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RNS
Barclays PLC  -  BARC   

Interim Management Statement

Released 07:00 31-Oct-2012

RNS Number : 9068P
Barclays PLC
31 October 2012
 

   

 

Barclays PLC

Interim Management Statement

 

30 September 2012


Table of Contents

Interim Management Statement

Page

Performance Highlights

4

Barclays Results by Quarter

6

Group Performance Review

7

Results by Business


- UK Retail and Business Banking

10

- Europe Retail and Business Banking

11

- Africa Retail and Business Banking

12

- Barclaycard

13

- Investment Bank

14

- Corporate Banking

16

- Wealth and Investment Management

17

- Head Office and Other Operations

18

Appendix I - Quarterly Results Summary

19

Appendix II - Margins and Income by Geography

21

Appendix III - Balance Sheet and Capital

22

Appendix IV - Group Exposures to Selected Countries

27

Appendix V - Credit Market Exposures

35

Appendix VI - Other Legal and Regulatory Matters

36

Appendix VII - Other Information

37

 


 

 

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 9 months to 30 September 2012 to the corresponding 9 months of 2011 and balance sheet comparatives relate to 30 June 2012. The abbreviations '£m' and '£bn' represent millions and thousands of millions of pounds sterling respectively; the abbreviations '$m' and '$bn' represent millions and thousands of millions of US dollars respectively.

Adjusted profit before tax 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 and one-off in nature and hence not representative of the underlying business performance. Items excluded from the adjusted measures are: the impact of own credit; gains on debt buy-backs; impairment and disposal of the investment in BlackRock, Inc.; the provision for Payment Protection Insurance redress payments and claims management costs (PPI redress); the provision for interest rate hedging products redress; goodwill impairments; and gains and losses on acquisitions and disposals. The regulatory penalties relating to the industry-wide investigation into the setting of interbank offered rates have not been excluded from adjusted measures.

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 http://group.barclays.com/about-barclays/investor-relations#institutional-investors.

The financial information on which this Interim Management Statement is based, and other data set out in the appendices to this statement, are unaudited and have been prepared in accordance with Barclays previously stated accounting policies described in the 2011 Annual Report.

The information in this announcement, which was approved by the Board of Directors on 30 October 2012, does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2011, which included certain information required for the Joint Annual Report on Form 20-F of Barclays PLC and Barclays Bank PLC to the US Securities and Exchange Commission (SEC) and which contained an unqualified audit report under Section 495 of the Companies Act 2006 and which did not make any statements under Section 498 of the Companies Act 2006, have been delivered to the Registrar of Companies in accordance with Section 441 of the Companies Act 2006.

For qualifying US and Canadian resident ADR holders, the interim dividend of 1p per ordinary share becomes 4p per ADS (representing four shares). The ADR depositary will mail the interim dividend on 7 December 2012 to ADR holders on the record on 9 November 2012.

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", "expect", "estimate", "intend", "plan", "goal", "believe" or other words of similar meaning. Examples of forward-looking statements include, among others, statements regarding the Group's future financial position, income growth, assets, impairment charges, business strategy, capital ratios, leverage, payment of dividends, projected levels of growth in the banking and financial markets, projected costs, estimates of capital expenditures and plans and objectives for future operations 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, including, but not limited to, UK domestic, Eurozone and global economic and business conditions, the effects of continued volatility in credit markets, market related risks such as changes in interest rates and exchange rates, effects of changes in valuation of credit market exposures, changes in valuation of issued notes, the policies and actions of governmental and regulatory authorities (including requirements regarding capital and Group structures and the potential for one or more countries exiting the Euro), changes in legislation, the further development of standards and interpretations under IFRS applicable to past, current and future periods, evolving practices with regard to the interpretation and application of standards under IFRS, the outcome of current and future legal proceedings, the success of future acquisitions and other strategic transactions and the impact of competition - a number of such factors being beyond the Group's control. As a result, the Group's actual future results may differ materially from the plans, goals, and expectations set forth in the Group's forward-looking statements.

Any forward-looking statements made herein speak only as of the date they are made. Except as required by the UK Financial Services Authority (FSA), the London Stock Exchange plc (LSE) or applicable law, Barclays expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this announcement 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 filed or may file with the LSE and/or the SEC.


Performance Highlights

"These results demonstrate that we continue to have good momentum in our businesses despite the difficulties we faced through this period. While we have much to do to restore trust among stakeholders, our universal banking franchise remains strong and well positioned. I am proud of how our colleagues have continued to focus on delivering for our customers and clients, and am grateful for our customers' and clients' continued loyalty to Barclays.

 

We look forward to closing out 2012 in a strong position, and to sharing more with you in February 2013 about how we intend to make Barclays the 'Go-To' bank for all of our stakeholders."

 

Antony Jenkins, Chief Executive

 

- Adjusted profit before tax up 18% to £5,954m for the nine months ended 30 September 2012, with an improvement of 27% in Corporate and Investment Banking

- Statutory profit before tax down 86% to £712m, including an own credit charge of £4,019m (2011: gain of £2,971m), gain on disposal of BlackRock investment of £227m (2011: impairment/loss of £1,858m) and a £1,000m (2011: £1,000m) provision for Payment Protection Insurance (PPI) redress, of which £700m was recognised in Q3

- Adjusted return on average shareholders' equity increased to 8.8% (2011: 8.4%) with improvements in the majority of our businesses. Statutory return on average shareholders' equity was negative 0.5% (2011: positive 6.9%)

- Adjusted income is in line with prior year at £22,347m despite challenging economic conditions, the continuing low interest rate environment and non recurrence of gains from the disposal of hedging instruments in Q3 11

- Investment Bank income improved 7% to £9,129m. Q3 12 Investment Bank income was £2,633m, up 17% on Q3 11 but down 13% on the strong Q2 12 performance

- Credit impairment charges were down 7% at £2,657m, principally reflecting improvements in the UK businesses, offset by higher charges in the Investment Bank and the RBB businesses in Europe and Africa

- Operating expenses, excluding the £1,000m (2011: £1,000m) provision for PPI redress and £450m (2011: nil) provision for interest rate hedging products redress, were down 4% to £13,832m. Non-performance costs reduced 3% to £11,837m and performance costs reduced 9% to £1,995m

- During Q3 12, sovereign exposures to Spain, Italy, Portugal, Ireland, Greece and Cyprus reduced 15% to £4.8bn. The Group reduced local Euro funding mismatches in Spain by £2.4bn to £0.1bn and in Portugal by £0.4bn to £3.3bn

- Core Tier 1 ratio strengthened to 11.2% in Q3 12 (30 June 2012: 10.9%). Risk weighted assets reduced 3% to £379bn, principally reflecting risk reduction in Corporate and Investment Banking and foreign exchange movements, partially offset by a change in methodology on loss given default for sovereign exposures

- The Group continues to access both secured and unsecured term funding markets and has met its term funding needs for 2012 having raised £22bn of term funding in the first nine months of 2012, including £1bn through Barclays participation in the Bank of England's Funding for Lending Scheme

- The liquidity pool was £160bn (30 June 2012: £170bn), remaining well above our liquidity risk appetite and within the month end range of £152bn to £173bn for the year to date (Full Year 2011: £140bn to £167bn)



Performance Highlights

Barclays Unaudited Results  

Adjusted1

 

Statutory

 

for the nine months ended

30.09.12

30.09.11

  


30.09.12

30.09.11


  

£m

£m

% Change


£m

£m

% Change

Total income net of insurance claims

22,347 

22,300 


18,555 

25,213 

(26)

Impairment charges and other provisions  

(2,657)

(2,851)

(7)


(2,657)

(4,651)

(43)

Net operating income  

19,690 

19,449 


15,898 

20,562 

(23)

Operating expenses

(13,832)

(14,441)

(4)


(15,282)

(15,488)

(1)

Other net income/(expense)

96 

54 

  


96 

(8)


Profit before tax  

5,954 

5,062 

18 


712 

5,066 

(86)

Profit after tax   

4,167 

3,868 


374 

3,349 

(89)

  



  





Performance Measures



  





Return on average shareholders' equity

8.8%

8.4%

  


(0.5%)

6.9%


Return on average tangible shareholders' equity

10.3%

10.1%

  


(0.6%)

8.3%


Return on average risk weighted assets

1.4%

1.3%

  


0.1%

1.1%


Cost: income ratio

62%

65%

  


82%

61%


Loan loss rate

69bps

74bps

  


69bps

74bps


  



  





Basic earnings per share  

29.3p

26.5p

  


(1.7p)

22.2p


Dividend per share  

3.0p

3.0p

  


3.0p

3.0p


   



  





Capital and Balance Sheet  



  


30.09.12

30.06.12

% Change

Core Tier 1 ratio  



  


11.2%

10.9%


Risk weighted assets  



  


£379bn

£390bn

(3)

Adjusted gross leverage



  


20x

20x

Group liquidity pool  



  


£160bn

£170bn

(6)

Net asset value per share  



  


444p

443p

Net tangible asset value per share  



  


379p

379p

Loan: deposit ratio  



  


111%

111%


  



  





 


Adjusted1

 

Statutory

 

Profit/(Loss) Before Tax by Business

30.09.12

30.09.11

  


30.09.12

30.09.11



£m

£m

% Change


£m

£m

% Change

UK

1,146 

1,198 

(4)


296 

798 

(63)

Europe

(151)

(109)

39 


(151)

(109)

39 

Africa

330 

561 

(41)


330 

563 

(41)

Barclaycard

1,150 

949 

21 


1,000 

302 

231 

Retail and Business Banking

2,475 

2,599 

(5)


1,475 

1,554 

(5)

Investment Bank

3,205 

2,698 

19 


3,205 

2,698 

19 

Corporate Banking

444 

167 

166 


(6)

103 


Corporate and Investment Banking

3,649 

2,865 

27 


3,199 

2,801 

14 

Wealth and Investment Management

200 

153 

31 


200 

153 

31 

Head Office and Other Operations

(370)

(555)

(33)


(4,162)

558 


Total profit before tax

5,954 

5,062 

18 


712 

5,066 

(86)

  

 

 

 

 

 

 

 

 

 

 

1        Adjusted performance measures and profit before tax exclude the impact of an own credit charge of £4,019m (2011: gain of £2,971m), gain on disposal of strategic investment in BlackRock, Inc. of £227m (2011: loss of £58m), impairment of investment in BlackRock Inc. of £nil (2011: £1,800m), provision for PPI redress of £1,000m (2011: £1,000m), provision for interest rate hedging products redress of £450m (2011: £nil), gains on acquisitions and disposals of £nil (2011: loss of £62m) and goodwill impairment of £nil (2011: £47m).

2       Comprises: share of post-tax results of associates and joint ventures; profit or loss on disposal of subsidiaries, associates and joint ventures; and gains on acquisitions.


