Half Yearly Report

RNS Number : 5644Q

Barclays PLC

05 August 2010

 



Barclays PLC

Interim Results Announcement

30th June 2010

BARCLAYS PLC, 1 CHURCHILL PLACE, LONDON, E14 5HP, UNITED KINGDOM. TELEPHONE: [phone]. COMPANY NO. 48839

Unless otherwise stated, the income statement analyses compare the six months to 30th June 2010 to the corresponding six months of 2009. Balance sheet comparisons, unless otherwise stated, relate to the corresponding position at 31st December 2009. Unless otherwise stated, all disclosed figures relate to continuing operations.

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 glossary on pages 115 to 121.

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 for the period, and having regard to the BBA Disclosure Code, the information provided in this report goes beyond the minimum levels required by accounting standards and listing rules for interim reporting. Barclays continues to develop its financial reporting considering best practice and feedback from investors, regulators and other stakeholders on the disclosures that investors would find most useful.

The information in this announcement, which was approved by the Board of Directors on 4th August 2010, does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31st December 2009, 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.

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, liquidity, 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 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.

Performance Highlights

	Half Year Ended	Half Year Ended
Group Results	30.06.10	30.06.09
	£m	£m	% Change
Total income net of insurance claims	16,581	15,318	8
Impairment charges and other credit provisions	(3,080)	(4,556)	(32)
Net income	13,501	10,762	25
Operating expenses	(9,720)	(8,051)	21
Profit before tax	3,947	2,745	44
Own credit (gain)/charge	(851)	893	nm
Gains on acquisitions and profits on disposals of subsidiaries, associates and JVs	(133)	(21)	nm
Gains on debt buy-backs	-	(1,192)	nm
Adjusted profit before tax	2,963	2,425	22
Profit after tax	2,921	2,213	32
Total profit attributable to equity holders of the parent	2,431	1,888	29
Basic earnings per share from continuing operations	20.9p	16.4p	27
Diluted earnings per share from continuing operations	19.7p	16.0p	23
Dividend per share	2.0p	0.0p	nm
Performance Measures
Return on average shareholders' equity	9.8%	9.4%	nm
Return on average tangible shareholders' equity	12.0%	13.0%	nm
Return on average risk weighted assets	1.5%	1.0%	nm
Cost:income ratio	59%	53%	nm
Cost:net income ratio	72%	75%	nm
Economic loss	(612)	(127)	nm
Capital and Balance Sheet	30.06.10	31.12.09	% Change
Core Tier 1 ratio	10.0%	10.0%	nm
Tier 1 ratio	13.2%	13.0%	nm
Total shareholders' equity	£61.1bn	£58.5bn	4
Total assets	£1,587bn	£1,379bn	15
Risk weighted assets	£395bn	£383bn	3
Adjusted gross leverage	20x	20x	nm
Group liquidity pool	£160bn	£127bn	26
Group loan:deposit ratio	124%	130%	nm
Net asset value per share	412p	414p	nm
Net tangible asset value per share	338p	337p	nm
Number of employees (full time equivalent)	146,800	144,200	2
Business Segment Results Profit Before Tax	30.06.10	30.06.09	% Change
UK Retail Banking	504	313	61
Barclaycard	317	375	(15)
Western Europe Retail Banking	10	92	(89)
Barclays Africa	70	65	8
Barclays Capital	3,400	1,047	225
Barclays Corporate
- UK & Ireland	379	369	3
- Continental Europe	(524)	(27)	nm
- New Markets	(232)	(190)	(22)
Barclays Wealth	95	75	27
Investment Management	31	37	(16)
Absa	318	259	23
Head Office Functions	(421)	330	nm

"Against the backdrop of subdued economic and market activity and the sovereign debt storm of the second quarter, we have delivered good growth in income and profits during the first half of the year, and, at the same time as lending a further £18bn to UK households and businesses, we have kept the regulatory balance sheet under tight control. The twin benefits of a broadly based set of banking activities - both by geography and business line - and sound risk management lie behind these results.

We recognise our wider social responsibility as an enabler of economic growth and prosperity, and our actions are - and will continue to be - informed by this duty. The period ahead will be one of great importance to the future of the industry as the final shape of the reform agenda starts to solidify. We will engage fully in that dialogue, whilst keeping our eyes firmly on the needs and interests of our customers and clients."

John Varley, Chief Executive

- Group profit before tax of £3,947m, up 44%

-    Income of £16,581m, up 8%

-    Impairment charges of £3,080m, down 32%, giving a loan loss rate of 118bps (full year 2009: 156bps), with a sharp decrease in impairment at Barclays Capital partially offset by an increase in impairment in Barclays Corporate in Spain

-    Net income of £13,501m, up 25%

-    Operating expenses of £9,720m, up 21%, reflecting continued investment in the build-out of Barclays Capital and Barclays Wealth, increased regulatory costs, increased charges relating to prior year compensation deferrals, adverse impact of currency exchange rate movements and restructuring charges in Barclays Corporate

-    Positive net income:cost "jaws" of 4%

-    Returns on average shareholders' equity of 9.8% (2009: 9.4%), on average tangible shareholders' equity of 12.0% (2009: 13.0%) and on average risk weighted assets of 1.5% (2009: 1.0%)

- Key measures of Group's financial strength:

-    Core Tier 1 ratio of 10.0% (31st December 2009: 10.0%) and Tier 1 capital ratio of 13.2% (31st December 2009: 13.0%)

-    Adjusted gross leverage of 20x (31st December 2009: 20x)

-    Group liquidity pool up £33bn to £160bn (31st December 2009: £127bn)

- Barclays Capital profit before tax more than trebled to £3,400m (2009: £1,047m)

-    Includes gain of £851m on own credit (2009: loss of £893m)

-    Excluding effect of own credit, profit before tax of £2,549m (2009: £1,940m)

- Global Retail Banking (GRB) profit before tax of £901m (2009: £845m)

-    Income of £5,134m (2009: £5,207m), reflecting weak economic growth and further margin compression

-    Impairment charges of £1,518m (2009: £1,647m)

-    Net income of £3,616m (2009: £3,560m)

- Absa profit before tax of £318m (2009: £259m), largely reflecting appreciation in the average value of the Rand against Sterling

- Barclays Corporate loss of £377m (2009: profit of £152m)

-    Profit before tax of £379m (2009: £369m) in UK & Ireland operation

-    More than offset by losses of £756m (2009: £217m) within Continental Europe and New Markets, reflecting an increase in corporate impairment in Spain of £433m and restructuring costs in New Markets of £93m

- Gross new lending to UK households and businesses of £18bn during the first half, plus a further £7bn through the acquisition of Standard Life Bank

- Second interim dividend of 1.0p per share, making 2.0p for the half year

Group Chief Executive's Review   

Summary

In the first half of 2010 we performed strongly against most parts of the Strategic Framework we use to manage the Group. We generated pre-tax profits of £3.9bn, up 44% (or 22% on an adjusted basis), and increased total income by 8%. We did so against a backdrop of slow growth in most of the economies and markets in which we operate, and some fragility of sentiment, particularly in the second quarter.

Our job is to supply services and products that are relevant and helpful to our customers, and thereby generate good returns for shareholders. Our return on average shareholders' equity improved to 9.8%, albeit that this figure is still below our cost of equity and below where it needs to be. The post-tax return on our regulatory balance sheet improved significantly to 1.5%.

As we seek to increase returns, we are carefully applying our capital resources to those businesses capable of generating the highest returns on a risk-adjusted basis. With a Core Tier 1 ratio of 10% and surplus liquidity of £160bn, together with an adjusted gross leverage ratio of 20x our Tier 1 capital, our balance sheet is well positioned to accommodate further economic uncertainty. We also believe that we are appropriately positioned to address the prudential changes that our regulators will require over the coming years.

We have continued to improve our overall loan-to-deposit ratio and we have adjusted internal incentives through our internal Funds Transfer Pricing structure to reward the attraction of long term deposits. During the first half, we raised term financing in the wholesale markets well in excess of the wholesale term funding which matures over the whole of 2010. We will continue to pre-fund forthcoming wholesale needs given the overall high demand likely to be placed on the wholesale markets by the volumes of funding required by a number of banks as previous government-supported programmes expire. We believe that the ability to fund competitively will be a key differentiator of bank performance in the months and years ahead, and we will manage Barclays in a manner that ensures that we continue to be advantaged in terms of access to multiple funding sources and overall cost of funds.

91 banks across the European Union have recently been exposed to stress tests conducted by the Committee of European Banking Supervisors (CEBS). After application of CEBS-defined adverse stress scenarios and additional sovereign shock across 30 European markets, Barclays Tier 1 ratio was projected to be 13.7% at the end of 2011, which was higher than all the European members of our major bank peer group. We regularly conduct our own internal stress testing as part of our overall risk management frameworks, based on adverse economic shock and adverse conditions in financial markets. We have also been the subject of annual external stress tests by the UK's Financial Services Authority (FSA). In each stress test, whether internal or external, Barclays has demonstrated that its capital position and resources are sufficient to meet its regulatory capital requirements.

Our cost:net income ratio improved from 75% to 72% for the first half of 2010 as increases in overall levels of operating expenses were more than offset by increases in net income. Although pre-impairment income did not rise as much as expenses, we monitor and maintain our flexibility to reduce costs by ensuring that enough of our cost base is discretionary, enabling us to vary expenditure should the income environment require this. We have been able to take advantage of opportunities from market dislocation and strategic refocusing of a number of competitors by continuing to build out a number of our underlying businesses on a "pay-as-you-go" basis, with costs of build-out borne by the businesses as ongoing operating expenses.

When reviewing our full year 2009 performance, I said that our dividend policy going forward would be conservative (because of the uncertain outlook for regulation) but progressive relative to a total pro forma comparable dividend for 2009 of 4.5p per share. We have declared a second interim dividend for the second quarter of 2010 of 1p, on top of the first interim dividend of 1p already paid to shareholders in respect of our first quarter's performance. We will review our dividend policy regularly, not only in the light of our own performance but also reflecting the evolution of the regulatory environment. As the regulatory outlook becomes clearer, and provided that the economic environment does not worsen, I would expect our pay-out ratio to increase over time, though not to the 50% or so dividend distribution at which our policy operated before the onset of the credit crisis.

Before describing the progress we are making within the context of the Strategic Framework I outlined at the beginning of 2010, a comment on our key output goal, which is to produce top quartile total shareholder returns (TSR) over time. We delivered TSR over the 18 months to 30th June 2010 of 78%, putting us at the top of the global peer group of 11 other universal banks based in the UK, Continental Europe and the US (the TSR Peer Group)1 against which we measure our TSR performance for these purposes. We ranked 4th out of 12 over the six months to the same date, and 7th out of 12 over three and five years. We will continue to monitor our performance on a medium term basis against this measure as we believe that it is the most visible and relevant external benchmark to our shareholders.

2010 Strategic Framework

At the beginning of the year I talked about our Strategic Framework and I identified aspects of it which I thought would be particularly relevant to our performance in 2010. In this section of my half year report, I review the areas identified at that time - responsible citizenship, soundness of financial and organisational footing, dividends, geographical and business line diversification, and profitability.

1.    I said that we would act as responsible corporate citizens by continuing to play our part as a source of economic growth and job creation in the countries in which we operate. We want to do this in a manner consistent with our obligations both to our shareholders to deliver returns, and to our regulators to run our businesses prudently. In this context we reported that our gross new lending to UK businesses and households totalled over £18bn in the first half. The number of people we employ around the world stood at nearly 147,000 by the end of June 2010. In the UK, our MoneySkills programme targets economically and socially disadvantaged young people and offers them training in the basic financial skills necessary to live independent and successful lives. We attach great importance to responsible banking in all our markets. This manifests itself in Africa through our investment in social infrastructure and the schemes we operate to encourage financial inclusion, all with the goal of building sustainable markets with long-term growth potential. We must help our customers and clients wherever we can as they cope with the aftermath of the economic downturn. We can do this either directly, by working with indebted clients to help them reschedule, or indirectly, by continued active support, for example, of the Citizens Advice Bureau or the National Debt Line. And we will engage constructively with the UK Government as its Banking Commission looks at the structure of the banking market in the UK with a view to making it safer and more competitive.

2.    I said that we would maintain a sound financial and organisational footing. The Summary above sets out the headline financial figures for the half year.

       Our organisational footing will, of course, be reviewed by the Banking Commission. We have a universal (i.e. broadly based) banking model, and we believe in it for three reasons. First, we believe that the services, products and capabilities within Barclays enable us, by their compositional mix, to respond best to the needs of our customers. What we have created in Barclays is in direct response to what our customers tell us they require. Second, the history of banking in the last 100 years reveals a broadly based structure to be the banking vehicle most resilient to extreme climates or shocks. Third, our own history in Barclays over the last three years - which have constituted a stress test of all banking models - reveals the model to be not a risk aggregator, but a risk diversifier, best illustrated both by the geographical and business line diversity of our Group and by the uncorrelated and asymmetrical income and risk cycles of investment banking on the one hand and retail banking on the other. The risk mitigation provided by our structure, which results from co-existent and mutually diversifying businesses, and from our own risk management techniques, lies behind our consistently profitable performance over the credit crisis. Since the crisis began in July 2007, the total pre tax profits posted by Barclays amount to £25bn in aggregate.

       Our view is that if you want to see clearly revealed the ability of narrow banks to cope with extreme conditions, you have to look no further than the upheaval now visiting some of the narrow bank communities in mainland Europe.

1     Peer group: Banco Santander, Grupo BBVA, BNP Paribas, Citigroup, Deutsche Bank, HSBC, JP Morgan Chase & Co., Lloyds Banking Group, RBS, UBS and UniCredit Group.

Group Chief Executive's Review   

3.    I have commented above on dividend payments and on the allocation of capital. Our Strategic Framework expresses, at its core, the view that medium term growth is best pursued through an internationally and operationally diversified business. We have made quiet but good progress towards this objective these last three years.

       In the context of geographical diversity, approximately two-thirds of our revenue and profits were generated outside the UK in the first half of 2010. We intend to continue to increase the percentage of our profits that come from outside our home market. It is a Group of this future geographical mix that we believe will offer the best platform from which to deliver increasing risk-adjusted returns and medium term growth potential to our shareholders.

4.    The final component of our Strategic Framework for 2010 is a requirement that we deliver another year of substantial profitability. Our performance in the first half of 2010 establishes a firm foundation from which to deliver that over the full year.

Key Objectives

Regular readers of Barclays full year and semi annual reviews will know that we have been managing Barclays against three principal objectives - staying close to customers and clients, managing our risks, and maintaining strategic momentum - since the credit crisis began in 2007. I want to comment on our performance in each area.

1.          Staying close to our customers and clients

At the heart of our ability to generate profits and returns for our shareholders throughout the credit crisis has been our income performance. Customers have choice. Income is driven and sustained by the strength of our relationships with the customers and clients who choose to do business with us. Our performance in the first half was executed in circumstances of relatively slow economic growth as the major economies in which we do business emerged from recession. Group income grew by 8%. It was up considerably in Barclays Capital; down in Barclays Corporate; up modestly in Wealth and Absa; and flat in GRB.

The benefit of our underlying income strength is shown by the net income that we are reporting today, up 25%. If the economic cycle improves, and our impairment charges with it, so the scale of the income we are generating should be increasingly felt in greater profit.

The income line in Barclays Capital is continuing to benefit from the Lehman transaction. The source of net income growth is broadly-based. We are beginning to see the benefits of the investments we have been making through 2009 in Equities and Investment Banking. Over time, we would expect to see the sources of income within Barclays Capital more broadly diversified. Fixed Income, Currency and Commodities (FICC) accounted for 75% of top-line income at Barclays Capital in 2008 and 76% in 2009. In the first half of 2010, these revenues were 69% of the total without our market shares in FICC businesses declining. Barclays Capital operates a client-focused, flow model. Like any investment banking business, it is not immune to the economic cycle, but we are building an enterprise where the key determinant of performance is client activity levels.

In Barclays Wealth, our income performance in the first half started to show the benefit of the investment we have made in the business over the past years. We now have a broad investment programme underway, which we intend to accelerate in the second half of 2010 as we build out the international platforms and invest in people, technology and infrastructure.

In UK Retail Banking, income was broadly flat but average customer asset balances grew 12% reflecting the acquisition of Standard Life Bank's mortgage book and good growth in our Home Finance mortgage balances. Our share by value of gross advances over the first half in UK mortgages was 14%. The number of active Barclays savings accounts increased by over 1 million to 14.1 million by comparison to the equivalent at the end of June 2009 and total average customer deposit balances increased 11%.

Barclaycard's income fell slightly, principally as a result of the impact of regulatory changes in the US. But overall numbers of Barclaycard customers increased by around 400,000 to 21.6 million globally over the half year and total outstanding balances declined only marginally despite the propensity of many consumers to pay down unsecured debt in the current environment.

Group Chief Executive's Review   

Income was down in Western Europe Retail Banking but our customer numbers in this business have increased to 2.7 million, up about 30% over the end of the first half of 2009. Whilst the economic backdrop in Southern Europe is challenging, we are working hard to achieve scale in our target markets of Spain, Portugal and the 10 largest cities in Italy. Our objective here is to convert the investment that we have made over the last three years in broadening products and services and developing distribution channels (which has significantly increased our average annual income run rate) into sustainable profit.

Barclays Africa put in a solid performance in the first half, with income rising 10% and profits rising 8%. Meanwhile, profits in our South African subsidiary Absa Group Limited rose 18% in local currency and 41% in Sterling, helped by the relative strength of the Rand against our home currency. These two businesses give us broad coverage across the continent of Africa, where we look after approximately 14 million customers.

In Barclays Corporate's UK & Ireland business, there was solid growth in our deposit base and the overall corporate customer franchise remains very strong. We are restructuring our New Markets and Continental Europe businesses here, both of which were loss-making in the half, as we manage through significantly higher loan loss severity assumptions for our property and construction exposure in Spain.

Finally, in the area of staying close to customers and clients, a comment on lending. One of the most tangible ways in which we can demonstrate our commitment to customers and clients is to support them through lending. In 2009, we committed to making an additional £11bn of credit available to the UK economy but the outturn for the year was an additional £35bn. We have continued that strong trend in the first half of 2010, lending an additional £18bn to UK businesses and households, despite widespread evidence of softer demand for credit.

2.          Managing our risks

The list of stakeholders who want to see good risk management in Barclays is long: it includes customers, clients, creditors and shareholders, of course; but also our Board, our regulators, and the governments in whose economies we do business. Effective risk management is central to our ability to support the economy through loan growth and employment, to pay tax, and to pay dividends. And if we are to support growth at a stage in the economic cycle when government spending is reducing and the private sector is required to pick up the baton, we have to be footsure in managing risk.

I want here to address one important issue at the heart of the current debate about how to make the financial system safer. If banking were to become risk free, then assuredly it would be socially useless. Our job is to help our customers take appropriate risk - that might be the risk of listing a company on a stock exchange and raising new capital; or it might be the risk of borrowing for university education.

Of course, we must help make the system safer so that governments, economies and ultimately taxpayers are not faced with the prospect of having to bail banks out again. We should not, however, lose sight of the fact that banks must take risk in order to act as a catalyst of economic activity. At the heart of a bank's risk-taking lies maturity transformation - which is acting as the custodian of cash placed with us on a short term basis by depositors and lending it out on a longer term basis to borrowers to enable them to consume or invest. If we try to have risk free banks by creating new rules for capital, liquidity and funding which substantially constrain risk taking, we will surely have banks that cannot perform their key role of facilitating economic activity. The goal of regulatory reform should not be to turn banks into riskless utilities unless governments (that means taxpayers) are prepared to be the suppliers of credit to households and businesses. A healthy, privately capitalised and privately funded banking system is a vital component in the machinery of all strong modern economies.

I do, however, believe that banks should only be allowed to take the risk necessary to fulfil their economic purpose in the economy within a new framework which combines sensibly calibrated capital, leverage and liquidity requirements, good brand governance, strong regulatory oversight and fit-for-purpose risk management practices.

Our risk management record through the credit crisis has been underpinned by the universal banking model, which enables us to diversify our risk across different markets, geographies and economic and political cycles.

It is risk management, overseen by strong macro and micro prudential regulatory supervision, that allows banks to fulfil, safely, their core functions of the safe storage of deposits and the giving of investment advice, payments and money transmission lending and maturity transformation, and the provision of underwriting and liquidity in the debt, equity and derivative capital markets. These activities can safely co-exist in a single banking group such as Barclays provided that the appropriate risk management skills and governance structures are in place.

Group Chief Executive's Review   

We support the development of recovery and resolution plans as a further means of reducing the probability and impact of potential bank failure. We are currently closely engaged with the FSA on their pilot project to take this forward and see this as an important and appropriate part of our overall risk management framework.

There is a multitude of proposals, bills, regulations, acts, levies and charges that is being debated and implemented to make banks and the financial system safer. We will need to accommodate the changes that are finally implemented and are working hard with the authorities to ensure as much consistency as possible internationally. A broadly level playing field on international regulation is vital if a robust financial services industry can continue to thrive in the United Kingdom - it will only thrive if it can compete on broadly equal terms.

3.          Maintaining strategic momentum

Our profit performance has afforded us the ability to develop our businesses on a "pay-as-you-go" basis, with investment costs being treated as ongoing operating expenses and absorbed through the income statement.

In Barclays Capital, we have continued to develop our sales, origination, trading and research functions. We will pace further investment in line with market conditions. We have flexibility in the cost base; we are benefiting from reduced credit market write downs and impairment, and are increasing net income notwithstanding the continued spend on the development of our underlying platforms.

In Barclays Wealth, our strategic investment programme to invest £350m in people and technology, is under way.

In Barclays Corporate, we are restructuring the business in New Markets and will take a charge of approximately £100m this year in this context. We expect a strong, well integrated regional (not global) corporate bank to emerge from this work offering world class cash, trade, credit and hedging capabilities in Europe, Africa and certain Asian markets to both larger local corporates and to subsidiaries of global multinationals, with a strongly integrated investment banking product and advisory offering. Credit conditions have worsened in our corporate business in Spain resulting in much higher impairment provisions, particularly against our property and construction sector exposures. Our Spanish business remains an important part of an overall well diversified global lending portfolio; and I am confident about the medium term prospects for the Spanish economy and its attractiveness as a banking market for Barclays.

At our GRB investor day six weeks ago, we reported to you in detail on the progress we have made since we set up GRB in November of last year. We have set four key goals for the business as a whole: strong profit growth; improved loan to deposit ratios; business line depth not breadth; and the generation of net equity. Good progress is being made against each of these. The new GRB management team has laid out its strategy to deepen our mass consumer platforms in existing markets; to grow our mass affluent presence; to deliver better targeted service to the SME clients GRB serves utilising all available channels but, in particular, through face-to-face relationships with the local bank managers in our branch network; and to expand the range of payment products we offer both through Barclaycard and through the retail banking platforms we operate in individual markets. Overlaying all of this is a fundamental belief in the need to build strong, personal and durable relationships with our customers by putting service of them at the centre of everything we do. We believe that our "Lives Made Much Easier" vision will help us to achieve not only our financial goals but also fulfil our social and regulatory responsibilities.

Within UK Retail Banking, we are benefiting from customer satisfaction ratings at the top of our peer group. We are continuing to invest in alternative channels including branch network refurbishment and in Barclays.mobi, our mobile phone offering. We have successfully acquired Standard Life Bank. We are directing a lot of effort at increasing Premier customer numbers.

At Barclaycard, we are pleased with continued diversification of this business by product and geography. We now have strong and material card platforms in the US, Germany, Scandinavia, South Africa and through Western Europe Retail Banking in Southern Europe. We are developing innovative payment products: for example, 8 million of the 9 million contactless cards in the UK are either issued by Barclaycard or Barclays debit cards. Barclaycard's new loyalty programme, Freedom, is showing encouraging early results. In total we have around 50 new payment innovations at various stages of early development, some of which we would expect to bring to market.

In Western Europe Retail Banking, we have been able to add 60 distribution points in the first half, 45 of them in Italy. We are seeing strong results from the CNP life and pension joint venture announced last year with financial results at the upper end of the JV's business plan.

Group Chief Executive's Review   

In Barclays Africa, our market positions are strong in most markets. We see significant incremental opportunity within our existing markets by working more closely with Absa on mutual clients; with Absa Capital, Absa Card and Absa Wealth in their respective areas of expertise; and with Barclays Corporate in serving the needs of the local subsidiaries of global multi-national corporations.

Absa is performing well in a difficult economic climate, and is increasingly integrated across the Barclays network. Absa is a core source of competitive strength for Barclays in its goal to be the most complete pan-African bank for wholesale and institutional clients.

Priorities, Goals and Strategic Framework

I send my thanks, at this half year stage, to the 147,000 employees who dedicate their working lives to our business objectives daily. Our priorities and goals for the rest of 2010 remain unchanged. We will continue to work hard to apply the resources of the Group to the strategic, operational and regulatory opportunities and challenges ahead so that we can meet the expectations of our owners as we serve our customers and clients.

John Varley, Group Chief Executive

Group Finance Director's Review

Group Performance

Barclays delivered profit before tax of £3,947m in the first half of 2010, an increase of 44% on 2009. Excluding movements on own credit, gains on acquisitions and gains on debt buy-backs, Group profit before tax increased by 22% to £2,963m from £2,425m.

Income increased 8% to £16,581m (2009: £15,318m). Barclays Capital reported a 30% increase in total income to £7,912m (2009: £6,089m). This reflected a substantial reduction in losses taken through income relating to credit market exposures which fell to £65m (2009: £3,507m) and a gain relating to own credit of £851m (2009: loss of £893m). Top-line income at Barclays Capital, which excludes these items, declined by 32% in the first half of 2010 to £7,126m relative to the exceptionally strong levels seen in 2009 and by 15% in the second quarter of 2010 to £3,281m relative to the first quarter of 2010 as overall activity levels slowed. GRB income declined by 1% to £5,134m, reflecting slow economic growth and further net interest income compression. Income at Absa increased 14% to £1,379m (2009: £1,210m).

Impairment charges across the Group against loans and advances, available for sale assets and reverse repurchase agreements improved 32% to £3,080m (2009: £4,556m). This reduction was achieved in spite of an increase of £433m in impairment on the Barclays Corporate loan book in Spain. Impairment charges as a proportion of Group loans and advances as at 30th June 2010 improved to 118 bps, compared to 156 bps for the full year 2009.

Net income for the Group after impairment charges increased 25% to £13,501m (2009: £10,762m) with a particularly strong increase at Barclays Capital of 80% to £7,603m (2009: £4,215m).

As a result, the Group's cost:net income ratio improved from 75% to 72%, with operating expenses up £1,669m to £9,720m, a 21% increase compared to the 25% increase in net income. Barclays Capital accounted for £1,037m of this increase, reflecting investment in the business across our sales, origination, trading and research functions, investment in technology and infrastructure, and increased charges relating to prior year compensation deferrals. Operating expenses increased in Head Office by £198m, principally from a provision in relation to the possible resolution of a review of Barclays compliance with US economic sanctions legislation. Expenses in Absa increased £127m, driven by the appreciation in the average value of the Rand against Sterling, and in Barclays Corporate growth in expenses in New Markets reflects restructuring charges of £93m. As a result, the Group's cost:income ratio increased to 59% (2009: 53%). The compensation:income ratio for Barclays Capital was 37% compared to 38% for the full year 2009.

Business Performance - Global Retail Banking

GRB comprises UK Retail Banking, Barclaycard, Western Europe Retail Banking and Barclays Africa. Global Retail Banking profit before tax increased 7% to £901m (2009: £845m) and included £129m of gains on the acquisitions of Standard Life Bank in the UK and the Citigroup card business in Italy.

Income declined 1% to £5,134m (2009: £5,207m) as a result of a 26bps decline in the net interest margin to 223bps as well as lower fees and commissions, partly offset by business growth. The decline in the net interest margin was driven by the continued low interest rate environment and competition for deposits, which was partially offset by the expansion of underlying asset margins. The impact of the new internal Funds Transfer Pricing mechanism (see pages 84 for details), whilst broadly neutral in its effect on the net interest margin across GRB, resulted in relatively higher liability margins and lower asset margins.

Impairment charges fell by 8% resulting in a 32bps improvement in the loan loss rate to 159bps demonstrating the relatively conservative positioning of GRB's asset mix and some improvements in economic conditions. Costs increased by 5% to £2,866m (2009: £2,739m) driven by the impact of acquisitions in the second half of 2009 and the first half of 2010, as well as higher ongoing pension costs. The first half of 2010 also reflected the benefit of a £146m pension credit resulting from amendments to the treatment of minimum defined benefits.

UK Retail Banking (UKRB) profit before tax increased 61% to £504m (2009: £313m) including a £100m gain on the acquisition of Standard Life Bank and lower impairment charges, partially offset by margin compression as a result of the continued low interest environment. Despite margin compression, income increased 1% reflecting continued business growth. The average loan-to-value ratio of new mortgage lending was 51%, continuing the conservative approach to lending. Impairment charges decreased 14%, driven by low interest rates and improvements in the quality of new business. As a result, net income grew 6% to £1,724m (2009: £1,630m). Operating expenses benefited by £118m from the UKRB portion of the pension credit resulting from amendments to the treatment of minimum defined benefits referred to above, partially offset by a year-on-year increase of £46m in pension costs.

Group Finance Director's Review

Barclaycard profit before tax decreased 15% to £317m (2009: £375m) largely as a result of the Credit Card Accountability, Responsibility and Disclosure Act in the US. Income decreased by 3% to £1,958m. Impairment charges also reduced, reflecting the improvement in economic conditions and better delinquency trends in all major markets. Operating expenses increased due to an increase in staff-related costs and investment in marketing activities.

Western Europe Retail Bankingprofit before tax was down £82m to £10m (2009: £92m) in a challenging economic environment. Despite the difficult backdrop there has been continued investment, with the acquisition of the Italian Citigroup credit card business which generated a £29m gain on acquisition. Income fell by 12% due to declining treasury interest income and margin compression, partially offset by higher fees and commissions. Impairment charges fell by 10% reflecting improved delinquency trends, tightened credit criteria and improved collections activities. Operating expenses increased by 12% driven mainly by branch expansion and the impact of the credit card acquisition in Portugal in the second half of 2009 and in Italy in the first half of 2010.

Barclays Africa profit before tax increased 8% to £70m (2009: £65m) driven by income growth coupled with lower impairment charges. Income increased 10% driven by improved margins and trading income. Impairment charges decreased as a result of the better economic environment coupled with improved collection processes. Operating expenses grew 12% as a result of increased investment in infrastructure. The sale of Barclays Africa's custody business agreed in April is expected to be completed by the end of 2010.

Business Performance - Corporate and Investment Banking, and Barclays Wealth

Barclays Capitalprofit before tax increased to £3,400m (2009: £1,047m). Excluding a gain on own credit, profit before tax grew 31% to £2,549m. Total income increased to £7,912m up 30% (2009: £6,089m). This reflected a substantial reduction in losses taken through income relating to credit market exposures which fell to £65m (2009: £3,507m) and a gain relating to own credit of £851m (2009: loss of £893m). Top-line income, which excludes these items, was £7,126m down 32% on the exceptionally strong prior year performance. Fixed Income, Currency and Commodities top-line income of £4,948m declined 40%, reflecting lower contributions from rates and commodities. Equities and Prime Services top-line income of £1,056m declined 18%, as growth in cash equities was more than offset by subdued market activity in European equity derivatives. Investment Banking revenues of £1,017m declined 6%.

Top-line income in the second quarter of 2010 was £3,281m, down 15% on the first quarter of 2010. Market conditions were more challenging in the second quarter of 2010, with lower activity levels leading to first to second quarter declines in the Fixed Income, Currency and Commodities business of 16% and Investment Banking businesses of 17%, which more than offset a 14% increase in the contribution from Equities and Prime Services.

Impairment charges of £309m for 2010 were significantly lower (2009: £1,874m) resulting in net income up 80% to £7,603m. Operating expenses increased 33%, broadly in line with the increase in net income excluding own credit, largely reflecting the continuing build-out of our sales, origination, trading and research activities and increased charges relating to prior year compensation deferrals. Compensation costs represented 37% of income compared with a rate of 38% for full year 2009; excluding the gain relating to own credit, compensation costs would have been 42% of income.

Barclays Corporaterecorded a loss before tax of £377m (2009: profit of £152m), as losses in Continental Europe and New Markets more than offset increased profits in the UK & Ireland operation. Total income decreased 14%, reflecting lower treasury management income and higher funding charges. Impairment charges increased 32% to £949m, driven by an increase of £433m in Spain due to increasing loss severity assumptions on exposures to the property and construction sector. In the UK & Ireland and New Markets operations, impairment charges improved significantly. Operating expenses grew 8% (£61m) to £829m, reflecting restructuring costs of £93m in New Markets and investment in infrastructure in the UK, partly offset by a pension credit resulting from amendments to the treatment of minimum defined pension benefits.

Barclays Wealthprofit before tax increased 27% to £95m (2009: £75m). Income increased 22% to £757m benefiting from strong income growth in the High Net Worth businesses and reflecting higher attributable net interest income from changes to the internal Funds Transfer Pricing mechanism. Impairment charges increased £6m reflecting the impact of the current economic environment on client liquidity and collateral values. Operating expenses increased 20%, principally due to the impact of growth in High Net Worth business revenues on staff and infrastructure costs and the start of Barclays Wealth's strategic investment programme. We expect investment in this programme to increase to approximately £80m in the second half of 2010.

Group Finance Director's Review

Investment Management profit before tax of £31m (2009: £37m) principally reflected dividend income from the 19.9% holding in BlackRock, Inc. Total assets as at 30th June 2010 of £3,604m reflected the fair value of the 37.567m shares held in BlackRock, Inc. (31st December 2009: £5,406m).

Business Performance - Absa

Absa Group Limited reported profit before tax of R5,617m (2009: R4,757m), an increase of 18%. In Barclays segmental reporting, the results of the Absa credit card business are included in Barclaycard, the investment banking operations in Barclays Capital and wealth operations in Barclays Wealth. The other operations of Absa Group Limited are reported in the Absa segment.

Absa profit before tax increased 23% to £318m (2009: £259m), driven by the appreciation in the average value of the Rand against Sterling. The impact of exchange rate movements also impacted operating expenses, which increased 19%, and impairment charges, which decreased 4%. Impairment charges in local currency improved by 18% reflecting a moderation in economic conditions.

