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Barclays PLC (BARC)

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Wednesday 30 July, 2014

Barclays PLC

Half Yearly Report

RNS Number : 6734N
Barclays PLC
30 July 2014
 

 

 

 

 

 

Barclays PLC

Results Announcement

 

30 June 2014

 


Table of Contents

 

Results Announcement

Page

Performance Highlights

3-4

Group Chief Executive's Review

5

Group Finance Director's Review

6-8

Condensed Consolidated Financial Statements

9-13

Results by Business

 

·     Personal and Corporate Banking

14-15

·     Barclaycard

16-17

·     Africa Banking

18-19

·     Investment Bank

20-22

·     Head Office

23-25

·     Barclays Non-Core

26-27

Barclays Results by Quarter

28-29

Performance Management


·     Returns and Equity

30-31

·     Margins and Balances

32

Risk Management


·     Overview

33

·     Funding Risk - Liquidity

33-36

·     Funding Risk - Capital

37-42

·     Credit Risk

43-50

·     Market Risk

51-52

Statement of Directors' Responsibilities

53

Independent Auditors' Review Report to Barclays PLC

54

Financial Statement Notes

55-88

Shareholder Information

89-90



 

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 six months to 30 June 2014 to the corresponding six months of 2013 and balance sheet analysis as at 30 June with comparatives relating to 31 December 2013. 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; '€m' and '€bn' represent millions and thousands of millions of Euros respectively; and 'C$m' and 'C$bn' represent millions and thousands of millions of Canadian Dollars respectively.

The comparatives have been restated to reflect the implementation of the Group structure changes and the reallocation of elements of the Head Office results under the revised business structure. These restatements were detailed in our announcement on 10 July 2014, accessible at http://www.barclays.com/barclays-investor-relations/results-and-reports. Balance sheet comparative figures have also been restated to adopt the offsetting amendments to IAS 32, Financial Instruments: Presentation.

Adjusted profit before tax, adjusted attributable profit 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; 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); and goodwill impairment. As Management reviews adjusting items at a Group level, segmental results are presented excluding these items in accordance with IFRS 8: Operating Segments.  Statutory and adjusted performance is reconciled at a Group level only.

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 information in this announcement, which was approved by the Board of Directors on 29 July 2014 does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2013, 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 (which did not make any statements under Section 498 of the Companies Act 2006) have been delivered to the Registrar of Companies in accordance with Section 441 of the Companies Act 2006.

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

 

Forward-looking statements

This document contains certain forward-looking statements within the meaning of Section 21E of the US Securities Exchange Act of 1934, as amended, and Section 27A of the US Securities Act of 1933, as amended, with respect to certain of the Group's plans and its current goals and expectations relating to its future financial condition and performance. Barclays cautions readers that no forward-looking statement is a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statements. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements sometimes use words such as 'may', 'will', 'seek', 'continue', 'aim', 'anticipate', 'target', '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, leverage and other regulatory ratios, payment of dividends (including dividend pay-out ratios), projected levels of growth in the banking and financial markets, projected costs or savings, original and revised commitments and targets in connection with the Transform Programme and Group Strategy Update, run-down of assets and businesses within Barclays Non-Core, estimates of capital expenditures and plans and objectives for future operations, projected employee numbers 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. These may be affected by changes in legislation, the development of standards and interpretations under International Financial Reporting Standards (IFRS), evolving practices with regard to the interpretation and application of accounting and regulatory standards, the outcome of current and future legal proceedings and regulatory investigations, future levels of conduct provisions, the policies and actions of governmental and regulatory authorities, geopolitical risks and the impact of competition. In addition, factors including (but not limited to) the following may have an effect: capital, leverage and other regulatory rules (including with regard to the future structure of the Group) applicable to past, current and future periods; UK, US, Africa, 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 securities; volatility in capital markets; changes in credit ratings of the Group; the potential for one or more countries exiting the Eurozone; the implementation of the Transform Programme; and the success of future acquisitions, disposals and other strategic transactions. A number of these influences and factors are beyond the Group's control. As a result, the Group's actual future results, dividend payments, and capital and leverage ratios may differ materially from the plans, goals, and expectations set forth in the Group's forward-looking statements. Additional risks and factors are identified in our filings with the SEC including our Annual Report on Form 20-F for the fiscal year ended 31 December 2013, which are available on the SEC's website at http://www.sec.gov.

 

Any forward-looking statements made herein speak only as of the date they are made and it should not be assumed that they have been revised or updated in the light of new information or future events. 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 SEC.



Performance Highlights

Income Statement

Group performance

· Adjusted profit before tax was down 7% to £3,349m largely driven by currency movements and a reduction in the Investment Bank profitability, partially offset by improvements in Personal and Corporate Banking (PCB), Barclaycard, and Barclays Non-Core (BNC)

· Adjusted income decreased 12% to £13,332m whilst impairment reduced by 33% to £1,086m, resulting in a 9% decrease in net operating income to £12,246m

· Adjusted operating expenses were down 9% to £8,877m, including costs to achieve Transform (CTA) of £494m (2013: £640m) and litigation and conduct charges of £211m (2013: £126m), reflecting savings associated with prior Transform initiatives and currency movements

· Statutory profit before tax was £2,501m (2013: £1,677m), reflecting an additional £900m of provisions for PPI redress (2013: £1,350m) and the non-recurrence of a provision for interest rate hedging products redress compared to the prior year (2013: £650m)

· Adjusted Group attributable profit was £1,760m (2013: £2,055m). As a result adjusted Group return on average shareholders' equity reduced to 6.5% (2013: 7.8%) reflecting the equity raised from the rights issue in Q413 and the decrease in Core profit before tax partially offset by improvements in BNC

Core performance

· Profit before tax was down 10% to £3,840m, as improved performance across the majority of the Core businesses was more than offset by a reduction in Investment Bank profit

· Income decreased 7% to £12,674m, reflecting a 18% reduction in the Investment Bank, driven by a decrease in Markets and a reduction in Africa Banking due to currency movements, partially offset by growth in Barclaycard and PCB. Net interest income for PCB, Barclaycard and Africa Banking increased 3% to £5,564m reflecting strong savings, mortgage and card growth

· Credit impairment charges improved 13% to £937m. This reflected lower impairments in PCB as the improving economic environment had a positive impact on the majority of retail and wholesale portfolios in the UK and lower impairment in Africa Banking mortgages on a constant currency basis

· Operating expenses decreased £370m to £7,944m, reflecting improvements across each of the businesses as a result of Transform initiatives and currency movements partially offset by higher CTA charges of £453m (2013: £223m) and higher litigation and conduct charges of £177m (2013: £86m)

· Core return on equity decreased to 11.0% (2013: 15.1%)

Non-Core performance

· Loss before tax reduced by 27% to £491m. This reflected lower income, following asset disposals and risk reductions, to £658m (2013: £1,474m), more than offset by a £407m improvement in impairment to £149m and a 36% reduction in operating expenses to £934m including lower CTA of £41m (2013: £418m)

· Non-Core return on equity dilution improved to 4.5% (2013: 7.3%)

Balance Sheet, Leverage and Capital Management

· Fully loaded CRD IV Common Equity Tier 1 (CET1) ratio increased to 9.9% (2013: 9.1%) mainly driven by RWA reductions in BNC

· The PRA leverage ratio increased to 3.4% (2013: 3.0%), reflecting a reduction in the PRA leverage exposure of £99bn to £1,266bn and an increase in eligible PRA adjusted Tier 1 Capital to £43.2bn (2013: £40.5bn) principally from an exchange of existing T1 instruments into new AT1 securities. The estimated BCBS 270 leverage ratio was 3.4%

· Net tangible asset value per share decreased to 279p (2013: 283p) and net asset value per share decreased to 327p (2013: 331p)  primarily due to an increase in the number of shares in issue and a decrease in currency translation reserves



Performance Highlights 

Barclays Group Results

for the six months ended

Adjusted


Statutory

 

  

30.06.14

30.06.13

YoY


30.06.14

30.06.13

YoY

  

£m

£m

% Change


£m

£m

% Change

Total income net of insurance claims

13,332 

15,071 

(12)


13,384 

15,157 

(12)

Credit impairment charges and other provisions  

(1,086)

(1,631)

33 


(1,086)

(1,631)

33 

Net operating income  

12,246 

13,440 

(9)


12,298 

13,526 

(9)

Operating expenses  

(8,172)

(9,015)


(8,172)

(9,015)

Litigation and conduct

(211)

(126)

(67)


(1,111)

(2,126)

48 

Costs to achieve Transform

(494)

(640)

23 


(494)

(640)

23 

Total operating expenses

(8,877)

(9,781)


(9,777)

(11,781)

17 

Other net expense

(20)

(68)

71 


(20)

(68)

71 

Profit before tax  

3,349 

3,591 

(7)


2,501 

1,677 

49 

Tax charge

(1,109)

(1,124)


(895)

(594)

(51)

Profit after tax   

2,240 

2,467 

(9)


1,606 

1,083 

48 

Non-controlling interests

(390)

(412)


(390)

(412)

Other equity interests

(90)



(90)


Attributable profit

1,760 

2,055 

(14)


1,126

671 

68 

  








Performance Measures








Return on average tangible shareholders' equity

7.5%

9.1%



4.9%

3.0%


Return on average shareholders' equity

6.5%

7.8%



4.2%

2.6%


Cost: income ratio

67%

65%



73%

78%


Compensation: net operating income ratio

38%

38%



38%

38%


Loan loss rate

45bps

63bps



45bps

63bps


Basic earnings per share

10.9p

15.2p



7.0p

5.0p


Dividend per share  

2.0p

2.0p



2.0p

2.0p


   








Balance Sheet and Leverage  





30.06.14

31.12.13


Net asset value per share





327p

331p


Net tangible asset value per share





279p

283p


PRA leverage exposure





£1,266bn

£1,365bn


Estimated BCBS 270 leverage exposure





£1,353bn

n/a


   








Capital Management








CRD IV fully loaded








Common equity tier 1 ratio3





9.9%

9.1%


Common equity tier 1 capital





£40.8bn

£40.4bn


PRA adjusted tier 1 capital





£43.2bn

£40.5bn


Risk weighted assets3  





£411bn

£442bn


PRA leverage ratio





3.4%

3.0%


Estimated BCBS 270 leverage ratio





3.4%

n/a


   








Funding and Liquidity








Group liquidity pool  





£134bn

£127bn


Estimated CRD IV liquidity coverage ratio





107%

96%


Loan: deposit ratio





92%

91%


  








Adjusted Profit Reconciliation


 



30.06.14

30.06.13


Adjusted profit before tax


 



3,349 

3,591 


Own credit


 



52 

86 


Provision for PPI redress


 



(900)

(1,350)


Provision for interest rate hedging products redress


 



(650)


Statutory profit before tax


 



2,501 

1,677 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1     Litigation and conduct charges include regulatory fines, litigation settlements and conduct related customer redress.

