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Barclays PLC (BARC)

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Friday 27 July, 2012

Barclays PLC

Half Yearly Report

RNS Number : 6429I
Barclays PLC
27 July 2012
 



 

 

 

 

 

Barclays PLC

Results Announcement

 

30 June 2012

 

 

 

 

 

 


 

Table of Contents

 

Interim Results Announcement

Page

Performance Highlights

2

Chairman's Statement

4

Group Finance Director's Review

5

Barclays Results by Quarter

8

Condensed Consolidated Financial Statements

9

Results by Business


- Retail and Business Banking


-   UK

14

-   Europe

16

-   Africa

18

-   Barclaycard

20

- Corporate and Investment Banking


-   Investment Bank

22

-   Corporate Banking

24

- Wealth and Investment Management

28

- Head Office and Other Operations

30

Business Results by Quarter

31

Performance Management


- Returns and Equity

33

- Margins and Balances

34

Risk Management

36

- Funding Risk - Capital

37

- Funding Risk - Liquidity

40

- Credit Risk

45

- Market Risk

70

Statement of Directors' Responsibilities

71

Independent Auditors' Review Report

72

Financial Statement Notes

73

Shareholder Information

91

Index

92

 

BARCLAYS PLC, 1 CHURCHILL PLACE, LONDON, E14 5HP, UNITED KINGDOM. TELEPHONE: +44 (0) 20 7116 1000. COMPANY NO. 48839



 

 

 

The term Barclays or Group refers to Barclays PLC together with its subsidiaries. Unless otherwise stated, the income statement analyses compare the six months to 30 June 2012 to the corresponding six months of 2011 and balance sheet comparisons relate to the corresponding position at 31 December 2011. The abbreviations '£m' and '£bn' represent millions and thousands of millions of pounds Sterling respectively; the abbreviations '$m' and '$bn' represent millions and thousands of millions of US dollars respectively.

Adjusted profit before tax and adjusted performance metrics have been presented to provide a more consistent basis for comparing business performance between periods. Adjusting items are considered to be significant and one-off in nature and hence not representative of the underlying business performance. Items excluded from the adjusted measures are: the impact of own credit; gains on debt buy-backs; impairment and disposal of the investment in BlackRock, Inc.; the provision for Payment Protection Insurance (PPI) redress; the provision for interest rate hedging products redress; goodwill impairments; and gains and losses on acquisitions and disposals. The regulatory penalties relating to the industry-wide investigation into the setting of interbank offered rates have not been excluded from adjusted measures.

Relevant terms that are used in this document but are not defined under applicable regulatory guidance or International Financial Reporting Standards (IFRS) are explained in the Results glossary that can be accessed at http://group.barclays.com/about-barclays/investor-relations#institutional-investors.

In accordance with Barclays policy to provide meaningful disclosures that help investors and other stakeholders understand the financial position, performance and changes in the financial position of the Group, and having regard to the BBA Disclosure Code, the information provided in this report goes beyond minimum requirements. Barclays continues to develop its financial reporting considering best practice and welcomes feedback from investors, regulators and other stakeholders on the disclosures that they would find most useful.

The information in this announcement, which was approved by the Board of Directors on 26 July 2012, does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2011, 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 495 of the Companies Act 2006 and which did not make any statements under Section 498 of the Companies Act 2006, have been delivered to the Registrar of Companies in accordance with Section 441 of the Companies Act 2006.

These results will be furnished as a Form 6-K to the SEC as soon as practicable following their publication. Once filed with the SEC, copies of the Form 6-K will also be available from the Barclays Investor Relations website www.barclays.com/investorrelations and from the SEC's website (www.sec.gov).

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, Eurozone 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 (including requirements regarding capital and Group structures and the potential for one or more countries exiting the Euro), changes in legislation, the further development of standards and interpretations under IFRS applicable to past, current and future periods, evolving practices with regard to the interpretation and application of standards under IFRS, the outcome of current 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 plc (LSE) 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 LSE and/or the SEC.



Performance Highlights

"We continue to deliver a good financial performance in the context of the current macroeconomic environment. Our competitive position continues to grow and our financial strength is serving us well in this period of uncertainty and volatility. 

These remain challenging times for Barclays, as well as the industry, and we are sorry for what has happened because of recent events. However our leadership continues to focus on the delivery of our financial performance targets and on building a platform for sustainable long term growth. Our customers and clients are at the heart of what we do. I am confident we can and will repair the reputational damage done to our business in their eyes and those of all our stakeholders."

 

 

Marcus Agius, Chairman

 

 

 

- Adjusted profit before tax up 13% to £4,227m with improvements of 15% in Retail and Business Banking (RBB) and 11% in Corporate and Investment Banking, and 38% in Wealth and Investment Management, demonstrating the benefits of the universal banking model

- Statutory profit before tax down 71% to £759m, including an own credit charge of £2,945m

- Adjusted return on average shareholders' equity increased to 9.9% (2011: 9.3%) with improvements in five of seven businesses and Investment Bank achieved nearly 15% despite difficult market conditions

- Adjusted income was up 1% at £15,475m despite macroeconomic challenges and the continuing low interest rate environment

- Income at Investment Bank improved 4% to £6,496m. Q2 12 income in Investment Bank was £3,032m, up 5% on Q2 11 and down 12% on Q1 12

- Credit impairment charges were flat at £1,832m, reflecting improvements across many businesses, offset principally by increased levels at Investment Bank where there was a net release of £111m in 2011

- Operating expenses, excluding the first quarter £300m (2011: £1,000m) provision for PPI and second quarter £450m (2011: nil) provision for interest rate hedging products redress, were down 3% to £9,491m. This reduction was achieved after absorbing regulatory penalties of £290m relating to the industry-wide investigation into the setting of interbank offered rates

- During the first six months of 2012, sovereign exposures to Spain, Italy, Portugal, Ireland, Greece and Cyprus reduced 22% to £5.6bn. In order to mitigate redenomination risk, the Group continues to reduce local funding mismatches in Spain and Portugal

- Core Tier 1 ratio remained strong at 10.9% (31 December 2011: 11.0%), having absorbed the impact of the final dividend for 2011, treasury share purchases and pension contributions. Risk weighted assets were stable at £390bn

- The Group continues to access both secured and unsecured term funding markets and raised £20bn of term funding in the first half of 2012 with £27bn of term maturities for full year 2012. Liquidity pool increased to £170bn (31 December 2011: £152bn) and the loan to deposit ratio continued to improve to 111% (2011: 118%)



Performance Highlights

Barclays Unaudited Results

Adjusted1

 

Statutory


30.06.12

30.06.11



30.06.12

30.06.11



£m

£m

% Change


£m

£m

% Change

Total income net of insurance claims

15,475

15,299

1


12,757 

15,330 

(17)

Credit impairment charges and other provisions

(1,832)

(1,828)

-


(1,832)

(1,828)

Net operating income

13,643

13,471

1


10,925 

13,502 

(19)

Operating expenses

(9,491)

(9,782)

(3)


(10,241)

(10,829)

(5)

Other net income/(expense)2

75

36



75 

(29)


Profit before tax

4,227

3,725

13


759 

2,644 

(71)

Profit after tax 

3,069

2,822

9


480 

1,983 

(76)




  





Performance Measures



  





Return on average shareholders' equity

9.9%

9.3%

  


0.3%

5.9%


Return on average tangible shareholders' equity

11.5%

11.3%

  


0.3%

7.1%


Return on average risk weighted assets

1.6%

1.4%

  


0.2%

1.0%


Cost: income ratio

61%

64%

  


80%

71%


Loan loss rate

71bps

74bps

  


71bps

74bps





  





Basic earnings per share

21.8p

19.6p

  


0.6p

12.5p


Dividend per share

2.0p

2.0p

  


2.0p

2.0p


 



  





Capital and Balance Sheet



  


30.06.12

31.12.11


Core Tier 1 ratio



  


10.9%

11.0%


Risk weighted assets



  


£390bn

£391bn

Adjusted gross leverage



  


20x

20x

Group liquidity pool



  


£170bn

£152bn

12 

Net asset value per share



  


443p

456p

(3)

Net tangible asset value per share



  


379p

391p

(3)

Loan: deposit ratio



  


111%

118%


 


Adjusted1

 

Statutory

Profit/(Loss) Before Tax by Business

30.06.12

30.06.11

  


30.06.12

30.06.11



£m

£m

% Change


£m

£m

% Change

UK

746 

704 


446 

304 

47 

Europe

(92)

(161)

(43)


(92)

(161)

(43)

Africa

274 

342 

(20)


274 

342 

(20)

Barclaycard

753 

571 

32 


753 

(76)


Retail and Business Banking

1,681 

1,456 

15 


1,381 

409 

238 

Investment Bank

2,268 

2,310 

(2)


2,268 

2,310 

(2)

Corporate Banking

346 

54 

  


(104)

(10)


Corporate and Investment Banking

2,614 

2,364 

11 


2,164 

2,300 

(6)

Wealth and Investment Management

121 

88 

38 


121 

88 

38 

Head Office and Other Operations

(189)

(183)


(2,907)

(153)


Total profit before tax

4,227 

3,725 

13 


759 

2,644 

(71)




  





 

Income by Geographic Region




  




UK

6,571 

6,266 

  

3,626 

6,279 

(42)

Europe

2,190 

2,189 

-   

  

2,190 

2,226 

(2)

Americas

3,797 

3,720 

  

4,024 

3,687 

Africa and Middle East

2,303 

2,501 

(8)

  

2,303 

2,501 

(8)

Asia

614 

623 

(1)

  

614 

637 

(4)

Total   

15,475 

 15,299 

 1 

  

12,757 

 15,330 

(17)

 

 

1     Adjusted performance measures, income by geography and profit before tax exclude the impact of £2,945m (2011: gain of £89m) own credit loss, £227m (2011: loss of £58m) gain on disposal of strategic investment in BlackRock, Inc. Adjusted performance measures and profit before tax also exclude £300m (2011: £1,000m) provision for PPI redress, £450m (2011: £nil) provision for interest rate hedging products redress, £nil (2011: loss of £65m) gains on acquisitions and disposals and  £nil (2011: £47m) goodwill impairment.

2     Other net income/(expense) represents: share of post-tax results of associates and joint ventures; profit or (loss) on disposal of subsidiaries, associates and joint ventures; and gains on acquisitions.

3     Total income net of insurance claims based on counterparty location.


Chairman's Statement

We are pleased to report a good set of results to 30 June 2012, as they reflect our continued hard work in supporting our customers and clients, delivering our financial objectives and managing risk. We continue to improve our market position across many of our key products and segments and our financial strength is serving us well in today's challenging environment. Our commitment to maintain Barclays position as a leading global universal bank, underpinned by a diverse set of businesses, remains unchanged.