Business Performance - Head Office Functions and Other Operations

Head Office Functions and Other Operations loss before tax was £421m (2009: profit £330m). This decrease resulted from the non recurrence of net gains on debt extinguishment of £1,109m in 2009 and a provision of £194m in relation to the possible resolution of Barclays compliance with US economic sanctions. These were partially offset by increased net interest income in 2010 due to reduced costs of central funding activity as money market dislocations eased and a reclassification of profit from the currency translation reserve to the income statement.

Balance Sheet and Capital Management

Shareholders' Equity

Shareholders' equity, including non-controlling interests, increased 4% to £61.1bn in 2010 driven by profit after tax of £2.9bn and the exercise of warrants. Net asset value per share was 412p (31st December 2009: 414p). Net tangible asset value per share was broadly flat at 338p (31st December 2009: 337p).

Balance Sheet

Total assets increased by £208bn to £1,587bn in 2010. Loans and advances increased by £33bn largely in Barclays Capital, UK Retail Banking and Barclays Wealth. Gross new lending to UK households and businesses amounted to £18bn during the first half and the acquisition of Standard Life Bank added a further £7bn. Derivative assets increased £88bn, largely reflecting an increase in the interest rate derivative asset balances resulting from decreases in major forward curves. Balances attributable to derivative assets and liabilities would have been £461bn lower (31st December 2009: £374bn lower) than reported under IFRS if, as under US GAAP, netting were permitted for assets and liabilities with the same counterparty or for which the Group holds cash collateral. Excluding this, assets under management on the balance sheet, settlement balances, goodwill and intangible assets, adjusted total tangible assets were £1,063bn at 30th June 2010 (31st December 2009: £969bn). Adjusted gross leverage on this basis, being the multiple of adjusted total tangible assets over total qualifying Tier 1 capital, was 20x as at 30th June 2010 (31st December 2009: 20x) and moved in the range of 20x to 24x during 2010, reflecting fluctuations in normal trading activities.

Capital Management

At 30th June 2010, on a Basel II basis, the Group's Core Tier 1 ratio was 10.0% (31st December 2009: 10.0%) and the Tier 1 ratio was 13.2% (31st December 2009: 13.0%). Risk weighted assets increased 3% to £395bn in the first half of 2010. Changes in regulatory methodologies accounted for £14bn of this increase in risk weighted assets and foreign exchange movements accounted for a further increase of £7bn. These increases were partially offset by a managed reduction of Risk Weighted Assets of £12bn. The exercise of warrants in February 2010 generated shareholders' equity of £1.2bn and attributable profit accounted for a further increase of £2.3bn over the period. The adverse movement in the fair value of the Group's holding in BlackRock, Inc. resulted in an adverse impact of 48bps in the Core Tier 1 ratio.

Group Finance Director's Review

Liquidity and Funding

The liquidity pool held by the Group increased by £33bn to £160bn at 30th June 2010 from £127bn at the end of 2009. The Group expects to maintain surplus liquidity at current levels for the foreseeable future. We will review levels of surplus liquidity once regulatory reviews are completed.

We continue to attract deposits in unsecured money markets and to raise additional secured and unsecured term funding in a variety of markets. We have extended the average term of our net unsecured liabilities from at least 26 months to at least 31 months and our Group liquidity pool is currently sufficient to cover more than one year of wholesale maturities.

We have continued to raise senior term debt successfully over the period in multiple markets. Secured public issuance totalled £3bn; unsecured public issuance totalled £6bn. We raised £12bn equivalent from our structured note programme.

Dividends

It is our policy to declare and pay dividends on a quarterly basis. We will pay an interim cash dividend for the second quarter of 2010 of 1p per share on 10th September 2010 giving a declared dividend for the first half of 2010 of 2p per share.

Outlook

Although the market and economic environment in which we operate remains uncertain, I am pleased with the strength of our income generation, the flexibility in our cost base and the performance of our risk management which, in combination, are driving higher profits and returns. Our client and customer relationships are at the heart of this performance.

The trends that we have observed during July are broadly similar to the first half, with each of our retail, commercial and wealth management businesses performing in line. Investment banking volumes picked up in the second half of July matching the second quarter run rate which was resilient. Own credit remains volatile and has been impacted by movements in credit spreads.

We will continue to maintain the Group's total capital, leverage and liquidity around current levels in anticipation of likely regulatory change over years to come.

Chris Lucas, Group Finance Director

Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Interim Income Statement (Unaudited)

		Half Year Ended	Half Year Ended	Half Year Ended
Continuing Operations		30.06.10	31.12.09	30.06.09
	Notes1	£m	£m	£m
Net interest income	1	5,969	6,196	5,722
Net fee and commission income	2	4,194	4,291	4,127
Net trading income	3	5,633	2,883	4,118
Net investment income/(loss)	4	529	185	(129)
Net premiums from insurance contracts	5	582	570	602
Other income	6	89	90	1,299
Total income		16,996	14,215	15,739
Net claims and benefits incurred on insurance contracts	7	(415)	(410)	(421)
Total income net of insurance claims		16,581	13,805	15,318
Impairment charges and other credit provisions	8	(3,080)	(3,515)	(4,556)
Net income		13,501	10,290	10,762
Staff costs	9	(5,812)	(5,133)	(4,815)
Administration and general expenses		(3,276)	(2,932)	(2,629)
Depreciation of property, plant and equipment		(408)	(380)	(379)
Amortisation of intangible assets		(224)	(219)	(228)
Operating expenses	9	(9,720)	(8,664)	(8,051)
Share of post-tax results of associates and joint ventures	10	33	21	13
Profit on disposal of subsidiaries, associates and joint ventures	11	4	167	21
Gains on acquisitions	16	129	26	-
Profit before tax from continuing operations		3,947	1,840	2,745
Tax on continuing operations	12	(1,026)	(542)	(532)
Profit after tax from continuing operations		2,921	1,298	2,213
Profit after tax from discontinued operations including gain on disposal	32	-	6,652	125
Net profit for the period		2,921	7,950	2,338
Attributable to:
Non-controlling interests	13	490	445	450
Equity holders of the parent		2,431	7,505	1,888
		2,921	7,950	2,338
Earnings per Share
Basic earnings per ordinary share from continuing operations	14	20.9p	7.9p	16.4p
Basic earnings per ordinary share from discontinued operations	14	-	60.8p	1.1p
		20.9p	68.7p	17.5p
Diluted earnings per ordinary share from continuing operations	14	19.7p	7.3p	16.0p
Diluted earnings per ordinary share from discontinued operations	14	-	57.2p	1.1p
		19.7p	64.5p	17.1p

1     The notes on pages 89 to 112 form an integral part of the condensed consolidated interim financial statements.

Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Interim Statement of Comprehensive Income (Unaudited)

	Half Year Ended	Half Year Ended	Half Year Ended
	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Net profit for the period	2,921	7,950	2,338
Other Comprehensive Income
Continuing operations
Currency translation differences	1,054	661	(1,522)
Available for sale financial assets	(1,904)	671	565
Cash flow hedges	730	(2)	167
Other	-	20	(20)
Tax relating to components of other comprehensive income	(259)	18	(44)
Other comprehensive income for the year, net of tax from continuing operations	(379)	1,368	(854)
Other comprehensive income for the year, net of tax from discontinued operations	-	79	(137)
Total comprehensive income for the year	2,542	9,397	1,347
Attributable to:
Non-controlling interests	662	620	568
Equity holders of the parent	1,880	8,777	779
Total comprehensive income for the year	2,542	9,397	1,347

1     The notes on pages 89 to 112 form an integral part of this condensed consolidated interim financial information.

Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Interim Balance Sheet (Unaudited)

		As at	As at	As at
Assets		30.06.10	31.12.09	30.06.09
	Notes1	£m	£m	£m
Cash and balances at central banks		103,928	81,483	21,423
Items in the course of collection from other banks		961	1,593	1,995
Trading portfolio assets		167,029	151,344	153,973
Financial assets designated at fair value		42,764	42,568	45,301
Derivative financial instruments	17	505,210	416,815	556,045
Loans and advances to banks	20	45,924	41,135	52,944
Loans and advances to customers	21	448,266	420,224	411,804
Available for sale financial investments		52,674	56,483	66,716
Reverse repurchase agreements and cash collateral on securities borrowed		197,050	143,431	144,978
Current and deferred tax assets		2,187	2,652	2,953
Investments in associates and joint ventures		406	422	284
Goodwill and intangible assets		8,824	8,795	9,732
Property, plant and equipment		5,738	5,626	4,138
Other assets		6,185	6,358	6,660
Assets of disposal group		-	-	66,392
Total assets		1,587,146	1,378,929	1,545,338
Liabilities
Deposits from banks		94,304	76,446	105,776
Items in the course of collection due to other banks		1,500	1,466	2,060
Customer accounts		360,980	322,429	319,101
Trading portfolio liabilities		71,752	51,252	44,737
Financial liabilities designated at fair value		87,229	86,202	64,521
Liabilities to customers under investment contracts		1,786	1,679	1,881
Derivative financial instruments	17	486,261	403,416	534,966
Debt securities in issue		151,728	135,902	142,263
Repurchase agreements and cash collateral on securities lent		227,706	198,781	175,077
Current and deferred tax liabilities		1,491	1,462	1,607
Insurance contract liabilities, including unit-linked liabilities		2,168	2,140	2,032
Subordinated liabilities	23	25,929	25,816	25,269
Provisions	24	807	590	481
Retirement benefit liabilities	25	788	769	1,523
Other liabilities		11,644	12,101	10,745
Liabilities of disposal group		-	-	64,612
Total liabilities		1,526,073	1,320,451	1,496,651
Shareholders' Equity
Called up share capital	26	3,011	2,853	2,757
Share premium account		9,053	7,951	7,282
Other reserves		2,212	2,768	1,693
Retained earnings		36,053	33,845	26,121
Less: treasury shares		(738)	(140)	(154)
Shareholders' equity excluding non-controlling interests		49,591	47,277	37,699
Non-controlling interests		11,482	11,201	10,988
Total shareholders' equity		61,073	58,478	48,687
Total liabilities and shareholders' equity		1,587,146	1,378,929	1,545,338

1     The notes on pages 89 to 112 form an integral part of this condensed consolidated interim financial information.

Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Interim Statement of Changes in Equity (Unaudited)

Half Year Ended 30.06.10	Share Capital and Share Premium1	Other Reserves2	Retained Earnings	Total	Non-controlling Interests	Total Equity
	£m	£m	£m	£m	£m	£m
Balance at 1st January 2010	10,804	2,628	33,845	47,277	11,201	58,478
Net profit for the period	-	-	2,431	2,431	490	2,921
Other comprehensive income:
Currency translation movements	-	935	-	935	119	1,054
Available-for-sale financial assets	-	(1,905)	-	(1,905)	1	(1,904)
Cash flow hedges	-	694	-	694	36	730
Tax relating to components of other comprehensive income	-	(279)	4	(275)	16	(259)
Total comprehensive income	-	(555)	2,435	1,880	662	2,542
Issue of new ordinary shares	1,240	-	-	1,240	-	1,240
Issue of shares under employee share schemes	20	-	405	425	-	425
Net purchase of treasury shares	-	(932)	-	(932)	-	(932)
Transfers	-	334	(334)	-	-	-
Dividends	-	-	(294)	(294)	(372)	(666)
Other	-	(1)	(4)	(5)	(9)	(14)
Balance at 30th June 2010	12,064	1,474	36,053	49,591	11,482	61,073
Half Year Ended 31.12.09
Balance at 1st July 2009	10,039	1,539	26,121	37,699	10,988	48,687
Net profit for the period	-	-	7,505	7,505	445	7,950
Other comprehensive income:
Currency translation movements	-	504	-	504	157	661
Available-for-sale financial assets	-	672	-	672	(1)	671
Cash flow hedges	-	3	-	3	(5)	(2)
Other	-	-	20	20	-	20
Tax relating to components of other comprehensive income	-	(176)	170	(6)	24	18
Other comprehensive income net of tax from discontinued operations	-	70	9	79	-	79
Total comprehensive income	-	1,073	7,704	8,777	620	9,397
Issue of new ordinary shares	749	-	-	749	-	749
Issue of shares under employee share schemes	16	-	98	114	-	114
Net purchase of treasury shares	-	(17)	-	(17)	-	(17)
Transfers	-	31	(31)	-	-	-
Dividends	-	-	(113)	(113)	(414)	(527)
Net decrease in non-controlling interest arising on acquisitions, disposals and capital issuances	-	-	-	-	(40)	(40)
Other	-	2	66	68	47	115
Balance at 31st December 2009	10,804	2,628	33,845	47,277	11,201	58,478

1     Details of share capital are shown in note 26.

2     Other Reserves include Treasury Shares.

Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Interim Statement of Changes in Equity (Unaudited)

Half Year Ended 30.06.09	Share Capital and Share Premium1	Other Reserves2	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
Net profit for the period	-	-	1,888	1,888	450	2,338
Other comprehensive income:
Currency translation movements	-	(1,642)	-	(1,642)	120	(1,522)
Available-for-sale financial assets	-	578	-	578	(13)	565
Cash flow hedges	-	191	-	191	(24)	167
Other	-	-	(20)	(20)	-	(20)
Tax relating to components of other comprehensive income	-	(80)	1	(79)	35	(44)
Other comprehensive income net of tax from discontinued operations	-	(145)	8	(137)	-	(137)
Total comprehensive income	-	(1,098)	1,877	779	568	1,347
Issue of new ordinary shares	-	-	-	-	-	-
Issue of shares under employee share schemes	19	-	200	219	-	219
Net purchase of treasury shares	-	(30)	-	(30)	-	(30)
Transfers	-	49	(49)	-	-	-
Dividends	-	-	-	-	(353)	(353)
Net decrease in non-controlling interest arising on acquisitions, disposals and capital issuances	-	-	-	-	(42)	(42)
Conversion of Mandatorily Convertible Notes	3,882	(3,652)	(230)	-	-	-
Other	-	(2)	115	113	22	135
Balance at 30th June 2009	10,039	1,539	26,121	37,699	10,988	48,687

Total comprehensive income of £2,542m (31st December 2009: £9,397m, 30th June 2009: £1,347m) has been recognised in the statement of changes in equity.

1     Details of share capital are shown in note 26.

2     Other Reserves include Treasury Shares.

Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Interim Cash Flow Statement (Unaudited)

	Half Year Ended	Half Year Ended	Half Year Ended
	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Continuing Operations
Profit before tax	3,947	1,840	2,745
Adjustment for non-cash items	(960)	13,026	611
Changes in operating assets and liabilities	22,096	29,574	(4,775)
Tax paid	(728)	(504)	(673)
Net cash from operating activities	24,355	43,936	(2,092)
Net cash from investing activities	3,821	20,264	(8,376)
Net cash from financing activities	(1,418)	719	(1,380)
Net cash from discontinued operations	-	(375)	(1)
Effect of exchange rates on cash and cash equivalents	2,747	(8,694)	5,830
Net increase in cash and cash equivalents	29,505	55,850	(6,019)
Cash and cash equivalents at beginning of period	114,340	58,490	64,509
Cash and cash equivalents at end of period	143,845	114,340	58,490

Group Results Summary

Set out below is a summary of the Group's results by quarter from 1st January 2009:

Group Results	Q210	Q110		Q409	Q309	Q209	Q109
	£m	£m		£m	£m	£m	£m
Top-line income	7,678	8,117		7,453	8,189	10,419	9,299
Credit market (losses)/income	(115)	50		(166)	(744)	(1,648)	(1,859)
Own credit gain/(charge)	953	(102)		(522)	(405)	(1,172)	279
Total income net of insurance claims	8,516	8,065		6,765	7,040	7,599	7,719
Impairment charges and other credit provisions	(1,452)	(1,317)		(1,612)	(1,404)	(1,831)	(1,555)
Credit market writedowns - impairment charges	(120)	(191)		(245)	(254)	(416)	(754)
Impairment charges	(1,572)	(1,508)		(1,857)	(1,658)	(2,247)	(2,309)
Net Income	6,944	6,557		4,908	5,382	5,352	5,410
Operating expenses	(4,868)	(4,852)		(4,482)	(4,182)	(3,888)	(4,163)
Share of post tax results of associates & JVs	18	15		16	5	24	(11)
Profit on disposal of subsidiaries, associates & JVs	4	-		10	157	19	2
Gains/(losses) on acquisitions	29	100		26	-	(1)	1
Profit before tax	2,127	1,820		478	1,362	1,506	1,239
Profit after tax	1,611	1,310		350	948	1,246	967
Cost:income ratio	57%	60%		66%	59%	51%	54%
Cost:net income ratio	70%	74%		91%	78%	73%	77%
Basic earnings per share from continuing operations	11.6p	9.3p		1.1p	6.6p	9.5p	6.9p
Profit before tax	2,127	1,820		478	1,362	1,506	1,239
Own credit (gain)/charge	(953)	102		522	405	1,172	(279)
Gains on acquisitions and profits on disposals of subsidiaries, associates & JVs	(33)	(100)		(36)	(157)	(18)	(3)
Gains on debt buy-backs	-	-		-	(57)	(1,192)	-
Adjusted profit before tax	1,141	1,822		964	1,553	1,468	957

Set out below is a summary of Barclays Capital's results by quarter from 1st January 2009:

Barclays Capital Results	Q210	Q110		Q409	Q309	Q209	Q109
	£m	£m		£m	£m	£m	£m
Fixed Income, Currency and Commodities	2,253	2,695		2,711	2,714	3,883	4,344
Equities and Prime Services	563	493		334	545	748	538
Investment Banking	461	556		643	459	751	335
Principal Investments	4	101		(46)	13	(107)	(3)
Top-line income	3,281	3,845		3,642	3,731	5,275	5,214
Credit market (losses)/income	(115)	50		(166)	(744)	(1,648)	(1,859)
Own credit gain/(charge)	953	(102)		(522)	(405)	(1,172)	279
Total income	4,119	3,793		2,954	2,582	2,455	3,634
Impairment charges and other credit provisions	(41)	(268)		(371)	(346)	(806)	(1,068)
Net income	4,078	3,525		2,583	2,236	1,649	2,566
Operating expenses	(2,154)	(2,059)		(1,552)	(1,864)	(1,529)	(1,647)
Share of post tax results of associates & JVs	7	3		17	(3)	20	(12)
Profit before tax	1,931	1,469		1,048	369	140	907
Profit before tax (excluding own credit)	978	1,571		1,570	774	1,312	628
Cost:income ratio	52%	54%		53%	72%	62%	45%
Cost:net income ratio	53%	58%		60%	83%	93%	64%

Results by Business

UK Retail Banking

	Half Year Ended	Half Year Ended	Half Year Ended
Income Statement Information	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Net interest income	1,493	1,417	1,425
Net fee and commission income	624	651	648
Net premiums from insurance contracts	73	91	107
Other (loss)/income	-	(1)	6
Total income	2,190	2,158	2,186
Net claims and benefits incurred under insurance contracts	(19)	(33)	(35)
Total income net of insurance claims	2,171	2,125	2,151
Impairment charges and other credit provisions	(447)	(510)	(521)
Net income	1,724	1,615	1,630
Operating expenses excluding amortisation of intangible assets	(1,301)	(1,197)	(1,299)
Amortisation of intangible assets	(21)	(22)	(20)
Operating expenses	(1,322)	(1,219)	(1,319)
Share of post-tax results of associates and joint ventures	2	1	2
Gains on acquisition	100	-	-
Profit before tax	504	397	313
Balance Sheet Information
Loans and advances to customers at amortised cost	£113.9bn	£103.0bn	£100.3bn
Customer accounts	£106.3bn	£96.8bn	£96.0bn
Total assets	£119.3bn	£109.3bn	£106.9bn
Risk weighted assets	£35.6bn	£35.9bn	£35.3bn
Performance Measures
Return on average equity	11%	9%	8%
Return on average tangible equity	22%	18%	16%
Return on average risk weighted assets	2.1%	1.6%	1.4%
Loan loss rate (bps)	77	97	102
3 month arrears rates - UK loans	2.38%	2.74%	2.71%
Cost:income ratio	61%	57%	61%
Cost:net income ratio	77%	75%	81%
Economic profit/(loss)	£124m	£31m	(£38m)
Key Facts
Number of UK current accounts	11.4m	11.2m	11.4m
Number of UK savings accounts1	14.1m	13.2m	13.0m
Number of UK mortgage accounts1	913,000	834,000	824,000
LTV of mortgage portfolio1	42%	43%	44%
LTV of new mortgage lending1	51%	48%	46%
Number of Barclays Business customers	760,000	742,000	728,000
Number of branches	1,674	1,698	1,720
Number of ATMs	3,343	3,394	3,414

1     Number of saving and mortgage and LTV figures include the impact of Standard Life Bank.

Results by Business

UK Retail Banking

UK Retail Banking profit before tax increased 61% (£191m) to £504m (2009: £313m). Results included a pension credit resulting from amendments to the treatment of minimum defined benefits, a gain on the acquisition of Standard Life Bank and lower impairment charges.

Income increased 1% (£20m) to £2,171m (2009: £2,151m) reflecting good growth in Barclays Business, partially offset by the impact of margin compression.

Net interest income increased 5% (£68m) to £1,493m (2009: £1,425m) driven by business growth and the acquisition of Standard Life Bank which more than offset continued margin compression. Net interest margin for UK Retail Banking reduced to 139bps (2009: 148bps). Total average customer deposit balances increased 11% to £103.5bn (2009: £93.0bn), reflecting good growth in personal customer balances and the impact of Standard Life Bank. The average liabilities margin increased to 161bps (2009: 128bps) reflecting the impact of the revised internal Funds Transfer Pricing mechanism. Total customer account balances increased £9.5bn to £106.3bn
(31st December 2009: £96.8bn).

Total average customer asset balances increased 12% to £112.5bn (2009: £100.9bn), reflecting good growth in Home Finance mortgage balances and the acquisition of Standard Life Bank. The average assets margin decreased to 117bps (2009: 151bps) reflecting the impact of the revised internal Funds Transfer Pricing mechanism. Total loans and advances to customers increased £10.9bn to £113.9bn (31st December 2009: £103.0bn), of which £6.7bn is due to the acquisition of Standard Life Bank.

Average mortgage balances grew 16%, reflecting strongly positive net lending. Mortgage balances were £98.7bn at the end of the period (31st December 2009: £87.9bn), a market share of 8% (2009: 7%). Gross advances increased to £8.5bn (2009: £6.0bn), a share by value of 14% (2009: 9%), with redemptions of £5.2bn
(2009: £3.8bn). Net mortgage lending was £3.3bn (2009: £2.2bn). The average loan to value ratio of the mortgage portfolio (including buy-to-let) on a current valuation basis was 42% (2009: 43%). The average loan to value ratio of new mortgage lending was 51% (2009: 48%).

Barclays Business was created in 2010 to cater for the needs of business customers with turnover up to £5m. Within this segment, customer numbers increased 18,000 to 760,000 (2009: 742,000), with Local Business start-ups increasing by 14% and customers who transferred their arrangements from other banks increasing by 10% year on year.

Net fee and commission income decreased 4% (£24m) to £624m (2009: £648m) reflecting lower investment related income.

Total impairment charges represented 77bps (2009: 102bps) of total gross loans and advances to customers and banks. This reflects a reduction in impairment charges of 14% (£74m) to £447m (2009: £521m), driven by low interest rates and improvements in the quality of new business. Impairment charges within Consumer Lending decreased 24% (£71m) to £221m (2009: £292m) and within Home Finance decreased 60% (£21m) to £14m (2009: £35m) more than offsetting an increase of 12% (£14m) to £129m (2009: £115m) in Barclays Business. As a percentage of the portfolio, 3 month arrears rates for the UK loans has improved by 36bps to 238bps
(2009: 274bps).

Operating expenses were £1,322m (2009: £1,319m). This includes a pension credit of £118m resulting from amendments to the treatment of minimum defined benefits, offset by a year on year increase in pension costs of £46m and increased investment spend.

Gain on acquisition of £100m represented the gain on purchase of Standard Life Bank.

Total assets increased 9% to £119.3bn (2009: £109.3bn) driven by growth in Home Finance balances and the acquisition of Standard Life Bank. Risk weighted assets remained flat at £35.6bn (2009: £35.9bn) with reductions in operational risk and improved economic conditions offsetting the acquisition of Standard Life Bank.

Results by Business

Barclaycard

	Half Year Ended	Half Year Ended	Half Year Ended
Income Statement Information	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Net interest income	1,369	1,366	1,357
Net fee and commission income	569	651	620
Net trading (loss)/income	(4)	(2)	1
Net investment income	10	3	20
Net premiums from insurance contracts	19	23	21
Other income	2	-	1
Total income	1,965	2,041	2,020
Net claims and benefits incurred under insurance contracts	(7)	(9)	(11)
Total income net of insurance claims	1,958	2,032	2,009
Impairment charges and other credit provisions	(890)	(883)	(915)
Net income	1,068	1,149	1,094
Operating expenses excluding amortisation of intangible assets	(721)	(758)	(687)
Amortisation of intangible assets	(43)	(45)	(37)
Operating expenses	(764)	(803)	(724)
Share of post-tax results of associates and joint ventures	13	6	2
Profit on disposal of subsidiaries, associates and joint ventures	-	-	3
Profit before tax	317	352	375
Balance Sheet Information
Loans and advances to customers at amortised cost	£26.3bn	£26.5bn	£26.0bn
Total assets	£31.1bn	£30.3bn	£29.6bn
Risk weighted assets	£32.2bn	£30.6bn	£26.9bn
Performance Measures
Return on average equity	10%	13%	15%
Return on average tangible equity	14%	19%	22%
Return on average risk weighted assets	1.4%	1.7%	1.9%
Loan loss rate (bps)	596	593	636
3 month arrears rates - UK cards	1.62%	1.79%	2.09%
3 month arrears rates - US cards	2.90%	3.31%	3.17%
Cost:income ratio	39%	40%	36%
Cost:net income ratio	72%	70%	66%
Economic (loss)/profit	(£20m)	(£10m)	£28m
Key Facts
Number of Barclaycard UK customers	11.1m	10.4m	11.9m
Number of Barclaycard International customers	10.5m	10.8m	11.7m
Total number of Barclaycard customers	21.6m	21.2m	23.6m
UK credit cards - average outstanding balances	£10.6bn	£10.9bn	£10.8bn
International - average outstanding balances	£9.8bn	£9.6bn	£9.9bn
Total - average outstanding balances	£20.4bn	£20.5bn	£20.7bn
UK credit cards - average extended credit balances	£8.6bn	£8.5bn	£8.5bn
International - average extended credit balances	£7.8bn	£7.8bn	£8.0bn
Total - average extended credit balances	£16.4bn	£16.3bn	£16.5bn
Loans - average outstanding balances	£5.6bn	£5.9bn	£6.0bn
Number of retailer relationships	85,000	87,000	88,000

Results by Business

Barclaycard

Barclaycard profit before tax decreased 15% (£58m) to £317m (2009: £375m) largely as a result of the impact of the Credit Card Accountability, Responsibility and Disclosure Act in the US (the US Credit Card Act), partially offset by an increase in Absa Card profit before tax to £66m (2009: £33m). Results reflected geographic and product diversification with approximately 50% of customers and 40% of average balances outside the UK and with over 20% of income generated via non-consumer credit cards.

Income decreased 3% (£51m) to £1,958m (2009: £2,009m) primarily driven by lower net fees and commissions reflecting the effect of the US Credit Card Act.

Net interest income increased 1% (£12m) to £1,369m (2009: £1,357m) reflecting modest growth in UK consumer card extended credit balances, up 1% to £8.6bn (2009: £8.5bn), the appreciation of the average value of the Rand against Sterling and growth in other portfolios, partially offset by lower net interest income due to the impact of the US Credit Card Act and the continued attrition of the FirstPlus portfolio. The asset margin remained stable at 906bps and the net interest margin fell to 962bps (2009: 979bps).

Net fee and commission income decreased 8% (£51m) to £569m (2009: £620m) primarily through the impact of regulation on late and over limit fees in the US.

Investment income of £10m (2009: £20m) represented the gain from the sale of MasterCard shares.

Impairment charges reduced 3% (£25m) to £890m (2009: £915m), reflecting the improvement in economic conditions in major markets. The 90 day delinquency rates for consumer card portfolios in the UK of 1.62%
(2009: 1.79%), and in the US of 2.90% (2009: 3.31%), reduced compared to the second half of 2009.

Operating expenses increased 6% (£40m) to £764m (2009: £724m), due to increases in staff-related costs and investment in marketing activities primarily relating to the launch and promotion of Barclaycard Freedom, the new point of sale loyalty programme being provided to UK cardholders and merchants which was launched in March 2010. Cost increases were partially offset by a pension credit resulting from amendments to the treatment of minimum defined benefits.

Period end total assets increased 3% to £31.1bn (2009: £30.3bn) reflecting the appreciation in the US Dollar against Sterling.

Risk weighted assets increased 5% (£1.6bn) to £32.2bn (2009: £30.6bn) reflecting lower securitisation relief and the appreciation in the US Dollar against Sterling. Return on average risk weighted assets decreased to 1.4%
(full year 2009: 1.8%).

Results by Business

Western Europe Retail Banking

	Half Year Ended	Half Year Ended	Half Year Ended
Income Statement Information	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Net interest income	335	405	463
Net fee and commission income	214	181	171
Net trading income	7	10	4
Net investment income	36	56	62
Net premiums from insurance contracts	262	255	289
Other income/(loss)	24	1	(7)
Total income	878	908	982
Net claims and benefits incurred under insurance contracts	(276)	(272)	(300)
Total income net of insurance claims	602	636	682
Impairment charges and other credit provisions	(133)	(190)	(148)
Net income	469	446	534
Operating expenses excluding amortisation of intangible assets	(481)	(433)	(432)
Amortisation of intangible assets	(14)	(12)	(10)
Operating expenses	(495)	(445)	(442)
Share of post-tax results of associates and joint ventures	7	4	-
Profit on disposal of subsidiaries, associates and joint ventures	-	157	-
Gains on acquisition	29	26	-
Profit before tax	10	188	92
Balance Sheet Information
Loans and advances to customers at amortised cost	£39.9bn	£41.1bn	£36.0bn
Customer accounts	£17.1bn	£17.6bn	£12.7bn
Total assets	£49.0bn	£51.0bn	£45.2bn
Risk weighted assets	£15.9bn	£16.8bn	£14.6bn
Performance Measures
Return on average equity1	10%	15%	5%
Return on average tangible equity1	15%	21%	7%
Return on average risk weighted assets1	1.5%	1.9%	0.6%
Loan loss rate (bps)	65	89	81
Cost:income ratio	82%	70%	65%
Cost:net income ratio	106%	100%	83%
Economic profit/(loss)1	£23m	£59m	(£46m)
Key Facts
Number of customers	2.7m	2.4m	2.1m
Number of branches	1,111	1,094	998
Number of sales centres	211	168	178
Number of distribution points	1,322	1,262	1,176

1     Return on average equity, return on average tangible equity, return on average risk weighted assets and economic profit/(loss) reflects a deferred tax benefit of £112m.

Results by Business

Western Europe Retail Banking

Western Europe Retail Banking profit before tax fell 89% (£82m) to £10m (2009: £92m). This reflected a reduction in income, consistent with an economic environment which remains challenging, continued investment in developing the franchise in accordance with the business strategic priorities and the negative impact of the 3% decline in the average value of the Euro against Sterling.

Income fell by 12% (£80m) to £602m (2009: £682m) due to lower net interest income, partially offset by higher fees and commissions.

Net interest income fell by 28% (£128m) to £335m (2009: £463m), mainly reflecting a decline in treasury interest income and continued underlying liability margin compression. As a result, the net interest margin reduced to 115bps (2009: 188bps). Average customer accounts increased 52% and average loans and advances increased 7%. Net interest income benefited from growth in credit cards. Customer assets margin remained broadly steady at 127bps (2009: 128bps) as the effect of repricing initiatives was offset by higher costs resulting from the new internal Funds Transfer Pricing mechanism. Customer liability margins fell to 49bps (2009: 59bps) reflecting the cost of acquiring deposits in a highly competitive environment, which more than offset the benefits from the new internal Funds Transfer Pricing mechanism.

Net fee and commission income increased 25% (£43m) to £214m (2009: £171m). The growth reflects the investment in the network in previous years and the credit card businesses acquired since late 2009, combined with increased investment and insurance income reflecting continued growth in the mass affluent market.

Net premiums from insurance contracts decreased 9% (£27m) to £262m (2009: £289m) and net claims and benefits incurred fell correspondingly by 8% (£24m) to £276m (2009: £300m).

Despite the economic conditions, impairment charges improved 10% (£15m) to £133m (2009: £148m) reflecting better delinquency trends, tightened credit criteria and improved collections activity. The overall 30 day delinquency rate improved by 54 bps to 195bps (2009: 249bps) and the 90 day delinquency rate improved by 33bps to 82bps (2009: 115bps) with improvements across all portfolios. Significant improvements were experienced across the Spanish business; the 90 day delinquency rate for mortgages improved by 37bps to 39bps (2009: 76bps). The average Loan to Value ratio for mortgages in Spain was 56% (full year 2009: 54%) and 12% of these (full year 2009: 10%) had a Loan to Value ratio of more than 85%, reflecting continued declines in Spanish house prices. Further, impairment levels are likely to reflect weakening house prices through the remainder of 2010.

Operating expenses increased 12% (£53m) to £495m (2009: £442m). This reflected continued investment in developing the franchise and pursuing strategic priorities: further penetration of the mass affluent market, which has resulted in higher Euro customer account balances; selective expansion of the distribution network, with 60 new distribution points opened in the first half of the year and; further development of the credit card network across the region, including the acquisition of Citigroup's credit card business in Italy in March 2010 and integration of the credit card business acquired in Portugal from Citigroup in late 2009. Underlying costs continue to be tightly controlled.

The £29m gain on acquisition was generated on the purchase of the Citigroup card business in Italy in March 2010. This resulted in the addition of approximately 200,000 customers and loans and advances to customers of £0.2bn.

Period end loans and advances to customers in Euro increased 4% to €48.6bn (2009: €46.6bn), reflecting continued growth in the business. Customer accounts in Euro increased 5% to €20.9bn (31st December 2009: €20.0bn) reflecting a continued focus on growing deposit balances. Period end asset and liability balances in Sterling were affected by the 8% decline in the value of Euro against Sterling since 31st December 2009. Accordingly, in Sterling terms, loans and advances to customers decreased 3% and customer accounts decreased 3%. Risk weighted assets decreased 5% to £15.9bn (2009: £16.8bn) largely reflecting the reductions in loans and advances to customers.

