TIDMBARC
RNS Number : 6734N
Barclays PLC
30 July 2014
Barclays PLC
Results Announcement
30 June 2014
Table of Contents
Results Announcement Page
Performance Highlights 3-4
Group Chief Executive's Review 5
Group Finance Director's Review 6-8
Condensed Consolidated Financial Statements 9-13
Results by Business
* Personal and Corporate Banking 14-15
* Barclaycard 16-17
* Africa Banking 18-19
* Investment Bank 20-22
* Head Office 23-25
* Barclays Non-Core 26-27
Barclays Results by Quarter 28-29
Performance Management
* Returns and Equity 30-31
* Margins and Balances 32
Risk Management
* Overview 33
* Funding Risk - Liquidity 33-36
* Funding Risk - Capital 37-42
* Credit Risk 43-50
* Market Risk 51-52
Statement of Directors' Responsibilities 53
Independent Auditors' Review Report to Barclays PLC 54
Financial Statement Notes 55-88
Shareholder Information 89-90
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 six months to 30 June 2014 to the
corresponding six months of 2013 and balance sheet analysis as at
30 June with comparatives relating to 31 December 2013. The
abbreviations 'GBPm' and 'GBPbn' 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; 'EURm' and 'EURbn' represent millions and
thousands of millions of Euros respectively; and 'C$m' and 'C$bn'
represent millions and thousands of millions of Canadian Dollars
respectively.
The comparatives have been restated to reflect the
implementation of the Group structure changes and the reallocation
of elements of the Head Office results under the revised business
structure. These restatements were detailed in our announcement on
10 July 2014, accessible at
http://www.barclays.com/barclays-investor-relations/results-and-reports.
Balance sheet comparative figures have also been restated to adopt
the offsetting amendments to IAS 32, Financial Instruments:
Presentation.
Adjusted profit before tax, adjusted attributable profit and
adjusted performance metrics have been presented to provide a more
consistent basis for comparing business performance between
periods. Adjusting items are considered to be significant and not
representative of the underlying business performance. Items
excluded from the adjusted measures are: the impact of own credit;
the provision for Payment Protection Insurance redress payments and
claims management costs (PPI redress); the provision for interest
rate hedging products redress and claims management costs (interest
rate hedging products redress); and goodwill impairment. As
Management reviews adjusting items at a Group level, segmental
results are presented excluding these items in accordance with IFRS
8: Operating Segments. Statutory and adjusted performance is
reconciled at a Group level only.
Relevant terms that are used in this document but are not
defined under applicable regulatory guidance or International
Financial Reporting Standards (IFRS) are explained in the Results
glossary that can be accessed at www.Barclays.com/results.
The information in this announcement, which was approved by the
Board of Directors on 29 July 2014 does not comprise statutory
accounts within the meaning of Section 434 of the Companies Act
2006. Statutory accounts for the year ended 31 December 2013, 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 (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.
These results will be furnished as a Form 6-K to the SEC as soon
as practicable following their publication. Once furnished with the
SEC, copies of the Form 6-K will also be available from the
Barclays Investor Relations website
www.barclays.com/investorrelations and from the SEC's website at
http://www.sec.gov.
Forward-looking statements
This document contains certain forward-looking statements within
the meaning of Section 21E of the US Securities Exchange Act of
1934, as amended, and Section 27A of the US Securities Act of 1933,
as amended, with respect to certain of the Group's plans and its
current goals and expectations relating to its future financial
condition and performance. Barclays cautions readers that no
forward-looking statement is a guarantee of future performance and
that actual results could differ materially from those contained in
the forward-looking statements. These forward-looking statements
can be identified by the fact that they do not relate only to
historical or current facts. Forward-looking statements sometimes
use words such as 'may', 'will', 'seek', 'continue', 'aim',
'anticipate', 'target', 'projected', 'expect', 'estimate',
'intend', 'plan', 'goal', 'believe', 'achieve' or other words of
similar meaning. Examples of forward-looking statements include,
among others, statements regarding the Group's future financial
position, income growth, assets, impairment charges and provisions,
business strategy, capital, leverage and other regulatory ratios,
payment of dividends (including dividend pay-out ratios), projected
levels of growth in the banking and financial markets, projected
costs or savings, original and revised commitments and targets in
connection with the Transform Programme and Group Strategy Update,
run-down of assets and businesses within Barclays Non-Core,
estimates of capital expenditures and plans and objectives for
future operations, projected employee numbers and other statements
that are not historical fact. By their nature, forward-looking
statements involve risk and uncertainty because they relate to
future events and circumstances. These may be affected by changes
in legislation, the development of standards and interpretations
under International Financial Reporting Standards (IFRS), evolving
practices with regard to the interpretation and application of
accounting and regulatory standards, the outcome of current and
future legal proceedings and regulatory investigations, future
levels of conduct provisions, the policies and actions of
governmental and regulatory authorities, geopolitical risks and the
impact of competition. In addition, factors including (but not
limited to) the following may have an effect: capital, leverage and
other regulatory rules (including with regard to the future
structure of the Group) applicable to past, current and future
periods; UK, US, Africa, Eurozone and global macroeconomic and
business conditions; the effects of continued volatility in credit
markets; market related risks such as changes in interest rates and
foreign exchange rates; effects of changes in valuation of credit
market exposures; changes in valuation of issued securities;
volatility in capital markets; changes in credit ratings of the
Group; the potential for one or more countries exiting the
Eurozone; the implementation of the Transform Programme; and the
success of future acquisitions, disposals and other strategic
transactions. A number of these influences and factors are beyond
the Group's control. As a result, the Group's actual future
results, dividend payments, and capital and leverage ratios may
differ materially from the plans, goals, and expectations set forth
in the Group's forward-looking statements. Additional risks and
factors are identified in our filings with the SEC including our
Annual Report on Form 20-F for the fiscal year ended 31 December
2013, which are available on the SEC's website at
http://www.sec.gov.
Any forward-looking statements made herein speak only as of the
date they are made and it should not be assumed that they have been
revised or updated in the light of new information or future
events. Except as required by the Prudential Regulation Authority,
the Financial Conduct Authority, the London Stock Exchange plc (the
LSE) or applicable law, Barclays expressly disclaims any obligation
or undertaking to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change
in Barclays' expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is
based. The reader should, however, consult any additional
disclosures that Barclays has made or may make in documents it has
published or may publish via the Regulatory News Service of the LSE
and/or has filed or may file with the SEC.
Performance Highlights
Income Statement
Group performance
-- Adjusted profit before tax was down 7% to GBP3,349m largely
driven by currency movements and a reduction in the Investment Bank
profitability, partially offset by improvements in Personal and
Corporate Banking (PCB), Barclaycard, and Barclays Non-Core
(BNC)
-- Adjusted income decreased 12% to GBP13,332m whilst impairment
reduced by 33% to GBP1,086m, resulting in a 9% decrease in net
operating income to GBP12,246m
-- Adjusted operating expenses were down 9% to GBP8,877m,
including costs to achieve Transform (CTA) of GBP494m (2013:
GBP640m) and litigation and conduct charges of GBP211m (2013:
GBP126m), reflecting savings associated with prior Transform
initiatives and currency movements
-- Statutory profit before tax was GBP2,501m (2013: GBP1,677m),
reflecting an additional GBP900m of provisions for PPI redress
(2013: GBP1,350m) and the non-recurrence of a provision for
interest rate hedging products redress compared to the prior year
(2013: GBP650m)
-- Adjusted Group attributable profit was GBP1,760m (2013:
GBP2,055m). As a result adjusted Group return on average
shareholders' equity reduced to 6.5% (2013: 7.8%) reflecting the
equity raised from the rights issue in Q413 and the decrease in
Core profit before tax partially offset by improvements in BNC
Core performance
-- Profit before tax was down 10% to GBP3,840m, as improved
performance across the majority of the Core businesses was more
than offset by a reduction in Investment Bank profit
-- Income decreased 7% to GBP12,674m, reflecting a 18% reduction
in the Investment Bank, driven by a decrease in Markets and a
reduction in Africa Banking due to currency movements, partially
offset by growth in Barclaycard and PCB. Net interest income for
PCB, Barclaycard and Africa Banking increased 3% to GBP5,564m
reflecting strong savings, mortgage and card growth
-- Credit impairment charges improved 13% to GBP937m. This
reflected lower impairments in PCB as the improving economic
environment had a positive impact on the majority of retail and
wholesale portfolios in the UK and lower impairment in Africa
Banking mortgages on a constant currency basis
-- Operating expenses decreased GBP370m to GBP7,944m, reflecting
improvements across each of the businesses as a result of Transform
initiatives and currency movements partially offset by higher CTA
charges of GBP453m (2013: GBP223m) and higher litigation and
conduct charges of GBP177m (2013: GBP86m)
-- Core return on equity decreased to 11.0% (2013: 15.1%)
Non-Core performance
-- Loss before tax reduced by 27% to GBP491m. This reflected
lower income, following asset disposals and risk reductions, to
GBP658m (2013: GBP1,474m), more than offset by a GBP407m
improvement in impairment to GBP149m and a 36% reduction in
operating expenses to GBP934m including lower CTA of GBP41m (2013:
GBP418m)
-- Non-Core return on equity dilution improved to 4.5% (2013:
7.3%)
Balance Sheet, Leverage and Capital Management
-- Fully loaded CRD IV Common Equity Tier 1 (CET1) ratio
increased to 9.9% (2013: 9.1%) mainly driven by RWA reductions in
BNC
-- The PRA leverage ratio increased to 3.4% (2013: 3.0%),
reflecting a reduction in the PRA leverage exposure of GBP99bn to
GBP1,266bn and an increase in eligible PRA adjusted Tier 1 Capital
to GBP43.2bn (2013: GBP40.5bn) principally from an exchange of
existing T1 instruments into new AT1 securities. The estimated BCBS
270 leverage ratio was 3.4%
-- Net tangible asset value per share decreased to 279p (2013:
283p) and net asset value per share decreased to 327p (2013: 331p)
primarily due to an increase in the number of shares in issue and a
decrease in currency translation reserves
Performance Highlights
Barclays Group Results
for the six months
ended Adjusted Statutory
30.06.14 30.06.13 YoY 30.06.14 30.06.13 YoY
GBPm GBPm % Change GBPm GBPm % Change
================================ ======== ======== ======== ========== ========== ========
Total income net of
insurance claims 13,332 15,071 (12) 13,384 15,157 (12)
Credit impairment charges
and other provisions (1,086) (1,631) 33 (1,086) (1,631) 33
================================ ======== ======== ======== ========== ========== ========
Net operating income 12,246 13,440 (9) 12,298 13,526 (9)
Operating expenses (8,172) (9,015) 9 (8,172) (9,015) 9
Litigation and conduct(1) (211) (126) (67) (1,111) (2,126) 48
Costs to achieve Transform (494) (640) 23 (494) (640) 23
================================ ======== ======== ======== ========== ========== ========
Total operating expenses (8,877) (9,781) 9 (9,777) (11,781) 17
Other net expense (20) (68) 71 (20) (68) 71
================================ ======== ======== ======== ========== ========== ========
Profit before tax 3,349 3,591 (7) 2,501 1,677 49
Tax charge (1,109) (1,124) 1 (895) (594) (51)
================================ ======== ======== ======== ========== ========== ========
Profit after tax 2,240 2,467 (9) 1,606 1,083 48
Non-controlling interests (390) (412) 5 (390) (412) 5
Other equity interests(2) (90) - (90) -
================================ ======== ======== ======== ========== ========== ========
Attributable profit 1,760 2,055 (14) 1,126 671 68
Performance Measures
================================ ======== ======== ======== ========== ========== ========
Return on average tangible
shareholders' equity(2) 7.5% 9.1% 4.9% 3.0%
Return on average shareholders'
equity(2) 6.5% 7.8% 4.2% 2.6%
Cost: income ratio 67% 65% 73% 78%
Compensation: net operating
income ratio 38% 38% 38% 38%
Loan loss rate 45bps 63bps 45bps 63bps
Basic earnings per
share(2) 10.9p 15.2p 7.0p 5.0p
Dividend per share 2.0p 2.0p 2.0p 2.0p
Balance Sheet and Leverage 30.06.14 31.12.13
================================ ======== ======== ======== ========== ========== ========
Net asset value per
share 327p 331p
Net tangible asset
value per share 279p 283p
PRA leverage exposure GBP1,266bn GBP1,365bn
Estimated BCBS 270 GBP1,353bn n/a
leverage exposure
Capital Management
================================ ======== ======== ======== ========== ========== ========
CRD IV fully loaded
Common equity tier
1 ratio(3) 9.9% 9.1%
Common equity tier GBP40.8bn GBP40.4bn
1 capital
PRA adjusted tier 1 GBP43.2bn GBP40.5bn
capital
Risk weighted assets(3) GBP411bn GBP442bn
PRA leverage ratio 3.4% 3.0%
Estimated BCBS 270 3.4% n/a
leverage ratio
Funding and Liquidity
================================ ======== ======== ======== ========== ========== ========
Group liquidity pool GBP134bn GBP127bn
Estimated CRD IV liquidity
coverage ratio 107% 96%
Loan: deposit ratio(4) 92% 91%
Adjusted Profit Reconciliation 30.06.14 30.06.13
================================ ======== ======== ======== ========== ========== ========
Adjusted profit before
tax 3,349 3,591
Own credit 52 86
Provision for PPI redress (900) (1,350)
Provision for interest
rate hedging products
redress - (650)
Statutory profit before
tax 2,501 1,677
1 Litigation and conduct charges include regulatory fines,
litigation settlements and conduct related customer redress.
2 The profit after tax attributable to other equity holders of
GBP90m (2013: GBPnil) is offset by a tax credit recorded in
reserves of GBP19m (2013: GBPnil). The net amount of GBP71m, along
with non-controlling interests (NCI) is deducted from profit after
tax in order to calculate earnings per share, return on average
tangible shareholders' equity and return on average shareholders'
equity.
3 Following the full implementation of CRD IV reporting in 2014,
the previously reported 31 December 2013 RWAs have been revised by
GBP6.9bn to GBP442bn and the fully loaded CET1 ratio revised by
(0.2)% to 9.1%. These additional RWAs have been included within
Head Office and Other Operations.
4 Loan: deposit ratio for PCB, Barclaycard, Africa Banking and Non-Core retail.
Performance Highlights
Barclays Core and Non-Core
Results
for the six months
ended
Barclays Core Barclays Non-Core
30.06.14 30.06.13 % Change 30.06.14 30.06.13 % Change
GBPm GBPm GBPm GBPm
================================ ======== ======== ======== ======== ======== ========
Total income net of
insurance claims 12,674 13,597 (7) 658 1,474 (55)
Credit impairment charges
and other provisions (937) (1,075) 13 (149) (556) 73
================================ ======== ======== ======== ======== ======== ========
Net operating income 11,737 12,522 (6) 509 918 (45)
Operating expenses (7,314) (8,005) 9 (860) (1,010) 15
Litigation and conduct (177) (86) (33) (39) 15
Costs to achieve Transform (453) (223) (41) (418) 90
================================ ======== ======== ======== ======== ======== ========
Total operating expenses (7,944) (8,314) 4 (934) (1,467) 36
Other net income/(expense) 47 56 (16) (66) (124) 47
================================ ======== ======== ======== ======== ======== ========
Profit/(loss) before
tax 3,840 4,264 (10) (491) (673) 27
Attributable profit/(loss) 2,224 2,675 (17) (464) (619) 25
Performance Measures
================================ ======== ======== ======== ======== ======== ========
Return on average tangible
shareholders' equity(1) 13.5% 19.3% (6.0%) (10.2%)
Return on average shareholders'
equity(1) 11.0% 15.1% (4.5%) (7.3%)
Cost: income ratio 63% 61% 142% 100%
Basic earnings per
share contribution 13.8p 19.8p (2.9p) (4.6p)
Capital Management 30.06.14 31.12.13 30.06.14 31.12.13
================================ ======== ======== ======== ======== ======== ========
CRD IV fully loaded
Risk weighted assets GBP324bn GBP333bn GBP87bn GBP110bn
Average allocated tangible GBP33bn GBP29bn GBP14bn GBP16bn
equity
Average allocated equity GBP41bn GBP37bn GBP14bn GBP17bn
Income by Business 30.06.14 30.06.13
GBPm GBPm % Change
=============================== ======== ======== ========
Personal and Corporate Banking 4,361 4,305 1
Barclaycard 2,124 2,019 5
Africa Banking 1,773 2,055 (14)
Investment Bank 4,257 5,222 (18)
Head Office 159 (4)
=============================== ======== ======== ========
Barclays Core 12,674 13,597 (7)
Barclays Non-Core 658 1,474 (55)
=============================== ======== ======== ========
Barclays Group adjusted total
income 13,332 15,071 (12)
Profit/(Loss) Before Tax 30.06.14 30.06.13
by Business
GBPm GBPm % Change
=============================== ======== ======== ========
Personal and Corporate Banking 1,468 1,197 23
Barclaycard 764 616 24
Africa Banking 484 547 (12)
Investment Bank 1,058 1,951 (46)
Head Office 66 (47)
=============================== ======== ======== ========
Barclays Core 3,840 4,264 (10)
Barclays Non-Core (491) (673) 27
=============================== ======== ======== ========
Barclays Group adjusted profit
before tax 3,349 3,591 (7)
1 Return on average equity and average tangible equity for
Barclays Non-Core represents its impact on the Group, being the
difference between Barclays Group returns and Barclays Core
returns.
Group Chief Executive Officer's Review
"In our strategy announcement on 8 May, we committed to
simplify, focus and rebalance the Group to deliver higher and more
sustainable returns across the cycle, while structurally reducing
our cost base and strengthening our capital position.
We are making encouraging progress in executing this plan.
Profits before tax in Personal & Corporate Banking and
Barclaycard were up 23% and 24% respectively. Africa Banking also
delivered a good performance with profits increasing 13% on a
constant currency basis. Performance in the Investment Bank was
impacted by the repositioning underway as well as difficult trading
conditions in the quarter, but it is where we expected it to be at
this point. The strong performance of our Banking division is
demonstrating the attractiveness of our new origination-led
strategy to our clients.
I am pleased with the very good start made in managing down
assets in our new non-core unit, with risk-weighted assets reducing
by GBP22bn in the first half. The return on equity drag has also
dropped from 7.3% to 4.5% in the quarter, placing us well on track
to meet our 3% 2016 target.
Structural cost reduction is vital to achieving strong returns,
and we continued to make progress on reducing operating expenses
while maintaining controls and improving customer and client
experience. Headcount across the Group is now at the lowest level
since 2007 and adjusted operating expenses, including CTA, reduced
nearly GBP1bn reflecting cost reductions across all businesses in
the half.
The Transform strategy we have been pursuing since February 2013
was designed to create a business which can accommodate external
pressures, including the impact of legacy issues, as well as to
deliver sustainable performance. Notwithstanding the additional
provision taken for Payment Protection Insurance redress, we
continued to build our capital strength, with the CRD IV CET1 ratio
increasing to 9.9% as at 30 June, keeping us on track to achieve
our target of exceeding 11% by 2016. The PRA leverage ratio also
increased to 3.4%, as a result of on-going leverage exposure
reductions and a successful liability management exercise in June
which resulted in the issuance of GBP2.3bn of new AT1 securities.
The estimated BCBS 270 leverage ratio was 3.4%.
As I reflect on the half, I am pleased with our performance,
excited by the potential for the Group, and confident in our plans
to become the 'Go-To' bank."
Antony Jenkins, Group Chief Executive
Group Finance Director's Review
Income Statement
Group performance
-- Adjusted profit before tax was down 7% to GBP3,349m largely
driven by currency movements and a reduction in the Investment Bank
profitability, partially offset by improvements in Personal and
Corporate Banking (PCB), Barclaycard, and Barclays Non-Core
(BNC)
-- Adjusted income decreased 12% to GBP13,332m whilst impairment
reduced by 33% to GBP1,086m, resulting in a 9% decrease in net
operating income to GBP12,246m
-- Adjusted operating expenses were down 9% to GBP8,877m,
including costs to achieve Transform (CTA) of GBP494m (2013:
GBP640m) and litigation and conduct charges of GBP211m (2013:
GBP126m), reflecting savings associated with prior Transform
initiatives and currency movements
-- Statutory profit before tax was GBP2,501m (2013: GBP1,677m),
reflecting an additional GBP900m of provisions for PPI redress
(2013: GBP1,350m) and the non-recurrence of a provision for
interest rate hedging products redress compared to the prior year
(2013: GBP650m)
-- The effective tax rate on adjusted profit before tax
increased to 33.1% (2013: 31.3%). The effective tax rate on
statutory profit before tax remained constant at 35.8% (2013:
35.4%).
-- Adjusted Group attributable profit was GBP1,760m (2013:
GBP2,055m), resulting in an adjusted Group return on average
shareholders' equity of 6.5% (2013: 7.8%) reflecting the equity
raised from the rights issue in Q413 and the decrease in Core
profit before tax partially offset by improvements in BNC
performance
Core Performance
-- Profit before tax was down 10% to GBP3,840m, as improved
performance across the majority of the Core businesses was more
than offset by a reduction in Investment Bank profit
-- Income decreased 7% to GBP12,674m, reflecting a 18% reduction
in the Investment Bank, driven by a decrease in Markets, and a
reduction in Africa Banking due to currency movements, partially
offset by growth in Barclaycard and PCB
- Net interest income increased 10% to GBP5,899m driven by
strong savings and mortgage growth in PCB, volume growth in
Barclaycard, and lower funding costs, partially offset by a
reduction in Africa Banking due to currency movements
- Investment Bank income was down 18% to GBP4,257m driven by a
22% decrease in Markets income, partially offset by a 5% increase
in Banking income
-- Credit impairment charges improved 13% to GBP937m. This reflected:
- Lower impairments in PCB as an improving UK economic
environment has a positive impact on the majority of retail and
wholesale portfolios in the UK
- Lower impairment in Africa Banking mortgages, on a constant
currency basis, driven by improvements mainly in the South Africa
mortgages portfolio
- Stable impairment in Barclaycard as volume growth was largely offset by currency movements
- Releases across a number of counterparties coupled with low
level of new charges in Investment Bank
-- Operating expenses decreased GBP370m to GBP7,944m, reflecting
improvements across each of the businesses as a result of Transform
initiatives and currency movements partially offset by higher CTA
charges of GBP453m (2013: GBP223m) and higher litigation and
conduct charges of GBP177m (2013: GBP86m)
-- Core return on equity decreased to 11.0% (2013: 15.1%)
Non-Core performance
-- Loss before tax reduced by 27% to GBP491m. This reflected
lower income, following asset disposals and risk reductions, to
GBP658m (2013: GBP1,474m), more than offset by a GBP407m
improvement in impairment to GBP149m and a 36% reduction in
operating expenses to GBP934m including lower CTA of GBP41m (2013:
GBP418m)
-- Non-Core return on equity dilution improved to 4.5% (2013:
7.3%)
Group Finance Director's Review
Balance Sheet and Leverage
Balance Sheet
-- Total assets as at 30 June 2014 decreased by 2% to GBP1,315bn
compared to December 2013
- Derivative assets decreased by GBP17bn primarily due to
weakening of USD, tightening of credit spreads, reduced activity
and balance sheet reduction initiatives, offset by a decrease in
major forward interest rates
- Reverse repurchase agreements decreased by GBP15bn primarily
driven by lower matched book trading due to a focus on deleveraging
the balance sheet
-- Total loans and advances were GBP486bn (2013: GBP474bn) with
a GBP13bn increase due to higher settlement balances, GBP6bn growth
in PCB through UK mortgage lending and GBP2bn growth in
Barclaycard. These were offset by a GBP7bn reduction in Non Core
assets as lending was managed down
-- Customer accounts increased by 3% to GBP444bn due to an
increase in settlement balances
-- Total shareholders' equity including non-controlling
interests, was GBP65bn (2013: GBP64bn). Excluding non-controlling
interests, shareholders' equity increased GBP2.6bn to GBP58bn,
primarily reflecting a GBP2.3bn increase in other equity
instruments AT1 instruments were issued to investors in exchange
for the cancellation of preference shares and subordinated debt
instruments
-- Net asset value per share was 327p (2013: 331p) and net
tangible asset value per share was 279p (2013: 283p). This decrease
was mainly attributable to the increase in the total number of
shares in issue and a GBP0.9bn decrease in currency translation
reserve as GBP strengthened
Leverage exposure
-- The PRA leverage exposure reduced by GBP99bn to GBP1,266bn
driven by a reduction in potential future exposures (PFEs) on
derivatives, securities financing transactions (SFTs) and currency
movements, partially offset by an increase in settlement balances.
