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Barclays PLC (BARC)

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Wednesday 24 April, 2013

Barclays PLC

Interim Management Statement

RNS Number : 0609D
Barclays PLC
24 April 2013
 



 

 

 

 

 

 

Barclays PLC

Interim Management Statement

 

 

31 March 2013

 

 


Table of Contents

Interim Management Statement

Page

Performance Highlights

4

Barclays Results by Quarter

6

Group Performance Review

7

Results by Business


- Retail and Business Banking (RBB)


UK

10

Europe

11

Africa

12

- Barclaycard

13

- Investment Bank

14

- Corporate Banking

16

- Wealth and Investment Management

18

- Head Office and Other Operations

19

Appendix I - Quarterly Results Summary

20

Appendix II - Performance Management

23

Appendix III - Balance Sheet and Capital

26

Appendix IV - Credit Risk


- Retail and Wholesale Loans and Advances to Customers

30

- Group Exposures to Eurozone Countries

33

- Credit Market Exposures

40

Appendix V - Other Information

41

 


 

 

 

 

 

 

 

 

 

 

 

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


 

Notes

The term Barclays or Group refers to Barclays PLC together with its subsidiaries. Unless otherwise stated, the income statement analysis compares the three months to 31 March 2013 to the corresponding three months of 2012 and balance sheet comparatives relate to 31 December 2012. 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.

The comparatives have been restated to reflect the implementation of IFRS 10 Consolidated Financial Statements and IAS 19 Employee Benefits (Revised 2011), the reallocation of elements of the Head Office results to businesses and portfolio restatements between businesses, as detailed in our announcement on 16 April 2013.

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 www.barclays.com/results.

The financial information on which this Interim Management Statement is based, and other data set out in the appendices to this statement, are unaudited and have been prepared in accordance with Barclays' previously stated accounting policies described in the 2012 Annual Report.

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 information in this announcement, which was approved by the Board of Directors on 23 April 2013, does not comprise statutory accounts or interim financial statements within the meaning of Section 434 of the Companies Act 2006 and IAS 34 Interim Financial Reporting respectively. Statutory accounts for the year ended 31 December 2012, 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.

For qualifying US and Canadian resident ADR holders, the interim dividend of 1p per ordinary share becomes 4p per ADS (representing four shares). The ADR depositary will mail the interim dividend on 7 June 2013 to ADR holders on the record on 3 May 2013.

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", "projected", "expect", "estimate", "intend", "plan", "goal", "believe", "achieve" 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 and provisions, business strategy, capital ratios, leverage, payment of dividends, projected levels of growth in the banking and financial markets, projected costs, commitments in connection with the Transform Programme, 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 macroeconomic and business conditions, the effects of continued volatility in credit markets, market related risks such as changes in interest rates and foreign 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 Eurozone), changes in legislation, the further development of standards and interpretations under International Financial Reporting Standards ("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, disposals 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 Prudential Regulation Authority, the Financial Conduct Authority, the London Stock Exchange plc (the "LSE") or applicable law, Barclays expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein 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 published or may publish via the Regulatory News Service of the LSE and/or has filed or may file with the US Securities and Exchange Commission.


Performance Highlights

"We set out in our Strategic Review in February our path to become the "Go-To" bank for all our stakeholders. While there remains much to do to build a stronger and more resilient Barclays, we are completely focused on executing our Transform programme and are making good early progress. 

Strategic cost management is a critical factor in delivering our commitments. We have recognised around £500m of 'costs to achieve Transform' in the first quarter, reflecting our immediate priorities to reduce our European retail branch network in order to focus on the mass-affluent segment and on re-positioning our equities and investment banking operations in Asia and Europe.  As indicated in the Strategic Review, we expect to recognise a further £500m of costs to achieve Transform in 2013.

 

For the first quarter, adjusted profit before tax was £1.8bn including the costs to achieve, driven by good momentum across the businesses, particularly in the Investment Bank, Barclaycard and Wealth and Investment Management.

 

In our goal to become the 'Go-To' bank we have not chosen an easy path for Barclays, but we have chosen the right one."

 

Antony Jenkins, Chief Executive

 

 

- Adjusted profit before tax was down 25% (£609m) to £1,786m.  Excluding costs to achieve Transform of £514m and non-recurrence of a £235m gain in Q1 12 in relation to hedges of employee share awards would have resulted in an increase in adjusted profit before tax of 6%

- Statutory profit before tax improved to £1,535m (Q1 12: £525m loss), reflecting a reduced own credit charge of £251m (Q1 12: £2,620m)

- Adjusted return on average shareholders' equity decreased to 7.6% (Q1 12: 12.4%) reflecting the costs to achieve Transform. Statutory return on average shareholders' equity improved to 6.5% (Q1 12: negative 4.5%)

- Adjusted income decreased 5% to £7,734m, principally due to non-recurrence of the gain in relation to hedges of employee share awards. Investment Bank income was up 1% at £3,463m (Q1 12: £3,436m) and was up 34% on Q4 12

- Credit impairment charges decreased 10% to £706m, with an annualised loan loss rate of 56bps (Q1 12: 63bps), principally reflecting improvements in the Investment Bank and Corporate Banking

- Adjusted operating expenses were up 7% at £5,296m. This reflected £514m of costs to achieve Transform, restructuring principally in Europe RBB and the Investment Bank, partially offset by a £183m reduction in other operating expenses. Adjusted cost to income ratio was 68% (Q1 12: 61%) with the increase attributable to costs to achieve Transform

- Risk weighted assets increased 3% to £398bn primarily driven by foreign currency movements

- Core Tier 1 ratio strengthened to 11.0% (2012: 10.8%), principally reflecting capital generated from earnings and the exercise of warrants

- Net asset value per share of 405p (2012: 414p) and net tangible asset value per share of 344p (2012: 349p) reflecting an increase in shares issued, including the exercise of warrants

- We provided an estimated £20bn of Funding for Lending Scheme (FLS) eligible gross new lending to UK households and businesses in Q1 13. Barclays was the leading provider of loans to UK households and businesses under the national loan guarantee scheme and the FLS through Q4 12



Performance Highlights

 

Barclays Unaudited Results  

Adjusted


Statutory

 

for the three months ended

31.03.13

31.03.12

  


31.03.13

31.03.12

  

  

£m

£m

% Change


£m

£m

% Change

Total income net of insurance claims

7,734 

8,108 

(5)


7,483 

5,488 

36 

Credit impairment charges and other provisions

(706)

(784)

(10)


(706)

(784)

(10)

Net operating income  

7,028 

7,324 

(4)


6,777 

4,704 

44 

Operating expenses excluding costs to achieve Transform  

(4,782)

(4,965)

(4)


(4,782)

(5,265)

(9)

Costs to achieve Transform

(514)

  


(514)

  

Operating expenses

(5,296)

(4,965)


(5,296)

(5,265)

Other net income

54 

36 

50 


54 

36 

50 

Profit/(loss) before tax  

1,786 

2,395 

(25)


1,535 

(525)

  

Profit/(loss) after tax   

1,215 

1,820 

(33)


1,044 

(385)

  

  



  




  

Performance Measures



  




  

Return on average shareholders' equity

7.6%

12.4%

  


6.5%

(4.5%)

  

Return on average tangible shareholders' equity

9.0%

14.6%

  


7.6%

(5.3%)

  

Return on average risk weighted assets

1.2%

1.8%

  


1.1%

(0.4%)

  

Cost: income ratio

68%

61%

  


71%

96%

  

Loan loss rate (bps)

56 

63 

  


56 

63 

  

  



  




  

Basic earnings/(loss) per share  

8.1p

13.2p

  


6.7p

(4.9p)

  

Dividend per share  

1.0p

1.0p

  


1.0p

1.0p

  

   



  




  

Capital and Balance Sheet  



  


31.03.13

31.12.12

  

Core Tier 1 ratio  



  


11.0%

10.8%

  

Risk weighted assets  



  


£398bn

£387bn

  

Adjusted gross leverage



  


20x

19x

  

Group liquidity pool  



  


£141bn

£150bn

  

Net asset value per share  



  


405p

414p

  

Net tangible asset value per share  



  


344p

349p

  

Loan: deposit ratio  



  


105%

110%

  

   



  




  

Adjusted profit reconciliation



  


31.03.13

31.03.12

  

Adjusted profit before tax



  


1,786 

2,395 

  

Own credit



  


(251)

(2,620)

  

Provision for PPI redress



  


(300)

  

Statutory profit/(loss) before tax



  


1,535 

(525)

  

  



  




  

 


Adjusted


Statutory

 


31.03.13

31.03.12

  


31.03.13

31.03.12

  

Profit/(Loss) Before Tax by Business

£m

£m

% Change


£m

£m

% Change

UK RBB

299 

232 

29 


299 

(68)

  

Europe RBB

(462)

(72)

  


(462)

(72)

  

Africa RBB

81 

132 

(39)


81 

132 

(39)

Barclaycard

363 

347 


363 

347 

Investment Bank

1,315 

1,182 

11 


1,315 

1,182 

11 

Corporate Banking

183 

203 

(10)


183 

203 

(10)

Wealth and Investment Management

60 

50 

20 


60 

50 

20 

Head Office and Other Operations

(53)

321 

  


(304)

(2,299)

  

Total profit before tax

1,786 

2,395 

(25)


1,535 

(525)

  

 

 

1        The comparatives on pages 5 to 24 have been restated to reflect the implementation of IFRS 10 Consolidated Financial Statements and IAS 19 Employee Benefits (Revised 2011), the reallocation of elements of Head Office results to businesses and portfolio restatements between businesses, as detailed in our announcement on 16 April 2013.

2       Comprises: share of post-tax results of associates and joint ventures; profit or loss on disposal of subsidiaries, associates and joint ventures; and gains on acquisitions.


Barclays Results by Quarter

Barclays Results by Quarter

Q113


Q412

Q312

Q212

Q112


Q411

Q311

Q211

  

£m


£m

£m

£m

£m


£m

£m

£m

Adjusted basis  











Total income net of insurance claims  

7,734 


6,867 

7,002 

7,384 

8,108 


6,213 

7,001 

7,549 

Credit impairment charges and other provisions  

(706)


(825)

(805)

(926)

(784)


(951)

(1,023)

(907)

Net operating income  

7,028 


6,042 

6,197 

6,458 

7,324 


5,262 

5,978 

6,642 

Operating expenses (excluding UK bank levy and costs to achieve Transform)  

(4,782)


(4,345)

(4,353)

(4,555)

(4,965)


(4,441)

(4,686)

(4,967)

UK bank levy  


(345)


(325)

Costs to achieve Transform

(514)



Operating expenses

(5,296)


(4,690)

(4,353)

(4,555)

(4,965)


(4,766)

(4,686)

(4,967)

Other net income

54 


43 

21 

41 

36 


18 

19 

Adjusted profit before tax  

1,786 


1,395 

1,865 

1,944 

2,395 


501 

1,310 

1,694 

   











Adjusting items  











Own credit  

(251)


(560)

(1,074)

(325)

(2,620)


(263)

2,882 

440 

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 profit/(loss) before tax

1,535 


(165)

91 

1,396 

(525)


786 

2,395 

962 

Statutory profit/(loss) after tax

1,044 


(364)

(13)

943 

(385)


581 

1,345 

721 

  











Attributable to:











Equity holders of the parent

839 


(589)

(183)

746 

(598)


335 

1,132 

465 

Non-controlling interests

205 


225 

170 

197 

213 


246 

213 

256 

  











