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Barclays PLC (BARC)

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Tuesday 12 February, 2013

Barclays PLC

Final Results

RNS Number : 6474X
Barclays PLC
12 February 2013
 



 

 

 

 

 

 

 

 

Barclays PLC

Results Announcement

 

31 December 2012

 

 

 

 

 

 

 


 

Table of Contents

 

Preliminary Results Announcement

Page

Performance Highlights                                     

2

Chief Executive's Statement

4

Group Finance Director's Review

6

Barclays Results by Quarter

8

Condensed Consolidated Financial Statements

9

Results by Business


- Retail and Business Banking


-   UK

14

-   Europe

16

-   Africa

18

-   Barclaycard

20

- Corporate and Investment Banking


-   Investment Bank

22

-   Corporate Banking

26

- Wealth and Investment Management

30

- Head Office and Other Operations

32

Business Results by Quarter

33

Performance Management


- Remuneration

35

- Returns and Equity

39

- Margins and Balances

40

Risk Management

42

- Funding Risk - Capital

43

- Funding Risk - Liquidity

48

- Credit Risk

56

- Market Risk

83

Financial Statement Notes

84

Other Financial Information

101

Shareholder Information

102

Index

103

 

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



 

 

 

The term Barclays or Group refers to Barclays PLC together with its subsidiaries. Unless otherwise stated, the income statement analysis compares the twelve months to 31 December 2012 to the corresponding twelve months of 2011 and balance sheet comparatives relate to 31 December 2011. The abbreviations '£m' and '£bn' represent millions and thousands of millions of pounds sterling respectively; the abbreviations '$m' and '$bn' represent millions and thousands of millions of US dollars respectively and 'C$m' and 'C$bn' represent millions and thousands of millions of Canadian dollars respectively.

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

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

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

The Listing Rules of the UK Listing Authority (LR 9.7A.1) require that preliminary statements of annual results must be agreed with the listed company's auditors prior to publication, even though an audit opinion has not yet been issued. In addition, the Listing Rules require such statements to give details of the nature of any likely modification that may be contained in the auditors' report to be included with the annual report and accounts. Barclays PLC confirms that it has agreed this preliminary statement of annual results with PricewaterhouseCoopers LLP and that the Board of Directors has not been made aware of any likely modification to the auditors' report to be included with the annual report and accounts for the year ended 31 December 2012.

The information in this announcement, which was approved by the Board of Directors on 11 February 2013, does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2011, which included certain information required for the Joint Annual Report on Form 20-F of Barclays PLC and Barclays Bank PLC to the US Securities and Exchange Commission (SEC) and which contained an unqualified audit report under Section 495 of the Companies Act 2006 and which did not make any statements under Section 498 of the Companies Act 2006, have been delivered to the Registrar of Companies in accordance with Section 441 of the Companies Act 2006.

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

Forward-looking statements

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

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



Performance Highlights

"There is no doubt that 2012 was a difficult year for Barclays and the entire banking sector. The behaviours which made headlines during the year stemmed from a period of 20 years in banking in which the sector became too aggressive, too focused on the short-term, and too disconnected from the needs of customers and clients, and wider society. Barclays was not immune from the impact of these trends, and we suffered reputational damage in 2012 as a consequence. Change is needed both in our industry and at Barclays. 

 

As I reflect on my first five months as Chief Executive and on the transformation required, I am reassured by the strong foundations on which we can build. Through a prolonged difficult economic environment, our financial performance has been strong, and our 2012 results clearly demonstrate the good momentum in our businesses. Our franchise remains robust and well positioned, in fact our position in many businesses improved through the year. I am proud of how our colleagues were not distracted and continued to focus on delivering for our customers and clients. I am also grateful for our customers' and clients' continued loyalty to Barclays, despite circumstances where it could have easily faltered.

 

The significant reduction in this year's total incentive awards is the product of actions taken by management to reposition Barclays in the marketplace and reflects the significant conduct issues that impacted Barclays in 2012. We committed last year to a journey to bring down our compensation ratio and have made good progress this year, with the Group compensation to net income ratio declining to 38% (2011: 42%). While this is progress, not the destination, we believe a ratio in the mid-30s is a sustainable position in the medium term which will ensure that we can continue to pay our people competitively for performance while also enabling us to deliver a greater share of the income we generate to shareholders.

 

Of course we must also improve our financial position further - despite improvement year on year, our return on equity is not yet at an acceptable level. However, the notion that there must always be a choice between profits and a values-driven business is false. Barclays will only be a valuable business if it is a values-driven business. Under my leadership, Barclays will become a valuable and sustainable institution for all our stakeholders by aligning behind a common purpose: 'helping people achieve their ambitions - in the right way'. This will be delivered by embedding five core values: Respect, Integrity, Service, Excellence and Stewardship. By building this culture, I am confident that Barclays can become the 'Go-To' bank for all our stakeholders"

 

Antony Jenkins, Chief Executive

 

- Adjusted profit before tax was up 26% to £7,048m for the 12 months ended 31 December 2012, with an improvement of 46% in Corporate and Investment Banking, and 52% in Wealth and Investment Management

- Statutory profit before tax decreased to £246m (2011: £5,879m), including own credit charge of £4,579m (2011: gain of £2,708m), gain on disposal of BlackRock investment of £227m (2011: impairment/loss of £1,858m), £1,600m (2011: £1,000m) provision for PPI redress, and £850m (2011: £nil) provision for interest rate hedging products redress

- Investment Bank profit before tax increased 37% to £4,063m driven by income growth of 13% and reduced operating expenses. Q4 12 Investment Bank income was £2,593m, up 43% on Q4 11 and down 2% on Q3 12

- Adjusted return on average shareholders' equity increased to 7.8% (2011: 6.6%) with improvements in most of our businesses. Statutory return on average shareholders' equity was negative 1.9% (2011: positive 5.8%)

- Adjusted income was up 2% at £29,043m despite challenging economic conditions, the continuing low interest rate environment and non-recurrence of gains from the disposal of hedging instruments in 2011 of £1,061m

- Credit impairment charges were down 5% at £3,596m, principally reflecting improvements in Barclaycard, Corporate Banking and UK RBB, partially offset by higher charges in the Investment Bank, Africa RBB and Europe RBB

- Adjusted operating expenses were down 3% to £18,539m as we reduced non-performance costs by 3% to £16,114m and performance costs by 4% to £2,425m. Total incentive awards declined 16% for the Group and 20% for the Investment Bank, reducing the Investment Bank compensation: income ratio to 39% (2011: 47%)

- Core Tier 1 ratio remained strong at 10.9% (2011: 11.0%). Risk weighted assets reduced 1% to £387bn

- The Group continues to access both secured and unsecured term funding markets and raised £28bn of term funding in 2012, including £6bn through Barclays participation in the Bank of England's Funding for Lending Scheme (FLS). In Q4 12 the Group successfully placed $3bn of Tier 2 Contingent Capital Notes (CCNs) which was well received by the market

- The Group delivered £44bn (2011: £45bn) of gross new lending to UK households and businesses



Performance Highlights

Barclays Results  

Adjusted

 

Statutory

 

for the twelve months ended

31.12.12

31.12.11


 

31.12.12

31.12.11


  

£m

£m

% Change

 

£m

£m

% Change

Total income net of insurance claims

29,043 

28,512 


24,691 

32,292 

(24)

Credit impairment charges and other provisions  

(3,596)

(3,802)

(5)


(3,596)

(5,602)

(36)

Net operating income  

25,447 

24,710 


21,095 

26,690 

(21)

Operating expenses

(18,539)

(19,180)

(3)


(20,989)

(20,777)

Other net income/(expense)

140 

60 

  


140 

(34)


Profit before tax  

7,048 

5,590 

26 


246 

5,879 


Profit/(loss) after tax   

5,023 

4,265 

18 


(236)

3,951 


  



  





Performance Measures



  





Return on average shareholders' equity

7.8%

6.6%

  


(1.9%)

5.8%


Return on average tangible shareholders' equity

9.1%

7.9%

  


(2.2%)

6.9%


Return on average risk weighted assets

1.3%

1.1%

  


(0.1%)

1.0%


Cost: income ratio

64%

67%

  


85%

64%


Compensation: net operating income

38%

42%



46%

39%


Loan loss rate

75bps

77bps

  


75bps

77bps


  



  





Basic earnings/(loss) per share  

34.5p

27.7p

  


(8.5p)

25.1p


Dividend per share  

6.5p

6.0p

  


6.5p

6.0p


   



  





Capital and Balance Sheet  



  





Core Tier 1 ratio  



  


10.9%

11.0%


Risk weighted assets  



  


£387bn

£391bn


Adjusted gross leverage



  


19x

20x


Group liquidity pool  



  


£150bn

£152bn


Net asset value per share  



  


438p

456p


Net tangible asset value per share  



  


373p

391p


Loan: deposit ratio  



  


110%

118%


  



  





Adjusted Profit Reconciliation



  





Adjusted profit before tax



  


7,048 

5,590 


Own credit



  


(4,579)

2,708 


Gains on debt buy-backs



  


1,130 


Gain/(loss) on disposal and impairment of BlackRock investment



  


227 

(1,858)


Provision for PPI redress



  


(1,600)

(1,000)


Provision for interest rate hedging products redress



  


(850)


Goodwill impairment



  


(597)


Losses on acquisitions and disposals



  


(94)


Statutory profit before tax



  


246 

5,879 


 





 





Adjusted

 

Statutory

 

Profit/(Loss) Before Tax by Business

31.12.12

31.12.11


 

31.12.12

31.12.11



£m

£m

% Change

 

£m

£m

% Change

UK

1,472 

1,420 


292 

1,020 

(71)

Europe

(239)

(234)


(239)

(661)

(64)

Africa

468 

830 

(44)


468 

832 

(44)

Barclaycard

1,506 

1,208 

25 


1,086 

561 


Retail and Business Banking (RBB)

3,207 

3,224 

(1)


1,607 

1,752 

(8)

Investment Bank

4,063 

2,965 

37 


4,063 

2,965 

37 

Corporate Banking

551 

204 

  


(299)


Corporate and Investment Banking

4,614 

3,169 

46 


3,764 

2,973 

27 

Wealth and Investment Management

315 

207 

52 


315 

207 

52 

Head Office and Other Operations

(1,088)

(1,010)


(5,440)

947 


Total profit before tax

7,048 

5,590 

26 


246 

5,879 





  






Chief Executive's Statement

2012 was a difficult year for Barclays. In June we reached a settlement with various regulators regarding the Bank's misconduct in relation to LIBOR and EURIBOR. We know that we need to change the way we do business if we are going to regain the trust of our various stakeholders and begin to restore our reputation. The process will take time, but we are committed to transforming Barclays.

We have defined our goal as becoming the 'Go-To' bank, an ambition for Barclays to be the instinctive bank of choice for all those with whom we engage. We want that choice to be both rational and emotional - because of what we deliver (our performance), and how we deliver (our values).