Results by Business

Barclays Africa

	Half Year Ended	Half Year Ended	Half Year Ended
Income Statement Information	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Net interest income	270	251	247
Net fee and commission income	95	89	89
Net trading income	38	27	27
Net investment (loss)/income	(1)	6	1
Other income	1	1	1
Total income	403	374	365
Impairment charges and other credit provisions	(48)	(58)	(63)
Net income	355	316	302
Operating expenses excluding amortisation of intangible assets	(282)	(281)	(252)
Amortisation of intangible assets	(3)	(3)	(2)
Operating expenses	(285)	(284)	(254)
Profit on disposal of subsidiaries, associates and joint ventures	-	7	17
Profit before tax	70	39	65
Balance Sheet Information
Loans and advances to customers at amortised cost	£3.9bn	£3.9bn	£3.9bn
Customer accounts	£6.8bn	£6.4bn	£5.9bn
Total assets	£7.9bn	£7.9bn	£7.1bn
Risk weighted assets	£7.8bn	£7.6bn	£6.8bn
Performance Measures
Return on average equity	13%	14%	2%
Return on average tangible equity	14%	16%	2%
Return on average risk weighted assets	1.5%	1.6%	0.4%
Loan loss rate (bps)	200	242	270
Cost:income ratio	71%	76%	70%
Cost:net income ratio	80%	90%	84%
Economic loss	(£8m)	(£5m)	(£48m)
Key Facts
Number of customers	2.7m	2.8m	2.8m
Number of branches	488	490	491
Number of sales centres	57	83	165
Number of distribution points	545	573	656

Results by Business

Barclays Africa

Barclays Africa profit before tax increased 8% to £70m (2009: £65m) driven by income growth and lower impairment. Prior year results included a one-off gain of £17m from sale of shares in Barclays Bank of Botswana Limited.

Income increased 10% (£38m) to £403m (2009: £365m) as a result of improved net interest margins and trading income.

Net interest income increased 9% (£23m) to £270m (2009: £247m) and the net interest margin increased to 506bps (2009: 446bps). The assets margin improved 241bps to 713bps primarily driven by a reduction in funding costs and changes in business mix. The liabilities margin decreased 32bps to 260bps due to margin compression.

Net fee and commission income increased 7% (£6m) to £95m (2009: £89m) primarily driven by growth in retail fee income.

Impairment charges decreased 24% (£15m) to £48m (2009: £63m), representing 200bps of total gross loans and advances to customers and banks (2009: 270bps). Impairment charges on the retail portfolio decreased to £32m (2009: £47m) reducing 224bps to 319bps (2009: 543bps) as a result of a better economic environment and improved collections. The retail portfolio 30 day delinquency rate decreased by 45bps to 290bps (2009: 335bps).

Operating expenses increased 12% (£31m) to £285m (2009: £254m) reflecting investment in infrastructure and an increase in staff costs.

Customer deposits increased 6% (£0.4bn) to £6.8bn (2009: £6.4bn), mainly in retail. Total assets remained flat at £7.9bn (2009: £7.9bn) and risk weighted assets increased 3% (£0.2bn) to £7.8bn (2009: £7.6bn).

On 27th April 2010, Barclays Africa announced the sale of its custody businesses in Africa to Standard Chartered. These businesses had gross assets of £1.9m and assets under custody of £3.9bn as at 31st December 2009. The sale is expected to complete in the second half of 2010, subject to regulatory approvals and other conditions.

Results by Business

Barclays Capital

	Half Year Ended	Half Year Ended	Half Year Ended
Income Statement Information	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Net interest income	357	770	828
Net fee and commission income	1,516	1,454	1,547
Net trading income	5,560	3,205	3,980
Net investment income/(loss)	479	101	(265)
Other income/(loss)	-	6	(1)
Total income	7,912	5,536	6,089
Impairment charges and other credit provisions	(309)	(717)	(1,874)
Net income	7,603	4,819	4,215
Operating expenses excluding amortisation of intangible assets	(4,135)	(3,333)	(3,073)
Amortisation of intangible assets	(78)	(83)	(103)
Operating expenses	(4,213)	(3,416)	(3,176)
Share of post-tax results of associates and joint ventures	10	14	8
Profit before tax	3,400	1,417	1,047
Profit before tax (excluding own credit)	2,549	2,344	1,940
Balance Sheet Information
Loans and advances to banks and customers at amortised cost	£188.1bn	£162.6bn	£173.5bn
Total assets	£1,212.4bn	£1,019.1bn	£1,133.7bn
Assets contributing to adjusted gross leverage	£697.6bn	£618.2bn	£591.1bn
Risk weighted assets	£194.3bn	£181.1bn	£209.8bn
Liquidity pool	£160bn	£127bn	£88bn
Performance Measures
Return on average equity1	21%	11%	6%
Return on average tangible equity1	22%	12%	7%
Return on average risk weighted assets1	2.2%	1.0%	0.6%
Loan loss rate (bps)	34	80	140
Cost:income ratio	53%	62%	52%
Cost:net income ratio	55%	71%	75%
Cost:net income (excluding own credit) ratio	62%	59%	62%
Compensation:income ratio	37%	41%	35%
Economic profit/(loss)	£1,412m	£289m	(£94m)
Other Financial Measures
Average DVaR (95%)	£57m	£66m	£87m
Average income per employee (000s)	£325	£243	£272

1     Includes own credit gains/(losses).

Results by Business

Barclays Capital

Barclays Capital profit before tax increased to £3,400m (2009: £1,047m). Excluding own credit, profit before tax increased 31% to £2,549m (2009: £1,940m). Top-line income of £7,126m (2009: £10,489m) was down 32% on the very strong prior year performance, reflecting a more challenging market environment. Net income, excluding an own credit gain of £851m (2009: loss of £893m), increased 32% to £6,752m (2009: £5,108m). There was a significant reduction both in credit market losses taken through income to £65m (2009: £3,507m) and in total impairment charges to £309m (2009: £1,874m).

	Half Year Ended	Half Year Ended	Half Year Ended
Analysis of Total Income	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Fixed Income, Currency and Commodities	4,948	5,425	8,227
Equities and Prime Services	1,056	879	1,286
Investment Banking	1,017	1,102	1,086
Principal Investments	105	(33)	(110)
Top-line income	7,126	7,373	10,489
Credit market losses in income	(65)	(910)	(3,507)
Total income (excluding own credit)	7,061	6,463	6,982
Own credit	851	(927)	(893)
Total income	7,912	5,536	6,089

Income of £7,912m was up 30% on prior year (2009: £6,089m). The impact of difficult trading conditions in the second quarter on top-line income was more than offset by the substantial reduction of credit market losses in income.

Fixed Income, Currency and Commodities top-line income was £4,948m (2009: £8,227m) a decline of 40% relative to the first half of 2009, reflecting lower contributions from rates and commodities. Higher funding costs also drove a reduction in net interest income.

Equities and Prime Services decreased 18% to £1,056m (2009: £1,286m) due to the subdued market activity in European equity derivatives, partially offset by improved client flow in cash equities.

Investment Banking, which comprises advisory businesses and equity and debt underwriting, reported income of £1,017m, a 6% decrease on prior year (2009: £1,086m) as a result of reduced market activity in the second quarter. Fee and commission income was broadly in line with prior year at £1,516m (2009: £1,547m) across the investment banking, fixed income and equities client franchises.

Principal Investments generated income of £105m (2009: loss of £110m) and contributed to the overall net investment gain of £479m (2009: loss of £265m) in addition to the disposal of available for sale assets and gains on assets held at fair value.

Impairment charges of £309m (2009: £1,874m) reflected credit market impairment of £311m (2009: £1,170m), as discussed on page 68. Non credit market related impairment was a release of £2m (2009: charge of £704m).

Operating expenses increased 33% to £4,213m (2009: £3,176m), broadly in line with net income excluding own credit, reflecting the continuing build-out of Equities and Investment Banking, investment in infrastructure, increased charges relating to prior year compensation deferrals and consolidation of entities due to holdings arising from debt restructuring. Compensation costs represented 37% (full year 2009: 38%) of income. Cost:net income (excluding own credit) ratio was 62% (2009: 62%), which is within the 60-65% long term range that is targeted for the business.

Total assets increased 19% to £1,212bn (31st December 2009: £1,019bn), reflecting an increase in interest rate derivative assets resulting from decreases in major forward curves, increased reverse repurchase trading and an increased holding in the liquidity pool, which Barclays Capital manages on behalf of the Group. Foreign exchange movements contributed 13% of the total increase. The above contributed to an overall increase of 13% in the adjusted gross leverage assets to £698bn (31st December 2009: £618bn). Risk weighted assets increased 7% to £194bn (31st December 2009: £181bn). Increases in the first quarter, primarily driven by prescribed regulatory changes of £15bn, increases in business activity of £8bn and foreign exchange rate movements of £8bn were partially offset by the reduction in business activity in the second quarter of £18bn.

Average DVaR decreased £30m to £57m (2009: £87m), due to lower client activity in the second quarter. Spot DVaR at 30th June 2010 of £43m reduced by £12m (31st December 2009: £55m).

Results by Business

Barclays Corporate

	Half Year Ended	Half Year Ended	Half Year Ended
Income Statement Information	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Net interest income	939	1,042	1,041
Net fee and commission income	464	494	508
Net trading income/(loss)	27	25	(7)
Net investment loss	(33)	(22)	(24)
Other income	4	4	120
Total income	1,401	1,543	1,638
Impairment charges and other credit provisions	(949)	(840)	(718)
Net income	452	703	920
Operating expenses excluding amortisation of intangible assets	(806)	(680)	(750)
Amortisation of intangible assets	(23)	(18)	(18)
Operating expenses	(829)	(698)	(768)
(Loss)/profit before tax	(377)	5	152
Balance Sheet Information
Loans and advances to customers at amortised cost	£66.8bn	£70.7bn	£74.8bn
Loans and advances to customers at fair value	£14.4bn	£13.1bn	£12.0bn
Customer accounts	£68.4bn	£66.3bn	£57.8bn
Total assets	£86.9bn	£88.8bn	£92.3bn
Risk weighted assets	£72.7bn	£76.9bn	£77.9bn
Performance Measures
Return on average equity	(12%)	-	4%
Return on average tangible equity	(13%)	-	4%
Return on average risk weighted assets	(1.2%)	-	0.3%
Loan loss rate (bps)	240	229	184
Cost:income ratio	59%	45%	47%
Cost:net income ratio	183%	99%	83%
Economic loss	(£760m)	(£332m)	(£200m)

Results by Business

Barclays Corporate

Barclays Corporate recorded a loss before tax of £377m (2009: profit £152m). Losses within Continental Europe and New Markets more than offset an increased profit in the UK & Ireland.

Profit before tax in UK & Ireland grew 3% (£10m) to £379m, or 33% (£93m) excluding the benefits of the 2009 buy-back of securitised debt of £83m. Performance reflected strong growth in customer accounts and significantly reduced impairment. The Continental Europe loss before tax increased £497m to £524m driven by impairment charges on property and construction exposures in Spain. The New Markets loss before tax increased £42m to £232m reflecting restructuring costs of £93m partially offset by a substantial reduction in impairment charges, particularly in retail businesses.

Total income decreased 14% (£237m) to £1,401m (2009: £1,638m) reflecting the 2009 buy-back of securitised debt and higher funding costs in the UK. In Continental Europe and New Markets income decreased due to higher funding costs and lower treasury management income as well as reduced risk appetite.

Net interest income fell 10% (£102m) to £939m (2009: £1,041m) reflecting lower treasury management income and higher funding charges in Continental Europe and New Markets. UK & Ireland net interest income was broadly flat, with reduced lending demand and higher funding costs mostly offset by higher deposit income driven by deposit balance growth. The net interest margin decreased 21bps to 145bps (2009: 166bps).

Total average lending fell 9% (£7.2bn) to £70.9bn (2009: £78.1bn) and UK new term lending was more than offset by reduced utilisation of overdraft facilities and reduced demand in asset based lending in the UK, along with tighter underwriting criteria outside the UK. The asset margin which excludes treasury management income decreased 25bps to 141bps reflecting the impact of changes to the new internal Funds Transfer Pricing mechanism. There was strong growth in total average deposits, which grew 24% (£11.4bn) to £59.8bn, with the majority arising in the UK as a result of a significant increase in current accounts and managed and currency deposits benefiting from ongoing cash management initiatives. As a result the gap between loans and deposits in UK & Ireland closed substantially. Deposit margins grew 5bps to 115bps reflecting the benefit of the new internal Funds Transfer Pricing mechanism which gives higher returns to behaviourally long-term deposits.

Non interest related income decreased 23% (£135m) to £462m (2009: £597m). Net fees and commissions income fell 9% (£44m) to £464m (2009: £508m) driven by lower debt fees and treasury income.

Net trading income increased £34m to £27m (2009: loss of £7m) and net investment loss increased 38% (£9m) to £33m loss (2009: loss of £24m) reflecting an increase in small venture capital investment write downs.

Other income decreased by £116m to £4m (2009: £120m), reflecting non recurrence of £83m income from the repurchase of securitised debt issued in 2009 and lower operating lease income.

Impairment charges increased to £949m (2009: £718m) primarily in Spain where an increase of £433m was driven by the depressed market conditions in the property and construction sector including some significant single name cases. This was partly offset by an improved performance in UK & Ireland of £135m reflecting lower default rates and fewer insolvencies and an improvement in New Markets of £77m, including £68m in the retail book. Impairment as a percentage of period-end loans and advances to customers and banks increased to 240bps
(2009: 184bps).

Operating expenses grew 8% (£61m) to £829m (2009: £768m), reflecting restructuring costs in New Markets of £93m predominantly relating to Indonesia, and investment in infrastructure primarily in the UK. This was partly offset by lower pension charges in the UK resulting from a £62m pension credit resulting from amendments to the treatment of minimum defined benefits.

Total assets fell 2% (£1.9bn) to £86.9bn (2009: £88.8bn) mostly driven by lower Asset Finance business loans. UK new term lending was £5.4bn. Risk weighted assets fell by 5% to £72.7bn (2009: £76.9bn) reflecting improving credit quality particularly in the UK, an 8% decline in the value of Euro denominated assets in Sterling terms and lower levels of customer assets.

Results by Business

Barclays Corporate

Half Year Ended 30th June 2010
Income Statement Information	UK & Ireland	Continental Europe	New Markets	Total
	£m	£m	£m	£m
Income	1,122	147	132	1,401
Impairment charges and other credit provisions	(280)	(586)	(83)	(949)
Operating expenses	(463)	(85)	(281)	(829)
Profit/(loss) before tax	379	(524)	(232)	(377)
Balance Sheet Information
Loans and advances to customers at amortised cost	£52.8bn	£10.4bn	£3.6bn	£66.8bn
Loans and advances to customers at fair value	£14.4bn	-	-	£14.4bn
Customer accounts	£61.6bn	£4.4bn	£2.4bn	£68.4bn
Total assets	£69.5bn	£12.5bn	£4.9bn	£86.9bn
Half Year Ended 31st December 2009
Income Statement Information
Income	1,195	189	159	1,543
Impairment charges and other credit provisions	(464)	(165)	(211)	(840)
Operating expenses	(427)	(80)	(191)	(698)
Profit/(loss) before tax	304	(56)	(243)	5
Balance Sheet Information
Loans and advances to customers at amortised cost	£55.6bn	£11.5bn	£3.6bn	£70.7bn
Loans and advances to customers at fair value	£13.1bn	-	-	£13.1bn
Customer accounts	£58.4bn	£5.6bn	£2.3bn	£66.3bn
Total assets	£71.3bn	£12.8bn	£4.7bn	£88.8bn
Half Year Ended 30th June 2009
Income Statement Information
Income	1,266	196	176	1,638
Impairment charges and other credit provisions	(415)	(143)	(160)	(718)
Operating expenses	(482)	(80)	(206)	(768)
Profit/(loss) before tax	369	(27)	(190)	152
Balance Sheet Information
Loans and advances to customers at amortised cost	£58.2bn	£12.8bn	£3.8bn	£74.8bn
Loans and advances to customers at fair value	£12.0bn	-	-	£12.0bn
Customer accounts	£52.1bn	£3.7bn	£2.0bn	£57.8bn
Total assets	£73.1bn	£14.4bn	£4.8bn	£92.3bn

Results by Business

Barclays Wealth

	Half Year Ended	Half Year Ended	Half Year Ended
Income Statement Information	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Net interest income	308	257	246
Net fee and commission income	444	428	364
Net trading income/(loss)	2	(5)	12
Net investment income/(loss)	3	14	(1)
Other income	-	5	2
Total income	757	699	623
Impairment charges and other credit provisions	(27)	(30)	(21)
Net income	730	669	602
Operating expenses excluding amortisation of intangible assets	(621)	(591)	(514)
Amortisation of intangible assets	(14)	(10)	(14)
Operating expenses	(635)	(601)	(528)
Profit on disposal of subsidiaries, associates and joint ventures	-	-	1
Profit before tax	95	68	75
Balance Sheet Information
Loans and advances to customers at amortised cost	£14.3bn	£13.0bn	£11.9bn
Customer accounts	£41.8bn	£38.4bn	£38.1bn
Total assets	£16.4bn	£14.9bn	£14.1bn
Risk weighted assets	£11.6bn	£11.4bn	£10.9bn
Performance Measures
Return on average equity	11%	9%	9%
Return on average tangible equity	16%	14%	13%
Return on average risk weighted assets	1.4%	1.1%	1.1%
Loan loss rate (bps)	37	46	34
Cost:income ratio	84%	86%	85%
Economic profit	£50m	£29m	£17m
Other Financial Measures
Average net income generated per member of staff (000s)	£99	£90	£78
Total client assets	£153.5bn	£151.2bn	£134.0bn

Results by Business

Barclays Wealth

Barclays Wealth profit before tax increased 27% (£20m) to £95m (2009: £75m).

Income increased 22% (£134m) to £757m (2009: £623m) principally reflecting growth in the High Net Worth businesses and higher attributable net interest income from the new internal Funds Transfer Pricing mechanism.

Net interest income increased 25% (£62m) to £308m (2009: £246m). The increase in net interest income was principally due to changes in internal Funds Transfer Pricing which gives credit for the behaviourally long-term deposits held by Barclays Wealth. The net interest margin increased to 116bps (2009: 99bps). This reflects the increase in the liabilities margin from 80bps to 130bps as well as the reduction in the asset margin from 113bps to 78bps. Customer accounts grew 9% to £41.8bn (31st December 2009: £38.4bn) and loans and advances to customers grew 10% to £14.3bn (31st December 2009: £13.0bn).

Net fee and commission income increased 22% (£80m) to £444m (2009: £364m) primarily driven by higher transactional activity with High Net Worth clients.

Impairment charges increased £6m to £27m (2009: £21m).

Operating expenses increased 20% (£107m) to £635m (2009: £528m). This was principally due to the impact of the growth in High Net Worth business revenues on staff and infrastructure costs and the start of Barclays Wealth's strategic investment programme. Expenditure in this programme was £33m in the first half of 2010 and is expected to increase to £80m for the second half. This programme is focused on hiring client facing staff to build productive capacity and investment in the facilities and technology required to develop our client experience.

Total client assets, comprising customer deposits and client investments were £153.5bn (2009: £151.2bn) with underlying net new asset inflows of £3bn. Risk weighted assets increased 2% to £11.6bn (2009: £11.4bn) reflecting growth in loans and advances and improved collateral coverage.

Results by Business

Investment Management

	Half Year Ended	Half Year Ended	Half Year Ended
Income Statement Information	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Net interest (expense)/income	(3)	-	10
Net fee and commission income/(expense)	3	26	(28)
Net trading (loss)/income	(17)	(12)	32
Net investment income/(loss)	51	(3)	14
Other income	-	1	-
Total income	34	12	28
Operating expenses excluding amortisation of intangible assets	(3)	(26)	9
Operating expenses	(3)	(26)	9
Loss on disposal of subsidiaries, associates and joint ventures	-	(1)	-
Profit/(loss) before tax	31	(15)	37
Balance Sheet Information
Total assets1	£3.6bn	£5.4bn	£67.8bn
Risk weighted assets1	£0.1bn	£0.1bn	£3.7bn
Performance Measures
Economic (loss)/profit2	(195)	6,582	65

1     30.6.09 includes assets and risk weighted assets relating to Barclays Global Investors discontinued operations.

2     Half year ended 31.12.09 includes profit before tax on disposal of Barclays Global Investors of £6,331m.

Results by Business

Investment Management

Investment Management profit before tax of £31m (2009: £37m) principally reflected dividend income from the 19.9% holding in BlackRock, Inc.

Total assets as at 30th June 2010 of £3.6bn (31st December 2009: £5.4bn) reflected the value of the 37.567m shares held in BlackRock, Inc. at the closing market price on 30th June 2010 of US$ 143.40 (31st December 2009: US$ 232.20).

This investment is carried as an available for sale financial instrument with the downward fair value movement of £2.2bn taken to the available for sale reserve. The offsetting appreciation in the shares' US Dollar value against Sterling of £0.4bn was hedged by foreign exchange instruments.

The holding was assessed for impairment by the Group as at 30th June 2010 in line with Group accounting policy. This analysis identified that the reduction in fair value was not significant or prolonged in the context of observed market volatility and, as such, there was no impairment as at 30th June 2010.

Results by Business

Absa

	Half Year Ended	Half Year Ended	Half Year Ended
Income Statement Information	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Net interest income	737	684	616
Net fee and commission income	538	509	434
Net trading income/(loss)	23	6	(11)
Net investment (loss)/income	(16)	62	66
Net premiums from insurance contracts	187	156	138
Other income	23	22	42
Total income	1,492	1,439	1,285
Net claims and benefits incurred under insurance contracts	(113)	(96)	(75)
Total income net of insurance claims	1,379	1,343	1,210
Impairment charges and other credit provisions	(282)	(272)	(295)
Net income	1,097	1,071	915
Operating expenses excluding amortisation of intangible assets	(756)	(768)	(632)
Amortisation of intangible assets	(28)	(26)	(25)
Operating expenses	(784)	(794)	(657)
Share of post-tax results of associates and joint ventures	1	(4)	-
Profit/(loss) on disposal of subsidiaries, associates and joint ventures	4	(4)	1
Profit before tax	318	269	259
Balance Sheet Information
Loans and advances to customers at amortised cost	£37.3bn	£36.4bn	£34.1bn
Customer accounts	£20.7bn	£19.7bn	£18.0bn
Total assets	£47.0bn	£45.8bn	£42.6bn
Risk weighted assets	£23.1bn	£21.4bn	£20.2bn
Performance Measures
Return on average equity1	11%	11%	9%
Return on average tangible equity2	22%	24%	24%
Return on average risk weighted assets	1.9%	1.9%	1.9%
Loan loss rate (bps)	147	146	168
Cost:income ratio	57%	59%	54%
Cost:net income ratio	71%	74%	72%
Economic profit/(loss)	£13m	(£1m)	(£14m)
Key Facts
Number of corporate customers	97,000	100,000	102,000
Number of retail customers	11.2m	11.4m	11.0m
Number of ATMs	8,500	8,560	8,826
Number of branches	851	857	865
Number of sales centres	192	205	208
Number of distribution points	1,043	1,062	1,073

1     The return on average equity differs from the return on equity (ROE) reported by Absa Group Ltd of 15% as the latter does not include goodwill arising from Barclays acquisition of Absa and reflects all of the Absa group businesses.

2     Including non-controlling interests

Results by Business

Absa

Impact of Absa Group Limited on Barclays Results

Absa Group Limited profit before tax of R5,617m (2009: R4,757m), an increase of 18%, is translated prior to consolidation into Barclays results at an average exchange rate of R11.48/£ (2009: R13.70/£), a 19% appreciation in the average value of the Rand against Sterling. Consolidation adjustments reflected the amortisation of intangible assets of £28m (2009: £25m) and internal funding and other adjustments of £22m (2009: £23m). The resulting profit before tax of £439m (2009: £299m) is represented within Absa £318m (2009: £259m), Barclays Capital £58m (2009: £6m), Barclaycard £66m (2009: £33m) and Barclays Wealth £3m loss (2009: £1m profit).

Absa Group Limited's total assets were R718,204m (31st December 2009: R710,796m), an increase of 1%. This is translated into Barclays results at a period end exchange rate of R11.45/£ (2009: R11.97/£).

Absa

Absa profit before tax increased 23% (£59m) to £318m (2009: £259m) mainly as a result of the 19% appreciation of the Rand against Sterling. Rand income declined slightly with cost growth offset by lower impairments.

Income increased 14% (£169m) to £1,379m (2009: £1,210m) predominantly reflecting the impact of exchange rate movements.

Net interest income improved 20% (£121m) to £737m (2009: £616m) reflecting the appreciation in the average value of the Rand against Sterling. The net interest margin increased to 261bps (2009: 257bps). Average customer assets increased 15% to £36.6bn (2009: £31.8bn) purely driven by appreciation of the Rand. Mortgages remained relatively flat, while instalment finance showed a decline with the run-off outweighing new sales. The assets margin decreased to 269bps (2009: 274bps) as a result of the higher cost of wholesale funding. Average customer liabilities increased 24% to £20.4bn (2009: £16.5bn), primarily driven by the appreciation of the Rand. Retail savings and commercial cheque and call deposits had growth of 4.9% and 3.7% respectively in Rand terms. The liability margin was in line with the previous year as the improvement in retail cheque accounts, fixed and notice deposits offsets the decline in business customers' call, cheque and fixed deposits. The decline in business customers' deposit margins is indicative of the significant competition in the market for deposits.

Net fee and commission increased 24% (£104m) to £538m (2009: £434m), mainly reflecting the impact of exchange rate movements as well as some pricing increases and volume growth.

Net trading income increased £34m to £23m (2009: loss of £11m), with net investment income decreasing £82m to a loss of £16m (2009:£66m). These movements reflect the non-recurrence of the gain of £17m from the sale of shares in MasterCard and the adverse impact of mark to market adjustments on Visa of a £9m loss compared to a £7m gain in 2009.

Net premiums from insurance contracts increased 36% (£49m) to £187m (2009: £138m) reflecting volume growth in both life and short-term insurance and the impact of exchange rate movements.

Other income decreased £19m to £23m (2009: £42m) reflecting lower mark-to-market adjustments on investment property portfolios.

Impairment charges decreased by 4% (£13m) to £282m (2009: £295m) mainly as a result of the continuing improvement in the retail portfolios associated with the moderate economic climate. This was offset by the impact of exchange rate movements. In local currency, impairment charges fell by 18%.

Operating expenses increased 19% (£127m) to £784m (2009: £657m) reflecting the impact of exchange rate movements partially offset by a one-off credit relating to the Group's recognition of a pension surplus. As a result, the cost:income ratio deteriorated from 54% to 57%.

Total assets increased 3% to £47.0bn (31st December 2009: £45.8bn) and risk weighted assets increased 8% (£1.7bn) to £23.1bn (31st December 2009: £21.4bn), reflecting the impact of exchange rate movements.

Results by Business

Head Office Functions and Other Operations

	Half Year Ended	Half Year Ended	Half Year Ended
Income Statement Information	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Net interest income/(expense)	164	4	(511)
Net fee and commission expense	(273)	(192)	(226)
Net trading (loss)/income	(3)	(371)	80
Net investment loss	-	(32)	(2)
Net premiums from insurance contracts	41	45	47
Other income	35	51	1,135
Total (loss)/income	(36)	(495)	523
Impairment charges and other credit provisions	5	(15)	(1)
Net (loss)/income	(31)	(510)	522
Operating expenses	(390)	(378)	(192)
Share of post-tax results of associates and joint ventures	-	-	1
Profit/(loss) on disposal of associates and joint ventures	-	8	(1)
(Loss)/profit before tax	(421)	(880)	330
Balance Sheet Information
Total assets	£13.7bn	£6.4bn	£6.1bn
Risk weighted assets	£1.8bn	£0.9bn	£0.1bn

Results by Business

Head Office Functions and Other Operations

Head Office Functions and Other Operations profit before tax decreased £751m to a loss of £421m (2009: profit of £330m). The first half of 2009 included £1,109m relating to a net gain on debt buy-backs.

Total income decreased £559m to a loss of £36m (2009: income of £523m).

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 increased £675m to £164m (2009: loss of £511m) primarily due to reduced costs of central funding activity as the money market dislocations eased and a £235m increase in consolidation adjustments on hedging derivatives, with the corresponding expense being recorded in net trading income.

Net fees and commissions expense increased £47m to £273m (2009: £226m) driven by increases in fees for structured capital market activities to £191m (2009: £147m).

Net trading income decreased £83m to a loss of £3m (2009: profit of £80m). During the half year a repatriation of capital from an overseas operation led to reclassification of £221m of profit from the currency translation reserve to the income statement. This was more than offset by the £235m increase in consolidation adjustments on hedging derivatives, noted above, and net losses on hedging activities.

Other income decreased £1,100m to £35m (2009: £1,135m) reflecting gains in 2009 of £1,127m on exchange of upper Tier 2 perpetual debt for new issuances of lower Tier 2 dated loan stock.

Operating expenses increased £198m to £390m (2009: £192m), largely due to a provision of £194m in relation to the possible resolution of a review of Barclays compliance with US economic sanctions legislation and UK bank payroll taxes of £51m.

Total assets increased 114% to £13.7bn (31st December 2009: £6.4bn) driven mainly by a change in hedging strategy.

1     Exchange differences arising from translation of foreign operations are included within cumulative translation reserves which are then released to the profit and loss account on disposal or partial disposal of the operation.

Risk Management

Overview of Barclays Risk Exposures

Overall impairment charges fell during the first half of 2010 reflecting generally improving credit conditions in our main markets. In the UK, GDP growth has been moderate, labour and housing markets have shown more resilience. Interest rates remained low, which has supported improved credit conditions. The economic environment in many other key markets has also begun to show signs of improvement. The most material risks to this outlook relate to the uncertainty in the strength of the global economic recovery, which would affect unemployment, asset values and interest rates over time.

Barclays continues to manage actively its businesses to mitigate these risks and address these challenges. There have been no material changes to the risk management processes as described in the Risk Management section of Barclays Annual Report and Accounts for the year ended 31st December 2009.

Pages 46 to 74 of this Results Announcement provide details with respect to Barclays risk exposures:

- Pages 48 to 61 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 46 to 47)

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

›     Loans and advances, impairment charges and segmental analyses (pages 48 to 51)

›     Potential Credit Risk Loans and Coverage Ratios (pages 52 to 53)

›     Wholesale Credit Risk (pages 54 to 57)

›     Retail Credit Risk (pages 58 to 60)

-    Analysis of the credit quality of debt and similar securities, other than loans held within Barclays (page 61)

- Pages 62 to 63 provide an analysis of market risk and, in particular, Barclays Capital's DVaR

- Pages 64 to 66 set out the key measures of liquidity risk, including the Group liquidity pool, term financing and funding structure, GRB, Barclays Corporate, Wealth and Head Office functions funding and Barclays Capital funding

- Pages 67 to 72 provide detailed disclosures and analysis of Barclays Capital credit market assets by asset class, covering current exposures, performance in the year, sales and paydowns, foreign exchange movements and, where appropriate, details of collateral held, geographic spread, vintage and credit quality

- Pages 73 to 74 provide exposures for selected Eurozone countries

Barclays is also affected by legal risk and regulatory compliance risk. Certain information regarding these risks can be found on pages 106 to 107. Other principal risks discussed in the 2009 Annual Report remain unchanged from the year end.

Risk Management

Analysis of Total Assets

			Accounting Basis
Assets as at 30.06.10	Total Assets		Cost Based Measure	Fair Value
	£m		£m	£m
Cash and balances at central banks	103,928		103,928	-
Items in the course of collection from other banks	961		961	-
Treasury & other eligible bills	3,955		-	3,955
Debt securities	137,456		-	137,456
Equity securities	21,365		-	21,365
Traded loans	2,562		-	2,562
Commodities6	1,691		-	1,691
Trading portfolio assets	167,029		-	167,029
Financial Assets Designated at Fair Value
Loans and advances	24,056		-	24,056
Debt securities	3,192		-	3,192
Equity securities	4,701		-	4,701
Other financial assets7	9,346		-	9,346
Held for own account	41,295		-	41,295
Held in respect of linked liabilities to customers under investment contracts8	1,469		-	1,469
Derivative financial instruments	505,210		-	505,210
Loans and advances to banks	45,924		45,924	-
Loans and advances to customers	448,266		448,266	-
Debt securities	42,348		-	42,348
Equity securities	4,741		-	4,741
Treasury & other eligible bills	5,585		-	5,585
Available for sale financial instruments	52,674		-	52,674
Reverse repurchase agreements and cash collateral on securities borrowed	197,050		197,050	-
Other assets	23,340		22,085	1,255
Total assets as at 30.06.10	1,587,146		818,214	768,932
Total assets as at 31.12.09	1,378,929		710,512	668,417

1     Further analysis of loans and advances is on pages 48 to 51.

2     Further analysis of debt securities and other bills is on page 61.

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.

Risk Management

Analysis of Total Assets							Sub Analysis
Loans and Advances1	Derivatives	Debt Securities and Other Bills2	Reverse Repurchase Agreements3	Equity Securities4	Other		Credit Market Exposures5
£m	£m	£m	£m	£m	£m		£m
-	-	-	-	-	103,928		-
-	-	-	-	-	961		-
-	-	3,955	-	-	-		-
-	-	137,456	-	-	-		231
-	-	-	-	21,365	-		-
2,562	-	-	-	-	-		-
-	-	-	-	-	1,691		-
2,562	-	141,411	-	21,365	1,691		231
24,056	-	-	-	-	-		6,482
-	-	3,192	-	-	-		-
-	-	-	-	4,701	-		-
-	-	-	8,624	-	722		-
24,056	-	3,192	8,624	4,701	722		6,482
-	-	-	-	-	1,469		-
-	505,210	-	-	-	-		2,527
45,924	-	-	-	-	-		-
448,266	-	-	-	-	-		15,216
-	-	42,348	-	-	-		455
-	-	-	-	4,741	-		-
-	-	5,585	-	-	-		-
-	-	47,933	-	4,741	-		455
-	-	-	197,050	-	-		-
-	-	-	-	-	23,340		1,252
520,808	505,210	192,536	205,674	30,807	132,111		26,163
487,268	416,815	180,334	151,188	32,534	110,790		26,601

5     Further analysis of Barclays Capital credit market exposures is on pages 67 to 72. Undrawn commitments of £219m (31st December 2009: £257m) are off-balance sheet and therefore not included in the table above.

6    Commodities primarily consist of physical inventory positions.

7     These instruments consist primarily of 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.

Risk Management

Credit Risk

Loans and Advances to Customers and Banks

Total loans and advances to customers and banks increased 7% to £520,808m (31st December 2009: £487,268m). Loans and advances at amortised cost were £494,190m (31st December 2009: £461,359m) and loans and advances at fair value were £26,618m (31st December 2009: £25,909m).