The estimated Basel Committee on Banking Supervision (BCBS)
leverage exposure was GBP1,353bn
Capital Management
-- Fully loaded CRD IV CET1 ratio increased to 9.9% (2013: 9.1%)
primarily due to RWA reductions
-- CRD IV RWAs reduced GBP31bn to GBP411bn, primarily driven by
reductions in BNC of GBP22bn, reflecting rundown and exit of
securities and reductions in derivatives risk
-- Fully loaded CRD IV CET1 capital increased by GBP0.4bn to
GBP40.8bn as a result of retained earnings generated
-- The PRA leverage ratio increased to 3.4% (2013: 3.0%),
reflecting a reduction in the PRA leverage exposure of GBP99bn and
an increase in eligible PRA adjusted Tier 1 Capital to GBP43.2bn
(2013: GBP40.5bn). Barclays exceeded the minimum of 3% requested by
the PRA as at 30 June 2014. From 1 July 2014 the PRA expects
Barclays to meet the 3% minimum on a fully loaded BCBS 270 basis.
The estimated BCBS leverage ratio on this basis was 3.4% as at 30
June 2014
Group Finance Director's Review
Funding and Liquidity
-- The Group liquidity pool was GBP134bn (2013: GBP127bn),
remaining within the expected normal operational range, while
maintaining compliance with internal liquidity risk appetite and
external regulatory requirements
-- The pool consists mainly of cash and deposits with central
banks and high quality government bonds
-- The estimated Liquidity Coverage Ratio (LCR) was 107% (2013:
96%) based upon the CRD IV rules, as implemented by the European
Banking Authority (EBA). This is equivalent to a surplus of GBP9bn
above the 100% ratio (2013: shortfall of GBP6bn). The Group
estimated LCR based on the Basel Standards published in January
2013 was 112% (2013: 102%)
-- The loan to deposit ratio for PCB, Africa Banking and
Barclaycard remained stable at 92% (2013: 91%). The loan to deposit
ratio for the Group was broadly unchanged at 100% (2013: 101%)
-- Total wholesale funding outstanding (excluding repurchase
agreements) was GBP179bn (2013: GBP186bn), of which GBP86bn (2013:
GBP82bn) matures in less than one year and GBP22bn (2013: GBP20bn)
matures within one month
-- The Group issued GBP9bn of term funding net of early
redemptions during 2014. Additionally, GBP6bn of funding was raised
through participation in the Bank of England's Funding for Lending
Scheme. Barclays has GBP12bn of term funding maturing in the
reminder of 2014 and GBP24bn in 2015. The Group expects to issue
more public wholesale debt in the reminder of 2014 and 2015, in
order to maintain a stable and diverse funding base by type,
currency and distribution channel
Dividends
-- A second interim dividend of 1.0p will be paid on 19
September 2014
Outlook
-- 2014 will be a transition year as we continue to make
investments and focus on balance sheet optimisation and cost
reduction
Tushar Morzaria, Group Finance Director
Condensed Consolidated Financial Statements
Condensed Consolidated Income Statement (Unaudited)
Half Year Half Year Half Year
Ended Ended Ended
Continuing Operations 30.06.14 31.12.13 30.06.13
Notes(1) GBPm GBPm GBPm
========================================== ======== ========= ========= =========
Net interest income 6,082 6,023 5,577
Net fee and commission income 4,256 4,335 4,396
Net trading income 2,575 1,979 4,574
Net investment income 356 263 417
Net premiums from insurance contracts 336 345 387
Other income 19 74 74
========================================== ======== ========= ========= =========
Total income 13,624 13,019 15,425
Net claims and benefits incurred
on insurance contracts (240) (241) (268)
========================================== ======== ========= ========= =========
Total income net of insurance claims 13,384 12,778 15,157
Credit impairment charges and other
provisions (1,086) (1,440) (1,631)
========================================== ======== ========= ========= =========
Net operating income 12,298 11,338 13,526
Staff costs 2 (5,730) (5,724) (6,431)
Administration and general expenses 3 (3,147) (4,467) (3,350)
========================================== ======== ========= ========= =========
Operating expenses excluding provisions
for PPI and interest rate hedging
products redress (8,877) (10,191) (9,781)
Provision for PPI redress 11 (900) - (1,350)
Provision for interest rate hedging
products redress 11 - - (650)
========================================== ======== ========= ========= =========
Operating expenses (9,777) (10,191) (11,781)
(Loss)/profit on disposal of undertakings
and share of results of
associates and joint ventures (20) 44 (68)
========================================== ======== ========= ========= =========
Profit before tax 2,501 1,191 1,677
Tax 4 (895) (977) (594)
========================================== ======== ========= ========= =========
Profit after tax : 1,606 214 1,083
Attributable to:
========================================== ======== ========= ========= =========
Ordinary equity holders of the parent: 1,126 (131) 671
Other equity holders(2) 90 - -
========================================== ======== ========= ========= =========
Total equity holders of the parent(2) 1,216 (131) 671
Non-controlling interests 5 390 345 412
========================================== ======== ========= ========= =========
Profit after tax 1,606 214 1,083
Earnings per Share from Continuing
Operations
========================================== ======== ========= ========= =========
Basic earnings/(loss) per ordinary
share(2) 6 7.0p (0.9p) 5.0p
Diluted earnings/(loss) per ordinary
share(2) 6 7.0p (0.9p) 4.8p
1 For notes to the Financial Statements see pages 55 to 88.
2 The profit after tax attributable to other equity holders of
GBP90m (2013: GBPnil) is offset by a tax credit recorded in
reserves of GBP19m (2013: GBPnil). The net amount of GBP71m, along
with NCI, is deducted from profit after tax in order to calculate
earnings per share.
Condensed Consolidated Financial Statements
Condensed Consolidated Statement of Profit or Loss and other Comprehensive
Income (Unaudited)
Half Year Half Year Half Year
Ended Ended Ended
Continuing Operations 30.06.14 31.12.13 30.06.13
Notes(1) GBPm GBPm GBPm
==================================== ======== ========= ========= =========
Profit after tax 1,606 214 1,083
Other comprehensive loss that may
be recycled to profit or loss:
==================================== ======== ========= ========= =========
Currency translation reserve 15 (1,056) (2,278) 511
Available for sale reserve 15 341 (288) (94)
Cash flow hedge reserve 15 254 (753) (1,137)
Other (53) (57) 20
==================================== ======== ========= ========= =========
Total comprehensive loss that may
be recycled to profit or loss (514) (3,376) (700)
Other comprehensive gain/(loss) not
recycled to profit or loss:
==================================== ======== ========= ========= =========
Retirement benefit remeasurements 12 236 (478) (37)
Other comprehensive loss for the
period (278) (3,854) (737)
Total comprehensive profit/(loss)
for the period 1,328 (3,640) 346
Attributable to:
==================================== ======== ========= ========= =========
Equity holders of the parent 1,064 (3,638) 232
Non-controlling interests 264 (2) 114
==================================== ======== ========= ========= =========
Total comprehensive profit/(loss)
for the period 1,328 (3,640) 346
1 For notes, see pages 55 to 88.
Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheet (Unaudited)
As at As at
Assets 30.06.14 31.12.13
Notes(1) GBPm GBPm
================================================= ========= ========== ==========
Cash and balances at central banks 44,047 45,687
Items in the course of collection from
other banks 1,746 1,282
Trading portfolio assets 128,812 133,069
Financial assets designated at fair value 39,746 38,968
Derivative financial instruments 8 333,220 350,300
Loans and advances to banks 43,448 39,422
Loans and advances to customers 442,549 434,237
Reverse repurchase agreements and other
similar secured lending 171,934 186,779
Available for sale investments 87,224 91,756
Current and deferred tax assets 4 4,461 5,026
Prepayments, accrued income and other
assets 5,092 4,415
Investments in associates and joint ventures 704 653
Goodwill 4,829 4,878
Intangible assets 3,049 2,807
Property, plant and equipment 3,983 4,216
Retirement benefit assets 12 55 133
================================================= ========= ========== ==========
Total assets 1,314,899 1,343,628
Liabilities
================================================= ========= ========== ==========
Deposits from banks 62,167 55,615
Items in the course of collection due
to other banks 1,958 1,359
Customer accounts 443,638 431,998
Repurchase agreements and other similar
secured borrowing 173,669 196,748
Trading portfolio liabilities 56,815 53,464
Financial liabilities designated at fair
value 62,248 64,796
Derivative financial instruments 8 326,501 347,118
Debt securities in issue 83,832 86,693
Accruals, deferred income and other liabilities 13,128 12,934
Current and deferred tax liabilities 4 1,429 1,415
Subordinated liabilities 10 19,301 21,695
Provisions 11 3,445 3,886
Retirement benefit liabilities 12 1,743 1,958
================================================= ========= ========== ==========
Total liabilities 1,249,874 1,279,679
Equity
================================================= ========= ========== ==========
Called up share capital and share premium 13 20,655 19,887
Other reserves 15 (154) 249
Retained earnings 33,241 33,186
================================================= ========= ========== ==========
Shareholders' equity attributable to ordinary
shareholders of parent 53,742 53,322
Other equity instruments 14 4,326 2,063
================================================= ========= ========== ==========
Total equity excluding non-controlling
interests 58,068 55,385
Non-controlling interests 5 6,957 8,564
================================================= ========= ========== ==========
Total equity 65,025 63,949
1 For notes, see pages 55 to 88.
Condensed Consolidated Financial Statements
Condensed Consolidated Statement of Changes in Equity (Unaudited)
Called
up Share
Capital Other
Half Year Ended and Share Equity Other Retained Non-controlling Total
30.06.14 Premium(1) Instruments(1) Reserves(1) Earnings Total Interests(2) Equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
===================== =============== =============== ============ ========= ======= =============== ==========
Balance at 1 January
2014 19,887 2,063 249 33,186 55,385 8,564 63,949
Profit after tax - 90 - 1,126 1,216 390 1,606
Currency translation
movements - - (941) - (941) (115) (1,056)
Available for sale
investments - - 345 - 345 (4) 341
Cash flow hedges - - 260 - 260 (6) 254
Retirement benefit
remeasurements - - - 237 237 (1) 236
Other - - - (53) (53) - (53)
===================== =============== =============== ============ ========= ======= =============== ==========
Total comprehensive
income
for the year - 90 (336) 1,310 1,064 264 1,328
Issue of new ordinary
shares 64 - - - 64 - 64
Issue of shares under
employee
share schemes 704 - - 379 1,083 - 1,083
Issue and exchange of
equity
instruments - 2,263 - (155) 2,108 (1,527) 581
Other equity
instruments
coupons paid - (90) - 19 (71) - (71)
Increase in treasury
shares - - (842) - (842) - (842)
Vesting of shares
under
employee share
schemes - - 775 (775) - - -
Dividends paid - - - (728) (728) (334) (1,062)
Other reserve
movements - - - 5 5 (10) (5)
===================== =============== =============== ============ ========= ======= =============== ==========
Balance at 30 June
2014 20,655 4,326 (154) 33,241 58,068 6,957 65,025
Half Year Ended
31.12.13
===================== =============== =============== ============ ========= ======= =============== ==========
Balance at 1 July
2013 13,988 - 3,233 33,862 51,083 9,054 60,137
(Loss)/profit after
tax - - - (131) (131) 345 214
Currency translation
movements - - (1,951) - (1,951) (327) (2,278)
Available for sale
investments - - (283) - (283) (5) (288)
Cash flow hedges - - (746) - (746) (7) (753)
Retirement benefit
remeasurements - - - (470) (470) (8) (478)
Other - - - (57) (57) - (57)
===================== =============== =============== ============ ========= ======= =============== ==========
Total comprehensive
income
for the period - - (2,980) (658) (3,638) (2) (3,640)
Issue of new ordinary
shares 5,870 - - - 5,870 - 5,870
Issue of shares under
employee
share schemes 29 - - 352 381 - 381
Issue of other equity
instruments - 2,063 - - 2,063 - 2,063
Increase in treasury
shares - - (17) - (17) - (17)
Vesting of shares
under
employee share
schemes - - 13 (13) - - -
Dividends paid - - - (289) (289) (490) (779)
Other reserve
movements - - - (68) (68) 2 (66)
===================== =============== =============== ============ ========= ======= =============== ==========
Balance at 31
December
2013 19,887 2,063 249 33,186 55,385 8,564 63,949
Half Year Ended
30.06.13
===================== =============== =============== ============ ========= ======= =============== ==========
Balance at 1 January
2013 12,477 - 3,674 34,464 50,615 9,371 59,986
Profit after tax - - - 671 671 412 1,083
Currency translation
movements - - 750 - 750 (239) 511
Available for sale
investments - - (96) - (96) 2 (94)
Cash flow hedges - - (1,080) - (1,080) (57) (1,137)
Retirement benefit
remeasurements - - - (33) (33) (4) (37)
Other - - - 20 20 - 20
===================== =============== =============== ============ ========= ======= =============== ==========
Total comprehensive
income
for the period - - (426) 658 232 114 346
Issue of new ordinary
shares 750 - - - 750 - 750
Issue of shares under
employee
share schemes 761 - - 337 1,098 - 1,098
Increase in treasury
shares - - (1,049) - (1,049) - (1,049)
Vesting of shares
under
employee share
schemes - - 1,034 (1,034) - - -
Dividends paid - - - (570) (570) (323) (893)
Other reserve
movements - - - 7 7 (108) (101)
===================== =============== =============== ============ ========= ======= =============== ==========
Balance at 30 June
2013 13,988 - 3,233 33,862 51,083 9,054 60,137
1 Details of Share Capital, Other Equity Instruments and Other
Reserves are shown on page 72 to 73.
2 Details of Non-controlling Interests are shown on page 58.
Condensed Consolidated Financial Statements
Condensed Consolidated Cash Flow Statement (Unaudited)
Half Year Half Year Half Year
Ended Ended Ended
Continuing Operations 30.06.14 31.12.13 30.06.13
GBPm GBPm GBPm
================================================ ========== ========== ==========
Profit before tax 2,501 1,191 1,677
Adjustment for non-cash items 1,760 6,230 351
Changes in operating assets and liabilities (3,082) (42,699) 9,866
Corporate income tax paid (586) (764) (794)
================================================ ========== ========== ==========
Net cash from operating activities 593 (36,042) 11,100
Net cash from investing activities 7,463 (6,017) (16,628)
Net cash from financing activities (2,202) 7,122 (1,212)
Effect of exchange rates on cash and cash
equivalents (1,380) (3,125) 3,323
================================================ ========== ========== ==========
Net increase/(decrease) in cash and cash
equivalents 4,474 (38,062) (3,417)
Cash and cash equivalents at beginning of
the period 81,754 119,816 123,233
================================================ ========== ========== ==========
Cash and cash equivalents at end of the period 86,228 81,754 119,816
Results by Business
Personal and Corporate Banking
Income Statement Information Half Year Half Year Half Year
ended ended ended YoY %
30.06.14 31.12.13 30.06.13 Change
GBPm GBPm GBPm
===================================== ========== ========== ========== ======
Net interest income 3,057 3,033 2,860 7
Net fee and commission income 1,257 1,320 1,403 (10)
Other income 47 65 42 12
===================================== ========== ========== ========== ======
Total income 4,361 4,418 4,305 1
Credit impairment charges
and other provisions (230) (322) (299) 23
===================================== ========== ========== ========== ======
Net operating income 4,131 4,096 4,006 3
Operating expenses (2,554) (2,706) (2,754) 7
Costs to achieve Transform (115) (292) (92) (25)
UK bank levy - (66) - -
===================================== ========== ========== ========== ======
Total operating expenses (2,669) (3,064) (2,846) 6
Other net income 6 4 37 (84)
===================================== ========== ========== ========== ======
Profit before tax 1,468 1,036 1,197 23
Attributable profit 1,039 800 881 18
Balance Sheet Information
and Key Facts
===================================== ========== ========== ========== ======
Loans and advances to customers GBP216.7bn GBP212.2bn GBP211.3bn
at amortised cost
Total assets GBP268.1bn GBP278.5bn GBP288.3bn
Customer deposits GBP298.3bn GBP295.9bn GBP289.5bn
Risk weighted assets - CRD GBP117.9bn GBP118.3bn n/a
IV fully loaded
Average allocated tangible GBP13.0bn GBP13.3bn GBP13.1bn
equity
Average allocated equity GBP17.3bn GBP17.5bn GBP17.2bn
Average LTV of mortgage portfolio(1) 55% 56% 58%
Average LTV of new mortgage
lending(1) 64% 64% 64%
Number of branches 1,546 1,560 1,577
Performance Measures
===================================== ========== ========== ========== ======
Return on average tangible
equity 16.1% 12.0% 13.5%
Return on average equity 12.1% 9.1% 10.3%
Cost: income ratio 61% 69% 66%
Loan loss rate (bps) 21 29 28
1 Average LTV of mortgage portfolio and new mortgage lending
calculated on the balance weighted basis.
Results by Business
Personal and Corporate Banking
Personal and Corporate Banking (PCB) comprises personal banking,
mortgages, wealth and investment management and corporate banking.
Through these businesses we serve the needs of our customers and
clients in the UK and in selected
international markets. Managing these businesses together will
help drive product and customer segment capabilities as well as
cost synergies through platform integration and leveraging
expertise, particularly within digital channels.
The number of customers using digital channels continued to grow
substantially; mobile banking users almost doubled to 3.0m
customers and Pingit users more than doubled to 1.7m. PCB continued
to support the UK economy advancing GBP2.3bn of net mortgage
lending in the first half of the year and advancing GBP0.9bn of
gross term lending to small businesses(1) in addition to helping
close to 60,000 start-ups.
Progress continues to be made on the Transform strategy. During
H114, the business incurred GBP115m (2013: GBP92m) of costs to
achieve Transform. Operational efficiency has been enhanced through
ongoing rationalisation to focus on target markets and simplify
operations, with continued investment in the customer experience
across multiple channels.
Income Statement - H114 compared to H113
-- Total income increased 1% to GBP4,361m driven by strong
savings and mortgage growth partially offset by lower fees
-- Net interest income increased 7% to GBP3,057m driven by
strong savings and mortgage growth. Net interest margin was up 8bps
to 296bps due to lower funding costs and lower customer deposit
rates
-- Net fee and commission income declined 10% to GBP1,257m
primarily due to lower fees from current account and insurance
products, and corporate banking
-- Credit impairment charges reduced GBP69m to GBP230m due to
the improving economic environment in the UK. Personal banking
benefited from lower write-offs in overdrafts and in home loans.
Corporate banking benefited from higher levels of releases and
recoveries in the UK
-- Operating expenses reduced 6% to GBP2,669m reflecting
benefits from headcount reduction, partially offset by increased
costs to achieve Transform of GBP115m (2013: GBP92m)
-- Profit before tax increased 23% to GBP1,468m
Income Statement - Q214 compared to Q114
-- Profit before tax increased 13% to GBP780m driven by GBP40m
lower impairment due to the improving economic environment in the
UK and higher levels of releases in corporate banking, in addition
to GBP41m lower operating expenses reflecting benefits from
Transform programmes
Balance Sheet - 30 June 2014 compared to 31 December 2013
-- Loans and advances to customers increased GBP4.5bn to
GBP216.7bn due to increases in mortgage balances and UK corporate
loans
-- Total assets decreased 4% to GBP268.1bn primarily driven by a
reduction in the Group liquidity pool allocation partly offset by
the increase in loans and advances to customers
-- Customer deposits increased GBP2.4bn to GBP298.3bn due to
increases in UK corporate and personal deposits, partially offset
by net reductions in wealth and investment management deposits
primarily driven by reduced institutional cash deposits
-- RWAs reduced to GBP117.9bn (2013: GBP118.3bn) driven by
changes in risk profile and the treatment of high quality liquidity
assets, partially offset by balance sheet growth
1 Small businesses with a turnover of less than GBP5m.
Results by Business
Barclaycard
Half Year Half Year Half Year
Ended Ended Ended
Income Statement Information 30.06.14 31.12.13 30.06.13 YoY
GBPm GBPm GBPm % Change
================================ ========= ========= ========= ========
Net interest income 1,500 1,444 1,385 8
Net fee and commission income 613 631 625 (2)
Other income 11 9 9 22
================================ ========= ========= ========= ========
Total income 2,124 2,084 2,019 5
Credit impairment charges
and other provisions (537) (556) (540) 1
================================ ========= ========= ========= ========
Net operating income 1,587 1,528 1,479 7
Operating expenses (822) (912) (874) 6
Costs to achieve Transform (36) (44) (5)
UK bank levy - (22) - -
================================ ========= ========= ========= ========
Total operating expenses (858) (978) (879) 2
Other net income 35 17 16
================================ ========= ========= =========
Profit before tax 764 567 616 24
Attributable profit 539 383 439 23
Balance Sheet Information
and Key Facts
================================ ========= ========= ========= ========
Loans and advances to customers GBP33.2bn GBP31.5bn GBP30.1bn
at amortised cost
Total assets GBP36.2bn GBP34.4bn GBP34.3bn
Customer deposits GBP5.9bn GBP5.1bn GBP4.4bn
Risk weighted assets - CRD GBP37.7bn GBP35.7bn n/a
IV fully loaded
Average allocated tangible GBP4.6bn GBP4.2bn GBP4.0bn
equity
Average allocated equity GBP5.7bn GBP5.4bn GBP5.2bn
30 day arrears rates - UK
cards 2.4% 2.4% 2.5%
30 day arrears rates - US
cards 1.9% 2.1% 2.0%
Performance Measures
================================ ========= ========= ========= ========
Return on average tangible
equity 23.6% 18.2% 21.7%
Return on average equity 18.9% 14.3% 16.8%
Cost:income ratio 40% 47% 44%
Loan loss rate (bps) 311 334 342
Results by Business
Barclaycard
Barclaycard was largely unchanged by the Group Strategy Update,
with the exception of the African Card business moving to Africa
Banking and the UK secured lending portfolio moving to Barclays
Non-Core.
Barclaycard continued to grow across all businesses, delivering
5% income growth, with a net increase of 2.3m customers since June
2013. Innovation remained a key priority, with the launch of the
open-market bPay band - a wearable contactless payment device - and
Barclaycard Anywhere, a new mobile point-of-sale solution that
makes it easy for businesses to take card payments securely,
anywhere in the UK.
On the journey to become the 'Go-To' bank for consumer payments,
Barclaycard focuses on providing customers and clients with simple
solutions that offer clear value. The business looks to improve the
customer experience through operational enhancements, improved
technical capability and digitalisation.
Income Statement - H114 compared to H113
-- Income improved 5% to GBP2,124m reflecting net lending growth
across the business
- UK income, including both the consumer and merchant sides of
payments, increased by 8% to GBP1,368m reflecting net lending
growth and lower funding costs
- International income remained flat at GBP756m reflecting
higher customer asset balances in the US and Germany, offset by
depreciation of USD against GBP
-- Net interest income increased by 8% to GBP1,500m driven by
volume growth. Net interest margin remained stable at 9.05% (2013:
9.03%). The impact of promotional offers and a change in product
mix, with growth through the US partner portfolio, were offset by
lower funding costs
-- Net fees and commission income remained broadly stable at
GBP613m (2013: GBP625m)
-- Credit impairment charges remained flat at GBP537m (2013:
GBP540m), with the impact of volume growth being offset by a
reduction in impairment rates and depreciation of USD against GBP.