The recent events have been challenging for Barclays and all those who work for the Group. We continue to address the operational and control issues raised in connection with our LIBOR settlement with the US and UK authorities, many of which have been resolved over the course of the investigation. However, as a consequence of recent events, the Board of Directors is now focused on identifying and recruiting a new Chief Executive as well as a Chairman of the Board. During this interim period, my role as Chairman of the Executive Committee is to provide stability and continuity for our customers and stakeholders. We have a mandate from the Board that goes beyond a simple caretaking role.   

Barclays has proven itself as a strong business that delivers resilient performance. The solid divisional leadership and customer focus of Antony Jenkins, Rich Ricci, Tom Kalaris and Maria Ramos continues. The depth of the Barclays management team, our relentless focus on customers and clients, and our steady financial performance gives me confidence in our ability to achieve continued growth in our businesses in difficult times. Our commitment to building a strong franchise over time based on the prudent management of our resources and delivering 13% Return on Equity remains unchanged.

Our Citizenship agenda is now more important than ever; we have ambitious commitments that we must deliver and continue to evolve to address the issues that matter most to those we serve. We must focus on getting the fundamentals right - serving our customers and clients with integrity and maintaining the highest standards of service - while reviewing our business values and working to become more transparent. In this regard, the Board has asked Anthony Salz to lead an independent, third party, review of business practices, engaging all Barclays stakeholders and with the intention of publishing the review findings and recommendations. This global review will 1) assess the bank's current values, principles and standard of operation; 2) test how well these are reflected in the bank's decision-making processes; 3) assess whether or not the appropriate training, development, incentives, and disciplinary processes are in place; and 4) determine to what extent each of these aspects need to change. We understand that we will be judged on our deeds and not our words.

The talent and hard work of our colleagues will play a vital role in achieving this. In the first half of 2012, they helped us deliver £20.5bn in gross new lending to UK households and businesses. Recognising the importance of helping new entrepreneurs, we launched an initiative to support up to 24,000 start-up businesses in the UK over the next three years. We also raised over £450bn in financing for businesses and governments globally. In the UK, our apprenticeship scheme is supporting young people into employment, we have already welcomed 120 new apprentices and are on track to recruit over 450 by the end of the year. Around half of our colleagues are actively involved in community investment programmes and, in the first half of 2012 alone, over 44,000 provided their time, skills and money to help disadvantaged people. This resulted in 160,000 of volunteering hours in local communities and £12.3m raised for charity.

We are sorry for the issues that have emerged over recent weeks and recognise that we have disappointed our customers and shareholders. I speak for all of Barclays people when I say how determined we are to regain the full confidence of all our stakeholders; customers and clients, investors, regulators and staff alike.

 

Marcus Agius, Chairman


Group Finance Director's Review

For the first six months of 2012 we reported a good performance as adjusted profits increased 13% year on year, despite continuing difficult market conditions. Our Core Tier 1 ratio was robust at 10.9%, while funding and liquidity remained strong.

Income Statement

- Statutory profit before tax was £759m (2011: £2,644m), including an own credit charge of £2,945m (2011: gain of £89m). Adjusted profit before tax increased 13% to £4,227m. Adjusted results provide a more consistent basis for comparing business performance between periods

- Adjusted return on average shareholders' equity increased to 9.9% (2011: 9.3%) with improvements in five of seven businesses and Investment Bank achieved nearly 15%, an encouraging performance in difficult market conditions

- Adjusted income increased 1% to £15,475m, despite continued low interest rates and continuing difficult macroeconomic conditions

- Customer net interest income from RBB, Corporate Banking and Wealth and Investment Management increased 2% to £4.9bn. The net interest margin declined 8bps to 189bps, driven by a 7bps decrease in non-customer margin reflecting reduced contributions from structural hedges. Average customer assets for these businesses increased 1% to £317.9bn and average customer liabilities increased 4% to £277.4bn

- Total income in Investment Bank increased 4% to £6,496m driven by improved performances in Rates and Commodities, partially offset by declines in market volumes and lower corporate deal activity

- Credit impairment charges were flat at £1,832m, reflecting improvements across many businesses, offset principally by increased levels at the Investment Bank where there was a net release of £111m in 2011

-    Loans and advances balances were up 5% and the annualised loan loss rate reduced to 71bps (Full Year 2011: 77bps; Half Year 2011: 74bps). While delinquency trends improved in cards portfolios and UK unsecured lending during 2012, home loans in Europe experienced some deterioration as a result of the adverse credit conditions. South Africa home loans impairment increased reflecting focus on reducing the recoveries portfolio during the first six months of 2012 which led to higher write offs. Credit metrics in the wholesale portfolios have remained generally stable, however, the Investment Bank experienced higher charges primarily relating to ABS CDO Super Senior positions and higher losses on single name exposures

-    The credit risk loans (CRL) coverage ratio increased slightly as CRL balances and impairment allowances fell 8% and 6%, respectively

- Operating expenses, excluding the £300m (2011: £1,000m) provision for PPI and £450m (2011: nil) provision for interest rate hedging products redress, were down 3% to £9,491m

-    Performance costs reduced by 14% to £1,422m despite a deferred bonus charge of £655m (2011: £458m). Investment Bank performance costs reduced 19% to £1,028m, compared to a 2% decrease in profit before tax and the compensation: income ratio reduced to 39% (2011: 45%)

-    Non-performance costs decreased by 1% to £8,069m after absorbing regulatory penalties of £290m in the Investment Bank and Head Office and Other Operations relating to the industry-wide investigation into the setting of interbank offered rates. Overall increases in regulatory and legal costs, continued business investment and the impact of acquisitions in 2011, were more than offset by reductions in other non-performance costs, in line with the Group's cost saving initiatives

- The adjusted cost: income ratio decreased to 61% (2011: 64%). At the Investment Bank the cost: net operating income ratio was flat at 64%

- The effective tax rate on statutory profit before tax was 36.8% (H1 11: 25.0%), principally due to profits taxed in countries with high local tax rates and non-deductible expenses. The increase in the tax rate compared to H1 11 reflects the recognition in 2011 of previously unrecognised deferred tax assets in the US branch of Barclays Bank PLC. The effective tax rate on adjusted profit before tax was 27.4% (H1 11: 24.2%)

 



Group Finance Director's Review

Balance Sheet

- Total assets increased to £1,631bn (2011: £1,564bn), reflecting increases across a number of asset categories, notably a £19bn increase in cash and balances at central banks, a £23bn increase in loans and advances to customers (primarily in relation to settlement balances) and a £21bn increase in reverse repurchase agreements.  These were partially offset by a £21bn reduction in derivative financial instrument assets

- Total customer accounts increased 12% to £409bn primarily in relation to settlement balances

- The Group's loan to deposit ratio continued to improve to 111% (2011: 118%)

- Total shareholders' equity (including non-controlling interests) at 30 June 2012 was £63.7bn (2011: £65.2bn). Excluding non-controlling interests, shareholders' equity decreased £1.4bn to £54.2bn, principally reflecting negative reserve movements, notably the £1.0bn net purchase of treasury shares for deferred compensation awards, £0.5bn of dividends paid and £0.5bn currency reserve movements, partially offset by profit after tax

- Net asset value per share decreased 3% to 443p and the net tangible asset value per share decreased 3% to 379p

- Adjusted gross leverage remained stable at 20x and moved within a month end range of 20x to 23x. Excluding the liquidity pool, adjusted gross leverage remained flat at 17x

 

Capital Management

- As at 30 June 2012, the Group's Core Tier 1 ratio was 10.9% (31 December 2011: 11.0%) after absorbing a 26bps impact from pensions, principally reflecting the additional pension contributions made in April 2012 and deducting future contributions expected over the next 5 years

- The Group continued to generate Core Tier 1 capital from retained earnings (excluding own credit, which is added back for regulatory capital purposes). Retained earnings of £2.3bn were more than offset by other movements in Core Tier 1 capital including pension movements, share purchases, dividends and currency reserve movements

- Risk weighted assets remained stable at £390bn (2011: £391bn), principally reflecting increases in operational and market risk, offset by reductions in counterparty risk and credit risk

- In May 2012, the investment in BlackRock, Inc. was sold for net proceeds of £3.5bn, recognising a gain on sale of £227m. This holding would have resulted in a negative Core Tier 1 capital impact under Basel 3

 

Funding and Liquidity

The liquidity pool as at 30 June 2012 was £170bn (31 December 2011: £152bn) which is towards the top of the month-end range for the period of £152bn to £173bn (Full Year 2011: £140bn to £167bn). The liquidity pool is held unencumbered and is not used to support payment or clearing requirements, which are treated as part of our regular business funding. It is intended to offset stress outflows and comprises the following cash and unencumbered assets.

 


Cash and Deposits with Central Banks

Government Bonds

Other Available Liquidity

Total


£bn

£bn

£bn

£bn

As at 30.06.12

124 

32 

14 

170 

As at 31.12.11

105 

36 

11 

152 

 

- RBB, Corporate Banking and Wealth and Investment Management activities are largely funded by customer deposits with the remainder covered by funding secured against customer loans and advances.  As at 30 June 2012, the loan to deposit ratio for these businesses was 106% (31 December 2011: 111%) and the loan to deposit and secured funding ratio was 94% (31 December 2011: 101%)

- The Investment Bank's activities are primarily funded through wholesale markets. As at 30 June 2012 total wholesale funding outstanding (excluding repurchase agreements) was £263bn (31 December 2011: £265bn). £118bn of wholesale funding matures in less than one year (31 December 2011: £130bn)

 

1     Of which over 95% (31 December 2011: over 95%) is placed with the Bank of England, US Federal Reserve, European Central Bank, Bank of Japan and Swiss National Bank.

2     Of which over 70% (31 December 2011: over 80%) are comprised of UK, US, Japanese, French, German, Danish and Dutch securities.

3     £149bn (31 December 2011: £140bn) of which is FSA eligible.