Total loans and advances to customers and banks at amortised cost gross of impairment increased by £33,782m (7%) to £505,937m (31st December 2009: £472,155m) with rises in both the wholesale (9%) and retail (5%) portfolios.

The principal drivers for this increase were:

- Barclays Capital, where loans and advances increased 15% to £190,941m (31st December 2009: £165,624m). This was driven by increases in settlement balances and cash collateral provided against derivative trades and the net depreciation of Sterling relative to other currencies, offset by a reduction in borrowings. The corporate and government lending portfolio declined 10% to £49,113m (31st December 2009: £54,342m), primarily due to reductions in borrowings by customers offset by increases due to the net depreciation in the value of Sterling relative to other currencies

- UK Retail Banking, due to the acquisition of the Standard Life Bank mortgage portfolio and increased lending in Home Finance

This was partially offset by a reduction of £3,329m (5%) in Barclays Corporate, due to lower customer demand in UK & Ireland operations.

Loans and Advances at Amortised Cost

As at 30.06.10	Gross Loans & Advances	Impair-ment Allowance	Loans & Advances Net of Impair-ment	Credit Risk Loans	CRLs % of Gross Loans & Advances	Impair-ment Charge1	Loan Loss Rates2
	£m	£m	£m	£m	%	£m	bp
Wholesale - customers	234,738	5,007	229,731	11,005	4.7%	1,214	103
Wholesale - banks	45,984	60	45,924	55	0.1%	(6)	(3)
Total wholesale	280,722	5,067	275,655	11,060	3.9%	1,208	86
Retail - customers	225,215	6,680	218,535	11,657	5.2%	1,773	157
Total retail	225,215	6,680	218,535	11,657	5.2%	1,773	157
Total	505,937	11,747	494,190	22,717	4.5%	2,981	118
As at 31.12.09
Wholesale - customers	217,470	4,616	212,854	10,982	5.0%	3,428	158
Wholesale - banks	41,196	61	41,135	57	0.1%	11	3
Total wholesale	258,666	4,677	253,989	11,039	4.3%	3,439	133
Retail - customers	213,489	6,119	207,370	11,349	5.3%	3,919	184
Total retail	213,489	6,119	207,370	11,349	5.3%	3,919	184
Total	472,155	10,796	461,359	22,388	4.7%	7,358	156

1     For 30.06.10, the impairment charge provided above relates to the six months ended 30.06.10. For 31.12.09, the impairment charge provided above relates to the twelve months ended 31.12.09.

2     The loan loss rates for 30.06.10 have been calculated on an annualised basis.

Risk Management

Impairment Charges

Impairment charges on loans and advances fell 24% (£922m) to £2,981m (2009: £3,903m). The fall reflected generally improving credit conditions in Barclays main markets, which led to lower charges across the majority of businesses but predominantly in the wholesale portfolios, where charges against credit market exposures fell and single name charges were generally lower. This reduction was achieved in spite of an increase of £433m in impairment on the Barclays Corporate loan book in Spain. In the retail portfolios, impairment performance improved as delinquency rates fell across Barclays businesses, most notably our UK, US, Spanish and Indian books.

As a result of this fall in impairment and the rise in loans and advances, the impairment charges as a percentage of period end Group total loans and advances decreased to 118bps (2009: 165bps).

Impairment Charges and Other Credit Provisions

	Half Year Ended	Half Year Ended	Half Year Ended
	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Impairment charges on loans and advances (note 22)	2,970	3,460	3,870
Charges in respect of undrawn facilities and guarantees	11	(5)	33
Impairment charges on loans and advances and other credit provisions	2,981	3,455	3,903
Impairment charges on reverse repurchase agreements	2	40	3
Impairment charges on available for sale assets	97	20	650
Impairment charges and other credit provisions	3,080	3,515	4,556

In Corporate and Investment Banking and Barclays Wealth, impairment fell by 39% (£774m) to £1,186m
(2009: £1,960m), reflecting lower charges against credit market exposures and fewer charges against large single name exposures, partially offset by higher charges against property and construction related names in Spain. The loan loss rate for the first half of 2010 was 86bps (2009: 148bps).

The impairment charge in Global Retail Banking fell by 8% (£129m) to £1,518m (2009: £1,647m) with lower charges across the majority of portfolios, reflecting improving credit conditions across all regions, which favourably impacted delinquency rates and reduced the loan loss rate for the first half of 2010 to 159bps
(2009: 191bps).

In Absa, impairment fell by 4% (£13m) to £282m (2009: £295m) as a result of continued improvement in the retail portfolios offset by currency movements. The loan loss rate for the first half of 2010 was 147bps
(2009: 168bps).

The impairment charge against available for sale assets and reverse repurchase agreements fell by 85% (£554m) to £99m (2009: £653m), principally driven by lower impairment against credit market exposures.

Risk Management

Impairment Charges and other Credit Provisions by Business

Half Year Ended 30.06.2010	Loans and Advances1	Available for Sale Assets	Reverse Repurchase Agreements	Total
	£m	£m	£m	£m
Global Retail Banking	1,518	-	-	1,518
UK Retail Banking	447	-	-	447
Barclaycard	890	-	-	890
Western Europe Retail Banking	133	-	-	133
Barclays Africa	48	-	-	48
Corporate and Investment Banking, and Barclays Wealth	1,186	97	2	1,285
Barclays Capital2	322	(15)	2	309
Barclays Corporate	837	112	-	949
Barclays Wealth	27	-	-	27
Absa	282	-	-	282
Head Office Functions and Other Operations	(5)	-	-	(5)
Total impairment charges and other credit provisions	2,981	97	2	3,080
Half Year Ended 31.12.2009
Global Retail Banking	1,637	4	-	1,641
UK Retail Banking	510	-	-	510
Barclaycard	883	-	-	883
Western Europe Retail Banking	186	4	-	190
Barclays Africa	58	-	-	58
Corporate and Investment Banking, and Barclays Wealth	1,533	14	40	1,587
Barclays Capital2	667	10	40	717
Barclays Corporate	836	4	-	840
Barclays Wealth	30	-	-	30
Absa	272	-	-	272
Head Office Functions and Other Operations	13	2	-	15
Total impairment charges and other credit provisions	3,455	20	40	3,515
Half Year Ended 30.06.2009
Global Retail Banking	1,647	-	-	1,647
UK Retail Banking	521	-	-	521
Barclaycard	915	-	-	915
Western Europe Retail Banking	148	-	-	148
Barclays Africa	63	-	-	63
Corporate and Investment Banking, and Barclays Wealth	1,960	650	3	2,613
Barclays Capital2	1,231	640	3	1,874
Barclays Corporate	708	10	-	718
Barclays Wealth	21	-	-	21
Absa	295	-	-	295
Head Office Functions and Other Operations	1	-	-	1
Total impairment charges and other credit provisions	3,903	650	3	4,556

1     Includes charges in respect of undrawn facilities and guarantees.

2                 Credit market related impairment charges within Barclays Capital comprised £311m (2009: £706m) against loans and advances, £nil (2009: £464m) against available for sale assets and £nil (2009: £nil) against reverse repurchase agreements.

Risk Management

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

As at 30.06.10	United Kingdom	Other European Union	United States	Africa	Rest of the World	Total
	£m	£m	£m	£m	£m	£m
Financial institutions	30,972	37,284	66,119	5,743	20,118	160,236
Agriculture, forestry and fishing	2,108	149	-	1,755	6	4,018
Manufacturing	7,179	5,034	1,411	1,083	2,256	16,963
Construction	3,859	1,363	5	1,525	125	6,877
Property	12,287	3,671	360	3,341	1,722	21,381
Government and central banks	616	1,467	614	3,041	4,090	9,828
Energy and water	2,174	2,324	1,851	163	1,954	8,466
Wholesale and retail distribution and leisure	11,110	2,411	775	1,864	1,678	17,838
Transport	3,376	1,821	263	220	1,471	7,151
Postal and communications	1,615	743	111	658	650	3,777
Business and other services	18,282	4,823	1,348	5,080	2,714	32,247
Home loans	100,475	34,259	64	22,504	1,448	158,750
Other personal	30,039	7,439	7,524	1,036	1,938	47,976
Finance lease receivables	2,813	1,969	295	5,147	205	10,429
Total loans and advances to customers and banks	226,905	104,757	80,740	53,160	40,375	505,937
As at 31.12.09
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 and central banks	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

Risk Management

Potential Credit Risk Loans and Coverage Ratios

	CRLs		PPLs		PCRLs
	30.06.10	31.12.09	30.06.10	31.12.09	30.06.10	31.12.09
Home Loans	3,873	3,604	185	135	4,058	3,739
Unsecured and Other	7,784	7,745	538	559	8,322	8,304
Retail	11,657	11,349	723	694	12,380	12,043
Wholesale	11,060	11,039	2,732	2,674	13,792	13,713
Group	22,717	22,388	3,455	3,368	26,172	25,756
	Impairment Allowance		CRL Coverage		PCRL Coverage
	30.06.10	31.12.09	30.06.10	31.12.09	30.06.10	31.12.09
Home Loans	650	639	16.8%	17.7%	16.0%	17.1%
Unsecured and Other	6,030	5,480	77.5%	70.8%	72.5%	66.0%
Retail	6,680	6,119	57.3%	53.9%	54.0%	50.8%
Wholesale	5,067	4,677	45.8%	42.4%	36.7%	34.1%
Group	11,747	10,796	51.7%	48.2%	44.9%	41.9%

Credit Risk Loans

The Group's Credit Risk Loans (CRLs) rose 1% to £22,717m (31st December 2009: £22,388m) in 2010. However, the net inflows to the Group continued to fall, quarter-on-quarter, from 17% in Q1 2009 to 3% in Q1 2010 and a net reduction of 1% in Q2 2010.

CRLs in the Retail portfolios rose by 3% to £11,657m (31st December 2009: £11,349m) reflecting an increase in Retail Home Loans of £269m (7%) to £3,873m (31st December 2009: £3,604m) primarily due to an increase in recovery balances in the Absa Home Loans portfolio and the inclusion of Standard Life Bank in UK Retail Banking. Unsecured and Other portfolios remained broadly stable at £7,784m (31st December 2009: £7,745m).

CRLs in the Corporate and Wholesale portfolios remained broadly unchanged at £11,060m (31st December 2009: £11,039m). Wholesale CRL balances were lower in Barclays Capital and Barclays Corporate - UK & Ireland, as credit conditions led to improvements across default grades and an improvement in credit market exposures. This was offset by an increase in CRL balances in Continental Europe, primarily Spain, due to deterioration in the property sector.

Potential Problem Loans

The Group's Potential Problem Loans (PPLs) balance rose by 3% to £3,455m (31st December 2009: £3,368m). In the Retail portfolios, PPLs rose 4% (£29m) to £723m (31st December 2009: £694m) as balances increased by £50m in Retail Home Loans, primarily due to an increase in UK Retail Banking as a result of better alignment of definitions across portfolios. This was partially offset by a fall of £21m in Unsecured and Other portfolios, mainly due to lower balances in Western Europe Retail Bank, primarily Spain. PPL balances rose 2% (£58m) in Wholesale portfolios to £2,732m (31st December 2009: £2,674m) mainly reflecting a rise in Barclays Capital, partially offset by a reduction in Spanish balances followed into the CRL categories.

Potential Credit Risk Loans

As a result of the increases in CRLs and PPLs, Group Potential Credit Risk Loan (PCRL) balances increased 2% to £26,172m (31st December 2009: £25,756m).

PCRL balances rose in Retail Home Loans by 9% to £4,058m (31st December 2009: £3,739m) while in Retail Unsecured and Other portfolios they remained broadly unchanged at £8,322m (31st December 2009: £8,304m).

Total PCRL balances in the Corporate and Wholesale portfolios remained broadly unchanged at £13,792m
(31st December 2009: £13,713m).

Risk Management

Impairment Allowances and Coverage Ratios

Impairment allowances increased 9% to £11,747m (31st December 2009: £10,796m), reflecting increased impairment against delinquent assets across the majority of retail businesses as they flowed into later cycles and increased impairment charges against the Spanish property sectors, which has been reflected in Barclays Corporate - Continental Europe.

Retail impairment allowances rose by 2% in Retail Home Loans to £650m (31st December 2009: £639m) and by 10% in Retail Unsecured and Other portfolios to £6,030m (31st December 2009: £5,480m) as impairment stock increased against delinquent assets flowing into later cycles. The CRL coverage ratio in Retail Home Loans reduced to 16.8% (31st December 2009: 17.7%), and the PCRL coverage ratio reduced to 16.0% (31st December 2009: 17.1%). The CRL coverage ratio in Retail Unsecured and Other portfolios increased to 77.5% (31st December 2009: 70.8 %) and the PCRL coverage ratio increased to 72.5% (31st December 2009: 66.0%).

In the Corporate and Wholesale portfolios, impairment allowances increased 8% to £5,067m (31st December 2009: £4,677m) reflecting the increase in Barclays Corporate - Continental Europe. The CRL coverage ratio rose to 45.8% (31st December 2009: 42.4%), and the PCRL coverage ratio rose to 36.7% (31st December 2009: 34.1%).

The CRL coverage ratios in Retail Home Loans, Retail Unsecured and Other and Corporate and Wholesale portfolios remain within typical severity rates ranges for these types of products. The Group's CRL coverage ratio increased to 51.7% (31st December 2009: 48.2%), and its PCRL coverage ratio also increased to 44.9%
(31st December 2009: 41.9%).

Risk Management

Wholesale Credit Risk

Loans and advances to customers and banks in the wholesale portfolios increased by £22,056m (9%) to £280,722m (31st December 2009: £258,666m), primarily as a result of a £25,317m (15%) rise in Barclays Capital to £190,941m (31st December 2009: £165,624m). This was driven by an increase in settlement balances, an increase in the cash collateral held against derivative trades and the net depreciation of Sterling relative to other currencies offset by a reduction in borrowings. The corporate and government lending portfolio in Barclays Capital declined 10% to £49,113m (31st December 2009: £54,342m), primarily due to reductions in borrowing by customers offset by increases due to the net depreciation in the value of Sterling relative to other currencies. Loans and advances fell in Barclays Corporate by £3,139m (4%) to £67,986m (31st December 2009: £71,125m), due to reduced customer demand in UK and Ireland. The increase of £777m (8%) in balances at Absa was primarily due to the appreciation of the Rand against Sterling during 2010. In Rand terms, balances were stable.

In the wholesale portfolios, the impairment charge against loans and advances fell by £714m (37%) to £1,208m (31st December 2009: £1,922m) mainly due to a decrease in Barclays Capital, driven by lower charges against credit market exposures and lower charges against single names in the general loan book. This was partially offset by an increase in the Barclays Corporate impairment charge as a result of deteriorating credit conditions in the Spanish property and construction market leading to significantly higher charges in Continental Europe, although this was mitigated by lower default rates and fewer single name charges in UK & Ireland and New Markets.

The loan loss rate across the Group's wholesale portfolios for the first half of 2010 was 86bps (full year 2009: 133bps), reflecting the fall in impairment and the 9% rise in wholesale loans and advances.

As Barclays enters the second half of 2010, the principal uncertainties relating to the performance of the wholesale portfolios are:

- The extent and sustainability of economic recovery in the UK, US, Spain and South Africa as governments consider how to tackle large budget deficits through fiscal tightening which will impact economic growth

- The potential for single name risk and for losses in different sectors and geographies

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

- The impact of potentially deteriorating sovereign credit quality on the credit performance of related corporate lending

Risk Management

Wholesale Loans and Advances (L&A) at Amortised Cost

As at 30.06.101	Gross L&A	Impairment Allowance	L&A Net of Impairment	Credit Risk Loans	CRLs % of Gross L&A	Impairment Charge2	Loan Loss Rates3
	£m	£m	£m	£m	%	£m	bps
UK Retail Banking	4,104	68	4,036	272	6.6%	42	205
Barclaycard4	391	6	385	8	2.0%	10	512
Barclays Africa	2,785	126	2,659	223	8.0%	16	115
Barclays Capital	190,941	2,881	188,060	5,772	3.0%	322	34
Barclays Corporate	67,986	1,700	66,286	3,710	5.5%	762	224
Barclays Wealth	2,839	53	2,786	202	7.1%	10	70
Absa	10,854	221	10,633	790	7.3%	51	94
Head Office	822	12	810	83	10.1%	(5)	(122)
Total	280,722	5,067	275,655	11,060	3.9%	1,208	86
As at 31.12.091
UK Retail Banking	4,002	56	3,946	247	6.2%	95	238
Barclaycard4	322	4	318	10	3.1%	17	528
Barclays Africa	2,991	124	2,867	227	7.6%	33	110
Barclays Capital	165,624	3,025	162,599	6,411	3.9%	1,898	115
Barclays Corporate	71,125	1,204	69,921	3,148	4.4%	1,298	182
Barclays Wealth	3,495	43	3,452	179	5.1%	17	49
Absa	10,077	195	9,882	690	6.8%	67	66
Head Office	1,030	26	1,004	127	12.4%	14	137
Total	258,666	4,677	253,989	11,039	4.3%	3,439	133

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

	Corporate		Government		Settlement Balances and Cash Collateral		Other Wholesale		Total Wholesale
Wholesale1	30.06.10	31.12.09	30.06.10	31.12.09	30.06.10	31.12.09	30.06.10	31.12.09	30.06.10	31.12.09
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
UK Retail Banking	4,036	3,946	-	-	-	-	-	-	4,036	3,946
Barclay-card4	385	318	-	-	-	-	-	-	385	318
Barclays Africa	1,939	2,056	96	141	-	-	624	670	2,659	2,867
Barclays Capital	44,675	49,849	3,707	3,456	85,870	55,672	53,808	53,622	188,060	162,599
Barclays Corporate	65,790	69,553	372	211	-	-	124	157	66,286	69,921
Barclays Wealth	2,180	2,818	146	162	-	-	460	472	2,786	3,452
Absa	9,037	8,695	717	263	-	-	879	924	10,633	9,882
Head Office	810	1,004	-	-	-	-	-	-	810	1,004
Total	128,852	138,239	5,038	4,233	85,870	55,672	55,895	55,845	275,655	253,989

1     Loans and advances to business customers in Western Europe Retail Banking are included in the Retail Loans and Advances to customers at amortised cost table on page 58.

2     For 30.06.10, the impairment charge provided above relates to the six months ended 30.06.10. For 31.12.09, the impairment charge provided above relates to the twelve months ended 31.12.09.

3     The loan loss rates for 30.06.10 have been calculated on an annualised basis. The loan loss rates for 31.12.09 have been calculated on the 12 months ended 31.12.09.

4     Barclaycard represents corporate credit and charge cards.

Risk Management

Analysis of Barclays Capital Wholesale Loans and Advances at Amortised Cost

As at 30.06.10	Gross L&A	Impair-ment Allowance	L&A Net of Impair-ment	Credit Risk Loans	CRLs % of Gross L&A	Impair- ment Charge1	Loan Loss Rates2
Loans and Advances to Banks	£m	£m	£m	£m	%	£m	bp
Cash collateral and settlement balances	21,598	-	21,598	-	-	-	-
Interbank lending	20,974	60	20,914	55	0.3%	(6)	(6)
Loans and Advances to Customers
Corporate and Government lending	49,113	731	48,382	1,357	2.8%	207	84
ABS CDO Super Senior	3,760	1,860	1,900	3,760	100.0%	113	601
Other wholesale lending	31,224	230	30,994	600	1.9%	8	5
Cash collateral and settlement balances	64,272	-	64,272	-	-	-	-
Total	190,941	2,881	188,060	5,772	3.0%	322	34
As at 31.12.09
Loans and Advances to Banks
Cash collateral and settlement balances	15,893	-	15,893	-	-	-	-
Interbank lending	21,722	61	21,661	57	0.3%	14	6
Loans and 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

Barclays Capital wholesale loans and advances increased 15% to £190,941m (31st December 2009: £165,624m). This was driven by an increase in settlement balances, an increase in the cash collateral held against derivative trades and the net depreciation in the value of Sterling relative to other currencies offset by a reduction in borrowings.

The corporate and government lending portfolio declined 10% to £49,113m (31st December 2009: £54,342m), primarily due to a reduction in borrowings by customers offset by increases due to the net depreciation in the value of Sterling relative to other currencies.

Included within corporate and government lending and other wholesale lending portfolios are £4,512m
(31st December 2009: £5,646m) of loans backed by retail mortgage collateral classified within financial institutions.

1     For 30.06.10, the impairment charge provided above relates to the six months ended 30.06.10. For 31.12.09, the impairment charge provided above relates to the twelve months ended 31.12.09.

2     The loan loss rates for 30.06.10 have been calculated on an annualised basis.

Risk Management

Loans and Advances Held at Fair Value

	As at	As at
	30.06.10	31.12.09
	£m	£m
Government	4,916	5,024
Financial Institutions	3,815	3,543
Transport	241	177
Postal and Communications	517	179
Business and other services	3,178	2,793
Manufacturing	483	1,561
Wholesale and retail distribution and leisure	559	664
Construction	333	237
Property	12,184	11,490
Energy and Water	392	241
Total	26,618	25,909

Barclays Capital loans and advances held at fair value were £12,222m (31st December 2009: £12,835m). Included within this balance is £6,482m relating to credit market exposures, the majority of which is made up of commercial real estate loans. The balance of £5,740m primarily comprises loans to financial institutions.

Barclays Corporate loans and advances held at fair value, which comprise lending to property, government and business and other services, were £14,396m (31st December 2009: £13,074m). The fair value of these loans and any movements are matched by offsetting fair value movements on hedging instruments.

Risk Management

Retail Credit Risk

Loans and advances to customers in the retail portfolios increased by £11,726m (5%) to £225,215m (31st December 2009: £213,489m). This was driven by an increase in UK Retail Banking, with balances in most other businesses remaining stable. The increase of £10,801m (11%) to £111,865m (31st December 2009: £101,064m) primarily reflected the acquisition of Standard Life Bank mortgage portfolio and increased lending in the UK Home Finance portfolio. Western Europe Retail Banking decreased by £1,126m (3%), which primarily reflected the depreciation of the Euro against Sterling partially offset by steady growth in Italy and Spain mortgages. The increase of £208m (1%) of balances in Absa was principally due to the appreciation of the Rand against Sterling during 2010 offset by a 4% fall in balances in Rand terms.

In the retail portfolios, the impairment charge against loans and advances fell by £208m (10%) to £1,773m (2009: £1,981m) due to improving economic conditions, particularly in the labour and housing markets and the low interest rate environment. The largest improvement was in the Retail portfolios of Barclays Corporate, which decreased by £67m (47%) to £75m, reflecting improving delinquency performance in the Indian book. The decrease of £64m (14%) to £405m in UK Retail Banking was driven by lower charge-offs in unsecured loans and a rise in house prices, which positively impacted Home Finance impairment allowances. The decrease of £27m (3%) in Barclaycard to £880m reflected positive underlying delinquency and bankruptcy trends, most notably in US Cards. Impairment charges were also lower in Western Europe Retail Banking, primarily due to improved collection performance and improving delinquency rates in Spanish cards, and in Barclays Africa mainly as a result of improved collection performance in the Egyptian and Zambian portfolios.

The loan loss rate across the Group's retail portfolios for the first half of 2010 was 157bps (full year 2009: 184bps).

As Barclays enters the second half of 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 to tackle large budget deficits through fiscal tightening, which will negatively affect net disposable income and impact economic growth

- The extent and duration of increases in unemployment and the speed and extent of rises in interest rates, as retail portfolio delinquency rates remain very sensitive to economic conditions

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

Retail Loans and Advances (L&A) to Customers at Amortised Cost

As at 30.06.10	Gross L&A	Impairment Allowance	L&A Net of Impairment	Credit Risk Loans	CRLs % of Gross L&A	Impairment Charge1	Loan Loss Rates2
	£m	£m	£m	£m	%	£m	bp
UK Retail Banking	111,865	1,715	110,150	3,061	2.7%	405	72
Barclaycard	29,459	2,955	26,504	3,459	11.7%	880	597
WE Retail Banking3	40,886	756	40,130	1,473	3.6%	133	65
Barclays Africa	2,006	161	1,845	180	9.0%	32	319
Barclays Corporate4	1,692	289	1,403	320	18.9%	75	887
Barclays Wealth	11,811	69	11,742	379	3.2%	17	29
Absa	27,496	735	26,761	2,785	10.1%	231	168
Total	225,215	6,680	218,535	11,657	5.2%	1,773	157
As at 31.12.09
UK Retail Banking	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
WE Retail Banking3	42,012	673	41,339	1,410	3.4%	334	80
Barclays Africa	1,811	138	1,673	163	9.0%	88	486
Barclays Corporate4	1,882	340	1,542	397	21.1%	246	1,307
Barclays Wealth	9,972	56	9,916	306	3.1%	34	34
Absa	27,288	655	26,633	2,573	9.4%	500	183
Total	213,489	6,119	207,370	11,349	5.3%	3,919	184

1     For 30.06.10, the impairment charge provided above relates to the six months ended 30.06.10. For 31.12.09, the impairment charge provided above relates to the twelve months ended 31.12.09.

2     The loan loss rates for 30.06.10 have been calculated on an annualised basis. The loan loss rate for 31.12.09 has been calculated on the twelve months ended 31.12.09.

3     WE Retail Banking includes loans and advances to business customers at amortised cost.

4     Barclays Corporate relates to retail portfolios in India, UAE, Russia, Pakistan and Indonesia.

Risk Management

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

Total home loans to retail customers rose by £9,001m (6%) to £158,100m (31st December 2009: £149,099m). The UK Home Loan portfolios within UK Retail Banking grew 12% to £98,705m (31st December 2009: £87,943m).

Unsecured retail credit (credit card and unsecured loans) portfolios increased 7% to £40,415m (31st December 2009: £37,733m).

	Home Loans		Cards and Unsecured Loans		Other Retail		Total Retail
	30.06.10	31.12.09	30.06.10	31.12.09	30.06.10	31.12.09	30.06.10	31.12.09
	£m	£m	£m	£m	£m	£m	£m	£m
UK Retail Banking	98,705	87,943	7,018	7,329	4,427	4,205	110,150	99,477
Barclaycard	-	-	22,666	21,564	3,838	5,226	26,504	26,790
WE Retail Banking	32,978	34,506	4,537	3,511	2,615	3,322	40,130	41,339
Barclays Africa	182	142	1,661	1,520	2	11	1,845	1,673
Barclays Corporate	311	396	960	984	132	162	1,403	1,542
Barclays Wealth	4,700	5,620	2,544	1,822	4,498	2,474	11,742	9,916
Absa	21,224	20,492	1,029	1,003	4,508	5,138	26,761	26,633
Total	158,100	149,099	40,415	37,733	20,020	20,538	218,535	207,370

Home Loans

The Group's principal home loans portfolios continued mainly to be in the UK Retail Banking Home Loans business (62% of the Group's total), Western Europe Retail Banking (21%, primarily Spain and Italy), and South Africa (13%). The asset quality of Barclays principal home loan portfolios remained resilient in the current economic conditions, as a consequence of the well secured back book and low LTV lending. Using current valuations, the average LTV of the portfolios as at 30th June 2010 was 42% for UK Home Loans (31st December 2009: 43%), 56% for Spain (31st December 2009: 54%), 45% for South Africa (31st December 2009: 47%) and 46% for Italy
(31st December 2009: 45%).

The average LTV for new mortgage business during 2010 at origination was 51% for UK Home Loans (31st December 2009: 48%), 60% for Spain (31st December 2009: 58%), 60% for South Africa (31st December 2009: 56%) and 59% for Italy (31st December 2009: 51%). The percentage of balances with an LTV of over 85% based on current values was 10% for UK Home Loans (31st December 2009: 14%), 12% for Spain (31st December 2009: 10%) and 31% for South Africa (31st December 2009: 36%) and 2% for Italy (31st December 2009: 2%). In the UK, buy-to-let mortgages comprised 6% of the total stock as at 30th June 2010.

Risk Management

Home Loans - Distribution of Balances by Loan to Value (Current Valuations)¹

	UK		Spain2		South Africa3		Italy
	30.06.10	31.12.09	30.06.10	31.12.09	30.06.10	31.12.09	30.06.10	31.12.09
	%	%	%	%	%	%	%	%
<= 75%	79.3%	74.5%	77.3%	79.1%	53.5%	49.0%	77.5%	79.2%
> 75% & <= 80%	6.3%	6.3%	6.2%	5.9%	7.7%	7.1%	18.8%	16.0%
> 80% & <= 85%	4.6%	5.4%	4.9%	4.9%	8.2%	7.8%	2.1%	2.8%
> 85% & <= 90%	3.6%	4.6%	3.4%	3.7%	7.9%	8.1%	0.8%	1.0%
> 90% & <= 95%	2.6%	3.4%	2.1%	2.2%	7.0%	7.8%	0.4%	0.5%
> 95%	3.6%	5.8%	6.1%	4.2%	15.7%	20.2%	0.4%	0.5%
Marked to market LTV	42%	43%	56%	54%	45%	47%	46%	45%
Average LTV on New Mortgages	51%	48%	60%	58%	60%	56%	59%	51%

	As at	As at	As at
Home Loans - 3 Month Arrears4	30.06.10	31.12.09	30.06.09
	%	%	%
UK	0.99%	1.04%	1.16%
Spain	0.39%	0.63%	0.76%
South Africa	4.33%	4.07%	4.02%
Italy	0.89%	1.00%	1.17%

Credit Cards and Unsecured Loans

The Group's largest card and unsecured loan portfolios are in the UK, being 53% of the Group total
(31st December 2009: 56%). The US cards portfolio accounts for 19% of the total exposure (31st December 2009: 20%).

Arrears rates in the UK Cards portfolio have improved during 2010 to 1.62% (31st December 2009: 1.79%), reflecting the impact of the improving economic conditions. As a percentage of the portfolio, three-month arrears rates fell during 2010 to 2.38% for UK Loans (31st December 2009: 2.74%) and 2.90% for US Cards
(31st December 2009: 3.31%).

	As at	As at	As at
Unsecured Lending 3 Month Arrears5	30.06.10	31.12.09	30.06.09
	%	%	%
UK Cards	1.62%	1.79%	2.09%
UK Loans	2.38%	2.74%	2.71%
US Cards	2.90%	3.31%	3.17%

1     Based on the following portfolios: UK: UK Retail Banking residential and buy-to-let mortgage portfolios; Spain: Western Europe Retail Banking Spanish retail mortgage portfolio; South Africa: Absa retail home loans portfolio; and Italy: Western Europe Retail Banking Italian retail mortgage portfolio. Metrics now include the recovery book.

2     Spain mark-to-market methodology based on balance weighted approach as per Bank of Spain requirements. 31.12.09 percentages have been revised to correctly account for further advances.

3     South Africa mark-to-market methodology revised to incorporate additional geographical granularity.

4     Defined as balances greater than 90 days delinquent but not charged off, expressed as a percentage of outstandings excluding balances in recovery. The UK definition includes balances in recovery. As at 30.06.10 the recovery book was Spain: £245m (1.64%); South Africa: £1.2bn (6.20%) and Italy: £132m (1.12%). Percentages are based on outstandings.

5     Defined as balances greater than 90 days delinquent but not charged off, expressed as a percentage of outstandings excluding balances in recovery. Percentages include accounts on repayment plans.

Risk Management

Debt Securities and Other Bills

The following table presents an analysis of the credit quality of debt and similar securities, other than loans held within the Group. Securities rated as investment grade amounted to 92.8% of the portfolio (31st December 2009: 91.8%).

As at 30.06.10	Treasury and Other Eligible Bills	Debt Securities	Total
	£m	£m	£m	%
AAA to BBB- (investment grade)	9,175	169,507	178,682	92.8%
BB+ to B	365	9,171	9,536	5.0%
B- or lower	-	4,318	4,318	2.2%
Total	9,540	182,996	192,536	100.0%
Of Which Issued by:
- governments and other public bodies	9,540	102,380	111,920	58.1%
- US agency	-	25,980	25,980	13.5%
- mortgage and asset-backed securities	-	14,258	14,258	7.4%
- corporate and other issuers	-	37,820	37,820	19.7%
- bank and building society certificates of deposit	-	2,558	2,558	1.3%
Total	9,540	182,996	192,536	100.0%
Of Which Classified as:
- trading portfolio assets	3,955	137,456	141,411	73.4%
- financial instruments designated at fair value	-	3,192	3,192	1.7%
- available-for-sale securities	5,585	42,348	47,933	24.9%
Total	9,540	182,996	192,536	100.0%
As at 31.12.09
AAA to BBB- (investment grade)	13,950	151,621	165,571	91.8%
BB+ to B	1,895	10,297	12,192	6.8%
B- or lower	-	2,571	2,571	1.4%
Total	15,845	164,489	180,334	100.0%
Of Which Issued by:
- governments and other public bodies	15,845	72,238	88,083	48.8%
- US agency	-	23,924	23,924	13.3%
- mortgage and asset-backed securities	-	17,826	17,826	9.9%
- corporate and other issuers	-	41,641	41,641	23.1%
- bank and building society certificates of deposit	-	8,860	8,860	4.9%
Total	15,845	164,489	180,334	100.0%
Of Which Classified as:
- trading portfolio assets	9,926	116,594	126,520	70.2%
- financial instruments designated at fair value	-	4,007	4,007	2.2%
- available-for-sale securities	5,919	43,888	49,807	27.6%
Total	15,845	164,489	180,334	100.0%

Risk Management

Market Risk

Market Risk is the risk that Barclays earnings or capital, or its ability to meet business objectives, will be adversely affected by changes in the level or volatility of market rates or prices such as interest rates, credit spreads, commodity prices, equity prices, and foreign exchange rates. The large majority of traded market risk resides in Barclays Capital.

Risk Measurement and Control

The measurement techniques used to measure and control traded market risk include Daily Value at Risk (DVaR), Expected Shortfall, three worst day average (3W) and stress testing.

DVaR is an estimate of the potential loss arising from unfavourable market movements, if the current positions were to be held unchanged for one business day. Barclays Capital uses the historical simulation methodology with a two year equally weighted historical period, at the 95% confidence level.

Market volatility increased due to concerns over future economic growth and the sovereign debt crisis, but remained below the extreme levels observed in 2008 and early 2009. The extreme volatility data points from 2008 and 2009 continue to impact DVaR in 2010 because the historical simulation methodology uses two years of equally weighted observations.