Loan loss rates reduced by 31bps to 311bps and 30 day delinquency
rates fell in UK and US consumer cards businesses
-- Operating expenses reduced 2% to GBP858m driven by
depreciation of USD against GBP, a VAT refund and improved
efficiency, partially offset by costs associated with volume growth
and costs to achieve Transform
-- Profit before tax improved 24% to GBP764m
Income Statement - Q214 compared to Q114
-- Profit before tax increased 8% to GBP396m driven by higher
volumes
Balance Sheet - 30 June 2014 compared to 31 December 2013
-- Total assets increased GBP1.8bn to GBP36.2bn driven by the
increase in loans and advances to customers across the business
-- Customer deposits increased by GBP0.8bn to GBP5.9bn due to
funding initiatives in the US
-- RWAs increased to GBP37.7bn (2013: GBP35.7bn) driven by
increased customer lending
Results by Business
Africa Banking Constant Currency(1)
Half Half Half Half Half
Year Year Year Year Year
Ended Ended Ended Ended ended
Income Statement Information 30.06.14 31.12.13 30.06.13 YoY 30.06.14 30.06.13 YoY
GBPm GBPm GBPm % Change GBPm GBPm % Change
============================== ======== ======== ======== ======== ======== ======== ========
Net interest income 1,007 1,105 1,140 (12) 1,261 1,140 11
Net fee and commission income 527 633 621 (15) 661 621 6
Net premiums from insurance
contracts 167 182 192 (13) 211 192 10
Net trading income 144 114 143 1 181 143 27
Other income 12 40 54 (78) 15 54 (72)
======== ======== ========
Total income 1,857 2,074 2,150 (14) 2,329 2,150 8
Net claims and benefits
incurred under insurance
contracts (84) (90) (95) 12 (106) (95) (12)
============================== ======== ======== ======== ======== ======== ======== ========
Total income net of insurance
claims 1,773 1,984 2,055 (14) 2,223 2,055 8
Credit impairment charges
and other provisions (196) (205) (274) 28 (249) (274) 9
============================== ======== ======== ======== ======== ======== ======== ========
Net operating income 1,577 1,779 1,781 (11) 1,974 1,781 11
Operating expenses (1,082) (1,221) (1,230) 12 (1,344) (1,230) (9)
Costs to achieve Transform (17) (17) (9) (89) (22) (9)
UK bank levy - (42) - - - -
============================== ======== ======== ======== ======== ======== ======== ========
Total operating expenses (1,099) (1,280) (1,239) 11 (1,366) (1,239) (10)
Other net income 6 3 5 20 8 5 60
============================== ======== ======== ======== ======== ======== ======== ========
Profit before tax 484 502 547 (12) 616 547 13
Attributable profit 181 134 222 (18) 231 222 4
Balance Sheet Information Half Half Half Half Half
and Key Facts Year Year Year Year Year
Ended Ended Ended Ended ended
30.06.14 31.12.13 30.06.13 30.06.14 31.12.13
Loans and advances to customers GBP33.8bn GBP34.9bn GBP38.7bn GBP35.3bn GBP34.9bn
at amortised cost
Total assets GBP52.4bn GBP54.9bn GBP61.2bn GBP54.8bn GBP54.9bn
Customer deposits GBP33.2bn GBP34.6bn GBP37.9bn GBP34.6bn GBP34.6bn
Risk weighted assets - CRD GBP36.5bn GBP38.0bn n/a
IV fully loaded
Average tangible equity(2) GBP2.7bn GBP2.9bn GBP3.4bn
Average equity(2) GBP3.8bn GBP4.1bn GBP4.7bn
Average LTV of mortgage
portfolio(3) 61.2% 62.3% 63.7%
Average LTV of new mortgage
lending(3) 75.0% 74.9% 74.1%
Number of distribution points 1,369 1,396 1,433
ZAR/GBP - Period end 18.17 17.37 15.11
ZAR/GBP - Average 17.82 15.94 14.20
Performance Measures
================================ ========= ========= =========
Return on average tangible
equity 13.3% 9.3% 13.0%
Return on average equity 9.6% 6.6% 9.4%
Cost: income ratio 62% 65% 60%
Loan loss rate (bps) 110 107 134
1 Constant currency results are calculated by converting ZAR
results into GBP using the average H113 exchange rate for the
income statement and the FY13 exchange rate for the balance sheet
to eliminate the impact of movement in exchange rates between the
two periods.
2 For Africa Banking the equity used for return on average
equity is Barclays' share of the statutory equity of the BAGL
entity (together with that of the Barclays Egypt and Zimbabwe
businesses which remain outside the BAGL corporate entity), as well
as the Barclays' goodwill on acquisition of these businesses. The
tangible equity for return on tangible equity uses the same basis
but excludes both Barclays' goodwill on acquisition and the
goodwill and intangibles held within the BAGL statutory equity.
3 Average LTV of mortgage portfolio and new mortgage lending
calculated on the balance weighted basis.
Results by Business
Africa Banking
The combined Africa Banking business is managed under three
primary businesses: Retail and Business Banking (RBB); Wealth,
Investment Management and Insurance (WIMI); Corporate and
Investment Banking (CIB) as well as an Africa Head Office
function.
The current focus areas of execution are:
-- The RBB turnaround strategy which is gaining early traction
and key indicators around client numbers, cheque account growth,
transactional deposits balances and debit card turnover are
reflected in a stabilisation in income
-- CIB investment across Africa has seen the roll-out of BARX in
markets across Africa and strong growth in income generated outside
South Africa
-- WIMI growth in net premium income reflects the close
collaboration with other business areas and also the expansion
outside South Africa
Africa Banking results showed strong underlying momentum in
H114, with constant currency profit before tax increasing 13%.
Reported results were adversely affected by currency movements with
the average ZAR for H114 compared to H113 depreciating 25% against
GBP.
Income Statement - H114 compared to H113
-- Total income net of insurance claims declined 14% to
GBP1,773m. On a constant currency basis, total income grew 8%
reflecting balance sheet growth and strong non-interest income
growth in the CIB Markets business, in addition to improved income
in RBB despite modest balance sheet growth. WIMI showed modest
growth, impacted by higher weather-related short term claims
-- Net interest income decreased 12% to GBP1,007m. On a constant
currency basis, net interest income increased 11% driven by higher
average loans and advances to customers in CIB, growth in RBB
customer deposits and an increased net interest margin following
the rise in the South African benchmark interest rate
-- Net fee and commission income decreased 15% to GBP527m. On a
constant currency basis, net fee and commission income increased 6%
reflecting strong performance particularly in cards
-- Credit impairment charges decreased 28% to GBP196m. On a
constant currency basis, credit impairment charges reduced 9%
driven by improvements mainly in the South Africa mortgages
portfolio, partially offset by increased provisions in the cards
portfolio. The loan loss rate improved 24bps to 110bps
-- Operating expenses decreased 11% to GBP1,099m. On a constant
currency basis, operating expenses increased 10% largely reflecting
increased spend on key initiatives including costs to achieve
Transform, in addition to higher staff costs
-- Profit before tax decreased 12% to GBP484m. On a constant
currency basis, profit before tax increased 13%
Income Statement - Q214 compared to Q114
-- Profit before tax of GBP244m (Q114: GBP240m) is largely in
line with stronger performance in CIB
Balance Sheet - 30 June 2014 compared to 31 December 2013
-- Loans and advances to customers decreased 3% to GBP33.8bn. On
a constant currency basis, loans and advances increased 1%
-- Total assets decreased by 5% to GBP52.4bn. On a constant
currency basis, total assets were broadly in line
-- Customer deposits decreased 4% to GBP33.2bn. On a constant
currency basis, customer deposits remained broadly in line
-- RWAs decreased 4% to GBP36.5bn. On a constant currency basis
RWAs decreased 1% driven by lower operational risk
Results by Business
Investment Bank
Half Year Half Year Half Year
Ended Ended Ended
Income Statement Information 30.06.14 31.12.13 30.06.13 YoY
GBPm GBPm GBPm % Change
===================================== ========== ========== ========== ========
Net interest income 334 229 164
Net fee and commission income 1,726 1,622 1,610 7
Net trading income 2,137 1,792 3,177 (33)
Net investment income(1) 60 (10) 271 (78)
Total income 4,257 3,633 5,222 (18)
Credit impairment releases/(charges)
and other provisions 26 (16) 38 (32)
===================================== ========== ========== ========== ========
Net operating income 4,283 3,617 5,260 (19)
Operating expenses (2,943) (2,979) (3,193) 8
Costs to achieve Transform (282) (74) (116)
UK bank levy - (236) - -
===================================== ========== ========== ========== ========
Total operating expenses (3,225) (3,289) (3,309) 3
Profit before tax 1,058 328 1,951 (46)
Attributable profit 435 209 1,306 (67)
Balance Sheet Information
===================================== ========== ========== ========== ========
Trading portfolio assets GBP101.2bn GBP96.6bn GBP107.4bn
Derivative financial instrument GBP104.2bn GBP108.7bn GBP128.4bn
assets
Reverse repurchase agreements GBP83.0bn GBP78.2bn GBP93.1bn
and other similar secured
lending
Total assets GBP447.8bn GBP439.6bn GBP515.5bn
Risk weighted assets - fully GBP125.5bn GBP126.0bn n/a
loaded CRD IV
Average allocated tangible GBP14.9bn GBP15.0bn GBP16.0bn
equity
Average allocated equity GBP15.6bn GBP15.6bn GBP16.6bn
Performance measures
===================================== ========== ========== ========== ========
Return on average tangible
equity 5.9% 2.8% 16.3%
Return on average equity 5.7% 2.7% 15.7%
Cost: income ratio 76% 91% 63%
Analysis of Total Income
Investment Banking fees 1,174 1,097 1,063 10
Lending(2) 169 110 215 (21)
========================== ===== ===== ===== ====
Banking 1,343 1,207 1,278 5
Credit(3) 616 539 718 (14)
Equities 1,220 945 1,352 (10)
Macro(3) 1,056 951 1,629 (35)
========================== ===== ===== ===== ====
Markets 2,892 2,435 3,699 (22)
========================== ===== ===== ===== ====
Banking & Markets 4,235 3,642 4,977 (15)
Other(1) 22 (9) 245 (91)
Total income 4,257 3,633 5,222 (18)
1 Net investment income and other income includes the GBP259m
gain recognised in Q2 2013 in respect of assets not yet received
from the 2008 US Lehman acquisition.
2 Lending income includes net interest income, fee income and
risk management income or losses. H114 net interest and fee income
was GBP268m (2013: GBP264m), while risk management losses were
GBP99m (2013: GBP49m). While net interest and fee income tends to
be broadly stable over time, there is volatility in risk management
income or losses.
3 Macro represents Rates, Currencies and Commodities income.
Credit represents Credit, Securitised Products and Municipals
income.
Results by Business
Investment Bank
The Investment Bank now consists of origination led and returns
focused markets and banking businesses. Non-strategic and lower
returning businesses have been moved to Barclays Non-Core, and the
African Investment Banking business has been moved to Africa
Banking. Investment Bank treasury operations have been moved to be
reported where they are now managed alongside the Group treasury
operations within Head Office and Other Operations.
Markets income reduced in H114 compared to H113 due to lower
volatility and elevated activity in the prior year. In H114 strong
growth was seen in the Banking franchise, which continued to
outperform the market(1) with Equity underwriting having
experienced record half-yearly revenues.
The Investment Bank continued to make progress in delivering the
Transform strategy, with a focus on driving cost and capital
efficiency, strengthening the control environment, and capitalising
on the build out of Equities and Banking. The business incurred
costs to achieve Transform of GBP282m primarily related to
restructuring across Europe, Asia and the Americas.
Income Statement - H114 compared to H113
-- Total income decreased 18% to GBP4,257m including a 4%
reduction due to a fair value adjustment in the prior year of
GBP259m relating to the 2008 US Lehman acquisition and a 5%
reduction due to currency movements. Excluding these items income
decreased 10%
- Investment Banking fee income increased 10% driven by
increased financial advisory and record equity underwriting fees
with debt underwriting largely in line with prior year
- Markets income decreased 22%
-- Credit decreased 14% to GBP616m driven by lower client
activity amid challenging trading conditions and tightening credit
spreads
-- Equities decreased 10% to GBP1,220m due to declines in the
cash equities business reflecting lower client volumes, partially
offset by higher income in equity financing
-- Macro decreased 35% to GBP1,056m reflecting decreased
volatility in currency markets and subdued client activity in
rates
- Other income decreased GBP223m to GBP22m primarily related to
a fair value adjustment in the prior year of GBP259m as a result of
greater certainty regarding the recoverability of certain assets
not yet received from the 2008 US Lehman acquisition
-- Net credit impairment release of GBP26m (2013: GBP38m) across
a number of counterparties
-- Operating expenses decreased 3% to GBP3,225m due to lower
compensation costs, benefits from Transform programmes, including
business restructuring and operational streamlining, and favourable
currency movements. This was partially offset by costs to achieve
Transform of GBP282m (2013: GBP116m), primarily related to
restructuring initiatives across Europe, Asia and the Americas, and
litigation and conduct charges
-- Including costs to achieve Transform, the cost: income ratio
increased 13% to 76%
-- Profit before tax decreased 46% to GBP1,058m
1 Source: Dealogic daily feed, 1 July 2014.
Results by Business
Income Statement - Q214 compared to Q213
-- Total income decreased 16% to GBP2,154m including a 8%
reduction due to a fair value adjustment in the prior year of
GBP259m relating to the 2008 US Lehman acquisition and a 6%
reduction due to currency movements. Excluding these items total
income decreased 2%
- Investment Banking fee income increased 35% to GBP661m driven
by increased debt and equity underwriting deal issuance and
financial advisory
- Markets income decreased 16% to GBP1,403m
-- Credit increased 13% to GBP270m driven by increased income from securitised products
-- Equities decreased 16% to GBP629m due to a decline in client
activity in cash equities as Q213 benefitted from improved global
equity markets driven by increased market confidence
-- Macro decreased 27% to GBP504m reflecting lower client
activity across rates and currency in Q214
-- Operating expenses increased 12% to GBP1,594m due to costs to
achieve Transform, including business restructuring and operational
streamlining, and increased litigation and conduct charges more
than offsetting savings from Transform programmes and favourable
currency movements
-- Profit before tax decreased 50% to GBP567m
Balance Sheet - 30 June 2014 compared to 31 December 2013
-- Trading portfolio assets increased 5% to GBP101.2bn due to
increased client demand for securitised products within Credit
-- Derivative financial instrument assets decreased 4% to
GBP104.2bn due to the strengthening of GBP against USD and reduced
volumes
-- Reverse repurchase agreements increased 6% to GBP83.0bn in
line with mandated limits
-- RWAs remained broadly in line at GBP125.5bn (2013:
GBP126.0bn)
Results by Business
Head Office and Other Operations
Half year Half year Half year
Ended Ended Ended
Income Statement Information 30.06.14 31.12.13 30.06.13
GBPm GBPm GBPm
=============================== ========== ========== ==========
Net interest income/(expense) 1 98 (166)
Net fee and commission expense (181) (69) (48)
Net trading income 117 25 146
Net investment income 204 51 17
Net premiums from insurance
contracts 9 12 13
Other income 9 29 34
=============================== ========== ========== ==========
Total income/(expense) 159 146 (4)
Credit impairment releases - 3 -
=============================== ========== ========== ==========
Net operating income/(expense) 159 149 (4)
Operating expenses (91) (72) (41)
Costs to achieve Transform (2) (22) -
UK bank levy - (29) -
=============================== ========== ========== ==========
Total operating expenses (93) (123) (41)
Other net (expense)/income (0) 6 (2)
=============================== ========== ========== ==========
Profit/(loss) before tax 66 32 (47)
Attributable profit/(loss) 30 84 (173)
Balance Sheet Information
=============================== ========== ========== ==========
Total assets GBP41.7bn GBP25.0bn GBP45.6bn
Risk weighted assets - fully GBP6.0bn n/a
loaded CRD IV(1) GBP14.6bn
Average allocated tangible GBP(2.1bn) GBP(6.4bn) GBP(8.7bn)
equity(2)
Average allocated equity(2) GBP(1.8bn) GBP(6.0bn) GBP(8.3bn)
1 Following the full implementation of CRD IV reporting in 2014,
the previously reported 31 December 2013 RWAs have been revised by
GBP6.9bn to GBP14.6bn.
2 Average allocated tangible equity and equity for the Head
Office and Other Operations include risk weighted assets and
capital deductions in Head Office and Other Operations, plus the
residual balance of average ordinary shareholders' equity and
tangible ordinary shareholders' equity caused by allocating equity
at the target 10.5% of average risk weighted assets as opposed to
the lower actual Core Tier 1 ratio of between 9.1 and 9.9% during
H114.
Results by Business
Head Office and Other Operations
Head Office and Other Operations now include treasury operations
previously reported in the Investment Bank, while the Africa Head
Office function has been transferred to Africa Banking
Income Statement - H114 compared to H113
-- Total income increased to GBP159m (2013: expense of GBP4m)
predominantly driven by a net gain of GBP69m from foreign exchange
recycling arising from the restructure of group subsidiaries
-- Operating expenses increased GBP52m to GBP93m, mainly due to
litigation and conduct charges
-- Profit before tax of GBP66m moved from a loss of GBP47m in
2013
Income Statement - Q214 compared to Q114
-- Profit before tax of GBP6m (Q114: GBP60m) due to operating
expenses increasing GBP49m to GBP71m, mainly due to litigation and
conduct charges
Balance Sheet - 30 June 2014 compared to 31 December 2013
-- Total assets increased to GBP41.7bn (2013: GBP25.0bn)
primarily reflecting an increase in surplus Group liquidity pool
assets
-- RWAs decreased to GBP6.0bn (2013: GBP14.6bn). Excluding the
impact of the GBP6.9bn comparative revisions, the decrease was
primarily driven by changes in the treatment of high quality
liquidity assets.
Results by Business
Barclays Non-Core
Half Year Half Year Half Year
Ended Ended Ended
Income Statement Information 30.06.14 31.12.13 30.06.13 YoY
GBPm GBPm GBPm % Change
================================= ========== ========== ========== ========
Net interest income 183 113 194 (6)
Net fee and commission income 314 198 185 70
Net trading income 116 327 1,000 (88)
Net premiums from insurance
contracts 147 140 166 (11)
Other income 53 192 101 (48)
================================= ========== ========== ========== ========
Total income 813 970 1,646 (51)
Net claims and benefits incurred
under insurance contracts (155) (152) (172) 10
================================= ========== ========== ========== ========
Total income net of insurance
claims 658 818 1,474 (55)
Credit impairment charges
and other provisions (149) (344) (556) 73
================================= ========== ========== ========== ========
Net operating income 509 474 918 (45)
Operating expenses (893) (1,149) (1,049) 15
Costs to achieve Transform (41) (120) (418) 90
UK bank levy - (109) -
================================= ========== ========== ========== ========
Total operating expenses (934) (1,378) (1,467) 36
Other net (expense)/income (66) 14 (124) 47
================================= ========== ========== ========== ========
Loss before tax (491) (890) (673) 27
Attributable loss (464) (1,271) (619) 25
Balance Sheet Information
================================= ========== ========== ========== ========
Loans and advances to banks GBP75.5bn GBP81.9bn GBP95.9bn
and customers at amortised
cost
Loans and advances to customers GBP17.0bn GBP17.6bn GBP18.6bn
at fair value
Trading portfolio assets GBP22.9bn GBP30.7bn GBP41.5bn
Derivative financial instrument GBP227.0bn GBP239.3bn GBP301.9bn
assets
Reverse repurchase agreements GBP86.8bn GBP104.7bn GBP123.6bn
and other similar secured
lending
Total assets GBP468.6bn GBP511.2bn GBP623.0bn
Customer deposits GBP28.6bn GBP29.3bn GBP34.2bn
Risk weighted assets - CRD GBP87.5bn GBP109.9bn n/a
IV fully loaded
Average allocated tangible GBP14.2bn GBP16.3bn GBP17.2bn
equity
Average allocated equity GBP14.5bn GBP16.5bn GBP17.5bn
Performance Measures
================================= ========== ========== ========== ========
Return on average tangible
equity(1) (6.0%) (9.6%) (10.2%)
Return on average equity(1) (4.5%) (7.5%) (7.3%)
Cost: income ratio 142% 168% 99%
Loan loss rate (bps) 45 81 114
Analysis of Total Income
========================= ==== ==== ===== ====
Businesses 564 662 822 (31)
Securities and Loans 147 171 570 (74)
Derivatives (53) (15) 82
========================= ==== ==== ===== ====
Total Income 658 818 1,474 (55)
1 Return on average equity and average tangible equity for
Barclays Non-Core represents its impact on the Group, being the
difference between Barclays Group returns and Barclays Core
returns.
Results by Business
Barclays Non-Core
Barclays Non Core (BNC) groups together businesses and assets
that are no longer strategically attractive to Barclays and are
being managed under three broad categories:
-- Businesses, including all of Europe Retail
-- Securities and Loans, incorporating Investment Bank portfolio
assets and the UK corporate long term fair value loan portfolio
-- Derivatives, including the pre-CRD IV Rates portfolio
These businesses and assets will be exited over time with
actions already undertaken during H114.
