Annual Reports

  • 20-F (Jul 6, 2010)
  • 10-K (Jun 3, 2010)
  • 10-K (Apr 9, 2010)
  • 10-K (Apr 8, 2010)
  • 10-K (Apr 7, 2010)
  • 10-K (Apr 6, 2010)

 
Quarterly Reports

 
8-K

 
Other

Volkswagen 20-F 2010
Form 20-F
Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 20-F

(Mark One)

¨ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

 

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

   For the fiscal year ended December 31, 2009

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

   For the transition period from              to             

OR

 

¨ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

   Date of event requiring this shell company report             

 

Commission file numbers    Barclays PLC    1-09246
   Barclays Bank PLC    1-10257

BARCLAYS PLC

BARCLAYS BANK PLC

(Exact Names of Registrants as Specified in their Charter[s])

ENGLAND

(Jurisdiction of Incorporation or Organization)

1 CHURCHILL PLACE, LONDON E14 5HP, ENGLAND

(Address of Principal Executive Offices)

 

PATRICK GONSALVES, +44 (0)20 7116 2901, PATRICK.GONSALVES@BARCLAYS.COM

1 CHURCHILL PLACE, LONDON E14 5HP, ENGLAND

*(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Barclays PLC

 

Title of Each Class

  

Name of Each Exchange On Which Registered

25p ordinary shares    New York Stock Exchange*
American Depository Shares, each representing four 25p ordinary shares    New York Stock Exchange

 

  * Not for trading, but in connection with the registration of American Depository Shares, pursuant to the requirements of the Securities and Exchange Commission.

Barclays Bank PLC

 

Title of Each Class

  

Name of Each Exchange On Which Registered

Callable Floating Rate Notes 2035    New York Stock Exchange
Non-Cumulative Callable Dollar Preference Shares, Series 2    New York Stock Exchange*
American Depository Shares, Series 2, each representing one Non-Cumulative Callable Dollar Preference Share, Series 2    New York Stock Exchange
Non-Cumulative Callable Dollar Preference Shares, Series 3    New York Stock Exchange*
American Depository Shares, Series 3, each representing one Non-Cumulative Callable Dollar Preference Share, Series 3    New York Stock Exchange
Non-Cumulative Callable Dollar Preference Shares, Series 4    New York Stock Exchange*
American Depository Shares, Series 4, each representing one Non-Cumulative Callable Dollar Preference Share, Series 4    New York Stock Exchange
Non-Cumulative Callable Dollar Preference Shares, Series 5    New York Stock Exchange*
American Depository Shares, Series 5, each representing one Non-Cumulative Callable Dollar Preference Share, Series 5    New York Stock Exchange
iPath® Dow Jones – UBS Commodity Index Total ReturnSM ETN    NYSE Arca
iPath® Dow Jones – UBS Agriculture Subindex Total Return SM ETN    NYSE Arca
iPath® Dow Jones – UBS Aluminum Subindex Total ReturnSM ETN    NYSE Arca
iPath® Dow Jones – UBS Cocoa Subindex Total ReturnSM ETN    NYSE Arca
iPath® Dow Jones – UBS Coffee Subindex Total ReturnSM ETN    NYSE Arca
iPath® Dow Jones – UBS Copper Subindex Total ReturnSM ETN    NYSE Arca
iPath® Dow Jones – UBS Cotton Subindex Total ReturnSM ETN    NYSE Arca
iPath® Dow Jones – UBS Energy Subindex Total ReturnSM ETN    NYSE Arca
iPath® Dow Jones – UBS Grains Subindex Total ReturnSM ETN    NYSE Arca
iPath® Dow Jones – UBS Industrial Metals Subindex Total ReturnSM ETN    NYSE Arca
iPath® Dow Jones – UBS Lead Subindex Total ReturnSM ETN    NYSE Arca
iPath® Dow Jones – UBS Livestock Subindex Total ReturnSM ETN    NYSE Arca
iPath® Dow Jones – UBS Natural Gas Subindex Total Return SM ETN    NYSE Arca
iPath® Dow Jones – UBS Nickel Subindex Total ReturnSM ETN    NYSE Arca
iPath® Dow Jones – UBS Platinum Subindex Total ReturnSM ETN    NYSE Arca
iPath® Dow Jones – UBS Precious Metals Subindex Total ReturnSM ETN    NYSE Arca
iPath® Dow Jones – UBS Softs Subindex Total ReturnSM ETN    NYSE Arca
iPath® Dow Jones – UBS Sugar Subindex Total ReturnSM ETN    NYSE Arca
iPath® Dow Jones – UBS Tin Subindex Total ReturnSM ETN    NYSE Arca
iPath® S&P GSCI® Total Return Index ETN    NYSE Arca
iPath® S&P GSCI® Crude Oil Total Return Index ETN    NYSE Arca
iPath® CBOE S&P 500 BuyWrite IndexSM ETN    NYSE Arca
iPath® MSCI India IndexSM ETN    NYSE Arca
iPath® EUR/USD Exchange Rate ETN    NYSE Arca
iPath® GBP/USD Exchange Rate ETN    NYSE Arca
iPath® JPY/USD Exchange Rate ETN    NYSE Arca
iPath® S&P 500 VIX Short-Term FuturesTM ETN    NYSE Arca
iPath® S&P 500 VIX Mid-Term FuturesTM ETN    NYSE Arca
iPath® Global Carbon ETN    NYSE Arca
iPath® Optimized Currency Carry ETN    NYSE Arca
Barclays GEMS IndexTM ETN    NYSE Arca
Barclays GEMS Asia 8 ETN    NYSE Arca
Barclays Asian and Gulf Currency Revaluation ETN    NYSE Arca
Barclays ETN + Short C Leveraged Exchange Traded Notes Linked to the Inverse Performance of the S&P 500® Total Return IndexSM    NYSE Arca
Barclays ETN + Short D Leveraged Exchange Traded Notes Linked to the Inverse Performance of the S&P 500® Total Return IndexSM    NYSE Arca
Barclays ETN + Long B Leveraged Exchange Traded Notes Linked to the S&P 500® Total Return IndexSM    NYSE Arca
Barclays ETN + Short B Leveraged Exchange Traded Notes Linked to the Inverse Performance of the S&P 500® Total Return IndexSM    NYSE Arca
Barclays ETN + Long C Leveraged Exchange Traded Notes Linked to the S&P 500® Total Return IndexSM    NYSE Arca

 

* Not for trading, but in connection with the registration of American Depository Shares, pursuant to the requirements of the Securities and Exchange Commission.

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuers’ classes of capital or common stock as of the close of the period covered by the annual report.

 

Barclays PLC    25p ordinary shares    11,411,577,230
Barclays Bank PLC    £1 ordinary shares    2,342,558,515
   £1 preference shares    1,000
   £100 preference shares    75,000
   100 preference shares    240,000
   $0.25 preference shares    237,000,000
   $100 preference shares    100,000

Indicate by check mark if each registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes  þ    No  ¨

If this report is an annual or transition report, indicate by check mark if the registrants are not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act 1934.

Yes  ¨    No  þ

Note—Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrants: (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.

Yes  þ    No  ¨

Indicate by check mark whether the registrants have submitted electronically and posted on their corporate Web sites, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).*

Yes  þ    No  ¨

 

* This requirement does not apply to the registrants until their fiscal year ending December 31, 2011.

Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

 

Barclays PLC                
Large Accelerated Filer  þ      Accelerated Filer  ¨      Non-Accelerated Filer  ¨      
Barclays Bank PLC                
Large Accelerated Filer  ¨      Accelerated Filer  ¨      Non-Accelerated Filer  þ      

 

* Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP  ¨

International Financial Reporting Standards as issued by the International Accounting Standards Board  þ

Other  ¨

 

* If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:

Item 17  ¨        Item 18  ¨

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ¨    No  þ

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS.)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes  ¨    No  ¨

 

 


Table of Contents

Certain non-IFRS measures

In this document certain non-IFRS (International Financial Reporting Standards) measures are reported. Barclays management believes that these non-IFRS measures provide valuable information to readers of its financial statements because they enable the reader to focus more directly on the underlying day-to-day performance of its businesses and provide more detail concerning the elements of performance which the managers of these businesses are most directly able to influence. They also reflect an important aspect of the way in which operating targets are defined and performance is monitored by Barclays management. However, any non-IFRS measures in this document are not a substitute for IFRS measures and readers should consider the IFRS measures as well. Among other non-IFRS information, certain information and related discussion are provided in pages 2 to 50 relating to the Group’s total results rather than separating out discontinued operations, representing the Barclays Global Investors (BGI) business sold on 1st December 2009. These non-IFRS measures are provided because management considers that including BGI as part of Group operations and separately identifying the gain on this disposal provides useful information about the performance of the Group as a whole and reflects how the operations were managed until the disposal of BGI. The consolidated summary income statement on page 2 provides a reconciliation between continuing and Group results, and the discussion of Group results from page 4 to 10 describe the Group’s results on a continuing operations basis, followed by a discussion of the Group’s discontinued operations.

Market and other data

This document contains information, including statistical data, about certain of Barclays markets and its competitive position. Except as otherwise indicated, this information is taken or derived from Datastream and other external sources. Barclays cannot guarantee the accuracy of information taken from external sources, or that, in respect of internal estimates, a third party using different methods would obtain the same estimates as Barclays.

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 Group’s plans and its current goals and expectations relating to its future financial conditions 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 to only to historic or current facts. Forward-looking statements sometimes use words such as “may”, “will”, “seek”, “continue”, “aim”, “anticipate”, “target”, “expect”, “estimate”, “intend”, “plan”, “goal”, “believe” or other words of similar meaning. Examples of forward-looking statements include, among others, statements regarding Group’s future financial position, income growth, assets, impairments, charges, business strategy, capital ratios, leverage, payment of dividends, projected levels of growth in the banking and finance markets, projected costs, estimates of capital expenditure, and plans and objectives for future operations and other statements that are not historical by fact. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, including, but not limited to, UK domestic and global economic and business conditions, the effect of continued volatility in credit market exposures, changes in valuation of issue notes, the policies and actions of governmental and regulatory authorities, changes in legislation, the further development of standards and interpretations under International Financial Reporting Standards (IFRS) applicable to past, current and future periods, evolving practices with regard to the interpretation and application of standards under IFRS, the outcome of pending and future litigation, the success of future acquisitions and other strategic transactions and the impact of completion – a number of such factors being beyond the Group’s control. As a result, the Group’s actual results may differ materially from plans, goals, and expectations set forth in the Group’s forward-looking statement.

Any forward-looking statements made herein speak only as of the date they are made. Expect as required by the U.K. Financial Services Authority (FSA), the London Stock Exchange or applicable laws, Barlcays expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this report to reflect any change in Barclay’s expectations with regard thereto or any change in events, conditions or circumstance on which any such statement is based. The reader should, however, consult any additional disclosures that Barclays has made or may make in documents it has filed or may file with the U.S. Securities and Exchange Commission.

Certain terms

The term ‘Barclays PLC Group’ means Barclays PLC together with its subsidiaries and the term ‘Barclays Bank PLC Group’ means Barclays Bank PLC together with its subsidiaries. ‘Barclays’ and ‘Group’ are terms which are used to refer to either of the preceding groups when the subject matter is identical. The term ‘Company’, ‘Parent Company’ or ‘Parent’ refers to Barclays PLC, and the term ‘Bank’ refers to Barclays Bank PLC. The term ‘Absa Group Limited’ is used to refer to Absa Group Limited and its subsidiaries, and the term ‘GRCB – Absa’ is used to the refer to the component of the Global Retail and Commercial Banking segment represented by this business. In this report, the abbreviations ‘£m’ and ‘£bn’ represent millions and thousands of millions of pounds sterling, respectively; the abbreviations ‘US$m’ and ‘US$bn’ represent millions and thousands of millions of US dollars, respectively, and ‘m’ and ‘bn’ represent millions and thousands of millions of euros, respectively.

