UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
August, 2005
Barclays PLC and
Barclays Bank PLC
(Names of Registrants)
1 Churchill Place
London E14 5HP
England
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No x
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b):
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This Report is a joint Report on Form 6-K filed by Barclays PLC and Barclays
Bank PLC. All of the issued ordinary share capital of Barclays Bank PLC is
owned by Barclays PLC.
This Report comprises:
Information given to The London Stock Exchange and furnished pursuant to
General Instruction B to the General Instructions to Form 6-K.
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EXHIBIT INDEX
Interim Results - 5 August 2005
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each of
the registrants has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BARCLAYS PLC
(Registrant)
Date: August 5, 2005 By: /s/ Patrick Gonsalves
----------------------
Patrick Gonsalves
Deputy Secretary
BARCLAYS BANK PLC
(Registrant)
Date: August 5, 2005 By: /s/ Patrick Gonsalves
----------------------
Patrick Gonsalves
Joint Secretary
Interim
Results
Announcement
June 2005
BARCLAYS PLC
INTERIM ANNOUNCEMENT OF RESULTS FOR 2005
TABLE OF CONTENTS
PAGE
Summary 1
Performance summary 2
Financial highlights 3
Half-year review 4
Consolidated income statement 7
Consolidated balance sheet 8
Group performance ratios 10
Results by business 11
Results by nature of income and expense 36
Additional information 59
Notes 65
Consolidated statement of recognised income and expense 80
Summary consolidated cashflow statement 81
Other information 82
Index 83
BARCLAYS PLC
The information in this announcement, which was approved by the Board of
Directors on 4th August 2005, does not comprise statutory accounts within the
meaning of Section 240 of the Companies Act 1985 (the 'Act'). Statutory accounts
for the year-ended 31st December 2004 were prepared under UK GAAP and included
certain information required for the joint Annual Report on Form 20-F of
Barclays PLC and Barclays Bank PLC to the US Securities and Exchange Commission
(SEC) and which contained an unqualified audit report under Section 235 of the
Act and which did not make any statements under Section 237 of the Act, have
been delivered to the Registrar of Companies in accordance with Section 242 of
the Act.
This document contains certain forward-looking statements within the meaning of
Section 21E of the US Securities Exchange Act of 1934, as amended, and Section
27A of the US Securities Act of 1933, as amended, with respect to certain of the
Group's plans and its current goals and expectations relating to its future
financial condition and performance. These forward-looking statements can be
identified by the fact that they do not relate only to historical or current
facts. Forward-looking statements sometimes use words such as "aim",
"anticipate", "target", "expect", "estimate", "intend", "plan", "goal",
"believe", or other words of similar meaning. Examples of forward-looking
statements include, among others, statements regarding the Group's future
financial position, income growth, impairment charges, business strategy,
projected levels of growth in the banking and financial markets, projected
costs, estimates of capital expenditures, and plans and objectives for future
operation.
By their nature, forward-looking statements involve risk and uncertainty because
they relate to future events and circumstances, including, but not limited to,
the further development of standards and interpretations under IFRS applicable
to past, current and future periods, evolving practices with regard to the
interpretation and application of standards under IFRS and pending tax elections
with regards to certain subsidiaries, as well as UK domestic and global economic
and business conditions, market related risks such as changes in interest rates
and exchange rates, the policies and actions of governmental and regulatory
authorities, changes in legislation, the outcome of pending and future
litigation, the impact of competition, and the Group's ability to increase
earnings per share from acquisitions such as Absa (which may be affected by,
among other things, the ability to realise expected synergies, integrate
businesses, and costs associated with the acquisition and integration) - a
number of which factors are beyond the Group's control. As a result, the Group's
actual future results may differ materially from the plans, goals, and
expectations set forth in the Group's forward-looking statements. Any
forward-looking statements made by or on behalf of Barclays speak only as of the
date they are made. Barclays does not undertake to update forward-looking
statements to reflect any changes in Barclays expectations with regard thereto
or any changes in events, conditions or circumstances on which any such
statement is based. The reader should, however, consult any additional
disclosures that Barclays has made or may make in documents it has filed or may
file with the SEC including its most recent Annual Report on Form 20-F.
The Group has applied IFRS from 1st January 2004, with the exception of the
standards relating to financial instruments and insurance contracts which are
applied only with effect from 1st January 2005. Therefore the impacts of
adopting IAS 32, IAS 39 and IFRS 4 are not included in the 2004 comparatives in
accordance with IFRS 1 and financial instruments and insurance contracts are
accounted for under UK GAAP in 2004.
The results for 2005 are therefore not entirely comparable to those for 2004 in
affected areas. For a fuller discussion of the transitional impacts of IFRS,
please refer to the IFRS Transition Report 2004/2005, released 11th May 2005.
5th August 2005
BARCLAYS PLC
"We made good progress in all the main elements of the Group's strategy,
particularly our international growth plans. The profit growth in the first half
demonstrates that our strategy is delivering strongly and that we are benefiting
from a mix of business that is well diversified by sector, income type and
geography."
John Varley, Group Chief Executive
RESULTS FOR SIX MONTHS TO 30TH JUNE 2005 (UNAUDITED)
Half-year ended
30.06.05 30.06.04 % Change
GBPm GBPm
Total income, net of insurance
claims 7,922 6,967 14
Impairment charges and other credit
provisions (706) (589) 20
Operating expenses (4,542) (3,974) 14
Profit before tax 2,690 2,463 9
Profit attributable to shareholders 1,841 1,798 2
Economic profit 1,004 964 4
Earnings per share 29.1p 28.0p 4
Proposed interim dividend per share 9.2p 8.25p 12
Post-tax return on average
shareholders' equity 23.4% 24.3%
Highlights of business profit GBPm GBPm % Change
before tax
UK Banking 1,275 1,162 10
Barclays Capital 703 588 20
Barclays Global Investors 242 151 60
Wealth Management1 89 64 39
Barclaycard 379 459 (17)
International Retail and
Commercial Banking 188 145 30
In this document the income statement analysis compares, unless stated
otherwise, the half-year ended 30th June 2005 to the corresponding period of
2004. Balance sheet comparisons, unless stated otherwise, relate to the
corresponding position at 31st December 2004. 2004 comparatives do not include
additional impacts arising from the first time application of IAS 32 (Financial
instruments: Disclosure and Presentation), IAS 39 (Financial instruments:
Recognition and Measurement) and IFRS 4 (Insurance Contracts), which were
applied from 1st January 2005.
1 Formerly Private Clients
BARCLAYS PLC
PERFORMANCE SUMMARY
- We made progress on each of our four strategic priorities:
- Building the best bank in the UK
- Accelerating growth of global product businesses
- Developing retail and commercial banking activities in selected markets
outside the UK
- Enhancing operational excellence
- The financial results reflect this progress:
- Total income1 up 14% to GBP7,922m
- Profit before tax up 9% to GBP2,690m
- Earnings per share up 4% to 29.1p
- Dividend per share up 12% to 9.2p
- Return on average shareholders' equity of 23.4%
- Income growth was well diversified by business, income type and
geography. Non-interest income1 rose 16% and was over half of total income1.
- In addition to strong organic growth, we continue to capture the
benefits expected from recent acquisitions.
- The increase in operating expenses1 was driven by significant
investment directed at future growth in investment banking, asset management,
international retail and commercial banking, international credit cards and by
higher performance related costs. This was complemented by a strong focus on
cost control in other areas.
- Impairment charges and other credit provisions rose 20%, driven
principally by an increase in delinquencies and a reduction in recoveries in
UK credit cards. Impairment charges rose at a slower rate in unsecured loans,
were steady in UK mortgages and decreased in the wholesale and corporate
businesses. Asset quality remains strong.
- UK Banking showed good growth with profit2 up 10% to GBP1,275m and made
progress on its productivity commitment with the cost:income1 ratio improving
by three percentage points.
- Barclays Capital delivered another excellent performance with profit2
up 20% to GBP703m. Growth, both by product and geography, reflected the
continued development through organic investment.
- Barclays Global Investors outstanding results continued with profit2
up 60% to GBP242m, attracting US$61bn of net new assets under management and
delivering strong investment performance.
- Wealth Management profit2 grew significantly, up 39% to GBP89m,
reflecting growth across the businesses, driven by good trends in transaction
volumes and growth in the balance sheet.
- Barclaycard profit2 fell 17% to GBP379m. Strong income growth was more
than offset by a significant rise in impairment losses, principally in the UK
card portfolio. Barclaycard profits were also adversely impacted by continued
investment in international development.
- International Retail and Commercial Banking achieved very strong
growth with profit2 up 30% to GBP188m. There was progress in all geographies,
and excellent performance in Spain.
- The acquisition of a majority stake in Absa completed at the end of July.
1 Trends in income and expenses are expressed after the deduction of 'net
insurance claims and benefits paid'.
2 Profit before tax.
BARCLAYS PLC
FINANCIAL HIGHLIGHTS (UNAUDITED)
Half-year ended
30.06.05 31.12.04 30.06.04
RESULTS GBPm GBPm GBPm
-------
Net interest income 3,700 3,500 3,333
Net fee and commission
income 2,540 2,532 2,315
Principal transactions 1,549 1,398 1,116
Net premiums from insurance
contracts 371 506 536
Other income 49 75 56
Total income 8,209 8,011 7,356
Net claims and benefits paid
on insurance contracts (287) (870) (389)
Total income, net of
insurance claims 7,922 7,141 6,967
Impairment charges and other
credit provisions (706) (504) (589)
Net income 7,216 6,637 6,378
Operating expenses (4,542) (4,562) (3,974)
Share of results of
associates and joint
ventures 16 42 14
Profit on disposal of
associates and joint
ventures - - 45
Profit before tax 2,690 2,117 2,463
Profit attributable to
shareholders 1,841 1,456 1,798
Economic profit 1,004 604 964
PER ORDINARY SHARE p p p
------------------
Earnings 29.1 23.0 28.0
Proposed dividend 9.2 15.75 8.25
Net asset value 249 246 232
PERFORMANCE RATIOS % % %
------------------
Post-tax return on average
shareholders' equity 23.4 18.9 24.3
Cost:income ratio1 57 64 57
Cost:net income ratio 63 69 62
As at
30.06.05 01.01.05 31.12.04 30.06.04
BALANCE SHEET GBPm GBPm GBPm GBPm
-------------
Shareholders' equity
excluding minority interests 16,099 15,287 15,870 14,978
Minority interests 5,686 3,330 894 178
Total shareholders' equity 21,785 18,617 16,764 15,156
Loan capital 11,309 10,606 12,277 12,468
Total capital resources 33,094 29,223 29,041 27,624
Total assets 850,123 715,600 538,181 512,331
Weighted risk assets 242,406 219,758 218,601 203,333
30.06.05 01.01.05 31.12.04 30.06.04
% % % %
Tier 1 ratio 7.6 7.1 7.6 7.7
Risk asset ratio 12.1 11.8 11.5 12.2
ECONOMIC DATA
-------------
Period end - US$/GBP 1.79 1.92 1.81
Average - US$/GBP 1.88 1.83 1.82
Period end - EUR/GBP 1.48 1.41 1.49
Average - EUR/GBP 1.46 1.47 1.48
1 Total income, net of insurance claims
BARCLAYS PLC
HALF-YEAR REVIEW
Barclays had a strong half-year, delivering good profit growth, investing
heavily for the future and making progress in each of our four strategic
priorities:
- Building the best bank in the UK
- Accelerating growth of global product businesses
- Developing retail and commercial banking activities in selected markets
outside the UK
- Enhancing operational excellence
Our overall profit performance demonstrated the benefits of our universal bank
model and the diversification and growth characteristics of our mix of
businesses. Our investment in the first half was directed particularly at the
global product businesses and International Retail and Commercial Banking.
Profit before tax increased 9% to GBP2,690m (2004: GBP2,463m). Earnings per
share rose 4% to 29.1p (2004: 28.0p). We have increased the proposed interim
dividend by 12% to 9.2p (2004: 8.25p).
Total income1 grew 14% to GBP7,922m (2004: GBP6,967m). Income growth was broadly
based - by business and by income type - and reflected both underlying momentum
and return on the investments made in prior years. Margins held up well across
the portfolio as a whole.
Operating expenses1 in the first half rose 14% to GBP4,542m (2004: GBP3,974m) in
line with growth in income. The substantial majority of the expense growth was
attributable to three factors: the very strong performance in the wholesale and
institutional businesses driving higher variable costs; investment spend in the
global product and international businesses; and the one-off expense of head
office relocation. Costs in all other areas were tightly controlled, and were
lower than the prior year in UK Banking.
Impairment charges and other credit provisions increased 20% to GBP706m (2004:
GBP589m). This growth was driven by an increase in the size of the book, higher
delinquency and lower recoveries in the Barclaycard UK card business. Impairment
was stable in UK mortgages, and fell in corporate and wholesale reflecting the
benign credit environment.
In UK Banking, we set a target in 2004 to deliver a 2 percentage point
improvement per annum in the cost:income ratio in each of 2005, 2006 and 2007.
The first half showed a 3 percentage point improvement relative to 2004 and this
resulted in an increase of 10% in profit before tax. UK Business Banking
continued to perform well with strong growth on both sides of the balance sheet
resulting in strong income growth at stable margins. Tight cost discipline and a
good risk performance also contributed to excellent profit growth of 20%. In UK
Retail Banking, income was broadly flat, but we benefited from a strong focus on
costs, delivering a 4% reduction in operating expenses despite continuing heavy
investment. We continued to build on the customer initiatives taken last year,
delivering significant improvement in key customer service metrics. We have also
launched new products in general insurance, mortgages and current accounts. Good
growth in current accounts and overdrafts was largely offset by margin pressure
in savings and a weak performance in mortgages. Excluding the effect of the sale
of our interest in Edotech in 2004, underlying profit before tax was up 6%.
1 Trends in income and expenses are expressed after the deduction of 'net
insurance claims and benefits paid'.
BARCLAYS PLC
HALF-YEAR REVIEW
Barclays Capital delivered record results in the first half, increasing profit
before tax by 20% to GBP703m (2004: GBP588m). Performance was broadly based
across products and geographies, reflecting delivery from past investments and
continued strengthening of the client franchise. The risk management performance
was excellent in volatile and sometimes difficult market conditions. Average
DVaR, at GBP30.4m, was lower than the average for 2004. We continue to invest
heavily in Barclays Capital, building on the breadth and depth of its
capabilities.
Barclays Global Investors (BGI) had another outstanding first half performance,
increasing profit before tax by 60% to GBP242m (2004: GBP151m). BGI now has
US$1.4 trillion of assets under management, and continued to generate strong
flows of net new assets and growth in higher margin products, reflecting ongoing
investment in the business. BGI delivered strong investment performance in
active products, with most funds outperforming their benchmarks. BGI also
delivered further significant improvement in operating margin and improved the
cost:income1 ratio to 59% (2004: 64%).
Wealth Management performed strongly. Profits2, which rose 39%, totalled GBP89m
(2004: GBP64m). Growth in this business was underpinned by higher asset and
liability volumes and higher levels of client activity across most of the wealth
businesses. We continued to invest in new products, to improve customer service
and to make progress with the integration of Gerrard. The cost:income1 ratio
improved by 4 percentage points.
Barclaycard profits2 fell 17% to GBP379m (2004: GBP459m) as a result of higher
impairment charges and international investment. Income growth of 11% reflected
good balance growth in the consumer loan businesses, stability in card margins,
the momentum in international cards and a first-time contribution from Juniper.
Operating expenses grew from the continued investment in the international
businesses, principally the acquisition of Juniper. The integration and
development of Juniper is in line with plan, with good growth in new
partnerships signed. Barclaycard International continued to make good progress
in Spain and Germany. Barclaycard announced new business extensions, including a
joint venture with ForeningsSparbanken in Scandinavia, and a partnership with
Sky TV in the UK.
International Retail and Commercial Banking, where profit2 rose 30% to GBP188m
(2004: GBP145m), performed strongly, driven by expansion in continental Europe,
particularly in mortgages. There was continued good progress with the
integration of Banco Zaragozano, where synergies are running ahead of plan. The
growth of International Retail and Commercial Banking will be accelerated in the
second half by the completion of the acquisition of a majority stake in Absa in
South Africa and by the acquisition of the ING Ferri business in France.
Good capital management enhances shareholder returns and continues to be a core
focus. In the first half of 2005, we raised GBP2.3bn of preference share capital
to fund organic growth and the acquisition of a majority stake in Absa. The Tier
1 capital ratio reported at 30th June 2005 has reduced by 90 basis points
following completion of the Absa transaction. We intend to run a tighter capital
structure and we have optimised the use of preference share capital in our
funding mix over the past 18 months. This has enabled us to buy back GBP700m of
shares in 2004 and fund GBP3.1 billion of acquisitions and joint ventures
without issuing ordinary shares. We continue to target the maintenance of our
Aa1/AA/AA+ credit ratings and have factored this into our capital management
plans. Whilst we would continue to adjust our capital levels to reflect the
environment and our business mix, our current focus is to rebuild capital ratios
to approximately 7.25% for the Tier 1 ratio. This is expected to be achieved in
2006 through the natural evolution of retained earnings.
1 Trends in income and expenses are expressed after the deduction of 'net
insurance claims and benefits paid'.
2 Profit before tax.
BARCLAYS PLC
HALF-YEAR REVIEW
We continue our progressive approach to dividends. With our annual dividend
approximately twice covered by earnings, the balance between income distribution
to shareholders and earnings retention to fund growth is appropriate. We expect
to grow dividends per share approximately in line with earnings per share over
the longer term. We would look to smooth this, with dividend growth lower than
earnings growth in years where earnings growth is exceptionally high, and the
converse when earnings growth in a particular year is below trend. We expect to
continue the practice of weighting the annual dividend towards the final
dividend to maintain flexibility, consistent with the practice and balance of
prior years.
In terms of progress towards Group goals, Barclays ranked in the second quartile
of its Total Shareholder Return (TSR) peer group2 for the goal period starting
1st January 2004. Cumulative economic profit growth for this period has exceeded
our stated compound annual target range of 10-13%.
We have completed the transition to International Financial Reporting Standards
(IFRS). Our first half results included the implementation of IAS 32, IAS 39 and
IFRS 4. This will introduce more volatility to reported earnings. In the first
half of 2005, this volatility had a positive effect on earnings in some areas,
particularly in the Group Treasury. The other key impacts on the income
statement in 2005 have been a change in the reporting of insurance income and a
reclassification between interest income and fee and commission income. The net
effect of the incremental IFRS changes in 2005 has been a modest reduction in
reported earnings per share.
The economic outlook for the remainder of the year continues to be fairly
positive. We expect the strong economic performances in the US and China to
continue to benefit the global economy. Although the rate of growth in the UK is
expected to be below the level of the past few years, it is still expected to be
in line with the longer term trend. We continue to see some softness in the UK
consumer sector, but the wholesale and corporate sector is in very good health.
The outlook for interest rates and unemployment is reassuring from a credit risk
perspective.
For the full year, excluding significant acquisitions and disposals, we continue
to target double digit income1 growth, with expense1 growth broadly in line with
this. Impairment charges are expected to be approximately in line with Risk
Tendency. In the second half of this year, we will also account for five months
of earnings from Absa (net of the associated funding and hedging costs), which
we expect to be modestly accretive to earnings per share.
We can now welcome to the Group our new colleagues from Absa. Absa's Chairman,
Dr Danie Cronje, joins the Barclays Board as a non-executive Director on 1st
September 2005. We are excited about the prospects for the enlarged business
both in South Africa and across the continent of Africa. We are also delighted
to have strengthened the Barclays Board during the first half through the
appointment of Robert E. Diamond Jnr. as an executive Director and President of
the Group, and through the appointment of Robert Steel and John Sunderland as
non-executive Directors.