Income Statement - H114 compared to H113
-- Total income net of insurance claims decreased 55% to
GBP658m
- Businesses income decreased 31% to GBP564m due to exit from
non strategic principal businesses and reduced European retail
income
- Securities and Loans decreased 74% to GBP147m primarily driven
by active rundown of securities, fair value adjustments on
wholesale loan portfolios and favourable market movements for
certain securitised products in 2013
- Derivatives income reduced GBP135m to an expense of GBP53m
reflecting reduced income from the pre-CRD IV Rates portfolio and
hedging activities
-- Credit impairment charges improved by GBP407m to GBP149m
primarily driven by a prior year charge against a single name
exposure, better credit performance in retail and lower charges on
the wholesale portfolio, reflecting actions to reduce exposures to
the Spanish property and construction sectors
-- Operating expenses decreased 36% to GBP934m reflecting
- Benefits from Transform programmes, including reduction in
compensation costs, Europe retail employees and distribution
points
- Cost to achieve Transform reduced by GBP377m to GBP41m
reflecting the significant restructuring in Europe retail in
H113
-- Other net expense reduced GBP58m to GBP66m due to a lower
valuation adjustment recognised in Q2 in respect of contractual
obligations to trading partners, based in locations affected by the
Group Strategy Update
-- Loss before tax decreased GBP182m to GBP491m
Income Statement - Q214 compared to Q114
-- Loss before tax increased GBP183m to GBP337m reflecting exits
from non-strategic principal businesses and rundown of securities,
coupled with a valuation adjustment recognised in respect of
contractual obligations to trading partners
Balance Sheet - 30 June 2014 compared to 31 December 2013
-- Loans and advances to banks and customers at amortised cost
reduced 8% to GBP75.5bn driven by asset reduction activity as part
of the Transform strategy and currency movements
-- Trading portfolio assets decreased 25% to GBP22.9bn due to
exiting of positions
-- Derivative financial instrument assets decreased 5% to
GBP227.0bn due to balance sheet reduction initiatives, including
trade maturities
-- Reverse repurchase agreements and other similar lending
decreased 17% to GBP86.8bn predominately driven by lower matched
book trading due a focus on deleveraging the balance sheet
-- Customer deposits reduced 2% to GBP28.6bn due to currency
movements and reduced customer balances
-- RWAs reduced 20% to GBP87.5bn reflecting rundown and exit of
securities and reductions in derivative risk
Barclays Results by Quarter
Barclays Group Results by Q214 Q114 Q413 Q313 Q213 Q113 Q412 Q312
Quarter
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
=============================== ======= ======= ======= ======= ======= ======= ======= =======
Adjusted basis
Total income net of insurance
claims 6,682 6,650 6,639 6,445 7,337 7,734 6,867 7,002
Credit impairment charges
and other provisions (538) (548) (718) (722) (925) (706) (825) (805)
=============================== ======= ======= ======= ======= ======= ======= ======= =======
Net operating income 6,144 6,102 5,921 5,723 6,412 7,028 6,042 6,197
Operating expenses (4,188) (4,195) (4,777) (4,262) (4,359) (4,782) (4,345) (4,353)
Costs to achieve Transform (254) (240) (468) (101) (126) (514) - -
UK bank levy - - (504) - - - (345) -
=============================== ======= ======= ======= ======= ======= ======= ======= =======
Total operating expenses (4,442) (4,435) (5,749) (4,363) (4,485) (5,296) (4,690) (4,353)
Other net (expense)/income (46) 26 19 25 (122) 54 43 21
=============================== ======= ======= ======= ======= ======= ======= ======= =======
Adjusted profit before tax 1,656 1,693 191 1,385 1,805 1,786 1,395 1,865
Adjusting items
=============================== ======= ======= ======= ======= ======= ======= ======= =======
Own credit (67) 119 (95) (211) 337 (251) (560) (1,074)
Provision for PPI redress (900) - - - (1,350) - (600) (700)
Provision for interest rate
hedging products
redress - - - - (650) - (400) -
Goodwill impairment - - (79) - - - - -
Statutory profit/(loss)
before tax 689 1,812 17 1,174 142 1,535 (165) 91
Statutory profit/(loss)
after tax 391 1,215 (514) 728 39 1,044 (364) (13)
Attributable to:
=============================== ======= ======= ======= ======= ======= ======= ======= =======
Ordinary equity holders
of the parent 161 965 (642) 511 (168) 839 (589) (183)
Other equity holders 41 49 - - - - - -
Non-controlling interests 189 201 128 217 207 205 225 170
Adjusted basic earnings/(loss)
per share 5.4p 5.5p (2.8p) 5.4p 7.7p 7.5p 6.7p 7.8p
Adjusted cost: income ratio 66% 67% 87% 68% 61% 68% 68% 62%
Basic earnings per share 1.0p 6.0p (4.5p) 3.8p (1.2p) 6.3p (4.5p) (1.4p)
Cost: income ratio 82% 66% 89% 70% 85% 71% 90% 85%
Barclays Core
============================== ======= ======= ======= ======= ======= ======= ======= =======
Total income net of insurance
claims 6,397 6,277 6,189 6,076 6,773 6,824 6,115 6,278
Credit impairment charges
and other provisions (456) (481) (542) (554) (558) (517) (600) (628)
============================== ======= ======= ======= ======= ======= ======= ======= =======
Net operating income 5,941 5,796 5,647 5,522 6,215 6,307 5,515 5,650
Operating expenses (3,738) (3,753) (4,114) (3,776) (3,853) (4,239) (3,844) (3,906)
Costs to achieve Transform (237) (216) (365) (84) (64) (158) - -
UK bank levy - - (395) - - - (263) -
============================== ======= ======= ======= ======= ======= ======= ======= =======
Total operating expenses (3,975) (3,969) (4,874) (3,860) (3,917) (4,397) (4,107) (3,906)
Other net income 27 20 15 15 13 43 21 12
============================== ======= ======= ======= ======= ======= ======= ======= =======
Profit before tax 1,993 1,847 788 1,677 2,311 1,953 1,429 1,756
Barclays Non-Core
Total income net of insurance
claims 285 373 450 368 564 911 752 724
Credit impairment charges
and other provisions (82) (67) (176) (168) (367) (189) (226) (177)
============================== ===== ===== ===== ===== ===== ===== ===== =====
Net operating income 203 306 274 200 197 722 526 547
Operating expenses (451) (442) (664) (485) (507) (542) (500) (447)
Costs to achieve Transform (17) (24) (103) (17) (62) (356) - -
UK bank levy - - (109) - - - (82) -
============================== ===== ===== ===== ===== ===== ===== ===== =====
Total operating expenses (468) (466) (876) (502) (569) (898) (582) (447)
Other net (expense)/income (72) 6 4 10 (135) 11 21 9
============================== ===== ===== ===== ===== ===== ===== ===== =====
(Loss)/profit before tax (337) (154) (598) (292) (507) (165) (35) 109
Business Results by Quarter
Q214 Q114 Q413 Q313 Q213 Q113 Q412 Q312
Personal and Corporate Banking GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
=============================== ======= ======= ======= ======= ======= ======= ======= =======
Total income net of insurance
claims 2,188 2,173 2,166 2,252 2,192 2,113 2,153 2,151
Credit impairment charges
and other provisions (95) (135) (169) (153) (165) (134) (191) (152)
=============================== ======= ======= ======= ======= ======= ======= ======= =======
Net operating income 2,093 2,038 1,997 2,099 2,027 1,979 1,962 1,999
Operating expenses (1,256) (1,298) (1,388) (1,318) (1,378) (1,376) (1,337) (1,356)
Costs to achieve Transform (58) (57) (219) (73) (55) (37) - -
UK bank levy - - (66) - - - (49) -
=============================== ======= ======= ======= ======= ======= ======= ======= =======
Total operating expenses (1,314) (1,355) (1,673) (1,391) (1,433) (1,413) (1,386) (1,356)
Other net income 1 5 3 1 7 30 3 7
=============================== ======= ======= ======= ======= ======= ======= ======= =======
Profit before tax 780 688 327 709 601 596 579 650
Barclaycard
============================== ===== ===== ===== ===== ===== ===== ===== =====
Total income net of insurance
claims 1,082 1,042 1,034 1,050 1,030 989 987 956
Credit impairment charges
and other provisions (268) (269) (266) (290) (272) (268) (265) (259)
============================== ===== ===== ===== ===== ===== ===== ===== =====
Net operating income 814 773 768 760 758 721 722 697
Operating expenses (420) (402) (457) (455) (424) (450) (472) (401)
Costs to achieve Transform (23) (13) (38) (6) (5) - - -
UK bank levy - - (22) - - - (15) -
============================== ===== ===== ===== ===== ===== ===== ===== =====
Total operating expenses (443) (415) (517) (461) (429) (450) (487) (401)
Other net income 25 10 5 12 7 9 5 7
============================== ===== ===== ===== ===== ===== ===== ===== =====
Profit before tax 396 368 256 311 336 280 240 303
Africa Banking
===================================== ======= ======= ======= ======= ======= ======= ======= =======
Total income net of insurance
claims 895 878 980 1,004 1,016 1,039 1,064 1,043
Credit impairment charges
and other provisions (100) (96) (104) (101) (131) (143) (164) (192)
===================================== ======= ======= ======= ======= ======= ======= ======= =======
Net operating income 795 782 876 903 885 896 900 851
Operating expenses (545) (537) (616) (605) (597) (633) (605) (660)
Costs to achieve Transform (8) (9) (15) (2) (9) - - -
UK bank levy - - (42) - - - (34) -
===================================== ======= ======= ======= ======= ======= ======= ======= =======
Total operating expenses (553) (546) (673) (607) (606) (633) (639) (660)
Other net income 2 4 - 3 4 1 12 3
===================================== ======= ======= ======= ======= ======= ======= ======= =======
Profit before tax 244 240 203 299 283 264 273 194
Investment Bank
===================================== ======= ======= ======= ======= ======= ======= ======= =======
Investment Banking fees 661 513 571 526 488 575 621 461
Lending 66 103 68 42 141 74 42 (38)
===================================== ======= ======= ======= ======= ======= ======= ======= =======
Banking 727 616 639 568 629 649 663 423
Credit 270 346 231 308 239 479 248 356
Equities 629 591 421 524 750 602 419 490
Macro 504 552 494 457 689 940 609 841
===================================== ======= ======= ======= ======= ======= ======= ======= =======
Markets 1,403 1,489 1,146 1,289 1,678 2,021 1,276 1,687
===================================== ======= ======= ======= ======= ======= ======= ======= =======
Banking & Markets 2,130 2,105 1,785 1,857 2,307 2,670 1,939 2,110
Other 24 (2) (3) (6) 252 (7) (8) (8)
Total income 2,154 2,103 1,782 1,851 2,559 2,663 1,931 2,102
Credit impairment releases/(charges)
and other provisions 7 19 (6) (10) 10 28 21 (24)
===================================== ======= ======= ======= ======= ======= ======= ======= =======
Net operating income 2,161 2,122 1,776 1,841 2,569 2,691 1,952 2,078
Operating expenses (1,442) (1,501) (1,606) (1,373) (1,429) (1,764) (1,360) (1,489)
Costs to achieve Transform (152) (130) (71) (3) - (116) - -
UK bank levy - - (236) - - - (139) -
===================================== ======= ======= ======= ======= ======= ======= ======= =======
Total operating expenses (1,594) (1,631) (1,913) (1,376) (1,429) (1,880) (1,499) (1,489)
Profit/(loss) before tax 567 491 (137) 465 1,140 811 453 589
Head Office
===================================== ==== ==== ==== ===== ==== ==== ===== ===
Total income/(expense) net
of insurance claims 78 81 227 (81) (24) 20 (20) 26
Credit impairment releases/(charges)
and other provisions - - 3 - - - (1) (1)
===================================== ==== ==== ==== ===== ==== ==== ===== ===
Net operating income/(expense) 78 81 230 (81) (24) 20 (21) 25
Operating expenses (76) (15) (47) (25) (25) (16) (70) -
Costs to achieve Transform 5 (7) (22) - 5 (5) - -
UK bank levy - - (29) - - - (26) -
===================================== ==== ==== ==== ===== ==== ==== ===== ===
Total operating expenses (71) (22) (98) (25) (20) (21) (96) -
Other net (expense)/income (1) 1 7 (1) (5) 3 1 (5)
===================================== ==== ==== ==== ===== ==== ==== ===== ===
Profit/(loss) before tax 6 60 139 (107) (49) 2 (116) 20
Performance Management
Returns and Equity by Business
Returns on average equity and average tangible equity are
calculated as profit for the period attributable to ordinary equity
holders of the parent (adjusted for the offset by the tax credit
recorded in reserves in respect of coupons on other equity
instruments) divided by average allocated equity or average
allocated tangible equity for the period as appropriate, excluding
non-controlling and other equity interests for businesses, apart
from Africa Banking (see below). Average allocated equity has been
calculated as 10.5% of average CRD IV fully loaded risk weighted
assets for each business, adjusted for CRD IV fully loaded capital
deductions, including goodwill and intangible assets, reflecting
the assumptions the Group uses for capital planning purposes. The
excess of the equity so allocated over the Group equity, reflecting
CRD IV fully loaded Common Equity Tier 1 capital ratio of 9.9% as
at 30 June 2014 being below 10.5%, is allocated as negative equity
to Head Office and Other Operations. Average allocated tangible
equity is calculated using the same method but excludes goodwill
and intangible assets.
For Africa Banking the equity used for return on average equity
is Barclays share of the statutory equity of the BAGL entity
(together with that of the Barclays Egypt and Zimbabwe businesses
which remain outside the BAGL corporate entity), as well as the
Barclays' goodwill on acquisition of these businesses. The tangible
equity for return on tangible equity uses the same basis but
excludes both the Barclays' goodwill on acquisition and the
goodwill and intangibles held within the BAGL statutory equity.
Half year ended Half year ended Half year ended
30.06.14 31.12.13 30.06.13
Return on Average % % %
Equity
======================== =============== =============== ===============
Personal and Corporate
Banking 12.1% 9.1% 10.3%
Barclaycard 18.9% 14.3% 16.8%
Africa Banking 9.6% 6.6% 9.4%
Investment Bank 5.7% 2.7% 15.7%
======================== =============== =============== ===============
Barclays Core excluding
Head Office 10.4% 7.2% 13.0%
Head Office impact(1) 0.6% 1.6% 2.1%
======================== =============== =============== ===============
Barclays Core 11.0% 8.8% 15.1%
Barclays Non-Core
impact(1) (4.5%) (7.5%) (7.3%)
======================== =============== =============== ===============
Barclays Group adjusted
total 6.5% 1.3% 7.8%
Half year ended Half year ended Half year ended
30.06.14 31.12.13 30.06.13
Return on Average % % %
Tangible Equity
======================== =============== =============== ===============
Personal and Corporate
Banking 16.1% 12.0% 13.5%
Barclaycard 23.6% 18.2% 21.7%
Africa Banking 13.3% 9.3% 13.0%
Investment Bank 5.9% 2.8% 16.3%
======================== =============== =============== ===============
Barclays Core excluding
Head Office 12.5% 8.6% 15.6%
Head Office impact(1) 1.0% 2.5% 3.7%
======================== =============== =============== ===============
Barclays Core 13.5% 11.1% 19.3%
Barclays Non-Core
impact(1) (6.0%) (9.6%) (10.2%)
======================== =============== =============== ===============
Barclays Group adjusted
total 7.5% 1.5% 9.1%
1 Return on average equity and average tangible equity for Head
Office and Barclays Non-Core represents their impact on Barclays
Core and the Group respectively.
Performance Management
Half year ended Half year ended Half year ended
30.06.14 31.12.13 30.06.13
Profit/(Loss) Attributable GBPm GBPm GBPm
to Ordinary Equity Holders
of the Parent(1)
============================ =============== =============== ===============
Personal and Corporate
Banking 1,044 800 881
Barclaycard 540 383 439
Africa Banking 181 134 222
Investment Bank 441 209 1,306
Head Office 31 84 (173)
============================ =============== =============== ===============
Barclays Core 2,237 1,610 2,675
Barclays Non-Core (458) (1,271) (619)
============================ =============== =============== ===============
Barclays Group adjusted
total 1,779 339 2,056
Average Equity
Half year ended Half year ended Half year ended
30.06.14 31.12.13 30.06.13
GBPbn GBPbn GBPbn
======================= =============== =============== ===============
Personal and Corporate
Banking 17.3 17.5 17.2
Barclaycard 5.7 5.4 5.2
Africa Banking 3.8 4.1 4.7
Investment Bank 15.6 15.6 16.6
Head Office(2) (1.8) (6.0) (8.3)
======================= =============== =============== ===============
Barclays Core 40.6 36.6 35.4
Barclays Non-Core 14.5 16.5 17.5
======================= =============== =============== ===============
Barclays Group total 55.1 53.1 52.9
Average Tangible Equity
Half year ended Half year ended Half year ended
30.06.14 31.12.13 30.06.13
GBPbn GBPbn GBPbn
======================= =============== =============== ===============
Personal and Corporate
Banking 13.0 13.3 13.1
Barclaycard 4.6 4.2 4.0
Africa Banking 2.7 2.9 3.4
Investment Bank 14.9 15.0 16.0
Head Office(2) (2.1) (6.4) (8.7)
======================= =============== =============== ===============
Barclays Core 33.1 29.0 27.8
Barclays Non-Core 14.2 16.3 17.2
======================= =============== =============== ===============
Barclays Group total 47.3 45.3 45.0
1 The profit after tax attributable to other equity holders of
GBP90m (2013: GBPnil) is offset by a tax credit recorded in
reserves of GBP19m (2013: GBPnil) allocated across the businesses.
The net amount of GBP71m, along with NCI, is deducted from profit
after tax in order to calculate return on average tangible
shareholders' equity and return on average shareholders' equity.
Hence, H114 attributable profit of GBP1,760m has been adjusted for
the tax credit recorded in reserves of GBP19m (2013: GBPnil).
2 Includes risk weighted assets and capital deductions in Head
Office and Other Operations, plus the residual balance of average
ordinary shareholders' equity and tangible ordinary shareholders'
equity.
Performance Management
Margins and Balances(1)
Half Year Ended 30.06.14 Half Year Ended 30.06.13
Average Average
Net Interest customer Net interest Net Interest customer Net interest
Income assets margin Income assets margin
GBPm GBPm % GBPm GBPm %
======================== ============ ========= ============ ============ ========= ============
Personal and Corporate
Banking 3,057 208,160 2.96 2,860 200,104 2.88
Barclaycard 1,500 33,410 9.05 1,385 30,932 9.03
Africa Banking 1,007 34,574 5.87 1,140 40,489 5.68
======================== ============ ========= ============ ============ ========= ============
Total Personal and
Corporate Banking,
Barclaycard and Africa
Banking 5,564 276,144 4.06 5,385 271,525 4.00
Investment Bank 334 164
Head Office and Other
Operations 1 (166)
======================== ============ ========= ============ ============ ========= ============
Core 5,899 5,383
Non-Core 183 194
======================== ============ ========= ============ ============ ========= ============
Total Net Interest
Income 6,082 5,577
-- Total PCB, Barclaycard and Africa Banking NII increased 3% to
GBP5,564m due to:
- An increase in average customer assets to GBP276.1bn (2013:
GBP271.5bn) with growth in PCB mortgage and savings and
Barclaycard, partially offset by reductions in Africa Banking as
the ZAR depreciated against GBP
- Net interest margin increased 6bps to 4.06% primarily due to
lower customer deposit rates in PCB and lower funding costs
-- Group NII increased to GBP6.1bn (2013: GBP5.6bn) including
structured hedge contributions of GBP0.8bn (2013: GBP0.8bn). Equity
structural hedge income increased as the weighted average life of
the hedge was expanded. This was offset by lower product structural
hedges driven by the maintenance of the hedge in a continuing low
rate environment
-- Net interest margin reflects movements in the Group's
internal funding rates which are based on the cost to the Group of
alternative funding in wholesale markets. The internal funding rate
prices intra-group funding and liquidity to appropriately give
credit to businesses with net surplus liquidity and to charge those
businesses in need of alternative funding at a rate that is driven
by prevailing market rates and includes a term premium.
Quarterly analysis for PCB, Barclaycard
and Africa Banking:
Quarter Ended 30.06.14 Quarter Ended 31.03.14
Average Average
Net Interest customer Net interest Net Interest customer Net interest
Income assets margin Income assets margin
GBPm GBPm % GBPm GBPm %
======================== ============ ========= ============ ============ ========= ============
Personal and Corporate
Banking 1,529 209,040 2.93 1,528 207,433 2.99
Barclaycard 754 33,904 8.92 746 32,911 9.19
Africa Banking 504 34,660 5.83 503 34,488 5.91
======================== ============ ========= ============ ============ ========= ============
Total Personal and
Corporate Banking,
Barclaycard and Africa
Banking 2,787 277,604 4.03 2,777 274,832 4.10
1 Margins are calculated as net interest income over average customer assets.
Risk Management
Risk Management and Principal Risks
Barclays risk management responsibilities are laid out in the
Enterprise Risk Management Framework (ERMF), which creates clear
ownership and accountability, with the purpose that the Group's
most significant risk exposures are understood and managed in
accordance with agreed risk appetite, and that there is regular
reporting of both risk exposures and the operating effectiveness of
controls. It includes those risks incurred by Barclays that are
foreseeable, continuous, and material enough to merit establishing
specific bank-wide control frameworks. These are known as Key Risks
and are grouped into six Principal Risks.
Further detail on these risks and how they are managed is
available from the 2013 Annual Report and Accounts or online at
www.barclays.com/investorrelations. There has been no significant
change to the Key Risks, risk management or principal uncertainties
during the period or expected for the remaining six months of the
financial year.
The following section gives an overview of the performance in
Funding Risk - Liquidity, Funding Risk - Capital, Credit Risk and
Market Risk for the period.
Funding & Liquidity
Barclays has a comprehensive Liquidity Risk Management Framework
(the Liquidity Framework) for managing the Group's liquidity
risk.
Liquidity risk is managed separately at Barclays Africa Group
Limited (BAGL) due to local currency and funding requirements.
Unless stated otherwise, all disclosures in this section exclude
BAGL and they are reported on a stand-alone basis. Adjusting for
local requirements, BAGL liquidity risk is managed on a consistent
basis to Barclays Group.
Liquidity stress testing
Under the Liquidity Framework, the Group has established a
Liquidity Risk Appetite (LRA), which is measured with reference to
the liquidity pool compared to anticipated stressed net contractual
and contingent outflows under a variety of stress scenarios. These
scenarios cover a market-wide stress event, a Barclays-specific
stress event and a combination of the two. Under normal market
conditions, the liquidity pool is managed to be at least 100% of 90
days of anticipated outflows for a market-wide stress and 30 days
of anticipated outflows for each of the Barclays-specific and
combined stresses. Of these, the 30 day Barclays-specific scenario
requires the largest liquidity pool to meet its stress
outflows.
Since June 2010 the Group has reported its liquidity position
against Individual Liquidity Guidance (ILG) provided by the PRA.
The Group also monitors its position against anticipated CRD IV and
Basel 3 metrics, including the Liquidity Coverage Ratio (LCR) and
the Net Stable Funding Ratio (NSFR)(1) .
As at 30 June 2014 the Group estimated its LCR at 107% (2013:
96%) based upon the CRD IV rules, as implemented by EBA. This is
equivalent to a surplus of GBP9bn (2013: shortfall of GBP6bn). The
Group estimated its LCR at 112% (2013: 102%) based on the Basel
standards published in January 2013.
As at 30 June 2014, the Group held eligible liquid assets in
excess of 100% of net stress outflows for both the 30 day
Barclays-specific LRA scenario and the CRD IV LCR as implemented by
the EBA:
Compliance with internal and regulatory stress Barclays'
tests LRA
(30 day
Barclays
specific Estimated
requirement)(2) CRD IV LCR(1)
GBPbn GBPbn
=============================================== ================ ==============
Eligible liquidity buffer 134 141
Net stress outflows 125 132
=============================================== ================ ==============
Surplus 9 9
Liquidity pool as a percentage of anticipated
net outflows as at 30 June 2014 107% 107%
=============================================== ================ ==============
Liquidity pool as a percentage of anticipated
net outflows as at 31 December 2013 104% 96%
1 The methodology for estimating the LCR and NSFR is based on an
interpretation of the CRD IV and Basel III standards respectively
and includes a number of assumptions which are subject to change
prior to the finalisation of CRD IV rules on these metrics. The
estimated LCR and NSFR in this section include BAGL.
2 Of the three stress scenarios monitored as part of the LRA,
the 30 day Barclays specific scenario results in the lowest ratio
at 107% (2013: 104%). This compares to 128% (2013: 127%) under the
90 day market-wide scenario and 114% (2013: 112%) under the 30 day
combined scenario.
Funding Risk - Liquidity
The LRA and LCR surpluses were within the expected normal
operating range, while maintaining compliance with internal
liquidity risk appetite and external regulatory requirements. This
includes maintaining an LCR of at least 100% based upon the CRD IV
rule ahead of the regulatory requirement.
Barclays estimated its NSFR at 98% (2013: 95%) based on its
current interpretation of the January 2014 BCBS consultation. This
includes the requirement for 50% required stable funding against
short-term reverse repos from non-banks. Without this requirement,
which did not exist in 2010 original Basel proposal, the NSFR would
have been 113%. Further changes to the rules are expected prior to
the Basel Committee's finalisation of the rules and implementation
by local regulators ahead of the target 2018 compliance date.
Barclays plans to maintain its surplus to the internal and
regulatory stress requirements at an efficient level. Barclays will
continue to monitor the money markets closely, in particular for
early indications of the tightening of available funding. In these
conditions, the nature and severity of the stress scenarios are
reassessed and appropriate action taken with respect to the
liquidity pool. This may include further increasing the size of the
pool or monetising the pool to meet stress outflows.
Liquidity pool
The Group liquidity pool was GBP134bn (2013: GBP127bn). During
2014, the month-end liquidity pool ranged from GBP134bn to GBP156bn
(2013: GBP127bn to GBP157bn), and the month-end average balance was
GBP145bn (2013: GBP144bn). The liquidity pool is held unencumbered
and is not used to support payment or clearing requirements.
Composition of the Group Liquidity
Pool
Liquidity Liquidity Liquidity pool Liquidity
Pool 30.06.2014 pool of of which CRD Pool 31.12.2013
which IV LCR-eligible(2)
PRA eligible(1)
Level Level
1 2A
As at 30.06.2014 GBPbn GBPbn GBPbn GBPbn GBPbn
===== ===== ===== ===== =====
Cash and deposits with central
banks(3) 42 41 40 - 43
Government bonds(4)
AAA rated 58 57 58 - 52
AA+ to AA- rated 11 10 11 - 9
Other government bonds 1 - 1 - 1
===================================== ===== ===== ===== ===== =====
Total Government bonds 70 67 70 - 62
Other
Supranational bonds and multilateral
development banks 6 3 6 - 3
Agencies and agency mortgage-backed
securities 8 - 5 3 10
Covered bonds (rated AA- and
above) 5 - - 5 6
Other 3 - - - 3
===================================== ===== ===== ===== ===== =====
Total other 22 3 11 8 22
Total as at 30 June 2014 134 111 121 8
===================================== ===== ===== ===== =====
Total as at 31 December 2013 127 104 109 11
Barclays manages the liquidity pool on a centralised basis. As
at 30 June 2014, 92% (2013: 90%) of the liquidity pool was located
in Barclays Bank PLC and was available to meet liquidity needs
across the Barclays Group. The residual liquidity pool is held
predominantly within Barclays Capital Inc (BCI). The portion of the
liquidity pool outside of Barclays Bank PLC is held against
entity-specific stressed outflows and regulatory requirements.
1 GBP111bn (2013: GBP104bn) of the liquidity pool is PRA
eligible as per BIPRU 12.7. In addition, there are GBP10bn (2013:
GBP9bn) of Level 2 assets available, as per PRA's announcement in
August 2013 that certain assets specified by PRA as Level 2 assets
can be used on a transitional basis.
2 The LCR-eligible assets presented in this table represent only
those assets which are also eligible for the Group liquidity pool
and do not include any Level 2B assets as defined by the Basel
Committee on Banking Supervision.
3 Of which over 95% (2013: over 95%) was placed with the Bank of
England, US Federal Reserve, European Central Bank, Bank of Japan
and Swiss National Bank.
4 Of which over 85% (2013: over 85%) are comprised of UK, US,
Japanese, French, German, Danish, Swiss and Dutch securities.
Funding Risk - Liquidity
Deposit Funding As at 30.06.2014 As at 31.12.13
LiquidityFunding of Loans and Loans and Loan to Loan to
Advances to Customers Advances Customer Deposit Deposit
(including BAGL) to Customers Deposits Ratio Ratio
GBPbn GBPbn % %
====================================== ------------- --------- -------- ========
Personal and Corporate banking 217 298
Barclaycard 33 6
Non-Core (retail) 39 16
Africa Banking 34 33
Total Retail funding 323 353 92 91
Investment Bank, Non-Core (wholesale)
and Other(1) 120 91
====================================== ============= ========= ======== ========
Total 443 444 100 101
PCB, Africa Banking, Barclaycard and Non-Core (retail) are
largely funded by customer deposits. The loan to deposit ratio for
these businesses was 92% (2013: 91%). The customer deposits in
excess of loans and advances are primarily used to fund liquidity
buffer requirements for these businesses. The Investment Bank is
funded with wholesale liabilities and does not rely on customer
deposit funding from these businesses. The loan to deposit ratio
for the Group was broadly unchanged at 100% (2013: 101%).
