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 2004
Barclays PLC and
Barclays Bank PLC
(Names of Registrants)
54 Lombard Street
London EC3P 3AH
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 announcement dated 5 August 2004
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BARCLAYS PLC
INTERIM ANNOUNCEMENT OF RESULTS FOR 2004
PAGE
Summary 1
Financial highlights 3
Half-year review 4
Consolidated profit and loss account 6
Consolidated balance sheet 7
Financial review 8
Additional information 47
Notes 50
Consolidated statement of changes in shareholders' funds 61
Statement of total recognised gains and losses 62
Summary consolidated cashflow statement 63
Average balance sheet and net interest income 64
Other information 66
Index 69
The information in this announcement, which was approved by the Board of
Directors on 4th August 2004, 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 2003, including the Group's Annual Report on
Form 20-F to the US Securities and Exchange Commission (SEC) and which contained
an unqualified audit report under Section 235 of the Act and 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 "anticipate",
"target", "expect", "estimate", "intend", "plan", "goal", "believe", or other
words of similar meaning. By their nature, forward-looking statements involve
risk and uncertainty because they relate to future events and circumstances,
including, but not limited to, UK domestic and global economic and business
conditions, 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 and the
impact of competition, a number of which are beyond the Group's control. As a
result, the Group's actual future results may differ materially from the plans,
goals, and expectations set forth in the Group's forward-looking 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.
Comparative figures have been restated for the changes in accounting policy and
presentation detailed on page 49.
In this document the profit and loss analysis compares, unless stated otherwise,
the half-year to 30th June 2004 to the corresponding period of 2003. Balance
sheet comparisons, unless stated otherwise, relate to the corresponding position
at 31st December 2003. Average balance sheet comparisons relate the half-year to
30th June 2004 to the corresponding period of 2003.
BARCLAYS PLC, 54 LOMBARD STREET, LONDON EC3P 3AH, TELEPHONE 020 7699 5000,
COMPANY NO. 48839.
BARCLAYS PLC - SUMMARY
RESULTS FOR SIX MONTHS TO 30TH JUNE 2004 (UNAUDITED)
Group Results
Half-year ended
30.06.04 30.06.03 % Change
GBPm GBPm
Operating income 6,852 5,993 14
Operating expenses (3,911) (3,387) 15
Provisions for bad and doubtful (589) (652) (10)
debts
Profit before tax 2,411 1,963 23
Profit after tax 1,736 1,396 24
Economic profit 1,054 745 41
Earnings per share 26.7p 21.3p 25
Dividend per share 8.25p 7.05p 17
Post-tax return on average
shareholders' funds 20.4% 17.7%
Summary of business performance1
GBPm GBPm % Change
UK Banking 1,217 1,149 6
Private Clients and International 196 129 52
Barclaycard 428 387 11
Barclays Capital 599 438 37
Barclays Global Investors 157 91 73
1 Comprises profit on ordinary activities before tax excluding goodwill and
exceptional items.
"Barclays had a record half year with all businesses delivering higher profits.
Good progress in our core UK businesses and excellent performances in our global
product businesses demonstrate the benefits of our distinctive portfolio."
Matthew W. Barrett, Group Chief Executive
Performance Summary
- Group performance was very strong:
- profit before tax up 23% to GBP2,411m
- earnings per share up 25% at 26.7p
- dividend per share up 17% to 8.25p
- return on equity of 20.4%
- All businesses had higher profits, demonstrating good progress across the
whole portfolio.
- Income growth was particularly strong, up 14%, with good broad based
contributions by business and by income type.
- Expenses increased broadly in line with income growth with the majority of the
increase attributable to increased variable performance based compensation
costs and to higher levels of investment spend.
- Provisions fell 10% to GBP589m reflecting a decline in non-performing loans
and potential problem loans.
- Delinquency and arrears experience in the UK retail businesses remained
stable.
- The core UK businesses performed well with good profit generation despite
absorbing considerable investment in infrastructure and in additional customer
facing staff.
- The global product businesses performed very strongly demonstrating the
success of prior period investments.
- The integrations of the acquisitions of Charles Schwab Europe, and
Clydesdale Financial Services, made during 2003, have been completed. The
integrations of Banco Zaragozano and Gerrard are progressing well and are
ahead of schedule.
- Balance sheet growth reflects higher levels of customer activity across the
Group.
- Group net interest margin of 2.56% was almost identical to the margin of
2.57% in the second half of 2003 and 10 basis points lower than the first
half of 2003.
- The Group's capital position remained healthy. Almost GBP1.5bn was returned to
shareholders through the final dividend for 2003 and share buybacks of
GBP600m.
- The Group continues to be well positioned for growth across its portfolio of
businesses.
FINANCIAL HIGHLIGHTS (UNAUDITED)
Half-year ended
30.06.04 31.12.03 30.06.03
RESULTS GBPm GBPm GBPm
Net interest income 3,341 3,368 3,236
Non-interest income 3,511 3,050 2,757
Operating income 6,852 6,418 5,993
Operating expenses (3,911) (3,866) (3,387)
Provisions for bad and doubtful debts (589) (695) (652)
Provisions for contingent liabilities
and commitments - 1 -
Operating profit 2,352 1,858 1,954
Profit from joint ventures and
associated undertakings 14 19 10
Exceptional items 45 5 (1)
Profit before tax 2,411 1,882 1,963
Profit after tax 1,736 1,373 1,396
Profit attributable to shareholders 1,716 1,361 1,383
Economic profit 1,054 685 745
BALANCE SHEET
Shareholders' funds 16,934 16,374 15,957
Loan capital 12,468 12,339 12,553
Total capital resources 29,580 28,996 28,703
Total assets 497,994 443,262 446,624
Weighted risk assets 203,333 188,997 181,414
PER ORDINARY SHARE p p p
Earnings 26.7 21.0 21.3
Dividend 8.25 13.45 7.05
Net asset value 262.7 249.5 243.7
PERFORMANCE RATIOS % % %
Post-tax return on average shareholders' 20.4 16.4 17.7
funds
CAPITAL RATIOS % % %
Equity Tier 1 ratio 6.4 6.5 6.9
Tier 1 ratio 7.7 7.9 8.4
Risk asset ratio 12.2 12.8 13.2
GROUP YIELDS, SPREADS & MARGINS % % %
Gross yield 4.95 4.84 5.00
Interest spread 2.26 2.29 2.37
Interest margin 2.56 2.57 2.66
ECONOMIC DATA
Period end - US$/GBP 1.81 1.78 1.65
Average - US$/GBP 1.82 1.64 1.61
Period end - EUR/GBP 1.49 1.41 1.44
Average - EUR/GBP 1.48 1.45 1.46
FTSE 100 index period end 4,464 4,477 4,031
FTSE 100 index average 4,468 4,051 3,844
HALF-YEAR REVIEW
Barclays had a record half year with all businesses delivering higher profits.
Good progress in our core UK businesses and excellent performances in our global
product businesses demonstrate the benefits of our distinctive portfolio.
Financial performance was very strong. Profit before tax increased 23% to
GBP2,411m (2003: GBP1,963m). Earnings per share rose 25% to 26.7p (2003: 21.3p).
We have increased the interim dividend by 17% to 8.25p (2003: 7.05p).
Income increased 14% to GBP6,852m (2003: GBP5,993m). Net revenue (operating
income less provisions) rose 17%. The income contributions were broadly based -
by business and by income type - and reflected the return on the investment made
in prior years. Customer activity levels were higher, and we achieved good new
customer flows across the portfolio of businesses.
Costs in the first half were GBP3,911m (2003: GBP3,387m) and grew broadly in
line with income. The majority of the cost growth was attributable to higher
variable costs consequent on good financial performance and increased investment
spend. At our results in February 2004, we said we expected to accelerate the
pace of implementation of our organic growth plans, in particular in Barclays
Capital and Barclaycard International, and we have done so.
Credit quality remained good, with provisions falling 10% to GBP589m (2003:
GBP652m). The credit environment in wholesale improved significantly relative to
2003 whilst retail remained benign. Delinquency trends across our UK retail
businesses continued to be very stable.
In our core UK Banking franchise, we made good progress with increased
investment in customer facing staff and systems being paid for by good cost
discipline elsewhere and by new efficiencies identified from the merger of the
UK Retail Banking and UK Business Banking businesses.
Private Clients performed strongly, assisted by recent acquisitions and provided
evidence that we have seen the beginning of a recovery in this business.
Customer activity was higher across private banking, stockbrokers and investment
services, underpinned by better market conditions and improved investor
confidence.
International, our non UK retail and commercial business, performed strongly.
The merger of Banco Zaragozano with Barclays Spain is ahead of schedule. We
expect to achieve synergies earlier than planned, and at lower cost. Underlying
performance across the Spanish business was strong.
Our global product businesses - Barclaycard, Barclays Capital and Barclays
Global Investors - delivered a very good performance.
Barclaycard continued to achieve good financial results. The business coped well
with the headwinds of higher interest rates, vigorous competition and continued
regulatory scrutiny. Barclaycard International made good progress, investing in
its growth and delivering growth across all key financial measures.
Barclays Capital delivered record results for the first half including income
growth of 27%. Performance was broadly based across products and geographies. We
continued to invest strongly in this business, building on its strong track
record.
Barclays Global Investors had an excellent first half performance. With over
US$1.1 trillion of assets under management, it continued to benefit from strong
flows of net new assets, growth in higher margin products and continued good
investment performance.
We made excellent progress relative to the economic profit performance goal for
the 2004 to 2007 period: economic profit was GBP1,054m. This was some 41% ahead
of the prior year period, and significantly exceeded the rate of growth we need
to hit our goal over time. However, although it is still early in the new goal
period, the combination of strong economic profit performance, healthy dividend
growth and an active share buy back programme, have not translated into
correspondingly strong total shareholder return: the UK banks, Barclays
included, have lagged the performance of continental European and US members of
our peer group since January.
Achieving world class productivity standards across all businesses is important
in delivering performance on a sustained basis. All our businesses are set
targets to achieve top quartile productivity and to improve continually once
this target is attained. In UK Banking, where current levels of productivity
fall short of the benchmark, we expect to deliver a two percentage point
improvement per annum in the cost:income ratio for each of the years 2005, 2006
and 2007. This should be achieved by progress on both income and in costs.
The economic outlook for the remainder of the year looks healthy. The world
economy continues to expand briskly, with the US performing strongly, the modest
recovery in the Eurozone persisting, and Asia growing well. This provides a very
helpful backdrop for the UK, where growth remains above trend and is expected to
continue to do so for the rest of the year. It is an encouraging environment for
Barclays clients and customers.
We made good progress in implementing our future leadership strategy, and we
recently announced that, with effect from 1st September 2004, Matthew Barrett
will become Chairman and John Varley Group Chief Executive.
Sir Peter Middleton Matthew W. Barrett
Chairman Group Chief Executive
CONSOLIDATED PROFIT AND LOSS ACCOUNT (UNAUDITED)
Half-year ended
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
Interest receivable 6,463 6,334 6,093
Interest payable (3,122) (2,966) (2,857)
Net interest income 3,341 3,368 3,236
Net fees and commissions receivable 2,378 2,233 2,030
Dealing profits 806 524 530
Other operating income 327 293 197
Total non-interest income 3,511 3,050 2,757
Operating income 6,852 6,418 5,993
Administration expenses - staff (2,397) (2,269) (2,026)
costs
Administration expenses - other (1,226) (1,312) (1,092)
Depreciation (140) (145) (144)
Goodwill amortisation (148) (140) (125)
Operating expenses (3,911) (3,866) (3,387)
Operating profit before provisions 2,941 2,552 2,606
Provisions for bad and doubtful
debts (589) (695) (652)
Provisions for contingent - 1 -
liabilities and commitments
Operating profit 2,352 1,858 1,954
Profit from joint ventures and
associated undertakings 14 19 10
Exceptional items 45 5 (1)
Profit on ordinary activities
before tax 2,411 1,882 1,963
Tax on profit on ordinary
activities (675) (509) (567)
Profit on ordinary activities after
tax 1,736 1,373 1,396
Minority interests: equity (20) (12) (13)
Profit for the period attributable
to the members of Barclays PLC 1,716 1,361 1,383
Dividends (528) (883) (457)
Profit retained for the financial
period 1,188 478 926
Earnings per ordinary share 26.7p 21.0p 21.3p
Fully diluted earnings per share 26.6p 20.8p 21.3p
Post tax return on average
shareholders' funds 20.4% 16.4% 17.7%
Dividends per ordinary share:
Interim 8.25p - 7.05p
Final - 13.45p -
CONSOLIDATED BALANCE SHEET (UNAUDITED)
30.06.04 31.12.03 30.06.03
Assets: GBPm GBPm GBPm
Cash and balances at central banks 1,829 1,726 1,717
Items in course of collection from 2,527 2,006 3,155
other banks
Treasury bills and other eligible bills 6,547 7,177 7,842
Loans and advances to banks - banking 17,577 17,254 14,937
- trading 59,100 44,670 52,534
76,677 61,924 67,471
Loans and advances to customers
- banking 174,180 167,858 164,912
- trading 72,893 58,961 59,447
247,073 226,819 224,359
Debt securities 117,387 97,393 100,122
Equity shares 9,365 7,859 5,157
Interests in joint ventures and 429 428 454
associated undertakings
Intangible fixed assets - goodwill 4,263 4,406 3,867
Tangible fixed assets 1,746 1,790 1,572
Other assets 22,240 23,657 23,266
490,083 435,185 438,982
Retail life-fund assets attributable to 7,911 8,077 7,642
policyholders
Total assets 497,994 443,262 446,624
Liabilities:
Deposits by banks - banking 62,905 57,641 51,357
- trading 52,931 36,451 41,844
115,836 94,092 93,201
Customer accounts - banking 162,830 155,814 153,893
- trading 43,374 29,054 44,223
206,204 184,868 198,116
Debt securities in issue 55,280 49,569 48,431
Items in course of collection due to
other banks 1,442 1,286 1,662
Other liabilities 81,741 76,374 68,869
Undated loan capital - non-convertible 6,233 6,310 6,570
Dated loan capital - convertible to
preference shares 15 17 11
Dated loan capital - non-convertible 6,220 6,012 5,972
472,971 418,528 422,832
Minority interests and shareholders'
funds:
Minority interests: equity 178 283 193
Called up share capital 1,613 1,642 1,638
Reserves 15,321 14,732 14,319
Shareholders' funds: equity 16,934 16,374 15,957
17,112 16,657 16,150
490,083 435,185 438,982
Retail life-fund liabilities 7,911 8,077 7,642
attributable to policyholders
Total liabilities and shareholders' 497,994 443,262 446,624
funds
FINANCIAL REVIEW
Results by nature of income and expense
Half-year ended
Net interest income 30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
Interest receivable 6,463 6,334 6,093
Interest payable (3,122) (2,966) (2,857)
3,341 3,368 3,236
Group net interest income increased 3% (GBP105m) to GBP3,341m (2003: GBP3,236m),
reflecting growth in balances which more than offset a 10 basis points fall in
the Group net interest margin to 2.56%. The Group net interest margin versus the
second half of 2003 was stable.