John Varley
Group Chief Executive
1 Trends in income and expenses are expressed after the deduction of 'net
insurance claims and benefits paid'.
2 Peer group for 2005 unchanged from 2004: ABN Amro, BBVA, BNP Paribas,
Citigroup, Deutsche Bank, HBOS, HSBC, JP Morgan Chase, Lloyds TSB, Royal Bank
of Scotland and UBS.
BARCLAYS PLC
CONSOLIDATED INCOME STATEMENT (UNAUDITED)
Half-year ended
30.06.05 31.12.04 30.06.04
Continuing operations GBPm GBPm GBPm
Interest income 7,648 7,315 6,565
Interest expense (3,948) (3,815) (3,232)
--------- --------- ---------
Net interest income 3,700 3,500 3,333
--------- --------- ---------
Fee and commission income 2,872 2,861 2,648
Fee and commission expense (332) (329) (333)
--------- --------- ---------
Net fee and commission income 2,540 2,532 2,315
--------- --------- ---------
Net trading income 1,176 684 803
Net investment income 373 714 313
--------- --------- ---------
Principal transactions 1,549 1,398 1,116
Net premiums from insurance contracts 371 506 536
Other income 49 75 56
--------- --------- ---------
Total income 8,209 8,011 7,356
Net claims and benefits paid on
insurance contracts (287) (870) (389)
--------- --------- ---------
Total income, net of insurance claims 7,922 7,141 6,967
Impairment charge and other credit
provisions (706) (504) (589)
--------- --------- ---------
Net income 7,216 6,637 6,378
Operating expenses (4,542) (4,562) (3,974)
Share of results of associates and
joint ventures 16 42 14
Profit on disposal of associates and
joint ventures - - 45
--------- --------- ---------
Profit before tax 2,690 2,117 2,463
Tax (715) (634) (645)
--------- --------- ---------
Profit for the period 1,975 1,483 1,818
--------- --------- ---------
Profit attributable to minority
interests 134 27 20
Profit attributable to shareholders 1,841 1,456 1,798
--------- --------- ---------
1,975 1,483 1,818
--------- --------- ---------
p p p
Basic earnings per ordinary share 29.1 23.0 28.0
Diluted earnings per share 28.9 22.8 27.9
Proposed dividends per ordinary share:
Interim 9.2 - 8.25
Final - 15.75 -
Proposed dividend GBP582m GBP1,010m GBP528m
BARCLAYS PLC
CONSOLIDATED BALANCE SHEET (UNAUDITED)
As at
30.06.05 01.01.05 31.12.04 30.06.04
Assets GBPm GBPm GBPm GBPm
Cash and balances at
central banks 4,106 3,238 1,753 1,829
Items in the course of
collection from other
banks 2,208 1,772 1,772 2,527
Treasury bills and other
eligible bills 6,658 6,547
Trading portfolio assets 134,235 110,033
Financial assets designated at
fair value:
- held on own account 9,747 9,799
- held in respect of linked
liabilities to customers
under investment
contracts 69,792 63,124
Derivative financial
instruments 133,932 94,211
Loans and advances to
banks 35,225 25,728 80,632 83,034
Loans and advances to
customers 237,123 207,259 262,409 252,053
Debt securities 130,311 119,840
Equity shares 11,399 8,599
Available for sale
financial investments 61,143 48,097
Reverse repurchase
agreements and cash
collateral on securities
borrowed 149,400 139,574
Other assets 3,491 3,647 25,915 21,344
Insurance assets,
including unit-linked
assets 107 109 8,576 8,165
Investments in associates
and joint ventures 438 429 429 442
Goodwill 4,590 4,518 4,518 4,398
Intangible assets 120 139 139 62
Property, plant and
equipment 2,407 2,282 2,282 2,108
Deferred tax assets 2,059 1,641 1,388 1,383
------- ------- ------- -------
Total assets 850,123 715,600 538,181 512,331
------- ------- ------- -------
BARCLAYS PLC
CONSOLIDATED BALANCE SHEET (UNAUDITED)
As at
30.06.05 01.01.05 31.12.04 30.06.04
Liabilities GBPm GBPm GBPm GBPm
Deposits from banks 84,538 74,735 111,024 115,836
Items in the course of
collection due to other
banks 2,809 1,205 1,205 1,442
Customer accounts 217,715 194,478 217,492 206,170
Trading portfolio
liabilities 65,598 59,114
Financial liabilities
designated at fair value:
held on own account 8,231 5,320
Liabilities to customers
under investment
contracts 71,608 64,609
Derivative financial
instruments 132,784 94,429
Debt securities in issue 93,328 76,154 83,842 69,431
Repurchase agreements and
cash collateral on
securities lent 122,076 98,582
Other liabilities 9,649 9,869 82,936 79,546
Current tax liabilities 786 621 621 697
Insurance contract
liabilities, including
unit-linked liabilities 3,589 3,596 8,377 7,944
Subordinated liabilities:
- Undated loan
capital-non convertible 4,366 4,208 6,149 6,233
- Dated loan
capital-convertible to
preference shares 13 15 15 15
- Dated loan capital-non
convertible 6,930 6,383 6,113 6,220
Deferred tax liabilities 1,891 1,397 1,362 1,284
Other provisions for
liabilities 386 403 416 329
Retirement benefit
liabilities 2,041 1,865 1,865 2,028
------- ------- ------- -------
Total liabilities 828,338 696,983 521,417 497,175
------- ------- ------- -------
Shareholders' equity
Called up share capital 1,616 1,614 1,614 1,613
Share premium account 5,554 5,524 5,524 5,437
Less: treasury shares (239) (119) (119) (115)
Available for sale
reserve 374 314
Cash flow hedging reserve 328 302
Capital redemption
reserve 309 309 309 305
Other capital reserve 617 617 617 617
Translation reserve (35) (58) (58) (43)
Retained earnings 7,575 6,784 7,983 7,164
------- ------- ------- -------
Shareholders' equity
excluding minority
interest 16,099 15,287 15,870 14,978
Minority interests 5,686 3,330 894 178
------- ------- ------- -------
Total shareholders'
equity 21,785 18,617 16,764 15,156
------- ------- ------- -------
------- ------- ------- -------
Total liabilities and
shareholders' equity 850,123 715,600 538,181 512,331
------- ------- ------- -------
BARCLAYS PLC
Group performance ratios
As at
30.06.05 01.01.05 31.12.04 30.06.04
Net asset value per ordinary
share (excluding
minority interests) 249p 236p 246p 232p
Half-year ended
30.06.05 31.12.04 30.06.04
% % %
Post-tax return on average shareholders'
equity (excluding
minority interests) 23.4 18.9 24.3
Cost:income ratios
The cost:income ratios are defined as follows:
- The cost:income ratio is defined as operating expenses compared to total
income, net of insurance claims; and
- The cost:net income ratio is defined as operating expenses compared to
total income, net of insurance claims, less impairment charges.
Half-year ended
30.06.05 31.12.04 30.06.04
% % %
Cost:income ratio 57 64 57
Cost:net income ratio 63 69 62
BARCLAYS PLC
FINANCIAL REVIEW
Results by business
The following section analyses the Group's performance by business. For
management and reporting purposes, Barclays is organised into the following
business groupings:
- UK Banking, comprising
- UK Retail Banking
- UK Business Banking
- Barclays Capital
- Barclays Global Investors
- Wealth Management
- Wealth Management - closed life assurance activities
- Barclaycard
- International Retail and Commercial Banking
- Head office functions and other operations
UK Banking
UK Banking delivers banking solutions to Barclays UK retail and business
banking customers. It offers a range of integrated products and services and
access to the expertise of other Group businesses. Customers are served
through a variety of channels comprising the branch network, automated
teller machines, telephone banking, online banking and relationship
managers. UK Banking is managed through two business areas, UK Retail
Banking and UK Business Banking.
UK Retail Banking
UK Retail Banking comprises Personal Customers, Mortgages, Small Business
and UK Premier. This cluster of businesses enables the building of broader
and deeper relationships with both existing and new customers. Personal
Customers and Mortgages provide a wide range of products and services to 14
million retail customers, including current accounts, savings, mortgages,
and general insurance. Small Business provides banking services to 580,000
small businesses. UK Premier provides banking, investment products and
advice to some 280,000 affluent customers.
UK Business Banking
UK Business Banking provides relationship banking to the Group's larger and
medium business customers in the United Kingdom. Customers are served by a
network of relationship and industry sector specialist managers who provide
local access to an extensive range of products and services, as well as
offering business information and support. Customers are also offered access
to the products and expertise of other businesses in the Group, particularly
Barclays Capital. UK Business Banking provides asset financing and leasing
solutions through a specialist business to customers in the United Kingdom
and continental Europe.
BARCLAYS PLC
Barclays Capital
Barclays Capital is a leading global investment bank which provides large
corporate, institutional and government clients with solutions to their
financing and risk management needs.
Barclays Capital services a wide variety of client needs, from capital
raising and managing foreign exchange, interest rate and commodity risks,
through to providing technical advice and expertise. Activities are
organised into three principal areas: Rates, which includes fixed income,
foreign exchange, commodities, emerging markets, money markets sales,
trading and research, prime brokerage and equity related activities; Credit,
which includes primary and secondary activities for loans and bonds for
investment grade, high yield and emerging market credits, as well as hybrid
capital products, asset based finance, commercial mortgage backed
securities, credit derivatives, structured capital markets and large asset
leasing; and Private Equity.
Barclays Global Investors
Barclays Global Investors (BGI) is one of the world's largest asset managers
and a leading global provider of investment management products and
services.
BGI offers structured investment strategies such as indexing, tactical asset
allocation and risk-controlled active products. BGI also provides related
investment services such as securities lending, cash management and
portfolio transition services. In addition, BGI is the global leader in
Exchange Traded Funds, with over 130 funds for institutions and individuals
trading in eleven global markets. BGI's investment philosophy is founded on
managing all dimensions of performance: a consistent focus on controlling
risk, return and cost.
Wealth Management
Wealth Management (formerly Private Clients) serves affluent, high net worth
and corporate clients, primarily in the UK and continental Europe, providing
private banking, offshore banking, stockbroking, asset management and
financial planning services.
Wealth Management - closed life assurance activities
Wealth Management - closed life assurance activities comprise the closed
life assurance businesses of Barclays and Woolwich in the UK.
BARCLAYS PLC
Barclaycard
Barclaycard is a multi-brand credit card and consumer lending business with
an increasing international presence and is one of the leading credit card
businesses in Europe.
In the UK, Barclaycard manages the Barclaycard branded credit cards and
other non-Barclaycard branded card portfolios including Monument, SkyCard
and Solution Personal Finance. In consumer lending, Barclaycard manages both
secured and unsecured loan portfolios, through Barclays branded loans, being
mostly Barclayloan, and also through the FirstPlus and Clydesdale Financial
Services businesses.
Outside the UK, Barclaycard operates in the United States, through Juniper
Financial Corporation, in Germany, Spain, Greece, Italy, Portugal, Republic
of Ireland and across Africa. In the Nordic region, Barclaycard operates
through Entercard, the joint venture with ForeningsSparbanken (Swedbank).
Barclaycard Business processes card payments for retailers and issues
purchasing and credit cards to business customers and to the UK Government.
Barclaycard works closely with other parts of the Group, including UK Retail
Banking, UK Business Banking and International Retail and Commercial
Banking, to leverage their distribution capability.
International Retail and Commercial Banking
International Retail and Commercial Banking provides a range of banking
services, including current accounts, savings, investments, mortgages and
loans to personal and corporate customers across Spain, Portugal, France,
Italy, the Caribbean, Africa and the Middle East.
International Retail and Commercial Banking works closely with other parts
of the Group, including Barclaycard, UK Banking, Barclays Capital and
Barclays Global Investors, to leverage synergies from product and service
propositions.
Head office functions and other operations
Head office functions and other operations comprise:
- head office and central support functions
- discontinued businesses in transition
- consolidation adjustments
Head office and central support functions comprise the following areas:
Executive Management, Finance, Treasury, Communications, Human Resources,
Strategy and Planning, Internal Audit, Legal, Corporate Secretariat,
Property, Tax, Compliance and Risk. Costs incurred wholly on behalf of the
businesses are recharged to them.
Discontinued businesses in transition principally relate to South American
and Middle Eastern corporate banking businesses. These businesses are
centrally managed with the objective of maximising recovery from the assets.
Consolidation adjustments largely reflect the elimination of inter segment
transactions.
BARCLAYS PLC
SUMMARY OF RESULTS (UNAUDITED)
Analysis of profit attributable to shareholders
Half-year ended
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
UK Banking 1,275 1,103 1,162
-------- -------- --------
UK Retail Banking 549 405 558
UK Business Banking 726 698 604
-------- -------- --------
Barclays Capital 703 432 588
Barclays Global Investors 242 185 151
Wealth Management 89 46 64
Wealth Management - closed life
assurance activities (2) (51) (1)
Barclaycard 379 384 459
International Retail and Commercial
Banking 188 148 145
Head office functions and other
operations (184) (130) (105)
-------- -------- --------
Profit before tax 2,690 2,117 2,463
Tax (715) (634) (645)
-------- -------- --------
Profit for the period 1,975 1,483 1,818
Profit attributable to minority
interests (134) (27) (20)
-------- -------- --------
Profit attributable to shareholders 1,841 1,456 1,798
-------- -------- --------
BARCLAYS PLC
TOTAL ASSETS AND WEIGHTED RISK ASSETS
Total assets
As at
30.06.05 01.01.05 31.12.04 30.06.04
GBPm GBPm GBPm GBPm
UK Banking 134,322 128,573 119,561 114,404
-------- -------- -------- --------
UK Retail Banking 67,518 69,064 68,861 67,255
UK Business Banking 66,804 59,509 50,700 47,149
-------- -------- -------- --------
Barclays Capital 566,675 454,437 346,901 330,235
Barclays Global Investors 68,630 61,201 798 711
Wealth Management 5,215 5,050 5,007 4,409
Wealth Management -
closed life assurance
activities 6,653 6,551 6,425 6,092
Barclaycard 23,777 22,878 23,059 20,693
International Retail and
Commercial Banking 29,505 28,723 28,448 25,114
Head office functions and
other operations 10,756 3,669 3,464 6,275
Goodwill 4,590 4,518 4,518 4,398
-------- -------- -------- --------
850,123 715,600 538,181 512,331
-------- -------- -------- --------
Weighted risk assets
As at
30.06.05 01.01.05 31.12.04 30.06.04
GBPm GBPm GBPm GBPm
UK Banking 100,355 92,590 91,913 87,506
-------- -------- -------- --------
UK Retail Banking 37,010 37,835 37,111 36,458
UK Business Banking 63,345 54,755 54,802 51,048
-------- -------- -------- --------
Barclays Capital 90,828 79,511 79,949 72,715
Barclays Global Investors 1,474 1,233 1,230 1,004
Wealth Management 4,589 4,187 4,018 3,632
Barclaycard 21,666 21,595 20,188 18,404
International Retail and
Commercial Banking 19,430 18,701 19,319 17,292
Head office functions and
other operations 4,064 1,941 1,984 2,780
-------- -------- -------- --------
242,406 219,758 218,601 203,333
-------- -------- -------- --------
Weighted risk assets at 1st January 2005 have been restated from those
reported in the IFRS Transition Report, reflecting a review of the treatment
of certain assets and offsets.
BARCLAYS PLC
UK Banking
Half-year ended
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
Net interest income 1,919 1,780 1,697
Net fee and commission
income 868 974 962
-------- -------- --------
Net trading income (2) - -
Net investment income 19 4 1
-------- -------- --------
Principal transactions 17 4 1
Net premiums from
insurance contracts 141 100 149
Other income 15 31 6
-------- -------- --------
Total income 2,960 2,889 2,815
Net claims and benefits
on insurance contracts (33) (20) (26)
-------- -------- --------
Total income, net of
insurance claims 2,927 2,869 2,789
Impairment charges and
other credit provisions (148) (46) (153)
-------- -------- --------
Net income 2,779 2,823 2,636
Operating expenses (1,498) (1,722) (1,519)
Share of results of
associates and joint
ventures (6) 2 3
Profit on disposal of
associates and joint
ventures - - 42
-------- -------- --------
Profit before tax 1,275 1,103 1,162
-------- -------- --------
Cost:income ratio 51% 60% 54%
Cost:net income ratio 54% 61% 58%
Risk Tendency GBP420m GBP375m GBP360m
Return on average
economic capital 34% 32% 35%
Economic profit GBP592m GBP565m GBP593m
As at
30.06.05 01.01.05 31.12.04 30.06.04
Loans and advances to GBP125.4bn GBP119.6bn GBP114.1bn GBP109.0bn
customers
Customer accounts GBP131.0bn GBP124.6bn GBP114.8bn GBP113.1bn
Total assets GBP134.3bn GBP128.6bn GBP119.6bn GBP114.4bn
Weighted risk assets GBP100.4bn GBP92.6bn GBP91.9bn GBP87.5bn
Key Facts 30.06.05 31.12.04 30.06.04
Number of UK branches 2,053 2,061 2,064
UK Banking profit before tax increased 10% (GBP113m) to GBP1,275m (2004:
GBP1,162m), driven by good income growth, well controlled risk and strong
cost management as operating expenses were held below 2004 levels.
UK Banking has continued to make good progress towards achieving its
strategic aims of delivering integrated banking solutions to customers,
enhancing the customer service experience, capturing revenue growth
opportunities and improving productivity. UK Banking is targeting cost:
income ratio improvements of 2 percentage points per annum in 2005, 2006 and
2007. During the first half of 2005 UK Banking made good progress towards
achieving this target with the cost:income ratio improving by 3 percentage
points to 51% (2004: 54%).
BARCLAYS PLC
UK Retail Banking
Half-year ended
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
Net interest income 1,041 1,046 1,013
Net fee and commission
income 550 554 569
-------- -------- --------
Net trading income - - -
Net investment income 9 1 -
-------- -------- --------
Principal transactions 9 1 -
Net premiums from
insurance contracts 141 100 149
Other income 12 22 4
-------- -------- --------
Total income 1,753 1,723 1,735
Net claims and benefits
on insurance contracts (33) (20) (26)
-------- -------- --------
Total income, net of
insurance claims 1,720 1,703 1,709
Impairment charges and
other credit provisions (72) 2 (62)
-------- -------- --------
Net income 1,648 1,705 1,647
Operating expenses (1,092) (1,300) (1,133)
Share of results of
associates and joint
ventures (7) - 2
Profit on disposal of
associates and joint
ventures - - 42
-------- -------- --------
Profit before tax 549 405 558
-------- -------- --------
Cost:income ratio 63% 76% 66%
Cost:net income ratio 66% 76% 69%
Risk Tendency GBP160m GBP150m GBP150m
Return on average
economic capital 34% 25% 36%
Economic profit GBP256m GBP183m GBP290m
As at
30.06.05 01.01.05 31.12.04 30.06.04
Loans and advances to GBP64.9bn GBP66.0bn GBP65.6bn GBP64.4bn
customers
Customer accounts GBP74.6bn GBP73.1bn GBP72.4bn GBP70.7bn
Total assets GBP67.5bn GBP69.1bn GBP68.9bn GBP67.3bn
Weighted risk assets GBP37.0bn GBP37.8bn GBP37.1bn GBP36.5bn
Key Facts 30.06.05 31.12.04 30.06.04
Personal Customers
------------------
Number of UK current
accounts 10.9m 10.7m 10.6m
Number of UK savings
accounts 10.7m 10.6m 10.5m
Total UK mortgage balances
(residential) GBP61.0bn GBP61.7bn GBP60.8bn
Small Business and UK Premier
-----------------------------
Number of Small Business
customers 580,000 566,000 567,000
Number of UK Premier
customers 280,000 273,000 269,000
BARCLAYS PLC
UK Retail Banking profit before tax decreased 2% (GBP9m) to GBP549m (2004:
GBP558m). Profit before tax increased 6% excluding the impact of a GBP42m
profit on the disposal of a stake in Edotech in the first half of 2004.