Barclays Results by Quarter

Barclays Results by Quarter

Q312

Q212

Q112


Q411

Q311

Q211

Q111

  

£m

£m

£m


£m

£m

£m

£m

Adjusted basis  









Total income net of insurance claims  

6,872 

7,337 

8,138 


6,212 

7,001 

7,549 

7,750 

Credit impairment charges and other provisions  

(825)

(1,054)

(778)


(951)

(1,023)

(907)

(921)

Net operating income  

6,047 

6,283 

7,360 


5,261 

5,978 

6,642 

6,829 

Operating expenses (excluding UK bank levy)

(4,341)

(4,542)

(4,949)


(4,414)

(4,659)

(4,940)

(4,842)

UK bank levy  


(325)

Other net income

21 

41 

34 


18 

19 

17 

Adjusted profit before tax  

1,727 

1,782 

2,445 


528 

1,337 

1,721 

2,004 

   









Adjusting items  









Own credit  

(1,074)

(325)

(2,620)


(263)

2,882 

440 

(351)

Gains on debt buy-backs  


1,130 

Impairment and gain/(loss) on disposal of BlackRock investment

227 


(1,800)

(58)

Provision for PPI redress

(700)

(300)


(1,000)

Provision for interest rate hedging products redress

(450)


Goodwill impairment  


(550)

(47)

(Losses)/gains on acquisitions and disposals  


(32)

(67)

Statutory (loss)/profit before tax

(47)

1,234 

(475)


813 

2,422 

989 

1,655 

Statutory (loss)/profit after tax

(106)

817 

(337)


602 

1,366 

742 

1,241 

   









Adjusted basic earnings per share  

7.5p

8.2p

13.6p


1.2p

6.9p

8.9p

10.7p

Adjusted cost: income ratio  

63%

62%

61%


76%

67%

65%

62%

Basic earnings per share  

(2.3p)

5.1p

(4.5p)


2.9p

9.7p

4.0p

8.5p

Cost: income ratio  

87%

69%

95%


75%

47%

75%

65%

  









 

Adjusted Profit/(Loss) Before Tax by Business

Q312

Q212

Q112


Q411

Q311

Q211

Q111

  

£m

£m

£m


£m

£m

£m

£m

UK

400 

412 

334 


222 

494 

416 

288 

Europe

(59)

(49)

(43)


(125)

52 

(102)

(59)

Africa

56 

97 

177 


269 

219 

195 

147 

Barclaycard

397 

404 

349 


259 

378 

275 

296 

Retail and Business Banking

794 

864 

817 


625 

1,143 

784 

672 

Investment Bank

937 

1,002 

1,266 


267 

388 

977 

1,333 

Corporate Banking

98 

127 

219 


37 

113 

33 

21 

Corporate and Investment Banking

1,035 

1,129 

1,485 


304 

501 

1,010 

1,354 

Wealth and Investment Management

79 

61 

60 


54 

65 

42 

46 

Head Office and Other Operations

(181)

(272)

83 


(455)

(372)

(115)

(68)

Total profit before tax

1,727 

1,782 

2,445 


528 

1,337 

1,721 

2,004 

  









  

 

 

 

 

 

 

 

 

1        The Q3 12 £700m provision for PPI redress includes claims management costs of £52m relating to Q2 12: £28m and Q1 12: £24m, previously recorded within operating expenses as a non-adjusting item.


Group Performance Review

For the first nine months of 2012 we reported a good performance as adjusted profits increased 18% year on year. Our Core Tier 1 ratio improved to 11.2%, while funding and liquidity remained strong.

Income Statement

- Adjusted profit before tax increased 18% to £5,954m. Adjusted results provide a more consistent basis for comparing business performance between periods

- Statutory profit before tax down 86% to £712m, including an own credit charge of £4,019m (2011: gain of £2,971m) and a £1,000m (2011: £1,000m) provision for PPI redress

- Adjusted return on average shareholders' equity increased to 8.8% (2011: 8.4%) with improvements in UK RBB, Barclaycard, Investment Bank, Corporate Banking and Wealth and Investment Management

- Adjusted income was flat at £22,347m despite challenging economic conditions, the continuing low interest rate environment and non-recurrence of gains of £1,000m from the disposal of hedging instruments in Q3 11

-    Customer net interest income for Retail and Business Banking, Corporate Banking and Wealth and Investment Management was stable at £7,345m. Total net interest income reduced 9% to £8,334m and the net interest margin declined 23bps to 186bps, principally reflecting the non recurrence of gains from the disposal of hedging instruments in Q3 11

-    Total income in the Investment Bank increased 7% to £9,129m driven by increases in Fixed Income, Currencies and Commodities (FICC), and Equities

- Credit impairment charges were down 7% at £2,657m, principally reflecting improvements in UK RBB, Barclaycard and Corporate Banking. This was partially offset by higher charges in the Investment Bank, driven by ABS CDO Super Senior positions, higher losses on single name exposures and a non-recurring release of £223m in 2011; as well as increases in Europe RBB and Africa RBB

-    The annualised loan loss rate reduced to 69bps (2011: 74bps)

-    During 2012, delinquency trends have improved in our main cards portfolios and UK unsecured lending, however, weak local economic conditions have led to some deterioration in the European home loan portfolios

-    While a number of credit metrics in the wholesale portfolios have shown some improvement during 2012, the challenging conditions in Europe have lead to some deterioration to metrics in Corporate Europe

-    The credit risk loans (CRL) coverage ratio increased to 51.0% (30 June 2012: 50.4%) as CRL balances and impairment allowances fell 3.1% and 1.8%, respectively during Q3 12

- Operating expenses, excluding the provision for PPI redress of £1,000m (2011: £1,000m) and  provision for interest rate hedging products redress of £450m (2011: nil), were down 4% to £13,832m

-    Non-performance costs decreased 3% to £11,837m after absorbing regulatory penalties of £290m relating to the industry-wide investigation into the setting of interbank offered rates. Cost reductions from management cost saving initiatives, business restructuring and foreign exchange movements, more than offset the impact of continued business investment, including 2011 acquisitions, and increased Financial Services Compensation Scheme costs

-    Performance costs reduced 9% to £1,995m despite an increase in the charge for bonuses deferred from prior years to £942m (2011: £751m). The Investment Bank compensation: income ratio reduced to 39% (2011: 46%)

-    2012 bonus pool awards have not yet been granted as discretionary incentive award decisions are not taken by the Remuneration Committee until the performance for the full year can be assessed. The current year bonus charge represents an accrual for estimated costs in accordance with accounting requirements

- The adjusted cost: income ratio decreased to 62% (2011: 65%). The Investment Bank cost: net operating income ratio improved to 64% (2011: 68%)

- Since the end of the first half 2012 Barclays has experienced higher than previously anticipated levels of PPI claim volumes, and has therefore determined that it is appropriate to provide a further £700m for PPI redress as at 30 September 2012. This is in addition to provisions recognised of £1bn in 2011 and £300m in Q1 12. Based on claims experience to date and anticipated future volumes, the resulting provision includes Barclays best estimate of expected future PPI redress payments and claims management costs. Barclays will continue to monitor actual claims volumes and the assumptions underlying the calculation of its PPI provision



Group Performance Review

Balance Sheet

- During Q312 total loans and advances remained stable at £502bn (30 June 2012: £504bn) with increases in UK mortgage lending being offset by reductions in lending in Europe RBB and Corporate Bank

- The Group's loan to deposit ratio was stable at 111% (30 June 2012: 111%), with both loans and advances to customers and customer deposits flat at £452.9bn and £407.3bn respectively

- Total assets reduced 2% to £1,599bn, principally reflecting lower derivative assets and reductions in cash and balances at central banks partially offset by increases in reverse repurchase agreements and other similar secured lending

- Total shareholders' equity, including non-controlling interests, remained at £63.7bn, principally reflecting increases in the value of available for sale debt investments of £0.6bn and cash flow hedges of £0.4bn, offset by £0.7bn negative currency translation differences due to depreciation of US dollar and South African Rand against Sterling, and dividends paid during the quarter of £0.3bn. After allowing for non-controlling interests, principally preference shares and Absa Group minority interests, statutory profit attributable to equity shareholders of the parent reduced to negative £0.2bn (2011: £2.7bn profit)  

- Net asset value per share was 444p (30 June 2012: 443p) and the net tangible asset value per share remained at 379p

- Adjusted gross leverage remained stable at 20x and during Q3 moved within a month end range of 20x to 21x. Excluding the liquidity pool, adjusted gross leverage remained flat at 17x

Capital Management

- The Core Tier 1 ratio increased to 11.2% (30 June 2012: 10.9%), reflecting a broadly stable Core Tier 1 equity at £42.5bn and a 3% reduction in risk weighted assets to £379bn, principally reflecting risk reduction in the Corporate and Investment Bank and foreign exchange movements. The benefit of risk reduction was partially offset by increases from adopting revised guidance from the FSA requiring higher loss given default assumptions on sovereign exposures

- Barclays generated £0.7bn Core Tier 1 capital from earnings in Q3, after absorbing the impact of the additional provision for PPI redress and the Group's quarterly interim dividend. The increase from earnings was offset by a £0.6bn reduction in reserves due to foreign exchange movements, which for the Core Tier 1 ratio was matched by a broadly offsetting £5.2bn foreign exchange reduction in risk weighted assets

- The EU was due to finalise the requirements of CRD IV by July 2012, in order to implement Basel 3 by 1 January 2013. However, there are a number of areas still under consideration and the European Parliament is not due to consider the final proposals until November 2012. While the expectation is that CRD IV will be delayed, in the absence of official guidance we are continuing to progress implementation activities in line with the original timetable

Funding and Liquidity

- The liquidity pool was £160bn (30 June 2012: £170bn), remaining well above our liquidity risk appetite and within the month end range of £152bn to £173bn for the year to date (Full Year 2011: £140bn to £167bn). We have also taken steps to realign the composition of the pool to reduce the cost of liquidity, in particular moving funds from deposits with central banks into government bonds1

 

Liquidity Pool

Cash and Deposits

with Central Banks

Government

Bonds

Other Available

Liquidity

Total

  

£bn

£bn

£bn

£bn

As at 30.09.12

99 

41 

20 

160 

As at 30.06.12

124 

32 

14 

170 

 

- RBB, Corporate Banking and Wealth and Investment Management activities are largely funded by customer deposits with the remaining funding secured against customer loans and advances. At Q3, the customer loan to deposit ratio for these businesses was 104% (30 June 2012: 106%, 31 December 2011: 111%) and the customer loan to deposit and secured funding ratio was 91% (30 June 2012: 94%, 31 December 2011:101%) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1        Of which over 75% (30 June 2012: over 70%) of securities are comprised of United Kingdom, United States, Japan, France, Germany, Denmark and the Netherlands.

2       Of which over 95% is placed with the Bank of England, US Federal Reserve, European Central Bank, Bank of Japan and Swiss National Bank.

3        £135bn (30 June 2012: £149bn) of which is FSA eligible.



Group Performance Review

- The Investment Bank's activities are primarily funded through wholesale markets. As at 30 September 2012, total wholesale funding outstanding (excluding repurchase agreements) was £253bn (30 June 2012: £263bn), of which £113bn matures in less than one year (30 June 2012: £118bn) and £39bn matures within one month (30 June 2012: £42bn)

- Barclays has met its term funding needs for the period to the end of 2012. In the first 9 months of 2012, the funding requirement has reduced with the improvement in the customer loan to deposit ratio, and the Group has raised £22bn of term funding, including £1bn through Barclays participation in the Bank of England's Funding for Lending Scheme. The Group has £27bn of term funding maturing during 2012

Exposures to Selected Eurozone Countries

- During Q3 12, sovereign exposures to Spain, Italy, Portugal, Ireland, Greece and Cyprus reduced by 15% to £4.8bn

- Retail loans and advances in Spain, Italy and Portugal decreased 3% to £38.5bn, while lending to corporates decreased 19% to £8.2bn reflecting continued prudent risk management of portfolios. The 90 day arrears rates for the significant residential mortgage portfolios in Spain and Italy remained stable during Q3 12

- During Q3 12, mitigating actions were taken to reduce local net funding mismatches in particular through the attraction of corporate deposits in Spain and reducing corporate lending in Spain and Portugal. As a result, the aggregate net local balance sheet funding mismatch reduced from £2.5bn to £0.1bn in Spain and from £3.7bn to £3.3bn in Portugal. In Italy the net funding mismatch reduced from £11.9bn to £9.6bn

Citizenship

- Provided £32.4bn (2011: £32.8bn) of gross new lending to UK households and businesses during 2012

-    We are committed to passing on the full funding benefit from the Funding for Lending Scheme to our customers. As part of this we have launched Cashback for Business, offering 2% cashback on loans for small and medium-sized enterprises in the UK

-    We supported 84,000 start-up businesses in the UK, the highest in a 9 month period since 1988

- We raised £628bn of financing for businesses and governments globally

- We provided 280 new UK apprenticeships, demonstrating good progress towards our commitment of at least 1,000 apprenticeships by June 2013

