and paydowns of £661m comprising £345m in the UK and Europe, £307m in the US, and £9m in Asia, and currency and other movements of £717m.

The commercial real estate loan balances comprised 51% UK and Europe, 44% US and 5% Asia.

One large transaction comprises 25% of the total US commercial real estate loan balance. The remaining 75% of the US balance comprises 64 transactions. The remaining weighted average number of years to initial maturity of the US portfolio is 1.2 years (31st December 2008: 1.4 years).

The UK and Europe portfolio is well diversified with 56 transactions at 31st December 2009. In Europe protection is provided by loan covenants and periodic LTV retests, which cover 83% of the portfolio. 50% of the German balance relates to one transaction secured on residential assets.


As at

As at


Marks at 31.12.09

Marks at 31.12.08

Commercial Real Estate Loans by Region

31.12.09

31.12.08



£m

£m


%

%

US

2,852

6,329


62%

88%

Germany

1,959

2,467


84%

95%

Sweden

201

265


81%

96%

France

189

270


70%

94%

Switzerland

141

176


85%

97%

Spain

72

106


56%

92%

Other Europe

370

677


57%

90%

UK

429

831


61%

89%

Asia

321

457


77%

97%

Total

6,534

11,578




 


As at 31.12.09


As at 31.12.08

Commercial Real Estate Loans by Industry

US

Germany

Other Europe

UK

Asia

Total


Total


£m

£m

£m

£m

£m

£m


£m

Residential

1,132

1,053

-

152

102

2,439


3,582

Office

372

251

557

79

79

1,338


3,656

Hotels

614

-

223

8

1

846


1,633

Retail

54

507

73

30

73

737


957

Industrial

383

105

103

20

11

622


887

Leisure

-

-

-

140

-

140


233

Land

128

-

-

-

-

128


232

Mixed/Others

169

43

17

-

55

284


398

Total

2,852

1,959

973

429

321

6,534


11,578

 

 


As at

As at

Commercial Real Estate Properties by Industry

31.12.09

31.12.08


£m

£m

Residential

56

-

Office

927

-

Hotels

126

-

Industrial

25

-

Leisure

33

-

Land

31

-

Mixed/Others

2

-

Total

1,200

-

 

Included within the commercial real estate properties balance are properties held by Crescent Real Estate Holdings LLC (Crescent) with a carrying value of £1,001m. On 19th November 2009, Barclays Capital assumed ownership of Crescent following the completion of a debt restructuring transaction.

Commercial Mortgage Backed Securities


As at 31.12.09

As at 31.12.08


Marks1 at 31.12.09

Marks1 at 31.12.08


£m

£m


%

%

Commercial Mortgage Backed Securities (Net of Hedges)

471

735


20%

21%

B2.      CMBS Wrapped by Monoline Insurers

The table below shows commercial mortgage backed security assets where Barclays Capital held protection from monoline insurers at 31st December 2009. These are measured at fair value through profit and loss.

By Rating of the Monoline

Notional

Fair Value of Underlying Asset

Fair Value Exposure

Credit Valuation Adjustment

Net Exposure

As at 31.12.09

£m

£m

£m

£m

£m

AAA/AA

54

21

33

(3)

30

Non-investment grade

383

160

223

(223)

-

Total

437

181

256

(226)

30







As at 31.12.08






AAA/AA

69

27

42

(4)

38

A/BBB

3,258

1,301

1,957

(320)

1,637

Non-investment grade

425

181

244

(65)

179

Total

3,752

1,509

2,243

(389)

1,854

 

The balance reduced by £1,824m to £30m (31st December 2008: £1,854m), reflecting the Protium sale of £1,208m, a credit valuation adjustment of £497m, and currency and other movements of £119m.

Claims would become due in the event of default of the underlying assets. There have been no claims under the monoline insurance contracts as none of the underlying assets defaulted in the year.

The notional value of the assets split by the current rating of the underlying asset is shown below.

 


As at 31.12.09


As at 31.12.08

By Rating of Underlying Asset

AAA/AA

A/BBB

Total


AAA/AA

Total


£m

£m

£m


£m

£m

2005 and earlier

-

-

-


437

437

2006

54

-

54


613

613

2007 and 2008

-

383

383


2,702

2,702

CMBS

54

383

437


3,752

3,752

 

 

1                 Marks are based on gross collateral.

 

C.      Other Credit Market

C1.      Leveraged Finance


As at

As at

Leveraged Finance Loans by Region

31.12.09

31.12.08


£m

£m

UK

4,530

4,519

Europe

1,051

1,291

Asia

165

140

US

35

3,213

Total lending and commitments

5,781

9,163

Impairment

(274)

(115)

Net lending and commitments at period end1

5,507

9,048

 

Leveraged finance loans are classified within loans and advances and are stated at amortised cost less impairment. The table above includes certain loan facilities originated prior to 1st July 2007, the start of the dislocation in the credit market2.