Total income net of insurance claims increased 1% (GBP11m) to GBP1,720m
(2004: GBP1,709m). There was a good performance in current accounts, whilst
income from mortgages and retail savings was weaker. Net income was flat at
GBP1,648m (2004: GBP1,647m).
Net interest income increased 3% (GBP28m) to GBP1,041m (2004: GBP1,013m).
Growth was driven by a higher contribution from current accounts (both
deposits and overdrafts), which was offset by margin pressure in retail
savings. Excluding the impact of the application of IAS 32 and IAS 39 from
1st January 2005, net interest income increased 1%.
UK average residential mortgage balances increased 1% to GBP61.4bn (2004:
GBP60.6bn). The mortgage business focused on higher margin new business
rather than volume during the period, which resulted in an improved margin
on new business. Gross advances were GBP5.2bn (2004: GBP9.2bn), an
estimated market share of 4%. UK residential mortgage balances ended the
period at GBP61.0bn (31st December 2004: GBP61.7bn). The estimated loan to
value ratio within the residential mortgage book on a current valuation
basis was 34% (31st December 2004: 35%). Average overdraft balances within
Personal Customers increased 11% and average Small Business loan balances
rose 10%.
Total average customer deposit balances increased 5% to GBP71.0bn (2004:
GBP67.5bn). There was strong growth in UK Premier with average deposits up
12% and good growth in Small Business where average deposit balances were
5% higher. Personal Customer average current account balances increased 4%
and average retail savings balances by 3%.
Net fee and commission income decreased 3% (GBP19m) to GBP550m (2004:
GBP569m), as lending related fees were impacted by the application of IAS
32 and IAS 39 from 1st January 2005. Excluding this impact, net fee and
commission income was 1% higher. Higher fee income was generated by
value-added fee-based current accounts, reflecting higher account numbers
and a broader product range.
Income from principal transactions was GBP9m (2004: GBPnil) representing
the gain on the sale of the investment in Gresham, an insurance
underwriting business, ahead of the launch of the new general insurance
offering.
Net premiums from insurance underwriting activities decreased 5% (GBP8m) to
GBP141m (2004: GBP149m), due to a lower insurance take up on consumer
lending activity.
Impairment charges increased 16% (GBP10m) to GBP72m (2004: GBP62m), in line
with expectations. The increase has principally arisen in Personal Customer
overdrafts and Small Business loans reflecting balance growth. The quality
of the mortgage portfolio remains high. Mortgage arrears balances remained
at a low level, despite some modest deterioration in the period.
Operating expenses decreased 4% (GBP41m) to GBP1,092m (2004: GBP1,133m) as
cost saving initiatives focused on the back and middle office more than
offset cost pressures arising from investment in frontline customer
service, inflation and volume growth. Investment in the infrastructure of
the business continued during the first half of 2005. The cost:income ratio
improved by 3 percentage points to 63% (2004: 66%).
BARCLAYS PLC
UK Business Banking
Half-year ended
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
Net interest income 878 734 684
Net fee and commission
income 318 420 393
-------- -------- --------
Net trading income (2) - -
Net investment income 10 3 1
-------- -------- --------
Principal transactions 8 3 1
Other income 3 9 2
-------- -------- --------
Total income 1,207 1,166 1,080
Impairment charges and
other credit provisions (76) (48) (91)
-------- -------- --------
Net income 1,131 1,118 989
Operating expenses (406) (422) (386)
Share of results of
associates and joint
ventures 1 2 1
-------- -------- --------
Profit before tax 726 698 604
-------- -------- --------
Cost:income ratio 34% 36% 36%
Cost:net income ratio 36% 38% 39%
Risk Tendency GBP260m GBP225m GBP210m
Return on average
economic capital 35% 38% 35%
Economic profit GBP336m GBP382m GBP303m
As at
30.06.05 01.01.05 31.12.04 30.06.04
Loans and advances to GBP60.5bn GBP53.6bn GBP48.5bn GBP44.7bn
customers
Customer accounts GBP56.4bn GBP51.6bn GBP42.4bn GBP42.4bn
Total assets GBP66.8bn GBP59.5bn GBP50.7bn GBP47.1bn
Weighted risk assets GBP63.3bn GBP54.8bn GBP54.8bn GBP51.0bn
Key Facts 30.06.05 31.12.04 30.06.04
Total number of Business
Banking customers 182,000 179,000 179,000
Customers registered for
online banking/Business
Master 70,300 66,900 66,800
BARCLAYS PLC
UK Business Banking profit before tax increased 20% (GBP122m) to GBP726m
(2004: GBP604m), as a result of strong income growth and lower impairment
losses. Both Larger Business and Medium Business performed well. The asset
and sales finance business performed very strongly and future growth will
be enhanced by the acquisition of a 51% stake in Iveco Finance, which
completed during June 2005.
Total income increased 12% (GBP127m) to GBP1,207m (2004: GBP1,080m). Net
income increased 14% (GBP142m) to GBP1,131m (2004: GBP989m).
Net interest income increased 28% (GBP194m) to GBP878m (2004: GBP684m).
Excluding the impact of the application of IAS 32 and IAS 39 from 1st
January 2005, net interest income increased by 12%.
Balance sheet growth was very strong. The application of IAS 32 and IAS 39
from 1st January 2005 has resulted in the grossing up of previously netted
positions (assets and liabilities subject to master netting agreements).
These amounted to GBP8.7bn as at 30th June 2005. Average lending balances
(excluding previously netted balances) increased 21% to GBP51.7bn (2004:
GBP42.7bn), with particularly strong growth in the large corporate segment.
UK Business Banking's market share of lending balances increased over the
period. Average deposit balances (excluding previously netted balances)
increased 10% to GBP44.4bn (2004: GBP40.4bn). Adjusting for the income
reclassification, there has been a modest decline in both the lending and
deposit margins.
The impact of the Iveco transaction was to increase both period end total
assets and weighted risk assets by GBP1.8bn.
Net fee and commission income decreased 19% (GBP75m) to GBP318m (2004:
GBP393m). Excluding the impact of the IAS 32 and IAS 39, net fee and
commission income increased 8%, as a result of higher underlying lending
fees and higher fees from the asset and sales finance business.
Income from principal transactions was GBP8m (2004: GBP1m). The majority of
the increase represented gains on the sale of venture capital investments.
Impairment charges decreased 16% (GBP15m) to GBP76m (2004: GBP91m). The
overall credit profile of the portfolio was maintained and the average
credit quality of new lending was above that of the average for the overall
book.
Operating expenses increased 5% (GBP20m) to GBP406m (2004: GBP386m),
reflecting volume growth and higher expenditure on front line staff. The
cost:income ratio improved by 2 percentage points to 34% (2004: 36%).
BARCLAYS PLC
Barclays Capital
Half-year ended
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
Net interest income 483 535 456
Net fee and commission
income 350 331 272
-------- -------- --------
Net trading income 1,115 679 784
Net investment income 158 121 176
-------- -------- --------
Principal transactions 1,273 800 960
Other income 11 11 10
-------- -------- --------
Total income 2,117 1,677 1,698
Impairment charges and
other credit provisions (48) (53) (49)
-------- -------- --------
Net income 2,069 1,624 1,649
Operating expenses (1,366) (1,192) (1,061)
-------- -------- --------
Profit before tax 703 432 588
-------- -------- --------
Cost:income ratio 65% 71% 62%
Cost:net income ratio 66% 73% 64%
Risk Tendency GBP75m GBP70m GBP80m
Return on average
economic capital 40% 32% 38%
Average net income per
member of staff ('000) GBP257 GBP221 GBP260
Economic profit GBP346m GBP230m GBP291m
As at
30.06.05 01.01.05 31.12.04 30.06.04
Total assets GBP566.7bn GBP454.4bn GBP346.9bn GBP330.2bn
Weighted risk assets GBP90.8bn GBP79.5bn GBP79.9bn GBP72.7bn
Key Facts1 30.06.05 30.06.04
League League
table Issuance table Issuance
position value position value
Global all debt 4th $163.5bn 5th $122.3bn
European all debt 2nd $116.0bn 3rd $80.9bn
All international bonds 4th $96.0bn 6th $75.9bn
(all currencies)
All international bonds 3rd EUR44.3bn 3rd EUR35.4bn
(Euros)
Sterling bonds 2nd GBP8.3bn 2nd GBP7.7bn
US investment grade 4th $5.1bn 12th $2.1bn
bonds
1 League tables compiled by Barclays Capital from external sources including
Dealogic and Thomson Financials.
BARCLAYS PLC
Barclays Capital continued to perform strongly delivering record first half
profit before tax and net income despite difficult market conditions,
particularly during the second quarter. Profit before tax increased 20%
(GBP115m) to GBP703m (2004: GBP588m) reflecting very strong income growth
driven by higher business volumes and client activity levels. Net income
increased 25% (GBP420m) to GBP2,069m (2004: GBP1,649m).
Total income increased 25% (GBP419m) to GBP2,117m (2004: GBP1,698m) as a
result of strong growth across the Rates and Credit businesses. Income by
asset category was broadly based with particularly strong income growth
from credit products and commodities. Areas of investment in 2004, such as
commercial mortgage backed securities, equity derivatives and commodities,
performed well. Average DVaR decreased 20% to GBP30.4m (2004: GBP38.1m)
primarily due to better diversification and was broadly in line with DVaR
for the second half of 2004 (GBP30.7m).
Secondary income, comprising principal transactions (net trading income and
net investment income) and net interest income, is mainly generated from
providing financing and client risk management solutions. This increased
24% (GBP340m) to GBP1,756m (2004: GBP1,416m).
Trading income increased 42% (GBP331m) to GBP1,115m (2004: GBP784m) due to
strong performances across the Rates and Credit businesses, in particular
from commodities, foreign exchange, structured capital markets and credit
derivatives. This was driven by higher volumes of client led activity
across a broad range of products and geographic regions and the continued
return on prior year investments. Net investment income decreased 10%
(GBP18m) to GBP158m (2004: GBP176m), due to lower contributions from
structured capital markets and private equity realisations. Net interest
income increased 6% (GBP27m) to GBP483m (2004: GBP456m).
Primary income, comprising net fee and commission income from advisory and
origination activities, grew 29% (GBP78m) to GBP350m (2004: GBP272m). This
reflected increased volumes and market share gains in a number of key
markets with particularly strong performances from primary bonds and loans.
Other income of GBP11m (2004: GBP10m) reflected income from operating
leases.
Impairment charges of GBP48m (2004: GBP49m) were broadly in line with prior
year as the wholesale credit environment remained stable.
Operating expenses increased 29% (GBP305m) to GBP1,366m (2004: GBP1,061m),
reflecting the ongoing costs associated with staff hired during 2004 and
the first half of 2005 and higher business volumes. Performance related
costs increased due to the strong profit performance. Investment
expenditure, primarily in the front office continued to be significant, but
decreased, relative to 2004, reflecting the reduced pace of hiring in the
first half of 2005. The cost:net income ratio increased to 66% (2004: 64%).
Total staff costs to net income was in line with the prior year at 53%.
Approximately half of the total operating expenses comprised performance
related pay, discretionary investment spend and short-term contractor
resource, consistent with the experience in the first half of 2004.
Total headcount increased by 500 during the first half of 2005 to 8,300
(31st December 2004: 7,800). Almost 60% of the increase was in the front
office, spread across product, client coverage and distribution across all
geographies. The remainder was directed at the continued strengthening of
the back office and control environment, mostly in lower cost
jurisdictions.
BARCLAYS PLC
Barclays Global Investors
Half-year ended
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
Net interest income 7 1 4
Net fee and commission
income 570 464 418
--------- -------- --------
Net trading income 2 3 -
Net investment income 4 3 -
--------- -------- --------
Principal transactions 6 6 -
Other income - (1) 1
--------- -------- --------
Total income 583 470 423
Operating expenses (342) (284) (272)
Share of results of
associates and joint
ventures 1 (1) (1)
Profit on disposal of
associates and joint
ventures - - 1
--------- -------- --------
Profit before tax 242 185 151
--------- -------- --------
Cost:income ratio 59% 60% 64%
Average income per
member of staff ('000) GBP299 GBP247 GBP217
Return on average
economic capital 247% 185% 147%
Economic profit GBP129m GBP108m GBP87m
As at
30.06.05 01.01.05 31.12.04 30.06.04
Total assets GBP68.6bn GBP61.2bn GBP0.8bn GBP0.7bn
Weighted risk assets GBP1.5bn GBP1.2bn GBP1.2bn GBP1.0bn
Key Facts 30.06.05 31.12.04 30.06.04
Number of institutional
clients 2,700 2,600 2,600
Assets under management:
-indexed GBP517bn GBP478bn GBP429bn
-active GBP169bn GBP147bn GBP134bn
-managed cash and other GBP95bn GBP84bn GBP71bn
Total assets under GBP781bn GBP709bn GBP634bn
management
Total assets under $1,401bn $1,362bn $1,151bn
management (US$)
Number of iShares
products 135 132 123
Total iShares assets under GBP84bn GBP68bn GBP52bn
management1
1 Included in indexed assets
BARCLAYS PLC
Barclays Global Investors (BGI) delivered another excellent performance.
Profit before tax increased 60% (GBP91m) to GBP242m (2004: GBP151m)
reflecting substantial income growth coupled with tight cost control and
focused investment spend.
Net fee and commission income increased 36% (GBP152m) to GBP570m (2004:
GBP418m). This was driven by a sharp rise in management and incentive fees
across all areas, particularly in the active and iShares businesses. Higher
margin assets under management and strong investment performance
contributed to the significant income growth along with higher market
levels. In addition, securities lending income growth was strong,
reflecting increased volumes in this area.
Very strong income and profit performance continued across a diverse range
of products, distribution channels and geographies. The trend of net new
revenue generation from an increasingly higher margin product mix
continued. Active product investment performance remained very good and
most funds outperformed their benchmarks. The growth in global iShares
continued at pace with assets under management up 24% (GBP16bn) to GBP84bn
from 2004 year-end and up 62% (GBP32bn) from June 2004.
Operating expenses increased 26% (GBP70m) to GBP342m (2004: GBP272m)
primarily as a result of higher performance based expenses and investment
in growth initiatives including Fixed Income and Alternative Assets. The
cost:income ratio of 59% showed continued improvement over the prior year
(2004: 64%).
Total headcount rose by 200 in the period to 2,100 (31st December 2004:
1,900) driven by the targeted ongoing investment for future growth of the
business. Headcount increased in all regions, across both product groups
and the support functions.
Total assets under management increased 10% (GBP72bn) to GBP781bn (31st
December 2004: GBP709bn). The growth included GBP33bn of net new assets,
GBP32bn attributable to favourable exchange rate movements and GBP7bn as a
result of market movements. The increase in the US$ assets under management
from US$1,362bn (31st December 2004) to US$1,401bn includes US$61bn of net
new assets and US$11bn of market movements, partially offset by adverse
exchange rate movements of US$33bn. BGI manages assets denominated in
numerous currencies with the majority being in US dollars.
BARCLAYS PLC
Wealth Management
Half-year ended
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
Net interest income 165 155 148
Net fee and commission
income 283 268 261
-------- -------- --------
Net trading income - - -
Net investment income 5 - -
-------- -------- --------
Principal transactions 5 - -
Other income (1) 4 3
-------- -------- --------
Total income 452 427 412
Impairment charges and
other credit provisions (1) 1 -
-------- -------- --------
Net income 451 428 412
Operating expenses (362) (382) (348)
-------- -------- --------
Profit before tax 89 46 64
-------- -------- --------
Cost:income ratio 80% 89% 84%
Cost:net income ratio 80% 89% 84%
Risk Tendency GBP5m GBP5m GBP5m
Return on average
economic capital 37% 23% 43%
Average net income per
member of staff ('000) GBP63 GBP60 GBP59
Economic profit GBP49m GBP23m GBP47m
As at
30.06.05 01.01.05 31.12.04 30.06.04
Loans and advances to GBP4.5bn GBP4.2bn GBP4.1bn GBP3.6bn
customers
Customer accounts GBP22.6bn GBP21.4bn GBP21.3bn GBP20.4bn
Total assets GBP5.2bn GBP5.1bn GBP5.0bn GBP4.4bn
Weighted risk assets GBP4.6bn GBP4.2bn GBP4.0bn GBP3.6bn
Key Facts 30.06.05 31.12.04 30.06.04
Total customer funds GBP74.2bn GBP70.8bn GBP69.0bn
BARCLAYS PLC
Wealth Management profit before tax increased 39% (GBP25m) to GBP89m (2004:
GBP64m), reflecting broad based income growth and tight control of costs.
Total income increased 10% (GBP40m) to GBP452m (2004: GBP412m).
Net interest income increased 11% (GBP17m) to GBP165m (2004: GBP148m)
reflecting good balance sheet growth. Total average customer deposits
increased 9% to GBP22.2bn (2004: GBP20.4bn) driven by strong growth from
offshore and private banking clients. Total average loans increased 27% to
GBP4.2bn (2004: GBP3.3bn), largely as a result of an increase in lending to
corporate clients in the offshore business. The deposit margin remained
stable whilst the lending margin declined modestly.
Net fee and commission income increased 8% (GBP22m) to GBP283m (2004:
GBP261m). The increase was driven principally by sales of investment
products to private banking and financial planning clients together with
the growth in equity markets.
Operating expenses increased 4% (GBP14m) to GBP362m (2004: GBP348m). Growth
was driven by investment in new customer propositions, Gerrard integration
costs and the continued investment in customer service and geographic
expansion. Core operating costs remained in line with 2004 levels. The
cost:income ratio improved to 80% (2004: 84%).
The integration of the Gerrard business continued to progress well with
profits ahead of 2004 and expectations.
Total customer funds, comprising customer deposits and assets under
management, increased to GBP74.2bn (31st December 2004: GBP70.8bn).
Multi-Manager assets increased to GBP4.1bn (31st December 2004: GBP1.6bn),
including existing customer assets.
BARCLAYS PLC
Wealth Management - closed life assurance activities
Half-year ended
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
Net interest income (15) (33) (20)
Net fee and commission
income 18 - -
-------- -------- --------
Net trading income - - -
Net investment income 115 517 79
-------- -------- --------
Principal transactions 115 517 79
Net premiums from
insurance contracts 100 195 167
Other income 1 1 3
-------- -------- --------
Total income 219 680 229
Net claims and benefits
on insurance contracts (167) (639) (179)
-------- -------- --------
Total income, net of
insurance claims 52 41 50
Endowment redress costs (40) (64) (33)
Other operating expenses (14) (28) (18)
-------- -------- --------
Loss before tax (2) (51) (1)
-------- -------- --------
Cost:income ratio 104% 224% 102%
Return on average
economic capital (15)% (117)% 11%
Economic (loss)/profit GBP(8)m GBP(79)m GBP2m
As at
30.06.05 01.01.05 31.12.04 30.06.04
Total assets GBP6.7bn GBP6.6bn GBP6.4bn GBP6.1bn
BARCLAYS PLC
From 1st January 2005, following the application of IAS 39 and IFRS 4, life
assurance products are divided into investment contracts and insurance
contracts. Investment income from assets backing investment contracts, and
the corresponding movement in investment contract liabilities, has been
presented on a net basis in other income. Therefore the line by line
results for 2005 are not directly comparable to those reported for 2004.
Wealth Management - closed life assurance activities loss before tax was
stable at GBP2m (2004: loss of GBP1m). Profit before tax excluding
endowment redress costs was GBP38m (2004: GBP32m).
Total income decreased GBP10m to GBP219m (2004: GBP229m). The decrease was
offset by a broadly similar reduction in net claims and benefits of GBP12m.