Dividends

- It is our policy to declare and pay dividends on a quarterly basis. We will pay a third interim cash dividend for 2012 of 1p per share on 7 December 2012

Outlook

- Performance during October continues to be affected by the challenging economic environment and subdued market volumes. We continue to be cautious about the environment in which we operate and have positioned the Bank accordingly with an intense focus on costs, returns and capital. We remain confident in the strength of our market positions, our robust risk management and the benefits of our universal banking model


Results by Business

  

Nine Months Ended

Nine Months Ended


UK RBB

30.09.12

30.09.11


  

£m

£m

% Change

Adjusted basis




Total income net of insurance claims

3,335 

3,527 

(5)

Credit impairment charges and other provisions

(198)

(380)

(48)

Net operating income

3,137 

3,147 

-

Operating expenses

(1,991)

(1,950)

Other net income


Adjusted profit before tax

1,146 

1,198 

(4)

  




Adjusting items




Provision for PPI redress

(850)

(400)


Statutory profit before tax

296 

798 

(63)

  




Performance Measures




Adjusted return on average equity

16.9%

16.7%


Adjusted return on average risk weighted assets

3.3%

3.3%


Adjusted cost: income ratio

60%

55%


Return on average equity

4.4%

11.0%


Return on average risk weighted assets

0.9%

2.2%


Cost: income ratio

85%

67%


Loan loss rate (bps)

21 

42 


  




Balance Sheet Information

30.09.12

30.06.12


Loans and advances to customers at amortised cost

£126.0bn

£123.4bn


Customer deposits

£114.5bn

£113.9bn


 

2012 compared to 2011

- Adjusted profit before tax decreased 4% to £1,146m. Statutory profit before tax was £296m (2011: £798m) after £850m (2011: £400m) provision for PPI redress, including claims management costs

-    Solid growth in new mortgage lending and customer deposits more than offset by higher funding costs and reduced structural hedge contribution

-    Reduction in impairment principally in personal unsecured lending

- Income declined 5% to £3,335m reflecting higher funding costs and reduced contribution from structural hedges in particular non recurrence of gains from the disposal of hedging instruments in Q3 11

- Credit impairment charges decreased 48% to £198m reflecting improvements across all portfolios, principally in personal unsecured lending

-    Loan loss rate reduced to 21bps (2011: 42bps)

-    90 day arrears rates on UK Personal Loans improved by 43bps to 1.35%

- Operating expenses, excluding the PPI provision and claims management costs, increased 2% to £1,991m

Q3 12 compared to Q2 12

- Adjusted profit before tax decreased 3% to £400m, principally reflecting a non recurring impairment release in Q2 12. Statutory loss before tax of £150m (Q212: profit of £412m) reflecting an additional £550m provision for PPI redress

- Loans and advances to customers increased 2% to £126.0bn reflecting solid growth in mortgage balances. Customer deposits continued to grow to £114.5bn (30 June 2012: £113.9bn)

- Plans have been announced to acquire from ING Direct UK a deposit book with balances of £10.9bn and a mortgage book with outstanding balances of £5.6bn (as at 31 August 2012). The mortgage book had a loan to value ratio of 50% and is being acquired at an approximate 3% discount. The deposit book is being acquired at par. Completion is subject to regulatory approval and is expected to occur early in Q2 13



Results by Business

  

Nine Months Ended

Nine Months Ended


Europe RBB

30.09.12

30.09.11


  

£m

£m

% Change

Adjusted and statutory basis




Total income net of insurance claims

705 

979 

(28)

Credit impairment charges and other provisions

(233)

(178)

31 

Net operating income

472 

801 

(41)

Operating expenses

(632)

(920)

(31)

Other net income

10 


Adjusted and statutory loss before tax

(151)

(109)

39 

  




Performance Measures




Return on average equity

(7.6%)

(3.9%)


Return on average risk weighted assets

(1.0%)

(0.6%)


Cost: income ratio

90%

94%


Loan loss rate (bps)

76 

52 


  




Balance Sheet Information

30.09.12

30.06.12


Loans and advances to customers at amortised cost

£40.1bn

£41.2bn


Customer deposits

£18.1bn

£18.4bn


 

2012 compared to 2011

- Loss before tax increased 39% to £151m

-    Decrease in income reflecting the challenging economic environment in Europe

-    Offset by lower costs following restructuring charges in 2011 and subsequent cost savings

- Income declined 28% to £705m reflecting lower volumes, reduced margins and non recurrence of gains from the disposal of hedging instruments in Q3 11

- Credit impairment charges increased 31% to £233m due to deterioration in credit performance across Europe reflecting current economic conditions

-    Loan loss rate increased to 76bps (2011: 52bps)

-    90 day arrears rates for home loans deteriorated by 12bps to 0.83% reflecting deterioration across all countries, most notably in Spain

- Operating expenses decreased 31% to £632m reflecting restructuring charges of £129m in 2011 and related cost savings

Q3 12 compared to Q2 12

- Loss before tax increased by £10m to £59m driven by a decline in income reflecting the challenging economic environment in Europe, partially offset by cost savings

- Loans and advances to customers decreased 3% to £40.1bn reflecting the strategy to reduce the net funding mismatch. Customer deposits decreased 2% to £18.1bn principally reflecting competitive pricing pressures



Results by Business

  

Nine Months Ended

Nine Months Ended


Africa RBB

30.09.12

30.09.11


  

£m

£m

% Change

Adjusted basis




Total income net of insurance claims

2,390 

2,710 

(12)

Credit impairment charges and other provisions

(501)

(378)

33 

Net operating income

1,889 

2,332 

(19)

Operating expenses

(1,564)

(1,774)

(12)

Other net income


Adjusted profit before tax

330 

561 

(41)

  




Adjusting items




Gains on acquisitions and disposals


Statutory profit before tax

330 

563 

(41)

  




Performance Measures




Adjusted return on average equity

4.9%

9.6%


Adjusted return on average risk weighted assets

0.9%

1.6%


Return on average equity

4.9%

9.7%


Return on average risk weighted assets

0.9%

1.6%


Cost: income ratio

65%

65%


Loan loss rate (bps)

197 

138 


  




Balance Sheet Information

30.09.12

30.06.12


Loans and advances to customers at amortised cost

£32.5bn

£34.1bn


Customer deposits

£21.9bn

£22.3bn


 

2012 compared to 2011

- Profit before tax decreased 41% to £330m

-    Higher credit impairment charges primarily in South African home loans recovery book

-    Adverse currency movements reflecting depreciation of major African currencies against Sterling

- Income declined 12% to £2,390m principally reflecting currency movements and non recurrence of gains from the disposal of Group hedging instruments in Q3 11

-    Excluding the impact of currency movements income is broadly in line

- Credit impairment charges increased 33% to £501m principally reflecting higher loss given default rates and higher levels of write-offs in the South African home loans recovery book

-    Loan loss rate increased to 197bps (2011: 138bps)

-    However 90 day arrears rate for home loans improved by 100bps to 2.20% reflecting improved new business and continuing low interest rate environment

- Operating expenses decreased by 12% to £1,564m reflecting currency movements and reduced costs in local currency

Q3 12 compared to Q2 12

- Profit before tax decreased 42% to £56m mainly reflecting higher operating costs driven by the timing of staff related and investment spend, while impairment charges in the South African home loans recovery book remained elevated

- Loans and advances to customers decreased 5% to £32.5bn reflecting adverse currency movements. Customer deposits decreased 2% to £21.9bn reflecting currency movements, partially offset by growth in local currency deposits in South Africa



Results by Business

  

Nine Months Ended

Nine Months Ended


Barclaycard

30.09.12

30.09.11


  

£m

£m

% Change

Adjusted basis




Total income net of insurance claims

3,072 

3,112 

(1)

Credit impairment charges and other provisions

(714)

(988)

(28)

Net operating income

2,358 

2,124 

11 

Operating expenses

(1,232)

(1,201)

Other net income

24 

26 


Adjusted profit before tax

1,150 

949 

21 

  




Adjusting items




Provision for PPI redress

(150)

(600)


Goodwill impairment

(47)


Statutory profit before tax

1,000 

302 

231 

  




Performance Measures




Adjusted return on average equity

22.7%

18.4%


Adjusted return on average risk weighted assets

3.4%

2.8%


Adjusted cost: income ratio

40%

39%


Return on average equity

19.5%

4.3%


Return on average risk weighted assets

2.9%

0.8%


Cost: income ratio

45%

59%


Loan loss rate (bps)

291 

423 


  




Balance Sheet Information

30.09.12

30.06.12


Loans and advances to customers at amortised cost

£30.9bn

£30.6bn


Customer deposits

£2.4bn

£2.0bn


 

2012 compared to 2011

- Adjusted profit before tax improved 21% to £1,150m. Statutory profit before tax was £1,000m (2011: £302m) after £150m (2011: £600m) provision for PPI redress, including claim management costs, and goodwill impairment in 2011

-    Solid profit growth within the UK and International businesses

-    Lower impairment reflecting improved delinquency performances

-    Strong returns with adjusted return on average equity improving to 22.7% (2011: 18.4%)

- Income remained in line with prior year at £3,072m (2011: £3,112m) reflecting continued growth across the business and contributions from 2011 portfolio acquisitions, offset by higher funding costs and non recurrence of gains from the disposal of hedging instruments in Q3 11

- Credit impairment charges decreased 28% to £714m reflecting lower charges in the European and US cards portfolios, driven by improved delinquency performances

-    Loan loss rate reduced to 291bps (2011: 423bps)

-    30 day arrears rates for consumer cards in UK down 26bps to 2.46%, in the US down 76bps to 2.48% and in South Africa down 13bps to 4.93%

- Operating expenses, excluding the PPI provision and claims management costs, increased 3% to £1,232m reflecting portfolio acquisitions and investment spend

Q3 12 compared to Q2 12

- Adjusted profit before tax decreased 2% to £397m reflecting a non recurring impairment release in Q2 12. Profit before tax reduced £157m to £247m, reflecting an additional £150m provision for PPI redress

- Loans and advances to customers increased 1% to £30.9bn. Customer deposits increased £0.4bn to £2.4bn through deposit funding initiatives in the US and Germany



Results by Business

  

Nine Months Ended

Nine Months Ended


Investment Bank

30.09.12

30.09.11


  

£m

£m

% Change

Adjusted and statutory basis




Fixed Income, Currency and Commodities

5,945 

5,354 

11 

Equities and Prime Services  

1,507 

1,446 

Investment Banking  

1,497 

1,521 

(2)

Principal Investments  

180 

196 

(8)

Total income

9,129 

8,517 

Credit impairment charges and other provisions

(346)

(3)


Net operating income

8,783 

8,514 

Operating expenses

(5,613)

(5,831)

(4)

Other net income

35 

15 


Adjusted profit before tax and profit before tax

3,205 

2,698 

19 

  




Performance Measures




Return on average equity

14.2%

12.0%


Return on average risk weighted assets

1.6%

1.3%


Cost: income ratio

61%

68%


Cost: net operating income ratio

64%

68%


Compensation: income ratio

39%

46%


Loan loss rate (bps)

24 


  




Balance Sheet Information

30.09.12

30.06.12


Loans and advances to banks and customers at amortised cost

£186.2bn

£185.9bn


Customer deposits

£105.9bn

£114.5bn


Assets contributing to adjusted gross leverage

£628.2bn

£650.4bn


Risk weighted assets

£180.4bn

£190.6bn


 

2012 compared to 2011

- Profit before tax increased 19% to £3,205m, primarily driven by income growth of 7% and a reduction in operating expenses of 4% despite a £193m charge relating to the Investment Banking allocation of the £290m penalty arising from the industry wide investigation into the setting of inter-bank offered rates

- Total income increased 7% to £9,129m

-    Fixed Income, Currency and Commodities (FICC) income improved 11% to £5,945m, reflecting higher contributions from the Rates, Commodities and Emerging Markets businesses, partially offset by lower contributions from Foreign Exchange