Group Finance Director's Review

- Barclays continues to attract deposits in unsecured money markets and to raise additional secured and unsecured term funding in a variety of markets. During H1 12, the Group raised £19.9bn of term funding, including £10.2bn of senior unsecured and £9.7bn of secured term funding

- The Group has £11bn of term funding maturing in the remainder of 2012 (31 December 2011: £27bn), and a further £18bn maturing in 2013

- The Group's liquidity pool and wholesale funds continue to be well diversified across major currencies

 

 

 

 

Exposures to Selected Eurozone Countries

- During H1 12, sovereign exposures to Spain, Italy, Portugal, Ireland, Greece and Cyprus reduced by 22% to £5.6bn

-    Spanish and Portuguese sovereign exposures reduced 13% to £2.2bn and 27% to £0.6bn respectively due to the disposal of available for sale government bonds held for the purpose of interest rate hedging and liquidity, that have been replaced by interest rate swaps with alternative counterparties

-    Italian sovereign exposures decreased 27% to £2.6bn principally due to a redemption in government bonds held for trading

- Retail loans and advances in Spain, Italy and Portugal decreased 5% to £39.6bn, while lending to corporates decreased 13% to £10.0bn reflecting continued prudent risk management of portfolios. CRL coverage ratios in the retail and wholesale portfolios for Spain, Italy and Portugal have remained broadly stable

- During 2012, mitigating actions have been taken to reduce the local net funding mismatch including the drawdown of €8.2bn in the European Central Bank's three year LTRO in Spain and Portugal and additional deposit taking in Spain. As a result, the Group reduced the aggregate net local balance sheet funding mismatch from £12.1bn to £2.5bn in Spain and from £6.9bn to £3.7bn in Portugal during the six months to 30 June 2012

 

Other Matters

- In June 2012, Barclays reached settlement with the FSA and US authorities regarding investigations into submissions made by Barclays and other panel members to the bodies that set various interbank offered rates. Barclays agreed to pay total penalties of £290m

- Following an increase in PPI claim volumes, the PPI provision was increased by £300m in the first quarter of 2012, bringing the cumulative charge to £1,300m. Claims volumes remain unpredictable, although have recently been trending downwards. As at 30 June 2012, £894m of the total £1,300m provision had been utilised

- On 29 June 2012, the FSA announced that it had reached agreement with a number of UK banks (including Barclays) in relation to a review and redress exercise to be carried out in respect of interest rate hedging products sold to small and medium sized enterprises. A provision of £450m has been recognised based on initial estimates relating to the appropriate implementation of the agreement, although the ultimate cost of this exercise is uncertain

Dividends

- It is our policy to declare and pay dividends on a quarterly basis. We will pay a second interim cash dividend for 2012 of 1p per share on 7 September 2012

 

Outlook

- Performance during July continues to be ahead of the prior year. Nevertheless, we continue to be cautious about the environment in which we operate and will maintain the Group's strong capital, leverage and liquidity positions

 

Chris Lucas, Group Finance Director


Barclays Results by Quarter

Barclays Results by Quarter

Q212

Q112


Q411

Q311

Q211

Q111

  

£m

£m


£m

£m

£m

£m

Adjusted basis  








Total income net of insurance claims  

7,337 

8,138 


6,212 

7,001 

7,549 

7,750 

Credit impairment charges and other provisions  

(1,054)

(778)


(951)

(1,023)

(907)

(921)

Net operating income  

6,283 

7,360 


5,261 

5,978 

6,642 

6,829 

Operating expenses (excluding UK bank levy)  

(4,542)

(4,949)


(4,414)

(4,659)

(4,940)

(4,842)

UK bank levy  


(325)

Other net income

41 

34 


18 

19 

17 

Adjusted profit before tax  

1,782 

2,445 


528 

1,337 

1,721 

2,004 

   








Adjusting items  








Own credit  

(325)

(2,620)


(263)

2,882 

440 

(351)

Gains on debt buy-backs  


1,130 

Impairment and gain/(loss) on disposal of BlackRock investment

227 


(1,800)

(58)

Provision for PPI redress

(300)


(1,000)

Provision for interest rate hedging products redress

(450)


Goodwill impairment  


(550)

(47)

(Losses)/gains on acquisitions and disposals  


(32)

(67)

Statutory profit/(loss) before tax

1,234 

(475)


813 

2,422 

989 

1,655 

   








Adjusted basic earnings per share  

8.2p

13.6p


1.2p

6.9p

8.9p

10.7p

Adjusted cost: income ratio  

62%

61%


76%

67%

65%

62%

Basic earnings per share  

5.1p

(4.5p)


2.9p

9.7p

4.0p

8.5p

Cost: income ratio  

69%

95%


75%

47%

75%

65%

  








 

Adjusted Profit/(Loss) Before Tax by Business

Q212

Q112


Q411

Q311

Q211

Q111

  

£m

£m


£m

£m

£m

£m

UK

412 

334 


222 

494 

416 

288 

Europe

(49)

(43)


(125)

52 

(102)

(59)

Africa

97 

177 


269 

219 

195 

147 

Barclaycard

404 

349 


259 

378 

275 

296 

Retail and Business Banking

864 

817 


625 

1,143 

784 

672 

Investment Bank

1,002 

1,266 


267 

388 

977 

1,333 

Corporate Banking

127 

219 


37 

113 

33 

21 

Corporate and Investment Banking

1,129 

1,485 


304 

501 

1,010 

1,354 

Wealth and Investment Management

61 

60 


54 

65 

42 

46 

Head Office and Other Operations

(272)

83 


(455)

(372)

(115)

(68)

Total profit before tax

1,782 

2,445 


528 

1,337 

1,721 

2,004 


Condensed Consolidated Financial Statements

Condensed Consolidated Income Statement (Unaudited)

  

  

Half Year Ended

Half Year Ended

Half Year Ended

Continuing Operations

  

30.06.12

31.12.11

30.06.11

  

Notes

£m

£m

£m

Net interest income

2

6,112 

6,012 

6,189 

Net fee and commission income

  

4,249 

4,203 

4,419 

Net trading income

  

1,584 

3,764 

3,896 

Net investment income

  

371 

1,711 

652 

Net premiums from insurance contracts

  

516 

507 

569 

Net gain/(loss) on disposal of investment in BlackRock, Inc.

  

227 

(58)

Gains on debt buy-backs and extinguishments

  

1,130 

Other income/(expense)

  

61 

(21)

60 

Total income  

  

13,120 

17,306 

15,727 

Net claims and benefits incurred on insurance contracts

  

(363)

(344)

(397)

Total income net of insurance claims

  

12,757 

16,962 

15,330 

Credit impairment charges and other provisions

  

(1,832)

(1,974)

(1,828)

Impairment of investment in BlackRock, Inc.

  

(1,800)

Net operating income

  

10,925 

13,188 

13,502 

  

  




Staff costs

3    

(5,469)

(5,297)

(6,110)

Administration and general expenses

4

(3,474)

(3,232)

(3,124)

Depreciation of property, plant and equipment

  

(337)

(322)

(351)

Amortisation of intangible assets

  

(211)

(222)

(197)

Operating expenses excluding goodwill impairment, UK bank levy and provisions for PPI and interest rate hedging products redress

  

(9,491)

(9,073)

(9,782)

Goodwill impairment

  

(550)

(47)

Provision for PPI redress

  

(300)

(1,000)

Provision for interest rate hedging products redress

  

(450)

UK bank levy

  

(325)

Operating expenses

  

(10,241)

(9,948)

(10,829)

  

  




Profit/(loss) on disposals of undertakings and share of results of associates and joint ventures


75

(5)

(29)

Profit before tax

  

759 

3,235 

2,644 

Tax

6

(279)

(1,267)

(661)

Profit after tax

  

480 

1,968 

1,983 

  

  




Attributable to:

  




Equity holders of the parent

  

70 

1,509 

1,498 

Non-controlling interests

7

410 

459 

485 

Profit after tax

  

480 

1,968 

1,983 

  

  




Earnings per Share from Continuing Operations

  




Basic earnings per ordinary share

8

0.6p

12.6p

12.5p

Diluted earnings per ordinary share

8

0.6p

12.1p

11.9p

 

 

 

  

 

  

 

  

1        For notes to the Financial Statements see pages 73 to 90.



Condensed Consolidated Financial Statements

Condensed Consolidated Statement of Profit or Loss and other Comprehensive Income (Unaudited)


  





  

Half Year Ended

Half Year Ended

Half Year Ended

Continuing Operations

  

30.06.12

31.12.11

30.06.11


Notes

£m

£m

£m

Profit after tax

  

480 

1,968 

1,983 


  




Other Comprehensive Income that may be recycled to profit or loss:

  




Currency translation differences

17

(614)

(817)

(790)

Available for sale financial assets

17

(199)

1,059 

315 

Cash flow hedges

17

242 

1,351 

(88)

Other

  

48 

(97)

23 

Other comprehensive income for the period

  

(523)

1,496 

(540)


  




Total comprehensive income for the period

  

(43)

3,464 

1,443 


  




Attributable to:

  




Equity holders of the parent

  

(410)

3,402 

1,174 

Non-controlling interests

  

367 

62 

269 

Total comprehensive income for the period

  

(43)

3,464 

1,443 

 

 

 

 

 

 

 

 

 

1      For notes, see pages 73 to 90.



Condensed Consolidated Financial Statements

Condensed Consolidated Balance Sheet (Unaudited)

  

  

As at

As at

As at

Assets

  

30.06.12

31.12.11

30.06.11

  

Notes

£m

£m

£m

Cash and balances at central banks

  

126,062 

106,894 

86,916 

Items in the course of collection from other banks

  

2,598 

1,812 

1,317 

Trading portfolio assets

  

166,300 

152,183 

181,799 

Financial assets designated at fair value

  

45,928 

36,949 

39,122 

Derivative financial instruments

10

517,685 

538,964 

379,854 

Loans and advances to banks

  

48,777 

47,446 

58,751 

Loans and advances to customers

  

454,728 

431,934 

441,983 

Reverse repurchase agreements and other similar secured lending

  

174,392 

153,665 

196,867 

Available for sale financial investments

  

68,922 

68,491 

81,837 

Current and deferred tax assets

6

3,244 

3,384 

3,007 

Prepayments, accrued income and other assets

  

5,892 

4,563 

6,030 

Investments in associates and joint ventures

  

489 

427 

576 

Goodwill and intangible assets

12

7,861 

7,846 

8,541 

Property, plant and equipment

  

5,909 

7,166 

6,196 

Retirement benefit assets

15

2,478 

1,803 

126 

Total assets

  

1,631,265 

1,563,527 

1,492,922 

  

  




Liabilities

  




Deposits from banks

  

94,467 

91,116 

84,188 

Items in the course of collection due to other banks

  

1,671 

969 

1,324 

Customer accounts

  

408,550 

366,032 

373,374 

Repurchase agreements and other similar secured borrowing

  

245,833 

207,292 

247,635 

Trading portfolio liabilities

  

51,747 

45,887 

77,208 

Financial liabilities designated at fair value

  

94,855 

87,997 

92,473 

Derivative financial instruments  

10

507,351 

527,910 

366,536 

Debt securities in issue

  

124,968 

129,736 

144,871 

Accruals, deferred income and other liabilities

  

12,326 

12,580 

12,952 

Current and deferred tax liabilities

6

1,377 

2,092 

1,100 

Subordinated liabilities

 13 

22,089 

24,870 

26,786 

Provisions  

14

1,851 

1,529 

2,074 

Retirement benefit liabilities

15

490 

321 

412 

Total liabilities

  