Adjusted basic earnings per share  

8.1p


7.2p

8.3p

9.2p

13.2p


1.0p

6.8p

8.7p

Adjusted cost: income ratio  

68%


68%

62%

62%

61%


77%

67%

66%

Basic earnings/(loss) per share  

6.7p


(4.8p)

(1.5p)

6.1p

(4.9p)


2.8p

9.4p

3.9p

Cost: income ratio  

71%


90%

85%

69%

96%


75%

58%

76%

  











 

Adjusted Profit/(Loss) Before Tax by Business

 

Q113


 

Q412

 

Q312

 

Q212

 

Q112


 

Q411

 

Q311

 

Q211

  

£m


£m

£m

£m

£m


£m

£m

£m

UK RBB

299 


275 

358 

360 

232 


162 

429 

378 

Europe RBB

(462)


(114)

(81)

(76)

(72)


(176)

21 

(109)

Africa RBB

81 


105 

34 

51 

132 


231 

191 

178 

Barclaycard

363 


335 

396 

404 

347 


261 

367 

273 

Investment Bank

1,315 


760 

988 

1,060 

1,182 


(32)

210 

888 

Corporate Banking

183 


61 

88 

108 

203 


(10)

140 

37 

Wealth and Investment Management

60 


105 

70 

49 

50 


43 

70 

34 

Head Office and Other Operations

(53)


(132)

12 

(12)

321 


22 

(118)

15 

Total profit before tax

1,786 


1,395 

1,865 

1,944 

2,395 


501 

1,310 

1,694 


Group Performance Review

Income Statement

- Adjusted profit before tax decreased £609m to £1,786m, driven by costs to achieve Transform of £514m in Q1 13 and by non-recurrence of gains of £235m in relation to hedges of employee share awards during Q1 12

- Statutory profit before tax improved to £1,535m (Q1 12: loss of £525m), reflecting a significantly lower own credit charge of £251m (Q1 12: £2,620m)

- Adjusted return on average shareholders' equity decreased to 7.6% (Q1 12: 12.4%) with an improvement in statutory return on average shareholders' equity to 6.5% (Q1 12: negative 4.5%)

- Adjusted income decreased 5% to £7,734m, driven by non-recurrence of gains of £235m in relation to hedges of employee share awards in Head Office in Q1 12. Investment Bank income was up 1% at £3,463m driven by increases in Equities and Prime Services, and Investment Banking, partially offset by a decrease in Fixed Income, Currency and Commodities, and was up 34% on Q4 12

- Customer net interest income for RBB, Barclaycard, Corporate Banking and Wealth and Investment Management was broadly stable at £2,509m (Q1 12: £2,449m). Total net interest income remained stable at £2,775m (Q1 12: £2,721m) while the growth in assets offset the net interest margin decline of 4bps to 179bps

- Credit impairment charges were down 10% to £706m, principally reflecting improvements in the Investment Bank and Corporate Banking, partially offset by increases in Europe RBB and Africa RBB

-        The annualised loan loss rate decreased to 56 bps (Q1 12: 63bps)

-        Challenging local economic conditions have led to some stress and higher impairment in the Europe and South Africa home loan portfolios

-        Credit metrics in the wholesale portfolios have generally shown some improvement during Q1 13, although conditions in Europe remain challenging

- Adjusted operating expenses were up 7% to £5,296m, principally reflecting costs to achieve Transform of £514m

-        Following the launch of the Transform programme, the costs to achieve Transform in Q1 13 related to restructuring principally in Europe RBB, with headcount reducing by nearly 2,000 and thedistribution network reducing by 30%, and in the Corporate and Investment Bank, where we are reducing headcount by 1,800. The below table summarises the Q1 13 costs to achieve Transform by business

 



Three Months Ended

31.03.13


Costs to achieve Transform by Business

£m


Europe RBB

(356)


Investment Bank

(116)


Corporate Banking

(37)


Head Office and Other Operations

(5)


Total costs to achieve Transform

(514)

 

-        Non-performance costs excluding costs to achieve Transform decreased 2% to £3,978m with the non-recurrence of a £115m charge relating to the setting of inter-bank offered rates in Q1 12

-        Performance costs excluding costs to achieve Transform reduced 10% to £804m and the compensation: income ratio in the Investment Bank improvedto 41% (Q1 12: 43%)

- The adjusted cost: income ratio increased to 68% (Q1 12: 61%). The Investment Bank cost: net operating income ratio improved to 62% (Q1 12: 65%)

 

 

 

 

 

 

Group Performance Review

Balance Sheet

·      Total assets increased to £1,596bn (2012: £1,488bn), principally reflecting increases in reverse repurchase agreements and other similar secured lending, loans and advances to customers and available for sale investments

·      Total loans and advances increased to £501bn (2012: £464bn) due to higher settlement balances in the Investment Bank and the acquisition of ING Direct UK

·      Total shareholders' equity, including non-controlling interests, was £61.4bn (2012: £60.0bn). Excluding non-controlling interests, shareholders' equity increased £1.5bn to £52.1bn, reflecting a £1.5bn increase in share capital and share premium, including the exercise of warrants.  There was also an increase of £1.1bn in currency translation reserves, partially offset by a £0.5bn reduction due to an increase in retirement benefit liabilities and dividends paid of £0.4bn

·      Net asset value per share was 405p (2012: 414p) and the net tangible asset value per share was 344p (2012: 349p).  The decrease was mainly attributable to an increase in shares issued, including the exercise of warrants

·      Adjusted gross leverage was 20x (2012: 19x). Excluding the liquidity pool, adjusted gross leverage increased to 17x (2012: 16x)

Capital Management

·      The Core Tier 1 ratio strengthened to 11.0% (2012: 10.8%)

·      Core Tier 1 capital increased by £2.1bn to £43.8bn, due to foreign currency movements of £1.1bn, the exercise of outstanding warrants of £0.8bn and £0.6bn of capital generated from earnings which excludes the impact of own credit, after absorbing the impact of dividends paid

·      Risk weighted assets increased by £11bn to £398bn, primarily driven by foreign currency movements

·      We have estimated our CRD IV Common Equity Tier 1 (CET1) ratio on both a transitional and fully loaded basis assuming the rules were applied as at 31 March 2013 using a consistent basis to the reported 2012 year end position. Barclays estimated transitional CET1 ratio is approximately 10.8% (2012: 10.6%) and the estimated fully loaded CET1 ratio is approximately 8.4% (2012: 8.2%). We are currently reviewing the CRD IV rules approved by the European Parliament on 16 April 2013 and will provide an updated view on the estimated impact in our half year results announcement

·      In April, Barclays issued a further $1.0bn of Tier 2 contingent capital notes and repurchased existing Tier 2 instruments for a similar amount, as a step in transitioning towards its end state CRD IV capital structure

Funding and Liquidity

- The liquidity pool as at 31 March 2013 was £141bn (2012: £150bn)

 

Liquidity Pool

Cash and Deposits

with Central Banks

Government

Bonds

Other Available

Liquidity

Total

  

£bn

£bn

£bn

£bn

As at 31.03.13

67 

55 

19 

141 

As at 31.12.12

85 

46 

19 

150 

 

- As at 31 March 2013, the Group estimates it was compliant with the Liquidity Coverage Ratio (LCR) requirement at 110% (2012: 126%) based upon the latest standards published by the Basel Committee. This is equivalent to a surplus of £13bn above a 100% LCR requirement (2012: £32bn)

- RBB, Corporate Banking and Wealth and Investment Management activities are largely funded by customer deposits with the remaining funding secured against customer loans and advances. At 31 March 2013, the customer loan to deposit ratio for these businesses was 98% (2012: 102%)

 

1        Of which over 95% (2012: over 95%) was placed with the Bank of England, US Federal Reserve, European Central Bank, Bank of Japan and Swiss National Bank.

2       Of which over 80% (2012: over 80%) of securities are comprised of UK, US, Japan, France, Germany, Denmark and the Netherlands.

3        £134bn (2012: £144bn) of which is eligible to count towards the LCR as per the Basel standards.

 

 

Group Performance Review

- The Investment Bank activities are primarily funded through wholesale markets. As at 31 March 2013, total Group wholesale funding outstanding excluding repurchase agreements was £235bn (2012: £240bn), of which £98bn matures in less than one year (2012: £102bn) and £36bn matures within one month (2012: £29bn)

- The Group has term funding maturities of £11bn for the remainder of 2013. However, with expected deposit growth and reduction in legacy assets, funding needs are likely to be lower. In addition, a significant portion of the Group's 2013 funding needs were pre-funded in 2012

Exposures to Selected Eurozone Countries

- During Q1 13 the Group's net on-balance sheet exposures to Spain, Italy, Portugal, Ireland, Cyprus and Greece remained flatat £59.4bn (2012: £59.3bn)

- The Group continues to  monitor developments in Cyprus and has taken steps to mitigate any financial and operational risks as appropriate. The Group's exposure to Cyprus remains minimal at £177m

Other matters

- As of 31 March 2013,  £1.9bn of the total £2.6bn PPI redress provision raised to date has been utilised leaving a residual provision of £0.7bn. The volume of customer initiated claims has continued to decline in Q1 13 while proactive mailing of customers is now 45% complete with 335,000 of the applicable 750,000 policy holders mailed to date. Barclays will continue to monitor actual claims volumes and the assumptions underlying the calculation of its PPI provision. It is possible that the eventual costs may materially differ from current estimates. Based on claims experience to date and anticipated future volumes, the remaining provision of £0.7bn reflects Barclays best current estimate of future expected PPI redress payments and claims management costs

- The Interest Rate Hedging Product redress provision at 31 March 2013 was £759m (2012: £814m), after utilisation of £55m during Q1 13, primarily related to administrative costs. The provision reflects Barclays best current estimate of the ultimate cost. It will be kept under ongoing review as the main redress and review exercise progresses, as further information regarding the extent and nature of amounts payable across the impacted population emerges

Dividends

- It is our policy to declare and pay dividends on a quarterly basis. We will pay a first interim cash dividend for 2013 of 1.0p per share on 7 June 2013

Outlook

- The good start to the year has continued into the second quarter across our businesses. Although the macroeconomic environment remains unpredictable, as part of the Transform programme, we continue to focus on costs, returns and capital to drive sustainable performance improvements

Results by Business

UK Retail and Business Banking

Three Months Ended

Three Months Ended


  

31.03.13

31.03.12


Income Statement Information

£m

£m

% Change

Adjusted basis




Total income net of insurance claims

1,067 

1,066 

Credit impairment charges and other provisions

(89)

(76)

17 

Net operating income

978 

990 

(1)

Operating expenses

(704)

(757)

(7)

Other net income/(expense)

25 

(1)


Adjusted profit before tax

299 

232 

29 

  




Adjusting items




Provision for PPI redress

(300)


Statutory profit/(loss) before tax

299 

(68)


  




Performance Measures




Adjusted return on average equity

11.3%

9.6%


Adjusted return on average risk weighted assets

2.2%

2.0%


Adjusted cost: income ratio

66%

71%


Return on average equity

11.3%

(3.5%)


Return on average risk weighted assets

2.2%

(0.6%)


Cost: income ratio

66%

99%


Loan loss rate (bps)

27 

25 


  




  

As at 31.03.13

As at 31.12.12


Balance Sheet Information

£bn

£bn


Loans and advances to customers at amortised cost

134.3 

128.2 


Customer deposits

130.8 

116.0 


Risk weighted assets

42.6 

39.1  


·      On 5 March 2013, Barclays acquired ING Direct UK. This part of the business will be known as Barclays Direct