2     The profit after tax attributable to other equity holders of £90m (2013: £nil) is offset by a tax credit recorded in reserves of £19m (2013: £nil).  The net amount of £71m, along with non-controlling interests (NCI) is deducted from profit after tax in order to calculate earnings per share, return on average tangible shareholders' equity and return on average shareholders' equity.

3     Following the full implementation of CRD IV reporting in 2014, the previously reported 31 December 2013 RWAs have been revised by £6.9bn to £442bn and the fully loaded CET1 ratio revised by (0.2)% to 9.1%. These additional RWAs have been included within Head Office and Other Operations.

 4     Loan: deposit ratio for PCB, Barclaycard, Africa Banking and Non-Core retail.

 

 

Performance Highlights

Barclays Core and Non-Core Results

for the six months ended

  

 

  

Barclays Core


Barclays Non-Core

 

  

30.06.14

30.06.13

% Change


30.06.14

30.06.13

% Change

  

£m

£m



£m

£m

  

Total income net of insurance claims

12,674 

13,597 

(7)


658 

1,474 

(55)

Credit impairment charges and other provisions  

(937)

(1,075)

13 


(149)

(556)

73 

Net operating income  

11,737 

12,522 

(6)


509 

918 

(45)

Operating expenses

(7,314)

(8,005)


(860)

(1,010)

15 

Litigation and conduct

(177)

(86)



(33)

(39)

15 

Costs to achieve Transform

(453)

(223)



(41)

(418)

90 

Total operating expenses

(7,944)

(8,314)


(934)

(1,467)

36 

Other net income/(expense)  

47 

56 

(16)


(66)

(124)

47 

Profit/(loss) before tax  

3,840 

4,264 

(10)


(491)

(673)

27 

Attributable profit/(loss)

2,224 

2,675 

(17)


(464)

(619)

25 

  







  

Performance Measures







  

Return on average tangible shareholders' equity

13.5%

19.3%



(6.0%)

(10.2%)

  

Return on average shareholders' equity

11.0%

15.1%



(4.5%)

(7.3%)

  

Cost: income ratio

63%

61%



142%

100%

  

Basic earnings per share contribution

13.8p

19.8p



(2.9p)

(4.6p)

  

   







  

Capital Management

30.06.14

31.12.13



30.06.14

31.12.13

  

CRD IV fully loaded







  

Risk weighted assets  

£324bn

£333bn



£87bn

£110bn

  

Average allocated tangible equity

£33bn

£29bn



£14bn

£16bn

  

Average allocated equity

£41bn

£37bn



£14bn

£17bn

  

  







  

 


  

 

Income by Business

30.06.14

30.06.13

  


£m

£m

% Change

Personal and Corporate Banking

4,361 

4,305 

Barclaycard

2,124 

2,019 

Africa Banking

1,773 

2,055 

(14)

Investment Bank

4,257 

5,222 

(18)

Head Office  

159 

(4)

  

Barclays Core

12,674 

13,597 

(7)

Barclays Non-Core

658 

1,474 

(55)

Barclays Group adjusted total income

13,332 

15,071 

(12)




  


  

 

Profit/(Loss) Before Tax by Business

30.06.14

30.06.13

  


£m

£m

% Change

Personal and Corporate Banking

1,468 

1,197 

23 

Barclaycard

764 

616 

24 

Africa Banking

484 

547 

(12)

Investment Bank

1,058 

1,951 

(46)

Head Office  

66 

(47)

  

Barclays Core

3,840 

4,264 

(10)

Barclays Non-Core

(491)

(673)

27 

Barclays Group adjusted profit before tax

3,349 

3,591 

(7)




  

1    Return on average equity and average tangible equity for Barclays Non-Core represents its impact on the Group, being the difference between Barclays Group returns and Barclays Core returns.


Group Chief Executive Officer's Review

"In our strategy announcement on 8 May, we committed to simplify, focus and rebalance the Group to deliver higher and more sustainable returns across the cycle, while structurally reducing our cost base and strengthening our capital position.

 

We are making encouraging progress in executing this plan.  Profits before tax in Personal & Corporate Banking and Barclaycard were up 23% and 24% respectively. Africa Banking also delivered a good performance with profits increasing 13% on a constant currency basis. Performance in the Investment Bank was impacted by the repositioning underway as well as difficult trading conditions in the quarter, but it is where we expected it to be at this point. The strong performance of our Banking division is demonstrating the attractiveness of our new origination-led strategy to our clients.

 

I am pleased with the very good start made in managing down assets in our new non-core unit, with risk-weighted assets reducing by £22bn in the first half. The return on equity drag has also dropped from 7.3% to 4.5% in the quarter, placing us well on track to meet our 3% 2016 target.

 

Structural cost reduction is vital to achieving strong returns, and we continued to make progress on reducing operating expenses while maintaining controls and improving customer and client experience. Headcount across the Group is now at the lowest level since 2007 and adjusted operating expenses, including CTA, reduced nearly £1bn reflecting cost reductions across all businesses in the half.

 

The Transform strategy we have been pursuing since February 2013 was designed to create a business which can accommodate external pressures, including the impact of legacy issues, as well as to deliver sustainable performance.  Notwithstanding the additional provision taken for Payment Protection Insurance redress, we continued to build our capital strength, with the CRD IV CET1 ratio increasing to 9.9% as at 30 June, keeping us on track to achieve our target of exceeding 11% by 2016.  The PRA leverage ratio also increased to 3.4%, as a result of on-going leverage exposure reductions and a successful liability management exercise in June which resulted in the issuance of £2.3bn of new AT1 securities.  The estimated BCBS 270 leverage ratio was 3.4%.

 

As I reflect on the half, I am pleased with our performance, excited by the potential for the Group, and confident in our plans to become the 'Go-To' bank."

 

Antony Jenkins, Group Chief Executive

 


Group Finance Director's Review

Income Statement

Group performance

· Adjusted profit before tax was down 7% to £3,349m largely driven by currency movements and a reduction in the Investment Bank profitability, partially offset by improvements in Personal and Corporate Banking (PCB), Barclaycard, and Barclays Non-Core (BNC) 

· Adjusted income decreased 12% to £13,332m whilst impairment reduced by 33% to £1,086m, resulting in a 9% decrease in net operating income to £12,246m

· Adjusted operating expenses were down 9% to £8,877m, including costs to achieve Transform (CTA) of £494m (2013: £640m) and litigation and conduct charges of £211m (2013: £126m), reflecting savings associated with prior Transform initiatives and currency movements

· Statutory profit before tax was £2,501m (2013: £1,677m), reflecting an additional £900m of provisions for PPI redress (2013: £1,350m) and the non-recurrence of a provision for interest rate hedging products redress compared to the prior year (2013: £650m)

· The effective tax rate on adjusted profit before tax increased to 33.1% (2013: 31.3%). The effective tax rate on statutory profit before tax remained constant at 35.8% (2013: 35.4%).

·   Adjusted Group attributable profit was £1,760m (2013: £2,055m), resulting in an adjusted Group return on average shareholders' equity of 6.5% (2013: 7.8%) reflecting the equity raised from the rights issue in Q413 and the decrease in Core profit before tax partially offset by improvements in BNC performance

Core Performance

·   Profit before tax was down 10% to £3,840m, as improved performance across the majority of the Core businesses was more than offset by a reduction in Investment Bank profit

· Income decreased 7% to £12,674m, reflecting a 18% reduction in the Investment Bank, driven by a decrease in Markets, and a reduction in Africa Banking due to currency movements, partially offset by growth in Barclaycard and PCB

-    Net interest income increased 10% to £5,899m driven by strong savings and mortgage growth in PCB, volume growth in Barclaycard, and lower funding costs, partially offset by a reduction in Africa Banking due to currency movements

-    Investment Bank income was down 18% to £4,257m driven by a 22% decrease in Markets income, partially offset by a 5% increase in Banking income

·    Credit impairment charges improved 13% to £937m. This reflected:

-    Lower impairments in PCB as an improving UK economic environment has a positive impact on the majority of retail and wholesale portfolios in the UK

-    Lower impairment in Africa Banking mortgages, on a constant currency basis, driven by improvements mainly in the South Africa mortgages portfolio

-    Stable impairment in Barclaycard as volume growth was largely offset by currency movements

-    Releases across a number of counterparties coupled with low level of new charges in Investment Bank 

·    Operating expenses decreased £370m to £7,944m, reflecting improvements across each of the businesses as a result of Transform initiatives and currency movements partially offset by higher CTA charges of £453m (2013: £223m) and higher litigation and conduct charges of £177m (2013: £86m)

·     Core return on equity decreased to 11.0% (2013: 15.1%)