 

i


Table of Contents

SEC FORM 20-F CROSS REFERENCE INFORMATION

 

Form 20-F
item number
         Page and caption references
in this document*
1    Identity of Directors, Senior Management and Advisers    Not applicable
2    Offer Statistics and Expected Timetable    Not applicable
3    Key Information     
   A. Selected financial data    11, 12, 304
   B. Capitalization and indebtedness    Not applicable
   C. Reason for the offer and use of proceeds    Not applicable
     D. Risk factors    54-58
4    Information on the Company   
   A. History and development of the company    165, 225 (Note 38)-230 (Note 41), 234 (Note 43), 305, 312
   B. Business overview    117-118, 193-195 (Note 14), 222 (Note 36), 278-282 (Note 53)
   C. Organizational structure    229-230 (Note 41)
     D. Property, plants and equipment    201 (Note 23), 223-224 (Note 37)
4A    Unresolved staff comments    Not applicable
5    Operating and Financial Review and Prospects   
   A. Operating results    2-50, 117-118, 193-195 (Note 14), 222 (Note 36), 257-261 (Note 48)
   B. Liquidity and capital resources    17-18, 92-93, 102-104, 182, 193-195 (Note 14), 204-209 (Note 27), 209-210 (Note 29), 216-218 (Note 31), 220-221 (Note 34), 261-266 (Note 49), 277-278 (Note 52)
   C. Research and development, patents and licenses, etc.    Not applicable
   D. Trend information    -
   E. Off-balance sheet arrangements    240-242 (note 45)
   F. Tabular disclosure of contractual obligations    20
     G. Safe harbor    i (Forward-looking statements)
6    Directors, Senior Management and Employees   
   A. Directors and senior management    119-121
   B. Compensation    145-161, 210-216 (Note 30), 230-234 (Note 42)
   C. Board practices    119-140, 147, 154-156
   D. Employees    8, 51
     E. Share ownership    145-161, 233 (Note 42)
7    Major Shareholders and Related Party Transactions   
   A. Major shareholders    123, 165
   B. Related party transactions    230-234 (Note 42)
     C. Interests of experts and counsel    Not applicable
8    Financial Information   
   A. Consolidated statements and other financial information   

122, 166-300, 302, 305-306

     B. Significant changes    125, 234 (Note 43)
9    The Offer and Listing   
   A. Offer and listing details    303
   B. Plan of distribution    Not applicable
   C. Markets    302
   D. Selling shareholders    Not applicable
   E. Dilution    Not applicable
     F. Expenses of the issue    Not applicable
10    Additional Information   

 

ii


Table of Contents
Form 20-F
item number
         Page and caption references
in this document*
   A. Share capital    Not applicable
   B. Memorandum and Articles of Association    305-307
   C. Material contracts    125, 154, 156, 217-218 (Note 31)
   D. Exchange controls    309
   E. Taxation    308-309
   F. Dividends and paying assets    Not applicable
   G. Statement by experts    Not applicable
   H. Documents on display    309
     I. Subsidiary information    229-230 (Note 41)
11    Quantitative and Qualitative Disclosure about Market Risk    53-116, 242 (Note 46)-266 (Note 49)
12    Description of Securities Other than Equity Securities   
   A. Debt Securities    Not applicable
   B. Warrants and Rights    Not applicable
   C. Other Securities    Not applicable
     D. American Depositary Shares    310-311
13    Defaults, Dividends Arrearages and Delinquencies    Not applicable
14    Material Modifications to the Rights of Security Holders and Use of Proceeds    Not applicable
15    Controls and Procedures   
   A. Disclosure controls and procedures    163
   B. Management’s annual report on internal control over financial reporting   

162

   C. Attestation report of the registered public accounting firm   

166

     D. Changes in internal control over financial reporting   

162

15T    Controls and Procedures    162-163
16A    Audit Committee Financial Expert   

134

16B    Code of Ethics   

144

16C    Principal Accountant Fees and Services    125, 137 (Non-Audit Services Policy), 188-189 (Note 9)
16D    Exemptions from the Listing Standards for Audit Committees    Not applicable
16E    Purchases of Equity Securities by the Issuer and Affiliated Purchasers    217 (Share Repurchase)
16F    Change in Registrant’s Certifying Accountant    Not applicable
16G    Corporate Governance    127, 144
17    Financial Statements    Not applicable
18    Financial Statements    164-300
19    Exhibits    Exhibit Index

 

* Captions have been included only in respect of pages with multiple sections on the same page in order to identify the relevant caption on that page covered by the corresponding Form 20-F item number.

 

iii


Table of Contents

Contents

 



Table of Contents

LOGO

 


Table of Contents
  2        

 

Financial review

Consolidated summary income statement

 

 

 

 

Year ended 31st December   2009            2008                   2007         
    

Continuing

operations

£m

   

Discontinued

operations

£m

   

Total

£m

   

Continuing

operations

£m

   

Discontinued

operations

£m

   

Total

£m

   

Continuing

operations

£m

   

Discontinued

operations

£m

   

Total

£m

 

Net interest income

  11,918      33      11,951      11,469           11,469      9,598      12      9,610   

Net fee and commission income

  8,418      1,759      10,177      6,491      1,916      8,407      5,771      1,937      7,708   

Principal transactions

  7,057      67      7,124      2,019      (10   2,009      4,970      5      4,975   

Net premiums from insurance contracts

  1,172           1,172      1,090           1,090      1,011           1,011   

Other income

  1,389      4      1,393      367      10      377      186      2      188   

Total income

  29,954      1,863      31,817      21,436      1,916      23,352      21,536      1,956      23,492   

Net claims and benefits incurred on insurance contracts

  (831        (831   (237        (237   (492        (492

Total income net of insurance claims

  29,123      1,863      30,986      21,199      1,916      23,115      21,044      1,956      23,000   

Impairment charges and other credit provisions

  (8,071        (8,071   (5,419        (5,419   (2,795        (2,795

Net income

  21,052      1,863      22,915      15,780      1,916      17,696      18,249      1,956      20,205   

Operating expenses

  (16,715   (1,137   (17,852   (13,391   (975   (14,366   (12,096   (1,103   (13,199

Share of post-tax results of associates and joint ventures

  34           34      14           14      42           42   

Profit on disposal of subsidiaries, associates and joint ventures

  188           188      327           327      28           28   

Gains on acquisitions

  26           26      2,406           2,406                  

Profit before tax and disposal of discontinued operations

  4,585      726      5,311      5,136      941      6,077      6,223      853      7,076   

Profit on disposal of discontinued operations

       6,331      6,331                                 

Profit before tax

  4,585      7,057      11,642      5,136      941      6,077      6,223      853      7,076   

Tax

  (1,074   (280   (1,354   (453   (337   (790   (1,699   (282   (1,981

Profit after tax

  3,511      6,777      10,288      4,683      604      5,287      4,524      571      5,095   

Profit for the year attributable to

                 

Equity holders of the Parent

  2,628      6,765      9,393      3,795      587      4,382      3,886      531      4,417   

Non-controlling interests

  883      12      895      888      17      905      638      40      678   
    3,511      6,777      10,288      4,683      604      5,287      4,524      571      5,095   

Earnings per share

                                                     

Basic earnings per share

  24.1p      62.1p      86.2p      51.4p      7.9p      59.3p      60.6p      8.3p      68.9p   

Diluted earnings per share

  22.7p      58.9p      81.6p      49.8p      7.7p      57.5p      58.8p      8.1p      66.9p   

The consolidated summary income statement above sets out the Group’s results analysed between continuing and discontinued operations for each income statement line for ease of comparability. The line items from “Net interest income” to “Profit before tax and disposal of discontinued operations” shown above under “Discontinued operations” for 2009 represent the results for the 11 month period to 30 November 2009 of the BGI discontinued operations that were sold on 1st December 2009. In addition, the figures included in the “Total” columns in 2009, 2008 and 2007 in respect of the line items from “Net interest income” to “Profit before tax and disposal of discontinued operations” are non-IFRS measures; see “Certain non-IFRS measures” on page i for more information with respect to including BGI results within such Group totals. The income statement on page 178 and the five year summary included on page 11 shows the income statement on a continuing basis with profit after tax from discontinued operations shown as a single line under profit after tax from continuing operations, in accordance with IFRS.


Table of Contents
        3  

 

LOGO

 

Financial review

Income statement commentarya

 

 

 

2009/08

Barclays delivered net profit for the year of £10,288m in 2009, an increase of 95% on 2008. This included the BGI gain on sale of £6,331m before tax, and was achieved after absorbing: £6,086m in writedowns on credit market exposures (including impairment of £1,669m), other Group impairment of £6,402m and a charge of £1,820m relating to the tightening of own credit spreads. Profit included £1,255m of gains on debt buy-backs and extinguishment.

Total income net of insurance claims grew 34% to £30,986m, and income from continuing operations grew 37% to £29,123m, with particularly strong growth in Barclays Capital. Within Global Retail and Commercial Banking (GRCB), Barclaycard and GRCB – Western Europe also reported good income growth. The aggregate revenue performance of GRCB businesses was, however, affected by the impact of margin compression on deposit income as a result of the very low absolute levels of interest rates. Barclays Capital income was up 122% compared to 2008. Top-line income rose by £8,004m reflecting the successful integration of the acquired Lehman Brothers North American businesses, buoyant market conditions observed across most financial markets in the first half of 2009 and a good relative performance in the second half of 2009 despite weaker markets. Income in Barclays Capital was impacted by writedowns of £4,417m (2008: £6,290m) relating to credit market exposures held in its trading books and by a charge of £1,820m (2008: gain of £1,663m) relating to own credit.

Impairment charges against loans and advances, available for sale assets and reverse repurchase agreements increased 49% to £8,071m, reflecting deteriorating economic conditions, portfolio maturation and currency movements. The impairment charge against credit market exposures included within this total reduced 5% to £1,669m. Impairment charges as a percentage of Group loans and advances as at 31st December 2009 increased to 156bps from 95bps, or 135bps on constant 2008 year end balance sheet amounts and average foreign exchange rates.

Total operating expenses increased 24% to £17,852m, but by 10% less than the rate of increase in Group total income. Operating expenses from continuing operations increased 25% to £16,715m. Expenses in GRCB were well controlled, with the cost:income ratio improving from 53% to 52%. Operating expenses in Barclays Capital increased by £2,818m to £6,592m reflecting the inclusion of the acquired Lehman Brothers North American business. The Group total cost:income ratio improved from 62% to 58% (from 63% to 57% on a continuing basis). At Barclays Capital the compensation:income ratio improved from 44% to 38%.

 

2008/07

Net profit for the year increased 4% to £5,287m. This included gains on acquisitions of £2,406m, including £2,262m gain on acquisition of Lehman Brothers North American businesses; profit on disposal of Barclays Closed UK Life assurance business of £326m; gains on Visa IPO and sales of shares in MasterCard of £291m; and gross credit market losses and impairment of £8,053m.