The Group net interest margin of 2.56% (2003: 2.66%) includes 0.45% (2003:
0.50%) arising from the benefit of free funds. A component of the benefit of
free funds is the structural hedge against short-term interest rate movements.
As expected, the contribution of the structural hedge has decreased to 0.16%
(2003: 0.21%) largely due to the impact of higher short term interest rates.
Group average interest earning assets increased GBP17bn to GBP261bn (2003:
GBP244bn). Domestic average interest earning assets increased GBP15bn to
GBP173bn (2003: GBP158bn). This reflected an increase of GBP9bn in Barclays
Capital and a GBP5bn increase in UK Banking. International average interest
earning assets increased GBP2bn to GBP88bn (2003: GBP86bn), primarily
attributable to the inclusion of Banco Zaragozano.
The domestic net interest margin fell 24 basis points to 3.43% (2003: 3.67%),
with a significant majority of the move attributable to the increased proportion
of wholesale assets in the domestic balance sheet and the impact of the
structural hedge. The remainder reflected increased margins in retail savings
and UK Business Banking lending, which were broadly offset by a decline in
mortgage and credit card margins as a result of interest rate rises.
The international net interest margin improved by 5 basis points to 0.85% (2003:
0.80%) largely due to a change in the mix, in particular in the Barclays Capital
portfolio.
The Group net interest margin was impacted by the factors described above with
the reduction partially mitigated by an increase in the proportion of domestic
interest earning assets.
Yields, spreads and margins - banking business1
Half-year ended
30.06.04 31.12.03 30.06.03
Gross yield2 % % %
Group 4.95 4.84 5.00
Domestic 5.63 5.40 5.75
International 3.62 3.85 3.64
Interest spread3
Group 2.26 2.29 2.37
Domestic 3.04 3.28 3.29
International 0.78 0.64 0.72
Interest margin4
Group 2.56 2.57 2.66
Domestic 3.43 3.61 3.67
International 0.85 0.74 0.80
Average UK base rate 4.06 3.59 3.80
1 Domestic business is conducted primarily in the UK in Sterling. International
business is conducted primarily in foreign currencies. In addition to the
business carried out by overseas branches and subsidiaries, some international
business is transacted in the UK by Barclays Capital.
The yields, spreads, and margins shown above exclude non-margin related items,
including profits and losses on the repurchase of loan capital and the unwinding
of the discount on vacant leasehold property provisions.
2 Gross yield is the interest rate earned on average interest earning assets.
3 Interest spread is the difference between the interest rate earned on average
interest earning assets and the interest rate paid on average interest bearing
liabilities.
4 Interest margin is net interest income as a percentage of average interest
earning assets.
Average interest earning assets and liabilities - banking business
Half-year ended
30.06.04 31.12.03 30.06.03
Average interest earning assets GBPm GBPm GBPm
Group 261,310 261,807 243,668
Domestic 172,823 167,303 157,565
International 88,487 94,504 86,103
Average interest bearing liabilities
Group 232,638 232,850 216,707
Domestic 146,413 141,082 132,796
International 86,225 91,768 83,911
Net fees and commissions
Half-year ended
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
Fees and commissions receivable 2,720 2,598 2,298
Less: fees and commissions payable (342) (365) (268)
2,378 2,233 2,030
Group net fees and commissions increased 17% (GBP348m) to GBP2,378m (2003:
GBP2,030m), reflecting increases in all businesses.
Fees and commissions receivable rose 18% to GBP2,720m (2003: GBP2,298m) driven
by increases in: Barclays Global Investors, reflecting very strong business
growth; Barclays Capital, consequent on improved client activity; and Private
Clients, as a result of stronger business volumes and better market levels as
well as the impact of acquisitions. Strong growth was also achieved in UK
Banking and in Barclaycard.
Fees and commissions payable increased 28% to GBP342m (2003: GBP268m). This was
primarily driven by an increase in fees and commissions payable in Barclaycard,
reflecting higher business volumes in cards and loans.
Dealing profits
Half-year ended
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
Rates related business 698 460 449
Credit related business 108 64 81
806 524 530
Almost all the Group's dealing profits are generated in Barclays Capital.
Dealing profits grew 52% to GBP806m (2003: GBP530m) with very strong
performances in the Rates and Credit businesses. This was driven by higher
volumes of client led activity across a broad range of products, the benefits of
recent headcount investments in product depth and geographical reach and
reflected the level of average Daily Value at Risk (DVaR). The very strong
growth in the Rates businesses was across fixed income, equity related
activities and commodities. The performance in the Credit businesses reflected
an increase in the contribution from credit derivatives.
Total foreign exchange income was GBP260m (2003: GBP277m) and consisted of
revenues earned from both retail and wholesale activities. The foreign exchange
income earned on customer transactions by UK Banking, Private Clients and
International and Barclaycard, both externally and within Barclays Capital, is
reported in those business units, within fees and commissions.
Other operating income
Half-year ended
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
Premium income on insurance
underwriting 128 156 108
Profits on disposal of investment
securities 67 18 55
Income from the long term assurance
business (3) (2) (31)
Property rentals 5 6 9
Dividend income from equity shares 6 3 3
Other income 124 112 53
327 293 197
Other operating income increased 66% (GBP130m) to GBP327m (2003: GBP197m).
Income on insurance underwriting rose by GBP20m to GBP128m (2003: GBP108m) as a
result of income from increased consumer lending activities and a favourable
claims experience.
The increase in profits on disposal of investment securities and other income
includes the effects of realisations in the private equity business and in
structured capital markets within Barclays Capital.
Virtually all of the Group's long term assurance activity is based in the UK.
This UK business, which closed to new business following the formation of the
strategic alliance with Legal and General in 2001, was the main contributor to
the loss of GBP3m for the first half of 2004 and the losses experienced in 2003.
The result for 2004 included costs of redress for customer claims in respect of
endowment policies of GBP33m (2003: GBP50m).
Operating expenses
The Group manages core costs on the basis of three specific categories: business
as usual, revenue related and strategic investment. Revenue related costs are
costs that are directly associated with a corresponding change in revenue or
profits. Strategic investment costs are costs that can generate or enable new
revenue streams or definable growth in a revenue stream, or generate or enable
reduced costs. Acquisition and disposal costs are those expenses incurred in
2004 or 2003 by those businesses that were purchased or sold by the group in
2004 or 2003. Restructuring costs and goodwill amortisation are reported
separately.
The Group's expenses are summarised in the following table:
Half-year ended
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
Business as usual costs 2,755 2,744 2,572
Revenue related costs 596 528 454
Strategic investment costs 216 247 145
Acquisitions and disposals 132 72 17
Restructuring costs 64 135 74
Goodwill amortisation 148 140 125
3,911 3,866 3,387
Operating expenses rose 15% (GBP524m) to GBP3,911m (2003: GBP3,387m). Against
the second half of 2003 operating expenses were up 1% (GBP45m).
Business as usual costs increased 7% (GBP183m) to GBP2,755m (2003: GBP2,572m),
reflecting higher business volumes and increased investment. In addition, costs
associated with the implementation of regulatory and legislative programmes,
including Mortgages and General Insurance, International Financial Reporting
Standards, Basel II and Sarbanes Oxley, represented GBP41m of the increase.
Revenue related costs rose 31% (GBP142m) to GBP596m (2003: GBP454m) driven
largely by increased performance related payments primarily in Barclays Capital
and Barclays Global Investors.
Strategic investment costs increased 49% (GBP71m) to GBP216m (2003: GBP145m).
This reflected increased spend in Barclays Capital, due to the impact of
continued investment in product, client coverage and distribution capabilities,
and, in UK Retail Banking, reflecting investment in the business infrastructure.
Acquisitions and disposals costs reflect the acquisitions of Charles Schwab
Europe, Clydesdale Financial Services, Banco Zaragozano and Gerrard in 2003.
Administrative expenses - staff costs
Half-year ended
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
Salaries and accrued incentive
payments 1,954 1,810 1,631
Social security costs 167 148 130
Pension costs 75 83 97
Post-retirement health care 10 10 9
Other staff costs 191 218 159
2,397 2,269 2,026
30.06.04 31.12.03 30.06.03
Number of staff at period end:
UK Banking 40,700 41,000 42,300
UK Retail Banking 33,500 34,000 35,100
UK Business Banking 7,200 7,000 7,200
Private Clients and International 19,100 19,000 17,000
Private Clients 7,100 6,900 6,200
International 12,000 12,100 10,800
Barclaycard 6,600 6,200 5,900
Barclays Capital 6,900 5,800 5,500
Barclays Global Investors 1,900 2,000 2,000
Head office functions and other
operations 1,000 800 900
Total Group permanent and contract
staff worldwide 76,200 74,800 73,600
Temporary and agency staff worldwide 5,600 4,100 3,800
Total including temporary and agency 81,800 78,900 77,400
staff
Staff costs increased by 18% (GBP371m) to GBP2,397m (2003: GBP2,026m).
Salaries and accrued incentive payments rose by 20% (GBP323m) to GBP1,954m
(2003: GBP1,631m) principally reflecting increased performance related payments
primarily within Barclays Capital and Barclays Global Investors, the impact of
the businesses acquired in 2003 and increased headcount.
Pension costs comprise all UK and international pension schemes. Included in the
costs is the charge of GBP53m (2003: GBP73m) in respect of the Group's main UK
pension schemes.
Staff numbers shown are on a full time equivalent basis. United Kingdom
permanent and contract staff are 58,900 (31st December 2003: 58,000; 30th June
2003: 58,300).
During the first half of 2004, permanent and contract staff increased by 1,400.
The implementation of restructuring programmes resulted in a decrease of 1,100
staff, but this was more than offset by the recruitment of additional staff
throughout the Group. Significant areas of recruitment were Barclays Capital, to
support the expansion of their business, and Barclaycard through the growth of
Barclaycard International and the addition of front office staff to improve
customer service in Barclaycard UK.
Head office functions and other operations includes staff undertaking activities
which support the operating business and provide central information technology
services and their costs are predominantly passed onto the businesses.
Administrative expenses - other
Half-year ended
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
Property and equipment expenses 494 583 510
Other administrative expenses 732 729 582
1,226 1,312 1,092
Administrative expenses - other rose by 12% (GBP134m) to GBP1,226m (2003:
GBP1,092m) as a result of increased outsourcing, higher business activity and
the impact of acquisitions.
Depreciation
Half-year ended
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
Property depreciation 42 48 45
Equipment depreciation 97 99 97
Loss/(profit) on sale of equipment 1 (2) 2
140 145 144
Provisions for bad and doubtful debts
Half-year ended
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
The provisions charge for the period
in respect of bad and doubtful debts
comprises:
Specific provisions
New and increased 836 857 771
Releases (56) (125) (70)
Recoveries (115) (51) (62)
665 681 639
General provision (release) / charge (76) 14 13
Net charge 589 695 652
Total provisions balances for bad
and doubtful
debts at end of the period comprise:
Specific provisions 2,223 2,233 2,261
General provisions 713 795 752
2,936 3,028 3,013
The provisions charge decreased 10% (GBP63m) to GBP589m (2003: GBP652m) due to
lower provisions charges in the corporate and wholesale businesses which
reflected a fall in non-performing loans and potential problem loans. As a
percentage of average banking loans and advances, the annualised provisions rate
decreased to 0.60% (2003: 0.71%).
The provisions charge was higher in the retail businesses at GBP412m (2003:
GBP393m). The increase occurred mainly in Barclaycard, following high levels of
new customer recruitment. The annualised retail provisions rate remained broadly
stable at 0.92% of loans and advances (2003: 0.90%).
The provisions charge decreased significantly in the corporate and wholesale
businesses, declining to GBP177m (2003: GBP260m). Barclays Capital provisions
fell significantly. The annualised wholesale provisions rate improved to 0.34%
of loans and advances (2003: 0.54%).
Total provisions balances declined slightly. Specific provisions balances were
flat, but the general provisions balance decreased 10% from December 2003. The
decline in the general provisions balance largely relates to the restructuring
of an individual corporate exposure, where a general provision was transferred
to new specific provisions. This individual transfer had no effect on the net
provisions charge.