-    Equities and Prime Services income increased 4% to £1,507m, reflecting improved performance in cash equities, despite subdued market volumes

-    Investment Banking income was comparable to 2011 at £1,497m, with improved performance in financial advisory offset by reduced performance in equity underwriting given lower deal activity.  Debt underwriting revenues were in line with the prior year

- Credit impairment charges of £346m (2011: £3m) primarily related to ABS CDO Super Senior positions and higher losses on single name exposures in H1 12. The prior year included a non recurring release of £223m

- Operating expenses decreased 4% to £5,613m, due to an 11% decline in total performance costs to £1,384m. Non-performance costs also decreased 1% to £4,229m whilst absorbing the £193m charge relating to the setting of inter-bank offered rates

- Cost to net operating income ratio of 64% (2011: 68%) within target range of 60% to 65%. The compensation to income ratio improved to 39% (2011: 46%)

- Return on average equity of 14.2% (2011: 12.0%) and return on average risk weighted assets of 1.6% (2011: 1.3%)



Results by Business

Q3 12 compared to Q2 12

- Profit before tax decreased 6% to £937m, with a 13% reduction in income partially offset by credit impairment charges decreasing to £23m (Q2 12: £248m). Operating expenses decreased 6% on the prior quarter driven by reduced non-performance costs

- Total income of £2,633m was down 13% on the strong performance in Q2 12 reflecting a reduction in FICC income of 20%, partially offset by a 26% increase in Equities and Prime Services. Investment Banking revenues were comparable to the prior quarter

- Assets contributing to adjusted gross leverage decreased 3% to £628bn reflecting decreases in cash and balances at central banks and trading portfolio assets, partially offset by an increase in reverse repurchase agreements

- Risk weighted assets decreased 5% to £180bn driven by business risk reductions, which includes legacy sell downs, and foreign exchange movements. The benefit of risk reduction was partially offset by increases from adopting revised guidance from the FSA requiring higher loss given default assumptions on sovereign exposures

Q3 12 compared to Q3 11

- Profit before tax increased 141% to £937m driven by a 17% increase in income and a significant reduction in credit impairment charges. Operating expenses decreased 4%, with a reduction of 9% in non-performance costs, more than offsetting an increase in the charge for bonuses deferred from prior years

- Total income was up 17% reflecting improved performance in FICC by 10%, Equities and Prime Services by 58% and Investment Banking by 25%



Results by Business

  

Nine Months Ended

Nine Months Ended


Corporate Banking

30.09.12

30.09.11


  

£m

£m

% Change

Adjusted basis




Total income net of insurance claims

2,205 

2,398 

(8)

Credit impairment charges and other provisions

(635)

(895)

(29)

Net operating income

1,570 

1,503 

Operating expenses

(1,130)

(1,337)

(15)

Other net income


Adjusted profit before tax

444 

167 

166 

  




Adjusting items




Provision for interest rate hedging products redress

(450)


Losses on disposal of Barclays Bank Russia

(64)


Statutory (loss)/profit before tax

(6)

103 

(106)

  




Adjusted profit/(loss) before tax by geographic segment




UK

681 

592 

15 

Europe

(290)

(434)

(33)

Rest of the World

53 


Corporate Banking

444 

167 

166 

  




Performance Measures




Adjusted return on average equity

5.6%

2.1%


Adjusted return on average risk weighted assets

0.6%

0.3%


Adjusted cost: income ratio

51%

56%


Return on average equity

(0.7%)

1.0%


Return on average risk weighted assets

(0.0%)

0.1%


Cost: income ratio

72%

56%


Loan loss rate (bps)

126 

164 






Balance Sheet Information

30.09.12

30.06.12


Loans and advances to customers at amortised cost

£62.1bn

£64.0bn


Loans and advances to customers at fair value

£17.5bn

£17.3bn


Customer deposits

£91.4bn

£88.5bn


2012 compared to 2011

- Adjusted profit before tax improved £277m to £444m, including a gain of £61m (2011: loss of £72m) on the net valuation of fair value loans. Statutory loss before tax was £6m (2011: £103m profit), after charging £450m provision for interest rate hedging products redress

-    UK adjusted profit before tax improved 15% to £681m reflecting the gains on fair value loans and improved credit impairment partially offset by increased funding costs. UK statutory profit before tax decreased £361m to £231m after a £450m provision for interest rate hedging products redress

-    Europe loss before tax improved £144m to £290m principally due to reduced credit impairment charges in Spain of £271m (2011: £415m), although credit conditions remain challenging, and improved operating expenses benefiting from progress in restructuring businesses

-    Rest of the World adjusted profit before tax improved £44m to £53m reflecting lower operating expenses following the prior year restructuring and disposal of Barclays Bank Russia (BBR). Rest of the World statutory profit before tax improved £108m to £53m reflecting the prior year loss on disposal of BBR

Q3 12 compared to Q2 12

- Adjusted profit before tax declined 23% to £98m with lower income following restructuring certain non-UK businesses. Statutory profit before tax improved £421m to £98m, reflecting the £450m provision for interest rate hedging products redress in Q2 12

- Loans and advances to customers declined 3% to £62.1bn reflecting significant progress in restructuring businesses in Europe. Customer deposits increased 3% to £91.4bn primarily driven by growth in the UK



Results by Business

  

Nine Months Ended

Nine Months Ended


Wealth and Investment Management

30.09.12

30.09.11


  

£m

£m

% Change

Adjusted and statutory basis




Total income net of insurance claims

1,334 

1,295 

Credit impairment charges and other provisions

(25)

(31)

(19)

Net operating income

1,309 

1,264 

Operating expenses

(1,109)

(1,109)

Other net expense

(2)


Adjusted profit before tax and profit before tax

200 

153 

31 

  




Performance Measures




Return on average equity

11.2%

10.7%


Return on average risk weighted assets

1.6%

1.5%


Cost: income ratio

83%

86%


Loan loss rate (bps)

16 

22 


  




Balance Sheet Information

30.09.12

30.06.12


Loans and advances to customers at amortised cost

£19.9bn

£19.8bn


Customer deposits

£52.2bn

£50.0bn


Total client assets

£177.6bn

£176.1bn


 

2012 compared to 2011

- Profit before tax increased 31% to £200m

-    Continue to execute strategic investment programme with a focus on building productive capacity and delivering a step change in the client experience

- Income increased by 3% to £1,334m driven by the High Net Worth businesses

- Operating expenses were flat as the continued cost of the strategic investment programme was offset by cost control initiatives

Q3 12 compared to Q2 12

- Profit before tax increased 30% to £79m, principally due to reduced operating expenses

- Client assets increased 1% to £177.6bn (30 June 2012: £176.1bn) principally reflecting net new assets in High Net Worth businesses

- Loans and advances to customers increased 1% to £19.9bn. Customer deposits increased 4% to £52.2bn



Results by Business

  

Nine Months Ended

Nine Months Ended


Head Office and Other Operations

30.09.12

30.09.11


  

£m

£m


Adjusted basis




Total income net of insurance claims

177 

(238)


Credit impairment charges and other provisions

(5)


Net operating income

172 

(236)


Operating expenses

(561)

(319)


Other net income

19 


Adjusted loss before tax

(370)

(555)


  




Adjusting items




Own credit

(4,019)

2,971 


Impairment and gain/(loss) on disposal of BlackRock investment

227 

(1,858)


Statutory (loss)/profit before tax

(4,162)

558 


 

2012 compared to 2011

- Adjusted loss before tax improved 33% to £370m

-    Adjusted income improved to £177m (2011: loss of £238m), principally due to changes in the value of hedges relating to employee share awards. These were closed out during Q1 12

-    Operating expenses increased to £561m (2011: £319m) due to higher costs relating to the Financial Services Compensation Scheme and a £97m charge relating to the allocation to Head Office and Other Operations of the £290m penalty arising from the industry wide investigation into the setting of interbank offered rates

- Statutory loss before tax was £4,162m (2011: £558m profit), including an own credit charge of £4,019m (2011: £2,971m gain) partially offset by the impact of the BlackRock investment disposal

Q3 12 compared to Q2 12

- Q3 12 adjusted loss before tax improved to £181m (Q2 12: £272m) due to a £115m reduction in operating expenses reflecting non recurrence of the penalty arising from the investigation into interbank offered rates recognised in Q2 12

 



Appendix I - Quarterly Results Summary


UK RBB

Q312

Q212

Q112


Q411

Q311

Q211

Q111

  

£m

£m

£m


£m

£m

£m

£m

Adjusted basis  









Total income net of insurance claims  

1,130 

1,128 

1,077 


1,129 

1,273 

1,170 

1,084 

Credit impairment charges and other provisions  

(76)

(46)

(76)


(156)

(105)

(131)

(144)

Net operating income  

1,054 

1,082 

1,001 


973 

1,168 

1,039 

940 

Operating expenses

(654)

(671)

(666)


(752)

(675)

(622)

(653)

Other net income/(expense)

(1)


(1)

Adjusted profit before tax  

400 

412 

334 


222 

494 

416 

288 

   









Adjusting items  









Provision for PPI redress

(550)

(300)


(400)

Statutory (loss)/profit before tax  

(150)

412 

34 


222 

494 

16 

288 

  









 

Europe RBB









Adjusted basis  









Total income net of insurance claims  

219 

243 

243 


247 

375 

309 

295 

Credit impairment charges and other provisions  

(76)

(85)

(72)


(83)

(62)

(47)

(69)

Net operating income  

143 

158 

171 


164 

313 

262 

226 

Operating expenses  

(204)

(211)

(217)


(291)

(263)

(368)

(289)

Other net income


Adjusted (loss)/profit before tax  

(59)

(49)

(43)


(125)

52 

(102)

(59)

   









Adjusting items  









Goodwill impairment  


(427)

Statutory (loss)/profit before tax  

(59)

(49)

(43)


(552)

52 

(102)

(59)

  









 

Africa RBB









Adjusted basis  









Total income net of insurance claims  

765 

795 

830 


861 

940 

906 

864 

Credit impairment charges and other provisions  

(180)

(214)

(107)


(88)

(108)

(126)

(144)

Net operating income  

585 

581 

723 


773 

832 

780 

720 

Operating expenses  

(531)

(485)

(548)


(505)

(613)

(586)

(575)

Other net income


Adjusted profit before tax  

56 

97 

177 


269 

219 

195 

147 

   









Adjusting items  









Gains on acquisitions and disposals  


Statutory profit before tax  

56 

97 

177 


269 

221 

195 

147 

  









 

Barclaycard









Adjusted basis  









Total income net of insurance claims  

1,046 

1,036 

990 


983 

1,140 

1,012 

960 

Credit impairment charges and other provisions  

(254)

(228)

(232)


(271)

(340)

(344)

(304)

Net operating income  

792 

808 

758 


712 

800 

668 

656 

Operating expenses

(402)

(412)

(418)


(458)

(430)

(400)

(371)

Other net income


11 

Adjusted profit before tax  

397 

404 

349 


259 

378 

275 

296 

   









Adjusting items  









Provision for PPI redress

(150)


(600)

Goodwill impairment  


(47)

Statutory profit/(loss) before tax  

247 

404 

349 


259 

378 

(372)

296 

  









 

 

 

 

 

 

  

 

 

1        The provision for PPI redress includes claims management costs relating to Q2 12 (UK RBB: £13m, Barclaycard: £15m) and Q1 12 (UK RBB: £11m, Barclaycard: £13m), previously recorded within operating expenses as a non-adjusting item.



