TIDM96ES TIDMBARC
RNS Number : 3233G
Barclays Bank PLC
03 March 2015
Barclays Bank PLC
Results Announcement
31 December 2014
Table of Contents
Results Announcement Page
Basis of Preparation 1
Statement of Directors' Responsibilities 2
Condensed Consolidated Income Statement 3
Condensed Consolidated Statement of Profit or Loss
and other Comprehensive Income 4
Condensed Consolidated Balance Sheet 5
Condensed Consolidated Statement of Changes in Equity 6
Condensed Consolidated Cash Flow Statement 7
Financial Statement Notes 8
Appendix
Barclays PLC Results Announcement 9
BARCLAYS BANK PLC, 1 CHURCHILL PLACE, LONDON, E14 5HP, UNITED
KINGDOM. TELEPHONE: +44 (0) 20 7116 1000. COMPANY NO. 1026167
Notes
The term Barclays or Group refers to Barclays PLC together with
its subsidiaries and the term Barclays Bank PLC Group refers to
Barclays Bank PLC together with its subsidiaries. The term 'The
Group' refers to Barclays Bank PLC together with its subsidiaries.
Unless otherwise stated, the income statement analysis compares the
year ended 31 December 2014 to the corresponding twelve months of
2013 and balance sheet analysis as at 31 December 2014 with
comparatives relating to 31 December 2013. The abbreviations 'GBPm'
and 'GBPbn' represent millions and thousands of millions of Pounds
Sterling respectively; and the abbreviations '$m' and '$bn'
represent millions and thousands of millions of US Dollars
respectively.
The comparatives have been restated to reflect the
implementation of the Group structure changes and the reallocation
of elements of the Head Office results under the revised business
structure. These restatements were detailed in our announcement on
10 July 2014, accessible at
http://www.barclays.com/barclays-investor-relations/results-and-reports.
Balance sheet comparative figures have also been restated to adopt
the offsetting amendments to IAS 32, Financial Instruments:
Presentation.
References throughout this Results Announcement to 'provisions
for ongoing investigations and litigation relating to Foreign
Exchange' means a provision of GBP1,250m held as at 31 December
2014 for certain aspects of ongoing investigations involving
certain authorities and litigation relating to Foreign
Exchange.
Adjusted profit before tax, adjusted attributable profit and
adjusted performance metrics have been presented to provide a more
consistent basis for comparing business performance between
periods. Adjusting items are considered to be significant but not
representative of the underlying business performance. Items
excluded from the adjusted measures are: the impact of own credit;
goodwill impairment; provisions for Payment Protection Insurance
and claims management costs (PPI) and interest rate hedging
redress; gain on US Lehman acquisition assets; provision for
ongoing investigations and litigation relating to Foreign Exchange;
loss on announced sale of the Spanish business; and Education,
Social Housing, and Local Authority (ESHLA) valuation revision. As
management reviews adjusting items at a Group level, results by
business are presented excluding these items. The reconciliation of
adjusted to statutory performance is done at a Group level
only.
Relevant terms that are used in this document but are not
defined under applicable regulatory guidance or International
Financial Reporting Standards (IFRS) are explained in the Results
glossary that can be accessed at www.Barclays.com/results.
This results announcement has been prepared in accordance with
the Disclosure and Transparency Rules of the Financial Conduct
Authority and should be read in conjunction with the annual
financial statements for the year ended 31 December 2014 included
in the Annual Report, which have been prepared in accordance with
IFRS as adopted by the European Union. The information in this
announcement, which was approved by the Board of Directors on 2
March 2015 does not comprise statutory accounts within the meaning
of Section 434 of the Companies Act 2006. Statutory accounts for
the year ended 31 December 2014, which include certain information
required for the Joint Annual Report on Form 20-F of Barclays PLC
and Barclays Bank PLC pursuant to the rules of the US Securities
and Exchange Commission (SEC) (2014 20-F) and which contain an
unqualified audit report under Section 495 of the Companies Act
2006 (which does not make any statements under Section 498 of the
Companies Act 2006) will be delivered to the Registrar of Companies
in accordance with Section 441 of the Companies Act 2006.
These results will be furnished as a Form 6-K to the SEC as soon
as practicable following their publication. Once furnished to the
SEC, copies of the Form 6-K will also be available from the
Barclays Investor Relations website
www.barclays.com/investorrelations and from the SEC's website at
http://www.sec.gov.
Barclays is a frequent issuer in the debt capital markets and
regularly meets with investors via formal road shows and other ad
hoc meetings. Consistent with its usual practice, Barclays expects
that from time to time over the coming quarter it will meet with
investors globally to discuss these results and other matters
relating to the Group.
Forward-looking statements
This document contains certain forward-looking statements within
the meaning of Section 21E of the US Securities Exchange Act of
1934, as amended, and Section 27A of the US Securities Act of 1933,
as amended, with respect to certain of the Group's plans and its
current goals and expectations relating to its future financial
condition and performance. Barclays cautions readers that no
forward-looking statement is a guarantee of future performance and
that actual results could differ materially from those contained in
the forward-looking statements. These forward-looking statements
can be identified by the fact that they do not relate only to
historical or current facts. Forward-looking statements sometimes
use words such as 'may', 'will', 'seek', 'continue', 'aim',
'anticipate', 'target', 'projected', 'expect', 'estimate',
'intend', 'plan', 'goal', 'believe', 'achieve' or other words of
similar meaning. Examples of forward-looking statements include,
among others, statements regarding the Group's future financial
position, income growth, assets, impairment charges and provisions,
business strategy, capital, leverage and other regulatory ratios,
payment of dividends (including dividend pay-out ratios), projected
levels of growth in the banking and financial markets, projected
costs or savings, original and revised commitments and targets in
connection with the Transform Programme and Group Strategy Update,
run-down of assets and businesses within Barclays Non-Core,
estimates of capital expenditures and plans and objectives for
future operations, projected employee numbers and other statements
that are not historical fact. By their nature, forward-looking
statements involve risk and uncertainty because they relate to
future events and circumstances. These may be affected by changes
in legislation, the development of standards and interpretations
under IFRS, evolving practices with regard to the interpretation
and application of accounting and regulatory standards, the outcome
of current and future legal proceedings and regulatory
investigations, future levels of conduct provisions, the policies
and actions of governmental and regulatory authorities,
geopolitical risks and the impact of competition. In addition,
factors including (but not limited to) the following may have an
effect: capital, leverage and other regulatory rules (including
with regard to the future structure of the Group) applicable to
past, current and future periods; UK, US, Africa, Eurozone and
global macroeconomic and business conditions; the effects of
continued volatility in credit markets; market related risks such
as changes in interest rates and foreign exchange rates; effects of
changes in valuation of credit market exposures; changes in
valuation of issued securities; volatility in capital markets;
changes in credit ratings of the Group; the potential for one or
more countries exiting the Eurozone; the impact of EU and US
sanctions on Russia; the implementation of the Transform Programme;
and the success of future acquisitions, disposals and other
strategic transactions. A number of these influences and factors
are beyond the Group's control. As a result, the Group's actual
future results, dividend payments, and capital and leverage ratios
may differ materially from the plans, goals, and expectations set
forth in the Group's forward-looking statements. Additional risks
and factors are identified in our filings with the SEC including
our Annual Report on Form 20-F for the fiscal year ended 31
December 2013, which are available on the SEC's website at
http://www.sec.gov; and in our Annual Report for the fiscal year
ended 31 December 2014, which is available on the Barclays Investor
Relations website at www.barclays.com/investorrelations.
Any forward-looking statements made herein speak only as of the
date they are made and it should not be assumed that they have been
revised or updated in the light of new information or future
events. Except as required by the Prudential Regulation Authority,
the Financial Conduct Authority, the London Stock Exchange plc (the
LSE) or applicable law, Barclays expressly disclaims any obligation
or undertaking to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change
in Barclays' expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is
based. The reader should, however, consult any additional
disclosures that Barclays has made or may make in documents it has
published or may publish via the Regulatory News Service of the LSE
and/or has filed or may file with the SEC, including the 2014
20-F.
Basis of Preparation
More extensive disclosures are contained in the Barclays PLC
Results Announcement for the year ended 31 December 2014, attached,
including risk exposures and business performance, which are
materially the same as those for Barclays Bank PLC.
Barclays Bank PLC is a wholly owned subsidiary of Barclays PLC,
which is the Group's ultimate parent company. The business
activities of Barclays Bank PLC Group and Barclays PLC Group are
fundamentally the same as the only difference is the holding
company, Barclays PLC. Reporting differences between Barclays Bank
PLC and Barclays PLC are driven by the holding company and
resulting differences in funding structures. The significant
differences are described below.
Barclays PLC Barclays Bank PLC
Instrument Type GBPm GBPm Primary reason for difference
================================== ============= ================== ===============================================
Preference shares - 5,846 Preference shares and capital notes issued by
Barclays Bank PLC are included within share
capital in Barclays Bank PLC, and presented as
non-controlling interests in the financial
statements of Barclays PLC Group.
================================== ============= ================== ===============================================
Other shareholders' equity - 485
================================== ============= ================== ===============================================
Non-controlling interests (NCI) 6,391 2,251
================================== ============= ================== ===============================================
Treasury shares (84) - Barclays PLC shares held for the purposes of
employee share schemes and for trading are
recognised
as available for sale investments and trading
portfolio assets respectively within Barclays
Bank PLC. Barclays PLC deducts these treasury
shares from shareholders' equity.
Capital Redemption Reserve (CRR) 394 24 Arising from the redemption or exchange of
Barclays PLC or Barclays Bank PLC shares
respectively.
Barclays Bank PLC Preference Share Exchange and Repurchase
During Q2 2014 Barclays Bank PLC preference shares with a total
book value of GBP1.5bn were repurchased by Barclays Bank PLC as
part of an overall exchange of those preference shares (together
with subordinated debt instruments with a nominal value of
GBP0.6bn), for three issuances of Barclays PLC Fixed Rate Resetting
Perpetual Subordinated Contingent Convertible Securities, with
principal amounts of $1.2bn, EUR1.1bn and GBP0.7bn. Upon completion
of the exercise, Barclays Bank PLC repurchased the preference
shares for cash, funded from retained earnings, at a fair value of
GBP1.7bn. In accordance with capital maintenance rules in the
Companies Act 2006, a Capital Redemption Reserve (CRR) of GBP16m
equal to the preference share capital nominal translated at current
exchange rates was established in Barclays Bank PLC. As the
preference shares are presented as NCI in the financial statements
of Barclays PLC, the exchange resulted in a reduction in NCI for
Barclays PLC.
Barclays Bank PLC Preference Share Redemption
During Q4 2014 Barclays Bank PLC preference shares with a total
book value of GBP0.7bn were redeemed on their first call date. The
cash redemption of the preference shares by Barclays Bank PLC at a
fair value of GBP0.8bn was funded from retained earnings. In
accordance with capital maintenance rules in the Companies Act
2006, a Capital Redemption Reserve (CRR) of GBP8m equal to the
preference share capital nominal translated at current exchange
rates was established in Barclays Bank PLC. As the preference
shares are presented as NCI in the financial statements of Barclays
PLC, the exchange resulted in a reduction in NCI for Barclays
PLC.
Barclays Bank PLC Contingent Capital Notes
Barclays Bank PLC has in issue two series of contingent capital
notes (CCNs). These both pay interest and principal to the holder
unless the consolidated CRD IV CET 1 ratio (FSA October 2012
transitional statement). of Barclays PLC falls below 7%, in which
case they are cancelled from the consolidated perspective. The
coupon payable on the CCNs is higher than a market rate of interest
for a similar note without this risk.
The accounting for these instruments differs between the
consolidated financial statements of Barclays PLC and Barclays Bank
PLC as follows:
- In the case of the 7.675% CCN issuance, the cancellation is
effected by an automatic legal transfer from the holder to Barclays
PLC. In these circumstances, Barclays Bank PLC remains liable to
Barclays PLC. Barclays Bank PLC does not benefit from the
cancellation feature although it pays a higher than market rate for
a similar note, and therefore the initial fair value of the note
recognised was higher than par. The difference between fair value
and par is amortised to the income statement over time.
- In the case of the 7.75% CCN issuance, the cancellation is
directly effected in Barclays Bank PLC. For Barclays Bank PLC, the
cancellation feature is separately valued from the host liability
as an embedded derivative with changes in fair value reported in
the income statement. The initial fair value of the host liability
recognised was higher than par by the amount of the initial fair
value of the derivative and the difference is amortised to the
income statement over time.
Statement of Directors' Responsibilities
Each of the Directors (the names of whom are set out below)
confirm that:
- to the best of their knowledge, the condensed consolidated
financial statements (set out on pages 3 to 8), which have been
prepared in accordance with the IFRSs as adopted by the European
Union, give a true and fair view of the assets, liabilities,
financial position and profit or loss of Barclays Bank PLC and the
undertakings included in the consolidation taken as a whole. The
condensed consolidated financial statements should be read in
conjunction with the annual financial statements for the year ended
31 December 2014 included in the Barclays Bank PLC Annual Report;
and
- to the best of their knowledge, the management information
(set out on pages 3 to 8) includes a fair review of the development
and performance of the business and the position of the Company and
the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and
uncertainties that they face.
Signed on behalf of the Board by
Antony Jenkins Date Tushar Morzaria Date
Group Chief Executive Group Finance Director
Barclays Bank PLC Board of Directors:
Chairman Executive Directors Non-executive Directors
Sir David Walker Antony Jenkins (Group Mike Ashley
Chief Executive) Tim Breedon CBE
Tushar Morzaria (Group Crawford Gillies
Finance Director) Reuben Jeffery III
Wendy Lucas-Bull
John McFarlane
Dambisa Moyo
Frits van Paasschen
Sir Michael Rake
Diane de Saint Victor
Sir John Sunderland
Stephen Thieke
Condensed Consolidated Financial Statements
Condensed Consolidated Income Statement (audited)
Year Ended Year Ended
Continuing Operations 31.12.14 31.12.13
Notes(1) GBPm GBPm
=============================================== ======== ========== ==========
Net interest income 12,138 11,653
Net fee and commission income 8,188 8,752
Net trading income 3,310 6,548
Net investment income(2) 1,328 680
Net premiums from insurance contracts 669 732
Other income 182 98
=============================================== ======== ========== ==========
Total income 25,815 28,463
Net claims and benefits incurred on insurance
contracts (480) (509)
=============================================== ======== ========== ==========
Total income net of insurance claims 25,335 27,954
Credit impairment charges and other provisions (2,168) (3,071)
=============================================== ======== ========== ==========
Net operating income 23,167 24,883
Staff costs (11,005) (12,155)
Administration and general expenses (9,418) (9,819)
=============================================== ======== ========== ==========
Operating expenses (20,423) (21,974)
(Loss) on disposal of undertakings and share
of results of associates and joint ventures (435) (24)
=============================================== ======== ========== ==========
Profit before tax 2,309 2,885
Tax (1,455) (1,577)
=============================================== ======== ========== ==========
Profit after tax 854 1,308
Attributable to:
=============================================== ======== ========== ==========
Equity holders of the parent 528 963
Non-controlling interests 1 326 345
=============================================== ======== ========== ==========
Profit after tax 854 1,308
1 For notes specific to Barclays Bank PLC see page 8 and for
those that also relate to Barclays PLC see pages 39 to 46 in the
Barclays PLC Results
Announcement.
2 Net investment income includes the GBP461m gain on US Lehman acquisition assets.
Condensed Consolidated Statement of Profit or Loss and other Comprehensive
Income (audited)
Year Ended Year Ended
Continuing Operations 31.12.14 31.12.13
Notes(1) GBPm GBPm
=============================================== ======== ========== ==========
Profit after tax 854 1,308
Other comprehensive income/(loss) that may
be recycled to profit or loss:
=============================================== ======== ========== ==========
Currency translation reserve 486 (1,767)
Available for sale reserve 426 (378)
Cash flow hedge reserve 1,540 (1,890)
Other (19) (37)
=============================================== ======== ========== ==========
Total comprehensive income/(loss) that may
be recycled to profit or loss 2,433 (4,072)
Other comprehensive income/(loss) not recycled
to profit or loss:
=============================================== ======== ========== ==========
Retirement benefit remeasurements 205 (515)
Other comprehensive income/(loss) for the
period 2,638 (4,587)
Total comprehensive income/(loss) for the
period 3,492 (3,279)
Attributable to:
=============================================== ======== ========== ==========
Equity holders of the parent 3,245 (2,979)
Non-controlling interests 1 247 (300)
=============================================== ======== ========== ==========
Total comprehensive income/(loss) for the
period 3,492 (3,279)
1 For notes specific to Barclays Bank PLC see page 8 and for
those that also relate to Barclays PLC see pages 39 to 46 in the
Barclays PLC Results
Announcement.
Condensed Consolidated Balance Sheet (audited)
As at As at
31.12.14 31.12.13
Assets Notes(1) GBPm GBPm
================================================= ======== ========= =========
Cash and balances at central banks 39,695 45,687
Items in the course of collection from other
banks 1,210 1,282
Trading portfolio assets 114,755 133,089
Financial assets designated at fair value 38,300 38,968
Derivative financial instruments 440,076 350,460
Available for sale financial investments 86,105 91,788
Loans and advances to banks 42,657 39,822
Loans and advances to customers 427,767 434,237
Reverse repurchase agreements and other similar
secured lending 131,753 186,779
Current tax assets 334 181
Deferred tax assets 4,130 4,807
Prepayments, accrued income and other assets 19,178 4,414
Investments in associates and joint ventures 711 653
Goodwill 4,887 4,878
Intangible assets 3,293 2,807
Property, plant and equipment 3,786 4,216
Retirement benefit assets 56 133
Total assets 1,358,693 1,344,201
Liabilities
================================================= ======== ========= =========
Deposits from banks 58,390 55,615
Items in the course of collection due to other
banks 1,177 1,359
Customer accounts 427,868 432,032
Repurchase agreements and other similar secured
borrowing 124,479 196,748
Trading portfolio liabilities 45,124 53,464
Financial liabilities designated at fair value 56,972 64,796
Derivative financial instruments 439,320 347,118
Debt securities in issue 86,099 86,693
Accruals, deferred income and other liabilities 24,547 13,673
Current tax liabilities 1,023 1,042
Deferred tax liabilities 255 348
Subordinated liabilities 21,685 22,249
Provisions 4,135 3,886
Retirement benefit liabilities 1,574 1,958
Total liabilities 1,292,648 1,280,981
Equity
================================================= ======== ========= =========
Called up share capital and share premium 3 14,472 14,494
Other reserves 2,322 (233)
Retained earnings 42,650 44,670
================================================= ======== ========= =========
Shareholders' equity attributable to ordinary
shareholders of the parent 59,444 58,931
Other equity instruments 4 4,350 2,078
================================================= ======== ========= =========
Total equity excluding non-controlling interests 63,794 61,009
Non-controlling interests 1 2,251 2,211
================================================= ======== ========= =========
Total equity 66,045 63,220
Total liabilities and equity 1,358,693 1,344,201
1 For notes specific to Barclays Bank PLC see page 8 and for
those that also relate to Barclays PLC see pages 39 to 46 in the
Barclays PLC Results
Announcement.
Condensed Consolidated Statement of Changes in Equity (audited)
Called
up Share
Capital Other
and Share Equity Other Retained Non-controlling Total
Premium(1) Instruments(1) Reserves Earnings Total Interests(2) Equity
Year Ended 31.12.14 GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------- ----------- --------------- --------- --------- ------- --------------- -------
Balance at 1 January 2014 14,494 2,078 (233) 44,670 61,009 2,211 63,220
Profit after tax - 250 - 278 528 326 854
Other comprehensive profit
after tax for the period - - 2,531 186 2,717 (79) 2,638
Buyback and issue of equity
instruments (15) 2,272 16 (1,683) 590 - 590
Redemption of preference
shares (7) - 8 (792) (791) - (791)
Coupons paid on other equity
instruments - (250) - 54 (196) - (196)
Equity settled share schemes - - - 693 693 - 693
Vesting of Barclays PLC
shares under share-based
payment schemes - - - (866) (866) - (866)
Dividends paid - - - (821) (821) (190) (1,011)
Dividends on preference
shares and other shareholders'
equity - - - (441) (441) - (441)
Capital contribution from
Barclays PLC - - - 1,412 1,412 - 1,412
Other reserve movements - - - (40) (40) (17) (57)
------------------------------- ----------- --------------- --------- --------- ------- --------------- -------
Balance at 31 December
2014 14,472 4,350 2,322 42,650 63,794 2,251 66,045
Year Ended 31.12.13
------------------------------- ----------- --------------- --------- --------- ------- --------------- -------
Balance at 1 January 2013 14,494 - 3,329 39,244 57,067 2,856 59,923
Profit after tax - - - 963 963 345 1,308
Other comprehensive profit
after tax for the period - - (3,402) (540) (3,942) (645) (4,587)
Issue of other equity
instruments - 2,078 - - 2,078 - 2,078
Equity settled share schemes - - - 689 689 - 689
Vesting of Barclays PLC
shares under share-based
payment schemes - - - (1,047) (1,047) - (1,047)
Dividends paid - - - (734) (734) (342) (1,076)
Dividends on preference
shares and other shareholders'
equity - - - (471) (471) - (471)
Redemption of capital
instruments - - (100) - (100) - (100)
Capital contribution from
Barclays PLC - - - 6,553 6,553 - 6,553
Other reserve movements - - (60) 13 (47) (3) (50)
------------------------------- ----------- --------------- --------- --------- ------- --------------- -------
Balance at 31 December
2013 14,494 2,078 (233) 44,670 61,009 2,211 63,220
1 Details of Share Capital and Other Equity Instruments are shown on page 8.
2 Details of Non-controlling Interests are shown on page 8.
Condensed Consolidated Cash Flow Statement (audited)
Year Ended Year Ended
Continuing Operations 31.12.14 31.12.13
GBPm GBPm
====================================================== ========== ==========
Profit before tax 2,309 2,885
Adjustment for non-cash items 4,728 5,713
Changes in operating assets and liabilities (17,538) (32,322)
Corporate income tax paid (1,590) (1,558)
====================================================== ========== ==========
Net cash from operating activities (12,091) (25,282)
Net cash from investing activities 10,661 (22,655)
Net cash from financing activities (1,414) 6,260
Effect of exchange rates on cash and cash equivalents (431) 198
====================================================== ========== ==========
Net decrease in cash and cash equivalents (3,275) (41,479)
Cash and cash equivalents at beginning of the period 81,754 123,233
====================================================== ========== ==========
Cash and cash equivalents at end of the period 78,479 81,754
Financial Statement Notes
1. Non-controlling Interests
Profit Attributable Equity Attributable
to Non-controlling to Non-controlling
Interest Interest
====================== =====================
Year Ended Year Ended As at As at
31.12.14 31.12.13 31.12.14 31.12.13
GBPm GBPm GBPm GBPm
Barclays Africa Group
Limited 320 343 2,247 2,204
Other non-controlling
interests 6 2 4 7
======================== ========== ========== ========== =========
Total 326 345 2,251 2,211
2. Dividends on Ordinary Shares
Year Year Ended
Ended 31.12.13
31.12.14
Dividends paid during the period GBPm GBPm
===================================== ========= ==========
Final dividend paid during period 512 373
Interim dividends paid during period 309 361
===================================== ========= ==========
Total 821 734
Ordinary dividends were paid to enable Barclays PLC to fund its
dividend to shareholders.