2013 compared to 2012

·      Income was flat at £1,067m reflecting additional income from Barclays Direct and good mortgage growth offset by reduced contribution from structural hedges.  Other net income of £25m relates to a gain on acquisition of ING Direct UK

·      Credit impairment charges increased £13m to £89m due to increased impairment in unsecured lending

-       Loan loss rate was stable at 27bps (Q1 12: 25bps)

-       90 day arrears rates improved 16bps on UK Personal Loans to 1.4% and increased 4bps on UK mortgages to 0.3%

·      Adjusted operating expenses decreased 7% to £704m driven in part by reduced Financial Services Compensation Scheme costs

·      Adjusted profit before tax improved 29% to £299m, while statutory profit before tax improved by £367m to £299m principally due to the non-recurrence of the Q1 12 provision for PPI redress of £300m

·      Adjusted return on average equity improved to 11.3% (Q1 12: 9.6%). Statutory return on average equity increased to 11.3% (Q1 12: negative 3.5%)

Q1 13 compared to Q412

- Adjusted profit before tax improved 9% to £299m principally due to the acquisition of ING Direct UK, offset partially by higher impairment. Statutory profit before tax improved by £354m to £299m reflecting the non-recurrence of the Q4 12 provision for PPI redress of £330m

- Loans and advances to customers increased 5% to £134.3bn with customer deposits growing 13% to £130.8bn, both reflecting the ING Direct UK acquisition which added £11.4bn customer deposits and £5.3bn mortgage balances

- Risk weighted assets increased 9% to £42.6bn primarily reflecting the ING Direct UK acquisition and other mortgage asset growth

 

 

Results by Business

Europe Retail and Business Banking

Three Months Ended

Three Months Ended


  

31.03.13

31.03.12


Income Statement Information

£m

£m

% Change

Adjusted and statutory basis




Total income net of insurance claims

176 

188 

(6)

Credit impairment charges and other provisions

(70)

(54)

30 

Net operating income

106 

134 

(21)

Operating expenses excluding costs to achieve Transform

(215)

(209)

Costs to achieve Transform

(356)


Operating expenses

(571)

(209)


Other net income


Adjusted and statutory loss before tax

(462)

(72)


  




Performance Measures




Return on average equity

(67.1%)

(10.7%)


Return on average risk weighted assets

(8.6%)

(1.4%)


Cost: income ratio

324%

111%


Loan loss rate (bps)

70 

51 


  




  

As at 31.03.13

As at 31.12.12


Balance Sheet Information

£bn

£bn


Loans and advances to customers at amortised cost

40.0 

39.2 


Customer deposits

17.6 

17.6 


Risk weighted assets

16.4 

15.8 


2013 compared to 2012

- Income declined by 6% to £176m driven by lower net interest income and lower fees and commissions, as a result of reduced mortgage volumes and lower sales of investment products partially offset by foreign currency movements. The customer net interest margin remained stable at 44bps (Q1 12: 44bps)

- Credit impairment charges increased by £16m to £70m as a result of increased recovery balances and deterioration in loss given default within the Spanish and Portuguese home loan portfolios

- Operating expenses increased £362m to £571m largely reflecting costs to achieve Transform of £356m related to restructuring costs to significantly downsize the distribution network

- Loss before tax increased to £462m (Q1 12: £72m) principally due to cost to achieve Transform

Q113 compared to Q4 12

- Loss before tax increased to £462m (Q4 12: £114m) largely as a result of costs to achieve Transform of £356m

- Income increased 9% to £176m driven by higher income from sales of investment products

- Risk weighted assets increased 4% to £16.4bn primarily driven by foreign currency movements



Results by Business

Africa Retail and Business Banking

Three Months Ended

Three Months Ended


  

31.03.13

31.03.12


Income Statement Information

£m

£m

% Change

Adjusted and statutory basis




Total income net of insurance claims

668 

764 

(13)

Credit impairment charges and other provisions

(114)

(106)

Net operating income

554 

658 

(16)

Operating expenses

(474)

(528)

(10)

Other net income


Adjusted and statutory profit before tax

81 

132 

(39)

  




Performance Measures




Return on average equity

1.6%

4.6%


Return on average risk weighted assets

0.9%

1.4%


Cost: income ratio

71%

69%


Loan loss rate (bps)

148 

122 


  




  

As at 31.03.13

As at 31.12.12


Balance Sheet Information

£bn

£bn


Loans and advances to customers at amortised cost

29.7 

29.9 


Customer deposits

19.3 

19.5 


Risk weighted assets

24.9 

24.5 


2013compared to 2012

·      Income declined 13% to £668m largely driven by foreign currency movements relating to the depreciation of major African currencies against Sterling. Excluding the impact of foreign currency movements income remained under pressure with lower transaction volumes.

·      The economic environment in South Africa remained challenging for consumers and credit impairment charges increased £8m to £114m principally reflecting higher loss given default rates and higher charge-offs in the South African home loans recovery book

·      Operating expenses decreased 10% to £474m largely due to foreign currency movements with costs in local currency broadly in line with Q1 12

·      Profit before tax decreased 39% to £81m.  Excluding the impact of foreign currency movements, profit before tax decreased 24%.  Return on average equity declined to 1.6%(Q1 12: 4.6%)

Q1 13 compared to Q412

·      Profit before tax decreased 23% to £81m due to a seasonal reduction in transaction volumes, partially offset by lower impairments in the commercial property portfolio in South Africa

·      Both loans and advances to customers and customer deposits decreased by 1% to £29.7bn and £19.3bn respectively, driven by foreign currency movements

·      Risk weighted assets remained broadly stable at £24.9bn



Results by Business

Barclaycard


Three Months Ended

Three Months Ended


  


31.03.13

31.03.12


Income Statement Information


£m

£m

% Change

Adjusted and statutory basis





Total income net of insurance claims


1,153 

1,033 

12 

Credit impairment charges and other provisions


(303)

(250)

21 

Net operating income


850 

783 

Operating expenses


(496)

(445)

11 

Other net income



Adjusted and statutory profit before tax


363 

347 

  





Performance Measures





Return on average equity


17.9%

17.8%


Return on average risk weighted assets


2.8%

2.8%


Cost: income ratio


43%

43%


Loan loss rate (bps)


340 

309 


  





  


As at 31.03.13

As at 31.12.12


Balance Sheet Information


£bn

£bn


Loans and advances to customers at amortised cost


34.1 

33.8 


Customer deposits


3.8 

2.8 


Risk weighted assets


39.0 

37.8  


2013 compared to 2012

·     Income increased 12% to £1,153m reflecting continued growth across the business predominantly in the UK and US, contributions from Q1 12 acquisitions and stable customer asset margins

·     Credit impairment charges increased 21% to £303m driven by higher volumes, including the impact of portfolio acquisitions, and non-recurrence of provision releases in Q1 12 

-       Impairment loan loss rates in consumer credit cards are trending at low levels in the UK and US

·     Operating expenses increased 11% to £496m due to business growth and the impact of portfolio acquisitions

·     Profit before tax improved 5% to £363m.  Return on average equity improved to 17.9% (Q1 12: 17.8%)

Q113 compared to Q4 12

·     Adjusted profit before tax improved 8% to £363m due to business growth and non-recurring costs in relation to provisions for certain insurance products in Q4 12, partially offset by an increase in impairment due to contribution from acquisitions and foreign exchange movements.  Statutory profit before tax improved by £298m reflecting the non-recurrence of the Q4 12 provision for PPI redress of £270m

·     Loans and advances to customers remained stable at £34.1bn (2012: £33.8bn) reflecting business growth and foreign currency movements which were offset by seasonal pay-downs.  Customer deposits increased to £3.8bn (2012: £2.8bn) driven by business funding initiatives in the US

·     Risk weighted assets increased 3% to £39.0bn primarily driven by foreign currency movements and asset growth



Results by Business

Investment Bank

Three Months Ended

Three Months Ended


  

31.03.13

31.03.12


Income Statement Information

£m

£m

% Change

Adjusted and statutory basis




Fixed Income, Currency and Commodities

2,190 

2,319 

(6)

Equities and Prime Services  

706 

591 

19 

Investment Banking  

558 

515 

Principal Investments  

11 

(18)

Total income

3,463 

3,436 

Credit impairment charges and other provisions

14 

(81)


Net operating income

3,477 

3,355 

Operating expenses excluding costs to achieve Transform

(2,054)

(2,195)

(6)

Costs to achieve Transform

(116)

 -


Operating expenses

(2,170)

(2,195)

(1)

Other net income

22 


Adjusted and statutory profit before tax

1,315 

1,182 

11 

  




Performance Measures




Return on average equity

16.3%

13.8%


Return on average risk weighted assets

1.9%

1.7%


Cost: income ratio

63%

64%


Cost: net operating income ratio

62%

65%


Compensation: income ratio

41%

43%


Loan loss rate (bps)

(5)

17 


  




  

As at 31.03.13

As at 31.12.12


Balance Sheet Information

£bn

£bn


Loans and advances to banks and customers at amortised cost

170.3 

143.5 


Customer deposits

104.2 

75.9 


Assets contributing to adjusted gross leverage

637.6 

567.0 


Risk weighted assets

181.9 

177.9 


 

2013 compared to 2012

- Total Income of £3,463m was up 1%, reflecting an improvement in Equities and Prime Services, and Investment Banking, offset by a decline in Fixed Income, Currency and Commodities (FICC)

-       FICC income declined 6% to £2,190m, reflecting lower contributions from Rates, Commodities and Emerging Markets due to a strong Q1 12 where markets were supported by the European Long-Term Refinancing Operation. There were improvements in Credit and Securitised Products which benefitted from increased volumes and tightening of spreads on positive economic news at the start of the year

-       Equities and Prime Services income increased 19% to £706m across US, Asia and European businesses, reflecting an improvement in global equity markets driven by increased market confidence, strong inflows and market share gains. An increase in client activity in Prime Services further improved the results

-       Investment Banking income increased 8% to £558m, driven by higher income in equity underwriting reflecting increases in client activity and market share gains

- Net credit impairment release of £14m (Q1 12: £81m charge), including a release of £40m across a number of counterparties was offset by charges of £26m driven by a number of single name exposures

- Operating expenses decreased 1% to £2,170m, which included £88m relating to improving infrastructure to meet the requirements of Basel 3 and other regulatory reporting change projects and deliver cost efficiencies.  Q1 13 included £116m of costs to achieve Transform related to restructuring costs. Q1 12 included a £115m charge relating to the setting of inter-bank offered rates

- Cost to net operating income ratio improved 3% to62%. The compensation to income ratio improved to 41% (Q1 12: 43%)

- Profit before tax increased 11% to £1,315m. Return on average equity improved to 16.3% (Q1 12: 13.8%)

Results by Business

Q113 compared to Q412

·      Income of £3,463m was up 34% on Q4 12 reflecting an increase in FICC income and Equities and Prime Services income, partially offset by a reduction in Investment Banking

-       FICC income increased 47% to £2,190m, reflecting seasonally higher contributions from most business areas due to increased volumes and a rally in credit markets

-       Equities and Prime Services income increased 56% to £706m, reflecting improved performance in cash equities and equity derivatives and continued strong performance in Prime Services driven by increased client activity

-       Investment Banking income decreased 10% to £558m, reflecting the lower number of completed advisory deals in Q1 13 compared to Q4 12.  The decrease in advisory was partially offset by higher income in equity underwriting

·      Operating expenses increased 17% to £2,170m, reflecting £116m costs to achieve Transform and a higher performance cost accrual driven by income growth