In the Autumn, I established a programme, which we called 'TRANSFORM', as the route through which we will become the 'Go-To' bank. That programme is made up of three parts, each with a distinct objective, they are:

1) Turnaround: To stabilise the organisation, ensuring short-term momentum is maintained while preparing the organisation for the change to come.

 2) Return Acceptable Numbers: To improve business returns through defining and executing a plan to deliver a return on equity above the cost of equity.

3) Sustain Forward Momentum: To become the 'Go-To' bank for all of our stakeholders - customers and clients, colleagues, investors and wider society.

Over the past five months, we have actively engaged and listened carefully to a wide range of our stakeholders and crafted robust plans to deliver each of these objectives, consistent with their needs. We have a deep appreciation of the scale of the task ahead as a result.

In the period post my appointment, my focus was on stabilising the organisation and maintaining momentum in the business. Colleagues across the business rose to that challenge, and we were able to deliver adjusted profit before tax for the year ended 31 December 2012, of £7bn - a 26% increase on 2011. That is a good achievement given the context in which we operated for much of the year. Our statutory profit before tax declined to £246m, primarily reflecting a £4.6bn own credit charge, and provisions of £1.6bn and £850m for PPI and interest rate hedging products redress, respectively.

Despite the ongoing global economic and market challenges, adjusted income increased 2% to £29.0bn and impairments improved 5%, decreasing to £3.6bn. We were also able to reduce our adjusted operating expenses by 3% to £18.5bn and improve our adjusted cost to income ratio to 64%. Consistent with the commitment that we made to shareholders last year, and despite the strong performance of our business in 2012, we lowered incentives by 16%, taking our compensation: net income ratio in the Group down to 38% (2011: 42%), and our compensation:income ratio in the Investment Bank was down to 39% (2011: 47%).

We were able to provide £44bn in gross new lending to UK households and businesses, including an estimated £5.7bn of net new lending under the Funding for Lending Scheme. Barclays was the leading provider of loans to UK households and businesses under the National Loan Guarantee Scheme and the FLS through Q3 121 with strong growth continuing, particularly to individuals and households through Q4. Moreover, the Investment Bank raised over £830bn in financing for businesses and governments globally, ranking it the fourth largest provider of financing globally.

Barclays has a proud history of serving the broader needs of society while also delivering good business results. In the UK during 2012 we continued that tradition. We welcomed our 500th apprentice in January 2013 and are on track to meet our commitment to recruit 1,000 apprentices by the middle of 2013. We renewed our global partnership with UNICEF, committing to invest a further £5m over three years in programmes to develop the skills and employability of disadvantaged young people in emerging economies. Nearly 68,000 Barclays colleagues provided their time, skills and money to charitable causes and we invested a total of £64m in community programmes globally in 2012.

Regulators and governments rightly want to be sure that the banking system is robust. Barclays continues to be at the forefront of work to introduce Resolution and Recovery Plans. Our Core Tier 1 ratio remained strong at 10.9%, we reduced risk weighted assets to £387bn and maintained a liquidity pool of £150bn. In November, Barclays successfully placed $3bn of Contingent Capital Notes in the market, reinforcing the market's view that Barclays is financially robust.

Our adjusted return on equity improved to 7.8% from 6.6%, with improvements in the majority of our businesses. However, there is still much work to be done to ensure that our return on equity exceeds our cost of equity on a sustainable basis.

Despite the challenges, Barclays performance enabled us to pay a full year dividend of 6.5p.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1     Cumulative net stock lending for Q3 2012 as per Bank of England publication in December 2012: http://www.bankofengland.co.uk/markets/Pages/FLS/
data.aspx.

 

Chief Executive's Statement

While I take pride in and comfort from Barclays performance in 2012, I understand that much more is expected of us as we move forward, in particular the need for our shareholders to receive an appropriate return. Highlights of our future plans developed through our TRANSFORM programme are contained in a separate announcement published this morning. Those make clear that our intention is to create a material improvement in return on equity over the medium term and with that a significant improvement in the dividend pay-out rate.

But how we do things at Barclays in the future will be every bit as important as what we do. In January of this year, we launched Barclays new purpose and values - a set of standards that will apply consistently across all businesses and serve as the basis against which the performance of every colleague and every business across the organisation will be assessed and rewarded.

Our Purpose is simple: to help people achieve their ambitions - in the right way.

Our Values appear simple but have deep implications for the behaviour that we expect of each and every colleague: Respect, Integrity, Service, Excellence and Stewardship.

The pursuit of profit that is achieved in ways inconsistent with that purpose and those values will not be tolerated. I believe Barclays will only be a valuable business if it is a values-driven business. We must operate to the highest standards if our stakeholders are to trust us and bring their business to Barclays. Our long-term performance depends on it.

We know that we have a great deal of work to do. We know that we will be judged by our actions, not our words. We are completely committed to becoming the 'Go-To' bank - for our customers and clients; colleagues; investors; and wider society.

Antony Jenkins, Chief Executive


Group Finance Director's Review

Income Statement

- Adjusted profit before tax increased 26% to £7,048m. Adjusted results provide a more consistent basis for comparing business performance between periods

- Statutory profit before tax decreased to £246m (2011: £5,879m), including own credit charge of £4,579m (2011: gain of £2,708m), gain on disposal of BlackRock investment of £227m (2011: impairment/loss of £1,858m), £1,600m (2011: £1,000m) provision for PPI redress, and £850m (2011: £nil) provision for interest rate hedging products redress

- Adjusted return on average shareholders' equity increased to 7.8% (2011: 6.6%) with significant improvements in UK RBB, Barclaycard, Investment Bank, Corporate Banking and Wealth and Investment Management

- Adjusted income was up 2% at £29,043m despite challenging economic conditions, the continuing low interest rate environment and non-recurrence of £1,061m gains from the disposal of hedging instruments in 2011

-    Total net interest income reduced 5% to £11,639m. Customer net interest income for RBB, Corporate Banking and Wealth and Investment Management was stable at £9,816m while the net interest margin for these businesses declined 18bps to 185bps, principally reflecting the non-recurrence of gains from the disposal of hedging instruments in 2011

-    Total income in the Investment Bank increased 13% to £11,722m driven by increases in Fixed Income, Currencyand Commodities (FICC), Equities and Prime Services, and Investment Banking, particularly in the Americas

- Credit impairment charges were down 5% at £3,596m, principally reflecting improvements in Barclaycard, Corporate Banking and UK RBB. This was partially offset by higher charges in the Investment Bank, Africa RBB and Europe RBB

-    Annualised loan loss rate decreased to 75bps (2011: 77bps) reflecting a 6% reduction inimpairment charge on loans and advances and a 3% contraction in gross loans and advances principally due to lower balances in the Investment Bank

- Adjusted operating expenses were down 3% to £18,539m

-    Non-performance costs decreased 3% to £16,114m after absorbing regulatory penalties of £290m (2011: £nil) relating to the industry-wide investigation into the setting of interbank offered rates and a £345m (2011: £325m) UK bank levy charge

-    Performance costs reduced 4% to £2,425m despite an increase in the charge for bonuses deferred from prior years to £1,223m (2011: £995m). The Investment Bank compensation: income ratio reduced to 39% (2011: 47%) including charges for bonuses deferred from prior years of £1,117m (2011: £907m)

- The adjusted cost: income ratio decreased to 64% (2011: 67%). The Investment Bank cost: net operating income ratio improved to 64% (2011: 71%)

- The tax charge on adjusted profits increased to £2,025m (2011: £1,325m), giving an adjusted effective tax rate of 28.7% (2011: 23.7%). The tax charge on statutory profits decreased to £482m (2011: £1,928m) after including a tax credit of £1,543m (2011: charge of £603m) on the charge for own credit, provisions for PPI and interest rate hedging product redress and other adjusting items, which mainly received relief at the UK rate of 24.5% (2011: 26.5%), resulting in a significant increase in the statutory effective tax rate

Balance Sheet 

- Total loans and advances declined to £466bn (2011: £479bn) with increases in UK mortgage lending and Barclaycard offset by reductions in lending in the Investment Bank, Europe RBB and Corporate Bank

- Total assets reduced 5% to £1,490bn, principally reflecting lower derivative assets as spreads tightened within the credit derivative portfolio. This was partially offset by increased reverse repurchase agreements and other similar secured lending due to higher matched book trading

- Total shareholders' equity (including non-controlling interests) reduced £2.2bn to £63.0bn, driven by the loss for the year, dividends paid and currency translation differences due to depreciation of US dollar and South African Rand against Sterling. This was partially offset by positive available for sale and cash flow hedge reserve movements

- Net asset value per share reduced to 438p (2011: 456p) and the net tangible asset value per share to 373p (2011: 391p)

- Adjusted gross leverage decreased to 19x (2011: 20x) and moved within a month end range of 19x to 23x. Excluding the liquidity pool, adjusted gross leverage decreased to 16x (2011: 17x)

Capital Management 

- Core Tier 1 ratio was 10.9% (2011: 11.0%), reflecting a 2% reduction in Core Tier 1 capital to £42.1bn partially offset by a 1% reduction in risk weighted assets to £387bn



Group Finance Director's Review

- Barclays generated £1.8bn Core Tier 1 capital from earnings, which excludes movements in own credit, after absorbing the impact of dividends paid and provisions for customer redress. The increase from earnings was more than offset by a £1.2bn increase in the defined benefit pension adjustment and a £1.6bn reduction in reserves due to foreign exchange movements

- Risk weighted assets reduced 1% to £387bn principally due to reductions in risk exposures, including the sell down of legacy assets, and the impact of foreign exchange movements, largely offset by an increased operational risk charge and methodology and model changes

- During the fourth quarter, the Group successfully placed $3bn of Tier 2 Contingent Capital Notes (CCNs), which was well received by the market

- We have estimated our proforma CRD IV Common Equity Tier 1 (CET1) ratio on both a transitional and fully loaded basis, reflecting our current interpretation of the rules and assuming they were applied as at 1 January 2013. As at that date Barclays proforma transitional CET1 ratio would be approximately 10.6% and the fully loaded CET1 ratio would be approximately 8.2%

Funding and Liquidity 

- The Group maintained a strong liquidity position throughout 2012. As at 31 December 2012, the Group estimates it was compliant with both the LCR requirement at 126% and the NSFR requirement at 104% based upon the Basel standards

- The liquidity pool was £150bn(2011: £152bn) remaining well within our liquidity risk appetite. During 2012 the month end liquidity pool ranged from £150bn to £173bn (2011: £140bn to £167bn) 

- The loan to deposit ratio for the Group was 110% (2011: 118%) and for RBB, Corporate Banking and Wealth and Investment Management was 102% (2011: 111%). The loan to deposit and secured funding ratio was 88%
(2011: 101%)