As at 30 June 2014, GBP125bn (2013: GBP122bn) of total customer
deposits were insured through the UK Financial Services
Compensation Scheme and other similar schemes. In addition to these
customer deposits, there were GBP3bn (2013: GBP3bn) of other
liabilities insured or guaranteed by governments.
Wholesale Funding
Funding of Other Assets as at 30 June 2014
Assets GBPbn Liabilities GBPbn
================================= ===== ================================ =====
Trading Portfolio Assets 59 Repurchase agreements 174
Reverse repurchase agreements 115
Reverse repurchase agreements 57 Trading Portfolio Liabilities 57
Derivative Financial Instruments 332 Derivative Financial Instruments 325
Less than 1 year wholesale
Liquidity pool (2) 104 debt 86
Greater than 1 year wholesale
Other unencumbered assets(3) 129 debt and equity 154
-- Trading portfolio assets are largely funded by repurchase
agreements with 60% (2013: 63%) secured against highly liquid
assets(4) (.) The weighted average maturity of these repurchase
agreements secured against less liquid assets was 67 days (2013: 69
days)
-- The majority of reverse repurchase agreements are matched by
repurchase agreements. As at 30 June 2014, 72% (2013: 76%) of
matched book activity was secured against highly liquid assets(4) .
The remainder of reverse repurchase agreements are used to settle
trading portfolio liabilities
-- Derivative assets and liabilities are largely matched. A
substantial proportion of balance sheet derivative positions
qualify for counterparty netting and the remaining portions are
largely offset once netted against cash collateral received and
paid
-- The Group liquidity pool is primarily funded by wholesale
debt with the remainder being funded by customer deposits
-- Other assets are largely matched by term wholesale debt and
equity
1 Includes trading settlements and cash collateral balances of
GBP84bn (2013: GBP71bn) relating to loans and advances to customers
and GBP75bn (2013: GBP62bn) relating to customer deposits.
2 The portion of the liquidity pool estimated to be funded by wholesale funds.
3 Predominantly available for sale investments, trading
portfolio assets, financial assets designated at fair value and
loans and advances to banks.
4 Highly liquid assets are limited to government bonds, US
agency securities and US agency mortgage-backed securities.
Funding Risk - Liquidity
Composition of wholesale funding
As at 30 June 2014 total wholesale funding outstanding
(excluding repurchase agreements) was GBP179bn (2013: GBP186bn).
GBP86bn (2013: GBP82bn) of wholesale funding matures in less than
one year of which GBP25bn(1) (2013: GBP23bn) relates to term
funding.
Outstanding wholesale funding comprised of GBP35bn (2013:
GBP35bn) secured funding and GBP144bn (2013: GBP151bn) unsecured
funding.
Maturity profile(2) Over Over Over Over Over Over
one three six nine one two
month months months months year years
but but but but but but
Not not not not not Sub-total not not
more more more more more less more more
than than than than than than than than Over
one three six nine one one two five five
month months months months year year years years years Total
GBPbn GBPbn GBPbn GBPbn GBPbn GBPbn GBPbn GBPbn GBPbn GBPbn
============================ ====== ======= ======= ======= ======= ========= ====== ====== ====== =====
Deposits from Banks 10.0 6.8 1.0 4.6 0.1 22.5 0.3 0.2 - 23.0
Certificates of Deposit
and Commercial Paper 2.4 8.8 6.4 3.7 3.0 24.3 0.5 1.1 0.4 26.3
Asset Backed Commercial
Paper 2.8 2.5 0.1 - - 5.4 - - - 5.4
Senior unsecured (Public
benchmark) 1.5 0.1 0.1 2.0 0.6 4.3 2.6 7.6 6.2 20.7
Senior unsecured (Privately
placed) 1.3 2.4 2.5 4.1 3.1 13.4 7.8 15.5 11.9 48.6
Covered bonds/ABS - 3.2 0.2 4.0 1.7 9.1 3.8 4.1 7.3 24.3
Subordinated liabilities - - - 0.1 - 0.1 - 2.8 15.6 18.5
Other(3) 3.5 1.4 0.7 0.5 0.3 6.4 2.2 1.4 2.1 12.1
============================ ====== ======= ======= ======= ======= ========= ====== ====== ====== =====
Total as at 30 June 2014 21.5 25.2 11.0 19.0 8.8 85.5 17.2 32.7 43.5 178.9
============================ ====== ======= ======= ======= ======= ========= ====== ====== ====== =====
Of which secured 5.0 6.7 0.9 4.5 1.9 19.0 4.2 4.4 7.4 35.0
Of which unsecured 16.5 18.5 10.1 14.5 6.9 66.5 13.0 28.3 36.1 143.9
============================ ====== ======= ======= ======= ======= ========= ====== ====== ====== =====
Total as at 31 December
2013 20.3 24.0 15.5 15.9 6.3 82.0 27.1 33.8 42.6 185.5
============================ ====== ======= ======= ======= ======= ========= ====== ====== ====== =====
Of which secured 4.6 3.7 1.4 3.5 0.7 13.9 7.3 6.5 7.2 34.9
Of which unsecured 15.7 20.3 14.1 12.4 5.6 68.1 19.8 27.3 35.4 150.6
============================ ====== ======= ======= ======= ======= ========= ====== ====== ====== =====
Outstanding wholesale funding includes GBP49bn (2013: GBP50bn)
of privately placed senior unsecured notes in issue. These notes
are issued through a variety of distribution channels including
intermediaries and private banks. A large proportion of end users
of these products are individual retail investors.
The liquidity risk of wholesale funding is carefully managed
primarily through the LRA stress tests, against which the liquidity
pool is held. Although not a requirement, the liquidity pool
exceeded wholesale funding maturing in less than one year by
GBP48bn (2013: GBP45bn).
The average maturity of wholesale funding net of the liquidity
pool was at least 80 months (2013: 69 months).
Term financing
The Group issued GBP9bn of term funding net of early redemptions
during H1 2014. In addition, the Group raised GBP6bn through
participation in the Bank of England's Funding for Lending Scheme.
Barclays has GBP12bn of term funding maturing in the reminder of
2014 and GBP24bn in 2015.
The Group expect to issue more public wholesale debt in the
remainder of 2014, in order to maintain a stable and diverse
funding base by type, currency and distribution channel.
Barclays Africa Group Limited
-- Liquidity risk is managed separately at BAGL due to local
currency, funding and regulatory requirements
-- In addition to the Group liquidity pool, BAGL held GBP5bn
(2013: GBP4bn) of liquidity pool assets against BAGL-specific
anticipated stressed outflows. The liquidity pool consists of South
African government bonds and Treasury bills
-- The BAGL loan to deposit ratio was 104% (2013: 103%)
-- As at 30 June 2014, BAGL had GBP8bn of wholesale funding
outstanding (2013: GBP9bn), of which GBP5bn matures in less than
one year (2013: GBP6bn)
1 Term funding maturities comprise public benchmark and
privately placed senior unsecured notes, covered bonds/asset-backed
securities (ABS) and subordinated debt where the original maturity
of the instrument was more than 1 year.
2 The composition of wholesale funds comprises the balance sheet
reported Deposits from Banks, Financial liabilities at Fair Value,
Debt Securities in Issue and Subordinated Liabilities, excluding
cash collateral and settlement balances. It does not include
collateral swaps, including participation in the Bank of England's
Funding for Lending Scheme. Included within deposits from banks are
GBP4bn of liabilities drawn in the European Central Bank's 3 year
LTRO.
3 Primarily comprised of fair value deposits GBP4bn and secured
financing of physical gold GBP5bn.
Funding Risk - Capital
CRD IV Capital
The Capital Requirements Regulation and Capital Requirements
Directive implemented Basel 3 within the EU (collectively known as
CRD IV) on 1 January 2014. The rules are supplemented by Regulatory
Technical Standards and the PRA's rulebook, including the
implementation of transitional rules. However, rules and guidance
are still subject to change as certain aspects of CRD IV are
dependent on final technical standards and clarifications to be
issued by the EBA and adopted by the European Commission and the
PRA. All capital, RWA and leverage calculations reflect Barclays'
interpretation of the current rules.
Capital Ratios As at As at
30.06.14 31.12.13
Fully Loaded Common Equity Tier 1(1) 9.9% 9.1%
PRA Transitional Common Equity Tier 1(2) 9.8% 9.1%
PRA Transitional Tier 1 12.7% 11.3%
PRA Transitional Total Capital 16.0% 15.0%
Capital Resources GBPm GBPm
====================================================== ======= =======
Shareholders' equity (excluding non controlling
interests) per the balance sheet 58,068 55,385
- Less: Other equity instruments (recognised
as AT1 capital) (4,326) (2,063)
Adjustment to retained earnings for foreseeable
dividends (596) (640)
Minority Interests (amount allowed in consolidated
CET1) 1,171 1,238
Other regulatory adjustments and deductions
Additional value adjustments (2,492) (2,479)
Goodwill and intangible assets(3) (7,828) (7,618)
Deferred tax assets that rely on future profitability
excluding temporary differences (1,062) (1,045)
Fair value reserves related to gains or losses
on cash flow hedges(3) (532) (270)
Excess of expected losses over impairment (2,036) (2,106)
Gains or losses on liabilities at fair value
resulting from own credit(3) 612 600
Other regulatory adjustments (172) (119)
Direct and indirect holdings by an institution
of own CET1 instruments (25) (496)
====================================================== ======= =======
Fully Loaded CET1 Capital 40,782 40,387
Regulatory adjustments relating to unrealised
gains(3) (513) (180)
====================================================== ======= =======
PRA Transitional CET1 Capital 40,269 40,207
Additional Tier 1 (AT1) capital
Capital instruments and the related share
premium accounts 4,326 2,063
Qualifying AT1 capital (including minority
interests) issued by subsidiaries 7,592 9,726
Less instruments issued by subsidiaries subject
to phase out (114) (1,849)
Other regulatory adjustments and deductions (28) -
====================================================== ======= =======
Transitional Additional Tier 1 capital 11,776 9,940
====================================================== ======= =======
PRA Transitional Tier 1 capital 52,045 50,147
Tier 2 (T2) capital
Qualifying T2 capital (including minority
interests) issued by subsidiaries 13,783 16,834
Less instruments issued by subsidiaries subject
to phase out - (522)
Other regulatory adjustments and deductions (85) (12)
====================================================== ======= =======
PRA Transitional Total regulatory capital 65,743 66,447
-- As at 30 June 2014, Barclays' fully loaded Tier 1 capital was
GBP45,364m, and the fully loaded Tier 1 ratio was 11.0%. Fully
loaded total regulatory capital was GBP61,740m and the fully loaded
total capital ratio was 15.0%. The fully loaded Tier 1 capital and
total capital measures are calculated without applying the
transitional provisions set out in CRD IV and assessing compliance
of AT1 and T2 instruments against the relevant criteria in CRD
IV
-- The transitional total capital is calculated on the basis of
PRA rules in the December 2013 publication of PS 7/13(4) ,
reflecting the minimum Capital Requirements Regulation (CRR)
transitional path for the grandfathering of existing capital
instruments within certain limits
1 Following the full implementation of CRD IV reporting in 2014,
the previously reported 31 December 2013 RWAs have been revised by
GBP6.9bn to GBP442bn and the fully loaded CET1 ratio revised by
(0.2)% to 9.1%. As at 31 March 2014, these figures were a GBP5.7bn
increase and a 0.1% decrease respectively. These additional RWAs
have been included within Head Office and Other Operations.
2 The CRD IV CET1 ratio (FSA October 2012 transitional
statement) as applicable to Barclays' Tier 2 Contingent Capital
Notes was 12.0% based on GBP49.3bn of transitional CRD IV CET1
capital and GBP411bn RWAs.
3 The capital impacts of these items are net of tax.
4 PS 7/13 refers to PRA policy statement PS7/13 on strengthening
capital standards published in December 2013.
Funding Risk - Capital
Movement in fully loaded Common Equity Tier 1 (CET1) Six Months
Capital
Ended
30.06.14
GBPm
Opening Common Equity Tier 1 capital 40,387
Profit for the period 1,216
Movement in own credit(1) 12
Movement in dividends (755)
Retained regulatory capital generated from earnings 473
Movement in reserves - net impact of share awards 305
Movement in available for sale reserves 345
Movement in currency translation reserves (941)
Retirement benefit remeasurements 237
Other reserves movements (205)
====================================================== ======
Other reserves movements (259)
Movement in regulatory adjustments and deductions:
Minority interests (67)
Additional value adjustments (13)
Goodwill and intangible assets(1) (210)
Deferred tax assets that rely on future profitability
excluding those arising from temporary differences (17)
Negative amounts resulting from the calculation of
expected loss amounts 70
Direct and indirect holdings by an institution of own
CET1 instruments 471
Other regulatory adjustments (53)
====================================================== ======
Closing Common Equity Tier 1 capital 40,782
-- Fully loaded Common Equity Tier 1 ratio increased to 9.9%
(2013: 9.1%) reflecting an increase in CET1 capital of GBP0.4bn to
GBP40.8bn and a GBP31bn decrease in RWAs.
-- Barclays generated GBP1.2bn capital from profits. After
adjusting for own credit, dividends paid and regulatory foreseeable
dividends, retained regulatory capital generated from earnings
increased CET1 capital by GBP0.5bn. Other material movements in
CET1 were:
- GBP0.5bn decrease in the deduction for holdings for own Common
Equity Tier 1 instruments following further management actions
- GBP0.9bn reduction due to currency movements primarily driven
by strengthening of GBP against USD, ZAR and EUR
- GBP0.3bn increase due to gains in the available for sale reserve
-- Transitional total capital decreased by GBP0.7bn to GBP65.7bn
due to the increase in fully loaded CET1 offset by the removal of
gains in the available for sale reserves in CET1 and a T2
redemption of dated subordinated liabilities
-- During Q2 2014, Barclays PLC issued Fixed Rate Resetting
Perpetual Subordinated Contingent Convertible Securities as part of
an exchange of GBP1.5bn of Barclays Bank PLC preference shares and
GBP0.6bn of Tier 1 notes and Reserve Capital Instruments. The
Barclays PLC instruments are full end point compliant Additional
Tier 1 capital and replace previously grandfathered instruments
1 The capital impacts of these items are net of tax.
Funding Risk - Capital
Risk Weighted Assets by Risk Type and Business
Counterparty Operational Total
Credit risk credit risk Market risk risk
As at 30 June 2014 GBPm GBPm GBPm GBPm GBPm
====================== =========== ============ =========== =========== =======
Personal & Corporate
Banking 100,680 1,064 15 16,176 117,935
Barclaycard 32,176 - - 5,505 37,681
Africa Banking 29,088 456 1,314 5,604 36,462
Investment Bank 40,044 27,214 38,585 19,621 125,464
Head Office and Other
Operations 3,818 395 577 1,185 5,975
====================== =========== ============ =========== =========== =======
Total Core 205,806 29,129 40,491 48,091 323,517
Barclays Non Core 37,898 23,138 17,842 8,592 87,470
====================== =========== ============ =========== =========== =======
Total risk weighted
assets 243,704 52,267 58,333 56,683 410,987
As at 31
December 2013
============== ================ ========================= ===================== ======================== ======================
Personal &
Corporate
Banking 102,385 823 57 15,020 118,285
Barclaycard 30,033 - - 5,627 35,660
Africa Banking 29,242 538 1,429 6,837 38,046
Investment
Bank 38,517 30,711 38,677 18,096 126,001
Head Office
and Other
Operations(1) 6,390 2,158 4,968 1,089 14,605
============== ================ ========================= ===================== ======================== ======================
Total Core 206,567 34,230 45,131 46,669 332,597
Barclays Non
Core 48,797 25,861 27,574 7,642 109,874
============== ================ ========================= ===================== ======================== ======================
Total risk
weighted
assets 255,364 60,091 72,705 54,311 442,471
Risk weighted assets by risk and approach
As at 30 June 2014 GBPm
========================================== =======
- Standardised 77,892
- Internal ratings based 165,812
========================================== =======
Credit risk 243,704
- Internal model method 37,537
- Non-model method 14,730
========================================== =======
Counterparty risk 52,267
- Standardised 24,125
- Modelled - VaR 34,208
========================================== =======
Market risk 58,333
========================================== =======
Operational risk 56,683
========================================== =======
Total risk weighted assets 410,987
Movement analysis of risk weighted assets
Counterparty Operational
Credit credit Market risk
risk risk risk Total
Risk weighted assets GBPbn GBPbn GBPbn GBPbn GBPbn
=========================== ====== ============ ============ ================ ======
As at 1 January 2014 255.4 60.1 72.7 54.3 442.5
Book size 7.2 (12.9) (10.0) - (15.7)
Acquisitions and disposals (4.5) - - - (4.5)
Book quality (2.1) (1.1) 1.2 - (2.0)
Model updates 3.7 3.2 (0.3) 2.4 9.0
Methodology and policy (9.0) 0.4 (5.1) - (13.7)
Foreign exchange movement (4.3) - - - (4.3)
Other (2.7) 2.6 (0.2) - (0.3)
=========================== ====== ============ ============ ================ ======
As at 30 June 2014 243.7 52.3 58.3 56.7 411.0
1 Following the full implementation of CRD IV reporting in 2014,
the previously reported 31 December 2013 RWAs have been revised by
GBP6.9bn to GBP14.6bn.
Funding Risk - Capital
RWAs decreased GBP31.5bn to GBP411.0bn, driven by:
-- Book size decreased RWAs by GBP15.7bn, primarily driven by
risk reductions in the trading book within BNC, offset by balance
sheet growth in PCB and increased customer lending in
Barclaycard
-- Acquisitions and disposals decreased RWAs by GBP4.5bn, primarily driven by disposals in BNC
-- Book quality improved, resulting in a RWA reduction of
GBP2.0bn, primarily driven by changes in risk profile within the
Investment Bank and PCB
-- Model updates increased RWAs by GBP9.0bn, driven by a
revision of probability of default metrics for wholesale portfolios
and the annual operational risk refresh
-- Methodology and policy changes decreased RWAs by GBP13.7bn,
primarily driven by changes to the treatment of high quality
liquidity assets, offset by the early adoption of LGD floors for
wholesale exposures
-- Foreign exchange movements decreased RWAs by GBP4.3bn,
primarily driven by the appreciation of GBP against ZAR, USD and
EUR
Leverage ratio requirements
CRD IV introduces a non-risk based leverage ratio that is
intended to act as a supplementary measure to the risk-based
capital measures. While CRD IV does not currently impose a binding
requirement, the PRA requested Barclays to meet a 3% CRD IV
adjusted leverage ratio - 'PRA leverage ratio' - by June 2014.
ThePRA leverage ratio is calculated based on fully loaded CRD IV
Tier 1 capital adjusted for certain PRA defined deductions, and a
PRA adjusted CRD IV leverage exposure measure.
On 12 January 2014, the Basel Committee finalised its revised
standards for calculating the Basel 3 leverage ratio. These
standards included a number of changes that would require amendment
to CRD IV to retain international consistency. The legislative
process to implement these changes is underway and final rules are
expected later in 2014. In June 2014 the PRA issued Supervisory
Statement SS3/13 and updated their supervisory expectation with a
3% end point leverage ratio based on the revised Basel 3
calculation basis that is applicable from 1 July 2014. For the
purposes of calculating this ratio, the PRA adjustments to leverage
exposures and Tier 1 capital will no longer apply.
Barclays has disclosed an estimated 'BCBS 270 leverage ratio'
based on its understanding of the latest requirements that are
expected to be included in the revised CRD IV text and guidance
from regulators. The final rules may result in a different
calculation methodology when implemented in the revised CRD IV
text.
PRA leverage ratio calculation
For an overview of the basis of preparation for the PRA leverage
ratio, please refer to the December 2013 Results Announcement.
Revised BCBS 270 leverage ratio calculation
The revised rules contain a number of differences to the way
elements of leverage exposure are measured under the current CRD IV
rules. Key differences areas follows:
-- Counterparty credit risk on derivatives is reduced due to
application of eligible collateral, and an exposure value
introduced for net written credit derivatives
-- Counterparty credit risk on SFTs changes as a result of the
removal of haircuts, however cash receivables must be retained on
the balance sheet and can only be netted in certain
circumstances
-- Regulatory add-ons relating to off balance sheet undrawn
commitments are based on the credit conversion factors used in the
standardised approach to credit risk
Funding Risk - Capital
Estimated Leverage
IFRS BCBS 270 PRA PRA
Balance Leverage Leverage Leverage
Sheet exposure exposure exposure
As at As at As at As at
30.06.14 30.06.14 30.06.14 31.12.13
Leverage exposure GBPbn GBPbn GBPbn GBPbn
============================================ ========= ========= ========= ========
Derivatives
IFRS derivative financial instruments 333 333 333 355
Mark-to-market and margin netting
adjustments for derivatives (298) (268) (288)
Cash collateral pledged on derivatives 48 17 39 48
Potential Future Exposure on derivatives 195 195 249
Net written credit protection 29 - -
============================================ ========= ========= ========= ========
Total derivatives 276 299 364
Securities Financing Transactions
(SFTs)
IFRS Reverse repurchase agreements
and other similar secured lending 172 199 172 187
Remove IFRS SFTs - (172) (187)
Counterparty risk leverage exposure
measure for SFTs 29 60 92
============================================ ========= ========= ========= ========
Total Securities Financing Transactions 228 60 92
Other assets and adjustments
Loans and advances and other assets 762 762 762 752
Weighted undrawn commitments 105 177 179
Regulatory deductions and other adjustments (18) (32) (22)
============================================ ========= ========= ========= ========
Total other assets and adjustments 849 907 909
Total fully loaded leverage exposure 1,315 1,353 1,266 1,365
BCBS 270 PRA PRA
Leverage Leverage Leverage
ratio ratio ratio
As at As at As at
30.06.14 30.06.14 31.12.13
============================================ ========= ========= ========= ========
CET1 capital 40.8 40.8 40.4
Additional Tier 1 capital 4.6 4.6 2.3
============================================ ========= ========= ========= ========
Tier 1 capital 45.4 45.4 42.7
PRA deductions to CET1 capital (2.2) (2.2)
============================================ ========= ========= ========= ========
PRA adjusted Tier 1 capital 45.4 43.2 40.5
Fully loaded leverage ratio 3.4% 3.4% 3.0%
-- The PRA leverage exposure reduced by GBP99bn to GBP1,266bn.