·      Profit before tax increased 73% to £1,315m

·      Assets contributing to adjusted gross leverage increased 12% to £637.6bn reflecting increases in reverse repurchase agreements and trading portfolio assets, partially offset by a decrease in cash and balances at central banks

·      Risk weighted assets increased 2% to £181.9bn primarily driven by foreign currency movements offset by a reduction in trading book sovereign exposures



Results by Business

Corporate Banking

Three Months Ended

Three Months Ended


  

31.03.13

31.03.12


Income Statement Information

£m

£m

% Change

Adjusted basis




Total income net of insurance claims

772 

849 

(9)

Credit impairment charges and other provisions

(130)

(208)

(38)

Net operating income

642 

641 

Operating expenses excluding costs to achieve Transform

(422)

(437)

(3)

Costs to achieve Transform

(37)

-


Operating expenses

(459)

(437)

Other net expense

(1)


Adjusted and statutory profit before tax

183 

203 

(10)

  




Adjusted profit/(loss) before tax by geographic segment




UK

269 

250 

Europe

(114)

(79)

44 

Rest of the World

28 

32 

(13)

Total  

183 

203 

(10)

  




Performance Measures




Return on average equity

6.1%

6.6%


Return on average risk weighted assets

0.8%

0.8%


Cost: income ratio

59%

51%


Loan loss rate (bps)

74 

117 


  




  

31.03.13

31.12.12


Balance Sheet Information

£bn

£bn


Loans and advances to customers at amortised cost

64.8 

64.3 


Loans and advances to customers at fair value

17.4 

17.6 


Customer deposits

103.3 

99.6 


Risk weighted assets

72.7 

70.9 


 

2013 compared to 2012

- Total income decreased 9% to £772m reflecting a reduction in gains on fair value items to £31m (Q1 12: £78m), increased funding costs, non-recurring income from exited businesses and reduction in legacy portfolios in Europe, partially offset by an increase in UK product income

- Credit impairment charges reduced 38% to £130m. Loan loss rate improved to 74bps (Q1 12: 117bps)

-       UK impairment reduced by £54m to £30m, partly reflecting increased recoveries in 2013

-       Europe impairment charges reduced by £26m to £98m with ongoing action to reduce exposure to the property and construction sector in Spain

- Operating expenses increased 5% to £459m, reflecting coststo achieve Transform of £37m related to restructuring costs in Europe, partially offset by the benefits of prior year restructuring

 

 

 

 

 

 

 

 

Results by Business

- Profit before tax decreased 10% to £183m.  Return on average equity declined to 6.1% (Q1 12: 6.6%)

-       UK profit before tax improved 8% to £269m driven by increased product income, lower impairment and operating expenses, partially offset by lower gains on fair value items

-       Europe loss before tax increased 44% to £114m principally due to costs to achieve Transform and lower income reflecting the impact of exited business lines, partially offset by improved credit impairment charges of £98m (Q1 12: £124m) largely driven by reduced exposure to the property and construction sector in Spain

-       Rest of the World profit before tax decreased by 13% to £28m, reflecting lower income due to exited businesses partially offset by improved operating expenses as a result of prior year restructuring

Q1 13 compared to Q4 12

- Adjusted profit before tax tripled to £183m, reflecting reduced impairment charges in the UK and Europe and gains on fair value items of £31m (Q4 12: £10m). Statutory profit before tax improved by £522m reflecting the non-recurrence of the Q4 12 provision for interest rate hedging products redress of £400m

- Customer deposits increased 4% to £103.3bn primarily within the UK. Loans and advances to customers remained stable at £64.8bn



Results by Business

Wealth and Investment Management

Three Months Ended

Three Months Ended


  

31.03.13

31.03.12


Income Statement Information

£m

£m

% Change

Adjusted and statutory basis




Total income net of insurance claims

469 

452 

Credit impairment charges and other provisions

(14)

(7)

100 

Net operating income

455 

445 

Operating expenses

(400)

(395)

Other net income


Adjusted and statutory profit before tax

60 

50 

20 

  




Performance Measures




Return on average equity

7.9%

7.0%


Return on average risk weighted assets

1.1%

1.1%


Cost: income ratio

85%

87%


Loan loss rate (bps)

25 

16 


  




  

As at 31.03.13

As at 31.12.12


Balance Sheet Information

£bn

£bn


Loans and advances to customers at amortised cost

22.2 

21.2 


Customer deposits

58.3 

53.8 


Risk weighted assets

17.1 

16.1 


Total client assets

200.2 

186.0 


 

2013 compared to 2012

- Income increased by 4% to £469m driven by the High Net Worth businesses. Net Interest income increased driven by growth in deposit and lending balances primarily in the High Net Worth businesses.  Net fee and commission income remained broadly in line

- Operating expenses of £400m were broadly flat against Q1 12 as ongoing costs of the strategic investment programme were offset by cost control initiatives

- Profit before tax increased 20% to £60m.  Return on average equity increased to 7.9% (Q1 12: 7.0%)

Q1 13 compared to Q4 12

- Profit before tax decreased 43% to £60m primarily due to increased funding costs and costs of the ongoing strategic investment programme

- Loans and advances to customers increased 5% to £22.2bn and customer deposits increased 8% to £58.3bn primarily driven by growth in the High Net Worth businesses

- Client assets increased to £200.2bn (2012: £186.0bn) driven by net new assets in the High Net Worth businesses and favourable market movements



Results by Business

Head Office and Other Operations


Three Months Ended

Three Months Ended

  


31.03.13

31.03.12

Income Statement Information


£m

£m

Adjusted basis




Total (expense)/income net of insurance claims


(34)

317 

Credit impairment charges and other provisions


(2)

Net operating income


(34)

315 

Operating expenses excluding costs to achieve Transform


(17)

Costs to achieve Transform


(5)

Operating expenses


(22)

Other net income


Adjusted (loss)/profit before tax  


(53)

321 

  




Adjusting items




Own credit


(251)

(2,620)

Statutory loss before tax  


(304)

(2,299)

  




  


As at 31.03.13

As at 31.12.12

Balance Sheet Information  


£bn

£bn

Risk weighted assets


3.2 

5.3 

2013 compared to 2012

- Adjusted income loss of £34m (Q1 12: income of £317m) deteriorated principally due to the non-recurrence of gains related to hedges of employee share awards in Q1 12 of £235m

- Operating expenses of £22m (Q1 12: gain of £1m) increased by £23m, including costs related to the Salz review and costs to achieve Transform

- Adjusted loss before tax of £53m (Q1 12: profit of £321m). Statutory loss before tax of £304m (Q1 12: £2,299m) included an own credit charge of £251m (Q1 12: £2,620m)

Q1 13 compared to Q4 12

- Adjusted expense of £34m reduced from £53m in Q4 12

- Operating expenses decreased by £55m to £22m mainly due the non-recurrence of costs relating to the Transform strategic review and the bank levy, and a reduction in costs arising from litigation and regulatory investigations

- Adjusted loss before tax improved to £53m (Q4 12: £132m). Statutory loss before tax of £304m (Q4 12: £692m) included an own credit charge of £251m (Q4 12: £560m)


Appendix I - Quarterly Results Summary

  

Q113


Q412

Q312

Q212

Q112


Q411

Q311

Q211

UK Retail and Business Banking

£m


£m

£m

£m

£m


£m

£m

£m

Adjusted basis  











Total income net of insurance claims  

1,067 


1,077 

1,123 

1,118 

1,066 


1,129 

1,244 

1,168 

Credit impairment charges and other provisions  

(89)


(71)

(76)

(46)

(76)


(156)

(105)

(131)

Net operating income  

978 


1,006 

1,047 

1,072 

990 


973 

1,139 

1,037 

Operating expenses excluding bank levy

(704)


(718)

(689)

(713)

(757)


(790)

(711)

(658)

UK bank levy


(17)

-

-

-


(22)

-

-

Operating expenses   

(704)


(735)

(689)

(713)

(757)


(812)

(711)

(658)

Other net income/(expense)

25 


-

(1)


(1)

Adjusted profit before tax  

299 


275 

358 

360 

232 


162 

429 

378 

   











Adjusting items  











Provision for PPI redress  


(330)

(550)

-

(300)


-

-

(400)

Statutory profit/(loss) before tax  

299 


(55)

(192)

360 

(68)


162 

429 

(22)

  











Europe Retail and Business Banking











Adjusted and statutory basis  











Total income net of insurance claims  

176 


161 

168 

191 

188 


198 

309 

254 

Credit impairment charges and other provisions  

(70)


(74)

(58)

(71)

(54)


(65)

(46)

(40)

Net operating income  

106 


87 

110 

120 

134 


133 

263 

214 

Operating expenses excluding bank levy and costs to achieve Transform

(215)


(185)

(193)

(200)

(209)


(290)

(244)

(327)

UK bank levy


(20)

-

-

-


(21)

-

-

Costs to achieve Transform

(356)


-

-

-

-


-

-

-

Operating expenses   

(571)


(205)

(193)

(200)

(209)


(311)

(244)

(327)

Other net income



Adjusted (loss)/profit before tax

(462)


(114)

(81)

(76)

(72)


(176)

21 

(109)

  











Adjusting items  











Goodwill impairment


-

-

-

-


(427)

-

-

Statutory (loss)/profit before tax  

(462)


(114)

(81)

(76)

(72)


(603)

21 

(109)

  











Africa Retail and Business Banking











Adjusted and statutory basis  











Total income net of insurance claims  

668 


721 

714 

729 

764 


806 

883 

858 

Credit impairment charges and other provisions  

(114)


(142)

(176)

(208)

(106)


(86)

(108)

(125)

Net operating income  

554 


579 

538 

521 

658 


720 

775 

733 

Operating expenses excluding bank levy

(474)


(455)

(506)

(471)

(528)


(468)

(584)

(556)

UK bank levy


(24)

-

-

-


(23)

-

-

Operating expenses  

(474)


(479)

(506)

(471)

(528)


(491)

(584)

(556)

Other net income



-

Adjusted profit before tax  

81 


105 

34 

51 

132 


231 

191 

178 

  











Adjusting items  











Gains on acquisitions and disposals   

-


-

-

-

-


-

-

Statutory profit before tax  

81 


105 

34 

51 

132 


231 

193 

178 



Appendix I - Quarterly Results Summary

  

Q113


Q412

Q312

Q212

Q112


Q411

Q311

Q211

Barclaycard

£m


£m

£m

£m

£m


£m

£m

£m

Adjusted basis  











Total income net of insurance claims  

1,153 


1,140 

1,092 

1,079 

1,033 


1,037 

1,177 

1,072 

Credit impairment charges and other provisions  

(303)


(286)

(271)

(242)

(250)


(287)

(356)

(351)

Net operating income  

850 


854 

821 

837 

783 


750 

821 

721 

Operating expenses excluding bank levy

(496)


(508)

(432)

(441)

(445)


(478)

(462)

(455)

UK bank levy


(16)

-

-

-


(16)

-

-

Operating expenses

(496)


(524)

(432)

(441)

(445)


(494)

(462)

(455)

Other net income



Adjusted profit before tax  

363 


335 

396 

404 

347 


261 

367 

273 

   











Adjusting items  











Provision for PPI redress  


(270)

(150)

-

-


-

-

(600)

Goodwill impairment


-

-

-

-


-

-

(47)

Statutory profit/(loss) before tax  

363 


65 

246 

404 

347 


261 

367 

(374)

  