At 31st December 2009, net lending and commitments reduced £3,541m to £5,507m (31st December 2008: £9,048m), following a repayment of £3,056m at par in January 2009, impairment of £396m, and other movements of £89m.

The overall credit performance of the assets remained satisfactory with the majority of the portfolio performing to plan or in line with original stress tolerances. There were a small number of deteriorating positions on which higher impairment was charged.

C2.      SIVs, SIV-Lites and CDPCs

SIV and SIV-lite positions comprise liquidity facilities and derivatives. At 31st December 2009 SIVs and SIV-Lites positions reduced by £433m to £530m (31st December 2008: £963m) with a reduced number of counterparties. There were £72m of gross writedowns in the year.

Credit Derivative Product Companies (CDPCs) positions at 31st December 2009 reduced by £127m to £23m (31st December 2008: £150m).

 

 

1                 Includes undrawn commitments of £257m (2008: £531m).

2                 This is a change of presentation from 31st December 2008, which reflected certain loan facilities originated post 1st July 2007.

 

C3.      CLO and Other Assets Wrapped by Monoline Insurers

The table below shows Collateralised Loan Obligations (CLOs) and other assets where we held protection from monoline insurers at 31st December 2009.

By Rating of the Monoline

Notional

Fair Value of Underlying Asset

Fair Value Exposure

Credit Valuation Adjustment

Net Exposure

As at 31.12.09

£m

£m

£m

£m

£m

AAA/AA

7,336

5,731

1,605

(91)

1,514

A/BBB

-

-

-

-

-

Non-investment grade:






Fair value through profit and loss

1,052

824

228

(175)

53

Loans and receivables

9,116

7,994

1,122

(563)

559

Total

17,504

14,549

2,955

(829)

2,126







As at 31.12.08






AAA/AA

8,281

5,854

2,427

(55)

2,372

A/BBB

6,446

4,808

1,638

(204)

1,434

Non-investment grade

6,148

4,441

1,707

(574)

1,133

Total

20,875

15,103

5,772

(833)

4,939

 

The balance reduced by £2,813m to £2,126m (31st December 2008: £4,939m), reflecting increases in the fair value of the underlying assets of £1,321m, credit valuation adjustments of £528m, the Protium sale of £396m, and currency and other movements of £568m.

Claims would become due in the event of default of the underlying assets. There have been no claims under the monoline insurance contracts as none of the underlying assets defaulted in the year.

On 25th November 2009, £8,027m of the CLO assets wrapped by non-investment grade rated monolines were reclassified to loans and receivables (as discussed in Note 18). At 31st December 2009, the fair value of the transferred assets was £7,994m and the net exposure to monoline insurers was £559m. The remaining non-investment grade exposure continues to be measured at fair value through profit and loss.

The notional value of the assets split by the current rating of the underlying asset is shown below.

By Rating of the Underlying Asset

 


As at 31.12.09


As at 31.12.08


AAA/AA

AAA/AA

A/BBB

A/BBB

Non- investment Grade

Total


AAA/AA

A/BBB

Total


Fair Value

Loans and Receivables

Fair Value

Loans and Receivables

Fair
Value



Fair
Value

Fair Value



£m

£m

£m

£m

£m

£m


£m

£m

£m

2005 and earlier

1,518

2,209

294

815

-


6,037

-

6,037

2006

1,972

2,952

-

458

-


5,894

-

5,894

2007 and 2008

2,452

2,199

548

483

-

5,682


6,295

-

6,295

CLOs

5,942

7,360

842

1,756

-


18,226

-

18,226












2005 and earlier

-

-

55

-

55


862

-

862

2006

118

-

90

-

125


535

-

535

2007 and 2008

441

-

-

-

720

1,161


785

467

1,252

Other

559

-

145

-

900


2,182

467

2,649












Total

6,501

7,360

987

1,756

900


20,408

467

20,875

 

D.         Protium

On 16th September 2009, Barclays Capital sold assets of £7,454m, including £5,087m in credit market assets, to Protium Finance LP (Protium), a newly established fund. The impact of the sale on each class of credit market asset is detailed in each relevant category in sections A to C.

As part of the transaction, Barclays extended a £7,669m 10 year loan to Protium Finance LP. The principal terms of the loan are as follows:

- The loan has a final maturity of ten years, with a commercial rate of return fixed at USD LIBOR plus 2.75% (expected to amount to a cumulative total of US$3.9bn)

- Protium is obliged to pay principal and interest equal to the amount of available cash generated by the Fund after payment of Fund expenses and certain payments to the Fund's partners

- The loan is secured by a charge over the assets of Protium

The loan is classified as loans and receivables. The difference between the size of the loan and assets sold relates to cash and US Treasuries held by Protium. The increase in the loan balance between 16th September 2009 and 31st December 2009 reflects accrued interest which was received from Protium in January 2010.