3. Called Up Share Capital
Ordinary Shares
At 31 December 2014 and 31 December 2013 the issued ordinary
share capital of Barclays Bank PLC, comprised 2,342 million
ordinary shares of GBP1 each.
Preference Shares
At 31 December 2014 the issued preference share capital of
Barclays Bank PLC comprised 1,000 (2013: 1,000) Sterling Preference
Shares of GBP1 each; 31,856 (2013: 240,000) Euro Preference Shares
of EUR100 each; 20,930 (2013: 75,000) Sterling Preference Shares of
GBP100 each; 58,133 (2013: 100,000) US Dollar Preference Shares of
$100 each; and 237 million (2013: 237 million) US Dollar Preference
Shares of $0.25 each.
4. Other Equity Instruments
Other Equity Instruments of GBP4,350m (2013: GBP2,078m) include
Additional Tier 1 (AT1) securities issued by Barclays Bank PLC
during 2013 and 2014. During 2013, there were two separate
issuances of Fixed Rate Resetting Perpetual Subordinated Contingent
Convertible Securities, with principal amounts of $2bn and
EUR1bn.
During 2014, there were three issuances of Fixed Rate Resetting
Perpetual Subordinated Contingent Convertible Securities, with
principal amounts of $1.21bn, EUR1.08bn and GBP0.7bn (The Bank AT1
securities). The Bank AT1 securities were issued to Barclays PLC as
part of an overall exchange of GBP1,527m of Barclays Bank PLC
preference shares and GBP607m of subordinated debt instruments
(Tier 1 Notes and Reserve Capital Instruments) for new AT1
securities issued by B PLC (The Group AT1 securities). Upon
completion of the exercise, the preference shares and subordinated
debt instruments were cancelled by Barclays Bank PLC. The cash
repurchase of the preference shares by Barclays Bank PLC at a fair
value of GBP1,683m was funded from retained earnings. In accordance
with capital maintenance rules in the Companies Act 2006, a Capital
Redemption Reserve (CRR) of GBP16m equal to the preference share
capital nominal translated at current exchange rates was
established in Barclays Bank PLC.
The AT1 securities are perpetual securities with no fixed
maturity and are structured to qualify as AT1 instruments under CRD
IV.
Appendix: Barclays PLC Results Announcement
Barclays PLC
Results Announcement
31 December 2014
Table of Contents
Results Announcement Page
Performance Highlights 4-6
Group Chief Executive Officer's Review 7
Group Finance Director's Review 8-11
Results by Business
* Personal and Corporate Banking 12-13
* Barclaycard 14
* Africa Banking 15-16
* Investment Bank 17-19
* Head Office 20
* Barclays Non-Core 21-22
Quarterly Results Summary 23-24
Performance Management
* Returns and equity by business 25-26
* Margins and balances 27
* Remuneration 28-29
Risk Management
* Funding Risk - Liquidity 30-32
* Funding Risk - Capital 33-36
* Credit Risk 37
Statement of Directors' Responsibilities 38
Condensed Consolidated Financial Statements 39-42
Financial Statement Notes 43-46
Shareholder Information 47
BARCLAYS PLC, 1 CHURCHILL PLACE, LONDON, E14 5HP, UNITED
KINGDOM. TELEPHONE: +44 (0) 20 7116 1000. COMPANY NO. 48839
Notes
The term Barclays or Group refers to Barclays PLC together with
its subsidiaries. Unless otherwise stated, the income statement
analysis compares the year ended 31 December 2014 to the
corresponding twelve months of 2013 and balance sheet analysis as
at 31 December 2014 with comparatives relating to 31 December 2013.
The abbreviations 'GBPm' and 'GBPbn' represent millions and
thousands of millions of Pounds Sterling respectively; and the
abbreviations '$m' and '$bn' represent millions and thousands of
millions of US Dollars respectively.
The comparatives have been restated to reflect the
implementation of the Group structure changes and the reallocation
of elements of the Head Office results under the revised business
structure. These restatements were detailed in our announcement on
10 July 2014, accessible at
http://www.barclays.com/barclays-investor-relations/results-and-reports.
Balance sheet comparative figures have also been restated to adopt
the offsetting amendments to IAS 32, Financial Instruments:
Presentation.
References throughout this Results Announcement to 'provisions
for ongoing investigations and litigation relating to Foreign
Exchange' means a provision of GBP1,250m held as at 31 December
2014 for certain aspects of ongoing investigations involving
certain authorities and litigation relating to Foreign
Exchange.
Adjusted profit before tax, adjusted attributable profit and
adjusted performance metrics have been presented to provide a more
consistent basis for comparing business performance between
periods. Adjusting items are considered to be significant but not
representative of the underlying business performance. Items
excluded from the adjusted measures are: the impact of own credit;
goodwill impairment; provisions for Payment Protection Insurance
and claims management costs (PPI) and interest rate hedging
redress; gain on US Lehman acquisition assets; provision for
ongoing investigations and litigation relating to Foreign Exchange;
loss on announced sale of the Spanish business; and Education,
Social Housing, and Local Authority (ESHLA) valuation revision. As
management reviews adjusting items at a Group level, results by
business are presented excluding these items. The reconciliation of
adjusted to statutory performance is done at a Group level
only.
Relevant terms that are used in this document but are not
defined under applicable regulatory guidance or International
Financial Reporting Standards (IFRS) are explained in the Results
glossary that can be accessed at www.Barclays.com/results.
This results announcement has been prepared in accordance with
the Disclosure and Transparency Rules of the Financial Conduct
Authority and should be read in conjunction with the annual
financial statements for the year ended 31 December 2014 included
in the Annual Report, which have been prepared in accordance with
IFRS as adopted by the European Union. The information in this
announcement, which was approved by the Board of Directors on 2
March 2015 does not comprise statutory accounts within the meaning
of Section 434 of the Companies Act 2006. Statutory accounts for
the year ended 31 December 2014, which include certain information
required for the Joint Annual Report on Form 20-F of Barclays PLC
and Barclays Bank PLC pursuant to the rules of the US Securities
and Exchange Commission (SEC) (2014 20-F) and which contain an
unqualified audit report under Section 495 of the Companies Act
2006 (which does not make any statements under Section 498 of the
Companies Act 2006) will be delivered to the Registrar of Companies
in accordance with Section 441 of the Companies Act 2006.
These results will be furnished as a Form 6-K to the SEC as soon
as practicable following their publication. Once furnished to the
SEC, copies of the Form 6-K will also be available from the
Barclays Investor Relations website
www.barclays.com/investorrelations and from the SEC's website at
http://www.sec.gov.
Barclays is a frequent issuer in the debt capital markets and
regularly meets with investors via formal road shows and other ad
hoc meetings. Consistent with its usual practice, Barclays expects
that from time to time over the coming quarter it will meet with
investors globally to discuss these results and other matters
relating to the Group.
Forward-looking statements
This document contains certain forward-looking statements within
the meaning of Section 21E of the US Securities Exchange Act of
1934, as amended, and Section 27A of the US Securities Act of 1933,
as amended, with respect to certain of the Group's plans and its
current goals and expectations relating to its future financial
condition and performance. Barclays cautions readers that no
forward-looking statement is a guarantee of future performance and
that actual results could differ materially from those contained in
the forward-looking statements. These forward-looking statements
can be identified by the fact that they do not relate only to
historical or current facts. Forward-looking statements sometimes
use words such as 'may', 'will', 'seek', 'continue', 'aim',
'anticipate', 'target', 'projected', 'expect', 'estimate',
'intend', 'plan', 'goal', 'believe', 'achieve' or other words of
similar meaning. Examples of forward-looking statements include,
among others, statements regarding the Group's future financial
position, income growth, assets, impairment charges and provisions,
business strategy, capital, leverage and other regulatory ratios,
payment of dividends (including dividend pay-out ratios), projected
levels of growth in the banking and financial markets, projected
costs or savings, original and revised commitments and targets in
connection with the Transform Programme and Group Strategy Update,
run-down of assets and businesses within Barclays Non-Core,
estimates of capital expenditures and plans and objectives for
future operations, projected employee numbers and other statements
that are not historical fact. By their nature, forward-looking
statements involve risk and uncertainty because they relate to
future events and circumstances. These may be affected by changes
in legislation, the development of standards and interpretations
under IFRS, evolving practices with regard to the interpretation
and application of accounting and regulatory standards, the outcome
of current and future legal proceedings and regulatory
investigations, future levels of conduct provisions, the policies
and actions of governmental and regulatory authorities,
geopolitical risks and the impact of competition. In addition,
factors including (but not limited to) the following may have an
effect: capital, leverage and other regulatory rules (including
with regard to the future structure of the Group) applicable to
past, current and future periods; UK, US, Africa, Eurozone and
global macroeconomic and business conditions; the effects of
continued volatility in credit markets; market related risks such
as changes in interest rates and foreign exchange rates; effects of
changes in valuation of credit market exposures; changes in
valuation of issued securities; volatility in capital markets;
changes in credit ratings of the Group; the potential for one or
more countries exiting the Eurozone; the impact of EU and US
sanctions on Russia; the implementation of the Transform Programme;
and the success of future acquisitions, disposals and other
strategic transactions. A number of these influences and factors
are beyond the Group's control. As a result, the Group's actual
future results, dividend payments, and capital and leverage ratios
may differ materially from the plans, goals, and expectations set
forth in the Group's forward-looking statements. Additional risks
and factors are identified in our filings with the SEC including
our Annual Report on Form 20-F for the fiscal year ended 31
December 2013, which are available on the SEC's website at
http://www.sec.gov; and in our Annual Report for the fiscal year
ended 31 December 2014, which is available on the Barclays Investor
Relations website at www.barclays.com/investorrelations.
Any forward-looking statements made herein speak only as of the
date they are made and it should not be assumed that they have been
revised or updated in the light of new information or future
events. Except as required by the Prudential Regulation Authority,
the Financial Conduct Authority, the London Stock Exchange plc (the
LSE) or applicable law, Barclays expressly disclaims any obligation
or undertaking to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change
in Barclays' expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is
based. The reader should, however, consult any additional
disclosures that Barclays has made or may make in documents it has
published or may publish via the Regulatory News Service of the LSE
and/or has filed or may file with the SEC, including the 2014
20-F.
Performance Highlights
Steady progress towards our Transform targets. Higher Group and
Core profit before tax were driven by focused cost saving
initiatives. Significant Non-Core run down throughout the year
contributed to strengthening of Group capital and leverage
ratios
- Group adjusted profit before tax increased 12% to GBP5,502m
with Core profit before tax increasing 3% to GBP6,682m
and areduction in Non-Core loss before tax of 24% to
GBP1,180m
- Total adjusted operating expenses decreased 9% to GBP18,069m
driven by savings from Transform programmes,
including a 5% net reduction in headcount. Operating expenses
excluding costs to achieve Transform reduced
GBP1,780m to GBP16,904m
- Credit impairment charges reduced 29% to GBP2,168m, with a
GBP732m reduction in Non-Core to GBP168m and an 8%
reduction in the Core business to GBP2,000m
- Within the Core business, Personal & Corporate Banking
(PCB) andBarclaycard continued to grow profits, with both
increasing income and reducing operating expenses excluding costs
to achieve Transform. Africa Banking reported improved constant
currency results, with reported results impacted by adverse
currency movements. The Investment Bank made further progress on
its strategic repositioning whilst driving cost savings and RWA
efficiencies, despite challenging market conditions impacting
income. Core return on average equity excluding costs to achieve
Transform of 10.9% (2013: 12.7%)
- Non-Core run-down made good progress, with RWAs reducing
GBP35bn to GBP75bn. Period end allocated equity reduced GBP4bn to
GBP11bn
- Fully loaded CRD IV Common Equity Tier 1 (CET1) ratio
increased to 10.3% (2013: 9.1%) achieving further
progress towards the 2016 Transform target in excess of 11%. The
improvement was mainly driven by a GBP40.6bn reduction in RWAs to
GBP402bn, demonstrating good progress on the Non-Core run-down, and
capital growth to GBP41.5bn (2013: GBP40.4bn). Including the sale
of the Spanish business,completed on 2 January 2015, the fully
loaded CRD IV CET1 ratio would haveincreased to 10.5% as at 31
December 2014
- The BCBS 270 leverage ratio increasedto 3.7% (September 2014:
3.5%), close to our 2016 Transform target in
excess of 4%. The increase was due to a significant reduction in
leverage exposure in Q414 to GBP1,233bn (September
2014: GBP1,324bn) driven by a seasonal reduction in settlement
balances and continued reductions in Non-Core leverage
exposure
- Net tangible asset value per share increased to 285p (2013:
283p)
Material adjusting items:
- A valuation revision of GBP935m was recognised in Q414 against
the Education, Social Housing, and Local Authority (ESHLA) loan
portfolio held at fair value in Barclays Non-Core. This is due to
changes in discount rates applied in the valuation methodology.
This revision does not impact either the CET1 or leverage ratio
- A provision of GBP1,250m was recognised in H214 for ongoing
investigations and litigation relating to Foreign Exchange. This
included an additional provision of GBP750m recognised in Q414
- An additional PPI redress provision of GBP200m was recognised
in Q414 based on an updated best estimate of future redress and
associated costs, resulting in a full year net charge of GBP1,110m
in relation to PPI and interest rate hedging redress
- A GBP461m gain on US Lehman acquisition assets wasrecognised
in Q314 (Q213: GBP259m)
- A loss was realised on the announced sale of the Spanish
business of GBP446m in Q3 and Q414, which completed on 2 January
2015. In addition, accumulated currency translation reserve losses
of approximately GBP100m will be recognised on completion in
Q115
Barclays Group results Adjusted Statutory
=============================== ===============================
for the year ended 31.12.14 31.12.13(1) 31.12.14 31.12.13
GBPm GBPm % Change GBPm GBPm % Change
================================ ======== =========== ======== ========== ========= ========
Total income net of insurance
claims 25,728 27,896 (8) 25,288 27,935 (9)
Credit impairment charges
and other provisions (2,168) (3,071) 29 (2,168) (3,071) 29
================================ ======== =========== ======== ========== ========= ========
Net operating income 23,560 24,825 (5) 23,120 24,864 (7)
Operating expenses (15,993) (17,739) 10 (15,993) (17,818) 10
Litigation and conduct (449) (441) (2) (2,809) (2,441) (15)
UK bank levy (462) (504) 8 (462) (504) 8
================================ ======== =========== ======== ========== ========= ========
Operating expenses excluding
costs to achieve Transform (16,904) (18,684) 10 (19,264) (20,763) 7
Costs to achieve Transform (1,165) (1,209) 4 (1,165) (1,209) 4
================================ ======== =========== ======== ========== ========= ========
Total operating expenses (18,069) (19,893) 9 (20,429) (21,972) 7
Loss on announced sale of
the Spanish business - - (446) -
Other net income/(expense) 11 (24) 11 (24)
================================ ======== =========== ======== ========== ========= ========
Profit before tax 5,502 4,908 12 2,256 2,868 (21)
Tax charge (1,704) (1,963) 13 (1,411) (1,571) 10
================================ ======== =========== ======== ========== ========= ========
Profit after tax 3,798 2,945 29 845 1,297 (35)
Non-controlling interests (769) (757) (2) (769) (757) (2)
Other equity interests(2) (250) - (250) -
================================ ======== =========== ======== ========== ========= ========
Attributable profit 2,779 2,188 27 (174) 540
Performance measures
================================ ======== =========== ======== ========== ========= ========
Return on average tangible
shareholders' equity(2) 5.9% 4.8% (0.3%) 1.2%
Return on average shareholders'
equity(2) 5.1% 4.1% (0.2%) 1.0%
Cost: income ratio 70% 71% 81% 79%
Loan loss rate (bps) 46 64 46 64
Basic earnings per share(2) 17.3p 15.3p (0.7p) 3.8p
Dividend per share 6.5p 6.5p 6.5p 6.5p
Balance sheet and leverage
================================ ======== =========== ======== ========== ========= ========
Net tangible asset value
per share 285p 283p
Net asset value per share 335p 331p
BCBS 270 leverage exposure GBP1,233bn n/a
Capital management
================================ ======== =========== ======== ========== ========= ========
CRD IV fully loaded
Common equity tier 1 ratio 10.3% 9.1%
Common equity tier 1 capital GBP41.5bn GBP40.4bn
Tier 1 capital GBP46.0bn GBP42.7bn
Risk weighted assets GBP402bn GBP442bn
BCBS 270 leverage ratio 3.7% n/a
Funding and liquidity
================================ ======== =========== ======== ========== ========= ========
Group liquidity pool GBP149bn GBP127bn
Estimated CRD IV liquidity
coverage ratio 124% 96%
Loan: deposit ratio(3) 89% 91%
Adjusted profit reconciliation
================================ ======== =========== ======== ========== ========= ========
Adjusted profit before tax 5,502 4,908
Own credit 34 (220)
Goodwill impairment - (79)
Provisions for PPI and interest rate hedging
redress (1,110) (2,000)
Gain on US Lehman acquisition assets(1) 461 259
Provision for ongoing investigations and litigation
relating to Foreign Exchange (1,250) -
Loss on announced sale of the Spanish business (446) -
ESHLA valuation revision (935) -
Statutory profit before
tax 2,256 2,868
1 2013 adjusted income and profit before tax have been restated
to exclude the Q213 GBP259m gain relating to assets not yet
received from the US Lehman acquisition
to aid comparability given its material nature in the current
year.
2 The profit after tax attributable to other equity holders of
GBP250m (2013: GBPnil) is offset by a tax credit recorded in
reserves of GBP54m (2013: GBPnil). The net amount of
GBP196m, along with non-controlling interests (NCI) is deducted
from profit after tax in order to calculate earnings per share,
return on average tangible shareholders'
equity and return on average shareholders' equity.