1,567,575 

1,498,331 

1,430,933 

  

  




Shareholders' Equity

  




Shareholders' equity excluding non-controlling interests

  

54,205 

55,589 

51,572 

Non-controlling interests

7

9,485 

9,607 

10,417 

Total shareholders' equity

  

63,690 

65,196 

61,989 

  

  




Total liabilities and shareholders' equity

  

1,631,265 

1,563,527 

1,492,922 

 

 

 

 

 

 

 

 

 

 

 

 

 

1      For notes, see pages 73 to 90.



Condensed Consolidated Financial Statements

Condensed Consolidated Statement of Changes in Equity (Unaudited)

Half Year Ended 30.06.12

Called up Share Capital and Share Premium

Other Reserves

Retained Earnings

Total

Non-controlling Interests

Total

Equity


£m

£m

£m

£m

£m

£m

Balance at 1 January 2012

12,380 

3,837 

39,372 

55,589 

9,607 

65,196 

Profit after tax

70 

70 

410 

480 

Currency translation movements

(543)

(543)

(71)

(614)

Available for sale investments

(218)

(218)

19 

(199)

Cash flow hedges

234 

234 

242 

Other

47 

47 

48 

Total comprehensive income for the period

(527)

117 

(410)

367 

(43)

Issue of shares under employee share schemes

82 

369 

451 

451 

Increase in treasury shares

(955)

(955)

(955)

Vesting of shares under employee share schemes

912 

(912)

Dividends paid

(488)

(488)

(364)

(852)

Other reserve movements

18 

18 

(125)

(107)

Balance at 30 June 2012

12,462 

3,267 

38,476 

54,205 

9,485 

63,690 


  

  



  


Half Year Ended 31.12.11

  

  



  


Balance at 1 July 2011

12,361 

1,291 

37,920 

51,572 

10,417 

61,989 

Profit after tax

1,509 

1,509 

459 

1,968 

Currency translation movements

(401)

(401)

(416)

(817)

Available for sale investments

1,057 

1,057 

1,059 

Cash flow hedges

1,338 

1,338 

13 

1,351 

Other

(101)

(101)

(97)

Total comprehensive income for the period

1,994 

1,408 

3,402 

62 

3,464 

Issue of shares under employee share schemes

19 

477 

496 

496 

Decrease in treasury shares

388 

388 

388 

Vesting of shares under employee share schemes

76 

(76)

Dividends paid

(241)

(241)

(364)

(605)

Redemption of Reserve Capital Instruments

(528)

(528)

Other reserve movements

88 

(116)

(28)

20 

(8)

Balance at 31 December 2011

12,380 

3,837 

39,372 

55,589 

9,607 

65,196 


  

  



  



  

  



  


Half Year Ended 30.06.11

  

  



  


Balance at 1 January 2011

12,339 

1,754 

36,765 

50,858 

11,404 

62,262 

Profit after tax

1,498 

1,498 

485 

1,983 

Currency translation movements

(608)

(608)

(182)

(790)

Available for sale investments

323 

323 

(8)

315 

Cash flow hedges

(48)

(48)

(40)

(88)

Other

14 

23 

Total comprehensive income for the period

(333)

1,507 

1,174 

269 

1,443 

Issue of shares under employee share schemes

22 

361 

383 

383 

Increase in treasury shares

(553)

(553)

(553)

Vesting of shares under employee share schemes

423 

(423)

Dividends paid

(419)

(419)

(363)

(782)

Redemption of Reserve Capital Instruments

(887)

(887)

Other reserve movements

129 

129 

(6)

123 

Balance at 30 June 2011

12,361 

1,291 

37,920 

51,572 

10,417 

61,989 


  

  



  



  

  



  


 

 

 

 

1    Details of Share Capital and Other Reserves are shown on page 81.

2    Details of Non-controlling interests are shown on page 76. Included within other reserve movement of £125m, £91m relates to the disposal of the Iveco Finance business.  



Condensed Consolidated Financial Statements

Condensed Consolidated Cash Flow Statement (Unaudited)




Half Year Ended

Half Year Ended

Half Year Ended

Continuing Operations

30.06.12

31.12.11

30.06.11


£m

£m

£m

Profit before tax

759 

3,235 

2,644 

Adjustment for non-cash items

6,998 

5,089 

3,104 

Changes in operating assets and liabilities

24,150 

(10,362)

27,055 

Corporate income tax paid

(889)

(796)

(890)

Net cash from operating activities

31,018 

(2,834)

31,913 

Net cash from investing activities

(2,232)

13,553 

(15,465)

Net cash from financing activities

(3,861)

(3,112)

(2,849)

Effect of exchange rates on cash and cash equivalents

(2,424)

(1,350)

(1,583)

Net increase in cash and cash equivalents

22,501 

6,257 

12,016 

Cash and cash equivalents at beginning of the period

149,673 

143,416 

131,400 

Cash and cash equivalents at end of the period

172,174 

149,673 

143,416 





 

 

  

 

 

 

 

 

 

 

 

 

 

 

 


Results by Business

UK Retail and Business Banking



  





  

  

Half Year Ended

Half Year Ended

Half Year Ended

  

Income Statement Information


30.06.12

  


31.12.11


30.06.11

YoY

  


£m

  


£m


£m

% Change

Net interest income


1,612 

  


1,788 


1,625 

(1)

Net fee and commission income


568 

  


566 


591 

(4)

Net investment income


  


17 


  

Net premiums from insurance contracts


39 

  


43 


49 

(20)

Other income/(expense)


  



(2)

  

Total income


2,222 

  


2,415 


2,263 

(2)

Net claims and benefits incurred under insurance contracts


(17)

  


(13)


(9)

  

Total income net of insurance claims


2,205 

  


2,402 


2,254 

(2)

Credit impairment charges and other provisions


(122)

  


(261)


(275)

(56)

Net operating income


2,083 

  


2,141 


1,979 

  



  





  

Operating expenses (excluding provision for PPI redress)


(1,337)

  


(1,427)


(1,275)

Provision for PPI redress


(300)

  



(400)

(25)

Operating expenses


(1,637)

  


(1,427)


(1,675)

(2)

  



  





  

Other net income


  



  

Profit before tax


446 

  


716 


304 

47 

  



  





  

Adjusted profit before tax


746 

  


716 


704 

 

  



  





  

Balance Sheet Information



  





  

Loans and advances to customers at amortised cost


£123.4bn

  


£121.2bn


£117.9bn

  

Customer deposits


£113.9bn

  


£111.8bn


£108.3bn

  

Total assets


£130.8bn

  


£127.8bn


£123.7bn

  

Risk weighted assets


£36.0bn

  


£34.0bn


£34.2bn

  

 

  



  





  

  

Adjusted


Statutory

  

Performance Measures

30.06.12

31.12.11

30.06.11


30.06.12

31.12.11

30.06.11

  

Return on average equity

16.6%

14.8%

15.0%


9.9%

14.8%

6.4%

  

Return on average risk weighted assets

3.3%

3.0%

3.0%


1.9%

3.0%

1.3%

  

Cost: income ratio

61%

59%

57%


74%

59%

74%

  

Loan loss rate (bps)

19 

42 

46 


19 

42 

46 

  

 

  



  





  

Key Facts


30.06.12

  


31.12.11


30.06.11

  

90 day arrears rates - UK personal loans


1.4%

  


1.7%


2.1%

  

90 day arrears rates - home loans


0.3%

  


0.3%


0.3%

  

Number of UK current accounts


12.0m

  


11.9m


11.7m

  

Number of UK savings accounts


15.6m

  


15.1m


15.0m

  

Number of UK mortgage accounts


932,000 

  


930,000 


925,000 

  

Number of Barclays Business customers


790,000 

  


785,000 


779,000 

  

Average LTV of mortgage portfolio


44%

  


44%


43%

  

Average LTV of new mortgage lending


55%

  


54%


53%

  

Number of branches


1,614 

  


1,625 


1,634 

  

Number of ATMs


3,984 

  


3,629 


3,361 

  

Number of employees (full time equivalent)


34,100 

  


34,100 


34,200 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1         Adjusted profit before tax and adjusted performance measures exclude the impact of the provision for PPI redress of £300m (H2 11 £nil; H1 11: £400m).



Results by Business

UK Retail and Business Banking

Income Statement - H1 12 compared to H1 11

- Adjusted profit before tax improved 6% to £746m. Profit before tax improved 47% to £446m after £300m (2011: £400m) provision for PPI redress

-    Solid new mortgage lending and deposit inflows as reflected in balance sheet growth

-    Continued reduction in impairment in personal unsecured lending

- Income declined 2% to £2,205m driven by lower net fees and commissions

- Net interest income declined 1% to £1,612m with net interest margin down 7bps to 139bps including reduced contributions from structural hedges

-    Customer asset margin decreased 17bps to 108bps reflecting higher funding rates

-    Average customer assets increased 5% to £122.3bn driven by 6% growth in average mortgage balances

-    Customer liability margin increased 14bps to 97bps reflecting an increase in funding rates and therefore the value generated from customer liabilities

-    Average customer liabilities increased 3% to £110.5bn due to savings deposit growth

- Net fee and commission income down 4% to £568m following closure of the branch-based element of the financial planning business in Q1 2011 and lower overdraft fees

- Credit impairment charges decreased 56% to £122m with annualised loan loss rate of 19bps (2011: 46bps)

-    Personal unsecured lending impairment improved 62% to £61m with 90 day arrears rates on UK personal loans improving 70bps to 1.4%

- Operating expenses decreased 2% to £1,637m. Excluding the provision for PPI redress of £300m (2011: £400m), operating expenses increased 5% including higher PPI related operating costs

- Adjusted return on average equity improved to 16.6% (2011: 15.0%). Return on average equity improved to 9.9% (2011: 6.4%)

Income Statement - Q2 12 compared to Q1 12

- Adjusted profit before tax improved 23% to £412m, reflecting a 5% increase in income and a 39% reduction in impairment charges due to a non-recurring provision release. Profit before tax improved £378m to £412m, reflecting the PPI redress provision of £300m recognised in Q1 12

Balance Sheet - 30 June 2012 compared to 31 December 2011

- Total loans and advances to customers increased 2% to £123.4bn driven by growth in mortgage balances

-    Mortgage balances of £110.0bn at 30 June 2012 (31 December 2011: £107.8bn). Gross new mortgage lending of £7.8bn (30 June 2011: £7.6bn) and mortgage redemptions of £5.6bn (30 June 2011: £4.9bn), resulted in net new mortgage lending of £2.2bn (30 June 2011: £2.7bn)