Costs relating to redress for customers in respect of sales of endowment
policies increased 21% (GBP7m) to GBP40m (2004: GBP33m). Other operating
expenses decreased by 22% to GBP14m (2004: GBP18m).
BARCLAYS PLC
Barclaycard
Half-year ended
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
Net interest income 863 790 810
Net fee and commission
income 454 416 374
Net premiums from
insurance contracts 10 11 11
-------- -------- --------
Total income 1,327 1,217 1,195
Net claims and benefits
on insurance contracts (2) (3) (2)
-------- -------- --------
Total income, net of
insurance claims 1,325 1,214 1,193
Impairment charges and
other credit provisions (508) (404) (357)
-------- -------- --------
Net income 817 810 836
Operating expenses (439) (428) (379)
Share of results of
associates and joint
ventures 1 2 2
-------- -------- --------
Profit before tax 379 384 459
-------- -------- --------
Cost:income ratio 33% 35% 32%
Cost:net income ratio 54% 53% 45%
Risk Tendency GBP980m GBP860m GBP810m
Return on average
economic capital 20% 20% 25%
Economic profit GBP115m GBP148m GBP202m
As at
30.06.05 01.01.05 31.12.04 30.06.04
Loans and advances to GBP23.1bn GBP22.2bn GBP22.3bn GBP20.1bn
customers
Total assets GBP23.8bn GBP22.9bn GBP23.1bn GBP20.7bn
Weighted risk assets GBP21.7bn GBP21.6bn GBP20.2bn GBP18.4bn
Half-year ended
Key Facts 30.06.05 31.12.04 30.06.04
Number of Barclaycard UK
customers 11.2m 11.2m 10.8m
Number of retailer
relationships 92,000 90,000 89,000
UK credit cards-average GBP10.2bn GBP9.9bn GBP9.3bn
outstanding balances
UK credit cards-average extended GBP8.8bn GBP8.5bn GBP7.9bn
credit balances
UK loans-average consumer GBP9.9bn GBP9.6bn GBP9.2bn
lending balances
International-average GBP1.7bn GBP1.0bn GBP0.8bn
extended credit balances
International-cards in
issue 3.7m 2.9m 1.8m
BARCLAYS PLC
Barclaycard profit before tax decreased 17% (GBP80m) to GBP379m (2004:
GBP459m) as good income growth was more than offset by higher impairment
charges together with increased costs arising from continued investment in
the business. Excluding Juniper, profit before tax fell 15% to GBP391m.
Total income, net of insurance claims, increased 11% (GBP132m) to GBP1,325m
(2004: GBP1,193m) driven by good performances across the diversified UK
cards and loans businesses, strong momentum in the international cards
business and continued growth in Barclaycard Business. Excluding Juniper,
income increased by 7% (GBP84m).
Net income fell 2% (GBP19m) to GBP817m (2004: GBP836m) as a result of the
rise in impairment charges.
Net interest income increased 7% (GBP53m) to GBP863m (2004: GBP810m)
reflecting growth in balances. UK average extended credit balances rose 11%
to GBP8.8bn (2004: GBP7.9bn) and international average extended credit
balances more than doubled to GBP1.7bn (2004: GBP0.8bn). Excluding Juniper,
international average extended credit balances increased 28%. UK average
consumer loan balances increased 8% to GBP9.9bn (2004: GBP9.2bn). Margins
in the cards business declined from the levels in the first half of 2004,
falling to 7.56% (2004: 7.83%), but increased from those in the second half
of 2004 (6.88%), due to the flow through of the UK rate rises and a reduced
impact from promotional offers. Margins in consumer lending fell from 2004
levels to 5.15% (2004: 6.31%), due to competitive pressure, change in the
product mix and the impact of IAS 39 moving fee and commission expenses to
net interest income. Excluding the impact of the application of IAS 32 and
IAS 39 from 1st January 2005, net interest income increased by 5%.
Net fee and commission income increased 21% (GBP80m) to GBP454m (2004:
GBP374m) reflecting the inclusion of Juniper for the full period and
increased contributions from FirstPlus and Barclaycard Business. Excluding
the impact of IAS 32 and IAS 39, net fee and commission income increased
16%.
Impairment charges increased to GBP508m, an increase of 26% relative to the
second half of 2004 and 42% relative to the first half of 2004. The
increase was driven largely by an increase in the size of the book and a
rise in delinquent balances and severity rates. The increases arose
primarily in the UK cards business and reflected the UK industry wide
credit experience in the first part of 2005. In UK consumer loans and
internationally (excluding Juniper), the rate of increase in impairment
charges was lower. Non-performing card and loan balances increased
significantly, driven by the growth in delinquent balances.
Operating expenses rose 16% (GBP60m) to GBP439m (2004: GBP379m) as a result
of the inclusion of Juniper. Excluding Juniper, operating expenses rose 3%,
mainly reflecting investment in international growth and the development of
multi-brand businesses with partners in the UK. Costs in the UK cards and
loans business were flat.
In the UK, the FirstPlus business and Barclaycard Business performed well.
The SkyCard program was launched in April and customer recruitment was
ahead of expectations at the end of the period.
Barclaycard International continued to make good progress with its growth
strategy. The businesses in Germany and Spain performed particularly
strongly. In June Barclaycard formed a new joint venture with Swedbank to
develop a card business in the Nordic region. Barclaycard International
profit before tax was GBP1m (2004: GBP1m). Excluding Juniper, profit before
tax increased to GBP13m and total income rose 28%. Juniper performance and
integration proceeded in line with expectations, with strong growth in
balances and customer account numbers and a steady stream of new
partnerships being established.
BARCLAYS PLC
International Retail and Commercial Banking
Half-year ended
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
Net interest income 288 277 257
Net fee and commission
income 171 145 143
-------- -------- --------
Net trading income 6 - -
Net investment income 67 71 64
-------- -------- --------
Principal transactions 73 71 64
Net premiums from
insurance contracts 60 155 145
Other income 14 12 13
-------- -------- --------
Total income 606 660 622
Net claims and benefits
on insurance contracts (85) (208) (182)
-------- -------- --------
Total income, net of
insurance claims 521 452 440
Impairment charges and
other credit provisions (8) (12) (19)
-------- -------- --------
Net income 513 440 421
Operating expenses (345) (330) (287)
Share of results of
associates and joint
ventures 20 38 11
-------- -------- --------
Profit before tax 188 148 145
-------- -------- --------
Cost:income ratio 66% 73% 65%
Cost:net income ratio 67% 75% 68%
Risk Tendency GBP75m GBP65m GBP75m
Return on average
economic capital 24% 22% 18%
Economic profit GBP70m GBP54m GBP57m
As at
30.06.05 01.01.05 31.12.04 30.06.04
Loans and advances to
customers GBP21.7bn GBP20.8bn GBP20.7bn GBP17.6bn
Customer accounts GBP9.6bn GBP9.5bn GBP10.1bn GBP9.7bn
Total assets GBP29.5bn GBP28.7bn GBP28.4bn GBP25.1bn
Weighted risk assets GBP19.4bn GBP18.7bn GBP19.3bn GBP17.3bn
Half-year ended
Key Facts 30.06.05 31.12.04 30.06.04
Number of international
branches 799 830 837
Number of Barclays Africa
and the Middle East
customer accounts 1.3m 1.4m 1.5m
Number of Barclays Spain
customers 0.5m 0.5m 0.5m
Number of Openplan
customers in Spain 52,000 47,000 44,000
European mortgages - EUR19.9bn EUR18.1bn EUR16.0bn
average balances (Euros)
European assets under
management (Euros) EUR19.5bn EUR17.1bn EUR17.2bn
BARCLAYS PLC
International Retail and Commercial Banking performed very strongly with
profit before tax increasing 30% (GBP43m) to GBP188m (2004: GBP145m). There
was progress in all geographies, with very good growth in Spain, where
profit before integration costs rose 30%, driven by the successful
realisation of synergies from the integration of Banco Zaragozano.
From 1st January 2005, following the application of IAS 39 and IFRS 4, life
assurance products are divided into investment contracts and insurance
contracts. Investment income from assets backing insurance contracts, and
the corresponding movement in investment contract liabilities, has been
presented on a net basis in other income. Therefore the line by line
results for 2005 are not directly comparable to those reported for 2004.
Total income, net of insurance claims, increased 18% (GBP81m) to GBP521m
(2004: GBP440m). Net income increased 22% (GBP92m) to GBP513m (2004:
GBP421m).
Net interest income increased 12% (GBP31m) to GBP288m (2004: GBP257m) as a
result of good balance growth in Spain, Italy, Africa and the Middle East.
Total average customer loans increased 28% to GBP20.8bn (2004: GBP16.3bn),
reflecting growth across the portfolio. Mortgage balance growth in Europe
was strong with average Euro balances up 24% including the benefit of
recent mortgage campaigns in France. Average lending balances in Africa and
the Middle East increased 38%. Competitive pressures in key European
markets and a change in the overall product mix, with a higher weighting to
mortgages, have contributed to slightly lower lending margins. Average
customer deposits increased 10% to GBP9.1bn (2004: GBP8.3bn), mainly in
Africa and the Middle East. Excluding the impact of the application of IAS
32 and IAS 39 from 1st January 2005, net interest income increased by 5%.
Net fee and commission income increased 20% (GBP28m) to GBP171m (2004:
GBP143m). This reflected a strong performance in Spain from increased fund
management related fees, together with good growth in France. Spain's
assets under management increased by 18%. Sales of mortgage related
insurance products in Italy have also contributed. Fee income showed solid
growth in Africa and the Middle East. Excluding the impact of IAS 32 and
IAS 39, net fee and commission income increased 25%.
Principal transactions increased 14% (GBP9m) to GBP73m (2004: GBP64m). This
reflected gains from investment realisations, including the sale of a
preference share holding in FirstCaribbean, partly offset by the change in
accounting for insurance businesses.
Impairment charges decreased 58% (GBP11m) to GBP8m (2004: GBP19m) with the
reduction mainly in Africa and the Middle East.
Operating expenses increased 20% (GBP58m) to GBP345m (2004: GBP287m). The
majority of the increase was attributable to integration costs in Spain and
the continued expansion of the business in Africa and the Middle East. The
cost: income ratio was 66% (2004: 65%).
Barclays Spain performed very strongly with profit before tax, pre
integration costs, up 30% to GBP82m (2004: GBP63m). This was driven by
benefits from the accelerated integration of Banco Zaragozano, together
with growth in mortgages and assets under management. The integration of
Banco Zaragozano is well ahead of plan.
BARCLAYS PLC
In Spain, Openplan continued to grow strongly reflecting the successful
targeting of new customer segments. Total customer numbers increased in the
period to 52,000 (31st December 2004: 47,000). The recent re-launch of
Openplan in Portugal has contributed to a strong performance, supported by
further expansion in the branch network, and customer numbers reached
10,600 by 30th June (31st December 2004: 8,900).
Africa and the Middle East profit before tax increased 12% to GBP65m (2004:
GBP58m) reflecting balance sheet growth across the businesses, particularly
in Egypt, UAE and South Africa.
The post-tax profit from associates increased GBP9m to GBP20m (2004:
GBP11m) reflecting an increased contribution from FirstCaribbean.
BARCLAYS PLC
Head office functions and other operations
Half-year ended
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
Net interest expense (10) (5) (19)
Net fee and commission expense (174) (66) (115)
-------- -------- --------
Net trading income 55 2 19
Net investment income 5 (2) (7)
-------- -------- --------
Principal transactions 60 - 12
Net premiums from insurance contracts 60 45 64
Other income 9 17 20
-------- -------- --------
Total income (55) (9) (38)
Impairment charges and other credit
provisions 7 10 (11)
-------- -------- --------
Net (loss)/income (48) 1 (49)
Other operating expenses (136) (132) (57)
Share of results of associates and
joint ventures - 1 1
-------- -------- --------
Loss before tax (184) (130) (105)
-------- -------- --------
Loss before tax increased GBP79m to GBP184m (2004: loss GBP105m),
reflecting increased costs and the impact of the elimination of
inter-segment transactions.
Group segmental reporting is prepared in accordance with Group accounting
policies as if each business segment were a stand alone company. This means
that inter-segment transactions are recorded in each segment as if
undertaken on an arms length basis. Consolidation adjustments necessary to
fully eliminate the inter-segment transactions, including adjustments to
eliminate timing differences on the recognition of inter-segment cost and
income, are included in Head office functions and other operations.
The consolidation adjustments amount to a loss to Head office functions and
other operations of GBP132m. The most significant adjustments include:
internal fees for structured capital market activities arranged by Barclays
Capital of GBP63m (2004: GBP45m); the timing of the recognition of
insurance commissions between UK Retail Banking and Barclaycard included as
a net fee and commission expense of GBP49m (2004: GBPnil) and net fees paid
to Barclays Capital for capital raising and currency management of GBP32m
(2004: GBPnil).
Net trading income of GBP55m (2004: GBP19m) arose as a result of
hedging-related transactions in Treasury. The hedge ineffectiveness from
1st January 2005, together with other related Treasury adjustments,
amounted to a gain of GBP12m (2004: GBPnil) and was reported in net
interest income. Other income comprises mainly property rental income.
Impairment gains reflect recoveries made on loans previously written off in
the transition businesses.
Operating expenses rose GBP79m to GBP136m (2004: GBP57m). Of this increase,
GBP47m reflected non-recurring costs relating to the head office relocation
to Canary Wharf.
BARCLAYS PLC
FINANCIAL REVIEW
Results by nature of income and expense
Net interest income
Half-year ended
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
Interest income 7,648 7,315 6,565
Interest expense (3,948) (3,815) (3,232)
-------- -------- --------
3,700 3,500 3,333
-------- -------- --------
Group net interest income increased 11% (GBP367m) to GBP3,700m (2004:
GBP3,333m), reflecting growth in average balances across all businesses.
Growth in net interest income was most notable in UK Banking, partly due to
the growth in average lending balances and deposit balances and the
reclassification of certain lending related fees from net fee and
commission income to net income with the application of IAS 32 and IAS 39
from 1st January 2005. Net interest income also improved in Barclaycard and
International Retail and Commercial Banking, as a result of strong growth
in balances.
The increase in net interest income also reflects the application of IAS 32
and IAS 39 with effect from 1st January 2005, under which Reserve Capital
Instruments and other capital instruments were classified from debt under
UK GAAP to minority interests under IFRS. The associated funding cost has
moved from interest expense to profit attributable to minority interests.
A component of the benefit of free funds included in Group net interest
income is the structural hedge which functions to reduce the impact of the
volatility of short-term interest rate movements. The contribution of the
structural hedge has decreased to GBP58m (2004: GBP206m), largely due to
the impact of higher short-term interest rates.
BARCLAYS PLC
FINANCIAL REVIEW
Divisional margins
Margin
Half-year ended
30.06.05 31.12.04 30.06.04
% % %
UK Retail Banking assets 0.77 0.74 0.72
UK Retail Banking liabilities 2.01 2.13 2.16
UK Business Banking assets 1.88 1.53 1.56
UK Business Banking liabilities 1.44 1.53 1.48
Wealth Management assets 0.98 0.92 1.03
Wealth Management liabilities 1.06 1.09 1.06
Barclaycard assets 6.48 6.58 7.12
Barclaycard assets - cards 7.56 6.88 7.83
Barclaycard assets - loans 5.15 6.23 6.31
International Retail and Commercial
Banking assets 1.42 1.48 1.69
International Retail and Commercial
Banking liabilities 1.54 1.56 1.42
Average balance
Half-year ended
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
UK Retail Banking assets 65,348 64,746 64,040
UK Retail Banking liabilities 70,972 69,491 67,529
UK Business Banking assets 51,726 46,493 42,663
UK Business Banking liabilities 44,400 42,629 40,373
Wealth Management assets 4,229 3,829 3,329
Wealth Management liabilities 22,603 21,466 20,816
Barclaycard assets 23,759 22,246 20,965
-------- -------- --------
Barclaycard assets - cards 13,126 12,012 11,105
Barclaycard assets - loans 10,633 10,234 9,860
-------- -------- --------
International Retail and Commercial
Banking assets 22,327 20,547 17,693
International Retail and Commercial
Banking liabilities 9,633 9,175 8,846
Divisional interest income
Half-year ended
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
UK Retail Banking assets 250 242 229
UK Retail Banking liabilities 707 743 723
UK Business Banking assets 482 359 330
UK Business Banking liabilities 317 329 296
Wealth Management assets 21 18 17
Wealth Management liabilities 120 117 110
Barclaycard assets 770 732 746
-------- -------- --------
Barclaycard assets - cards 496 413 435
Barclaycard assets - loans 274 319 311
-------- -------- --------
International Retail and Commercial
Banking assets 159 152 150
International Retail and Commercial
Banking liabilities 74 72 63
-------- -------- --------
2,900 2,764 2,664
-------- -------- --------
BARCLAYS PLC
FINANCIAL REVIEW
Reconciliation of divisional interest income to Group net interest income1
Half-year-ended
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
Divisional interest income 2,900 2,764 2,664
Other:
- Barclays Capital 483 535 456
- Barclays Global Investors 7 1 4
- Other 310 200 209
-------- -------- --------
Group net interest income 3,700 3,500 3,333
-------- -------- --------
UK Retail Banking assets margin increased 5 basis points to 0.77% (2004:
0.72%). The application of IAS 32 and IAS 39 increased the assets margin
for 2005 by 1 basis point. Excluding the impact of IAS 32 and IAS 39 the
higher assets margin reflected stable mortgage margins and improved
contributions from Personal Customer overdrafts and Small Business loans.
UK Business Banking assets margin increased 32 basis points to 1.88% (2004:
1.56%). The application of IAS 32 and IAS 39 had a significant effect on
the UK Business Banking assets margin for 2005, increasing it by 34 basis
points. UK Business Banking liabilities margin also experienced some modest
downward pressure, decreasing 4 basis points to 1.44% (2004: 1.48%).
Wealth Management assets margin decreased 5 basis points to 0.98% (2004:
1.03%) due to some modest pressure in the business. The application of IAS
32 and IAS 39 did not impact the assets margin. Relative to the second half
of 2004, asset margins improved by 6 basis points. Wealth Management
liabilities margin was stable at 1.06% (2004: 1.06%).
Barclaycard cards margin decreased 27 basis points to 7.56% (2004: 7.83%).
The application of IAS 32 and IAS 39 increased the cards margin in the
first half of 2005 by 12 basis points. Margins in the cards business
declined from the level of the first half of 2004 but increased on those of
the second half of 2004 (6.88%). Barclaycard loans margin decreased 116
basis points to 5.15% (2004: 6.31%). The application of IAS 32 and IAS 39
reduced the loans margin in the first half of 2005 by 47 basis points.
Margins in the loans business reduced due to competitive pressure and
change in the product mix.
International Retail and Commercial Banking assets margin decreased 27
basis points to 1.42% (2004: 1.69%). The application of IAS 32 and IAS 39
increased the assets margin for 2005 by 8 basis points. Excluding the
impact of IAS 32 and IAS 39 the assets margin reflected margin erosion from
strong growth in continental European mortgage balances and competitive
pressures. International Retail and Commercial Banking liabilities margin
rose 12 basis points to 1.54% (2004: 1.42%).
1 Divisional interest income is the difference between the interest rate
earned on average assets or paid on average liabilities relative to the
average Bank of England base rate or local equivalents for international
businesses. The margin is expressed as annualised divisional interest over
average balance. Asset and liability margins cannot be added together as
they are relative to the average Bank of England base rate or local
equivalent for international businesses.
Average balances are calculated on daily averages for most UK banking
operations and monthly averages elsewhere.
2005 figures are not strictly comparable to those in 2004 with the
application of IAS 32 and IAS 39 from 1st January 2005 affecting the asset
margin.