Profit from joint ventures and associated undertakings
Half-year ended
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
(Loss)/profit from joint ventures (2) 1 -
Profit from associated undertakings 16 18 10
14 19 10
The majority of the profit from associated undertakings for the year relates to
the investment in FirstCaribbean.
Exceptional items
Half-year ended
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
Profit on disposal of associated
undertakings 44 - -
Profit / (loss) on disposal of 1 5 (1)
Group undertakings
45 5 (1)
The profit on disposal relates mainly to the sale of Edotech, an investment in a
management buy out of the former Barclays in-house statement printing operation.
Tax rate
The charge for the period is based upon a UK corporation tax rate of 30% for the
calendar year 2004 (full year 2003: 30%). The effective rate of tax for the
first half of 2004 was 28.0 % (2003: 28.9%). This is lower than the standard
rate primarily due to the beneficial effects of lower tax on overseas income.
Earnings per ordinary share
Half-year ended
30.06.04 31.12.03 30.06.03
Profit for the financial year
attributable to the members of Barclays
PLC GBP1,716m GBP1,361m GBP1,383m
Weighted average number of ordinary
shares in issue 6,421m 6,477m 6,488m
Dilutive effect of share options
outstanding 31m 31m 17m
Diluted weighted average number of
shares 6,452m 6,508m 6,505m
p p p
Earnings per ordinary share 26.7 21.0 21.3
Fully diluted earnings per ordinary 26.6 20.8 21.3
share
Dividends on ordinary shares
The Board has decided to pay, on 1st October 2004, an interim dividend for the
six months ended 30th June 2004 of 8.25p per ordinary share, for shares
registered in the books of the Company at the close of business on 20th August
2004. 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 2004.
For qualifying US and Canadian resident ADR holders, the interim dividend of
8.25p per ordinary share becomes 33.0p per ADS (representing four shares). The
ADR depositary will mail the dividend on 1st October 2004 to ADR holders on the
record on 20th August 2004.
For qualifying Japanese shareholders, the interim dividend of 8.25p per ordinary
share will be distributed in mid-October to shareholders on the record on 20th
August 2004.
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, The Causeway, Worthing BN99 6DA; or by phoning 0870
609 4535. The completed form should be returned to The Plan Administrator on or
before 10th September 2004 for it to be effective in time for the payment of the
interim dividend on 1st October 2004. 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.
Balance Sheet
Capital resources
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
Shareholders' funds 16,934 16,374 15,957
Minority interests 178 283 193
17,112 16,657 16,150
Loan capital 12,468 12,339 12,553
29,580 28,996 28,703
Total capital resources increased in the half-year by GBP584m.
Equity shareholders' funds increased by GBP560m, reflecting profit retentions of
GBP1,188m, net proceeds of share issues of GBP22m and gains arising from
transactions with third parties which are reflected in the statement of
recognised gains and losses of GBP20m, offset by share repurchases of GBP600m
(and a further GBP5m of costs), an increase in treasury shares of GBP22m and
exchange rate losses of GBP43m.
Loan capital rose by GBP129m reflecting raisings of GBP769m, partially offset by
redemptions of GBP401m, exchange rate movements of GBP238m and amortisation of
issue expenses of GBP1m.
Capital ratios
Weighted risk assets and capital resources, as defined for supervisory purposes
by the Financial Services Authority, comprise:
30.06.04 31.12.03 30.06.03
Weighted risk assets: GBPm GBPm GBPm
Banking book
on-balance sheet 138,021 133,816 131,320
off-balance sheet 23,894 22,987 22,358
Associated undertakings and joint
ventures 3,386 2,830 2,777
Total banking book 165,301 159,633 156,455
Trading book
Market risks 20,338 13,861 11,336
Counterparty and settlement risks 17,694 15,503 13,623
Total trading book 38,032 29,364 24,959
Total weighted risk assets 203,333 188,997 181,414
Capital resources:
Tier 1
Called up share capital 1,613 1,642 1,638
Eligible reserves 15,245 14,657 14,288
Minority interests - equity 571 637 592
Reserve capital instruments 1 1,656 1,705 1,783
Tier one notes 1 951 960 1,005
Less: goodwill (4,427) (4,607) (4,084)
Total qualifying tier 1 capital 15,609 14,994 15,222
Tier 2
Revaluation reserves 25 25 23
General provisions 713 795 752
Qualifying subordinated liabilities
2
Undated loan capital 3,595 3,636 3,750
Dated loan capital 5,773 5,652 5,448
Other 2 2 1
Total qualifying tier 2 capital 10,108 10,110 9,974
Tier 3: short term subordinated
liabilities2 267 280 441
Less: Supervisory deductions
Investments not consolidated for
Supervisory purposes 3 (923) (979) (1,363)
Other deductions (343) (182) (247)
(1,266) (1,161) (1,610)
Total net capital resources 24,718 24,223 24,027
% % %
Equity Tier 1 ratio4 6.4 6.5 6.9
Tier 1 ratio 7.7 7.9 8.4
Risk asset ratio 12.2 12.8 13.2
1 Reserve capital instruments (RCIs) and tier one notes (TONs) are included in
the undated loan capital in the consolidated balance sheet.
2 Subordinated liabilities are included in tiers 2 or 3, subject to limits laid
down in the supervisory requirements. Barclays retains significant capacity to
raise additional capital within these limits.
3 Includes GBP436m (31st December 2003: GBP478m; 30th June 2003: GBP799m) of
shareholders' interest in the retail life fund.
4 Equity defined as total qualifying tier 1 capital less RCIs and TONs.
Net capital resources grew 2% (GBP0.5bn). Tier 1 capital rose by GBP0.6bn with
retained profits of GBP1.2bn being partially offset by share repurchases of
GBP0.6bn. Tier 2 and tier 3 capital remained broadly as reported at 31st
December 2003. Supervisory deductions increased by GBP0.1bn.
Growth in net capital resources was more than offset by the impact of 8% growth
(GBP14.3bn) in weighted risk assets. The increase in weighted risk assets is
primarily accounted for by a rise of 30% (GBP8.7bn) in the Trading book. Banking
book weighted risk assets grew 4% (GBP5.7bn).
The risk asset ratio was 12.2% (31st December 2003: 12.8%). The Tier 1 ratio was
7.7% (31st December 2003: 7.9%). The Equity Tier 1 ratio was 6.4% (31st December
2003: 6.5%).
Total assets and Weighted risk assets
The Group's balance sheet increased 12% (GBP54.7bn) to GBP498.0bn (31st December
2003: GBP443.3bn). Weighted risk assets increased 8% (GBP14.3bn) to GBP203.3bn
(31st December 2003: GBP189.0bn).
UK Banking total assets increased 3% to GBP114.7bn (31st December 2003:
GBP111.0bn). Weighted risk assets increased 4% to GBP87.5bn (31st December 2003:
GBP84.5bn).
UK Retail Banking total assets increased 1% to GBP67.5bn (31st December 2003:
GBP67.0bn) and weighted risk assets increased 2% to GBP36.5bn (31st December
2003: GBP35.8bn). This was mainly attributable to the growth in the UK
residential mortgage portfolio, up 2% to GBP60.8bn (31st December 2003:
GBP59.8bn).
UK Business Banking total assets increased 7% to GBP47.2bn (31st December 2003:
GBP44.0bn) and weighted risk assets increased 5% to GBP51.0bn (31st December
2003: GBP48.6bn). This resulted from good growth in lending balances.
Private Clients & International total assets (excluding the assets of the closed
life assurance activities) increased 5% to GBP27.3bn (31st December 2003:
GBP26.0bn), due to growth of customer loans in Iberia. Weighted risk assets
increased 15% to GBP20.9bn (31st December 2003: GBP18.2bn), mainly reflecting
growth in customer loans in Spain and Africa.
Barclaycard total assets increased 2% to GBP20.7bn (31st December 2003:
GBP20.3bn). Weighted risk assets increased 1% to GBP18.4bn (31st December 2003:
GBP18.3bn).
Barclays Capital total assets increased 18% to GBP317.0bn (31st December 2003:
GBP268.7bn) due to increases in government and high grade corporate debt
securities, settlement balances and reverse repos. Total settlement balances
increased GBP15.9bn reflecting higher volumes of government debt trading at the
period end. Total weighted risk assets increased 12% to GBP72.7bn (31st December
2003: GBP65.1bn), reflecting the higher quality and lower risk weightings
associated with the balance sheet growth.
Results by business
The following section analyses the Group's performance by business. From 1st
January 2004, for reporting purposes, Barclays has been organised into the
following business groupings:
- UK Banking, comprising
- UK Retail Banking
- UK Business Banking
- Private Clients and International, comprising
- Private Clients
- International
- Barclaycard
- Wholesale and Institutional, comprising
- Barclays Capital
- Barclays Global Investors
The Group restructure has had no impact on the Group profit and loss account as
reported in the 2003 Annual Report.
The analysis of results by business excludes goodwill amortisation and
exceptional items.
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 groupings, UK Retail Banking and UK Business Banking.
UK Retail Banking
UK Retail Banking comprises Personal Customers, mortgages, Small Business and UK
Premier. The bringing together of these businesses provides the opportunity to
build broader and deeper relationships with both existing and new customers.
Personal Customers and mortgages provide a wide range of products and services
to over 14 million retail customers, including current accounts, savings,
mortgages, and general insurance. Small Business provides banking services to
over 565,000 small businesses. UK Premier provides banking, investment products
and advice to some 270,000 mass 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.
Private Clients and International
Private Clients and International brings together Barclays wealth management
operations and the Group's non-domestic retail and commercial banking
activities. It is managed as two distinct businesses; Private Clients which
serves affluent and high net worth clients; and International which provides
banking services to personal and corporate customers internationally.
Private Clients
Private Clients serves affluent and high net worth clients, primarily in the UK
and continental Europe, providing private banking, offshore banking,
stockbroking and asset management services, as well as providing financial
planning services to a broader customer base. It comprises the following ongoing
businesses: International Banking, Private Banking, Barclays Financial Planning,
Barclays Stockbrokers and the Gerrard business which was acquired in December
2003.
International
International provides a range of banking services, including current accounts,
savings, investments mortgages and consumer loans to personal and corporate
customers across Spain, Portugal, France, Italy, Africa and the Middle East.
International also includes the results of the FirstCaribbean business,
accounted for as an associated undertaking.
Barclaycard
Barclaycard is one of the leading credit card businesses in Europe. Barclaycard
now incorporates all of the Group's UK unsecured and card lending products and
expertise. Barclaycard works closely with the UK Retail Banking business to
leverage the branch distribution capability. In addition to its operations in
the United Kingdom, Barclaycard is active in Germany, Spain, Greece, France,
Italy, Portugal, the Republic of Ireland and across Africa.
Wholesale and Institutional - Barclays Capital
Barclays Capital is the investment banking division of Barclays, providing large
corporate, institutional and government clients with solutions to their
financing and risk management needs.
The Barclays Capital business model focuses on a broad span of financing and
risk management services in the interest rate, foreign exchange, commodities and
credit markets combined with certain capabilities in equities. Activities are
divided between two areas: Rates, which includes fixed income, foreign exchange,
commodities, emerging markets, money markets sales, trading and research, prime
brokerage and equity related activities; and Credit, which includes origination,
sales, trading and research relating to loans, debt capital markets, structured
capital markets, commercial mortgage backed securities, private equity and large
asset leasing.
Wholesale and Institutional - 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 product leader in Exchange Traded
Funds (iShares), with over 100 funds for institutions and individuals trading in
ten global markets. BGI's investment philosophy is founded on managing all
dimensions of performance - a consistent focus on controlling risk, return and
cost.
SUMMARY OF RESULTS (UNAUDITED)
RECONCILIATION OF PROFIT BEFORE TAX EXCLUDING GOODWILL AMORTISATION AND
EXCEPTIONAL ITEMS
Half-year ended
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
UK Banking 1,217 1,137 1,149
UK Retail Banking 588 569 582
UK Business Banking 629 568 567
Private Clients and International 196 151 129
Private Clients - ongoing business 81 40 58
- closed life assurance
activities (29) (32) (48)
International 144 143 119
Barclaycard 428 374 387
Barclays Capital 599 398 438
Barclays Global Investors 157 100 91
Head office functions and other operations (80) (139) (102)
Profit before tax excluding goodwill
amortisation and exceptional items 2,517 2,021 2,092
Goodwill amortisation (148) (140) (125)
Goodwill relating to associated undertakings (3) (4) (3)
Exceptional items 45 5 (1)
Profit before tax 2,411 1,882 1,963
TOTAL ASSETS AND WEIGHTED RISK ASSETS
Total assets Weighted risk assets
30.06.04 31.12.03 30.06.03 30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm GBPm GBPm GBPm
UK Banking 114,683 110,995 109,529 87,506 84,482 83,062
UK Retail Banking 67,502 67,001 66,415 36,458 35,835 36,022
UK Business Banking 47,181 43,994 43,114 51,048 48,647 47,040
Private Clients and
International 27,794 26,492 21,170 20,924 18,184 15,556
Private Clients -
ongoing 4,426 3,867 4,072 3,632 3,238 2,968
- closed life 480 528 872 - 2 16
International 22,888 22,097 16,226 17,292 14,944 12,572
Barclaycard 20,689 20,348 19,054 18,404 18,334 17,571
Barclays Capital 317,027 268,702 279,963 72,715 65,149 62,082
Barclays Global
Investors 706 533 607 1,004 1,137 1,083
Head office functions
and other operations 4,921 3,709 4,792 2,780 1,711 2,060
Goodwill 4,263 4,406 3,867 - - -
Retail life-fund assets 7,911 8,077 7,642 - - -
497,994 443,262 446,624 203,333 188,997 181,414
UK Banking Half-year ended
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
Net interest income 1,691 1,667 1,634
Net fees and commissions 957 926 881
Other operating income 134 217 180
Operating income 2,782 2,810 2,695
Operating expenses excluding goodwill (1,418) (1,510) (1,393)
Operating profit before provisions
excluding goodwill 1,364 1,300 1,302
Provisions for bad and doubtful debts (152) (169) (157)
Operating profit excluding goodwill 1,212 1,131 1,145
Profit from associated undertakings 5 6 4
Profit on ordinary activities before
tax excluding goodwill and exceptional
items 1,217 1,137 1,149
Cost:income ratio 51% 54% 52%
Total assets GBP114.7bn GBP111.0bn GBP109.5bn
Weighted risk assets GBP87.5bn GBP84.5bn GBP83.1bn
Risk Tendency GBP360m GBP385m GBP420m
Return on average economic capital 40% 33% 35%
Economic profit GBP666m GBP535m GBP588m
UK Banking delivered profitable growth notwithstanding significant investment in
infrastructure.