The fair value of assets sold to Protium is set out below. The balances at 31st December 2009 include cash realised from subsequent sales and paydowns.

US Residential Mortgages

As at
31.12.09

As at
16.09.09

As at
30.06.09


As at
31.12.09

As at
16.09.09

As at
30.06.09


$m

$m

$m


£m

£m

£m

Other US sub-prime whole loans and real estate

1,038

1,124

1,256


641

682

764

Other US sub-prime securities

578

513

508


357

311

309

Total other US sub-prime

1,616

1,637

1,764


998

993

1,073









Alt-A

2,112

2,185

2,342


1,304

1,326

1,424









Monoline wrapped US RMBS

1,447

1,919

2,081


893

1,164

1,266









Commercial Mortgages








Monoline wrapped CMBS

1,378

1,991

2,450


851

1,208

1,490









Other Credit Market








Monoline wrapped CLO and other

475

652

752


294

396

457









Credit market related exposure

7,028

8,384

9,389


4,340

5,087

5,710









Fair value of underlying assets wrapped by monoline insurers

4,095

3,592

2,728


2,529

2,179

1,659

Other assets

1,230

309

285


759

188

173

Total

12,353

12,285

12,402


7,628

7,454

7,542









Loan to Protium

12,727

12,641

-


7,859

7,669

-

 

E.         Own Credit

The carrying amount of issued notes that are designated under the IAS 39 fair value option is adjusted to reflect the effect of changes in own credit spreads. The resulting gain or loss is recognised in the income statement.

From 30th September 2007 to 30th June 2009, Barclays credit default swap spreads were used to calculate the carrying amount of issued notes, since there were insufficient observable own credit spreads through secondary trading prices in Barclays issued bonds. From 1st July 2009, the carrying amount of issued notes has been calculated using credit spreads derived from secondary trading in Barclays issued bonds.

At 31st December 2009, the own credit adjustment arose from the fair valuation of £61.5bn of Barclays Capital structured notes (31st December 2008: £54.5bn). Barclays credit spreads improved during 2009, leading to a loss of £1,820m (2008: gain £1,663m) from the fair value of changes in own credit.

Barclays Capital also uses credit default swap spreads to determine the impact of Barclays own credit quality on the fair value of derivative liabilities. At 31st December 2009, cumulative adjustments of £307m (31st December 2008: £1,176m) were netted against derivative liabilities. The impact of these adjustments in both periods was more than offset by the impact of the credit valuation adjustments to reflect counterparty creditworthiness that were netted against derivative assets.

Credit Risk

Loans and Advances to Customers and Banks

Total loans and advances to customers and banks net of impairment allowance fell 10% to £487,268m (31st December 2008: £542,118m). Loans and advances at amortised cost were £461,359m (31st December 2008: £509,522m) and loans and advances at fair value were £25,909m (31st December 2008: £32,596m).

Total loans and advances to customers and banks gross of impairment allowances fell by £43,941m (9%) to £472,155m (31st December 2008: £516,096m) due to an 18% reduction in the wholesale portfolios, principally in:

- Barclays Capital, due to a decrease in the cash collateral held against derivative trades, a reduction in non-UK lending and a decrease in the value of other currencies relative to Sterling. This was partially offset by increases in lending due to restructuring of credit market assets and a reclassification of previously held for trading assets to loans and advances; and

- Barclays Commercial Bank, due to reduced customer demand

This was partially offset by a rise in loans and advances to customers across the majority of retail business units, notably in UK Retail Bank due to growth in the UK Home Finance portfolio.

Loans and Advances at Amortised Cost

 

As at 31.12.09

Gross Loans & Advances

Impairment Allowance

Loans & Advances Net of Impairment


Credit Risk Loans

CRLs % of Gross Loans & Advances

Impairment Charge


Loan Loss Rates


£m

£m

£m


£m

%

£m


bp

Wholesale - customers

218,110

4,604

213,506


10,990

5.0%

3,430


157

Wholesale - banks

41,196

61

41,135


57

0.1%

11


3

Total wholesale

259,306

4,665

254,641


11,047

4.3%

3,441


133











Retail - customers

212,849

6,131

206,718


11,341

5.3%

3,917


184

Total retail

212,849

6,131

206,718


11,341

5.3%

3,917


184











Total

472,155

10,796

461,359


22,388

4.7%

7,358


156











As at 31.12.08










Wholesale - customers

266,750

2,784

263,966


8,144

3.1%

2,540


95

Wholesale - banks

47,758

51

47,707


48

0.1%

40


8

Total wholesale

314,508

2,835

311,673


8,192

2.6%

2,580


82











Retail - customers

201,588

3,739

197,849


7,508

3.7%

2,333


116

Total retail

201,588

3,739

197,849


7,508

3.7%

2,333


116











Total

516,096

6,574

509,522


15,700

3.0%

4,913


95

 

Impairment Charges

Impairment charges on loans and advances increased 50% (£2,445m) to £7,358m (2008: £4,913m). The increase was primarily due to economic deterioration and portfolio maturation, currency movements and methodology enhancements, partially offset by a contraction in loan balances. As a result of this increase in impairment and the fall in loans and advances, the impairment charges as a percentage of period end Group total loans and advances increased to 156bps (31st December 2008: 95bps). When measured against constant 2008 year-end loans and advances balances and impairment at average 2008 foreign exchange rates, the loan loss rate for the period was 135bps.