Appendix I - Quarterly Results Summary

Investment Bank

Q312

Q212

Q112


Q411

Q311

Q211

Q111

  

£m

£m

£m


£m

£m

£m

£m

Adjusted and statutory basis  









Fixed Income, Currency and Commodities  

1,581 

1,968 

2,396 


971 

1,438 

1,715 

2,201 

Equities and Prime Services  

534 

423 

550 


305 

338 

563 

545 

Investment Banking  

487 

501 

509 


506 

389 

520 

612 

Principal Investments  

31 

140 


36 

89 

99 

Total income  

2,633 

3,032 

3,464 


1,818 

2,254 

2,897 

3,366 

Credit impairment (charges)/releases and other provisions  

(23)

(248)

(75)


(90)

(114)

80 

31 

Net operating income  

2,610 

2,784 

3,389 


1,728 

2,140 

2,977 

3,397 

Operating expenses  

(1,680)

(1,788)

(2,145)


(1,458)

(1,758)

(2,006)

(2,067)

Other net income/(expense)

22 


(3)

Adjusted profit before tax and profit before tax

937 

1,002 

1,266 


267 

388 

977 

1,333 










 

Corporate Banking









Adjusted basis  









Total income net of insurance claims  

678 

703 

824 


710 

830 

817 

751 

Credit impairment charges and other provisions  

(210)

(218)

(207)


(252)

(283)

(327)

(285)

Net operating income  

468 

485 

617 


458 

547 

490 

466 

Operating expenses  

(376)

(357)

(397)


(422)

(436)

(459)

(442)

Other net income/(expense)

(1)

(1)


(3)

Adjusted profit before tax  

98 

127 

219 


37 

113 

33 

21 

   









Adjusting items  









Goodwill impairment  


(123)

Provision for interest rate hedging products redress

(450)


Losses on disposal  


(9)

(64)

Statutory profit/(loss) before tax  

98 

(323)

219 


(95)

113 

(31)

21 










 

Wealth and Investment Management









Adjusted and statutory basis  









Total income net of insurance claims  

442 

441 

451 


449 

447 

426 

422 

Credit impairment charges and other provisions  

(6)

(12)

(7)


(10)

(12)

(9)

(10)

Net operating income  

436 

429 

444 


439 

435 

417 

412 

Operating expenses  

(358)

(367)

(384)


(384)

(369)

(375)

(365)

Other net income/(expense)

(1)


(1)

(1)

(1)

Adjusted profit before tax and profit before tax

79 

61 

60 


54 

65 

42 

46 










Head Office and Other Operations









Adjusted basis  









Total (expense)/income net of insurance claims  

(41)

(41)

259 


15 

(258)

12 

Credit impairment (charges)/releases and other provisions  

(3)

(2)


(1)

(3)

Net operating (expense)/income  

(41)

(44)

257 


14 

(257)

12 

Operating expenses (excluding UK bank levy)  

(136)

(251)

(174)


(144)

(115)

(124)

(80)

UK bank levy  


(325)

Other net (expense)/income

(4)

23 


Adjusted (loss)/profit before tax  

(181)

(272)

83 


(455)

(372)

(115)

(68)

   









Adjusting items  









Own credit  

(1,074)

(325)

(2,620)


(263)

2,882 

440 

(351)

Impairment and gain/(loss) on disposal of BlackRock investment

227 


(1,800)

(58)

Gains on debt buy-backs  


1,130 

(Losses)/gains on acquisitions and disposals  


(23)

(3)

Statutory (loss)/profit before tax  

(1,255)

(370)

(2,537)


389 

711 

264 

(417)


Appendix II - Margins and Income by Geography

Analysis of Net Interest Margin


  


  




 


UK RBB margin

Europe RBB margin

Africa RBB margin

Barclay-

card margin

Corporate Banking margin

Wealth and Investment Management margin

Total RBB, Corporate and Wealth margin

RBB, Corporate and Wealth interest income

Nine Months Ended 30.09.12

%

%

%

%

%

%

%

£m

Customer asset margin/ interest income

1.09 

0.82 

3.25 

9.34 

1.18 

0.64 

2.11 

5,025 

Customer liability margin/ interest income

0.97 

0.45 

2.38 

nm

1.07 

1.12 

1.11 

2,320 

Non-customer generated margin/ interest income

0.36 

0.35 

0.22 

(0.66)

0.14 

0.25 

0.22 

989 




  


  




Net interest margin/ income

1.39 

1.07 

3.13 

8.68 

1.26 

1.23 

1.86 

8,334 




  


  




Average customer assets (£m)

 123,217 

 41,241 

 34,084 

 32,072 

 68,048 

 19,325 

 317,987 

n/a

Average customer liabilities (£m)

 111,044 

 15,034 

 22,255 

nm

 81,833 

 49,182 

 279,348 

n/a




  


  




Nine Months Ended 30.09.11



  


  




Customer asset margin/ interest income

1.25 

0.91 

2.93 

9.59 

1.53 

0.78 

2.23 

5,303 

Customer liability margin/ interest income

0.85 

0.59 

2.67 

nm

0.91 

0.97 

1.03 

2,077 

Non-customer generated margin/ interest income

0.48 

0.51 

0.38 

0.13 

0.35 

0.38 

0.41 

1,805 




  


  




Net interest margin/ income

1.54 

1.33 

3.21 

9.72 

1.56 

1.30 

2.09 

9,185 




  


  




Average customer assets (£m)

 117,540 

 43,693 

 39,178 

 29,973 

 69,881 

 17,143 

 317,408 

n/a

Average customer liabilities (£m)

 107,276 

 18,021 

 23,884 

nm

 76,249 

 43,957 

 269,387 

n/a

 

- Net interest income for the RBB, Corporate Banking and Wealth and Investment Management businesses reduced 9% to £8,334m due to the reduction in contribution from Group structural hedging activities, including the non recurrence of £516m gains on disposal of hedging instruments recognised in Q3 11. Total customer generated interest income in these businesses was flat at £7,345m

- The RBB, Corporate Banking and Wealth and Investment Management net interest margin reduced 23bps to 186bps, principally due to the impact of reduced contributions from the Group structural hedging activities on non-customer generated margin, which reduced 19bps to 22bps

- Group net interest income including contributions for the Investment Bank and Head Office and Other Functions was £8,786m (2011: £9,237m)

- The total contribution from Group product and equity structural hedges reduced £1,503m to £1,296m, principally due to the non recurrence of gains on disposal of hedging instruments in Q3 11 of £1,000m

 

 

Income by Geographic Region

Adjusted3

 

Statutory

 

  

30.09.12

30.09.11

  


30.09.12

30.09.11


  

£m

£m

% Change


£m

£m

% Change

UK

9,371 

9,476 

(1)


5,352 

12,447 

(57)

Europe

3,071 

3,566 

(14)


3,071 

3,566 

(14)

Americas

5,610 

4,695 

19 


5,837 

4,637 

26 

Africa and Middle East

3,401 

3,784 

(10)


3,401 

3,784 

(10)

Asia

894 

779 

15 


894 

779 

15 

Total   

22,347 

 22,300 

  


18,555 

 25,213 

(26)

 

  

 

 

 

1        2011 comparatives have been revised to reflect certain corporate banking activities previously reported in Africa RBB which are now included within Corporate Banking. Africa RBB comparatives have additionally been revised to include gross cheque advances and cheque deposits within average assets and average liabilities respectively where these were previously reported net.

2       Total income net of insurance claims based on counterparty location.

3        Adjusted income by geographic region excludesthe impact of an own credit charge of £4,019m (2011: gain of £2,971m) and a  gain on disposal of strategic investment in BlackRock, Inc. of £227m (2011: loss of £58m).


Appendix III - Balance Sheet and Capital

Consolidated Summary Balance Sheet (Unaudited)



  

As at

As at

  

30.09.12

30.06.12

Assets

£m

£m

Cash, balances at central banks and items in the course of collection

103,622 

128,660 

Trading portfolio assets

160,921 

166,300 

Financial assets designated at fair value

45,426 

45,928 

Derivative financial instruments

494,852 

517,685 

Available for sale financial investments

72,361 

68,922 

Loans and advances to banks

49,001 

48,777 

Loans and advances to customers

452,877 

454,728 

Reverse repurchase agreements and other similar secured lending

194,665 

174,392 

Other assets

25,413 

25,873 

Total assets

1,599,138 

1,631,265 

  



Liabilities



Deposits and items in the course of collection due to banks

91,445 

96,138 

Customer accounts

407,260 

408,550 

Repurchase agreements and other similar secured borrowing

238,649 

245,833 

Trading portfolio liabilities

58,090 

51,747 

Financial liabilities designated at fair value

88,125 

94,855 

Derivative financial instruments  

487,528 

507,351 

Debt securities in issue

124,786 

124,968 

Subordinated liabilities

21,801 

22,089 

Other liabilities

17,746 

16,044 

Total liabilities

1,535,430 

1,567,575 

  



Shareholders' Equity



Called up share capital and share premium

12,471 

12,462 

Other reserves

3,585 

3,267 

Retained earnings

38,239 

38,476 

Shareholders' equity excluding non-controlling interests

54,295 

54,205 

Non-controlling interests

9,413 

9,485 

Total shareholders' equity

63,708 

63,690 

  



Total liabilities and shareholders' equity

1,599,138 

1,631,265 


Appendix III - Balance Sheet and Capital

Key Capital Ratios

As at 30.09.12

As at 30.06.12

Core tier 1

11.2%

10.9%

Tier 1

13.7%

13.3%

Total capital

16.9%

16.5%

  



Capital Resources

£m

£m

Shareholders' equity (excluding non-controlling interests) per balance sheet:

 54,295 

 54,205 

  



Non-controlling interests per balance sheet

9,413 

9,485 

- Less: Other tier 1 capital - preference shares

(6,214)

(6,225)

- Less: Other tier 1 capital - Reserve Capital Instruments

- Less: Non-controlling tier 2 capital

(548)

(564)

Other regulatory adjustments

(242)

(171)

  



Regulatory adjustments and deductions:



Own credit cumulative charge/(gain) (net of tax)

323 

(492)

Defined benefit pension adjustment

(2,297)

(2,260)

Unrealised (gains)/losses on available for sale debt securities

(433)

83 

Unrealised gains on available for sale equity (recognised as tier 2 capital)

(88)

(95)

Cash flow hedging reserve

(2,049)

(1,676)

Goodwill and intangible assets

(7,564)

(7,574)

50% excess of expected losses over impairment (net of tax)

(519)

(500)

50% of securitisation positions

(1,550)

(1,663)

Other regulatory adjustments

(20)

23 

Core tier 1 capital

 42,507 

 42,576 

  



Other tier 1 capital:



Preference shares

6,214 

6,225 

Tier 1 notes

512 

521 

Reserve Capital Instruments

2,875 

2,874 

  



Regulatory adjustments and deductions:



50% of material holdings

(243)

(285)

50% tax on excess of expected losses over impairment

111 

100 

Total tier 1 capital

 51,976 

 52,011 

  



Tier 2 capital:



Undated subordinated liabilities

1,647 

1,648 

Dated subordinated liabilities

11,872 

12,488 

Non-controlling tier 2 capital

548 

564 

Reserves arising on revaluation of property

22 

21 

Unrealised gains on available for sale equity

88 

95 

Collectively assessed impairment allowances

1,844 

1,783 

  



Tier 2 deductions:



50% of material holdings

(243)

(285)

50% excess of expected losses over impairment (gross of tax)

(630)

(601)

50% of securitisation positions

(1,550)

(1,663)

  



Total capital regulatory adjustments and deductions:



Investments that are not material holdings or qualifying holdings

(1,199)

(1,209)

Other deductions from total capital

(475)

(565)

Total regulatory capital  

 63,900 

 64,287 

 

  

 

 

 

 

 

1        Tier 1 notes are included in subordinated liabilities in the consolidated balance sheet.



Appendix III - Balance Sheet and Capital

  

Total Assets by Business


Risk Weighted Assets by Business

 

Assets and Risk Weighted Assets by Business

As at

30.09.12

As at

30.06.12


As at

30.09.12

As at

30.06.12

  