Barclays Capital's DVaR model has been approved by the FSA to calculate regulatory capital for designated trading books. The FSA categorises a DVaR model as green, amber or red depending on the number of days when a loss (as defined by the FSA) exceeds the corresponding DVaR estimate, measured at the 99% confidence level. A green model is consistent with a good working model. For Barclays Capital's trading book, green model status has been maintained for 2009 and the first half of 2010. Internally, DVaR is calculated for the trading book and certain banking books.

Both Expected Shortfall and 3W metrics use data from the DVaR historical simulation. Expected Shortfall is the average of all hypothetical losses beyond DVaR while 3W is the average of the three worst observations.

Stress testing provides an estimate of the potential losses that could arise in extreme market conditions. Global Asset Class stress testing has been designed to cover major asset classes including interest rate, credit spread, commodity, equity and foreign exchange rates. Global Scenario stress testing is based on hypothetical events which could lead to extreme yet plausible stress type moves, under which profitability is seriously challenged.

Market Risk is controlled through the use of limits on the above risk measures, where appropriate. Limits are set at the Barclays Capital level, risk factor level (e.g. interest rate risk) and business level (e.g. Emerging Markets). Many book limits are also in place, such as foreign exchange and interest rate sensitivity limits.

Analysis of Barclays Capital's Market Risk Exposure

Barclays Capital's market risk exposure, as measured by average total DVaR, was £57m in the first half of 2010. This is £30m (34%) lower compared to the corresponding period of 2009, and £9m (14%) lower compared to the second half of 2009. The decrease in DVaR was due to a reduction in exposures and increased diversification.

Total DVaR as at 30th June 2010 was £43m (30th June 2009: £71m, 31st December 2009: £55m).

Expected Shortfall and 3W averaged £89m and £170m respectively in the first half of 2010. These represent decreases of £44m (33%) and £54m (24%) respectively compared to the corresponding period of 2009 and decreases of £21m (19%) and £24m (12%) respectively compared to the second half of 2009.

As we enter the second half of 2010, the principal uncertainties which may impact Barclays market risk relate to volatility in interest rates, commodities, credit spreads, equity prices and foreign exchange rates. Price instability and higher volatility may arise as government policy targets future economic growth against a background of fiscal pressures and accommodatory monetary policy.

Risk Management

The daily average, maximum and minimum values of DVaR, Expected Shortfall and 3W are calculated as below:

	Half Year Ended 30.06.10				Half Year Ended 31.12.09				Half Year Ended 30.06.09
DVaR (95%)	Avg	High	Low		Avg	High	Low		Avg	High	Low
	£m	£m	£m		£m	£m	£m		£m	£m	£m
Interest rate risk	32	49	21		34	52	23		54	83	39
Credit spread risk	50	62	40		45	55	35		71	102	49
Commodity risk	16	25	9		14	20	11		14	17	11
Equity risk	13	24	6		12	27	5		13	19	7
Foreign exchange risk	7	15	3		8	13	3		9	15	4
Diversification effect	(61)	-	-		(47)	-	-		(74)	-	-
Total DVaR	57	75	38		66	93	50		87	119	66
Expected shortfall	89	147	52		110	153	88		133	188	96
3W	170	311	90		194	274	158		224	301	148

Analysis of Trading Revenue

Trading revenue reflects top-line income, excluding income from Private Equity and Principal Investments.

Average daily trading revenue for the first half of 2010 was £57m. This was £29m (34%) lower compared to the corresponding period of 2009 due to reduced client activity in the second quarter, but in line with the average for the second half 2009 of £57m.

In the first half of 2010 there were 121 positive revenue days, 3 negative days and no flat days. For the first half of 2009 there were 119 positive days, 4 negative days and one flat day while for the second half of 2009 there were 128 positive days, one negative day and no flat days.

Risk Management

Liquidity Risk

Barclays has a comprehensive Liquidity Risk Management Framework (the Liquidity Framework) for managing the Group's liquidity risk. The objective of the Liquidity Framework is for the Group to have sufficient liquidity to continue to operate for at least the minimum period specified by the FSA in the event that the wholesale funding markets are neither open to Barclays nor to the market as a whole. Many of the stress tests currently applied under the Liquidity Framework will also be applied under the FSA's new regime, although the precise calibration may differ in Barclays final Individual Liquidity Guidance to be set by the FSA. The Framework considers a range of possible wholesale and retail factors leading to loss of financing including:

- Maturing of wholesale liabilities

- Loss of secured financing and widened haircuts on remaining book

- Retail and commercial outflows from savings and deposit accounts

- Drawdown of loans and commitments

- Potential impact of a 2 notch ratings downgrade

- Withdrawal of initial margin amounts by counterparties

These stressed scenarios are used to assess the appropriate level for the Group's liquidity pool, which comprises unencumbered assets and central bank deposits. Barclays regularly uses these assets to access secured funding markets, thereby testing the liquidity assumptions underlying pool composition. The Group does not presume the availability of central bank borrowing facilities to monetise the liquidity pool in any of the stress scenarios under the Liquidity Framework.

Liquidity Pool

The Group liquidity pool as at 30th June 2010 was £160bn gross (31st December 2009: £127bn) and comprised the following cash and unencumbered assets:

	Cash and Deposits with Central Banks1	Government Guaranteed Bonds	Governments and Supranational Bonds	Other Available Liquidity	Total
	£bn	£bn	£bn	£bn	£bn
As at 30.06.10	102	4	46	8	160
As at 31.12.09	81	3	31	12	127

Term Financing

Raising term funding is important in meeting the risk appetite of the Barclays Liquidity Framework. Barclays has continued to increase the term of issued liabilities during 2010 by issuing:

- £6bn equivalent of public senior term funding

- £3bn equivalent of public covered bonds

- £12bn equivalent of structured notes

As at 31st December 2009 the Group had £4bn of publicly issued term debt and £11bn of term structured notes maturing in 2010. Issuance in the first six months of the year has covered this refinancing requirement. The Group expects to issue further term funding in the second half of the year.

1     Cash and deposits with central banks exclude Absa.

Risk Management

Funding Structure

Global Retail Banking, Barclays Corporate, Barclays Wealth and Head Office Functions are structured to be self-funded through customer deposits and Barclays equity and other long term funding. Barclays Capital and, in part, Absa are funded through the wholesale secured and unsecured funding markets.

The loan to deposit and long term funding ratio improved to 78% at 30th June 2010, from 81% at 31st December 2009. The loan to deposit ratio also improved to 124% at 30th June 2010 (31st December 2009: 130%).

Global Retail Banking, Barclays Corporate, Barclays Wealth and Head Office Functions

An important source of structural liquidity is provided by our core retail deposits in the UK, Europe and Africa; mainly current accounts and savings accounts. Although, contractually, current accounts are repayable on demand and savings accounts at short notice, the Group's broad base of customers - numerically and by depositor type - helps to protect against unexpected fluctuations. Such accounts form a stable funding base for the Group's operations and liquidity needs.

Group policy is to ensure that the assets of the retail, wealth and corporate businesses, together with Head Office functions, on a global basis, do not exceed customer deposits and long term funding so that these businesses place no reliance on wholesale money markets. The exception to this policy is Absa, which has a large portion of wholesale funding, reflecting the structure of the South African financial sector.

In order to assess liquidity risk for these businesses, the balance sheet is modelled to reflect behavioural experience in both assets and liabilities and is managed to maintain a cash surplus. The maturity profile, excluding Absa, resulting from this behavioural modelling is set out below. This shows that there is a funding surplus of £111.1bn, and that there are expected outflows of £11.5bn within one year from asset repayments being less than liability attrition. Expected liability attrition can be offset to the extent that new customer deposits can be raised. As at 31st December 2009, behavioural modelling showed £10.2bn of expected outflows in the under one year category; all of the expected liability attrition was offset by new customer deposits raised in the first half of 2010. For subsequent years the expected repayments on assets are larger than the roll off of liabilities resulting in cash inflows. Maturities of net liabilities are, therefore, behaviourally expected to occur after 5 years.

		Cash Inflow/(Outflow)
Behavioural Maturity Profile of Assets and Liabilities	Funding Surplus	Not More Than 1yr	Over 1yr but Not More Than 2yrs	Over 2yrs but Not More Than 3yrs	Over 3yrs but Not More Than 4yrs	Over 4yrs but Not More Than 5yrs	Over 5yrs
	£bn	£bn	£bn	£bn	£bn	£bn	£bn
As at 30.06.10	111.1	(11.5)	13.3	26.0	7.5	(0.9)	(145.5)
As at 31.12.09	94.5	(10.2)	17.8	21.2	7.8	1.8	(132.9)

Barclays Capital

Barclays Capital manages its liquidity to be primarily funded through wholesale sources, managing access to liquidity to ensure that potential cash outflows in a stressed environment are covered.

68% of the inventory is funded on a secured basis (31st December 2009: 73%). Additionally, much of the short term funding is invested in highly liquid assets and central bank cash and therefore contributes towards the Group liquidity pool.

Barclays Capital undertakes secured funding in the repo markets based on liquidity characteristics. Limits are in place for each security asset class reflecting liquidity in the cash and financing markets for these assets. The percentage of secured funding using each asset class as collateral is set out below:

Secured Funding by Asset Class	Govt	Agency	MBS	ABS	Corporate	Equity	Other
	%	%	%	%	%	%	%
As at 30.06.10	64	7	9	5	6	7	2
As at 31.12.09	59	7	7	6	10	8	3

Risk Management

Unsecured wholesale funding for the Group (excluding Absa) is managed by Barclays Capital within specific term limits. Excluding short term deposits that are placed within the Group liquidity pool, the term of unsecured liabilities has been extended, with average life improving from at least 26 months at 31st December 2009 to at least 31 months at 30th June 2010.

Contractual Maturity of Unsecured Liabilities	Not More than 3 Months	Not More than 6 Months	Not More than 1yr	Over 1yr
	%	%	%	%
As at 30.06.10	-	-	-	100
As at 31.12.09	-	-	19	81

Extending the term of the wholesale financing in this way has meant that, as at 30th June 2010, 100% of net wholesale funding had a remaining maturity of greater than one year. This means that our Group liquidity pool (excluding other available liquidity) is sufficient to cover more than one year of wholesale maturities.

Risk Management

Analysis of Barclays Capital Credit Market Exposures by Asset Class

	Trading Portfolio Assets - Debt Securities	Financial Assets Designated at Fair Value - L&A	Derivative Financial Instruments	L&A to Customers	Available For Sale - Debt Securities	Other Assets	Total as at 30.06.101	Total as at 31.12.09
	£m	£m	£m	£m	£m	£m	£m	£m
ABS CDO Super Senior	-	-	-	1,900	-	-	1,900	1,931
Other US Sub-prime and Alt-A	-	-	414	30	455	-	899	894
Monoline Wrapped US RMBS	-	-	-	-	-	-	-	6
Commercial Real Estate Loans and Property	-	6,125	-	-	-	1,252	7,377	7,734
CMBS	231	-	(35)	-	-	-	196	218
Monoline Wrapped CMBS	-	-	19	-	-	-	19	30
Leveraged Finance2	-	-	-	4,792	-	-	4,792	5,250
SIVs, SIV-lites and CDPCs	-	357	72	122	-	-	551	553
Monoline Wrapped CLO and Other	-	-	2,057	-	-	-	2,057	2,126
Loan to Protium Finance LP	-	-	-	8,372	-	-	8,372	7,859
Total exposures	231	6,482	2,527	15,216	455	1,252	26,163	26,601

1     Further analysis of Barclays Capital credit market exposures is on pages 68 to 72.

2     Undrawn commitments of £219m (31st December 2009: £257m) are off-balance sheet and therefore not included in the table above.

Risk Management

Barclays Capital Credit Market Exposures

Barclays Capital's credit market exposures primarily relate to commercial real estate, leveraged finance and a loan to Protium Finance LP. These include positions subject to fair value movements in the income statement and positions that are classified as loans and advances and as available for sale.

The balances and writedowns presented below represent credit market exposures held at the time of the market dislocation in mid-2007. Similar assets acquired subsequent to the market dislocation are actively traded in the secondary market and are therefore excluded from this disclosure.

The balances and writedowns to 30th June 2010 are set out by asset class below:

							Half Year Ended 30.06.10
US Residential Mortgages		As at 30.06.10	As at 31.12.09	As at 30.06.10	As at 31.12.09		Fair Value (Losses)/ Gains	Impair-ment (Charge)/ Release	Total (Losses)/ Gains
	Notes	$m1	$m1	£m1	£m1		£m	£m	£m
ABS CDO Super Senior	A1	2,840	3,127	1,900	1,931		-	(113)	(113)
Other US sub-prime and Alt-A2	A2	1,344	1,447	899	894		(32)	(50)	(82)
Monoline wrapped US RMBS	A3	-	9	-	6		(2)	-	(2)
Commercial Mortgages
Commercial real estate loans and properties	B1	11,026	12,525	7,377	7,734		(191)	-	(191)
CMBS2	B1	293	352	196	218		(3)	-	(3)
Monoline wrapped CMBS	B2	29	49	19	30		33	-	33
Other Credit Market
Leveraged Finance3	C1	7,489	8,919	5,011	5,507		-	(160)	(160)
SIVs, SIV -Lites and CDPCs	C2	824	896	551	553		6	12	18
Monoline wrapped CLO and other	C3	3,074	3,443	2,057	2,126		124	-	124
Loan to Protium	D	12,513	12,727	8,372	7,859
Total credit market exposures		39,432	43,494	26,382	26,858
Total gross writedowns							(65)	(311)	(376)

During the period ended 30th June 2010, these credit market exposures decreased £476m to £26,382m
(31st December 2009: £26,858m). The decrease reflected net sales and paydowns and other movements of £1,283m and total writedowns of £376m, offset by foreign exchange rate movements of £1,183m, primarily relating to the appreciation of the US Dollar against Sterling.

In the period ended 30th June 2010, writedowns comprised £311m (2009: £1,170m) of impairment charges and £65m of net fair value losses through income (2009: loss £3,507m). Total writedowns included £197m (2009: £1,745m) against US residential mortgage positions, £161m (2009: £2,009m) against commercial mortgage positions, and £18m (2009: £923m) against other credit market positions.

1     As the majority of exposure is held in US Dollars, the exposures above are shown in both US Dollars and Sterling.

2     31st December 2009 comparatives have been adjusted to exclude actively traded positions relating to other US sub-prime and Alt-A of £498m and commercial mortgage-backed securities of £253m.

3     Includes undrawn commitments of £219m (31st December 2009: £257m).

Risk Management

A.        US Residential Mortgages

A1.        ABS CDO Super Senior

ABS CDO Super Senior positions at 30th June 2010 comprised five high grade liquidity facilities which were fully drawn and classified within loans and receivables.

ABS CDO Super Senior positions decreased £31m to £1,900m (31st December 2009: £1,931m). Net exposures are stated after impairment charges, of which £113m was incurred in the current period (2009: £437m). There was an increase of £156m resulting from appreciation in the value of the US Dollar against Sterling, offset by amortisation of £74m in the period.

ABS CDO Super Senior positions at 30th June 2010 equated to a 45% mark after impairment and subordination (31st December 2009: 49%).

A2.       Other US Sub-Prime and Alt-A

Other US sub-prime and Alt-A positions at 30th June 2010 were £899m (31st December 2009: £894m). The appreciation of the US Dollar against Sterling of £70m and net sales and paydowns and other movements of £17m were mostly offset by writedowns of £82m (2009: £1,052m).

A3.       US Residential Mortgage Backed Securities Wrapped by Monoline Insurers

Exposure to US RMBS assets where Barclays Capital holds protection from monoline insurers reduced to £nil at 30th June 2010 (31st December 2009: £6m), as the residual fair value exposure of £50m was fully covered by a credit valuation adjustment.

B.        Commercial Mortgages

B1.        Commercial Real Estate and Mortgage-Backed Securities

Commercial mortgages include commercial real estate loans of £6,125m (31st December 2009: £6,534m), commercial real estate properties owned of £1,252m (31st December 2009: £1,200m) and commercial mortgage-backed securities of £196m (31st December 2009: £218m).

Commercial Real Estate Loans and Properties Owned

In the period ended 30th June 2010, commercial real estate loans and properties owned decreased by £357m to £7,377m (31st December 2009: £7,734m). The decrease was driven by net sales, paydowns and restructuring of £84m in the US, £230m in the UK and Europe, and £10m in Asia, as well as losses of £191m (2009: £1,443m), of which £156m related to the US, £22m to UK and Europe, and £13m to Asia. This was offset by the appreciation in value of other currencies against Sterling and other movements of £158m.

The geographic distribution of commercial real estate loans comprised 48% UK and Europe, 47% US and 5% Asia.

One large transaction comprised 26% of the total US commercial real estate loan balance. The remaining 74% of the US positions comprised 59 transactions.

The UK and Europe portfolio comprised 55 transactions at 30th June 2010. In Europe, protection is provided by loan covenants and periodic LTV retests, which cover 83% of the portfolio. 50% of the German positions related to one transaction secured on residential assets.

Risk Management

Commercial Real Estate Loans by Region	As at 30.06.10	As at 31.12.09		Marks at 30.06.10	Marks at 31.12.09
	£m	£m		%	%
US	2,884	2,852		60%	62%
Germany	1,787	1,959		83%	84%
Sweden	192	201		80%	81%
France	174	189		71%	70%
Switzerland	145	141		86%	85%
Spain	66	72		67%	56%
Other Europe	134	370		62%	57%
UK	413	429		60%	61%
Asia	330	321		73%	77%
Total	6,125	6,534

Commercial Real Estate Loans by Industry

	As at 30.06.10							As at 31.12.09
	US	Germany	Other Europe	UK	Asia	Total		Total
	£m	£m	£m	£m	£m	£m		£m
Residential	1,058	955	-	155	107	2,275		2,439
Office	357	234	525	69	87	1,272		1,338
Hotels	631	-	3	8	1	643		846
Retail	47	465	70	30	78	690		737
Industrial	395	95	98	15	8	611		622
Leisure	-	-	-	136	-	136		140
Land	269	-	-	-	-	269		128
Mixed/Others	127	38	15	-	49	229		284
Total	2,884	1,787	711	413	330	6,125		6,534

Commercial Real Estate Properties Owned by Industry	As at 30.06.10	As at 31.12.09
	£m	£m
Residential	48	56
Office	973	927
Hotels	136	126
Industrial	26	25
Leisure	34	33
Land	34	31
Mixed/Others	1	2
Total	1,252	1,200

Commercial Mortgage Backed Securities

In the period ended 30th June 2010, commercial mortgage backed securities positions decreased £22m to £196m (31st December 2009: £218m), primarily due to net sales and paydowns of £34m.

B2.       CMBS Exposure Wrapped by Monoline Insurers

Exposure to CMBS assets where Barclays Capital held protection from monoline insurers reduced to £19m at
30th June 2010 (31st December 2009: £30m), as the fair value exposure of £228m was largely covered by a credit valuation adjustment of £209m.

Risk Management

C.        Other Credit Market

C1.        Leveraged Finance

Leveraged Finance Loans by Region	As at 30.06.10	As at 31.12.09
	£m	£m
UK	4,245	4,530
Europe	755	1,051
Asia	169	165
US	16	35
Total lending and commitments	5,185	5,781
Impairment	(174)	(274)
Net lending and commitments at period end	5,011	5,507

At 30th June 2010, the gross exposure relating to leveraged finance loans reduced £496m to £5,011m
(31st December 2009: £5,507m) reflecting net paydowns and other movements of £258m, impairment charges of £160m (2009: £204m) and the depreciation of the Euro against Sterling driving currency decreases of £78m.

C2.       SIVs, SIV-Lites and CDPCs

SIV and SIV-lite positions comprise liquidity facilities and derivatives. At 30th June 2010 exposures increased by £1m to £531m (31st December 2009: £530m).

Credit Derivative Product Companies (CDPCs) positions at 30th June 2010 reduced by £3m to £20m
(31st December 2009: £23m).

C3.       CLO and Other Exposure Wrapped by Monoline Insurers

The table below shows Collateralised Loan Obligations (CLOs) and other assets where Barclays held protection from monoline insurers at 30th June 2010.

By Rating of the Monoline	Notional	Fair Value of Underlying Asset	Fair Value Exposure	Credit Valuation Adjustment	Net Exposure
As at 30.06.10	£m	£m	£m	£m	£m
AAA/AA	7,537	5,984	1,553	(95)	1,458
Non-investment grade:
- Fair value through profit and loss	1,100	866	234	(132)	102
- Loans and receivables	9,118	8,096	1,022	(525)	497
Total	17,755	14,946	2,809	(752)	2,057
As at 31.12.09	£m	£m	£m	£m	£m
AAA/AA	7,336	5,731	1,605	(91)	1,514
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

The movement in net exposure of £69m was driven by a decrease in the fair value exposure to monoline insurers of £361m, offset by currency appreciation of £168m and credit valuation adjustments of £124m (2009: loss of £593m).

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 period. At 30th June 2010, the majority of the underlying assets were rated AAA/AA.

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 19). At 30th June 2010, the fair value of the reclassified assets was £8,096m and the net exposure to monoline insurers was £497m. The remaining assets continue to be measured at fair value through profit and loss.

Risk Management

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 table below includes all assets held by Protium as collateral for the loan. At 30th June 2010, there were assets wrapped by monoline insurers with a fair value of $4,229m (31st December 2009: $4,095m). Cash and cash equivalents at 30th June 2010 were $1,351m (31st December 2009: $688m) including cash realised from sales and paydowns and funds available to purchase third party assets. Other assets at 30th June 2010 were $856m
(31st December 2009: $567m) including residential mortgage-backed securities purchased by the fund post inception and other asset-backed securities.

The loan decreased in local currency between 31st December 2009 and 30th June 2010 due to principal repayments of $194m and interest payments of $211m offsetting accrued interest in the period. In July 2010, there was a principal repayment of $437m and an interest payment of $96m, further reducing the Protium loan balance.

The loan to Protium was assessed for impairment at 30th June 2010, and no impairment was identified.

Protium Assets	As at 30.06.10	As at 31.12.09	As at 16.09.09		As at 30.06.10	As at 31.12.09	As at 16.09.09
	$m	$m	$m		£m	£m	£m
Other US sub-prime whole loans and real estate	871	1,038	1,124		583	641	682
Other US sub-prime securities	555	578	513		371	357	311
Total other US sub-prime	1,426	1,616	1,637		954	998	993
Alt-A	2,375	2,112	2,185		1,589	1,304	1,326
Monoline wrapped US RMBS	869	1,447	1,919		581	893	1,164
Monoline wrapped CMBS	1,109	1,378	1,991		742	851	1,208
Monoline wrapped CLO and other	341	475	652		228	294	396
Total monoline wrapped assets	2,319	3,300	4,562		1,551	2,038	2,768
Credit market related assets	6,120	7,028	8,384		4,094	4,340	5,087
Fair value of underlying US RMBS	769	723	655		514	447	397
Fair value of underlying CMBS	2,595	2,350	1,897		1,736	1,451	1,151
Fair value of underlying CLO and other	865	1,022	1,040		579	631	631
Fair value of underlying assets wrapped by monoline insurers	4,229	4,095	3,592		2,829	2,529	2,179
Cash and cash equivalents	1,351	688	250		904	425	152
Other assets	856	567	309		573	350	187
Total assets	12,556	12,378	12,535		8,400	7,644	7,605
Loan to Protium	12,513	12,727	12,641		8,372	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.

At 30th June 2010, the own credit adjustment arose from the fair valuation of £76.2bn of Barclays Capital structured notes (31st December 2009: £61.5bn). The current period effect on fair value of changes in own credit was a gain of £851m (2009: loss of £893m).

Barclays Capital also adjusts the fair value of its derivative liabilities to reflect the impact of own credit quality. At 30th June 2010, cumulative adjustments of £532m (31st December 2009: £307m) 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.

Risk Management

Exposure for Selected Eurozone Countries

The tables below show the Group's exposures as at 30th June 2010 to selected Eurozone countries (Spain, Italy, Portugal and Ireland), representing those countries that have a credit rating of AA or below from Standard & Poor's and where the Group has an exposure of over £0.5bn.

The Group's exposure to Greece, which has a sovereign credit rating of BB, was less than £250m as at 30th June 2010. This principally comprised £114m of loans and advances provided by Barclays Capital to large corporates and financial institutions, and net positions in assets held at fair value of £66m.

The asset balances included in the tables below represent the Group's exposure to retail and corporate customers, including sovereign entities, in each of the respective countries. Assets are stated gross of any trading liability positions and before any risk mitigation but net of impairment allowances and of derivative counterparty netting and collateral held.

Retail Portfolio

Held at Amortised Cost

Retail exposures mainly related to our domestic lending in Spain, Italy and Portugal, principally residential mortgages.

	Loans and Advances Held at Amortised Cost
As at 30.06.10	Home Loans	Cards and Unsecured Loans	Other Retail	Total		Contingent Liabilities and Commitments
	£m	£m	£m	£m		£m
Spain	14,618	1,822	1,684	18,124		1,805
Italy	11,964	2,110	165	14,239		945
Portugal	3,122	1,139	717	4,978		1,162
Ireland	124	11	7	142		19

The credit quality of our mortgage lending in Spain and Italy reflects low LTV lending, with average mark to market LTVs in Spain of 56% and in Italy of 46%. During 2010, credit risk loan balances in Spain reduced 7% to £681m (31st December 2009: £732m) and in Italy increased 28% to £479m (31st December 2009: £374m).

Risk Management

Exposure for Selected Eurozone Countries (continued)

Wholesale Portfolio

Wholesale exposures related to Barclays Capital and Barclays Corporate activities in Spain, Portugal, Italy and Ireland and Barclays Capital covering a broad range of SME, corporate and investment banking activities, as well as Western Europe treasury operations' holdings of sovereign and corporate bonds in those countries.

Held at Amortised Cost

	Loans and Advances Held at Amortised Cost
As at 30.06.10	Corporate	Government	Other Wholesale	Total		Contingent Liabilities and Commitments
	£m	£m	£m	£m		£m
Spain	6,743	133	291	7,167		3,182
Italy	3,099	-	60	3,159		1,546
Portugal	2,364	19	22	2,405		1,543
Ireland	2,327	-	997	3,324		1,482

Loans and advances to corporate customers include exposures to the property and construction industry of £3,029m in Spain, £651m in Portugal, £219m in Ireland and £88m in Italy.

Held at Fair Value

As at 30.06.10	Trading Portfolio Assets	Financial Assets Designated at Fair Value	Net Derivative Exposure	Available for Sale Assets	Total Held at Fair Value	Of Which Government
	£m	£m	£m	£m	£m	£m
Spain	2,881	79	891	4,880	8,731	6,403
Italy	7,938	86	1,463	979	10,466	8,606
Portugal	443	-	272	1,693	2,408	1,177
Ireland	1,662	50	916	532	3,160	328

Wholesale exposures for assets held at fair value are primarily trading assets, which are highly liquid in nature, and available for sale positions, comprising high quality debt securities, including holdings in government bonds to support the local treasury activities of Barclays in these locations.

Capital and Performance Management

Total Assets and Risk Weighted Assets by Business

	Total Assets by Business				Risk Weighted Assets by Business
	As at 30.06.10	As at 31.12.09	As at 30.06.09		As at 30.06.10	As at 31.12.09	As at 30.06.09
	£m	£m	£m		£m	£m	£m
UK Retail Banking	119,251	109,327	106,898		35,586	35,876	35,316
Barclaycard	31,062	30,274	29,589		32,215	30,566	26,860
Western Europe Retail Banking	48,976	51,027	45,224		15,865	16,811	14,591
Barclays Africa	7,882	7,893	7,072		7,777	7,649	6,806
Barclays Capital	1,212,413	1,019,120	1,133,685		194,283	181,117	209,783
Barclays Corporate	86,906	88,798	92,303		72,724	76,928	77,936
Barclays Wealth	16,376	14,889	14,063		11,638	11,353	10,862
Investment Management1	3,604	5,406	67,842		74	73	3,659
Absa	46,964	45,765	42,596		23,102	21,410	20,163
Head Office Functions and Other Operations	13,712	6,430	6,066		1,761	870	78
Total	1,587,146	1,378,929	1,545,338		395,025	382,653	406,054

Risk Weighted Assets by Risk

	As at 30.06.10	As at 31.12.09	As at 30.06.09
	£m	£m	£m
Credit risk	256,117	252,054	263,179
Counterparty risk
- Internal model method	28,401	24,453	29,522
- Non-model method	17,001	20,997	29,268
Market risk
- Modelled - VaR	14,085	10,623	13,139
- Modelled - IDRC2 and Non-VaR	7,206	5,378	5,268
- Standardised	41,259	38,525	34,530
Operational risk	30,956	30,623	31,148
Total risk weighted assets	395,025	382,653	406,054

Adjusted Gross Leverage

	As at 30.06.10	As at 31.12.09	As at 30.06.09
	£m	£m	£m
Total assets	1,587,146	1,378,929	1,545,338
Counterparty net/collateralised derivatives	(461,140)	(374,099)	(506,774)
Financial assets designated at fair value and associated cash balances - held in respect of linked liabilities to customers under investment contracts1	(1,786)	(1,679)	(66,039)
Settlement balances	(52,764)	(25,825)	(35,314)
Goodwill and intangible assets	(8,824)	(8,795)	(10,146)
Adjusted total tangible assets	1,062,632	968,531	927,065
Total qualifying Tier 1 capital	51,976	49,637	42,625
Adjusted gross leverage	20	20	22

The adjusted gross leverage at month ends during 2010 moved in the range 20x to 24x. The fluctuations arose from normal trading activities. Adjusted total tangible assets include cash and balances at central banks of £103.9bn (31st December 2009: £81.5bn). Excluding these balances, the adjusted gross leverage would be 18x (31st December 2009: 18x).

1     30.06.09 includes assets/risk weighted assets relating to Barclays Global Investors discontinued operations.

2     Incremental Default Risk Charge.

Capital and Performance Management

Capital Resources

	As at 30.06.10	As at 31.12.09	As at 30.06.09
	£m	£m	£m
Ordinary shareholders' funds	49,591	47,277	37,699
Regulatory adjustments to reserves:
- Available for sale reserve - debt	(131)	83	168
- Available for sale reserve - equity	-	(309)	(144)
- Cash flow hedging reserve	(757)	(252)	(330)
- Defined benefit pension scheme	406	431	968
- Adjustments for scope of regulatory consolidation	213	196	453
- Foreign exchange on RCIs and upper Tier 2 loan stock	(64)	25	84
- Adjustment for own credit	(953)	(340)	(1,007)
- Other adjustments	107	144	207
Equity non-controlling interests	2,540	2,351	2,133
Less: Intangible assets	(8,437)	(8,345)	(9,729)
Less: Net excess of expected loss over impairment at 50%	-	(25)	(122)
Less: Securitisation positions at 50%	(2,922)	(2,799)	(1,479)
Core Tier 1 capital	39,593	38,437	28,901
Preference shares	6,270	6,256	6,221
Reserve Capital Instruments	6,903	6,724	6,640
Tier 1 Notes1	1,069	1,017	1,008
Tax on the net excess of expected loss over impairment	-	8	7
Less: Material holdings in financial companies at 50%	(1,859)	(2,805)	(152)
Total qualifying Tier 1 capital	51,976	49,637	42,625
Revaluation reserves	25	26	25
Available for sale reserve - equity	-	309	144
Collectively assessed impairment allowances	2,491	2,443	2,221
Tier 2 non-controlling interests	592	547	538
Qualifying subordinated liabilities:
- Undated loan capital	1,588	1,350	1,541
- Dated loan capital	14,326	15,657	15,181
Less: Net excess of expected loss over impairment at 50%	-	(25)	(122)
Less: Securitisation positions at 50%	(2,922)	(2,799)	(1,479)
Less: Material holdings in financial companies at 50%	(1,859)	(2,805)	(152)
Total qualifying Tier 2 capital	14,241	14,703	17,897
Less: Other regulatory deductions	(1,007)	(880)	(1,802)
Total net capital resources	65,210	63,460	58,720
Capital Ratios
Core Tier 1 ratio	10.0%	10.0%	7.1%
Tier 1 ratio	13.2%	13.0%	10.5%
Risk asset ratio	16.5%	16.6%	14.5%

1     Tier 1 notes are included in subordinated liabilities in the consolidated balance sheet.

Capital and Performance Management

Capital Resources

Core Tier 1 and Tier 1 capital increased by £1.2bn and £2.3bn respectively during the first half of 2010. There were increases of £2.1bn due to retained profits, £1.2bn following the exercise of warrants and £0.9bn due to currency translation differences. These were offset by net losses on available sale equity positions, of which BlackRock, Inc. was £2.2bn, and an increase in Treasury Shares of £0.6bn.

At the Tier 1 level the lower value of the shares held in BlackRock, Inc. drove the £0.9bn fall in the deduction for material holdings.

Tier 2 capital reduced by £0.5bn, driven by the redemption of £1.0bn of dated loan capital and the available for sale equity reserve moving into net loss, partly offset by a £0.9bn reduction in the deduction for material holdings.

Capital and Performance Management

Economic Capital

Economic capital is an internal measure of the minimum equity and preference capital required for the Group to maintain its credit rating based upon its risk profile.

Barclays assesses capital requirements by measuring the Group's risk profile using both internally and externally developed models. The Group assigns economic capital primarily within the following risk categories: credit risk, market risk, operational risk, private equity and pension risk.

The Group regularly reviews its economic capital methodology and benchmarks outputs to external reference points. The framework uses default probabilities during average credit conditions, rather than those prevailing at the balance sheet date, thus seeking to remove cyclicality from the economic capital calculation. The economic capital framework takes into consideration time horizon, correlation of risks and risk concentrations.

Economic capital is allocated on a consistent basis across all of Barclays businesses and risk activities. A single cost of equity is applied to calculate the cost of risk.

The total average economic capital required by the Group is compared with the supply of economic capital to evaluate economic capital utilisation. The supply of economic capital is based on the available shareholders' equity adjusted for certain items (e.g. Retirements Benefit Liability, Cash flow Hedging Reserve) and including preference shares.

Economic capital forms the basis of the Group's submission for the Basel II Internal Capital Adequacy Assessment Process (ICAAP).