The impairment charge in Global Retail and Commercial Banking increased by 85% (£2,473m) to £5,395m (2008: £2,922m) as charges rose in all portfolios, reflecting deteriorating credit conditions across all regions. The loan loss rate for 2009 was 185bps (2008: 99bps).

In Investment Banking and Investment Management, impairment was broadly unchanged at £1,949m (2008: £1,980m). The loan loss rate for 2009 was 109bps (2008: 90bps).

The impairment charge against available for sale assets and reverse repurchase agreements increased by 41% (£207m) to £713m (2008: £506m), driven by impairment against credit market exposures.

Impairment Charges and Other Credit Provisions


Year Ended

Year Ended


31.12.09

31.12.08


£m

£m

Impairment charges on loans and advances

7,330

4,584

Charges in respect of undrawn facilities and guarantees

28

329

Impairment charges on loans and advances

7,358

4,913

Impairment charges on reverse repurchase agreements

43

124

Impairment charges on available for sale assets

670

382

Impairment charges and other credit provisions

8,071

5,419

 

Impairment Charges by Business

Year Ended 31.12.2009

Loans and advances

Available for sale assets

Reverse repurchase agreements

Total


£m

£m

£m

£m

Global Retail and Commercial Banking

5,395

18

-

5,413

UK Retail Banking

936

-

-

936

Barclays Commercial Bank

960

14

-

974

Barclaycard

1,798

-

-

1,798

GRCB - Western Europe

663

4

-

667

GRCB - Emerging Markets

471

-

-

471

GRCB - Absa

567

-

-

567

Investment Banking and Investment Management

1,949

650

43

2,642

Barclays Capital1

1,898

650

43

2,591

Barclays Wealth

51

-

-

51

Head Office Functions and Other Operations

14

2

-

16

Total impairment charges

7,358

670

43

8,071






Year Ended 31.12.2008





Global Retail and Commercial Banking

2,922

-

-

2,922

UK Retail Banking

602

-

-

602

Barclays Commercial Bank

414

-

-

414

Barclaycard

1,097

-

-

1,097

GRCB - Western Europe

297

-

-

297

GRCB - Emerging Markets

165

-

-

165

GRCB - Absa

347

-

-

347

Investment Banking and Investment Management

1,980

363

124

2,467

Barclays Capital1

1,936

363

124

2,423

Barclays Wealth

44

-

-

44

Head Office Functions and Other Operations

11

19

-

30

Total impairment charges

4,913

382

124

5,419

 

 

1                 Credit market related impairment charges within Barclays Capital comprised £1,205m (2008: £1,517m) against loans and advances, £464m (2008: £192m) against available for sale assets and £nil (2008: £54m) against reverse repurchase agreements.

 

Gross Loans and Advances at Amortised Cost by Geographical Area and Industry Sector

 