£m

£m


£m

£m

UK RBB

133,750 

130,776 


37,305 

36,038 

Europe RBB

47,201 

48,109 


16,055 

16,563 

Africa RBB

45,788 

47,398 


26,846 

27,909 

Barclaycard

36,103 

34,596 


33,573 

33,149 

Investment Bank

1,188,580 

1,225,409 


180,415 

190,553 

Corporate Banking

85,753 

87,758 


64,349 

69,328 

Wealth and Investment Management

22,418 

22,205 


14,095 

13,998 

Head Office and Other Functions

39,545 

35,014 


6,004 

2,685 

Total

1,599,138 

1,631,265 


378,642 

390,223 

  






 

  

As at

As at 

Balance Sheet Leverage

30.09.12

30.06.12

  

£m

£m

Total assets per balance sheet

1,599,138 

1,631,265 

Counterparty netting

(411,440)

(425,616)

Collateral on derivatives

(48,142)

(51,421)

Net settlement balances and cash collateral

(100,072)

(97,181)

Goodwill and intangible assets

(7,859)

(7,861)

Customer assets held under investment contracts

(1,570)

(1,661)

Adjusted total tangible assets

1,030,055 

 1,047,525 

Total qualifying Tier 1 capital

51,976 

52,011 

Adjusted gross leverage

20x

20x

Adjusted gross leverage (excluding liquidity pool)

17x

17x

Ratio of total assets to shareholders' equity

25x

26x

Ratio of total assets to shareholders' equity (excluding liquidity pool)

23x

23x

- Barclays continues to manage its balance sheet within limits and targets for balance sheet usage

- Adjusted gross leverage remained stable at 20x with qualifying Tier 1 capital remaining broadly flat and adjusted total tangible assets down 2%

- During Q3 12, the ratio moved in a range from 20x to 21x (2012 year to date: 20x to 23x, Full Year 2011: 20x to 23x) primarily due to fluctuations in collateralised reverse repurchase lending and high quality trading portfolio assets

- Adjusted total tangible assets include cash and balances at central banks of £100.9bn (30 June 2012: £126.1bn). Excluding these balances, the balance sheet leverage would be 18x (30 June 2012: 18x). Excluding the whole liquidity pool, leverage would be 17x (30 June 2012: 17x)

- The ratio of total assets to total shareholders' equity was 25x (30 June 2012: 26x) and during Q3 12 moved within a month end range of 25x to 26x (2012 Year to date: 25x to 28x, Full Year 2011: 24x to 28x), driven by fluctuations noted above and changes in gross interest rate derivatives and settlement balances 

 

 

 

 

1        Includes Liquidity Pool of £160bn (30 June 2012: £170bn).

2       Comprising financial assets designated at fair value and associated cash balances.


 

 

 

 

Appendix III - Balance Sheet and Capital

 

Retail and Wholesale Loans and Advances to Customers and Banks

 

As at 30.09.12

Gross

 L&A

Impairment Allowance

L&A Net of Impairment

Credit Risk loans

CRLs % of Gross L&A

Loan Impairment Charges

Loan Loss

 Rate


£m

£m

£m

£m

£m

£m

bps

Total retail

241,655 

4,854 

236,801 

9,206 

3.8 

1,490 

82 

Wholesale - customers

220,948 

4,872 

216,076 

9,922 

4.5 

1,162 

70 

Wholesale - banks

49,039 

38 

49,001 

(12)

(3)

Total wholesale

269,987 

4,910 

265,077 

9,922 

3.7 

1,150 

57 







  

  

Loans and advances at amortised cost

511,642 

9,764 

501,878 

19,128 

3.7 

2,640 

69 

Loans and advances held at fair value

23,013 

na

23,013 



  

  

Total loans and advances

534,655 

9,764 

524,891 



  

  









 As at 30.06.12







 

Total retail

240,903 

5,021 

235,882 

9,545 

4.0 

978 

82 

Wholesale - customers

223,719 

4,873 

218,846 

10,161 

4.5 

842 

76 

Wholesale - banks

48,829 

52 

48,777 

35 

0.1 

Total wholesale

272,548 

4,925 

267,623 

10,196 

3.7 

844 

62 







  

  

Loans and advances at amortised cost

513,451 

9,946 

503,505 

19,741 

3.8 

1,822 

71 

Loans and advances held at fair value

24,256 

na

24,256 



  

  

Total loans and advances

537,707 

9,946 

527,761 



  

  

 

  






  


Retail Loans and Advances at Amortised Cost

  


 

As at 30.09.12

Gross L&A

Impairment Allowance

L&A Net of Impairment

Credit Risk Loans

CRLs % of Gross L&A

Loan Impairment Charges

Loan Loss  Rates

  

£m

£m

£m

£m

%

£m

bps

UK RBB

 124,673 

 1,352 

 123,321 

 2,629 

 2.1 

 167 

 18 

Europe RBB

 40,970 

 693 

 40,277 

 1,856 

 4.5 

 233 

 76 

Africa RBB

 24,722 

 753 

 23,969 

 1,870 

 7.6 

 374 

 202 

Barclaycard

 32,162 

 1,826 

 30,336 

 2,262 

 7.0 

 694 

 288 

Corporate Banking

 1,093 

 136 

 957 

 140 

 12.8 

 1 

 12 

Wealth and Investment Management

 18,035 

 94 

 17,941 

 449 

 2.5 

 21 

 16 

Total

 241,655 

 4,854 

 236,801 

 9,206 

 3.8 

 1,490 

 82 

  






  


As at 30.06.12






  


UK RBB

 122,284 

 1,403 

 120,881 

 2,713 

2.2 

 100 

 16 

Europe RBB

 42,198 

 721 

 41,477 

 1,833 

4.3 

 157 

 75 

Africa RBB

 25,591 

 770 

 24,821 

 2,087 

8.2 

 257 

 202 

Barclaycard

 31,908 

 1,890 

 30,018 

 2,321 

7.3 

 446 

 281 

Corporate Banking

 1,207 

 145 

 1,062 

 145 

12.0 

 1 

 17 

Wealth and Investment Management

 17,715 

 92 

 17,623 

 446 

2.5 

 17 

 19 

Total

 240,903 

 5,021 

 235,882 

 9,545 

4.0 

 978 

 82 

 

 

 

 

 

 

 

 

 

 

 

 

1        Loan impairment charges, comprising impairment on loans and advances and charges in respect of undrawn facilities and guarantees.

2       Includes loans and advances to business customers.

3        Primarily comprises retail portfolios in India and UAE.

4       Loan impairment charge as at June 2012 is the charge incurred over the period of 6 months.



Appendix III - Balance Sheet and Capital

Wholesale Loans and Advances at Amortised Cost

  

  



 

As at 30.09.12

Gross

L&A

Impairment Allowance

L&A Net of Impairment

Credit

Risk Loans

CRLs % of Gross L&A

Loan Impairment Charges

Loan Loss Rates

  

£m

£m

£m

£m

%

£m

bps

UK RBB

 2,909 

 63 

 2,846 

236 

8.1 

 31 

 142 

Africa RBB

 9,342 

 298 

 9,044 

811 

8.7 

 128 

 183 

Barclaycard

 606 

 7 

 599 

0.5 

 21 

 463 

Investment Bank

 188,684 

 2,442 

 186,242 

4,555 

2.4 

 344 

 24 

Corporate Banking

 64,779 

 2,029 

 62,750 

3,978 

6.1 

 621 

 128 

- UK

 51,525 

 405 

 51,120 

1,303 

2.5 

 213 

 55 

- Europe

 8,390 

 1,525 

 6,865 

2,523 

30.1 

 406 

 646 

- Rest of World

 4,864 

 99 

 4,765 

152 

3.1 

 2 

 5 

Wealth and Investment Management

 2,383 

 53 

 2,330 

320 

13.4 

 4 

 22 

Head Office and Other Functions

 1,284 

 18 

 1,266 

19 

1.5 

 10 

Total

 269,987 

 4,910 

 265,077 

9,922 

3.7 

 1,150 

 57 

  



  

  

  



As at 30.06.12



  

  

  



UK RBB

 2,844 

 66 

 2,778 

241 

8.5 

 22 

 156 

Africa RBB

 9,952 

 278 

 9,674 

839 

8.4 

 64 

 129 

Barclaycard

 589 

 7 

 582 

0.8 

 14 

 478 

Investment Bank

 188,414 

 2,494 

 185,920 

4,631 

2.5 

 324 

 35 

Corporate Banking

 67,034 

 2,010 

 65,024 

4,117 

6.1 

 417 

 125 

- UK

 52,404 

 433 

 51,971 

 1,243 

2.4 

 143 

 55 

- Europe

 9,106 

 1,474 

 7,632 

 2,714 

29.8 

 273 

 602 

- Rest of World

 5,524 

 103 

 5,421 

 160 

2.9 

 1 

 5 

Wealth and Investment Management

 2,441 

 52 

 2,389 

329 

13.5 

 2 

 16 

Head Office and Other Functions

 1,274 

 18 

 1,256 

34 

2.7 

 1 

 16 

Total

 272,548 

 4,925 

 267,623 

10,196 

3.7 

 844 

 62 

 

 

 

 

 

 

 

 

 

 

1        Loans and advances to business customers in Europe RBB are included in the Retail Loans and Advances to Customers at Amortised Cost table on page 25.

2       Barclaycard wholesale loans and advances represent corporate credit and charge cards.

3        Investment Bank gross loans and advances include cash collateral and settlement balances of £117bn as at 30 September 2012 and £111bn as at 30 June 2012. Excluding these balances CRLs as a proportion of gross loans and advances was 6.35% (30 June 2012: 5.98% respectively).

4       Balances revised following a reallocation of £1,361m from UK to Europe (£390m) and Rest of World (£971m).


Appendix IV - Group Exposures to Selected Countries

Group Exposures to Selected Eurozone Countries

Direct credit and market risk exposures

- The following table shows Barclays net exposure to those Eurozone countries monitored internally as being higher risk and the subject of particular management focus. Detailed analysis on these countries is on pages 29 to 34. The basis of preparation is consistent with that described in the H1 2012 Results Announcement. Net exposures are shown as they provide a relevant measure of counterparty credit risk

 







Total net on-

Contingent




Financial


Residential

Other retail

balance sheet

liabilities and

Total

As at 30.09.12

Sovereign

institutions

Corporate

mortgages

lending

exposure

commitments

exposure


£m

£m

£m

£m

£m

£m

£m

£m

Spain

 2,165 

 2,866 

 4,175 

 13,261 

 2,815 

 25,282 

 3,195 

 28,477 

Italy

 1,946 

 298 

 1,790 

 15,238 

 1,991 

 21,263 

 2,836 

 24,099 

Portugal

 627 

 67 

 2,190 

 3,436 

 1,752 

 8,072 

 2,623 

 10,695 

Ireland

 10 

 3,790 

 1,023 

 78 

 105 

 5,006 

 1,518 

 6,524 

Cyprus

 8 

 3 

 133 

 48 

 18 

 210 

 120 

 330 

Greece

 1 

 1 

 59 

 6 

 16 

 83 

 14 

 97 










As at 30.06.12









Spain

 2,207 

 1,082 

 5,117 

 13,645 

 2,988 

 25,039 

 3,244 

 28,283 

Italy

 2,551 

 270 

 2,500 

 15,447 

 2,134 

 22,902 

 2,616 

 25,518 

Portugal

 588 

 45 

 2,415 

 3,510 

 1,879 

 8,437 

 2,740 

 11,177 

Ireland

 211 

 4,222 

 1,109 

 91 

 105 

 5,738 

 1,570 

 7,308 

Cyprus

 8 

 6 

 130 

 51 

 6 

 201 

 122 

 323 

Greece

 1 

 1 

 59 

 8 

 19 

 88 

 20 

 108 

 

Exposures to other Eurozone countries

- Barclays has net exposures to other Eurozone countries as set out below. Individual countries that have an on-balance sheet exposure of less than £1bn are reported in aggregate under Other

 







