Trading Statement
Barclays PLC
3 December 2001
December 3rd, 2001
BARCLAYS PLC
PRE-CLOSE BRIEFINGS WITH ANALYSTS
Barclays PLC ('Barclays') will be meeting analysts ahead of its close period
for the year ended 31st December 2001.
During the third quarter of the year, Barclays continued to build on the
strong performance of the first half in generally more difficult market
conditions.
This was primarily driven by operating income, where there was good growth in
the third quarter over the equivalent period in 2000. The rate of total
operating cost growth in the second half of the year is expected to be broadly
similar to the rate of growth in the first half of the year. The annual net
provisions charge is currently expected to be broadly in line with the
published risk tendency estimate of £1.1bn reported at 30th June 2001. Total
weighted risk assets grew by 6% in the nine months to 30th September.
Key trends set out below relate to the third quarter of 2001 and, unless
stated otherwise, are compared to the third quarter of 2000. Balance sheet
comparisons are in relation to 30th June 2001. Comparisons are made on a
pro-forma basis which assumes Woolwich plc was a member of the Barclays Group
for the whole of 2000.
Income: Total operating income experienced good growth compared to the
equivalent period in 2000 and exceeded the average quarterly levels achieved
during the first half of the year, benefiting from the Group's diverse
portfolio of businesses.
Net interest income: Net interest income saw good growth relative to the
third quarter of 2000 and exceeded the average quarterly levels of the first
half of 2001. In Personal Financial Services, consumer lending growth
continued to benefit from the introduction of personal pricing in 2000.
Woolwich net interest income was broadly in line with the quarterly levels of
the first half. The benefit of significantly higher mortgage volumes was
partly offset by reducing deposit spreads. Net mortgage lending was sharply
higher than in the equivalent period in the prior year. In Barclaycard, net
interest income grew strongly versus the equivalent period in 2000, exceeding
the performance achieved in the first half and benefiting from growth in
average extended credit balances.
In each of Barclays Private Clients and Business Banking, net interest income
was at similar levels to those achieved during the third quarter of 2000, and
broadly tracked the performance of the first half of 2001. Business Banking
average balances grew 7% in the nine months to the end of September, which was
somewhat below the market rate of growth.
Net interest income at Barclays Capital grew strongly compared to the average
quarterly performance of the first half and to the equivalent prior year
period, as a result of a good performance in money markets.
Average UK deposits in Personal Financial Services grew 3% between 30th June
and 30th September, representing growth of 6% in 2001 year to date. Business
Banking year to date average deposit balances grew 1% during the quarter, a
growth of 6% over the equivalent period of 2000.
Net interest margin: In Personal Financial Services, the personal pricing
policy caused lending margins to compress slightly during the quarter. In
Woolwich, there was some improvement in UK mortgage margins in the third
quarter compared to the average margins in the first half. Barclaycard's net
margin continued to benefit from changing business mix and falling interest
rates. In Business Banking, the overall UK lending margin fell as a result of
the continued focus on higher quality lending.
In both Woolwich and Barclays Private Clients, UK deposit margins fell
compared to the first half. In Personal Financial Services and Business
Banking, the overall deposit margins remained broadly unchanged.
Net fees and commissions: Group fees and commissions were above the average
quarterly fee level achieved in the first half.
Barclaycard fee income saw good growth compared to the prior year period and
was ahead of average quarterly fee income in the first half of the year. This
was the result of higher commercial card usage and restructured fee charges.
Barclays Global Investors fees were at similar levels to the third quarter of
2000 and maintained the run rate of the first half of 2001. This was
attributable particularly to good levels of investment performance related
income, and was despite the fall in assets under management to £479bn at 30th
September 2001 (£562bn: 30th September 2000) consequent on lower market
levels. Woolwich fees and commissions were at a similar level to the average
in the first half, supported by higher mortgage volumes.