The decrease was primarily driven by reductions in derivatives PFE
and the regulatory exposure for SFTs
- GBP54bn reduction in derivative PFE as a result of GBP18bn
reduction due to trade compression and tear ups, GBP13bn reduction
due to change of basis of preparation principally relating to sold
options, GBP10bn reduction due to netting and other optimisations
and other reductions due to currency movements
- GBP32bn reduction in SFTs primarily driven by netting,
collateral and other optimisations as well as other reductions due
to currency movements
Funding Risk - Capital
-- The estimated BCBS 270 leverage exposure of GBP1,353bn
represents an GBP87bn increase on the PRA leverage exposure driven
by a change in the treatment of SFTs, derivatives and off balance
sheet undrawn commitments
- GBP181bn increase in SFTs exposure due to the inclusion of
GBP212bn of on and off balance sheet cash receivables and the
change in regulatory counterparty credit risk exposure add on
resulting in a GBP31bn decrease due to the removal of haircuts
- GBP23bn decrease in derivatives due GBP52bn reduction in
counterparty credit risk exposure as a result of applying eligible
derivatives collateral, offset by GBP29bn increase due to the
incremental exposure value for net written credit derivatives
- GBP72bn reduction in undrawn commitments due the application
of credit conversion factors to the exposure as used in the
standardised approach to credit risk
Credit Risk
Analysis of Retail and Wholesale Loans and Advances
and Impairment
CRLs
% of Loan
Gross Impairment L&A Net Credit Gross Loan Impairment Loss
As at 30.06.14 L&A Allowance of Impairment Risk Loans L&A Charges(1) Rates
GBPm GBPm GBPm GBPm % GBPm bps
====================== ======= ========== ============== =========== ====== =============== ======
Personal & Corporate
Banking 143,839 1,302 142,537 2,648 1.8 133 19
Africa Banking 20,820 700 20,120 1,175 5.6 167 162
Barclaycard 34,854 1,607 33,247 1,606 4.6 537 311
====================== ======= ========== ============== =========== ====== =============== ======
Barclays Core 199,513 3,609 195,904 5,429 2.7 837 85
Barclays Non-Core 37,383 823 36,560 2,233 6.0 101 54
====================== ======= ========== ============== =========== ====== =============== ======
Total Group Retail 236,896 4,432 232,464 7,662 3.2 938 80
Investment Bank 117,259 31 117,228 43 - (26) (4)
Personal & Corporate
Banking 80,451 611 79,840 1,852 2.3 97 24
Africa Banking 15,263 263 15,000 633 4.1 29 38
Head Office and
Other Operations 2,496 - 2,496 - - - -
====================== ======= ========== ============== =========== ====== =============== ======
Barclays Core 215,469 905 214,564 2,528 1.2 100 9
Barclays Non-Core 40,598 1,629 38,969 2,705 6.7 72 36
====================== ======= ========== ============== =========== ====== =============== ======
Total Group Wholesale 256,067 2,534 253,533 5,233 2.0 172 14
Group Total 492,963 6,966 485,997 12,895 2.6 1,110 45
Traded Loans 3,074 n/a 3,074
Loans and advances
designated at fair
value 18,454 n/a 18,454
====================== ======= ========== ==============
Loans and advances
held at fair value 21,528 n/a 21,528
Total loans and
advances 514,491 6,966 507,525
As at 31.12.13
====================== ======= ========== ============== =========== ====== =============== ======
Personal & Corporate
Banking 140,742 1,325 139,417 2,703 1.9 357 25
Africa Banking 21,586 674 20,912 1,205 5.6 388 180
Barclaycard 33,024 1,517 31,507 1,541 4.7 1,096 332
====================== ======= ========== ============== =========== ====== =============== ======
Barclays Core 195,352 3,516 191,836 5,449 2.8 1,841 94
Barclays Non-Core 40,867 856 40,011 2,118 5.2 320 78
====================== ======= ========== ============== =========== ====== =============== ======
Total Group Retail 236,219 4,372 231,847 7,567 3.2 2,161 91
Investment Bank 104,468 - 104,468 - - (30) (3)
Personal & Corporate
Banking 77,674 701 76,973 1,861 2.4 264 34
Africa Banking 15,793 352 15,441 722 4.6 89 56
Head Office and
Other Operations 3,072 - 3,072 - - (3) (10)
====================== ======= ========== ============== =========== ====== =============== ======
Barclays Core 201,007 1,053 199,954 2,583 1.3 320 16
Barclays Non-Core 43,691 1,833 41,858 3,148 7.2 581 133
====================== ======= ========== ============== =========== ====== =============== ======
Total Group Wholesale 244,698 2,886 241,812 5,731 2.3 901 37
Group Total 480,917 7,258 473,659 13,298 2.8 3,062 64
Traded Loans 1,647 n/a 1,647
Loans and advances
designated at fair
value 18,695 n/a 18,695
====================== ======= ========== ==============
Loans and advances
held at fair value 20,342 n/a 20,342
Total loans and
advances 501,259 7,258 494,001
1 Excluding impairment charges on available for sale investments
and reverse repurchase agreements.
Credit Risk
-- Loans and advances to customers and banks at amortised cost
net of impairment increased to GBP486.0bn (2013: GBP473.7bn)
- Investment Bank increased by GBP12.8bn to GBP117.2bn
reflecting an increase in cash collateral and settlement balances
driven principally by higher trading volumes
- PCB increased GBP6.0bn to GBP222.4bn driven by UK mortgage
growth and an increase in corporate lending
Analysis of Impairment
Credit impairment charges and other provisions
by business
Half Year Half Year Half Year
Ended 30.06.14 Ended 31.12.13 Ended 30.06.13
GBPm GBPm GBPm
=============================================== =============== =============== ===============
Personal and Corporate Banking 230 322 299
Barclaycard 537 556 540
Africa Banking 196 201 276
Investment Bank (26) 8 (38)
Head Office - (3) -
----------------------------------------------- --------------- --------------- ---------------
Barclays Core 937 1,084 1,077
Barclays Non-Core 173 344 557
----------------------------------------------- --------------- --------------- ---------------
Total loan impairment charge(1) 1,110 1,428 1,634
Impairment charges on available for sale
investments (19) 1 -
Impairment of reverse repurchase agreements (5) 11 (3)
=============================================== =============== =============== ===============
Total credit impairment charges and other
provisions 1,086 1,440 1,631
-- Impairment charges on loans and advances decreased 32% to
GBP1,110m reflecting lower charges in Barclays Non-Core, Africa
Banking and PCB
- Non-Core decreased 69% to GBP173m driven by the non-recurrence
of single name exposure charge of GBP224m in the prior year as well
as the on-going actions to reduce corporate exposure in Iberia
- Africa decreased 29% to GBP196m principally due to lower
charges in the South Africa home loans portfolio and depreciation
of ZAR against GBP
- PCB decreased 23% to GBP230m reflecting improvements in
personal banking, mortgages and corporates as the economic
environment improved
- Lower overall impairment charges led to a decrease in the loan
loss rate to 45bps (2013: 64bps)
1 Includes charges of GBP25m (2013: GBP17m) in respect of undrawn facilities and guarantees.
Credit Risk
Analysis of Loans and Advances to Customers and Banks
Loans and Advances at Amortised Cost Net of Impairment Allowances,
by Industry Sector and Geography
Africa
United and Middle
As at 30th June 2014 Kingdom Europe Americas East Asia Total
GBPm GBPm GBPm GBPm GBPm GBPm
============================= ======== ====== ======== =========== ====== =======
Banks 7,351 12,768 10,825 2,280 6,082 39,306
Other financial institutions 27,260 22,175 46,524 2,793 7,604 106,356
Home loans 131,849 32,440 771 13,631 331 179,022
Cards, unsecured loans and
other personal lending 29,273 6,259 14,117 3,831 1,376 54,856
Construction and property 18,006 2,434 1,157 2,022 478 24,097
Other 41,255 12,685 8,048 16,183 4,189 82,360
============================= ======== ====== ======== =========== ====== =======
Net loans and advances to
customers and banks 254,994 88,761 81,442 40,740 20,060 485,997
Impairment allowance 3,000 2,203 665 1,033 65 6,966
============================= ======== ====== ======== =========== ====== =======
Gross loans and advances
to customers and banks 257,994 90,964 82,107 41,773 20,125 492,963
Loans and Advances at FV 16,571 1,479 2,758 643 77 21,528
As at 31st December 2013
============================= ======== ====== ======== =========== ====== =======
Banks 5,796 12,353 10,154 2,394 6,691 37,388
Other financial institutions 22,052 17,719 49,157 6,118 8,124 103,170
Home loans 129,591 34,752 782 14,051 351 179,527
Cards, unsecured loans and
other personal lending 28,168 6,792 12,630 3,842 1,283 52,715
Construction and property 18,155 2,402 956 2,288 150 23,951
Other 39,381 12,513 7,450 13,444 4,120 76,908
============================= ======== ====== ======== =========== ====== =======
Net loans and advances to
customers and banks 243,143 86,531 81,129 42,137 20,719 473,659
Impairment allowance 2,980 2,486 654 1,079 59 7,258
============================= ======== ====== ======== =========== ====== =======
Gross loans and advances
to customers and banks 246,123 89,017 81,783 43,216 20,778 480,917
Loans and Advances at FV 15,992 1,974 1,617 700 59 20,342
Credit Risk
Analysis of Potential Credit Risk Loans and
Coverage Ratios
CRLs PPLs PCRLs
As at As at As at As at As at As at
30.06.14 31.12.13 30.06.14 31.12.13 30.06.14 31.12.13
GBPm GBPm GBPm GBPm GBPm GBPm
================================= ======== ======== ======== ======== ======== ========
Personal & Corporate Banking 2,648 2,703 215 241 2,863 2,944
Africa Banking 1,175 1,205 182 194 1,357 1,399
Barclaycard 1,606 1,541 188 182 1,794 1,723
================================= ======== ======== ======== ======== ======== ========
Barclays Core 5,429 5,449 585 617 6,014 6,066
Barclays Non-Core 2,233 2,118 76 91 2,309 2,209
================================= ======== ======== ======== ======== ======== ========
Total Group Retail 7,662 7,567 661 708 8,323 8,275
Investment Bank 43 - 91 106 134 106
Personal & Corporate Banking 1,852 1,861 745 840 2,597 2,701
Africa Banking 633 722 108 112 741 834
Head Office and Other Operations - - - - - -
================================= ======== ======== ======== ======== ======== ========
Barclays Core 2,528 2,583 944 1,058 3,472 3,641
Barclays Non-Core 2,705 3,148 82 42 2,787 3,190
================================= ======== ======== ======== ======== ======== ========
Total Group Wholesale 5,233 5,731 1,026 1,100 6,259 6,831
Group Total 12,895 13,298 1,687 1,808 14,582 15,106
Impairment CRL coverage PCRL coverage
allowance
As at As at As at As at As at As at
30.06.14 31.12.13 30.06.14 31.12.13 30.06.14 31.12.13
GBPm GBPm % % % %
================================= ======== ======== ======== ======== ======== ========
Personal & Corporate Banking 1,302 1,325 49.2 49.0 45.5 45.0
Africa Banking 700 674 59.6 55.9 51.6 48.2
Barclaycard 1,607 1,517 100.1 98.4 89.6 88.0
================================= ======== ======== ======== ======== ======== ========
Barclays Core 3,609 3,516 66.5 64.5 60.0 58.0
Barclays Non-Core 823 856 36.9 40.4 35.6 38.8
================================= ======== ======== ======== ======== ======== ========
Total Group Retail 4,432 4,372 57.8 57.8 53.3 52.8
Investment Bank 31 - 72.1 - 23.1 -
Personal & Corporate Banking 611 701 33.0 37.7 23.5 26.0
Africa Banking 263 352 41.5 48.8 35.5 42.2
Head Office and Other Operations - - - - - -
================================= ======== ======== ======== ======== ======== ========
Barclays Core 905 1,053 35.8 40.8 26.1 28.9
Barclays Non-Core 1,629 1,833 60.2 58.2 58.4 57.5
================================= ======== ======== ======== ======== ======== ========
Total Group Wholesale 2,534 2,886 48.4 50.4 40.5 42.2
Group Total 6,966 7,258 54.0 54.6 47.8 48.0
-- Credit Risk Loans (CRLs) decreased 3.0% to GBP12.9bn
-- CRLs in wholesale portfolios decreased 8.7% to GBP5.2bn. This
is primarily driven by Non-Core reflecting on-going actions to
reduce corporate exposures in Iberia
-- CRLs in retail portfolios have remained stable at GBP7.7bn.
The increase in Non-Core has been offset by a decrease in Africa
Banking reflecting improvements in the home loans portfolio
-- Group's CRL coverage ratio was stable at 54.0% (2013: 54.6%)
Credit Risk
Analysis of Forbearance Programmes
Balances Impairment Allowance Coverage
Allowance
As at As at As at As at As at As at
30.06.14 31.12.13 30.06.14 31.12.13 30.06.14 31.12.13
GBPm GBPm GBPm GBPm % %
============================== ========= ========= ========= ========= ========= =========
Personal & Corporate Banking 2,533 2,814 78 90 3.1 3.2
Africa Banking 308 338 41 50 13.3 14.8
Barclaycard 1,044 1,064 353 358 33.8 33.6
============================== ========= ========= ========= ========= ========= =========
Barclays Core 3,885 4,216 472 498 12.1 11.8
Barclays Non-Core 754 786 76 83 10.1 10.6
============================== ========= ========= ========= ========= ========= =========
Total Retail 4,639 5,002 548 581 11.8 11.6
Investment Bank 229 476 4 8 1.7 1.7
Personal & Corporate Banking 1,587 1,569 265 260 16.7 16.6
Africa Banking 129 159 14 14 10.9 8.8
============================== ========= ========= ========= ========= ========= =========
Barclays Core 1,945 2,204 283 282 14.6 12.8
Barclays Non-Core 976 1,181 462 609 47.3 51.5
============================== ========= ========= ========= ========= ========= =========
Total Wholesale 2,921 3,385 745 891 25.5 26.3
Group Total 7,560 8,387 1,293 1,472 17.1 17.6
-- Balances in forbearance decreased by 10% to GBP7.6bn
reflecting falls in the majority of businesses. Overall coverage
remained broadly stable at 17.1% (2013: 17.6%)
-- Retail forbearance decreased 7% to GBP4,639m primarily as a
result of reductions in PCB, mainly due to a decrease in UK home
loans
-- Wholesale forbearance reduced by 14% to GBP2,921m primarily
driven by the exit of a single Investment Bank counterparty from
the forbearance portfolio and further reductions across the
Non-Core portfolios
Analysis of Specific Core Portfolios/Businesses
Secured home loans
-- Total home loans to retail core customers grew by 2% to
GBP141bn
-- The principal home loan portfolios listed below account for
97% (2013: 97%) of total home loans in the Group's retail core
portfolios and principally comprise first lien mortgages
Home loans principal portfolios
Recoveries
> 90 Day Annualised proportion Recoveries
arrears, gross of impairment
Gross loans > 90 Day including charge-off outstanding coverage
and advances arrears recoveries rates balances ratio
As at 30.06.14 GBPm % % % % %
PCB - UK 125,221 0.2 0.7 0.4 0.4 15.7
Africa Banking
- South Africa 11,544 0.7 5.6 1.9 4.9 32.6
As at 31.12.13
PCB - UK 122,880 0.3 0.8 0.5 0.5 14.7
Africa Banking-
South Africa 12,172 0.7 6.2 2.6 5.6 34.7
Credit Risk
-- UK: The home loans portfolio grew by 2% to GBP125bn. As a
result of the ongoing low base rate environment and conservative
credit policy, arrears and charge-off rates remained stable. Buy to
let home loans of GBP10bn (2013: GBP9bn) represent 8% (2013: 8%) of
total balances. The 90 day arrears rates for Buy to let home loans
remained steady at 15bps while balance weighted portfolio LTV
improved to 61.6% (2013: 62.9%), due to an increase in average
house prices
-- South Africa: Gross loans and advances of GBP11.5bn (2013:
GBP12.2bn) were broadly unchanged on a constant currency basis. The
improvement in the charge-off rates was due to the continued strong
performance of new lending. The decrease in recoveries balances was
driven by a combination of the ongoing strategy of reducing this
segment of the portfolio and lower charge-off rates
-- Non-Core Europe: Gross loans and advances to Spain and Italy
reduced 7% to GBP26.4bn reflecting the amortisation of existing
portfolios and reduced new business flows. The 90 days arrears
rates excluding recoveries remained broadly stable in 2014 with
Spain at 0.7% (2013: 0.7%) and Italy at 1.2% (2013: 1.1%)
Home loans principal portfolios - distribution of balances by LTV
PCB Africa Banking
UK South Africa
30.06.14 31.12.13 30.06.14 31.12.13
% % % %
============================ ======== ======== ======== ========
<=75% 86.9 84.2 72.2 69.6
>75% and <=80% 5.8 6.9 8.3 8.8
>80% and <=85% 3.1 3.4 6.4 7.1
>85% and <=90% 1.9 2.1 4.5 4.8
>90% and <=95% 1.0 1.3 3.0 3.3
>95% and <=100% 0.6 0.8 1.7 1.9
>100% 0.7 1.3 3.9 4.5
Portfolio Marked To Market
LTV:
Balance weighted % 54.5 56.3 61.2 62.3
Portfolio Marked To Market
LTV:
Valuation weighted % 42.4 43.6 41.4 42.1
For > 100% LTV:
============================ ======== ======== ======== ========
Balances GBPm 910 1,596 442 540
Marked to market collateral
GBPm 813 1,411 369 452
Average LTV: Balance
weighted % 116.9 120.5 123.7 123.1
Average LTV: Valuation
weighted % 111.9 113.2 119.9 119.5
% Balances in Recovery
Book 4.0 3.2 42.0 45.6
-- House price appreciation in the UK and South Africa led to a
reduction on the average LTV of the home loan portfolios
-- UK: Balances with >100% LTV reduced 43% to GBP910m,
primarily due to an increase in average house prices
-- South Africa: Balances with >100% LTV reduced 18% to
GBP442m, primarily due to decrease in the size of the recoveries
book
Home loans principal portfolios - new lending
PCB - UK Africa Banking
- South Africa
30.06.14 30.06.13 30.06.14 30.06.13
======================================== ======== ======== ======== ========
New Bookings (GBPm) 10,162 7,652 591 532
New Mortgages Proportion Above
85% LTV (%)(1) 5.0 2.9 32.9 28.1
Average LTV on New Mortgages: Balance
weighted (%)(1) 64.4 63.9 75.0 74.1
Average LTV on New Mortgages: Valuation
weighted (%)(1) 57.2 56.8 65.6 63.8
-- UK: New bookings grew by 33% to GBP10.2bn, reflective of the
increased confidence in the housing market. The higher proportion
of bookings above 85% LTV is due to increased appetite for lending
into this segment, but remains at conservative levels
-- South Africa: Proportion of new home loans above 85% LTV
increased to 32.9% (2013: 28.1%) due to a revised strategy in H2 13
which allows a greater proportion of higher LTV loans to be booked
for customers with high credit quality
1 UK figures were restated following a detailed review of the
LTVs post migration to a new data management system.
Credit Risk
Exposures to interest only home loans
-- Interest only mortgages comprise GBP52.5bn (2013: GBP52.6bn)
of the total GBP125bn (2013: GBP123bn) UK home loans portfolio. Of
these, GBP43bn (2013: GBP45bn) are owner-occupied with the
remaining GBP9bn (2013: GBP8bn) buy-to-let
As at As at
Exposure to interest only owner-occupied home
loans 30.06.14 31.12.13
Interest only balances (GBPm)(1) 43,354 44,543
90 days arrears (%) 0.2 0.3
Total Impairment Coverage (bps) 2 2
Marked to market LTV: Balance weighted % 52.6 54.2
Marked to market LTV: Valuation weighted % 40.8 42.4
-- In line with the overall portfolio's performance, risk
indicators remained stable with the average balance weighted LTV
for owner-occupied interest only balances reduced to 52.6% (2013:
54.2%) and 90 day arrears remained low at 0.2% (2013: 0.3%)
Credit cards, overdrafts and unsecured loans
-- Gross loans and advances in credit cards, overdrafts and
unsecured loans in the Group's retail core portfolios increased 3%
to GBP44.7bn (2013: GBP43.4bn)
-- The principal portfolios listed below account for 95% (2013:
94%) of total and increased by 4% to GBP42.4bn (2013: GBP40.7bn)
with increases in US cards, UK cards and Barclays Partner Finance
being offset by decreases in South Africa Personal Loans and UK
overdrafts
Recoveries
30 Day 90 Day Annualised Proportion Recoveries
Gross Arrears, Arrears, Gross of Impairment
Loans excluding excluding Charge-off Outstanding Coverage
Principal Portfolios and Advances recoveries recoveries Rates Balances Ratio
As at 30.06.14 GBPm % % % % %
Barclaycard - UK cards 16,185 2.4 1.2 4.4 4.9 83.7
Barclaycard - US cards
(2) 11,565 1.9 0.9 3.8 1.8 88.0
Barclaycard - Barclays
Partner Finance 3,055 1.6 0.8 2.3 2.9 75.9
Barclaycard - Germany
cards 1,308 2.5 1.0 3.9 3.5 74.9
Barclaycard - Iberia
cards 1,011 6.5 2.7 7.9 8.9 88.2
PCB - UK personal loans 5,110 2.5 1.3 3.2 14.5 79.3
PCB - UK overdrafts 1,165 4.9 3.5 7.1 15.8 94.9
Africa Banking - South
Africa cards 2,255 9.5 5.1 7.3 5.5 69.5
Africa Banking - South
Africa personal loans 782 5.6 2.8 8.5 7.7 71.4
As at 31.12.13
Barclaycard - UK cards 15,937 2.4 1.1 4.4 4.6 86.2
Barclaycard - US cards 10,301 2.1 1.0 4.0 1.8 86.6
Barclaycard - Barclays
Partner Finance (3) 2,765 1.6 0.8 2.9 3.2 83.2
Barclaycard - Germany
cards (4) 1,290 2.5 1.0 3.7 3.2 73.5
Barclaycard - Iberia
cards 1,036 5.7 2.4 10.7 9.9 84.8
PCB - UK personal loans 4,958 2.7 1.2 4.6 15.8 79.4
PCB - UK overdrafts 1,307 4.8 3.3 7.6 14.5 94.5
Africa Banking - South
Africa cards 2,224 8.1 4.3 7.3 5.1 70.7
Africa Banking - South
Africa personal loans 906 5.4 2.6 7.9 7.4 70.4
1 Includes forborne interest-only loans.
2 US Airways portfolio of US$745m, which was brought onto the
balance sheet in Q2 14, is included within Gross Loans and Advances
but excluded from the risk metrics.
3 Gross Loans and Advances have been revised to include the
Secure Motor portfolio of GBP266m.
4 Germany cards recovery figures have been restated to align to
the Barclays Group charge-off policy and Gross Loans and Advances
have been revised to exclude Personal Loans and Fundy Loans
portfolios totaling GBP879m.
Credit Risk
-- UK cards: Recovery coverage reduced to 83.7% (2013: 86.2%)
following the write off of accounts in late 2013 where repayments
were below that required by Barclays group policy
-- US cards: Significant improvement in arrears rates was driven
by a targeted growth strategy focused on high quality customers and
low-risk Partnerships
-- UK personal loans: Charge-off rates reduced due to the
improved performance of new bookings following changes to credit
criteria in 2013
-- South Africa cards: The arrears rate deterioration reflected
the maturation of lower quality business in the Edcon portfolio
booked pre-2014
Group exposures to Eurozone countries
-- The Group recognises the credit and market risk resulting
from the ongoing volatility in the Eurozone and continues to
monitor events closely while taking coordinated steps to mitigate
the risks associated with the challenging economic environment
-- During H114 the Group's net on-balance sheet exposures to
Spain, Italy, Portugal, Ireland, Cyprus and Greece reduced by 11%
to GBP47.4bn principally due a fall of 31% in Financial
Institutions due to loan repayments; and residential mortgage
exposure decreasing 7% to GBP29.3bn due to lower volumes of new
lending
-- As at 30 June 2014, the local net funding deficit in Italy
was EUR10.8bn (2013: EUR11.6bn) and the deficit in Portugal was
EUR2.6bn (2013: EUR3.0bn). The net funding surplus in Spain was
EUR2.4bn (2013: EUR3.1bn)
-- The following table shows Barclays exposure to Eurozone
countries monitored internally as being higher risk and thus being
the subject of particular management focus. The basis of
preparation is consistent with that described in the 2013 Annual
Report
-- The net exposure provides the most appropriate measure of the
credit risk to which the Group is exposed. The gross exposure is
also presented below, alongside off-balance sheet contingent
liabilities and commitments
Other
Financial Residential retail
Contingent
Net on-balance Gross on-balance liabilities
Sovereign institutions Corporate mortgages lending Sheet exposure sheet exposure and commitments
As at 30.06.14 GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Spain 134 753 2,736 11,710 1,984 17,317 25,198 3,335
Italy 1,898 681 1,377 14,284 1,592 19,832 26,396 2,773
Portugal 165 43 653 3,187 1,370 5,418 5,793 1,575
Ireland 30 2,972 1,394 92 88 4,576 8,217 1,521
Cyprus 42 2 118 20 41 223 322 28
Greece - 27 35 6 6 74 1,119 2
=============== ====== ====== ====== ======= ====== ======= ======= ======
Total 2,269 4,478 6,313 29,299 5,081 47,440 67,045 9,234
As at 31.12.13
Spain 184 1,029 3,203 12,537 2,292 19,245 26,474 3,253
Italy 1,556 417 1,479 15,295 1,881 20,628 27,341 3,124
Portugal 372 38 891 3,413 1,548 6,262 6,608 2,288
Ireland 67 5,032 1,356 103 100 6,658 10,051 2,047
Cyprus - 7 106 19 43 175 256 66
Greece 8 5 51 6 12 82 903 3
========= ====== ====== ====== ======= ====== ======= =======
Total 2,187 6,528 7,086 31,373 5,876 53,050 71,633 10,781
Market Risk
Traded Market Risk
During H114 average DVaR in the trading book reduced in line
with lower levels of market activity
Analysis of Management VaR
-- The table below shows the total Management VaR on a
diversified basis by risk factor. Total Management VaR includes all
trading positions in the Investment Bank, Non-Core and Africa
Banking
-- Limits are applied against each risk factor VaR as well as
total Management VaR, which are then cascaded further by risk
managers to each business
-- Average management VaR fell during the period reflecting the
lower levels of market volatility than observed in H113 and reduced
overall positioning. During the period Management VaR fell to a
level as low as GBP18m
Six months ended Six months ended Six months ended
30.06.14 31.12.13 30.06.13
Management VaR Daily High(1) Low(1) Daily High(1) Low(1) Daily High(1) Low(1)
(95%) Avg Avg Avg
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Credit risk 12 15 9 16 21 12 21 25 17
Interest rate
risk 10 14 6 11 16 7 14 24 6
Spread risk 5 8 3 7 9 5 15 21 7
Basis risk 6 8 4 9 13 7 13 17 9
Equity risk 12 23 8 11 17 6 10 21 5
Commodity risk 3 8 2 4 6 2 5 8 4
Foreign exchange
risk 4 6 2 3 7 2 4 7 2
Inflation risk 3 4 2 3 5 2 4 8 2
Diversification
effect (32) - - (38) - - (55) - -
Total Management
VaR 23 31 18 26 33 21 31 39 23
-- In H114, Equity VaR replaced Credit VaR as the single largest
contributor, which was reflected in the level of activity and
revenue performance from the Equity business
-- The three main contributors to total DVaR were equity, credit
and interest rate risks. From average H113 levels, average DVaR
fell for spread risk by GBP10m (67%), credit risk by GBP9m (43%),
basis risk by GBP7m (54%) and interest rate risk by GBP4m (29%).