The formation of UK Banking provides more integrated banking solutions to
customers and enables opportunities to streamline back office and support
functions.
UK Banking profit before tax excluding goodwill and exceptional items increased
6% (GBP68m) to GBP1,217m (2003: GBP1,149m). Operating income increased 3%
(GBP87m) to GBP2,782m (2003: GBP2,695m) reflecting good growth in fees and
commissions, whilst operating expenses excluding goodwill increased 2% (GBP25m)
to GBP1,418m (2003: GBP1,393m).
UK Retail Banking
Half-year ended
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
Net interest income 1,013 1,003 997
Net fees and commissions 566 550 524
Other operating income 131 204 161
Operating income 1,710 1,757 1,682
Operating expenses excluding goodwill (1,063) (1,147) (1,041)
Operating profit before provisions
excluding goodwill 647 610 641
Provisions for bad and doubtful debts (62) (45) (62)
Operating profit excluding goodwill 585 565 579
Profit from associated undertakings 3 4 3
Profit on ordinary activities before
tax excluding goodwill and exceptional
items 588 569 582
Cost:income ratio 62% 65% 62%
Loans and advances to customers -
banking (period end) GBP64.3bn GBP63.2bn GBP63.0bn
Customer deposits - banking (period
end) GBP70.7bn GBP69.5bn GBP67.6bn
Total assets GBP67.5bn GBP67.0bn GBP66.4bn
Weighted risk assets GBP36.5bn GBP35.8bn GBP36.0bn
Risk Tendency GBP150m GBP150m GBP185m
Return on average economic capital 42% 34% 39%
Economic profit GBP344m GBP268m GBP328m
Key Facts
Personal Customers
Number of UK current accounts 10.6m 10.5m 10.6m
Number of UK savings accounts 10.5m 10.3m 10.7m
Total UK mortgage balances
(residential) GBP60.8bn GBP59.8bn GBP59.0bn
Small Business and UK Premier
Number of Small Business customers 567,000 561,000 561,000
Number of UK Premier customers 269,000 265,000 272,000
UK Openplan
Number of UK Openplan customers 2.8m 2.6m 2.4m
Total UK Openplan savings balances GBP21.5bn GBP21.6bn GBP20.6bn
Total UK Openplan mortgage balances
(residential) GBP31.5bn GBP28.7bn GBP26.2bn
Most of the businesses within UK Retail Banking delivered solid income growth
during the first half of the year. However, the results were significantly
impacted by margin pressure in the mortgage business and lower mortgage
redemption income. The level of investment in the infrastructure of this
business to improve customer service increased significantly and good progress
has been made in recruiting the targeted additional 1,000 front-line staff. Risk
metrics remained stable, while the quality of the loan portfolio has been
maintained.
UK Retail Banking profit before tax excluding goodwill and exceptional items
increased 1% (GBP6m) to GBP588m (2003: GBP582m). There was steady income growth
partly offset by cost growth which included a significant increase in investment
spend. The risk position remained stable.
Operating income increased 2% (GBP28m) to GBP1,710m (2003: GBP1,682m). Net
revenue (operating income less provisions) increased 2% (GBP28m) to GBP1,648m
(2003: GBP1,620m).
Net interest income increased 2% (GBP16m) to GBP1,013m (2003: GBP997m). Growth
was driven by higher customer deposit balances, and an increase in the margin
associated with the savings business. Income attributable to growth in average
UK mortgage balances was more than offset by margin pressure.
A selective approach to the mortgage market has been maintained. Average UK
residential mortgage balances increased 3% to GBP60.6bn (2003: GBP58.6bn). Gross
advances were GBP9.2bn (2003: GBP8.8bn) and net lending was GBP1.0bn (2003:
GBP1.2bn). UK residential mortgage balances ended the period at GBP60.8bn (31st
December 2003: GBP59.8bn). The loan to value ratio within the mortgage book on a
current valuation basis averaged 38% (2003: 40%). Average overdraft balances
within Personal Customers increased by 8%.
Average customer deposit balances increased 5% to GBP67.5bn (2003: GBP64.0bn).
There was good growth in both UK Premier and Small Business balances. Personal
Customer current account balances increased 10% whilst retail savings balances
were maintained in highly competitive market conditions.
Openplan customer numbers totalled 2.8m (2003: 2.4m). Mortgage balances
increased 20% to GBP31.5bn (2003: GBP26.2bn) and savings balances increased 4%
(GBP0.9bn) to GBP21.5bn (2003: GBP20.6bn).
Net fees and commissions increased 8% (GBP42m) to GBP566m (2003: GBP524m),
driven by a good performance in Personal Customers, including value-added
fee-based current accounts.
Other operating income decreased by 19% (GBP30m) to GBP131m (2003: GBP161m). The
prior period included income from a revision of the estimated amounts expected
to be repaid on banking liabilities. The absence of this income in the period
has been partly offset by an increase in income arising from general insurance
activities.
Operating expenses rose 2% (GBP22m) to GBP1,063m (2003: GBP1,041m). Cost growth
was due primarily to increased investment in the infrastructure of the business
and costs associated with preparations for complying with the new regulatory
environment in the mortgage and general insurance businesses. The cost:income
ratio was maintained at 62%.
Provisions remained stable at GBP62m (2003: GBP62m). The quality of the loan
portfolio has been maintained and mortgage arrears balances remained low over
the period.
UK Business Banking Half-year ended
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
Net interest income 678 664 637
Net fees and commissions 391 376 357
Other operating income 3 13 19
Operating income 1,072 1,053 1,013
Operating expenses excluding goodwill (355) (363) (352)
Operating profit before provisions 717 690 661
excluding goodwill
Provisions for bad and doubtful debts (90) (124) (95)
Operating profit excluding goodwill 627 566 566
Profit from associated undertakings 2 2 1
Profit on ordinary activities before
tax excluding goodwill and exceptional
items 629 568 567
Cost:income ratio 33% 34% 35%
Loans and advances to customers -
banking (period end) GBP44.7bn P41.4bn P40.0bn
Customer deposits - banking (period
end) GBP42.4bn GBP38.5bn GBP37.7bn
Total assets GBP47.2bn GBP44.0bn GBP43.1bn
Weighted risk assets GBP51.0bn GBP48.6bn GBP47.0bn
Risk Tendency GBP210m GBP235m GBP235m
Return on average economic capital 39% 31% 31%
Economic profit GBP322m GBP267m GBP260m
Key Facts
Total number of Business Banking
customers 179,000 177,000 175,000
Customers registered for online banking
/BusinessMaster 66,800 63,500 59,300
UK Business Banking maintained its momentum, with good growth in both lending
and deposit balances. Both Larger Business and Medium Business continued to
perform well. Market shares of primary banking relationships for Larger Business
and Medium Business were maintained at 26% and 25% respectively.
UK Business Banking profit before tax excluding goodwill increased 11% (GBP62m)
to GBP629m (2003: GBP567m), as a result of good income growth, tight cost
management and well controlled risk.
Operating income increased 6% (GBP59m) to GBP1,072m (2003: GBP1,013m). Net
revenue (operating income less provisions) increased 7% (GBP64m) to
GBP982m(2003: GBP918m).
Net interest income increased 6% (GBP41m) to GBP678m (2003: GBP637m), as a
result of good balance sheet growth. Average lending balances increased 8% to
GBP42.7bn (2003: GBP39.4bn). Average deposit balances increased 9% to GBP40.4bn
(2003: GBP37.1bn). The lending margin remained firm, whilst there was some
downward pressure on the deposit margin.
Net fees and commissions increased 10% (GBP34m) to GBP391m (2003: GBP357m),
driven by lending related fees which rose strongly and accompanied the growth in
balances.
Operating expenses increased 1% (GBP3m) to GBP355m (2003: GBP352m). Business as
usual costs were well controlled, remaining flat despite higher business
volumes. Strategic investment was focused on improving direct channels and
shared technology infrastructure. The cost:income ratio improved to 33% (2003:
35%).
Provisions decreased 5% (GBP5m) to GBP90m (2003: GBP95m) notwithstanding the
good growth in lending. The overall quality of the portfolio remained stable
with total potential credit risk loans balances lower than the year end
position.
Private Clients and International
Half-year ended
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
Net interest income 409 410 339
Net fees and commissions 416 364 319
Other operating income 25 24 12
Operating income 850 798 670
Operating expenses excluding goodwill (619) (608) (488)
Operating profit before provisions
excluding goodwill 231 190 182
Provisions for bad and doubtful debts (19) (22) (14)
Operating profit excluding goodwill -
ongoing business 212 168 168
Profit from associated undertakings 13 15 9
Profit on ordinary activities before
tax excluding goodwill and exceptional
items - ongoing business 225 183 177
Contribution from closed life
assurance activities (29) (32) (48)
Profit on ordinary activities before
tax excluding goodwill and exceptional
items 196 151 129
Cost:income ratio 73% 76% 73%
Total assets GBP27.8bn GBP26.5bn GBP21.2bn
Weighted risk assets GBP20.9bn GBP18.2bn GBP15.6bn
Risk Tendency GBP80m GBP75m GBP50m
Return on average economic capital 21% 25% 17%
Economic profit GBP93m GBP91m GBP38m
The improved performance reflects good growth in both the Private Clients and
International businesses, supported by improving market conditions, together
with the benefits of the acquisitions made in 2003 and the reduced deficit from
the closed life assurance business.
Private Clients and International profit before tax excluding goodwill and
exceptional items, increased 52% (GBP67m) to GBP196m (2003: GBP129m).
Private Clients
Half-year ended
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
Net interest income 148 148 140
Net fees and commissions 261 206 188
Other operating income 3 1 3
Operating income 412 355 331
Operating expenses excluding goodwill (331) (314) (271)
Operating profit before provisions
excluding goodwill 81 41 60
Provisions for bad and doubtful debts - (1) (2)
Profit on ordinary activities before
tax excluding goodwill and exceptional
items - ongoing business 81 40 58
Contribution from closed life assurance
activities (29) (32) (48)
Profit on ordinary activities before
tax excluding goodwill and exceptional
items 52 8 10
Cost:income ratio 80% 88% 82%
Loans and advances to customers -
banking (period end) GBP3.6bn GBP3.1bn GBP3.0bn
Customer deposits - banking (period
end) GBP20.4bn GBP20.2bn GBP20.8bn
Total assets - ongoing business GBP4.4bn GBP3.9bn GBP4.1bn
Weighted risk assets - ongoing business GBP3.6bn GBP3.2bn GBP3.0bn
Risk Tendency GBP5m GBP5m GBP5m
Return on average economic capital 29% 34% 8%
Economic profit - ongoing business GBP64m GBP45m GBP39m
Key Facts
Total customer funds GBP75bn GBP75bn GBP62bn
Average stockbroking deal volumes per
day 8,300 9,400 7,000
The comparison with the prior period is affected by acquisitions made during
2003. The retail stockbroking business Charles Schwab Europe was acquired at the
end of January and the Gerrard business in mid December.
The improved performance reflected growth across the Private Clients businesses,
supported by the improvements in the market environment. The integration of
Charles Schwab Europe is now complete and the integration of Gerrard is
progressing well.
Private Clients profit before tax excluding goodwill and exceptional items for
the ongoing business increased 40% (GBP23m) to GBP81m (2003: GBP58m).
Operating income increased 24% (GBP81m) to GBP412m (2003: GBP331m).
Net interest income increased 6% (GBP8m) to GBP148m (2003: GBP140m). Total
average customer deposits remained flat at GBP20.5bn (2003: GBP20.6bn) and total
average loans increased 21% to GBP3.4bn (2003: GBP2.8bn). Good growth in
offshore corporate deposits and loans reflected the success of investment in
relationship managers and internet based offerings. Margins remained stable.
Net fees and commissions increased 39% (GBP73m) to GBP261m(2003: GBP188m).
Excluding the contribution from Gerrard, net fees and commissions increased 11%.
Business volumes improved as higher average equity market levels contributed to
increased sales of investment products and higher fund management fees.
The average level of the FTSE 100 Index was 16% higher than in the prior year
period at 4,468 (2003: 3,844). Stockbroking fee income increased 16% during the
first half of 2004, reflecting improved volumes. Average daily deal volumes in
UK retail stockbroking, including Charles Schwab Europe, increased to 8,300
(2003: 7,000). Fee income in Private Banking increased 13%, reflecting higher
volumes and asset management fees. Activity levels moderated somewhat towards
the end of the period as the momentum in the equity markets slowed.
Operating expenses increased 22% (GBP60m) to GBP331m (2003: GBP271m). Excluding
the contribution from Gerrard, operating expenses increased 3%. The cost:income
ratio improved to 80% (2003: 82%).