Total income net of insurance claims grew 1% to £23,115m and income from continuing operations grew 1% to £21,199m. Income in GRCB increased 17% and was particularly strong in businesses outside of the UK. Income in Barclays Capital was affected by very challenging market conditions in 2008, with income falling by £1,888m (27%) on 2007, reflecting gross losses of £6,290m relating to credit market assets, partially offset by gains of £1,663m on the fair valuation of notes issued due to widening of credit spreads and £1,433m in related income and hedges. Excluding credit market related losses, gains on own credit and related income and hedges, income in Barclays Capital increased 6%.

Impairment charges and other credit provisions of £5,419m increased 94% on the prior year. Impairment charges included £1,763m arising from US sub-prime mortgages and other credit market exposures. Other wholesale impairment charges increased significantly as corporate credit conditions turned sharply worse. Significant impairment growth in GRCB businesses reflected book growth and deteriorating credit conditions particularly in the US, South Africa and Spain.

Total operating expenses increased 9% to £14,366m and operating expenses from continuing operations increased 11% to £13,391m. This reflected continued investment in the distribution network in the GRCB businesses. Expenses fell in Barclays Capital due to lower performance related costs. Group gains from property disposals were £148m (2007: £267m). Head office costs included £101m relating to the UK Financial Services Compensation Scheme. Underlying cost growth was well controlled. The Group cost:income ratio deteriorated by five percentage points to 62% (from 57% to 63% on a continuing basis).


 

Note

 

a Total income net of reinsurance claims, total operating expenses and total cost: income ratio information in the 2009/2008 and 2008/2007 discussions are non-IFRS measures because they present Group operating results that combine continued operations and discontinued operations. See page 2 for a reconciliation between continuing and Group results, see “Certain non-IFRS measures” on page i for more information with respect to including BGI results within such Group totals. In addition, “Top-line income” within Barclays Capital is a non-IFRS measure that represents income before gains/losses and credit market write-downs. This measure has been presented as it provides a consistent basis for comparing the business’ performance between financial periods. For a reconciliation of top-line income to total income of Barclays Capital, see page 43.

 


Table of Contents
  4        

 

Financial review

Income statement commentary

continued

 

 

 

Continuing operations

The commentary below reflects the Group’s results from continuing operations.

Net interest income

2009/08

Group net interest income increased 4% (£449m) to £11,918m (2008: £11,469m) reflecting growth in average customer balances primarily in Barclaycard and Western Europe, and net funding costs and hedging recognised in Head Office Functions and Other Operations.

Group net interest income includes the impact of structural hedges which function to reduce the impact of the volatility of short-term interest rate movements on equity and customer balances that do not re-price with market rates. In total, equity structural hedges generated a gain of £1,162m (2008: £21m gain).

Further discussion of margins is included in the analysis of results by business on pages 29 to 50.

2008/07

Group net interest income increased 19% (£1,871m) to £11,469m (2007: £9,598m) reflecting balance sheet growth across the Global Retail

and Commercial Banking businesses and in particular very strong growth internationally driven by expansion of the distribution network and entrance into new markets. An increase in net interest income was also seen in Barclays Capital due to strong results from global loans and money markets.

The contribution of structural hedges relative to average base rates increased income by £117m (2007: £351m expense), largely due to the effect of the structural hedge on changes in interest rates.

Net fee and commission income

2009/08

Net fee and commission income increased 30% (£1,927m) to £8,418m (2008: £6,491m). Banking and credit related fees and commissions increased 33% (£2,370m) to £9,578m (2008: £7,208m), primarily due to Barclays Capital’s strong performance in Equities and Investment Banking.

2008/07

Net fee and commission income increased 12% (£720m) to £6,491m (2007: £5,771m). Banking and credit related fees and commissions increased 13% (£845m) to £7,208m (2007: £6,363m), reflecting growth in Barclaycard International, increased fees from advisory and origination activities in Barclays Capital and increased foreign exchange, derivative and debt fees in Barclays Commercial Bank.


 

 

Net interest income   
      2009
£m
    2008
£m
    2007
£m
 

Cash and balances with central banks

   131      174      145   

Available for sale investments

   1,937      2,355      2,580   

Loans and advances to banks

   513      1,267      1,416   

Loans and advances to customers

   18,456      23,754      19,559   

Other

   199      460      1,596   

Interest income

   21,236      28,010      25,296   

Deposits from banks

   (634   (2,189   (2,720

Customer accounts

   (2,716   (6,697   (4,110

Debt securities in issue

   (3,889   (5,910   (6,651

Subordinated liabilities

   (1,718   (1,349   (878

Other

   (361   (396   (1,339

Interest expense

   (9,318   (16,541   (15,698

Net interest income

   11,918      11,469      9,598   

 

 

Net fee and commission income   
      2009
£m
    2008
£m
    2007
£m
 

Brokerage fees

   88      56      78   

Investment management fees

   133      120      122   

Banking and credit related fees and commissions

   9,578      7,208      6,363   

Foreign exchange commission

   147      189      178   

Fee and commission income

   9,946      7,573      6,741   

Fee and commission expense

   (1,528   (1,082   (970

Net fee and commission income

   8,418      6,491      5,771   


Table of Contents
        5  

 

LOGO

 

 

 

Principal transactions

2009/08

Principal transactions comprise net trading income and net investment income. Net trading income increased £5,662m to £7,001m (2008: £1,339m). The majority of the Group’s trading income arises in Barclays Capital. Fixed Income, Currency and Commodities drove the very strong increase in trading income as the expansion of the business and client flows more than absorbed gross credit market losses of £4,417m (2008: £6,290m) and losses relating to own credit of £1,820m (2008: £1,663m gain).

Net investment income decreased 92% (£624m) to £56m (2008: £680m) driven by realised losses in commercial real estate equity investments and losses in the principal investments business, partially offset by gains on disposal of available for sale investments within Barclays Capital.

2008/07

Net trading income decreased 64% (£2,415m) to £1,339m (2007: £3,754m). The majority of the Group’s net trading income arose in Barclays Capital. There was growth in fixed income, prime services, foreign exchange, commodities and emerging markets. There were net losses from credit market dislocation partially offset by the benefits of widening credit spreads on structured notes issued by Barclays Capital.

Net investment income decreased 44% (£536m) to £680m (2007: £1,216m) reflecting the lower profits realised on the sale of investments, the continued decrease in value of assets backing customer liabilities in Barclays Life Assurance and fair value decreases of a number of investments reflecting the current market condition. This was offset by a £170m increase in dividend income reflecting the Visa IPO dividend received by GRCB – Western Europe, GRCB – Emerging Markets and Barclaycard.

 

Net premiums from insurance contracts

2009/08

Net premiums from insurance contracts increased 8% (£82m) to £1,172m (2008: £1,090m) primarily reflecting expansion in GRCB – Western Europe and GRCB – Absa, partially offset by the impact of the sale of the closed life assurance business in the second half of 2008.

2008/07

Net premiums from insurance contracts increased 8% (£79m) to £1,090m (2007: £1,011m), primarily due to expansion in GRCB – Western Europe reflecting a full year’s impact of a range of insurance products launched in late 2007, partially offset by lower net premiums following the sale of the closed life assurance business in the second half of 2008.

Other income

2009/08

Other income includes £1,170m gains on debt buy-backs relating to Upper Tier 2 perpetual debt and its corresponding hedge and £85m (2008: £24m) from the repurchase of securitised debt issued by Barclays Commercial Bank.

2008/07

Certain asset management products offered to institutional clients by Absa are recognised as investment contracts. Accordingly, the invested assets and the related liabilities to investors are held at fair value and changes in those fair values are reported within other income. Other income in 2008 included a £46m gain from the Visa IPO.


 

 

Principal transactions        
      2009
£m
    2008
£m
   2007
£m

Net trading income

   7,001      1,339    3,754

Net gain from disposal of available for sale assets

   349      212    560

Dividend income

   6      196    26

Net gain from financial instruments designated at fair value

   (208   33    293

Other investment income

   (91   239    337

Net investment income

   56      680    1,216

Principal transactions

   7,057      2,019    4,970

 

 

Net premiums from insurance contracts       
      2009
£m
    2008
£m
    2007
£m
 

Gross premiums from insurance contracts

   1,224      1,138      1,062   

Premiums ceded to reinsurers

   (52   (48   (51

Net premiums from insurance contracts

   1,172      1,090      1,011   

 

 

Other income       
      2009
£m
    2008
£m
    2007
£m
 

Increase/(decrease) in fair value of assets held in respect of linked liabilities to customers under investment contracts

   102      (1,219   23   

(Increase)/decrease in liabilities to customers under investment contracts

   (102   1,219      (23

Property rentals

   64      73      53   

Gain on debt buy backs and extinguishments

   1,255      24        

Other

   70      270      133   

Other income

   1,389      367      186   


Table of Contents
  6        

 

Financial review

Income statement commentary

continued

 

 

 

Net claims and benefits incurred under insurance contracts

2009/08

Net claims and benefits incurred under insurance contracts increased 251% (£594m) to £831m (2008: £237m) reflecting the expansion in GRCB – Western Europe and GRCB – Absa and a credit as a result of falls in equity markets and the disposal of the closed life assurance business.

2008/07

Net claims and benefits incurred under insurance contracts decreased 52% (£255m) to £237m (2007: £492m), principally due to a decrease in the value of unit linked insurance contracts in Barclays Wealth, explained by falls in equity markets and the disposal of closed life business in October 2008. This was partially offset by the growth in GRCB – Western Europe.

Impairment charges and other credit provisions

2009/08

Impairment charges on loans and advances and other credit provisions increased 50% (£2,445m) to £7,358m (2008: £4,913m). The increase was primarily due to economic deterioration and portfolio maturation, currency movements and methodology enhancements, partially offset by a contraction in loan balances.

The impairment charge in Global Retail and Commercial Banking increased by 85% (£2,473m) to £5,395m (2008: £2,922m) as charges rose in all portfolios, reflecting deteriorating credit conditions across all regions.

In Investment Banking and Investment Management, impairment was broadly unchanged at £1,949m (2008: £1,980m).

 

The impairment charge against available for sale assets and reverse repurchase agreements increased by 41% (£207m) to £713m (2008: £506m), driven by impairment against credit market exposures.

Further discussion of impairments is included in the analysis of results by business on pages 29 to 50.

2008/07

Impairment charges on loans and advances and other credit provisions increased 77% (£2,131m) to £4,913m (2007: £2,782m). The increase was caused by charges against ABS CDO Super Senior and other credit market positions and as a result of deteriorating economic conditions coupled with growth in several portfolios.

The impairment charge in Global Retail and Commercial Banking increased by 51% (£983m) to £2,922m (2007: £1,939m) resulting from deteriorating economic conditions and growth in several portfolios.

In Investment Banking and Investment Management, impairment increased by 136% (£1,140m) to £1,980m (2007: £840m). This included a charge of £1,517m against ABS CDO Super Senior and other credit market positions. The remaining movement primarily related to charges in the private equity and other loans business.

The impairment charge against available for sale assets and reverse repurchase agreements increased by £493m to £506m (2007: £13m) driven by impairment against credit market exposures.