Total net on-

Contingent




Financial


Residential

Other retail

balance sheet

liabilities and

Total

As at 30.09.12

Sovereign

institutions

Corporate

mortgages

lending

exposure

commitments

exposure


£m

£m

£m

£m

£m

£m

£m

£m

France

 3,544 

 6,072 

 3,584 

 2,518 

 204 

 15,922 

 7,497 

 23,419 

Germany

 280 

 4,841 

 2,832 

 24 

 1,645 

 9,622 

 6,406 

 16,028 

Netherlands

 2,599 

 5,039 

 2,012 

 15 

 66 

 9,731 

 1,837 

 11,568 

Luxembourg

 2 

 3,965 

 581 

 105 

 49 

 4,702 

 748 

 5,450 

Belgium

 2,618 

 13 

 377 

 9 

 2 

 3,019 

 1,558 

 4,577 

Austria

 1,437 

 279 

 194 

 5 

 - 

 1,915 

 97 

 2,012 

Finland

 1,122 

 149 

 45 

 2 

 - 

 1,318 

 451 

 1,769 

Other

 183 

 6 

 34 

 24 

 50 

 297 

 23 

 320 










As at 30.06.12









France

 3,867 

 4,350 

 3,432 

 2,612 

 267 

 14,528 

 6,949 

 21,477 

Germany

 1,170 

 5,377 

 2,985 

 26 

 1,605 

 11,163 

 6,457 

 17,620 

Netherlands

 2,513 

 4,646 

 1,857 

 16 

 23 

 9,055 

 1,918 

 10,973 

Luxembourg

 24 

 3,104 

 551 

 100 

 91 

 3,870 

 760 

 4,630 

Belgium

 2,670 

 88 

 303 

 10 

 4 

 3,075 

 1,660 

 4,735 

Austria

 675 

 300 

 178 

 5 

 1 

 1,159 

 182 

 1,341 

Finland

 586 

 133 

 50 

 3 

 - 

 772 

 431 

 1,203 

Other

 186 

 3 

 41 

 27 

 42 

 299 

 48 

 347 



Appendix IV - Group Exposures to Selected Countries

Credit Derivatives Referencing Eurozone Sovereign Debt

- The Group enters into credit mitigation arrangements (principally credit default swaps and total return swaps) primarily for risk management purposes for which the reference asset is government debt. These generally have the net effect of reducing the Group's exposure in the event of sovereign default

 

As at 30.09.12

Spain

Italy

Portugal

Ireland

Cyprus

Greece


£m

£m

£m

£m

£m

£m

Fair value







- Bought

245 

361 

139 

61 

- Sold

(242)

(297)

(131)

(74)

(1)

Net derivative fair value

64 

(13)








Contract notional amount







- Bought

(2,507)

(3,901)

(1,173)

(953)

(4)

- Sold

2,457 

3,757 

1,016 

1,048 

Net derivative notional amount

(50)

(144)

(157)

95 








Net (protection)/exposure from credit derivatives in the event of sovereign default (notional less fair value)

(47)

(80)

(149)

82 

 

- The net derivative notional amount disclosed represents a reduction in exposures and should be considered alongside the direct exposures as disclosed in the following pages

- In addition, the Group has indirect sovereign exposure through the guarantee of certain savings and investment funds, which hold a proportion of their assets in sovereign debt. As at 30 September 2012, the net liability in respect of these guarantees was £34m (30 June 2012: £45m)

 

Eurozone balance sheet funding mismatches

- Redenomination risk is the risk of financial loss to the Group should one or more countries exit from the Euro, leading to the devaluation of local balance sheet assets and liabilities. The Group is directly exposed to redenomination risk where there is a mismatch between the level of locally denominated assets and funding

- Within Barclays, retail banking, corporate banking and wealth activities in the Eurozone are generally booked locally within each country. Locally booked external customer assets and liabilities, primarily loans and advances to customers and customer deposits, are predominantly denominated in Euros. The remaining funding mismatch between local external assets and liabilities is met through local funding secured against customer loans and advances, with any residual mismatch funded through the Group

- Barclays continues to monitor and take mitigating actions to limit the potential impact of the Eurozone volatility on local balance sheet funding

- During Q3 12, mitigating actions have been taken to reduce local net funding mismatches in particular through the attraction of corporate deposits in Spain and reducing corporate lending in Spain and Portugal. As a result the Group reduced the aggregate net local balance sheet funding mismatch from £2.5bn to £0.1bn in Spain and from £3.7bn to £3.3bn in Portugal

- In Italy net funding by the Group reduced from £11.9bn to £9.6bn during Q3 12. Collateral is available to support additional secured funding in Italy should the risk of redenomination increase

- Direct exposure to Greece is very small with negligible net funding required from Group. For Ireland there is no local balance sheet funding requirement by the Group as total liabilities in this country exceed total assets



Appendix IV - Group Exposures to Selected Countries

Spain

Trading Portfolio


Derivatives

Designated

  



 

Fair Value through

Trading

Trading

Net






at FV

Total


Total

Profit and Loss

Portfolio

Portfolio

Trading


Gross

Gross

Cash

Net

through

as at


as at


Assets

Liabilities

Portfolio


Assets

Liabilities

Collateral

Derivatives

P&L

30.09.12


30.06.12


£m

£m

£m


£m

£m

£m

£m

£m

£m  


£m

Sovereign

 1,101 

 (849)

 252 


 32 

 (32)

 - 

 - 

 - 

 252 


 232 

Financial institutions

 2,195 

 (156)

 2,039 


 7,936 

 (7,383)

 (553)

 - 

 155 

 2,194 


 367 

Corporate

 215 

 (209)

 6 


 535 

 (208)

 - 

 327 

 304 

 637 


 1,291 











  



 











  


Total

Fair Value through Equity



Available for Sale Assets as at 30.09.121


as at

 






Cost

AFS Reserve


Total


30.06.12






£m

£m


£m  


£m

 

Sovereign






 1,954 


 (69)


 1,885 


 1,926 

Financial institutions






 490 


 (12)


 478 


 467 

Corporate






 6 


 - 


 6 


 5 











  



 

Held at Amortised Cost



Loans and Advances as at 30.09.12


Total

 









Impairment


  


as at







Gross


Allowances


Total


30.06.12







£m


£m


£m  


£m

Sovereign






 28 


 - 


 28 


 49 

Financial institutions






 208 


 (14)


 194 


 248 

Residential mortgages






 13,355 


 (94)


 13,261 


 13,645 

Corporate






 4,636 


 (1,104)


 3,532 


 3,821 

Other retail lending






 2,945 


 (130)


 2,815 


 2,988 











  



 











Total


Total

Contingent Liabilities and Commitments







as at


as at

 











30.09.12


30.06.12











£m


£m

Sovereign










 - 


 162 

Financial institutions










 102 


 17 

Residential mortgages










 15 


 14 

Corporate










 1,953 


 2,027 

Other retail lending










 1,125 


 1,024 

 

- Sovereign

-    Largely AFS government bonds. No impairment and £69m (30 June 2012: £158m) loss held in AFS reserve

- Financial institutions

-    £2,194m (30 June 2012: £367m) held at fair value through profit and loss, predominantly traded equity securities that are fully hedged by total return swaps with non-Spanish counterparties

-    £478m (30 June 2012: £467m) AFS assets with £12m (30 June 2012: £28m) loss held in AFS reserve

- Residential mortgages

-    Fully secured on residential property with average marked to market LTV of 63.8% (30 June 2012: 62.7%), which is reflected in the CRL coverage of 30% (30 June 2012: 26%)

-    90 day arrears rates have remained stable at 0.7% during Q3 12 while annualised loan loss rates have marginally increased to 45bps (30 June 2012: 43bps)

 

 

  

 

 

 

 

 

 

 

1        'Cost' refers to the fair value of the asset at recognition, less any impairment booked. 'AFS Reserve' is the cumulative fair value gain or loss on the assets that is held in equity. 'Total' is the fair value of the assets at the balance sheet date.


 

Appendix IV - Group Exposures to Selected Countries

- Corporate

-    Net lending to corporates of £3,532m (30 June 2012: £3,821m) with CRLs of £1,870m (30 June 2012: £2,005m), impairment allowance of £1,104m (30 June 2012: £1,082m) and CRL coverage of 59% (30 June 2012: 54%)

-    Net lending to property and construction industry of £1,223m (30 June 2012: £1,556m) largely secured on real estate collateral, with CRLs of £1,475m (30 June 2012: £1,364m), impairment allowance of £852m (30 June 2012: £795m) and CRL coverage of 58% (30 June 2012: 58%)

-    Balances on early warning lists peaked in September 2009. Portfolio kept under close review and impairment recognised as appropriate

-    Corporate impairment in Spain was at its highest level in H1 10 when commercial property declines were reflected earlier in the cycle

-    £418m (30 June 2012: £368m) Investment Bank lending to multinational and large national corporates, which continues to perform

- Other retail lending

-    £1,019m (30 June 2012: £1,045m) credit cards and unsecured loans. Arrears and charge off rates in credit cards and unsecured loans increased marginally in Q3 12

-    £1,447m (30 June 2012: £1,542m) lending to small and medium enterprises (SMEs), largely secured against commercial property



Appendix IV - Group Exposures to Selected Countries

Italy

Trading Portfolio


Derivatives

Designated

  



 

Fair Value through

Trading

Trading

Net






at FV

Total


Total

Profit and Loss

Portfolio

Portfolio

Trading


Gross

Gross

Cash

Net

through

as at


as at


Assets

Liabilities

Portfolio


Assets

Liabilities

Collateral

Derivatives

P&L

30.09.12


30.06.12


£m

£m

£m


£m

£m

£m

£m

£m

£m  


£m

Sovereign

 2,313 

 (2,249)

 64 


 1,383 

 (1,118)

 - 

 265 

 2 

 331 


 598 

Financial institutions

 144 

 (113)

 31 


 7,169 

 (5,444)

 (1,725)

 - 

 124 

 155 


 129 

Corporate

 288 

 (204)

 84 


 648 

 (440)

 (17)

 191 

 224 

 499 


 415 
























  


Total

Fair Value through Equity



Available for Sale Assets as at 30.09.121


as at

 






Cost

AFS Reserve


Total


30.06.12







£m


£m


£m  


£m

Sovereign






 1,614 


 1 


 1,615 


 1,940 

Financial institutions






 127 


 2 


 129 


 127 

Corporate






 29 


 2 


 31 


 30 







 

Held at Amortised Cost



Loans and Advances as at 30.09.12


Total

 









Impairment


  


as at







Gross


Allowances


Total


30.06.12







£m


£m


£m  


£m

Sovereign






 - 


 - 


 - 


 13 

Financial institutions






 14 


 - 


 14 


 14 

Residential mortgages






 15,338 


 (100)


 15,238 


 15,447 

Corporate






 1,369 


 (109)


 1,260 


 2,055 

Other retail lending






 2,133 


 (142)


 1,991 


 2,134 
























Total


Total

Contingent Liabilities and Commitments







as at


as at

 











30.09.12


30.06.12











£m


£m

Financial institutions










 102 


 13 

Residential mortgages










 55 


 60 

Corporate










 1,871 


 1,668 

Other retail lending










 808 


 875 

 

- Sovereign

-    Predominantly £1,615m (30 June 2012: £1,940m) AFS government bonds with no impairment or loss in the AFS reserve

- Residential mortgages

-    Fully secured on residential property with average marked to market LTVs of 46.3% (30 June 2012: 46.5%)

-    90 day arrears rates at 1.1% (30 June 2012: 1.0%) and annualised loan loss rates of 18bps (30 June 2012: 17bps) remained broadly stable

-    CRL coverage of 23% (30 June 2012: 23%)

- Corporate

-    Net loans and advances of £1,260m (30 June 2012: £2,055m), which are focused on large corporate clients with very limited exposure to the property sector

-    Balances in early warning lists were broadly stable since December 2011

- Other retail lending

-    £1,397m (30 June 2012: £1,503m) Italian salary advance loans (repayment deducted at source by qualifying employers and Barclays is insured in the event of termination of employment or death). During Q3 12, arrears rates have deteriorated while charge off rates have improved

-    £417m (30 June 2012: £432m) credit cards and other unsecured loans. During Q3 12, arrears rates have improved while charge off rates have deteriorated 

 

 

1        'Cost' refers to the fair value of the asset at recognition, less any impairment booked. 'AFS Reserve' is the cumulative fair value gain or loss on the assets that is held in equity. 'Total' is the fair value of the assets at the balance sheet date.