3 Loan: deposit ratio for PCB, Barclaycard, Africa Banking and Non-Core retail.
Barclays Core and Non-Core Barclays Core Barclays Non-Core
results
=============================== ============================
for the year ended 31.12.14 31.12.13(1) 31.12.14 31.12.13
GBPm GBPm % Change GBPm GBPm % Change
============================== ======== =========== ======== ======== ======== ========
Total income net of insurance
claims 24,678 25,603 (4) 1,050 2,293 (54)
Credit impairment charges
and other provisions (2,000) (2,171) 8 (168) (900) 81
============================== ======== =========== ======== ======== ======== ========
Net operating income 22,678 23,432 (3) 882 1,393 (37)
Operating expenses (14,483) (15,809) 8 (1,510) (1,930) 22
Litigation and conduct (251) (173) (45) (198) (268) 26
UK bank levy (371) (395) 6 (91) (109) 17
Costs to achieve Transform (953) (671) (42) (212) (538) 61
============================== ======== =========== ======== ======== ======== ========
Total operating expenses (16,058) (17,048) 6 (2,011) (2,845) 29
Other net income/(expense) 62 86 (28) (51) (110) 54
============================== ======== =========== ======== ======== ======== ========
Profit/(loss) before tax 6,682 6,470 3 (1,180) (1,562) 24
Tax (charge)/credit (1,976) (1,754) (13) 272 (209)
============================== ======== =========== ======== ======== ======== ========
Profit/(loss) after tax 4,706 4,716 - (908) (1,771) 49
Non-controlling interests (648) (638) (2) (121) (119) (2)
Other equity interests (194) - (56) -
============================== ======== =========== ======== ======== ======== ========
Attributable profit/(loss) 3,864 4,078 (5) (1,085) (1,890) 43
Performance measures
============================== ======== =========== ======== ======== ======== ========
Return on average tangible
equity(2) 11.3% 14.4% (5.4%) (9.6%)
Average allocated tangible GBP35bn GBP28bn GBP13bn GBP17bn
equity (GBPbn)
Return on average equity(2) 9.2% 11.3% (4.1%) (7.2%)
Average allocated equity GBP42bn GBP36bn GBP13bn GBP17bn
(GBPbn)
Period end allocated equity GBP45bn GBP39bn GBP11bn GBP15bn
(GBPbn)
Cost: income ratio 65% 67% n/a n/a
Basic earnings per share
contribution 24.0p 28.5p (6.7p) (13.2p)
Capital management
============================== ======== =========== ======== ======== ======== ========
Risk weighted assets GBP327bn GBP333bn GBP75bn GBP110bn
BCBS 270 leverage exposure GBP956bn n/a GBP277bn n/a
31.12.14 31.12.13
Income by business GBPm GBPm % Change
=============================== ======== ======== ========
Personal and Corporate Banking 8,828 8,723 1
Barclaycard 4,356 4,103 6
Africa Banking 3,664 4,039 (9)
Investment Bank(1) 7,588 8,596 (12)
Head Office 242 142 70
=============================== ======== ======== ========
Barclays Core 24,678 25,603 (4)
Barclays Non-Core 1,050 2,293 (54)
=============================== ======== ======== ========
Barclays Group adjusted
income 25,728 27,896 (8)
31.12.14 31.12.13
Profit/(loss) before tax GBPm GBPm % Change
by business
=============================== ======== ======== ========
Personal and Corporate Banking 2,885 2,233 29
Barclaycard 1,339 1,183 13
Africa Banking 984 1,049 (6)
Investment Bank(1) 1,377 2,020 (32)
Head Office 97 (15)
=============================== ======== ======== ========
Barclays Core 6,682 6,470 3
Barclays Non-Core (1,180) (1,562) 24
=============================== ======== ======== ========
Barclays Group adjusted
profit before tax 5,502 4,908 12
1 2013 adjusted income and profit before tax have been restated
to exclude the Q213 GBP259m gain relating to assets not yet
received from the US Lehman acquisition to aid comparability given
its material nature in the current year.
2 Return on average equity and average tangible equity for
Barclays Non-Core represents its impact on the Group, being the
difference between Barclays Group returns and Barclays Core
returns. This does not represent the return on average equity and
average tangible equity of the Non-Core business.
Group Chief Executive Officer's Review
"Barclays today is a stronger business, with better prospects,
than at any time since the financial crisis.
While our work in transforming the bank is not complete, our
performance in 2014 gives us confidence that we are on the right
track.
Group adjusted profit before tax increased 12% year on year. Our
Personal and Corporate Banking and Barclaycard businesses continue
to thrive and grow, Africa Banking has done well despite currency
headwinds, and we saw encouraging performance in several areas of
our Investment Bank.
We made good progress against our Transform 2016 targets during
the year, notably on cost, capital, and leverage, providing further
evidence that our strategy is working.
On cost, we delivered significant reductions in 2014, with
operating costs reducing nearly GBP1.8bn, equivalent to 10% of the
Group adjusted cost base excluding costs to achieve Transform. This
achievement over the past twelve months, with further reductions to
come in 2015, will better position Barclays to grow returns and
drive sustainable competitive advantages across all of our
businesses. In our Core business, the future of Barclays, adjusted
Return on Equity was nearly 11% excluding costs to achieve
Transform, tracking well towards the 12% plus we are targeting for
2016. Barclays Non-Core run-down is ahead of target, with RWAs
reducing by nearly GBP35bn to GBP75bn, and its RoE dilution
reducing from 7.2% to 4.1%.
We made substantial progress in strengthening our capital
position in 2014. Our fully loaded CET1 ratio improved to 10.5%,
taking into account the effect of the disposal of our Spanish
business completed on 2 January 2015 and a further provision in Q4
for ongoing investigations and litigation relating to Foreign
Exchange, compared to 9.1% a year ago. Equally important, our
leverage ratio increased to 3.7%. This means we are now well
positioned to achieve the Transform 2016 targets of greater than
11% and 4% respectively.
In terms of dividends, we declared a cash dividend of 6.5p for
2014 despite the impact of provisions for conduct items. We have a
growing confidence in the capital position of the Group and
continue to target a 40-50% payout ratio.
Barclays is also making steady progress on the targets in our
Balanced Scorecard, implemented across the organisation for the
first time this year. Specific measures across Customers and
Clients, Colleagues, Conduct, Citizenship, and Company - tied
directly to executive and staff appraisals and remuneration -
ensure that we are delivering performance in the right way, in line
with our purpose and values.
We remain focussed on addressing outstanding conduct issues,
including those relating to Foreign Exchange trading. I regard the
behaviour at the centre of these investigations as wholly
incompatible with our values, and I share the frustration of
colleagues and shareholders that matters like these continue to
cast a shadow over our business. But resolving these issues is an
important part of our plan for Barclays and, although it may be
difficult, I expect that we will make significant progress in this
area in 2015.
So despite our real progress in 2014, we still have more work to
do. We are determined to build on the momentum across the Group, to
continue to improve returns across our businesses, and to
accelerate execution of our plans.
2015 will be a year of continued delivery for Barclays."
Antony Jenkins, Group Chief Executive
Group Finance Director's Review
Income statement
Group performance
-- Adjusted profit before tax increased 12% to GBP5,502m driven
by improvements in PCB, Barclaycard and Non-Core, partially offset
by a reduction in the Investment Bank and adverse currency
movements impacting Africa Banking reported results
-- Adjusted income decreased 8% to GBP25,728m whilst impairment
reduced 29% to GBP2,168m, resulting in a 5% decrease in net
operating income to GBP23,560m
-- Total adjusted operating expenses were down 9% to GBP18,069m,
driven by savings from Transform programmes, including a 5% net
reduction in headcount, and currency movements
- Total compensation costs decreased 8% to GBP8,891m, with the
Investment Bank reducing 9% to GBP3,620m, reflecting
reduced headcount, and lower deferred and current year bonus
charges
- Operating expenses excluding costs to achieve Transform were
GBP16,904m (2013: GBP18,684m). Costs to achieve
Transform were GBP1,165m (2013: GBP1,209m)
-- Statutory profit before tax was GBP2,256m (2013: GBP2,868m)
principally reflecting an additional GBP1,110m (2013: GBP2,000m)
net
provision for PPI and interest rate hedging redress, a gain on
US Lehman acquisition assets of GBP461m (2013: GBP259m), a
GBP1,250m provision for ongoing investigations and litigation
relating to Foreign Exchange, a GBP446m loss on the announced
sale of the Spanish business, and a GBP935m ESHLA valuation
revision
-- The effective tax rate on adjusted profit before tax
decreased to 31.0% (2013: 40.0%) and on statutory profit before
tax
increased to 62.5% (2013: 54.8%), principally due to
non-deductible expenses, including the provision for ongoing
investigations and litigation relating to Foreign Exchange.
Additionally, the 2013 effective tax rate included a GBP440m write
down
of deferred tax assets in Spain
-- Adjusted group attributable profit was GBP2,779m (2013:
GBP2,188m), increasing the adjusted Group return on average
shareholders' equity to 5.1% (2013: 4.1%)
Core performance
-- Profit before tax increased 3% to GBP6,682m, as improvements
in PCB and Barclaycard were partially offset by a reduction in the
Investment Bank and currency movements impacting the reported
results of Africa Banking
-- Income decreased 4% to GBP24,678m, reflecting a 12% reduction
in the Investment Bank to GBP7,588m and a reduction in Africa
Banking due to adverse currency movements, partially offset by
growth in Barclaycard and PCB. Investment Bank Q414 income was down
7% to GBP1,666m relative to Q413 due to reduced client activity and
lower volatility in Credit and Macro, which were down 25% and 14%
respectively
- Net interest income in PCB, Barclaycard and Africa Banking
increased 4% to GBP11,435m driven by strong income growth in PCB
and volume growth in Barclaycard, partially offset by a reduction
in Africa Banking due to currency movements. This resulted in a net
interest margin of 4.08% (2013: 4.02%)
-- Credit impairment charges improved 8% to GBP2,000m,
reflecting lower impairments in PCB due to the improving UK
economic environment, particularly impacting Corporate which
benefitted from one-off releases and lower defaults from large UK
Corporate clients, and reduced impairments in the Africa Banking
South Africa mortgages portfolio. Q414 credit impairment charges
increased to GBP573m (Q314: GBP509m) due to enhanced coverage for
forbearance in Barclaycard
-- Total operating expenses decreased 6% to GBP16,058m,
reflecting significant savings from Transform programmes across
the
businesses, partially offset by higher costs to achieve
Transform of GBP953m (2013: GBP671m). Costs to achieve Transform
increased in Q414 to GBP298m (Q314: GBP202m) predominantly within
PCB, due to restructuring of the branch network and technology
improvements to increase automation
-- Attributable profit decreased to GBP3,864m (2013: GBP4,078m),
reflecting a higher effective tax rate principally due to the
non-
recurrence of a tax credit, which reduced the rate in 2013, and
distributions to other equity holders in relation to Additional
Tier 1 (AT1) instruments in 2014. Average allocated equity
increased to GBP42bn (2013: GBP36bn), resulting in the Core return
on equity decreasing to 9.2% (2013: 11.3%)
Non-Core performance
-- Loss before tax reduced 24% to GBP1,180m, reflecting:
- Lower income of GBP1,050m (2013: GBP2,293m) following assets
and securities run-down, and business disposals, partially offset
by a GBP119m gain on sale of the UAE retail banking portfolio
- An improvement in credit impairment charges of GBP732m to
GBP168m driven by the non-recurrence of impairments on single name
exposures, impairment releases on the wholesale portfolio and
improved performance in Europe
- A 29% reduction in total operating expenses to GBP2,011m
reflecting savings from Transform programmes, including lower
headcount and the results of the previously announced European
retail restructuring, and reduced costs to achieve Transform of
GBP212m (2013: GBP538m)
-- The Non-Core dilution on the Group's return on equity
improved to 4.1% (2013: 7.2%) reflecting a GBP35bn reduction in
RWAs
Balance sheet and leverage
Balance sheet
- Total assets remained broadly in line at GBP1,358bn (2013:
GBP1,344bn)
- Derivative assets increased GBP90bn to GBP440bn, consistent
with the increase in derivative liabilities of GBP92bn to
GBP439bn,
primarily due to an increase in interest rate derivatives as
major forward interest rates reduced
- Reverse repurchase agreements and other similar secured
lending decreased GBP55bn to GBP132bn from lower matched
book trading due to balance sheet deleveraging
- Total loans and advances decreased GBP4bn to GBP470bn as
lending growth in Barclaycard and PCB was partially offset by the
GBP13bn reclassification of loans to other assets, relating to the
Spanish business which was held for sale
- Customer accounts decreased GBP4bn to GBP428bn as a result of
the reclassification of GBP8bn in relation to the Spanish business
to other liabilities, partially offset by GBP5bn of growth within
PCB and Barclaycard
- Total shareholders' equity including non-controlling interests
was GBP66bn (2013: GBP64bn). Excluding non-controlling
interests,
shareholders' equity increased to GBP60bn (2013: GBP55bn),
primarily reflecting a GBP2bn increase in other equity instruments,
due
to issuance of equity accounted AT1 securities to investors in
exchange for the cancellation of preference shares and
subordinated debt instruments, and a GBP2bn increase in the cash
flow hedge reserve driven by gains as forward interest rates
decreased
- Net asset value per share increased to 335p (2013: 331p) and
net tangible asset value per share increased to 285p (2013:
283p)
Leverage exposure
- The Basel Committee on Banking Supervision (BCBS) 270 leverage
exposure decreased GBP91bn to GBP1,233bn during Q414
primarily due to:
- Loans and advances and other assets decreased by GBP52bn to
GBP713bn primarily due to a seasonal reduction in settlement
balances of GBP28bn and a GBP13bn reduction in cash balances
- Securities Financing Transactions (SFTs) decreased GBP35bn to
GBP157bn due to reductions in reverse repurchase
agreements, and in SFT adjustments reflecting reduced activity
in Non-Core and a seasonal reduction in trading volumes
- The Potential Future Exposure (PFE) on derivatives decreased
GBP16bn to GBP179bn mainly due to reductions in business
activity and optimisations, including trade compressions and
tear-ups
Capital management
- The fully loaded CRD IV CET1 ratio increased to 10.3% (2013:
9.1%) due to a GBP40.6bn reduction in risk weighted assets (RWAs)
to GBP402bn and an increase in the fully loaded CRD IV CET1 capital
of GBP1.1bn to GBP41.5bn
- The increase in CET1 capital, after absorbing GBP3.3bn of
adjusting items, was driven by a GBP1.6bn increase in other
qualifying reserves and a GBP0.6bn increase due to lower
regulatory adjustments and deductions. This was partially offset
by
GBP1.2bn recognised for dividends. Including the sale of the
Spanish business, completed on 2 January 2015, the fully
loaded CRD IV CET1 ratio would have increased to 10.5% as at 31
December 2014
- The RWA reduction was mainly driven by a GBP35bn reduction in
Non-Core to GBP75bn reflecting the disposal of businesses,
run-down and exit of securities and loans, and derivative risk
reductions
- The BCBS 270 leverage ratio increased to 3.7% (September 2014:
3.5%), reflecting a reduction in the BCBS 270 leverage
exposure to GBP1,233bn (September 2014: GBP1,324bn) driven by a
seasonal reduction in settlement balances and continued
reductions in Non-Core exposure. Including the sale of the
Spanish business, completed on 2 January 2015, the BCBS 270
leverage ratio would have increased to 3.8% as at 31 December
2014
Funding and liquidity
- During 2014, the Group strengthened its liquidity position,
building a larger surplus to its Liquidity Risk Appetite. This
positions the Group well for potential rating changes as credit
rating agencies assess sovereign support in Barclays Bank
PLC's credit ratings. This resulted in an increase in the Group
liquidity pool to GBP149bn (2013: GBP127bn). The estimated CRD
IV
Liquidity Coverage Ratio (LCR) increased to 124% (2013: 96%),
equivalent to a surplus of GBP30bn (2013: shortfall of GBP6bn)
- The Group funding profile remains stable and well diversified.
Wholesale funding outstanding (excluding repurchase
agreements) was GBP171bn (2013: GBP186bn). The Group was active
in wholesale unsecured, secured and debt capital markets,
issuing GBP15bn (2013: GBP1bn) net of early redemptions
Legal, competition and regulatory matters
- The Group faces legal, competition and regulatory challenges,
details of which are set out in note 29 of the Annual Report on
pages 306-314. The extent of the impact on the Group of these
matters cannot always be predicted but may materially impact our
operations, financial results, conditions and prospects
- Provisions of GBP1,690m (2013: GBP485m) are held for legal,
competition and regulatory matters. Changes to these provisions and
to asset values impacted by such matters during 2014 include the
following:
- A provision of GBP1,250m was recognised for certain aspects of
ongoing investigations involving certain authorities and litigation
relating to Foreign Exchange. This included an additional provision
of GBP750m recognised in Q414.
- A gain of GBP461m was recognised in Q314 reflecting greater
certainty around the recoverability of assets not yet received from
the 2008 US Lehman acquisition. This change in asset value followed
a favourable ruling during Q314 from the US Court of Appeals for
the Second Circuit
Other matters
- A valuation revision of GBP935m has been recognised in Q414
against the ESHLA portfolio held at a GBP17.4bn fair value in
Barclays Non-Core. This portfolio primarily consists of long
dated fixed rate loans with strong credit quality. Valuation
uncertainty is derived from their long-dated nature, and lack of
secondary market and observable loan spreads
The revision was due to a Q414 change in the valuation
methodology, incorporating information on external parties and the
factors they may take into account when valuing these assets. This
is also consistent with recent industry trends changing asset
valuations away from Libor-based discounting. This revision does
not impact the CET1 ratio, as there was a corresponding reduction
in the Prudential Valuation Adjustment (PVA) for this portfolio at
year end
- The provision for PPI redress was GBP1,059m (2013: GBP971m)
following utilisation of GBP1,182m and the recognition of
additional amounts of GBP1,270m. This included the recognition of
an additional amount of GBP200m in Q414 based on an updated
estimate of future redress and associated costs. The remaining
provision reflects Barclays' best current estimate of future
costs(1)
- The provision for interest rate hedging product redress was
GBP211m (2013: GBP1,169m) after utilisation of GBP798m and a
provision release of GBP160m in Q314. The review is now
substantially complete with redress outcomes communicated to nearly
all customers covered by the redress exercise during 2014(1)
The loss on the announced sale of the Spanish business of
GBP446m represents a GBP761m impairment of assets in the Spanish
businesses agreed for sale at the end of the year, partially offset
by a GBP315m gain on related hedging instruments. Accumulated
currency translation reserve losses of approximately GBP100m will
be recognised on completion of the sale on 2 January 2015. Post
completion, assets will reduce by GBP13.4bn, liabilities will
reduce by GBP12.8bn and RWAs will reduce by GBP5.0bn. The foregone
annual income from the Spanish business sold of approximately
GBP280m will be largely offset by a GBP240m reduction in operating
expenses
1 For further detail on customer redress provisions refer to
note 27 of the Annual Report on pages 303-305.
Dividends
- A final dividend for 2014 of 3.5p per share will be paid on 2
April 2015 resulting in a total 6.5p dividend per share for the
year. Total dividends paid to ordinary shareholders increased 23%
to GBP1,057m
Outlook
- Although there remains uncertainty in the global macroeconomic
environment, which is expected to persist through the year, we
believe there will be greater clarity on regulatory requirements
and several conduct issues during 2015. Our priority is to continue
strengthening the capital position of the Group, targeting a fully
loaded CRD IV CET1 ratio above 11% in 2016, after taking account of
any conduct items resolved
- We expect to make further progress in 2015 on the run-down of
the Non-Core unit, towards our target of GBP45bn risk weighted
assets in 2016 (revised for completion of the sale of the Spanish
business in January). Income in Non-Core is expected to reduce
significantly from 2014 levels, as seen in the fourth quarter, as
businesses and portfolios are sold or run-off. We continue to
expect the Non-Core dilution on the Group's return on equity in
2015 to remain within the 3% to 6% guidelines communicated
previously
- Credit quality across the Group is expected to remain
consistent with recent underlying trends, reflecting broader
economic
factors in the markets in which the Group operates. In terms of
operating expenses, we expect to drive further reductions
beyond those achieved in 2014, targeting GBP16.3bn for the
Group, excluding costs to achieve Transform (CTA), for 2015.
CTA
is projected to be approximately GBP700m for 2015 and GBP200m in
2016. We also expect net interest margin to be broadly stable
in 2015. Based on current trends and a strong Banking pipeline,
we expect Q1 2015 income for the Investment Bank to be
well ahead of Q4 reported income and approaching that of Q1
2014
- For the Group overall, we intend to build on the positive
underlying momentum seen within our businesses, towards
achievement of the 2016 Transform targets. We will also
accelerate delivery of these targets wherever possible
Tushar Morzaria, Group Finance Director
Results by Business
Personal and Corporate Banking Year ended Year ended
31.12.14 31.12.13
Income statement information GBPm GBPm % Change
====================================== ============== ========
Net interest income 6,298 5,893 7
Net fee and commission income 2,443 2,723 (10)
Other income 87 107 (19)
====================================== ============== ============== ========
Total income 8,828 8,723 1
Credit impairment charges and other
provisions (482) (621) 22
====================================== ============== ============== ========
Net operating income 8,346 8,102 3
Operating expenses (5,005) (5,460) 8
UK bank levy (70) (66) (6)
Costs to achieve Transform (400) (384) (4)
====================================== ============== ============== ========
Total operating expenses (5,475) (5,910) 7
Other net income 14 41 (66)
====================================== ============== ============== ========
Profit before tax 2,885 2,233 29
Attributable profit 2,058 1,681 22
As at 31.12.14 As at 31.12.13
Balance sheet information GBPbn GBPbn
====================================== ============== ============== ========
Loans and advances to customers
at amortised cost 217.0 212.2
Total assets 285.0 278.5
Customer deposits 299.2 295.9
Risk weighted assets 120.2 118.3
Performance measures 31.12.14 31.12.13
====================================== ============== ==============
Return on average tangible equity 15.8% 12.7%
Average allocated tangible equity
(GBPbn) 13.1 13.2
Return on average equity 11.9% 9.7%
Average allocated equity (GBPbn) 17.5 17.3
Cost: income ratio 62% 68%
Loan loss rate (bps) 21 28
Analysis of total income GBPm GBPm % Change
====================================== -------------- -------------- ========
Personal 4,159 4,040 3
Corporate 3,592 3,620 (1)
Wealth 1,077 1,063 1
====================================== ============== ============== ========
Total income 8,828 8,723 1
Analysis of loans and advances GBPbn GBPbn
to customers at amortised cost
====================================== -------------- -------------- ========
Personal 136.8 133.8
Corporate 65.1 62.5
Wealth 15.1 15.9
====================================== ============== ============== ========
Total loans and advances to customers
at amortised cost 217.0 212.2
Analysis of customer deposits
====================================== ============== ============== ========
Personal 145.8 140.5
Corporate 122.2 118.5
Wealth 31.2 36.9
====================================== ============== ============== ========
Total customer deposits 299.2 295.9
2014 compared to 2013
- Profit before tax increased 29% to GBP2,885m driven by 3%
growth in Personal income, lower impairment due to the improving
economic environment in the UK, and the continued reduction in
operating expenses due to progress on the Transform strategy. This
resulted in a 2.2% increase in return on average equity to 11.9%.