Investment Bank











Adjusted and statutory basis  











Fixed Income, Currency and Commodities

2,190 


1,494 

1,675 

1,761 

2,319 


933 

1,299 

1,623 

Equities and Prime Services

706 


454 

523 

615 

591 


300 

346 

615 

Investment Banking

558 


620 

493 

509 

515 


518 

402 

533 

Principal Investments


26 

30 

139 

11 


36 

89 

99 

Total income  

3,463 


2,594 

2,721 

3,024 

3,436 


1,787 

2,136 

2,870 

Credit impairment charges and other provisions  

14 


(3)

(121)

(81)


(89)

(114)

79 

Net operating income  

3,477 


2,595 

2,718 

2,903 

3,355 


1,698 

2,022 

2,949 

Operating expenses excluding bank levy and costs to achieve Transform

(2,054)


(1,644)

(1,737)

(1,849)

(2,195)


(1,527)

(1,818)

(2,068)

UK bank levy


(206)

-

-

-


(199)

-

-

Costs to achieve Transform

(116)


-

-

-

-


-

-

-

Operating expenses  

(2,170)


(1,850)

(1,737)

(1,849)

(2,195)


(1,726)

(1,818)

(2,068)

Other net income/(expense)


15 

22 


(4)

Adjusted and statutory profit/(loss) before tax

1,315 


760 

988 

1,060 

1,182 


(32)

210 

888 

  











Corporate Banking











Adjusted basis  











Total income net of insurance claims  

772 


746 

717 

734 

849 


753 

902 

866 

Credit impairment charges and other provisions  

(130)


(240)

(214)

(223)

(208)


(252)

(284)

(328)

Net operating income  

642 


506 

503 

511 

641 


501 

618 

538 

Operating expenses excluding UK bank levy and costs to achieve Transform

(422)


(412)

(421)

(402)

(437)


(469)

(480)

(503)

UK bank levy


(39)

-

-

-


(43)

-

-

Costs to achieve Transform  

(37)


-

-

-

-


-

-

-

Operating expenses

(459)


(451)

(421)

(402)

(437)


(512)

(480)

(503)

Other net income/(expense)


(1)

(1)


Adjusted profit/(loss) before tax  

183 


61 

88 

108 

203 


(10)

140 

37 

   











Adjusting items  











Goodwill impairment


-

-

-

-


(123)

-

-

Provision for interest rate hedging products redress  


(400)

-

(450)

-


-

-

-

Losses on disposal


-

-

-

-


(9)

-

(64)

Statutory profit/(loss) before tax  

183 


(339)

88 

(342)

203 


(142)

140 

(27)



Appendix I - Quarterly Results Summary

  

Q113


Q412

Q312

Q212

Q112


Q411

Q311

Q211

Wealth and Investment Management

£m


£m

£m

£m

£m


£m

£m

£m

Adjusted and statutory basis  











Total income net of insurance claims  

469 


483 

443 

442 

452 


453 

462 

429 

Credit impairment charges and other provisions  

(14)


(13)

(6)

(12)

(7)


(10)

(12)

(9)

Net operating income  

455 


470 

437 

430 

445 


443 

450 

420 

Operating expenses excluding bank levy

(400)


(361)

(369)

(380)

(395)


(398)

(380)

(386)

UK bank levy


(4)

-

-

-


(1)

-

-

Operating expenses   

(400)


(365)

(369)

(380)

(395)


(399)

(380)

(386)

Other net income/(expense)  


(1)

-


(1)

-

-

Adjusted and statutory profit before tax

60 


105 

70 

49 

50 


43 

70 

34 

  











Head Office and Other Operations











Adjusted basis  











Total (expense)/income net of insurance claims  

(34)


(53)

22 

70 

317 


49 

(112)

33 

Credit impairment charges and other provisions  


(3)

(2)


(1)

(3)

Net operating (expense)/income  

(34)


(52)

22 

67 

315 


48 

(111)

30 

Operating expenses excluding bank levy and costs to achieve Transform

(17)


(59)

(7)

(101)


(26)

(7)

(13)

UK bank levy


(18)

-

-

-


-

-

-

Costs to achieve Transform  

(5) 


-

-

-

-


-

-

-

Operating expenses   

(22)


(77)

(7)

(101)


(26)

(7)

(13)

Other net income/(expense)


(3)

(3)

22 


-

(2)

Adjusted (loss)/profit before tax

(53)


(132)

12 

(12)

321 


22 

(118)

15 

   











Adjusting items  











Own Credit

(251)


(560)

(1,074)

(325)

(2,620)


(263)

2,882 

440 

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  

(304)


(692)

(1,062)

(110)

(2,299)


866 

965 

394 


Appendix II - Performance Management

Returns on Equity by Business

Returns on average equity and average tangible equity are calculated using profit after tax and non-controlling interests for the period, divided by average allocated equity or tangible equity as appropriate. Average allocated equity has been calculated as 10.5% of average risk weighted assets for each business, adjusted for capital deductions, including goodwill and intangible assets, reflecting the assumptions the Group uses for capital planning purposes. The higher capital level currently held, reflecting the Core Tier 1 capital ratio of 11.0% as at 31 March 2013, is allocated to Head Office and Other Operations. Average allocated tangible equity is calculated using the same method but excludes goodwill and intangible assets.

 

  

Adjusted


Statutory

 

  

Three Months Ended

Three Months Ended


Three Months Ended

Three Months Ended

  

31.03.13

31.03.12


31.03.13

31.03.12

Return on Average Equity

%

%


%

%

UK RBB

11.3 

9.6 


11.3 

(3.5)

Europe RBB

(67.1)

(10.7)


(67.1)

(10.7)

Africa RBB

1.6 

4.6 


1.6 

4.6 

Barclaycard

17.9 

17.8 


17.9 

17.8 

Investment Bank

16.3 

13.8 


16.3 

13.8 

Corporate Banking

6.1 

6.6 


6.1 

6.6 

Wealth and Investment Management

7.9 

7.0 


7.9 

7.0 

Group excluding Head Office and Other Operations

9.1 

10.5 


9.1 

8.6 

Head Office and Other Operations impact

(1.5)

1.9 


(2.6)

(13.1)

Total

7.6 

12.4 


6.5 

(4.5)

  


  



  

 

  

Adjusted


Statutory

 

  

Three Months Ended

Three Months Ended


Three Months Ended

Three Months Ended

  

31.03.13

31.03.12


31.03.13

31.03.12

Return on Average Tangible Equity

%

%


%

%

UK RBB

20.1 

18.3 


20.1 

(6.7)

Europe RBB

(73.4)

(11.7)


(73.4)

(11.7)

Africa RBB

7.6 

11.8 


7.6 

11.8 

Barclaycard

24.1 

24.0 


24.1 

24.0 

Investment Bank

16.9 

14.3 


16.9 

14.3 

Corporate Banking

6.4 

6.9 


6.4 

6.9 

Wealth and Investment Management

10.5 

9.7 


10.5 

9.7 

Group excluding Head Office and Other Operations

10.9 

12.6 


10.9 

10.4 

Head Office and Other Operations impact

(1.9)

2.0 


(3.3)

(15.7)

Total

9.0 

14.6 


7.6 

(5.3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1        The return on average tangible equity for Africa RBB has been calculated including amounts relating to Absa Group's non-controlling interests.

 

Appendix II - Performance Management

  

Adjusted


Statutory

 

  

Three months ended

Three months ended


Three months ended

Three months ended

  

31.03.13

31.03.12


31.03.13

31.03.12

Profit attributable to equity holders of the parent

£m

£m


£m

£m

UK RBB

218 

165 


218 

(61)

Europe RBB

(363)

(60)


(363)

(60)

Africa RBB

33 


33 

Barclaycard

242 

220 


242 

220 

Investment Bank

823 

747 


823 

747 

Corporate Banking

120 

133 


120 

133 

Wealth and Investment Management

45 

33 


45 

33 

Head Office and Other Operations  

(84)

337 


(255)

(1,643)

Total

1,010

1,608 


839 

(598)

  


  



  

 

  

Average Equity  


Average Tangible Equity  

 

  

Three months ended

Three months ended


Three months ended

Three months ended


31.03.13

31.03.12


31.03.13

31.03.12


£m

£m


£m

£m

UK RBB

7,705 

6,890 


4,337 

3,625 

Europe RBB

2,165 

2,220 


1,977 

2,037 

Africa RBB

2,270 

2,866 


938 

1,370 

Barclaycard

5,408 

4,945 


4,022 

3,673 

Investment Bank

20,166 

21,640 


19,469 

20,910 

Corporate Banking

7,868 

8,093 


7,497 

7,708 

Wealth and Investment Management

2,283 

1,894 


1,722 

1,361 

Head Office and Other Operations

4,044 

4,694 


4,027 

4,694 

Total

51,909 

53,242 


43,989 

45,378 

 

 

 

 


 

Three months ended 31.03.13

 

Additional adjusted performance measures by business excluding costs to achieve Transform

Costs to achieve Transform

£m

Profit before tax

£m

Return on average equity

%

Cost: income ratio

%

UK RBB

299 

11.3 

66 

Europe RBB

(356)

(106)

(16.0)

122

Africa RBB

81 

1.6 

71 

Barclaycard

363 

17.9 

43 

Investment Bank

(116)

1,431 

17.9 

59 

Corporate Banking

(37)

220 

7.5 

55 

Wealth and Investment Management

60 

7.9 

85 

Head Office and Other Operations

(48)

(1.7)

Group excluding costs to achieve Transform

(514)

2,300 

10.6 

62 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1        Includes risk weighted assets and capital deductions in Head Office and Other Operations, plus the residual balance of average shareholders' equity and tangible equity.

2       Group average shareholders' equity and average shareholders' tangible equity excludes the cumulative impact of own credit on retained earnings for the calculation of adjusted performance measures. 



Appendix II - Performance Management

Margins and Balances



  


  




  



  


  




Analysis of Net Interest Margin



  


  




  

RBB - UK margin

RBB - Europe margin

RBB - Africa margin

Barclay-

card margin

Corporate Banking margin

Wealth and Investment Management margin

Total RBB, Barclaycard, Corporate and Wealth margin

RBB, Barclaycard, Corporate and Wealth interest income

Three Months Ended 31.03.13

%

%

%

%

%

%

%

£m

Customer asset margin/ interest income

1.10 

0.45 

2.92 

9.49 

1.32 

0.85 

2.14 

1,723 

Customer liability margin/ interest income

0.96 

0.42 

2.73 

(0.35)

0.97 

1.02 

1.05 

786 

  



  


  




Customer generated margin/ interest income

1.03 

0.44 

2.85 

8.77 

1.12 

0.97 

1.62 

2,509 

Non-customer generated margin/ interest income

0.25 

0.37 

0.18 

(0.28)

0.11 

0.14 

0.17 

266 

  



  


  




Net interest margin/ income

1.28 

0.81 

3.03 

8.49 

1.23 

1.11 

1.79 

2,775 

  



  


  




Average customer assets (£m)

 130,546 

 40,494 

 30,451 

 35,887 

 66,741 

 22,221 

 326,340 

n/a

Average customer liabilities (£m)

 118,721 

 14,307 

 18,925 

 2,822 

 93,423 

 55,642 

 303,840 

n/a

  



  


  




Three Months Ended 31.03.12



  


  




Customer asset margin/ interest income

0.99 

0.41 

3.10 

9.53 

1.25 

0.63 

2.04 

1,632 

Customer liability margin/ interest income

0.97 

0.53 

2.79 

-

1.27 

1.08 

1.19 

817 

  



  


  




Customer generated margin/ interest income

0.98 

0.44 

2.98 

9.53 

1.26 

0.95 

1.65 

2,449 

Non-customer generated margin/ interest income

0.36 

0.36 

0.09 

(0.79)

0.04 

0.30 

0.18 

272 

  



  


  




Net interest margin/ income

1.34 

0.80 

3.07 

8.74 

1.30 

1.25 

1.83 

2,721 

  



  


  




Average customer assets (£m)

 121,898 

 41,956 

 33,212 

 32,844 

 73,008 

 18,914 

 321,832 

n/a

Average customer liabilities (£m)

 109,879 

 15,730 

 20,238 

-

 83,515 

 47,287 

 276,649 

n/a

 

- Net interest income for the Retail Banking businesses, Barclaycard, Corporate Banking and Wealth and Investment Management businesses remained stable at £2,775m (Q1 12: £2,721m), reflecting business growth in Barclaycard, UK RBB and Wealth and Investment Management. This was partially offset by foreign exchange movements and lower volumes in Africa RBB and the withdrawal from certain business lines in Europe RBB and Corporate Banking

- The Retail Banking businesses, Barclaycard, Corporate Banking and Wealth and Investment Management net interest margin reduced 4bps to 179bps, reflecting reductions in contribution from customer liabilities and structural hedges. Customer generated margin remained stable at 162bps (Q1 12: 165bps) with an increase in customer asset margin to 2.14% (Q1 12: 2.04%)

- Group net interest income including contributions for the Investment Bank and Head Office and Other Operations was £2,877m (Q1 12: £2,868m). The total contribution from Group product and equity structural hedges reduced £46m to £391m

 

 

 

 

 

 

 

 

 

 

1        The comparatives have been restated to reflect the reallocation of elements of the Head Office results to businesses and portfolio restatements between businesses.