-    Average Loan to Value (LTV) ratio on the mortgage portfolio (including buy to let) on a current valuation basis was 44% (31 December 2011: 44%). Average LTV of new mortgage lending was 55% (31 December 2011: 54%)

- Total customer deposits increased 2% to £113.9bn primarily driven by growth in savings from ISAs and bonds

- Risk weighted assets increased 6% to £36.0bn as a result of methodology changes and an increase in mortgage balances

 


Results by Business

Europe Retail and Business Banking



  






  

Half Year Ended

Half Year Ended

Half Year Ended


Income Statement Information


30.06.12

  


31.12.11


30.06.11

YoY

  


£m

  


£m


£m

% Change

Net interest income  


309 

  


428 


358 

(14)

Net fee and commission income


152 

  


210 


219 

(31)

Net trading income


  




Net investment income


27 

  


58 


33 

(18)

Net premiums from insurance contracts


220 

  


209 


254 

(13)

Other income/(expense)


11

  


(56)



Total income


723 

  


853 


876 

(17)

Net claims and benefits incurred under insurance contracts


(237)

  


(231)


(272)

(13)

Total income net of insurance claims


486 

  


622 


604 

(20)

Credit impairment charges and other provisions


(157)

  


(145)


(116)

35 

Net operating income


329 

  


477 


488 

(33)

  



  






Operating expenses (excluding goodwill impairment)


(428)

  


(554)


(657)

(35)

Goodwill impairment


  


(427)



Operating expenses  


(428)

  


(981)


(657)

(35)

  



  






Other net income  


  



(13)

Loss before tax


(92)

  


(500)


(161)

(43)

  



  






Adjusted loss before tax


(92)

  


(73)


(161)

(43)

 

  



  






Balance Sheet Information



  






Loans and advances to customers at amortised cost


£41.2bn

  


£43.6bn


£46.0bn


Customer deposits


£18.4bn

  


£16.4bn


£19.1bn


Total assets


£48.1bn

  


£51.3bn


£56.7bn


Risk weighted assets


£16.6bn

  


£17.4bn


£17.9bn


 

  



  






  

Adjusted


Statutory


Performance Measures

30.06.12

31.12.11

30.06.11


30.06.12

31.12.11

30.06.11


Return on average equity

(6.2%)

(2.7%)

(9.3%)


(6.2%)

(34.1%)

(9.3%)


Return on average risk weighted assets

(0.8%)

(0.4%)

(1.4%)


(0.8%)

(5.2%)

(1.4%)


Cost: income ratio

88%

89%

109%


88%

158%

109%


Loan loss rate (bps)

75 

56 

50 


75 

56 

50 


 

  



  






Key Facts


30.06.12

  


31.12.11


30.06.11


30 day arrears rates - cards


6.2%

  


5.9%


6.7%


90 day arrears rate - home Loans


0.8%

  


0.7%


0.6%


Number of customers


2.6m

  


2.7m


2.7m


  



  






Number of branches  


951 

  


978 


1,120 


Number of sales centres


228 

  


250 


247 


Number of distribution points


1,179 

  


1,228 


1,367 


  



  






Number of employees (full time equivalent)


8,000 

  


8,500 


9,300 


 

 

  

 

  

 

 

1        Adjusted profit before tax and adjusted performance measures excludes the impact of goodwill impairment £nil (H2 11: £427m; H1 11: £nil).

 

Results by Business

Europe Retail and Business Banking

Income Statement - H1 12 compared to H1 11

- Loss before tax improved to £92m (2011: £161m) reflecting on-going strategic actions to reposition the business

-    Lower costs following restructuring charges in 2011 and subsequent cost savings

-    Reduction in funding mismatch driven by the active management of retail assets, particularly in Spain

- Income declined 20% to £486m reflecting the challenging economic environment across Europe

- Net interest income declined 14% to £309m reflecting lower asset and liability balances, partially offset by higher liability margins

-    Customer asset margin decreased 14bps to 80bps with net interest margin down to 108bps (2011: 118bps), driven by higher funding rates

-    Average customer assets decreased 3% to £42.0bn driven by active management to reduce funding mismatch

-    Customer liability margin increased 6bps to 47bps mainly due to re-pricing initiatives

-    Average customer liabilities decreased 14% to £15.5bn reflecting competitive pressures

- Net fee and commission income declined 31% to £152m, reflecting lower income from Italy mortgage sales and lower sales of investment products

- Net premiums from insurance contracts declined 13% to £220m, with a corresponding 13% decline in net claims and benefits to £237m

- Credit impairment charges increased 35% to £157m reflecting deterioration in credit performance in Spain and Portugal as economic conditions continued to worsen 

-    Loan loss rate increased to 75bps (2011: 50bps)

-    90 day arrears rate for home loans deteriorated to 80bps (30 June 2011: 60bps)

- Operating expenses decreased 35% to £428m, reflecting restructuring charges of £129m in 2011 and subsequent cost savings

- Return on average equity improved to negative 6.2% (2011: negative 9.3%) reflecting the improved loss before tax

Income Statement - Q2 12 compared to Q1 12

- Loss before tax of £49m (Q1 12: £43m) reflecting worsening delinquency trends on Spanish and Italian mortgages

Balance Sheet - 30 June 2012 compared to 31 December 2011

- Loans and advances to customers decreased 6% to £41.2bn reflecting currency movements and strategy to reduce the net funding mismatch. This change has driven a 6% reduction in total assets to £48.1bn

- Customer deposits increased 12% to £18.4bn, reflecting active management to improve liquidity and reduce the funding mismatch

- Risk weighted assets decreased 5% to £16.6bn reflecting reduced loans and advances to customers


Results by Business

Africa Retail and Business Banking



  





  

  

Half Year Ended

Half Year Ended

Half Year Ended

  

Income Statement Information


30.06.12

  


31.12.11


30.06.11

YoY

  


£m

  


£m


£m

% Change

Net interest income  


897 

  


1,021 


957 

(6)

Net fee and commission income


561 

  


584 


612 

(8)

Net trading income


43 

  


27 


43 

Net investment income


  


26 


30 

  

Net premiums from insurance contracts


214 

  


216 


216 

(1)

Other income


10 

  


29 


25 

  

Total income


1,733 

  


1,903 


1,883 

(8)

Net claims and benefits incurred under insurance contracts


(108)

  


(102)


(113)

(4)

Total income net of insurance claims


1,625 

  


1,801 


1,770 

(8)

Credit impairment charges and other provisions


(321)

  


(196)


(270)

19 

Net operating income


1,304 

  


1,605 


1,500 

(13)

  



  





  

Operating expenses  


(1,033)

  


(1,118)


(1,161)

(11)

  



  





  

Other net income






Profit before tax


274 

  


490 


342 

(20)

  



  





  

Adjusted profit before tax


274 

  


488 


342 

(20)

 

  



  





  

Balance Sheet Information



  





  

Loans and advances to customers at amortised cost


£34.1bn

  


£34.4bn


£39.9bn

  

Customer deposits


£22.3bn

  


£22.6bn


£24.2bn

  

Total assets


£47.4bn

  


£48.2bn


£55.1bn

  

Risk weighted assets


£27.9bn

  


£30.3bn


£32.7bn

  

 

  



  





  

  

Adjusted1

 

Statutory

  

Performance Measures

30.06.12

31.12.11

30.06.11


30.06.12

31.12.11

30.06.11

  

Return on average equity

7.6%

11.5%

7.9%


7.6%

11.7%

7.9%

  

Return on average risk weighted assets

1.3%

2.0%

1.4%


1.3%

2.0%

1.4%

  

Cost: income ratio

64%

62%

66%


64%

62%

66%

  

Loan loss rate (bps)

182 

107 

130 


182 

107 

130 

  

 

  



  





  

Key Facts


30.06.12

  


31.12.11


30.06.11

  

90 day arrears rate - South African home loans


2.8%

  


3.2%


3.5%

  

Number of customers


14.8m

  


14.5m


14.5m

  

Number of ATMs


10,365 

  


10,068 


9,816 

  

  



  





  

Number of branches  


1,342 

  


1,354 


1,317 

  

Number of sales centres


106 

  


139 


189 

  

Number of distribution points


1,448 

  


1,493 


1,506 

  

  



  





  

Number of employees (full time equivalent)


42,700 

  


43,800 


45,500 

  

 

   

 

 

 

 

 

 

 

 

 

 

1        Adjusted profit before tax and adjusted performance measures excludes the impact of profit on disposals of subsidiaries, associates and joint ventures of £nil (H2 11: £2m; H1 11: £nil).  



Results by Business

Africa Retail and Business Banking

Income Statement - H1 12 compared to H1 11

- Profit before tax declined 20% to £274m

-    Higher credit impairment in the South African home loans portfolio

-    Adverse currency movements due to depreciation of major African currencies against Sterling

- Income declined 8% to £1,625m driven by currency movements, partially offset by modest pricing increases and volume growth

- Net interest income declined 6% to £897m with the net interest margin up 16bps to 318bps primarily due to a change in composition to higher margin business

-    Customer asset margin increased 15bps to 310bps reflecting a change in composition towards higher margin business and lower funding rates

-    Average customer assets decreased 14% to £34.4bn, driven by currency movements and a modest decrease in the mortgage book

-    Customer liability margin increased 8bps to 266bps driven by improving margins across a number of African countries partially offset by a decline in South Africa

-    Average customer liabilities decreased 7% to £22.3bn, driven by currency movements partially offset by 10% underlying growth in deposits in South Africa where Absa remains a leader in customer deposits

- Net fee and commission income declined 8% to £561m driven by currency movements, partially offset by modest pricing increases and volume growth

- Credit impairment charges increased 19% to £321m reflecting higher impairment charges in the South African home loans portfolio due to higher write-offs

- Operating expenses decreased 11% to £1,033m primarily driven by currency movements and tight cost control

- Adjusted return on average equity decreased to 7.6% (2011: 7.9%)

Income Statement - Q2 12 compared to Q1 12

- Profit before tax of £97m (Q1 12: £177m) driven by higher impairments in South Africa retail mortgages and currency movements

Balance Sheet - 30 June 2012 compared to 31 December 2011

- Loans and advances to customers decreased 1% to £34.1bn and total assets decreased 2% to £47.4bn mainly due to currency movements

- Customer deposits decreased 1% to £22.3bn due to currency movements partially offset by growth in deposits in South Africa

- Risk weighted assets decreased 8% to £27.9bn primarily driven by changes in exposure risk weightings and currency movements


Results by Business

Barclaycard



  






  

Half Year Ended

Half Year Ended

Half Year Ended


Income Statement Information


30.06.12

  


31.12.11


30.06.11

YoY

  


£m

  


£m


£m

% Change

Net interest income


1,394 

  


1,490 


1,370 

Net fee and commission income


604 

  