In Personal, income increased GBP119m alongside significant cost
reductions, with the net closure of 72 branches as part of ongoing
branch network optimisation, as well as investment in the customer
experience across multiple channels. Corporate increased both loans
and deposits, and Wealth undertook a substantial reorganisation to
reduce the number of target markets while simplifying
operations
- Total income increased 1% to GBP8,828m
- Personal income increased 3% to GBP4,159m due to balance
growth and improved savings margins, partially offset by lower fee
income
- Corporate income was broadly in line at GBP3,592m (2013:
GBP3,620m), with balance growth in both lending and deposits,
offset by margin compression
- Wealth income was broadly in line at GBP1,077m (2013:
GBP1,063m) driven by growth in the UK business, offset by client
and market exits as part of the reorganisations in the US and EU
businesses, and lower fee income
- Net interest income increased 7% to GBP6,298m driven by
lending and deposit growth and margin improvement. Net interest
margin improved 9bps to 3.00% primarily due to the launch of a
revised overdraft proposition, which recognises the majority of
overdraft income as net interest income as opposed to fee income,
and higher savings margins within Personal and Wealth. These
factors were partially offset by lower Corporate deposit
margins
- Net fee and commission income reduced 10% to GBP2,443m due to
the launch of the revised overdraft proposition and lower
transactional income in Wealth
- Credit impairment charges improved 22% to GBP482m and the loan
loss rate reduced 7bps to 21bps due to the improving
economic environment in the UK, particularly impacting Corporate
which benefited from one-off releases and lower defaults
from large UK Corporate clients
- Total operating expenses reduced 7% to GBP5,475m reflecting
savings realised from Transform programmes relating to
restructuring of the branch network and technology improvements
to increase automation
- Loans and advances to customers increased 2% to GBP217.0bn due
to mortgage growth and Corporate loan growth
- Total assets increased 2% to GBP285.0bn driven by the growth
in loans and advances to customers
- Customer deposits increased to GBP299.2bn (2013:
GBP295.9bn)
- RWAs increased 2% to GBP120.2bn primarily driven by growth in
mortgage and Corporate lending
Q414 compared to Q314
- Profit before tax reduced 20% to GBP628m driven by higher
costs to achieve Transform of GBP195m (Q314: GBP90m), due to
restructuring of the branch network and increased spend on
technology improvements, and UK bank levy of GBP70m (Q314:
GBPnil)
Barclaycard Year ended Year ended
31.12.14 31.12.13
Income statement information GBPm GBPm % Change
==================================== ============== ============== ========
Net interest income 3,044 2,829 8
Net fee and commission income 1,286 1,256 2
Other income 26 18 44
==================================== ============== ============== ========
Total income 4,356 4,103 6
Credit impairment charges and other
provisions (1,183) (1,096) (8)
==================================== ============== ============== ========
Net operating income 3,173 3,007 6
Operating expenses (1,727) (1,786) 3
UK bank levy (29) (22) (32)
Costs to achieve Transform (118) (49)
==================================== ============== ============== ========
Total operating expenses (1,874) (1,857) (1)
Other net income 40 33 21
==================================== ============== ============== ========
Profit before tax 1,339 1,183 13
Attributable profit 938 822 14
As at 31.12.14 As at 31.12.13
Balance sheet information GBPbn GBPbn
==================================== ============== ============== ========
Loans and advances to customers
at amortised cost 36.6 31.5
Total assets 41.3 34.4
Customer deposits 7.3 5.1
Risk weighted assets 39.9 35.7
Performance measures 31.12.14 31.12.13
==================================== ============== ============== ========
Return on average tangible equity 19.9% 19.9%
Average allocated tangible equity
(GBPbn) 4.7 4.1
Return on average equity 16.0% 15.5%
Average allocated equity (GBPbn) 5.9 5.3
Cost: income ratio 43% 45%
Loan loss rate (bps) 308 332
2014 compared to 2013
- Profit before tax increased 13% to GBP1,339m. Strong growth in
2014 was delivered through a diversified consumer and
merchant business model, with customer numbers increasing to 30m
(2013: 26m) and asset growth across all geographies
generating a 6% increase in income. Growth has been managed on a
well-controlled cost base, with the business focusing
on scale through insourcing of services, consolidation of sites
and digitalisation, resulting in an improvement in the cost to
income ratio to 43% (2013: 45%). The business focus on risk
management is reflected in stable 30-day delinquency rates
and falling loan loss rates. The diversified and scaled business
model has allowed the business to deliver a strong return on
average equity of 16.0% (2013: 15.5%)
- Total income increased 6% to GBP4,356m reflecting growth in
the UK consumer and merchant, Germany and US businesses,
partially offset by depreciation of average USD against GBP
- Net interest income increased 8% to GBP3,044m driven by volume
growth. Net interest margin decreased to 8.75% (2013:
8.99%) due to a change in product mix and the impact of
promotional offers, particularly in the US, partially offset by
lower
funding costs
- Net fee and commission income increased 2% to GBP1,286m due to growth in payment volumes
- Credit impairment charges increased 8% to GBP1,183m due to
asset growth and enhanced coverage for forbearance.
Delinquency rates remained broadly stable and the loan loss rate
reduced 24bps to 308bps
- Total operating expenses increased 1% to GBP1,874m driven by
higher costs to achieve Transform of GBP118m (2013: GBP49m),
partially offset by depreciation of average USD against GBP, VAT
refunds and savings from Transform programmes, including
insourcing of services, consolidation of sites and
digitalisation
- Loans and advances to customers increased 16% to GBP36.6bn
reflecting growth across all geographies, including the impact of
promotional offers and the acquisition of portfolios in the US
- Total assets increased 20% to GBP41.3bn due to the increase in
loans and advances to customers
- Customer deposits increased 43% to GBP7.3bn driven by the
deposits funding strategy in the US
- RWAs increased 12% to GBP39.9bn primarily driven by the growth
in loans and advances to customers
Q414 compared to Q314
- Profit before tax reduced 41% to GBP213m due to an update to
effective interest rate assumptions reducing Q4 income,
increased impairment driven by enhanced coverage for
forbearance, UK bank levy of GBP29m (Q314: GBPnil) and higher costs
to
achieve Transform of GBP50m (Q314: GBP32m)
Africa Banking Constant Currency(1)
Year ended Year ended Year ended Year ended
31.12.14 31.12.13 31.12.14 31.12.13
Income statement information GBPm GBPm % Change GBPm GBPm % Change
============================== ============== ============== ======== ============== ============== ========
Net interest income 2,093 2,245 (7) 2,093 1,912 9
Net fee and commission
income 1,086 1,254 (13) 1,086 1,067 2
Net trading income 250 260 (4) 250 219 14
Net premiums from insurance
contracts 337 374 (10) 337 316 7
Other income 68 91 (25) 68 78 (13)
============================== ============== ============== ======== ============== ============== ========
Total income 3,834 4,224 (9) 3,834 3,592 7
Net claims and benefits
incurred under insurance
contracts (170) (185) 8 (170) (157) (8)
============================== ============== ============== ======== ============== ============== ========
Total income net of insurance
claims 3,664 4,039 (9) 3,664 3,435 7
Credit impairment charges
and other provisions (349) (479) 27 (349) (406) 14
============================== ============== ============== ======== ============== ============== ========
Net operating income 3,315 3,560 (7) 3,315 3,029 9
Operating expenses (2,246) (2,451) 8 (2,246) (2,098) (7)
UK bank levy (45) (42) (7) (45) (42) (7)
Costs to achieve Transform (51) (26) (96) (51) (23)
============================== ============== ============== ======== ============== ============== ========
Total operating expenses (2,342) (2,519) 7 (2,342) (2,163) (8)
Other net income 11 8 38 11 7 57
============================== ============== ============== ======== ============== ============== ========
Profit before tax 984 1,049 (6) 984 873 13
Attributable profit 360 356 1 360 289 25
As at 31.12.14 As at 31.12.13 As at 31.12.14 As at 31.12.13
Balance sheet information GBPbn GBPbn GBPbn GBPbn
============================== ============== ============== ======== ============== ============== ========
Loans and advances to
customers at amortised
cost 35.2 34.9 35.2 33.6
Total assets 55.5 54.9 55.5 52.8
Customer deposits 35.0 34.6 35.0 33.3
Risk weighted assets 38.5 38.0
Performance measures 31.12.14 31.12.13
============================== ========
Return on average tangible
equity 12.9% 11.3%
Average tangible equity
(GBPbn) 2.8 3.2
Return on average equity 9.3% 8.1%
Average equity (GBPbn) 3.9 4.4
Cost: income ratio 64% 62%
Loan loss rate (bps) 93 128
2014 compared to 2013
- On a reported basis(2) , total income net of insurance claims
decreased 9% to GBP3,664m and profit before tax decreased 6% to
GBP984m. Based on average rates, the ZAR depreciated against GBP by
18% in 2014. The deterioration was a significant contributor to the
movement in the reported results of Africa Banking. The discussion
of business performance below is based on results on a constant
currency basis(1) unless otherwise stated
- Profit before tax increased 13% to GBP984m, reflecting good
growth in Corporate and Investment Banking (CIB) and Retail and
Business Banking (RBB). CIB experienced strong income growth,
driven by the corporate banking business outside South Africa, and
improved investment banking trading performance across Africa.
Continued progress was made on the RBB South Africa turnaround
strategy, with increased net fee and commission income growth in
the second half of the year, and Wealth, Investment Management and
Insurance (WIMI) delivered strong growth outside South Africa due
to expansion initiatives
- Total income net of insurance claims increased 7% to
GBP3,664m
- Net interest income increased 9% to GBP2,093m, primarily
driven by higher average loans and advances to customers in CIB and
growth in customer deposits in RBB in South Africa. Net interest
margin on a reported basis(2) increased 14bps to 5.95% following
the rise in the South African benchmark interest rate and the
favourable impact of higher deposit margins, partially offset by
lower rates outside South Africa
- Net fee and commission income increased 2% to GBP1,086m mainly
reflecting increased RBB transactions in South Africa
- Credit impairment charges decreased 14% to GBP349m and on a
reported basis(2) the loan loss rate improved 35bps to 93bps,
driven by reduced impairments in the South Africa mortgages
portfolio and business banking, partially offset by increased
impairments in the card portfolio
- Total operating expenses increased 8% to GBP2,342m largely
reflecting inflationary increases, resulting in higher staff costs,
and increased investment spend on key initiatives, including higher
costs to achieve Transform of GBP51m (2013: GBP23m), partially
offset by savings from Transform programmes
- Loans and advances to customers increased 5% to GBP35.2bn
primarily driven by strong corporate banking growth across Africa
in CIB and limited growth in RBB, mainly due to a modest reduction
in the South Africa mortgages portfolio
- Total assets increased 5% to GBP55.5bn due to the increase in
loans and advances to customers
- Customer deposits increased 5% to GBP35.0bn reflecting strong
growth in the South African RBB business
- RWAs increased 1% to GBP38.5bn on a reported basis(2) ,
primarily driven by growth in loans and advances to customers,
partially offset by the depreciation of ZAR against GBP
Q414 compared to Q314
- Profit before tax decreased 16% to GBP228m on a reported
basis(2) , due to the UK bank levy of GBP45m (Q314: GBPnil) and
increased costs to achieve Transform of GBP23m (Q314: GBP11m),
partially offset by increased income driven by a seasonal increase
in RBB in South Africa and the appreciation of ZAR against GBP in
the quarter
1
Constant currency results are calculated by converting ZAR
results into GBP using the average exchange rate for the year ended
31 December 2014 for the income statement and the 31 December 2014
closing exchange rate for the balance sheet to eliminate the impact
of movement in exchange rates between the two periods.
2
Reported basis represents results in GBP using actual exchange
rates.
Investment Bank Year ended Year ended(1)
31.12.14 31.12.13
Income statement information GBPm GBPm % Change
---------------------------------- -------------- ----------------- --------
Net interest income 647 393 65
Net fee and commission income 3,087 3,232 (4)
Net trading income 3,735 4,969 (25)
Net investment income 119 2
Total income 7,588 8,596 (12)
Credit impairment releases and
other provisions 14 22 (36)
================================== ============== ================= ========
Net operating income 7,602 8,618 (12)
Operating expenses (5,633) (6,172) 9
UK bank levy (218) (236) 8
Costs to achieve Transform (374) (190) (97)
================================== ============== ================= ========
Total operating expenses (6,225) (6,598) 6
Profit before tax 1,377 2,020 (32)
Attributable profit 397 1,308 (70)
As at 31.12.14 As at 31.12.13(1)
Balance sheet information GBPbn GBPbn
================================== ============== ================= ========
Loans and advances to banks and
customers at amortised cost(2) 106.3 104.5
Trading portfolio assets 94.8 96.6
Derivative financial instrument
assets 152.6 108.7
Derivative financial instrument
liabilities 160.6 116.6
Reverse repurchase agreements and
other similar secured lending 64.3 78.2
Total assets(1) 455.7 438.0
Risk weighted assets(1) 122.4 124.4
Performance measures 31.12.14 31.12.13(1)
================================== ============== ================= ========
Return on average tangible equity 2.8% 8.5%
Average allocated tangible equity
(GBPbn) 14.6 15.3
Return on average equity 2.7% 8.2%
Average allocated equity (GBPbn) 15.4 15.9
Cost: income ratio 82% 77%
Analysis of total income
================================== ============== ================= ========
Investment Banking fees 2,111 2,160 (2)
Lending 417 325 28
================================== ============== ================= ========
Banking 2,528 2,485 2
Credit 1,044 1,257 (17)
Equities 2,046 2,297 (11)
Macro 1,950 2,580 (24)
================================== ============== ================= ========
Markets 5,040 6,134 (18)
================================== ============== ================= ========
Banking and Markets 7,568 8,619 (12)
Other(1) 20 (23)
================================== ============== ================= ========
Total income 7,588 8,596 (12)
1 2013 adjusted income and profit before tax have been restated
to exclude the Q213 GBP259m gain relating to assets not yet
received from the US Lehman acquisition to aid comparability given
its material nature in the current year. In addition, December 2013
US Lehman acquisition assets and RWAs of GBP1.6bn have been
restated for the reclassification of these assets from the
Investment Bank to Head Office to more accurately reflect
responsibility for the resolution of this matter.
2 As at 31 December 2014 loans and advances included GBP86.4bn
(2013: GBP84.1bn) of loans and advances to customers (including
settlement balances of GBP25.8bn (2013: GBP33.2bn) and cash
collateral of GBP32.2bn (2013: GBP25.6bn)) and loans and advances
to banks of GBP19.9bn (2013: GBP20.4bn) (including settlement
balances of GBP2.7bn (2013: GBP4.4bn) and cash collateral of
GBP6.9bn (2013: GBP6.4bn)).
2014 compared to 2013
-- Profit before tax decreased 32% to GBP1,377m. The Investment
Bank continues to make progress on its origination-led strategy,
building on leading positions in its home markets of the UK and US,
while driving cost savings and RWA efficiencies. The business is
focused on a simpler product set in Markets, which will enable it
to build on existing strengths and adapt to regulatory
developments. The business continued to execute this strategy
despite difficult market-making conditions and continued low levels
of activity. This has particularly impacted credit and interest
rate products, resulting in an income decline across the Markets
businesses. This decline was partially offset by improved Banking
performance and significant cost reductions as a result of savings
from Transform programmes
-- Total income decreased 12% to GBP7,588m, including the impact
of depreciation of average USD against GBP
- Banking income increased 2% to GBP2,528m. Investment Banking
fee income decreased 2% to GBP2,111m driven by lower debt
underwriting fees, partially offset by higher financial advisory
and equity underwriting fees. Lending income increased to GBP417m
(2013: GBP325m) due to lower fair value losses on hedges and higher
net interest and fee income
- Markets income decreased 18% to GBP5,040m
- Credit decreased 17% to GBP1,044m driven by reduced volatility
and client activity, with lower income in distressed credit, US
high yield and US high grade products
- Equities decreased 11% to GBP2,046m due to declines in cash
equities and equity derivatives, reflecting lower client volumes,
partially offset by higher income in equity financing
- Macro decreased 24% to GBP1,950m reflecting subdued client
activity in rates and lower volatility in currency markets in the
first half of the year
-- Net credit impairment release of GBP14m (2013: GBP22m) arose
from a number of single name exposures
-- Total operating expenses decreased 6% to GBP6,225m reflecting
a 9% reduction in compensation costs to GBP3,620m, savings from
Transform programmes, including business restructuring, continued
rationalisation of the technology platform and real estate
infrastructure, and depreciation of average USD against GBP. This
was partially offset by increased costs to achieve Transform of
GBP374m (2013: GBP190m) and litigation and conduct charges
-- Loans and advances to customers and banks increased 2% to
GBP106.3bn driven by an increase in cash collateral and lending,
partially offset by a reduction in settlement balances due to
reduced activity
-- Derivative financial instrument assets and liabilities
increased 40% to GBP152.6bn and 38% to GBP160.6bn respectively,
driven by decreases in predominantly GBP, USD and EUR forward
interest rates, and strengthening of USD against major
currencies
-- Reverse repurchase agreements and other similar secured
lending decreased 18% to GBP64.3bn due to decreased match
book trading and funding requirements
-- Total assets increased 4% to GBP455.7bn due to an increase in
derivative financial instrument assets, partially offset by a
decrease in reverse repurchase agreements and other similar
secured lending, and financial assets at fair value
-- RWAs decreased 2% to GBP122.4bn primarily driven by risk
reductions in the trading book, partially offset by the
implementation of a revised credit risk model for assessing
counterparty probability of default
Q414 compared to Q413
- Total income decreased 7% to GBP1,666m, including the impact
of appreciation of average USD against GBP
- Banking income was in line with prior year at GBP638m.
Investment Banking fee income decreased 8% to GBP527m driven by
decreased underwriting and financial advisory income. Lending
income increased to GBP111m (Q413: GBP68m) due to lower fair value
losses on hedges and higher net interest and fee income
- Markets income decreased 10% to GBP1,028m
- Credit decreased 25% to GBP173m driven by declines in
distressed credit, securitised products and US high grade
products
- Equities increased 2% to GBP431m due to higher income in
equity financing, partially offset by declines in cash equities and
equity derivatives
- Macro decreased 14% to GBP424m reflecting subdued client
activity and a challenging trading environment in rates
- Total operating expenses decreased 15% to GBP1,624m reflecting
lower compensation costs, savings from Transform
programmes, including business restructuring, continued
rationalisation of the technology platform and real estate
infrastructure, and lower costs to achieve Transform of GBP22m
(Q413: GBP71m). This was partially offset by appreciation of
average USD against GBP
- Profit before tax increased to GBP35m (Q413: loss of
GBP137m)
Q414 compared to Q314
- Total income was in line at GBP1,666m (Q314: GBP1,665m),
including the impact of appreciation of average USD against GBP
- Banking income increased 17% to GBP638m. Investment Banking
fee income increased 29% to GBP527m driven by increased
underwriting and financial advisory income. Lending income
decreased to GBP111m (Q314: GBP137m) due to fair value losses on
hedges
- Markets income decreased 8% to GBP1,028m
- Credit decreased 32% to GBP173m driven by declines in
securitised products, distressed credit and high grade products
- Equities increased 9% to GBP431m due to increased client
activity in cash equities and equity derivatives
- Macro decreased 10% to GBP424m reflecting lower client
activity and a challenging trading environment in rates
- Total operating expenses increased 18% to GBP1,624m reflecting
an increase due to UK bank levy of GBP218m (Q314: GBPnil),
appreciation of average USD against GBP, and higher litigation
and conduct charges, partially offset by lower costs to achieve
Transform of GBP22m (Q314: GBP70m)
- Profit before tax decreased to GBP35m (Q314: GBP284m)
Head Office Year ended Year ended
31.12.14 31.12.13
Income statement information GBPm GBPm
================================== ============== ==============
Total income 242 142
Credit impairment releases - 3
================================== ============== ==============
Net operating income 242 145
Operating expenses (123) (113)
UK bank levy (9) (29)
Costs to achieve Transform (10) (22)
================================== ============== ==============
Total operating expenses (142) (164)
Other net (expense)/income (3) 4
================================== ============== ==============
Profit/(loss) before tax 97 (15)
Attributable profit/(loss) 112 (89)
As at 31.12.14 As at 31.12.13
Balance sheet information GBPbn GBPbn
================================== ============== ==============
Total assets(1) 49.1 26.6
Risk weighted assets(1) 5.6 16.2
Average allocated tangible equity (0.6) (7.4)
Average allocated equity (0.4) (7.0)
1 December 2013 US Lehman acquisition assets and RWAs of GBP1.6bn have been restated for the reclassification of these assets from the Investment Bank to Head Office to more accurately reflect responsibility for the resolution of this matter.
