Interim Results - Part 1

Barclays PLC 02 August 2007 Interim Results Announcement 30th June 2007 2nd August 2007 BARCLAYS PLC INTERIM RESULTS ANNOUNCEMENT FOR 2007 TABLE OF CONTENTS PAGE Summary of key information 2 Performance summary 3 Financial highlights 4 Group Chief Executive's Review 5 Group Finance Director's Review 7 Consolidated income statement 11 Consolidated balance sheet 12 Results by business 14 Results by nature of income and expense 42 Analysis of amounts included in the balance sheet 57 Performance management 61 Additional information 69 Notes 75 Consolidated statement of recognised income and expense 90 Summary consolidated cash flow statement 91 Other information 92 Appendix 1-Absa Group Limited results 94 Index 96 BARCLAYS PLC, 1 CHURCHILL PLACE, LONDON, E14 5HP, ENGLAND, UNITED KINGDOM. TELEPHONE: +44 (0) 20 7116 1000. COMPANY NO. 48839 The information in this announcement, which was approved by the Board of Directors on 1st August 2007, does not comprise statutory accounts within the meaning of Section 240 of the Companies Act 1985 (the 'Act'). Statutory accounts for the year ended 31st December 2006, which included certain information required for the Joint Annual Report on Form 20-F of Barclays PLC and Barclays Bank PLC to the US Securities and Exchange Commission (SEC) and which contained an unqualified audit report under Section 235 of the Act and which did not make any statements under Section 237 of the Act, have been delivered to the Registrar of Companies in accordance with Section 242 of the Act. Unless otherwise stated, the income statement analyses compare the six months to 30th June 2007 to the corresponding six months of 2006. Balance sheet comparisons, unless otherwise stated, relate to the corresponding position at 31st December 2006. Average balance sheet comparisons relate the six months to 30th June 2007 to the corresponding six months of 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 Barclays plans and its current goals and expectations relating to its future financial condition and performance and which involve a number of risks and uncertainties. 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. Forward-looking statements sometimes use words such as '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 Barclays future financial position, income growth, impairment charges, business strategy, projected costs and estimates of capital expenditure and revenue benefits, projected levels of growth in the banking and financial markets, future financial and operating results, future financial position, projected costs and estimates of capital expenditures, the consummation of the business combination between ABN AMRO and Barclays within the expected timeframe and on the expected terms (if at all), the benefits of the business combination transaction involving ABN AMRO and Barclays, including the achievement of synergy targets, and plans and objectives for future operations of ABN AMRO, Barclays and the combined group 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 which are subject to, among other things, domestic and global economic and business conditions, market related risks such as changes in interest rates and exchange rates, the policies and actions of governmental and regulatory authorities, changes in legislation, the timing and successful implementation of the proposed business combination between ABN AMRO and Barclays, progress in the integration of Absa into the Group's business and the achievement of synergy targets related to Absa, the outcome of pending and future litigation, and the impact of competition-a number of which factors are 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. Additional risks and factors are identified in Barclays filings with the U.S. Securities and Exchange Commission (SEC) including Barclays Annual Report on Form 20-F for the fiscal year ended December 31, 2006, which are available on Barclays website at www.barclays.com and on the SEC's website at www.sec.gov. Any forward-looking statements made by or on behalf of Barclays speak only as of the date they are made. Barclays does not undertake to update forward-looking statements to reflect any changes in expectations with regard thereto or any changes 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 they have filed or may file with the SEC. Future SEC Filings : Important Information In connection with the proposed business combination transaction between ABN AMRO and Barclays, Barclays has filed with the SEC a Registration Statement on Form F-4 ('Form F-4'), which includes a preliminary version of the Barclays offer document/prospectus. The Form F-4 has not yet become effective. Barclays expects that it will also file with the SEC a Statement on Schedule TO and other relevant materials. In addition, ABN AMRO expects that it will file with the SEC a Recommendation Statement on Schedule 14D-9 and other relevant materials. Following the Form F-4 being declared effective by the SEC, Barclays intends to mail the final offer document/prospectus to holders of ABN AMRO ordinary shares located in the United States and Canada and to holders of ABN AMRO ADSs wherever located. Such final offer document/prospectus, however, is not currently available. For information regarding the potential transaction, investors are urged to read the final offer document/prospectus and any documents regarding the potential transaction if and when they become available, because they will contain important information. Investors will be able to obtain a free copy of the Form F-4, the final offer document/prospectus and other filings without charge, at the SEC's website (www.sec.gov) if and when such documents are filed with the SEC. Copies of such documents may also be obtained from ABN AMRO and Barclays without charge, if and when they are filed with the SEC. This document shall not constitute an offer to buy sell or issue or the solicitation of an offer to buy, sell or issue any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. Absa Definitions '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 (JSE Limited) in which Barclays owns a controlling stake. 'Absa' refers to the results for Absa Group Limited as consolidated into the results of Barclays PLC; translated into Sterling with adjustments for amortisation of intangible assets, certain head office adjustments, transfer pricing and minority interests. 'International Retail and Commercial Banking-Absa' is the portion of Absa's results that is reported by Barclays within the International Retail and Commercial Banking business. 'Absa Capital' is the portion of Absa's results that is reported by Barclays within the Barclays Capital business. Glossary of terms The cost:income ratio is defined as operating expenses compared to total income net of insurance claims. The cost:net income ratio is defined as operating expenses compared to total income net of insurance claims less impairment charges. The Return on average economic capital is defined as attributable profit compared to average economic capital. 'Income' refers to total income net of insurance claims, unless otherwise specified. SUMMARY OF KEY INFORMATION 'Barclays made good progress on all key strategic priorities and delivered another very strong set of results for shareholders. Double-digit growth in earnings and dividends reflects an outstanding performance from Barclays Capital, good profit growth in UK Banking, an improvement in UK unsecured impairment and strong investment across the business'. John Varley, Group Chief Executive Half-year ended Group Results 30.06.07 30.06.06 % Change Â£m Â£m Total income net of insurance claims 11,902 10,969 9 Impairment charges (959) (1,057) (9) Operating expenses (6,847) (6,269) 9 Profit before tax 4,101 3,673 12 Profit attributable to minority interests (309) (294) 5 Profit attributable to equity holders of the parent 2,634 2,307 14 Economic profit 1,609 1,385 16 p p Earnings per share 41.4 36.3 14 Diluted earnings per share 40.1 35.1 14 Dividend per share 11.5 10.5 10 % % Tier 1 Capital ratio 7.7 7.2 Return on average shareholders' equity 25.6 25.8 Profit before tax by business(1) Â£m Â£m % Change UK Banking 1,363 1,253 9 --------- --------- UK Retail Banking 651 600 9 UK Business Banking 712 653 9 --------- --------- Barclaycard 272 326 (17) International Retail and Commercial Banking 452 512 (12) Barclays Capital 1,660 1,246 33 Barclays Global Investors 388 364 7 Barclays Wealth 173 129 34 (1) Summary excludes Head Office functions and other operations. Full analysis of business profit before tax is on page 18. PERFORMANCE SUMMARY â€¢ Strong financial results reflect successful execution of strategy. â€¢ Income growth of 9% was broadly based by business and geography and reflected a particularly strong performance from Barclays Capital. â€¢ Operating expenses increased 9% as we continued to invest for future growth through increased headcount and distribution. â€¢ Profit before tax increased 12% despite adverse currency movements against Sterling. â€¢ Earnings per share increased 14%. â€¢ Approximately 50% of profits came from outside the UK. â€¢ In UK Retail Banking, good income growth (partially offset by settlements on overdraft fees), coupled with well controlled costs and improved impairment, drove profit growth of 9%. UK Business Banking profit rose 9%. This was mainly attributable to strong growth in fees and well controlled costs. â€¢ We are on track to deliver a further two percentage point improvement in the cost:income ratio of UK Banking during 2007, adding to the six percentage point improvement achieved during 2005 and 2006. â€¢ Headline profit of Barclaycard declined 17%. More than all of the headline profit decline was due to the impact of property gains in the first half of 2006 and a loss on the disposal of part of the Monument portfolio during the first half of 2007. Profit more than doubled relative to the second half of 2006 as a consequence of the reduction in impairment charges. â€¢ In International Retail and Commercial Banking - excluding Absa, the first half of 2006 included the gain on the sale of a property together with the contribution of our former associate FirstCaribbean International Bank. Adjusted for these, International Retail and Commercial Banking - excluding Absa generated strong profit growth in the first half of 2007, driven by significant increases in business volumes. Absa Group Limited announced very strong profit growth in Rand terms, but the 20% depreciation of the Rand versus Sterling caused period on period profit of International Retail and Commercial Banking - Absa to be broadly steady. â€¢ Barclays Capital delivered record results, with its two best quarters ever. Profit rose 33%. This was due to a very strong income performance driven by continued strong growth across asset classes and regions, in particular across the structured credit and credit derivatives, equities and commodities platforms, underpinned by the strength of the client franchise and its focus on delivering risk management and financing solutions. â€¢ In Barclays Global Investors profit rose 7% in Sterling, while both income and profit were up substantially more in US Dollars. This reflected the continued strength of the franchise and significant new flows and revenues into its suite of exchange traded funds, alternative asset classes and quantitative active strategies. â€¢ The profit of Barclays Wealth rose 34%. This reflected strong income growth from increased client funds and transaction volumes partially offset by continued investment in the business. â€¢ The Tier 1 capital ratio was stable at 7.7%. FINANCIAL HIGHLIGHTS Half-year ended 30.06.07 31.12.06 30.06.06 RESULTS Â£m Â£m Â£m ---------- Net interest income 4,589 4,739 4,404 Net fee and commission income 3,812 3,525 3,652 Principal transactions 3,207 2,001 2,575 Net premiums from insurance contracts 442 550 510 Other income 100 153 61 -------- -------- -------- Total income 12,150 10,968 11,202 Net claims and benefits paid on insurance contracts (248) (342) (233) -------- -------- -------- Total income net of insurance claims 11,902 10,626 10,969 Impairment charges (959) (1,097) (1,057) -------- -------- -------- Net income 10,943 9,529 9,912 Operating expenses (6,847) (6,405) (6,269) Share of post-tax results of associates and joint ventures - 16 30 Profit on disposal of subsidiaries, associates and JVs 5 323 - -------- -------- -------- Profit before tax 4,101 3,463 3,673 -------- -------- -------- Profit attributable to equity holders of the parent 2,634 2,264 2,307 Economic profit 1,609 1,319 1,385 PER ORDINARY SHARE p p p -------------------- Earnings 41.4 35.6 36.3 Diluted earnings 40.1 34.5 35.1 Dividend 11.5 20.5 10.5 Net asset value 320 303 276 PERFORMANCE RATIOS % % % -------------------- Return on average shareholders' equity 25.6 24.7 25.8 Cost:income ratio 58 60 57 Cost:net income ratio 63 67 63 30.06.07 31.12.06 30.06.06 BALANCE SHEET Â£m Â£m Â£m --------------- Shareholders' equity excluding minority interests 20,973 19,799 17,988 Minority interests 7,748 7,591 7,551 -------- -------- -------- Total shareholders' equity 28,721 27,390 25,539 Subordinated liabilities 15,067 13,786 13,629 -------- -------- -------- Total capital resources 43,788 41,176 39,168 -------- -------- -------- Total assets 1,158,262 996,787 986,124 Risk weighted assets 318,043 297,833 290,924 CAPITAL RATIOS % % % ---------------- Tier 1 ratio 7.7 7.7 7.2 Risk asset ratio 11.8 11.7 11.6 GROUP CHIEF EXECUTIVE'S REVIEW I am pleased to report another strong half year for Barclays. We have delivered excellent results for shareholders - with