Appendix IV - Group Exposures to Selected Countries

Portugal

Trading Portfolio


Derivatives

Designated

  



 

Fair Value through

Trading

Trading

Net






at FV

Total


Total

Profit and Loss

Portfolio

Portfolio

Trading


Gross

Gross

Cash

Net

through

as at


as at


Assets

Liabilities

Portfolio


Assets

Liabilities

Collateral

Derivatives

P&L

30.09.12


30.06.12


£m

£m

£m


£m

£m

£m

£m

£m

£m  


£m

Sovereign

 130 

 (117)

 13 


 237 

 (237)

 - 

 - 

 - 

 13 


 - 

Financial institutions

 22 

 (6)

 16 


 284 

 (177)

 (107)

 - 

 - 

 16 


 12 

Corporate

 46 

 (8)

 38 


 441 

 (209)

 (5)

 227 

 - 

 265 


 262 
























  


Total

Fair Value through Equity



Available for Sale Assets as at 30.09.12


as at

 






Cost

AFS Reserve


Total


30.06.12







£m


£m


£m  



£m

 

Sovereign





 592 


 (15)


 577 


 550 

Financial institutions






 2 


 - 


 2 


 2 

Corporate






 436 


 (1)


 435 


 534 











  



Held at Amortised Cost



Loans and Advances as at 30.09.12


Total

 









Impairment


  


as at







Gross


Allowances


Total


30.06.12







£m


£m


£m  


£m

Sovereign






 37 


 - 


 37 


 38 

Financial institutions






 49 


 - 


 49 


 31 

Residential mortgages






 3,461 


 (25)


 3,436 


 3,510 

Corporate






 1,744 


 (254)


 1,490 


 1,619 

Other retail lending






 1,944 


 (192)


 1,752 


 1,879 
























Total


Total

Contingent Liabilities and Commitments







as at


as at

 











30.09.12


30.06.12











£m


£m

Sovereign










 - 


 4 

Financial institutions










 1 


 8 

Residential mortgages










 29 


 39 

Corporate










 1,015 


 1,240 

Other retail lending










 1,578 


 1,449 

 

- Sovereign

-    Largely AFS government bonds. No impairment and £15m (30 June 2012: £56m) loss held in the AFS reserve

- Residential mortgages

-    Fully secured on residential property with average marked to market LTVs of 76.6% (30 June 2012: 73.1%)

-    90 day arrears rates remained broadly stable at 0.6% (Jun 12: 0.6%) while annualised loan loss rates improved to 62bps (30 June 2012: 76bps)

-    CRL coverage of 21% (30 June 2012: 21%)

- Corporate

-    Net lending to corporates of £1,490m (30 June 2012: £1,619m), with CRLs of £442m (30 June 2012: £512m), impairment allowance of £254m (30 June 2012: £230m) and CRL coverage of 57% (30 June 2012: 45%)

-    Net lending to property and construction industry of £385m (30 June 2012: £306m) secured, in part, on real estate collateral, with CRLs of £258m (30 June 2012: £240m), impairment allowance of £120m (30 June 2012: £118m) and CRL coverage of 46% (30 June 2012: 49%)

- Other retail lending

-    £963m (30 June 2012: £988m) credit cards and unsecured loans. During Q3 12, arrears rates in cards and unsecured portfolios have improved while charge off rates have marginally deteriorated

-    CRL coverage of 74% (30 June 2012: 65%) driven by credit cards and unsecured loans exposure

 

 

  

 

 

 

 

 

 

 

 

 

 

 

1        'Cost' refers to the fair value of the asset at recognition, less any impairment booked. 'AFS Reserve' is the cumulative fair value gain or loss on the assets that is held in equity. 'Total' is the fair value of the assets at the balance sheet date.



Appendix IV - Group Exposures to Selected Countries

Ireland

Trading Portfolio


Derivatives

Designated

  



 

Fair Value through

Trading

Trading

Net






at FV

Total


Total

Profit and Loss

Portfolio

Portfolio

Trading


Gross

Gross

Cash

Net

through

as at


as at


Assets

Liabilities

Portfolio


Assets

Liabilities

Collateral

Derivatives

P&L

30.09.12


30.06.12


£m

£m

£m


£m

£m

£m

£m

£m

£m  


£m

Sovereign

 61 

 (61)

 - 


 - 

 - 

 - 

 - 

 2 

 2 


 - 

Financial institutions

 977 

 (29)

 948 


 4,805 

 (3,917)

 (888)

 - 

 491 

 1,439 


 1,795 

Corporate

 112 

 (50)

 62 


 282 

 (70)

 (117)

 95 

 77 

 234 


 238 











  













  


Total

Fair Value through Equity



Available for Sale Assets as at 30.09.121


as at

 






Cost

AFS Reserve


Total


30.06.12







£m


£m


£m  


£m

Sovereign






 8 


 - 


 8 


 211 

Financial institutions






 44 


 2 


 46 


 29 

Corporate






 3 


 - 


 3 


 3 







Held at Amortised Cost



Loans and Advances as at 30.09.12


Total

 









Impairment


  


as at







Gross


Allowances


Total


30.06.12







£m


£m


£m  


£m

Financial institutions






 2,462 


 (157)


 2,305 


 2,398 

Residential mortgages






 88 


 (10)


 78 


 91 

Corporate






 795 


 (9)


 786 


 868 

Other retail lending






 105 


 - 


 105 


 105 











  













Total


Total

Contingent Liabilities and Commitments







as at


as at

 











30.09.12


30.06.12











£m


£m

Financial institutions










 697 


 548 

Corporate










 810 


 1,013 

Other retail lending










 11 


 9 

 

- Sovereign

-    AFS exposure reduced to £8m (30 June 2012: £211m) due to the disposal of government bonds held for the purposes of interest rate hedging and liquidity, which have been replaced by bonds with alternative counterparties

- Financial institutions

-    Exposure focused on financial institutions with investment grade credit ratings

-    Exposure to Irish banks amounted to £68m (30 June 2012: £82m)

-    £1.2bn (30 June 2012: £0.9bn) of loans relate to issuers domiciled in Ireland whose principal business and exposures are outside of Ireland

- Corporate

-    £786m (30 June 2012: £868m) net loans and advances, including a significant proportion to other multinational entities domiciled in Ireland, whose principal businesses and exposures are outside of Ireland

-    The portfolio continues to perform and has not been impacted materially by the decline in the property sector 

  

 

 

 

 

 

 

 

 

 

 

 

1        'Cost' refers to the fair value of the asset at recognition, less any impairment booked. 'AFS Reserve' is the cumulative fair value gain or loss on the assets that is held in equity. 'Total' is the fair value of the assets at the balance sheet date.



Appendix IV - Group Exposures to Selected Countries

Greece

Trading Portfolio


Derivatives

Designated

  



 

Fair Value through

Trading

Trading

Net






at FV

Total


Total

Profit and Loss

Portfolio

Portfolio

Trading


Gross

Gross

Cash

Net

through

as at


as at


Assets

Liabilities

Portfolio


Assets

Liabilities

Collateral

Derivatives

P&L

30.09.12


30.06.12


£m

£m

£m


£m

£m

£m

£m

£m

£m  


£m

Sovereign

 1 

 (1)

 - 


 - 

 - 

 - 

 - 

 - 

 - 


 - 

Financial institutions

 1 

 - 

 1 


 1,227 

 (333)

 (894)

 - 

 - 

 1 


 1 

Corporate

 1 

 - 

 1 


 1 

 - 

 - 

 1 

 - 

 2 


 2 


























Total

Fair Value through Equity



Available for Sale Assets as at 30.09.121


as at

 






Cost

AFS Reserve


Total


30.06.12







£m


£m


£m  


£m

Sovereign






 1 


 - 


 1 


 1 







Held at Amortised Cost



Loans and Advances as at 30.09.12


Total

 









Impairment


  


as at







Gross


Allowances


Total


30.06.12







£m


£m


£m  


£m

Residential mortgages






 6 


 - 


 6 


 8 

Corporate






 57 


 - 


 57 


 57 

Other retail lending






 25 


 (9)


 16 


 19 
























Total


Total

Contingent Liabilities and Commitments







as at


as at

 











30.09.12


30.06.12











£m


£m

Corporate










 3 


 3 

Other retail lending










 11 


 17 

 

 

 

 

 

 

 

 

Cyprus

Trading Portfolio


Derivatives

Designated




 

Fair Value through

Trading

Trading

Net






at FV

Total


Total

Profit and Loss

Portfolio

Portfolio

Trading


Gross

Gross

Cash

Net

through

as at


as at


Assets

Liabilities

Portfolio


Assets

Liabilities

Collateral

Derivatives

P&L

30.09.12


30.06.12


£m

£m

£m


£m

£m

£m

£m

£m

£m


£m

Sovereign

 1 

 - 

 1 


 - 

 - 

 - 

 - 

 - 

 1 


 1 

Financial institutions

 3 

 - 

 3 


 94 

 (44)

 (50)

 - 

 - 

 3 


 6 

Corporate

 8 

 - 

 8 


 15 

 - 

 - 

 15 

 - 

 23 


 15 







Held at Amortised Cost



Loans and Advances as at 30.09.12


Total

 









Impairment




as at







Gross


Allowances


Total


30.06.12







£m


£m


£m


£m

Sovereign






 7 


 - 


 7 


 7 

Residential mortgages






 48 


 - 


 48 


 51 

Corporate






 125 


 (15)


 110 


 115 

Other retail lending






 18 


 - 


 18 


 6 














 











Total


Total

Contingent Liabilities and Commitments







as at


as at

 











30.09.12


30.06.12











£m


£m

Residential mortgages










 1 


 1 

Corporate










 87 


 101 

Other retail lending










 32 


 20 

 

 

   

 

 

 

1        Cost' refers to the fair value of the asset at recognition, less any impairment booked. 'AFS Reserve' is the cumulative fair value gain or loss on the assets that is held in equity. 'Total' is the fair value of the assets at the balance sheet date.


Appendix V - Credit Market Exposures

BarclaysCredit Market Exposures1

 

 

 

 

 

 

 

 

 

Nine Months Ended 30.09.12

 

  

As at 30.09.12

As at 30.06.12

As at 31.12.11

As at 30.09.12

As at 30.06.12

As at 31.12.11


Fair Value (Losses)/ Gains and Net Funding

Impairment (Charge)/ Release

Total (Losses)/ Gains

US Residential Mortgages

$m

$m

$m

£m

£m

£m


£m

£m

£m

ABS CDO Super Senior

2,479 

2,535 

2,844 

1,536 

1,615 

1,842 


(24)

(129)

(153)

US sub-prime and Alt-A

1,296 

1,621 

2,134 

803 

1,033 

1,381 


68 

(12)

56 

  

  

  

  

  

  

  




  

Commercial Mortgages

  

  

  

  

  

  




  

Commercial real estate loans and properties

4,553 

6,655 

8,228 

2,821 

4,240 

5,329 


78 

78 

Commercial Mortgage Backed Securities

489 

1,208 

1,578 

303 

770 

1,022 


135 

135 

Monoline protection on CMBS

10 

14 


  

  

  

  

  

  

  




  

Other Credit Market  

  

  

  

  

  

  




  

Leveraged Finance

6,035 

6,090 

6,278 

3,739 

3,880 

4,066 


(42)

(35)

SIVs, SIV -Lites and CDPCs


(1)

(1)

Monoline protection on CLO and other

1,078 

1,351 

1,729 

668 

861 

1,120 


(30)

(30)

CLO and Other assets