As at 31.12.09

United Kingdom

Other European Union

United States

Africa

Rest of the World

Total


£m

£m

£m

£m

£m

£m

Financial institutions

26,687

26,977

59,212

4,365

15,369

132,610

Agriculture, forestry and fishing

2,192

187

1

1,936

5

4,321

Manufacturing

8,549

5,754

797

1,419

2,336

18,855

Construction

3,544

1,610

7

903

239

6,303

Property

13,514

4,224

428

4,154

1,148

23,468

Government

913

770

360

3,072

4,111

9,226

Energy and water

2,447

3,882

2,336

158

1,912

10,735

Wholesale and retail distribution and leisure

12,792

2,428

720

1,789

2,017

19,746

Transport

2,784

1,905

383

368

1,844

7,284

Postal and communications

1,098

649

355

715

610

3,427

Business and other services

16,577

4,878

1,721

4,319

2,782

30,277

Home loans

90,903

35,752

19

22,057

1,007

149,738

Other personal

27,687

7,403

7,410

964

1,507

44,971

Finance lease receivables

3,021

2,636

318

5,018

201

11,194

Total loans and advances to customers and banks

212,708

99,055

74,067

51,237

35,088

472,155








As at 31.12.08







Financial institutions

32,982

26,081

68,825

4,017

26,927

158,832

Agriculture, forestry and fishing

2,245

216

-

817

3

3,281

Manufacturing

11,340

8,700

2,171

1,082

3,081

26,374

Construction

4,278

1,786

21

2,053

101

8,239

Property

12,091

4,814

549

3,485

1,216

22,155

Government

661

1,826

1,133

1,869

2,807

8,296

Energy and water

3,040

5,313

3,085

118

2,545

14,101

Wholesale and retail distribution and leisure

14,421

2,653

1,165

1,012

957

20,208

Transport

3,467

2,603

415

739

1,388

8,612

Postal and communications

1,491

962

3,343

293

1,179

7,268

Business and other services

19,589

5,490

2,279

4,699

5,316

37,373

Home loans

85,672

34,451

28

19,036

979

140,166

Other personal

28,362

6,440

7,691

3,069

2,743

48,305

Finance lease receivables

3,911

3,328

298

5,130

219

12,886

Total loans and advances to customers and banks

223,550

104,663

91,003

47,419

49,461

516,096

 

 

Potential Credit Risk Loans and Coverage Ratios

 


CRLs


PPLs


PCRLs


31.12.09

31.12.08


31.12.09

31.12.08


31.12.09

31.12.08


£m

£m


£m

£m


£m

£m

Home Loans

3,604

2,528


135

267


3,739

2,795

Unsecured and Other

7,737

4,980


559

230


8,296

5,210

Retail

11,341

7,508


694

497


12,035

8,005










Corporate/Wholesale

11,047

8,192


2,674

1,959


13,721

10,151

Group

22,388

15,700


3,368

2,456


25,756

18,156











Impairment Allowance


CRL Coverage


PCRL Coverage

Home Loans

639

321


17.7%

12.7%


17.1%

11.5%

Unsecured and Other

5,492

3,418


71.0%

68.6%


66.2%

65.6%

Retail

6,131

3,739


54.1%

49.8%


50.9%

46.7%










Corporate/Wholesale

4,665

2,835


42.2%

34.6%


34.0%

27.9%

Group

10,796

6,574


48.2%

41.9%


41.9%

36.2%

Credit Risk Loans

The Group's Credit Risk Loans (CRLs) rose 43% to £22,388m (31st December 2008: £15,700m) in 2009. Balances were higher across Retail Home Loans, Retail Unsecured and Other and Corporate and Wholesale exposures reflecting the deterioration in credit conditions in the past year across Barclays areas of operations. The most notable increases were in the international businesses in Global Retail and Commercial Banking, with GRCB - Western Europe increasing the most as credit conditions deteriorated in Spain, Italy and Portugal. However, the rate of increase to the Group numbers has fallen during each quarter of 2009 from 17% in Q1 09 to 5% in Q4 09.

CRLs in Retail Home Loans increased by £1,076m (43%) to £3,604m (31st December 2008: £2,528m) and in Retail Unsecured and Other portfolios by £2,757m (55%) to £7,737m (31st December 2008: £4,980m) as credit conditions deteriorated and arrears balances rose in a number of regions, notably in: Absa Home Finance and Cards, GRCB - Western Europe, particularly in Spain and Italy; Barclaycard US cards; and in UK Retail Banking unsecured lending. CRLs also increased in GRCB - Western Europe following the purchase of the Citigroup cards portfolio in Portugal in December 2009.

CRLs in the Corporate and Wholesale portfolios rose 35% to £11,047m (31st December 2008: £8,192m). CRL balances were higher in all businesses, as economic conditions led to deterioration across default grades and a rise in impairment in most wholesale portfolios. The largest increases were in GRCB - Western Europe, Barclays Capital and Barclays Commercial Bank.

Potential Problem Loans

Balances within the Group's Potential Problem Loans (PPLs) category rose by 37% to £3,368m (31st December 2008: £2,456m). The principal movements were in the Corporate and Wholesale portfolios, where PPLs rose £715m to £2,674m (31st December 2008: £1,959m). PPL balances increased in the retail portfolios to £694m (31st December 2008: £497m) as balances increased in the Retail Unsecured and Other portfolios. This was partially offset by a fall in PPL balances in Retail Home Loans.

 

Potential Credit Risk Loans

As a result of the increases in CRLs and PPLs, Group Potential Credit Risk Loan (PCRL) balances rose 42% to £25,756m (31st December 2008: £18,156m).

PCRL balances rose in Retail Home Loans by 34% to £3,739m (31st December 2008: £2,795m) and in Retail Unsecured and Other portfolios by 59% to £8,296m (31st December 2008: £5,210m) as delinquency rates rose across a number of portfolios, particularly in the UK, US, Spain and South Africa.

Total PCRL balances in the Corporate and Wholesale portfolios increased by 35% to £13,721m (31st December 2008: £10,151m) after a number of customers migrated into the CRL and PPL categories, reflecting higher default probabilities in the deteriorating global wholesale environment.

Impairment Allowances and Coverage Ratios

Impairment allowances increased 64% to £10,796m (31st December 2008: £6,574m), reflecting increases across the majority of businesses as credit conditions deteriorated during the year.