600 


571 

Net trading loss


(4)

  


(4)


(3)


Net investment income


  


10 



Net premiums from insurance contracts


22 

  


21 


21 


Other income


11 

  



15 


Total income


2,027 

  


2,122 


1,974 

Net claims and benefits incurred under insurance contracts


(1)

  



(2)


Total income net of insurance claims


2,026 

  


2,123 


1,972 

Credit impairment charges and other provisions


(460)

  


(611)


(648)

(29)

Net operating income


1,566 

  


1,512 


1,324 

18 

  



  






Operating expenses (excluding provision for PPI redress and goodwill impairment)  


(830)

  


(888)


(771)

Provision for PPI redress


  



(600)


Goodwill impairment


  



(47)


Operating expenses


(830)

  


(888)


(1,418)

(41)

  



  






Other net income


17 

  


13 


18 

(6)

Profit/(loss) before tax


753 

  


637 


(76)


  



  






Adjusted profit before tax


753 

  


637 


571 

32 

 

  



  






Balance Sheet Information



  






Loans and advances to customers at amortised cost


£30.6bn

  


£30.1bn


£28.3bn


Customer deposits


£2.0bn

  


£0.6bn


£0.6bn


Total assets


£34.6bn

  


£33.8bn


£32.5bn


Risk weighted assets


£33.1bn

  


£34.2bn


£34.0bn


 

  



  






  

Adjusted


Statutory


Performance Measures

30.06.12

31.12.11

30.06.11


30.06.12

31.12.11

30.06.11


Return on average equity

22.0%

17.1%

17.7%


22.0%

17.1%

(3.6%)


Return on average risk weighted assets

3.3%

2.5%

2.7%


3.3%

2.5%

(0.3%)


Loan loss rate (bps)

285 

376 

420 


285 

376 

420 


Cost: income ratio

41%

42%

39%


41%

42%

72%


 

  



  






Key Facts


30.06.12

  


31.12.11


30.06.11


30 day arrears rates - UK cards


2.7%

  


2.7%


3.0%


30 day arrears rates - US cards


2.5%

  


3.1%


3.2%


30 day arrears rates - South Africa cards


5.1%

  


4.9%


5.4%


Total number of Barclaycard customers


23.0m

  


22.6m


22.2m


Total average customer assets


£31.8bn

  


£31.1bn


£29.4bn


Number of retailer relationships


89,000 

  


87,000 


90,000 


Number of employees (full time equivalent)


10,600 

  


10,400 


10,400 


 

 

 

 

 

 

 

 

 

 

 

1        Adjusted profit before tax and adjusted performance measures excludes the impact of the provision for PPI redress of £nil (H2 11: £nil; H1 11: £600m) and goodwill impairment of £nil (H2 11: £nil; H1 11: £47m).



Results by Business

Barclaycard

Income Statement - H1 12 compared to H1 11

- Adjusted profit before tax improved 32% to £753m.  Profit before tax increased by £829m to £753m reflecting £600m provision for PPI redress and £47m goodwill impairment in FirstPlus secured lending portfolio, both charged in H1 11

-    International profit increased driven by significant improvement in the US

-    UK consumer card profit increased due to balance growth and 2011 portfolio acquisitions

-    Solid profit growth within the Business Payments portfolio due to higher volumes

- Income improved 3% to £2,026m reflecting continued growth across the business and contributions from 2011 portfolio acquisitions, partially offset by higher funding rates

-    UK income increased by 2% to £1,281m including contribution from 2011 portfolio acquisitions offset by higher funding rates

-    International income improved 3% to £745m reflecting higher US outstanding balances partially offset by increased funding rates

- Net interest income increased by 2% to £1,394m driven by volume growth, partially offset by lower net interest margin of 881bps (2011: 939bps) including an adverse impact from structural hedges

-    Average customer assets increased 8% to £31.8bn due to 2011 portfolio acquisitions and business growth, partially offset by the continued run-off of FirstPlus

-    Customer asset margin was down 5bps to 953bps due to higher funding rates

- Net fee and commission income improved 6% to £604m due to increased business volumes

- Credit impairment charges decreased 29% to £460m

-    Loan loss rate reduced to 285bps (2011: 420bps) principally driven by lower charges in the cards portfolios, reflecting improved underlying delinquency performance

-    30 day arrears rates for consumer cards in UK down 30bps to 2.7%, in the US down 70bps to 2.5% and in South Africa down 30bps to 5.1%

- Operating expenses decreased 41% to £830m. Excluding the provision for PPI redress and FirstPlus goodwill impairment, operating expenses increased 8% reflecting 2011 portfolio acquisitions, investment spend and PPI related operating costs

- Adjusted return on average equity improved to 22.0% (2011: 17.7%). Return on average equity improved to 22.0% (2011: negative 3.6%)

Income Statement - Q2 12 compared to Q1 12

- Profit before tax improved 16% to £404m driven by higher income reflecting seasonal trends and business growth       

Balance Sheet - 30 June 2012 compared to 31 December 2011

- Total assets increased 2% to £34.6bn in line with loans and advances to customers, primarily within the US

- Customer deposits increased by £1.4bn due to business funding initiatives in the US and Germany

- Risk weighted assets decreased 3% to £33.1bn, driven by impairment trends and a change in risk weightings more than offsetting volume growth


Results by Business

Investment Bank



  






  

Half Year Ended

Half Year Ended

Half Year Ended


Income Statement Information


30.06.12

  


31.12.11


30.06.11

YoY

  


£m

  


£m


£m

% Change

Net interest income


426 

  


666 


511 

(17)

Net fee and commission income


1,527 

  


1,483 


1,543 

(1)

Net trading income


4,269 

  


1,544 


3,720 

15 

Net investment income


270 

  


382 


491 

(45)

Other income/(expense)


  


(3)


(2)


Total income


6,496 

  


4,072 


6,263 

Credit impairment charges and other provisions


(323)

  


(204)


111 


Net operating income


6,173 

  


3,868 


6,374 

(3)

  



  






Operating expenses


(3,933)

  


(3,216)


(4,073)

(3)

  



  






Other net income   


28 

  




Profit before tax


2,268 

  


655 


2,310 

(2)

  



  






Adjusted profit before tax


2,268 

  


655 


2,310 

(2)

 

 

 

 

 

 

 

 

Balance Sheet Information and Key Facts



  






Loans and advances to banks and customers at amortised cost


£185.9bn

  


£158.6bn


£180.7bn


Customer deposits


£114.5bn

  


£83.1bn


£92.0bn


Total assets


£1,225.4bn

  


£1,158.4bn


£1,076.0bn


Assets contributing to adjusted gross leverage


£650.4bn

  


£604.0bn


£653.6bn


Risk weighted assets


£190.6bn

  


£186.7bn


£190.0bn


Average DVaR (95%)


£42m

  


£65m


£48m


Number of employees (full time equivalent)


23,300 

  


23,600 


23,600 


 

 

  



  






  

Adjusted

 

Statutory


 

Performance Measures

30.06.12

31.12.11

30.06.11


30.06.12

31.12.11

30.06.11


 

Return on average equity

14.9%

5.0%

15.6%


14.9%

5.0%

15.6%


 

Return on average risk weighted assets

1.7%

0.6%

1.8%


1.7%

0.6%

1.8%


 

Cost: income ratio  

61%

79%

65%


61%

79%

65%


 

Cost: net operating income ratio  

64%

83%

64%


64%

83%

64%


 

Compensation: income ratio

39%

49%

45%


39%

49%

45%


 

Average income per employee (000s)1

£276

£170

£259


£276

£170

£259


 

Loan loss rate (bps)

35 

22 

(6)


35 

22 

(6)


 

  



  






 

  



  






 

  



  






 

  



  






 

  



  






 

  



  






 

  



  






 

  



  






 

  



  






 

  



  






 

  



  






 

  



  






 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1        H2 11 and H1 11 comparatives have been revised to reflect the transfer of 400 and 500 respectively of dedicated shared service employees to Wealth and Investment Management.



Results by Business

Investment Bank

Income Statement - H1 12 compared to H1 11

- Profit before tax decreased 2% to £2,268m driven by 4% income growth and 3% improvement in operating expenses more than offset by higher credit impairment charges

 


Half Year Ended

Half Year Ended

Half Year Ended


Analysis of Total Income

30.06.12

31.12.11

30.06.11

YoY


£m

£m

£m

%  Change

Fixed Income, Currency and Commodities

4,364 

2,409 

3,916 

11 

Equities and Prime Services

973 

643 

1,108 

(12)

Investment Banking

1,010 

895 

1,132 

(11)

Principal Investments

149 

125 

107 

39 

Total income

6,496 

4,072 

6,263 

 

- Total income increased 4% to £6,496m

-    Fixed Income, Currency and Commodities (FICC) income increased 11% to £4,364m, reflecting improved performances in Rates and Commodities partly offset by lower contributions from Securitised Products

-    Equities and Prime Services income decreased 12% to £973m, with reduced performance in cash equities and equity derivatives driven by declines in market volumes

-    Investment Banking income decreased 11% to £1,010m. Equity and debt underwriting were impacted by lower deal activity partly offset by growth in financial advisory

-    Total income for the second quarter of £3,032m increased 5% on the second quarter of 2011. FICC income increased 15%, Equities and Prime Services income was down 25%, and Investment Banking income was down 4%

- Credit impairment charge of £323m (2011: release of £111m) reflecting charges primarily relating to ABS CDO Super Senior positions and higher losses on single name exposures. There was a non-recurring release of £223m in the prior year

- Operating expenses reduced 3% to £3,933m, due to a 19% decrease in total performance costs. This was partially offset by a £193m charge relating to the Investment Banking allocation of the £290m penalty arising from the industry wide investigation into the setting of interbank offered rates. The remaining £97m has been charged to the Head Office and Other Operations

- Cost to net operating income ratio of 64% (2011: 64%) within target range of 60% to 65%. Compensation to income ratio improved to 39% (2011: 45%)

- Return on average equity of 14.9% (2011: 15.6%) and return on average risk weighted assets of 1.7% (2011: 1.8%)

Income Statement - Q2 12 compared to Q1 12

- Profit before tax decreased to £1,002m (Q1 12: £1,266m) driven by a decline in income and higher credit impairment charges, partially offset by a 17% improvement in operating expenses primarily due to performance costs

- Income of £3,032m decreased 12% on the first quarter of 2012 with an improved seasonal trend compared to 2011

Balance Sheet - 30 June 2012 compared to 31 December 2011

- Assets contributing to adjusted gross leverage increased 8% to £650bn reflecting increases in cash and central bank deposits and reverse repurchase agreements. Total assets increased 6% to £1,225bn reflecting the above, and an increase in settlement balances partially offset by a decrease in the fair value of gross derivative assets