Total customer funds, comprising customer deposits and assets under management
(including assets managed by Legal & General under the strategic alliance),
remained flat at GBP75bn (31st December 2003: GBP75bn). Growth in new business
was offset by unfavourable exchange rate movements. Stock market levels remained
broadly flat during the period. Private Clients customer deposits remained
stable at GBP20bn (31st December 2003: GBP20bn).
The integration of Gerrard is progressing well. The business delivered a strong
performance with operating profit higher than in the first half of 2003,
supported by income growth of 10%.
The contribution from the closed life assurance activities, a loss of GBP29m
(2003: loss of GBP48m), comprises the embedded value of the closed Barclays Life
fund together with the costs of GBP33m (2003: GBP50m) relating to redress for
customers in respect of sales of endowment policies. Of the loss of GBP29m, in
the Group's results, GBP9m is included within other operating income and GBP20m
within net interest income.
International
Half-year ended
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
Net interest income 261 262 199
Net fees and commissions 155 158 131
Other operating income 22 23 9
Operating income 438 443 339
Operating expenses excluding goodwill (288) (294) (217)
Operating profit before provisions
excluding goodwill 150 149 122
Provisions for bad and doubtful debts (19) (21) (12)
Operating profit excluding goodwill 131 128 110
Profit from associated undertakings 13 15 9
Profit on ordinary activities before tax
excluding goodwill and exceptional items 144 143 119
Cost:income ratio 66% 66% 64%
Loans and advances to customers - GBP17.6bn GBP16.8bn GBP11.9bn
banking (period end)
Customer deposits - banking (period end) GBP9.4bn GBP9.9bn GBP6.9bn
Total assets GBP22.9bn GBP22.1bn GBP16.2bn
Weighted risk assets GBP17.3bn GBP14.9bn GBP12.6bn
Risk Tendency GBP75m GBP70m GBP45m
Return on average economic capital 17% 21% 22%
Economic profit GBP56m GBP49m GBP42m
Key Facts
Number of Barclays Africa customer
accounts 1.5m 1.5m 1.4m
Number of Barclays Spain customers 0.5m 0.5m 0.2m
Number of Openplan customers in Spain 44,000 35,000 28,000
The comparison with the prior period is affected by the acquisition of Banco
Zaragozano which completed in mid July 2003.
The businesses within International performed well. The integration of Banco
Zaragozano is ahead of schedule, and the combined Spanish businesses showed
significant progress. International has delivered good performances across
continental Europe, Africa and the Middle East.
International profit before tax excluding goodwill and exceptional items
increased 21% (GBP25m) to GBP144m (2003: GBP119m), reflecting growth across its
core businesses, including a continuing strong performance in the mortgage
market in continental Europe.
Operating income increased 29% (GBP99m) to GBP438m (2003: GBP339m).
Net interest income increased 31% (GBP62m) to GBP261m (2003: GBP199m), as a
result of the inclusion of Banco Zaragozano and good performances in Spain and
Africa.
Total average customer deposits increased 50% to GBP9.6bn (2003: GBP6.4bn),
including growth of 64% in European balances and 21% in African balances. Total
average loans increased 61% to GBP17.1bn (2003: GBP10.6bn), including growth of
66% in European balances and 24% in African balances. Margins reduced during the
first half due mainly to the impact of changes in the product mix.
Net fees and commissions increased 18% (GBP24m) to GBP155m (2003: GBP131m),
reflecting principally the inclusion of Banco Zaragozano, the continued success
of the Openplan mortgage products in Spain and a strong performance in France
from increased fund management related fees.
Operating expenses increased 33% (GBP71m) to GBP288m (2003: GBP217m) mainly due
to the inclusion of Banco Zaragozano. Strategic investment and restructuring
costs increased as a result of the inclusion of costs associated with the
integration of Banco Zaragozano and continued infrastructure investment in
Africa. The cost: income ratio was 66% (2003: 64%).
Provisions increased 58% (GBP7m) to GBP19m (2003: GBP12m), reflecting the
inclusion of Banco Zaragozano.
Barclays share of income from the FirstCaribbean business increased to GBP13m
(2003: GBP9m).
Barclays Spain (including Banco Zaragozano in 2004) continued to perform
strongly, with profit before tax up 46% to EUR73m (2003: EUR50m). Good
progress has been made with the integration: we are ahead of plan in the
combination of head office functions and technology integration; the Banco
Zaragozano branch network has been co-branded; and Barclays products,
particularly mortgages and investment funds, have been successfully launched
into the Banco Zaragozano customer base.
Openplan in Spain continued its successful growth and its penetration of the
customer base of Banco Zaragozano. Total customer numbers at the end of the
first half of 2004 were 44,200 (2003: 27,600), mortgages were EUR6.4bn (2003:
EUR3.7bn) and savings were EUR1.3bn (2003: EUR0.8bn).
Profit before tax in Africa and the Middle East remained stable at GBP58m (2003:
GBP58m) with a good income performance and strong growth in corporate balances
offset by increased restructuring costs and investment costs.
Barclaycard
Half-year ended
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
Net interest income 810 804 751
Net fees and commissions 361 350 323
Operating income 1,171 1,154 1,074
Operating expenses excluding goodwill (388) (409) (352)
Operating profit before provisions
excluding goodwill 783 745 722
Provisions for bad and doubtful debts (357) (373) (335)
Operating profit excluding goodwill 426 372 387
Profit from joint ventures 2 2 -
Profit on ordinary activities before
tax excluding goodwill and exceptional
items 428 374 387
Cost:income ratio 33% 35% 33%
Loans and advances to customers -
banking (period end) GBP20.1bn GBP19.6bn GBP18.4bn
Total assets GBP20.7bn GBP20.3bn GBP19.1bn
Weighted risk assets GBP18.4bn GBP18.3bn GBP17.6bn
Risk Tendency GBP810m GBP775m GBP710m
Return on average economic capital 25% 23% 25%
Economic profit GBP180m GBP144m GBP160m
Key Facts
Number of Barclaycard UK customers 10.8m 10.6m 10.1m
Number of retailer relationships 89,000 86,000 88,000
Number of customers registered for
online services 1.7m 1.5m 1.3m
UK credit cards - average outstanding
balances GBP9.3bn GBP9.2bn GBP8.6bn
UK credit cards - average extended
credit balances GBP7.9bn GBP7.7bn GBP7.2bn
UK loans - average consumer lending
balances GBP9.2bn GBP8.8bn GBP8.3bn
International - average extended credit
balances GBP0.8bn GBP0.7bn GBP0.6bn
International - cards in issue 1.8m 1.7m 1.5m
Barclaycard combined the UK consumer lending business with its UK credit card
operations to create an integrated business focused on meeting personal
customers' short and medium term borrowing needs.
Barclaycard International continued to execute its international card strategy,
which the Group expects to be achieved through a combination of organic
activity, partnerships, alliances and acquisitions.
The comparison with the prior period is impacted by the acquisition of
Clydesdale Financial Services in May 2003.
Barclaycard profit before tax excluding goodwill and exceptional items increased
11% (GBP41m) to GBP428m (2003: GBP387m).
Operating income increased 9% (GBP97m) to GBP1,171m (2003: GBP1,074m). Net
revenue (operating income less provisions) increased 10% (GBP75m) to GBP814m
(2003: GBP739m).
Net interest income increased 8% (GBP59m) to GBP810m (2003: GBP751m) reflecting
growth in UK average extended credit balances, up 10% to GBP7.9bn (2003:
GBP7.2bn) and UK average loan balances up 11% to GBP9.2bn (2003: GBP8.3bn).
Rising funding costs reduced margins on UK extended credit balances. Balance
transfer activity at promotional initial rates remained a key feature of the
market.
Recruitment of UK card customers at 560,000 remained strong (2003: 650,000).
Sales of the Barclayloan product were good, up 10% to GBP2.2bn (2003: GBP2.0bn)
in the period. In addition, First Plus average loan balances increased 27% to
GBP1.4bn (2003: GBP1.1bn).
Net fees and commissions increased 12% (GBP38m) to GBP361m (2003: GBP323m) as a
result of increased cardholder activity fees and growth in the consumer lending
business and good volume growth within the merchant acquiring business.
Operating expenses rose 10% (GBP36m) to GBP388m (2003: GBP352m). The increase
reflected the growth in Barclaycard International, business as usual costs in
the UK business and brand related investment.
Provisions increased 7% (GBP22m) to GBP357m (2003: GBP335m) broadly in line with
the growth in lendings.
Barclaycard International made good progress with its international expansion
strategy. Income increased 23% to GBP73m due to the growth in average extended
credit balances, up 22% (GBP142m) to GBP777m (2003: GBP635m). The number of
Barclaycard International cards in issue rose to 1.8m (2003:1.5m). Operating
costs increased in line with income.
Wholesale and Institutional - Barclays Capital
Half-year ended
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
Net interest income 463 509 515
Dealing profits 787 515 527
Net fees and commissions 276 298 253
Other operating income 175 61 48
Operating income 1,701 1,383 1,343
Operating expenses (1,053) (863) (775)
Operating profit before provisions 648 520 568
Provisions for bad and doubtful debts (49) (122) (131)
Operating profit 599 398 437
Profit from associated undertakings - - 1
Profit on ordinary activities before
tax 599 398 438
Cost:income ratio 62% 62% 58%
Cost:net revenue ratio 64% 68% 64%
Net revenue per member of staff ('000) GBP260 GBP223 GBP220
Total assets GBP317.0bn GBP268.7bn GBP280.0bn
Weighted risk assets GBP72.7bn GBP65.1bn GBP62.1bn
Risk Tendency GBP80m GBP135m GBP190m
Return on average economic capital 39% 26% 27%
Economic profit GBP298m GBP166m GBP183m
Key facts
30.06.04 30.06.03
League League
table Issuance table Issuance
position value position value
Global all debt 5th $122.3bn 4th $103.0bn
European all debt 3rd $80.9bn 3rd $68.2bn
All international bonds (all currencies) 6th $75.9bn 5th $60.6bn
All international bonds (Euros) 3rd EUR35.4bn 6th EUR30.8bn
Sterling bonds 2nd GBP7.7bn 1st GBP5.8bn
US investment grade corporate bonds 12th $2.1bn 9th $4.7bn
Barclays Capital delivered record first half operating income and profit. The
very strong performance has been driven by growth in business volumes as the
franchise continued the planned expansion into targeted geographies and
products. There has been significant headcount growth in the first half of the
year in Europe, the United States and Asia. These investments were broadly based
across product, distribution and support capabilities particularly in equity
derivatives, commodities, foreign exchange and mortgage backed securities.
Barclays Capital profit before tax increased 37% (GBP161m) to GBP599m (2003:
GBP438m), as a result of very strong operating income growth and the improved
credit environment.
Operating income increased 27% (GBP358m) to a record GBP1,701m (2003: GBP1,343m)
and reflected broadly based growth across most of the product areas in Rates and
Credit. Net revenue (operating income less provisions) increased 36% (GBP440m)
to GBP1,652m (2003: GBP1,212m). Higher average DVaR at GBP38m (2003: GBP23m) was
driven by increased business volumes and market opportunities. Average DVaR in
the first half remained in line with the 2003 year end position of GBP37m.
Period end DVaR at 30th June 2004 of GBP26m reflected lower interest rate
positions during the last few weeks of the period.
Secondary income, comprising dealing profits and net interest income, which is
primarily generated from providing client risk management and financing
solutions, increased 20% (GBP208m) to GBP1,250m (2003: GBP1,042m).
Dealing profits grew 49% (GBP260m) to GBP787m (2003: GBP527m), with very strong
performances in the Rates and Credit businesses. This was driven by higher
volumes of client led activity across a broad range of products, the benefit of
recent headcount investments in product depth and geographical reach and
reflected the level of average DVaR. Net interest income fell 10% (GBP52m) to
GBP463m (2003: GBP515m) due to lower contributions from both money markets as
the size of the book was reduced and from the loan portfolio as average drawn
credit balances fell to GBP7bn (2003: GBP10bn).
Primary income, comprising net fees and commissions, grew 9% to GBP276m (2003:
GBP253m), with good contributions from primary bonds as a result of higher
issuance volumes. This performance was achieved despite the market trends of
lower corporate issuance. Net fees and commissions included GBP46m (2003:
GBP40m) of internal fees for structured capital markets activities arranged by
Barclays Capital.
Other operating income increased to GBP175m (2003: GBP48m) as a result of a
number of private equity and structured capital markets investment realisations.
Operating expenses increased 36% (GBP278m) to GBP1,053m (2003: GBP775m).
Business as usual costs grew as a result of higher business volumes and a
significant increase in headcount across Europe, the United States and Asia.
Revenue related costs increased due to the strong financial performance.
Strategic investment costs were higher reflecting continued investment in
product, client coverage and distribution capabilities. The ratio of staff costs
to net revenue remained broadly stable at 53% (2003: 52%). The cost:income ratio
was 62% (2003: 58%). The cost:net revenue ratio remained stable at 64%.
Provisions fell 63% (GBP82m) to GBP49m (2003: GBP131m), reflecting the ongoing
improvement in the wholesale credit environment.