Within the reconciliation of Group net interest income, there is an amount
captured as Other. This relates to: benefit of capital, including the
restatement of Reserve Capital Instruments and other capital instruments;
Head office functions and other operations; net funding on non customer
assets and liabilities; and Wealth Management - closed life assurance
activities.
BARCLAYS PLC
FINANCIAL REVIEW
Net fee and commission income
Half-year ended
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
Fee and commission income 2,872 2,861 2,648
Fee and commission expense (332) (329) (333)
-------- -------- --------
2,540 2,532 2,315
-------- -------- --------
Net fee and commission income increased 10% (GBP225m) to GBP2,540m (2004:
GBP2,315m), reflecting increases across the business. The application of
IAS 32 and 39 caused the reclassification of GBP109m from net fee and
commission income to net interest income in the first half of 2005.
Excluding IAS 32 and 39 growth was 14% reflecting increases across all
businesses.
Fee and commission income receivable rose 8% (GBP224m) to GBP2,872m (2004:
GBP2,648m). The increase was driven by Barclays Global Investors,
reflecting strong investment performance and higher market levels and
Barclays Capital, due to increased business volumes and improved market
share; and Barclaycard fee and commission income increased as a result of
including Juniper for the full period, and higher contributions from
FirstPlus and Barclaycard Business.
Total foreign exchange income was GBP298m (half-year ended 31st December
2004: GBP260m; half-year ended 30th June 2004: GBP260m) and consisted of
revenues earned from both retail and wholesale activities. The foreign
exchange income earned on customer transactions by UK Retail Banking, UK
Business Banking, International Retail and Commercial Banking, Barclaycard,
Barclays Global Investors and Wealth Management, both externally and with
Barclays Capital, is reported in those business units, within fee and
commission income. The foreign exchange income earned in Barclays Capital
is reported within trading income.
BARCLAYS PLC
FINANCIAL REVIEW
Principal transactions
Half-year ended
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
Net trading income
Rates related business 859 443 698
Credit related business 317 241 105
-------- -------- --------
1,176 684 803
-------- -------- --------
Net investment income
Cumulative gain from disposal of
available for
sale assets/investment
securities 87 129 70
Dividend income 13 11 6
Net income from financial instruments
designated at fair value 175 - -
Income from assets backing insurance
policies - 581 136
Other investment income 98 (7) 101
-------- -------- --------
373 714 313
-------- -------- --------
Most of the Group's trading income is generated in Barclays Capital.
Trading income increased 46% (GBP373m) to GBP1,176m (2004: GBP803m) due to
strong performances across the Rates and Credit businesses, in particular
from commodities, foreign exchange, structured capital markets and credit
derivatives. This was driven by higher volumes of client led activity
across a broad range of products and geographic regions and the return on
prior year headcount investment.
Net investment income rose by 19% (GBP60m) to GBP373m (2004: GBP313m)
reflecting gains on the disposals of short term investments and fair value
movements.
Following the application of IAS 39 at 1st January 2005, certain assets and
liabilities have been designated at fair value. Fair value movements on
these items of GBP175m are taken to net investment income. Fair value
movements on insurance assets included within this category contributed
GBP149m.
From 1st January 2005, investment and insurance contracts are separately
accounted for in accordance with IAS 39 and IFRS 4. This has resulted in
investment income and the corresponding movement in investment contract
liabilities being presented on a net basis within other income. In 2004,
all contracts were accounted for as insurance contracts and the gross
income relating to these contracts was reported as income from assets
backing insurance policies.
BARCLAYS PLC
FINANCIAL REVIEW
Net premiums from insurance contracts
Half-year ended
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
Gross premiums from insurance contracts 385 519 550
Premiums ceded to reinsurers (14) (13) (14)
-------- -------- --------
Net premiums from insurance contracts 371 506 536
-------- -------- --------
The change in accounting for investment contracts results in a substantial
decline in reported net premiums from insurance contracts in the Wealth
Management - closed life assurance activities and International Retail and
Commercial Banking businesses. There is a corresponding decline in net
claims and benefits on insurance contracts.
Other income
Half-year ended
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
Increase in fair value of assets held
in respect of linked liabilities to
customers under investment contracts 6,885
Increase in liabilities held in respect
of linked liabilities to customers
under investment contracts (6,885)
Property rentals 25 28 18
Other income 24 47 38
-------- -------- --------
49 75 56
-------- -------- --------
In accordance with IAS 39, from 1st January 2005, asset management products
offered to institutional pension funds by Barclays Global Investors are
recognised as investment contracts. This results in a substantial increase
in the fair value of assets held in respect of linked liabilities to
customers under investment contracts and the related liabilities compared
to the increase which has followed the change in accounting for investment
contracts in the Wealth Management - closed life assurance activities and
International Retail and Commercial Banking businesses.
BARCLAYS PLC
FINANCIAL REVIEW
Net claims and benefits paid on insurance contracts
Half-year ended
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
Gross claims and benefits paid on
insurance contracts 296 880 395
Reinsurers' share of claims paid (9) (10) (6)
-------- -------- --------
Net claims and benefits paid on
insurance contracts 287 870 389
-------- -------- --------
The change in accounting for investment contracts results in a substantial
decline in reported net claims and benefits paid on insurance contracts in
Wealth Management - closed life assurance activities and International
Retail and Commercial Banking. There is a corresponding decline in net
premiums from insurance contracts.
BARCLAYS PLC
FINANCIAL REVIEW
Impairment charges and other credit provisions
Half-year ended
30.06.05 31.12.04 30.06.04
Impairment charges GBPm GBPm GBPm
The charges for the period in respect
of impairment for loans and advances
comprise:
- New and increased 945 927 828
- Releases (134) (267) (129)
- Recoveries (98) (140) (115)
-------- -------- --------
Total impairment charges 713 520 584
Other credit provisions
Charges for the period in respect of
provision for undrawn contractually
committed facilities and guarantees
provided (7) (16) 5
-------- -------- --------
Total impairment charges and
other credit provisions 706 504 589
-------- -------- --------
Period-on-period comparison is affected by the adoption of IAS 39 on 1st
January 2005, which has changed the absolute value and calculation basis of
the impairment charges and Potential Credit Risk Loans (PCRLs).
The high level of household indebtedness in the UK and lower discretionary
incomes have led to strains on household budgets and resulted in a
deterioration in consumer credit risk. Wholesale and corporate credit
conditions remained satisfactory though loan markets were very competitive.
Overall, an increase in retail impairment charges was partly offset by
lower wholesale impairment charges, resulting in impairment charges for the
half-year of GBP706m (2004: GBP589m). As a percentage of period-end total
non-trading loans and advances, impairment charges on an annualised basis
were 0.51% (2004: 0.53%).
Retail impairment charges increased to GBP582m (2004: GBP417m), accounting
for over 80% of the Group's impairment charges and amounting to 1.06%
(2004: 0.83%) of the period-end total non-trading loans and advances. The
increase was predominantly in the UK cards portfolio. The mortgage
impairment charge was low. There was some deterioration in mortgage arrears
though they remain low and below the level of mid-2003.
In the wholesale and corporate businesses, impairment charges declined to
GBP131m (2004: GBP161m). The decrease occurred largely in UK Business
Banking which included a number of recoveries. Wholesale and corporate
impairment charges were 0.16% (2004: 0.26%) of period-end total non-trading
loans and advances.
In the second half of 2004, the credit loss was reduced by a number of
one-off items, including an exceptional recovery of GBP57m in UK Business
Banking and a release of mortgage provisions of GBP40m. The absence of such
items means that the increase in the impairment charge in the first half of
2005 relative to the second half of 2004 appears greater than the increase
in the underlying trends.
BARCLAYS PLC
FINANCIAL REVIEW
Operating expenses
Half-year ended
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
Staff costs (refer to page 45) 2,854 2,720 2,507
Administrative expenses 1,382 1,553 1,213
Depreciation 152 156 141
Amortisation of intangible assets 17 13 9
Impairment loss - intangible assets - 5 4
Operating lease rentals 137 115 100
-------- -------- --------
4,542 4,562 3,974
-------- -------- --------
Operating expenses increased 14% (GBP568m) to GBP4,542m (2004: GBP3,974m).
Administrative expenses increased 14% (GBP169m) to GBP1,382m (2004:
GBP1,213m) principally as a result of higher business activity in Barclays
Capital and Barclays Global Investors and the inclusion of Juniper in
Barclaycard. There was a strong focus on cost control, particularly in UK
Retail Banking.
Amortisation of intangible assets increased GBP8m to GBP17m (2004: GBP9m),
primarily due to the acquisition of Juniper in December 2004.
Operating lease rentals increased by GBP37m to GBP137m (2004: GBP100m) as a
consequence of the double occupancy costs associated with the head office
relocation to Canary Wharf.
The Group cost:income ratio remained steady at 57%. This reflected improved
productivity in UK Banking, Barclays Global Investors and Wealth
Management, offset by increases in Barclays Capital, Barclaycard and
International Retail and Commercial Banking, reflecting increased
investment.
The Group cost:net income ratio was 63% (2004: 62%).
BARCLAYS PLC
FINANCIAL REVIEW
Staff costs
Half-year ended
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
Salaries and accrued incentive payments 2,256 2,124 1,974
Social security costs 197 172 167
Pension costs
- defined contribution plans 40 39 53
- defined benefit plans 156 126 109
Other post retirement benefits 13 16 13
Other 192 243 191
-------- -------- --------
2,854 2,720 2,507
-------- -------- --------
Included in salaries and accrued incentive payments is GBP130m (half-year
ended 31st December 2004: GBP115m; half-year ended 30th June 2004: GBP89m)
arising from equity settled share based payments.
Staff costs increased by 14% (GBP347m) to GBP2,854m (2004:GBP2,507m).
Salaries and accrued incentive payments rose by 14% (GBP282m) to GBP2,256m
(2004: GBP1,974m), primarily due to increased headcount in Barclays Capital
and performance related payments primarily in Barclays Capital and Barclays
Global Investors.
Pension costs comprise all UK and international pension schemes. Included
in pension costs is a charge of GBP155m (2004: GBP140m) in respect of the
Group's main UK pension schemes.
BARCLAYS PLC
FINANCIAL REVIEW
Half-year ended
30.06.05 31.12.04 30.06.04
Staff numbers:
UK Banking 40,700 41,800 40,700
-------- -------- --------
UK Retail Banking 32,900 34,400 33,500
UK Business Banking 7,800 7,400 7,200
-------- -------- --------
Barclays Capital 8,300 7,800 6,900
Barclays Global Investors 2,100 1,900 1,900
Wealth Management 7,200 7,200 7,100
Barclaycard 7,200 6,700 6,600
International Retail and Commercial
Banking 12,400 12,100 12,000
Head office functions and other
operations 900 900 1,000
-------- -------- --------
Total Group permanent and contract
staff worldwide 78,800 78,400 76,200
Temporary and agency staff worldwide 4,300 4,300 5,600
-------- -------- --------
Total including temporary and agency
staff 83,100 82,700 81,800
-------- -------- --------
Staff numbers are shown on a full-time equivalent basis. Total Group
permanent and contract staff comprise 59,200 (31st December 2004: 60,000)
in the UK and 19,600 (31st December 2004: 18,400) internationally.
Since 31st December 2004, permanent and contract staff numbers increased by
400. The implementation of restructuring programmes resulted in a decrease
of 800 staff, which was offset by the recruitment of additional staff
throughout the Group.
UK Banking staff numbers fell by 1,100 to 40,700 (31st December 2004:
41,800), reflecting the cost management programme in UK Retail Banking
offset by an increase in UK Business Banking frontline staff and the
inclusion of 200 Iveco Finance staff.
Barclays Capital staff numbers rose by 500 to 8,300 (31st December 2004:
7,800), reflecting the continued expansion of the business. Barclays Global
Investors increased staff numbers in line with business growth plans to
2,100 (31st December 2004: 1,900).
Barclaycard staff numbers rose by 500 to 7,200 (31st December 2004: 6,700),
reflecting growth in Juniper and an increase in customer facing staff,
particularly in partnership activities.
International Retail and Commercial Banking increased staff numbers by 300
to 12,400 (31st December 2004: 12,100), mainly due to growth in continental
Europe.
Head office functions and other operations staff numbers remained stable at
900 (31st December 2004: 900).
The number of staff who were under notice at 30th June 2005, was 1,700.
BARCLAYS PLC
FINANCIAL REVIEW
Share of results of associates and joint ventures (after tax)
Half-year ended
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
Profit from joint ventures 1 - -
Profit from associates 15 42 14
--------- --------- ---------
16 42 14
--------- --------- ---------
Profit from associates in the first half of 2005 primarily relates to the
investment in FirstCaribbean.
Tax
The charge for the period is based upon a UK corporation tax rate of 30%
for the calendar year 2005 (full-year 2004: 30%). The effective rate of tax
for the first half of 2005 was 26.7% (2004: 26.3%). This excludes tax on
associates and joint ventures whose results are stated on an after tax
basis. This is lower than the standard rate due to the beneficial effects
of lower tax on overseas income and certain non-taxable gains.
Profit attributable to minority interests
Half-year ended
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
Preference shares 33 2 -
Reserve capital instruments 65 - -
Upper Tier 2 instruments 7 - -
Other minority interests 29 25 20
-------- --------- ---------
134 27 20
-------- --------- ---------
Profit attributable to minority interests has increased due to the
inclusion of reserve capital instruments within minority interests in
accordance with IAS 39, together with an increase in the preference share
capital of subsidiary undertakings and the related dividends payable.
Other minority interests include the share of earnings in Barclays Global
Investors attributable to employee shareholders.
BARCLAYS PLC
FINANCIAL REVIEW
Earnings per share
Half-year ended
30.06.05 31.12.04 30.06.04
Profit attributable to the members of
Barclays PLC GBP1,841m GBP1,456m GBP1,798m
Basic weighted average number of shares
in issue 6,337m 6,341m 6,421m
Potential ordinary shares1 38m 32m 31m
-------- -------- --------
Diluted weighted average number of
shares 6,375m 6,373m 6,452m
-------- -------- --------
p p p
Basic earnings per ordinary share 29.1 23.0 28.0
Diluted earnings per ordinary share 28.9 22.8 27.9
Dividends on ordinary shares
The Board has decided to pay, on 3rd October 2005, an interim dividend for
the year ending 31st December 2005 of 9.2p per ordinary share, for shares
registered in the books of the Company at the close of business on 19th
August 2005. Shareholders who have their dividends paid direct to their
bank or building society account will receive a consolidated tax voucher
detailing the dividends paid in the 2004/2005 tax year in mid-October 2005.
The amount payable for the 2005 interim dividend is GBP582m (half-year
ended 31st December 2004: GBP1,010m; half-year ended 30th June 2004:
GBP528m). This amount excludes GBP12m payable on shares held by employee
benefit trusts (half-year ended 31st December 2004: GBP7m; half-year ended
30th June 2004: GBP3m). Dividends payable are no longer accrued but rather
are recognised when they are paid.
For qualifying US and Canadian resident ADR holders, the interim dividend
of 9.2p per ordinary share becomes 36.8p per ADS (representing four
shares). The ADR depositary will mail the dividend on 3rd October 2005 to
ADR holders on the record on 19th August 2005.
For qualifying Japanese shareholders, the interim dividend of 9.2p per
ordinary share will be distributed in mid-October to shareholders on the
record on 19th August 2005.
Shareholders may have their dividends reinvested in Barclays PLC shares by
participating in the Barclays Dividend Reinvestment Plan. The plan is
available to all shareholders, including members of Barclays Sharestore,
provided that they do not live in or are subject to the jurisdiction of any
country where their participation in the plan would require Barclays or The
Plan Administrator to take action to comply with local government or
regulatory procedures or any similar formalities. Any shareholder wishing
to obtain details and a form to join the plan should contact The Plan
Administrator by writing to: The Plan Administrator to Barclays, Share
Dividend Team, The Causeway, Worthing, West Sussex, BN99 6DA; or, by
telephoning 0870 609 4535. The completed form should be returned to The
Plan Administrator on or before 12th September 2005 for it to be effective
in time for the payment of the interim dividend on 3rd October 2005.
Shareholders who are already in the plan need take no action unless they
wish to change their instructions in which case they should write to The
Plan Administrator.
1 Potential ordinary shares reflect the dilutive effect of share options
outstanding.
BARCLAYS PLC
Analysis of amounts included in the balance sheet
Capital resources
As at
30.06.05 01.01.05 31.12.04 30.06.04
GBPm GBPm GBPm GBPm
Shareholders' equity
excluding minority
interests 16,099 15,287 15,870 14,978
-------- -------- -------- --------
Preference shares 2,971 690 690 -
Reserve capital
instruments 1,929 1,907
Upper Tier 2 instruments 586 586
Other minority interests 200 147 204 178
-------- -------- -------- --------
Minority interests 5,686 3,330 894 178
-------- -------- -------- --------
Total shareholders'
equity 21,785 18,617 16,764 15,156
Loan capital 11,309 10,606 12,277 12,468
-------- -------- -------- --------
33,094 29,223 29,041 27,624
-------- -------- -------- --------
The authorised share capital of Barclays PLC is GBP2,500m (2004: GBP2,500m)
comprising 9,996 million (2004: 9,996million) ordinary shares of 25p shares
and 1 million (2004: 1 million) staff shares of GBP1 each. Called up share
capital comprises 6,461million (December 2004: 6,454 million; June 2004:
6,447 million) ordinary shares of 25p each and 1 million (2004: 1 million)
staff shares of GBP1 each.
Total capital resources increased since 1st January 2005 by GBP3,871m to
GBP33,094m.
Shareholders' equity excluding minority interests increased by GBP812m
since 1st January 2005. The increase included profits attributable to
shareholders of GBP1,841m, available for sale movements of GBP60m, GBP32m
of proceeds from shares issued, cashflow hedge movements of GBP26m, tax
credits of GBP26m and foreign exchange movements of GBP23m and other
movements of GBP31m. These were offset by dividends of GBP1,017m1,
increases in ESOP shares of GBP120m and tax adjustments of GBP90m.
Loan capital rose by GBP703m reflecting raisings of GBP1,011m, fair value
uplift of GBP156m and exchange rate movements of GBP41m offset by
redemptions of GBP458m, accrued interest of GBP44m and amortisation of
issue expenses of GBP3m.
Minority interests increased by GBP2,356m since 1st January 2005 primarily
reflecting the issue of preference shares during the first six months of
2005:
- 140,000 preference shares of Euro 100 each (EUR1.4bn; GBP978m) with a
4.75% dividend
- 100,000 preference shares of US$100 each (US$1.0bn; GBP551m) with a
6.278% dividend
- 75,000 preference shares of GBP100 each (GBP750m) with a 6% dividend
The impact of IAS 32 resulted in the reclassification of certain capital
instruments from debt to minority interests. This accounts for
substantially all of the increase in minority interests between 31st
December 2004 and 1st January 2005.
1 This amount includes GBP7m dividend on shares held by employee benefit
trusts.