- Total wholesale funding outstanding (excluding repurchase agreements) was £240bn (2011: £265bn), of which £101bn matures in less than one year (2011: £130bn)

- The wholesale funding requirement supporting retail and wholesale businesses reduced with the continued increase in customer deposits and further reduction of legacy assets. £27bn of term debt matured in 2012 and the group issued approximately £28bn of term funding. The Group has £18bn of term debt maturing in 2013. £6bn was raised through Barclays participation in the Bank of England's FLS supporting lending into the real economy to individuals, households and private non-financial companies

Other Matters

- During Q4 Barclays determined that it is appropriate to provide a further £600m for PPI redress, principally as a result of a higher than anticipated response rate to pro-active mailings. This brings the cumulative provision to £2.6bn, of which £1.6bn had been utilised as at 31 December 2012. Based on claims experience to date and anticipated future volumes, the provision represents Barclays best estimate of expected future PPI redress payments and claims management costs. Barclays will continue to monitor actual claims volumes and the assumptions underlying the calculation of the PPI provision

- Following the outcome of its pilot review of Interest Rate Hedging Products sold to small and medium-sized enterprises, and the Financial Services Authority's report on this review and those conducted by a number of other banks, Barclays has increased its provision for redress by £400m at Q4 2012. This brings the cumulative provision to £850m, of which £36m had been utilised as at 31 December 2012. The main review and redress exercise will commence shortly and the appropriate provision level will be kept under ongoing review as it progresses

Dividends

- It is our policy to declare and pay dividends on a quarterly basis. We will pay a final cash dividend for 2012 of 3.5p per share on 15 March 2013, giving a total declared dividend for 2012 of 6.5p per share

Outlook

- Performance in January has shown a good start to the year across the Group. As part of the TRANSFORM programme, we continue to focus on costs, returns and capital to drive sustainable performance improvements

Chris Lucas, Group Finance Director


Barclays Results by Quarter

Barclays Results by Quarter

Q412

Q312

Q212

Q112


Q411

Q311

Q211

Q111

  

£m

£m

£m

£m


£m

£m

£m

£m

Adjusted basis  










Total income net of insurance claims  

6,696 

6,872 

7,337 

8,138 


6,212 

7,001 

7,549 

7,750 

Credit impairment charges and other provisions  

(939)

(825)

(1,054)

(778)


(951)

(1,023)

(907)

(921)

Net operating income  

5,757 

6,047 

6,283 

7,360 


5,261 

5,978 

6,642 

6,829 

Operating expenses (excluding UK bank levy)  

(4,362)

(4,341)

(4,542)

(4,949)


(4,414)

(4,659)

(4,940)

(4,842)

UK bank levy  

(345)


(325)

Other net income

44 

21 

41 

34 


18 

19 

17 

Adjusted profit before tax  

1,094 

1,727 

1,782 

2,445 


528 

1,337 

1,721 

2,004 

   










Adjusting items  










Own credit  

(560)

(1,074)

(325)

(2,620)


(263)

2,882 

440 

(351)

Gains on debt buy-backs  


1,130 

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

227 


(1,800)

(58)

Provision for PPI redress

(600)

(700)

(300)


(1,000)

Provision for interest rate hedging products redress

(400)

(450)


Goodwill impairment  


(550)

(47)

(Losses)/gains on acquisitions and disposals  


(32)

(67)

Statutory (loss)/profit before tax

(466)

(47)

1,234 

(475)


813 

2,422 

989 

1,655 

Statutory (loss)/ profit after tax

(610)

(106)

817 

(337)


602 

1,366 

742 

1,241 

  










Attributable to:










Equity holders of the parent

(835)

(276)

620 

(550)


356 

1,153 

486 

1,012 

Non-controlling interests

225 

170 

197 

213 


246 

213 

256 

229 

  










Adjusted basic earnings per share  

5.2p

7.5p

8.2p

13.6p


1.2p

6.9p

8.9p

10.7p

Adjusted cost: income ratio  

70%

63%

62%

61%


76%

67%

65%

62%

Basic (loss)/earnings per share  

(6.8p)

(2.3p)

5.1p

(4.5p)


2.9p

9.7p

4.0p

8.5p

Cost: income ratio  

93%

87%

69%

95%


75%

47%

75%

65%

  










 

Adjusted Profit/(Loss) Before Tax by Business

Q412

Q312

Q212

Q112


Q411

Q311

Q211

Q111

  

£m

£m

£m

£m


£m

£m

£m

£m

UK

326 

400 

412 

334 


222 

494 

416 

288 

Europe

(88)

(59)

(49)

(43)


(125)

52 

(102)

(59)

Africa

138 

56 

97 

177 


269 

219 

195 

147 

Barclaycard

356 

397 

404 

349 


259 

378 

275 

296 

Retail and Business Banking

732 

794 

864 

817 


625 

1,143 

784 

672 

Investment Bank

858 

937 

1,002 

1,266 


267 

388 

977 

1,333 

Corporate Banking

107 

98 

127 

219 


37 

113 

33 

21 

Corporate and Investment Banking

965 

1,035 

1,129 

1,485 


304 

501 

1,010 

1,354 

Wealth and Investment Management

115 

79 

61 

60 


54 

65 

42 

46 

Head Office and Other Operations

(718)

(181)

(272)

83 


(455)

(372)

(115)

(68)

Total profit before tax

1,094 

1,727 

1,782 

2,445 


528 

1,337 

1,721 

2,004 


Condensed Consolidated Financial Statements

Condensed Consolidated Income Statement

  

  

Year Ended

Year Ended

Continuing Operations

  

31.12.12

31.12.11

  

Notes1

£m

£m

Net interest income

2

11,639 

12,201 

Net fee and commission income

  

8,582 

8,622 

Net trading income

  

3,025 

7,660 

Net investment income

  

817 

2,305 

Net premiums from insurance contracts

  

896 

1,076 

Net gain on disposal of investment in BlackRock, Inc.

  

227 

Other income

  

105 

1,169 

Total income  

  

25,291 

33,033 

Net claims and benefits incurred on insurance contracts

  

(600)

(741)

Total income net of insurance claims

  

24,691 

32,292 

Credit impairment charges and other provisions

  

(3,596)

(3,802)

Impairment of investment in BlackRock, Inc.

  

(1,800)

Net operating income

  

21,095 

26,690 

  

  



Staff costs

  

(10,447)

(11,407)

Administration and general expenses

3

(6,643)

(6,356)

Depreciation of property, plant and equipment

  

(669)

(673)

Amortisation of intangible assets

  

(435)

(419)

UK Bank Levy

  

(345)

(325)

Operating expenses excluding goodwill impairment and provisions for PPI and interest rate hedging products redress

  

(18,539)

(19,180)

Goodwill impairment

  

(597)

Provision for PPI redress

12

(1,600)

(1,000)

Provision for interest rate hedging products redress

12

(850)

Operating expenses

  

(20,989)

(20,777)

  

  



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

  

140 

(34)

Profit before tax

  

246 

5,879 

Tax

4

(482)

(1,928)

(Loss)/Profit after tax

  

(236)

3,951 

  

  



Attributable to:

  



Equity holders of the parent

  

(1,041)

3,007 

Non-controlling interests

5

805 

944 

(Loss)/Profit after tax

  

(236)

3,951 

  

  



Earnings per Share from Continuing Operations

  



Basic (loss)/earnings per ordinary share

6

(8.5p)

25.1p

Diluted (loss)/earnings per ordinary share

6

(8.5p)

24.0p

 

 

  

 

 

 

 

 

 

 

 

 

 

1        For notes to the Financial Statements see pages 84 to 100.

 

 

Condensed Consolidated Financial Statements

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income


  

Year Ended

Year Ended

Continuing Operations

  

31.12.12

31.12.11


Notes1

£m

£m

(Loss)/profit after tax

  

(236)

3,951 


  



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

  



Currency translation differences

15

(1,578)

(1,607)

Available for sale investments

15

546 

1,374 

Cash flow hedges

15

662 

1,263 

Other

  

95 

(74)

Other comprehensive income for the year

  

(275)

956 


  



Total comprehensive income for the year

  

(511)

4,907 


  



Attributable to:

  



Equity holders of the parent

  

(1,107)

4,576 

Non-controlling interests

  

596 

331 

Total comprehensive income for the year

  

(511)

4,907 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1        For notes, see pages 84 to 100.



Condensed Consolidated Financial Statements

Condensed Consolidated Balance Sheet

  

  

As at

As at

  

  

31.12.12

31.12.11

Assets

Notes1

£m

£m

Cash and balances at central banks

  

86,175 

106,894 

Items in the course of collection from other banks

  

1,456 

1,812 

Trading portfolio assets

  

145,030 

152,183 

Financial assets designated at fair value

  

46,061 

36,949 

Derivative financial instruments

8

469,146 

538,964 

Loans and advances to banks

  

40,489 

47,446 

Loans and advances to customers

  

425,729 

431,934 

Reverse repurchase agreements and other similar secured lending

  

176,956 

153,665 

Available for sale investments

  

75,109 

68,491 

Current and deferred tax assets

4

3,268 

3,384 

Prepayments, accrued income and other assets

  

4,360 

4,563 

Investments in associates and joint ventures

  

570 

427 

Goodwill and intangible assets

10

7,915 

7,846 

Property, plant and equipment

  

5,754 

7,166 

Retirement benefit assets

13

2,303 

1,803 

Total assets

  

1,490,321 

1,563,527 

  

  



Liabilities

  



Deposits from banks

  

77,010 

91,116 

Items in the course of collection due to other banks

  

1,573 

969 

Customer accounts

  

385,707 

366,032 

Repurchase agreements and other similar secured borrowing

  

217,342 

207,292 

Trading portfolio liabilities

  

44,794 

45,887 

Financial liabilities designated at fair value

  

78,280 

87,997 

Derivative financial instruments  

8

462,468 

527,910 

Debt securities in issue

  

119,581 

129,736 

Accruals, deferred income and other liabilities

  

12,232 

12,580 

Current and deferred tax liabilities

4

1,340 

2,092 

Subordinated liabilities

11

24,018 

24,870 

Provisions  

12

2,766 

1,529 

Retirement benefit liabilities

13

253 

321 

Total liabilities

  

1,427,364 

1,498,331 

  

  



Shareholders' Equity

  



Shareholders' equity excluding non-controlling interests

  

53,586 

55,589 

Non-controlling interests

5

9,371 

9,607 

Total shareholders' equity

  

62,957 

65,196 

  

  



Total liabilities and shareholders' equity

  

1,490,321 

1,563,527 

 

 

  

 

1        For notes, see pages 84 to 100.



Condensed Consolidated Financial Statements

Condensed Consolidated Statement of Changes in Equity

Year Ended 31.12.12

Called up Share Capital and Share Premium

Other Reserves

Retained Earnings

Total

Non-controlling Interests

Total

Equity


£m

£m

£m

£m

£m

£m

Balance at 1 January 2012

12,380 

3,837 

39,372 

55,589 

9,607 

65,196 

(Loss)/Profit after tax

(1,041)