 

Net claims and benefits incurred on insurance contracts  
      2009
£m
    2008
£m
    2007
£m
 

Gross claims and benefits incurred on insurance contracts

   858      263      520   

Reinsurers’ share of claims incurred

   (27   (26   (28

Net claims and benefits incurred on insurance contracts

   831      237      492   

 

 

Impairment charges and other credit provisions

      2009
£m
    2008
£m
    2007
£m
 

Impairment charges on loans and advances

      

– New and increased impairment allowances

   8,111      5,116      2,871   

– Releases

   (631   (358   (338

– Recoveries

   (150   (174   (227

Impairment charges on loans and advances

   7,330      4,584      2,306   

Charge/(release) in respect of provision for undrawn contractually committed facilities and guarantees provided

   28      329      476   

Impairment charges on loans and advances and other credit provisions

   7,358      4,913      2,782   

Impairment charges on reverse repurchase agreements

   43      124        

Impairment on available for sale assets

   670      382      13   

Impairment charges and other credit provisions

   8,071      5,419      2,795   

Impairment charges and other credit provisions on ABS CDO Super Senior and other credit market exposures included above:

                  

Impairment charges on loans and advances

   1,205      1,218      300   

Charges in respect of undrawn facilities and guarantees

        299      469   

Impairment charges on loans and advances and other credit provisions on ABS CDO Super Senior and other credit market exposures

   1,205      1,517      769   

Impairment charges on reverse repurchase agreements

        54        

Impairment charges on available for sale assets

   464      192      13   

Impairment charges and other credit provisions on ABS CDO Super Senior and other credit market exposures

   1,669      1,763      782   


Table of Contents
        7  

 

LOGO

 

 

 

 

Operating expenses

2009/08

Operating expenses increased 25% (£3,324m) to £16,715m (2008: £13,391m). The increase was driven by a 38% increase (£2,744m) in staff costs to £9,948m (2008: £7,204m).

Administrative expenses grew 2% (£98m) to £4,889m (2008:

£4,791m) reflecting the impact of acquisitions made during 2008, the costs of servicing an expanded distribution network across Global Retail and Commercial Banking, and expenses relating to the Financial Services Compensation Scheme.

Operating expenses increased due to a £119m decrease in gains from sale of property to £29m (2008: £148m) as the Group wound down its sale and leaseback of freehold property programme.

Amortisation of intangibles increased £171m to £447m (2008: £276m) primarily related to the intangible assets arising from the acquisition of the Lehman Brothers North American businesses.

2008/07

Operating expenses increased 11% (£1,295m) to £13,391m (2007: £12,096m).

Administrative expenses grew 30% (£1,100m) to £4,791m (2007: £3,691m), reflecting the impact of acquisitions (in particular Lehman Brothers North American businesses and Goldfish), fees associated with Group capital raisings, the cost of the Financial Services Compensation Scheme as well as continued investment in the Global Retail and Commercial Banking distribution network.

Operating expenses were reduced by gains from the sale of property of £148m (2007: £267m) as the Group continued the sale and leaseback of some of its freehold portfolio in 2008.

Amortisation of intangible assets increased 55% (£98m) to £276m (2007: £178m), primarily related to intangible assets arising from the acquisition of Lehman Brothers North American businesses.

Goodwill impairment of £112m reflects the full write-down of £74m relating to EquiFirst and a partial write-down of £37m relating to FirstPlus following its closure to new business in August 2008.

 

Staff costs

2009/08

Staff costs increased 38% (£2,744m) to £9,948m (2008: £7,204m) driven by a 40% increase in salaries and accrued incentive payments, primarily in Barclays Capital, reflecting the inclusion of the acquired Lehman Brothers North American businesses and associated net increase of 7,000 employees in September 2008.

In December 2009, the UK government announced that the Finance Bill 2010 will introduce a bank payroll tax of 50% applicable to discretionary bonuses over £25,000 awarded to UK bank employees between 9th December 2009 and 5th April 2010. Draft legislation and further guidance on its application has been published. Based on this, and in accordance with IAS 19 – Employee benefits, we have accrued for the estimated tax payable in respect of employee services provided during the period. For 2009, £190m has been included within Other Staff Costs in respect of 2009 cash awards. A further provision of £35m has also been included in Other Staff Costs in respect of certain prior year awards being distributed during the tax window, which may fall within the proposed legislation.

Defined benefit plan pension costs decreased £122m to £33m credit (2008: cost of £89m) primarily due to the UK Retirement Fund whose charges decreased as a result of a one-off credit of £371m from the closure of the final salary scheme to existing members.

2008/07

Staff costs decreased 5% (£407m) to £7,204m (2007: £7,611m). Salaries and accrued incentive payments fell overall by 8% (£535m) to £5,787m in 2008 (2007: £6,322m), after absorbing increases of £718m relating to in year hiring and staff from acquisitions. Performance related costs were 48% lower, driven mainly by Barclays Capital.

Defined benefit plans pension costs decreased 41% (£61m) to £89m (2007: £150m). This was due to recognition of actuarial gains, higher expected return on assets and reduction in past service costs partially offset by higher interest costs and reduction in curtailment credit.


 

Operating expenses                   
      2009
£m
    2008
£m
    2007
£m
 

Staff costs

   9,948      7,204      7,611   

Administrative expenses

   4,889      4,791      3,691   

Depreciation

   759      606      453   

Impairment charges/(releases)

      

– property and equipment

   33      33      2   

– intangible assets

   28      (3   14   

– goodwill

   1      112        

Operating lease rentals

   639      520      414   

Gain on property disposals

   (29   (148   (267

Amortisation of intangible assets

   447      276      178   

Operating expenses

   16,715      13,391      12,096   

 

Staff costs                
      2009
£m
    2008
£m
   2007
£m

Salaries and accrued incentive payments

   8,081      5,787    6,322

Social security costs

   606      444    480

Pension costs

       

– defined contribution plans

   224      221    119

– defined benefit plans

   (33   89    150

Other post retirement benefits

   16      1    9

Other

   1,054      662    531

Staff costs

   9,948      7,204    7,611


Table of Contents
  8        

 

Financial review

Income statement commentary

continued

 

 

 

Staff numbers

2009/08

Staff numbers are shown on a full-time equivalent basis. Group permanent and fixed term contract staff comprised 55,700 (31st December 2008: 59,600) in the UK and 88,500 (31st December 2008: 93,200) internationally.

UK Retail Banking number of employees decreased 2,200 to 30,400 (31st December 2008: 32,600) reflecting active cost management. Barclays Commercial Bank number of employees decreased 400 to 9,100 (31st December 2008: 9,500) reflecting tightly managed costs, partly offset by the expansion of risk and offshore support operations. Barclaycard number of employees decreased 300 to 10,300 (31st December 2008: 10,600) reflecting the centralisation of certain support functions in Absa from Absa Card and active cost management, offset by increases in collections capacity. GRCB – Western Europe number of employees decreased 200 to 11,600 (31st December 2008: 11,800) primarily due to restructuring within Spain and Russia, partially offset by increases in Portugal and Italy to support the expansion of the network in these countries. GRCB – Emerging Markets number of employees decreased 2,700 to 17,400 (31st December 2008: 20,100) mainly driven by the introduction of more effective and efficient structures. GRCB – Absa number of employees decreased 2,500 to 33,300 (31st December 2008: 35,800), reflecting restructuring and a freeze on recruitment.

Barclays Capital number of employees increased 100 to 23,200 (31st December 2008: 23,100) as a net reduction in the first half of the year was offset by strategic growth in the business and the annual graduate intake. Barclays Wealth number of employees decreased 500 to 7,400 (31st December 2008: 7,900) reflecting active cost management, including efficiency savings in non-client facing areas.

 

2008/07

Staff numbers are shown on a full-time equivalent basis. Total Group permanent and fixed-term contract staff comprised 59,600 (2007: 60,900) in the UK and 93,200 (2007: 70,600) internationally.

UK Retail Banking staff numbers increased 700 to 32,600 (2007: 31,900). Barclays Commercial Bank staff numbers increased 200 to 9,500 (2007: 9,300), reflecting investment in product expertise, sales and risk capability and associated support areas. Barclaycard staff numbers increased 1,200 to 10,600 (2007: 9,400), primarily due to the transfer of staff into Absacard as a result of the acquisition of a majority stake in the South African Woolworth Financial Services business in October 2008. GRCB – Western Europe staff numbers increased 3,600 to 11,800 (2007: 8,200), reflecting expansion of the retail distribution network. GRCB – Emerging Markets staff numbers increased 6,800 to 20,100 (2007: 13,300), driven by expansion into new markets and continued investment in distribution in existing countries. GRCB – Absa staff numbers increased 600 to 35,800 (2007: 35,200), reflecting continued growth in the business and investment in collections capacity.

Barclays Capital staff numbers increased 6,900 to 23,100 (2007: 16,200), due principally to the acquisition of Lehman Brothers North American businesses. Barclays Wealth staff numbers increased 1,000 to 7,900 (2007: 6,900), principally due to the acquisition of the Lehman Brothers North American businesses.


 

Staff numbers

As at 31st December

              
      2009    2008    2007

UK Retail Banking

   30,400    32,600    31,900

Barclays Commercial Bank

   9,100    9,500    9,300

Barclaycard

   10,300    10,600    9,400

GRCB – Western Europe

   11,600    11,800    8,200

GRCB – Emerging Markets

   17,400    20,100    13,300

GRCB – Absa

   33,300    35,800    35,200

Barclays Capital

   23,200    23,100    16,200

Barclays Wealth

   7,400    7,900    6,900

Head office functions and other operations

   1,500    1,400    1,100

Total Group permanent and fixed- term contract staff worldwide

   144,200    152,800    131,500


Table of Contents
        9  

 

LOGO

 

 

 

 

Share of post-tax results of associates and joint ventures

2009/08

The share of post-tax results of associates and joint ventures increased £20m to £34m (2008: £14m), reflecting a £23m increase in results from joint ventures largely from Barclaycard and Barclays Capital, and a £3m decrease in results from associates, mainly due to reduced contributions from private equity investments.

2008/07

The overall share of post-tax results of associates and joint ventures decreased £28m to £14m (2007: £42m), mainly due to reduced contributions from private equity associates and Barclays Capital joint ventures.

Profit on disposal of subsidiaries, associates and joint ventures

2009/08

The profit on disposal of £188m (2008: £327m) is largely attributable to the sale of 50% of Barclays Vida y Pensiones Compañía de Seguros

(£157m), and the 7% sale of GRCB – Emerging Markets Botswana business (£24m).

2008/07

On 31st October 2008 Barclays completed the sale of Barclays Life Assurance Company Ltd to Swiss Reinsurance Company for a net consideration of £729m leading to a net profit on disposal of £326m.

Gains on acquisitions

2009/08

Gains of £26m for the year relate to the acquisition of the Portuguese credit card business of Citibank International PLC in December 2009.

2008/07

The gains on acquisitions in 2008 related to the acquisition of Lehman Brothers North American businesses (£2,262m) on 22nd September 2008, Goldfish credit card UK business (£92m) on 31st March 2008 and Macquarie Bank Limited Italian residential mortgage business (£52m) on 6th November 2008.


 

Share of post-tax results of associates and joint ventures
      2009
£m
   2008
£m
    2007
£m

Profit from associates

   19    22      33

Profit/(loss) from joint ventures

   15    (8   9

Share of post-tax results of associates and joint ventures

   34    14      42
       
Profit on disposal of subsidiaries, associates and joint ventures
      2009
£m
   2008
£m
    2007
£m

Profit on disposal of subsidiaries, associates and joint ventures

   188    327      28
       
Gains on acquisitions                
      2009
£m
   2008
£m
    2007
£m

Gains on acquisitions

   26    2,406     


Table of Contents
  10        

 

Financial review

Income statement commentary

continued

 

 

 

Tax

2009/08

The effective tax rate for 2009, based on profit before tax on continuing operations was 23.4% (2008: 8.8%). The effective tax rate differs from the UK tax rate of 28% (2008: 28.5%) because of non-taxable gains and income, different tax rates applied to taxable profits and losses outside the UK, disallowed expenditure and adjustments in respect of prior years. The low effective tax rate of 8.8% on continuing operations in 2008 mainly resulted from the Lehman Brothers North American businesses acquisition.