double-digit growth in earnings and dividends - through the disciplined execution of our strategic priorities. When I became chief executive three years ago, I set out for shareholders the priorities we had identified for executing our strategy. We said we would strive for higher growth; that profit diversification outside the UK would help us achieve this growth; that an increasing ratio of non-net interest income to net interest income would be a sign of increasing financial health and quality of income; that we would improve our standing in the eyes of our customers, our colleagues and our communities; that we would turn around the performance of our UK Retail Bank; that we expected significant future growth in Barclays Capital and Barclays Global Investors; and that our Wealth business would become an engine for growth. We have been delivering on each of these priorities since 2004, applying in each of the businesses our common principle of 'earn, invest and grow' - that is, investing strongly in the pursuit of growth while offering our shareholders good short-term returns. Our strong first half performance in 2007 demonstrates continued progress on these priorities, and continued success in execution. Profit increased by a further 12% on top of the outstanding 37% profit growth achieved at the interim stage last year; earnings per share increased 14%, and we increased our dividend by 10%. Our return on equity was 26%. Our ambition is to be one of the handful of universal banks leading the global financial services industry. We believe the universal banking model enables us best to serve our customers and clients, and to capture superior returns on equity. Just a few years ago, Barclays was primarily a UK clearing bank. Our UK Banking business lies at the heart of the strength of the Barclays brand and we serve millions of customers in the United Kingdom. But we've been able to expand rapidly outside the United Kingdom, such that, even as our UK businesses have grown strongly, half of our profit is made outside the UK and over two-thirds of our profit is made outside of the two main UK Banking businesses. These half year results demonstrate that we are doing the things we said we would. Our strategy of striving for higher growth via greater profit diversification is generating increasing returns for our shareholders. We believe that the capabilities we have assembled within Barclays equip us strongly to take advantage of the significant opportunities that lie ahead for the financial services industry. We judge our performance by how we convert relevance to customers and clients into Total Shareholder Return (TSR) and economic profit, measuring ourselves against multi-year performance goals. In 2003, we set a four-year goal of delivering top quartile TSR relative to a peer group of financial services companies. We estimated that achieving that goal would require the generation of annual growth in economic profit of 10%-13% per annum, which implied a cumulative total of between Â£6.5bn and Â£7bn of economic profit from the beginning of 2004 to the end of 2007. As we head into the last half year of our current four year goal period, we rank in the second quartile in TSR over the period. But we have already delivered a cumulative total of Â£7.6bn economic profit, well ahead of the target, with a further six months to go. We will set new economic profit and TSR goals at the beginning of next year. As we report another set of strong interim results we are, of course, also heavily engaged in pursuit of a merger with ABN AMRO. Our goal in achieving that merger is the same as our standalone goal: higher growth and higher returns for shareholders as a result. We believe that in combination with ABN AMRO we would create a powerful new competitive force on behalf of customers and employees; a universal bank with greater product and customer reach than Barclays standalone; and the opportunity to capture a significant and sustained increment over the already high growth that we expect to achieve in the years ahead. Our pursuit of the merger does not change our strategy, but it would facilitate significant acceleration. We have recently announced that China Development Bank (CDB) and Temasek will become significant shareholders in Barclays. I am delighted to welcome them as major shareholders. I believe that their investment indicates that they share our belief in the growth prospects of Barclays, as well as in the growth prospects of Barclays in a combination with ABN AMRO. We are particularly excited about the opportunities presented by the strategic collaboration agreement with CDB. We believe that the further earnings growth unlocked by that agreement is material, that it creates further exposure to Asia which fits well with our strategy, and that it will create further benefits for all shareholders. We enter the second half of 2007 with good business momentum across Barclays, driven by a strong first half resulting from high levels of customer activity. Whilst we report at a time of turbulence in the capital markets, Barclays Capital's net income for July was ahead of last year, and the UK and global economic outlook continues to be broadly positive. We are well positioned to grow further in the years ahead. John Varley Group Chief Executive GROUP FINANCE DIRECTOR'S REVIEW Group performance In the first half of 2007, Barclays continued to make substantial progress on its strategic priorities, further diversifying the profit base and delivering record financial results. Profits and earnings grew at a double digit rate relative to the very strong performance recorded in the first half of 2006. Profit before tax increased 12% to Â£4,101m (2006: Â£3,673m). This was achieved despite significant adverse currency movements against Sterling. Earnings per share rose 14% to 41.4p (2006: 36.3p). Profit grew at a rate higher than the rate of growth of both daily value at risk and risk weighted assets. Group income rose 9% to Â£11,902m (2006: Â£10,969m). Income growth, which was led by a particularly strong performance in Barclays Capital, was broadly based by business and by geography. Group operating expenses increased 9% to Â£6,847m (2006: Â£6,269m). We continued to invest in future business growth, with increased headcount in Barclays Capital, Barclays Global Investors and Absa, and significant growth in the branch network in International Retail and Commercial Banking. Operating expenses included gains on the sale of properties of Â£147m (2006: Â£238m) largely in UK Retail Banking, which were substantially reinvested in the business. Group impairment charges improved 9% to Â£959m (2006: Â£1,057m). The 2006 impairment charge included Â£83m relating to available for sale assets. The improvement also reflected reduced flows into delinquency and lower arrears balances in the UK cards and consumer loans business. The number of UK personal customers missing a payment continued to fall. UK Retail Banking mortgage impairment charges remained negligible. Impairment levels in the wholesale sector continued to be stable, with low levels of defaults. Business performance - Global Retail and Commercial Banking UK Banking continued to pursue the strategic priority of building the best bank in the UK. Profit before tax increased 9% to Â£1,363m driven by solid growth in income. The cost:income ratio improved one percentage point to 48%. Excluding the impact of settlement on overdraft fees from prior years, the cost:income ratio improved two percentage points. On this basis we continue to target a two percentage point improvement in the cost:income ratio for the full year 2007. UK Retail Banking profit before tax grew 9% to Â£651m. Income of Â£2,121m included the impact of settlements on overdraft fees from prior years of Â£87m. Excluding this item, income grew 5%. There was a strong performance in Personal Customer Retail Savings and good performances in Local Business and Current Accounts. We performed strongly in mortgage origination, processing capacity and retentions leading to a net market share of 6% of net lending in the first half of the year. We invested substantially all of the Â£113m gains on property sales into the business, upgrading distribution capabilities including completing the migration of Woolwich customers to Barclays products and infrastructure; transforming the performance of the mortgage business; improving the product range; and improving core operations and processes. Overall costs were well controlled and in line with the prior year. Impairment charges fell 9% benefiting from active management of consumer credit. UK Business Banking delivered good growth in profit before tax of 9% to Â£712m. Growth in loans and deposits with improved margins and strong growth in fees drove income up 8%. Costs rose 3%, leading to a two percentage point improvement in the cost:income ratio to 33%. Barclaycard profit before tax of Â£272m was 17% lower than the first half of 2006 but more than double the second half of 2006. Steady income reflected strong growth in Barclaycard International offset by a reduction in UK card extended credit balances. Impairment charges fell 9% to Â£443m. More selective customer recruitment, limit management, and improved collections led to a reduction of flows into delinquency and lower levels of arrears balances. Costs rose 16%, of which 9% is attributable to a property gain included in the 2006 figures. We continued to invest in Barclaycard International and in UK partnerships. Barclaycard US continued to make progress and moved into profit. International Retail and Commercial Banking profit before tax declined 12% to Â£452m. Results in 2006 reflected a Â£55m gain on the sale and leaseback of property, and a Â£21m post tax profit share from the associate FirstCaribbean International Bank (FCIB). Results in 2007 reflected the impact of the 20% depreciation of the Rand against Sterling. International Retail and Commercial Banking - excluding Absa achieved profit before tax of Â£142m (2006: Â£195m). Excluding the prior year Â£55m gain on the sale and leaseback of property and a Â£21m post tax profit share from the associate FCIB, profit before tax grew 19%. Income growth of 16% was driven by strong balance sheet growth and increased net fees and commissions income. Excluding the prior year property gain, costs grew 15% as we continued to invest in distribution capacity and technology. We opened 173 new branches in the first half of 2007. International Retail and Commercial Banking - Absa Sterling profit fell Â£7m to Â£310m, after absorbing a 20% decline in the value of the Rand. Absa Group Limited profit before tax grew 32% in Rand terms, reflecting very strong growth in Retail Banking, Absa Corporate and Business Bank and Absa Capital. Loans and advances increased 20% from 30th June 2006 and deposits grew 13%. We have delivered synergies of R650m for the half year to 30th June 2007. On an annualised basis we are therefore close to delivering the R1.4bn targeted by December 2009. Business Performance - Investment Banking and Investment Management Barclays Capital delivered record profit before tax with a 33% increase to Â£1,660m. Income growth of 21% was broadly based across asset classes and geographies. Growth was particularly strong in areas where we have invested in recent years, including commodity, credit and equity products. Profit growth was accompanied by improvements in productivity: income and profit grew significantly faster than Daily Value at Risk, risk weighted assets, economic capital and costs. The cost:net income ratio improved three percentage points to 60%. We continued to invest for future growth, increasing headcount by 2,500, including 1,400 from the acquisition of EquiFirst, a US mortgage origination business. Barclays Global Investors (BGI) profit before tax increased 7% to Â£388m. Income growth of 12% was primarily attributable to increased management fees, particularly in the iShares and active businesses, and securities lending. Profit and income growth were both affected by the 9% depreciation of the US Dollar against Sterling. BGI costs increased 15% as we continued the strategic investment programme with a build-out across multiple products and platforms and ongoing investment to support the growth of the business. The cost:income ratio rose to 59% (2006: 57%). Assets under management grew US$199bn to US$2 trillion, including net new assets of $50bn (2006: $30bn). Barclays Wealth profit before tax rose 34% to Â£173m. This reflected income growth of 10% driven by increased client funds, greater transaction volumes, favourable market conditions and increased income from life assurance. Costs were well controlled as business volumes rose and the cost:income ratio improved six percentage points to 72% (2006: 78%). Redress costs declined. The business continued to invest in client-facing staff and infrastructure and to upgrade technology to build a platform for future growth. Total client assets increased 20% to Â£126.8bn. Head office functions and other operations In Head office functions and other operations the loss before tax increased Â£50m to Â£207m. 2006 results included a Â£59m gain in respect of the hedging of the translation of the Absa foreign currency earnings. Capital management At 30 June 2007, our Tier 1 Capital ratio was stable at 7.7%. We maintained our progressive approach to dividends and increased the dividend to shareholders by 10%. We commenced parallel running for Basel II at the end of 2006 and have since completed our second parallel run. We continue to expect a modest reduction in our capital demand under Basel II, with slightly