Average DVaR for the Group fell by GBP8m (26%)
-- The business remained within the Management VaR limits agreed
with the Board Financial Risk Committee throughout H114 for both
risk type VaR and total VaR
-- For regulatory market risk capital calculations, VaR is
calculated at the 99% level. The model is subject to daily
back-testing, where it is compared to profit and loss results. The
VaR model has performed well in back-testing and maintains its
Green categorisation, as defined by the PRA
1 The high and low DVaR figures reported for each category did
not necessarily occur on the same day as the high and low DVaR
reported as a whole. Consequently a diversification effect balance
for the high and low DVaR figures would not be meaningful and is
therefore omitted from the above table.
Market Risk
Analysis of Net Interest Income Sensitivity
Annual Earnings at Risk (AEaR) is the primary income risk metric
used to measure and control non-traded market risk exposure. AEaR
measures net interest income sensitivity over the next twelve
months after instantaneous 200bp parallel shocks up and down are
applied to the current yield curve. 200bp shocks are consistent
with industry best practice and are supported by banking
regulators.
The table below shows sensitivity analysis on the pre-tax net
interest income for the non-trading financial assets and financial
liabilities held at 31 May 2014 and 31 December 2013.
The main model assumptions are:
-- The balance sheet is projected on a static basis (kept flat
over the horizon) so all changes in AEaR sensitivity are linked to
the interest rate shock, rather than variations in balances
-- Balances are adjusted for an assumed behavioural profile.
This includes the treatment of fixed rate loans including
mortgages
-- The parallel shock down is subject to an interest rate floor
at 0%
Net interest income sensitivity (AEaR) by
business unit
Personal
& Corporate
Banking Barclaycard Africa Non-core Other Total
Period ended 31.05.14(1) GBPm GBPm GBPm(2) GBPm GBPm(3) GBPm
+200bps 412 (74) 28 2 (66) 302
+100bps 224 (35) 14 1 (53) 151
-100bps (418) 24 (14) (1) (8) (417)
-200bps (461) 24 (26) (1) (17) (481)
Period ended 31.12.13
+200bps 373 (84) 19 9 (92) 225
+100bps 195 (42) 9 5 (57) 110
-100bps (315) 25 (8) (1) 56 (243)
-200bps (352) 26 (15) (1) 49 (293)
Total AEaR from a -200bp shock increased by 64% to GBP(481)m
(2013: GBP(293)m). For a +200bp shock, total AEaR increased by 34%
to GBP302m (Dec 13: GBP225m) predominantly due to the following
changes in PCB:
-- The inclusion of re-pricing lag risk within the overall AEaR numbers from May 14
-- A steepening of the forecast base rate path (next base rate
rise expected to occur in December 14 against a previous
expectation of February 15) allowing larger shocks to funding
income on liability products
1 Based on May 2014 data, being the latest available.
2 Excluding Investment banking operations.
3 Other consists of Group Treasury and adjustments made for hedge ineffectiveness.
Statement of Directors' Responsibilities
The Directors (who are listed below) confirm that the condensed
consolidated interim financial statements set out on pages 9 to 13
and 55 to 88 have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union, and that the interim management report
herein includes a fair review of the information required by
Disclosure and Transparency Rules 4.2.7R and 4.2.8R namely:
-- an indication of important events that have occurred during
the six months ended 30 June 2014 and their impact on the condensed
consolidated interim financial statements, and a description of the
principal risks and uncertainties for the remaining six months of
the financial year
-- material related party transactions in the six months ended
30 June 2014 and any material changes in the related party
transactions described in the last Annual Report
Signed on behalf of the Board by
Antony Jenkins Tushar Morzaria
Group Chief Executive Group Finance Director
Barclays PLC Board of Directors:
Chairman Executive Directors Non-executive Directors
Sir David Walker Antony Jenkins (Group Mike Ashley
Chief Executive) Tim Breedon
Tushar Morzaria (Group Crawford Gillies
Finance Director) Reuben Jeffery
Wendy Lucas-Bull
Dambisa Moyo
Frits van Paasschen
Sir Michael Rake
Diane de Saint Victor
Sir John Sunderland
Steve Thieke
Independent Auditors' Review Report to Barclays PLC
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed the condensed consolidated interim financial
statements, defined below, in the interim results announcement of
Barclays PLC for the six months ended 30 June 2014. Based on our
review, nothing has come to our attention that causes us to believe
that the condensed consolidated interim financial statements are
not prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European
Union and the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
This conclusion is to be read in the context of what we say in
the remainder of this report.
What we have reviewed
The condensed consolidated interim financial statements, which
are prepared by Barclays PLC, comprise:
-- the Condensed Consolidated Income Statement for the six months ended 30 June 2014;
-- the Condensed Consolidated Statement of Profit or Loss and
other Comprehensive income for the period then ended;
-- the Condensed Consolidated Balance Sheet as at 30 June 2014;
-- the Condensed Consolidated Statement of Changes in Equity for the period then ended;
-- the Condensed Consolidated Cash Flow Statement for the period then ended; and
-- the related notes to the condensed consolidated interim financial statements.
As disclosed in note 1, the financial reporting framework that
has been applied in the preparation of the full annual financial
statements of the group is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European
Union.
The condensed consolidated interim financial statements included
in the interim results announcement have been prepared in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the
Disclosure and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
What a review of condensed consolidated financial statements
involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK and
Ireland) and, consequently, does not enable us to obtain assurance
that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
We have read the other information contained in the interim
results announcement and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed consolidated interim financial
statements.
Responsibilities for the condensed consolidated interim
financial statements and the review
Our responsibilities and those of the directors(1,2)
The interim results announcement including the condensed
consolidated interim financial statements, is the responsibility
of, and has been approved by, the Directors. The Directors are
responsible for preparing the interim results announcement in
accordance with the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Our responsibility is to express to the company a conclusion on
the condensed consolidated interim financial statements in the
interim results announcement based on our review. This report,
including the conclusion, has been prepared for and only for the
company for the purpose of complying with the Disclosure and
Transparency Rules of the Financial Conduct Authority and for no
other purpose. We do not, in giving this conclusion, accept or
assume responsibility for any other purpose or to any other person
to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London, United Kingdom
29 July 2014
1 The maintenance and integrity of the Barclays website is the
responsibility of the directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred to the financial statements since they were
initially presented on the website.
2 Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
Financial Statement Notes
1. Basis of preparation
These condensed interim financial statements for the six months
ended 30 June 2014 have been prepared in accordance with the
Disclosure and Transparency Rules of the Financial Conduct
Authority (previously the Financial Services Authority) and with
IAS 34, 'Interim financial reporting', as adopted by the European
Union. The condensed interim financial statements should be read in
conjunction with the annual financial statements for the year ended
31 December 2013, which have been prepared in accordance with IFRSs
as adopted by the European Union.
The accounting policies and methods of computation used in these
condensed interim financial statements are the same as those used
in the 2013 Annual Report, except as detailed below:
IAS 32 Financial Instruments: Presentation
IAS 32, Amendments to Offsetting Financial Assets and Financial
Liabilities, which was adopted by the Group on 1 January 2014,
clarified the circumstances in which netting is permitted; in
particular what constitutes a currently legally enforceable right
of set-off and the circumstances in which gross settlement systems
may be considered equivalent to net settlement. The financial
impact for the group to the 31 December 2013 balance sheet is to
gross up certain financial assets and financial liabilities (mainly
derivatives and settlement balances) by GBP31.4bn that were
previously reported net.
Other reporting changes
As a result of the business reorganisation outlined in the Group
Strategy Update on 8 May 2014, the Group has made changes to the
composition of its business segments for the purposes of reporting
in accordance with IFRS 8. For more details of the changes made
please refer to the Restatement Document published on 10 July 2014,
which outlines the impact on the Group's previously reported
segmental results from the Group structure changes and the
subsequent reallocation of elements of the Head Office results to
the businesses post the resegmentation. The Head Office allocation
and resegmentation only affects the reported results of the
individual businesses and does not impact the consolidated primary
financial statements.
Future accounting developments
IFRS 9 Financial Instruments
IFRS 9 will change the classification and therefore the
measurement of the Group's financial assets, the recognition of
impairment and hedge accounting. In addition to these changes, the
effect of changes in the Group's own credit risk on the fair value
of financial liabilities that the group designates at fair value
through profit and loss will be included in other comprehensive
income rather than the income statement. A final version of the
standard was issued in July 2014. The new Standard will come into
effect on 1 January 2018 subject to EU Endorsement.
IFRS 15 Revenue from Contracts with Customers
The International Accounting Standards Board (IASB) and the US
Financial Accounting Standards Board (FASB) have jointly issued a
converged standard on the recognition of revenue from contracts
with customers. The impact for the Group of the new standard is
currently being assessed. The standard will be effective for annual
reporting periods beginning on or after 1 January 2017 with
retrospective application, subject to EU Endorsement.
For more information on future accounting changes, refer to the
Barclays 2013 annual report.
Going Concern
The Directors confirm they are satisfied that the Group has
adequate resources to continue in business for the foreseeable
future. For this reason, they continue to adopt the going concern
basis for preparing accounts.
2. Staff Costs
Half Year Half Year Half Year
Ended Ended Ended
30.06.14 31.12.13 30.06.13
Compensation costs GBPm GBPm GBPm
========= ========= =========
Deferred bonus charge 573 492 655
Current year bonus charges 430 446 511
Sales commissions, commitments and other
incentives 111 246 204
========= ========= =========
Performance costs 1,114 1,184 1,370
Salaries 2,510 2,278 2,703
Social security costs 363 339 376
Post retirement benefits 327 340 348
Other compensation costs 296 325 353
========= ========= =========
Total compensation costs 4,610 4,466 5,150
Other resourcing costs
========= ========= =========
Outsourcing 532 562 522
Redundancy and restructuring 253 304 383
Temporary staff costs 263 270 281
Other 72 122 95
========= ========= =========
Total other resourcing costs 1,120 1,258 1,281
Total staff costs 5,730 5,724 6,431
Total staff costs decreased 11% to GBP5,730m, principally
reflecting an19% decrease in performance costs, a 7% decrease in
salaries and a 34% decrease in redundancy and restructuring.
Group compensation costs decreased 10% to GBP4,610m with the
Group compensation: adjusted net operating income ratio remaining
at 38% (2013: 38%). Group performance costs reduced 19% to
GBP1,114m primarily reflecting lower deferred and current year
bonus charges. There was an expected charge of GBP1.1bn (2013:
GBP1.2bn) relating to future periods for bonus awards granted but
not yet expensed as at 30 June 2014.
No awards have yet been granted in relation to the 2014 bonus
pool as decisions regarding incentive awards are not taken by the
Remuneration Committee until the performance for the full year can
be assessed. The current year bonus charge for the first six months
represents an accrual for estimated costs in accordance with
accounting requirements.
Other resourcing costs decreased by 13% to GBP1,120m primarily
due to a reduction in redundancy and restructuring costs of 34% to
GBP253m due to a number of Transform initiatives occurring
particularly in Europe.
3. Administration and General Expenses
Half Year Half Year Half Year
Ended Ended Ended
30.06.14 31.12.13 30.06.13
GBPm GBPm GBPm
Infrastructure costs
Property and equipment 727 711 899
Depreciation of property, plant and equipment 292 316 331
Operating lease rentals 288 325 320
Amortisation of intangible assets 251 246 234
Impairment of property, equipment and intangible
assets 10 101 48
Total infrastructure costs 1,568 1,699 1,832
Other costs
Consultancy, legal and professional fees 729 712 541
Subscriptions, publications, stationery and
communications 378 479 390
Marketing, advertising and sponsorship 260 326 257
Travel and accommodation 97 154 153
UK bank levy - 504 -
Goodwill impairment - 79 -
Other administration and general expenses 115 514 177
Total other costs 1,579 2,768 1,518
Total administration and general expenses 3,147 4,467 3,350
Administration and general expenses have decreased 6% to
GBP3,147m. This was driven by decreased infrastructure and other
costs due to the Transform program which is offset by an increase
in litigation and conduct charges.
4. Tax
Assets Liabilities
Current and Deferred Tax Assets and
Liabilities 30.06.14 31.12.13 30.06.14 31.12.13
GBPm GBPm GBPm GBPm
Current tax 216 219 (1,076) (1,042)
Deferred tax 4,245 4,807 (353) (373)
Total 4,461 5,026 (1,429) (1,415)
The tax charge for H114 was GBP895m (2013: GBP594m),
representing an effective tax rate of 35.8% (2013: 35.4%). The
effective tax rate is higher than the UK statutory tax rate of
21.5% (2013: 23.25%) mainly due to profits outside of the UK taxed
at higher local statutory tax rates, non-creditable taxes and
non-deductible expenses, partially offset by the effect of
non-taxable gains and income and deferred tax asset measurement
adjustments.
The deferred tax asset of GBP4,245m (2013: GBP4,807m) mainly
relates to amounts in the UK, US and Spain.
5. Non-controlling Interests
Profit Attributable Equity Attributable
to Non-controlling to Non-controlling
Interest Interest
Half Year Half Year Half Year As at As at As at
ended ended ended
30.06.14 31.12.13 30.06.13 30.06.14 31.12.13 30.06.13
GBPm GBPm GBPm GBPm GBPm GBPm
================================ ========= ========= ========= ======== ======== ========
Barclays Bank PLC Issued:
- Preference shares 237 171 239 4,341 5,868 5,948
- Upper Tier 2 instruments 1 1 1 486 485 486
Barclays Africa Group Limited 149 185 158 2,126 2,204 2,509
Other non-controlling interests 3 (12) 14 4 7 111
================================ ========= ========= ========= ======== ======== ========
Total 390 345 412 6,957 8,564 9,054
Equity attributable to non-controlling interests decreased by
GBP1,607m to GBP6,957m due to GBP1,527m of Barclays Bank Plc
preference shares being bought back and cancelled as part of the
Additional Tier 1 (AT1) exchange exercise detailed in Note 14.
6. Earnings Per Share
Half Year Half Year Half Year
Ended Ended Ended
30.06.14 31.12.13 30.06.13
GBPm GBPm GBPm
========= ========= =========
Profit/(loss) attributable to ordinary equity
holders of the parent(1) 1,126 (131) 671
Dilutive impact of convertible options - 1 -
Tax credit on profit after tax attributable
to other equity holders 19 - -
Total profit/(loss) attributable to equity
holders of the parent including tax credit
on other equity 1,145 (130) 671
Basic weighted average number of shares in
issue(2) 16,296 14,308 13,525
Number of potential ordinary shares 127 360 365
========= ========= =========
Diluted weighted average number of shares 16,423 14,668 13,890
Basic earnings/(loss) per ordinary share 7.0p (0.9p) 5.0p
Diluted earnings/(loss) per ordinary share 7.0p (0.9p) 4.8p
7. Dividends on Ordinary Shares
It is Barclays policy to declare and pay dividends on a
quarterly basis. The first interim dividend for 2014 of 1p per
share was paid on 23 June 2014. The Board has decided to pay on 19
September 2014, a second interim dividend for 2014 of 1p per
ordinary share to shareholders on the share register on 8 August
2014, making a total for H114 of 2p (2013: 2p).
Half Year ended Half Year Ended Half Year Ended
30.06.14 31.12.13 30.06.13
Dividends Paid During Per Share Total Per Share Total Per Share Total
the Period
Pence GBPm Pence GBPm Pence GBPm
Final dividend paid
during period 3.5p 564 - - 3.5p 442
Interim dividends
paid during period 1.0p 164 2.0p 289 1.0p 128
For qualifying US and Canadian resident ADR holders, the second
interim dividend of 1p per ordinary share becomes 4p per ADS
(representing four shares). The ADR depositary will post the second
interim dividend on 19 September 2014 to ADR holders on the record
at close of business on 8 August 2014.
1 The profit after tax attributable to other equity holders of
GBP90m (2013: GBPnil) is offset by a tax credit recorded in
reserves of GBP19m (2013: GBPnil). The net amount of GBP71m, along
with NCI, is deducted from profit after tax in order to calculate
earnings per share.
2 The basic weighted average number of shares excludes Treasury
shares held in employee benefit trusts or held for trading. The
rights issue in October 2013 resulted in the issue of an additional
3,219m shares. In accordance with IAS33, a retrospective adjustment
has been applied to the basic weighted average number of shares in
issue for the prior periods which has resulted in a movement in
earnings per share of 5.3p to of 5.0p for the half year ended 30
June 2013.
8. Derivative Financial Instruments
Fair Value
Contract
Notional
As at 30.06.14 Amount Assets Liabilities
GBPm GBPm GBPm
Foreign exchange derivatives 4,331,867 39,519 (41,055)
Interest rate derivatives 31,655,700 240,332 (227,604)
Credit derivatives 1,246,563 23,571 (22,681)
Equity and stock index and commodity
derivatives 1,332,423 27,813 (33,738)
Derivative assets/(liabilities) held
for trading 38,566,553 331,235 (325,078)
Derivatives in Hedge Accounting Relationships
Derivatives designated as cash flow hedges 155,819 725 (338)
Derivatives designated as fair value
hedges 159,810 1,168 (1,084)
Derivatives designated as hedges of net
investments 3,179 92 (1)
Derivative assets/(liabilities) designated
in hedge accounting relationships 318,808 1,985 (1,423)
Total recognised derivative assets/(liabilities) 38,885,361 333,220 (326,501)
As at 31.12.13
Foreign exchange derivatives 4,637,028 59,605 (64,765)
Interest rate derivatives 34,706,623 230,127 (217,326)
Credit derivatives 1,576,184 27,350 (27,068)
Equity and stock index and commodity
derivatives 1,063,431 30,473 (36,686)
Derivative assets/(liabilities) held
for trading 41,983,266 347,555 (345,845)
Derivatives in Hedge Accounting Relationships
Derivatives designated as cash flow hedges 160,809 899 (500)
Derivatives designated as fair value
hedges 123,459 1,278 (752)
Derivatives designated as hedges of net
investments 19,377 568 (21)
Derivative assets/(liabilities) designated
in hedge accounting relationships 303,645 2,745 (1,273)
Total recognised derivative assets/(liabilities) 42,286,911 350,300 (347,118)
Derivative assets decreased by GBP17bn primarily due to a
decrease in foreign exchange derivatives as GBP strengthened
against USD and reduced trading activity; and a decrease in credit
derivatives due to tightening of credit spreads and trade
maturities, offset by an increase in interest rate derivatives due
to a decrease in major forward interest rates.
Derivative asset exposures would be GBP305bn (2013: GBP321bn)
lower than reported under IFRS if the netting of financial
instruments and financial collateral were permitted for all amounts
that are covered by enforceable netting arrangements, irrespective
of whether the stricter requirements of IAS 32 were met. Similarly,
derivative liabilities would be GBP301bn (2013: GBP317bn) lower.
Netting posted on the balance sheet under IFRS for Derivative
assets and liabilities was GBP164bn (2013: GBP265bn) and GBP165bn
(2013: GBP265bn) respectively.
9. Fair value of assets and liabilities
This section should be read in conjunction with Note 18 "Fair
value of assets and liabilities" of the 2013 Annual Report, which
provides more detail about accounting policies adopted, valuation
methodologies used in calculating fair value and, the valuation
control framework which governs oversight of valuations.
Valuation
This section should be read in conjunction with Note 18 "Fair
value of assets and liabilities" of the 2013 Annual Report, which
provides more detail about the definitions of the three levels of
the fair value hierarchy.
The following table shows the Group's assets and liabilities
that are held at fair value disaggregated by valuation technique
(fair value hierarchy) and balance sheet classification:
Valuation technique using
Quoted Significant
market Observable unobservable
prices inputs inputs
(Level (Level (Level
1) 2) 3) Total
As at 30.06.14 GBPm GBPm GBPm GBPm
Trading portfolio assets 53,012 69,391 6,409 128,812
Financial assets designated at fair
value 12,131 9,213 18,402 39,746
Derivative financial assets 5,466 322,738 5,016 333,220
Available for sale assets 32,033 52,942 2,249 87,224
Investment property - - 362 362
Non current assets held for sale - - 30 30
Total assets 102,642 454,284 32,468 589,394
Trading portfolio liabilities (34,694) (22,098) (23) (56,815)
Financial liabilities designated
at fair value (5) (60,584) (1,659) (62,248)
Derivative financial liabilities (5,648) (315,812) (5,041) (326,501)
Total liabilities (40,347) (398,494) (6,723) (445,564)
As at 31.12.13 GBPm GBPm GBPm GBPm
Trading portfolio assets 54,363 72,285 6,421 133,069
Financial assets designated at fair
value 11,188 9,010 18,770 38,968
Derivative financial assets 4,824 340,463 5,013 350,300
Available for sale assets 36,050 53,561 2,145 91,756
Investment property - - 451 451
Non current assets held for sale - - 114 114
Total assets 106,425 475,319 32,914 614,658
Trading portfolio liabilities (29,450) (24,014) - (53,464)
Financial liabilities designated
at fair value (98) (63,058) (1,640) (64,796)
Derivative financial liabilities (5,627) (337,172) (4,319) (347,118)
Total liabilities (35,175) (424,244) (5,959) (465,378)
There are no assets or liabilities measured at fair value on a
non-recurring basis.
The following table shows the Group's assets and liabilities
that are held at fair value disaggregated by valuation technique
(fair value hierarchy) and product type:
Assets Liabilities
Valuation technique Valuation technique
using using
Quoted Significant Quoted Significant
market Observable unobservable market Observable unobservable
prices inputs inputs prices inputs inputs
(Level (Level (Level (Level (Level (Level
1) 2) 3) 1) 2) 3)
GBPm GBPm GBPm GBPm GBPm GBPm
As at 30.06.14
Interest rate derivatives - 241,060 1,151 - (227,674) (1,343)
Foreign exchange derivatives - 39,521 104 - (40,945) (120)
Credit derivatives(1) - 21,870 1,701 (26) (22,011) (644)
Equity derivatives 3,625 10,773 1,662 (3,661) (15,768) (2,420)
Commodity derivatives 1,841 9,514 398 (1,961) (9,414) (514)
Government and government
sponsored debt 51,894 68,603 328 (14,275) (16,183) (15)
Corporate debt 307 22,037 3,268 - (3,966) (14)
Certificates of deposit,
commercial paper and
other money market instruments 4 953 - - (4,511) -
Reverse repurchase and
repurchase agreements - 5,767 1 - (5,713) -
Non asset backed loans - 3,395 16,000 (5) (588) (342)
Asset backed securities 2 17,676 1,885 - (882) (4)
Commercial real estate
loans - - 1,219 - - -
Issued debt - 148 - - (46,414) (1,103)
Equity cash products 44,372 7,449 207 (20,419) (2,165) -
Funds and fund linked
products - 2,096 866 - (2,056) (44)
Physical commodities 477 2,206 - - (18) -
Investment properties - - 362 - - -
Other(2) 120 1,216 3,316 - (186) (160)
Total 102,642 454,284 32,468 (40,347) (398,494) (6,723)
As at 31.12.13
Interest rate derivatives - 231,218 1,031 - (217,517) (1,046)
Foreign exchange derivatives - 60,111 117 - (64,715) (86)
Credit derivatives(1) - 25,150 2,200 (26) (26,262) (780)
Equity derivatives 3,353 11,665 1,266 (3,926) (16,237) (1,867)
Commodity derivatives 1,471 12,319 399 (1,675) (12,441) (540)
Government and government
sponsored debt 53,518 63,627 220 (17,833) (17,758) -
Corporate debt 1,005 34,247 3,040 (63) (5,247) (12)
Certificates of deposit,
commercial paper and
other money market instruments - 1,493 - (96) (5,303) (409)
Reverse repurchase and
repurchase agreements - 5,323 - - (5,306) -
Non asset backed loans - 2,493 16,132 - - -
Asset backed securities - 15,141 2,112 - (105) -
Commercial real estate
loans - - 1,198 - - -
Issued debt - 54 1 - (48,734) (1,164)
Equity cash products 45,547 397 168 (11,554) (704) -
Funds and fund linked
products - 8,509 550 - (3,369) (54)
Physical commodities 1,155 3,048 - - (72) -
Investment properties - - 451 - - -
Other(2) 376 524 4,029 (2) (474) (1)
Total 106,425 475,319 32,914 (35,175) (424,244) (5,959)
1 Credit derivatives also includes derivative exposure to Monoline insurers.
2 Other primarily includes receivables resulting from the
acquisition of the North American businesses of Lehman Brothers,
asset backed loans, private equity investments and non-current
assets held for sale.