2014 compared to 2013
-- Profit before tax of GBP97m improved from a loss of GBP15m in 2013
-- Net operating income increased to GBP242m (2013: GBP145m)
predominantly due to net gains of GBP88m from foreign exchange
recycling arising from the restructure of group subsidiaries
-- Total operating expenses decreased GBP22m to GBP142m mainly
due to a reduction in UK bank levy to GBP9m (2013: GBP29m), the
non-recurrence of costs associated with the Salz Review and the
establishment of the Transform programme in the prior year,
partially offset by increased litigation and conduct charges
-- Total assets increased GBP22.5bn to GBP49.1bn reflecting an
increase in the Group liquidity pool assets
-- RWAs decreased GBP10.6bn to GBP5.6bn, including the partial
settlement of the US Lehman acquisition assets and a GBP6.9bn
revision to 2013 RWAs following full implementation of CRD IV
reporting, as disclosed in the 30 June 2014 Results
Announcement
-- Negative average allocated equity reduced to GBP0.4bn (2013:
GBP7.0bn) as the Group moved towards the allocation rate of 10.5%
fully loaded CRD IV CET1 ratio during the year, resulting in a
reduction in excess equity allocated to businesses
Q414 compared to Q314
- Loss before tax of GBP9m moved from a GBP40m profit in Q314
primarily driven by higher operating expenses due to litigation and
conduct charges, costs to achieve Transform of GBP8m (Q314: GBPnil)
and UK bank levy of GBP9m (Q314: GBPnil)
Barclays Non-Core Year ended Year ended
31.12.14 31.12.13
Income statement information GBPm GBPm % Change
====================================== ============== ============== ========
Net interest income 214 307 (30)
Net fee and commission income 466 383 22
Net trading income 120 1,327 (91)
Net investment income 164 302 (46)
Net premiums from insurance contracts 290 306 (5)
Other income/(expense) 106 (8)
====================================== ============== ============== ========
Total income 1,360 2,617 (48)
Net claims and benefits incurred
under insurance contracts (310) (324) (4)
====================================== ============== ============== ========
Total income net of insurance claims 1,050 2,293 (54)
Credit impairment charges and other
provisions (168) (900) 81
====================================== ============== ============== ========
Net operating income 882 1,393 (37)
Operating expenses (1,708) (2,198) 22
UK bank levy (91) (109) 17
Costs to achieve Transform (212) (538) 61
====================================== ============== ============== ========
Total operating expenses (2,011) (2,845) 29
Other net expense (51) (110) 54
====================================== ============== ============== ========
Loss before tax (1,180) (1,562) 24
Attributable loss (1,085) (1,890) 43
As at 31.12.14 As at 31.12.13
Balance sheet information GBPbn GBPbn
====================================== ============== ============== ========
Loans and advances to banks and
customers at amortised cost(1) 63.9 81.9
Loans and advances to customers
at fair value 18.7 17.6
Trading portfolio assets 15.9 30.7
Derivative financial instrument
assets 285.4 239.3
Derivative financial instrument
liabilities 277.1 228.3
Reverse repurchase agreements and
other similar secured lending 49.3 104.7
Total assets 471.5 511.2
Customer deposits 21.6 29.3
Risk weighted assets 75.3 109.9
Performance measures 31.12.14 31.12.13
====================================== ============== ============== ========
Return on average tangible equity
impact(2) (5.4%) (9.6%)
Average allocated tangible equity
(GBPbn) 13.2 16.8
Return on average equity impact(2) (4.1%) (7.2%)
Average allocated equity (GBPbn) 13.4 17.1
Period end allocated equity (GBPbn) 11.0 15.1
Analysis of total income net of GBPm GBPm % Change
insurance claims
====================================== ============== ============== ========
Businesses 1,101 1,498 (27)
Securities and Loans 117 642 (82)
Derivatives (168) 153
====================================== ============== ============== ========
Total income net of insurance claims 1,050 2,293 (54)
1 As at 31 December 2014 loans and advances included GBP51.6bn
(2013: GBP70.8bn) of loans and advances to customers (including
settlement balances of GBP1.6bn (2013: GBP2.6bn) and cash
collateral of GBP22.1bn (2013: GBP14.5bn)) and loans and advances
to banks of GBP12.3bn (2013: GBP11.1bn) (including settlement
balances of GBP0.3bn (2013: GBP0.8bn) and cash collateral of
GBP11.3bn (2013: GBP9.5bn)).
2 Return on average equity and average tangible equity for
Barclays Non-Core represents its impact on the Group, This does not
represent the return on average equity and average tangible equity
of the Non-Core business.
2014 compared to 2013
- Loss before tax reduced 24% to GBP1,180m as Barclays Non-Core
(BNC) made good progress in exiting and running-down certain
businesses and securities during 2014. This drove a GBP34.6bn
reduction in RWAs, making substantial progress towards the BNC
target reductions as outlined in the Group Strategy Update on 8 May
2014
- Total income net of insurance claims reduced 54% to
GBP1,050m
- Businesses income reduced 27% to GBP1,101m due to the sale and
run-down of legacy portfolio assets and the rationalisation of
product offerings within the European retail business
- Securities and Loans income reduced 82% to GBP117m primarily
driven by the active run-down of securities, fair value losses on
wholesale loan portfolios and the non-recurrence of prior year
favourable market movements on certain securitised products,
partially offset by a GBP119m gain on the sale of the UAE retail
banking portfolio
- Derivatives income reduced GBP321m to an expense of GBP168m
reflecting the funding costs of the traded legacy derivatives
portfolio and the non-recurrence of fair value gains in the prior
year
- Credit impairment charges improved 81% to GBP168m due to the
non-recurrence of impairments on single name exposures, impairment
releases on the wholesale portfolio as a result of confirmation on
Spanish government subsidies in the renewable energy sector, and
improved performance in Europe, primarily due to improved
recoveries and delinquencies in the mortgages portfolio
- Total operating expenses improved 29% to GBP2,011m reflecting
savings from Transform programmes, including lower
headcount and the results of the previously announced European
retail restructuring. In addition, costs to achieve Transform
reduced 61% to GBP212m
- Loans and advances to banks and customers reduced 22% to
GBP63.9bn due to a GBP12.9bn reclassification of loans relating to
the Spanish business, which was held for sale, and a reduction in
Europe retail driven by a run-off of assets
- Trading portfolio assets reduced 48% to GBP15.9bn due to the
sale and run-down of legacy portfolio assets
- Derivative financial instrument assets and liabilities
increased 19% to GBP285.4bn and 21% to GBP277.1bn respectively,
driven by decreases in major forward interest rates
- Total assets decreased 8% to GBP471.5bn with reduced reverse
repurchase agreements and other similar secured lending, and
trading portfolio assets, due to the run-down of legacy portfolio
assets, offset by an increase in derivative financial instrument
assets. BCBS 270 leverage exposure reduced to GBP277bn
- RWAs decreased GBP34.6bn to GBP75.3bn and period end allocated
equity decreased GBP5.1bn to GBP11.0bn, reflecting the disposal of
businesses, run-down and exit of securities and loans, and
derivative risk reductions
Q414 compared to Q314
- Total income net of insurance claims reduced 94% to GBP22m
- Businesses income reduced 30% to GBP228m primarily driven by
lower fair value gains and sale proceeds in Q314 as part of the
exit strategy
- Securities and Loans income reduced GBP248m to an expense of
GBP142m driven by the non-recurrence of a GBP119m gain on the sale
of the UAE retail banking portfolio and fair value losses on
wholesale loan portfolios
- Derivative income reduced 2% to an expense of GBP64m
reflecting increased fair value losses, partially offset by a gain
on disposal of commodities assets
- Credit impairment charges improved GBP15m to GBP2m driven by
impairment releases as a result of confirmation on Spanish
government subsidies in the renewable energy sector and improved
performance in Europe
- Total operating expenses increased GBP11m to GBP544m due to UK
bank levy of GBP91m (Q314: GBPnil), partially offset by a reduction
in costs to achieve Transform to GBP40m (Q314: GBP130m)
- Loss before tax increased GBP375m to GBP532m
Quarterly Results Summary
Q414 Q314 Q214 Q114 Q413 Q313 Q213 Q113
=====================================
Barclays results by quarter(1) GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
===================================== ======= ======= ======= ======= ======= ======= ======= =======
Adjusted basis
Total income net of insurance
claims 6,018 6,378 6,682 6,650 6,639 6,445 7,078 7,734
Credit impairment charges
and other provisions (573) (509) (538) (548) (718) (722) (925) (706)
===================================== ======= ======= ======= ======= ======= ======= ======= =======
Net operating income 5,445 5,869 6,144 6,102 5,921 5,723 6,153 7,028
Operating expenses (3,942) (3,879) (4,042) (4,130) (4,500) (4,223) (4,282) (4,734)
Litigation and conduct (140) (98) (146) (65) (277) (39) (77) (48)
UK bank levy (462) - - - (504) - - -
Costs to achieve Transform (339) (332) (254) (240) (468) (101) (126) (514)
===================================== ======= ======= ======= ======= ======= ======= ======= =======
Total operating expenses (4,883) (4,309) (4,442) (4,435) (5,749) (4,363) (4,485) (5,296)
Other net income/(expense) 1 30 (46) 26 19 25 (122) 54
===================================== ======= ======= ======= ======= ======= ======= ======= =======
Adjusted profit before tax 563 1,590 1,656 1,693 191 1,385 1,546 1,786
Adjusting items
===================================== ======= ======= ======= ======= ======= ======= ======= =======
Own credit (62) 44 (67) 119 (95) (211) 337 (251)
Provisions for PPI and interest
rate hedging redress (200) (10) (900) - - - (2,000) -
Goodwill impairment - - - - (79) - - -
Gain on US Lehman acquisition
assets - 461 - - - - 259 -
Provision for ongoing investigations
and litigation relating to
Foreign Exchange (750) (500) - - - - - -
Loss on announced sale of
the Spanish business (82) (364) - - - - - -
ESHLA valuation revision (935) - - - - - - -
===================================== ======= ======= ======= ======= ======= ======= ======= =======
Statutory (loss)/profit before
tax (1,466) 1,221 689 1,812 17 1,174 142 1,535
Statutory (loss)/profit after
tax (1,381) 620 391 1,215 (514) 728 39 1,044
Attributable to:
===================================== ======= ======= ======= ======= ======= ======= ======= =======
Ordinary equity holders of
the parent (1,679) 379 161 965 (642) 511 (168) 839
Other equity holders 80 80 41 49 - - - -
Non-controlling interests 218 161 189 201 128 217 207 205
Adjusted basic earnings/(loss)
per share 1.3p 5.2p 5.4p 5.5p (2.8p) 5.4p 6.2p 7.5p
Adjusted cost: income ratio 81% 68% 66% 67% 87% 68% 63% 68%
Basic (loss)/earnings per
share (10.2p) 2.4p 1.0p 6.0p (4.5p) 3.8p (1.2p) 6.3p
Cost: income ratio 116% 70% 82% 66% 89% 70% 85% 71%
Barclays Core(1)
===================================== ======= ======= ======= ======= ======= ======= ======= =======
Total income net of insurance
claims 5,996 6,008 6,397 6,277 6,189 6,076 6,514 6,824
Credit impairment charges
and other provisions (571) (492) (456) (481) (542) (554) (558) (517)
===================================== ======= ======= ======= ======= ======= ======= ======= =======
Net operating income 5,425 5,516 5,941 5,796 5,647 5,522 5,956 6,307
Operating expenses (3,614) (3,557) (3,602) (3,710) (4,045) (3,758) (3,802) (4,204)
Litigation and conduct (56) (16) (136) (43) (69) (18) (51) (35)
UK bank levy (371) - - - (395) - - -
Costs to achieve Transform (298) (202) (237) (216) (365) (84) (64) (158)
===================================== ======= ======= ======= ======= ======= ======= ======= =======
Total operating expenses (4,339) (3,775) (3,975) (3,969) (4,874) (3,860) (3,917) (4,397)
Other net income 9 6 27 20 15 15 13 43
===================================== ======= ======= ======= ======= ======= ======= ======= =======
Profit before tax 1,095 1,747 1,993 1,847 788 1,677 2,052 1,953
1 2013 adjusted income and profit before tax have been restated
to exclude the Q213 GBP259m gain relating to assets not yet
received from the US Lehman acquisition to aid comparability given
its material nature in the current year.
Barclays Non-Core
============================== ===== ===== ===== ===== ===== ===== ===== =====
Total income net of insurance
claims 22 370 285 373 450 368 564 911
Credit impairment charges
and other provisions (2) (17) (82) (67) (176) (168) (367) (189)
============================== ===== ===== ===== ===== ===== ===== ===== =====
Net operating income 20 353 203 306 274 200 197 722
Operating expenses (329) (321) (441) (419) (456) (464) (481) (529)
Litigation and conduct (83) (82) (10) (23) (208) (21) (26) (13)
UK bank levy (91) - - - (109) - - -
Costs to achieve Transform (41) (130) (17) (24) (103) (17) (62) (356)
============================== ===== ===== ===== ===== ===== ===== ===== =====
Total operating expenses (544) (533) (468) (466) (876) (502) (569) (898)
Other net (expense)/income (8) 23 (72) 6 4 10 (135) 11
============================== ===== ===== ===== ===== ===== ===== ===== =====
Loss before tax (532) (157) (337) (154) (598) (292) (507) (165)
Personal and Corporate Banking
=============================== ======= ======= ======= ======= ======= ======= ======= =======
Personal 1,045 1,061 1,027 1,026 1,037 1,033 1,018 952
Corporate 922 902 889 879 866 956 911 887
Wealth 264 273 272 268 263 263 263 274
=============================== ======= ======= ======= ======= ======= ======= ======= =======
Total income 2,231 2,236 2,188 2,173 2,166 2,252 2,192 2,113
Credit impairment charges
and other provisions (123) (129) (95) (135) (169) (153) (165) (134)
=============================== ======= ======= ======= ======= ======= ======= ======= =======
Net operating income 2,108 2,107 2,093 2,038 1,997 2,099 2,027 1,979
Operating expenses (1,219) (1,232) (1,256) (1,298) (1,388) (1,318) (1,378) (1,376)
UK bank levy (70) - - - (66) - - -
Costs to achieve Transform (195) (90) (58) (57) (219) (73) (55) (37)
=============================== ======= ======= ======= ======= ======= ======= ======= =======
Total operating expenses (1,484) (1,322) (1,314) (1,355) (1,673) (1,391) (1,433) (1,413)
Other net income 4 4 1 5 3 1 7 30
=============================== ======= ======= ======= ======= ======= ======= ======= =======
Profit before tax 628 789 780 688 327 709 601 596
Barclaycard
=========================== ===== ===== ===== ===== ===== ===== ===== =====
Total income 1,109 1,123 1,082 1,042 1,034 1,050 1,030 989
Credit impairment charges
and other provisions (362) (284) (268) (269) (266) (290) (272) (268)
=========================== ===== ===== ===== ===== ===== ===== ===== =====
Net operating income 747 839 814 773 768 760 758 721
Operating expenses (456) (449) (420) (402) (457) (455) (424) (450)
UK bank levy (29) - - - (22) - - -
Costs to achieve Transform (50) (32) (23) (13) (38) (6) (5) -
=========================== ===== ===== ===== ===== ===== ===== ===== =====
Total operating expenses (535) (481) (443) (415) (517) (461) (429) (450)
Other net income 1 4 25 10 5 12 7 9
=========================== ===== ===== ===== ===== ===== ===== ===== =====
Profit before tax 213 362 396 368 256 311 336 280
Africa Banking
============================== ===== ===== ===== ===== ===== ===== ===== =====
Total income net of insurance
claims 963 928 895 878 980 1,004 1,016 1,039
Credit impairment charges
and other provisions (79) (74) (100) (96) (104) (101) (131) (143)
============================== ===== ===== ===== ===== ===== ===== ===== =====
Net operating income 884 854 795 782 876 903 885 896
Operating expenses (591) (573) (545) (537) (616) (605) (597) (633)
UK bank levy (45) - - - (42) - - -
Costs to achieve Transform (23) (11) (8) (9) (15) (2) (9) -
============================== ===== ===== ===== ===== ===== ===== ===== =====
Total operating expenses (659) (584) (553) (546) (673) (607) (606) (633)
Other net income 3 2 2 4 - 3 4 1
============================== ===== ===== ===== ===== ===== ===== ===== =====
Profit before tax 228 272 244 240 203 299 283 264
Investment Bank
===================================== ======= ======= ======= ======= ======= ======= ======= =======
Investment Banking fees 527 410 661 513 571 526 488 575
Lending 111 137 66 103 68 42 141 74
===================================== ======= ======= ======= ======= ======= ======= ======= =======
Banking 638 547 727 616 639 568 629 649
Credit 173 255 270 346 231 308 239 479
Equities 431 395 629 591 421 524 750 602
Macro 424 470 504 552 494 457 689 940
===================================== ======= ======= ======= ======= ======= ======= ======= =======
Markets 1,028 1,120 1,403 1,489 1,146 1,289 1,678 2,021
===================================== ======= ======= ======= ======= ======= ======= ======= =======
Banking and Markets 1,666 1,667 2,130 2,105 1,785 1,857 2,307 2,670
Other - (2) 24 (2) (3) (6) (7) (7)
===================================== ======= ======= ======= ======= ======= ======= ======= =======
Total income 1,666 1,665 2,154 2,103 1,782 1,851 2,300 2,663
Credit impairment (charges)/releases
and other provisions (7) (5) 7 19 (6) (10) 10 28
===================================== ======= ======= ======= ======= ======= ======= ======= =======
Net operating income 1,659 1,660 2,161 2,122 1,776 1,841 2,310 2,691
Operating expenses (1,384) (1,306) (1,442) (1,501) (1,606) (1,373) (1,429) (1,764)
UK bank levy (218) - - - (236) - - -
Costs to achieve Transform (22) (70) (152) (130) (71) (3) - (116)
===================================== ======= ======= ======= ======= ======= ======= ======= =======
Total operating expenses (1,624) (1,376) (1,594) (1,631) (1,913) (1,376) (1,429) (1,880)
Profit/(loss) before tax 35 284 567 491 (137) 465 881 811
Head Office
=============================== ==== ==== ==== ==== ==== ===== ==== ====
Total income/(expense) 27 56 78 81 227 (81) (24) 20
Credit impairment releases - - - - 3 - - -
=============================== ==== ==== ==== ==== ==== ===== ==== ====
Net operating income/(expense) 27 56 78 81 230 (81) (24) 20
Operating expenses (19) (13) (76) (15) (47) (25) (25) (16)
UK bank levy (9) - - - (29) - - -
Costs to achieve Transform (8) - 5 (7) (22) - 5 (5)
=============================== ==== ==== ==== ==== ==== ===== ==== ====
Total operating expenses (36) (13) (71) (22) (98) (25) (20) (21)
Other net (expense)/income - (3) (1) 1 7 (1) (5) 3
=============================== ==== ==== ==== ==== ==== ===== ==== ====
(Loss)/profit before tax (9) 40 6 60 139 (107) (49) 2
Performance Management
Returns and equity by business
Returns on average equity and average tangible equity are
calculated as profit for the year attributable to ordinary equity
holders of the parent (adjusted for the tax credit recorded in
reserves in respect of coupons on other equity instruments) divided
by average allocated equity or average allocated tangible equity
for the period as appropriate, excluding non-controlling and other
equity interests for businesses, apart from Africa Banking (see
below). Allocated equity has been calculated as 10.5% of CRD IV
fully loaded risk weighted assets for each business, adjusted for
CRD IV fully loaded capital deductions, including goodwill and
intangible assets, reflecting the assumptions the Group uses for
capital planning purposes. The excess of allocated Group equity,
caused by the fully loaded CRD IV CET1 ratio being below 10.5% on
average in the period, is allocated as negative equity to Head
Office. Allocated tangible equity is calculated using the same
method, but excludes goodwill and intangible assets.
For Africa Banking, the equity used for return on average equity
is Barclays' share of the statutory equity of the BAGL entity
(together with that of the Barclays Egypt and Zimbabwe businesses
which remain outside the BAGL corporate entity), as well as the
Barclays' goodwill on acquisition of these businesses. The tangible
equity for return on tangible equity uses the same basis, but
excludes both the Barclays' goodwill on acquisition and the
goodwill and intangibles held within the BAGL statutory equity.
Year ended Year ended
31.12.14 31.12.13(1)
Return on average equity % %
================================== ========== ===========
Personal and Corporate Banking 11.9 9.7
Barclaycard 16.0 15.5
Africa Banking 9.3 8.1
Investment Bank 2.7 8.2
================================== ========== ===========
Barclays Core excluding Head
Office 8.9 9.7
Head Office impact(2) 0.3 1.6
Barclays Core 9.2 11.3
Barclays Non-Core impact(2) (4.1) (7.2)
================================== ========== ===========
Barclays Group adjusted total 5.1 4.1
Year ended Year ended
31.12.14 31.12.13(1)
Return on average tangible equity %%
================================== ========== ==========
Personal and Corporate Banking 15.8 12.7
Barclaycard 19.9 19.9
Africa Banking 12.9 11.3
Investment Bank 2.8 8.5
================================== ========== ===========
Barclays Core excluding Head
Office 10.8 11.6
Head Office impact(2) 0.5 2.8
Barclays Core 11.3 14.4
Barclays Non-Core impact(2) (5.4) (9.6)
================================== ========== ===========
Barclays Group adjusted total 5.9 4.8
1 2013 adjusted income and profit before tax have been restated
to exclude the Q213 GBP259m gain relating to assets not yet
received from the US Lehman acquisition to aid comparability given
its material nature in the current year.