lower risk weighted assets. Our overall expectation is for our regulatory capital position to be broadly unchanged. For 2007 we continue to report our capital ratios under Basel I. Chris Lucas Group Finance Director CONSOLIDATED INCOME STATEMENT (UNAUDITED) Half-year ended 30.06.07 31.12.06 30.06.06 Â£m Â£m Â£m -------- -------- -------- Interest income 12,037 11,261 10,544 Interest expense (7,448) (6,522) (6,140) -------- -------- -------- Net interest income 4,589 4,739 4,404 -------- -------- -------- Fee and commission income 4,292 3,928 4,077 Fee and commission expense (480) (403) (425) -------- -------- -------- Net fee and commission income 3,812 3,525 3,652 -------- -------- -------- Net trading income 2,811 1,413 2,201 Net investment income 396 588 374 -------- -------- -------- Principal transactions 3,207 2,001 2,575 Net premiums from insurance contracts 442 550 510 Other income 100 153 61 -------- -------- -------- Total income 12,150 10,968 11,202 Net claims and benefits incurred on insurance contracts (248) (342) (233) -------- -------- -------- Total income net of insurance claims 11,902 10,626 10,969 Impairment charges (959) (1,097) (1,057) -------- -------- -------- Net income 10,943 9,529 9,912 -------- -------- -------- Operating expenses excluding amortisation of intangible assets (6,760) (6,332) (6,206) Amortisation of intangible assets (87) (73) (63) -------- -------- -------- Operating expenses (6,847) (6,405) (6,269) Share of post-tax results of associates and joint ventures - 16 30 Profit on disposal of subsidiaries, associates and joint ventures 5 323 - -------- -------- -------- Profit before tax 4,101 3,463 3,673 Tax (1,158) (869) (1,072) -------- -------- -------- Profit after tax 2,943 2,594 2,601 -------- -------- -------- Profit attributable to minority interests 309 330 294 Profit attributable to equity holders of the parent 2,634 2,264 2,307 -------- -------- -------- 2,943 2,594 2,601 -------- -------- -------- p p p Basic earnings per ordinary share 41.4 35.6 36.3 Diluted earnings per ordinary share 40.1 34.5 35.1 Dividends per ordinary share: Interim dividend 11.5 - 10.5 Final dividend - 20.5 - Dividend Â£731m Â£1,311m Â£666m CONSOLIDATED BALANCE SHEET (UNAUDITED) As at 30.06.07 31.12.06 30.06.06 Assets Â£m Â£m Â£m Cash and balances at central banks 4,785 7,345 6,777 Items in the course of collection from other banks 2,533 2,408 2,600 Trading portfolio assets 217,573 177,867 181,857 Financial assets designated at fair value: - held on own account 46,171 31,799 18,833 - held in respect of linked liabilities to customers under investment contracts 92,194 82,798 79,334 Derivative financial instruments 174,225 138,353 136,901 Loans and advances to banks 43,191 30,926 35,330 Loans and advances to customers 321,243 282,300 282,097 Available for sale financial investments 47,764 51,703 53,716 Reverse repurchase agreements and cash collateral on securities borrowed 190,546 174,090 171,869 Other assets 6,289 5,850 5,866 Current tax assets 345 557 - Investments in associates and joint ventures 228 228 560 Goodwill 6,635 6,092 5,968 Intangible assets 1,228 1,215 1,125 Property, plant and equipment 2,538 2,492 2,515 Deferred tax assets 774 764 776 --------- -------- -------- Total assets 1,158,262 996,787 986,124 --------- -------- -------- CONSOLIDATED BALANCE SHEET (UNAUDITED) As at 30.06.07 31.12.06 30.06.06 Liabilities Â£m Â£m Â£m Deposits from banks 87,429 79,562 86,221 Items in the course of collection due to other banks 2,206 2,221 2,700 Customer accounts 292,444 256,754 253,200 Trading portfolio liabilities Financial liabilities designated at fair 79,252 71,874 74,719 value 63,490 53,987 43,594 Liabilities to customers under investment contracts 93,735 84,637 81,380 Derivative financial instruments 177,774 140,697 138,982 Debt securities in issue 118,745 111,137 102,198 Repurchase agreements and cash collateral on securities lent 181,093 136,956 146,165 Other liabilities 10,908 10,337 10,767 Current tax liabilities 1,003 1,020 592 Insurance contract liabilities, including unit-linked liabilities 3,770 3,878 3,558 Subordinated liabilities 15,067 13,786 13,629 Deferred tax liabilities 258 282 430 Provisions 527 462 474 Retirement benefit liabilities 1,840 1,807 1,976 --------- -------- -------- Total liabilities 1,129,541 969,397 960,585 --------- -------- -------- Shareholders' equity Called up share capital 1,637 1,634 1,628 Share premium account 5,859 5,818 5,720 Other reserves 271 390 587 Retained earnings 13,461 12,169 10,279 Less: treasury shares (255) (212) (226) --------- -------- -------- Shareholders' equity excluding minority interests 20,973 19,799 17,988 Minority interests 7,748 7,591 7,551 --------- -------- -------- Total shareholders' equity 28,721 27,390 25,539 --------- -------- -------- --------- -------- -------- Total liabilities and shareholders' equity 1,158,262 996,787 986,124 --------- -------- -------- RESULTS BY BUSINESS The following section analyses the Group's performance by business. This reflects the business segment restatements as disclosed on 19th June 2007 (see page 69). For management and reporting purposes, Barclays is organised into the following business groupings: Global Retail and Commercial Banking â€¢ UK Banking, comprising - UK Retail Banking - UK Business Banking â€¢ Barclaycard â€¢ International Retail and Commercial Banking, comprising - International Retail and Commercial Banking - excluding Absa - International Retail and Commercial Banking - Absa. Investment Banking and Investment Management â€¢ Barclays Capital â€¢ Barclays Global Investors â€¢ Barclays Wealth Head office functions and other operations UK Banking UK Banking delivers banking solutions to Barclays UK retail and business banking customers. It offers a range of integrated products and services and access to the expertise of other Group businesses. Customers are served through a variety of channels comprising the branch network, automated teller machines, telephone banking, online banking and relationship managers. UK Banking is managed through two business areas, UK Retail Banking and UK Business Banking. UK Retail Banking UK Retail Banking comprises Personal Customers, Home Finance, Local Business, Consumer Loans and Barclays Financial Planning. This cluster of businesses aims to build broader and deeper relationships with its Personal and Local Business customers through providing a wide range of products and financial services. Personal Customers and Home Finance provide access to current account and savings products, Woolwich branded mortgages and general insurance. Consumer Loans provides unsecured loan and protection products and Barclays Financial Planning provides investment advice and products. Local Business provides banking services, including money transmission, to small businesses. UK Business Banking UK Business Banking provides relationship banking to Barclays larger and medium business customers in the UK. Customers are served by a network of relationship and industry sector specialist managers who provide local access to an extensive range of products and services, as well as offering business information and support. Customers are also offered access to the products and expertise of other businesses in the Group, particularly Barclays Capital and Barclaycard. UK Business Banking provides asset financing and leasing solutions through a specialist business. Barclaycard Barclaycard is a multi-brand credit card business which also processes card payments for retailers and merchants and issues credit and charge cards to corporate customers and the UK Government. It is one of Europe's leading credit card businesses and has an increasing presence in the United States. In the UK, Barclaycard comprises Barclaycard, SkyCard and FirstPlus secured lending. Outside the UK, Barclaycard provides credit cards in the United States, Germany, Spain, Italy, Portugal, Africa, India and the United Arab Emirates. In the Nordic region, Barclaycard operates through Entercard, a joint venture with ForeningsSparbanken (Swedbank). Barclaycard works closely with other parts of the Group, including UK Retail Banking, UK Business Banking and International Retail and Commercial Banking, to leverage their distribution capabilities. International Retail and Commercial Banking International Retail and Commercial Banking provides banking services to Barclays personal and corporate customers outside the UK The products and services offered to customers are tailored to meet the regulatory and commercial environments within each country. For reporting purposes the operations are grouped into two components: International Retail and Commercial Banking - excluding Absa and International Retail and Commercial Banking - Absa. International Retail and Commercial Banking works closely with all other parts of the Group to leverage synergies from product and service propositions. International Retail and Commercial Banking - excluding Absa International Retail and Commercial Banking - excluding Absa provides a range of banking services to retail and corporate customers in Western Europe and Emerging Markets, including current accounts, savings, investments, mortgages and loans. Western Europe includes Spain, Italy, France and Portugal. Emerging Markets includes Africa, India and the Middle East. International Retail and Commercial Banking - Absa International Retail and Commercial Banking - Absa represents Barclays consolidation of Absa, excluding Absa Capital which is included as part of Barclays Capital. Absa Group Limited is one of South Africa's largest financial services organisations serving personal, commercial and corporate customers predominantly in South Africa. International Retail and Commercial Banking - 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, credit cards, bancassurance products and wealth management services; it also offers customised business solutions for commercial and large corporate customers. Barclays Capital Barclays Capital is a leading global investment bank which provides large corporate, institutional and government clients with solutions to their financing and risk management needs. Barclays Capital services a wide variety of client needs, from capital raising and managing foreign exchange, interest rate, equity and commodity risks, through to providing technical advice and expertise. Activities are organised into three principal areas: Rates, which includes fixed income, foreign exchange, commodities, emerging markets, money markets, prime services and equity products; Credit, which includes primary and secondary activities for loans and bonds for investment grade, high yield and emerging market credit, as well as hybrid capital products, asset based finance, mortgage backed securities, credit derivatives, structured capital markets and large asset leasing; and Private Equity. 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 Global Investors Barclays Global Investors (BGI) is one of the world's largest asset managers and a leading global provider of investment management products and services. BGI offers structured investment strategies such as indexing, global asset allocation and risk controlled active products including hedge funds and provides related investment services such as securities lending, cash management and portfolio transition services. In addition, BGI is the global leader in assets and products in the exchange traded funds business, with over 290 funds for institutions and individuals trading in nineteen markets globally. BGI's investment philosophy is founded on managing all dimensions of performance: a consistent focus on controlling risk, return and cost. BGI collaborates with the other Barclays businesses, particularly Barclays Capital and Barclays Wealth, to develop and market products and leverage capabilities to better serve the client base. Barclays Wealth Barclays Wealth serves affluent, high net worth and intermediary clients worldwide, providing private banking, asset management, stockbroking, offshore banking, wealth structuring, financial planning services and manages the closed life assurance activities of Barclays and Woolwich in the UK. Barclays Wealth works closely with all other parts of the Group to leverage synergies from client relationships and product capabilities. Head office functions and other operations Head office functions and other operations comprises: â€¢ Head office and central support functions â€¢ Businesses in transition â€¢ Consolidation adjustments. Head office and central support functions comprises the following areas: Executive Management, Finance, Treasury, Corporate Affairs, Human Resources, Strategy and Planning, Internal Audit, Legal, Corporate Secretariat, Property, Tax, 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 intra-segment transactions. Analysis of profit attributable to equity holders of the parent Half-year ended 30.06.07 31.12.06 30.06.06 Â£m Â£m Â£m UK Banking 1,363 1,293 1,253 -------- -------- -------- UK Retail Banking 651 581 600 UK Business Banking 712 712 653 -------- -------- -------- Barclaycard 272 132 326 International Retail and Commercial Banking 452 704 512 -------- -------- -------- International Retail and Commercial Banking-ex Absa 142 323 195 International Retail and Commercial Banking-Absa 310 381 317 -------- -------- -------- Barclays Capital 1,660 970 1,246 Barclays Global Investors 388 350 364 Barclays Wealth 173 116 129 Head office functions and other operations (207) (102) (157) -------- -------- -------- Profit before tax 4,101 3,463 3,673 Tax (1,158) (869) (1,072) -------- -------- -------- Profit after tax 2,943 