Capital and Performance Management

Economic Capital Demand¹

	Average Half Year Ended	Average Half Year Ended	Average Half Year Ended
	30.06.10	31.12.09	30.06.09
	£m	£m	£m
UK Retail Banking	3,950	3,900	4,100
Barclaycard	3,350	3,400	3,300
Western Europe Retail Banking	1,550	1,400	1,500
Barclays Africa	750	700	800
Barclays Capital	11,000	10,500	11,000
Barclays Corporate	4,900	4,700	4,800
Barclays Wealth	500	500	600
Investment Management	3,800	1,250	750
Absa	1,200	1,200	1,200
Head Office Functions and Other Operations	150	100	100
Economic Capital requirement (excluding goodwill)	31,150	27,650	28,150
Average historical goodwill and intangible assets2	10,200	11,000	11,050
Total economic capital requirement3	41,350	38,650	39,200

UK Retail Banking economic capital allocation increased £50m to £3,950m (31st December 2009: £3,900m), driven primarily by the inclusion of Standard Life mortgage portfolio in Q1 2010.

Barclaycard economic capital allocation decreased £50m to £3,350m (31st December 2009: £3,400m), driven predominantly by a change in EC methodology and an improvement in credit quality in UK Cards.

Western Europe Retail Banking economic capital allocation increased £150m to £1,550m (31st December 2009: £1,400m), primarily driven by more conservative loss given default estimates and asset growth in the mortgage portfolio.

Barclays Africa economic capital allocation increased £50m to £750m (31st December 2009: £700m) due to asset growth and exchange rate movements.

Barclays Capital economic capital allocation increased £500m to £11,000m (31st December 2009: £10,500m). This was driven by a reduction in diversification benefit in credit risk exposures and an increase in property risk. The increase was partially offset by a fall in market risk, due to reduction in exposures and less directional trading.

Barclays Corporate economic capital allocation increased £200m to £4,900m (31st December 2009: £4,700m), driven primarily by recalibration of models in Continental Europe and New Markets, partially offset by reduced balance sheet size.

Investment Management economic capital allocation increased £2,550m to £3,800m (31st December 2009: £1,250m), primarily as a result of the inclusion of BlackRock, Inc. equity position for the full six month period in 2010.

1     Calculated using an adjusted average over the half year and rounded to the nearest £50m for presentation purposes. EC demand excludes the EC calculated for pension risk.

2     Average goodwill relates to purchased goodwill and intangible assets from business acquisitions.

3     Total period end economic capital requirement as at 30th June 2010 stood at £41,250m (31st December 2009: £40,750m; 30th June 2009: £38,700m).

Capital and Performance Management

Economic Capital Supply

The capital resources to support economic capital comprise adjusted shareholders' equity including preference shares but excluding other non-controlling interests. Preference shares have been issued to optimise the long-term capital base of the Group.

The capital resources to support economic capital are impacted by a number of factors arising from the application of IFRS and are modified in calculating available funds for economic capital. This applies specifically to:

- Retirement benefits liability - the Group has recorded a net liability with a consequent reduction in shareholders' equity. This represents a non-cash reduction in shareholders' equity. For the purposes of calculating economic capital supply, the Group does not deduct the pension liability from shareholders' equity

- Cashflow hedging reserve - to the extent that the Group undertakes the hedging of future cash flows, shareholders' equity will include gains and losses which will be offset against the gain or loss on the hedged item when it is recognised in the income statement at the conclusion of the future hedged transaction. Given the future offset of such gains and losses, they are excluded from shareholders' equity when calculating economic capital supply

- Available for sale reserve - unrealised gains and losses on available for sale securities are included in shareholders' equity until disposal or impairment. Such gains and losses are excluded from shareholders' equity for the purposes of calculating economic capital supply. Realised gains and losses, foreign exchange translation differences and any impairment charges recorded in the income statement will impact economic profit

- Cumulative gains on own credit - gains on the fair valuation of notes issued are included in the income statement but are excluded from shareholders' equity when calculating economic capital supply

- Preference shares - are included in funds to support economic capital as preference share capital was specifically raised to increase capital, but are excluded from average shareholders' equity as the costs of servicing preference shares is included in non-controlling interests

The average supply of capital to support the economic capital framework is set out below¹:

	Average Half Year Ended	Average Half Year Ended	Average Half Year Ended
	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Shareholders' equity excluding non-controlling interests less goodwill2	40,900	31,950	24,050
Retirement benefits liability	550	600	1,000
Cash flow hedging reserve	(600)	(450)	(200)
Available for sale reserve	750	300	900
Cumulative gains on own credit	(450)	(700)	(1,600)
Preference shares	5,850	5,850	5,850
Available funds for economic capital excluding goodwill	47,000	37,550	30,000
Average historical goodwill and intangible assets2	10,200	11,000	11,050
Available funds for economic capital including goodwill3	57,200	48,550	41,050

1     Averages for the period will not correspond to period-end balances disclosed in the balance sheet. Numbers are rounded to the nearest £50m for presentational purposes only.

2     Average goodwill relates to purchased goodwill and intangible assets from business acquisitions.

3     Available funds for economic capital as at 30th June 2010 stood at £58,200m (31st December 2009: £54,600m; 30th June 2009:£45,400m).

Capital and Performance Management

Economic Profit

Economic profit comprises:

- Profit after tax and non-controlling interests; less

- Capital charge (average shareholders' equity excluding non-controlling interests multiplied by Barclays cost of capital)

The Group cost of capital has been applied at a uniform rate of 12.5%.

	Half Year Ended	Half Year Ended	Half Year Ended
	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Profit after tax and non-controlling interests	2,431	7,505	1,888
Addback of amortisation charged on acquired intangible assets1	166	163	185
Profit for economic profit purposes	2,597	7,668	2,073
Average shareholders' equity excluding non-controlling interests 2,3	40,900	31,950	24,050
Adjust for unrealised loss on available for sale investments3	750	300	900
Adjust for unrealised loss on cash flow hedge reserve3	(600)	(450)	(200)
Adjust for cumulative gains on own credit	(450)	(700)	(1,600)
Add: retirement benefits liability	550	600	1,000
Goodwill and intangible assets arising on acquisitions3	10,200	11,000	11,050
Average shareholders' equity for economic profit purposes2,3	51,350	42,700	35,200
Capital charge at 12.5%	(3,209)	(2,666)	(2,200)
Economic (loss)/profit	(612)	5,002	(127)
UK Retail Banking	124	31	(38)
Barclaycard	(20)	(10)	28
Western Europe Retail Banking	23	59	(46)
Barclays Africa	(8)	(5)	(48)
Barclays Capital	1,412	289	(94)
Barclays Corporate	(760)	(332)	(200)
Barclays Wealth	50	29	17
Investment Management4	(195)	6,582	65
Absa	13	(1)	(14)
Head Office Functions and Other Operations	(117)	(751)	693
	522	5,891	363
Historical goodwill and intangibles arising on acquisition	(636)	(683)	(691)
Variance to average shareholders' funds (excluding non-controlling interest)	(498)	(206)	201
Economic (loss)/profit	(612)	5,002	(127)

1     Amortisation charged for purchased intangibles, adjusted for tax and non-controlling interests.

2     Average ordinary shareholders' equity for Group economic profit calculation is the sum of adjusted equity and reserves plus goodwill and intangible assets arising on acquisition, but excludes preference shares.

3     Averages for the period will not correspond exactly to period end balances disclosed in the balance sheet. Numbers are rounded to the nearest £50m for presentation purposes only.

4     Half year ended 31.12.09 includes profit before tax on disposal of BGI of £6,331m.

Capital and Performance Management

Economic loss for the Group increased £485m to a loss of £612m (2009: loss of £127m) due to a £524m increase in profit for economic profit purposes more than offset by a £1,009m increase in the economic capital charge, due to significant increases in the level of economic capital supply reflecting an increase in capital requirements introduced by the FSA.

UK Retail Banking economic profit increased £162m to £124m (2009: loss of £38m) due to a 61% increase in profit before tax largely reflecting a pension credit resulting from amendments to the treatment of minimum defined benefits, the impact of Standard Life Bank and lower impairment charges.

Barclaycard economic profit decreased £48m to a loss of £20m (2009: profit of £28m) due to a 15% decrease in profit before tax, largely as a result of the impact of the US Credit Card Act and associated changes in consumer activity.

Western Europe Retail Banking economic profit increased £69m to £23m (2009: loss of £46m) due to the inclusion of a deferred tax benefit of £112m partially offset by an 89% decrease in profit before tax due to a reduction in treasury interest income and deposit margin compression.

Barclays Africa economic loss decreased £40m to a loss of £8m (2009: loss of £48m) due to an 8% increase in profit before tax and lower taxes.

Barclays Capital economic profit increased £1,506m to a profit of £1,412m (2009: loss of £94m) due to a 225% increase in profit before tax reflecting own credit gains and a significant decrease in credit market losses and impairment, partially offset by 32% reduction in top-line income on the exceptionally strong prior year performance.

Barclays Corporate economic loss increased £560m to a loss of £760m (2009: loss of £200m) due to a £529m decrease in profit before tax driven by impairment charges in Continental Europe and restructuring costs in New Markets.

Barclays Wealth economic profit increased £33m to £50m (2009: £17m) driven by growth in the High Net Worth businesses, partially offset by strategic investment programme expenditure.

Absa economic profit increased £27m to a profit of £13m (2009: loss of £14m) due to a 23% increase in profit before tax, mainly as a result of the 19% appreciation in the average value of the Rand against Sterling.

Head Office Functions and Other Operations economic profit decreased £810m to a loss of £117m (2009: profit of £693m) due to a £751m decrease in profit before tax, reflecting non recurrence of £1,109m of gains on debt buy-backs.

Capital and Performance Management

Margins and Balances

The current low interest rate environment substantially reduces the spread generated on retail and commercial banking liabilities as well as returns on the Group's equity. This impact is reduced, to an extent, by the Group's structural interest rate hedges, which are designed to minimise net interest margin volatility. Product structural hedges generated a gain of £788m (2009: gain £671m) converting short term interest margin volatility on product balances (such as non interest bearing current accounts and managed rate deposits) into a more stable medium term rate. Hedges are built on a monthly basis to achieve a targeted maturity profile, referencing term rates, which protect against margin compression where short term interest rates are lower than historical averages.

During the first half of this year, Barclays began to extend the maturity profile of its product structural hedges. This has increased expected revenue contribution for the half year and reduced future earnings volatility. Based on the market curve as at the end of June 2010 and the on-going hedging strategy, fixed rate returns on structural hedges are expected to remain broadly similar over the next 2 years. Therefore, to the extent that the current low floating rates persist, the net contribution from the hedges will remain broadly stable. Any increases in short term interest rates will reduce the benefit of the hedges, although it is expected that this would be offset by enhanced product margins. The net contribution from these hedges is included in the business net interest income.

Additionally, equity structural hedges are in place to manage the volatility in earnings on the Group's equity with the impact allocated to the businesses as part of the share of the interest income benefit on Group equity. Equity structural hedges generated a gain of £626m (2009: gain £527m). Equity hedge duration was increased in 2010 and fixed rate returns are not expected to fall materially over the next 2 years.

Within the analysis of net interest income below, there is an amount captured as Other. This relates to the cost of subordinated debt and net funding on non-customer assets and liabilities, together with the residual benefit of interest income on Group equity, held within Head Office Functions and Other Operations. In the first half of 2009 there were additional costs of central funding activity, relating to money market dislocations.

	Half Year Ended	Half Year Ended	Half Year Ended
Analysis of Net Interest Income	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Net interest income pre product structural hedge	4,342	4,338	4,316
Net interest income from product structural hedge1	788	693	671
Share of benefit of interest income on Group equity	321	391	408
Total GRB, Barclays Corporate, Barclays Wealth and Absa	5,451	5,422	5,395
Barclays Capital net interest income2	357	770	828
Investment Management net interest (expense)/income2	(3)	-	10
Other net interest income/(expense)	164	4	(511)
Group net interest income from continuing operations	5,969	6,196	5,722
Net Interest Margin	%	%	%
UK Retail Banking	1.39	1.42	1.48
Barclaycard	9.62	9.59	9.79
Western Europe Retail Banking	1.15	1.44	1.88
Barclays Africa	5.06	4.78	4.46
Barclays Corporate	1.45	1.65	1.66
Barclays Wealth	1.16	1.05	0.99
Absa	2.61	2.64	2.57
GRB, Barclays Corporate, Barclays Wealth and Absa	1.98	2.08	2.14

Total GRB, Barclays Corporate, Barclays Wealth and Absa net interest income divided by the total average assets for GRB, Barclays Corporate, Barclays Wealth and Absa results in an aggregate margin of 3.58% (2009: 3.71%).

1     UK Retail Banking and Barclays Corporate were allocated £439m (2009: £412m) and £134m (2009: £149m) of this amount respectively.

2     Including share of the interest income on Group equity.

Capital and Performance Management

Net interest income is derived from the interest rate earned on average assets or paid on average liabilities relative to 1 month Libor plus the liquidity premium (the funds transfer price rate), local equivalents for international businesses or the rate managed by the bank using derivatives. The margin is expressed as annualised net interest income over the relevant average balance. The asset and liability margins for each business are set out below along with average asset and liability balances.

On 1st October 2009, the Group implemented a revised Funds Transfer Pricing (FTP) mechanism (which prices intra-group funding and liquidity). The effect of the FTP is to appropriately give credit to businesses with net surplus liquidity and to charge those businesses in need of wholesale funding at Barclays internal funding rate, which is driven by prevailing market rates. During the first half of 2010 the impact of the change in FTP mechanism on net interest margins for GRB, Barclays Corporate, Barclays Wealth and Absa, in aggregate, was not significant, with Barclays Wealth benefiting as a result of surplus term liquidity, broadly offsetting the term asset liquidity requirement of Barclaycard.

Asset and Liability Margins

The change in the FTP mechanism has impacted the asset and liability margins of the businesses affected. The FTP approach apportions liquidity value to assets and liabilities across the balance sheet in a consistent manner to generate an internal cost of funds rate inclusive of term premium. The objective is to transfer price funding for assets and liabilities in line with the cost of alternative sources of funding, which ensures there is consistency between retail and wholesale sources.

In particular, the liability margins of UK Retail Banking, Western Europe Retail Banking, Barclays Corporate and Barclays Wealth (the main deposit gathering businesses affected by the FTP mechanism) have benefited from the new FTP mechanism. Conversely the asset margins of those businesses and, to a more limited extent Barclaycard, have been negatively impacted by the FTP mechanism. Margins are also affected by hedging activity. Hedging is executed to minimise the net interest margin volatility. As such, the hedges provide a more constant revenue stream on liabilities generated and a more constant cost of funding for fixed rate assets generated.

	Half Year Ended	Half Year Ended	Half Year Ended
	30.06.10	31.12.09	30.06.09
	%	%	%
UK Retail Banking assets	1.17	1.28	1.51
UK Retail Banking liabilities	1.61	1.47	1.28
Barclaycard assets	9.06	8.96	9.06
Western Europe Retail Banking assets	1.27	1.37	1.28
Western Europe Retail Banking liabilities	0.49	0.27	0.59
Barclays Africa assets	7.13	6.88	4.72
Barclays Africa liabilities	2.60	2.49	2.92
Barclays Corporate assets	1.41	1.60	1.66
Barclays Corporate liabilities	1.15	1.14	1.10
Barclays Wealth assets	0.78	0.89	1.13
Barclays Wealth liabilities	1.30	1.12	0.80
Absa assets	2.69	2.64	2.74
Absa liabilities	2.43	2.45	2.43
Total GRB, Barclays Corporate, Barclays Wealth and Absa assets	2.22	2.32	2.41
Total GRB, Barclays Corporate, Barclays Wealth and Absa liabilities	1.46	1.36	1.25

Capital and Performance Management

Average Customer Balances

	Half Year Ended	Half Year Ended	Half Year Ended
	30.06.10	31.12.09	30.06.09
	£m	£m	£m
UK Retail Banking assets	112,505	103,180	100,887
UK Retail Banking liabilities	103,516	94,238	92,990
Barclaycard assets	28,687	28,256	27,948
Western Europe Retail Banking assets	40,814	38,985	37,973
Western Europe Retail Banking liabilities	17,740	16,615	11,679
Barclays Africa assets	3,990	4,193	4,601
Barclays Africa liabilities	6,761	6,231	6,555
Barclays Corporate assets	70,948	74,499	78,110
Barclays Corporate liabilities	59,773	50,927	48,355
Barclays Wealth assets	13,790	12,452	12,081
Barclays Wealth liabilities	39,892	36,182	38,077
Absa assets	36,640	33,161	31,805
Absa liabilities	20,370	18,302	16,458
Total GRB, Barclays Corporate, Barclays Wealth and Absa average assets	307,374	294,726	293,405
Total GRB, Barclays Corporate, Barclays Wealth and Absa average liabilities	248,052	222,495	214,114

Statement of Directors' Responsibilities

The Directors confirm to the best of their knowledge that the condensed consolidated interim financial statements set out on pages 14 to 19 and 88 to 112 have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union, and that the interim management report herein includes a fair review of the information required by Disclosure and Transparency Rules 4.2.7 and 4.2.8 namely:

- an indication of important events that have occurred during the six months ended 30th June 2010 and their impact on the condensed consolidated interim financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

- material related party transactions in the six months ended 30th June 2010 and any material changes in the related party transactions described in the last Annual Report

On behalf of the Board

John Varley Group Chief Executive	Chris Lucas Group Finance Director

Independent Auditors' Review Report

Independent Auditors' Review Report to Barclays PLC

Introduction

We have been engaged by Barclays PLC to review the condensed consolidated interim financial statements in the interim results announcement for the six months ended 30th June 2010, which comprises the consolidated interim income statement on page 14, consolidated interim statement of comprehensive income on page 15, consolidated interim balance sheet on page 16, consolidated interim statement of changes in equity on pages 17 to 18, condensed consolidated interim cash flow statement on page 19 and related notes on pages 88 to 112. We have read the other information contained in the interim results announcement and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated interim financial statements.

Directors' Responsibilities

The interim results announcement is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the interim results announcement in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in the 'Accounting Policies' section, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed consolidated interim financial statements included in this interim results announcement have been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our Responsibility

Our responsibility is to express to the company a conclusion on the condensed consolidated interim financial statements in the interim results announcement based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of Review

We conducted our review in accordance with the International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial statements in the interim results announcement for the six months ended 30th June 2010 are not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

PricewaterhouseCoopers LLP

Chartered Accountants

London, United Kingdom

4th August 2010

1     The maintenance and integrity of the Barclays website is the responsibility of the Directors; the work carried out by the auditors does not involve             consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial                    statements since they were initially presented on the website.

2     Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other    jurisdictions.

Accounting Policies

Going Concern

The Group's business activities and financial position, the factors likely to affect its future development and performance its objectives and policies in managing the financial risks to which it is exposed and its capital are discussed in the Results by Business and Risk Management section.

The Directors have assessed, in the light of current and anticipated economic conditions, the Group's ability to continue as a going concern.

The Directors confirm they are satisfied that the Group has adequate resources to continue in business for the foreseeable future. For this reason, they continue to adopt the going concern basis for preparing financial statements.

Basis of Preparation

The condensed consolidated interim financial statements for the 6 months ended 30th June 2010 on pages 14 to 19 have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with International Accounting Standards (IAS 34), 'Interim Financial Reporting' as published by the International Accounting Standards Board (IASB). They are also in accordance with IAS 34 as adopted by the European Union. The Condensed Consolidated Interim Financial Statements should be read in conjunction with the annual financial statements for the year ended 31st December 2009, which were prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) as published by the IASB. The annual financial statements are also prepared in accordance with IFRS and IFRIC interpretations as adopted by the European Union.

Changes to Accounting Policy

The accounting policies adopted are consistent with the accounting policies described in the 2009 Annual Report, except for the effects of the following revised accounting standards which apply to the Group from 1st January 2010:

- IFRS 3 Business Combinations (Revised for 2008) - one of the main changes is that any costs directly related to the acquisition of a subsidiary are expensed as incurred, and are not part of the cost of the business combination

- IAS 27 Consolidated and Separate Financial Statements (Revised 2008) - the main change is that changes in ownership interests in subsidiaries are accounted for as equity transactions if they occur after control has already been obtained and they do not result in loss of control

Prior periods are not affected by the revised standards.

A number of other amendments and interpretations to IFRS have been published that first apply from 1st January 2010. These have also not resulted in any material changes to the Group's accounting policies.

Future Accounting Developments

The most significant accounting development is IFRS 9 - Financial Instruments: Classification and Measurement, which was published on 12th November 2009. It is the first phase of a project to replace IAS 39 - Financial Instruments Recognition and Measurement and will ultimately result in significant changes in the way that the Group accounts for financial instruments. Adoption of the standard is not mandatory until accounting periods beginning on or after 1st January 2013. Early adoption is permitted once the standard has been endorsed by the EU.

Aspects of financial instrument accounting that are being addressed in later phases of the project are accounting for financial liabilities, impairment of amortised cost financial assets and hedge accounting.

The Group is assessing the impacts of the first phase of the project and is following developments in the subsequent phases with the aim of determining a suitable programme for implementation. At this stage, the potential impacts of the project as a whole cannot be determined.

Notes

1.          Net Interest Income

	Half Year Ended	Half Year Ended	Half Year Ended
	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Cash and balances with central banks	154	83	48
Available for sale investments	750	817	1,120
Loans and advances to banks	197	217	296
Loans and advances to customers	8,685	8,594	9,862
Other	42	100	99
Interest income	9,828	9,811	11,425
Deposits from banks	(247)	(310)	(324)
Customer accounts	(706)	(669)	(2,047)
Debt securities in issue	(1,852)	(1,776)	(2,113)
Subordinated liabilities	(869)	(850)	(868)
Other	(185)	(10)	(351)
Interest expense	(3,859)	(3,615)	(5,703)
Net interest income	5,969	6,196	5,722

Group net interest income increased 4% (£247m) to £5,969m (2009: £5,722m) reflecting the acquisition of Standard Life Bank and reduced costs of central funding as money market dislocations have eased. Margin compression continues to affect growth in net interest margin.

2.         Net Fee and Commission Income

	Half Year Ended	Half Year Ended	Half Year Ended
	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Brokerage fees	41	45	43
Investment management fees	44	122	11
Banking and credit related fees and commissions	4,982	4,906	4,672
Foreign exchange commission	71	66	81
Fee and commission income	5,138	5,139	4,807
Fee and commission expense	(944)	(848)	(680)
Net fee and commission income	4,194	4,291	4,127

3.         Net Trading Income

	Half Year Ended	Half Year Ended	Half Year Ended
	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Trading income	4,847	4,720	8,518
Own credit gain/(charge)	851	(927)	(893)
Credit market fair value losses	(65)	(910)	(3,507)
Net trading income	5,633	2,883	4,118

The majority of the Group's trading income arises in Barclays Capital. Trading income decreased 43% on the very strong prior period performance, reflecting a more challenging market environment. These declines were more than offset by reductions in losses taken through income relating to credit market exposures of £65m
(2009: £3,507m) and gains on own credit of £851m (2009: loss of £893m).

Notes

4.        Net Investment Income/(Loss)

	Half Year Ended	Half Year Ended	Half Year Ended
	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Net gain from disposal of available for sale assets	302	260	89
Dividend income	58	4	2
Net gain/(loss) from financial instruments designated at fair value	97	(75)	(133)
Other net investment income/(loss)	72	(4)	(87)
Net investment income/(loss)	529	185	(129)

Net investment income increased by £658m to a gain of £529m (2009: loss of £129m) driven by the disposal of available for sale investments within Barclays Capital, income from commercial properties and dividend income within Investment Management.

5.         Net Premiums from Insurance Contracts

	Half Year Ended	Half Year Ended	Half Year Ended
	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Gross premiums from insurance contracts	618	596	628
Premiums ceded to reinsurers	(36)	(26)	(26)
Net premiums from insurance contracts	582	570	602

6.         Other Income

	Half Year Ended	Half Year Ended	Half Year Ended
	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Increase in fair value of assets held in respect of linked liabilities to customers under investment contracts	46	1	101
Increase in fair value of liabilities to customers under investment contracts	(46)	(1)	(101)
Property rentals	24	22	42
Other income	65	68	1,257
	89	90	1,299

In the first half of 2009, other income included one-off gains of £1,127m relating to Upper Tier 2 perpetual debt extinguishment and its corresponding hedge.

7.         Net Claims and Benefits Incurred on Insurance Contracts

	Half Year Ended	Half Year Ended	Half Year Ended
	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Gross claims and benefits incurred on insurance contracts	419	426	432
Reinsurers' share of claims incurred	(4)	(16)	(11)
Net claims and benefits incurred on insurance contracts	415	410	421

Notes

8.        Impairment Charges and Other Credit Provisions

	Half Year Ended	Half Year Ended	Half Year Ended
	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Impairment charges on loans and advances (note 22)	2,970	3,460	3,870
Charges in respect of undrawn facilities and guarantees	11	(5)	33
Impairment charges on loans and advances and other credit provisions	2,981	3,455	3,903
Impairment charges on reverse repurchase agreements	2	40	3
Impairment charges on available for sale assets	97	20	650
Impairment charges and other credit provisions	3,080	3,515	4,556

Included in the impairment charges and other credit provisions above, are amounts relating to Barclays Capital's credit market exposures held at amortised cost or available for sale as follows:

	Half Year Ended	Half Year Ended	Half Year Ended
	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Impairment charges on loans and advances	311	499	706
Impairment charges on available for sale assets	-	-	464
Impairment charges and other credit provisions on Barclays Capital credit market exposures	311	499	1,170

9.         Operating Expenses

	Half Year Ended	Half Year Ended	Half Year Ended
	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Staff costs	5,812	5,133	4,815
Administrative expenses	2,889	2,590	2,299
Depreciation	408	380	379
Impairment loss - property and equipment and intangible assets	83	56	5
Operating lease rentals	316	306	333
Gain on property disposals	(12)	(20)	(9)
Amortisation of intangible assets	224	219	228
Impairment of goodwill	-	-	1
Operating expenses	9,720	8,664	8,051

Operating expenses increased 21% (£1,669m) to £9,720m (2009: £8,051m). The increase was largely driven by continued build-out in Barclays Capital and Barclays Wealth, increased charges relating to prior year compensation deferrals, the adverse impacts of currency exchange movements, a provision in relation to the possible resolution of Barclays compliance with US economic sanctions legislation and restructuring charges in Barclays Corporate of £93m reflecting realignment of activities in New Markets.

Notes

9.         Operating Expenses (continued)

Staff Costs

	Half Year Ended	Half Year Ended	Half Year Ended
	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Salaries and accrued incentive payments	4,920	4,268	3,813
Social security costs	375	303	303
Pension costs
- defined contribution plans	148	107	117
- defined benefit plans	(27)	(216)	183
Other post retirement benefits	8	9	7
Other	388	662	392
Staff costs	5,812	5,133	4,815

Staff costs increased 21% (£997m) to £5,812m (2009: £4,815m) driven by a 29% increase in salaries and accrued incentive payments, primarily due to increased charges relating to prior year compensation deferrals, the continued build-out at Barclays Capital and strategic growth within Barclays Wealth.

The defined benefit pension net credit of £27m (2009: £183m charge) reflects the £241m credit resulting from amendments to treatment of minimum defined benefits and a £54m credit relating to the Group's recognition of a surplus in Absa. This was partly offset by an increase relating to the amortisation of actuarial losses and curtailment charges.

In December 2009, the UK Government announced the introduction of a bank payroll tax of 50% applicable to discretionary bonuses over £25,000 awarded to UK bank employees between 9th December 2009 and 5th April 2010. In 2009, we recognised a charge of £225m in respect of 2009 cash awards and certain prior year awards distributed during the taxable period. For the six months ended 30th June 2010, other staff costs reflect a charge of £51m relating to the bank payroll tax on deferred compensation recognised during the period.

	Half Year Ended	Half Year Ended	Half Year Ended
Number of Employees (Full Time Equivalent)1	30.06.10	31.12.09	30.06.09
UK Retail Banking	33,200	31,900	32,800
Barclaycard	10,400	10,100	10,100
Western Europe Retail Banking	9,300	9,600	9,300
Barclays Africa	14,400	14,400	15,000
Barclays Capital	25,500	23,200	21,900
Barclays Corporate	11,900	12,900	13,500
Barclays Wealth	7,400	7,400	7,500
Absa	33,300	33,200	33,600
Head Office Functions and Other Operations	1,400	1,500	1,500
Total Group permanent and fixed term contract staff worldwide	146,800	144,200	145,200

Staff numbers are shown on a full-time equivalent basis. Total Group permanent and fixed term contract staff comprised 56,800 (31st December 2009: 55,700) in the UK and 90,000 (31st December 2009: 88,500) internationally.

Staff numbers have increased for Global Retail Banking overall largely due to the acquisition of Standard Life Bank, build-out of Barclays Shared Services in India, in sourcing of operations and the further international development of the technology infrastructure.

Barclays Capital staff numbers increased 2,300 to 25,500 (31st December 2009: 23,200) as a result of investment in sales, origination, trading and research activities.

Barclays Corporate staff numbers decreased 1,000 to 11,900 (31st December 2009: 12,900) primarily reflecting planned reductions in New Markets relating to restructuring.

1     Excludes 2,400 employees as of 30th June 2010, (31st December 2009: 2,500), of consolidated entities which are engaged in activities that are not closely related to our principal businesses.

Notes

10.       Share of Post-Tax Results of Associates and Joint Ventures

	Half Year Ended	Half Year Ended	Half Year Ended
	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Profit from associates	15	11	8
Profit from joint ventures	18	10	5
Share of post-tax results of associates and joint ventures	33	21	13

11.        Profit on Disposal of Subsidiaries, Associates and Joint Ventures

	Half Year Ended	Half Year Ended	Half Year Ended
	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Profit on disposal of subsidiaries, associates and joint ventures	4	167	21

The prior period profit on disposal was largely attributable to the sale of 50% of Barclays Vida y Pensiones Compañía de Seguros SA (£157m) and the sale of a 7% stake in Barclays Bank of Botswana Limited (£24m).

12.       Tax

The tax charge for continuing operations for the first half of 2010 was £1,026m (2009: £532m) representing a tax rate of 26.0% (2009: 19.4%). The effective tax rate for both periods differs from the UK tax rate of 28% (2009: 28%) because of non taxable gains and income, different tax rates that are applied to the profits outside of the UK, disallowable expenditure and adjustments in respect of prior years. The UK tax rate change to 27% was not substantively enacted at 30th June 2010 and so did not impact the tax charge for the first half of 2010 and is not expected to have a material impact on the full year tax charge.

Tax charges/(credits) relating to each component of other comprehensive income were as follows:

	Half Year Ended 30.06.10				Half Year Ended 31.12.09				Half Year Ended 30.06.09
	Before Tax Amount	Tax	Net of Tax Amount		Before Tax Amount	Tax	Net of Tax Amount		Before Tax Amount	Tax	Net of Tax Amount
	£m	£m	£m		£m	£m	£m		£m	£m	£m
Currency translation differences	1,054	-	1,054		661	2	663		(1,522)	(4)	(1,526)
Available for sale	(1,904)	(89)	(1,993)		671	(97)	574		565	(80)	485
Cash flow hedge	730	(197)	533		(2)	(79)	(81)		167	14	181
Other	-	27	27		20	192	212		(20)	26	6
Other comprehensive income	(120)	(259)	(379)		1,350	18	1,368		(810)	(44)	(854)

13.       Profit Attributable to Non-controlling Interests

	Half Year Ended	Half Year Ended	Half Year Ended
	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Preference shares	242	232	245
Reserve capital instruments	58	57	59
Upper Tier 2 instruments	1	2	4
Absa Group Limited	178	141	131
Barclays Global Investors UK Holdings Limited	-	2	10
Other non-controlling interests	11	11	1
Profit attributable to non-controlling interests	490	445	450

Notes

14.       Earnings Per Share

	Half Year Ended	Half Year Ended	Half Year Ended
	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Profit attributable to equity holders of the parent from continuing operations	2,431	859	1,769
Dilutive impact of convertible options	(2)	(10)	(7)
Profit attributable to equity holders of the parent from continuing operations including dilutive impact of convertible options	2,429	849	1,762
Profit attributable to equity holders of the parent from discontinued operations	-	6,646	119
Basic weighted average number of shares in issue	11,625m	10,924m	10,784m
Number of potential ordinary shares	715m	696m	200m
Diluted weighted average number of shares	12,340m	11,620m	10,984m
Basic earnings per ordinary share from continuing operations	20.9p	7.9p	16.4p
Diluted earnings per ordinary share from continuing operations	19.7p	7.3p	16.0p
Basic earnings per ordinary share from discontinued operations	-	60.8p	1.1p
Diluted earnings per ordinary share from discontinued operations	-	57.2p	1.1p

The calculation of basic earnings per share is based on the profit attributable to equity holders of the parent and the weighted average number of shares excluding own shares held in employee benefit trusts and shares held for trading.

When calculating the diluted earnings per share, the profit attributable to equity holders of the parent is adjusted for the dilutive impact of the potential conversion of outstanding options held in respect of Absa Group Limited, which on exercise would increase the Group's non-controlling interests. In addition, the weighted average number of shares in issue is adjusted for the effects of all dilutive potential ordinary shares held in respect of Barclays PLC, totalling 715 million (2009: 200 million).

The basic weighted average number of shares in issue in the half year ended 30th June 2010 reflects the full year impact of the exercise of 379 million warrants in 2009, and the weighted average impact of the 627 million warrants exercised in 2010.

The increase in the number of potential ordinary shares is primarily driven by the impact of the unexercised warrants becoming dilutive as the average share price increased significantly during the period and exceeded the warrants' exercise price, as well as new options being granted under employee share schemes.

Notes

15.       Dividends on Ordinary Shares

	Half Year Ended	Half Year Ended	Half Year Ended
Dividends Paid During the Period	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Final dividend	176	-	-
Interim dividend	118	113	-
Final dividend paid per share	1.5p	-	-
Interim dividend paid per share	1.0p	1.0p	-

As previously announced, it is the Group's policy to declare and pay dividends on a quarterly basis. An interim cash dividend for the first quarter of 2010 of 1p per share was paid on 4th June 2010. The Board has decided to pay, on 10th September 2010, the second quarterly dividend for the year ending 31st December 2010 of 1p per ordinary share for shares registered in the books of the Company at the close of business on 13th August 2010.

For qualifying US and Canadian resident ADR holders, the second quarterly dividend of 1p per ordinary share becomes 4p per ADS (representing four shares). The ADR depositary will post the interim dividend on 10th September 2010 to ADR holders on the record at close of business on 13th August 2010.