BARCLAYS PLC
Capital ratios
Weighted risk assets and capital resources, as defined for supervisory
purposes by the Financial Services Authority (FSA), comprise:
As at
30.06.05 01.01.05 31.12.04 30.06.04
Weighted risk assets: GBPm GBPm GBPm GBPm
Banking book
On-balance sheet 159,927 148,328 148,621 138,021
Off-balance sheet 30,090 28,191 26,741 23,894
Associated undertakings
and joint ventures 3,299 3,020 3,020 3,386
-------- -------- -------- --------
Total banking book 193,316 179,539 178,382 165,301
-------- -------- -------- --------
Trading book
Market risks 26,432 22,106 22,106 20,338
Counterparty and
settlement risks 22,658 18,113 18,113 17,694
-------- -------- -------- --------
Total trading book 49,090 40,219 40,219 38,032
-------- -------- -------- --------
Total weighted risk
assets 242,406 219,758 218,601 203,333
-------- -------- -------- --------
Capital resources:
Tier 1
Called up share capital 1,616 1,614 1,614 1,613
Eligible reserves 15,544 14,933 15,670 15,245
Minority interests1 5,237 2,824 2,890 2,227
Tier one notes2 957 920 920 951
Less: intangible assets (4,880) (4,747) (4,432) (4,427)
-------- -------- -------- --------
Total qualifying Tier 1
capital 18,474 15,544 16,662 15,609
-------- -------- -------- --------
Tier 2
Revaluation reserves 25 25 25 25
Collectively assessed
impairment allowances 2,067 2,046
General Provisions 564 713
Minority Interests 494 397 - -
Qualifying subordinated
liabilities3
Undated loan capital 3,210 3,176 3,573 3,595
Dated loan capital 6,560 5,647 5,647 5,773
Other - 3 2 2
-------- -------- -------- --------
Total qualifying Tier 2
capital 12,356 11,294 9,811 10,108
-------- -------- -------- --------
Tier 3: short term
subordinated liabilities3 - 286 286 267
-------- -------- -------- --------
Less: Supervisory
deductions:
Investments not
consolidated for
supervisory purposes (696) (781) (1,047) (923)
Other deductions (713) (496) (496) (343)
-------- -------- -------- --------
(1,409) (1,277) (1,543) (1,266)
-------- -------- -------- --------
Total net capital
resources 29,421 25,847 25,216 24,718
-------- -------- -------- --------
Tier 1 ratio 7.6% 7.1% 7.6% 7.7%
Risk asset ratio 12.1% 11.8% 11.5% 12.2%
1 Includes Reserve Capital Instruments of GBP1,679m (01.01.05: GBP1,627m;
31.12.04: GBP1,627m; 30.06.04: GBP1,656m).
2 Tier one notes are included in undated loan capital in the consolidated
balance sheet.
3 Subordinated liabilities are included in Tiers 2 or 3, subject to limits
laid down in the supervisory requirements.
BARCLAYS PLC
Capital ratios (continued)
Capital ratios strengthened from 1st January 2005 with the addition of
GBP3.6bn in net total capital resources. This more than offset the growth
in weighted risk assets. The risk asset ratio increased 30 basis points and
the Tier 1 capital ratio increased 50 basis points.
Tier 1 capital rose GBP2.9bn, including retained profit of GBP0.8bn. In
accordance with IFRS, no amount has been provided for the 2005 interim
dividend which will impact the capital ratios when paid. Minority interests
increased GBP2.4bn primarily due to the issuance of GBP2.3bn of preference
shares by Barclays Bank PLC. This increase included funding for balance
sheet growth and for the acquisition of a majority stake in Absa which
closed subsequent to the half-year end. Tier 2 capital increased GBP1.1bn
largely due to the issue of loan stock. The Tier 3 debt matured in April
2005.
The increase in weighted risk assets since 1st January 2005 comprised a
rise of GBP13.8bn in the Banking book and a rise of GBP8.9bn in the Trading
book.
A reconciliation of accounting capital to regulatory capital is as follows:
30.06.05 01.01.05
GBPm GBPm
Shareholders' equity excluding minority interests 16,099 15,287
Available for sale reserve (374) (314)
Cashflow hedging reserve (328) (302)
Defined benefit pension scheme 1,401 1,252
Additional companies in regulatory consolidation and
non-consolidated companies 5 266
Foreign exchange on Reserve Capital Instruments and
Upper Tier 2 loan stock 390 459
Other adjustments (33) (101)
--------- ---------
Called up share capital and eligible reserves for
regulatory purposes 17,160 16,547
--------- ---------
The difference between shareholders' equity excluding minority interests
and called up share capital and eligible reserves for regulatory purposes,
arises from the treatment of regulatory capital versus the treatment of
accounting capital.
The available for sale reserve in respect of debt instruments is reversed
for regulatory capital purposes. Equity net losses are written back but net
gains are included in Tier 2 capital. The effect of cashflow hedging is
eliminated from the calculation of regulatory capital.
For regulatory capital purposes the defined benefit pension scheme post tax
deficit is replaced with a liability calculated for regulatory purposes.
For regulatory capital purposes the Reserve Capital Instruments and Upper
Tier 2 loan stock are converted to sterling at the exchange rates ruling at
the reporting date rather than the exchange rates at issue date which are
used for financial reporting.
BARCLAYS PLC
Total assets and weighted risk assets
Total assets increased 19% to GBP850.1bn (1st January 2005: GBP715.6bn).
Weighted risk assets increased 10% to GBP242.4bn (1st January 2005:
GBP219.8bn). Securitised assets are excluded from weighted risk assets but
included in total assets.
UK Banking total assets increased 4% to GBP134.3bn (1st January 2005:
GBP128.6bn). Weighted risk assets increased 8% to GBP100.4bn (1st January
2005: GBP92.6bn).
UK Retail Banking total assets decreased 2% to GBP67.5bn (1st January 2005:
GBP69.1bn). This was mainly attributable to lower period end UK residential
mortgage balances. Weighted risk assets decreased 2% to GBP37.0bn (1st
January 2005: GBP37.8bn).
UK Business Banking total assets increased 12% to GBP66.8bn (1st January
2005: GBP59.5bn). Weighted risk assets increased 16% to GBP63.3bn (1st
January 2005: GBP54.8bn), reflecting strong growth in lending balances. The
acquisition of a 51% stake in Iveco Finance, completed in June, increased
total assets and weighted risk assets by GBP1.8bn. Excluding the impact of
Iveco Finance, assets and weighted risk assets increased by 9% and 12%
respectively.
Barclays Capital total assets increased 25% to GBP566.7bn (1st January
2005: GBP454.4bn), due to the impact of market movements on derivatives
financial instruments and growth in settlement balances and debt
securities, as the expansion of the business continued. Weighted risk
assets increased 14% to GBP90.8bn (1st January 2005: GBP79.5bn), reflecting
increased business volumes and expansion of the credit derivatives business
to meet client demand.
Barclays Global Investors total assets increased 12% to GBP68.6bn (1st
January 2005: GBP61.2bn) due to growth in asset management products held on
the balance sheet. Equal and offsetting balances are reflected within
liabilities to customers. Weighted risk assets rose 25% to GBP1.5bn (1st
January 2005: GBP1.2bn), primarily driven by growth in the securities
lending business.
Wealth Management total assets increased 2% to GBP5.2bn (1st January 2005:
GBP5.1bn). Weighted risk assets increased 10% to GBP4.6bn (1st January
2005: GBP4.2bn) reflecting the growth in lending balances.
Barclaycard total assets increased 4% to GBP23.8bn (1st January 2005:
GBP22.9bn). Weighted risk assets were in line at GBP21.7bn (1st January
2005: GBP21.6bn).
International Retail and Commercial Banking total assets increased 3% to
GBP29.5bn (1st January 2005: GBP28.7bn) and weighted risk assets increased
4% to GBP19.4bn (1st January 2005: GBP18.7bn).
Head office and other operations total assets increased 192% to GBP10.8bn
(1st January 2005: GBP3.7bn), excluding goodwill. The increase includes
assets acquired for hedging purposes and cash raised from preference share
issues during the period relating to the funding for the acquisition of
Absa which closed in July. Weighted risk assets increased 116% to GBP4.1bn
(1st January 2005: GBP1.9bn) reflecting assets held for hedging purposes.
BARCLAYS PLC
Economic capital
Barclays assesses capital requirements by measuring the Group risk profile
using both internally and externally developed models. The Group assigns
economic capital primarily within seven risk categories: Credit Risk,
Market Risk, Business Risk, Operational Risk, Insurance Risk, Fixed Assets
and Private Equity.
The Group regularly enhances its economic capital methodology and
benchmarks outputs to external reference points. During 2004, the framework
was enhanced to reflect default probabilities during average credit
conditions, rather than those prevailing at the balance sheet date, thus
seeking to remove cyclicality from the capital calculation. The framework
also adjusts capital to reflect time horizon, correlation of risks and risk
concentrations.
Economic capital is allocated on a consistent basis across all of Barclays
businesses and risk activities. A single cost of equity is applied to
calculate the cost of risk. Capital allocations are adjusted to reflect
varying levels of risk.
The total average economic capital required by the Group, as determined by
risk assessment models and after considering the Group's estimated
diversification benefits, is compared with the supply of capital to
evaluate capital utilisation. Supply of economic capital is calculated as
the average available shareholders' equity after adjustment and including
preference shares.
The economic capital methodology will form the basis of the Group's
submission for the Basel II Internal Capital Adequacy Assessment Process
(ICAAP).
Capital demand
The average demand for capital from the Group's businesses via the economic
capital framework is set out below:
Half-year ended
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
UK Banking 5,150 4,800 4,450
-------- -------- --------
UK Retail Banking 2,250 2,200 2,150
UK Business Banking 2,900 2,600 2,300
-------- -------- --------
Barclays Capital 2,400 2,100 2,050
Barclays Global Investors 150 150 150
Wealth Management 400 350 300
Wealth Management - closed life
assurance activities 50 100 100
Barclaycard 2,650 2,500 2,450
International Retail and Commercial
Banking 1,100 1,000 1,000
Head office functions and other
operations1 200 200 200
-------- -------- --------
Business unit economic capital 12,100 11,200 10,700
Capital held at Group centre2 1,600 1,500 1,300
-------- -------- --------
Economic capital requirement (excluding
goodwill) 13,700 12,700 12,000
Average historic goodwill3 5,800 5,650 5,550
-------- -------- --------
Total economic capital requirement 19,500 18,350 17,550
-------- -------- --------
1 Includes Transition Businesses and capital for central functional risks.
2 The Group's practice is to maintain an appropriate level of excess
capital, held at Group centre, which is not allocated to business units.
This variance arises as a result of capital management timing and includes
capital held to cover pension contribution risk.
3 Average goodwill relates to purchased goodwill and intangibles from
business acquisitions.
BARCLAYS PLC
UK Retail Banking economic capital allocation increased GBP50m to
GBP2.25bn. The impact of growth was offset by a risk transfer transaction
within UK mortgages. UK Business Banking economic capital allocation
increased GBP300m to GBP2.9bn as a consequence of asset growth and the
addition of the Iveco Finance business.
Barclays Capital economic capital increased by GBP300m to GBP2.4bn
reflecting underlying growth in loan and derivative portfolios and the
Group-wide annual recalibration of business and operational risk economic
capital.
Wealth Management ongoing business economic capital allocation increased
GBP50m to GBP400m as a consequence of general growth across all businesses
and the recalibration of business and operational risk economic capital.
Wealth Management - closed life assurance activities economic capital
allocation reduced GBP50m to GBP50m reflecting the impact of IFRS removing
the volatility associated with embedded value accounting.
Barclaycard economic capital allocation increased by GBP150m to GBP2.65bn,
due to growth in outstandings and the acquisition of Juniper.
International Retail and Commercial Banking economic capital allocation
increased by GBP100m to GBP1.1bn due to the Group-wide annual recalibration
of business and operational risk economic capital together with growth
exposure in Africa and Spain.
Capital held at the Group centre rose GBP100m to GBP1.6bn, as a result of
the increase in available funds to support economic capital (see Capital
supply).
Capital supply
The Group has determined that the impacts of IFRS should be modified in
calculating available funds for economic capital. This applies specifically
to:
- Cashflow hedge reserve - to the extent that the Group undertakes the
hedging of future cash flows, shareholders' equity will include gains
and losses which will be offset at the conclusion of the future hedged
transaction. Given the future offset of such gains and losses, they are
excluded from shareholders' equity upon which the capital charge is
based.
- Available for sale reserve - unrealised gains and losses on such
securities are included in shareholders' equity until disposal or
impairment. Such gains and losses will be excluded from shareholders'
equity for the purposes of calculating the capital charge. Realised
gains and losses and any impairment charges recorded in the income
statement will impact economic profit.
- Pension liability - the Group has recorded a deficit with a
consequent reduction in shareholders' equity. This represents a non-cash
reduction in shareholders' equity. For the purposes of deriving the
capital charge, the Group will not deduct the pension deficit from
shareholders' equity upon which the capital charge is based, a policy
that is also followed for regulatory purposes.
The capital resources to support economic capital comprise adjusted
shareholders' equity including preference shares but excluding other
minority interests. Preference shares have been issued to optimise the
long-term capital base of the Group.
BARCLAYS PLC
The average supply of capital to support the economic capital framework is
set out below1:
Half-year ended
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
Shareholders' equity excluding minority
interests,
less goodwill2 11,000 10,600 10,300
Pension liability 1,500 1,750 1,700
Cashflow hedge reserve (250)
Available for sale reserve (300)
Preference shares 1,750 350 -
-------- -------- --------
Available funds for economic capital
excluding goodwill 13,700 12,700 12,000
Average historic goodwill2 5,800 5,650 5,550
-------- -------- --------
Available funds for economic capital 19,500 18,350 17,550
-------- -------- --------
1 Averages for the period will not correspond to period-end balances
disclosed in the balance sheet. Numbers are independently rounded to the
nearest GBP50m for presentational purposes only.
2 Average goodwill relates to purchased goodwill and intangibles from
business acquisitions.
BARCLAYS PLC
Economic profit
Economic profit comprises:
- Profit after tax and minority interests; less
- Capital charge (average shareholders' equity excluding minority
interests multiplied by the Group cost of capital).
The Group cost of capital has been applied at a uniform rate of 9.5%. Prior
periods have been restated on a comparable basis.
The economic profit for the Group is set out below:
Half-year ended
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
Profit after tax and minority interests 1,841 1,456 1,798
Addback of amortisation charged on
acquired intangible assets 7 6 -
-------- -------- --------
Profit for economic profit purposes 1,848 1,462 1,798
-------- -------- --------
Average shareholders' equity for
economic profit purposes1 17,750 18,000 17,550
-------- -------- --------
Capital charge at 9.5% (844) (858) (834)
-------- -------- --------
-------- -------- --------
Economic profit 1,004 604 964
-------- -------- --------
1 Average ordinary shareholders' equity for Group economic profit
calculation is the sum of adjusted equity and reserves plus goodwill, but
excludes preference shares.
BARCLAYS PLC
Economic profit generated by business
Half-year ended
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
UK Banking 592 565 593
-------- -------- --------
UK Retail Banking 256 183 290
UK Business Banking 336 382 303
-------- -------- --------
Barclays Capital 346 230 291
Barclays Global Investors 129 108 87
Wealth Management 49 23 47
Wealth Management - closed life
assurance activities (8) (79) 2
Barclaycard 115 148 202
International Retail and Commercial
Banking 70 54 57
Head office functions and other
operations (19) (138) (8)
-------- -------- --------
1,274 911 1,271
Historic goodwill (275) (268) (265)
Variance to average shareholders' funds
(excluding minority interest) 5 (39) (42)
-------- -------- --------
Economic profit 1,004 604 964
-------- -------- --------
Economic profit for the Group increased 4% (GBP40m) to GBP1,004m (2004:
GBP964m). The rise in economic profit was less than the increase in profit
before tax due to the increased share of minority interests and the growth
in average shareholders' funds.
BARCLAYS PLC
Risk Tendency
As part of its credit risk management system, the Group uses a model-based
methodology to assess the point-in-time expected loss of credit portfolios
across different customer categories. The approach is termed Risk Tendency
and applies to credit exposures in both wholesale and retail sectors. Risk
Tendency provides statistical estimates of losses expected to arise within
the next year based on averages in the ranges of possible losses expected
from each of the current portfolios. This can be contrasted with impairment
allowances required under accounting standards, which are based on losses
known to have been incurred at the balance sheet date.
Since Risk Tendency and impairment allowances are calculated for different
purposes and on different bases, Risk Tendency does not predict loan
impairment. Risk Tendency is provided to present a view of the evolution of
the quality and scale of the credit portfolios.
As at
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
UK Banking 420 375 360
-------- -------- --------
UK Retail Banking 160 150 150
UK Business Banking 260 225 210
-------- -------- --------
Barclays Capital 75 70 80
Wealth Management 5 5 5
Barclaycard 980 860 810
International Retail and Commercial
Banking 75 65 75
Transition Businesses 20 20 10
-------- -------- --------
1,575 1,395 1,340
-------- -------- --------
Risk Tendency increased from GBP1,395m at 31st December 2004 to GBP1,575m,
an increase of GBP180m (13%). The largest increase occurred in Barclaycard,
which rose GBP120m to GBP980m. The increase reflects the deteriorating
credit conditions in the UK credit card market. Risk Tendency increased in
UK Business Banking due to the acquisition of the Iveco business and the
growth in the loan book.
BARCLAYS PLC
ADDITIONAL INFORMATION
Basis of preparation
The Group will adopt the requirements of International Financial Reporting
Standards and International Accounting Standards (collectively IFRS) for
the first time for the purpose of preparing financial statements for the
year ending 31st December 2005.
The Group issued an IFRS Transition Report on 11th May 2005 ('the
Transition Report') that set out the restated 2004 comparatives and 2005
opening balance sheet and also provided the reconciliations required by
IFRS and the provisional accounting policies expected to be applied in the
preparation of the 2005 financial statements.
As explained in the Transition Report, the next annual financial statements
of the Group will be prepared in accordance with accounting standards
issued by the International Accounting Standards Board and adopted by the
European Union. The financial information in this Interim Results
Announcement has been prepared in accordance with the basis of preparation
and provisional accounting policies included in the Transition Report
('Basis of Preparation') except for the use of the fair value option as
explained below.
The accounting policies are consistent with those the Group intends to use
in the next annual financial statements. As explained in the Basis of
Preparation contained within the Transition Report there is, however, a
possibility that some changes may be necessary when preparing the full
annual financial statements for the first time in accordance with
accounting standards issued by the International Accounting Standards Board
and adopted by the European Union. The accounting standards and
International Financial Reporting Interpretations Committee (IFRIC)
interpretations that will be applicable, and adopted for use in the
European Union at 31st December 2005, are not known with certainty at the
time of preparing this financial information.
The fair value option
At present, the EU endorsed version of IAS 39 'Financial Instruments:
Recognition and Measurement' does not permit non-trading financial
liabilities to be designated at fair value through profit or loss. However,
it is expected that the recent amendments to IAS 39 will result in the EU
endorsing a revised version of the standard that will permit designations
for both financial assets and liabilities in certain circumstances ('the
fair value option'). The relevant transitional arrangements are expected to
permit designations in accordance with the fair value option to be made as
at 1st January 2005 for companies adopting IFRS from that date. The 2005
interim financial information has been prepared on the basis that the fair
value option has been used in the following circumstances:
a) Financial assets backing insurance contracts and financial assets
backing investment contracts are designated at fair value through profit or
loss because the related liabilities have cash flows that are contractually
based on the performance of the assets or the related liabilities are
insurance contracts whose measurement incorporates current information.
Fair valuing the assets significantly reduces the recognition
inconsistencies that would arise if the financial assets were classified as
available for sale.
b) Financial assets, loans to customers, financial liabilities and
structured notes are designated at fair value through profit or loss where
they contain substantive embedded derivatives or where doing so
significantly reduces measurement inconsistencies that would arise if the
related economic hedging derivatives were treated as held for trading and
the underlying financial instruments were carried at amortised cost.