Business Banking fees and commissions remained at similar levels to the prior
year period and to the first half of 2001. Barclays Private Clients fees
decreased compared to the equivalent prior year period reflecting weaker
markets and lower client activity, but were at levels similar to the quarterly
run rate of the first half of 2001.
In Personal Financial Services, fees were broadly in line with the prior year
period and first half run rate. Barclays Capital's fee levels were
significantly lower than the equivalent period in the prior year as a result
of reduced financing activity, but exceeded the average quarterly levels of
the first half of 2001.
Dealing profits at Barclays Capital were sharply higher than those achieved
during the equivalent period in 2000 and maintained the levels experienced in
the first half of this year. Income from this source is typically lower
during the fourth quarter of the year than in the first three quarters.
Other operating income: Income from the long term assurance business fell
significantly compared to the equivalent period in 2000 as a result of the
level of the stock market at 30th September 2001.
Costs: Business as usual costs remain tightly managed. Barclays is on track
to achieve the targeted cost savings of £1.15 billion for the four year period
ending 2003. Revenue related expenditure was significantly higher than in the
prior year period and versus the half year quarterly average. This was driven
by the strong performance in Barclays Capital. As indicated in the interim
results, the second half of 2001 will see higher costs in Barclays Capital as
a result of hiring product and client coverage staff during the year. The
rate of strategic investment expenditure in the third quarter was somewhat
higher than the average quarterly run rate of the first half of the year but
was in line with the prior year period.
Provisions for bad and doubtful debts: The annual net provisions charge is
currently expected to be broadly in line with the published risk tendency
estimate of £1.1bn reported at 30th June 2001. As a result of the less
favourable economic outlook, the overall provisions charge rose during the
quarter relative to average quarterly levels in the first half. Provisions in
both Business Banking and Barclays Capital have been running closer to risk
tendency levels during the third quarter and were therefore above the average
quarterly levels of the first half. Provisions in each of Personal Financial
Services, Woolwich and Barclays Private Clients were at similar levels to the
run rate experienced in the first half of 2001. Barclaycard provisions rose
versus the first half run rate, reflecting the high levels of recruitment
activity over the last two years.
Restructuring charge: The Group restructuring programme has continued in the
third quarter, and the second half charge is expected to be in line with the
second half of last year.
Caribbean: As announced on 31st October 2001, Barclays and CIBC have reached
agreement to combine their businesses in the Caribbean to form FirstCaribbean
International Bank. The completion of this transaction is expected to occur
during the first quarter of 2002.
Legal & General: The strategic alliance with Legal & General continues to
progress according to plan.
Woolwich: The integration of Woolwich within the Barclays Group continues
according to plan. The Group expects to achieve by year end the first year
pre tax synergies of at least £80m announced earlier in the year.
The 2001 full year results will be announced on Thursday 14th February 2002.
For further information please contact:
Investor Relations Media Relations
Ian Roundell/Cathy Turner Chris Tucker/Leigh Bruce
020 7699 2961/020 7699 3638 020 7699 3161/020 7699 2658
This document contains certain forward-looking statements within the meaning
of the United States Private Securities Litigation Reform Act 1995 with
respect to certain of the Group's plans and its current goals and expectations
relating to its future financial condition and performance, including targeted
economic profit growth and synergy expectations referred to above. By their
nature, forward looking statements involve risk and uncertainty because they
relate to events and circumstances, including UK domestic and global economic
business conditions, market related risks such as interest and exchange rates,
the policies and actions of regulatory authorities, the impact of competition
and the Group's ability to achieve the estimated synergies relating to The
Woolwich (such as the ability to integrate businesses and IT systems within
anticipated timeframes, the success of cross-selling products and the ability
to share data), a number of which are beyond the Group's control. As a
result, the Group's actual future results may differ materially from the
plans, goals and expectations set forth in the Group's forward-looking
statement. A more detailed list of these factors is contained on page 59 of
Barclays Annual Report for 2000.
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