Retail impairment allowances rose by 99% in Retail Home Loans to £639m (31st December 2008: £321m) and by 61% in Retail Unsecured and Other portfolios to £5,492m (31st December 2008: £3,418m). The CRL coverage ratio in Retail Home Loans increased to 17.7% (31st December 2008: 12.7%), and the PCRL coverage ratio increased to 17.1% (31st December 2008: 11.5%). The CRL coverage ratio in Retail Unsecured and Others portfolios increased to 71.0% (31st December 2008: 68.6%). The PCRL coverage ratio increased to 66.2% (31st December 2008: 65.6%).

In the Corporate and Wholesale portfolios, impairment allowances increased 65% to £4,665m (31st December 2008: £2,835m). The CRL coverage ratio rose to 42.2% (31st December 2008: 34.6%), and the PCRL coverage ratio rose to 34.0% (31st December 2008: 27.9%).

The CRL coverage ratios in Retail Home Loans, Retail Unsecured and Other and Corporate and Wholesale portfolios remain within the ranges which are the typical severity rates for these types of products. As a result of the movements across these three portfolios, the Group's CRL coverage ratio increased to 48.2% (31st December 2008: 41.9%), and its PCRL coverage ratio also increased to 41.9% (31st December 2008: 36.2%).

 

Wholesale Credit Risk

Loans and Advances to customers and banks in the wholesale portfolios decreased by £55,202m (18%) to £259,306m, primarily as a result of a £42,972m (21%) fall in Barclays Capital to £165,624m, due to a decrease in the cash collateral held against derivative trades, a reduction in non-UK lending and a decrease in the value of Sterling relative to other currencies. This was partially offset by increases in lending due to restructuring of credit market assets and a reclassification of previously held for trading assets to loans and advances. Loans and advances fell in Barclays Commercial Bank by £8,064m (12%) to £60,840m, due to reduced customer demand. Balances fell in both GRCB - Western Europe and GRCB - Emerging Markets, which was due, in part, to the depreciation of various currencies across the regions against Sterling. The increase of £1,429m (17%) of balances in GRCB - Absa was due to the appreciation of the Rand against Sterling during 2009. In Rand terms, balances were stable.

In the wholesale portfolios, the impairment charge against loans and advances rose by £861m (33%) to £3,441m (2008: £2,580m) mainly due to increases in:

- Barclays Commercial Bank, reflecting rising default rates and lower asset values

- GRCB - Western Europe, reflecting the economic deterioration in Spain which has impacted the commercial, construction and SME portfolios in particular, together with the appreciation of the average value of the Euro against Sterling

- GRCB - Emerging Markets as credit conditions continued to deteriorate resulting in a small number of higher value single name charges and the appreciation of the average value of a number of currencies against Sterling

Impairment in Barclays Capital of £1,898m (2008: £1,936m) was broadly in line with 2008, as a fall in the impairment charge against credit market exposures was partially offset by a rise in the impairment charge against non-credit market exposures.

The loan loss rate across the Group's wholesale portfolios for 2009 was 133bps (2008: 82bps), reflecting the rise in impairment and the 18% reduction in wholesale loans and advances.

As we enter 2010, the principal uncertainties relating to the performance of the wholesale portfolios are:

- The extent and sustainability of economic recovery and asset prices in the UK, US, Spain and South Africa as governments consider how and when to withdraw stimulus packages

- The potential for single name risk and for idiosyncratic losses in different sectors and geographies where credit positions are sensitive to economic downturn

- Possible additional deterioration in our remaining credit market exposures, including commercial real estate and leveraged finance

- The potential impact of deteriorating sovereign credit quality

 

Wholesale Loans and Advances at Amortised Cost

 

As at 31.12.09

Gross Loans and Advances

Impairment Allowance

Loans and Advances Net of Impairment


Credit Risk Loans

CRLs % of Gross Loans and Advances

Impairment Charge


Loan Loss Rates


£m

£m

£m


£m

%

£m


bps

BCB

60,840

679

60,161


1,837

3.0%

960


158

Barclaycard

322

4

318


10

3.1%

17


528

GRCB WE

12,690

466

12,224


1,435

11.3%

328


258

GRCB EM

5,228

227

5,001


358

6.8%

140


268

GRCB Absa

10,077

195

9,882


690

6.8%

67


66

Barclays Capital

165,624

3,025

162,599


6,411

3.9%

1,898


115

BGI

5

-

5


-

-

-


-

Barclays Wealth

3,495

43

3,452


179

5.1%

17


49

Head Office

1,025

26

999


127

12.4%

14


137

Total

259,306

4,665

254,641


11,047

4.3%

3,441


133











As at 31.12.08










BCB

68,904

504

68,400


1,181

1.7%

414


60

Barclaycard

301

2

299


20

6.6%

11


365

GRCB WE

15,750

232

15,518


579

3.7%

125


79

GRCB EM

7,233

122

7,111


190

2.6%

36


50

GRCB Absa

8,648

140

8,508


304

3.5%

19


22

Barclays Capital

208,596

1,796

206,800


5,743

2.8%

1,936


93

BGI

834

-

834


-

-

-


-

Barclays Wealth

3,282

28

3,254


174

5.3%

28


85

Head Office

960

11

949


1

0.1%

11


115

Total

314,508

2,835

311,673


8,192

2.6%

2,580


82

Analysis of Wholesale Loans and Advances at Amortised Cost Net of Impairment Allowances