2,594 2,601 Profit attributable to minority (309) (330) (294) interests -------- -------- -------- Profit attributable to equity holders of the parent 2,634 2,264 2,307 -------- -------- -------- Total assets As at 30.06.07 31.12.06 30.06.06 Â£m Â£m Â£m UK Banking 153,772 147,576 141,970 -------- -------- -------- UK Retail Banking 84,266 81,692 78,485 UK Business Banking 69,506 65,884 63,485 -------- -------- -------- Barclaycard 20,406 20,082 19,155 International Retail and Commercial Banking 75,236 68,588 64,916 -------- -------- -------- International Retail and Commercial Banking-ex Absa 42,434 38,191 35,616 International Retail and Commercial Banking-Absa 32,802 30,397 29,300 -------- -------- -------- Barclays Capital 796,389 657,922 659,328 Barclays Global Investors 90,440 80,515 77,298 Barclays Wealth 16,663 15,022 14,170 Head office functions and other 5,356 7,082 9,287 operations --------- -------- -------- 1,158,262 996,787 986,124 --------- -------- -------- Risk weighted assets As at 30.06.07 31.12.06 30.06.06 Â£m Â£m Â£m UK Banking 93,261 92,981 92,805 -------- -------- -------- UK Retail Banking 42,498 43,020 42,021 UK Business Banking 50,763 49,961 50,784 -------- -------- -------- Barclaycard 17,053 17,035 15,698 International Retail and Commercial Banking 45,299 40,810 41,884 -------- -------- -------- International Retail and Commercial Banking-ex Absa 23,520 20,082 21,211 International Retail and Commercial Banking-Absa 21,779 20,728 20,673 -------- -------- -------- Barclays Capital 152,467 137,635 130,533 Barclays Global Investors 1,616 1,375 1,378 Barclays Wealth 6,871 6,077 5,202 Head office functions and other operations 1,476 1,920 3,424 -------- -------- -------- 318,043 297,833 290,924 -------- -------- -------- Further analysis of total assets and risk weighted assets, can be found on page 60. UK Banking Half-year ended 30.06.07 31.12.06 30.06.06 Â£m Â£m Â£m Net interest income 2,270 2,287 2,180 Net fee and commission income 951 985 947 -------- -------- -------- Net trading income 2 - 2 Net investment income 30 11 17 -------- -------- -------- Principal transactions 32 11 19 Net premiums from insurance contracts 87 141 143 Other income 54 61 2 -------- -------- -------- Total income 3,394 3,485 3,291 Net claims and benefits on insurance contracts (22) (7) (28) -------- -------- -------- Total income net of insurance claims 3,372 3,478 3,263 Impairment charges (400) (481) (406) -------- -------- -------- Net income 2,972 2,997 2,857 -------- -------- -------- Operating expenses excluding amortisation of intangible assets (1,606) (1,782) (1,605) Amortisation of intangible assets (4) (1) (1) -------- -------- -------- Operating expenses (1,610) (1,783) (1,606) Share of post-tax results of associates and joint ventures 1 3 2 Profit on disposal of subsidiaries, associates and joint ventures - 76 - -------- -------- -------- Profit before tax 1,363 1,293 1,253 -------- -------- -------- Cost:income ratio 48% 51% 49% Cost:net income ratio 54% 59% 56% Risk Tendency Â£870m Â£790m Â£705m Return on average economic capital 30% 27% 24% Economic profit Â£654m Â£734m Â£593m As at 30.06.07 31.12.06 30.06.06 Loans and advances to customers Â£137.6bn Â£131.0bn Â£127.8bn Customer accounts Â£144.3bn Â£139.7bn Â£133.4bn Total assets Â£153.8bn Â£147.6bn Â£142.0bn Risk weighted assets Â£93.3bn Â£93.0bn Â£92.8bn Key Facts Number of UK branches 1,810 2,014 2,014 UK Banking profit before tax increased 9% (Â£110m) to Â£1,363m (2006: Â£1,253m) driven principally by solid income growth. Gains from the sale and leaseback of properties of Â£138m (2006: Â£145m) included in operating expenses were substantially offset by investment expenditure primarily to accelerate the development of UK Retail Banking. The cost:income ratio improved one percentage point to 48%. Excluding settlements on overdraft fees from prior years, the cost:income ratio improved two percentage points. On this basis, UK Banking continues to target a two percentage point improvement in 2007, a further extension of the six percentage point aggregate improvement in 2005 and 2006. As part of the Woolwich transition and overall investment programme in our UK distribution network, we have co-located branches within 300 metres of each other, either to the preferred site or to a new location that best enables us to serve customer needs. UK Retail Banking Half-year ended 30.06.07 31.12.06 30.06.06 Â£m Â£m Â£m Net interest income 1,407 1,407 1,358 Net fee and commission income 600 654 636 Net premiums from insurance contracts 87 141 143 Other income 49 42 - -------- -------- -------- Total income 2,143 2,244 2,137 Net claims and benefits on insurance contracts (22) (7) (28) -------- -------- -------- Total income net of insurance claims 2,121 2,237 2,109 Impairment charges (277) (329) (306) -------- -------- -------- Net income 1,844 1,908 1,803 -------- -------- -------- Operating expenses excluding amortisation of intangible assets (1,191) (1,328) (1,203) Amortisation of intangible assets (3) (1) - -------- -------- -------- Operating expenses (1,194) (1,329) (1,203) Share of post-tax results of associates and joint ventures 1 2 - -------- -------- -------- Profit before tax 651 581 600 -------- -------- -------- Cost:income ratio 56% 59% 57% Cost:net income ratio 65% 70% 67% Risk Tendency Â£580m Â£500m Â£430m Return on average economic capital 28% 30% 26% Economic profit Â£315m Â£323m Â£266m As at 30.06.07 31.12.06 30.06.06 Loans and advances to customers Â£77.5bn Â£74.7bn Â£72.2bn Customer accounts Â£84.5bn Â£82.3bn Â£79.1bn Total assets Â£84.3bn Â£81.7bn Â£78.5bn Risk weighted assets Â£42.5bn Â£43.0bn Â£42.0bn Key Facts Number of UK current accounts 11.4m 11.5m 11.3m Number of UK savings accounts 11.1m 11.0m 10.9m Total UK mortgage balances (residential) Â£65.0bn Â£61.7bn Â£59.1bn Number of household insurance policies 839,000 825,000 727,000 Number of Local Business customers 637,000 630,000 641,000 UK Retail Banking profit before tax increased 9% (Â£51m) to Â£651m (2006: Â£600m), driven by good income growth which was offset by settlements on overdraft fees, well controlled costs and improved impairment. Income increased Â£12m to Â£2,121m (2006: Â£2,109m). There was strong growth in Personal Customer Retail Savings and good growth in Personal Customers Current Accounts and Local Business. This was offset by Â£87m settlements on overdraft fees from prior years. Excluding this item, income grew Â£99m or 5%. Net interest income increased 4% (Â£49m) to Â£1,407m (2006: Â£1,358m). Growth was driven by a higher contribution from deposits, through a combination of good balance sheet growth and an increased liability margin. Total average customer deposit balances increased 7% to Â£80.2bn (2006: Â£74.9bn), supported by the launch of new products. Mortgage volumes improved significantly, driven by a focus on improving capacity, customer service, value and promotion. UK residential mortgage balances were Â£65.0bn at the end of the period (31st December 2006: Â£61.7bn), an approximate market share of 6% (31st December 2006: 6%). Gross advances were 45% higher at Â£10.5bn (2006: Â£7.3bn). Net lending was Â£3.2bn (2006: net outflow Â£0.3bn), a market share of net lending of 6% (2006: net outflow 1%). The asset margin was reduced by the flow of new mortgages and base rate changes. The loan to value ratio within the residential mortgage book on a current valuation basis was 32% (2006: 34%). Consumer lending balances showed a moderate fall, reflecting the impact of tighter lending criteria. Net fee and commission income decreased 6% (Â£36m) to Â£600m (2006: Â£636m). There was good current account income growth in Personal Customers and Local Business. Barclays Financial Planning achieved good income growth through higher value and structured product sales. This was more than offset by settlements on overdraft fees. Net premiums from insurance underwriting activities reduced 39% (Â£56m) to Â£87m (2006: Â£143m). There continued to be lower customer take-up of loan protection insurance. Net claims and benefits on insurance contracts fell to Â£22m (2006: Â£28m). Other income increased to Â£49m (2006: nil), representing the benefit from reinsurance. Impairment charges decreased 9% (Â£29m) to Â£277m (2006: Â£306m) reflecting lower charges in unsecured consumer loans. This was driven by reduced flows into delinquency, lower levels of arrears and stable charge-offs. Operating expenses fell Â£9m to Â£1,194m (2006: Â£1,203m). Gains from the sale and leaseback of property of Â£113m (2006: Â£116m) were substantially reinvested in the business to upgrade distribution capabilities, with particular focus on converting the branch network, improving the product range to meet customer needs and improving operations and processes. The cost:income ratio improved one percentage point to 56%. UK Business Banking Half-year ended 30.06.07 31.12.06 30.06.06 Â£m Â£m Â£m Net interest income 863 880 822 Net fee and commission income 351 331 311 -------- -------- -------- Net trading income 2 - 2 Net investment income 30 11 17 -------- -------- -------- Principal transactions 32 11 19 Other income 5 19 2 -------- -------- -------- Total income 1,251 1,241 1,154 Impairment charges (123) (152) (100) -------- -------- -------- Net income 1,128 1,089 1,054 -------- -------- -------- Operating expenses excluding amortisation of intangible assets (415) (454) (402) Amortisation of intangible assets (1) - (1) -------- -------- -------- Operating expenses (416) (454) (403) Share of post-tax results of associates and joint ventures - 1 2 Profit on disposal of subsidiaries, associates and joint ventures - 76 - -------- -------- -------- Profit before tax 712 712 653 -------- -------- -------- Cost:income ratio 33% 37% 35% Cost:net income ratio 37% 42% 38% Risk Tendency Â£290m Â£290m Â£275m Return on average economic capital 31% 39% 35% Economic profit Â£339m Â£411m Â£327m As at 30.06.07 31.12.06 30.06.06 Loans and advances to customers Â£60.1bn Â£56.3bn Â£55.6bn Customer accounts Â£59.8bn Â£57.4bn Â£54.3bn Total assets Â£69.5bn Â£65.9bn Â£63.5bn Risk weighted assets Â£50.8bn Â£50.0bn Â£50.8bn Key Facts Total number of Business Banking customers 151,000 150,000 147,000 UK Business Banking profit before tax increased 9% (Â£59m) to Â£712m (2006: Â£653m), driven by continued good income growth. UK Business Banking maintained its market share of primary customer relationships. Income increased 8% (Â£97m) to Â£1,251m (2006: Â£1,154m) The uplift in income was broadly based across income categories. Net interest income improved 5% (Â£41m) to Â£863m (2006: Â£822m) driven by solid balance sheet growth. There was continued growth in all business areas, in particular Larger Business. Average deposit balances increased 6% to Â£46.5bn (2006: Â£43.7bn) with good growth across product categories. Average lending balances grew 2% to Â£52.3bn (2006: Â£51.1bn) reflecting the disposal of Â£1.1bn assets in the vehicle leasing and European vendor finance businesses sold in the second half of 2006. The liabilities margin improved and the assets margin was broadly stable. Net fee and commission income increased 13% (Â£40m) to Â£351m (2006: Â£311m) due to strong growth in lending fees, syndication fees and transaction related income. Income from principal transactions was Â£32m (2006: Â£19m), primarily reflecting strong gains from venture capital and private equity realisations. Impairment increased 23% (Â£23m) to Â£123m (2006: Â£100m), mainly as a consequence of Larger Business credit charges trending towards risk tendency. Impairment charges in Medium Business and Asset & Sales Financing reduced. Operating expenses increased 3% (Â£13m) to Â£416m (2006: Â£403m) reflecting tight cost control. Operating expenses included gains of Â£25m (2006: Â£29m) on the sale and leaseback of property which were reinvested in the business, including costs relating to the acceleration of the rationalisation of operating sites and technology infrastructure. The cost:income ratio improved two percentage points to 33% (2006: 35%). Barclaycard Half-year ended 30.06.07 31.12.06 30.06.06 Â£m Â£m Â£m Net interest income 700 705 678 Net fee and commission income 544 544 562 Net trading income 2 - - Net investment income - - 15 Net premiums from insurance contracts 21 11 7 Other income (27) - - -------- -------- -------- Total income 1,240 1,260 1,262 Net claims and benefits on insurance contracts (7) (4) (4) -------- -------- -------- Total income net of insurance claims 1,233 1,256 1,258 Impairment charges (443) (579) (488) -------- -------- -------- Net income 790 677 770 -------- -------- -------- Operating expenses excluding amortisation of intangible assets (505) (527) (437) Amortisation of intangible assets (11) (9) (8) -------- -------- -------- Operating expenses (516) (536) (445) Share of post-tax results of associates and joint ventures (2) (9) 1 -------- -------- -------- Profit before tax 272 132 326 -------- -------- -------- Cost:income ratio 42% 43% 35% Cost:net income ratio 65% 79% 58% Risk Tendency Â£1,000m Â£1,135m Â£1,105m Return on average economic capital 19% 12% 20% Economic profit Â£101m Â£22m Â£115m As at 30.06.07 31.12.06 30.06.06 Loans and advances to customers Â£18.3bn Â£18.2bn Â£17.4bn Total assets Â£20.4bn Â£20.1bn Â£19.2bn Risk weighted assets Â£17.1bn Â£17.0bn Â£15.7bn Key Facts Number of Barclaycard UK customers 9.6m 9.8m 11.2m Number of retailer relationships 95,000 93,000 95,000 UK credit cards - average outstanding balances Â£8.5bn Â£9.2bn Â£9.6bn UK credit cards - average extended credit balances Â£7.0bn Â£7.8bn Â£8.2bn International - average extended credit balances Â£3.1bn Â£2.6bn Â£2.3bn International - cards in issue 7.6m 6.4m 5.3m Barclaycard profit before tax decreased 17% (Â£54m) to Â£272m (2006: Â£326m). 