2 Return on average equity and average tangible equity for Head
Office and Barclays Non-Core represents their impact on Barclays
Core and the Group respectively. This does not represent the return
on average equity and average tangible equity of Head Office or the
Non-Core business.
Year ended Year ended
31.12.14 31.12.13(1)
Profit/(loss) attributable to GBPm GBPm
ordinary equity holders of the
parent(2)
================================== ========== ===========
Personal and Corporate Banking 2,075 1,681
Barclaycard 943 822
Africa Banking 360 356
Investment Bank 415 1,308
Head Office 112 (89)
================================== ========== ===========
Barclays Core 3,905 4,078
Barclays Non-Core (1,072) (1,890)
================================== ========== ===========
Barclays Group adjusted total 2,833 2,188
Year ended Year ended
31.12.14 31.12.13
Average Allocated Equity GBPbn GBPbn
================================== ========== ===========
Personal and Corporate Banking 17.5 17.3
Barclaycard 5.9 5.3
Africa Banking 3.9 4.4
Investment Bank 15.4 15.9
Head Office(3) (0.4) (7.0)
================================== ========== ===========
Barclays Core 42.3 35.9
Barclays Non-Core 13.4 17.1
================================== ========== ===========
Barclays Group adjusted total 55.7 53.0
Year ended Year ended
31.12.14 31.12.13
Average Allocated Tangible Equity GBPbn GBPbn
================================== ========== ===========
Personal and Corporate Banking 13.1 13.2
Barclaycard 4.7 4.1
Africa Banking 2.8 3.2
Investment Bank 14.6 15.3
Head Office(3) (0.6) (7.4)
================================== ========== ===========
Barclays Core 34.6 28.4
Barclays Non-Core 13.2 16.8
================================== ========== ===========
Barclays Group adjusted total 47.8 45.2
Year ended Year ended
31.12.14 31.12.13
Period End Allocated Equity GBPbn GBPbn
=============================== =========================================================== ==========
Personal and Corporate Banking 17.9 17.3
Barclaycard 6.2 5.4
Africa Banking 4.0 3.8
Investment Bank 14.7 14.6
Head Office(3) 2.1 (2.1)
=============================== =========================================================== ==========
Barclays Core 44.9 39.0
Barclays Non-Core 11.0 15.1
=============================== =========================================================== ==========
Barclays Group adjusted total 55.9 54.1
1 2013 adjusted income and profit before tax have been restated
to exclude the Q213 GBP259m gain relating to assets not yet
received from the US Lehman acquisition to aid comparability given
its material nature in the current year.
2 The profit after tax attributable to other equity holders of
GBP250m (2013: GBPnil) is offset by a tax credit recorded in
reserves of GBP54m (2013: GBPnil) allocated across the businesses.
The net amount of GBP196m, along with NCI, is deducted from profit
after tax in order to calculate return on average tangible
shareholders' equity and return on average shareholders' equity.
Hence, 2014 attributable profit of GBP2,779m has been adjusted for
the tax credit recorded in reserves of GBP54m (2013: GBPnil).
3 Includes risk weighted assets and capital deductions in Head
Office, plus the residual balance of ordinary shareholders' equity
and tangible ordinary shareholders' equity.
Margins and balances
Year ended 31.12.14 Year ended 31.12.13
Net Interest Average Net Interest Net Interest Average Net Interest
Income Customer Margin Income Customer Margin
Assets Assets
GBPm GBPm % GBPm GBPm %
----------------------------- ------------ --------- ------------ ------------ --------- ------------
Personal and Corporate
Banking 6,298 210,026 3.00 5,893 202,497 2.91
Barclaycard 3,044 34,776 8.75 2,829 31,459 8.99
Africa Banking 2,093 35,153 5.95 2,245 38,640 5.81
----------------------------- ------------ --------- ------------ ------------ --------- ------------
Total Personal and Corporate
Banking, Barclaycard and
Africa Banking 11,435 279,955 4.08 10,967 272,596 4.02
Investment Bank 647 393
Head Office and Other
Operations (216) (67)
----------------------------- ------------ --------- ------------ ------------ --------- ------------
Barclays Core 11,866 11,293
Barclays Non-Core 214 307
----------------------------- ------------ --------- ------------ ------------ --------- ------------
Total Net Interest Income 12,080 11,600
-- Total PCB, Barclaycard and Africa Banking net interest income
increased 4% to GBP11.4bn due to:
- An increase in average customer assets to GBP280.0bn (2013:
GBP272.6bn) with growth in PCB mortgages and Barclaycard, partially
offset by reductions in Africa Banking as the ZAR depreciated
against GBP
- Net interest margin increased 6bps to 4.08% primarily due to
higher savings margins in PCB and in Africa following the rise in
the South African benchmark interest rate and the favourable impact
of higher deposit margins. This was partially offset by a decrease
in Barclaycard due to the impact of promotional offers and a change
in product mix
-- Group net interest income increased to GBP12.1bn (2013:
GBP11.6bn) including structural hedge contributions of GBP1.6bn
(2013: GBP1.6bn). Equity structural hedge income increased as the
weighted average life of the hedge was extended. This was offset by
lower product structural hedges driven by the maintenance of the
hedge in a continuing low rate environment
Quarterly analysis for PCB, Barclaycard and Quarter ended 31.12.14
Africa Banking
Net Interest Average Net Interest
Income Customer Margin
Assets
GBPm GBPm %
-------------------------------------------------- ------------ --------- ------------
Personal and Corporate Banking 1,619 212,444 3.02
Barclaycard 757 36,932 8.13
Africa Banking 546 36,465 5.94
-------------------------------------------------- ------------ --------- ------------
Total Personal and Corporate Banking, Barclaycard
and Africa Banking 2,922 285,841 4.06
Quarter ended 30.09.14
Personal and Corporate Banking 1,622 210,859 3.05
Barclaycard 787 35,308 8.84
Africa Banking 540 35,026 6.12
-------------------------------------------------- ------------ --------- ------------
Total Personal and Corporate Banking, Barclaycard
and Africa Banking 2,949 281,193 4.16
Quarter ended 30.06.14
Personal and Corporate Banking 1,529 209,040 2.93
Barclaycard 754 33,904 8.92
Africa Banking 504 34,660 5.83
-------------------------------------------------- ------------ --------- ------------
Total Personal and Corporate Banking, Barclaycard
and Africa Banking 2,787 277,604 4.03
Quarter ended 31.03.14
Personal and Corporate Banking 1,528 207,433 2.99
Barclaycard 746 32,911 9.19
Africa Banking 503 34,488 5.91
-------------------------------------------------- ------------ --------- ------------
Total Personal and Corporate Banking, Barclaycard
and Africa Banking 2,777 274,832 4.10
Remuneration
Deferred bonuses are payable only once an employee meets certain
conditions, including a specified period of service. This creates a
timing difference between the communication of the bonus pool and
the charges that appear in the income statement which are
reconciled in the table below to show the charge for performance
costs. The table also shows the other elements of compensation and
staff costs.
Barclays Group Investment Bank(1)
================================ ================================
Year ended Year ended Year ended Year ended
31.12.14 31.12.13 31.12.14 31.12.13
GBPm GBPm % Change GBPm GBPm % Change
============================ ========== ========== ======== ========== ========== ========
Incentive awards granted
Current year bonus 885 957 8 381 411 7
Deferred bonus 757 1,140 34 634 921 31
Commissions, commitments
and other incentives 218 281 22 38 46 17
============================ ========== ========== ======== ========== ========== ========
Total incentive awards
granted 1,860 2,378 22 1,053 1,378 24
Reconciliation of incentive
awards granted to income
statement charge:
Less: deferred bonuses
granted in current year (757) (1,140) 34 (634) (921) 31
Add: current year charges
for deferred bonuses
from previous years 1,067 1,147 7 854 933 8
Other(2) (108) 169 12 99 88
============================ ========== ========== ======== ========== ========== ========
Income statement charge
for performance costs 2,062 2,554 19 1,285 1,489 14
Other income statement
charges:
Salaries(3) 4,998 4,981 - 1,749 1,787 2
Social security costs 659 715 8 268 294 9
Post retirement benefits 624 688 9 120 151 21
Allowances and trading
incentives 170 211 19 64 86 26
Other compensation costs 378 467 19 134 171 22
============================ ========== ========== ======== ========== ========== ========
Total compensation costs(4) 8,891 9,616 8 3,620 3,978 9
Other resourcing costs(5) 2,114 2,539 17 466 530 12
Total staff costs 11,005 12,155 9 4,086 4,508 9
============================ ========== ========== ======== ========== ========== ========
Compensation as % of
adjusted net income 37.7% 38.7% 47.6% 46.2%
Compensation as % of
adjusted income 34.6% 34.5% 47.7% 46.3%
1 Investment Bank other compensation costs included allocations
from Head Office and net recharges relating to compensation costs
incurred in the Investment Bank but charged to other businesses and
charges from other businesses to the Investment Bank.
2 Difference between incentive awards granted and income
statement charge for commissions, commitments and other long-term
incentives.
3 Salaries include role based pay and fixed pay allowances.
4 In addition, GBP250m of Group compensation (2013: GBP346m) was
capitalised as internally generated software.
5 Other resourcing costs include outsourcing, redundancy and
restructuring costs and other temporary staff costs.
For further detail on remuneration refer to the Remuneration
Report on pages 77-110 of the Annual Report
Deferred bonuses have been awarded and are expected to be
charged to the income statement in the years outlined in the table
that follows:
Year in which income statement charge is expected to be taken for
deferred bonuses awarded to date(1)
Actual Expected(2)
====================== ====================
Year ended Year ended Year ended 2016 and
31.12.13 31.12.14 31.12.15 beyond
Barclays Group GBPm GBPm GBPm GBPm
--------------------------------------- ---------- ---------- ---------- --------
Deferred bonuses from 2011 and earlier
bonus pools 621 202 18 -
Deferred bonuses from 2012 bonus
pool 526 286 106 15
Deferred bonuses from 2013 bonus
pool - 579 294 145
Deferred bonuses from 2014 bonus
pool - - 421 304
--------------------------------------- ---------- ---------- ---------- --------
Income statement charge for deferred
bonuses 1,147 1,067 839 464
Investment Bank
--------------------------------------- ---------- ---------- ---------- --------
Deferred bonuses from 2011 and earlier
bonus pools 480 172 15 -
Deferred bonuses from 2012 bonus
pool 453 226 84 12
Deferred bonuses from 2013 bonus
pool - 456 232 113
Deferred bonuses from 2014 bonus
pool - - 362 249
--------------------------------------- ---------- ---------- ---------- --------
Income statement charge for deferred
bonuses 933 854 693 374
1 The actual amount charged depends upon whether conditions have
been met and will vary compared with the above expectation.
2 Does not include the impact of grants which will be made in 2015 and 2016.
Funding Risk - Liquidity
Whilst Barclays has a comprehensive framework for managing the
Group's liquidity risks, liquidity risk is managed separately at
Barclays Africa Group Limited (BAGL) due to local currency and
funding requirements. Unless stated otherwise, all disclosures in
this section exclude BAGL and they are reported on a stand-alone
basis. Adjusting for local requirements, BAGL liquidity risk is
managed on a consistent basis to Barclays Group.
Liquidity stress testing
Barclays manages the Group's liquidity position against the
Group's internally defined Liquidity Risk Appetite (LRA) and
regulatory metrics, such as the Individual Liquidity Guidance (ILG)
provided by the PRA, and the CRD IV Liquidity Coverage Ratio (LCR).
As at 31 December 2014, the Group held eligible liquid assets in
excess of 100% of net stress outflows for both the 30 day
Barclays-specific LRA and the LCR.
Compliance with internal and regulatory stress Barclays' Estimated
tests LRA CRD IV LCR
(30 day
Barclays
specific
requirement)(1)
=============================================== ================ ===========
GBPbn GBPbn
Eligible liquidity buffer 149 153
Net stress outflows (120) (123)
=============================================== ================ ===========
Surplus 29 30
Liquidity pool as a percentage of anticipated
net outflows as at 31 December 2014 124% 124%
=============================================== ================ ===========
Liquidity pool as a percentage of anticipated
net outflows as at 31 December 2013 104% 96%
1 Of the three stress scenarios monitored as part of the LRA,
the 30 day Barclays specific scenario results in the lowest ratio
at 124% (2013: 104%). This compares to 135% (2013: 127%) under the
90 day market-wide scenario and 127% (2013: 112%) under the 30 day
combined scenario.
During the period, the Group strengthened its liquidity
position, building a larger surplus to its internal and regulatory
stress requirements which position it well for potential rating
changes as credit rating agencies assess sovereign support in
Barclays Bank PLC's credit ratings.
Barclays plans to maintain its surplus to the internal and
regulatory stress requirements at an efficient level, whilst
considering risks to market funding conditions and its liquidity
position. The continuous reassessment of these risks may lead to
appropriate actions being taken with respect to sizing of the
liquidity pool.
Barclays estimated its Net Stable Funding Ratio (NSFR) at 102%
(2013: 94%) based on the final NSFR guidelines published by the
BCBS in October 2014.
Liquidity pool
Liquidity Liquidity Liquidity pool Liquidity
pool 31.12.2014 pool of of which CRD pool 31.12.2013
which IV LCR-eligible(2)
PRA eligible(1)
================ ================ ===================== ================
Level Level
1 2A
As at 31.12.2014 GBPbn GBPbn GBPbn GBPbn GBPbn
================ ================ ========== ========= ================
Cash and deposits with central
banks(3) 37 36 34 2 43
Government bonds(4)
AAA rated 73 72 73 - 52
AA+ to AA- rated 12 11 12 - 9
Other government bonds - - - - 1
====================================== ================ ================ ========== ========= ================
Total Government bonds 85 83 85 - 62
Other
Supranational bonds and multilateral
development banks 9 3 9 - 3
Agencies and agency mortgage-backed
securities 11 - 5 5 10
Covered bonds (rated AA- and
above) 3 - 3 - 6
Other 4 - - - 3
====================================== ================ ================ ========== ========= ================
Total other 27 3 17 5 22
Total as at 31 December 2014 149 122 136 7
====================================== ================ ================ ========== =========
Total as at 31 December 2013 127 104 109 11
The Group liquidity pool was GBP149bn at year end (2013:
GBP127bn). During 2014, the month-end liquidity pool ranged from
GBP134bn to GBP156bn (2013: GBP127bn to GBP157bn), and the
month-end average balance was GBP145bn (2013: GBP144bn). The
liquidity pool is held unencumbered and is not used to support
payment or clearing requirements.
Barclays manages the liquidity pool on a centralised basis. As
at 31 December 2014, 92% (2013: 90%) of the liquidity pool was
located in Barclays Bank PLC and was available to meet liquidity
needs across the Barclays Group. The residual liquidity pool is
held predominantly within Barclays Capital Inc (BCI). The portion
of the liquidity pool outside of Barclays Bank PLC is held against
entity-specific stressed outflows and regulatory requirements.
Deposit funding
As at 31.12.2014 As at 31.12.13
================================== ==============
Funding of loans and advances Loans and Loan to Loan to
to customers advances Customer deposit deposit
(including BAGL) to customers deposits ratio ratio
GBPbn GBPbn % %
====================================== ------------- --------- -------- ==============
Personal and Corporate banking 217 299
Barclaycard 37 7
Africa Banking 35 35
Non-Core (retail) 20 8
====================================== ============= ========= ======== ==============
Total Retail funding 309 349 89% 91
Investment Bank, Non-Core (wholesale)
and other 119 79
-------------------------------------- ------------- --------- -------- --------------
Total 428 428 100% 101
1 GBP122bn (2013: GBP104bn) of the liquidity pool is PRA
eligible as per BIPRU 12.7. In addition, there are GBP12bn (2013:
GBP9bn) of Level 2 assets available, as per PRA's announcement in
August 2013 that certain assets specified by PRA as Level 2 assets
can be used on a transitional basis.
2 The LCR-eligible assets presented in this table represent only
those assets which are also eligible for the Group liquidity pool
and do not include any Level 2B assets as defined by CRD IV.
3 Of which over 95% (2013: over 95%) was placed with the Bank of
England, US Federal Reserve, European Central Bank, Bank of Japan
and Swiss National Bank.
4 Of which over 95% (2013: over 85%) are comprised of UK, US,
Japanese, French, German, Danish, Swiss and Dutch securities.
PCB, Barclaycard, Africa Banking and Non-Core (retail) are
largely funded by customer deposits. The loan to deposit ratio for
these businesses was 89% (2013: 91%). The customer deposits in
excess of loans and advances are primarily used to fund liquidity
buffer requirements for these businesses. The Investment Bank is
funded with wholesale liabilities and does not rely on customer
deposit funding from these businesses. The loan to deposit ratio
for the Group was broadly unchanged at 100% (2013: 101%).
As at 31 December 2014, GBP128bn (2013: GBP122bn) of total
customer deposits were insured through the UK Financial Services
Compensation Scheme and other similar schemes. In addition to these
customer deposits, there were GBP4bn (2013: GBP3bn) of other
liabilities insured or guaranteed by governments.
Wholesale funding
Composition of wholesale funding
Total wholesale funding outstanding (excluding repurchase
agreements) was GBP171bn (2013: GBP186bn). GBP75bn (2013: GBP82bn)
of wholesale funding matures in less than one year of which
GBP22bn(2) (2013: GBP23bn) relates to term funding.
Outstanding wholesale funding comprised of GBP33bn (2013:
GBP35bn) secured funding and GBP138bn (2013: GBP151bn) unsecured
funding.
In preparation for a Single Point of Entry resolution model,
Barclays has started to issue debt capital and term senior
unsecured funding out of Barclays PLC, the holding company. The
Group expects to refinance most debt capital and term senior
unsecured debt out of Barclays PLC over time.
Maturity profile of wholesale <= 1-3 3-6 6-9 9-12 <= 1-2 2-5 >=
funding(1) 1 month months months months months 1 year years years 5 years Total
GBPbn GBPbn GBPbn GBPbn GBPbn GBPbn GBPbn GBPbn GBPbn GBPbn
------------------------------ -------- ------- ------- ------- ------- ------- ------ ------ -------- -----
Barclays PLC
Senior unsecured (Public
benchmark) - - - - - - - 1.3 0.8 2.1
Subordinated liabilities - - - - - - - - 0.8 0.8
Barclays Bank PLC
Deposits from Banks 9.2 5.7 0.9 0.5 0.3 16.6 0.2 0.1 0.2 17.1
Certificates of Deposit
and Commercial Paper 0.8 5.6 7.8 6.0 4.0 24.2 0.6 2.0 0.6 27.4
Asset Backed Commercial
Paper 1.0 4.4 0.2 - - 5.6 - - - 5.6
Senior unsecured (Public
benchmark) - 2.0 0.7 1.1 - 3.8 2.7 7.9 5.1 19.5
Senior unsecured (Privately
placed)(3) 0.6 1.8 3.3 3.8 2.0 11.5 7.2 13.3 12.6 44.6
Covered bonds/ABS 2.7 2.0 0.7 1.6 0.2 7.2 2.2 7.5 6.0 22.9
Subordinated liabilities - 0.1 - - - 0.1 2.9 16.7 19.7
Other(4) 2.5 1.6 0.8 0.5 1.0 6.4 1.1 1.6 2.6 11.7
============================== ======== ======= ======= ======= ======= ======= ====== ====== ======== =====
Total as at 31 December
2014 16.8 23.2 14.4 13.5 7.5 75.4 14.0 36.6 45.4 171.4
============================== ======== ======= ======= ======= ======= ======= ====== ====== ======== =====
Of which secured 5.3 7.8 1.7 1.9 0.3 17.0 2.7 7.6 6.0 33.3
Of which unsecured 11.5 15.4 12.7 11.6 7.2 58.4 11.3 29.0 39.4 138.1
============================== ======== ======= ======= ======= ======= ======= ====== ====== ======== =====
Total as at 31 December
2013 20.3 24.0 15.5 15.9 6.3 82.0 27.1 33.8 42.6 185.5
============================== ======== ======= ======= ======= ======= ======= ====== ====== ======== =====
Of which secured 4.6 3.7 1.4 3.5 0.7 13.9 7.3 6.5 7.2 34.9
Of which unsecured 15.7 20.3 14.1 12.4 5.6 68.1 19.8 27.3 35.4 150.6
============================== ======== ======= ======= ======= ======= ======= ====== ====== ======== =====
Outstanding wholesale funding includes GBP45bn (2013: GBP50bn)
of privately placed senior unsecured notes in issue. These notes
are issued through a variety of distribution channels including
intermediaries and private banks. Although not a requirement, the
liquidity pool exceeded wholesale funding maturing in less than one
year by GBP74bn (2013: GBP45bn).
The average maturity of wholesale funding net of the liquidity
pool was at least 105 months (2013: 69 months).
Term financing
The Group issued GBP15bn (2013: GBP1bn) of term funding net of
early redemptions during 2014. In addition, the Group raised GBP6bn
through participation in the Bank of England's Funding for Lending
Scheme. Barclays has GBP23bn of term funding maturing in 2015 and
GBP13bn in 2016(5) .
The Group expects to continue issuing public wholesale debt in
2015, in order to maintain a stable and diverse funding base by
type, currency and distribution channel.
1
The composition of wholesale funds comprises the balance sheet
reported Deposits from Banks, Financial liabilities at Fair Value,
Debt Securities in Issue and Subordinated Liabilities, excluding
cash collateral and settlement balances. It does not include
collateral swaps, including participation in the Bank of England's
Funding for Lending Scheme. Included within deposits from banks are
GBP1bn of liabilities drawn in the European Central Bank's 3 year
LTRO.