Wholesale and Institutional - Barclays Global Investors
Half-year ended
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
Net interest income 4 4 5
Net fees and commissions 418 356 306
Other operating income 1 1 -
Operating income 423 361 311
Operating expenses excluding goodwill (265) (260) (220)
Operating profit excluding goodwill 158 101 91
Loss from joint ventures (1) (1) -
Profit on ordinary activities before
tax excluding goodwill 157 100 91
Cost:income ratio 63% 72% 71%
Net revenue per member of staff ('000) GBP217 GBP181 GBP152
Total assets GBP0.7bn GBP0.5bn GBP0.6bn
Weighted risk assets GBP1.0bn GBP1.1bn GBP1.1bn
Return on average economic capital 129% 89% 81%
Economic profit GBP91m GBP59m GBP53m
Key Facts
Number of institutional clients 2,600 2,500 2,400
Total assets under management GBP634bn GBP598bn GBP543bn
Total indexed assets under management GBP429bn GBP410bn GBP385bn
Total active assets under management GBP134bn GBP125bn GBP109bn
Total managed cash assets under
management GBP71bn GBP63bn GBP49bn
Number of iShares products 123 108 111
Total iShares assets under management GBP52bn GBP38bn GBP28bn
Barclays Global Investors continued to deliver a very strong performance. The
success has been achieved from a combination of: a commitment to product
innovation; a more diverse product range; success in attracting net new assets;
the investment performance of the active business; and increased operating
efficiency.
Barclays Global Investors profit before tax excluding goodwill increased 73%
(GBP66m) to GBP157m (2003: GBP91m) reflecting very strong income growth and good
cost control. Growth in income and costs was constrained by adverse foreign
exchange movements. Approximately 55% of income is generated in the US and 31%
in the UK.
Net fees and commissions increased 37% (GBP112m) to GBP418m (2003: GBP306m),
with strong income generation across both the active and index businesses. The
increase was largely driven by growth of investment management fees. These
resulted from strong net new sales, growth in sales of higher margin products,
continued solid investment performance and stronger global equity markets, which
more than compensated for the adverse impact of foreign exchange movements.
Securities lending income growth was also strong, benefiting from increased
volumes.
Operating expenses increased 20% (GBP45m) to GBP265m (2003: GBP220m) primarily
as a result of higher performance based expenses. The cost:income ratio improved
to 63% (2003: 71%).
Total assets under management increased 6% (GBP36bn) to GBP634bn or US$1,151bn
(31st December 2003: GBP598bn or US$1,070bn). This growth came from GBP28bn of
net new assets and GBP16bn attributable to market movements, partially offset by
GBP8bn of adverse exchange rate movements.
Head office functions and other operations
Head office functions comprise all the Group's central costs, including the
following areas that fall within Group Functions: Executive Management, Finance,
Marketing, Communications, Human Resources, Strategy and Planning, Internal
Audit, Legal, Corporate Secretariat, Tax, Compliance and Risk. Costs incurred
wholly on behalf of the business units are recharged to them.
Transition Businesses comprise discontinued South American and Middle Eastern
corporate banking businesses and other centrally managed Transition Businesses.
These non-core relationships are managed separately with the objective of
maximising the recovery from the assets concerned.
Central items include internal fees charged by Barclays Capital for structured
capital markets activities, income from the management of the Group's
operational premises, property related services and other central items
including activities which support the operating business.
Half-year ended
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
Head office functions and central
items (65) (124) (76)
Transition Businesses (9) (5) (20)
Restructuring costs (6) (10) (6)
Loss on ordinary activities before
tax excluding goodwill and
exceptional items (80) (139) (102)
Head office functions and central items costs decreased 14% (GBP11m) to GBP65m
(2003: GBP76m). Central items included internal fees charged by Barclays Capital
for structured capital market activities of GBP46m (2003: GBP40m).
The improved performance of Transition Businesses, from a loss of GBP20m to a
loss of GBP9m, primarily reflected provisions released in the current year.
Woolwich integration synergies
Total Woolwich integration benefits of GBP227m were achieved by the programme in
the half-year ended 30th June 2004. This comprises ongoing cost and revenue
synergies totalling GBP226m and tax savings of GBP1m.
The Group is on track to exceed the targeted GBP400m in cost and revenue
synergies for the full year to 31st December 2004.
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 six 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. During the first
half of 2004 enhancements included improvements in the modelling of the time
horizon, correlation of risks and risk concentrations. The developments in the
methodology are consistent with the capital proposals within the Basel II
accord.
Average economic capital by business is set out below:
Half-year ended
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
UK Banking 4,450 4,800 4,800
UK Retail Banking 2,150 2,250 2,250
UK Business Banking 2,300 2,550 2,550
Private Clients and International 1,400 1,350 1,050
Private Clients - ongoing business 300 250 200
- closed life assurance activities 100 150 150
International 1,000 950 700
Barclaycard 2,450 2,250 2,150
Barclays Capital 2,050 2,100 2,150
Barclays Global Investors 150 150 150
Head office functions and other
operations1 200 250 250
Average business unit economic capital 10,700 10,900 10,550
Capital held at Group centre2 1,600 1,300 1,050
Average historical goodwill 5,600 5,300 4,900
Total average shareholders' funds 17,900 17,500 16,500
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.
Total average shareholders' funds including unamortised goodwill rose by GBP400m
to GBP17,900m in the first half of 2004.
UK Retail Banking economic capital allocation has decreased GBP100m to GBP2,150m
primarily as a result of the sale of non-core mortgage assets that had
previously been acquired with the Woolwich.
UK Business Banking economic capital allocation has decreased GBP250m to
GBP2,300m as a consequence of both general improvements in the credit quality of
counterparties within Larger Business and of continued improvement in the risk
assessment of complex transactions within Assets Sales and Venture Finance.
Private Clients and International economic capital allocation has increased
GBP50m to GBP1,400m reflecting the impact of including an entire half year of
the two acquisitions made in the second half of 2003.
Barclaycard economic capital allocation has increased GBP200m due to continued
growth in the loan book and methodology improvements in First Plus.
Economic Profit
Economic profit for the half year 2004 was GBP1,054m (2003: GBP745m).
The breakdown of economic profit performance is shown below:
Half-year ended
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
Profit after tax and minority interests 1,716 1,361 1,383
Goodwill amortisation 148 140 125
Tax credit on goodwill (5) (4) (3)
Goodwill relating to associated
undertakings 3 4 3
Profit after tax and minority interests
excluding goodwill amortisation 1,862 1,501 1,508
Gain/(loss) on disposal recognised in
the statement of total recognised gains
and losses 20 (4) -
1,882 1,497 1,508
Average shareholders' funds including
average historical goodwill1 17,900 17,517 16,521
Post tax cost of equity 9.5% 9.5% 9.5%
Cost of average shareholders' funds
including average historical goodwill2 (828) (812) (763)
Economic profit 1,054 685 745
1 The difference between the average shareholders' funds (excluding minority
interests) of GBP16,789m and that reported above represents cumulative goodwill
amortisation charged and goodwill previously written off to reserves. 2 The cost
includes a charge for purchased goodwill of GBP242m (2003: GBP211m). A post-tax
cost of equity of 8.5% has been used for goodwill associated with the
acquisition of Woolwich plc. A post-tax cost of equity of 9.5% has been used for
all other goodwill. The post tax cost of equity is unchanged for 2004.
The table below shows the economic profit generated by each business area:
Half-year ended
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
UK Banking 666 535 588
UK Retail Banking 344 268 328
UK Business Banking 322 267 260
Private Clients and International 93 91 38
Private Clients - ongoing business 64 45 39
- closed life assurance activities (27) (3) (43)
International 56 49 42
Barclaycard 180 144 160
Barclays Capital 298 166 183
Barclays Global Investors 91 59 53
Head office functions and other
operations1 21 (35) (33)
1,349 960 989
Historical goodwill2 (242) (231) (211)
Variance to average shareholders' funds (53) (44) (33)
Economic profit 1,054 685 745
1 Includes Transition businesses, see page 42.
2 Cost of equity charge on historical purchased goodwill.
Risk Tendency
As part of its credit risk measurement system, the Group uses a model-based
methodology to assess the quality of the credit portfolios across different
customer categories. The approach is termed Risk Tendency and applies to all
performing credit exposures in both wholesale and retail sectors. Looking one
year ahead, it provides a statistical estimate that is the average in the range
of possible losses expected from the current performing portfolio. The actual
outcome in any one year is likely to be different. Thus it is not a prediction
of specific provisions but it gives management a clear view of the evolution of
the quality of the credit portfolio.
Half-year ended
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
UK Banking 360 385 420
UK Retail Banking 150 150 185
UK Business Banking 210 235 235
Private Clients and International 80 75 50
Private Clients 5 5 5
International 75 70 45
Barclaycard 810 775 710
Barclays Capital 80 135 190
Transition businesses 10 20 20
1,340 1,390 1,390
Risk Tendency fell 4% to GBP1,340m (31st December 2003: GBP1,390m).
Barclaycard Risk Tendency increased due to high levels of card customer
recruitment.
International Risk Tendency increased as a result of continued growth in the
portfolio, particularly in Spain. The rise in the second half of 2003 was mainly
a consequence of the acquisition of Banco Zaragozano.
Risk Tendency fell in UK Business Banking and in Barclays Capital due to
improved credit conditions in the corporate and wholesale environment.
ADDITIONAL INFORMATION
Group Structure changes from 2003
From 1st January 2004, for reporting purposes, Barclays has been organised into
the business groupings outlined on pages 21 and 22. Results are also provided
for Head office functions and other operations.
The restructure has had no impact on the Group profit and loss account as
reported in the 2003 Annual report.
Acquisitions and disposals
On 11th March 2004, Barclays purchased the remaining 40% minority share in
Barclays Cairo Bank.
On 7th April 2004, Barclays completed the disposal of Edotech Limited to Astron,
the business process outsourcing group.
Accounting policies
A change in accounting policy arose from the adoption in 2004 of UITF Abstract
38 (UITF 38), 'Accounting for ESOP trusts'. UITF 38 requires Barclays PLC shares
held in Employee Share Ownership Plans (ESOP) trusts to be accounted for as a
deduction in arriving at shareholders' funds, rather than as assets. The balance
sheets for June 2003 and December 2003 have been restated accordingly, and other
assets and shareholders' funds have been reduced by GBP100m at 30th June 2003
and GBP99m at 31st December 2003. The impact of UITF 38 on the June 2003 and
December 2003 profit and loss account was immaterial, and the comparatives have
not been restated.
In addition, the June 2003 balance sheet has been restated to reflect the impact
of UITF Abstract 37 (UITF 37), 'Purchases and sales of own shares', which was
implemented in the 2003 year-end accounts. As a result equity shares and
shareholders' funds have been reduced by GBP7m at 30th June 2003. The impact of
UITF 37 on the June 2003 profit and loss account was immaterial, and the
comparatives have not been restated.
Apart from UITF 38, there have been no significant changes to the accounting
policies as described in the 2003 Annual Report.
Future UK accounting developments
In July 2004 the Accounting Standards Board issued Financial Reporting Exposure
Draft 34 on Life Assurance, which sets out a proposed standard to apply for the
December 2004 year-end. The Group is currently assessing the impact of the
proposals on its life assurance business.
Conversion to International Financial Reporting Standards in 2005
By Regulation, the EU has agreed that virtually all listed companies must use
International Financial Reporting Standards (IFRS) adopted for use in the EU in
the preparation of their 2005 consolidated accounts. Barclays will have to
comply with this Regulation. The objective is to improve financial reporting and
enhance transparency to assist the free flow of capital throughout the EU and to
improve the efficiency of the capital markets.
Work to meet the requirements of IFRS fully in 2005 is advancing to plan.
Differences are being identified, revised accounting policies are being
developed, design work is advancing for the necessary changes to systems and
processes whilst the building of the identified changes is progressing well.
The main risks and uncertainties relate to the standards that have not yet been
finalised and adopted by the EU. How IFRS financial statements will be
interpreted for tax and regulatory capital purposes also remains unclear at this
time. However, the programme is following normal project controls and change
management and the Group is confident that it will be able to meet requirements
for financial reporting in 2005.
While almost all standards are now finalised, there remains uncertainty with
respect to the application of one key standard, 'Financial Instruments:
Recognition and Measurement' (IAS 39). Although a final text was published on
31st March 2004, it is currently unclear whether or not the standard will be
endorsed by the EU for use in 2005. In these circumstances it is not practicable
to provide further information about likely impacts on 2005 results.
IAS 39 will have a significant impact on the IFRS accounts as it changes the
recognition and measurement of the majority of the assets and liabilities held
by the bank, including loans, investment securities and derivatives used for
risk management purposes. 'Financial Instruments: Presentation and Disclosure'
(IAS 32), which contains different requirements for off setting assets and
liabilities than UK GAAP, will also have a significant impact, particularly in
the presentation of the balance sheet. Other standards that will have
significant impact on the reported results include: employee benefits
(pensions), share based payment, goodwill (amortisation), intangible assets
(capitalisation of software), consolidation and insurance contracts.
Barclays intends to hold briefings on IFRS in the fourth quarter of 2004. The
restated 2004 IFRS results and the opening 2005 IFRS balance sheet will be
issued in the first half of 2005. The first financial information on an IFRS
basis will be provided for the June 2005 half-year.
Changes in accounting presentation
The prior period presentation has, where appropriate, been restated to conform
with current year classification, and the changes in accounting policies
discussed above.
Share capital
The Group manages both its debt and equity capital actively. The Group renewed
its authority to buy back ordinary shares at the 2004 Annual General Meeting to
provide additional flexibility in the management of the Group's capital
resources.
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 2004, 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 2004. Copies
will be available to the public at Barclays registered office and at its website
www.investorrelations.barclays.co.uk.
NOTES
1. Loans and advances to banks
30.06.04 31.12.03 30.06.03
Banking business GBPm GBPm GBPm
United Kingdom 15,105 14,315 11,347
Other European Union 1,000 1,702 1,594
United States 94 110 377
Rest of the World 1,385 1,143 1,640
17,584 17,270 14,958
Less - provisions (7) (16) (21)
17,577 17,254 14,937
Trading business 59,100 44,670 52,534
Total loans and advances to banks 76,677 61,924 67,471
Of the total loans and advances to banks, placings with banks were GBP71.2bn at
30th June 2004 (31st December 2003: GBP56.5bn; 30th June 2003: GBP57.1bn).