Non-Core performance

· Loss before tax reduced by 27% to £491m.  This reflected lower income, following asset disposals and risk reductions, to £658m (2013: £1,474m), more than offset by a £407m improvement in impairment to £149m and a 36% reduction in operating expenses to £934m including lower CTA of £41m (2013: £418m)

· Non-Core return on equity dilution improved to 4.5% (2013: 7.3%)



 

Group Finance Director's Review

Balance Sheet and Leverage

Balance Sheet

· Total assets as at 30 June 2014 decreased by 2% to £1,315bn compared to December 2013

-       Derivative assets decreased by £17bn primarily due to weakening of USD, tightening of credit spreads, reduced activity  and balance sheet reduction initiatives, offset by a decrease in major forward interest rates

-       Reverse repurchase agreements decreased by £15bn primarily driven by lower matched book trading due to a focus on deleveraging the balance sheet

· Total loans and advances were £486bn (2013: £474bn) with a £13bn increase due to higher settlement balances, £6bn growth in PCB through UK mortgage lending and £2bn growth in Barclaycard. These were offset by a £7bn reduction in Non Core assets as lending was managed down

· Customer accounts increased by 3% to £444bn due to an increase in settlement balances

· Total shareholders' equity including non-controlling interests, was £65bn (2013: £64bn). Excluding non-controlling interests, shareholders' equity increased £2.6bn to £58bn, primarily reflecting a £2.3bn increase in other equity instruments AT1 instruments were issued to investors in exchange for the cancellation of preference shares and subordinated debt instruments

· Net asset value per share was 327p (2013: 331p) and net tangible asset value per share was 279p (2013: 283p). This decrease was mainly attributable to the increase in the total number of shares in issue and a £0.9bn decrease in currency translation reserve as GBP strengthened

Leverage exposure

· The PRA leverage exposure reduced by £99bn to £1,266bn driven by a reduction in potential future exposures (PFEs) on derivatives, securities financing transactions (SFTs) and currency movements, partially offset by an increase in settlement balances. The estimated Basel Committee on Banking Supervision (BCBS) leverage exposure was £1,353bn

 

 

Capital Management

· Fully loaded CRD IV CET1 ratio increased to 9.9% (2013: 9.1%) primarily due to RWA reductions

· CRD IV RWAs reduced £31bn to £411bn, primarily driven by reductions in BNC of £22bn, reflecting rundown and exit of securities and reductions in derivatives risk

· Fully loaded CRD IV CET1 capital increased by £0.4bn to £40.8bn as a result of retained earnings generated

· The PRA leverage ratio increased to 3.4% (2013: 3.0%), reflecting a reduction in the PRA leverage exposure of £99bn and an increase in eligible PRA adjusted Tier 1 Capital to £43.2bn (2013: £40.5bn). Barclays exceeded the minimum of 3% requested by the PRA as at 30 June 2014. From 1 July 2014 the PRA expects Barclays to meet the 3% minimum on a fully loaded BCBS 270 basis. The estimated BCBS leverage ratio on this basis was 3.4% as at 30 June 2014



 

Group Finance Director's Review

Funding and Liquidity

· The Group liquidity pool was £134bn (2013: £127bn), remaining within the expected normal operational range, while maintaining compliance with internal liquidity risk appetite and external regulatory requirements

· The pool consists mainly of cash and deposits with central banks and high quality government bonds

· The estimated Liquidity Coverage Ratio (LCR) was 107% (2013:  96%) based upon the CRD IV rules, as implemented by the European Banking Authority (EBA). This is equivalent to a surplus of £9bn above the 100% ratio (2013: shortfall of £6bn). The Group estimated LCR based on the Basel Standards published in January 2013 was 112% (2013: 102%)

· The loan to deposit ratio for PCB, Africa Banking and Barclaycard remained stable at 92% (2013: 91%). The loan to deposit ratio for the Group was broadly unchanged at 100% (2013: 101%)

· Total wholesale funding outstanding (excluding repurchase agreements) was £179bn (2013: £186bn), of which £86bn (2013: £82bn) matures in less than one year and £22bn (2013: £20bn) matures within one month

· The Group issued £9bn of term funding net of early redemptions during 2014. Additionally, £6bn of funding was raised through participation in the Bank of England's Funding for Lending Scheme. Barclays has £12bn of term funding maturing in the reminder of 2014 and £24bn in 2015. The Group expects to issue more public wholesale debt in the reminder of 2014 and 2015, in order to maintain a stable and diverse funding base by type, currency and distribution channel

 

Dividends

· A second interim dividend of 1.0p will be paid on 19 September 2014

Outlook

· 2014 will be a transition year as we continue to make investments and focus on balance sheet optimisation and cost reduction

 

Tushar Morzaria, Group Finance Director


Condensed Consolidated Financial Statements

Condensed Consolidated Income Statement (Unaudited)

 

  

  

Half Year Ended

Half Year Ended

Half Year Ended

Continuing Operations

  

30.06.14

31.12.13

30.06.13

  

Notes

£m

£m

£m

Net interest income

  

6,082 

6,023 

5,577 

Net fee and commission income

  

4,256 

4,335 

4,396 

Net trading income

  

2,575 

1,979 

4,574 

Net investment income

  

356 

263 

417 

Net premiums from insurance contracts

  

336 

345 

387 

Other income

  

19 

74 

74 

Total income  

  

13,624 

13,019 

15,425 

Net claims and benefits incurred on insurance contracts

  

(240)

(241)

(268)

Total income net of insurance claims

  

13,384 

12,778 

15,157 

Credit impairment charges and other provisions

  

(1,086)

(1,440)

(1,631)

Net operating income

  

12,298 

11,338 

13,526 

  

  




Staff costs

2

(5,730)

(5,724)

(6,431)

Administration and general expenses

3

(3,147)

(4,467)

(3,350)

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

  

(8,877)

(10,191)

(9,781)

Provision for PPI redress

11  

(900)

(1,350)

Provision for interest rate hedging products redress

11  

(650)

Operating expenses

  

(9,777)

(10,191)

(11,781)

  

  




(Loss)/profit on disposal of undertakings and share of results of  

  




associates and joint ventures

  

(20)

44 

(68)

Profit before tax

  

2,501 

1,191 

1,677 

Tax

4

(895)

(977)

(594)

Profit after tax :

  

1,606 

214 

1,083 

  

  




Attributable to:

  




Ordinary equity holders of the parent:

  

1,126 

(131)

671 

Other equity holders

  

90 

Total equity holders of the parent

  

1,216 

(131)

671 

Non-controlling interests

5

390 

345 

412 

Profit after tax

  

1,606 

214 

1,083 

  

  




Earnings per Share from Continuing Operations

  




Basic earnings/(loss) per ordinary share

6

7.0p

(0.9p)

5.0p

Diluted earnings/(loss) per ordinary share

6

7.0p

(0.9p)

4.8p

 

 

1        For notes to the Financial Statements see pages 55 to 88.

2       The profit after tax attributable to other equity holders of £90m (2013: £nil) is offset by a tax credit recorded in reserves of £19m (2013: £nil).  The net amount of £71m, along with NCI, is deducted from profit after tax in order to calculate earnings per share.

 

 



 

Condensed Consolidated Financial Statements

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

 


  





  

Half Year Ended

Half Year Ended

Half Year Ended

Continuing Operations

  

30.06.14

31.12.13

30.06.13


Notes

£m

£m

£m

Profit after tax

  

1,606 

214 

1,083 


  




Other comprehensive loss that may be recycled to profit or loss:

  




Currency translation reserve

15

(1,056)

(2,278)

511 

Available for sale reserve

15

341 

(288)

(94)

Cash flow hedge reserve

15

254 

(753)

(1,137)

Other

  

(53)

(57)

20 

Total comprehensive loss that may be recycled to profit or loss

  

(514)

(3,376)

(700)


  




Other comprehensive gain/(loss) not recycled to profit or loss:

  




Retirement benefit remeasurements

12

236 

(478)

(37)


  




Other comprehensive loss for the period

  

(278)

(3,854)

(737)


  




Total comprehensive profit/(loss) for the period

  

1,328 

(3,640)

346 


  




Attributable to:

  




Equity holders of the parent

  

1,064 

(3,638)

232 

Non-controlling interests

  

264 

(2)

114 

Total comprehensive profit/(loss) for the period

  

1,328 

(3,640)

346 

 

 

1        For notes, see pages 55 to 88.

 

 



 

Condensed Consolidated Financial Statements

Condensed Consolidated Balance Sheet (Unaudited)

 

  

  

As at

As at

Assets

  

30.06.14

31.12.13

  

Notes

£m

£m

Cash and balances at central banks

  

44,047 

45,687 

Items in the course of collection from other banks

  

1,746 

1,282 

Trading portfolio assets

  

128,812 

133,069 

Financial assets designated at fair value

  

39,746 

38,968 

Derivative financial instruments

8

333,220 

350,300 

Loans and advances to banks

  

43,448 

39,422 

Loans and advances to customers

  

442,549 

434,237 

Reverse repurchase agreements and other similar secured lending

  

171,934 

186,779 

Available for sale investments

  

87,224 

91,756 

Current and deferred tax assets

4

4,461 

5,026 

Prepayments, accrued income and other assets

  

5,092 

4,415 

Investments in associates and joint ventures

  

704 

653 

Goodwill  

  

4,829 

4,878 

Intangible assets

  

3,049 

2,807 

Property, plant and equipment

  

3,983 

4,216 

Retirement benefit assets

12

55 

133 

Total assets

  

1,314,899 

1,343,628 

  

  



Liabilities

  



Deposits from banks

  

62,167 

55,615 

Items in the course of collection due to other banks

  

1,958 

1,359 

Customer accounts

  

443,638 

431,998 

Repurchase agreements and other similar secured borrowing

  

173,669 

196,748 

Trading portfolio liabilities

  

56,815 

53,464 

Financial liabilities designated at fair value

  