2
Term funding maturities comprise public benchmark and privately
placed senior unsecured notes, covered bonds/asset-backed
securities (ABS) and subordinated debt where the original maturity
of the instrument was more than 1 year.
3
Includes structured notes of GBP35bn, GBP9bn of which matures
within one year.
4
Primarily comprised of fair value deposits GBP5bn and secured
financing of physical gold GBP5bn.
5
Includes GBP1bn of bilateral secured funding in 2015 and GBP1bn
in 2016.
Credit ratings
The credit ratings of most financial institutions, including
Barclays, currently benefit from sovereign support notches to
reflect the historic propensity for governments to support
systemically important banks. As regulation has evolved, credit
rating agencies have communicated their intention to remove part or
all of this support over time.
In line with this intent, on 3 February 2015, S&P took
action to remove government support notches from certain U.K. and
Swiss bank non-operating holding companies, including Barclays PLC,
the holding company of Barclays. This resulted in a downgrade of
Barclays PLC by two notches to BBB/A-2 with stable outlook as they
believe that the prospect of extraordinary government support to
its senior creditors is now unlikely. S&P also placed the long-
and short-term ratings of most UK, German and Austrian bank
operating companies, including Barclays Bank PLC (A/A-1) and its
subsidiaries and branches, the counterparties for customer and
client relationships, on 'CreditWatch with negative implications'
as they assess how the legislative bail-in powers may operate for
bank operating companies in practice.
Funding Risk - Capital
CRD IV capital
The Capital Requirements Regulation (CRR) and Capital
Requirements Directive implemented Basel 3 within the EU
(collectively known as CRD IV) on 1 January 2014. The rules are
supplemented by Regulatory Technical Standards and the PRA's
rulebook, including the implementation of transitional rules.
However, rules and guidance are still subject to change as certain
aspects of CRD IV are dependent on final technical standards and
clarifications to be issued by the EBA and adopted by the European
Commission and the PRA. All capital, RWA and leverage calculations
reflect Barclays' interpretation of the current rules.
As at As at As at
Capital ratios 31.12.14 30.09.14 31.12.13
====================================================== ======== ======== ========
Fully Loaded Common Equity Tier 1 10.3% 10.2% 9.1%
PRA Transitional Common Equity Tier 1(1,2) 10.2% 10.0% 9.1%
PRA Transitional Tier 1(2,3) 13.0% 12.9% 11.3%
PRA Transitional Total Capital(2,3) 16.5% 16.4% 15.0%
Capital resources GBPm GBPm GBPm
====================================================== ======== ======== ========
Shareholders' equity (excluding non controlling
interests) per the balance sheet 59,567 59,571 55,385
Less other equity instruments (recognised
as AT1 capital) (4,322) (4,317) (2,063)
Adjustment to retained earnings for foreseeable
dividends (615) (787) (640)
Minority interests (amount allowed in consolidated
CET1) 1,227 1,182 1,238
Other regulatory adjustments and deductions:
Additional value adjustments (PVA) (2,199) (2,641) (2,479)
Goodwill and intangible assets (8,127) (7,953) (7,618)
Deferred tax assets that rely on future profitability
excluding temporary differences (1,080) (945) (1,045)
Fair value reserves related to gains or losses
on cash flow hedges (1,814) (617) (270)
Excess of expected losses over impairment (1,772) (1,914) (2,106)
Gains or losses on liabilities at fair value
resulting from own credit 658 581 600
Other regulatory adjustments (45) (88) (119)
Direct and indirect holdings by an institution
of own CET1 instruments (25) (27) (496)
====================================================== ======== ======== ========
Fully loaded CET1 capital 41,453 42,045 40,387
Regulatory adjustments relating to unrealised
gains (583) (604) (180)
====================================================== ======== ======== ========
PRA Transitional CET1 capital 40,870 41,441 40,207
Additional Tier 1 (AT1) capital
Capital instruments and related share premium
accounts 4,322 4,317 2,063
Qualifying AT1 capital (including minority
interests) issued by subsidiaries 6,870 7,549 9,726
Less instruments issued by subsidiaries subject
to phase out - (106) (1,849)
Other regulatory adjustments and deductions - (6) -
====================================================== ======== ======== ========
Transitional Additional Tier 1 capital 11,192 11,754 9,940
====================================================== ======== ======== ========
PRA Transitional Tier 1 capital 52,062 53,195 50,147
Tier 2 (T2) capital
Capital instruments and related share premium
accounts 800 771 -
Qualifying T2 capital (including minority
interests) issued by subsidiaries 13,529 13,856 16,834
Less instruments issued by subsidiaries subject
to phase out - - (522)
Other regulatory adjustments and deductions (48) (93) (12)
====================================================== ======== ======== ========
PRA Transitional Total regulatory capital 66,343 67,729 66,447
Risk weighted assets 401,900 412,892 442,471
1 The CRD IV CET1 ratio (FSA October 2012 transitional
statement) as applicable to Barclays' Tier 2 Contingent Capital
Notes was 12.3% based on GBP49.6bn of transitional CRD IV CET1
capital and GBP402bn RWAs.
2 The PRA transitional capital is based on guidance provided in
policy statement PS 7/13 on strengthening capital standards
published in December 2013.
3 As at 31 December 2014, Barclays' fully loaded Tier 1 capital
was GBP46,020m, and the fully loaded Tier 1 ratio was 11.5%. Fully
loaded total regulatory capital was GBP61,763m and the fully loaded
total capital ratio was 15.4%. The fully-loaded Tier 1 capital and
total capital measures are calculated without applying the
transitional provisions set out in CRD IV and assessing compliance
of AT1 and T2 instruments against the relevant criteria in CRD
IV.
Movement in fully loaded Common Equity Tier 1 (CET1) Three Twelve
capital months months
------------------------------------------------------
ended ended
------------------------------------------------------
31.12.14 31.12.14
GBPm GBPm
------------------------------------------------------ -------- --------
Opening CET1 capital 42,045 40,387
(Loss)/profit for the period (1,599) 76
Movement in own credit 77 58
Movement in dividends (55) (1,228)
Retained regulatory capital generated from earnings (1,577) (1,094)
Movement in reserves - net impact of share awards 171 706
Movement in available for sale reserves (24) 414
Movement in currency translation reserves 718 560
Movement in retirement benefits (145) 205
Other reserves movements (100) (329)
------------------------------------------------------ -------- --------
Movement in other qualifying reserves 620 1,556
Minority interests 45 (11)
Additional value adjustments (PVA) 442 280
Goodwill and intangible assets (174) (509)
Deferred tax assets that rely on future profitability
excluding those arising from temporary differences (135) (35)
Excess of expected loss over impairment 142 334
Direct and indirect holdings by an institution of
own CET1 instruments 2 471
Other regulatory adjustments 43 74
------------------------------------------------------ -------- --------
Movement in regulatory adjustments and deductions: 365 604
Closing CET1 capital 41,453 41,453
- The fully loaded CRD IV CET1 ratio increased significantly
during the period to 10.3% (2013: 9.1%) reflecting an increase in
CET1 capital of GBP1.1bn to GBP41.5bn, after absorbing GBP3.3bn of
adjusting items, and a GBP40.6bn decrease in RWAs to GBP401.9bn.
The improvement reflects progress made in execution of the Group
strategy and good progress towards the 2016 Transform target in
excess of 11%. Including the sale of the Spanish business,
completed on 2 January 2015, the fully loaded CRD IV CET1 ratio
would have increased to 10.5% as at 31 December 2014
- Material movements in CET1 capital included:
- a GBP1.2bn decrease recognised for dividends paid and foreseen;
- a GBP0.6bn increase due to movements in the currency
translation reserve primarily driven by the strengthening of USD
against GBP;
- a GBP0.4bn increase due to gains in the available for sale reserve; and
- A GBP0.6bn increase due to lower regulatory adjustments and
deductions, with decreased deductions of GBP0.5bn for holdings of
own CET1 instruments, GBP0.3bn for expected loss over impairment
and GBP0.3bn for PVA, partially offset by a GBP0.5bn increase in
the deduction for goodwill and intangibles. The reduction in PVA
results principally from the GBP0.9bn adjustment to the balance
sheet valuation of the ESHLA portfolio
- Transitional total capital decreased by GBP0.1bn to GBP66.3bn
largely due to capital redemptions in the period of EUR1bn non-
cumulative callable preference shares and EUR1bn callable
fixed/floating rate subordinated notes (T2 capital). These
decreases were offset by the increase in fully loaded CET1 capital
and a T2 capital issuance of $1.25bn of fixed rate subordinated
notes
Risk weighted assets by risk type and business
Counterparty Operational Total
Credit risk credit risk(1) Market risk(2) risk RWAs
================= ================ =========== =======
Std IRB Std IRB Std IMA
As at 31 December GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
2014
======================= ====== ======= ======== ======= ======= ======= =========== =======
Personal and Corporate
Banking 32,657 70,080 238 1,049 26 - 16,176 120,226
Barclaycard 15,910 18,492 - - - - 5,505 39,907
Africa Banking 9,015 21,794 10 562 948 588 5,604 38,521
Investment Bank 5,773 36,829 13,739 11,781 18,179 16,480 19,621 122,402
Head Office 506 2,912 234 62 7 521 1,326 5,568
======================= ====== ======= ======== ======= ======= ======= =========== =======
Total Core 63,861 150,107 14,221 13,454 19,160 17,589 48,232 326,624
Barclays Non-Core 10,679 19,416 3,023 18,406 2,236 13,088 8,428 75,276
======================= ====== ======= ======== ======= ======= ======= =========== =======
Total risk weighted
assets 74,540 169,523 17,244 31,860 21,396 30,677 56,660 401,900
As at 31 December
2013
======================= ====== ======= ======== ======= ======= ======= =========== =======
Personal and Corporate
Banking 30,750 71,635 174 649 57 - 15,020 118,285
Barclaycard 14,357 15,676 - - - - 5,627 35,660
Africa Banking 7,435 21,807 9 529 494 935 6,837 38,046
Investment Bank 3,681 33,215 11,200 19,511 21,756 16,921 18,096 124,380
Head Office 251 7,760 411 1,747 3,612 1,356 1,089 16,226
======================= ====== ======= ======== ======= ======= ======= =========== =======
Total Core 56,474 150,093 11,794 22,436 25,919 19,212 46,669 332,597
Barclays Non-Core 19,120 29,677 5,152 20,709 7,819 19,755 7,642 109,874
======================= ====== ======= ======== ======= ======= ======= =========== =======
Total risk weighted
assets 75,594 179,770 16,946 43,145 33,738 38,967 54,311 442,471
Movement analysis of risk weighted assets
Credit Counterparty Market Operational Total
credit
risk risk(1) risk(2) risk RWAs
GBPbn GBPbn GBPbn GBPbn GBPbn
============================== ====== ============ ======= =========== ======
As at 1 January 2014 255.4 60.1 72.7 54.3 442.5
Book size 14.4 (16.0) (15.8) - (17.4)
Acquisition and disposals (12.9) (0.3) (1.3) - (14.5)
Book quality (4.4) (2.1) 1.2 - (5.3)
Model updates 6.0 3.5 (1.0) 3.4 11.9
Methodology and policy (10.6) 1.3 (3.6) - (12.9)
Foreign exchange movements(3) (0.5) - - (1.0) (1.5)
Other (3.4) 2.6 (0.1) - (0.9)
============================== ====== ============ ======= =========== ======
As at 31 December 2014 244.0 49.1 52.1 56.7 401.9
1 RWAs in relation to default fund contributions are included in counterparty credit risk.
2 RWAs in relation to CVA are included in market risk.
3 Foreign exchange movements do not include movements for
counterparty credit risk or market risk.
- RWAs decreased GBP40.6bn to GBP401.9bn reflecting the
following:
- Book size decreased GBP17.4bn driven by trading book risk
reductions within the Investment Bank and Non-Core, partially
offset by growth in loans and advances to customers in PCB and
Barclaycard
- Acquisitions and disposals decreased GBP14.5bn primarily
driven by Non-Core disposals. The sale of the Spanish business,
completed on 2 January 2015, would have decreased RWAs by a further
GBP5.0bn
- Book quality decreased GBP5.3bn due to improvements in
underlying Investment Bank and PCB exposure risk profiles
- Model updates increased GBP11.9bn, primarily driven by the
implementation of a revised credit risk model for assessing the
probability of counterparty default
- Methodology and policy decreased GBP12.9bn due to regulatory
changes in the treatment of high quality liquidity pool assets
- Foreign exchange movements decreased GBP1.5bn due to the
depreciation of ZAR and EUR against GBP, partially offset by the
appreciation of USD against GBP
Leverage ratio requirements
The leverage exposure below has been prepared in line with the
PRA's revised Supervisory Statement SS3/13 which requires the
exposure measure to be calculated on a BCBS 270 basis and Barclays
to meet a 3% end point Tier 1 leverage ratio.
In January 2014, the Basel Committee finalised its revised
standards (BCBS 270) for calculating the Basel 3 leverage ratio.
The European Commission is implementing the amendments into the CRR
via a delegated act which came into force from January 2015.
Barclays does not believe that there is a material difference
between the BCBS 270 leverage ratio and a leverage ratio calculated
in accordance with the delegated act.
At 31 December 2014 Barclays BCBS 270 leverage ratio was 3.7%,
which is in line with the expected minimum fully loaded requirement
outlined by the Financial Policy Committee (FPC).
BCBS 270 leverage ratio
As at 31.12.14 As at 30.09.14 As at 30.06.14
Leverage exposure GBPbn GBPbn GBPbn
========================================= ============== ============== ==============
Accounting assets
Derivative financial instruments 440 383 333
Cash collateral 73 60 60
Reverse repurchase agreements 132 158 172
Loans and advances and other assets 713 765 750
========================================= ============== ============== ==============
Total IFRS assets 1,358 1,366 1,315
Regulatory consolidation adjustments (8) (8) (8)
Derivatives adjustments
Derivatives netting (395) (345) (298)
Adjustments to cash collateral (53) (42) (31)
Net written credit protection 27 28 29
Potential Future Exposure on derivatives 179 195 195
----------------------------------------- ============== ============== ==============
Total derivatives adjustments (242) (164) (105)
Securities financing transactions
(SFTs) adjustments 25 34 56
Regulatory deductions and other
adjustments (15) (14) (10)
Weighted off balance sheet commitments 115 110 105
Total fully loaded leverage exposure 1,233 1,324 1,353
Fully loaded CET1 capital 41.5 42.0 40.8
Fully loaded AT1 capital 4.6 4.6 4.6
========================================= ============== ============== ==============
Fully loaded Tier 1 capital 46.0 46.6 45.4
Fully loaded leverage ratio 3.7% 3.5% 3.4%
- Leverage exposures during Q414 decreased by GBP91bn to
GBP1,233bn:
- Loans and advances and other assets decreased by GBP52bn to
GBP713bn primarily due to a seasonal reduction in settlement
balances of GBP28bn and a GBP13bn reduction in cash balances
- SFTs decreased GBP35bn to GBP157bn driven by a GBP26bn
reduction in IFRS reverse repurchase agreements and GBP9bn in SFT
adjustments, reflecting deleveraging in Non-Core and a seasonal
reduction in trading volumes
- Total derivative exposures(1) decreased GBP8bn due to a
GBP16bn reduction in the potential future exposure (PFE), partially
offset by an increase in IFRS derivatives and cash collateral
- PFE on derivatives decreased GBP16bn to GBP179bn mainly due to
reductions in business activity and optimisations,
including trade compressions and tear-ups. This was partially
offset by an increase relating to sold options driven by a change
to the basis of calculation
- Other derivatives exposures increased GBP8bn to GBP92bn driven
by an increase in IFRS derivatives of GBP57bn to GBP440bn and cash
collateral GBP13bn to GBP73bn. This was broadly offset by increases
in allowable derivatives netting
1
Total derivative exposures include IFRS derivative financial
instruments, cash collateral and total derivatives adjustments
Credit Risk
Analysis of loans and advances and impairment
CRLs %
Gross Impairment L&A net Credit of gross Loan impairment Loan loss
As at 31.12.14 L&A allowance of Impairment risk loans L&A charges(1) rates
GBPm GBPm GBPm GBPm % GBPm bps
========================= ======= ========== ============== =========== ========= =============== =========
Personal & Corporate
Banking 145,114 971 144,143 2,064 1.4 263 18
Africa Banking 21,334 681 20,653 1,093 5.1 295 138
Barclaycard 38,376 1,815 36,561 1,765 4.6 1,183 308
========================= ======= ========== ============== =========== ========= =============== =========
Barclays Core 204,824 3,467 201,357 4,922 2.4 1,741 85
Barclays Non-Core 20,259 428 19,831 1,209 6.0 151 75
========================= ======= ========== ============== =========== ========= =============== =========
Total Group Retail 225,083 3,895 221,188 6,131 2.7 1,892 84
Investment Bank 106,377 44 106,333 71 0.1 (14) (1)
Personal & Corporate
Banking 79,622 668 78,954 1,630 2.0 219 28
Africa Banking 16,312 246 16,066 665 4.1 54 33
Head Office and Other
Operations 3,240 - 3,240 - - - -
========================= ======= ========== ============== =========== ========= =============== =========
Barclays Core 205,551 958 204,593 2,366 1.2 259 13
Barclays Non-Core(2) 44,699 602 44,097 841 1.9 53 12
========================= ======= ========== ============== =========== ========= =============== =========
Total Group Wholesale 250,250 1,560 248,690 3,207 1.3 312 12
Group total 475,333 5,455 469,878 9,338 2.0 2,204 46
Traded Loans 2,693 n/a 2,693
Loans and advances
designated at fair
value 20,198 n/a 20,198
========================= ======= ========== ==============
Loans and advances
held at fair value 22,891 n/a 22,891
Total loans and advances 498,224 5,455 492,769
As at 31.12.13
========================= ======= ========== ============== =========== ========= =============== =========
Personal & Corporate
Banking 140,742 1,325 139,417 2,703 1.9 357 25
Africa 21,586 674 20,912 1,205 5.6 388 180
Barclaycard 33,024 1,517 31,507 1,541 4.7 1,096 332
========================= ======= ========== ============== =========== ========= =============== =========
Barclays Core 195,352 3,516 191,836 5,449 2.8 1,841 94
Barclays Non-Core 40,867 856 40,011 2,118 5.2 320 78
========================= ======= ========== ============== =========== ========= =============== =========
Total Group Retail 236,219 4,372 231,847 7,567 3.2 2,161 91
Investment Bank 104,468 - 104,468 - - (30) (3)
Personal & Corporate
Banking 77,674 701 76,973 1,861 2.4 264 34
Africa 15,793 352 15,441 722 4.6 89 56
Head Office and Other
Operations 3,072 - 3,072 - - (3) (10)
========================= ======= ========== ============== =========== ========= =============== =========
Barclays Core 201,007 1,053 199,954 2,583 1.3 320 16
Barclays Non-Core 43,691 1,833 41,858 3,148 7.2 581 133
========================= ======= ========== ============== =========== ========= =============== =========
Total Group Wholesale 244,698 2,886 241,812 5,731 2.3 901 37
Group total 480,917 7,258 473,659 13,298 2.8 3,062 64
Traded Loans 1,647 n/a 1,647
Loans and advances
designated at fair
value 18,695 n/a 18,695
========================= ======= ========== ==============
Loans and advances
held at fair value 20,342 n/a 20,342
Total loans and advances 501,259 7,258 494,001
1 Excludes impairment charges on available for sale investments
and reverse repurchase agreements.
2 Credit Risk Loans decreased to GBP841m (2013: GBP3,148m) as a
result of the reclassification of Spanish loans now held for sale
and a write-off of a single name exposure.
Statement of Directors' Responsibilities
Each of the Directors (the names of whom are set out below)
confirm that:
- to the best of their knowledge, the condensed consolidated
financial statements (set out on pages 39 to 42), which have been
prepared in accordance with the IFRSs as adopted by the European
Union, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company and the
undertakings included in the consolidation taken as a whole. The
condensed consolidated financial statements should be read in
conjunction with the annual financial statements for the year ended
31 December 2014 included in the Annual Report; and
- to the best of their knowledge, the management information
(set out on pages 4 to 37) includes a fair review of the
development and performance of the business and the position of
the Company and the undertakings included in the
consolidation taken as a whole, together with a description of
the principal risks and uncertainties that they face.