Shareholders may have their dividends reinvested in Barclays PLC shares by participating in the Barclays Dividend Reinvestment Plan (DRIP). The DRIP is available to all shareholders, including members of Barclays Sharestore, provided that they neither live in nor are subject to the jurisdiction of any country where their participation in the DRIP would require Barclays or The Plan Administrator to Barclays DRIP to take action to comply with local government or regulatory procedures or any similar formalities. Any shareholder wishing to obtain details and a form to join the DRIP should write to: The Plan Administrator to Barclays DRIP, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, United Kingdom, or, by telephoning 0871 384 2055 (calls to this number are charged at 8p per minute if using a BT landline. Other telephony provider costs may vary) or [phone] from overseas. The completed form should be returned to The Plan Administrator to Barclays DRIP on or before 13th August 2010 for it to be effective in time for the payment of the dividend on 10th September 2010. Shareholders who are already in the DRIP need take no action unless they wish to change their instructions in which case they should contact The Plan Administrator to Barclays DRIP.

Notes

16.       Acquisitions

On 1st January 2010, the Group acquired 100% ownership of Standard Life Bank PLC realising a gain on acquisition of £100m. On 31st March 2010, the Group acquired 100% of the Italian credit card business of Citibank International PLC realising a gain on acquisition of £29m. Details of the net assets acquired and the consideration paid are set out in aggregate below. The result of their operations have been included from the dates acquired and since acquisition have contributed £60m to consolidated revenues and £43m to consolidated profit before tax.

Assets	Carrying Value pre-Acquisition	Fair Value Adjustments	Fair Values
	£m	£m	£m
Cash and balances at central banks	1,327	-	1,327
Financial assets designated at fair value held on own account	195	-	195
Derivative financial instruments	139	2	141
Loans and advances to banks	165	-	165
Loans and advances to customers	7,690	(78)	7,612
Other assets	72	-	72
Total assets	9,588	(76)	9,512
Liabilities
Deposits from banks	(80)	-	(80)
Customer accounts	(5,847)	3	(5,844)
Derivative financial instruments	(102)	(4)	(106)
Debt securities in issue	(2,782)	64	(2,718)
Subordinated liabilities	(279)	53	(226)
Other liabilities	(21)	-	(21)
Total liabilities	(9,111)	116	(8,995)
Net assets acquired	477	40	517
Consideration Transferred
Cash paid			388
Total consideration			388
Gain on acquisition			129

Acquisition related costs of £7m have been included in operating expenses.

The aggregate net inflow of cash from the acquisitions of the above Group entities was £939m, representing cash and cash equivalents acquired of £1,327m less cash consideration paid of £388m.

Lehman Brothers North American Businesses

In September 2008 Barclays acquired the North American businesses of Lehman Brothers, Inc. Approximately £2.6bn of the assets acquired as part of the acquisition had not been received by 30th June 2010, approximately £2.0bn of which were recognised as part of the accounting for the acquisition and are included in the balance sheet as at 30th June 2010. Ongoing legal proceedings relating to the acquisition, including in respect of assets not yet received, are discussed in note 28.

Notes

17.       Derivative Financial Instruments

	Contract Notional		Fair Value
Derivatives Held for Trading - 30th June 2010	Amount		Assets	Liabilities
	£m		£m	£m
Foreign exchange derivatives	3,612,023		65,646	(69,623)
Interest rate derivatives	35,880,532		332,080	(310,963)
Credit derivatives	1,987,271		58,179	(54,883)
Equity and stock index and commodity derivatives	1,233,593		47,724	(49,160)
Total derivative assets/(liabilities) held for trading	42,713,419		503,629	(484,629)
Derivatives in Hedge Accounting Relationships
Derivatives designated as cash flow hedges	129,183		746	(594)
Derivatives designated as fair value hedges	56,144		755	(662)
Derivatives designated as hedges of net investments	5,632		80	(376)
Total derivative assets/(liabilities) designated in hedge accounting relationships	190,959		1,581	(1,632)
Total recognised derivative assets/(liabilities)	42,904,378		505,210	(486,261)
Derivatives Held for Trading - 31st December 2009
Foreign exchange derivatives	2,838,168		51,488	(57,697)
Interest rate derivatives	33,203,958		260,375	(244,337)
Credit derivatives	2,016,796		56,295	(51,780)
Equity and stock index and commodity derivatives	1,073,057		47,480	(48,205)
Total derivative assets/(liabilities) held for trading	39,131,979		415,638	(402,019)
Derivatives in Hedge Accounting Relationships
Derivatives designated as cash flow hedges	115,672		717	(545)
Derivatives designated as fair value hedges	58,054		438	(618)
Derivatives designated as hedges of net investments	6,292		22	(234)
Total derivative assets/(liabilities) designated in hedge accounting relationships	180,018		1,177	(1,397)
Total recognised derivative assets/(liabilities)	39,311,997		416,815	(403,416)
Derivatives Held for Trading - 30th June 2009
Foreign exchange derivatives	2,977,014		59,809	(62,763)
Interest rate derivatives	32,858,470		336,997	(323,103)
Credit derivatives	2,189,217		97,537	(85,911)
Equity and stock index and commodity derivatives	1,091,218		60,139	(61,431)
Total derivative assets/(liabilities) held for trading	39,115,919		554,482	(533,208)
Derivatives in Hedge Accounting Relationships
Derivatives designated as cash flow hedges	65,696		613	(1,046)
Derivatives designated as fair value hedges	46,061		748	(448)
Derivatives designated as hedges of net investments	4,966		202	(264)
Total derivative assets/(liabilities) designated in hedge accounting relationships	116,723		1,563	(1,758)
Total recognised derivative assets/(liabilities)	39,232,642		556,045	(534,966)

Notes

17.       Derivative Financial Instruments (continued)

The £88,395m increase (2009: decrease of £139,230m) in gross derivative assets has been predominantly driven by movements in interest rate derivate assets resulting from decreases in all major forward curves.

Derivative asset and liability exposures would be £461,140m (31st December 2009: £374,099m) lower than reported under IFRS if netting were permitted for assets and liabilities with the same counterparty or for which we hold cash collateral.

The tables below set out the fair values of the derivative assets together with the value of those assets subject to enforceable counterparty netting arrangements for which the Group holds offsetting liabilities and eligible collateral.

30th June 2010	Gross Assets	Counterparty Netting	Net Exposure
	£m	£m	£m
Foreign exchange	65,751	56,789	8,962
Interest rate	333,556	280,942	52,614
Credit derivatives	58,179	49,739	8,440
Equity and stock index	20,003	13,437	6,566
Commodity derivatives	27,721	19,200	8,521
	505,210	420,107	85,103
Total collateral held			41,033
Net exposure less collateral			44,070
31st December 2009
Foreign exchange	51,775	45,391	6,384
Interest rate	261,211	213,446	47,765
Credit derivatives	56,295	48,774	7,521
Equity and stock index	17,784	13,330	4,454
Commodity derivatives	29,750	21,687	8,063
	416,815	342,628	74,187
Total collateral held			31,471
Net exposure less collateral			42,716
30th June 2009
Foreign exchange	60,225	53,273	6,952
Interest rate	338,090	290,806	47,284
Credit derivatives	97,537	82,150	15,387
Equity and stock index	21,553	15,911	5,642
Commodity derivatives	38,640	30,248	8,392
	556,045	472,388	83,657
Total collateral held			34,386
Net exposure less collateral			49,271

Notes

18.       Financial Instruments Held at Fair Value

The table below shows the financial assets and liabilities that are recognised and measured at fair value analysed by level within the fair value hierarchy.

	Valuations Based on
	Quoted Market Prices	Observable Inputs	Significant Unobservable Inputs
30th June 2010	(Level 1)	(Level 2)	(Level 3)		Total
	£m	£m	£m		£m
Trading portfolio assets	51,815	108,779	6,435		167,029
Financial assets designated at fair value
-    held on own account	3,950	26,787	10,558		41,295
-    held in respect of linked liabilities to customers under      investment contracts	1,469	-	-		1,469
Derivative financial assets	4,146	489,965	11,099		505,210
Available for sale assets	21,453	27,869	3,352		52,674
Total Assets	82,833	653,400	31,444		767,677
Trading portfolio liabilities	(32,463)	(39,264)	(25)		(71,752)
Financial liabilities designated at fair value	(558)	(82,517)	(4,154)		(87,229)
Liabilities to customers under investment contracts	(86)	(1,700)	-		(1,786)
Derivative financial liabilities	(3,351)	(474,916)	(7,994)		(486,261)
Total Liabilities	(36,458)	(598,397)	(12,173)		(647,028)
31st December 2009
Trading portfolio assets	76,256	69,010	6,078		151,344
Financial assets designated at fair value
-    held on own account	5,766	24,845	10,700		41,311
-    held in respect of linked liabilities to customers under       investment contracts	1,209	48	-		1,257
Derivative financial assets	3,163	401,451	12,201		416,815
Available for sale assets	19,919	35,287	1,277		56,483
Total Assets	106,313	530,641	30,256		667,210
Trading portfolio liabilities	(42,238)	(8,936)	(78)		(51,252)
Financial liabilities designated at fair value	-	(82,374)	(3,828)		(86,202)
Liabilities to customers under investment contracts	(109)	(1,570)	-		(1,679)
Derivative financial liabilities	(2,386)	(391,916)	(9,114)		(403,416)
Total Liabilities	(44,733)	(484,796)	(13,020)		(542,549)

Transfers between level 1 and level 2 primarily comprised government bonds that became less actively traded.

Notes

18.       Financial Instruments Held at Fair Value (continued)

The following table summarises the movements in the level 3 balance during the period ended 30th June 2010. The table shows gains and losses and includes amounts for financial assets and liabilities transferred into and out of level 3 during the period. Transfers have been reflected as if they had taken place at the beginning of the year.

As at 30th June 2010	Trading Portfolio Assets	Financial Assets Designated at Fair Value	Available for Sale Assets	Trading Portfolio Liabilities	Financial Liabilities Designated at Fair Value	Net Derivative Financial Instruments	Total
	£m	£m	£m	£m	£m	£m	£m
As at 1st January 2010	6,078	10,700	1,277	(78)	(3,828)	3,087	17,236
Purchases	1,908	354	343	(7)	(9)	515	3,104
Sales	(1,907)	(412)	(189)	-	21	(77)	(2,564)
Issues	-	-	-	-	(139)	(509)	(648)
Settlements	(286)	(434)	(113)	62	221	660	110
Total gains and losses recognised in the income statement in the period
- trading income	485	71	-	(2)	(596)	70	28
- non trading income	-	148	(112)	-	-	-	36
Total gains or losses recognised in other comprehensive income	-	-	104	-	-	-	104
Transfers in / transfers out	157	131	2,042	-	176	(641)	1,865
	6,435	10,558	3,352	(25)	(4,154)	3,105	19,271

The significant movements in the level 3 positions during the period ended 30th June 2010 are explained below:

- Purchases of £3.1bn were primarily composed of £1.5bn of asset backed products, £0.5bn of equity, credit and commodity derivatives, £0.3bn of traded loans and £0.2bn of bonds

- Sales of £2.6bn included the disposal of £1.6bn of asset backed products, £0.2bn of equities and £0.2bn of bonds

- Net Issuances and Settlements of £0.5bn were primarily driven by new equity, credit and commodity derivatives as well as restructuring transactions

- Transfers into Level 3 primarily reflected a £2bn receivable arising as part of the acquisition of the North American businesses of Lehman Brothers. This resulted from a change in the accounting treatment from loans and advances to available for sale financial instruments. This classification is due to the uncertainty inherent in any litigation, rather than uncertainty relating to the valuation of the assets themselves

The following table discloses the gains and losses recognised in the period arising on level 3 financial assets and liabilities held as at 30th June 2010.

As at 30th June 2010	Trading Portfolio Assets	Financial Assets Designated at Fair Value	Available for Sale Assets	Trading Portfolio Liabilities	Financial Liabilities Designated at Fair Value	Net Derivative Financial Instruments	Total
	£m	£m	£m	£m	£m	£m	£m
Recognised in the income statement
- trading income	287	(17)	-	(2)	(517)	164	(85)
- non trading income	-	142	(140)	-	-	-	2
Total gains or losses recognised in other comprehensive income	-	-	87	-	-	-	87
Total	287	125	(53)	(2)	(517)	164	4

Notes

18.       Financial Instruments Held at Fair Value (continued)

The amount that has yet to be recognised in income that relates to the difference between the transaction price (the fair value at initial recognition) and the amount that would have arisen had valuation models using unobservable inputs been used on initial recognition, less amounts subsequently recognised, was as follows:

	Half Year Ended	Half Year Ended	Half Year Ended
	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Opening balance	99	110	128
Additions	18	19	20
Amortisation and releases	(8)	(30)	(38)
Closing balance	109	99	110

As part of our risk management processes, we apply stress tests on the significant unobservable parameters to generate a range of potentially possible alternative valuations. The results of the most recent stress test showed a potential to increase the fair values by up to £1.7bn (31st December 2009: £1.9bn) or to decrease the fair values by up to £2.0bn (31st December 2009: £2.2bn) with substantially all the potential effect being recorded in profit or loss rather than equity. The metric has not been offset by the effect of hedging. No stress has been applied to the £2.0bn receivable arising from the Lehman acquisition since, as disclosed in note 28, it is not possible to estimate any possible loss to Barclays in relation to the matter.

The stresses applied take account of the nature of valuation techniques used, as well as the availability and reliability of observable proxy and historical data. In all cases, an assessment is made to determine the suitability of available data. The sensitivity methodologies are based on a range, standard deviation or spread data of a reliable reference source or a scenario based on alternative market views. The level of shift or scenarios applied is considered for each product and varied according to the quality of the data and variability of underlying market.

19.       Reclassification of Financial Assets Held for Trading

Prior to 2010, the Group reclassified certain financial assets, originally classified as held for trading that were deemed to be not held for trading purposes, and thus considered as loans and receivables.

There were no additional reclassifications of financial assets during 2010.

The carrying value of the securities previously reclassified into loans and receivables has decreased from £9,378m to £8,800m primarily as a result of paydowns and maturities of the underlying securities. At June 2010, the carrying value of those assets reclassified at 25th November 2009 was greater than that at 31st December 2009 as a result of foreign exchange movements. No impairment has been identified on these securities.

The following table provides a summary of the assets reclassified from held for trading to loans and receivables.

	As at 30.06.10			As at 31.12.09			As at 30.06.09
Trading Assets Reclassified to Loans and Receivables	Carrying Value	Fair Value		Carrying Value	Fair Value		Carrying Value	Fair Value
	£m	£m		£m	£m		£m	£m
Reclassification 25th November 2009	8,120	8,096		8,099	7,994		-	-
Reclassification 16th December 2008	680	693		1,279	1,335		3,076	3,025
Total financial assets reclassified to loans and receivables	8,800	8,789		9,378	9,329		3,076	3,025

The reclassified financial assets contributed £190m (2009: £79m) to interest income.

If the reclassifications had not been made, the Group's income statement for 2010 would have additional gains on the reclassified trading assets of £38m (2009: loss of £49m).

Notes

20.      Loans and Advances to Banks

	As at	As at	As at
By Geographical Area	30.06.10	31.12.09	30.06.09
	£m	£m	£m
United Kingdom	4,582	5,129	11,117
Other European Union	16,532	12,697	15,051
United States	12,972	13,137	15,568
Africa	3,327	2,388	2,755
Rest of the World	8,571	7,845	8,511
	45,984	41,196	53,002
Less: Allowance for impairment	(60)	(61)	(58)
Total loans and advances to banks	45,924	41,135	52,944

Loans and advances to banks included £12,601m (31st December 2009: £6,004m) of settlement balances and £8,997m (31st December 2009: £9,889m) of cash collateral balances.

21.       Loans and Advances to Customers

	As at	As at	As at
	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Retail business	225,215	213,489	200,552
Wholesale and corporate business	234,738	217,470	220,030
	459,953	430,959	420,582
Less: Allowances for impairment	(11,687)	(10,735)	(8,778)
Total loans and advances to customers	448,266	420,224	411,804

Loans and advances to customers included £40,163m (31st December 2009: £19,821m) of settlement balances and £24,109m (31st December 2009: £19,958m) of cash collateral balances.

Notes

22.      Allowance for Impairment on Loans and Advances

	As at 30.06.10	As at 31.12.09	As at 30.06.09
	£m	£m	£m
At beginning of period	10,796	8,836	6,574
Acquisitions and disposals	70	364	70
Exchange and other adjustments	135	234	(361)
Unwind of discount	(88)	(90)	(95)
Amounts written off	(2,216)	(2,101)	(1,279)
Recoveries	80	93	57
Amounts charged against profit	2,970	3,460	3,870
At end of period	11,747	10,796	8,836
Allowance
United Kingdom	4,425	4,083	3,461
Other European Union	2,268	2,014	1,547
United States	2,847	2,518	2,184
Africa	1,528	1,349	1,129
Rest of the World	679	832	515
At end of period	11,747	10,796	8,836
Amounts Charged Against Profit
Increases in Impairment Allowances
United Kingdom	1,405	1,543	1,580
Other European Union	899	735	890
United States	447	592	943
Africa	419	475	457
Rest of the World	220	563	333
	3,390	3,908	4,203
Less: Releases of Impairment Allowance
United Kingdom	(152)	(235)	(96)
Other European Union	(112)	(76)	(129)
United States	(22)	6	(10)
Africa	(23)	(25)	(13)
Rest of the World	(31)	(25)	(28)
	(340)	(355)	(276)
Less: Recoveries
United Kingdom	(49)	(17)	(31)
Other European Union	(3)	(4)	(8)
United States	-	(6)	-
Africa	(26)	(63)	(17)
Rest of the World	(2)	(3)	(1)
	(80)	(93)	(57)
Total amounts charged against profit (note 8)	2,970	3,460	3,870

Notes

23.      Subordinated Liabilities

Dated	As at 30.06.10	As at 31.12.09	As at 30.06.09
	£m	£m	£m
Opening balance	17,668	16,972	16,169
Issuances	93	283	2,952
Redemptions	(1,185)	(253)	(285)
Other	318	666	(1,864)
Closing balance	16,894	17,668	16,972

During the six months ended 30th June 2010 redemptions comprised Callable Floating Rate Subordinated Notes 2015 (US$1,500m) of £1,050m; 10.75% Subordinated Callable Notes 2015 (R 1,100m) of £99m; and Subordinated Callable Notes 2015 (R 400m) of £36m.

During 2010, Subordinated Callable Floating Rate Notes 2022 (R 400m) of £37m and 10.28% Fixed Rate Subordinated Notes 2022 (R 600m) of £56m were issued by Absa.

Undated	As at 30.06.10	As at 31.12.09	As at 30.06.09
	£m	£m	£m
Opening balance	8,148	8,297	13,673
Redemptions	-	(355)	(3,507)
Other	887	206	(1,869)
Closing balance	9,035	8,148	8,297
Total dated and undated subordinated liabilities	25,929	25,816	25,269

Other movements include hedging fair value movements, accrued interest and an increase in subordinated liabilities of £226m (2009: £nil) related to acquisitions during the period (see note 16).

24.      Provisions

	As at 30.06.10	As at 31.12.09	As at 30.06.09
	£m	£m	£m
Redundancy and restructuring	131	162	110
Undrawn contractually committed facilities and guarantees	166	162	116
Onerous contracts	61	68	40
Sundry provisions	449	198	215
	807	590	481

Provisions increased by 37% (£217m) to £807m (31st December 2009: £590m) primarily due to the recognition of a provision relating to a review of the Group's compliance with US economic sanctions.

25.      Retirement Benefit Liabilities

The Group's IAS 19 pension deficit across all schemes as at 30th June 2010 was £4,364m (31st December 2009: £3,946m). There are net recognised liabilities of £663m (31st December 2009: £698m) and unrecognised actuarial losses of £3,701m (31st December 2009: £3,248m). The net recognised liabilities comprised retirement benefit liabilities of £788m (31st December 2009: £769m) and assets of £125m (31st December 2009: £71m).

The Group's IAS 19 pension deficit in respect of the main UK Scheme as at 30th June 2010 was £4,028m (31st December 2009: £3,534m). The most significant reason for this change was the decrease in AA long-term corporate bond yields which resulted in a lower discount rate of 5.22% (31st December 2009: 5.61%). This was partially offset by the reduction in the pension liability of £241m resulting from amendments to the treatment of minimum defined benefits as well as favourable investment returns over the period.

The most recent triennial funding valuation of the UK Retirement Fund (UKRF) was performed with an effective date of 30th September 2007. In compliance with the Pension Act 2004, the Bank and the Trustee have agreed a scheme-specific funding target, statement of funding principles, and schedule of contributions. The next triennial funding valuation will take place with an effective date of 30th September 2010.

Notes

26.      Share Capital

Called Up and Authorised Share Capital

Called up share capital comprises 12,045 million (31st December 2009: 11,412 million) ordinary shares of 25p each.

On 1st October 2009, the final provisions of the Companies Act 2006 came into force, which included the abolition of the concept of authorised share capital, subject to restrictions in the Company's articles of association. The Company adopted new articles of association at its 2010 Annual General Meeting that removed any such restrictions.

Conversion of Mandatorily Convertible Notes

The Mandatorily Convertible Notes (MCNs), issued by Barclays Bank PLC on 27th November 2008, were converted into 2,642 million ordinary shares in Barclays PLC by 30th June 2009 at the conversion price of £1.53276. £661m was credited to share capital and the remaining £3,221m (net of issuance costs) was credited to the share premium account.

Warrants

On 31st October 2008 Barclays PLC issued, in conjunction with a simultaneous issue of Reserve Capital Instruments issued by Barclays Bank PLC, warrants to subscribe for up to 1,516.9 million new ordinary shares at a price of £1.97775. On 28th October 2009, 379.2 million of these warrants were exercised resulting in £94m being credited to share capital and the remaining £655m being credited to the share premium account. On 17th February 2010, 626.8 million warrants were exercised with £157m credited to share capital and the remaining £1,083m credited to the share premium account.

27.      Contingent Liabilities and Commitments

	As at 30.06.10	As at 31.12.09	As at 30.06.09
	£m	£m	£m
Acceptances and endorsements	359	375	312
Guarantees and letters of credit pledged as collateral security	12,503	15,406	13,056
Securities lending arrangements	26,489	27,406	31,639
Other contingent liabilities	9,109	9,587	9,773
Contingent liabilities	48,460	52,774	54,780
Documentary credits and other short-term trade related transactions	1,141	762	620
Undrawn Note Issuance and Revolving Underwriting Facilities
Forward asset purchases and forward deposits placed	18	46	53
Standby facilities, credit lines and other	219,946	206,467	204,341
Commitments	221,105	207,275	205,014

Up to the disposal of Barclays Global Investors on 1st December 2009, the Group facilitated securities lending arrangements for its managed investment funds whereby securities held by funds under management were lent to third parties. Borrowers provided cash or investment grade assets as collateral equal to 100% of the market value of the securities lent plus a margin of 2%-10%. The Group has agreed with BlackRock, Inc. to continue to provide indemnities to support these arrangements for three years following the sale of the business. As at 30th June 2010, the fair value of the collateral held was £27,406m (31st December 2009: £28,248m) and that of the stock lent was £26,489m (31st December 2009: £27,406m).

Barclays has included an accrual of £94m in other liabilities as at 30th June 2010 (31st December 2009: £108m) in respect of levies raised by the Financial Services Compensation Scheme (FSCS), which include interest on facilities provided by HM Treasury to FSCS in support of FSCS's obligations to the depositors of banks declared in default. The total of these facilities is understood to be some £20bn. While it is anticipated that the substantial majority of these facilities will be repaid wholly from recoveries from the institutions concerned, there is the risk of a shortfall, such that the FSCS may place additional levies on all FSCS participants.

Notes

28.      Legal Proceedings

Barclays Bank PLC, Barclays PLC and various current and former members of Barclays PLC's Board of Directors have been named as defendants in five proposed securities class actions (which have been consolidated) pending in the United States District Court for the Southern District of New York. The consolidated amended complaint, dated 12th February 2010, alleges that the registration statements relating to American Depositary Shares representing Preferred Stock, Series 2, 3, 4 and 5 (ADS) offered by Barclays Bank PLC at various times between 2006 and 2008 contained misstatements and omissions concerning (amongst other things) Barclays portfolio of mortgage-related (including U.S. subprime-related) securities, Barclays exposure to mortgage and credit market risk and Barclays financial condition. The consolidated amended complaint asserts claims under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933. Barclays considers that these ADS-related claims against it are without merit and is defending them vigorously. It is not possible to estimate any possible loss in relation to these claims or any effect that they might have upon operating results in any particular financial period.

On 15th September 2009, motions were filed in the United States Bankruptcy Court for the Southern District of New York by Lehman Brothers Holdings Inc. (LBHI), the SIPA Trustee for Lehman Brothers Inc. (the Trustee) and the Official Committee of Unsecured Creditors of Lehman Brothers Holdings Inc. (the Committee). All three motions challenge certain aspects of the transaction pursuant to which Barclays Capital Inc. (BCI) and other companies in the Barclays Group acquired most of the assets of Lehman Brothers Inc. (LBI) in September 2008 and the court order approving such sale. The claimants seek an order: voiding the transfer of certain assets to BCI; requiring BCI to return to the LBI estate alleged excess value BCI received; and declaring that BCI is not entitled to certain assets that it claims pursuant to the sale documents and order approving the sale. On 16th November 2009, LBHI, the Trustee and the Committee filed separate complaints in the Bankruptcy Court asserting claims against BCI based on the same underlying allegations as the pending motions and seeking relief similar to that which is requested in the motions. On 29th January 2010, BCI filed its response to the motions. Barclays considers that the motions and claims against BCI are without merit and BCI is vigorously defending its position. On 29th January 2010, BCI also filed a motion seeking delivery of certain assets that LBHI and LBI have failed to deliver as required by the sale documents and the court order approving the sale. The Court commenced a hearing in mid-April, and claimants completed the presentation of their fact evidence on 25th June 2010. Barclays is scheduled to present its evidence to the Court during the period 23rd August 2010 to 24th September 2010 and closing arguments are expected to be made before the end of the year. It is not possible to estimate any possible loss to Barclays in relation to these matters or any effect that these matters might have upon operating results in any particular financial period.

Barclays is engaged in various other litigation proceedings both in the United Kingdom and a number of overseas jurisdictions, including the United States, involving claims by and against it which arise in the ordinary course of business. Barclays does not expect the ultimate resolution of any of the proceedings to which Barclays is party to have a significant adverse effect on the financial position of the Group and Barclays has not disclosed the contingent liabilities associated with these claims either because they cannot reasonably be estimated or because such disclosure could be prejudicial to the conduct of the claims.

29.      Competition and Regulatory Matters

The scale of regulatory change remains challenging and the global financial crisis is resulting in a significant tightening of regulation and changes to regulatory structures globally, especially for banks that are deemed to be of systemic importance. Concurrently, there is continuing political and regulatory scrutiny of the operation of the banking and consumer credit industries in the UK and elsewhere which, in some cases, is leading to increased or changing regulation. For example, the UK Chancellor of the Exchequer has proposed reallocating the FSA's current responsibilities between the Bank of England and a new Consumer Protection and Markets Authority by the end of 2012 and has tasked an independent commission with reviewing the UK banking system, in particular focusing on competition issues and the possible splitting of retail and investment banking operations, with findings and recommendations expected by September 2011. As part of an Emergency Budget, the Chancellor also announced a new bank levy, which will apply to certain UK banks and building societies and the UK operations of foreign banks from 1st January 2011. Barclays expects to be subject to the new levy but cannot, as at the date of this document, quantify its potential exposure. In the United States, the Dodd-Frank Wall Street Reform and Consumer Protection Act contains far reaching regulatory reform. Whilst focused on US financial institutions, many provisions will significantly affect companies such as Barclays although the full impact will not be known until implementing rules are made by governmental authorities. The nature and impact of future changes in the legal framework, policies and regulatory action cannot currently be fully predicted and are beyond Barclays control but, especially in the area of banking regulation, are likely to have an impact on Barclays businesses and earnings.

Notes

29.      Competition and Regulatory Matters (continued)

The market for payment protection insurance (PPI) has been under scrutiny by the UK competition authorities and financial services regulators. Following a reference from the Office of Fair Trading (OFT), the UK Competition Commission (CC) undertook an in-depth enquiry into the PPI market. The CC published its final report on 29th January 2009 concluding that the businesses which offer PPI alongside credit face little or no competition when selling PPI to their credit customers. In March 2009, Barclays submitted a targeted appeal focused on the prohibition on sale of PPI at the point of sale (POSP) remedy on the basis that it was not based on sound analysis, and is unduly draconian. The Competition Appeals Tribunal (CAT) upheld Barclays appeal on two grounds, meaning that the CC will be required to reconsider the POSP remedy and the basis for it, and made an order to that effect on 26th November 2009. This remittal process is expected to take until the autumn of 2010, at which time the CC will publish its final Remedies Order.

Separately, in 2006, the FSA published the outcome of its broad industry thematic review of PPI sales practices in which it concluded that some firms fail to treat customers fairly and that the FSA would strengthen its actions against such firms. Tackling poor PPI sales practices remains a priority for the FSA. In September 2009, the FSA issued a Consultation Paper on the assessment and redress of PPI complaints made on or after 14th January 2005. It was expected that the FSA would issue a final version of its policy statement in February or March 2010. Instead, the FSA issued a revised Consultation Paper in March 2010. The FSA will publish a final version of the policy statement by way of an amendment to the DISP (Dispute Resolution: Complaints) rules in the FSA Sourcebook. It is anticipated that the final rules will be published in August 2010. Barclays voluntarily complied with the FSA's request to cease selling single premium PPI by the end of January 2009.

The OFT has carried out investigations into Visa and MasterCard credit card interchange rates. A decision by the OFT in the MasterCard interchange case was set aside by the CAT in 2006. The OFT is progressing its investigations in the Visa interchange case and a second MasterCard interchange case in parallel and both are ongoing. The outcome is not known but these investigations may have an impact on the consumer credit industry in general and therefore on Barclays business in this sector. In 2007, the OFT expanded its investigation into interchange rates to include debit cards.

Notwithstanding the Supreme Court ruling in relation to the test case, Barclays continues to be involved in the OFT's work on personal current accounts (PCAs). The OFT initiated a market study into PCAs in the UK in 2007 which also included an examination of other retail banking products, in particular savings accounts, credit cards, personal loans and mortgages in order to take into account the competitive dynamics of UK retail banking. In 2008, the OFT published its market study report, in which it concluded that certain features of the UK PCA market were not working well for consumers. The OFT reached the provisional view that some form of regulatory intervention is necessary in the UK PCA market. The OFT also held a consultation to seek views on the findings and possible measures to address the issues raised in its report. In October 2009, the OFT published a follow-up report containing details of voluntary initiatives in relation to transparency and switching agreed between the OFT and the industry. A further follow-up report was published in March 2010 providing details of voluntary initiatives and working parties agreed in relation to certain aspects of charging structures. Barclays has participated fully in the market study process and will continue to engage with the working parties.

As previously reported, Barclays has been conducting an internal review of its conduct with respect to US dollar payments involving countries, persons and entities subject to US economic sanctions and has been reporting the results of that review to various governmental authorities including the US Department of Justice, the New York County District Attorney's Office and the Office of Foreign Assets Control which have been conducting investigations of the matter. Barclays is in advanced discussions with these and other authorities with respect to a possible resolution of the investigations. Barclays provided £194m in the first half of 2010 in relation to the possible resolution of this matter.

30.      Related Party Transactions

Related party transactions in the half year ended 30th June 2010 were similar in nature to those disclosed in the Group's 2009 Annual Report. No related party transactions that have taken place in the six months to 30th June 2010 have materially affected the financial position or the performance of the Group during this period and there were no changes in the related parties transactions described in the 2009 Annual Report that could have a material effect on the financial position or performance of the Group in the first six months of the current financial year.

Notes

31.       Segmental Reporting

Since 1st January 2010, for management reporting purposes, we have reorganised our activities under three business groupings: Global Retail Banking; Corporate and Investment Banking, and Barclays Wealth; and Absa. We retain our Head Office and Other Operations activity. The comparatives have been restated to reflect this new group structure, as detailed in our announcement on 22nd March 2010.

The following section analyses the Group's performance by business.

1.          Global Retail Banking

UK Retail Banking

UK Retail Banking builds broad and deep relationships with consumers and small and medium sized business owners throughout the UK by providing a wide range of products and financial services. UK Retail Banking provides access to current account and savings products and Woolwich branded mortgages. Within Consumer Lending and Insurance, UK Retail Banking provides unsecured loan and protection products and general insurance. Barclays Financial Planning provides investment advice and products. Barclays Business provides banking services, including money transmission, to small and medium enterprises.

Barclaycard

Barclaycard is a multi-brand payment business which provides consumer cards and lending, processes card transactions for retailers and merchants and issues credit and charge cards to corporate customers and the UK Government. It is one of the leading credit card businesses in Europe and South Africa and has an increased presence in the United States.

In the UK, Barclaycard comprises Barclaycard UK Cards, Barclays Partner Finance and FirstPlus. Global Commercial Payments and Global Payment Acceptance provide payment products and solutions to corporate clients and institutions. Outside the UK, Barclaycard provides credit cards in the United States, Germany, South Africa (through management of the Absa credit card portfolio) and in the Scandinavian region, where Barclaycard operates through Entercard, a joint venture with Swedbank.

Barclaycard works closely with other parts of the Group, including UK Retail Banking, Barclays Corporate, Western Europe Retail Banking and Barclays Africa, to leverage their distribution capabilities.

Western Europe Retail Banking

Western Europe Retail Banking encompasses Barclays Global Retail Banking and Barclaycard operations in Spain, Italy, Portugal and France. Western Europe Retail Banking serves retail, mass affluent and local business customers in Spain, Italy and Portugal and serves retail and mass affluent customers in France. Western Europe Retail Banking serves customers through a variety of distribution channels and provides a range of products including retail mortgages, current and deposit accounts, unsecured lending, credit cards, investments and insurance.

Barclays Africa

Barclays Africa encompasses Barclays Global Retail Banking, Corporate Banking, and Barclaycard operations in 10 countries organised in four geographic areas: North Africa (Egypt), East and West Africa (Ghana, Tanzania, Uganda and Kenya), Southern Africa (Botswana, Zambia and Zimbabwe), and Indian Ocean (Mauritius and Seychelles). The region is managed from Dubai.

Barclays Africa serves its 2.7m customers through a network of 545 branches and service centres providing a variety of traditional financial products including retail current and deposit accounts, unsecured lending, credit cards, mortgages, commercial lending, trade services, cash management, treasury and investments. In addition to this, it provides specialist services such as Sharia-compliant products and mobile banking.