 


Corporate


Government


Settlement Balances & Cash Collateral


Other Wholesale


Total Wholesale

Wholesale

31.12.09

31.12.08


31.12.09

31.12.08


31.12.09

31.12.08


31.12.09

31.12.08


31.12.09

31.12.08


£m

£m


£m

£m


£m

£m


£m

£m


£m

£m

BCB

59,979

67,741


182

659


-

-


-

-


60,161

68,400

Barclaycard

318

299


-

-


-

-


-

-


318

299

GRCB WE

12,184

15,226


14

32


-

-


26

260


12,224

15,518

GRCB EM

4,044

5,074


170

1,709


-

-


787

328


5,001

7,111

GRCB Absa

8,695

8,480


263

28


-

-


924

-


9,882

8,508

Barclays Capital

49,849

72,796


3,456

3,760


55,672

79,418


53,622

50,826


162,599

206,800

BGI

5

834


-

-


-

-


-

-


5

834

Barclays Wealth1

2,818

2,691


162

105


-

-


472

458


3,452

3,254

Head Office

999

949


-

-


-

-


-

-


999

949

Total

138,891

174,090


4,247

6,293


55,672

79,418


55,831

51,872


254,641

311,673

 

 

1                 2008 Barclays Wealth analysis of Wholesale loans and advances has been reanalysed to reflect changes in the reclassification of assets.

 

Analysis of Barclays Capital Wholesale Loans and Advances at Amortised Cost

 

Loans & Advances to Banks

Gross Loans & Advances

Impairment
Allowance

Loans and Advances Net of Impairment

Credit Risk Loans

CRLs % of Gross Loans & Advances


Impair-ment Charge


Loan Loss
Rates

As at 31.12.09

£m

£m

£m

£m

%


£m


bp

Cash collateral and settlement balances

15,893

-

15,893

-

-


-


-

Interbank lending

21,722

61

21,661

57

0.3%


14


6

Loans & Advances to Customers










Corporate and Government lending

54,342

1,037

53,305

2,198

4.0%


1,115


205

ABS CDO Super Senior

3,541

1,610

1,931

3,541

100.0%


714


2,016

Other wholesale lending

30,347

317

30,030

615

2.0%


55


18

Cash collateral and settlement balances

39,779

-

39,779

-

-


-


-

Total

165,624

3,025

162,599

6,411

3.9%


1,898


115











As at 31.12.08










Cash collateral and settlement balances

19,264

-

19,264

-

-


-


-

Interbank lending

24,086

51

24,035

48

0.2%


40


17

Loans & Advances to Customers










Corporate and Government lending

77,042

486

76,556

1,100

1.4%


305


40

ABS CDO Super Senior

4,117

1,013

3,104

4,117

100.0%


1,383


3,359

Other wholesale lending

23,933

246

23,687

478

2.0%


208


87

Cash collateral and settlement balances

60,154

-

60,154

-

-


-


-

Total

208,596

1,796

206,800

5,743

2.8%


1,936


93

 

Barclays Capital gross wholesale loans and advances at amortised cost decreased 21% to £165,624m
(31st December 2008: £208,596m). This was driven by a decrease in the cash collateral held against derivative trades, a reduction in non-UK lending and a depreciation in the value of other currencies relative to Sterling. This was partially offset by increases in lending due to restructuring of credit market assets and a reclassification of previously held for trading assets to loans and advances.

The corporate and government lending portfolio declined 30% to £53,305m (31st December 2008: £76,556m) primarily due to reductions in non-UK lending, a decrease in the value of other currencies relative to Sterling and the repayment of leveraged finance loans.

Included within corporate and government lending and other wholesale lending portfolios are £5,646m (31st December 2008: £7,674m) of loans backed by retail mortgage collateral classified within financial institutions.

 

Loans and Advances Held at Fair Value


As at

As at1


31.12.09

31.12.08


£m

£m

Government

5,024

5,143

Financial Institutions

3,543

7,354

Transport

177

218

Postal and Communications

179

37

Business and other services

2,793

2,882

Manufacturing

1,561

238

Wholesale and retail distribution and leisure

664

1,110

Construction

237

412

Property

11,490

14,944

Energy and Water

241

258

Total

25,909

32,596

 

Barclays Capital loans and advances held at fair value were £12,835m (31st December 2008: £19,630m). Included within this balance is £6,941m relating to credit market exposures, the majority of which are commercial real estate loans. The balance of £5,894m primarily comprises financial institutions and manufacturing loans.