Signed on behalf of the Board by
Antony Jenkins Date Tushar Morzaria Date
Group Chief Executive Group Finance Director
Barclays PLC Board of Directors:
Chairman Executive Directors Non-executive Directors
Sir David Walker Antony Jenkins (Group Mike Ashley
Chief Executive) Tim Breedon CBE
Tushar Morzaria (Group Crawford Gillies
Finance Director) Reuben Jeffery III
Wendy Lucas-Bull
John McFarlane
Dambisa Moyo
Frits van Paasschen
Sir Michael Rake
Diane de Saint Victor
Sir John Sunderland
Stephen Thieke
Condensed Consolidated Financial Statements
Condensed consolidated income statement (audited)
Year ended Year ended
Continuing operations 31.12.14 31.12.13
Notes(1) GBPm GBPm
============================================== ======== ========== ==========
Net interest income 12,080 11,600
Net fee and commission income 8,174 8,731
Net trading income 3,331 6,553
Net investment income(2) 1,328 680
Net premiums from insurance contracts 669 732
Other income 186 148
============================================== ======== ---------- ==========
Total income 25,768 28,444
Net claims and benefits incurred on
insurance contracts (480) (509)
============================================== ======== ========== ==========
Total income net of insurance claims 25,288 27,935
Credit impairment charges and other
provisions (2,168) (3,071)
============================================== ======== ========== ==========
Net operating income 23,120 24,864
Staff costs (11,005) (12,155)
Administration and general expenses (9,424) (9,817)
Operating expenses (20,429) (21,972)
(Loss)/profit on disposal of undertakings
and share of results of associates and
joint ventures (435) (24)
============================================== ======== ========== ==========
Profit before tax 2,256 2,868
Tax 1 (1,411) (1,571)
============================================== ======== ========== ==========
Profit after tax 845 1,297
Attributable to:
============================================== ======== ========== ==========
Ordinary equity holders of the parent (174) 540
Other equity holders 8 250 -
============================================== ======== ========== ==========
Total equity holders 76 540
Non-controlling interests 2 769 757
============================================== ======== ========== ==========
Profit after tax 845 1,297
Earnings per share from continuing operations
============================================== ======== ========== ==========
Basic earnings/(loss) per ordinary share(3) 3 (0.7)p 3.8p
Diluted earnings/(loss) per ordinary
share(3) (0.7)p 3.7p
1 For notes to the Financial Statements see pages 43 to 46.
2 Net investment income includes the GBP461m gain on US Lehman acquisition assets.
3 The profit after tax attributable to other equity holders of
GBP250m (2013: GBPnil) is offset by a tax credit recorded in
reserves of GBP54m (2013: GBPnil). The net amount of GBP196m, along
with NCI, is deducted from profit after tax in order to calculate
earnings per share.
Condensed consolidated statement of profit or loss and other comprehensive
income (audited)
Year ended Year ended
Continuing operations 31.12.14 31.12.13
Notes(1) GBPm GBPm
=============================================== ======== ========== ==========
Profit after tax 845 1,297
Other comprehensive income/(loss) that may
be recycled to profit or loss:
=============================================== ======== ========== ==========
Currency translation reserve 9 486 (1,767)
Available for sale reserve 9 413 (382)
Cash flow hedge reserve 9 1,540 (1,890)
Other (42) (37)
=============================================== ======== ========== ==========
Total comprehensive income/(loss) that may
be recycled to profit or loss 2,397 (4,076)
Other comprehensive income/(loss) not recycled
to profit or loss:
=============================================== ======== ========== ==========
Retirement benefit remeasurements 205 (515)
Other comprehensive income/(loss) for the
period 2,602 (4,591)
Total comprehensive income/(loss) for the
period 3,447 (3,294)
Attributable to:
=============================================== ======== ========== ==========
Equity holders of the parent 2,756 (3,406)
Non-controlling interests 691 112
=============================================== ======== ========== ==========
Total comprehensive income/(loss) for the
period 3,447 (3,294)
1 For notes to the Financial Statements see pages 43 to 46.
Condensed consolidated balance sheet (audited)
As at As at
31.12.14 31.12.13
Assets Notes(1) GBPm GBPm
================================================= ======== ========= =========
Cash and balances at central banks 39,695 45,687
Items in the course of collection from other
banks 1,210 1,282
Trading portfolio assets 114,717 133,069
Financial assets designated at fair value 38,300 38,968
Derivative financial instruments 439,909 350,300
Available for sale financial investments 86,066 91,756
Loans and advances to banks 42,111 39,422
Loans and advances to customers 427,767 434,237
Reverse repurchase agreements and other
similar secured lending 131,753 186,779
Current and deferred tax assets 4,464 5,026
Prepayments, accrued income and other assets 19,181 4,415
Investments in associates and joint ventures 711 653
Goodwill 4,887 4,878
Intangible assets 3,293 2,807
Property, plant and equipment 3,786 4,216
Retirement benefit assets 6 56 133
================================================= ======== ========= =========
Total assets 1,357,906 1,343,628
Liabilities
================================================= ======== ========= =========
Deposits from banks 58,390 55,615
Items in the course of collection due to
other banks 1,177 1,359
Customer accounts 427,704 431,998
Repurchase agreements and other similar
secured borrowing 124,479 196,748
Trading portfolio liabilities 45,124 53,464
Financial liabilities designated at fair
value 56,972 64,796
Derivative financial instruments 439,320 347,118
Debt securities in issue 86,099 86,693
Accruals, deferred income and other liabilities
(2) 24,538 12,934
Current and deferred tax liabilities 1,283 1,415
Subordinated liabilities 21,153 21,695
Provisions 5 4,135 3,886
Retirement benefit liabilities 6 1,574 1,958
================================================= ======== ========= =========
Total liabilities 1,291,948 1,279,679
Equity
================================================= ======== ========= =========
Called up share capital and share premium 7 20,809 19,887
Other reserves 9 2,724 249
Retained earnings 31,712 33,186
================================================= ======== ========= =========
Shareholders' equity attributable to ordinary
shareholders of the parent 55,245 53,322
Other equity instruments 8 4,322 2,063
================================================= ======== ========= =========
Total equity excluding non-controlling interests 59,567 55,385
Non-controlling interests 2 6,391 8,564
================================================= ======== ========= =========
Total equity 65,958 63,949
Total liabilities and equity 1,357,906 1,343,628
1 For notes, see pages 43 to 46.
Condensed consolidated statement of changes in equity (audited)
Called
up share
capital Other
and share equity Other Retained Non-controlling Total
premium(1) instruments(1) reserves(1) earnings Total interests(2) equity
Year ended 31.12.14 GBPm GBPm GBPm GBPm GBPm GBPm GBPm
============================ =========== =============== ============ ========= ======= =============== =======
Balance at 1 January 2014 19,887 2,063 249 33,186 55,385 8,564 63,949
Profit after tax - 250 - (174) 76 769 845
Other comprehensive profit
after tax for the period - - 2,518 162 2,680 (78) 2,602
Issue of shares 922 - - 693 1,615 - 1,615
Issue and exchange of equity
instruments - 2,263 - (155) 2,108 (1,527) 581
Dividends - - - (1,057) (1,057) (631) (1,688)
Coupons paid on other equity
instruments - (250) - 54 (196) - (196)
Redemption of preference
shares - - - (104) (104) (687) (791)
Treasury shares - - (43) (866) (909) - (909)
Other movements - (4) - (27) (31) (19) (50)
============================ =========== =============== ============ ========= ======= =============== =======
Balance at 31 December
2014 20,809 4,322 2,724 31,712 59,567 6,391 65,958
Year ended 31.12.13
============================ =========== =============== ============ ========= ======= =============== =======
Balance at 1 January 2013 12,477 - 3,674 34,464 50,615 9,371 59,986
Profit after tax - - - 540 540 757 1,297
Other comprehensive profit
after tax for the period - - (3,406) (540) (3,946) (645) (4,591)
Issue of shares 7,410 - - 689 8,099 - 8,099
Issue and exchange of equity
instruments - 2,063 - - 2,063 - 2,063
Dividends - - - (859) (859) (813) (1,672)
Coupons paid on other equity - - - - - - -
instruments
Treasury shares - - (19) (1,047) (1,066) - (1,066)
Other movements - - - (61) (61) (106) (167)
============================ =========== =============== ============ ========= ======= =============== =======
Balance at 31 December
2013 19,887 2,063 249 33,186 55,385 8,564 63,949
1 Details of Share Capital, Other Equity Instruments and Other
Reserves are shown on pages 45-46.
2 Details of Non-controlling Interests are shown on page 43.
Condensed consolidated cash flow statement (audited)
Year ended Year ended
31.12.14 31.12.13
GBPm GBPm
=============================================== ========== ==========
Profit before tax 2,256 2,868
Adjustment for non-cash items 5,620 6,581
Changes in operating assets and liabilities (16,765) (32,833)
Corporate income tax paid (1,552) (1,558)
================================================ ========== ==========
Net cash from operating activities (10,441) (24,942)
Net cash from investing activities 10,655 (22,645)
Net cash from financing activities (3,058) 5,910
Effect of exchange rates on cash and cash
equivalents (431) 198
================================================ ========== ==========
Net decrease in cash and cash equivalents (3,275) (41,479)
Cash and cash equivalents at beginning of
the period 81,754 123,233
================================================ ========== ==========
Cash and cash equivalents at end of the period 78,479 81,754
Financial Statement Notes
1 Tax
The 2014 tax charge of GBP1,411m (2013: GBP1,571m), represented
an effective tax rate of 62.5% (2013: 54.8%). The effective tax
rate was higher than the UK statutory tax rate of 21.5% (2013:
23.25%) mainly due to profits outside of the UK taxed at higher
local statutory tax rates, non-creditable taxes and non-deductible
expenses, including the provision for ongoing investigations and
litigation relating to Foreign Exchange. This was partially offset
by the effect of non-taxable gains and income, and deferred tax
asset measurement adjustments. Additionally, the 2013 effective tax
rate included the write down of the Spanish deferred tax asset.
The deferred tax asset of GBP4,130m (2013: GBP4,807m) mainly
relates to amounts in the US and UK.
Assets Liabilities
================== ==================
Current and deferred tax assets 31.12.13 31.12.14 31.12.13
and liabilities 31.12.14
GBPm GBPm GBPm GBPm
================================ ======== ======== ======== ========
Current tax 334 219 (1,021) (1,042)
Deferred tax 4,130 4,807 (262) (373)
================================ ======== ======== ======== ========
Total 4,464 5,026 (1,283) (1,415)
Deferred tax assets and liabilities 31.12.14 31.12.13
GBPm GBPm
=========================================== ======== ========
Barclays Group US Inc. (BGUS) tax group 1,588 1,449
US Branch of Barclays Bank PLC (US Branch) 1,591 1,362
UK tax group 461 1,171
Spanish tax group 54 353
Other 436 472
=========================================== ======== ========
Deferred tax asset 4,130 4,807
Deferred tax liability (262) (373)
=========================================== ======== ========
Net deferred tax 3,868 4,434
2 Non-Controlling interests
Profit attributable Equity attributable
to non-controlling to non-controlling
interest interest
===================== =====================
2014 2013 2014 2013
GBPm GBPm GBPm GBPm
=========================== ========== ========= ========== =========
Barclays Bank PLC Issued:
- Preference shares 441 410 3,654 5,868
- Upper Tier 2 instruments 2 2 486 485
Barclays Africa Group
Limited 320 343 2,247 2,204
Other non-controlling
interests 6 2 4 7
=========================== ========== ========= ========== =========
Total 769 757 6,391 8,564
Equity attributable to non-controlling interests decreased by
GBP2,173m to GBP6,391m primarily due to movements in preference
shares. GBP1,527m of Barclays Bank PLC preference shares were
bought back and cancelled as part of the AT1 exchange exercise. A
further GBP687m of preference shares were redeemed on their first
call date.
3 Earnings per share
31.12.14 31.12.13
GBPm GBPm
====================================================== ======== ========
Profit/(loss) attributable to ordinary equity holders
of the parent(1) (174) 540
Dilutive impact of convertible options - 1
Tax credit on profit after tax attributable to other
equity holders 54 -
====================================================== ======== ========
Total profit/(loss) attributable to equity holders
of the parent including tax credit on other equity (120) 541
====================================================== ======== ========
Basic weighted average number of shares in issue 16,329 14,308
Number of potential ordinary shares 296 360
====================================================== ======== ========
Diluted weighted average number of shares 16,625 14,668
====================================================== ======== ========
Basic earnings/(loss) per ordinary share (p) (0.7) 3.8
Diluted earnings/(loss) per ordinary share (p) (0.7) 3.7
1 The profit after tax attributable to other equity holders of
GBP250m (2013: GBPnil) is offset by a tax credit recorded in
reserves of GBP54m (2013: GBPnil). The net amount of GBP196m, along
with NCI, is deducted from profit after tax in order to calculate
earnings per share.
4 Dividends on ordinary shares
A final dividend in respect of 2014 of 3.5p per ordinary share
will be paid on 2 April 2015 to shareholders on the Share Register
on 11 March 2015 and accounted for as a distribution of retained
earnings in the year ending 31 December 2015. The financial
statements for 2014 include the following dividends paid during the
year.
Year ended Year ended
31.12.14 31.12.13
================= ================
Dividends paid during the period Per share Total Per share Total
Pence GBPm Pence GBPm
===================================== ========= ====== ========= =====
Final dividend paid during period 3.5 564 3.5 441
Interim dividends paid during period 3.0 493 3.0 418
====================================== ========= ====== ========= =====
Total 6.5 1,057 6.5 859
For qualifying US and Canadian resident ADR holders, the final
dividend of 3.5p per ordinary share becomes 14p per ADS
(representing four shares). The ADR depositary will post the final
dividend on 2 April 2015 to ADR holders on the record at close of
business on 11 March 2015.
5 Provisions
As at As at
31.12.14 31.12.13
GBPm GBPm
---------------------------------------------------------- -------- --------
Conduct remediation
- Payment Protection Insurance redress 1,059 971
- Interest rate hedging product redress 211 1,169
- Other customer redress 375 388
Legal, Competition & Regulatory matters 1,690 485
Redundancy and restructuring 291 388
Undrawn contractually committed facilities and guarantees 94 165
Onerous contracts 205 100
Sundry provisions 210 220
---------------------------------------------------------- -------- --------
Total 4,135 3,886
6 Retirement benefits
As at 31 December 2014, the Group's IAS 19 (Revised) pension
deficit across all schemes was GBP1.5bn (2013: GBP1.8bn). The UK
Retirement Fund (UKRF), which is the Group's main scheme, had a
deficit of GBP1.1bn (2013: GBP1.4bn).
The movement for the UKRF is largely due to an increase in asset
values, which was partially offset by an increase in defined
benefit obligation. The increase in defined benefit obligation can
be linked to a decrease in discount rate to 3.67% (2013: 4.46%),
partially offset by a decrease in long term expected inflation to
3.05% (2013: 3.42%).
The triennial funding valuation of the UKRF was completed in
2014 with an effective date of 30 September 2013. The funding
deficit at that date was calculated to be GBP3.6bn. Under the
agreed recovery plan, deficit contributions of GBP300m will be paid
to the fund in 2015 and 2016. Further deficit contributions of
GBP740m each year are payable between 2017 and 2021 with up to
GBP500m of the 2021 deficit contributions payable in 2017 depending
on the deficit level at that time. These deficit contributions are
in addition to the regular contributions to meet the Group's share
of the cost of benefits accruing over each year.
In non-valuation years the Scheme Actuary prepares an annual
update of the funding position. The latest annual update was
carried out as at 30 September 2014 and showed a deficit of
GBP4.6bn.
The increase in funding deficit over the year to 30 September
2014 can be mainly attributed to the fall in real gilt yields over
the year.
7 Called up share capital
Called up share capital comprises 16,498m (2013: 16,113m)
ordinary shares of 25p each. The increase was due to the issuance
of shares under employee share schemes and the Barclays PLC Scrip
Dividend Programme.
8 Other equity instruments
Other Equity Instruments of GBP4,322m (2013: GBP2,063m) include
AT1 securities issued by Barclays PLC during 2013 and 2014. During
2013, there were two separate issuances of Fixed Rate Resetting
Perpetual Subordinated Contingent Convertible Securities, with
principal amounts of $2bn and EUR1bn. In 2014, there were three
issuances of Fixed Rate Resetting Perpetual Subordinated Contingent
Convertible Securities, with principal amounts of $1.2bn, EUR1.1bn
and GBP0.7bn. The 2014 AT1 securities were issued as part of an
exchange of GBP1,527m of Barclays Bank PLC preference shares (held
as non controlling interests for Barclays PLC) and GBP607m of
subordinated debt instruments (Tier 1 Notes and Reserve Capital
Instruments).
The exchange exercise involved Barclays PLC issuing AT1
securities to investors in exchange for Barclays Bank PLC
preference shares and Barclays Bank PLC subordinated debt
instruments held by the same investors. As part of the exercise,
Barclays Bank PLC issued three corresponding AT1 instruments to
Barclays PLC. Upon completion of the exercise, the preference
shares and subordinated debt instruments were cancelled by Barclays
Bank PLC.
The AT1 securities are perpetual securities with no fixed
maturity and are structured to qualify as AT1 instruments under CRD
IV.
9 Other reserves
Other reserves of GBP2,724bn (2013: GBP249bn) mainly consist of
the following:
Currency translation reserve
As at 31 December 2014 there was a debit balance of GBP582m
(2013: GBP1,142m debit) in the currency translation reserve. The
decrease in the debit balance of GBP560m (2013: GBP1,201m debit)
principally reflected the strengthening of USD against GBP. The
currency translation reserve movement associated with
non-controlling interests was a GBP74m debit (2013: GBP566m debit)
reflecting the further depreciation of ZAR against GBP.
During the period a GBP91m net gain (2013: GBP5m) from recycling
of the currency translation reserve was recognised in the income
statement.
Available for sale reserve
As at 31 December 2014 the available for sale reserve was
GBP562m (2013: GBP148m). The increase of GBP414m (2013: GBP379m
decrease) principally reflected a GBP5,336m gain from changes in
fair value on Government Bonds, predominantly held in the liquidity
pool, offset by GBP4,074m of losses from related interest rate
hedges, GBP620m of net gains transferred to net profit as bonds
were disposed and GBP103m of tax.
Cash Flow Hedging Reserve
As at 31 December 2014 there was a credit balance of GBP1,817m
(2013: GBP273m credit) in the cash flow hedging reserve. The
increase of GBP1,544m (2013: GBP1,826m decrease) principally
reflected a GBP2,662m increase in the fair value of interest rate
swaps held for hedging purposes as interest rate forward curves
decreased, partly offset by GBP737m gains recycled to the income
statement in line with when the hedged item affects profit or loss,
and GBP381m of tax.
Treasury shares
During the period GBP909m (2013: GBP1,049m) net purchases of
treasury shares were made, principally reflecting the increase in
shares held for the purposes of employee share schemes, and GBP866m
(2013: GBP1,034m) was transferred to retained earnings reflecting
the vesting of deferred share based payments.
Shareholder Information
Results timetable(1) Date
========================================================= =============
Ex-dividend date 10 March 2015
Dividend Record date 11 March 2015
Scrip reference share price set and made available to
shareholders 17 March 2015
Cut off time of 4.30 pm (London time) for the receipt
of Mandate Forms or Revocation Forms (as applicable) 20 March 2015
Dividend Payment date/first day of dealing in New Shares 2 April 2015
Q1 2015 Interim Management Statement 29 April 2015
To ensure the final dividend for the year ended 31 December 2014
is paid before the end of the tax year ending 5 April 2015, which
we believe is helpful to shareholders, the Scrip dividend election
period has reduced from 15 working days to 9 working days. Please
also note that the ex-dividend date and record date have moved
from the usual Thursday/Friday to Tuesday 10 March 2015 and Wednesday
11 March 2015 respectively. Dates are detailed above.
For qualifying US and Canadian resident ADR holders, the final
dividend of 3.5p per ordinary share becomes 14p per ADS (representing
four shares). The ADR depositary will post the final dividend on
Thursday 2 April 2015 to ADR holders on the record at close of
business on Wednesday 11 March 2015. The ex-dividend date for ADR
holders will be Monday 9 March 2015.
Year ended Year ended % Change(3)
Exchange rates(2) 31.12.14 31.12.13
============================================= ========== ========== ===========
Period end - USD/GBP 1.56 1.65 (5%)
Average - USD/GBP 1.65 1.56 6%
3 Month Average - USD/GBP 1.58 1.62 (2%)
Period end - EUR/GBP 1.28 1.20 7%
Average - EUR/GBP 1.24 1.18 5%
3 Month Average - EUR/GBP 1.27 1.19 7%
Period end - ZAR/GBP 18.03 17.37 4%
Average - ZAR/GBP 17.84 15.10 18%
3 Month Average - ZAR/GBP 17.75 16.43 8%
Share price data 31.12.14 31.12.13
============================================= ========== ---------- -----------
Barclays PLC (p) 243.50 271.95
Barclays PLC number of shares (m) 16,498 16,113
Barclays Africa Group Limited (formerly Absa
Group Limited) (ZAR) 182.00 132.25
Barclays Africa Group Limited (formerly Absa
Group Limited) number of shares (m) 848 848
For further information please contact
Investor Relations Media Relations
============================================= ===================================
Charlie Rozes +44 (0) 20 7116 5752 Giles Croot +44 (0)
20 7116 6132
More information on Barclays can be found on our website:
Barclays.com
Registered office
1 Churchill Place, London, E14 5HP, United Kingdom. Tel: +44 (0)
20 7116 1000. Company number: 48839
Registrar
Equiniti, Aspect House, Spencer Road, Lancing, West Sussex BN99
6DA United Kingdom.
Tel: 0871 384 2055(4) from the UK or +44 121
415 7004 from overseas.
1 Note that these announcement dates are provisional and subject
to change. Any changes to the Scrip Dividend Programme dates will
be made available at Barclays.com/dividends.
2 The average rates shown above are derived from daily spot
rates during the year used to convert foreign currency transactions
into GBP for accounting purposes.
3 The change is the impact to GBP reported information.
4 Calls cost 8p per minute plus network extras. Lines open
8.30am to 5.30pm UK time, Monday to Friday, excluding UK public
holidays.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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