Appendix III - Balance Sheet and Capital

Consolidated Summary Balance Sheet


  

  

As at

As at

  

31.03.13

31.12.12

Assets

£m

£m

Cash, balances at central banks and items in the course of collection

72,463 

87,664 

Trading portfolio assets

168,290 

146,352 

Financial assets designated at fair value

48,802 

46,629 

Derivative financial instruments

460,500 

469,156 

Available for sale investments

85,390 

75,109 

Loans and advances to banks

43,893 

40,462 

Loans and advances to customers

457,283 

423,906 

Reverse repurchase agreements and other similar secured lending

234,879 

176,522 

Other assets

24,622 

22,535 

Total assets

1,596,122 

1,488,335 

  


  

Liabilities


  

Deposits and items in the course of collection due to banks

83,731 

78,599 

Customer accounts

437,548 

385,411 

Repurchase agreements and other similar secured borrowing

260,466 

217,178 

Trading portfolio liabilities

61,412 

44,794 

Financial liabilities designated at fair value

80,044 

78,561 

Derivative financial instruments  

453,955 

462,721 

Debt securities in issue

112,207 

119,525 

Subordinated liabilities

24,557 

24,018 

Other liabilities

20,771 

17,542 

Total liabilities

1,534,691 

1,428,349 

  


  

Shareholders' Equity


  

Called up share capital and share premium

13,977 

12,477 

Other reserves

1,772 

1,253 

Retained earnings

36,391 

36,885 

Shareholders' equity excluding non-controlling interests

52,140 

50,615 

Non-controlling interests

9,291 

9,371 

Total shareholders' equity

61,431 

59,986 

  


  

Total liabilities and shareholders' equity

1,596,122 

1,488,335 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1        The comparatives have been restated to reflect the implementation of IFRS 10 Consolidated Financial Statements and IAS 19 Employee Benefits (Revised 2011).


Appendix III - Balance Sheet and Capital

Key Capital Ratios 

As at

As at

   

31.03.13

31.12.121

Core Tier 1  

11.0%

10.8%

Tier 1  

13.3%

13.2%

Total capital  

17.2%

17.0%

   



Capital Resources  

£m

£m

Shareholders' equity (excluding non-controlling interests) per balance sheet  

52,140 

50,615 

Own credit cumulative loss

1,034 

804 

Unrealised gains on available for sale debt securities

(475)

(417)

Unrealised gains on available for sale equity (recognised as tier 2 capital)

(136)

(110)

Cash flow hedging reserve

(1,963)

(2,099)

   



Non-controlling interests per balance sheet  

9,291 

9,371 

- Less: Other Tier 1 capital - preference shares  

(6,197)

(6,203)

- Less: Non-controlling Tier 2 capital  

(583)

(547)

Other regulatory adjustments to non-controlling interests  

(141)

(171)

   



Other regulatory adjustments and deductions:  



Defined benefit pension adjustment

496 

49 

Goodwill and intangible assets

(7,623)

(7,622)

50% excess of expected losses over impairment

(798)

(648)

50% of securitisation positions  

(897)

(997)

Other regulatory adjustments  

(372)

(303)

Core Tier 1 capital  

43,776 

41,722 

   



Other Tier 1 capital:  



Preference shares  

6,197 

6,203 

Tier 1 notes

535 

509 

Reserve Capital Instruments  

2,914 

2,866 

   



Regulatory adjustments and deductions:  



50% of material holdings  

(481)

(241)

50% of the tax on excess of expected losses over impairment  

24 

176 

Total Tier 1 capital  

52,965 

51,235 

   



Tier 2 capital:  



Undated subordinated liabilities  

1,638 

1,625 

Dated subordinated liabilities  

14,409 

14,066 

Non-controlling Tier 2 capital  

583 

547 

Reserves arising on revaluation of property

24 

39 

Unrealised gains on available for sale equity

139 

110 

Collectively assessed impairment allowances  

1,980 

2,002 

   



Tier 2 deductions:  



50% of material holdings  

(481)

(241)

50% excess of expected losses over impairment (gross of tax)  

(822)

(824)

50% of securitisation positions  

(897)

(997)

   



Total capital regulatory adjustments and deductions:  



Investments that are not material holdings or qualifying holdings  

(1,168)

(1,139)

Other deductions from total capital  

(102)

(550)

Total regulatory capital   

68,268 

65,873 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1          The comparatives have been restated to reflect the implementation of IFRS 10 Consolidated Financial Statements and IAS 19 Employee Benefits (Revised 2011).

2          The capital impacts of these items are net of tax.

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

 

 

 

 

 

Appendix III - Balance Sheet and Capital

 

 

·      The Core Tier 1 ratio increased to 11.0% (2012: 10.8%) reflecting an increase in Core Tier 1 capital to £43.8bn (2012: £41.7bn), partially offset by a 3% increase in risk weighted assets to £397.9bn (2012: £387.4bn)
 
·      Barclays generated £0.6bn Core Tier 1 capital from earnings, which excludes movements in own credit, after absorbing the impact of dividends paid.  Other material movements in Core Tier 1 capital include:

 

-       £1.1bn increase due to foreign currency movements, primarily due to appreciation of Euro and US Dollar against Sterling, which was broadly offset by foreign currency movements in risk weighted assets

-       £0.8bn increase in share capital and share premium due to warrants exercised

-       £0.3bn net decrease in reserves due to share purchases to settle share awards

 

Risk Weighted Assets by Business 

As at

31.03.13

As at

31.12.121

  

£m

£m

UK RBB

42,613 

39,088 

Europe RBB

16,358 

15,795 

Africa RBB

24,929 

24,532 

Barclaycard

39,021 

37,836 

Investment Bank

181,922 

177,884 

Corporate Banking

72,731 

70,858 

Wealth and Investment Management

17,092 

16,054 

Head Office and Other Operations

3,188 

5,326 

Total

397,854 

387,373 

 



Movement in Risk Weighted Assets

Risk Weighted Assets


£bn

As at 1 January 2013

387.4  

Foreign exchange

8.5  

Methodology and model changes

2.3  

Business activity

Change in risk parameters

(0.3)

As at 31 March 2013

397.9 

 

 

·         Risk weighted assets increased 3% to £397.9bn, principally reflecting:

-       Foreign exchange movements of £8.5bn primarily due to the appreciation of Euro and US Dollar against Sterling during the period
-       Methodology and model changes, primarily model recalibration resulting in a £2.3bn increase 
-       Business activity being broadly flat, with the largest components being a £3.0bn decrease in the Investment Bank primarily relating to reductions in trading book sovereign exposures offset by a £2.5bn increase in UK RBB primarily driven by the ING Direct UK acquisition and other mortgage asset growth
-       These were offset by a £0.3bn decrease in risk parameters driven by improvements in underlying risk profiles and market conditions

 

 

 

 

 

1        The comparatives have been restated to reflect the implementation of IFRS 10 Consolidated Financial Statements, IAS 19 Employee Benefits (revised 2011), the reallocation of elements of the Head Office results to businesses and portfolio restatements between businesses.



Appendix III - Balance Sheet and Capital

Balance Sheet Leverage


  

  

As at

As at   

  

31.03.13

31.12.12

  

£m

£m

Total assets

1,596,122 

1,488,335 

Counterparty netting

(378,426)

(387,672)

Collateral on derivatives

(47,147)

(46,855)

Net settlement balances and cash collateral

(94,862)

(71,718)

Goodwill and intangible assets

(7,910)

(7,915)

Customer assets held under investment contracts

(1,569)

(1,542)

Adjusted total tangible assets

1,066,208 

 972,633 

Total qualifying Tier 1 capital

52,965 

51,235 

Adjusted gross leverage

20x

19x

Adjusted gross leverage (excluding liquidity pool)

17x

16x

Ratio of total assets to shareholders' equity

26x

25x

Ratio of total assets to shareholders' equity (excluding liquidity pool)

24x

22x

- Barclays continues to manage its balance sheet within limits and targets for balance sheet usage

- Adjusted gross leverage increased to 20x (2012: 19x) due to qualifying Tier 1 capital increasing by 3% to £53bn and adjusted total tangible assets increasing by 10% to £1,066bn

- At month ends during Q1 13, the ratio moved in a range from 20x to 21x (full year 2012: 19x to 23x) primarily due to fluctuations in collateralised reverse repurchase lending and high quality trading portfolio assets

- Adjusted total tangible assets include cash and balances at central banks of £69.3bn (2012: £86.2bn). Excluding these balances, the balance sheet leverage would be 19x (2012: 17x). Excluding the whole liquidity pool, leverage would be 17x (2012: 16x)

- The ratio of total assets to total shareholders' equity was 26x (2012: 25x) and during Q1 13 moved within a month end range of 26x to 27x (full year 2012: 25x to 28x), driven by fluctuations in collateralised reverse repurchase lending, high quality trading portfolio assets and settlement balances

 

 

 

 

 

1        The comparatives have been restated to reflect the implementation of IFRS 10 Consolidated Financial Statements and IAS 19 Employee Benefits (Revised 2011).