2007 results reflected a Â£27m loss on disposal of part of the Monument card portfolio. 2006 results reflected a property gain of Â£38m. Excluding these items, profit before tax rose 4%. A solid net income performance was partially offset by increased investment in Barclaycard US, new emerging markets and new UK partnerships. Income fell 2% (Â£25m) to Â£1,233m (2006: Â£1,258m). Excluding the Â£27m loss on disposal of part of the Monument card portfolio in the first half of 2007, income remained flat at Â£1,260m, reflecting very strong growth in Barclaycard International, particularly Barclaycard US, partially offset by a decrease in UK Cards revenue. Net interest income increased 3% (Â£22m) to Â£700m (2006: Â£678m). This was driven by strong organic growth in international average extended credit card balances, up 35% to Â£3.1bn, average secured consumer lending balances up 40% to Â£4.2bn, partially offset by lower UK average extended credit card balances which fell 15% to Â£7.0bn. Margins fell to 6.87% (2006: 7.32%) due to a change in the product mix with a higher weighting to secured lending. Net fee and commission income fell 3% (Â£18m) to Â£544m (2006: Â£562m) with growth in Barclaycard International offset by the impact of the Office of Fair Trading's findings on late and overlimit fees in the UK which were implemented in August 2006. Impairment charges improved 9% (Â£45m) to Â£443m (2006: Â£488m) reflecting reduced flows into delinquency, lower levels of arrears and lower charge-offs in UK Cards. We made changes to our methodologies as part of efforts to standardise our impairment approach in anticipation of Basel II. The net positive impact of these changes in methodology was offset by an increase in impairment in the secured loans portfolio. Operating expenses increased 16% (Â£71m) to Â£516m (2006: Â£445m). Excluding the property gain of Â£38m in the first half of 2006, operating expenses increased 7% (Â£33m) driven by continued investment in international businesses in Europe, the US and new emerging markets and the launch of new partnerships with Thomas Cook and Argos in the UK. Barclaycard International continued to gain momentum and moved into profitability in the first half of 2007 delivering Â£26m profit before tax (2006: Â£8m loss before tax). New credit card products were launched in India and the United Arab Emirates. The Entercard joint venture, which is based in Scandinavia, continued to perform ahead of plan. Barclaycard US moved into profit with very strong average balance growth and a number of new card partnerships including Aer Lingus and ATA Airlines. International Retail and Commercial Banking Half-year ended 30.06.07 31.12.06 30.06.06 Â£m Â£m Â£m Net interest income 844 809 844 Net fee and commission income 598 593 628 -------- -------- -------- Net trading income 18 3 3 Net investment income 97 141 47 -------- -------- -------- Principal transactions 115 144 50 Net premiums from insurance contracts 162 177 174 Other income 42 40 34 -------- -------- -------- Total income 1,761 1,763 1,730 Net claims and benefits on insurance contracts (115) (125) (119) -------- -------- -------- Total income net of insurance claims 1,646 1,638 1,611 Impairment charges (93) (99) (68) -------- -------- -------- Net income 1,553 1,539 1,543 -------- -------- -------- Operating expenses excluding amortisation of intangible assets (1,075) (1,064) (1,013) Amortisation of intangible assets (32) (40) (45) -------- -------- -------- Operating expenses (1,107) (1,104) (1,058) Share of post-tax results of associates and joint ventures 1 22 27 Profit on disposal of subsidiaries, associates and joint ventures 5 247 - -------- -------- -------- Profit before tax 452 704 512 -------- -------- -------- Cost:income ratio 67% 67% 66% Cost:net income ratio 71% 72% 69% Risk Tendency Â£315m Â£220m Â£195m Return on average economic capital 17% 42% 28% Economic profit Â£85m Â£324m Â£169m As at 30.06.07 31.12.06 30.06.06 Loans and advances to customers Â£58.6bn Â£53.2bn Â£50.2bn Customer accounts Â£24.9bn Â£22.1bn Â£22.6bn Total assets Â£75.2bn Â£68.6bn Â£64.9bn Risk weighted assets Â£45.3bn Â£40.8bn Â£41.9bn Key Facts Number of international branches 1,838 1,653 1,587 International Retail and Commercial Banking profit before tax decreased Â£60m to Â£452m (2006: Â£512m). Very strong profit growth in Rand terms in International Retail and Commercial Banking - Absa, was offset by depreciation in the Rand. International Retail and Commercial Banking - excluding Absa results for 2006 included a Â£55m gain from the sale and leaseback of property in Spain and a Â£21m share of post-tax results of the associate FirstCarribean International Bank which was sold in 2006. A significant investment was made in infrastructure and distribution, including opening 185 new branches across Western Europe, Emerging Markets and Absa. International Retail and Commercial Banking - excluding Absa Half-year ended 30.06.07 31.12.06 30.06.06 Â£m Â£m Â£m Net interest income 334 311 293 Net fee and commission income 208 181 185 -------- -------- -------- Net trading income 20 5 12 Net investment income 50 37 29 -------- -------- -------- Principal transactions 70 42 41 Net premiums from insurance contracts 45 61 50 Other income 5 6 14 -------- -------- -------- Total income 662 601 583 Net claims and benefits on insurance contracts (60) (73) (65) -------- -------- -------- Total income net of insurance claims 602 528 518 Impairment charges (24) (25) (16) -------- -------- -------- Net income 578 503 502 -------- -------- -------- Operating expenses excluding amortisation of intangible assets (435) (441) (324) Amortisation of intangible assets (5) (5) (4) -------- -------- -------- Operating expenses (440) (446) (328) Share of post-tax results of associates and joint ventures - 19 21 Profit on disposal of subsidiaries, 4 247 - associates and joint ventures -------- -------- -------- Profit before tax 142 323 195 -------- -------- -------- Cost:income ratio 73% 85% 63% Cost:net income ratio 76% 89% 65% Risk Tendency Â£105m Â£75m Â£70m Return on average economic capital 14% 48% 22% Economic profit Â£31m Â£233m Â£76m As at 30.06.07 31.12.06 30.06.06 Loans and advances to customers Â£32.4bn Â£29.0bn Â£26.8bn Customer accounts Â£12.5bn Â£11.0bn Â£10.5bn Total assets Â£42.4bn Â£38.2bn Â£35.6bn Risk weighted assets Â£23.5bn Â£20.1bn Â£21.2bn Key Facts Number of international branches 1,026 853 800 Number of continental European customers 936,000 819,000 799,000 Number of continental European mortgage customers 263,000 252,000 227,000 Continental European mortgages - average balances (Euros) â‚¬29.1bn â‚¬25.9bn â‚¬24.9bn The profit before tax of International Retail and Commercial Banking - excluding Absa (which comprises Western Europe and Emerging Markets) decreased 27% (Â£53m) to Â£142m (2006: Â£195m). Excluding a Â£55m gain from the sale and leaseback of property and a Â£21m share of post-tax results of the associate FirstCaribbean International Bank, both included in 2006, profit before tax increased 19%. This reflected both strong income growth and investment in the expansion of the distribution network and in technology. Income increased 16% (Â£84m) to Â£602m (2006: Â£518m) driven by strong performances in Western Europe and Emerging Markets. Net interest income increased 14% (Â£41m) to Â£334m (2006: Â£293m), reflecting very strong balance sheet growth. Total average customer loans increased 19% to Â£30.9bn (2006: Â£26.0bn) with lending margins broadly stable. Mortgage balance growth in Western Europe was very strong, with average Euro balances up 17% to Â£29.1bn (2006: Â£24.9bn). Average customer deposits increased 18% to Â£11.7bn (2006: Â£9.9bn) driven by growth in Western Europe and Emerging Markets. Liability margins declined primarily as a result of margin compression in Emerging Markets. Net fee and commission income grew 12% (Â£23m) to Â£208m (2006: Â£185m). This reflected a strong performance in Spain and France, driven by higher service and insurance commissions. Principal transactions increased Â£29m to Â£70m (2006: Â£41m), reflecting higher equity investment income in Spain and higher life assurance income. Impairment charges rose Â£8m to Â£24m (2006: Â£16m). The increase, from a low historical base, reflected strong growth and lower recoveries. Operating expenses grew 34% (Â£112m) to Â£440m (2006: Â£328m). Excluding a Â£55m gain from the sale and leaseback of property in Spain in 2006, operating expenses increased 15% driven by the accelerated expansion of the distribution network across Western Europe and Emerging Markets and investments in technology. We opened 173 new branches. Western Europe continued to perform strongly. Profit before tax increased 17% (Â£18m) to Â£124m (2006: Â£106m), excluding one-off gains on asset sales of Â£55m and integration costs of Â£16m in 2006. Barclays Spain profit before tax increased 28% (Â£21m) to Â£96m (2006: Â£75m), adjusted for integration costs and the gains on asset sales in 2006. This was driven by higher service and insurance commissions, increased customer lending and higher equity investment income. France also performed well driven by good growth in the balance sheet, higher service commissions and good cost control. Income grew strongly in Italy as a result of the opening of new branches and a broadening of the product offering but this was more than offset by higher investment costs. Profit before tax decreased in Portugal, with strong income growth more than offset by increased investment in the rapid expansion of the business. Emerging Markets profit before tax increased 25% (Â£15m) to Â£74m (2006: Â£59m) driven by a strong rise in income as a result of very strong balance sheet growth across a broad range of markets. This was partially offset by increased investment in the business including branch openings and the launch of retail banking services in India. International Retail and Commercial Banking - Absa Half-year ended 30.06.07 31.12.06 30.06.06 Â£m Â£m Â£m Net interest income 510 498 551 Net fee and commission income 390 412 443 -------- -------- -------- Net trading income (2) (2) (9) Net investment income 47 104 18 -------- -------- -------- Principal transactions 45 102 9 Net premiums from insurance contracts 117 116 124 Other income 37 34 20 -------- -------- -------- Total income 1,099 1,162 1,147 Net claims and benefits on insurance contracts (55) (52) (54) -------- -------- -------- Total income net of insurance claims 1,044 1,110 1,093 Impairment charges (69) (74) (52) -------- -------- -------- Net income 975 1,036 1,041 -------- -------- -------- Operating expenses excluding amortisation of intangible assets (640) (623) (689) Amortisation of intangible assets (27) (35) (41) -------- -------- -------- Operating expenses (667) (658) (730) Share of post-tax results of associates and joint ventures 1 3 6 Profit on disposal of subsidiaries, 1 - - associates and joint ventures -------- -------- -------- Profit before tax 310 381 317 -------- -------- -------- Cost:income ratio 64% 59% 67% Cost:net income ratio 68% 64% 70% Risk Tendency Â£210m Â£145m Â£125m Return on average economic capital 21% 32% 37% Economic profit Â£54m Â£91m Â£93m As at 30.06.07 31.12.06 30.06.06 Loans and advances to customers Â£26.2bn Â£24.2bn Â£23.4bn Customer accounts Â£12.4bn Â£11.1bn Â£12.1bn Total assets Â£32.8bn Â£30.4bn Â£29.3bn Risk weighted assets Â£21.8bn Â£20.7bn Â£20.7bn Key Facts Number of branches 812 800 787 Number of ATMs 7,455 7,053 6,256 Number of retail customers 8.7m 8.3m 8.0m Number of corporate customers 87,000 84,000 80,000 International Retail and Commercial Banking - Absa profit before tax decreased 2% to Â£310m (2006: Â£317m). Appendix 1 on page 94 summarises the Rand results of Absa Group Limited for the six months to 30th June 2007 as reported to the JSE Limited. Impact on Barclays results Absa Group Limited's profit before tax of R6,429m (2006: R4,879m) is translated into Barclays results at an average exchange rate for the six months to 30th June 2007 of R14.11/Â£ (2006: R11.31/Â£), a 20% depreciation in the average rate of the Rand against Sterling. Consolidation adjustments reflected the amortisation of intangible assets of Â£27m (2006: Â£41m) and internal funding and other adjustments of Â£52m (2006: Â£28m). The resulting profit before tax of Â£377m (2006: Â£362m) is represented within International Retail and Commercial Banking - Absa Â£310m, (2006: Â£317m) and Barclays Capital, Â£67m (2006: Â£45m). Absa Group Limited's total assets at 30th June 2007 were R553,893m (31st December 2006: R495,112m), growth of 12%. This is translated into Barclays results at a period-end exchange rate of R14.12/Â£ (31st December 2006: R13.71/ Â£). The capital investment remains hedged against currency movements. Barclays Capital Half-year ended 30.06.07 31.12.06 30.06.06 Â£m Â£m Â£m Net interest income 567 663 495 Net fee and commission income 614 436 516 -------- -------- -------- Net trading income 2,761 1,423 2,139 Net investment income 206 296 277 -------- -------- -------- Principal transactions 2,967 1,719 2,416 Other income 5 12 10 -------- -------- -------- Total income 4,153 2,830 3,437 Impairment charges (10) 28 (70) -------- -------- -------- Net income 4,143 2,858 3,367 -------- -------- -------- Operating expenses excluding amortisation of intangible assets (2,453) (1,876) (2,120) Amortisation of intangible assets (30) (12) (1) -------- -------- -------- Operating expenses (2,483) (1,888) (2,121) -------- -------- -------- Profit