- Credit market exposures reduced £2.5bn to £12.7bn, primarily driven by sales of commercial real estate loans and properties

- Risk weighted assets increased 2% to £191bn driven by increases in operational risk and market risk, mainly due to methodology changes, partially offset by a reduction in counterparty risk and foreign currency movements

 

 

 

 

 

 

 

 


Results by Business

Corporate Banking



  






  

Half Year Ended

Half Year Ended

Half Year Ended


Income Statement Information


30.06.12

  


31.12.11


30.06.11

YoY

  


£m

  


£m


£m

% Change

Net interest income


957 

  


1,141 


1,014 

(6)

Net fee and commission income


489 

  


497 


508 

(4)

Net trading income/(expense)


70 

  


(128)


29 

141 

Net investment income


  


21 



Other income


  




Total income


1,527 

  


1,540 


1,568 

(3)

Credit impairment charges and other provisions


(425)

  


(535)


(612)

(31)

Net operating income


1,102 

  


1,005 


956 

15 

  



  






Operating expenses (excluding goodwill impairment and provision for interest rate hedging products redress)


(754)

  


(858)


(901)

(16)

Goodwill impairment


  


(123)



Provision for interest rate hedging products redress


(450)

  




Operating expenses


(1,204)

  


(981)


(901)

34 

  



  






Other net expense


(2)



(6)


(65)


(Loss)/profit before tax


(104)

  


18 


(10)


  



  






Adjusted profit before tax


346 

  


150 


54 


 

  



  






Balance Sheet Information and Key Facts



  






Loans and advances to customers at amortised cost


£64.0bn

  


£66.9bn


£66.2bn


Loans and advances to customers at fair value


£17.3bn

  


£17.2bn


£14.4bn


Customer deposits


£88.5bn

  


£85.2bn


£84.5bn


Total assets


£87.8bn

  


£91.2bn


£87.1bn


Risk weighted assets


£69.3bn

  


£72.8bn


£72.0bn


Number of employees (full time equivalent)


10,600 

  


11,200 


13,200 


 

  



  






  

Adjusted1

 

Statutory


Performance Measures

30.06.12

31.12.11

30.06.11


30.06.12

31.12.11

30.06.11


Return on average equity

6.0%

2.8%

0.6%


(3.3%)

(0.8%)

(1.2%)


Return on average risk weighted assets

0.7%

0.3%

0.1%


(0.3%)

(0.1%)

(0.1%)


Loan loss rate (bps)

123 

145 

173 


123 

145 

173 


Cost: income ratio

49%

56%

57%


79%

64%

57%


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1     Adjusted profit before tax and adjusted performance measures exclude the impact of goodwill impairment of £nil (H2 11: £123m, H1 11: £nil), provision for interest rate hedging products redress of £450m (H2 11: £nil, H1 11: £nil) and loss on disposal of £nil (H2 11: £9m, H1 11: £64m).



Results by Business

Corporate Banking





  





Half Year Ended 30 June 2012

UK

Europe

RoW

Total

Income Statement Information

£m

£m

£m

£m

Income

1,150 

173 

204 

1,527 

Credit impairment charges and other provisions

(146)

(277)

(2)

(425)

Operating expenses (excluding provision for interest rate hedging products redress)

(515)

(76)

(163)

(754)

Provision for interest rate hedging products redress

(450)

(450)

Other net expense

(2)

(2)

Profit/(loss) before tax

37 

(180)

39 

(104)

  





Adjusted profit/(loss) before tax

487 

(180)

39 

346 

  





Balance Sheet Information





Loans and advances to customers at amortised cost

£51.1bn

£7.5bn

£5.4bn

£64.0bn

Loans and advances to customers at fair value

£17.2bn

£0.1bn

£17.3bn

Customer deposits

£72.6bn

£5.6bn

£10.3bn

£88.5bn

Risk weighted assets

£49.9bn

£11.5bn

£7.9bn

£69.3bn

 

  





Half Year Ended 31 December 2011





Income Statement Information





Income

1,064 

240 

236 

1,540 

Credit impairment charges and other provisions

(192)

(288)

(55)

(535)

Operating expenses (excluding goodwill impairment)

(541)

(117)

(200)

(858)

Goodwill impairment

(123)

(123)

Other net income/(expense)

(9)

(6)

Profit/(loss) before tax

334 

(288)

(28)

18 

  





Adjusted profit/(loss) before tax

334 

(165)

(19)

150 

  





Balance Sheet Information





Loans and advances to customers at amortised cost

£50.6bn

£11.2bn

£5.1bn

£66.9bn

Loans and advances to customers at fair value

£17.2bn

£17.2bn

Customer deposits

£69.9bn

£5.6bn

£9.7bn

£85.2bn

Risk weighted assets

£49.9bn

£15.4bn

£7.5bn

£72.8bn

 

  





Half Year Ended 30 June 2011





Income Statement Information





Income

1,135 

200 

233 

1,568 

Credit impairment charges and other provisions

(163)

(428)

(21)

(612)

Operating expenses

(558)

(131)

(212)

(901)

Other net expense

(1)

(64)

(65)

Profit/(loss) before tax

413 

(359)

(64)

(10)

  





Adjusted profit/(loss) before tax

413 

(359)

54 

  





Balance Sheet Information





Loans and advances to customers at amortised cost

£48.9bn

£12.5bn

£4.8bn

£66.2bn

Loans and advances to customers at fair value

£14.4bn

£14.4bn

Customer deposits

£67.5bn

£7.2bn

£9.8bn

£84.5bn

Risk weighted assets

£47.1bn

£17.2bn

£7.7bn

£72.0bn



Results by Business

Corporate Banking

 

Income Statement - H1 12 compared to H1 11

- Adjusted profit before tax improved £292m to £346m, primarily driven by improved credit impairment in Europe and improved operating expenses. Loss before tax was £104m (2011: £10m) including a gain of £68m (2011: gain of £21m) in the net valuation of fair value loans and a £450m provision for interest rate hedging products redress

-    UK adjusted profit before tax improved 18% to £487m reflecting improved operating expenses and credit impairment. UK profit before tax decreased £376m to £37m after £450m provision for interest rate hedging products redress

-    Europe loss before tax improved £179m to £180m driven by improved credit impairment charges in Spain and improved operating expenses, partially offset by non-recurring income from exited businesses

-    Rest of the World profit before tax improved £103m to £39m including a prior year loss on disposal of Barclays Bank Russia (BBR). Excluding this item, Rest of the World profit before tax improved £39m

- Net interest income decreased 6% to £957m reflecting increased funding rates and non-recurring income from exited businesses

- Credit impairment charges reduced 31% to £425m. Overall loan loss rates improved to 123bps (2011: 173bps)

-    Impairment charges in Spain reduced £115m to £184m, primarily as a result of ongoing action to reduce exposure within the property and construction sector

- Operating expenses excluding a £450m provision for interest rate hedging products redress improved 16% to £754m,  principally due to prior year restructuring including the exit of BBR. Adjusted cost to income ratio improved to 49% (2011: 57%)

- Adjusted return on average equity improved to 6.0% (2011: 0.6%). Return on average equity was negative 3.3% (2011: negative 1.2%)

Income Statement - Q2 12 compared to Q1 12

- Adjusted profit before tax decreased £92m to £127m including a loss of £10m (Q1 12: gain of £78m) in the net valuation of fair value loans. Excluding this item, adjusted profit before tax of £137m was broadly in line with the previous quarter

- Loss before tax decreased £542m to £323m after £450m provision for interest rate hedging products redress

Balance Sheet - 30 June 2012 compared to 31 December 2011

- Total assets down £3.4bn to £87.8bn driven by reduced balances in Europe

- Customer deposits increased 4% to £88.5bn with increased balances in the UK

- Risk weighted assets decreased 5% to £69.3bn reflecting lower net exposures in Europe



Results by Business

 

 


Results by Business

Wealth and Investment Management









  

Half Year Ended

Half Year Ended

Half Year Ended


Income Statement Information


30.06.12



31.12.11


30.06.11

YoY

  


£m



£m


£m

% Change

Net interest income


419 



429 


369 

14 

Net fee and commission income


467 



473 


470 

(1)

Net trading income/(expense)




(4)



Net investment income






Other income/(expense)




(2)



Total income


892 



896 


848 

Credit impairment charges and other provisions


(19)



(22)


(19)

Net operating income


873 



874 


829 

  









Operating expenses


(751)



(753)


(740)

  









Other net expense


(1)



(2)


(1)


Profit before tax


121 



119 


88 

38 

  









Adjusted profit before tax


121 



119 


88 

38 

 

  









Balance Sheet Information and Key Facts









Loans and advances to customers at amortised cost


£19.8bn



£18.8bn


£17.6bn


Customer deposits


£50.0bn



£46.5bn


£44.4bn


Total assets


£22.2bn



£20.9bn


£19.8bn


Risk weighted assets


£14.0bn



£13.1bn


£12.7bn


Client assets


£176.1bn



£164.2bn


£169.5bn


Number of employees (full time equivalent)


8,000 



8,100 


8,400 


 

  









  

Adjusted


Statutory


Performance Measures

30.06.12

31.12.11

30.06.11


30.06.12

31.12.11

30.06.11


Return on average equity

10.0%

12.2%

9.6%


10.0%

12.2%

9.6%


Return on average risk weighted assets

1.5%

1.7%

1.3%


1.5%

1.7%

1.3%


Cost: income ratio

84%

84%

87%


84%

84%

87%


Loan loss rate (bps)

19 

23 

21 


19 

23 

21 


  









  









  









  









  









  









  









  











 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1        H2 11 and H1 11 comparatives have been revised to reflect the transfer of 400 and 500 respectively of dedicated shared service employees to Wealth and Investment Management.