(1,041)

805 

(236)

Currency translation movements

(1,319)

(1,319)

(259)

(1,578)

Available for sale investments

502 

502 

44 

546 

Cash flow hedges

657 

657 

662 

Other

94 

94 

95 

Total comprehensive income for the year

(160)

(947)

(1,107)

596 

(511)

Issue of shares under employee share schemes

97 

717 

814 

814 

Increase in treasury shares

(979)

(979)

(979)

Vesting of shares under employee share schemes

946 

(946)

Dividends paid

(733)

(733)

(694)

(1,427)

Other reserve movements

(138)

(136)

Balance at 31 December 2012

12,477 

3,644 

37,465 

53,586 

9,371 

62,957 


  

  



  


Year Ended 31.12.11

  

  



  


Balance at 1 January 2011

12,339 

1,754 

36,765 

50,858 

11,404 

62,262 

Profit after tax

3,007 

3,007 

944 

3,951 

Currency translation movements

(1,009)

(1,009)

(598)

(1,607)

Available for sale investments

1,380 

1,380 

(6)

1,374 

Cash flow hedges

1,290 

1,290 

(27)

1,263 

Other

(92)

(92)

18 

(74)

Total comprehensive income for the year

1,661 

2,915 

4,576 

331 

4,907 

Issue of shares under employee share schemes

41 

838 

879 

879 

Increase in treasury shares

(165)

(165)

(165)

Vesting of shares under employee share schemes

499 

(499)

Dividends paid

(660)

(660)

(727)

(1,387)

Redemption of Reserve Capital Instruments

(1,415)

(1,415)

Other reserve movements

88 

13 

101 

14 

115 

Balance at 31 December 2011

12,380 

3,837 

39,372 

55,589 

9,607 

65,196 


  

  



  


 

 

  

 

 

 

 

 

 

 

 

 

 

 

1     Details of Share Capital and Other Reserves are shown on page 92.

2     Details of Non-controlling Interests are shown on page 86. Included within other reserve movement of the £138m, £91m relates to the disposal of the Iveco Finance business.  



Condensed Consolidated Financial Statements

Condensed Consolidated Cash Flow Statement



Year Ended

Year Ended

Continuing Operations

31.12.12

31.12.11


£m

£m

Profit before tax

246 

5,879 

Adjustment for non-cash items

12,541 

8,193 

Changes in operating assets and liabilities

(24,987)

16,693 

Corporate income tax paid

(1,516)

(1,686)

Net cash from operating activities

(13,716)

29,079 

Net cash from investing activities

(7,099)

(1,912)

Net cash from financing activities

(2,842)

(5,961)

Effect of exchange rates on cash and cash equivalents

(4,109)

(2,933)

Net (decrease)/increase in cash and cash equivalents

(27,766)

18,273 

Cash and cash equivalents at beginning of the period

149,673 

131,400 

Cash and cash equivalents at end of the period

121,907 

149,673 




 

 

 



Results by Business

UK Retail and Business Banking


  


  

  


Year Ended

Year Ended

  

Income Statement Information


31.12.12

31.12.11

  

  


£m

£m

% Change

Net interest income


3,227 

3,413 

(5)

Net fee and commission income


1,154 

1,157 

Net investment income


17 

  

Net premiums from insurance contracts


74 

92 

(20)

Other expense


(1)

(1)

  

Total income


4,454 

4,678 

(5)

Net claims and benefits incurred under insurance contracts


(33)

(22)

  

Total income net of insurance claims


4,421 

4,656 

(5)

Credit impairment charges and other provisions


(269)

(536)

(50)

Net operating income


4,152 

4,120 

  


  


  

Operating expenses (excluding provision for PPI redress)


(2,684)

(2,702)

(1)

Provision for PPI redress


(1,180)

(400)

  

Operating expenses


(3,864)

(3,102)

25 

  


  


  

Other net income


  

Profit before tax


292 

1,020 

(71)

  


  


  

Adjusted profit before tax


1,472 

1,420 

  


  


  

Balance Sheet Information


  


  

Loans and advances to customers at amortised cost


£128.2bn

£121.2bn

  

Customer deposits


£116.0bn

£111.8bn

  

Total assets


£136.7bn

£127.8bn

  

Risk weighted assets


£38.8bn

£34.0bn

  

  


  


  

  

Adjusted1

Statutory

 

Performance Measures

31.12.12

31.12.11

31.12.12

31.12.11

Return on average equity

16.0%

14.9%

3.1%

10.6%

Return on average risk weighted assets

3.1%

3.0%

0.6%

2.1%

Cost: income ratio

61%

58%

87%

67%

Loan loss rate (bps)

21 

44 

21 

44 

  


  


  

Key Facts


31.12.12

31.12.11

  

90 day arrears rates - UK personal loans


1.3%

1.7%

  

90 day arrears rates - home loans


0.3%

0.3%

  

Number of UK current accounts


11.7m

11.9m

  

Number of UK savings accounts


15.4m

15.1m

  

Number of UK mortgage accounts


945,000 

930,000 

  

Number of Barclays Business customers


765,000 

785,000 

  

Average LTV of mortgage portfolio


46%

44%

  

Average LTV of new mortgage lending


56%

54%

  

Number of branches


1,593 

1,625 

  

Number of ATMs


4,166 

3,629 

  

Number of employees (full time equivalent)


34,800 

34,100 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1         Adjusted profit before tax and adjusted performance measures exclude the impact of the provision for PPI redress of £1,180m (2011: £400m).



Results by Business

UK Retail and Business Banking

- Loans and advances to UK customers and clients grew £7bn, including an estimated £4.4bn under the FLS where we have committed to pass all associated funding cost benefits to customers

- Attracted £4.2bn of UK deposits, principally through growth in ISAs and retail bonds

- From 1 December 2012, all branch and call centre staff will receive incentive payments based solely on customer satisfaction. The scheme will reward the customer service performance of branches and areas rather than that of individuals

2012 compared to 2011

- Income declined 5% to £4,421m reflecting higher funding costs and reduced contribution from structural hedges, including non recurrence of gains from the disposal of hedging instruments in 2011

- Net interest income declined 5% to £3,227m with net interest margin down 14bps to 137bps principally due to reduced contributions from structural hedges

-    Customer asset margin decreased 15bps to 107bps reflecting higher funding costs. Average customer assets increased 5% to £124.3bn driven by mortgage growth

-    Customer liability margin increased 10bps to 97bps reflecting an increase in funding rates and therefore the value generated from customer liabilities. Average customer liabilities increased 4% to £111.8bn due to personal savings deposit growth

- Non-interest income declined 4% to £1,194m reflecting lower net insurance income

- Credit impairment charges decreased 50% to £269m reflecting improvements across all portfolios, principally in personal unsecured lending

-    Loan loss rate reduced to 21bps (2011: 44bps)

-    90 day arrear rates improved 33bps on UK personal loans to 1.3% and deteriorated4bps on UK mortgages to 0.3%

- Adjusted operating expenses remained broadly flat at £2,684m (2011: £2,702m)

- Adjusted profit before tax improved 4% to £1,472m. Statutory profit before tax declined 71% to £292m after £1,180m (2011: £400m) provision for PPI redress

- Adjusted return on average equity improved to 16.0% (2011: 14.9%). Statutory return on average equity declined to 3.1% (2011: 10.6%)

- Total loans and advances to customers increased 6% to £128.2bn driven by growth in mortgage balances

-    Mortgage balances of £114.7bn at 31 December 2012 (2011: £107.8bn). Gross new mortgage lending of £18.2bn (2011: £17.2bn) and mortgage redemptions of £11.3bn (2011: £10.7bn), resulted in net new mortgage lending of £6.9bn (2011: £6.5bn)

-    Average Loan to Value (LTV) ratio for the mortgage portfolio (including buy to let) on a current valuation basis was 46% (31 December 2011: 44%). Average LTV of new mortgage lending was 56% (31 December 2011: 54%)

- Total customer deposits increased 4% to £116.0bn primarily driven by growth in savings from ISAs and retail bonds

- Risk weighted assets increased 14% to £38.8bn principally due to mortgage balance growth, an increased operational risk charge and adoption of a more comprehensive approach to loans subject to forbearance

Q4 12 compared to Q3 12

- Adjusted profit before tax declined 19% to £326m

-    Income declined 4% to £1,086m primarily due to provisions taken to remedy historical interest charges incorrectly applied to customers

-    Impairment decreased £5m to £71m 

-    Adjusted operating expenses increased 6% to £693m mainly due to the transfer of claims management costs to the PPI provision in Q3 12

- Statutory loss before tax was £4m (Q3 12: £150m) including £330m (Q3 12: £550m) additional provision for PPI redress

- Loans and advances to customers increased to £128.2bn (30 September 2012: £126.0bn) reflecting steady growth in mortgage balances. Customer deposits continued to increase to £116.0bn (30 September 2012: £114.5bn)



 

Results by Business

Europe Retail and Business Banking


  



  


Year Ended

Year Ended


Income Statement Information


31.12.12

31.12.11


  


£m

£m

% Change

Net interest income  


599 

786 

(24)

Net fee and commission income


284 

429 

(34)

Net trading income



Net investment income


52 

91 

(43)

Net premiums from insurance contracts


331 

463 

(29)

Other income/(expense)


(49)


Total income


1,274 

1,729 

(26)

Net claims and benefits incurred under insurance contracts


(359)

(503)

(29)

Total income net of insurance claims


915 

1,226 

(25)

Credit impairment charges and other provisions


(328)

(261)

26 

Net operating income


587 

965 

(39)

  


  



Operating expenses (excluding goodwill impairment)


(839)

(1,211)

(31)

Goodwill impairment


(427)


Operating expenses  


(839)

(1,638)

(49)

  


  



Other net income


13 

12 

Loss before tax


(239)

(661)

(64)

  


  



Adjusted loss before tax


(239)

(234)

  


  



Balance Sheet Information


  



Loans and advances to customers at amortised cost


£40.0bn

£43.6bn


Customer deposits


£17.6bn

£16.4bn


Total assets


£47.1bn

£51.3bn


Risk weighted assets


£17.1bn

£17.4bn


  


  



  

Adjusted1

Statutory

 

Performance Measures

31.12.12

31.12.11

31.12.12

31.12.11

Return on average equity

(8.0%)

(6.0%)

(8.0%)

(21.8%)

Return on average risk weighted assets

(1.1%)

(0.9%)

(1.1%)

(3.3%)

Cost: income ratio

92%

99%

92%

134%

Loan loss rate (bps)

80 

54 

80 

54 

  


  



Key Facts


31.12.12

31.12.11


90 day arrears rate - Spain home loans


0.7%

0.5%


90 day arrears rate - Portugal home loans


0.7%

0.6%


90 day arrears rate - Italy home loans


1.0%

1.0%


90 day arrears rate - Total Europe RBB home loans


0.8%

0.7%


30 day arrears rate - cards


6.2%

5.9%


Number of customers


2.7m

2.7m


  


  



Number of branches  


923 

978 


Number of sales centres


219 

250 


Number of distribution points


1,142 

1,228 


  


  



Number of employees (full time equivalent)


7,900 

8,500 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1        Adjusted loss before tax and adjusted performance measures excludes the impact of goodwill impairment £nil (2011: £427m).