before tax 1,660 970 1,246 -------- -------- -------- Cost:income ratio 60% 67% 62% Cost:net income ratio 60% 66% 63% Compensation:net income ratio 47% 48% 49% Average DVaR Â£39.3m Â£38.0m Â£36.2m Risk Tendency Â£110m Â£95m Â£125m Return on average economic capital 54% 36% 47% Average net income generated per member of staff (1) ('000) Â£329 Â£249 Â£330 Economic profit Â£969m Â£510m Â£671m As at 30.06.07 31.12.06 30.06.06 Total assets Â£796.4bn Â£657.9bn Â£659.3bn Risk weighted assets Â£152.5bn Â£137.6bn Â£130.5bn Corporate lending portfolio Â£44.5bn Â£40.6bn Â£41.4bn Key Facts 30.06.07 30.06.06 League League table Issuance table Issuance position value position value All international bonds (all 1st US$187.7bn 2nd US$111.0bn currencies) Sterling bonds 1st Â£10.9bn 2nd Â£10.9bn International securitisations 1st US$41.7bn 4th US$16.5bn US investment grade corporate 5th US$2.8bn 7th US$3.2bn bonds (1) Adjusted to exclude contribution and headcount from HomEq and EquiFirst Barclays Capital delivered record results in the first half of 2007 with its two best quarters ever. Profit before tax increased 33% (Â£414m) to Â£1,660m (2006: Â£1,246m). This was the result of a very strong income performance, driven by good growth across asset classes and geographical regions underpinned by the strength of the client franchise. Net income increased 23% (Â£776m) to Â£4,143m (2006: Â£3,367m). Absa Capital delivered a very strong growth in profit before tax of 49% to Â£67m (2006: Â£45m) in the first half of 2007, despite a 20% depreciation in the Rand against Sterling. Income increased 21% (Â£716m) to Â£4,153m (2006: Â£3,437m) as a result of very strong growth in commodity, credit, equity, emerging market, mortgage and currency asset classes. Income grew in all geographical regions. Average DVaR increased 9% to Â£39.3m (2006: Â£36.2m). Secondary income, comprising principal transactions (net trading income and net investment income) and net interest income, is mainly generated from providing client financing and risk management solutions. Secondary income increased 21% (Â£623m) to Â£3,534m (2006: Â£2,911m). Net trading income increased 29% (Â£622m) to Â£2,761m (2006: Â£2,139m) with strong contributions across the Rates and Credit businesses, particularly fixed income, commodities, equity derivatives, structured credit and credit derivatives. There was very strong growth in primary bonds, emerging markets, mortgage backed securities and credit trading. Net investment income decreased 26% (Â£71m) to Â£206m (2006: Â£277m) due to lower investment realisations primarily in private equity and structured capital markets. Net interest income increased 15% (Â£72m) to Â£567m (2006: Â£495m) driven by higher contributions from money markets and the credit portfolio. Corporate lending increased 7% to Â£44.5bn (31st December 2006: Â£40.6bn). Primary income, which comprises net fee and commission income from advisory and origination activities, grew 19% (Â£98m) to Â£614m (2006: Â£516m). This reflected higher volumes and continued market share gains in a number of key markets. Impairment charges of Â£10m (2006: Â£70m) reflected the stable wholesale credit environment and recoveries in the period. The prior year included non credit-related impairment charges on available for sale assets of Â£83m. Operating expenses increased 17% (Â£362m) to Â£2,483m (2006: Â£2,121m), largely driven by incremental performance related costs. The cost:net income ratio improved three percentage points to 60% (2006: 63%) and the compensation cost to net income ratio improved to 47% (2006: 49%). Barclays Capital has maintained its cost base flexibility with performance related pay, discretionary investment spend and short term contractor resources representing 54% (2006: 54%) of the cost base. Amortisation of intangible assets of Â£30m (2006: Â£1m) principally relates to mortgage service rights. Total headcount increased 2,500 during the first half of 2007 to 15,700 (31st December 2006: 13,200) and included 1,400 from the acquisition of EquiFirst completed on 30th March 2007. Organic growth was broadly based across all regions and reflected further investments in the front office, systems development and control functions to support continued business expansion. Barclays Global Investors Half-year ended 30.06.07 31.12.06 30.06.06 Â£m Â£m Â£m Net interest (expense)/income (2) 3 7 Net fee and commission income 940 814 837 -------- -------- -------- Net trading income 1 1 1 Net investment income 3 2 - -------- -------- -------- Principal transactions 4 3 1 Other income 1 - - -------- -------- -------- Total income 943 820 845 -------- -------- -------- Operating expenses excluding amortisation of intangible assets (551) (467) (479) Amortisation of intangible assets (4) (3) (2) -------- -------- -------- Operating expenses (555) (470) (481) -------- -------- -------- Profit before tax 388 350 364 -------- -------- -------- Cost:income ratio 59% 57% 57% Average income generated per member of staff ('000) Â£325 Â£306 Â£360 Return on average economic capital 238% 202% 260% Economic profit Â£210m Â£181m Â£195m As at 30.06.07 31.12.06 30.06.06 Total assets Â£90.4bn Â£80.5bn Â£77.3bn Risk weighted assets Â£1.6bn Â£1.4bn Â£1.4bn Key Facts Assets under management(Â£): Â£1,003bn Â£927bn Â£877bn -------- -------- -------- -indexed Â£589bn Â£566bn Â£554bn -iShares Â£179bn Â£147bn Â£124bn -active Â£235bn Â£214bn Â£199bn -------- -------- -------- Net new assets in period (Â£) Â£25bn Â£20bn Â£17bn Assets under management(US$): US$2,013bn US$1,814bn US$1,623bn -------- -------- -------- -indexed US$1,183bn US$1,108bn US$1,024bn -iShares US$359bn US$287bn US$230bn -active US$471bn US$419bn US$369bn -------- -------- -------- Net new assets in period (US$) US$50bn US$38bn US$30bn Number of iShares products 294 191 164 Number of institutional clients 3,000 2,900 2,800 Barclays Global Investors delivered good growth in profit before tax, which increased 7% (Â£24m) to Â£388m (2006: Â£364m). Very strong US Dollar income and profit growth was partially offset by the depreciation in the US Dollar. The growth was broadly based across products, distribution channels and geographies. Net fee and commission income improved 12% (Â£103m) to Â£940m (2006: Â£837m). This growth was primarily attributable to increased management fees, particularly in the iShares and active businesses, and securities lending. Incentive fees increased 2% (Â£2m) to Â£109m (2006: Â£107m). Higher asset values, driven by higher market levels and good net new inflows, contributed to the growth in income. Operating expenses increased 15% (Â£74m) to Â£555m (2006: Â£481m) as a result of significant investment in key growth initiatives and ongoing investment in product development and infrastructure. The cost:income ratio rose two percentage points to 59% (2006: 57%). Headcount increased 400 to 3,100 (31st December 2006: 2,700). Headcount increased in all geographical regions and across product groups and the support functions, reflecting continued investment to support further growth. Total assets under management increased 8% (Â£76bn) to Â£1,003bn (31st December2006: Â£927bn) including net new inflows of Â£25bn and Â£12bn attributable to the acquisition of Indexchange Investment AG (Indexchange). The positive market move impact of Â£57bn was partially offset by Â£18bn of adverse exchange rate movements. In US$ terms assets under management increased by US$199bn to US$2,013bn (31st December 2006: US$1,814bn), comprising US$50bn of net new assets, US$23bn attributable to acquisition of Indexchange, US$115bn of favourable market movements and US$11bn of positive exchange rate movements. The acquisition of Indexchange, a European exchange traded funds business, completed on 8th February 2007. Barclays Wealth Half-year ended 30.06.07 31.12.06 30.06.06 Â£m Â£m Â£m Net interest income 205 200 192 Net fee and commission income 359 329 345 -------- -------- -------- Net trading income 7 1 1 Net investment income 59 130 24 -------- -------- -------- Principal transactions 66 131 25 Net premium from insurance contracts 100 117 93 Other income 9 11 5 -------- -------- -------- Total income 739 788 660 Net claims and benefits from insurance contracts (104) (206) (82) -------- -------- -------- Total Income net of insurance claims 635 582 578 Impairment charges (2) (1) (1) -------- -------- -------- Net income 633 581 577 -------- -------- -------- Operating expenses excluding amortisation of intangible assets (458) (463) (446) Amortisation of intangible assets (2) (2) (2) -------- -------- -------- Operating expenses (460) (465) (448) -------- -------- -------- Profit before tax 173 116 129 -------- -------- -------- Cost:income ratio 72% 80% 78% Risk Tendency Â£10m Â£10m Â£10m Return on average economic capital 56% 30% 51% Average net income per member of staff ('000) Â£94 Â£89 Â£92 Economic profit Â£114m Â£43m Â£87m As at 30.06.07 31.12.06 30.06.06 Customer accounts Â£30.9bn Â£28.3bn Â£28.0bn Loans and advances to customers Â£7.1bn Â£6.2bn Â£5.5bn Total assets Â£16.7bn Â£15.0bn Â£14.2bn Risk weighted assets Â£6.9bn Â£6.1bn Â£5.2bn Key Facts Total client assets Â£126.8bn Â£116.1bn Â£105.9bn Barclays Wealth profit before tax showed very strong growth of 34% (Â£44m) to Â£173m (2006: Â£129m). Performance was driven by broadly based income growth, favourable market conditions, reduced redress costs and tight cost control. This was partially offset by additional volume related costs and increased investment in people and infrastructure to support future growth. Income increased 10% (Â£57m) to Â£635m (2006: Â£578m). Net interest income increased 7% (Â£13m) to Â£205m (2006: Â£192m) reflecting growth in both customer deposits and customer lending. Average deposits grew 6% to Â£29.1bn (2006: Â£27.5bn). Average lending grew 23% to Â£6.5bn (2006: Â£5.3bn) driven by increased lending to private banking and intermediary clients. Deposit margins were stable at 1.08% whilst asset margins increased to 1.12% (2006: 1.07%). Net fee and commission income grew 4% (Â£14m) to Â£359m (2006: Â£345m). This reflected growth in client assets and higher transactional income, including increased sales of investment products to affluent and high net worth clients. Principal transactions increased to Â£66m (2006: Â£25m) driven by a significant increase in the value of the unit linked insurance contracts largely offset by a Â£22m increase in net claims and benefits on insurance contracts to Â£104m (2006: Â£82m). Operating expenses increased 3% to Â£460m (2006: Â£448m) with greater volume related and investment costs partially offset by efficiency gains and lower customer redress costs of Â£18m (2006: Â£34m). Ongoing investment costs included increased hiring of client facing staff and improvements to infrastructure with the upgrade of technology and operations platforms. The cost:income ratio improved six percentage points to 72% (2006: 78%). Total client assets, comprising customer deposits and client investments, increased 20% (Â£20.9bn) to Â£126.8bn (2006: Â£105.9bn) reflecting strong net new asset inflows, favourable market conditions and the acquisition of Walbrook, an independent fiduciary services company, which completed on 18th May 2007. Head office functions and other operations Half-year ended 30.06.07 31.12.06 30.06.06 Â£m Â£m Â£m Net interest income 5 72 8 Net fee and commission income (194) (176) (183) -------- -------- -------- Net trading income/(loss) 20 (15) 55 Net investment income 1 8 (6) -------- -------- -------- Principal transactions 21 (7) 49 Net premiums from insurance contracts 72 104 93 Other income 16 29 10 -------- -------- -------- Total income (80) 22 (23) Impairment (charges)/releases (11) 35 (24) -------- -------- -------- Net income (91) 57 (47) -------- -------- -------- Operating expenses excluding amortisation of intangible assets (112) (153) (106) Amortisation of intangible assets (4) (6) (4) -------- -------- -------- Operating expenses (116) (159) (110) -------- -------- -------- Loss before tax (207) (102) (157) -------- -------- -------- Risk Tendency Â£5m Â£10m Â£25m As at 30.06.07 31.12.06 30.06.06 Total assets Â£5.4bn Â£7.1bn Â£9.3bn Risk weighted assets Â£1.5bn Â£1.9bn Â£3.4bn Head office functions and other operations loss before tax increased Â£50m to Â£207m (2006: loss Â£157m). Net interest income fell Â£3m to Â£5m (2006: Â£8m) and included the cost of hedging the foreign exchange risk on the Group's equity investment in Absa, which amounted to Â£42m (2006: Â£39m). 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 the inter-segment transactions are included in Head office functions and other operations. The impact of such inter-segment adjustments increased Â£28m to Â£109m (2006: Â£81m). These adjustments related to internal fees for structured capital market activities of Â£79m (2006: Â£41m) and fees paid to Barclays Capital for capital raising and risk management advice of Â£18m (2006: Â£8m), both of which reduced net fee and commission income in Head Office. The impact on the inter-segment adjustments of the timing of the recognition of insurance commissions included in Barclaycard and UK Retail was a reduction in Head Office income of Â£17m (2006: Â£35m). This net reduction was reflected in a decrease in net fee and commission income of Â£89m (2006: Â£128m) and an increase in net premium income of Â£72m (2006: Â£93m). Principal transactions decreased Â£28m to Â£21m (2006: Â£49m). 