2       Includes Liquidity Pool of £141bn (2012: £150bn).

3        Comprising financial assets designated at fair value and associated cash balances.

      


Appendix IV - Credit Risk

Retail and Wholesale Loans and Advances to Customers and Banks

As at 31.03.13

Gross

 L&A

Impairment Allowance

L&A Net of Impairment

Credit Risk

Loans

CRLs % of Gross L&A

Loan Impairment Charges

Loan Loss

 Rate

  

£m

£m

£m

£m

%

£m

bps

Total retail

240,061 

4,687 

235,374 

8,621 

3.6 

561 

95 

Wholesale - customers

225,667 

3,124 

222,543 

6,054 

2.7 

145 

26 

Wholesale - banks

43,294 

35 

43,259 

54 

0.1 

(8)

(7)

Total wholesale

268,961 

3,159 

265,802 

6,108 

2.3 

137 

21 

  






  

  

Loans and advances at amortised cost

509,022 

7,846 

501,176 

14,729 

2.9 

698 

56 

Traded loans

2,523 

n/a

2,523 



  

  

Loans and advances designated at fair value

21,659 

n/a

21,659 



  

  

Loans and advances held at fair value

24,182 

n/a

24,182 



  

  

  






  

  

Total loans and advances

533,204 

7,846 

525,358 



  

  

  






  

  

As at 31.12.12






  

  

Total retail

232,672 

4,635 

228,037 

8,821 

3.8 

2,075 

89 

Wholesale - customers

199,423 

3,123 

196,300 

6,252 

3.1 

1,251 

63 

Wholesale - banks

40,072 

41 

40,031 

51 

0.1 

(23)

(6)

Total wholesale

239,495 

3,164 

236,331 

6,303 

2.6 

1,228 

51 

  






  

  

Loans and advances at amortised cost

472,167 

7,799 

464,368 

15,124 

3.2 

3,303 

70 

Traded loans

2,410 

n/a

2,410 



  

  

Loans and advances designated at fair value

21,996 

n/a

21,996 



  

  

Loans and advances held at fair value

24,406 

n/a

24,406 



  

  

  






  

  

Total loans and advances

496,573 

7,799 

488,774 



  

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1        Loan impairment charge as at December 2012 is the charge for the 12 month period.

2       Comparatives have been restated to reflect the implementation of IFRS 10 Consolidated Financial Statements and portfolio restatements between businesses.



Appendix IV - Credit Risk

Retail Loans and Advances to Customers and Banks at Amortised Cost

  


As at 31.03.13

Gross L&A

Impairment Allowance

L&A Net of Impairment

Credit Risk Loans

CRLs % of Gross L&A

Loan Impairment Charges1,4

Loan Loss  Rates

  

£m

£m

£m

£m

%

£m

bps

UK RBB

 136,104 

 1,349 

 134,755 

 2,819 

 2.1 

 89 

 27 

Europe RBB

 40,793 

 600 

 40,193 

 1,747 

 4.3 

 70 

 70 

Africa RBB

 23,786 

 724 

 23,062 

 1,659 

 7.0 

 98 

 167 

Barclaycard

 36,093 

 1,941 

 34,152 

 2,303 

 6.4 

 303 

 340 

Corporate Banking

 631 

 56 

 575 

 59 

 9.4 

 - 

 - 

Wealth and Investment Management

 2,654 

 17 

 2,637 

 34 

 1.3 

 1 

 15 

Total

 240,061 

 4,687 

 235,374 

 8,621 

 3.6 

 561 

 95 

  






  


As at 31.12.12






  


UK RBB

 129,682 

 1,369 

 128,313 

 2,883 

2.2 

 269 

 21 

Europe RBB

 39,997 

 560 

 39,437 

 1,734 

4.3 

 257 

 64 

Africa RBB

 23,987 

 700 

 23,287 

 1,790 

7.5 

 472 

 197 

Barclaycard

 35,732 

 1,911 

 33,821 

 2,288 

6.4 

 1,050 

 294 

Corporate Banking

 739 

 79 

 660 

 92 

12.4 

 27 

 365 

Wealth and Investment Management

 2,535 

 16 

 2,519 

 34 

1.3 

 - 

 - 

Total

 232,672 

 4,635 

 228,037 

 8,821 

3.8 

 2,075 

 89 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1          Loan impairment charges, comprising impairment on loans and advances and charges in respect of undrawn facilities and guarantees.

2          Includes loans and advances to business customers.

3          Primarily comprises retail portfolios in India and UAE.

4          Loan impairment charge as at December 2012 is the charge for the 12 month period.

5          Comparatives have been restated to reflect the implementation of IFRS 10 Consolidated Financial Statements and the portfolio restatements between businesses.

 

 

 

 

 

Appendix IV - Credit Risk

 

Wholesale Loans and Advances to Customers and Banks at Amortised Cost

  


 

As at 31.03.13

Gross

L&A

Impairment Allowance

L&A Net of Impairment

Credit

Risk Loans

CRLs % of Gross L&A

Loan Impairment Charges

Loan Loss Rates


£m

£m

£m

£m

%

£m

bps

Africa RBB

 7,416 

 222 

 7,194 

715 

9.6 

 16 

 88 

Investment Bank

 170,871 

 562 

 170,309 

583 

0.3 

(20)

(5)

Corporate Banking

 69,069 

 2,225 

 66,844 

4,159 

6.0 

 128 

 75 

- UK

 53,372 

 423 

 52,949 

1,288 

2.4 

 30 

 23 

- Europe

 8,186 

 1,605 

 6,581 

2,632 

32.2 

 96 

 477 

- Rest of World

 7,511 

 197 

 7,314 

239 

3.2 

 2 

 11 

Wealth and Investment Management

 20,096 

 135 

 19,961 

632 

3.1 

 13 

 26 

Head Office and Other Operations

 1,509 

 15 

 1,494 

19 

1.3 

 - 

 - 

Total

 268,961 

 3,159 

 265,802 

6,108 

2.3 

 137 

 21 

  



  

  


  


As at 31.12.12



  

  


  


Africa RBB

 7,313 

 250 

 7,063 

681 

9.3 

 160 

 219 

Investment Bank

 144,143 

 586 

 143,557 

768 

0.5 

 192 

 13 

Corporate Banking

 67,337 

 2,171 

 65,166 

4,232 

6.3 

 838 

 124 

- UK

 52,667 

 428 

 52,239 

 1,381 

2.6 

 279 

 53 

- Europe

 8,122 

 1,536 

 6,586 

 2,607 

32.1 

 527 

 649 

- Rest of World

 6,548 

 207 

 6,341 

 244 

3.7 

 32 

 49 

Wealth and Investment Management

 19,236 

 141 

 19,095 

603 

3.1 

 38 

 20 

Head Office and Other Operations

 1,466 

 16 

 1,450 

19 

1.3 

 - 

 - 

Total

 239,495 

 3,164 

 236,331 

6,303 

2.6 

 1,228 

 51 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1        Investment Bank gross loans and advances include cash collateral and settlement balances of £110,165m as at 31 March 2013 and £85,116m as at 31 December 2012. Excluding these balances CRLs as a proportion of gross loans and advances were 1.0% and 1.3% respectively.

2       Comparatives have been restated to reflect the implementation of IFRS 10 Consolidated Financial Statements and the portfolio restatements between businesses.

3        Loan impairment charge as at December 2012 is the charge for the 12 month period.


Appendix IV- Credit Risk

Group Exposures to Eurozone Countries1

- The Group recognises the credit and market risk resulting from the ongoing volatility in the Eurozone and continues to monitor events closely while taking coordinated steps to mitigate the risks associated with the challenging economic environment

- During Q1 13 the Group's net on-balance sheet exposures to Spain, Italy, Portugal, Ireland, Cyprus and Greece remained stable at £59.4bn (2012: £59.3bn)

-       Sovereign exposure decreased 12% to £4.8bn principally due to a reduction in Italian government bonds held as available for sale

-       Exposure to retail customers and corporate clients rose marginally by 1% to £48.4bn. Excluding the effects of foreign exchange, exposure reduced 3% reflecting the Group's continuing focus on managing exposures in Spain, Italy and Portugal

-       Exposure to financial institutions rose by 9% to £6.2bn driven by increased lending to a single Irish counterparty

- The local net funding mismatches in Italy and Portugal were broadly stable in Q1 13. As at 31 March 2013, the deficit in Italy was €11.9bn (2012: €11.8bn) and the deficit in Portugal was €4.3bn (2012: €4.1bn). The net funding surplus in Spain was €1.3bn (2012: €2.3bn). Barclays continues to monitor the potential impact of the Eurozone volatility on local balance sheet funding and will consider actions as appropriate to manage the risk

- The Group continues to monitor developments in Cyprus and has taken steps to mitigate the financial and operational risks:

-       The Group's exposure to Cyprus remains minimal at £177m (2012: £184m), with exposure predominantly relating to corporate counterparties whose main operations are outside of Cyprus

-       As at 31 March 2013 Barclays' Cyprus branch had €1.3bn of customer deposits. Subsequent to the reopening of the Cyprus banking system on 28 March 2013, the branch saw €0.2bn of deposit outflow. There has been no observed impact of the Cyprus banking crisis on customers outside of the branch including retail and corporate deposits in our other European business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1  The comparatives on pages 33 to 39 have been restated to reflect the implementation of IFRS 10 Consolidated Financial Statements.

Appendix IV - Credit Risk

Summary of Group Exposures

- The following table shows Barclays exposure to Eurozone countries monitored internally as being higher risk and thus being the subject of particular management focus. Detailed analysis on these countries is on pages 35 to 39. The basis of preparation is consistent with that described in the 2012 Annual Report

- The net exposure provides the most appropriate measure of the credit risk to which the Group is exposed. The gross exposure is also presented below, alongside off-balance sheet contingent liabilities and commitments

 






Other

Net on-


Gross on-

Contingent



Financial


Residential

 retail

balance sheet


balance sheet

liabilities and


Sovereign

institutions

Corporate

mortgages

lending

exposure


exposure

commitments

As at 31.03.13

£m

£m

£m

£m

£m

£m


£m

£m

Spain

 1,816 

 1,719 

 4,033 

 13,587 

 2,592 

 23,747 


 33,047 

 3,257 

Italy

 2,247 

 346 

 1,660 

 15,847 

 2,123 

 22,223 


 32,509 

 3,070 

Portugal

 661 

 21 

 1,587 

 3,591 

 1,776 

 7,636 


 8,328 

 2,627 

Ireland

 31 

 4,149 

 1,208 

 108 

 96 

 5,592 


 11,037 

 1,496 

Cyprus

 - 

 - 

 101 

 39 

 37 

 177 


 287 

 48 

Greece

 2 

 - 

 6 

 6 

 13 

 27 


 1,077 

 3 







  




As at 31.12.12






  




Spain

 2,067 

 1,525 

 4,138 

 13,305 

 2,428 

 23,463 


 32,374 

 3,301 

Italy

 2,669 

 567 

 1,962 

 15,591 

 1,936 

 22,725 


 33,029 

 3,082 

Portugal

 637 

 48 

 1,958 

 3,474 

 1,783 

 7,900 


 8,769 

 2,588 

Ireland

 21 

 3,585 

 1,127 

 112 

 83 

 4,928 


 10,078 

 1,644 

Cyprus

 8 

 - 

 106 

 44 

 26 

 184 


 300 

 131 

Greece

 1 

 - 

 61 

 8 

 9 

 79 


 1,262 

 5 

 

 

- Barclays has exposures to other Eurozone countries as set out below. Total net on-balance sheet exposures to individual countries that are less than £1bn are reported in aggregate under Other

 







  









Other

Net on-


Gross on-

Contingent



Financial


Residential

retail

balance sheet


balance sheet

liabilities and


Sovereign

institutions

Corporate

mortgages

lending

exposure


exposure

commitments

As at 31.03.13

£m

£m

£m

£m

£m

£m


£m

£m

France

 3,408 

 5,543 

 4,925 

 2,571 

 190 

 16,637 


 60,428 

 8,413 

Germany

 1,590 

 5,184 

 6,841 

 26 

 1,874 

 15,515 


 63,739 

 7,047 

Netherlands

 4,209 

 4,475 

 1,937 

 14 

 69 

 10,704 


 29,956 

 2,432 

Belgium

 2,789 

 6 

 316 

 10 

 6 

 3,127 


 10,821 

 1,595 

Luxembourg

 42 

 779 

 861 

 218 

 31 

 1,931 


 5,713 

 922 

Austria

 1,470 

 287 

 194 

 1 

 4 

 1,956 


 4,294 

 138 

Finland

 1,201 

 163 

 35 

 3 

 - 

 1,402 


 7,882 

 478 

Other

 203 

 3 

 34 

 5 

 65 

 310 


 586 

 10 







  