Results by Business

Europe Retail and Business Banking

- Strategic action taken to significantly reduce redenomination risk and reposition the business, considering the ongoing economic challenges

2012 compared to 2011

- Income declined 25% to £915m reflecting the challenging economic environment across Europe and non-recurrence of gains from disposal of hedging instruments in 2011

- Net interest income declined 24% to £599m

-    Customer asset margin decreased 4bps to 83bps with net interest margin down 20bps to 108bps, driven by higher funding costs partially offset by product re-pricing

-    Average customer assets decreased 7% to £40.8bn driven by active management to reduce funding mismatch

-    Customer liability margin decreased 27bps to 38bps and average customer liabilities decreased 16% to £14.8bn, reflecting competitive pressures

- Non-interest income declined 28% to £316m, reflecting lower commissions mainly from Italy mortgage sales and lower sales of investment products

- Credit impairment charges increased 26% to £328m due to deterioration in credit performance across Europe reflecting current economic conditions

-    Loan loss rate increased to 80bps (2011: 54bps)

-    90 day arrears rate for home loans increased 19bps to 0.7% in Spain, increased 5bps to 0.7% in Portugal and increased 6bps to 1.0% in Italy

- Adjusted operating expenses decreased 31% to £839m, reflecting non recurrence of 2011 restructuring charges of £189m and related ongoing cost savings

- Adjusted loss before tax increased 2% to £239m while adjusted return on average equity declined to negative 8.0% (2011: negative 6.0%) primarily due to lower average capital resulting from the 2011 goodwill impairment write off  

- Loans and advances to customers decreased 8% to £40.0bn reflecting currency movements and active management to reduce funding mismatch. This change has driven an 8% reduction in total assets to £47.1bn

- Customer deposits increased 7% to £17.6bn, reflecting active management to reduce funding mismatch

- Risk weighted assets decreased 2% to £17.1bn principally due to reductions in loans and advances and currency movements, partially offset by an increased operational risk charge and portfolio deterioration in Spain

 Q4 12 compared to Q3 12

- Loss before tax increased 49% to £88m driven by a decline in income reflecting the challenging economic environment in Europe:

-    Income declined 4% to £210m driven by lower non-interest income from commissions and investment products

-    Impairment increased 25% to £95m mainly in Spain reflecting a decline in property values

-    Operating expenses remained in line with Q3 12

- Loans and advances to customers remained stable at £40.0bn and customer deposits decreased 3% to £17.6bn reflecting competitive pressures


Results by Business

Africa Retail and Business Banking


  


  

  


Year Ended

Year Ended

  

Income Statement Information


31.12.12

31.12.11

  

  


£m

£m

% Change

Net interest income  


1,751 

1,978 

(11)

Net fee and commission income


1,101 

1,196 

(8)

Net trading income


69 

70 

(1)

Net investment income


56 

  

Net premiums from insurance contracts


417 

432 

(3)

Other income


21 

54 

  

Total income


3,364 

3,786 

(11)

Net claims and benefits incurred under insurance contracts


(207)

(215)

(4)

Total income net of insurance claims


3,157 

3,571 

(12)

Credit impairment charges and other provisions


(646)

(466)

39 

Net operating income


2,511 

3,105 

(19)

  


  


  

Operating expenses  


(2,053)

(2,279)

(10)

  


  


  

Other net income


10 

67 

Profit before tax


468 

832 

(44)

  


  


  

Adjusted profit before tax


468 

830 

(44)

  


  


  

Balance Sheet Information


  


  

Loans and advances to customers at amortised cost


£31.7bn

£34.4bn

  

Customer deposits


£22.0bn

£22.6bn

  

Total assets


£44.8bn

£48.2bn

  

Risk weighted assets


£27.0bn

£30.3bn

  

  


  


  

  

Adjusted1

Statutory

 

Performance Measures

31.12.12

31.12.11

31.12.12

31.12.11

Return on average equity

3.8%

9.7%

3.8%

9.8%

Return on average risk weighted assets

0.9%

1.7%

0.9%

1.7%

Cost: income ratio

65%

64%

65%

64%

Loan loss rate (bps)

194 

129 

194 

129 

  


  


  

Key Facts


31.12.12

31.12.11

  

90 days arrears rate - South African home loans


1.6%

3.2%

  

Number of customers


13.5m

14.5m

  

Number of ATMs


10,468 

10,068 

  

  


  


  

Number of branches  


1,339 

1,354 

  

Number of sales centres


112 

139 

  

Number of distribution points


1,451 

1,493 

  

  


  


  

Number of employees (full time equivalent)


41,700 

43,800 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1     Adjusted profit before tax and adjusted performance measures excludes the impact of profit on disposals of subsidiaries, associates and joint ventures of £nil (2011: £2m).  



Results by Business

Africa Retail and Business Banking

- The proposed combination of Barclays Africa operations and Absa will simplify management and legal structures and will create a leading pan-African financial services business with a platform for further growth

- Retail and Business product suites expanded across the African geographies with multiple product launches including Premier, Bancassurance and Barclays Direct

- Rolled out new online and mobile channels across Africa including Absa online, Pingit, Barclays Mobile and Internet Banking

2012 compared to 2011

- Income declined 12% to £3,157m. Excluding currency movements, income declined 2% reflectingnon-recurrence of gains from the disposal of Group hedging instruments in 2011 and downward commercial property valuations with underlying businesses across Africa remaining flat

- Net interest income declined 11% to £1,751m with the net interest margin down 10bps to 312bps primarily due to lower income generated through non customer related items partially offset by increased higher margin business

-    Customer asset margin increased 34bps to 326bps reflecting a change in composition towards higher margin business

-    Average customer assets decreased 10% to £34.1bn driven by currency movements and a modest decline in the South African mortgage book

-    Customer liability margin decreased 42bps to 234bps driven by a decline in South Africa partially offset by improving margins across a number of other African countries

-    Average customer liabilities decreased 6% to £22.1bn driven by currency movements as deposits continued to grow in South Africa where Absa remains a leader in retail deposits

- Non-interest income declined 12% to £1,406m driven largely by adverse currency movements

- Credit impairment charges increased 39% to £646m. Excluding currency movements impairment charges increased 57% principally reflecting higher loss given default rates and higher levels of write-offs in the South African home loans recovery book and the impact of one large name in the commercial property portfolio in South Africa

-    Loan loss rate increased to 194bps (2011: 129bps)

-    However 90 day arrears rate for home loans decreased by 168bps to 1.6% reflecting improved new business and continuing low interest rate environment

- Operating expenses decreased 10% to £2,053m mainly due to currency movements with underlying business growth broadly in line

- Profit before tax declined 44% to £468m and adjusted return on average equity decreased to 3.8% (2011: 9.7%)

- Loans and advances to customers decreased 8% to £31.7bn mainly due to currency movements and a modest decline in the South African mortgage book

- Customer deposits decreased 3% to £22.0bn. Excluding currency movements customer deposits increased 7% mainly due to growth in South African deposits

- Risk weighted assets decreased 11% to £27.0bn, principally due to foreign exchange movements and a change in approach for sovereign risk weightings, offset by an increased operational risk charge

Q4 12 compared to Q3 12

- Profit before tax increased by £82m to £138m

-    Income remained flat at £767m. Excluding currency movements income increased 7% across Africa primarily due to seasonal activity

-    Impairment decreased 19% to £145m primarily driven by lower impairments in South African retail mortgages

-    Operating expenses decreased 8% to £489m mainly due to currency movements

- Loans and advances to customers decreased 2% to £31.7bn reflecting adverse currency movements partially offset by an increase of 1% in underlying businesses. Customer deposits remained flat at £22.0bn reflecting growth of 3% in local currency deposits offset by currency movements


Results by Business

Barclaycard


  



  


Year Ended

Year Ended


Income Statement Information


31.12.12

31.12.11


  


£m

£m

% Change

Net interest income


2,854 

2,860 

Net fee and commission income


1,271 

1,171 

Net trading loss


(9)

(7)


Net investment income


10 


Net premiums from insurance contracts


36 

42 


Other income


19 

20 


Total income


4,171 

4,096 

Net claims and benefits incurred under insurance contracts


(1)

(1)


Total income net of insurance claims


4,170 

4,095 

Credit impairment charges and other provisions


(979)

(1,259)

(22)

Net operating income


3,191 

2,836 

13 

  


  



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


(1,715)

(1,659)

Provision for PPI redress


(420)

(600)


Goodwill impairment


(47)


Operating expenses


(2,135)

(2,306)

(7)

  


  



Other net income


30 

31 


Profit before tax


1,086 

561 


  


  



Adjusted profit before tax


1,506 

1,208 

25 

  


  



Balance Sheet Information


  



Loans and advances to customers at amortised cost


£32.9bn

£30.1bn


Customer deposits


£2.8bn

£0.6bn


Total assets


£37.5bn

£33.8bn


Risk weighted assets


£36.5bn

£34.2bn


  


  



  

Adjusted1

Statutory

 

Performance Measures

31.12.12

31.12.11

31.12.12

31.12.11

Return on average equity

22.1%

17.4%

15.2%

6.8%

Return on average risk weighted assets

3.3%

2.6%

2.3%

1.2%

Loan loss rate (bps)

282 

391 

282 

391 

Cost: income ratio

41%

41%

51%

56%

  


  



Key Facts


31.12.12

31.12.11


30 day arrears rates - UK cards


2.5%

2.7%


30 day arrears rates - US cards


2.4%

3.1%


30 day arrears rates - South Africa cards


5.2%

4.9%


Total number of Barclaycard customers


28.8m

22.6m


Total average customer assets


£32.5bn

£30.3bn


Payments processed


£240bn

£219bn


Number of merchant relationships


89,000 

87,000 


Number of employees (full time equivalent)


11,000 

10,400 


 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1     Adjusted profit before tax and adjusted performance measures excludes the impact of the provision for PPI redress of £420m (2011: £600m) and goodwill impairment of £nil (2011: £47m).