62,248 

64,796 

Derivative financial instruments  

8

326,501 

347,118 

Debt securities in issue

  

83,832 

86,693 

Accruals, deferred income and other liabilities

  

13,128 

12,934 

Current and deferred tax liabilities

4

1,429 

1,415 

Subordinated liabilities

10

19,301 

21,695 

Provisions  

11

3,445 

3,886 

Retirement benefit liabilities

12

1,743 

1,958 

Total liabilities

  

1,249,874 

1,279,679 

  

  



Equity

  



Called up share capital and share premium

13

20,655 

19,887 

Other reserves

15

(154)

249 

Retained earnings  

  

33,241

33,186 

Shareholders' equity attributable to ordinary shareholders of parent

  

53,742

53,322 

Other equity instruments

14

4,326 

2,063 

Total equity excluding non-controlling interests

  

58,068 

55,385 

Non-controlling interests

5

6,957 

8,564 

Total equity

  

65,025 

63,949 

  

  



 

 

1        For notes, see pages 55 to 88.


 

Condensed Consolidated Financial Statements

Condensed Consolidated Statement of Changes in Equity (Unaudited)

 

Half Year Ended 30.06.14

Called up Share Capital and Share Premium

Other Equity Instruments

Other Reserves

Retained Earnings

Total

Non-controlling Interests

Total

Equity


£m

£m

£m

£m

£m

£m

£m

Balance at 1 January 2014

19,887 

2,063 

249 

33,186 

55,385 

8,564 

63,949 

Profit after tax

90 

1,126 

1,216

390 

1,606

Currency translation movements

(941)

(941)

(115)

(1,056)

Available for sale investments

345 

345 

(4)

341 

Cash flow hedges

260 

260

(6)

254

Retirement benefit remeasurements

237 

237

(1)

236

Other

(53) 

(53)

(53)

Total comprehensive income for the year

90 

(336)

1,310 

1,064 

264 

1,328 

Issue of new ordinary shares

             64  

64 

         64

Issue of shares under employee share schemes

704 

379 

1,083 

1,083 

Issue and exchange of equity instruments

2,263 

(155)

2,108 

(1,527)

581 

Other equity instruments coupons paid

(90)

19 

(71)

(71)

Increase in treasury shares

(842)

(842)

(842)

Vesting of shares under employee share schemes

775 

(775)

Dividends paid

(728)

(728)

(334)

(1,062)

Other reserve movements

(10)

(5)

Balance at 30 June 2014

20,655 

4,326 

(154)

33,241 

58,068 

6,957 

65,025


  

  

  



  


Half Year Ended 31.12.13

  

  

  



  


Balance at 1 July 2013

13,988 

3,233 

33,862 

51,083 

9,054 

60,137 

(Loss)/profit after tax

(131)

(131)

345 

214 

Currency translation movements

(1,951)

(1,951)

(327)

(2,278)

Available for sale investments

(283)

(283)

(5)

(288)

Cash flow hedges

(746)

(746)

(7)

(753)

Retirement benefit remeasurements

(470)

(470)

(8)

(478)

Other

(57)

(57)

(57)

Total comprehensive income for the period

(2,980)

(658)

(3,638)

(2)

(3,640)

Issue of new ordinary shares

5,870 

5,870 

5,870 

Issue of shares under employee share schemes

29 

352 

381 

381 

Issue of other equity instruments

2,063 

2,063 

2,063 

Increase in treasury shares

(17)

(17)

(17)

Vesting of shares under employee share schemes

13 

(13)

Dividends paid

(289)

(289)

(490)

(779)

Other reserve movements

(68)

(68)

(66)

Balance at 31 December 2013

19,887 

2,063 

249 

33,186 

55,385 

8,564 

63,949 


  

  

  



  


Half Year Ended 30.06.13

  

  

  



  


Balance at 1 January 2013

12,477 

3,674 

34,464 

50,615 

9,371 

59,986 

Profit after tax

671 

671 

412 

1,083 

Currency translation movements

750 

750 

(239)

511 

Available for sale investments

(96)

(96)

(94)

Cash flow hedges

(1,080)

(1,080)

(57)

(1,137)

Retirement benefit remeasurements

(33)

(33)

(4)

(37)

Other

20 

20 

20 

Total comprehensive income for the period

(426)

658 

232 

114 

346 

Issue of new ordinary shares

750 

750 

750 

Issue of shares under employee share schemes

761 

337 

1,098 

1,098 

Increase in treasury shares

(1,049)

(1,049)

(1,049)

Vesting of shares under employee share schemes

1,034 

(1,034)

Dividends paid

(570)

(570)

(323)

(893)

Other reserve movements

(108)

(101)

Balance at 30 June 2013

13,988 

3,233 

33,862 

51,083 

9,054 

60,137 


  

  

  



  



  

  

  

 


  


 

 

1       Details of Share Capital, Other  Equity Instruments and Other Reserves are shown on page 72 to 73.

2       Details of Non-controlling Interests are shown on page 58.

 

Condensed Consolidated Financial Statements

Condensed Consolidated Cash Flow Statement (Unaudited)



 


Half Year Ended

Half Year Ended

Half Year Ended

Continuing Operations

30.06.14

31.12.13

30.06.13


£m

£m

£m

Profit before tax

2,501 

1,191 

1,677 

Adjustment for non-cash items

1,760 

6,230 

351 

Changes in operating assets and liabilities

(3,082)

(42,699)

9,866 

Corporate income tax paid

(586)

(764)

(794)

Net cash from operating activities

593 

(36,042)

11,100 

Net cash from investing activities

7,463 

(6,017)

(16,628)

Net cash from financing activities

(2,202)

7,122 

(1,212)

Effect of exchange rates on cash and cash equivalents

(1,380)

(3,125)

3,323 

Net increase/(decrease) in cash and cash equivalents

4,474 

(38,062)

(3,417)

Cash and cash equivalents at beginning of the period

81,754 

119,816 

123,233 

Cash and cash equivalents at end of the period

86,228 

81,754 

119,816 

 

 



Results by Business

Personal and Corporate Banking


  





Income Statement Information

Half Year ended

  

Half Year ended


Half Year ended

YoY %

  

30.06.14

  

31.12.13


30.06.13

Change

  

£m

  

£m


£m


Net interest income

3,057 

  

3,033 


2,860 

Net fee and commission income

1,257 

  

1,320 


1,403 

(10)

Other income

47 

  

65 


42 

12 

Total income  

4,361 

  

4,418 


4,305 

Credit impairment charges and other provisions

(230)

  

(322)


(299)

23 

Net operating income

4,131 

  

4,096 


4,006 

  


  





Operating expenses  

(2,554)

  

(2,706)


(2,754)

Costs to achieve Transform

(115)

  

(292)


(92)

(25)

UK bank levy

  

(66)


Total operating expenses

(2,669)

  

(3,064)


(2,846)

  


  





Other net income

  


37 

(84)

Profit before tax

1,468 

  

1,036 


1,197 

23 

Attributable profit

1,039 

  

800 


881 

18 

  


  





Balance Sheet Information and Key Facts


  





Loans and advances to customers at amortised cost

£216.7bn

  

£212.2bn


£211.3bn


Total assets

£268.1bn

  

£278.5bn


£288.3bn


Customer deposits

£298.3bn

  

£295.9bn


£289.5bn


Risk weighted assets - CRD IV fully loaded

£117.9bn

  

£118.3bn


n/a


Average allocated tangible equity

£13.0bn

  

£13.3bn


£13.1bn


Average allocated equity

£17.3bn

  

£17.5bn


£17.2bn


  


  





Average LTV of mortgage portfolio

55%

  

56%


58%


Average LTV of new mortgage lending

64%

  

64%


64%


  


  





Number of branches

1,546 

  

1,560 


1,577 


  


  





Performance Measures


  





Return on average tangible equity

16.1%

  

12.0%


13.5%


Return on average equity

12.1%

  

9.1%


10.3%


Cost: income ratio

61%

  

69%


66%


Loan loss rate (bps)

21 

  

29 


28 


 

 

 

1        Average LTV of mortgage portfolio and new mortgage lending calculated on the balance weighted basis.

 

 

Results by Business

Personal and Corporate Banking     

Personal and Corporate Banking (PCB) comprises personal banking, mortgages, wealth and investment management and corporate banking. Through these businesses we serve the needs of our customers and clients in the UK and in selected

international markets. Managing these businesses together will help drive product and customer segment capabilities as well as cost synergies through platform integration and leveraging expertise, particularly within digital channels.

 

The number of customers using digital channels continued to grow substantially; mobile banking users almost doubled to 3.0m customers and Pingit users more than doubled to 1.7m. PCB continued to support the UK economy advancing £2.3bn of net mortgage lending in the first half of the year and advancing £0.9bn of gross term lending to small businesses1 in addition to helping close to 60,000 start-ups.

 

Progress continues to be made on the Transform strategy. During H114, the business incurred £115m (2013: £92m) of costs to achieve Transform. Operational efficiency has been enhanced through ongoing rationalisation to focus on target markets and simplify operations, with continued investment in the customer experience across multiple channels.