Barclays Commercial Bank loans and advances held at fair value split between property, business and services and Government sectors, were £13,074m (31st December 2008: £12,966m). The fair value of these loans and any movements are matched by offsetting fair value movements on hedging instruments.

 

 

1    2008 loans and advances held at fair value have been reanalysed to reflect changes in classification of assets.

 

Retail Credit Risk

Loans and advances to customers in the retail portfolios increased by £11,261m (6%) to £212,849m. Balances grew in most businesses with the largest increase in UK Retail Banking, which increased by £4,981m (5%) to £101,064m primarily in the UK Home Finance portfolio. There was modest growth in balances to local businesses but a moderate decline in balances relating to unsecured loans and overdrafts. GRCB - Western Europe increased by £2,517m (6%), which primarily reflected growth in Italy and Portugal following the expansion of the franchise, principally across mortgages and cards. This growth was partially offset by the appreciation of the Euro against Sterling. The increase of £2,611m (11%) of balances in GRCB - Absa was due to the appreciation of the Rand against Sterling during 2009. In Rand terms, balances fell by 3%. Balances in GRCB - Emerging Markets were £483m (12%) lower, in part reflecting movements in Sterling against local currencies.

In the retail portfolios, the impairment charge against loans and advances rose by £1,584m (68%) to £3,917m (2008: £2,333m) as economic conditions, particularly unemployment, deteriorated across all regions. Policy and methodology enhancements, currency movements and portfolio maturation also had an impact. The largest increase was in Barclaycard, which increased by £695m (64%) to £1,781m, mainly driven by higher delinquencies and deteriorating economic conditions in the United Kingdom and the United States as well as portfolio maturation. The increase of £334m (55%) to £936m in UK Retail Banking was primarily due to lower recoveries and policy and methodology enhancements. Impairment charges in GRCB - Western Europe and GRCB - Emerging Markets were impacted by increased delinquency rates as credit conditions deteriorated particularly in Spain and India. Impairment increased in GRCB - Absa as a result of high delinquency levels due to consumer indebtedness and increased debt counselling balances following the enactment of the 2007 National Credit Act.

The loan loss rate across the Group's retail portfolios for 2009 was 184bps (2008: 116bps).

As we enter 2010, the principal uncertainties relating to the performance of the Group's retail portfolios are:

- The extent and sustainability of economic recovery in the UK, US, Spain and South Africa as governments consider how and when to withdraw stimulus packages

- The dynamics of unemployment in those markets and the impact on delinquency and charge-off rates

- The speed and extent of possible rises in interest rates in the UK, US and eurozone

- The possibility of any further falls in residential property prices in the UK, South Africa and Spain

Retail Loans and Advances to Customers at Amortised Cost

 

As at 31.12.09

Gross Loans & Advances

Impairment
Allowance

Loans & Advances Net of Impairment


Credit Risk Loans

CRLs % of Gross Loans & Advances

Impairment Charge


Loan Loss
Rates


£m

£m

£m


£m

%

£m


bp

UKRB

101,064

1,587

99,477


3,108

3.1%

936


93

Barclaycard

29,460

2,670

26,790


3,392

11.5%

1,781


605

GRCB WE

41,514

689

40,825


1,411

3.4%

335


81

GRCB EM

3,521

474

3,047


551

15.6%

331


940

GRCB Absa

27,288

655

26,633


2,573

9.4%

500


183

Barclays Wealth

10,002

56

9,946


306

3.1%

34


34

Total

212,849

6,131

206,718


11,341

5.3%

3,917


184











As at 31.12.08










UKRB

96,083

1,134

94,949


2,403

2.5%

602


63

Barclaycard

29,390

1,677

27,713


2,566

8.7%

1,086


370

GRCB WE

38,997

306

38,691


798

2.0%

172


44

GRCB EM

4,004

187

3,817


175

4.4%

129


322

GRCB Absa

24,677

411

24,266


1,518

6.2%

328


133

Barclays Wealth

8,437

24

8,413


48

0.6%

16


19

Total

201,588

3,739

197,849


7,508

3.7%

2,333


116

 

 

Analysis of Retail Loans and Advances to Customers at Amortised Cost Net of Impairment Allowances

Total home loans to retail customers rose by £9,254m (7%) to £149,099m (31st December 2008: £139,845m). The UK Home Finance portfolios within UK Retail Banking grew 7% to £87,943m (31st December 2008: £82,303m).

Unsecured retail credit (credit card and unsecured loans) portfolios fell 7% to £37,733m (31st December 2008: £40,437m).


Home Loans


Cards and Unsecured Loans


Other Retail


Total Retail


31.12.09

31.12.08


31.12.09

31.12.08


31.12.09

31.12.08


31.12.09

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