Results by Business

Barclaycard

- Continued to grow UK and International businesses, and lead in payments innovation, with10% increase in payments processed to £240bn and 9% increase in loans and advances to customers including £0.7bn new lending through FLS

- Strengthened funding profile; raised customer deposits, including $1.4bn in the US and €1.7bn in Germany, and launched $1bn of securitisation in the US  

- Successful integration of acquisitions and focused cost management driving down the cost per account

2012 compared to 2011

- Income increased 2% to £4,170m reflecting continued growth across the business and contributions from portfolio acquisitions. This was partially offset by higher funding costs, non-recurrence of gains from the disposal of hedging instruments in 2011 and depreciation of Rand against Sterling

-    UK income increased 1% to £2,616m including contribution from 2011 portfolio acquisitions and business growth offset by increased funding costs

-    International income improved 7% to £1,554m driven by higher US outstanding balances and contribution from portfolio acquisitions

- Net interest income remained flat at £2,854m. Contributions from business growth and acquisitions were offset by lower net interest margin of 846bps (2011: 944bps) which stabilised in the second half of the year

-    Average customer assets increased 7% to £32.5bn due to portfolio acquisitions and business growth

-    Customer asset margin was down 13bps to 939bps due to higher funding costs

- Non-interest income improved 7% to £1,316m driven by increased volumes in the Business Payment and US portfolios

- Credit impairment charges decreased 22% to £979m resulting from improved delinquency, lower charge-offs and better recovery rates, primarily in H1 12

-    Loan loss rate improved by 109bps to 282bps (2011: 391bps)

-    30 day arrears rates for consumer cards in UK down to 2.5% (2011: 2.7%), in the US down to 2.4% (2011: 3.1%)and in South Africa up to 5.2% (2011: 4.9%)  

- Adjusted operating expenses increased 3% to £1,715m reflecting portfolio acquisitions, provision for certain other insurance products and investment spend

- Adjusted profit before tax improved 25% to £1,506m. Statutory profit before tax increased by £525m to £1,086m after £420m (2011: £600m) provision for PPI redress

- Adjusted return on average equity improved to 22.1% (2011: 17.4%)

- Total assets increased 11% to £37.5bn primarily driven by business growth and acquisitions

- Customer deposits increased by £2.2bn to £2.8bn due to business funding initiatives in the US and Germany

- Risk weighted assets increased 7% to £36.5bn, principally due to growth in assets and an increased operational risk charge

Q4 12 compared to Q3 12

- Adjusted profit before tax decreased 10% to £356m

-    Income increased 5% reflecting contribution from portfolio acquisitions

-    Impairment increased 4% due to increased business volumes

-    Adjusted operating expenses increased 20% principally due to a provision for certain other insurance products and the transfer of claims management costs to the PPI provision in Q3 12

- Statutory profit before tax was £86m (Q312: £247m) including £270m (Q312: £150m) additional provision for PPI redress

- Loans and advances to customers increased 6% to £32.9bn including the acquisition of Edcon and growth across the UK and International businesses. Customer deposits increased to £2.8bn (30 September 2012: £2.4bn) through deposit funding initiatives in the US and Germany


Results by Business

Investment Bank


  



  


Year Ended

Year Ended


Income Statement Information


31.12.12

31.12.11


  


£m

£m

% Change

Net interest income


619 

1,177 

(47)

Net fee and commission income


3,262 

3,026 

Net trading income


7,315 

5,264 

39 

Net investment income and other


526 

868 

(39)

Total income


11,722 

10,335 

13 

Credit impairment charges and other provisions


(460)

(93)


Net operating income


11,262 

10,242 

10 

  


  



Operating expenses


(7,249)

(7,289)

(1)

  


  



Other net income


50 

12 


Profit before tax


4,063 

2,965 

37 

  


  



Adjusted profit before tax


4,063 

2,965 

37 

  


  



Balance Sheet Information and Key Facts


  



Loans and advances to banks and customers at amortised cost


£145.0bn

£158.6bn


Customer deposits


£76.2bn

£83.1bn


Total assets


£1,074.8bn

£1,158.4bn


Assets contributing to adjusted gross leverage


£567.9bn

£604.0bn


Risk weighted assets


£178.0bn

£186.7bn


Average DVaR (95%)


£38m

£57m


Number of employees (full time equivalent)


24,000 

23,600 


  


  



  

Adjusted

Statutory

 

Performance Measures

31.12.12

31.12.11

31.12.12

31.12.11

Return on average equity

13.7%

10.4%

13.7%

10.4%

Return on average risk weighted assets

1.5%

1.2%

1.5%

1.2%

Cost: income ratio  

62%

71%

62%

71%

Cost: net operating income ratio  

64%

71%

64%

71%

Compensation: income ratio

39%

47%

39%

47%

Average income per employee (000s)

£494

£429

£494

£429

Loan loss rate (bps)

30 

30 

  


  





Results by Business

Investment Bank

 Analysis of Total Income

FY12
£m

FY11
£m

%  Change

Q412
£m

Q312
£m

%  Change

Q411
£m

%  Change

 

Fixed Income, Currency and Commodities

7,403 

6,325 

17 

1,458 

1,581 

(8)

971 

50 

Equities and Prime Services

1,991 

1,751 

14 

484 

534 

(9)

305 

59 

Investment Banking

2,123 

2,027 

626 

487 

29 

506 

24 

Principal Investments

205 

232 

(12)

25 

31 

(19)

36 

(31)

Total income

11,722 

10,335 

13 

2,593 

2,633 

(2)

1,818 

43 

 

2012 compared to 2011

- Profit before tax increased 37% to £4,063m driven by strong income growth and reduced operating expenses

- Total income increased 13% to £11,722m

-    Fixed Income, Currency and Commodities (FICC) income improved 17% to £7,403m, in an uncertain, but more favourable trading environment. Increased liquidity and higher client volumes across a number of product areas resulted in increased contributions from the Rates, Emerging Markets, Commodities, Securitised Products and Credit businesses, partially offset by lower contributions from Currency driven by subdued volumes and lower volatility

-    Equities and Prime Services income increased 14% to £1,991m, reflecting global market share gains which resulted in an improved performance in cash equities and equity derivatives, despite subdued market volumes

-    Investment Banking income increased 5% to £2,123m, reflecting global market share gains and increases in revenues across global financial advisory and underwriting businesses more than offsetting the impact of increased internal sales concessions. Debt underwriting activity and equity underwriting in the Americas grew particularly strongly and were primary contributors to the 8% increase in total net fees and commission income

- Credit impairment charges of £460m (2011: £93m) primarily related to £232m on ABS CDO Super Senior positions as a result of model changes to calibrate to current market data sources, and higher losses on single name exposures. The prior year included a non recurring release of £223m

- Operating expenses decreased 1% to £7,249m, driven by a 3% reduction in total performance costs to £1,693m including £210m increase in deferred bonus charges. Non-performance costs remained in line at £5,556m (2011: £5,571m) despite absorbing £193m charge relating to the setting of inter-bank offered rates

- Cost to net operating income ratio of 64% (2011: 71%) within target range of 60% to 65%. The compensation to income ratio improved to 39% (2011: 47%)

- Return on average equity of 13.7% (2011: 10.4%) and return on average risk weighted assets of 1.5% (2011: 1.2%)

- Assets contributing to adjusted gross leverage decreased 6% to £567.9bn reflecting decreases in cash and balances at central banks, trading portfolio assets, and loans and advances to banks and customers, partially offset by an increase in reverse repurchase agreements

- Credit market exposures decreased 39% to £9,310m, reflecting net sales and paydowns and other movements of £5,436m, foreign exchange movements of £459m, offset by net fair value gains and impairment charges of £44m

- Risk weighted assets decreased 5% to £178.0bn, principally reflecting reductions in risk exposures, including legacy asset sell downs, and foreign exchange movements. This was partially offset by an increased operational risk charge and a change in approach to loss given default on sovereign exposures

Q4 12 compared to Q312

- Profit before tax decreased 8% to £858m

- Income of £2,593m was down 2% on Q3 12. FICC income reduced 8% and Equities and Prime Services income reduced 9%, partially offset by a 29% increase in Investment Banking revenues

-    The decrease in FICC income of 8% to £1,458m reflected lower activity in Securitised Products and a reduction in Currency income, driven by reduced market volatility and resulting lower volumes. This was partially offset by higher contributions from Credit and Rates

-    The reduction in Equities and Prime Services income of 9% to £484m resulted from reduced performance in equity derivatives and equity-related Prime Services, driven by continued subdued volumes in equity issuance globally

-    The increase in Investment Banking income of 29% to £626m was driven by improved performance across financial advisory, debt underwriting and equity underwriting, as a result of increased activity in debt and equity issuancein the quarter

- Impairment increased to £114m (Q3 12: £23m) relating to ABS CDO Super Senior positions

- Operating expenses decreased 3% driven by reduced performance costs

Results by Business

Q412 compared to Q4 11

- Profit before tax increased £591m to £858m

- Income of £2,593m increased 43% on Q4 11 reflecting increases in FICC of 50%, Equities and Prime Services of 59%, and Investment Banking of 24%

-    The increase in FICC income of 50% to £1,458m reflected a significantly enhanced trading environment which resulted in higher income across Rates, Commodities, Securitised Products andEmerging Markets offset by a reduction in Currency income as confidence and liquidity in the markets were significantly improved

-    Equities and Prime Services income increased 59% to £484m driven by stronger performance in cash equities and equity derivatives as markets improved from the low levels experienced in Q4 11

-    Investment Banking income increased 24% to £626m resulting from increased market activity in debt and equity underwriting

- Impairment increased to £114m (Q4 11: £90m) relating to ABS CDO Super Senior positions

- Operating expenses increased 12% on Q4 11 reflective of increased accrual for performance costs

              

 


Results by Business

Corporate Banking


  



  


Year Ended

Year Ended


Income Statement Information


31.12.12

31.12.11


  


£m

£m

% Change

Net interest income


1,870 

2,155 

(13)

Net fee and commission income


955 

1,005 

(5)

Net trading income/(expense)


65 

(99)


Net investment income


23 

29 


Other income


18 


Total income


2,918 

3,108 

(6)

Credit impairment charges and other provisions


(872)

(1,147)

(24)

Net operating income


2,046 

1,961 

  


  



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


(1,505)

(1,759)

(14)

Goodwill impairment


(123)


Provision for interest rate hedging products redress


(850)


Operating expenses


(2,355)

(1,882)

25 

  


  



Other net income/(expense)


10 

(71)


(Loss)/profit before tax


(299)


  


  



Adjusted profit before tax


551 

204 


  


  



Balance Sheet Information and Key Facts


  



Loans and advances to customers at amortised cost


£62.9bn

£66.9bn


Loans and advances to customers at fair value


£17.6bn

£17.2bn


Customer deposits


£97.1bn

£85.2bn


Total assets


£86.3bn

£91.2bn


Risk weighted assets


£68.0bn

£72.8bn


Number of employees (full time equivalent)


10,300 

11,200 


  


  



  

Adjusted1

Statutory

 

Performance Measures

31.12.12

31.12.11

31.12.12

31.12.11

Return on average equity

5.5%

1.7%

(3.7%)

(1.0%)

Return on average risk weighted assets

0.6%

0.2%

(0.3%)

(0.1%)

Loan loss rate (bps)

128 

156 

128 

156 

Cost: income ratio

52%

57%

81%

61%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1     Adjusted profit before tax and adjusted performance measures exclude the impact of goodwill impairment of £nil (2011: £123m), provision for interest rate hedging products redress of £850m (2011: £nil) and loss on disposal of £nil  (2011: £73m).