Income Statement - H114 compared to H113

· Total income increased 1% to £4,361m driven by strong savings and mortgage growth partially offset by lower fees

· Net interest income increased 7% to £3,057m driven by strong savings and mortgage growth. Net interest margin was up 8bps to 296bps due to lower funding costs and lower customer deposit rates

· Net fee and commission income declined 10% to £1,257m primarily due to lower fees from current account and insurance products, and corporate banking

· Credit impairment charges reduced £69m to £230m due to the improving economic environment in the UK. Personal banking benefited from lower write-offs in overdrafts and in home loans. Corporate banking benefited from higher levels of releases and recoveries in the UK

· Operating expenses reduced 6% to £2,669m reflecting benefits from headcount reduction, partially offset by increased costs to achieve Transform of £115m (2013: £92m)

· Profit before tax increased 23% to £1,468m

Income Statement - Q214 compared to Q114

· Profit before tax increased 13% to £780m driven by £40m lower impairment due to the improving economic environment in the UK and higher levels of releases in corporate banking, in addition to £41m lower operating expenses reflecting benefits from Transform programmes

Balance Sheet - 30 June 2014 compared to 31 December 2013

· Loans and advances to customers increased £4.5bn to £216.7bn due to increases in mortgage balances and UK corporate loans

· Total assets decreased 4% to £268.1bn primarily driven by a reduction in the Group liquidity pool allocation partly offset by the increase in loans and advances to customers

· Customer deposits increased £2.4bn to £298.3bn due to increases in UK corporate and personal deposits, partially offset by net reductions in wealth and investment management deposits primarily driven by reduced institutional cash deposits

· RWAs reduced to £117.9bn (2013: £118.3bn) driven by changes in risk profile and the treatment of high quality liquidity assets, partially offset by balance sheet growth

 

1     Small businesses with a turnover of less than £5m.

 

 

Results by Business

Barclaycard


  





  

Half Year Ended

  

Half Year Ended


Half Year Ended


Income Statement Information

30.06.14

  

31.12.13


30.06.13

YoY

  

£m

  

£m


£m

% Change

Net interest income

1,500 

  

1,444 


1,385 

Net fee and commission income

613 

  

631 


625 

(2)

Other income

11 

  


22 

Total income  

2,124 

  

2,084 


2,019 

Credit impairment charges and other provisions

(537)

  

(556)


(540)

Net operating income

1,587 

  

1,528 


1,479 

  


  





Operating expenses

(822)

  

(912)


(874)

Costs to achieve Transform

(36)

  

(44)


(5)


UK bank levy

  

(22)


Total operating expenses

(858)

  

(978)


(879)

  


  





Other net income

35 

  

17 


16 


Profit before tax

764 

  

567 


616 

24 

Attributable profit

539 

  

383 


439 

23 

  


  





Balance Sheet Information and Key Facts


  





Loans and advances to customers at amortised cost

£33.2bn

  

£31.5bn


£30.1bn


Total assets

£36.2bn

  

£34.4bn


£34.3bn


Customer deposits

£5.9bn

  

£5.1bn


£4.4bn


Risk weighted assets - CRD IV fully loaded

£37.7bn

  

£35.7bn


n/a


Average allocated tangible equity

£4.6bn

  

£4.2bn


£4.0bn


Average allocated equity

£5.7bn

  

£5.4bn


£5.2bn


  


  





30 day arrears rates - UK cards

2.4%

  

2.4%


2.5%


30 day arrears rates - US cards

1.9%

  

2.1%


2.0%


  


  





Performance Measures


  





Return on average tangible equity

23.6%

  

18.2%


21.7%


Return on average equity

18.9%

  

14.3%


16.8%


Cost:income ratio

40%

  

47%


44%


Loan loss rate (bps)

311 

  

334 


342 


 



 

Results by Business

Barclaycard

 

Barclaycard was largely unchanged by the Group Strategy Update, with the exception of the African Card business moving to Africa Banking and the UK secured lending portfolio moving to Barclays Non-Core.

 

Barclaycard continued to grow across all businesses, delivering 5% income growth, with a net increase of 2.3m customers since June 2013. Innovation remained a key priority, with the launch of the open-market bPay band - a wearable contactless payment device - and Barclaycard Anywhere, a new mobile point-of-sale solution that makes it easy for businesses to take card payments securely, anywhere in the UK.

 

On the journey to become the 'Go-To' bank for consumer payments, Barclaycard focuses on providing customers and clients with simple solutions that offer clear value. The business looks to improve the customer experience through operational enhancements, improved technical capability and digitalisation.

Income Statement - H114 compared to H113

· Income improved 5% to £2,124m reflecting net lending growth across the business

-     UK income, including both the consumer and merchant sides of payments, increased by 8% to £1,368m reflecting net lending growth and lower funding costs

-     International income remained flat at £756m reflecting higher customer asset balances in the US and Germany,  offset by depreciation of USD against GBP

· Net interest income increased by 8% to £1,500m driven by volume growth. Net interest margin remained stable at 9.05% (2013: 9.03%). The impact of promotional offers and a change in product mix, with growth through the US partner portfolio, were offset by lower funding costs

· Net fees and commission income remained broadly stable at £613m (2013: £625m)

· Credit impairment charges remained flat at £537m (2013: £540m), with the impact of volume growth being offset by a reduction in impairment rates and depreciation of USD against GBP. Loan loss rates reduced by 31bps to 311bps and 30 day delinquency rates fell in UK and US consumer cards businesses

· Operating expenses reduced 2% to £858m driven by depreciation of USD against GBP, a VAT refund and improved efficiency, partially offset by costs associated with volume growth and costs to achieve Transform

· Profit before tax improved 24% to £764m

Income Statement - Q214 compared to Q114

· Profit before tax increased 8% to £396m driven by higher volumes

Balance Sheet - 30 June 2014 compared to 31 December 2013

· Total assets increased £1.8bn to £36.2bn driven by the increase in loans and advances to customers across the business

· Customer deposits increased by £0.8bn to £5.9bn due to funding initiatives in the US

· RWAs increased to £37.7bn (2013: £35.7bn) driven by increased customer lending


Results by Business

Africa Banking






Constant Currency

 

  

Half Year

Ended

Half Year

Ended

Half Year

Ended



Half Year Ended

Half Year ended

  

Income Statement Information

30.06.14

31.12.13

30.06.13

YoY


30.06.14

30.06.13

YoY

  

£m

£m

£m

% Change


£m

£m

% Change

Net interest income  

1,007 

1,105 

1,140 

(12)


1,261 

1,140 

11 

Net fee and commission income

527 

633 

621 

(15)


661 

621 

Net premiums from insurance contracts

167 

182 

192 

(13)


211 

192 

10 

Net trading income

144 

114 

143 


181 

143 

27 

Other income

12 

40 

54 

(78)


15 

54 

(72)

Total income

1,857 

2,074 

2,150 

(14)


2,329 

2,150 

Net claims and benefits incurred under insurance contracts

(84)

(90)

(95)

12 


(106)

(95)

(12)

Total income net of insurance claims

1,773 

1,984 

2,055 

(14)


2,223 

2,055 

Credit impairment charges and other provisions

(196)

(205)

(274)

28 


(249)

(274)

Net operating income

1,577 

1,779 

1,781 

(11)


1,974 

1,781 

11 

  








  

Operating expenses  

(1,082)

(1,221)

(1,230)

12 


(1,344)

(1,230)

(9)

Costs to achieve Transform

(17)

(17)

(9)

(89)


(22)

(9)

  

UK bank levy

(42)


  

Total operating expenses  

(1,099)

(1,280)

(1,239)

11 


(1,366)

(1,239)

(10)

  








  

Other net income

20 


60 

Profit before tax

484 

502 

547 

(12)


616 

547 

13 

Attributable profit

181 

134 

222 

(18)


231 

222 

  








  

  








  

Balance Sheet Information and Key Facts

Half Year

Ended

Half Year

Ended

Half Year

Ended



Half Year Ended

Half Year ended

  

30.06.14

31.12.13

30.06.13



30.06.14

31.12.13

  

 

Loans and advances to customers at amortised cost

£33.8bn

£34.9bn

£38.7bn



£35.3bn

£34.9bn

  

Total assets

£52.4bn

£54.9bn

£61.2bn



£54.8bn

£54.9bn

  

Customer deposits

£33.2bn

£34.6bn

£37.9bn



£34.6bn

£34.6bn

  

Risk weighted assets - CRD IV fully loaded

£36.5bn

£38.0bn

n/a





  

Average tangible equity

£2.7bn

£2.9bn

£3.4bn





  

Average equity

£3.8bn

£4.1bn

£4.7bn





  

  








  

Average LTV of mortgage portfolio

61.2%

62.3%

63.7%





  

Average LTV of new mortgage lending

75.0%

74.9%

74.1%





  

  








  

Number of distribution points

1,369 

1,396 

1,433 





  

  








  

ZAR/£ - Period end

18.17 

17.37 

15.11 





  

ZAR/£ - Average

17.82 

15.94 

14.20 





  

  








  

Performance Measures








  

Return on average tangible equity

13.3%

9.3%

13.0%





  

Return on average equity

9.6%

6.6%

9.4%





  

Cost: income ratio

62%

65%

60%





  

Loan loss rate (bps)

110 

107 

134 





  

 

 

1    Constant currency results are calculated by converting ZAR results into GBP using the average H113 exchange rate for the income statement and the FY13 exchange rate for the balance sheet to eliminate the impact of movement in exchange rates between the two periods.

2    For Africa Banking the equity used for return on average equity is Barclays' share of the statutory equity of the BAGL entity (together with that of the Barclays Egypt and Zimbabwe businesses which remain outside the BAGL corporate entity), as well as the Barclays' goodwill on acquisition of these businesses. The tangible equity for return on tangible equity uses the same basis but excludes both Barclays' goodwill on acquisition and the goodwill and intangibles held within the BAGL statutory equity.

3    Average LTV of mortgage portfolio and new mortgage lending calculated on the balance weighted basis.



 

Results by Business

Africa Banking

 

The combined Africa Banking business is managed under three primary businesses: Retail and Business Banking (RBB); Wealth, Investment Management and Insurance (WIMI); Corporate and Investment Banking (CIB) as well as an Africa Head Office function.

The current focus areas of execution are:

·    The RBB turnaround strategy which is gaining early traction and key indicators around client numbers, cheque account growth, transactional deposits balances and debit card turnover are reflected in  a stabilisation in income

·    CIB investment across Africa has seen the roll-out of BARX in markets across Africa and strong growth in income generated outside South Africa

·    WIMI growth in net premium income reflects the close collaboration with other business areas and also the expansion outside South Africa

Africa Banking results showed strong underlying momentum in H114, with constant currency profit before tax increasing 13%. Reported results were adversely affected by currency movements with the average ZAR for H114 compared to H113 depreciating 25% against GBP.