BARCLAYS PLC
ADDITIONAL INFORMATION
Restatement of 1st January 2005 reconciliation as at 01.01.05 as previously
published for use of the fair value option
The reconciliations for 1st January 2005 and the 2005 opening balance sheet
information provided in the Transition Report have been restated as
follows:
As at
01.01.05
As Restatement as
previously for fair value per revised
published option reconciliation
Assets GBPm GBPm GBPm
Cash and balances at central 3,238 - 3,238
banks
Items in the course of
collection from other banks 1,772 - 1,772
Trading portfolio assets 113,241 (3,208) 110,033
Financial assets designated at
fair value:
- held on own account 2,367 7,432 9,799
- held in respect of linked
liabilities to customers under
investment contracts 63,124 - 63,124
Derivative financial 94,340 (129) 94,211
instruments
Loans and advances to banks 25,728 - 25,728
Loans and advances to customers 210,959 (3,700) 207,259
Available for sale financial
investments 48,491 (394) 48,097
Reverse repurchase agreements
and cash collateral on
securities borrowed 139,574 - 139,574
Other assets 3,639 8 3,647
Insurance assets, including
unit-linked assets 109 - 109
Investments in associates and
joint ventures 429 - 429
Goodwill 4,518 - 4,518
Intangible assets 139 - 139
Property, plant and equipment 2,282 - 2,282
Prepayments and accrued income - - -
Deferred tax assets 1,642 (1) 1,641
--------- --------- ---------
Total assets 715,592 8 715,600
--------- --------- ---------
BARCLAYS PLC
ADDITIONAL INFORMATION
Restatement of 1st January 2005 reconciliation as at 01.01.05 as previously
published for use of the fair value option
As at
As Restatement 01.01.05 as
previously for fair value per revised
published option reconciliation
Liabilities GBPm GBPm GBPm
Deposits from banks 74,735 - 74,735
Items in the course of
collection due to other
banks 1,205 - 1,205
Customer accounts 194,488 (10) 194,478
Trading portfolio liabilities 59,114 - 59,114
Financial liabilities designated
at fair value - held on own
account - 5,320 5,320
Liabilities to customers under
investment contracts 64,609 - 64,609
Derivative financial
instruments 95,218 (789) 94,429
Debt securities in issue 80,754 (4,600) 76,154
Repurchase agreements and cash
collateral on securities lent 98,582 - 98,582
Other liabilities 9,859 10 9,869
Accruals and deferred income - - -
Current tax liabilities 621 - 621
Insurance contract liabilities
including unit-linked
liabilities 3,596 - 3,596
Subordinated liabilities:
- Undated loan capital- non
convertible 4,208 - 4,208
- Dated loan
capital-convertible
to preference shares 15 - 15
- Dated loan capital- non
convertible 6,383 - 6,383
Deferred tax liabilities 1,365 32 1,397
Other provisions for 403 - 403
liabilities
Retirement benefit liabilities 1,865 - 1,865
--------- --------- ---------
Total liabilities 697,020 (37) 696,983
--------- --------- ---------
Shareholders' equity
Called up share capital 1,614 - 1,614
Share premium account 5,524 - 5,524
Less: Treasury shares (119) - (119)
Available for sale reserve 314 - 314
Revaluation reserve - - -
Cashflow hedging reserve 302 - 302
Capital redemption reserve 309 - 309
Other capital reserve 617 - 617
Translation reserve (58) - (58)
Retained earnings 6,739 45 6,784
--------- --------- ---------
Shareholders' equity
excluding minority interests 15,242 45 15,287
Minority interests 3,330 - 3,330
--------- --------- ---------
Total shareholders' equity 18,572 45 18,617
--------- --------- ---------
Total liabilities and
shareholders' equity 715,592 8 715,600
--------- --------- ---------
BARCLAYS PLC
ADDITIONAL INFORMATION
Group structure changes from 2004
The presentation of results by business differs from that provided in 2004
in the following respects:
- International Retail and Commercial Banking and Wealth Management
(formerly called Private Clients) are reported as completely separate
business divisions and not aggregated, reflecting changes in management
accountability.
- The results for the Wealth Management - closed life assurance activities
are provided separately from those for the rest of Wealth Management. The
introduction of IFRS requires that the results of the closed life
assurance activities are recorded on a line by line basis rather than the
previous single line presentation. In order that the presentation of the
underlying financial performance of Wealth Management is not distorted, it
is considered appropriate to report the closed life assurance activity
separately.
- The 2004 results of Barclaycard and UK Retail Banking have been restated
to reflect the 2005 change in allocation of branch network costs and
insurance sales between the two divisions. This had the impact of
increasing Barclaycard profit before tax by GBP59m and reducing UK Banking
profit before tax by the same amount.
- In order to comply with segmental reporting under IFRS, a new Income
Statement has been prepared for 'Head office functions and other
operations'. This information was previously reported in an abbreviated
format.
Acquisitions and disposals
On 1st June 2005, Barclays Asset and Sales Finance ('BASF') acquired a 51%
share and controlling stake in Fiat's Iveco Vehicle Finance Business. The
transaction will expand BASF's commercial vehicle expertise across Europe.
On 30th June 2005, EnterCard, the joint venture between Barclays Bank PLC
and ForeningsSparbanken (also know as Swedbank), which was announced on 4th
February 2005, began operations. Barclays Bank PLC has a 50% economic
interest in the joint venture. EnterCard will provide credit cards in the
Nordic market, initially in Sweden and Norway.
BARCLAYS PLC
ADDITIONAL INFORMATION
Change in accounting estimate
The Group has undertaken a review of the actual useful economic lives of
property, plant and equipment. As a result of this review, the assumed
useful economic lives of the costs of adaptation of freehold and leasehold
property and equipment installed in freehold and leasehold property have
increased from 10 to a range of 10-15 years. The useful economic lives of
fixtures and fittings and other equipment have increased from 5 to a range
of 5-10 years. This change in accounting estimate better reflects historical
experience and has been applied prospectively from 1st January 2005. This
has reduced the depreciation charge for the period to 30th June 2005 by
GBP15m.
Hedge accounting
The element of ineffectiveness arising on hedges that qualify for hedge
accounting is included in net interest income.
Share capital
The Group manages both its debt and equity capital actively. The Group's
authority to buy back ordinary shares was renewed at the 2005 Annual General
Meeting.
Group share schemes
The independent trustees of the Group's share schemes may make purchases of
Barclays PLC ordinary shares in the market at any time or times following
this announcement of the Group's results for the purposes of those schemes'
current and future requirements. The total number of ordinary shares
purchased would not be material in relation to the issued share capital of
Barclays PLC.
Filings with the SEC
The results will be furnished as a Form 6-K to the US Securities and
Exchange Commission as soon as practicable following the publication of
these results.
Other information
The interim report for the six months to 30th June 2005, including extracts
from this announcement and the independent review report by the auditors,
will be advertised in The Daily Telegraph and the Daily Mail on 6th August
2005. Copies will be available to the public at Barclays registered office
and at its website www.investorrelations.barclays.co.uk.
BARCLAYS PLC
ADDITIONAL INFORMATION
Recent developments
On 9th May, 2005, Barclays announced the terms of an intended recommended
acquisition of a majority stake of up to 60% in Absa Group Limited ('Absa').
The acquisition comprised a scheme of arrangement and a partial offer to
shareholders, which were interconditional. The Board of Directors of Absa
voted unanimously to recommend the acquisition to shareholders. The South
African Minister of Finance approved Barclays application to acquire a
majority stake in Absa, and the acquisition has been endorsed by Absa's
black economic empowerment partner.
The Absa transaction closed on 27th July 2005. At closing, Barclays owned
53.96% of Absa. On 1st August 2005, Barclays acquired a further 14.5 million
shares in Absa taking its ordinary shareholding to 56.1%, which affords
Barclays voting control. The aggregate consideration for the investment in
Absa was R31,087m (approximately GBP2.6 billion at an exchange rate of 11.96
as at 30th June 2005).
Naguib Kheraj and David Roberts joined the Boards of Absa and Absa Bank Ltd
as non-executive Directors on 27th July 2005. Dominic Bruynseels, Chief
Executive Officer of Barclays Africa and Middle East, joined the Absa Boards
on 27th July 2005, as an executive Director. Dr Danie Cronje, the Chairman
of Absa, will join the Boards of Barclays PLC and Barclays Bank PLC as a
non-executive Director on 1st September 2005.
The Absa transaction was financed from a combination of available resources
and preference share finance. For Absa's financial year-ended 31st March
2005, Absa reported an increase of 23% in profit before tax to R7,633m
(year-ended 31st March 2004: R6,223m) and net assets as at the year-end of
R23,737m.
On 11th July 2005 Barclays announced that it had acquired the wealth
business of ING Securities Bank (France), consisting of ING Ferri and ING
Private Banking on 1st July 2005. At 31st December 2004, the combined
business of ING Ferri and ING Private Banking had net assets of
approximately EUR10million and assets under management of approximately
EUR2.7 billion.
The Office of Fair Trading (OFT) has been investigating the level of default
charges applied by the credit card industry since October 2003. These are
fees charged when a customer pays late or goes over their credit limit.
Barclaycard, along with other credit card issuers, has been cooperating with
the investigation. The OFT issued a press release on 26th July 2005 stating
that their provisional conclusion was that these fees are excessive and need
to be reduced to be fair. The OFT have given Barclaycard, and seven other
credit card companies, three months to provide suitable undertakings
regarding the basis of future default charges or otherwise to address the
concerns of the OFT. Barclays is considering the impact of the provisional
finding on the credit card industry and Barclaycard, including steps to
mitigate any financial impact for shareholders. Barclays will continue to
work with the OFT to address its concerns over the next three months.
BARCLAYS PLC
NOTES (UNAUDITED)
1. Assets held in respect of linked liabilities to customers under
investment contracts/liabilities arising from investment contracts
As at
30.06.05 01.01.05 31.12.04 30.06.04
GBPm GBPm GBPm GBPm
Non-trading financial
instruments fair
valued through profit and
loss
- held in respect of
linked liabilities 69,792 63,124
Cash and bank balances
within the funds 1,816 1,485
-------- --------
71,608 64,609
-------- --------
Liabilities to customers
under investment
contracts 71,608 64,609
-------- --------
This comprises assets under management held on behalf of clients, required
to be recognised on the balance sheet under IAS 39.
2. Derivative financial instruments
The tables set out below analyse the contract or underlying principal and
the fair value of derivative financial instruments held for trading purposes
and for the purposes of managing the Group's structural exposures.
Derivatives are measured at fair value and the resultant profits and losses
from derivatives held for trading purposes are included in net trading
income. Where derivatives are held for risk management purposes and when
transactions meet the criteria specified in IAS 39, the Group applies hedge
accounting as appropriate to the risks being hedged.
As at 30.06.05
Contract Fair value
amount Assets (Liabilities)
Derivatives designated as held for GBPm GBPm GBPm
trading
Foreign exchange derivatives 1,031,529 17,912 (17,174)
Interest rate derivatives 13,362,136 93,435 (91,197)
Credit derivatives 398,126 3,110 (2,897)
Equity and stock index and commodity
derivatives 376,436 18,492 (20,815)
---------- -------- --------
Total derivative assets/
(liabilities) held for trading 15,168,227 132,949 (132,083)
Derivatives designated in hedge
accounting relationships
Derivatives designated as cash flow
hedges 22,839 283 (300)
Derivatives designated as fair value
hedges 38,857 694 (401)
Derivatives designated as hedges of
net investments 313 6 -
---------- -------- --------
Total derivative assets/
(liabilities) held for 62,009 983 (701)
risk management ---------- -------- --------
Total recognised derivative
assets/(liabilities) 15,230,236 133,932 (132,784)
---------- -------- --------
Total derivative notionals at 30th June 2005 have grown from 1st January
2005 due to significant increase in throughput of fixed income derivatives.
This reflects the larger client base and clients increased use of Barclays'
electronic trading platforms in Europe and the US.
BARCLAYS PLC
2. Derivative financial instruments (continued)
The Group's total derivative asset and liability position as presented on
the balance sheet is as follows:
As at 30.06.05
Contract Fair value
Amount Assets (Liabilities)
GBPm GBPm GBPm
Derivative assets/(liabilities)
designated as held for trading 15,168,227 132,949 (132,083)
Derivative assets/(liabilities)
designated in hedge accounting
relationships 62,009 983 (701)
---------- -------- --------
Total recognised derivative
assets/(liabilities) 15,230,236 133,932 (132,784)
---------- -------- --------
As at 01.01.05
Contract Fair value
Amount Assets (Liabilities)
GBPm GBPm GBPm
Derivative assets/(liabilities)
designated as held for trading 12,381,890 92,490 (93,217)
Derivative assets/(liabilities)
designated in hedge accounting
relationships 89,894 1,721 (1,212)
---------- -------- --------
Total recognised derivative
assets/(liabilities) 12,471,784 94,211 (94,429)
---------- -------- --------
BARCLAYS PLC
3. Loans and advances to banks
As at
30.06.05 01.01.05 31.12.04 30.06.04
GBPm GBPm GBPm GBPm
By geographical area
United Kingdom 6,026 5,813 3,949 4,877
Other European Union 11,992 4,274 1,813 5,547
United States 9,180 8,459 7,668 6,067
Rest of the World 8,039 7,206 6,150 7,041
-------- -------- -------- --------
Total non-trading 35,237 25,752 19,580 23,532
Reverse repurchase
agreements1 61,075 59,510
Less: Allowance for
impairment/provision (12) (24) (23) (8)
-------- -------- -------- --------
35,225 25,728 80,632 83,034
-------- -------- -------- --------
The geographic presentation is based on the location of the customer. In
previous publications, the geographic presentation was based on the location
of the office recording the transaction.
Of the total loans and advances to banks, placings with banks were GBP21.1bn
at 30th June 2005 (31st December 2004: GBP66.7bn; 30th June 2004:
GBP71.2bn). Placings with banks have decreased primarily due to the
reclassification of reverse repurchase agreements, in accordance with IAS
39.
1 Reverse repurchase agreements are now disclosed separately on the face of
the balance sheet.
BARCLAYS PLC
4. Loans and advances to customers
As at
30.06.05 01.01.05 31.12.04 30.06.04
GBPm GBPm GBPm GBPm
Retail business 109,566 108,506 106,296 100,307
Wholesale business 130,385 101,366 100,497 99,298
-------- -------- -------- --------
Total non-trading 239,951 209,872 206,793 199,605
Reverse repurchase
agreements1 58,304 55,291
Less: Allowances for
impairment/provisions (2,828) (2,613) (2,688) (2,843)
-------- -------- -------- --------
Total loans and advances 237,123 207,259 262,409 252,053
-------- -------- -------- --------
By geographical area
United Kingdom 165,382 148,197 146,248 144,827
Other European Union 35,479 26,350 26,210 24,863
United States 22,588 21,813 20,982 18,062
Rest of the World 16,502 13,512 13,353 11,853
-------- -------- -------- --------
Total non-trading 239,951 209,872 206,793 199,605
Reverse repurchase
agreements1 58,304 55,291
Less: Allowance for
impairment/provisions (2,828) (2,613) (2,688) (2,843)
-------- -------- -------- --------
237,123 207,259 262,409 252,053
-------- -------- -------- --------
By industry
Financial institutions 44,791 36,865 29,148 33,377
Agriculture, forestry and
fishing 2,426 2,247 2,243 2,306
Manufacturing 12,717 9,477 8,422 8,368
Construction 4,478 3,637 3,389 2,697
Property 7,797 5,747 8,577 9,426
Energy and water 4,976 3,194 2,534 3,217
Wholesale and retail
distribution and leisure 13,844 11,897 10,928 10,050
Transport 5,169 3,812 3,461 3,671
Postal and communication 1,164 828 678 581
Business and other
services 28,721 20,924 19,004 15,751
Home loans2 75,435 78,030 77,673 73,284
Other personal 30,287 27,400 25,952 24,167
Overseas customers3 8,973 6,893
Finance lease receivables 8,146 5,814 5,811 5,817
-------- -------- -------- --------
Non-trading 239,951 209,872 206,793 199,605
Reverse repurchase
agreements2 58,304 55,291
Less: Allowance for
impairment/provisions (2,828) (2,613) (2,688) (2,843)
-------- -------- -------- --------
Total loans and advances
to customers 237,123 207,259 262,409 252,053
-------- -------- -------- --------
The geographic presentation of loans and advances is based on the location
of the customer. In previous publications, it was based on the location of
the office recording the transaction.
1 Reverse repurchase agreements are now disclosed separately on the face of
the balance sheet.
2 Excludes commercial property mortgages.
3 Overseas customers are now classified as part of other industry segments.
BARCLAYS PLC
4. Loans and advances to customers (continued)
In 2005, total loans and advances have decreased primarily due to the
reclassification of reverse repurchase agreements, in accordance with IAS
39.
The industry classifications have been prepared at the level of the
borrowing entity. This means that a loan to the subsidiary of a major
corporation is classified by the industry in which that subsidiary operates
even though the parent's predominant business may be a different industry.
BARCLAYS PLC
5. Allowance for impairment on loans and advances/provisions for bad and
doubtful debts
Half-year ended
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
At beginning of period1 2,637 2,851 2,946
Acquisitions and disposals 23 21 -
Exchange and other adjustments 33 (8) (25)
Amounts written off (see below) (664) (813) (769)
Recoveries (see below) 98 140 115
Amounts charged against profit (see
below) 713 520 584
-------- -------- --------
At end of period 2,840 2,711 2,851
-------- -------- --------
Amounts written off
United Kingdom (620) (692) (588)
Other European Union (16) (36) (27)
United States (24) (30) (20)
Rest of the World (4) (55) (134)
-------- -------- --------
(664) (813) (769)
-------- -------- --------
Recoveries
United Kingdom 65 121 96
Other European Union 4 - 9
United States 6 8 6
Rest of the World 23 11 4
-------- -------- --------
98 140 115
-------- -------- --------
Impairment/provisions charged against
profit:
New and increased impairment allowances
/provisions
United Kingdom 827 780 578
Other European Union 45 84 47
United States 37 35 50
Rest of the World 36 28 153
-------- -------- --------
945 927 828
-------- -------- --------
Less: Releases of impairment allowance/
provision
United Kingdom (97) (98) (22)
Other European Union (10) (6) (14)
United States (23) (10) (4)
Rest of the World (4) (23) (13)
-------- -------- --------
(134) (137) (53)
-------- -------- --------
Recoveries (98) (140) (115)
-------- -------- --------
Impairment charged against profit/Net
specific
provisions charge 713 650 660
General provision (release)/charge (130) (76)
-------- -------- --------
Net charge to profit2 713 520 584
-------- -------- --------
1 Due to the adoption of IAS 32 and IAS 39 on 1st January 2005 and the
consequent restatement of the impairment allowance, the period end value
at 31st December 2004 does not correspond to the opening value at the
beginning of 2005.
2 This excludes other credit provisions detailed on page 43.
BARCLAYS PLC
5. Allowance for impairment on loans and advances/provisions for bad and
doubtful debts (continued)
As at
30.06.05 31.12.04 30.06.04
Allowance/specific provisions GBPm GBPm GBPm
United Kingdom 2,174 1,683 1,700
Other European Union 282 149 99
United States 149 155 125
Rest of the World 235 160 214
-------- -------- --------
Total allowance/specific provisions 2,840 2,147 2,138
General provisions 564 713
-------- -------- --------
2,840 2,711 2,851
-------- -------- --------
The geographic analysis of provisions shown above is based on the location
of the customer.
A reconciliation of UK GAAP provisions to IFRS impairment allowances is as
follows:
GBPm
UK GAAP provision as at 31st December 2004 2,711
IFRS interest and fees not recognised (157)
UK GAAP interest in suspense as at 31st December 2004 40
UK GAAP fees in suspense as at 31st December 2004 19
Additional impairment allowances resulting from the application of
revised calculation methodologies at 1st January 2005 24
--------
IFRS impairment allowances as at 1st January 2005 2,637
--------
BARCLAYS PLC
6. Potential credit risk loans
The following tables present an analysis of potential credit risk loans
(non-performing and potential problem loans).