2008/07

The effective rate of tax for 2008, based on profit before tax on continuing operations was 8.8% (2007: 27.3%). The effective tax rate differs from the 2007 effective rate and the UK corporation tax rate of 28.5% principally due to the Lehman Brothers North American businesses acquisition.

Discontinued operations

Profit after tax from discontinued operations 2009/08

Profit after tax from discontinued operations increased £6,173m to £6,777m, reflecting the gain on sale of the discontinued operations of £6,331m (2008: £nil) and other profit before tax of £726m (2008: £604m). The results for 2009 included 11 months of operations compared to 12 months for 2008.

2008/07

The profit after tax from discontinued operations increased 6% to £604m, reflecting an 8% appreciation of the average value of the US Dollar against Sterling and a £128m decrease in operating expenses, principally reflecting reduced performance related costs, offset by a decline in income from fees and commissions and a reduction in trading income.


 

 

 

Tax  
      2009
£m
    2008
£m
    2007
£m
 

Profit before tax from continuing operations

   4,585      5,136      6,223   

Tax charge at average UK corporation tax rate of 28% (2008: 28.5%, 2007: 30%)

   1,284      1,464      1,867   

Prior year adjustments

   (220   (171   (17

Differing overseas tax rates

   (27   175      (82

Non-taxable gains and income (including amounts offset by unrecognised tax losses)

   (112   (859   (136

Share-based payments

   (38   201      71   

Deferred tax assets not recognised/(previously not recognised)

   27      (504   (159

Change in tax rates

   (12   (1   24   

Other non-allowable expenses

   172      148      131   

Tax charge

   1,074      453      1,699   

Effective tax rate

   23%      9%      27%   

 

 

Discontinued operations
      2009
£m
   2008
£m
   2007
£m

Profit for the year from discontinued operations, including gain on disposal

   6,777    604    571


Table of Contents
        11  

 

LOGO

 

Financial review

Five-year consolidated summary income statement

 

 

 

For the year ended 31st December                               
     

2009

£m

   

2008

£m

   

2007

£m

   

2006

£m

    2005
£m
 

Continuing operations

          

Net interest income

   11,918      11,469      9,598      9,133      8,060   

Non-interest income

   18,036      9,967      11,938      11,372      8,600   

Net claims and benefits incurred on insurance contracts

   (831   (237   (492   (575   (645

Total income net of insurance claims

   29,123      21,199      21,044      19,930      16,015   

Impairment charges and other credit provisions

   (8,071   (5,419   (2,795   (2,154   (1,571

Operating expenses

   (16,715   (13,391   (12,096   (11,723   (9,748

Share of post-tax results of associates and joint ventures

   34      14      42      46      45   

Profit on disposal of subsidiaries, associates and joint ventures

   188      327      28      323        

Gain on acquisitions

   26      2,406                  

Profit before tax from continuing operations

   4,585      5,136      6,223      6,422      4,741   

Tax from continuing operations

   (1,074   (453   (1,699   (1,611   (1,251

Profit after tax from continuing operations

   3,511      4,683      4,524      4,811      3,490   

Profit for the year from discontinued operations, including gain on disposal

   6,777      604      571      384      351   

Net profit for the year

   10,288      5,287      5,095      5,195      3,841   

Profit attributable to equity holders of the Parent

   9,393      4,382      4,417      4,571      3,447   

Profit attributable to non-controlling interests

   895      905      678      624      394   
     10,288      5,287      5,095      5,195      3,841   

Selected financial statistics

                              

Basic earnings per share

   86.2p      59.3p      68.9p      71.9p      54.4p   

Basic earnings per share from continuing operations

   24.1p      51.4p      60.6p      66.6p      49.5p   

Diluted earnings per share

   81.6p      57.5p      66.9p      69.8p      52.6p   

Dividends per ordinary share

   2.5p      11.5p      34.0p      31.0p      26.6p   

Dividend payout ratio

   2.9%      19.4%      49.3%      43.1%      48.9%   

Profit attributable to the equity holders of the Parent as a percentage of:

          

average shareholders’ equity

   23.8%      16.5%      20.3%      24.7%      21.1%   

average total assets

   0.5%      0.2%      0.3%      0.4%      0.4%   

Average United States Dollar exchange rate used in preparing the accounts

   1.57      1.86      2.00      1.84      1.82   

Average Euro exchange rate used in preparing the accounts

   1.12      1.26      1.46      1.47      1.46   

Average Rand exchange rate used in preparing the accounts

   13.14      15.17      14.11      12.47      11.57   

The financial information above is extracted from the published accounts. This information should be read together with the information included in the accompanying financial statements.


Table of Contents
  12        

 

Financial review

Consolidated summary balance sheet

 

 

 

As at 31st December                         
     

2009

£m

  

2008

£m

  

2007

£m

  

2006

£m

  

2005

£m

Assets

              

Cash and other short-term funds

   83,076    31,714    7,637    9,753    5,807

Trading portfolio and financial assets designated at fair value

   193,912    306,836    341,171    292,464    251,820

Derivative financial instruments

   416,815    984,802    248,088    138,353    136,823

Loans and advances to banks

   41,135    47,707    40,120    30,926    31,105

Loans and advances to customers

   420,224    461,815    345,398    282,300    268,896

Available for sale financial investments

   56,483    64,976    43,072    51,703    53,497

Reverse repurchase agreements and cash collateral on securities borrowed

   143,431    130,354    183,075    174,090    160,398

Other assets

   23,853    24,776    18,800    17,198    16,011

Total assets

   1,378,929    2,052,980    1,227,361    996,787    924,357

Liabilities

              

Deposits and items in the course of collection due to banks

   77,912    116,545    92,338    81,783    77,468

Customer accounts

   322,429    335,505    294,987    256,754    238,684

Trading portfolio and financial liabilities designated at fair value

   137,454    136,366    139,891    125,861    104,949

Liabilities to customers under investment contracts

   1,679    69,183    92,639    84,637    85,201

Derivative financial instruments

   403,416    968,072    248,288    140,697    137,971

Debt securities in issue

   135,902    149,567    120,228    111,137    103,328

Repurchase agreements and cash collateral on securities lent

   198,781    182,285    169,429    136,956    121,178

Insurance contract liabilities, including unit-linked liabilities

   2,140    2,152    3,903    3,878    3,767

Subordinated liabilities

   25,816    29,842    18,150    13,786    12,463

Other liabilities

   14,922    16,052    15,032    13,908    14,918

Total liabilities

   1,320,451    2,005,569    1,194,885    969,397    899,927

Shareholders’ equity

              

Shareholders’ equity excluding non-controlling interests

   47,277    36,618    23,291    19,799    17,426

Non-controlling interests

   11,201    10,793    9,185    7,591    7,004

Total shareholders’ equity

   58,478    47,411    32,476    27,390    24,430

Total liabilities and shareholders’ equity

   1,378,929    2,052,980    1,227,361    996,787    924,357

Risk weighted assets and capital ratios a

                        

Risk weighted assets

   382,653    433,302    353,878    297,833    269,148

Tier 1 ratio

   13.0%    8.6%    7.6%    7.7%    7.0%

Risk asset ratio

   16.6%    13.6%    11.2%    11.7%    11.3%

Selected financial statistics

                        

Net asset value per ordinary share

   414p    437p    353p    303p    269p

Number of ordinary shares of Barclays PLC (in millions)

   11,412    8,372    6,601    6,535    6,490

Year-end United States Dollar exchange rate used in preparing the accounts

   1.62    1.46    2.00    1.96    1.72

Year-end Euro exchange rate used in preparing the accounts

   1.12    1.04    1.36    1.49    1.46

Year-end Rand exchange rate used in preparing the accounts

   11.97    13.74    13.64    13.71    10.87

The financial information above is extracted from the published accounts. This information should be read together with the information included in the accompanying financial statements.

Note

 

a Risk weighted assets and capital ratios for 2006 and 2005 are calculated on a Basel I basis.
  Risk weighted assets and capital ratios for 2009, 2008 and 2007 are calculated on a Basel II basis.


Table of Contents
        13  

 

LOGO

 

Financial review

Balance sheet commentary

 

Shareholders’ equity

Shareholders’ equity, including non-controlling interests, increased 23% to £58.5bn in 2009 driven by profit after tax of £10.3bn. Net tangible asset value increased by 47% to £38.5bn. Net tangible asset value per share increased to 337p (2008: 313p).

Balance sheet

Total assets decreased by £674bn to £1,379bn in 2009, primarily reflecting movements in market rates and active reductions in derivative balances.

Assets and risk weighted assets were affected by the depreciation in value of various currencies relative to Sterling during 2009. As at 31st December 2009, the US Dollar and the Euro had depreciated 10% and 7%, respectively, relative to Sterling.

Capital management

At 31st December 2009, on a Basel II basis, our Core Tier 1 ratio was 10.0% (31st December 2008: 5.6%) and our Tier 1 ratio was 13.0% (31st December 2008: 8.6%). Capital ratios reflect a 12% decrease (£51bn) in risk weighted assets to £383bn in 2009. Key drivers included a reduction in the overall size of the balance sheet and foreign exchange movements.

Liquidity

The liquidity pool held by the Group increased to £127bn at 31st December 2009 from £43bn at the end of 2008. Whilst funding markets were difficult, particularly in the first half of 2009, the Group were able to increase available liquidity and the Group extended the average term of unsecured liabilities from 14 months to 26 months. The Group issued £15bn equivalent in public senior unguaranteed debt markets, across multiple currencies and maturities. In addition, the Group raised £1.8bn equivalent in the covered bond market and issued £21bn equivalent of structured notes. The Group have continued to manage liquidity prudently in the light of market conditions and in anticipation of ongoing regulatory developments.

 

Foreign currency translation

During 2009, US Dollar and Euro depreciated 10% and 7%, respectively, relative to Sterling. As a result, foreign currency assets and risk weighted assets decreased in value in Sterling terms.

The Group’s hedging strategy in respect of net investments in foreign currencies is designed to minimise the volatility of the capital ratios caused by changes in the Sterling value of foreign currency capital resources and risk weighted assets due to movements in foreign currency exchange rates. In this regard, the Group’s 31st December 2009 Core Tier 1 ratio is hedged to approximately 75%, 25% and 80% of the movements in US Dollar, Euro and South African Rand respectively against Sterling.

The currency translation reserve reduced by £1.2bn in 2009. This reflected movements in foreign currency net investments which are partially economically hedged through preference share capital (denominated in US Dollars and Euros) that is not revalued for accounting purposes.



Table of Contents
  14        

 

Financial review

Balance sheet commentary

continued

Total assets and risk weighted assets by business

2009/08

Total assets decreased by £674bn to £1,379bn and risk weighted assets decreased £51bn to £383bn.

Barclays UK Retail Bank’s total assets increased 4% to £105.2bn (31st December 2008: £101.4bn) driven by growth in mortgage balances. Risk weighted assets increased 6% (£1.7bn) to £32.2bn (2008: £30.5bn), a significant contributor being the growth in the mortgage book.