Results by Business

Corporate Banking





  





Year Ended 31 December 2012

UK

Europe

RoW

Total

Income Statement Information

£m

£m

£m

£m

Income

2,234 

313 

371 

2,918 

Credit impairment charges and other provisions

(285)

(542)

(45)

(872)

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

(1,041)

(152)

(312)

(1,505)

Provision for interest rate hedging products redress

(850)

(850)

Other net income

10 

Profit/(loss) before tax

60 

(381)

22 

(299)

  





Adjusted profit/(loss) before tax

910 

(381)

22 

551 

  





Balance Sheet Information





Loans and advances to customers at amortised cost

£51.5bn

£6.5bn

£4.9bn

£62.9bn

Loans and advances to customers at fair value

£17.6bn

£17.6bn

Customer deposits

£79.0bn

£8.2bn

£9.9bn

£97.1bn

Risk weighted assets

£49.9bn

£10.5bn

£7.6bn

£68.0bn

  





Year Ended 31 December 2011





Income Statement Information





Income

2,199 

440 

469 

3,108 

Credit impairment charges and other provisions

(355)

(716)

(76)

(1,147)

Operating expenses (excluding goodwill impairment)

(1,099)

(248)

(412)

(1,759)

Goodwill impairment

(123)

(123)

Other net income/(expense)

(73)

(71)

Profit/(loss) before tax

747 

(647)

(92)

  





Adjusted profit/(loss) before tax

747 

(524)

(19)

204 

  





Balance Sheet Information





Loans and advances to customers at amortised cost

£50.6bn

£11.2bn

£5.1bn

£66.9bn

Loans and advances to customers at fair value

£17.2bn

£17.2bn

Customer deposits

£69.9bn

£5.6bn

£9.7bn

£85.2bn

Risk weighted assets

£49.9bn

£15.4bn

£7.5bn

£72.8bn



Results by Business

Corporate Banking

- The turnaround in Corporate Banking profitability continued with the exit of non-core businesses internationally

- Improved credit performance across all regions due to management actions taken in 2010 and 2011 to refocus the international business, particularly in Continental Europe

- Total UK loans and advances to customers up £0.9bn driven by solid growth in net new UK lending. Attracted an additional £11.9bn of global deposits with strong growth in the UK and Europe

2012 compared to 2011

- Adjusted profit before tax improved £347m to £551mincluding a gain of £71m (2011: loss of £111m) in the net valuation of fair value items, primarily driven by improved credit impairment in Europe and UK and loweroperating expenses. Statutory loss before tax was £299m (2011: profit £8m) including a £850m provision for interest rate hedging products redress

-    UK adjusted profit before tax improved 22% to £910m reflecting a £182m improvement in the net valuation of fair value items, improved operating expenses and credit impairment. UK statutory profit before tax decreased £687m to £60m including a £850m provision for interest rate hedging products redress

-    Europe loss before tax improved £266m to £381m principally due to improved credit impairment charges in Spain of £337m (2011: £480m) and improved operating expenses benefitting from progress in restructuring, partially offset by reduced income from exited businesses

-    Rest of the World adjusted profit before tax improved £41m to £22m reflecting lower operating expenses as a result of refocusing of our international business. Rest of the World statutory profit before tax improved £114m to £22m reflecting the non-recurrence of prior year loss on disposal of Barclays Bank Russia

- Net interest income decreased 13% to £1,870m reflecting non-recurring gains on the disposal of hedging instruments, reduced income from exited businesses and increased funding costs

-    Net interest margin down 22bps to 124bps principally due to higher funding costs and non-recurring gains from the sale of hedging instruments

-    Customer asset margin decreased 32bps to 114bps reflecting higher funding costs and reduced balances due to the refocusing of our international business

-    Customer liability margin increased 15bps to 109bps principally due to higher balances in the UK driven by currency deposits and current accounts, and reflecting an increase in funding rates and therefore the value generated from customer liabilities

- Credit impairment charges reduced 24% to £872m. Loan loss rate improved to 128bps (2011: 156bps)

-    Impairment charges in Europe reduced by £174m to £542m, primarily as a result of ongoing action to reduce exposure within the property and construction sector in Spain

- Adjusted operating expenses improved 14% to £1,505m, reflecting the benefits of prior year restructuring and cost control initiatives. Adjusted cost to income ratio improved to 52% (2011: 57%)

- Adjusted return on average equity improved to 5.5% (2011: 1.7%). Statutory return on average equity is negative 3.7% (2011: negative 1.0%)

- Total assets in UK up by £0.6bn driven by solid growth in net UK lending. Total assets down £4.9bn to £86.3bn as increases in the UK are more than offset by reductions in Europe and Rest of the World due to the refocusing of our international business

- Customer deposits increased 14% to £97.1bn with increased balances in the UK and Europe due to higher currency deposits and current accounts

- Risk weighted assets decreased 7% to £68.0bn, principally reflecting the benefit of the refocusing of our international business, partially offset by an increased operational risk charge



Results by Business

Q4 12 compared to Q3 12

- Q4 12 adjusted profit before tax increased 9% to £107m including a gain of £10m (Q3 12: loss of £6m) in the net valuation of fair value items

-    Income increased 5% to £713m driven by growth in UK deposits, supported by consistent performance in the European and Rest of the World businesses

-    Impairment increased 13% primarily due to Rest of the World increases including charges for the Indian retail portfolio,partially offset by reductions in Europe

-    Adjusted operating expenses in line with previous quarter

- Statutory loss before tax was £293m (Q3 12: profit £98m) after charging a £400m (Q3 12: £nil) additional provision for interest rate hedging products redress

- Loans and advances to customers increased 1% to £62.9bn driven by net UK lending. Customer deposits increased 6% to £97.1bn primarily driven by growth in the UK


Results by Business

Wealth and Investment Management


  



  


Year Ended

Year Ended


Income Statement Information


31.12.12

31.12.11


  


£m

£m

% Change

Net interest income


853 

798 

Net fee and commission income


946 

943 

Net trading income


16 


Other expense


(2)


Total income


1,815 

1,744 

Credit impairment charges and other provisions


(38)

(41)

(7)

Net operating income


1,777 

1,703 

  


  



Operating expenses


(1,463)

(1,493)

(2)

  


  



Other net income/(expense)


(3)


Profit before tax


315 

207 

52 

  


  



Adjusted profit before tax


315 

207 

52 

  


  



Balance Sheet Information and Key Facts


  



Loans and advances to customers at amortised cost


£21.2bn

£18.8bn


Customer deposits


£53.8bn

£46.5bn


Total assets


£23.7bn

£20.9bn


Risk weighted assets


£15.8bn

£13.1bn


Client assets


£186.0bn

£164.2bn


Number of employees (full time equivalent)


7,900 

8,100 


  


  



  

Adjusted

Statutory

 

Performance Measures

31.12.12

31.12.11

31.12.12

31.12.11

Return on average equity

13.9%

10.9%

13.9%

10.9%

Return on average risk weighted assets

2.0%

1.5%

2.0%

1.5%

Cost: income ratio

81%

86%

81%

86%

Loan loss rate (bps)

17 

21 

17 

21 

  


  



  


  



  


  



  


  



  


  



  


  



  


  



  


  







Results by Business

Wealth and Investment Management

- 2012 marked the third year of execution of Wealth and Investment Management's five year strategic investment programme to transform the business into a top tier global wealth manager

- Continued build out of world class infrastructure and significant strengthening of product and service capabilities

- Strong growth in client assets as we continue to build our client proposition 

2012 compared to 2011

- Income improved 4% to £1,815m primarily driven by an increase in the High Net Worth businesses

- Net interest income grew 7% to £853m reflecting growth in deposit and lending balances in the High Net Worth businesses. Net interest margin decreased 7bps to 122bps due to ongoing low interest rate environment and reduced contribution from structural hedges

-    Customer deposits increased 16% to £53.8bn

-    Loans and advances to customers increased 13% to £21.2bn

- Net fees and commissions income remained broadly in line at £946m (2011 : £943m) despite challenging market conditions

- Operating expenses decreased 2% to £1,463m as cost control initiatives were partially offset by the continued cost of the strategic investment programme

- Profit before tax increased 52% to £315m and return on average equity increased to 13.9% (2011: 10.9%)

- Client assets increased 13% to £186.0bn (2011: £164.2bn) principally reflecting increase in net new assets in High Net Worth businesses

- Risk weighted assets increased 21% to £15.8bn principally due to growth in lending and an increased operational risk charge

Q4 12 compared to Q3 12

- Profit before tax increased 46% to £115m

-    Income increased 9% to £481m primarily driven by strong growth in the High Net Worth businesses and increased client activity during Q4

-    Costs remained stable at £354m (Q3 12: £358m)

- Client assets increased 5% to £186.0bn (Q3 12: £177.6bn) principally reflecting increased client assets within the High Net Worth businesses

 


Results by Business

Head Office and Other Operations


  

Year Ended

Year Ended


Income Statement Information

31.12.12

31.12.11


  

£m

£m


Adjusted total expense net of insurance claims

(75)

(223)


Own credit

(4,579)

2,708 


Gains on debt buy-backs

1,130 


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

227 

(58)


Total (expense)/income net of insurance claims

(4,427)

3,557 


Credit impairment (charges)/release and other provisions

(4)


Impairment of investment in BlackRock, Inc.

(1,800)


Net operating (expense)/income

(4,431)

1,758 


  




Operating expenses (excluding bank levy)

(686)

(463)


UK bank levy

(345)

(325)


Operating expenses

(1,031)

(788)


  




Other net income/(expense)

22 

(23)


(Loss)/profit before tax

(5,440)

947 


  




Adjusted loss before tax

(1,088)

(1,010)


  




Balance Sheet Information and Key Facts




Total assets

£39.4bn

£31.9bn


Risk weighted assets

£5.7bn

£2.5bn


Number of employees (full time equivalent)

1,600 

1,400 


 

 

2012 compared to 2011

- Adjusted total expense net of insurance claims reduced to £75m (2011: £223m) principally due to changes in the value of hedges relating to employee share awards which were closed out during Q1 12

- Operating expenses increased 31% to £1,031m mainly from higher regulatory costs, including a charge relating to the allocation to Head Office and Other Operations of the penalty of £97m (2011: £nil) arising from the industry wide investigation into the setting of interbank offered rates, Financial Services Compensation Scheme of £135m (2011: £45m), the increase in the UK bank levy to £345m (2011: £325m) and increased strategic initiative costs

- Adjusted loss before tax increased by 8% to £1,088m

- Statutory loss before tax increased to £5,440m (2011: profit £947m) including an own credit charge of £4,579m (2011: £2,708m gain) and non-recurrence of gains on debt buy-backs, partially offset by the impact of BlackRock, Inc. investment disposal and income from changes in the value of hedges relating to employee share awards that were closed out during Q1 12

- Total assets increased to £39.4bn (31 December 2011: £31.9bn) reflecting growth in the liquidity bond portfolio held at Head Office and Other Operations, partially offset by the sale of the strategic investment in BlackRock, Inc.