 Income Statement - H114 compared to H113

·   Total income net of insurance claims declined 14% to £1,773m.  On a constant currency basis, total income grew 8% reflecting balance sheet growth and strong non-interest income growth in the CIB Markets business, in addition to improved income in RBB despite modest balance sheet growth. WIMI showed modest growth, impacted by higher weather-related short term claims

·    Net interest income decreased 12% to £1,007m. On a constant currency basis, net interest income increased 11% driven by higher average loans and advances to customers in CIB, growth in RBB customer deposits and an increased net interest margin following the rise in the South African benchmark interest rate

·    Net fee and commission income decreased 15% to £527m. On a constant currency basis, net fee and commission income increased 6% reflecting strong performance particularly in cards

·    Credit impairment charges decreased 28% to £196m.  On a constant currency basis, credit impairment charges reduced 9% driven by improvements mainly in the South Africa mortgages portfolio, partially offset by increased provisions in the cards portfolio. The loan loss rate improved 24bps to 110bps

·    Operating expenses decreased 11% to £1,099m. On a constant currency basis, operating expenses increased 10% largely reflecting increased spend on key initiatives including costs to achieve Transform, in addition to higher staff costs

·     Profit before tax decreased 12% to £484m. On a constant currency basis, profit before tax increased 13%

 Income Statement - Q214 compared to Q114

·     Profit before tax of £244m (Q114: £240m) is largely in line with stronger performance in CIB

 Balance Sheet - 30 June 2014 compared to 31 December 2013

·    Loans and advances to customers decreased 3% to £33.8bn. On a constant currency basis, loans and advances increased 1%

·     Total assets decreased by 5% to £52.4bn. On a constant currency basis, total assets were broadly in line

·     Customer deposits decreased 4% to £33.2bn. On a constant currency basis, customer deposits remained broadly in line

·     RWAs decreased 4% to £36.5bn. On a constant currency basis RWAs decreased 1% driven by lower operational risk


Results by Business

Investment Bank






  

  

Half Year Ended


Half Year Ended


Half Year Ended

  

Income Statement Information

30.06.14


31.12.13


30.06.13

YoY

  

£m


£m


£m

% Change

Net interest income

334 


229 


164 

  

Net fee and commission income

1,726 


1,622 


1,610 

Net trading income

2,137 


1,792 


3,177 

(33)

Net investment income

60 


(10)


271 

(78)

Total income

4,257 


3,633 


5,222 

(18)

Credit impairment releases/(charges) and other provisions

26 


(16)


38 

(32)

Net operating income

4,283 


3,617 


5,260 

(19)

  






  

Operating expenses  

(2,943)


(2,979)


(3,193)

Costs to achieve Transform

(282)


(74)


(116)

  

UK bank levy


(236)


Total operating expenses

(3,225)


(3,289)


(3,309)

  






  

Profit before tax

1,058 


328 


1,951 

(46)

Attributable profit

435 


209 


1,306 

(67)

  






  

Balance Sheet Information  






  

Trading portfolio assets

£101.2bn


£96.6bn


£107.4bn

  

Derivative financial instrument assets

£104.2bn


£108.7bn


£128.4bn

  

Reverse repurchase agreements and other similar secured lending

£83.0bn


£78.2bn


£93.1bn

  

Total assets

£447.8bn


£439.6bn


£515.5bn


Risk weighted assets - fully loaded CRD IV  

£125.5bn


£126.0bn


n/a

  

Average allocated tangible equity

£14.9bn


£15.0bn


£16.0bn

  

Average allocated equity

£15.6bn


£15.6bn


£16.6bn

  

  






  

Performance measures






  

Return on average tangible equity

5.9%


2.8%


16.3%

  

Return on average equity

5.7%


2.7%


15.7%

  

Cost: income ratio

76%


91%


63%

  

 

  







Analysis of Total Income







  







   Investment Banking fees

1,174 


1,097 


1,063 

10 

   Lending

169 


110 


215 

(21)

Banking  

1,343 


1,207 


1,278 

     Credit

616 


539 


718 

(14)

     Equities

1,220 


945 


1,352 

(10)

     Macro

1,056 


951 


1,629 

(35)

Markets

2,892 


2,435 


3,699 

(22)

Banking & Markets

4,235 


3,642 


4,977 

(15)

Other

22 


(9)


245 

(91)

Total income

4,257 


3,633 


5,222 

(18)

 

 

1    Net investment income and other income includes the £259m gain recognised in Q2 2013 in respect of assets not yet received from the 2008 US Lehman acquisition.

2    Lending income includes net interest income, fee income and risk management income or losses. H114 net interest and fee income was £268m (2013: £264m), while risk management losses were £99m (2013: £49m). While net interest and fee income tends to be broadly stable over time, there is volatility in risk management income or losses.

3    Macro represents Rates, Currencies and Commodities income.  Credit represents Credit, Securitised Products and Municipals income. 



 

Results by Business

Investment Bank

The Investment Bank now consists of origination led and returns focused markets and banking businesses. Non-strategic and lower returning businesses have been moved to Barclays Non-Core, and the African Investment Banking business has been moved to Africa Banking. Investment Bank treasury operations have been moved to be reported where they are now managed alongside the Group treasury operations within Head Office and Other Operations.

Markets income reduced in H114 compared to H113 due to lower volatility and elevated activity in the prior year. In H114 strong growth was seen in the Banking franchise, which continued to outperform the market1 with Equity underwriting having experienced record half-yearly revenues.

The Investment Bank continued to make progress in delivering the Transform strategy, with a focus on driving cost and capital efficiency, strengthening the control environment, and capitalising on the build out of Equities and Banking. The business incurred costs to achieve Transform of £282m primarily related to restructuring across Europe, Asia and the Americas.

Income Statement - H114 compared to H113

· Total income decreased 18% to £4,257m including a 4% reduction due to a fair value adjustment in the prior year of £259m relating to the 2008 US Lehman acquisition and a 5% reduction due to currency movements. Excluding these items income decreased 10%

-    Investment Banking fee income increased 10% driven by increased financial advisory and record equity underwriting fees with debt underwriting largely in line with prior year

-    Markets income decreased 22%

·    Credit decreased 14% to £616m driven by lower client activity amid challenging trading conditions and tightening credit spreads

·     Equities decreased 10% to £1,220m due to declines in the cash equities business reflecting lower client volumes, partially offset by higher income in equity financing

·     Macro decreased 35% to £1,056m reflecting decreased volatility in currency markets and subdued client activity in rates

-    Other income decreased £223m to £22m primarily related to a fair value adjustment in the prior year of £259m as a result of greater certainty regarding the recoverability of certain assets not yet received from the 2008 US Lehman acquisition

· Net credit impairment release of £26m (2013: £38m) across a number of counterparties

·  Operating expenses decreased 3% to £3,225m due to lower compensation costs, benefits from Transform programmes, including business restructuring and operational streamlining, and favourable currency movements. This was partially offset by costs to achieve Transform of £282m (2013: £116m), primarily related to restructuring initiatives across Europe, Asia and the Americas, and litigation and conduct charges

· Including costs to achieve Transform, the cost: income ratio increased 13% to 76%

· Profit before tax decreased 46% to £1,058m

 

1    Source: Dealogic daily feed, 1 July 2014.

 

 



 

Results by Business

Income Statement - Q214 compared to Q213

· Total income decreased 16% to £2,154m including a 8% reduction due to a fair value adjustment in the prior year of £259m relating to the 2008 US Lehman acquisition and a 6% reduction due to currency movements. Excluding these items total income decreased 2%

 -     Investment Banking fee income increased 35% to £661m driven by increased debt and equity underwriting deal issuance and financial advisory

 -      Markets income decreased 16% to £1,403m

·    Credit increased 13% to £270m driven by increased income from securitised products

·    Equities decreased 16% to £629m due to a decline in client activity in cash equities as Q213 benefitted from improved global equity markets driven by increased market confidence

·     Macro decreased 27% to £504m reflecting lower client activity across rates and currency in Q214

· Operating expenses increased 12% to £1,594m due to costs to achieve Transform, including business restructuring and operational streamlining, and increased litigation and conduct charges more than offsetting savings from Transform programmes and favourable currency movements

· Profit before tax decreased 50% to £567m

Balance Sheet - 30 June 2014 compared to 31 December 2013

· Trading portfolio assets increased 5% to £101.2bn due to increased client demand for securitised products within Credit

· Derivative financial instrument assets decreased 4% to £104.2bn due to the strengthening of GBP against USD and reduced volumes

· Reverse repurchase agreements increased 6% to £83.0bn in line with mandated limits

· RWAs remained broadly in line at £125.5bn (2013: £126.0bn)



 


Results by Business

Head Office and Other Operations



 

  

Half year Ended


Half year Ended


Half year Ended

Income Statement Information

30.06.14


31.12.13


30.06.13

  

£m


£m


£m

Net interest income/(expense)


98 


(166)

Net fee and commission expense

(181)


(69)


(48)

Net trading income

117 


25 


146 

Net investment income

204 


51 


17 

Net premiums from insurance contracts


12 


13 

Other income


29 


34 

Total income/(expense)  

159 


146 


(4)

Credit impairment releases



Net operating income/(expense)

159 


149 


(4)

  






Operating expenses

(91)


(72)


(41)

Costs to achieve Transform

(2)


(22)


UK bank levy


(29)


Total operating expenses

(93)


(123)


(41)

  






Other net (expense)/income

(0)



(2)

Profit/(loss) before tax

66 


32 


(47)

Attributable profit/(loss)

30 


84 


(173)

  






Balance Sheet Information






Total assets

£41.7bn


£25.0bn


£45.6bn

Risk weighted assets - fully loaded CRD IV1

£6.0bn


£14.6bn


n/a

Average allocated tangible equity

£(2.1bn)


£(6.4bn)


£(8.7bn)

Average  allocated equity

£(1.8bn)


£(6.0bn)


£(8.3bn)

 

 

1       Following the full implementation of CRD IV reporting in 2014, the previously reported 31 December 2013 RWAs have been revised by £6.9bn to £14.6bn.