Notes

31.       Segmental Reporting (continued)

2.          Corporate and Investment Banking, and Barclays Wealth

Barclays Capital

Barclays Capital is a global investment bank that provides large corporate, government and institutional clients with a full spectrum of solutions to their strategic advisory, financing and risk management needs. These solutions include the following products and services: Fixed income, currency and commodities, which includes interest rate, foreign exchange, commodities, emerging markets, money markets, and credit; Equities, which includes cash and equity derivatives and prime services; Investment Banking, which includes financial advisory, equity and debt underwriting; and Principal Investments. Barclays Capital includes Absa Capital, the investment banking business of Absa. Barclays Capital works closely with all other parts of the Group to leverage synergies from client relationships and product capabilities.

Barclays Corporate

Barclays Corporate provides global banking services across 10 countries grouped into three markets: UK & Ireland, Continental Europe (Spain, Italy, Portugal and France) and New Markets (India, Pakistan, Russia and the UAE). Customers are served via a network of relationship and industry sector specialists which provides a comprehensive set of global banking products, support, expertise and services. Customers are also offered access to the products and expertise of other Group businesses in particular Barclays Capital, Barclaycard and Barclays Wealth.

Barclays Wealth

Barclays Wealth focuses on private and intermediary clients worldwide providing international and private banking, fiduciary services, investment management and brokerage.

Investment Management

The Investment Management business manages the Group's 19.9% ongoing interest in BlackRock, Inc. and the residual cash support arrangements and associated liquidity support charges relating to Barclays Global Investors, which was sold on 1st December 2009.

3.          Absa

Absa represents Barclays consolidation of Absa Group Limited, excluding Absa Capital, Absa Card and Absa Wealth which are included as part of Barclays Capital, Barclaycard and Barclays Wealth respectively. Absa Group Limited is one of South Africa's largest financial services organisations serving personal, commercial and corporate customers predominantly in South Africa. Absa serves retail customers through a variety of distribution channels and offers a full range of banking services, including current and deposit accounts, mortgages, instalment finance and bancassurance products. It also offers customised business solutions for commercial and large corporate customers.

4.         Head Office Functions and Other Operations

Head Office Functions and Other Operations comprise head office and central support functions, businesses in transition and consolidation adjustments.

Head office and central support functions includes the following areas: Executive Management, Finance, Property, Treasury, Corporate Secretariat, Corporate Development, Tax, Investor Relations, Risk, Human Resources, Corporate Affairs, Internal Audit, Legal and Compliance and Risk. Costs incurred wholly on behalf of the businesses are recharged to them.

Businesses in transition principally relate to certain lending portfolios that are centrally managed with the objective of maximising recovery from the assets. Consolidation adjustments largely reflect the elimination of inter-segment transactions.

Notes

31.       Segmental Reporting (continued)

Half Year Ended 30th June 2010	UK Retail Banking	Barclaycard	Western Europe Retail Banking	Barclays Africa
	£m	£m	£m	£m
Income from external customers, net of insurance claims	2,192	1,934	614	402
Inter-segment (loss)/income	(21)	24	(12)	1
Total income net of insurance claims	2,171	1,958	602	403
Business segment profit before tax	504	317	10	70
Total assets	119,251	31,062	48,976	7,882
Half Year Ended 31st December 2009
Income from external customers, net of insurance claims	2,116	2,024	635	374
Inter-segment income/(loss)	9	8	1	-
Total income net of insurance claims	2,125	2,032	636	374
Business segment profit before tax	397	352	188	39
Total assets	109,327	30,274	51,027	7,893
Half Year Ended 30th June 2009
Income from external customers, net of insurance claims	2,145	2,004	683	365
Inter-segment income/(loss)	6	5	(1)	-
Total income net of insurance claims	2,151	2,009	682	365
Business segment profit before tax	313	375	92	65
Total assets	106,898	29,589	45,224	7,072

Notes

Barclays Capital	Barclays Corporate	Barclays Wealth	Investment Management1	Absa	Head Office Functions and Other Operations	Total
£m	£m	£m	£m	£m	£m	£m
7,571	1,419	801	34	1,387	227	16,581
341	(18)	(44)	-	(8)	(263)	-
7,912	1,401	757	34	1,379	(36)	16,581
3,400	(377)	95	31	318	(421)	3,947
1,212,413	86,906	16,376	3,604	46,964	13,712	1,587,146
5,116	1,527	751	14	1,358	(110)	13,805
420	16	(52)	(2)	(15)	(385)	-
5,536	1,543	699	12	1,343	(495)	13,805
1,417	5	68	(15)	269	(880)	1,840
1,019,120	88,798	14,889	5,406	45,765	6,430	1,378,929
5,983	1,583	674	25	1,197	659	15,318
106	55	(51)	3	13	(136)	-
6,089	1,638	623	28	1,210	523	15,318
1,047	152	75	37	259	330	2,745
1,133,685	92,303	14,063	67,842	42,596	6,066	1,545,338

1     At 30th June 2009 includes assets of disposal group.

Notes

32.      Discontinued Operations

On 1st December 2009 the Group completed the sale of Barclays Global Investors to BlackRock, Inc. (BlackRock). The consideration at completion was US$15.2bn (£9.5bn), including 37.567 million new BlackRock shares. This gives the Group an economic interest of 19.9% of the enlarged BlackRock group, which is accounted for as an available for sale equity investment. The profit on disposal before tax recorded in 2009 was £6,331m, with a tax charge of £43m, reflecting the application of UK substantial shareholdings relief in accordance with UK tax law.

The results of the discontinued operations are set out below. For the half year ended 31st December 2009 the results are for the 5 month period up to the date of disposal:

	Half Year Ended	Half Year Ended	Half Year Ended
	30.06.10	31.12.09	30.06.09
	£m	£m	£m
Net interest income	-	33	-
Net fee and commission income	-	808	951
Net trading income/(expense)	-	20	(19)
Net investment income	-	66	-
Other income	-	1	3
Total income	-	928	935
Operating expenses excluding amortisation of intangible assets and deal costs	-	(541)	(582)
Amortisation of intangible assets	-	(6)	(8)
Operating expenses1	-	(547)	(590)
Profit before tax from discontinued operations	-	381	345
Tax	-	(123)	(114)
Profit after tax from discontinued operations	-	258	231
Profit on disposal of discontinued operations1	-	6,437	(106)
Tax	-	(43)	-
Net profit on the disposal of the discontinued operation	-	6,394	(106)
Profit after tax from discontinued operations, including gain on disposal	-	6,652	125

Other comprehensive income relating to discontinued operations is as follows:

Available for sale assets	-	(2)	12
Currency translation reserve	-	72	(157)
Tax relating to components of other comprehensive income	-	9	8
Other comprehensive income, net of tax from discontinued operations	-	79	(137)

The cash flows attribute to the discontinued operations as follows:

Cash Flows from Discontinued Operations
Net cash flows from operating activities	-	419	(86)
Net cash flows from investing activities	-	19	(44)
Net cash flows from financing activities	-	(775)	225
Effect of exchange rates on cash and cash equivalents	-	(38)	(96)
Net decrease in cash and cash equivalents	-	(375)	(1)

1     Deal costs of £106m were previously included within operating expenses for the half year ended June 2009. These costs were reflected in the profit recognised on disposal on 1st December 2009.

Other Information

Share Capital

The Group manages its debt and equity capital actively. The Group's authority to buy back ordinary shares (up to 1,203.9 million ordinary shares) was renewed at the 2010 Annual General Meeting to provide additional flexibility in the management of the Group's capital resources.

Group Share Schemes

The independent trustees of the Group's share schemes may make purchases of Barclays PLC ordinary shares in the market at any time or times following this announcement of the Group's results for the purposes of those schemes' current and future requirements.

Registered Office

1 Churchill Place, London, E14 5HP, United Kingdom. Tel: [phone].

Company number: 48839

Website

www.barclays.com

Registrar

The Registrar to Barclays, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, United Kingdom.

Tel: [phone] or [phone] from overseas.

Listing

The principal trading market for Barclays PLC ordinary shares is the London Stock Exchange. Trading on the New York Stock Exchange is in the form of ADSs under the ticker symbol 'BCS'. Each ADS represents four ordinary shares of 25p each and is evidenced by an ADR. The ADR depositary is JPMorgan Chase Bank, whose international telephone number is [phone], whose domestic telephone number is 1-800-990-1135 and whose address is JPMorgan Chase Bank, PO Box 64504, St. Paul, MN 55164-0504, USA.

Filings with the SEC

The results will be furnished as a form 6-K to the SEC as soon as practicable following their publication.

Statutory accounts for the year ended 31st December 2009, which also include certain information required for the Joint Annual Report on Form 20-F of Barclays PLC and Barclays Bank PLC to the SEC, can be obtained from Corporate Communications, Barclays Bank PLC, 745 Seventh Avenue, New York, NY 10019, United States of America or from the Director, Investor Relations at Barclays registered office address, shown above. Copies of the Form 20-F are also available from the Barclays Investor Relations website (details below) and from the SEC's website (www.sec.gov).

1     Calls to this number are charged at 8p per minute if using a BT landline. Call charges may vary if using other providers.

Other Information

General Information (continued)

Results Timetable

Item	Date
Ex-dividend date	Wednesday, 11th August 2010
Dividend Record date	Friday, 13th August 2010
Dividend Payment date	Friday, 10th September 2010
Q3 2010 Interim Management Statement1	Tuesday, 9th November 2010

Economic Data

	30.06.10	31.12.09	30.06.09	Change 31.12.092	Change 30.06.092
Period end - US$/£	1.49	1.62	1.64	9%	10%
Average - US$/£	1.52	1.57	1.50	3%	(1%)
Period end - €/£	1.22	1.12	1.17	(8%)	(4%)
Average - €/£	1.15	1.12	1.12	(3%)	(3%)
Period end - ZAR/£	11.45	11.97	12.73	5%	11%
Average - ZAR/£	11.48	13.14	13.70	14%	19%

Share Price Data

	30.06.10	31.12.09	30.06.09
Barclays PLC (p)	270.55	276.00	283.00
Absa Group Limited (ZAR)	121.49	128.50	110.00
BlackRock, Inc. (US$)	143.40	232.20	175.42

For Further Information Please Contact

Investor Relations	Media Relations
Stephen Jones / James Johnson	Howell James /Alistair Smith
[phone]/7233	[phone]/6132

More information on Barclays can be found on our website at the following address:

www.barclays.com/investorrelations

1     Note that this announcement date is provisional and subject to change.

2     The change is the impact to Sterling reported information.

Glossary of Terms

Absa - The South African segment of Barclays PLC, comprising Absa Group Limited, but excluding Absa Capital, Absa Card and Absa Wealth which are reported within Barclays Capital, Barclaycard, and Barclays Wealth respectively.

Absa Card - The portion of Absa's results that arises from the Absa credit card business and is reported within Barclaycard.

Absa Group Limited- Refers to the consolidated results of the South African Group of which the parent company is listed on the Johannesburg Stock Exchange in which Barclays owns a controlling stake.

ABS CDO Super Senior - Super senior tranches of debt linked to collateralised debt obligations of asset backed securities (defined below). Payment of super senior tranches takes priority over other obligations. See Risk Management section - Credit Market Exposures.

Adjusted Gross Leverage- The multiple of adjusted total tangible assets over total qualifying Tier 1 capital. Adjusted total tangible assets are total assets less derivative counterparty netting, assets under management on the balance sheet, settlement balances, goodwill and intangible assets. See 'Tier 1 Capital' below.

Adjusted profit before tax -Profit before own credit, gains on other acquisitions and disposals and gains on debt buy-backs.

Alt-A - Loans regarded as lower risk than sub-prime, but with higher risk characteristics than lending under normal criteria. See Risk Management section - Credit Market Exposures.

Arrears - Customers are said to be in arrears when they are behind in fulfilling their obligations with the result that an outstanding loan is unpaid or overdue. Such customers are also said to be in a state of delinquency. When a customer is in arrears, his entire outstanding balance is said to be delinquent, meaning that delinquent balances are the total outstanding loans on which payments are overdue.

Asset Backed Securities (ABS) - Securities that represent an interest in an underlying pool of referenced assets. The referenced pool can comprise any assets which attract a set of associated cash flows but are commonly pools of residential or commercial mortgages and, in the case of Collateralised Debt Obligations (CDOs), the referenced pool may be ABS or other classes of assets. See Risk Management section - Credit Market Exposures.

Assets Margin - Interest earned on customer assets relative to the average internal funding rate, divided by average customer assets, expressed as an annualised percentage.

Average Customer Balances - Average customer balances which make up the average balance sheet are based upon daily averages for most UK banking operations and monthly averages outside the UK.

Average Daily Value at Risk - The average Daily Value at Risk (defined below) for a specified period of time.

Average LTV on new mortgages - Computed as the ratio of all new mortgage balances disbursed in the period to the appraised property value of those mortgages, i.e. total amount disbursed year-to-date divided by total amount of appraised property value.

Average Portfolio MTM LTV - Computed as the ratio of the total outstanding balance to the current value of the security, which is estimated using one or more external house price indices, i.e. total outstanding balance divided by total current property value (mark to market).

Average total income generated per member of staff - Total income compared to the average number of employees for the reporting period.

Barclays Business- A business unit within UK Retail Banking providing banking services, to small and medium enterprises.

Barclays Corporate - A business unit within Corporate and Investment Banking and Barclays Wealth that provides global banking services across 10 countries grouped into three markets: UK & Ireland, Continental Europe (Spain, Italy, Portugal and France) and New Markets (India, Pakistan, Russia and the UAE).

Collateralised Debt Obligations (CDOs) - Securities issued by a third party which reference Asset Backed Securities (ABSs) (defined above) and/or certain other related assets purchased by the issuer. CDOs may feature exposure to sub-prime mortgage assets through the underlying assets. CDO² securities represent investments in CDOs that have been securitised by a third party. See Risk Management section - Credit Market Exposures.

Glossary of Terms

Collateralised Loan Obligation (CLO) - A security backed by the repayments from a pool of commercial loans. The payments may be made to different classes of owners (in tranches). See Risk Management section - Credit Market Exposures.

Commercial Mortgage Backed Securities (CMBS) - Securities that represent interests in a pool of commercial mortgages. Investors in these securities have the right to cash received from future mortgage payments (interest and/or principal). See Risk Management section - Credit Market Exposures.

Commercial Real Estate - Commercial real estate includes office buildings, industrial property, medical centres, hotels, malls, retail stores, shopping centres, farm land, multifamily housing buildings, warehouses, garages, and industrial properties. Commercial real estate loans are those backed by a package of commercial real estate assets. See Risk Management section - Credit Market Exposures.

Compensation: income ratio - Staff compensation based costs compared to total income.

Continental Europe - See Barclays Corporate.

Core Tier 1 capital- Called-up share capital and eligible reserves plus equity non-controlling interests, less intangible assets and deductions relating to the excess of expected loss over regulatory impairment allowance and securitisation positions as specified by the FSA.

Core Tier 1 ratio - Core Tier 1 capital as a percentage of risk weighted assets.

Corporate and Investment Banking, and Barclays Wealth- Barclays Capital, Barclays Corporate, Barclays Wealth and Investment Management. See page 109 for a description of each business.

Cost:income ratio - Operating expenses compared to total income net of insurance claims.

Cost:net income ratio - Operating expenses compared to total income net of insurance claims less impairment charges and other credit provisions.

Cost of Equity - The rate of return targeted by the equity holders of the company.

Coverage ratio - Impairment allowances as a percentage of credit risk loan balances.

Credit Default Swaps (CDS) - A credit derivative is an arrangement whereby the credit risk of an asset (the reference asset) is transferred from the buyer to the seller of protection. A credit default swap is a contract where the protection seller receives premiums or interest-related payments in return for contracting to make payments to the protection buyer in the event of a defined credit event. Credit events normally include bankruptcy, payment default on a reference asset or assets, or downgrades by a rating agency.

Credit Derivative Product Company (CDPC) - A company that sells protection on credit derivatives. CDPCs are similar to monoline insurers. However, unlike monoline insurers, they are not regulated as insurers. See Risk Management section - Credit Market Exposures.

Credit Market Exposures - Relates to commercial real estate and leveraged finance businesses that have been significantly impacted by the deterioration in the global credit markets. The exposures include positions subject to fair value movements in the Income Statement, positions that are classified as loans and advances and available for sale and other assets.

Credit Risk Loans (CRLs) - A loan becomes a credit risk loan when evidence of deterioration has been observed, for example a missed payment or other breach of covenant. A loan may be reported in one of three categories: impaired loans, accruing past due 90 days or more or impaired and restructured loans. These may include loans which, while impaired, are still performing but have associated individual impairment allowances raised against them.

Credit spread - The yield spread between securities with the same coupon rate and maturity structure but with different associated credit risks, with the yield spread rising as the credit rating worsens. It is the premium over the benchmark or risk-free rate required by the market to accept a lower credit quality.

Credit Valuation Adjustment (CVA) - The difference between the risk-free value of a portfolio of trades and the market value which takes into account the counterparty's risk of default. The CVA therefore represents an estimate of the adjustment to fair value that a market participant would make to incorporate the credit risk of the counterparty due to any failure to perform on contractual agreements.

Glossary of Terms

Customer deposits - Money deposited by all individuals and companies that are not credit institutions. Such funds are recorded as liabilities in the Group's balance sheet under Customer Accounts.

Daily Value at Risk (DVaR) - An estimate of the potential loss which might arise from market movements under normal market conditions, if the current positions were to be held unchanged for one business day, measured to a confidence level. (Also see VaR, Average Daily Value at Risk and Spot daily Value at Risk).

Delinquency - See 'Arrears'.

Economic Capital - An internal measure of the minimum equity and preference capital required for the Group to maintain its credit rating based upon its risk profile.

Economic profit- Profit attributable to equity holders of the parent excluding amortisation of acquired intangible assets less a capital charge representing adjusted average shareholders' equity excluding non-controlling interests multiplied by the Group cost of capital.

Equity structural hedge - An interest rate hedge which functions to reduce the impact of the volatility of short-term interest rate movements on equity positions on the balance sheet that do not re-price with market rates.

Expected loss - The Group measure of anticipated loss for exposures captured under an internal ratings based credit risk approach for capital adequacy calculations. It is measured as the Barclays modelled view of anticipated loss based on Probability of Default (PD), Loss Given Default (LGD) and Exposure at Default (EAD), with a one year time horizon.

Exposure at default (EAD) - The estimation of the extent to which Barclays may be exposed to a customer or counterparty in the event of, and at the time of, that counterparty's default. At default, the customer may not have drawn the loan fully or may already have repaid some of the principal, so that exposure is typically less than the approved loan limit.

First/Second Lien - First lien: debt that places its holder first in line to collect compensation from the sale of the underlying collateral in the event of a default on the loan. Second lien: debt that is issued against the same collateral as higher lien debt but that is subordinate to it. In the case of default, compensation for this debt will only be received after the first lien has been repaid and thus represents a riskier investment than the first lien. See Risk Management section - Credit Market Exposures.

Funds Transfer Pricing (FTP) - The Group's mechanism for pricing intra-group funding and liquidity.

Full time equivalent - Full time equivalent employee units are the on-job hours paid for employee services divided by the number of ordinary-time hours normally paid for a full-time staff member when on the job (or contract employee where applicable).

Gain on acquisition - The amount, by which the acquirer's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities, recognised in a business combination, exceeds the cost of the combination.

Global Retail Banking (GRB) - UK Retail Banking, Barclaycard, Western Europe Retail Banking and Barclays Africa. See page 108 for a description of each business.

Home Loan - A loan to purchase a residential property which is then used as collateral to guarantee repayment of the loan. The borrower gives the lender a lien against the property, and the lender can foreclose on the property if the borrower does not repay the loan per the agreed terms. Also known as a residential mortgage.

Impaired loans - Loans that are reported as Credit Risk Loans (defined above) and comprise loans where individual identified impairment allowances have been raised and also include loans which are fully collateralised or where indebtedness has already been written down to the expected realisable value. The impaired loan category may include loans, which, while impaired, are still performing.

Impairment allowances - A provision held on the balance sheet as a result of the raising of a charge against profit for incurred losses inherent in the lending book. An impairment allowance may either be identified or unidentified and individual or collective.

Income - Total income net of insurance claims, unless otherwise specified.

Income:cost jaws - The difference between the growth in cost and the growth in income.

Incremental Default Risk Charge (IDRC) - The IDRC captures default risk. This means the potential for a direct loss due to an obligor's default as well as the potential for indirect losses that may arise from a default event.

Glossary of Terms

Individually/Collectively Assessed - Impairment is measured individually for assets that are individually significant, and collectively where a portfolio comprises homogenous assets and where appropriate statistical techniques are available.

Investment grade - A debt security, treasury bill or similar instrument with a credit rating measured by external agencies of AAA to BBB.

Leveraged Finance - Loans or other financing agreements provided to companies whose overall level of debt is high in relation to their cash flow (net debt: EBITDA) typically arising from private equity sponsor led acquisitions of the businesses concerned.

Liabilities margin - Interest paid on customer liabilities relative to the average internal funding rate, divided by average customer liabilities. Expressed as an annualised percentage.

Liquidity pool/buffer - The Group liquidity pool comprises cash at central banks and highly liquid collateral specifically held by the Group as contingency to enable the bank to meet cash outflows in the event of stressed market conditions.

Loan loss rate - Total credit impairment charge (excluding available for sale assets and reverse repurchase agreements) divided by gross loans and advances to customers and banks (held at amortised cost).

Loan to deposit ratio - The ratio of wholesale and retail loans and advances to customers net of impairment allowance divided by customer accounts.

Loan to deposit and long term funding ratio - The ratio of wholesale and retail loans and advances to customers net of impairment allowance, divided by the total of customer accounts, long term debt (>1 yr) and equity.

Loan to value of new mortgage lending - See Average LTV in new mortgage.

Loan to value ratio (LTV) - Expresses the amount borrowed against asset (i.e. a mortgage) as a percentage of the appraised value. The ratios are used in determining the appropriate level of risk for the loan and are generally reported as an average for new mortgages or an entire portfolio.

Loss Given Default (LGD) - The fraction of Exposure at Default (EAD) (defined above) that will not be recovered following default. LGD comprises the actual loss (the part that is not expected to be recovered), together with the economic costs associated with the recovery process.

Monolines - A monoline insurer is defined as an entity which specialises in providing credit protection to the holders of debt instruments in the event of default by a debt security counterparty. This protection is typically held in the form of derivatives such as credit default swaps (CDS) referencing the underlying exposures held. See Risk Management section - Credit Market Exposures.

Monoline Wrapped - Debt instruments for which credit enhancement or protection by a monoline insurer has been obtained. The wrap is credit protection against the notional and principal interest cash flows due to the holders of debt instruments in the event of default in payment of these by the underlying counterparty. Therefore, if a security is monoline wrapped its payments of principal and interest are guaranteed by a monoline insurer. See Risk Management section - Credit Market Exposures.

Mortgage Backed Securities (MBS) - Securities that represent interests in a group of mortgages. Investors in these securities have the right to cash received from future mortgage payments (interest and/or principal). See Risk Management section - Credit Market Exposures.

Mortgage vintage - The year the mortgage was issued.

Mortgage related securities - Securities which are referenced to underlying mortgages. See RMBS, CMBS and MBS.

Net Asset Value per Share - Computed by dividing shareholders' equity excluding non-controlling interests by the number of issued ordinary shares.

Net income:cost jaws - The difference between the growth in net income and the growth in cost.

Net Interest Income - The difference between interest received on assets and interest paid on liabilities including the interest income on Group equity.

Net Investment Income - Includes the net result of revaluing financial instruments designated at fair value, dividend income and the net result on disposal of available for sale assets.

Glossary of Terms

Net Interest Margin - The margin is expressed as annualised net interest income for Global Retail Bank, Barclays Corporate and Barclays Wealth divided by the sum of the average assets and average liabilities for those businesses.

Net Trading Income - Arises from trading positions which are held at fair value including market-making and customer business. The resulting gains and losses are included in the income statement together with interest, dividends and funding costs relating to trading activities.

Net Tangible Asset Value per Share - Computed by dividing shareholders' equity excluding non-controlling interests less goodwill and intangible assets, by the number of issued ordinary shares.

New Markets - See Barclays Corporate.

Non-investment grade - A debt security, treasury bill or similar instrument with a credit rating measured by external agencies of BB+ or below.

Non-performing loans - A loan that is in default or close to being in default because interest or capital payments are not made on time.

Own Credit - The effect of the Group's own credit standing on the fair value of financial liabilities.

PCRL Coverage ratio - Impairment allowances as a percentage of total CRL (credit risk loan) & PPL (potential problem loan) balances. See CRL and PPL.

Potential Credit Risk Loans(PCRLs) - Comprise the outstanding balances to Potential Problem Loans (defined below) and the three categories of Credit Risk Loans (defined above).

Potential Problem Loans (PPLs) - Loans where serious doubt exists as to the ability of the borrowers to continue to comply with repayment terms in the near future.

Prime Loans - Loans of a higher credit quality and would be expected to satisfy the criteria for inclusion into Government programmes.

Probability of default (PD) - The likelihood that a loan will not be repaid and will fall into default. PD may be calculated for each client who has a loan (normally applicable to wholesale customers/clients) or for a portfolio of clients with similar attributes (normally applicable to retail customers). To calculate PD, Barclays assesses the credit quality of borrowers and other counterparties and assigns them an internal risk rating. Multiple rating methodologies may be used to inform the rating decision on individual large credits, such as internal and external models, rating agency ratings, and for wholesale assets market information such as credit spreads. For smaller credits, a single source may suffice such as the result from an internal rating model.

Product structural hedge - An interest rate hedge which functions to reduce the impact of the volatility of short-term interest rate movements on balance sheet positions that can be matched to a specific product, e.g. customer balances that do not re-price with market rates.

Proprietary trading - When a bank, brokerage or other financial institution trades on its own account, at its own risk, rather than on behalf of customers, so as to make a profit for itself.

Repurchase agreement (repo)/reverse repurchase agreement (reverse repo) - A repurchase agreement that allows a borrower to use a financial security as collateral for a cash loan at a fixed rate of interest. In a repo, the borrower agrees to sell a security to the lender subject to a commitment to repurchase the asset at a specified price on a given date. For the party selling the security (and agreeing to repurchase it in the future) it is a repo; for the party on the other end of the transaction (buying the security and agreeing to sell in the future) it is a reverse repurchase agreement or reverse repo.

Residential Mortgage Backed Securities (RMBS) - Securities that represent interests in a group of residential mortgages. Investors in these securities have the right to cash received from future mortgage payments (interest and/or principal). See Risk Management section - Credit Market Exposures.

Retail Loans - Loans to individuals rather than to financial institutions. This includes both secured and unsecured loans such as mortgages and credit card balances, as well as loans to certain smaller business customers.

Return on average shareholders' equity - Calculated as annualised profit for the period attributable to equity holders of the parent divided by the average shareholders' equity for the period, excluding non - controlling interests.

Glossary of Terms

Return on average equity - Calculated as annualised profit after tax and non-controlling interests for the period, divided by average allocated equity for the period. Average allocated equity is calculated as 9% of average risk weighted assets (8% in 2009), adjusted for capital deductions, including goodwill and intangible assets.

Return on average risk weighted assets- Calculated as annualised profit after tax for the period divided by average risk weighted assets for the period.

Return on average tangible equity - Calculated as annualised profit after tax and non-controlling interests for the period, divided by average allocated tangible equity. Average allocated tangible equity is calculated as 9% of average risk weighted assets (8% in 2009), adjusted for average capital deductions, excluding goodwill and intangible assets.

Return on average tangible shareholders' equity - Calculated as annualised profit for the period attributable to equity holders of the parent divided by average shareholders' equity for the period, excluding non-controlling interests, goodwill and intangible assets.

Risk asset ratio - A measure of the risk attached to the assets of a business using definitions of capital and risk weightings established in accordance with the Basel Capital Accord as implemented by the FSA.

Risk weighted assets - A measure of a bank's assets adjusted for their associated risks. Risk weightings are established in accordance with the Basel Capital Accord as implemented by the FSA.

Securitisation - A process by which debt instruments are aggregated into a pool, which is used to back new securities. A company sells assets to an SPV (special purpose vehicle) who then issues securities backed by the assets based on their value. This allows the credit quality of the assets to be separated from the credit rating of the original company and transfers risk to external investors.

SIV Lites - Special Purpose Entities which invest in diversified portfolios of interest earning assets to take advantage of the spread differentials between the assets in the Structured Investment Vehicle (SIV) and the funding cost. Unlike SIVs they are not perpetual, making them more like CDOs, which have fixed maturity dates. See Risk Management section - Credit Market Exposures.

Special Purpose Entities (SPEs) - Entities that are created to accomplish a narrow and well defined objective. There are often specific restrictions or limits around their ongoing activities. Transactions with SPEs take a number of forms, including the provision of financing to fund asset purchases, or commitments to provide finance for future purchases; derivative transactions to provide investors in the SPE with a specified exposure; the provision of liquidity or backstop facilities which may be drawn upon if the SPE experiences future funding difficulties; and direct investment in the notes issued by SPEs.

Spot Daily Value at Risk - The Daily Value at Risk (defined above) recorded for a specified day.

Structural hedge - An interest rate hedge which functions to reduce the impact of the volatility of short-term interest rate movements on positions that exist within the balance sheet that carry interest rates that do not re-price with market rates. See also equity structural hedge and product structural hedge.

Structured Investment Vehicles (SIVs) - SPEs (Special Purpose Entities) which invest in diversified portfolios of interest earning assets to take advantage of the spread differentials between the assets in the SIV and the funding cost. See Risk Management section - Credit Market Exposures.

Structural liquidity - The liquidity available from current positions - principally unpledged marketable assets and holdings of term liabilities with long remaining lives.

Structured finance/notes - A structured note is an investment tool which pays a return linked to the value or level of a specified asset or index and sometimes offers capital protection if the value declines. Structured notes can be linked to equities, interest rates, funds, commodities and foreign currency.

Subordination - The state of prioritising repayments of principal and interest on debt to a creditor lower than repayments to other creditors by the same debtor. That is, claims of a security are settled by a debtor to a creditor only after the claims of securities held by other creditors of the same debtor have been settled.

Subordinated liabilities - Liabilities which, in the event of insolvency or liquidation of the issuer, are subordinated to the claims of depositors and other creditors of the issuer.

Glossary of Terms

Sub-Prime - Loans to borrowers typically having weakened credit histories that include payment delinquencies and potentially more severe problems such as court judgements and bankruptcies. They may also display reduced repayment capacity as measured by credit scores, high debt-to-income ratios, or other criteria indicating heightened risk of default. See Risk Management section - Credit Market Exposures.

Tier 1 capital - A measure of a bank's financial strength defined by the FSA. It captures Core Tier 1 capital plus other Tier 1 securities in issue, but is subject to a deduction in respect of material holdings in financial companies.

Tier 1 capital ratio - The ratio expresses Tier 1 capital as a percentage of risk weighted assets.

Tier 2 capital - Broadly includes qualifying subordinated debt and other Tier 2 securities in issue, eligible collective impairment allowances, unrealised available for sale equity gains and revaluation reserves. It is subject to deductions relating to the excess of expected loss over regulatory impairment allowance, securitisation positions and material holdings in financial companies.

Top-line income - Income before own credit gains/losses and credit market write-downs.

Total shareholders return - The value created for shareholders through share price appreciation plus dividend payments.

UK & Ireland - See Barclays Corporate.

Value at Risk (VaR) - An estimate of the potential loss which might arise from market movements under normal market conditions, if the current positions were to be held unchanged for one business day, measured to a confidence level. (Also see DVaR).

Whole loans - A mortgage loan sold in its entirety when the buyer assumes the entire loan along with its rights and responsibilities. A whole loan is differentiated from investments in which the buyer becomes part owner of a pool of mortgages. See Risk Management section - Credit Market Exposures.

Wholesale Loans - Lending to larger businesses, financial institutions and sovereign entities.

Index

Absa	40		Legal proceedings		106
Accounting policies	88		Liquidity Risk		64
Acquisitions	96		Loans and advances to banks		102
Adjusted gross leverage	75		Loans and advances to customers		102
Allowance for impairment on			Margins and Balances		83
loans and advances	103		Market risk		62
Asset and liability margins	84		Net claims and benefits incurred under
Average customer balances	85		insurance contracts		90
Balance sheet (Condensed Consolidated			Net fee and commission income		89
Interim)	16		Net interest income		89
Barclaycard	24		Net Investment Income/(Loss)		90
Barclays Africa	28		Net premiums from insurance contracts		90
Barclays Capital	30		Net Trading Income		89
Barclays Capital credit market exposures	67, 68		Operating expenses		91
Barclays Corporate	32		Other income		90
Barclays Wealth	36		Other information		113
Basis of preparation	88		Performance highlights		2
Capital ratios	76		Potential credit risk loans		52
Capital resources	76		Profit attributable to non-controlling
Cash flow statement (Condensed			interests		93
Consolidated Interim)	19		Profit before tax		2
Chief Executive's Review	4		Profit on disposal of subsidiaries,
Competition and regulatory matters	106		associates and joint ventures		93
Contingent liabilities and commitments	105		Provisions		104
Core Tier 1 ratio	76		Reclassification of financial assets held
Credit risk	48		for trading		101
Debt securities and other bills	61		Related party transactions		107
Derivative financial instruments	97		Results by business		22
Dividends on ordinary shares	95		Results timetable		114
Daily Value at Risk (DVaR)	63		Retail credit risk		58
Discontinued Operations	112		Retirement benefit liabilities		104
Earnings per share	94		Risk asset ratio		76
Economic capital	78		Risk management		45
Economic capital demand	79		Risk weighted assets		75
Economic capital supply	80		Segmental reporting		108
Economic data	114		Share capital	105, 113
Economic profit	81		Share of post-tax results of associates
Eurozone Exposures	73		and joint ventures		93
Financial Instruments Held at Fair Value	99		Share price data		114
Filings with the SEC	113		Staff costs		92
Finance Director's Review	10		Staff numbers		92
Glossary of terms	115		Statement of Directors' Responsibilities		86
Group performance	10		Statement of Comprehensive Income
Group share schemes	113		(Condensed Consolidated Interim)		15
Group Results Summary	20		Statement of Changes in Equity
Head office functions and other			(Condensed Consolidated Interim)		17
operations	42		Subordinated Liabilities		104
Impairment charges and other credit			Tax		93
provisions	50, 91		Tier 1 Capital ratio		76
Income statement (Condensed Consolidated			Total assets		46, 75
Interim)	14		UK Retail Banking		22
Independent Auditors Review Report	87		Western Europe Retail Banking		26
Investment Management	38		Wholesale credit risk		54

 

END

 

 

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