2007 included a profit of Â£2m (2006: Â£59m) in respect of the economic hedge of the translation exposure arising from Absa foreign currency earnings. The impairment charge fell Â£13m to Â£11m (2006: Â£24m). Operating expenses increased Â£6m to Â£116m (2006: Â£110m). RESULTS BY NATURE OF INCOME AND EXPENSE Net interest income Half Year ended 30.06.07 31.12.06 30.06.06 Â£m Â£m Â£m Cash and balances with central banks 12 9 7 Financial investments 1,444 1,405 1,406 Loans and advances to banks 608 455 523 Loans and advances to customers 9,054 8,407 7,883 Other 919 985 725 -------- -------- -------- Interest income 12,037 11,261 10,544 -------- -------- -------- Deposits from banks (1,471) (1,556) (1,263) Customer accounts (1,902) (1,232) (1,844) Debt securities in issue (2,994) (2,894) (2,388) Subordinated liabilities (398) (437) (340) Other (683) (403) (305) -------- -------- -------- Interest expense (7,448) (6,522) (6,140) -------- -------- -------- Net interest income 4,589 4,739 4,404 -------- -------- -------- Group net interest income increased 4% (Â£185m) to Â£4,589m (2006: Â£4,404m) reflecting balance sheet growth across a number of businesses. A component of the benefit of free funds included in Group net interest income is the structural hedge which functions to reduce the impact of the volatility of short-term interest rate movements. The contribution of the structural hedge decreased to Â£126m expense (2006: Â£47m income), largely due to the impact of relatively higher short-term interest rates and lower medium-term rates. Interest income includes Â£53m (2006: Â£48m) accrued on impaired loans. Business margins Half Year ended 30.06.07 31.12.06 30.06.06 % % % UK Retail Banking assets 1.20 1.28 1.35 UK Retail Banking liabilities 2.15 2.08 2.01 UK Business Banking assets 1.85 1.98 1.86 UK Business Banking liabilities 1.50 1.48 1.44 Barclaycard assets 6.87 6.96 7.32 International Retail and Commercial Banking-ex Absa assets 1.25 1.34 1.24 International Retail and Commercial Banking - ex Absa liabilities 1.82 1.99 2.12 International Retail and Commercial Banking-Absa assets(1) 2.85 2.94 3.10 International Retail and Commercial Banking-Absa liabilities(1) 2.94 2.41 2.23 Barclays Wealth assets 1.12 1.08 1.07 Barclays Wealth liabilities 1.08 1.12 1.08 Average balances Half Year ended 30.06.07 31.12.06 30.06.06 Â£m Â£m Â£m UK Retail Banking assets 76,747 74,057 73,128 UK Retail Banking liabilities 80,213 78,120 74,876 UK Business Banking assets 52,327 52,933 51,103 UK Business Banking liabilities 46,492 46,007 43,671 Barclaycard assets 18,761 18,427 17,408 International Retail and Commercial Banking-ex Absa assets 30,903 28,341 26,046 International Retail and Commercial Banking-ex Absa liabilities 11,673 11,044 9,862 International Retail and Commercial Banking-Absa assets(1) 24,832 23,414 24,228 International Retail and Commercial Banking-Absa liabilities(1) 11,229 11,973 13,454 Barclays Wealth assets 6,458 5,816 5,270 Barclays Wealth liabilities 29,140 27,964 27,523 (1) International Retail and Commercial Banking - Absa assets and liabilities business margins, average balances and business net interest income for the half year ended 30th June 2006 and the half year ended 31st December 2006 have been restated on a consistent basis to reflect changes in methodology Business net interest income Half Year ended 30.06.07 31.12.06 30.06.06 Â£m Â£m Â£m UK Retail Banking assets 456 479 491 UK Retail Banking liabilities 854 819 747 UK Business Banking assets 480 527 471 UK Business Banking liabilities 345 343 312 Barclaycard assets 640 646 632 International Retail and Commercial Banking - ex Absa assets 192 190 160 International Retail and Commercial Banking - ex Absa liabilities 105 110 106 International Retail and Commercial Banking-Absa assets(1) 351 347 373 International Retail and Commercial Banking-Absa liabilities(1) 164 145 149 Barclays Wealth assets 36 32 28 Barclays Wealth liabilities 156 158 148 -------- -------- -------- Business net interest income 3,779 3,796 3,617 -------- -------- -------- Reconciliation of business interest income to Group net interest income Half Year ended 30.06.07 31.12.06 30.06.06 Â£m Â£m Â£m Business net interest income 3,779 3,796 3,617 Other: - Barclays Capital 567 663 495 - Barclays Global Investors (2) 3 7 - Other 245 277 285 -------- -------- -------- Group net interest income 4,589 4,739 4,404 -------- -------- -------- Business net interest income is derived from the interest rate earned on average assets or paid on average liabilities relative to the average Bank of England base rate, local equivalents for international businesses or the rate managed by the bank using derivatives. The margin is expressed as annualised business interest income over the relevant average balance. Asset and liability margins cannot be added together as they are relative to the average Bank of England base rate, local equivalent for international businesses or the rate managed by the bank using derivatives. The benefit of capital attributed to these businesses is excluded from the calculation of business margins and business net interest income. Average balances are calculated on daily averages for most UK banking operations and monthly averages elsewhere. Within the reconciliation of Group net interest income, there is an amount captured as Other. This relates to the benefit of capital excluded from the business margin calculation, Head office functions and other operations and net funding on non-customer assets and liabilities. (1) International Retail and Commercial Banking - Absa assets and liabilities business margins, average balances and business net interest income for the half year ended 30th June 2006 and the half year ended 31st December 2006 have been restated on a consistent basis to reflect changes in methodology UK Retail Banking assets margin decreased 15 basis points to 1.20% (2006: 1.35%) principally due to the increased flow of new mortgages at prevailing market rates. UK Retail Banking liabilities margin increased 14 basis points to 2.15% (2006: 2.01%) due to pricing initiatives. UK Business Banking assets margin remained broadly stable at 1.85% (2006:1.86%). UK Business Banking liabilities margin increased 6 basis points to 1.50% (2006: 1.44%). Barclaycard assets margin decreased 45 basis points to 6.87% (2006: 7.32%) due to a change in the product mix with a higher proportion of secured lending. International Retail and Commercial Banking - excluding Absa assets margin of 1.25% (2006: 1.24%) was broadly stable. International Retail and Commercial Banking - excluding Absa liabilities margin decreased 30 basis points to 1.82% (2006: 2.12%) primarily driven by margin compression in Emerging Markets. International Retail and Commercial Banking - Absa assets margin decreased 25 basis points to 2.85% (2006: 3.10%) due to increased competition, increases in interest rates and changes in the product mix. The liabilities margin increased 71 basis points to 2.94% (2006: 2.23%) driven by a re-pricing of customer deposits. Barclays Wealth assets margin increased 5 basis points to 1.12% (2006: 1.07%) reflecting a slight strengthening of margins across the portfolio. The liabilities margin was stable at 1.08%. Net fee and commission income Half Year ended 30.06.07 31.12.06 30.06.06 Â£m Â£m Â£m Fee and commission income 4,292 3,928 4,077 Fee and commission expense (480) (403) (425) --------- --------- --------- Net fee and commission income 3,812 3,525 3,652 --------- --------- --------- Net fee and commission income increased 4% (Â£160m) to Â£3,812m (2006: Â£3,652m) with the increase spread across a number of businesses including UK Retail Banking, UK Business Banking, Barclays Capital and Barclays Global Investors. Fee and commission income rose 5% (Â£215m) to Â£4,292m (2006: Â£4,077m) reflecting good growth in current account income in UK Retail Banking and strong growth in lending fees, syndication fees and transaction related income in UK Business Banking. Fee income in Barclays Capital increased due to higher volumes and continued market share gains in a number of key markets whilst Barclays Global Investors fee income grew as a result of increased management fees particularly in iShares and active businesses. Fee and commission expense increased 13% (Â£55m) to Â£480m (2006: Â£425m) largely reflecting increases in Barclays Capital arising from higher volumes. Total foreign exchange income was Â£477m (2006: Â£457m) and consisted of revenues earned from both retail and wholesale activities. Foreign exchange income earned on customer transactions by individual businesses is reported in those respective business units within fee and commission income. The foreign exchange income earned in Barclays Capital and in Treasury is reported within principal transactions. Principal transactions Half Year ended 30.06.07 31.12.06 30.06.06 Â£m Â£m Â£m Rates related business 2,002 1,212 1,636 Credit related business 809 201 565 -------- -------- -------- Net trading income 2,811 1,413 2,201 -------- -------- -------- Cumulative gain from disposal of available for sale assets 159 187 120 Dividend income 18 (3) 18 Net income from financial instruments 102 361 86 designated at fair value Other investment income 117 43 150 -------- -------- -------- Net investment income 396 588 374 -------- -------- -------- Principal transactions 3,207 2,001 2,575 -------- -------- -------- The majority of the Group's trading income is generated in Barclays Capital. Net trading income increased 28% (Â£610m) to Â£2,811m (2006: Â£2,201m) due to excellent performances in Barclays Capital Rates and Credit businesses particularly fixed income, commodities, equity derivatives, structured credit and credit derivatives. There was very strong growth in primary bonds, emerging markets, mortgage backed securities and credit trading. Net investment income increased 6% (Â£22m) to Â£396m (2006: Â£374m). The cumulative gain from disposal of available for sale assets increased 33% (Â£39m) to Â£159m (2006: Â£120m) reflecting profits realised on the sale of investments partially offset by lower equity realisations primarily in private equity and structured capital markets. Fair value movements on certain assets and liabilities have been reported within net trading income or within net investment income depending on the nature of the transaction. Fair value movements on insurance assets included within net investment income contributed Â£83m (2006: Â£46m). Net premiums from insurance contracts Half Year ended 30.06.07 31.12.06 30.06.06 Â£m Â£m Â£m Gross premiums from insurance contracts 465 572 536 Premiums ceded to reinsurers (23) (22) (26) -------- -------- -------- Net premiums from insurance contracts 442 550 510 -------- -------- -------- Net premiums from insurance contracts decreased 13% (Â£68m) to Â£442m (2006: Â£510m), primarily due to lower customer take up of loan protection insurance. Other income Half Year ended 30.06.07 31.12.06 30.06.06 Â£m Â£m Â£m Increase/(decrease) in fair value of assets held in respect of linked liabilities to customers under investment contracts 2,810 10,377 (2,960) (Increase)/decrease in liabilities to customers under investment contracts (2,810) (10,377) 2,960 Property rentals 27 27 28 Loss on part disposal of Monument credit card portfolio (27) - - Other 100 126 33 -------- -------- -------- Other income 100 153 61 -------- -------- -------- Certain asset management products offered to institutional clients by Barclays Global Investors are recognised as investment contracts. Accordingly the invested assets and the related liabilities to investors are held at fair value and changes in those fair values are reported within Other income. Net claims and benefits paid on insurance contracts Half Year ended 30.06.07 31.12.06 30.06.06 Â£m Â£m Â£m Gross claims and benefits incurred on insurance contracts 254 353 235 Reinsurers' share of claims incurred (6) (11) (2) -------- -------- -------- Net claims and benefits incurred on insurance contracts 248 342 233 -------- -------- -------- Impairment charges Half Year ended 30.06.07 31.12.06 30.06.06 Impairment charges on loans and advances Â£m Â£m Â£m - New and increased impairment allowances 1,223 1,465 1,257 - Releases (136) (238) (151) - Recoveries (124) (134) (125) --------- --------- --------- Impairment charges on loans and advances (see note 5) 963 1,093 981 Other credit provisions (Credits)/charges for the year in respect of provision for undrawn contractually committed facilities and guarantees provided (4) 1 (7) --------- --------- --------- Impairment charges on loans and advances and other credit provisions 959 1,094 974 Impairment charges on available for sale assets - 3 83 --------- --------- --------- Total impairment charges 959 1,097 1,057 --------- --------- --------- Total impairment charges decreased 9% (Â£98m) to Â£959m (2006: Â£1,057m). Impairment charges on loans and advances and other credit provisions Impairment charges on loans and advances and other credit provisions decreased 2% (Â£15m) to Â£959m (2006: Â£974m). In retail sectors this reflected a decrease in flows into delinquency and arrears balances across UK cards and unsecured loans; and some increase in impairment following book growth in international portfolios. UK mortgage impairment remained negligible. In addition, the wholesale credit environment remained stable with continued low levels of default. Impairment charges on loans and advances and other credit provisions as a percentage of total loans and advances fell to 0.52% (2006: 0.61%) as total loans and advances grew by 14% to Â£367,711m (2006: Â£320,831m). Retail impairment charges on loans and advances and other credit provisions fell 5% (Â£39m) to Â£800m (2006: Â£839m). As a result, retail impairment charges as a percentage of period end total loans and advances of Â£147,730m (2006: Â£134,534m) improved