2       Average allocated tangible equity and equity for the Head Office and Other Operations include risk weighted assets and capital deductions in Head Office and Other Operations, plus the residual balance of average ordinary shareholders' equity and tangible ordinary shareholders' equity caused by allocating equity at the target 10.5% of average risk weighted assets as opposed to the lower actual Core Tier 1 ratio of between 9.1 and 9.9% during H114.

 

 

Results by Business

Head Office and Other Operations

Head Office and Other Operations now include treasury operations previously reported in the Investment Bank, while the Africa Head Office function has been transferred to Africa Banking

 

Income Statement - H114 compared to H113

· Total income increased to £159m (2013: expense of £4m) predominantly driven by a net gain of £69m from foreign exchange recycling arising from the restructure of group subsidiaries

· Operating expenses increased £52m to £93m, mainly due to litigation and conduct charges

· Profit before tax of £66m moved from a loss of £47m in 2013

Income Statement - Q214 compared to Q114

·   Profit before tax of £6m (Q114: £60m) due to operating expenses increasing £49m to £71m, mainly due to litigation and conduct charges

Balance Sheet - 30 June 2014 compared to 31 December 2013

· Total assets increased to £41.7bn (2013: £25.0bn) primarily reflecting an increase in surplus Group liquidity pool assets

· RWAs decreased to £6.0bn (2013: £14.6bn). Excluding the impact of the £6.9bn comparative revisions, the decrease was primarily driven by changes in the treatment of high quality liquidity assets.


Results by Business

Barclays Non-Core


  




  

  

Half Year

Ended

  

Half Year

Ended


Half Year

Ended

  

Income Statement Information

30.06.14

  

31.12.13


30.06.13

YoY

  

£m

  

£m


£m

% Change

Net interest income  

183 

  

113 


194 

(6)

Net fee and commission income

314 

  

198 


185 

70 

Net trading income

116 

  

327 


1,000 

(88)

Net premiums from insurance contracts

147 

  

140 


166 

(11)

Other income

53 

  

192 


101 

(48)

Total income

813 

  

970 


1,646 

(51)

Net claims and benefits incurred under insurance contracts

(155)

  

(152)


(172)

10 

Total income net of insurance claims

658 

  

818 


1,474 

(55)

Credit impairment charges and other provisions

(149)

  

(344)


(556)

73 

Net operating income

509 

  

474 


918 

(45)

  


  




  

Operating expenses

(893)

  

(1,149)


(1,049)

15 

Costs to achieve Transform

(41)

  

(120)


(418)

90 

UK bank levy

  

(109)


  

Total operating expenses  

(934)

  

(1,378)


(1,467)

36 

  


  




  

Other net (expense)/income

(66)

  

14 


(124)

47 

Loss before tax

(491)

  

(890)


(673)

27 

Attributable loss

(464)

  

(1,271)


(619)

25 

  


  




  

Balance Sheet Information  


  




  

Loans and advances to banks and customers at amortised cost

£75.5bn

  

£81.9bn


£95.9bn

  

Loans and advances to customers at fair value

£17.0bn

  

£17.6bn


£18.6bn

  

Trading portfolio assets

£22.9bn

  

£30.7bn


£41.5bn

  

Derivative financial instrument assets

£227.0bn

  

£239.3bn


£301.9bn

  

Reverse repurchase agreements and other similar secured lending

£86.8bn

  

£104.7bn


£123.6bn

  

Total assets

£468.6bn


£511.2bn


£623.0bn


Customer deposits

£28.6bn

  

£29.3bn


£34.2bn

  

Risk weighted assets - CRD IV fully loaded

£87.5bn

  

£109.9bn


n/a

  

Average allocated tangible equity

£14.2bn

  

£16.3bn


£17.2bn

  

Average allocated equity

£14.5bn

  

£16.5bn


£17.5bn

  

  


  




  

Performance Measures


  




  

Return on average tangible equity

(6.0%)

  

(9.6%)


(10.2%)

  

Return on average equity

(4.5%)

  

(7.5%)


(7.3%)

  

Cost: income ratio

142%

  

168%


99%

  

Loan loss rate (bps)

45 

  

81 


114 

  

 

  







Analysis of Total Income







Businesses

564 


662 


822 

(31)

Securities and Loans

147 


171 


570 

(74)

Derivatives

(53)


(15)


82 


Total Income

658 


818 


1,474 

(55)

 

1     Return on average equity and average tangible equity for Barclays Non-Core represents its impact on the Group, being the difference between Barclays Group returns and Barclays Core returns.

 

 

Results by Business

Barclays Non-Core

Barclays Non Core (BNC) groups together businesses and assets that are no longer strategically attractive to Barclays and are being managed under three broad categories:

· Businesses, including all of Europe Retail

·   Securities and Loans, incorporating Investment Bank portfolio assets and the UK corporate long term fair value loan portfolio

· Derivatives, including the pre-CRD IV Rates portfolio

These businesses and assets will be exited over time with actions already undertaken during H114.

Income Statement - H114 compared to H113

· Total income net of insurance claims decreased 55% to £658m

-      Businesses income decreased 31% to £564m due to exit from non strategic principal businesses and reduced European retail income

-      Securities and Loans decreased 74% to £147m primarily driven by active rundown of securities, fair value adjustments on wholesale loan portfolios and favourable market movements for certain securitised products in 2013

-      Derivatives income reduced £135m to an expense of £53m reflecting reduced income from the pre-CRD IV Rates portfolio and hedging activities

· Credit impairment charges improved by £407m to £149m primarily driven by a prior year charge against a single name exposure, better credit performance in retail and lower charges on the wholesale portfolio, reflecting actions to reduce exposures to the Spanish property and construction sectors

· Operating expenses decreased 36% to £934m reflecting

-      Benefits from Transform programmes, including reduction in compensation costs, Europe retail employees and distribution points

-       Cost to achieve Transform reduced by £377m to £41m reflecting the significant restructuring in Europe retail in H113

· Other net expense reduced £58m to £66m due to a lower valuation adjustment recognised in Q2 in respect of contractual obligations to trading partners, based in locations affected by the Group Strategy Update

· Loss before tax decreased £182m to £491m

Income Statement - Q214 compared to Q114

·   Loss before tax increased £183m to £337m reflecting exits from non-strategic principal businesses and rundown of securities, coupled with a valuation adjustment recognised in respect of contractual obligations to trading partners

Balance Sheet - 30 June 2014 compared to 31 December 2013

· Loans and advances to banks and customers at amortised cost reduced 8% to £75.5bn driven by asset reduction activity as part of the Transform strategy and currency movements

· Trading portfolio assets decreased 25% to £22.9bn due to exiting of positions

· Derivative financial instrument assets decreased 5% to £227.0bn due to balance sheet reduction initiatives, including trade maturities

· Reverse repurchase agreements and other similar lending decreased 17% to £86.8bn predominately driven by lower matched book trading due a focus on deleveraging the balance sheet

· Customer deposits reduced 2% to £28.6bn due to currency movements and reduced customer balances

· RWAs reduced 20% to £87.5bn reflecting rundown and exit of securities and reductions in derivative risk

 

 


Barclays Results by Quarter

Barclays Group Results by Quarter  

Q214

Q114


Q413

Q313

Q213

Q113


Q412

Q312

  

£m

£m


£m

£m

£m

£m


£m

£m

Adjusted basis  











Total income net of insurance claims  

6,682 

6,650 


6,639 

6,445 

7,337 

7,734 


6,867 

7,002 

Credit impairment charges and other provisions  

(538)

(548)


(718)

(722)

(925)

(706)


(825)

(805)

Net operating income  

6,144 

6,102 


5,921 

5,723 

6,412 

7,028 


6,042 

6,197 

Operating expenses  

(4,188)

(4,195)


(4,777)

(4,262)

(4,359)

(4,782)


(4,345)

(4,353)

Costs to achieve Transform

(254)

(240)


(468)

(101)

(126)

(514)


UK bank levy  


(504)


(345)

Total operating expenses

(4,442)

(4,435)


(5,749)

(4,363)

(4,485)

(5,296)


(4,690)

(4,353)

Other net (expense)/income

(46)

26 


19 

25 

(122)

54 


43 

21 

Adjusted profit before tax  

1,656 

1,693 


191 

1,385 

1,805 

1,786 


1,395 

1,865 

   











Adjusting items  











Own credit  

(67)

119 


(95)

(211)

337 

(251)


(560)

(1,074)

Provision for PPI redress

(900)


(1,350)


(600)

(700)

Provision for interest rate hedging products

redress


(650)


(400)

Goodwill impairment  


(79)


Statutory profit/(loss) before tax  

689 

1,812 


17 

1,174 

142 

1,535 


(165)

91 

Statutory profit/(loss) after tax  

391 

1,215 


(514)

728 

39 

1,044 


(364)

(13)

   











Attributable to:  











Ordinary equity holders of the parent  

161 

965 


(642)

511 

(168)

839 


(589)

(183)

Other equity holders  

41 

49 



Non-controlling interests  

189 

201 


128 

217 

207 

205 


225 

170 

  











Adjusted basic earnings/(loss) per share

5.4p

5.5p


(2.8p)

5.4p

7.7p

7.5p


6.7p

7.8p

Adjusted cost: income ratio  

66%

67%


87%

68%

61%

68%


68%

62%

Basic earnings per share  

1.0p

6.0p


(4.5p)