As at
30.06.05 01.01.05 31.12.04 30.06.04
Potential credit risk GBPm GBPm GBPm GBPm
loans
Summary
Non-accrual loans 2,104 2,052 2,115 2,235
Accruing loans where
there is an expectation
of ultimate write-off
(either partial or full) 1,631 1,484 1,435 1,468
Accruing loans 90 days
overdue, against which no
allowances have been made 613 538 550 610
-------- -------- -------- --------
4,348 4,074 4,100 4,313
Reduced rate loans 23 15 15 10
-------- -------- -------- --------
Total non-performing
loans 4,371 4,089 4,115 4,323
Potential problem loans 731 795 798 884
-------- -------- -------- --------
Total potential credit
risk loans 5,102 4,884 4,913 5,207
-------- -------- -------- --------
Geographical split
Non-accrual loans:
United Kingdom 1,585 1,449 1,509 1,630
Other European Union 140 240 243 135
United States 210 258 258 290
Rest of the World 169 105 105 180
-------- -------- -------- --------
Total 2,104 2,052 2,115 2,235
-------- -------- -------- --------
Accruing loans where there
is an expectation of
ultimate write-off (either
partial or full)
United Kingdom 1,285 1,231 1,188 1,193
Other European Union 165 68 58 91
United States 27 26 26 -
Rest of the World 154 159 163 184
-------- -------- -------- --------
Total 1,631 1,484 1,435 1,468
-------- -------- -------- --------
Accruing loans 90 days
overdue, against which no
allowances have been
made
United Kingdom 576 501 513 583
Other European Union 31 34 34 27
United States 1 1 1 -
Rest of the World 5 2 2 -
-------- -------- -------- --------
Total 613 538 550 610
-------- -------- -------- --------
BARCLAYS PLC
6. Potential credit risk loans (continued)
Half-year ended
30.06.05 01.01.05 31.12.04 30.06.04
Reduced rate loans: GBPm GBPm GBPm GBPm
United Kingdom - 2 2 10
Other European Union 7 - - -
United States 16 13 13 -
Rest of the World - - - -
-------- -------- -------- --------
Total 23 15 15 10
-------- -------- -------- --------
Total non-performing
loans:
United Kingdom 3,446 3,183 3,212 3,416
Other European Union 343 342 335 253
United States 254 298 298 290
Rest of the World 328 266 270 364
-------- -------- -------- --------
Total 4,371 4,089 4,115 4,323
-------- -------- -------- --------
Potential problem loans:
United Kingdom 561 655 658 588
Other European Union 58 32 32 26
United States 43 27 27 191
Rest of the World 69 81 81 79
-------- -------- -------- --------
Total 731 795 798 884
-------- -------- -------- --------
Total potential credit
risk loans:
United Kingdom 4,007 3,838 3,870 4,004
Other European Union 401 374 367 279
United States 297 325 325 481
Rest of the World 397 347 351 443
-------- -------- -------- --------
Total 5,102 4,884 4,913 5,207
-------- -------- -------- --------
Allowance coverage of % % % %
non-performing loans1:
United Kingdom 63.1 64.2 68.1 68.5
Other European Union 82.2 69.9 60.9 66.0
United States 58.7 53.7 57.0 49.3
Rest of the World 71.6 73.7 70.4 67.9
-------- -------- -------- --------
Total 65.0 64.5 66.9 67.0
-------- -------- -------- --------
Allowance coverage of % % % %
total potential credit
risk loans1:
United Kingdom 54.3 53.2 56.5 58.4
Other European Union 70.3 63.9 55.6 59.9
United States 50.2 49.2 52.3 29.7
Rest of the World 59.2 56.5 54.1 55.8
-------- -------- -------- --------
Total 55.7 54.0 56.0 55.6
-------- -------- -------- --------
1 In 2004, the geographical coverage ratios include an allocation of general
provisions.
BARCLAYS PLC
6. Potential credit risk loans (continued)
Since 1st January 2005, non-performing loans (NPLs) have increased 7% to
GBP4,371m (1st January 2005: GBP4,089m). The increase occurred in the retail
businesses with wholesale and corporate NPLs remaining flat. Potential
problem loans (PPLs) decreased 8% from the beginning of the year to GBP731m
(1st January 2005: GBP795m). Retail PPLs increased but this was more than
offset by the decline in the level of wholesale and corporate PPLs. The
increase in the Potential Credit Risk Loans (PCRLs) occurred mainly in the
UK.
The value of PCRLs at 31st December 2004 was restated for the adoption of
IFRS on 1st January 2005. This restatement has not been applied to the
numbers for 30th June 2004 and, as a consequence, these numbers are not
comparable with the current values. In addition, due to improved modelling,
PCRLs in the mortgage business have been restated. The restatement has been
applied to the prior periods shown, causing increases of GBP226m at 30th
June 2004 and GBP172m at 31st December 2004 and at 1st January 2005. This
restatement does not reflect changes in credit quality but arises from the
extension of Group methodology to the mortgage portfolios which were
previously estimated on a different basis.
Coverage of NPLs by the stock of impairment allowances increased to 65.0%
(1st January 2005: 64.5%). Coverage of PCRLs rose to 55.7% (1st January
2005: 54.0%).
7. Available for sale financial investments
As at
30.06.05 01.01.05 31.12.04 30.06.04
GBPm GBPm GBPm GBPm
Debt securities 59,227 46,059
Equity securities 848 675
Treasury bills 1,065 1,143
Other eligible bills 3 220
-------- -------- -------- --------
61,143 48,097 - -
-------- -------- -------- --------
As at 1st January 2005, financial instruments have been classified and
measured in accordance with IAS 39. In general, investment securities held
under UK GAAP have been classified as available for sale under IFRS.
BARCLAYS PLC
8. Other assets
As at
30.06.05 01.01.05 31.12.04 30.06.04
GBPm GBPm GBPm GBPm
Sundry debtors 2,789 3,042 3,711 3,629
Prepayments 530 415 467 410
Balances arising from
off-balance sheet
instruments 18,174 14,000
Accrued income 172 190 3,563 3,305
-------- -------- -------- --------
3,491 3,647 25,915 21,344
-------- -------- -------- --------
As at 1st January 2005, balances arising from off-balance sheet instruments
were reclassified to derivative financial instruments.
Also from 1st January 2005, accrued income no longer includes accrued
interest, which is included in the loan balances as part of the effective
interest rate calculation.
9. Insurance assets, including unit-linked assets
As at
30.06.05 01.01.05 31.12.04 30.06.04
GBPm GBPm GBPm GBPm
Reinsurer's share of
provisions 107 109 109 105
Assets held to cover
linked liabilities 5,870 5,836
Assets held to cover
non-linked liabilities 2,597 2,224
-------- -------- -------- --------
107 109 8,576 8,165
-------- -------- -------- --------
In 2005, investment and insurance contracts are separately accounting for in
accordance with IAS 39 and IFRS 4. At 1st January 2005, this has resulted in
the majority of the assets within the life assurance businesses being
classified as financial assets designated at fair value. These assets are
held both in respect of linked liabilities to customers under investment
contracts and also held on own account. In 2004, assets held to cover linked
liabilities and provision for linked liabilities were aggregated and
reported as insurance assets and insurance contract liabilities.
10. Insurance contract liabilities, including unit-linked liabilities
As at
30.06.05 01.01.05 31.12.04 30.06.04
GBPm GBPm GBPm GBPm
Long term business
provision:
- Provision for linked
liabilities 1,434 1,460 5,821 5,722
- Provision for non-unit
linked liabilities 2,098 2,100 2,520 2,186
Provision for claims
outstanding 57 36 36 36
-------- -------- -------- --------
3,589 3,596 8,377 7,944
-------- -------- -------- --------
In 2005, investment and insurance contracts are separately accounted for in
accordance with IAS 39 and IFRS 4. In 2004, assets held to cover linked
liabilities and provision for linked liabilities were aggregated and
reported as insurance assets and insurance contract liabilities.
BARCLAYS PLC
11. Other liabilities
As at
30.06.05 01.01.05 31.12.04 30.06.04
GBPm GBPm GBPm GBPm
Obligations under finance
leases payable 338 353 353 352
Balances arising from
off-balance sheet
financial instruments 18,009 12,829
Sundry creditors 5,477 5,021 3,851 3,531
Accruals and deferred
income 3,834 4,495 6,820 5,396
Short positions in
securities 53,903 57,438
-------- -------- -------- --------
9,649 9,869 82,936 79,546
-------- -------- -------- --------
As at 1st January 2005, balances arising from off-balance sheet instruments
were reclassified to derivative financial instruments and short positions in
securities to trading portfolio liabilities.
Also from 1st January 2005, accruals and deferred income no longer includes
accrued interest, which is included in customer balances as part of the
amortised cost.
12. Other provisions for liabilities
As at
30.06.05 01.01.05 31.12.04 30.06.04
GBPm GBPm GBPm GBPm
Customer loyalty
provisions 12 15
Redundancy and
restructuring 70 97 97 34
Undrawn contractually
committed facilities and
guarantees 48 55 55 85
Onerous contracts 42 39 39 13
Sundry provisions 226 212 213 182
-------- -------- -------- --------
386 403 416 329
-------- -------- -------- --------
As at 1st January 2005, the customer loyalty provision has been reclassified
to other liabilities.
BARCLAYS PLC
13. Legal proceedings
Proceedings have been brought in the United States against a number of
defendants, including Barclays, following the collapse of Enron. In each
case the claims are against groups of defendants. Barclays considers that
the claims against it are without merit and is defending them vigorously. A
court ordered mediation commenced in September 2003 but no material progress
has been made towards a resolution of the litigation. In addition, in
respect of investigations relating to Enron, Barclays is continuing to
provide information in response to enquiries by regulatory and governmental
authorities in the United States and elsewhere. It is not possible to
estimate Barclays possible loss in relation to these matters, nor the effect
that it might have upon operating results in any particular financial
period. Barclays is also currently in negotiations with the staff of the US
Securities and Exchange Commission with respect to a settlement of the
Commission's investigation of transactions between Barclays and Enron.
Barclays does not expect that the amount of any settlement with the
Commission would have a significant adverse effect on its financial position
or operating results.
Barclays is engaged in various other litigation proceedings both in the
United Kingdom and a number of overseas jurisdictions, including the United
States, involving claims by and against it, which arise in the ordinary
course of business. Barclays does not expect the ultimate resolution of any
of the proceedings to which Barclays is party to have a significant adverse
effect on the financial position of the Group.
BARCLAYS PLC
14. Contingent liabilities and commitments
As at
30.06.05 01.01.05 31.12.04 30.06.04
Contingent liabilities GBPm GBPm GBPm GBPm
Acceptances and
endorsements 271 303 303 530
Assets pledged as
collateral for security 35,703 30,011 30,011 26,334
Other contingent
liabilities 8,503 8,245 8,245 7,800
-------- -------- -------- --------
44,477 38,559 38,559 34,664
-------- -------- -------- --------
Commitments
Standby facilities,
credit lines and other
commitments 163,037 134,051 134,051 119,887
-------- -------- -------- --------
Contingent liabilities increased by 15% (GBP5.9bn) to GBP44.5bn (1st
January 2005: GBP38.6bn) due to the increased indemnifications issued by
Barclays Bank PLC to Barclays Global Investors' clients for securities
lending activities.
Commitments increased by 22% (GBP28.9bn) to GBP163.0bn (1st January 2005:
GBP134.1bn) primarily as a result of the growth in Barclaycard due to
Juniper, and new facilities in Barclays Capital and UK Business Banking.
BARCLAYS PLC
15. Market risk
Market risk is the risk that the Group's earnings, capital, or ability to
meet its business objectives, will be adversely affected by changes in the
level or volatility of market rates or prices such as interest rates,
credit spreads, foreign exchange rates, equity prices and commodity prices.
Barclays Capital's market risk exposure, as measured by average total Daily
Value at Risk (DVaR), decreased in the first half of 2005 compared to the
first half of 2004. This was mainly due to a reduction in interest rate
risk and an increase in diversification effect.
Total DVaR as at 30th June 2005 was GBP31.0m (31st December 2004: GBP31.9m;
30th June 2004: GBP26.0m).
Analysis of Barclays Capital's market risk exposures
The daily average, maximum and minimum values of DVaR were calculated as
below:
Half-year ended
30th June 2005
Average High1 Low1
GBPm GBPm GBPm
Interest rate risk 24.1 42.4 15.4
Credit spread risk 23.3 27.9 19.3
Foreign exchange risk 2.9 5.3 1.6
Equities risk 5.2 7.3 3.9
Commodities risk 5.8 7.6 4.5
Diversification effect (30.9) n/a n/a
-------- -------- ---------
Total DVaR 30.4 37.4 25.4
-------- -------- ---------
Half-year ended
31st December 2004
Average High1 Low1
GBPm GBPm GBPm
Interest rate risk 19.7 29.4 15.1
Credit spread risk 20.3 24.1 16.1
Foreign exchange risk 3.1 7.4 1.6
Equities risk 4.3 7.9 2.4
Commodities risk 8.2 14.4 4.5
Diversification effect (24.9) n/a n/a
-------- -------- ---------
Total DVaR 30.7 40.7 24.0
-------- -------- ---------
Half-year ended
30th June 2004
Average High1 Low1
GBPm GBPm GBPm
Interest rate risk 30.5 53.6 19.0
Credit spread risk 25.0 32.9 16.0
Foreign exchange risk 1.8 3.0 0.9
Equities risk 4.1 7.9 2.2
Commodities risk 3.7 7.8 2.2
Diversification effect (27.0) n/a n/a
-------- -------- ---------
Total DVaR 38.1 46.8 25.7
-------- -------- ---------
1 The high (and low) DVaR figures reported for each category did not
necessarily occur on the same day as the high (and low) DVaR reported as a
whole. Consequently a diversification effect number for the high (and low)
DVaR figures would not be meaningful and it is therefore omitted from the
above table.
BARCLAYS PLC
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE (UNAUDITED)
Half-year ended
30.06.05 31.12.04 30.06.04
GBPm GBPm GBPm
Available for sale reserve:
Net gains from changes in fair value 112
Amount transferred to profit on
disposal (26)
Cash flow hedging reserve:
Gains from changes in fair value 16
Amount transferred to profit 12
Share of changes in associates' equity (28) (17) -
Currency translation differences
arising during the year 23 (15) (43)
Tax (118) - -
Other 38 16 11
Profit for the period 1,975 1,483 1,818
-------- -------- --------
Total recognised income and expense for
the period 2,004 1,467 1,786
-------- -------- --------
Attributable to:
Shareholders 1,873 1,440 1,766
Minority interest 131 27 20
-------- -------- --------
2,004 1,467 1,786
-------- -------- --------
Tax comprises items taken directly to reserves, including tax on available
for sale reserve and cash flow hedging reserve.
BARCLAYS PLC
SUMMARY CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)
Half-year ended
30.06.051 31.12.04 30.06.04
GBPm GBPm GBPm
Net cash inflow from operating
activities 17,584 2,384 2,787
Net cash outflow from investing
activities (11,394) (2,702) (4,296)
Net cash inflow from financing
activities 2,526 1,004 1,956
Effect of exchange rate changes on
cash and cash equivalents (539) (165) (305)
-------- -------- --------
Net increase in cash and cash
equivalents 8,177 521 142
Cash and cash equivalents at beginning
of period 21,603 13,996 13,854
-------- -------- --------
Cash and cash equivalents at end of
period 29,780 14,517 13,996
-------- -------- --------
1 The opening cash equivalents balance includes the impacts of adopting IAS
32 and IAS 39 and IFRS 4, which have not been applied to 2004 comparatives,
in accordance with IFRS 1.
BARCLAYS PLC
OTHER INFORMATION
Registered office
1 Churchill Place, London, E14 5HP, England, United Kingdom.
Tel: +44 (0) 20 7116 1000. Company number: 48839.
Website
www.barclays.com
Registrar
The Registrar to Barclays PLC, The Causeway, Worthing, West Sussex, BN99
6DA, England, United Kingdom. Tel: + 44 (0) 870 609 4535.
Listing
The principal trading market for Barclays PLC ordinary shares is the London
Stock Exchange. Ordinary shares are also listed on the New York Stock
Exchange and the Tokyo Stock Exchange. Trading on the New York Stock
Exchange is in the form of ADSs under the ticker symbol 'BCS'. Each ADS
represents four ordinary shares of 25p each and is evidenced by an ADR. The
ADR depositary is The Bank of New York whose international telephone number
is +1-610-382-7836, whose domestic telephone number is 1-888-BNY-ADRS and
whose address is The Bank of New York, Investor Relations, PO Box 11258,
Church Street Station, New York, NY 10286-1258.
Filings with the SEC
Statutory accounts for the year ended 31st December 2004, which also include
certain information required for the joint Annual Report on Form 20-F of
Barclays PLC and Barclays Bank PLC to the US Securities and Exchange
Commission (SEC), can be obtained from Corporate Communications, Barclays
Bank PLC, 200 Park Avenue, New York, NY 10166, United States of America or
from the Head of Investor Relations at Barclays registered office address,
shown above. Copies of the Form 20-F are also available from the Barclays
Investor Relations' website (details below) and from the SEC's website (
www.sec.gov).
Results timetable
Interim 2005 Ex Dividend date Wednesday 17th August 2005
Interim 2005 Dividend record date Friday 19th August 2005
Interim 2005 Dividend payment date Monday 3rd October 2005
2005 Preliminary results Thursday 9th February 2006
Note that all dates are provisional and subject to change.
For further information please contact:
Investor Relations Media Relations
-------------------- -----------------
Mark Merson/James S Johnson Chris Tucker/Pam Horrell
+44 (0) 20 7116 5752/2927 +44 (0) 20 7116 6223/6132
More information on Barclays, including the 2005 interim results, can be
found on our website at the following address:
www.investorrelations.barclays.co.uk
BARCLAYS PLC
Index of Main Reference Points
Accounting policies 63
Acquisitions and disposals 62
Additional information 59
Associated undertakings and joint ventures 47
Available for sale financial instruments 74
Balance sheet (consolidated) 8, 9
Barclaycard 13, 29
Barclays Capital 12, 21
Barclays Global Investors 23
Basis of preparation 59
Capital demand 53
Capital supply 54
Capital ratios 50, 51
Capital resources 49, 50
Cash flow statement - summary
(consolidated) 81
Changes in accounting estimates 63
Contingent liabilities and commitments 78
Cost:income ratios 10
Derivatives 65
Dividends on ordinary shares 48
Divisional interest income 38
Divisional margins 37
Daily Value at Risk (DVaR) 79
Earnings per ordinary share 48
Economic capital 53
Economic data 3
Economic profit 56
Fair value option 59
Filings with the SEC 63
Financial highlights 3
Group performance ratios 10
Group share schemes 63
Group structure changes from 2004 62
Half-year review 4
Head office functions and other
operations 13, 33
Impairment 43
Income statement (consolidated) 7
Insurance assets 75
Insurance contract liabilities 75
International Retail and Commercial
Banking 13, 31
Legal proceedings 77
Loans and advances to banks 67
Loans and advances to customers 68
Market risk 79
Minority interests 47
Net fee and commission income 39
Net premiums from insurance contracts 41
Net claims and benefits paid on insurance
contracts 42
Net interest income 36
Operating expenses 44
Other assets 75
Other information 82
Other liabilities 76
Other income 41
Other provisions for liabilities 76
Performance summary 2
Performance ratios 3
Potential credit risk loans 72
Principal transactions 40
Profit before tax 7, 14
Profit before tax excluding goodwill
amortisation 67
Recent developments 64
Results by business 11
Results timetable 82
Risk asset ratios 3, 50
Risk Tendency 58
Share capital 63
Staff costs 45
Staff numbers 46
Statement of recognised income and
expense (consolidated) 80
Tax rate 47
Total assets 15, 52
UK Banking 11, 16
UK Business Banking 11, 19
UK Retail Banking 11, 17
Wealth Management 12, 25
Wealth Management-closed life
assurance activities 12, 27
Weighted risk assets 15, 50, 52