to 1.08% (2006: 1.25%). We made changes to our methodologies as part of efforts to standardise our impairment approach in anticipation of Basel II. In the UK retail businesses, high debt levels and changing social attitudes to bankruptcy have, until recently, led to sustained growth in personal insolvency. This growth has now slowed but rising interest rates meant that household cashflows remained under pressure. In UK cards and unsecured loans, improvements in new customer quality and earlier customer intervention helped cut flows into delinquency while arrears balances trended downwards since the third quarter of last year. In UK cards, these trends continued to drive down charge-offs. UK unsecured loans showed positive delinquency flow trends, although charge-offs have not yet fallen from last year's levels. In UK Home Finance, mortgage delinquencies as a percentage of outstandings remained stable and amounts charged off were low, with the result that there was a small release to impairment. The impairment charge in Barclaycard UK secured lending increased sharply in the second half of 2006 reflecting very strong book growth and stricter criteria for management of early cycle delinquency. The impairment charge in the first half of 2007 was consistent with the second half of 2006 and Risk Tendency was broadly stable. The impairment charge in the international card portfolios increased, from a low base, as the balance sheet grew strongly in 2006 and the first half of 2007. Arrears in some of Absa's key retail portfolios deteriorated in 2007, driven by interest rate increases in 2006 and 2007 and pressure on collections. Action has been taken to reduce some of the higher risk customer balances. In the wholesale and corporate businesses, impairment charges on loans and advances and other credit provisions increased 12% (Â£17m) to Â£159m (2006: Â£142m). Wholesale and corporate impairment charges as a percentage of period end total loans and advances of Â£219,981m (2006: Â£186,297m) was broadly stable at 0.14% (2006: 0.15%). Impairment on available for sale assets In 2006, there was an impairment charge related to losses on assets in the available for sale portfolio. There has been no corresponding charge in the first half of 2007. Operating expenses Half Year ended 30.06.07 31.12.06 30.06.06 Â£m Â£m Â£m Staff costs (refer to page 52) 4,581 4,022 4,147 Administrative expenses 1,893 2,064 1,916 Depreciation 227 248 207 Impairment loss - property and equipment - 8 6 - intangible assets 2 7 - Operating lease rentals 204 177 168 Gain on property disposals (147) (194) (238) Amortisation of intangible assets 87 73 63 -------- -------- -------- Operating expenses 6,847 6,405 6,269 -------- -------- -------- Operating expenses grew 9% (Â£578m) to Â£6,847m (2006: Â£6,269m). The increase was driven by growth of 10% (Â£434m) in staff costs to Â£4,581m (2006: Â£4,147m). Administrative expenses fell 1% (Â£23m) to Â£1,893m (2006: Â£1,916m) reflecting tight cost control across all businesses. Operating lease rentals increased 21% (Â£36m) to Â£204m (2006: Â£168m), primarily due to increased levels of property held under operating leases. Operating expenses were reduced by gains from the sale of property of Â£147m (2006: Â£238m) as the Group continued the sale and leaseback of its freehold portfolio which was substantially reinvested in the business. Amortisation of intangible assets increased 38% (Â£24m) to Â£87m (2006: Â£63m) primarily reflecting the amortisation of mortgage servicing rights relating to the acquisition of HomEq in November 2006. The Group cost:income ratio increased one percentage point to 58% (2006: 57%). The Group cost:net income ratio was 63% (2006: 63%). Staff costs 30.06.07 31.12.06 30.06.06 Â£m Â£m Â£m Salaries and accrued incentive payments 3,856 3,271 3,364 Social security costs 301 210 292 Pension costs - defined contribution plans 71 73 55 - defined benefit plans 77 140 142 Other post retirement benefits 12 15 15 Other 264 313 279 -------- -------- -------- Staff costs 4,581 4,022 4,147 -------- -------- -------- Staff costs increased 10% (Â£434m) to Â£4,581m (2006: Â£4,147m). Salaries and accrued incentive payments rose 15% (Â£492m) to Â£3,856m (2006: Â£3,364m), largely reflecting incremental performance related costs in Barclays Capital associated with strong results. Defined benefit plans pension costs have decreased 46% (Â£65m) to Â£77m (2006: Â£142m). This has been caused by changed assumptions leading to falling service costs and an increase in the expected return on scheme assets. Staff numbers As at 30.06.07 31.12.06 30.06.06 UK Banking 41,700 42,600 42,900 --------- -------- -------- UK Retail Banking 33,900 34,500 35,000 UK Business Banking 7,800 8,100 7,900 --------- -------- -------- Barclaycard 8,300 8,500 8,300 International Retail and Commercial Banking 50,800 47,800 46,800 --------- -------- -------- International Retail and Commercial Banking-ex Absa 16,800 13,900 13,100 International Retail and Commercial Banking-Absa 34,000 33,900 33,700 --------- -------- -------- Barclays Capital 15,700 13,200 10,500 Barclays Global Investors 3,100 2,700 2,400 Barclays Wealth 6,900 6,600 6,400 Head office functions and other operations 1,200 1,200 1,000 --------- -------- -------- Total Group permanent and fixed term contract staff worldwide 127,700 122,600 118,300 Agency staff worldwide 15,000 9,100 8,700 --------- -------- -------- Total including agency staff 142,700 131,700 127,000 --------- -------- -------- Staff numbers are shown on a full-time equivalent basis. Total Group permanent and contract staff comprised 61,700 (31st December 2006: 62,400) in the UK and 66,000 (31st December 2006: 60,200) internationally. UK Banking staff numbers decreased 900 to 41,700 (31st December 2006: 42,600), primarily due to reductions in back office operations. Barclaycard staff numbers decreased 200 to 8,300 (31st December 2006: 8,500), due to the sale of part of the Monument card portfolio, partially offset by an increase in the International cards businesses. International Retail and Commercial Banking staff numbers increased 3,000 to 50,800 (31st December 2006: 47,800). International Retail and Commercial Banking - excluding Absa staff numbers increased 2,900 to 16,800 (31st December 2006: 13,900) due to growth in the distribution network in Emerging Markets and Western Europe. International Retail and Commercial Banking - Absa staff numbers increased 100 to 34,000 (31st December 2006: 33,900), reflecting continued growth in the business. Barclays Capital staff numbers increased 2,500 during 2007 to 15,700 (31st December 2006:13,200) including 1,400 from the acquisition of EquiFirst. Organic growth was broadly based across all regions and reflected further investments in the front office, systems development and control functions to support continued business expansion. Barclays Global Investors staff numbers increased 400 to 3,100 (31st December 2006: 2,700) spread across regions, product groups and support functions, reflecting continued investment to support strategic initiatives. Barclays Wealth staff numbers increased 300 to 6,900 (31st December 2006: 6,600) principally due to the acquisition of Walbrook. Head office functions and other operations staff numbers remained stable at 1,200. Agency staff numbers rose 5,900 to 15,000 (31st December 2006: 9,100) due to the additional sales agents engaged in retail banking activities across Emerging Markets, particularly in India, to support the continued growth of international business. Share of post-tax results of associates and joint ventures Half Year ended 30.06.07 31.12.06 30.06.06 Â£m Â£m Â£m Profit from associates 3 24 29 (Loss)/profit from joint ventures (3) (8) 1 -------- -------- -------- Share of post-tax results of associates and joint ventures - 16 30 -------- -------- -------- The share of post-tax results of associates and joint ventures decreased Â£30m to Â£nil (2006: Â£30m), principally due to the sale of the Group's interest in FirstCaribbean International Bank, which completed on 22nd December 2006. Profit on disposal of subsidiaries, associates and joint ventures Half Year ended 30.06.07 31.12.06 30.06.06 Â£m Â£m Â£m Profit on disposal of subsidiaries, associates and joint ventures 5 323 - -------- -------- -------- The profit on disposal in the first half of 2007 relates mainly to the partial disposal of the Group's shareholding in Gabetti Property Solutions. Tax The tax charge for the period is based upon a UK corporation tax rate of 30% for the calendar year 2007 (2006: 30%). The effective rate of tax for the first half of 2007, based on profit before tax, was 28.2% (2006: 29.2%). The effective tax rate differs from 30% as it takes account of the different tax rates which are applied to the profits earned outside the UK, disallowable expenditure, non-taxable gains and income and adjustments to prior year tax provisions. The forthcoming change in the UK mainstream rate of corporation tax from 30% to 28% on 1st April 2008 has led to an additional tax charge in 2007 as a result of its effect on the Group's net deferred tax asset. The effective tax rate for this interim period is marginally higher than the 2006 full year rate, principally because there was, in 2006, a higher level of profit on disposals of subsidiaries, associates and joint ventures offset by losses or exemptions. The tax charge for the first half of the year includes Â£706m (2006: Â£640m) arising in the UK and Â£452m (2006: Â£432m) arising overseas. Profit attributable to minority interests Half Year ended 30.06.07 31.12.06 30.06.06 Â£m Â£m Â£m Absa Group Limited 129 140 122 Preference shares 90 90 85 Reserve capital instruments 44 45 47 Upper tier 2 instruments 8 8 7 Barclays Global Investors minority 22 21 26 interests Other minority interests 16 26 7 -------- -------- -------- Profit attributable to minority interests 309 330 294 -------- -------- -------- Earnings per share Half Year ended 30.06.07 31.12.06 30.06.06 Profit attributable to equity holders of the parent Â£2,634m Â£2,264m Â£2,307m Dilutive impact of convertible options (Â£13m) (Â£17m) (Â£17m) -------- -------- -------- Profit attributable to equity holders of the parent including dilutive impact of convertible options Â£2,621m Â£2,247m Â£2,290m Basic weighted average number of shares in issue 6,356m 6,360m 6,353m Number of potential ordinary shares(1) 178m 152m 177m -------- -------- -------- Diluted weighted average number of shares 6,534m 6,512m 6,530m -------- -------- -------- p p p Basic earnings per ordinary share 41.4 35.6 36.3 Diluted earnings per ordinary share 40.1 34.5 35.1 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, currently not vested 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 conversion of outstanding options into shares within Absa Group Limited and Barclays Global Investors UK Holdings Limited. The weighted average number of ordinary shares excluding own shares held in employee benefit trusts currently not vested and shares held for trading, is adjusted for the effects of all dilutive potential ordinary shares, totalling 178 million (2006: 177 million). (1) Potential ordinary shares reflect the dilutive impact of share options outstanding. Dividends on ordinary shares The Board has decided to pay, on 1st October 2007, an interim dividend for the year ended 31st December 2007 of 11.5p per ordinary share for shares registered in the books of the Company at the close of business on 17th August 2007. Shareholders who have their dividends paid direct to their bank or building society account will receive a consolidated tax voucher detailing the dividends paid in the 2007-2008 UK tax year in mid-October 2007. The amount payable for the 2007 interim dividend based on the number of shares outstanding at 30th June 2007 would be Â£731m (half-year ended 31st December 2006: Â£1,311m; half-year ended 30th June 2006: Â£666m). This amount does not include the effects of the share subscriptions and share buy back programme described in the Recent developments section on page 74. This amount also excludes Â£22m payable on own shares held by employee benefit trusts (half-year ended 31st December 2006: Â£30m; half-year ended 30th June 2006: Â£18m). For qualifying US and Canadian resident ADR holders, the interim dividend of 11.5p per ordinary share becomes 46p per ADS (representing four shares). The ADR depositary will mail the dividend on 1st October 2007 to ADR holders on the record on 17th August 2007. For qualifying Japanese shareholders, the final dividend of 11.5p per ordinary share will be distributed in mid-October to shareholders on the record on 17th August 2007. Shareholders may have their dividends reinvested in Barclays PLC shares by participating in the Barclays Dividend Reinvestment Plan. The plan 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 plan would require Barclays or The Plan Administrator 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 plan should contact The Plan Administrator by writing to: The Plan Administrator to Barclays, Share Dividend Team, The Causeway, Worthing, West Sussex, BN99 6DA; or, by telephoning 0870 609 4535. The completed form should be returned to The Plan Administrator on or before 7th September 2007 for it to be effective in time for the payment of the interim dividend on 1st October 2007. Shareholders who are already in the plan need take no action unless they wish to change their instructions in which case they should write to The Plan Administrator. This information is provided by RNS The company news service from the London Stock Exchange

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