3.8p

(1.2p)

6.3p


(4.5p)

(1.4p)

Cost: income ratio  

82%

66%


89%

70%

85%

71%


90%

85%

  












 

Barclays Core











Total income net of insurance claims  

6,397 

6,277 


6,189 

6,076 

6,773 

6,824 


6,115 

6,278 

Credit impairment charges and other provisions  

(456)

(481)


(542)

(554)

(558)

(517)


(600)

(628)

Net operating income  

5,941 

5,796 


5,647 

5,522 

6,215 

6,307 


5,515 

5,650 

Operating expenses

(3,738)

(3,753)


(4,114)

(3,776)

(3,853)

(4,239)


(3,844)

(3,906)

Costs to achieve Transform

(237)

(216)


(365)

(84)

(64)

(158)


UK bank levy  


(395)


(263)

Total operating expenses

(3,975)

(3,969)


(4,874)

(3,860)

(3,917)

(4,397)


(4,107)

(3,906)

Other net income

27 

20 


15 

15 

13 

43 


21 

12 

Profit before tax  

1,993 

1,847 


788 

1,677 

2,311 

1,953 


1,429 

1,756 

  











 

Barclays Non-Core











  











Total income net of insurance claims  

285 

373 


450 

368 

564 

911 


752 

724 

Credit impairment charges and other provisions  

(82)

(67)


(176)

(168)

(367)

(189)


(226)

(177)

Net operating income  

203 

306 


274 

200 

197 

722 


526 

547 

Operating expenses  

(451)

(442)


(664)

(485)

(507)

(542)


(500)

(447)

Costs to achieve Transform

(17)

(24)


(103)

(17)

(62)

(356)


UK bank levy


(109)


(82)

Total operating expenses  

(468)

(466)


(876)

(502)

(569)

(898)


(582)

(447)

Other net (expense)/income

(72)


10 

(135)

11 


21 

(Loss)/profit before tax  

(337)

(154)


(598)

(292)

(507)

(165)


(35)

109 

  













 

Business Results by Quarter

  

Q214

Q114


Q413

Q313

Q213

Q113


Q412

Q312

Personal and Corporate Banking

£m

£m


£m

£m

£m

£m


£m

£m

Total income net of insurance claims  

2,188 

2,173 


2,166 

2,252 

2,192 

2,113 


2,153 

2,151 

Credit impairment charges and other provisions  

(95)

(135)


(169)

(153)

(165)

(134)


(191)

(152)

Net operating income  

2,093 

2,038 


1,997 

2,099 

2,027 

1,979 


1,962 

1,999 

Operating expenses

(1,256)

(1,298)


(1,388)

(1,318)

(1,378)

(1,376)


(1,337)

(1,356)

Costs to achieve Transform

(58)

(57)


(219)

(73)

(55)

(37)


UK bank levy


(66)


(49)

Total operating expenses

(1,314)

(1,355)


(1,673)

(1,391)

(1,433)

(1,413)


(1,386)

(1,356)

Other net income


30 


Profit before tax  

780 

688 


327 

709 

601 

596 


579 

650 

 

  











Barclaycard











Total income net of insurance claims  

1,082 

1,042 


1,034 

1,050 

1,030 

989 


987 

956 

Credit impairment charges and other provisions  

(268)

(269)


(266)

(290)

(272)

(268)


(265)

(259)

Net operating income  

814 

773 


768 

760 

758 

721 


722 

697 

Operating expenses  

(420)

(402)


(457)

(455)

(424)

(450)


(472)

(401)

Costs to achieve Transform

(23)

(13)


(38)

(6)

(5)


UK bank levy


(22)


(15)

Total operating expenses  

(443)

(415)


(517)

(461)

(429)

(450)


(487)

(401)

Other net income

25 

10 


12 


Profit before tax  

396 

368 


256 

311 

336 

280 


240 

303 

 












Africa Banking











Total income net of insurance claims  

895 

878 


980 

1,004 

1,016 

1,039 


1,064 

1,043 

Credit impairment charges and other provisions  

(100)

(96)


(104)

(101)

(131)

(143)


(164)

(192)

Net operating income  

795 

782 


876 

903 

885 

896 


900 

851 

Operating expenses

(545)

(537)


(616)

(605)

(597)

(633)


(605)

(660)

Costs to achieve Transform

(8)

(9)


(15)

(2)

(9)


UK bank levy


(42)


(34)

Total operating expenses  

(553)

(546)


(673)

(607)

(606)

(633)


(639)

(660)

Other net income



12 

Profit before tax  

244 

240 


203 

299 

283 

264 


273 

194 

  











Investment Bank











     Investment Banking fees

661 

513 


571 

526 

488 

575 


621 

461 

     Lending

66 

103 


68 

42 

141 

74 


42 

(38)

Banking  

727 

616 


639 

568 

629 

649 


663 

423 

     Credit  

270 

346 


231 

308 

239 

479 


248 

356 

     Equities  

629 

591 


421 

524 

750 

602 


419 

490 

     Macro  

504 

552 


494 

457 

689 

940 


609 

841 

Markets

1,403 

1,489 


1,146 

1,289 

1,678 

2,021 


1,276 

1,687 

Banking & Markets

2,130 

2,105 


1,785 

1,857 

2,307 

2,670 


1,939 

2,110 

Other

24 

(2)


(3)

(6)

252 

(7)


(8)

(8)

Total income  

2,154 

2,103 


1,782 

1,851 

2,559 

2,663 


1,931 

2,102 

Credit impairment releases/(charges) and other provisions  

19 


(6)

(10)

10 

28 


21 

(24)

Net operating income  

2,161 

2,122 


1,776 

1,841 

2,569 

2,691 


1,952 

2,078 

Operating expenses

(1,442)

(1,501)


(1,606)

(1,373)

(1,429)

(1,764)


(1,360)

(1,489)

Costs to achieve Transform

(152)

(130)


(71)

(3)

(116)


UK bank levy


(236)


(139)

Total operating expenses  

(1,594)

(1,631)


(1,913)

(1,376)

(1,429)

(1,880)


(1,499)

(1,489)

Profit/(loss) before tax

567 

491 


(137)

465 

1,140 

811 


453 

589 

 


 










Head Office  

 










Total income/(expense) net of insurance claims  

78 

81 


227 

(81)

(24)

20 


(20)

26 

Credit impairment releases/(charges) and other provisions  



(1)

(1)

Net operating income/(expense)

78 

81 


230 

(81)

(24)

20 


(21)

25 

Operating expenses  

(76)

(15)


(47)

(25)

(25)

(16)


(70)

Costs to achieve Transform

(7)


(22)

(5)


UK bank levy  


(29)


(26)

Total operating expenses

(71)

(22)


(98)

(25)

(20)

(21)


(96)

Other net (expense)/income

(1)


(1)

(5)


(5)

Profit/(loss) before tax  

60 


139 

(107)

(49)


(116)

20 


Performance Management

Returns and Equity by Business

Returns on average equity and average tangible equity are calculated as profit for the period attributable to ordinary equity holders of the parent (adjusted for the offset by the tax credit recorded in reserves in respect of coupons on other equity instruments) divided by average allocated equity or average allocated tangible equity for the period as appropriate, excluding non-controlling and other equity interests for businesses, apart from Africa Banking (see below). Average allocated equity has been calculated as 10.5% of average CRD IV fully loaded risk weighted assets for each business, adjusted for CRD IV fully loaded capital deductions, including goodwill and intangible assets, reflecting the assumptions the Group uses for capital planning purposes. The excess of the equity so allocated over the Group equity, reflecting CRD IV fully loaded Common Equity Tier 1 capital ratio of 9.9% as at 30 June 2014 being below 10.5%, is allocated as negative equity to Head Office and Other Operations. Average allocated tangible equity is calculated using the same method but excludes goodwill and intangible assets.

 

For Africa Banking the equity used for return on average equity is Barclays share of the statutory equity of the BAGL entity (together with that of the Barclays Egypt and Zimbabwe businesses which remain outside the BAGL corporate entity), as well as the Barclays' goodwill on acquisition of these businesses. The tangible equity for return on tangible equity uses the same basis but excludes both the Barclays' goodwill on acquisition and the goodwill and intangibles held within the BAGL statutory equity.

 

  

 

 

  

Half year ended

Half year ended

Half year ended

  

30.06.14

31.12.13

30.06.13

Return on Average Equity

%

%

%

Personal and Corporate Banking

12.1%

9.1%

10.3%

Barclaycard

18.9%

14.3%

16.8%

Africa Banking

9.6%

6.6%

9.4%

Investment Bank

5.7%

2.7%

15.7%

Barclays Core excluding Head Office

10.4%

7.2%

13.0%

Head Office impact

0.6%

1.6%

2.1%

Barclays Core  

11.0%

8.8%

15.1%

Barclays Non-Core impact

(4.5%)

(7.5%)

(7.3%)

Barclays Group adjusted total

6.5%

1.3%

7.8%

  



  

  

 

 

  

Half year ended

Half year ended

Half year ended

  

30.06.14

31.12.13

30.06.13

Return on Average Tangible Equity

%

%

%

Personal and Corporate Banking

16.1%

12.0%

13.5%

Barclaycard

23.6%

18.2%

21.7%

Africa Banking

13.3%

9.3%

13.0%

Investment Bank

5.9%

2.8%

16.3%

Barclays Core excluding Head Office

12.5%

8.6%

15.6%

Head Office impact

1.0%

2.5%

3.7%

Barclays Core  

13.5%

11.1%

19.3%

Barclays Non-Core impact

(6.0%)

(9.6%)

(10.2%)

Barclays Group adjusted total

7.5%

1.5%

9.1%

  



  

 

 

1        Return on average equity and average tangible equity for Head Office and Barclays Non-Core represents their impact on Barclays Core and the Group respectively.



 

Performance Management