Total assets in Barclays Commercial Bank fell 10% (£8.5bn) to £75.5bn (2008: £84.0bn) driven by reduced overdraft borrowings and lower volumes in Barclays Asset and Sales Finance business. New term lending was £14bn. Risk weighted assets fell 4% (£2.8bn) to £60.3bn (2008: £63.1bn) largely reflecting a reduction in net balance sheet exposures offset by the impact of deteriorating credit conditions.

Total assets decreased 2% to £30.2bn (2008: £30.9bn) in Barclaycard reflecting the depreciation in the US Dollar and Euro against Sterling, the decision to stop writing new business in FirstPlus and tighter lending criteria. Risk weighted assets increased 12% (£3.3bn) to £30.6bn (2008: £27.3bn) due to higher volumes and the impact of moving toward an advanced risk measurement methodology offset by favourable foreign exchange and lower secured lending balances in FirstPlus.

Total assets in GRCB – Western Europe remained stable at £64.2bn (2008: £65.5bn), as underlying asset growth was offset by depreciation in the period end value of the Euro against Sterling. Risk weighted assets decreased 12% (£4.6bn) to £32.4bn (2008: £37.0bn) driven by active management and the migration of certain retail portfolios onto the advanced credit risk approach.

 

GRCB – Emerging Markets’ total assets decreased 14% (£2.0bn) to £11.9bn (2008: £13.9bn), and risk weighted assets decreased 15% (£2.2bn) to £12.4bn (2008: £14.6bn) due to the business pro-actively managing down portfolio exposures and the impact of exchange rate movements driven by a realignment of lending strategy in light of the economic downturn. Customer assets decreased 25% (£2.4bn) to £7.3bn (2008: £9.7bn) and customer deposits decreased 9% (£0.8bn) to £8.5bn (2008: £9.3bn).

Total assets in GRCB – Absa increased 13% to £45.8bn (2008: £40.4bn) and risk weighted assets increased 14% (£2.6bn) to £21.4bn (2008: £18.8bn), reflecting the impact of exchange rate movements.

Total assets in Barclays Capital reduced 37% to £1,019.1bn (2008: £1,629.1bn) primarily as a result of lower derivative balances. There were further reductions in the trading portfolio and lending as well as depreciation in the value of other currencies relative to Sterling. These reductions contributed to an overall decrease of 9% in the adjusted gross leverage assets to £618.2bn (2008: £681bn). Risk weighted assets reduced 20% (£46.3bn) to £181.1bn (2008: £227.4bn) following reductions in the size of the balance sheet and reclassification of certain securitisation assets to capital deductions and depreciation on the value of other currencies against Sterling, partially offset by a deterioration in credit conditions which increased probabilities of default.

Barclays Global Investors’ total assets have decreased £65.9bn to £5.4bn (2008: £71.3bn) reflecting the sale of BGI and the Group’s ongoing interest in BlackRock shares.

In Barclays Wealth, total assets increased 14% to £15.1bn (2008: £13.3bn) and risk weighted assets increased 10% (£1.1bn) to £11.4bn (2008: £10.3bn) reflecting growth in loans and advances.


 

 

Total assets by business

 

     

2009

£m

  

2008

£m

  

2007

£m

UK Retail Banking

   105,228    101,384    88,477

Barclays Commercial Bank

   75,547    84,029    74,566

Barclaycard

   30,220    30,925    22,121

GRCB – Western Europe

   64,185    65,519    43,702

GRCB – Emerging Markets

   11,874    13,866    9,188

GRCB – Absa

   45,824    40,391    36,368

Barclays Capital

   1,019,120    1,629,117    839,850

Barclays Global Investors

   5,406    71,340    89,218

Barclays Wealth

   15,095    13,263    18,188

Head office functions and other operations

   6,430    3,146    5,683

Total assets

   1,378,929    2,052,980    1,227,361

 

 

Risk weighted assets by business under Basel II

 

      2009
£m
   2008
£m
   2007
£m

UK Retail Banking

   32,176    30,491    31,463

Barclays Commercial Bank

   60,292    63,081    57,040

Barclaycard

   30,566    27,316    20,199

GRCB – Western Europe

   32,396    36,953    24,971

GRCB – Emerging Markets

   12,399    14,607    10,484

GRCB – Absa

   21,410    18,846    17,829

Barclays Capital

   181,117    227,448    178,206

Barclays Global Investors

   73    3,910    4,369

Barclays Wealth

   11,354    10,300    8,216

Head office functions and other operations

   870    350    1,101

Total risk weighted assets

   382,653    433,302    353,878


Table of Contents
        15  

 

LOGO

 

2008/07

Total assets increased 67% to £2,053.0bn (2007: £1,227.4bn). Risk weighted assets increased 22% to £433.3bn (2007: £353.9bn).

UK Retail Banking total assets increased 15% to £101.4bn (2007: £88.5bn) driven by growth in mortgage balances. Risk weighted assets decreased 3% to £30.5bn (2007: £31.5bn) as lending growth mainly in high quality, low risk mortgages was more than offset in capital terms by active risk management.

Barclays Commercial Bank total assets grew 13% to £84.0bn (2007: £74.6bn) driven by higher loans and advances. Risk weighted assets increased 11% to £63.1bn (2007: £57.0bn). This was slightly lower than asset growth, reflecting a relative increase in lower risk portfolios.

Barclaycard total assets increased 40% to £30.9bn ( 2007: £22.1bn) reflecting increases in International assets, the acquisition of Goldfish and the appreciation of the Euro and US Dollar against Sterling. Risk weighted assets increased 35% to £27.3bn ( 2007: £20.2bn), driven by acquisitions, the redemption of securitisation deals and exposure growth predominantly in the US.

GRCB – Western Europe total assets grew 50% to £65.5bn (2007: £43.7bn) reflecting growth in retail mortgages, unsecured lending, commercial lending and a 31% appreciation over the year in the value of the Euro against Sterling. Risk weighted assets increased 48% to £37bn (2007: £25.0bn), primarily reflecting underlying lending growth and the appreciation of the Euro.

GRCB – Emerging Markets total assets grew 51% to £13.9bn (2007: £9.2bn) reflecting increases in retail and commercial lending combined with the impact of Sterling depreciation. Risk weighted assets increased 39% to £14.6bn (2007: £10.5bn), reflecting portfolio growth.

GRCB – Absa total assets increased 11% to £40.4bn (2007: £36.4bn) reflecting broad based asset growth. Risk weighted assets increased 6% to £18.8bn (2007: £17.8bn), reflecting balance sheet growth.

Barclays Capital total assets increased 94% (£789.2bn) to £1,629.1bn (2007: £839.9bn) due to an increase in derivative assets of £736.7bn, predominantly driven by significant volatility and movements in yield curves in 2008, together with a substantial depreciation in Sterling against most major currencies. Total assets excluding derivatives increased by 9% in

Sterling. On a constant currency basis, total assets excluding derivatives decreased by approximately 15%. Risk weighted assets increased 28% to £227.4bn (2007: £178.2bn). This was driven by the depreciation in Sterling against the US Dollar and Euro, and an increase in market volatility.

The total assets of our former business, Barclays Global Investors, decreased 20% to £71.3bn (2007: £89.2bn), mainly attributable to adverse market movements in certain asset management products recognised as investment contracts. Risk weighted assets decreased 11% to £3.9bn (2007: £4.4bn) mainly attributed to changes in the asset class mix, partially offset by the weakening of Sterling against other currencies.

Barclays Wealth total assets decreased 27% to £13.3bn (2007: £18.2bn) reflecting the sale of the closed life assurance business partially offset by strong growth in lending to high net worth and intermediary clients. Risk weighted assets increased 26% to £10.3bn (2007: £8.2bn) reflecting strong growth in lending.

 

Head office functions and other operations total assets decreased 46% to £3.1bn (2007: £5.7bn). Risk weighted assets decreased 64% to £0.4bn (2007: £1.1bn). The decrease in the year was mainly attributable to the increased netting of Group deferred tax assets and liabilities.

Adjusted gross leverage

2009/08

The adjusted gross leverage ratio is defined as the multiple of adjusted total tangible assets over total qualifying Tier 1 capital.

Adjusted total tangible assets are total assets less derivative counterparty netting, assets under management on the balance sheet, settlement balances, goodwill and tangible assets. Tier 1 capital is defined by the UK FSA. Adjusted gross leverage is a non-IFRS measure. However, Barclays management believes that this measure provides valuable information to readers of Barclays financial statements as a key measure of stability, which is consistent with the views of regulators and investors. However, this measure is not a substitute for IFRS measures and readers should consider IFRS measures as well.

Limited netting is permitted under IFRS, even for receivables and payables with the same counterparty where there are contractually agreed netting arrangements. Derivative assets and liabilities would be £374bn (2008: £917bn) lower than reported under IFRS if netting were permitted for assets and liabilities with the same counterparty or for which we hold cash collateral.

Assets and liabilities also include amounts held under investment contracts with third parties of a further £2bn as at 31st December 2009 (2008: £69bn). These constitute asset management products offered to institutional pension funds which are required to be recognised as financial instruments. Changes in value in these assets are entirely to the account of the beneficial owner of the asset.

 

Adjusted gross leverage                      
      2009
£m
    2008
£m
    2007
£m
 

Total assets

   1,378,929      2,052,980      1,227,361   

Counterparty net/ collateralised derivatives

   (374,099   (917,074   (215,485
Financial assets designated at fair value and associated cash balances – held in respect of linked liabilities to customers under investment contracts    (1,679   (69,183   (92,639

Net settlement balances

   (25,825   (29,786   (22,459

Goodwill and intangible assets

   (8,795   (10,402   (8,296

Adjusted total tangible assets

   968,531      1,026,535      888,482   

Total qualifying Tier 1 capital

   49,637      37,250      26,743   

Adjusted gross leverage

   20      28      33   


Table of Contents
  16        

 

Financial review

Balance sheet commentary

continued

 

 

 

Excluding these items, settlement balances, goodwill and intangible assets, our adjusted total tangible assets were £969bn at 31st December 2009 (2008: £1,026bn). At 31st December 2009 adjusted gross leverage was 20x (2008: 28x).

Adjusted total tangible assets include cash and balances at central banks of £81.5bn (2008: £30.0bn). Excluding these balances the adjusted gross leverage would be 18x (2008: 27x).

2008/07

Derivative assets and liabilities would be £917bn lower than reported under IFRS if netting were permitted for assets and liabilities with the same counterparty or for which we hold cash collateral. Assets and liabilities also include amounts held under investment contracts with third parties of a further £69bn as at 31st December 2008. These constitute asset management products offered to institutional pension funds which are required to be recognised as financial instruments. Changes in value in these assets are entirely to the account of the beneficial owner of the asset.

Excluding these items, settlement balances, goodwill and intangible assets, our adjusted total tangible assets were £1,026bn at 31st December 2008 (2007: £888bn). At 31st December 2008 adjusted gross leverage was 28x (2007: 33x).

Total shareholders’ equity

2009/08

Total shareholders’ equity increased £11,067m to £58,478m (2008: £47,411m).

Called up share capital comprises 11,412 million ordinary shares of 25p each (2008: 8,372 million ordinary shares of 25p each).

Retained earnings increased £9,637m to £33,845m (2008: £24,208m). Profit attributable to the equity holders of the Parent of £9,393m and the proceeds of capital raising of £784m were partially offset by dividends paid to shareholders of £113m. Other equity in the prior year represents Mandatorily Convertible Notes, which were converted into ordinary shares by June 2009.