As at 31.12.12






  




France

 3,746 

 5,553 

 4,042 

 2,607 

 121 

 16,069 


 59,317 

 7,712 

Germany

 282 

 4,462 

 4,959 

 27 

 1,734 

 11,464 


 62,043 

 6,604 

Netherlands

 3,503 

 4,456 

 2,002 

 16 

 92 

 10,069 


 28,565 

 2,205 

Belgium

 2,548 

 333 

 239 

 9 

 6 

 3,135 


 10,602 

 1,525 

Luxembourg

 13 

 1,127 

 704 

 151 

 49 

 2,044 


 6,009 

 812 

Austria

 1,047 

 228 

 187 

 5 

 - 

 1,467 


 3,930 

 127 

Finland

 1,044 

 209 

 140 

 3 

 - 

 1,396 


 9,120 

 461 

Other

 210 

 9 

 24 

 26 

 41 

 310 


 649 

 25 

 

 

 

 

 



Appendix IV - Credit Risk

Spain









Designated

  


  

Fair Value through Profit and Loss

Trading Portfolio


Derivatives

at FV

Total


Total







Cash


through

as at


as at

 


Assets

Liabilities

Net


Assets

Liabilities

Collateral

Net

P&L

31.03.13


31.12.12


£m

£m

£m


£m

£m

£m

£m

£m

£m  


£m  

Sovereign

 1,073 

 (1,073)

 - 


 30 

 (30)

 - 

 - 

 367 

 367 


 476 

Financial institutions

 844 

 (158)

 686 


 7,731 

 (7,217)

 (514)

 - 

 314 

 1,000 


 788 

Corporate

 345 

 (100)

 245 


 434 

 (208)

 - 

 226 

 400 

 871 


 817 











  


  











  


Total

 

Fair Value through Other Comprehensive Income (OCI)

Available for Sale Assets as at 31.03.13


as at






Cost

AFS Reserve


Total


31.12.12






£m

£m


£m  


£m  

 

Sovereign





 1,427 


 (8)


 1,419 


 1,562 

Financial institutions





 506 


 6 


 512 


 480 

Corporate






 8 


 - 


 8 


 10 











  


  

 

Held at Amortised Cost



Loans and Advances as at 31.03.13


Total

 









Impairment


  


as at







Gross


Allowances


Total


31.12.12







£m


£m


£m  


£m  

Sovereign






 30 


 - 


 30 


 29 

Financial institutions





 216 


 (9)


 207 


 257 

Residential mortgages





 13,718 


 (131)


 13,587 


 13,305 

Corporate






 4,288 


 (1,134)


 3,154 


 3,311 

Other retail lending





 2,716 


 (124)


 2,592 


 2,428 











  


  

 

Contingent Liabilities and Commitments







Total


Total








as at


as at

 











31.03.13


31.12.12











£m


£m

Financial institutions









 167 


 88 

Residential mortgages









 10 


 12 

Corporate










 1,896 


 1,938 

Other retail lending









 1,184 


 1,263 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1        'Cost' refers to the fair value of the asset at recognition, less any impairment booked. 'AFS Reserve' is the cumulative fair value gain or loss on the assets that is held in equity. 'Total' is the fair value of the assets at the balance sheet date.



Appendix IV - Credit Risk

Italy









Designated

  


  

Fair Value through Profit and Loss

Trading Portfolio


Derivatives

at FV

Total


Total







Cash


through

as at


as at

 


Assets

Liabilities

Net


Assets

Liabilities

Collateral

Net

P&L

31.03.13


31.12.12


£m

£m

£m


£m

£m

£m

£m

£m

£m  


£m  

Sovereign

 2,508 

 (2,317)

 191 


 1,775 

 (668)

 - 

 1,107 

 3 

 1,301 


 1,123 

Financial institutions

 196 

 (104)

 92 


 6,375 

 (4,367)

 (2,008)

 - 

 180 

 272 


 391 

Corporate

 236 

 (196)

 40 


 709 

 (475)

 (151)

 83 

 323 

 446 


 699 











  


  











  


Total

 

Fair Value through OCI



Available for Sale Assets as at 31.03.13


as at






Cost

AFS Reserve


Total


31.12.12






£m

£m


£m  


£m  

 

Sovereign





 929 


 17 


 946 


 1,537 

Financial institutions





 57 


 2 


 59 


 138 

Corporate






 28 


 2 


 30 


 29 











  


  

 

Held at Amortised Cost



Loans and Advances as at 31.03.13


Total









Impairment


  


as at







Gross


Allowances


Total


31.12.12







£m


£m


£m  


£m  

 

Sovereign






 - 


 - 


 - 


 9 

Financial institutions





 15 


 - 


 15 


 38 

Residential mortgages





 15,963 


 (116)


 15,847 


 15,591 

Corporate






 1,318 


 (134)


 1,184 


 1,234 

 

Other retail lending





 2,242 


 (119)


 2,123 


 1,936 











  


  

 

Contingent Liabilities and Commitments







Total


Total








as at


as at

 











31.03.13


31.12.12











£m


£m

Financial institutions









 126 


 90 

Residential mortgages









 44 


 45 

Corporate










 2,102 


 2,158 

Other retail lending









 798 


 789 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1        'Cost' refers to the fair value of the asset at recognition, less any impairment booked. 'AFS Reserve' is the cumulative fair value gain or loss on the assets that is held in equity. 'Total' is the fair value of the assets at the balance sheet date.



Appendix IV - Credit Risk

Portugal









Designated

  



Fair Value through

Trading Portfolio


Derivatives

at FV

Total


Total

 

Profit and Loss







Cash


through

as at


as at


Assets

Liabilities

Net


Assets

Liabilities

Collateral

Net

P&L

31.03.13


31.12.12


£m

£m

£m


£m

£m

£m

£m

£m

£m  


£m

Sovereign

 73 

 (73)

 - 


 264 

 (264)

 - 

 - 

 - 

 - 


 8 

Financial institutions

 26 

 (21)

 5 


 205 

 (154)

 (51)

 - 

 - 

 5 


 18 

Corporate

 23 

 (22)

 1 


 273 

 (102)

 (5)

 166 

 - 

 167 


 252 











  













  


Total

 

Fair Value through OCI



Available for Sale Assets as at 31.03.13


as at






Cost

AFS Reserve


Total


31.12.12






£m

£m


£m  


£m

 

Sovereign





 627 


 1 


 628 


 594 

Financial institutions





 2 


 - 


 2 


 2 

Corporate






 188 


 (1)


 187 


 331 











  



 

Held at Amortised Cost



Loans and Advances as at 31.03.13


Total

 









Impairment


  


as at







Gross


Allowances


Total


31.12.12







£m


£m


£m  


£m

Sovereign






 33 


 - 


 33 


 35 

Financial institutions





 23 


 (9)


 14 


 28 

Residential mortgages





 3,622 


 (31)


 3,591 


 3,474 

Corporate






 1,564 


 (331)


 1,233 


 1,375 

Other retail lending





 1,978 


 (202)


 1,776 


 1,783 











  



 

Contingent Liabilities and Commitments







Total


Total

 








as at


as at











31.03.13


31.12.12











£m


£m

Financial institutions









 2 


 1 

Residential mortgages









 21 


 25 

Corporate










 865 


 889 

Other retail lending









 1,739 


 1,673 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1        'Cost' refers to the fair value of the asset at recognition, less any impairment booked. 'AFS Reserve' is the cumulative fair value gain or loss on the assets that is held in equity. 'Total' is the fair value of the assets at the balance sheet date.



Appendix IV - Credit Risk

Ireland









Designated

  


  

Fair Value through

Trading Portfolio


Derivatives

at FV

Total


Total

 

Profit and Loss







Cash


through

as at


as at


Assets

Liabilities

Net


Assets

Liabilities

Collateral

Net

P&L

31.03.13


31.12.12


£m

£m

£m


£m

£m

£m

£m

£m

£m  


£m  

Sovereign

 241 

 (241)

 - 


 242 

 (11)

 (231)

 - 

 21 

 21 


 12 

Financial institutions

 1,202 

 (56)

 1,146 


 4,764 

 (3,628)

 (1,136)

 - 

 502 

 1,648 


 1,558 

Corporate

 301 

 (76)

 225 


 155 

 (65)

 (1)

 89 

 80 

 394 


 293 











  


  











  


Total

 

Fair Value through OCI



Available for Sale Assets as at 31.03.13


as at






Cost

AFS Reserve


Total


31.12.12






£m

£m


£m  


£m  

 

Sovereign





 9 


 1 


 10 


 9 

Financial institutions





 51 


 (3)


 48 


 60 

Corporate






 4 


 - 


 4 


 4 











  


  

 

Held at Amortised Cost



Loans and Advances as at 31.03.13


Total

 









Impairment


  


as at







Gross


Allowances


Total


31.12.12







£m


£m


£m  


£m  

Financial institutions





 2,453 


 - 


 2,453 


 1,967 

Residential mortgages





 116 


 (8)


 108 


 112 

Corporate






 830 


 (20)


 810 


 830 

Other retail lending





 96 


 - 


 96 


 83 











  


  

 

Contingent Liabilities and Commitments







Total


Total








as at


as at

 











31.03.13


31.12.12











£m


£m

Financial institutions









 667 


 628 

Corporate










 829 


 1,007 

Other retail lending









 - 


 9 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1        'Cost' refers to the fair value of the asset at recognition, less any impairment booked. 'AFS Reserve' is the cumulative fair value gain or loss on the assets that is held in equity. 'Total' is the fair value of the assets at the balance sheet date.



Appendix IV - Credit Risk

Cyprus









Designated

  



Fair Value through

Trading Portfolio


Derivatives

at FV

Total


Total

 

Profit and Loss







Cash


through

as at


as at


Assets

Liabilities

Net


Assets

Liabilities

Collateral

Net

P&L

31.03.13


31.12.12



£m

£m


£m

£m

£m

£m

£m

£m  


£m

Financial institutions

 - 

 - 

 - 


 109 

 (55)

 (54)

 - 

 - 

 - 


 - 

Corporate

 - 

 - 

 - 


 2 

 (1)

 - 

 1 

 - 

 1 


 12 











  



 

Held at Amortised Cost



Loans and Advances as at 31.03.13


Total

 









Impairment


  


as at







Gross


Allowances


Total


31.12.12







£m


£m


£m  


£m

Sovereign






 - 


 - 


 - 


 8 

Residential mortgages





 39 


 - 


 39 


 44 

Corporate






 101 


 (1)


 100 


 94 

Other retail lending





 37 


 - 


 37 


 26 











  



 

Contingent Liabilities and Commitments







Total


Total








as at


as at

 











31.03.13


31.12.12











£m


£m

Corporate










 33 


 94 

Other retail lending









 15 


 37 











  



 

 

 

Greece









Designated

  



Fair Value through

Trading Portfolio


Derivatives

at FV

Total


Total

 

Profit and Loss







Cash


through

as at


as at


Assets

Liabilities

Net


Assets

Liabilities

Collateral

Net

P&L

31.03.13


31.12.12


£m

£m

£m


£m

£m

£m

£m

£m

£m  


£m

Sovereign

 2 

 - 

 2 


 - 

 - 

 - 

 - 

 - 

 2 


 1 

Financial institutions

 -