 

 



Results by Business

Wealth and Investment Management

Income Statement - H1 12 compared to H1 11

- Profit before tax increased 38% to £121m

-    Wealth and Investment Management continues to execute its strategic investment programme with a focus on building productive capacity and delivering a step change in the client experience

-    Delivery against these objectives has been strong over the last two and a half years, with significant front office hiring and material improvements to technology platforms driving efficiencies as well as improved service to clients

- Income improved 5% to £892m primarily driven by an increase in the High Net Worth businesses:

-    Net interest income grew 14% to £419m. Net interest margin increased to 125bps from 122bps with average loans up £2.3bn to £19.2bn and average customer deposits up £4.3bn to £48.2bn. The growth in deposits was primarily driven by an enhanced banking proposition in the High Net Worth businesses and a shift in client investment appetite towards holding cash in volatile market conditions

-    Net fee and commission income decreased 1% to £467m due to reduced client activity in challenging market conditions

- Operating expenses increased 1% to £751m as the continued cost of the strategic investment programme was partially offset by additional cost control initiatives

- Return on average equity increased to 10.0% (2011: 9.6%)

Income Statement - Q2 12 compared to Q1 12

- Profit before tax remained stable at £61m (Q1 12: £60m)

Balance Sheet - 30 June 2012 compared to 31 December 2011

- Customer deposits increased 8% to £50.0bn and loans and advances to customers increased 5% to £19.8bn driven by growth in the High Net Worth businesses

- Client assets increased to £176.1bn (2011: £164.2bn) driven by net new assets in the High Net Worth businesses offset by market, foreign exchange and other movements

- Risk weighted assets increased 7% to £14.0bn principally due to growth in lending balances


Results by Business

Head Office and Other Operations


  

Half Year Ended

Half Year Ended

Half Year Ended


Income Statement Information


30.06.12



31.12.11


30.06.11


  


£m



£m


£m


Adjusted total income/(expense) net of insurance claims


218 



(243)


20 


Own credit


(2,945)



2,619 


89 


Gains on debt buy-backs




1,130 



Gain/(loss) on disposal of investment in BlackRock, Inc.


227 




(58)


Total (expense)/income net of insurance claims


(2,500)



3,506 


51 


Credit impairment (charges)/release and other provisions


(5)





Impairment of investment in BlackRock, Inc.




(1,800)



Net operating (expense)/income


(2,505)



1,706 


52 


  









Operating expenses (excluding bank levy)


(425)



(259)


(204)


UK bank levy




(325)



Operating expenses


(425)



(584)


(204)


  









Other net income/(expense)


23 



(22)


(1)


(Loss)/profit before tax


(2,907)



1,100 


(153)


  









Adjusted loss before tax


(189)



(827)


(183)


 

  









Balance Sheet Information and Key Facts









Total assets


£35.0bn



£31.9bn


£41.9bn


Risk weighted assets


£2.7bn



£2.5bn


£1.7bn


Number of employees (full time equivalent)


1,700 



1,400 


1,500 


 

 

 

Income Statement - H1 12 compared to H1 11

- Adjusted loss before tax increased 3% to £189m

-    Income improved to £218m (2011: £20m), principally due to a one-time gain relating to hedges of employee share awards that were closed out during Q1 12

-    Operating expenses increased to £425m (2011: £204m) due to higher regulatory costs and a £97m charge relating to the allocation to Head Office and Other Operations of the £290m penalty arising from the industry wide investigation into the setting of interbank offered rates

- Statutory loss before tax increased to £2,907m (2011: £153m) reflecting an own credit charge of £2,945m (2011: gain of £89m), partially offset by the gain on sale of the strategic investment in Blackrock, Inc. of £227m (2011: £58m loss)

- The 2012 impact of the UK bank levy, which is calculated by reference to the Group's liabilities as at 31 December 2012, has not been reflected in these results in accordance with IFRS. The total cost for 2012, due to be recognised in the fourth quarter, is expected to be approximately £360m

Income Statement - Q2 12 compared to Q1 12

- Adjusted loss before tax of £272m (Q1 12: profit before tax £83m) principally reflects the non recurrence of gain on hedges of employee share awards that were closed out in Q1 12 and the penalty arising from the investigation into interbank offered rates recognised in Q2 12. Loss before tax improved to £370m (Q1 12: £2,537m), reflecting reduced own credit charges and the Q2 12 gain on sale of the investment BlackRock, Inc.

Balance Sheet - 30 June 2012 compared to 31 December 2011

- Total assets increased to £35.0bn (31 December 2011: £31.9bn) reflecting growth in the liquidity bond portfolio, partially offset by the sale of the strategic investment in Blackrock, Inc.

- Risk weighted assets increased 8% to £2.7bn

 

 

1        Includes net interest income of £98m (H2 11: expense of £950m; H1 11: expense of £15m).

2     Adjusted performance measures and profit before tax exclude the impact of £2,945m (2011: gain of £89m) own credit loss, £nil (2011: £1m loss) gains on acquisitions and disposals and £227m (2011: loss of £58m) gain on disposal of strategic investment in BlackRock, Inc.


Business Results by Quarter

UK RBB

Q212

Q112


Q411

Q311

Q211

Q111

  

£m

£m


£m

£m

£m

£m

Adjusted basis  








Total income net of insurance claims  

1,128 

1,077 


1,129 

1,273 

1,170 

1,084 

Credit impairment charges and other provisions  

(46)

(76)


(156)

(105)

(131)

(144)

Net operating income  

1,082 

1,001 


973 

1,168 

1,039 

940 

Operating expenses  

(671)

(666)


(752)

(675)

(622)

(653)

Other net income/(expense)

(1)


(1)

Adjusted profit before tax  

412 

334 


222 

494 

416 

288 

   








Adjusting items  








Provision for PPI redress  

(300)


(400)

Statutory profit before tax  

412 

34 


222 

494 

16 

288 

 

Europe RBB








Adjusted basis  








Total income net of insurance claims  

243 

243 


247 

375 

309 

295 

Credit impairment charges and other provisions  

(85)

(72)


(83)

(62)

(47)

(69)

Net operating income  

158 

171 


164 

313 

262 

226 

Operating expenses  

(211)

(217)


(291)

(263)

(368)

(289)

Other net income


Adjusted (loss)/profit before tax  

(49)

(43)


(125)

52 

(102)

(59)

   








Adjusting items  








Goodwill impairment  


(427)

Statutory (loss)/profit before tax  

(49)

(43)


(552)

52 

(102)

(59)

 

Africa RBB








Adjusted basis  








Total income net of insurance claims  

795 

830 


861 

940 

906 

864 

Credit impairment charges and other provisions  

(214)

(107)


(88)

(108)

(126)

(144)

Net operating income  

581 

723 


773 

832 

780 

720 

Operating expenses  

(485)

(548)


(505)

(613)

(586)

(575)

Other net income


Adjusted profit before tax  

97 

177 


269 

219 

195 

147 

   








Adjusting items  








Gains on acquisitions and disposals  


Statutory profit before tax  

97 

177 


269 

221 

195 

147 

 

Barclaycard








Adjusted basis  








Total income net of insurance claims  

1,036 

990 


983 

1,140 

1,012 

960 

Credit impairment charges and other provisions  

(228)

(232)


(271)

(340)

(344)

(304)

Net operating income  

808 

758 


712 

800 

668 

656 

Operating expenses  

(412)

(418)


(458)

(430)

(400)

(371)

Other net income


11 

Adjusted profit before tax  

404 

349 


259 

378 

275 

296 

   








Adjusting items  








Provision for PPI redress  


(600)

Goodwill impairment  


(47)

Statutory profit/(loss) before tax  

404 

349 


259 

378 

(372)

296 

  










Business Results by Quarter

Investment Bank

Q212

Q112


Q411

Q311

Q211

Q111

  

£m

£m


£m

£m

£m

£m

Adjusted and statutory basis  








Fixed Income, Currency and Commodities  

1,968 

2,396 


971 

1,438 

1,715 

2,201 

Equities and Prime Services  

423 

550 


305 

338 

563 

545 

Investment Banking  

501 

509 


506 

389 

520 

612 

Principal Investments  

140 


36 

89 

99 

Total income  

3,032 

3,464 


1,818 

2,254 

2,897 

3,366 

Credit impairment (charges)/releases and other provisions  

(248)

(75)


(90)

(114)

80 

31 

Net operating income  

2,784 

3,389 


1,728 

2,140 

2,977 

3,397 

Operating expenses  

(1,788)

(2,145)


(1,458)

(1,758)

(2,006)

(2,067)

Other net income/(expense)

22 


(3)

Adjusted profit before tax and profit before tax

1,002 

1,266 


267 

388 

977 

1,333 

 

Corporate Banking








Adjusted basis  








Total income net of insurance claims  

703 

824 


710 

830 

817 

751 

Credit impairment charges and other provisions  

(218)

(207)


(252)

(283)

(327)

(285)

Net operating income  

485 

617 


458 

547 

490 

466 

Operating expenses  

(357)

(397)


(422)

(436)

(459)

(442)

Other net (expense)/income

(1)

(1)


(3)

Adjusted profit before tax  

127 

219 


37 

113 

33 

21 

   








Adjusting items  








Goodwill impairment  


(123)

Provision for interest rate hedging products redress

(450)


Losses on disposal  


(9)

(64)

Statutory (loss)/profit before tax  

(323)

219 


(95)

113 

(31)

21 

 

Wealth and Investment Management








Adjusted and statutory basis  








Total income net of insurance claims  

441 

451 


449 

447 

426 

422 

Credit impairment charges and other provisions  

(12)

(7)


(10)

(12)

(9)

(10)

Net operating income  

429 

444 


439 

435 

417 

412 

Operating expenses  

(367)

(384)


(384)

(369)

(375)

(365)

Other net expenses

(1)


(1)

(1)

(1)

Adjusted profit before tax and profit before tax

61 

60 


54 

65 

42 

46 

  








 

Head Office and Other Operations








Adjusted basis  








Total (expense)/income net of insurance claims  

(41)

259 


15 

(258)

12 

Credit impairment (charges)/releases and other provisions  

(3)

(2)


(1)

(3)

Net operating (expense)/income  

(44)

257 


14 

(257)

12 

Operating expenses (excluding UK bank levy)  

(251)

(174)


(144)

(115)

(124)

(80)

UK bank levy  


(325)

Other net income

23 


Adjusted (loss)/profit before tax  

(272)

83 


(455)

(372)

(115)

(68)

   








Adjusting items  








Own credit  

(325)

(2,620)


(263)

2,882 

440 

(351)

Impairment and gain/(loss) on disposal of BlackRock investment

227 


(1,800)

(58)

Gains on debt buy-backs  


1,130 

(Losses)/gains on acquisitions and disposals  


(23)

(3)

Statutory (loss)/profit before tax  

(370)

(2,537)


389 

711 

264 

(417)


Performance Management

Returns and Equity by Business

Returns on average equity and average tangible equity are calculated using profit after tax and non-controlling interests for the period, divided by average allocated equity or tangible equity as appropriate. Average allocated equity has been calculated as 10% of average risk weighted assets for each business, adjusted for capital deductions, including goodwill and intangible assets, reflecting the assumptions the Group uses for capital planning purposes. The higher capital level currently held, reflecting as at 30 June 2012 Core Tier 1 capital ratio of 10.9%, is allocated to Head Office and Other Operations. Average allocated tangible equity is calculated using the same method but excludes goodwill and intangible assets.

 

  

Adjusted1

 

Statutory

  

Half Year Ended

Half Year Ended

Half Year Ended


Half Year Ended

Half Year Ended

Half Year Ended

Return on Average Equity

30.06.12

31.12.11

30.06.11 </