Movements in other reserves, except the capital redemption reserve and

other capital reserve, reflect the relevant amounts recorded in the consolidated statement of comprehensive income on page 179.

Non-controlling interests increased £408m to £11,201m (2008: £10,793m). The increase primarily reflects profit for the year attributable to non-controlling interests of £895m, currency translation differences of £277m, offset by dividends paid of £767m.

The Group’s authority to buy back equity shares was renewed at the 2009 AGM.

2008/07

Total shareholders’ equity increased £14,935m to £47,411m (2007: £32,476m).

Called up share capital comprised 8,372 million ordinary shares of 25p each (2007: 6,600 million ordinary shares of 25p each and 1 million staff shares of £1 each).

Retained earnings increased £3,238m to £24,208m (2007: £20,970m). Profit attributable to the equity holders of the Parent of £4,382m and the proceeds of capital raising of £1,410m were partially offset by dividends paid to shareholders of £2,344m. Other equity of £3,652m represents the issue of Mandatorily Convertible Notes, which were subsequently converted into ordinary shares prior to 1st July 2009.

Movements in other reserves, except the capital redemption reserve and other capital reserve, reflect the relevant amounts recorded in the consolidated statement of comprehensive income on page 179.

Non-controlling interests increased £1,608m to £10,793m (2007: £9,185m). The increase primarily reflects a 2008 preference share issuance by Barclays Bank PLC of £1,345m.

Barclays Bank PLC

Preference shares issued by Barclays Bank PLC are included within share capital and share premium in the Barclays Bank PLC Group but represent non-controlling interests in the Barclays PLC Group. Certain issuances of reserve capital instruments and capital notes by Barclays Bank PLC are included within other shareholders’ equity in the Barclays Bank PLC Group but represent non-controlling interests in Barclays PLC Group.


 

 

 

Total shareholders’ equity

 

 
      2009
£m
          2008
£m
          2007
£m
 
Barclays PLC Group                             

Called up share capital

   2,853         2,093         1,651   

Share premium account

   7,951         4,045         56   

Other equity

           3,652           

Available for sale reserve

   (110        (1,190        154   

Cash flow hedging reserve

   252         132         26   

Capital redemption reserve

   394         394         384   

Other capital reserve

   617         617         617   

Currency translation reserve

   1,615           2,840           (307

Other reserves

   2,768         2,793         874   

Retained earnings

   33,845         24,208         20,970   

Less: Treasury shares

   (140        (173        (260

Shareholders’ equity excluding

non-controlling interests

   47,277         36,618         23,291   

Non-controlling interests

   11,201           10,793           9,185   

Total shareholders’ equity

   58,478           47,411           32,476   

 

 

Total shareholders’ equity

 

 
     

2009

£m

          2008
£m
         

2007

£m

 
Barclays Bank PLC Group                             

Called up share capital

   2,402         2,398         2,382   

Share premium account

   12,092         12,060         10,751   

Available for sale reserve

   (84        (1,249        111   

Cash flow hedging reserve

   252         132         26   

Currency translation reserve

   1,615           2,840           (307

Other reserves

   1,783         1,723         (170

Other shareholders’ equity

   2,559         2,564         2,687   

Retained earnings

   37,089           22,457           14,222   

Shareholders’ equity excluding

non-controlling interests

   55,925         41,202         29,872   

Non-controlling interests

   2,774           2,372           1,949   

Total shareholders’ equity

   58,699           43,574           31,821   


Table of Contents
        17  

 

LOGO

 

Financial review

Capital management

 

 

 

Capital resources

2009/08

Core Tier 1 capital for Barclays PLC Group increased £14.1bn to £38.4bn and Tier 1 capital increased £12.4bn to £49.6bn.

Retained earnings and capital issues (including the conversion of the Mandatorily Convertible Notes) contributed £9.3bn and £4.7bn respectively to Core Tier 1 and Tier 1 capital. Reductions in the adjustment for own credit (£1.3bn) and deduction for intangible assets (£1.6bn) were broadly offset by the increase in securitisation deductions (£2.1bn).

The investment in BlackRock contributed to the £2.6bn increase in deductions from Tier 1 capital. This was partially offset by an increase in the amount of Reserve Capital Instruments eligible for inclusion in Tier 1.

Tier 2 capital decreased by £7.6bn. Deductions increased by £4.6bn, mainly in respect of the investment in BlackRock and securitisation positions. Subordinated loan capital decreased by £4.0bn, driven by net redemptions, the impact of exchange rate movements and lower levels of Reserve Capital Instruments in excess of the Tier 1 limits.

 

2008/07

Core Tier 1 capital increased by £7.6bn to £24.4bn and Tier 1 capital increased by £10.5bn during the year, driven by issues of ordinary shares (£5.2bn), other capital issuances (£4.3bn), retained profits (£2.0bn) and exchange rate movements (£3.2bn). These movements were partially offset by an increase in intangible assets (£1.3bn), innovative Tier 1 capital in excess of regulatory limits being reclassified as Tier 2 capital (£1.3bn) and the reversal of gains on own credit, net of tax (£1.2bn).

Tier 2 capital increased by £8.5bn due to issuance of loan capital (£3.6bn) net of redemptions (£1.1bn), inclusion of innovative capital in excess of the Tier 1 limits (£1.3bn), increases in collective impairment (£1.2bn) and exchange rate movements (£3.9bn).


 

 

Capital ratios under Basel II

 

   2009    2008    2007
      Barclays
PLC
Group
   Barclays
Bank PLC
Group
   Barclays
PLC
Group
   Barclays
Bank PLC
Group
   Barclays
PLC
Group
   Barclays
Bank PLC
Group

Capital ratios

   %    %    %    %    %    %

Core Tier 1 ratio

   10.0    10.1    5.6    5.6    4.7    4.5

Tier 1 ratio

   13.0    13.0    8.6    8.6    7.6    7.3

Risk asset ratio

   16.6    16.6    13.6    13.5    11.2    11.0
Risk weighted assets    £m    £m    £m    £m    £m    £m

Credit risk

   252,054    252,054    266,912    266,912    244,474    244,469

Counterparty risk

   45,450    45,450    70,902    70,902    41,203    41,203

Market risk

                 

– Modelled – VaR

   10,623    10,623    14,452    14,452    7,270    7,270

– Modelled – IRDC a and non-VaR

   5,378    5,378    7,771    7,771    5,522    5,522

– Standardised

   38,525    38,525    43,149    43,149    27,020    27,020

Operational risk

   30,623    30,623    30,116    30,116    28,389    28,389

Total risk weighted assets

   382,653    382,653    433,302    433,302    353,878    353,873

Note

 

a Incremental Default Risk Charge.


Table of Contents
  18        

 

Financial review

Capital management

continued

 

 

 

Capital resources continued

 

 

Total net capital resources under Basel II

 

     2009     2008     2007  
Capital resources
(as defined for regulatory purposes)
   Barclays
PLC
Group
£m
   

Barclays

Bank PLC
Group
£m

    Barclays
PLC
Group
£m
    Barclays
Bank PLC
Group
£m
    Barclays
PLC
Group
£m
    Barclays
Bank PLC
Group
£m
 

Ordinary shareholders’ funds a

   47,277      55,925      36,618      41,202      23,291      29,872   

Regulatory adjustments:

            

MCNs not yet converted

             (3,652               

Available for sale reserve – debt b

   83      83      372      372      49      49   

Available for sale reserve – equity

   (309   (335   (122   (63   (295   (514

Cash flow hedging reserve

   (252   (252   (132   (132   (26   (26

Defined benefit pension scheme

   431      431      849      849      1,052      1,052   

Adjustments for scope of regulatory consolidation

   196      196      847      847      (191   (191

Foreign exchange on RCIs and upper Tier 2 loan stock

   25      25      (231   (231   499      499   

Adjustment for own credit

   (340   (340   (1,650   (1,650   (461   (461

Other adjustments

   144      144      305      304      465      465   

Equity non-controlling interest

   2,351      2,351      1,981      1,981      1,608      1,608   

Less: Intangible assets

   (8,345   (8,345   (9,964   (9,964   (8,191   (8,191

Less: Net excess of expected loss over impairment at 50%

   (25   (25   (159   (159   (743   (743

Less: Securitisation positions at 50%

   (2,799   (2,799   (704   (704   (335   (335

Less: Non Core Tier 1 capital issues included in shareholders’ funds

        (8,427        (8,421        (7,236

Core Tier 1 Capital

   38,437      38,632      24,358      24,231      16,722      15,848   

Preference shares c

   6,256      6,256      6,191      6,191      5,035      5,035   

Reserve Capital Instruments d

   6,724      6,724      5,743      5,721      3,908      3,908   

Tier 1 Notes e

   1,017      1,017      1,086      1,086      899      899   

Tax on the net excess of expected loss over impairment

   8      8      46      46      207      207   

Less: Material holdings in financial companies at 50%

   (2,805   (2,915   (174   (174   (28   (28

Total qualifying Tier 1 capital

   49,637      49,722      37,250      37,101      26,743      25,869   

Revaluation reserves

   26      26      26      26      26      26   

Available for sale reserve – equity

   309      335      122      122      295      295   

Collectively assessed impairment allowances

   2,443      2,443      1,654      1,654      440      440   

Tier 2 non-controlling interests

   547      547      607      607      442      442   

Qualifying subordinated liabilities f

            

Undated loan capital

   1,350      1,350      6,745      6,768      3,191      3,191   

Dated loan capital

   15,657      15,658      14,215      14,215      10,578      10,578   

Less: Net excess of expected loss over impairment at 50%

   (25   (25   (158   (158   (743   (743

Less: Securitisation positions at 50%

   (2,799   (2,799   (704   (704   (335   (335

Less: Material holdings in financial companies at 50%

   (2,805   (2,915   (174   (174   (28   (28

Total qualifying Tier 2 capital

   14,703      14,620      22,333      22,356      13,866      13,866   

Less: Other regulatory deductions

   (880   (880   (856   (964   (826   (826

Total net capital resources

   63,460      63,462      58,727      58,493      39,783      38,909   

Notes

 

a For Barclays Bank PLC this balance represents Shareholders’ equity excluding non-controlling interests.

 

b Adjusted for the scope of regulatory consolidation.

 

c Preference shares are included in the balance sheet under non-controlling interests for Barclays PLC and shareholders equity for Barclays Bank PLC.

 

d Reserve Capital Instruments comprise instruments that are both debt and equity accounted and are included in the balance sheet under subordinated liabilities and non-controlling interests for Barclays PLC and subordinated liabilities and shareholders equity for Barclays Bank PLC.

 

e Tier 1 Notes are included in the balance sheet under subordinated liabilities.

 

f Qualifying subordinated liabilities include excess innovative Tier 1 instruments and are subject to limits laid down in the regulatory requirements.


Table of Contents
        19  

 

LOGO

 

Financial review

Additional financial disclosure

 

 

 

Deposits and short-term borrowings

Deposits

 

Deposits include deposits from banks and customers accounts.

 

      Averagea for the year ended
31st December
     

2009

£m

  

2008

£m

   2007
£m

Deposits from banks

        

Customers in the United Kingdom

   13,702    14,003    15,321

Other European Union

   48,161    38,210    33,162

United States

   14,757    15,925    6,656

Africa

   2,218    3,110    4,452

Rest of the World

   24,350    36,599    36,626

Total deposits from banks

   103,188    107,847    96,217

Customer accounts

        

Customers in the United Kingdom

   197,363    206,020    187,249

Other European Union

   38,326    30,909    23,696

United States

   32,218    31,719    21,908

Africa

   37,009    35,692    29,855

Rest of the World

   23,655    27,653    23,032

Customer accounts

   328,571    331,993    285,740

Deposits from banks in offices in the United Kingdom received from non-residents amounted to £51,423m (2008: £63,284m).