- Risk weighted assets have increased £3.2bn to £5.7bn, principally reflecting increases in sovereign bonds held for liquidity purposes and a change in approach to loss given default on sovereign exposures

 Q4 12 compared to Q3 12

- Adjusted loss before tax increased £537m to £718m principally due to the UK bank levy that is charged in Q4

- Statutory loss before tax increased by 2% to £1,278m reflecting the impact of the UK bank levy that is charged in Q4, partially offset by increased total expense net of insurance claims

  

 

 

 

 

 

 

 

 

 

 

1     Includes net interest expense of £134m (2011: £965m).

2     Adjusted performance measures and profit before tax exclude the impact of an own credit charge of £4,579m (2011: gain of £2,708m), gains on debt buy-backs (retirement of non-qualifying Tier 1 Capital under Basel 3) of £nil (2011: £1,130m), gain on disposal of strategic investment in BlackRock, Inc. of £227m (2011: loss of £58m), impairment of investment in BlackRock Inc. of £nil (2011: £1,800m) and loss on disposals of £nil (2011: £23m).


Business Results by Quarter

UK RBB

Q412

Q312

Q212

Q112


Q411

Q311

Q211

Q111

  

£m

£m

£m

£m


£m

£m

£m

£m

Adjusted basis  










Total income net of insurance claims  

1,086 

1,130 

1,128 

1,077 


1,129 

1,273 

1,170 

1,084 

Credit impairment charges and other provisions  

(71)

(76)

(46)

(76)


(156)

(105)

(131)

(144)

Net operating income  

1,015 

1,054 

1,082 

1,001 


973 

1,168 

1,039 

940 

Operating expenses  

(693)

(654)

(671)

(666)


(752)

(675)

(622)

(653)

Other net income/(expense)

(1)


(1)

Adjusted profit before tax  

326 

400 

412 

334 


222 

494 

416 

288 

   










Adjusting items  










Provision for PPI redress  

(330)

(550)

(300)


(400)

Statutory (loss)/profit before tax  

(4)

(150)

412 

34 


222 

494 

16 

288 

  










 

Europe RBB










Adjusted basis  










Total income net of insurance claims  

210 

219 

243 

243 


247 

375 

309 

295 

Credit impairment charges and other provisions  

(95)

(76)

(85)

(72)


(83)

(62)

(47)

(69)

Net operating income  

115 

143 

158 

171 


164 

313 

262 

226 

Operating expenses  

(207)

(204)

(211)

(217)


(291)

(263)

(368)

(289)

Other net income


Adjusted (loss)/profit before tax  

(88)

(59)

(49)

(43)


(125)

52 

(102)

(59)

   










Adjusting items  










Goodwill impairment  


(427)

Statutory (loss)/profit before tax  

(88)

(59)

(49)

(43)


(552)

52 

(102)

(59)

  










 

Africa RBB










Adjusted basis  










Total income net of insurance claims  

767 

765 

795 

830 


861 

940 

906 

864 

Credit impairment charges and other provisions  

(145)

(180)

(214)

(107)


(88)

(108)

(126)

(144)

Net operating income  

622 

585 

581 

723 


773 

832 

780 

720 

Operating expenses  

(489)

(531)

(485)

(548)


(505)

(613)

(586)

(575)

Other net income


Adjusted profit before tax  

138 

56 

97 

177 


269 

219 

195 

147 

   










Adjusting items  










Gains on acquisitions and disposals  


Statutory profit before tax  

138 

56 

97 

177 


269 

221 

195 

147 

  










 

Barclaycard










Adjusted basis  










Total income net of insurance claims  

1,098 

1,046 

1,036 

990 


983 

1,140 

1,012 

960 

Credit impairment charges and other provisions  

(265)

(254)

(228)

(232)


(271)

(340)

(344)

(304)

Net operating income  

833 

792 

808 

758 


712 

800 

668 

656 

Operating expenses  

(483)

(402)

(412)

(418)


(458)

(430)

(400)

(371)

Other net income


11 

Adjusted profit before tax  

356 

397 

404 

349 


259 

378 

275 

296 

   










Adjusting items  










Provision for PPI redress  

(270)

(150)


(600)

Goodwill impairment  


(47)

Statutory profit/(loss) before tax  

86 

247 

404 

349 


259 

378 

(372)

296 

  












Business Results by Quarter

Investment Bank

Q412

Q312

Q212

Q112


Q411

Q311

Q211

Q111

  

£m

£m

£m

£m


£m

£m

£m

£m

Adjusted and statutory basis  










Fixed Income, Currency and Commodities  

1,458 

1,581 

1,968 

2,396 


971 

1,438 

1,715 

2,201 

Equities and Prime Services  

484 

534 

423 

550 


305 

338 

563 

545 

Investment Banking  

626 

487 

501 

509 


506 

389 

520 

612 

Principal Investments  

25 

31 

140 


36 

89 

99 

Total income  

2,593 

2,633 

3,032 

3,464 


1,818 

2,254 

2,897 

3,366 

Credit impairment (charges)/releases and other provisions  

(114)

(23)

(248)

(75)


(90)

(114)

80 

31 

Net operating income  

2,479 

2,610 

2,784 

3,389 


1,728 

2,140 

2,977 

3,397 

Operating expenses  

(1,636)

(1,680)

(1,788)

(2,145)


(1,458)

(1,758)

(2,006)

(2,067)

Other net income/(expense)

15 

22 


(3)

Adjusted profit before tax and profit before tax

858 

937 

1,002 

1,266 


267 

388 

977 

1,333 

  










 

Corporate Banking










Adjusted basis  










Total income net of insurance claims  

713 

678 

703 

824 


710 

830 

817 

751 

Credit impairment charges and other provisions  

(237)

(210)

(218)

(207)


(252)

(283)

(327)

(285)

Net operating income  

476 

468 

485 

617 


458 

547 

490 

466 

Operating expenses  

(375)

(376)

(357)

(397)


(422)

(436)

(459)

(442)

Other net income/(expense)

(1)

(1)


(3)

Adjusted profit before tax  

107 

98 

127 

219 


37 

113 

33 

21 

   










Adjusting items  










Goodwill impairment  


(123)

Provision for interest rate hedging products redress

(400)

(450)


Losses on disposal  


(9)

(64)

Statutory (loss)/profit before tax  

(293)

98 

(323)

219 


(95)

113 

(31)

21 

  










 

Wealth and Investment Management










Adjusted and statutory basis  










Total income net of insurance claims  

481 

442 

441 

451 


449 

447 

426 

422 

Credit impairment charges and other provisions  

(13)

(6)

(12)

(7)


(10)

(12)

(9)

(10)

Net operating income  

468 

436 

429 

444 


439 

435 

417 

412 

Operating expenses  

(354)

(358)

(367)

(384)


(384)

(369)

(375)

(365)

Other net income/(expense)

(1)


(1)

(1)

(1)

Adjusted profit before tax and profit before tax

115 

79 

61 

60 


54 

65 

42 

46 

  










 

Head Office and Other Operations










Adjusted basis  










Total (expense)/income net of insurance claims  

(252)

(41)

(41)

259 


15 

(258)

12 

Credit impairment releases/(charges) and other provisions  

(3)

(2)


(1)

(3)

Net operating (expense)/income  

(251)

(41)

(44)

257 


14 

(257)

12 

Operating expenses (excluding UK bank levy)  

(125)

(136)

(251)

(174)


(144)

(115)

(124)

(80)

UK bank levy  

(345)


(325)

Other net income/(expense)

(4)

23 


Adjusted (loss)/profit before tax  

(718)

(181)

(272)

83 


(455)

(372)

(115)

(68)

   










Adjusting items  










Own credit  

(560)

(1,074)

(325)

(2,620)


(263)

2,882 

440 

(351)

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

227 


(1,800)

(58)

Gains on debt buy-backs  


1,130 

(Losses)/gains on acquisitions and disposals  


(23)

(3)

Statutory (loss)/profit before tax  

(1,278)

(1,255)

(370)

(2,537)


389 

711 

264 

(417)


Performance Management

Remuneration

We recognise the importance our stakeholders attach to the judgements that we apply in managing remuneration. Reduced remuneration costs, increasingly robust risk-adjustments and tougher performance conditions will continue to be a focus in how we achieve the right balance between the priorities of our various stakeholders. This requires remuneration to be managed in a way which incentivises employees, ensures pay is linked to performance and is appropriately aligned to risk.

We will continue to maintain a constructive and transparent dialogue with our shareholders and regulators on remuneration matters, as undertaken during 2012.

Incentive awards

- Total Group incentive awards have been reduced by 16% since 2011, with adjusted Group profit before tax increasing 26%

- Incentive awards at the Investment Bank have been reduced by 20% since 2011, with adjusted profit before tax increasing 37%

- Group incentives have reduced by £1.3bn (38%) since 2010 with adjusted profit before tax up 23% since 2010. In the Investment Bank incentives have reduced by a similar amount, £1.3bn (48%), since 2010 with adjusted profit before tax down 7% since 2010 

- Incentive pools have been reduced whilst adjusted profits have increased since 2011. This is because of actions taken by management to reposition Barclays compensation in the market place and to reflect significant risk events that impacted Barclays in 2012. The significant risk events include LIBOR settlement and redress for PPI and interest rate hedging products

- Compensation to adjusted net operating income is down to 38% in 2012 (2011: 42%). Within aggregate compensation there has been strong differentiation on the basis of individual performance to allow us to manage compensation costs but also to pay competitively for high performers

- Average value of bonus per Group employee down 13% year on year to £13,300; average value of bonus per Investment Bank employee down 17% year on year to £54,100. Average value of bonus per Group employee excluding the Investment Bank down 8% year on year to £4,800

- The proportion of bonus pool that is deferred significantly exceeds the FSA's Remuneration Code requirements and is expected to remain amongst the highest deferral levels globally

 

 



Performance Management

Total Incentive Awards Granted - Current Year and Deferred





  








  

Barclays Group


Investment Bank

 

  

Year Ended 31.12.12

Year Ended 31.12.11



Year Ended 31.12.12

Year Ended 31.12.11