Placings with banks include reverse repos of GBP59.5bn (31st December 2003:
GBP50.4bn; 30th June 2003: GBP43.3bn). The majority of the placings have a
residual maturity of less than one year.
2. Loans and advances to customers
30.06.04 31.12.03 30.06.03
Banking business - United Kingdom: GBPm GBPm GBPm
Financial institutions 8,681 7,721 7,612
Agriculture, forestry and fishing 1,932 1,766 1,860
Manufacturing 6,219 5,967 6,860
Construction 2,007 1,883 1,961
Property 7,214 6,341 6,515
Energy and water 1,128 1,286 1,064
Wholesale and retail distribution
and leisure 9,339 8,886 8,147
Transport 2,324 2,579 2,878
Postal and communication 503 476 373
Business and other services 12,009 12,030 11,713
Home loans1 63,114 61,905 60,715
Other personal 22,202 21,905 21,151
Overseas customers 6,377 5,477 6,367
Finance lease receivables 5,447 5,587 4,204
Total United Kingdom 148,496 143,809 141,420
Business Banking - Overseas:
Other European Union 18,432 19,027 15,255
United States 5,435 3,573 4,764
Rest of the World 4,791 4,510 6,540
28,658 27,110 26,559
Total banking loans and advances
to customers 177,154 170,919 167,979
Less provisions (2,929) (3,012) (2,992)
Less interest in suspense (45) (49) (75)
174,180 167,858 164,912
Trading business 72,893 58,961 59,447
Total loans and advances to
customers 247,073 226,819 224,359
1 Excludes commercial property mortgages
Of the total loans and advances to customers, reverse repos were GBP55.3bn (31st
December 2003: GBP50.0bn; 30th June 2003: GBP39.8bn)
The geographic presentation above is based on the office recording the
transaction.
The UK 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 the subsidiary operates even though the
parent's predominant business may be in a different industry.
The above numbers include securitised loans of GBP2,995m which meet the criteria
for linked presentation (31st December 2003: GBP81m; 30th June 2003: GBP83m),
stated net of non-recourse finance of GBP2,954m (31st December 2003: GBP80m;
30th June 2003: GBP82m).
3. Provision balances for bad and doubtful debts
Half-year ended
Movements in provisions for bad and 30.06.04 31.12.03 30.06.03
doubtful debts
GBPm GBPm GBPm
Provisions at beginning of period 3,028 3,013 2,998
Acquisitions and disposals - 48 14
Exchange and other adjustments (25) (20) 2
Amounts written off (see below) (771) (759) (715)
Recoveries (see below) 115 51 62
Provisions charged against profit
(see below) 589 695 652
Provisions balance at end of period 2,936 3,028 3,013
Amounts written off
United Kingdom (705) (615) (560)
Other European Union (26) (39) (15)
United States (36) (82) (133)
Rest of the World (4) (23) (7)
Total amounts written off (771) (759) (715)
Recoveries
United Kingdom 97 44 51
Other European Union 9 2 5
United States 7 4 6
Rest of the World 2 1 -
Total recoveries 115 51 62
Provisions charged against profit
New and increased specific provisions
United Kingdom 745 751 622
Other European Union 44 27 30
United States 28 47 71
Rest of the World 19 32 48
836 857 771
Releases of specific provisions
United Kingdom (28) (96) (55)
Other European Union (10) (7) (6)
United States (9) (20) (4)
Rest of the World (9) (2) (5)
(56) (125) (70)
Recoveries (115) (51) (62)
Net specific provisions charge 665 681 639
General provision (release) / charge (76) 14 13
Net charge to profit 589 695 652
Total provisions for bad and doubtful debts at end of period comprise:
30.06.04 31.12.03 30.06.03
Specific provisions GBPm GBPm GBPm
United Kingdom 1,865 1,856 1,812
Other European Union 101 97 99
United States 101 121 187
Rest of the World 156 159 163
Total specific provisions 2,223 2,233 2,261
General provisions 713 795 752
2,936 3,028 3,013
The geographic analysis of provisions shown above is based on the location of
the office recording the transaction. These provisions balances (and interest in
suspense - see note 2) provide coverage of the non-performing loans and
potential credit risk loans as shown in note 4 below.
4. Potential credit risk loans
The following table presents an analysis of potential credit risk loans
(non-performing and potential problem loans). The geographical presentation is
based on the location of the office recording the transaction, and the amounts
are stated before deduction of the value of security held, specific provisions
carried or interest suspended.
Potential credit risk loans 30.06.04 31.12.03 30.06.03
Summary GBPm GBPm GBPm
Non-accrual loans: 2,235 2,261 2,455
Accruing where interest is being 432 629 542
suspended with or without provisions
Other accruing loans against which
provisions have been made 911 821 768
3,578 3,711 3,765
Accruing loans 90 days overdue,
against which no provisions have been
made 569 590 785
Reduced rate loans 10 4 8
Total non-performing loans 4,157 4,305 4,558
Potential problem loans 824 1,327 1,171
Total potential credit risk loans 4,981 5,632 5,729
Non-performing loans declined to GBP4,157m (31st December 2003: GBP4,305m). The
potential problem loan balance fell to GBP824m (31st December 2003: GBP1,327m)
reflecting regradings, settlements, write-offs and a reduction in emergence of
new potential problem loans.
Geographical split: 30.06.04 31.12.03 30.06.03
Non-accrual loans GBPm GBPm GBPm
United Kingdom 1,634 1,572 1,628
Other European Union 135 143 126
United States 315 383 570
Rest of the World 151 163 131
Total 2,235 2,261 2,455
Accruing loans where interest is
being suspended with or without
provisions:
United Kingdom 341 559 435
Other European Union 48 29 23
United States - - -
Rest of the World 43 41 84
Total 432 629 542
Other accruing loans against which
provisions
have been made:
United Kingdom 858 760 713
Other European Union 26 35 40
United States - - -
Rest of the World 27 26 15
Total 911 821 768
30.06.04 31.12.03 30.06.03
Accruing loans 90 days overdue,
against which no provisions have
been made:
United Kingdom 542 566 757
Other European Union 27 24 28
United States - - -
Rest of the World - - -
Total 569 590 785
Reduced rate loans:
United Kingdom 10 4 6
Other European Union - - -
United States - - -
Rest of the World - - 2
Total 10 4 8
Total non-performing loans:
United Kingdom 3,385 3,461 3,539
Other European Union 236 231 217
United States 315 383 570
Rest of the World 221 230 232
Total 4,157 4,305 4,558
Potential problem loans:
United Kingdom 554 989 878
Other European Union - 23 25
United States 191 259 202
Rest of the World 79 56 66
Total 824 1,327 1,171
Total potential credit risk loans:
United Kingdom 3,939 4,450 4,417
Other European Union 236 254 242
United States 506 642 772
Rest of the World 300 286 298
Total 4,981 5,632 5,729
Provision coverage of non-performing
loans: % % %
United Kingdom 74.0 74.2 71.1
Other European Union 71.6 71.4 59.0
United States 37.8 39.2 43.2
Rest of the World 85.5 83.9 85.3
Total 71.7 71.5 67.7
Provision coverage of total potential % % %
credit risk loans:
United Kingdom 63.6 57.7 57.0
Other European Union 71.6 65.0 52.9
United States 23.5 23.4 31.9
Rest of the World 63.0 67.5 66.4
Total 59.8 54.6 53.9
The geographical coverage ratios include an allocation of general provisions.
The coverage of non-performing loans by the Group's stock of provisions and
interest in suspense remained broadly stable at 71.7% (31st December 2003:
71.5%). The coverage of total potential credit risk loans was higher at 59.8%
(31st December 2003: 54.6%).
5. Other assets
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
Balances arising from off-balance
sheet financial instruments
(see note 10) 14,000 15,812 16,039
Shareholders' interest in long term
assurance fund 436 478 799
London Metal Exchange warrants and 1,443 1,290 794
other metals trading positions
Sundry debtors 1,786 2,156 2,223
Prepayments and accrued income 4,575 3,921 3,411
22,240 23,657 23,266
6. Other liabilities
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
Obligations under finance leases 352 110 129
payable
Balances arising from off-balance
sheet financial instruments (See
note 10) 12,829 14,797 12,900
Short positions in securities 57,438 49,934 44,337
Current tax 680 497 731
Sundry creditors 3,643 4,159 4,941
Accruals and deferred income 5,212 4,983 4,476
Provisions for liabilities and
charges 1,058 1,015 899
Dividend 529 879 456
81,741 76,374 68,869
7. Loans and advances to borrowers in currencies other than the local
currency of the borrower
At 30th June 2004, the countries where these outstandings exceeded 1% of total
Group assets were the United States and Germany. In this context, assets
comprise total assets as presented in the consolidated balance sheet and include
acceptances.
Loans and advances to borrowers in currencies other than the local currency of
the borrower for countries where borrowing exceeds 1% of total Group assets
As % of Total
assets GBPm
At 30th June 2004
United States 2.5 12,337
Germany 1.1 5,286
At 31st December 2003
United States 2.7 12,110
Germany 1.2 5,127
As at 30th June 2004, only France had such outstandings between 0.75% and 1% of
total Group assets, which amounted to GBP4,581m (31st December 2003: GBP3,570m).
8. 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 and it is not possible to estimate
Barclays possible loss, if any, in relation to them. 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.
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 or profitability of the Group.
9. Contingent liabilities and commitments
30.06.04 31.12.03 30.06.03
Contingent liabilities GBPm GBPm GBPm
Acceptances and endorsements 530 671 2,259
Guarantees and assets pledged as
collateral security 26,334 24,596 22,655
Other contingent liabilities 7,800 8,427 7,964
34,664 33,694 32,878
Commitments
Standby facilities, credit lines and
other commitments 119,887 114,847 106,472
10. Derivatives
The tables set out below analyse the contract or underlying principal amounts of
derivative financial instruments held for trading purposes and for the purposes
of managing the Group's structural exposures.
Foreign exchange derivatives 30.06.04 31.12.03 30.06.03
Contract or underlying principal GBPm GBPm GBPm
amount
Forward foreign exchange 415,997 310,319 336,079
Currency swaps 239,440 207,364 175,115
Other exchange rate related
contracts 145,238 167,643 130,864
800,675 685,326 642,058
Interest rate derivatives
Contract or underlying principal
amount
Interest rate swaps 3,676,218 2,944,310 2,471,207
Forward rate agreements 588,977 381,511 245,529
OTC options bought and sold 1,095,615 842,631 707,160
Other interest rate related
contracts 2,408,350 2,051,161 1,341,117
7,769,160 6,219,613 4,765,013
Credit derivatives 82,835 47,450 29,621
Equity, stock index and commodity
derivatives
Contract or underlying principal
amount 196,964 171,939 151,054
Other exchange rate related contracts are primarily over the counter (OTC)
options. Other interest rate related contracts are primarily exchange traded
options, futures and swaps.
The increased nominal amounts reflect the expansion of the Barclays Capital
business and the continued growth in customer usage of electronic dealing
systems.
Derivatives entered into as trading transactions, together with any associated
hedging thereof, are measured at fair value and the resultant profits and losses
are included in dealing profits. The tables below summarise the positive and
negative fair values of such derivatives, including an adjustment for netting
where the Group has the ability to insist on net settlement which is assured
beyond doubt, based on a legal right that would survive the insolvency of the
counterparty.
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
Positive fair values
Foreign exchange derivatives 11,332 17,129 12,071
Interest rate derivatives 45,563 51,776 73,905
Credit derivatives 750 798 828
Equity, stock index and commodity
derivatives 7,021 4,721 3,716
Effect of netting (47,390) (55,030) (70,106)
Cash collateral meeting offset
criteria (3,276) (3,582) (4,375)
14,000 15,812 16,039
Negative fair values
Foreign exchange derivatives 11,233 18,393 12,335
Interest rate derivatives 43,944 49,735 70,990
Credit derivatives 488 584 476
Equity, stock index and commodity
derivatives 7,928 5,733 4,215
Effect of netting (47,390) (55,030) (70,106)
Cash collateral meeting offset
criteria (3,374) (4,618) (5,010)
12,829 14,797 12,900
11. Market risk
Market Risk is the risk that the Group's earnings or capital, or its ability to
meet business objectives, will be adversely affected by changes in the level or
volatility of market rates or prices such as interest rates including 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), increased in the first half of 2004 compared to 2003. This
was due mainly to interest rate opportunities taken and an increase in credit
spread risk. The latter increase was primarily a result of growing client
business in corporate bonds and credit derivatives. Market risk exposure
decreased towards the end of the first half 2004. Total DVaR as at 30th June
2004 was GBP26.0m (31st December 2003: GBP37.2m; 30th June 2003: GBP24.6m).
Analysis of Barclays Capital's market risk exposures
The daily average, maximum and minimum values of DVaR were calculated as below:
Half-year ended
30.06.04
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)
Total DVaR 38.1 46.8 25.7
Half-year ended
31.12.03
Average High1 Low1
GBPm GBPm GBPm
Interest rate risk 21.3 34.1 13.6
Credit spread risk 20.6 29.2 14.8
Foreign exchange risk 1.8 3.1 1.0
Equities risk 2.7 4.9 1.5
Commodities risk 4.2 7.0 2.2
Diversification effect (21.8)
Total DVaR 28.8 38.6 20.5
Half-year ended
30.06.03
Average High1 Low1
GBPm GBPm GBPm
Interest rate risk 20.7 27.7 13.7
Credit spread risk 11.7 16.0 8.9
Foreign exchange risk 2.9 5.0 1.3
Equities risk 2.5 3.8 1.7
Commodities risk 4.6 6.2 2.2
Diversification effect (19.4)
Total DVaR 23.0 29.5 17.6
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.