 

     Year ended 31st December
    

2009

£m

  

2008

£m

  

2007

£m

Customer accounts

  322,429    335,505    294,987

In offices in the United Kingdom:

       

Current and Demand accounts

       

– interest free

  45,160    41,351    33,400

Current and Demand accounts

       

– interest bearing

  24,066    20,898    32,047

Savings accounts

  71,238    68,335    70,682

Other time deposits – retail

  29,678    33,785    36,123

Other time deposits – wholesale

  52,891    74,417    65,726

Total repayable in offices in the United Kingdom

  223,033    238,786    237,978

In offices outside the United Kingdom:

       

Current and Demand accounts

       

– interest free

  7,308    4,803    2,990

Current and Demand accounts

       

– interest bearing

  24,176    15,463    11,570

Savings accounts

  9,950    7,673    3,917

Other time deposits

  57,962    68,780    38,532

Total repayable in offices outside the United Kingdom

  99,396    96,719    57,009

Customer accounts deposits in offices in the United Kingdom received from non-residents amounted to £57,014m (2008: £61,714m).

Note

 

a Calculated using month-end balances.

 

Short-term borrowings

Short-term borrowings include deposits from banks, commercial paper and negotiable certificates of deposit.

Deposits from banks

Deposits from banks are taken from a wide range of counterparties and generally have maturities of less than one year.

 

     

2009

£m

  

2008

£m

  

2007

£m

Year-end balance

   76,446    114,910    90,546

Average balanced a

   103,188    107,847    96,217

Maximum balance

   121,940    139,836    109,586

Average interest rate during year

   0.6%    3.6%    4.1%

Year-end interest rate

   0.4%    2.3%    4.0%

Commercial paper

Commercial paper is issued by the Group, mainly in the United States, generally in denominations of not less than US$100,000, with maturities of up to 270 days.

 

      2009
£m
  

2008

£m

  

2007

£m

Year-end balance

   19,300    27,692    23,451

Average balance a

   21,835    24,668    26,229

Maximum balance

   28,756    27,792    30,736

Average interest rate during year

   2.5%    4.4%    5.4%

Year-end interest rate

   2.5%    4.2%    5.2%

Negotiable certificates of deposit

Negotiable certificates of deposits are issued mainly in the United Kingdom and United States, generally in denominations of not less than US$100,000.

 

     

2009

£m

  

2008

£m

  

2007

£m

Year-end balance

   44,681    61,332    58,401

Average balance a

   54,960    55,122    55,394

Maximum balance

   64,054    67,715    62,436

Average interest rate during year

   2.3%    4.4%    5.1%

Year-end interest rate

   2.2%    4.1%    5.0%


Table of Contents
  20        

 

Financial review

Additional financial disclosure

continued

 

 

 

Commitments and contractual obligations

Commercial commitments include guarantees, contingent liabilities and standby facilities.

 

 

Commercial commitments

     Amount of commitment expiration per period
      Less than
one year
£m
   Between
one to
three years
£m
   Between
three to
five years
£m
   After
five years
£m
   Total
amounts
committed
£m

2009

              

Acceptances and endorsements

   372    3          375

Guarantees and letters of credit pledged as collateral security

   6,770    4,103    1,286    3,247    15,406

Securities lending arrangements a

   27,406             27,406

Other contingent liabilities

   7,637    853    381    716    9,587

Documentary credits and other short-term trade related transactions

   722    38    2       762

Forward asset purchases and forward deposits placed

   46             46

Standby facilities, credit lines and other

   145,916    44,004    9,794    6,753    206,467

2008

              

Acceptances and endorsements

   576    6    3       585

Guarantees and letters of credit pledged as collateral security

   7,272    2,529    1,781    4,070    15,652

Securities lending arrangements a

   38,290             38,290

Other contingent liabilities

   7,989    1,604    372    1,818    11,783

Documentary credits and other short-term trade related transactions

   770    88    1       859

Forward asset purchases and forward deposits placed

   50    241          291

Standby facilities, credit lines and other

   195,035    29,666    26,150    8,815    259,666

Contractual obligations include debt securities, operating lease and purchase obligations.

 

 

Contractual obligations

     Payments due by period
      Less than
one year
£m
   Between
one to
three years
£m
   Between
three to
five years
£m
   After
five years
£m
   Total
£m

2009

              

Long-term debt

   80,824    31,138    12,982    28,626    153,570

Operating lease obligations

   468    808    675    2,936    4,887

Purchase obligations

   1,109    940    541    1,243    3,833

Total

   82,401    32,886    14,198    32,805    162,290

2008

              

Long-term debt

   108,172    24,701    10,855    22,008    165,736

Operating lease obligations

   280    690    785    2,745    4,500

Purchase obligations

   214    225    61    20    520

Total

   108,666    25,616    11,701    24,773    170,756

The long-term debt does not include undated loan capital of £8,148m (2008: £13,673m). Further information on the contractual maturity of the Group’s assets and liabilities is given in Note 49.

Note

 

a Securities lending arrangements are fully collateralised, and are not expected to result in an outflow of funds from the Group, see Note 34 on page 220 for further details.


Table of Contents
        21  

 

LOGO

 

 

 

 

Securities

The following table analyses the book value of securities which are carried at fair value.

 

 

     2009    2008    2007
      Book value
£m
   Amortised
cost
£m
   Book value
£m
   Amortised
cost
£m
   Book value
£m
   Amortised
cost
£m

Investment securities – available for sale

                 

Debt securities:

                 

United Kingdom government

   77    74    1,238    1,240    78    81

Other government

   10,958    8,389    11,456    11,338    7,383    7,434

Other public bodies and US Agencies

   3,456    3,505    14,660    14,834    5,052    5,048

Mortgage and asset backed securities

   2,498    2,958    3,510    4,126    1,367    1,429

Bank and building society certificates of deposit

   7,697    7,343    10,478    10,535    3,028    3,029

Corporate and other issuers

   19,202    18,986    17,489    17,908    21,765    21,803

Equity securities

   6,676    6,247    2,142    1,814    1,676    1,418

Investment securities – available for sale

   50,564    47,502    60,973    61,795    40,349    40,242

Other securities – held for trading

                 

Debt securities:

                 

United Kingdom government

   6,815    n/a    6,955    n/a    3,832    n/a

Other government

   54,161    n/a    50,727    n/a    51,104    n/a

Other public bodies and US Agencies

   20,517    n/a    21,909    n/a    9,466    n/a

Mortgage and asset backed securities

   12,942    n/a    30,748    n/a    27,572    n/a

Bank and building society certificates of deposit

   995    n/a    7,518    n/a    17,751    n/a

Corporate and other issuers

   21,164    n/a    30,829    n/a    43,053    n/a

Equity securities

   19,602    n/a    30,535    n/a    36,307    n/a

Other securities – held for trading

   136,196    n/a    179,221    n/a    189,085    n/a

Investment debt securities include government securities held as part of the Group’s treasury management portfolio for asset and liability, liquidity and regulatory purposes and are for use on a continuing basis in the activities of the Group. In addition, the Group holds as investments listed and unlisted corporate securities.

Bank and building society certificates of deposit are freely negotiable and have original maturities of up to five years, but are typically held for shorter periods.

In addition to UK government securities shown above, the Group held the following government securities which exceeded 10% of shareholders’ equity in any of the last three years. These securities are held at fair value.

 

 

Government securities

     2009    2008    2007
      Book value
£m
   Book value
£m
   Book value
£m

United States

   17,356    17,165    15,156

Japan

   7,609    9,092    9,124

Germany

   9,698    5,832    5,136

France

   2,574    4,091    3,538

Italy

   6,297    6,091    5,090

Spain

   4,948    3,647    3,674

 

 

Maturities and yield of available for sale debt securities

 

     Maturing within
one year
   Maturing after one but
within five years
   Maturing after five but
within ten years
   Maturing after
ten years
   Total
      Amount
£m
   Yield
%
   Amount
£m
   Yield
%
   Amount
£m
   Yield
%
   Amount
£m
   Yield
%
   Amount
£m
   Yield
%

Government

   971    5.3    6,647    2.5    2,147    1.8    1,270    1.2    11,035    2.5

Other public bodies and US Agencies

   14    3.6    148    2.4    3,279    4.1    15    4.8    3,456    4.1

Other issuers

   14,727    2.7    12,983    1.4    1,075    3.0    612    3.4    29,397    2.3

Total book value

   15,712    2.9    19,778    1.8    6,501    3.2    1,897    1.9    43,888    2.5

The yield for each range of maturities is calculated by dividing the annualised interest income prevailing at 31st December 2009 by the fair value of securities held at that date.


Table of Contents
  22        

 

Financial review

Additional financial disclosure

continued

 

 

 

Average balance sheet

Average balance sheet and net interest income (year ended 31st December)

 

     

2009

  

2008

  

2007

      Average
balance a
£m
    Interest
£m
    Average
rate
%
   Average
balance a
£m
    Interest
£m
    Average
rate
%
   Average
balance a
£m
    Interest
£m
    Average
rate
%

Assets

                    

Loans and advances to banks b:

                    

– in offices in the United Kingdom

   41,912      483      1.2    38,913      1,453      3.7    29,431      1,074      3.6

– in offices outside the United Kingdom

   35,073      271      0.8    14,379      419      2.9    12,262      779      6.4

Loans and advances to customers b:

                    

– in offices in the United Kingdom

   264,687      9,405      3.6    249,081      13,714      5.5    205,707      13,027      6.3

– in offices outside the United Kingdom

   135,936      8,869      6.5    116,284      9,208      7.9    88,212      6,733      7.6

Lease receivables:

                    

– in offices in the United Kingdom

   4,316      174      4.0    4,827      281      5.8    4,822      283      5.9

– in offices outside the United Kingdom

   7,406      732      9.9    6,543      752      11.5    5,861      691      11.8

Financial investments:

                    

– in offices in the United Kingdom

   46,702      1,525      3.3    35,844      1,654      4.6    37,803      2,039      5.4

– in offices outside the United Kingdom

   13,590      485      3.6    10,450      697      6.7    14,750      452      3.1

Reverse repurchase agreements and cash collateral on securities borrowed:

                    

– in offices in the United Kingdom

   163,139      1,770      1.1    207,521      8,768      4.2    211,709      9,644      4.6

– in offices outside the United Kingdom

   145,606      665      0.5    128,250      4,450      3.5    109,012      5,454      5.0

Trading portfolio assets:

                    

– in offices in the United Kingdom

   96,421      3,262      3.4    107,626      4,948      4.6    120,691      5,926      4.9

– in offices outside the United Kingdom

   103,789      3,228      3.1    128,287      5,577      4.3    57,535      3,489      6.1

Financial assets designated at fair value:

                    

– in offices in the United Kingdom

   18,881      822      4.4    20,299      1,325      6.5    19,154      849      4.4

– in offices outside the United Kingdom

   13,552      315      2.3    8,690      426      4.9    11,298      713      6.3

Total average interest earning assets

   1,091,010      32,006      2.9    1,076,994      53,672      5.0    928,247      51,153      5.5

Impairment allowances/provisions

   (8,705        (5,749        (4,435    

Non-interest earning assets

   782,378