CONSOLIDATED STATEMENT OF CHANGES IN
SHAREHOLDERS' FUNDS (UNAUDITED)
Half year ended
30.06.04 31.12.03 30.06.03
Share capital1 GBPm GBPm GBPm
At beginning of period 1,642 1,638 1,645
Shares issued 2 8 1
Repurchase of shares (31) (4) (8)
At end of period 1,613 1,642 1,638
Share premium account
At beginning of period 5,417 5,292 5,277
Premium arising on shares issued 20 125 15
At end of period 5,437 5,417 5,292
Revaluation reserve
At beginning of period 24 22 24
Other - 2 (2)
At end of period 24 24 22
Capital redemption reserve
At beginning of period 274 270 262
Repurchase of ordinary shares 31 4 8
305 274 270
Other capital reserve
At beginning and end of period 617 617 617
Profit retained
At beginning of period 8,400 8,118 7,321
Profit retained 1,188 478 926
Exchange rate translation differences (43) (67) 36
Repurchase of ordinary shares (31) (4) (8)
Premium and legal costs on
repurchase of ordinary shares (574) (81) (111)
Shares issued to Quest in relation to
share option schemes for staff - (36) -
Increase in Treasury shares (22) (4) (48)
Other items 20 (4) 2
At end of period 8,938 8,400 8,118
Total reserves 15,321 14,732 14,319
Total shareholders' funds 16,934 16,374 15,957
1 Share capital comprises 6,447m (31st December 2003: 6,563m; 30th June 2003:
6,549m) ordinary shares of 25p each and 1m (31st December 2003:1m; 30th June
2003:1m) staff shares of GBP1 each.
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES (UNAUDITED)
Half-year ended
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
Profit attributable to the members of
Barclays PLC 1,716 1,361 1,383
Exchange rate translation differences (39) (38) 34
Gain / (loss) arising from transactions
with third parties 20 (4) -
Joint ventures and associated
undertakings (10) (40) 18
Other items 6 13 (16)
Total gains and losses recognised in the
period 1,693 1,292 1,419
SUMMARY CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)
Half-year ended
30.06.04 31.12.03 30.06.03
GBPm GBPm GBPm
Net cash inflow/(outflow) from
operating activities 4,299 (3,690) 1,400
Dividends received from joint
ventures and associated undertakings 5 6 1
Net cash outflow from returns on
investment and servicing of finance (301) (326) (294)
Tax paid (319) (532) (378)
Net cash (outflow)/inflow from
capital expenditure and financial
investment (4,307) 661 771
Net cash inflow/(outflow) from
acquisitions and disposals 18 (913) (17)
Equity dividend paid (878) (462) (787)
Net cash (outflow)/inflow before
financing (1,483) (5,256) 696
Net cash inflow from financing 2,877 3,297 891
Increase/(decrease)in cash 1,394 (1,959) 1,587
AVERAGE BALANCE SHEET AND NET INTEREST INCOME (UNAUDITED)
Half-year ended
30.06.04 30.06.04 30.06.04 30.06.03 30.06.03 30.06.03
Average Average Average Average
Balance Interest Rate Balance Interest Rate
Assets GBPm GBPm % GBPm GBPm %
Treasury bills and other
eligible bills:
In offices in the UK 1,638 31 3.8 4,772 65 2.7
In offices outside the UK 1,941 30 3.1 1,152 31 5.4
Loans and advances to banks:
In offices in the UK 16,819 299 3.6 11,715 281 4.8
In offices outside the UK 4,290 51 2.4 4,871 61 2.5
Loans and advances to
customers:
In offices in the UK 140,509 4,146 5.9 133,980 3,886 5.8
In offices outside the UK 27,291 574 4.2 25,463 544 4.3
Lease receivables:
In offices in the UK 5,586 120 4.3 4,167 96 4.6
In offices outside the UK 363 10 5.5 263 9 6.8
Debt securities:
In offices in the UK 54,726 1,052 3.8 53,078 1,009 3.8
In offices outside the UK 8,147 150 3.7 4,207 111 5.3
Average assets of banking
business 261,310 6,463 4.9 243,668 6,093 5.0
Average assets of trading
business 284,584 2,779 2.0 189,544 2,518 2.7
Total average interest
earning assets 545,894 9,242 3.4 433,212 8,611 4.0
Provisions (2,820) (2,800)
Non-interest earning assets 65,395 55,735
Total average assets and
Interest income 608,469 9,242 3.0 486,147 8,611 3.5
Percentage of total average
assets in offices outside
the UK 28.2% 27.1%
Average interest earning
assets and net interest income:
Banking business 261,310 3,341 2.6 243,668 3,237 2.7
Trading business 284,584 (78) (0.1)189,544 141 0.1
Discount rate adjustment on
provisions - - - - (1) -
Total average interest
earning assets and net
interest income 545,894 3,263 1.2 433,212 3,377 1.6
Total average interest
earning assets related to:
Interest income 9,242 3.4 8,611 4.0
Interest expense (5,979) (2.2) (5,233) (2.4)
Discount rate adjustment on
provisions - - (1) -
3,263 1.2 3,377 1.6
1 Loans and advances to customers and banks include all doubtful lendings,
including non-accrual lendings. Interest receivable on such lendings has been
included to the extent to which either cash payments have been received or
interest has been accrued in accordance with the income recognition policy of
the Group.
2 Average balances are based upon daily averages for most UK banking operations
and monthly averages elsewhere.
3 The average balance sheet does not include the retail life-fund assets
attributable to policyholders nor the related liabilities.
Half-year ended
30.06.04 30.06.04 30.06.04 30.06.03 30.06.03 30.06.03
Average Average Average Average
Balance Interest Rate Balance Interest Rate
Liabilities and GBPm GBPm % GBPm GBPm %
shareholders' funds
Deposits by banks:
In offices in the UK 41,689 506 2.4 40,867 486 2.4
In offices outside the UK 16,039 124 1.5 8,028 95 2.4
Customer accounts - demand
accounts:
In offices in the UK 20,438 117 1.1 17,517 93 1.1
In offices outside the UK 3,220 16 1.0 2,055 14 1.4
Customer accounts - savings
accounts:
In offices in the UK 47,309 580 2.5 44,849 508 2.3
In offices outside the UK 1,105 10 1.8 767 13 3.4
Customer accounts -
Other time deposits -
retail:
In offices in the UK 34,018 587 3.5 33,271 568 3.4
In offices outside the UK 5,205 59 2.3 3,617 51 2.8
Customer accounts -
Other time deposits -
wholesale:
In offices in the UK 62,456 1,039 3.3 55,263 830 3.0
In offices outside the UK 12,735 150 2.4 8,412 134 3.2
Debt securities in issue:
In offices in the UK 32,161 496 3.1 33,067 489 3.0
In offices outside the UK 12,949 128 2.0 12,650 124 2.0
Dated and undated loan
capital and other
subordinated liabilities
Principally in offices in 12,557 341 5.4 12,159 345 5.7
the UK
Internal funding of trading
business (69,243) (1,031) 3.0 (55,815) (894) 3.2
Average liabilities of
banking business 232,638 3,122 2.7 216,707 2,856 2.6
Average liabilities of
trading business 291,859 2,857 2.0 190,567 2,377 2.5
Total average interest
bearing liabilities 524,497 5,979 2.3 407,274 5,233 2.6
Interest free customer
deposits:
In offices in the UK 15,441 12,807
In offices outside the UK 1,278 1,170
Other non-interest bearing
liabilities 50,271 49,020
Minority interests and
shareholders' funds 16,982 15,876
Total average liabilities,
shareholders' funds and
interest expense 608,469 5,979 2.0 486,147 5,233 2.2
Percentage of total average
non-capital liabilities in
offices outside the UK 25.5% 24.0%
OTHER INFORMATION
RECONCILIATION OF PROFIT BEFORE TAX AND TOTAL ASSETS
The presentation in this document of the results of individual businesses
excludes goodwill amortisation and exceptional items. Barclays management
believes that this non-GAAP measure provides valuable information to readers of
its financial statements, because it enables the reader to focus more directly
on the day-to-day performance of its businesses. The tables below reconcile
certain of the non GAAP numbers in the presentation of the results of the
businesses to the relevant UK GAAP numbers.
PROFIT BEFORE TAX BY BUSINESS Half-year ended
30.06.04
Excluding Goodwill and Profit
goodwill and Exceptional before
exceptional Items tax
items
GBPm GBPm GBPm
UK Banking 1,217 (45) 1,172
UK Retail Banking 588 (37) 551
UK Business Banking 629 (8) 621
Private Clients and International 196 (35) 161
Private Clients - ongoing business 81 (31) 50
- closed life assurance activities (29) - (29)
International 144 (4) 140
Barclaycard 428 (21) 407
Barclays Capital 599 - 599
Barclays Global Investors 157 (7) 150
Head office functions and other
operations (80) 2 (78)
Exceptional items 45 (45) -
Goodwill relating to associated
undertakings (3) 3 -
Goodwill amortisation (148) 148 -
Profit before tax 2,411 - 2,411
Half-year ended Half-year ended
31.12.03 30.06.03
Excluding Excluding
goodwill Goodwill goodwill Goodwill
and and Profit and and Profit
exceptional exceptional before exceptional exceptional before
items items tax items items tax
GBPm GBPm GBPm GBPm GBPm GBPm
UK Banking 1,137 (97) 1,040 1,149 (86) 1,063
UK Retail Banking 569 (89) 480 582 (79) 503
UK Business Banking 568 (8) 560 567 (7) 560
Private Clients and
International 151 (24) 127 129 (18) 111
Private Clients -
ongoing business 40 (21) 19 58 (15) 43
- closed life (32) - (32) (48) - (48)
International 143 (3) 140 119 (3) 116
Barclaycard 374 (21) 353 387 (17) 370
Barclays Capital 398 - 398 438 - 438
Barclays Global
Investors 100 (7) 93 91 (6) 85
Head office functions (139) 10 (129) (102) (2) (104)
and other operations
Exceptional items 5 (5) - (1) 1 -
Goodwill relating to
associated
undertakings (4) 4 - (3) 3 -
Goodwill amortisation (140) 140 - (125) 125 -
Profit before tax 1,882 - 1,882 1,963 - 1,963
TOTAL ASSETS BY BUSINESS
30.06.04
Excluding Total
goodwill Goodwill assets
GBPm GBPm GBPm
UK Banking 114,683 2,706 117,389
UK Retail Banking 67,502 2,665 70,167
UK Business Banking 47,181 41 47,222
Private Clients and International 27,794 1,116 28,910
Private Clients - ongoing business 4,426 1,089 5,515
- closed life assurance activities 480 - 480
International 22,888 27 22,915
Barclaycard 20,689 271 20,960
Barclays Capital 317,027 - 317,027
Barclays Global Investors 706 165 871
Head office functions and other operations 4,921 5 4,926
Goodwill 4,263 (4,263) -
Retail life-fund assets 7,911 - 7,911
Total assets 497,994 - 497,994
31.12.03 30.06.03
Excluding Total Excluding Total
goodwill Goodwill assets goodwill Goodwill assets
GBPm GBPm GBPm GBPm GBPm GBPm
UK Banking 110,995 2,793 113,788 109,529 2,876 112,405
UK Retail Banking 67,001 49 67,050 66,415 53 66,468
UK Business Banking 43,994 2,744 46,738 43,114 2,823 45,937
Private Clients and
International 26,492 1,155 27,647 21,170 526 21,696
Private Clients -
ongoing business 3,867 1,144 5,011 4,072 513 4,585
- closed life 528 - 528 872 - 872
International 22,097 11 22,108 16,226 13 16,239
Barclaycard 20,348 291 20,639 19,054 307 19,361
Barclays Capital 268,702 - 268,702 279,963 - 279,963
Barclays Global
Investors 533 162 695 607 153 760
Head office functions
and other operations 3,709 5 3,714 4,792 5 4,797
Goodwill 4,406 (4,406) - 3,867 (3,867) -
Retail life-fund assets 8,077 - 8,077 7,642 - 7,642
Total assets 443,262 - 443,262 446,624 - 446,624
Registered office
54 Lombard Street, London, EC3P 3AH, England, United Kingdom. Tel: 020 7699
5000. Company number: 48839.
Website
www.barclays.com
Registrar
The Registrar to Barclays PLC, The Causeway, Worthing BN99 6DA.
Tel: 0870 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 +1-610-312-5315, whose domestic
telephone number is +1-888-269-2377 and whose address is 22nd Floor, 101 Barclay
Street, New York, NY 10286.
Filings with the SEC
Statutory accounts for the year ended 31st December 2003, 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 or from the Head of Investor Relations at
Barclays registered office address. 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 2004 Ex Dividend Date 18th August 2004
Interim 2004 Dividend Record Date 20th August 2004
Interim 2004 Dividend Payment Date 1st October 2004
2004 Preliminary Results 10th February 2005
For further information please contact:
Investor Relations Media Relations
James S Johnson/Cathy Turner Chris Tucker/Leigh Bruce
+44 (0) 20 7699 4525/+44 (0) 20 7699 3638 +44 (0) 20 7699 3161/2658
More information on Barclays, including the 2004 Interim results, can be found
on our website at the following address:www.investorrelations.barclays.co.uk.
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 05, 2004 By: /s/ Simon Pordage
----------------------
Simon Pordage
Head of Board Support
BARCLAYS BANK PLC
(Registrant)
Date: August 05, 2004 By: /s/ Simon Pordage
----------------------
Simon Pordage
Head of Board Support