Assets and liabilities reclassified between Level 1 and Level
2
There were no transfers between level 1 and 2 during the
period.
Level 3 movement analysis
The following table summarises the movements in the Level 3
balance during the year. The table shows gains and losses and
includes amounts for all financial assets and liabilities
transferred to and from Level 3 during the year. Transfers have
been reflected as if they had taken place at the beginning of the
year.
For the period ended 30 June 2014, net transfers into Level 3
totalled GBP576m primarily due to GBP426m of funds and fund linked
products within trading assets and GBP77m of non asset backed loans
classified as trading portfolio assets following a decrease in the
observable market activity. Liabilities of GBP267m were also
transferred in mainly in relation to issued debt classified as
financial liabilities designated at fair value.
Transfers out of level 3 totalled GBP186m primarily due to a
transfer out of non-asset backed loans of GBP92m within trading
assets, GBP78m of non-asset backed loans classified as financial
assets designated at fair value and GBP33m of private equity
investments classified as available for sale financial investments
in line with more observable market activity.
Total gains
and losses
in the period
recognised
in the income
statement Transfers
Total
gains
or losses
As at Trading Other recognised As at
01.01.14 Purchases Sales Issues Settlements income income in OCI In Out 30.06.14
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Government
and government
sponsored
debt 161 22 (25) - (25) (12) - - 3 - 124
Corporate
debt 3,039 176 (195) - (2) 203 - - 3 (10) 3,214
Asset backed
securities 2,111 1,388 (1,611) - (109) 106 - - 4 (5) 1,884
Non asset
backed loans 176 52 (28) - (1) 13 - - 77 (92) 197
Funds and
fund linked
products 494 - (64) - - (35) - - 426 - 821
Other 440 10 (301) - - 11 - - 13 (4) 169
Trading
portfolio
assets 6,421 1,648 (2,224) - (137) 286 - - 526 (111) 6,409
Commercial
real estate
loans 1,198 994 (761) - (195) (17) - - - - 1,219
Non asset
backed loans 15,956 - (43) 7 (72) 31 2 - - (78) 15,803
Asset backed
loans 375 130 (376) - (4) 11 - - - (7) 129
Private
equity investments 1,168 19 (107) - (11) 1 27 - - - 1,097
Other 73 80 (36) - (12) (5) 1 - 57 (4) 154
Financial
assets designated
at fair
value 18,770 1,223 (1,323) 7 (294) 21 30 - 57 (89) 18,402
Asset backed
securities 1 - - - - - - - - - 1
Government
and government
sponsored
debt 59 145 - - - - - - - - 204
Other 2,085 15 (25) - - 3 (61) 29 31 (33) 2,044
Available
for sale
investments 2,145 160 (25) - - 3 (61) 29 31 (33) 2,249
Investment
property 451 - (131) - - (9) - - 51 - 362
Non current
assets held
for sale 114 - (84) - - - - - - - 30
Total gains
and losses
in the period
recognised
in the income
statement Transfers
Total
gains
or losses
As at Trading Other recognised As at
01.01.14 Purchases Sales Issues Settlements income income in OCI In Out 30.06.14
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Trading
portfolio
liabilities - (2) - - - (1) - - (20) - (23)
Certificates
of deposit,
commercial
paper and
other money
market instruments (409) - - - 408 1 - - - - -
Issued debt (1,164) - 74 (13) 204 55 - - (267) 8 (1,103)
Other (67) (395) 50 (161) 3 4 (1) - - 11 (556)
Financial
liabilities
designated
at fair
value (1,640) (395) 124 (174) 615 60 (1) - (267) 19 (1,659)
Interest
rate derivatives (15) (120) (16) - 32 (242) 21 - 154 (6) (192)
Credit derivatives 1,420 5 (14) - (68) (168) (22) - (66) (30) 1,057
Equity derivatives (601) (143) (14) (172) 2 91 - - (11) 90 (758)
Commodity
derivatives (141) - (13) (5) 5 3 (1) - 63 (27) (116)
Foreign
exchange
derivatives 31 136 (13) (34) 38 (233) - - 58 1 (16)
Net derivative
financial
instruments(1) 694 (122) (70) (211) 9 (549) (2) - 198 28 (25)
Total 26,955 2,512 (3,733) (378) 193 (189) (34) 29 576 (186) 25,745
Included in financial assets designated at fair value is the
Education, Social Housing and Local Authority (ESHLA) loan
portfolio of GBP15.8bn (2013:GBP15.6bn). The valuation of the ESHLA
portfolio continues to be based on internally modelled spreads.
Valuation uncertainty arises mainly from the long dated nature of
the portfolio, the lack of active secondary market in the loans and
the lack of observable loan spreads.
1 The derivative financial instruments are represented on a net
basis. On a gross basis derivative financial assets as at 30 June
2014 totalled GBP5,016m (31 December 2013: GBP5,013m) and
derivative financial liabilities totalled GBP5,041m (31 December
2013: GBP4,319m).
Total gains Total
and losses gains
in the period or losses
recognised recognised
in the income in OCI
statement Transfers
As at Trading Other As at
01.01.13 Purchases Sales Issues Settlements income income In Out 31.12.13
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Government
and government
sponsored
debt 321 135 (199) 82 (23) (3) (11) - - (141) 161
Corporate
debt 3,136 84 (83) - - (46) - - - (52) 3,039
Asset backed
securities 3,614 2,773 (4,729) - (389) 831 - - 50 (39) 2,111
Non asset
backed loans 344 91 (281) 35 (37) 16 - - 8 - 176
Funds and
fund linked
products 685 - (64) - - (95) - - - (32) 494
Other 414 46 (42) - (44) 44 - - 34 (12) 440
Trading
portfolio
assets 8,514 3,129 (5,398) 117 (493) 747 (11) - 92 (276) 6,421
Commercial
real estate
loans 1,798 1,542 (1,717) - (526) 156 2 - 2 (59) 1,198
Non asset
backed loans 2,021 390 (1) - (208) (1,441) (107) - 15,317 (15) 15,956
Asset backed
loans 564 595 (748) - (23) 106 - - - (119) 375
Private
equity investments 1,350 161 (134) - (87) 50 (139) - 18 (51) 1,168
Other 353 11 (237) - (28) (36) (1) - 105 (94) 73
Financial
assets designated
at fair
value 6,086 2,699 (2,837) - (872) (1,165) (245) - 15,442 (338) 18,770
Asset backed
securities 492 - (521) - (29) (1) 30 30 - - 1
Government
and government
sponsored
debt 46 13 - - (1) - 1 - - - 59
Other 2,342 25 (77) - (471) 1 255 2 36 (28) 2,085
Available
for sale
investments 2,880 38 (598) - (501) - 286 32 36 (28) 2,145
Investment
property 1,686 151 (1,210) - - 17 (31) - - (162) 451
Non current
assets held
for sale - - - - - - - - 114 - 114
Total gains Total
and losses gains
in the period or losses
recognised recognised
in the income in OCI
statement Transfers
As at Trading Other As at
01.01.13 Purchases Sales Issues Settlements income income In Out 31.12.13
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Trading
portfolio
liabilities (2) (1) - - - 1 - - - 2 -
Certificates
of deposit,
commercial
paper and
other money
market instruments (760) - - - 7 204 93 - - 47 (409)
Issued debt (1,439) - 9 (67) 319 60 6 - (205) 153 (1,164)
Other (156) (2) 1 - (2) (3) 3 - - 92 (67)
Financial
liabilities
designated
at fair
value (2,355) (2) 10 (67) 324 261 102 - (205) 292 (1,640)
Interest
rate derivatives 149 (26) (1) - 31 262 2 - (26) (406) (15)
Credit derivatives 1,776 95 (66) (2) 54 (488) (81) - (74) 206 1,420
Equity derivatives (608) 301 (1) (394) (48) 151 2 - (85) 81 (601)
Commodity
derivatives 117 (57) - (44) 42 66 1 - (146) (120) (141)
Foreign
exchange
derivatives (40) - - - 145 (44) 1 - (10) (21) 31
Other (164) - - - - - - - - 164 -
Net derivative
financial
instruments(1) 1,230 313 (68) (440) 224 (53) (75) - (341) (96) 694
Total 18,039 6,327 (10,101) (390) (1,318) (192) 26 32 15,138 (606) 26,955
1 The derivative financial instruments are represented on a net
basis. On a gross basis derivative financial assets as at 31
December 2013 totalled GBP5,013m (31 December 2012: GBP6,217m) and
derivative financial liabilities totalled GBP4,319m (31 December
2012: GBP4,987m).
Unrealised gains and losses on Level 3 financial assets and
liabilities
The following table discloses the unrealised gains and losses
recognised in the year arising on Level 3 financial assets and
liabilities held at the period end.
Unrealised gains and losses recognised during the
period on Level 3 financial assets and liabilities
held at period end
As at 30.06.14 As at 31.12.13
Income statement Income statement
Other Other
compre- compre-
Trading Other hensive Trading Other hensive
income income income Total income income income Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Trading portfolio assets 284 - - 284 222 - - 222
Financial assets designated
at fair value (122) 34 - (88) (1,276) 10 - (1,266)
Available for sale assets 5 (4) 32 33 - (5) 27 22
Investment property (10) - - (10) (27) (31) (58)
Trading portfolio liabilities (1) - - (1) - - - -
Financial liabilities designated
at fair value 22 - - 22 74 - - 74
Net derivative financial instruments (78) (21) - (99) (411) (75) - (486)
Total 100 9 32 141 (1,418) (101) 27 (1,492)
Valuation techniques and sensitivity analysis
Sensitivity analysis is performed on products with significant
unobservable inputs (Level 3) to generate a range of reasonably
possible alternative valuations. The sensitivity methodologies
applied take account of the nature of valuation techniques used, as
well as the availability and reliability of observable proxy and
historical data and the impact of using alternative models.
Current year valuation and sensitivity methodologies are
consistent with those described within note 18 'Fair value of
assets and liabilities' in the 2013 Annual Report.
Sensitivity analysis of valuations using unobservable inputs
Fair value Favourable changes Unfavourable changes
Total Total Income Income
Product type assets liabilities statement Equity statement Equity
GBPm GBPm GBPm GBPm GBPm GBPm
As at 30.06.14
Interest rate derivatives 1,151 (1,343) 109 - (108) -
Foreign exchange
derivatives 104 (120) 36 - (36) -
Credit derivatives 1,701 (644) 61 - (208) -
Equity derivatives 1,662 (2,420) 321 - (321) (0)
Commodity derivatives 398 (514) 40 - (40) -
Government and government
sponsored debt 328 (15) 1 - (1) -
Corporate debt 3,268 (14) 10 - (9) (0)
Certificates of
deposit, commercial
paper and other
money market instruments - - - - - -
Repurchase agreements 1 - - - - -
Non asset backed
loans 16,000 (342) 123 - (1,217) -
Asset backed securities 1,885 (4) 89 1 (48) (1)
Commercial real
estate loans 1,219 - 56 - (45) -
Issued debt - (1,103) - - - -
Equity cash products 207 - - 10 - (10)
Funds and fund linked
products 866 (44) 21 - (21) -
Physical commodities - - - - - -
Investment property 362 - 26 - (12) -
Other 3,316 (160) 225 64 (190) (51)
------- ----- ------- ----
Total 32,468 (6,723) 1,118 75 (2,256) (62)
As at 31.12.13
Interest rate derivatives 1,031 (1,046) 246 - (251) -
Foreign exchange
derivatives 117 (86) 32 - (32) -
Credit derivatives 2,200 (780) 145 - (287) -
Equity derivatives 1,266 (1,867) 234 - (234) -
Commodity derivatives 399 (540) 41 - (41) -
Government and government
sponsored debt 220 - 1 - (1) -
Corporate debt 3,040 (12) 10 - (4) -
Certificates of
deposit, commercial
paper and other
money market instruments - (409) - - - -
Non asset backed
loans 16,132 - 151 - (1,177) -
Asset backed securities 2,112 - 104 1 (74) (1)
Commercial real
estate loans 1,198 - 61 - (29) -
Issued debt 1 (1,164) - - - -
Equity cash products 168 - - 12 - (12)
Funds and fund linked
products 550 (54) 25 - (25) -
Investment property 451 - 22 - (21) -
Other 4,029 (1) 186 58 (182) (47)
Total 32,914 (5,959) 1,258 71 (2,358) (60)
The effect of stressing unobservable inputs to a range of
reasonably possible alternatives alongside considering the impact
of using alternative models would be to increase fair values by up
to GBP1.2bn (31 December 2013: GBP1.3bn) or to decrease fair values
by up to GBP2.3bn (31 December 2013: GBP2.4bn) with substantially
all the potential effect impacting profit and loss rather than
equity.
Significant unobservable inputs
The valuation techniques and significant unobservable inputs for
assets and liabilities recognised at fair value and classified as
Level 3, along with the range of values used for those significant
unobservable inputs, are consistent with Note 18 'Fair value of
assets and liabilities' in the 2013 Annual Report. The description
of the significant unobservable inputs and the sensitivity of fair
value measurement of the instruments categorised as Level 3 assets
or liabilities to increases in significant unobservable inputs is
also found in Note 18 'Fair value of assets and liabilities' of the
2013 Annual Report.
Fair value adjustments
Key balance sheet valuation adjustments that may be of interest
from a financial statement user perspective are quantified
below:
30.06.14 31.12.13
GBPm GBPm
Bid-offer valuation adjustments (366) (406)
Other exit adjustments (171) (208)
Uncollateralised derivative funding (83) (67)
Derivative credit valuation adjustments:
- Monolines (24) (62)
- Other derivative credit valuation adjustments (321) (322)
Derivative debit valuation adjustments 220 310
-- Bid offer and other exit adjustments have reduced by GBP40m
to GBP366m and by GBP37m to GBP171m respectively during 2014 as a
result of movements in market bid offer spreads
-- Derivative credit valuation adjustments reduced by GBP39m to
GBP345m in 2014 as a result of a reduction in monoline exposure and
improvements in counterparty credit
-- Uncollateralised derivative funding adjustments have
increased by GBP16m to GBP83m
-- Derivative debit valuation adjustments have reduced by GBP90m
to GBP220m as a result of improvements in Barclays credit
Portfolio exemption
The Group uses the portfolio exemption in IFRS 13 Fair Value
Measurement to measure the fair value of certain groups of
financial assets and financial liabilities. Assets and liabilities
are measured using the price that would be received to sell a net
long position (i.e. an asset) for a particular risk exposure or to
transfer a net short position (i.e. a liability) for a particular
risk exposure in an orderly transaction between market participants
at the balance sheet date under current market conditions.
Unrecognised gains as a result of the use of valuation models
using unobservable inputs
The amount that has yet to be recognised in income that relates
to the difference between the transaction price (the fair value at
initial recognition) and the amount that would have arisen had
valuation models using unobservable inputs been used on initial
recognition, less amounts subsequently recognised, is as
follows:
Half year Half year
ended ended
30.06.14 31.12.13
GBPm GBPm
Opening balance 137 159
Additions 10 12
Amortisation and releases (22) (34)
Closing balance 125 137
The reserve held for unrecognised gains is predominantly related
to derivative financial instruments.
Third party credit enhancements
Structured and brokered certificates of deposit issued by
Barclays Group are insured up to $250,000 per depositor, by the
Federal Deposit Insurance Corporation (FDIC) in the United States
of America. The FDIC is funded by premiums that Barclays and other
banks pay for deposit insurance coverage. The carrying value of
these issued certificates of deposit that are designated under the
IAS 39 fair value option includes this third party credit
enhancement. The on balance sheet value of these brokered
certificates of deposit amounted to GBP3.1bn at 30 June 2014.
Comparison of carrying amounts and fair values for assets and
liabilities not held at fair value
Valuation methodologies employed in calculating the fair value
of financial assets and liabilities measured at amortised cost are
consistent with the 2013 Annual Report disclosure.
The following table summarises the fair value of financial
assets and liabilities measured at amortised cost on the Group's
balance sheet where carrying amount is not a reasonable
approximation of fair value:
As at 30.06.14 As at 31.12.13
Carrying Carrying
amount Fair Value amount Fair Value
Financial assets GBPm GBPm GBPm GBPm
Loans and advances to banks 43,448 43,435 39,422 39,408
Loans and advances to customers:
-Home loans 179,022 166,169 179,527 170,793
-Credit cards, unsecured and other
retail lending 62,412 61,975 64,551 63,944
-Finance lease receivables 5,471 5,424 5,827 5,759
-Corporate loans 195,644 192,648 184,332 180,499
Reverse repurchase agreements and
other similar secured lending 171,934 171,934 186,779 186,756
Financial liabilities
Deposits from banks (62,167) (62,162) (55,615) (55,646)
Customer accounts:
-Current and demand accounts (142,610) (142,610) (134,849) (134,849)
-Savings accounts (127,807) (127,933) (123,824) (123,886)
-Other time deposits (173,221) (173,254) (173,325) (173,056)
Debt securities in issue (83,832) (84,919) (86,693) (87,022)
Repurchase agreements and other similar
secured borrowing (173,669) (173,669) (196,748) (196,748)
Subordinated liabilities (19,301) (21,466) (21,695) (22,193)
10. Subordinated Liabilities
As at As at
30.06.14 31.12.13
GBPm GBPm
======== ========
Opening balance as at 1 January 21,695 24,018
Issuances 23 700
Redemptions (1,526) (1,426)
Other (891) (1,597)
======== ========
Total dated and undated subordinated liabilities
as at period end 19,301 21,695
Subordinated liabilities decreased 11% to GBP19,301m.
Redemptions included GBP821m Callable Fixed/Floating Rate
Subordinated Notes (EUR1,000m) and GBP98m 8.80% Callable
Subordinated Notes (ZAR 1,725m). In addition, GBP607m Tier One
Notes and Reserve Capital Instruments were exchanged as part of the
Additional Tier 1 (AT1) exchange exercise detailed in Note 14.
11. Provisions
As at As at
30.06.14 31.12.13
GBPm GBPm
Conduct Remediation
- Payment Protection Insurance redress 1,295 971
- Interest rate hedging product redress 648 1,169
- Other conduct 288 388
Litigation 358 485
Redundancy and restructuring 344 388
Undrawn contractually committed facilities
and guarantees 180 165
Onerous contracts 108 100
Sundry provisions 224 220
Total 3,445 3,886
Payment Protection Insurance Redress
As at 31 December 2013, Barclays had recognised cumulative
provisions totalling GBP3.95bn against the cost of Payment
Protection Insurance (PPI) redress and associated processing costs.
Utilisation of GBP2.98bn left a remaining balance of GBP0.97bn at
that date.
During H114, utilisation has been GBP576m, down 15% compared to
H113 (GBP680m) and 16% on H213 (GBP685m). As at 30 June 2014, 1.1m
(31 December 2013: 1.0m) customer initiated claims(1) had been
received and processed. The monthly volume of claims received in H1
declined 22% compared to H113 and 10% versus H213. This rate of
decline was slower than previously expected with an increased level
of claims from Claims Management Companies (CMCs) experienced
during Q2 14 in particular. CMC claims have reduced by only 39%
from the peak in May 2012 compared to a drop in direct customer
claims of 69%.
The appropriate provision is determined by reference to a number
of key assumptions which involve significant management judgement
and modelling:
-- Customer initiated claim volumes - claims received but not
yet processed as at 30 June and an estimate of future claims
-- Proactive response rate - volume of claims in response to
proactive mailing
-- Uphold rate - the percentage of claims that are upheld as
being valid upon review
-- Average claim redress - the expected average payment to
customers for upheld claims based on the type and age of the
policy/policies
An additional provision of GBP900m was recognised in June 2014,
as a result of the lower than expected decline in claims, related
referrals of cases to the Financial Ombudsman Service (FOS) and
associated operational costs. As at 30 June 2014, cumulative
utilisation has been GBP3.56bn, leaving a remaining provision of
GBP1.3bn.
The assumptions underlying the provision remain subjective, in
particular due to the uncertainty associated with future claims
levels, which include complaints driven by CMC activity. The
current provision represents Barclays' best estimate of all future
expected costs of PPI redress, however, due to the level of
uncertainty regarding future complaint volumes it is possible the
eventual outcome may differ from the current estimate. If this were
to be material, the provision will be increased or decreased
accordingly.
The following table details, by key assumption, actual data
through to 30 June 2014, forecast assumptions used in the provision
calculation and a sensitivity analysis illustrating the impact on
the provision if the future expected assumptions prove too high or
too low.
1 Total claims received to date, which include those received
via CMCs but exclude those for which no PPI policy exists and
excluding responses to proactive mailing. This sensitivity includes
the associated costs of FOS referrals and operating costs.
Cumulative Sensitivity
actual Analysis increase/decrease
Assumption to 30.06.14 Future Expected in provision
Customer initiated claims received
and processed(1) 1,120k 330k 50k = GBP98m
Proactive mailing 680k 320k 50k =GBP18m
Response rate to proactive mailing 28% 20% 1% = GBP5m
Average uphold rate per claim(2) 76% 80% 1% = GBP7m
Average redress per valid claim(3) GBP1,797 GBP1,668 GBP100 = GBP38m
Interest Rate Hedging Product Redress
GBPm
As at 31 December 2013 1,169
Increase in provision in period -
Utilisation of provision in period (521)
As at 30 June 2014 648
As at 30 June 2014, the provision for interest rate hedging
product redress was GBP648m after H114 utilisation of GBP521m
primarily due to the payment of redress to customers. Redress
outcomes have been communicated to approximately 95% of the
non-sophisticated customers covered by the review. Over 60% of the
customers covered by the review have now been paid all redress due
or are not due redress.
.
There has been no significant change to the estimate of future
costs and the group expects the provision to be sufficient to cover
the cost of completing redress. No provision has been recognised in
relation to possible incremental consequential loss claims (over
and above 8% per annum simple interest and an allowance for tax
rate differentials). As at 30 June 2014, no significant incremental
consequential loss claims from customers categorised as
non-sophisticated had been agreed. Incremental consequential loss
claims and claims from sophisticated customers will be monitored
and future provisions will be recognised to the extent an
obligation resulting in a probable outflow is identified.
1 Total claims received to date, including those received via
CMCs but excluding those for which no PPI policy exists and
excluding responses to proactive mailing. This sensitivity includes
the associated costs of FOS referrals and operating costs.
2 Average uphold rate per claim excludes those for which no PPI policy exists.
3 Average redress stated on a per policy basis.
12. Retirement Benefits
As at 30 June 2014, the Group's IAS 19 (Revised) pension deficit
across all schemes was GBP1.7bn (2013: GBP1.8bn). The UK Retirement
Fund (UKRF), which is the Group's main scheme, had a deficit of
GBP1.3bn (2013: GBP1.4bn).
The movement for the UKRF is largely due to an increase in asset
values, which was partially offset by an increase in defined
benefit obligation. The increase in defined benefit obligation can
be linked to a decrease in discount rate to 4.31% (2013: 4.46%),
partially offset by a decrease in long term expected inflation to
3.34% (2013: 3.42%).
The triennial funding valuation of the UKRF is currently
underway with an effective date of 30 September 2013. Contribution
requirements, including any deficit recovery plans, will be agreed
between the Group and Trustee by the end of 2014. The previous
triennial funding valuation at 30 September 2010 showed a deficit
of GBP5.0bn. Under the agreed recovery plan, deficit contributions
of GBP1.8bn were paid to the fund in December 2011 and a further
GBP0.5bn paid in April 2012. Further deficit contributions are
payable from 2017 to 2021 starting at GBP0.7bn in 2017 and
increasing by approximately 3.5% per annum until 2021. These
deficit contributions are in addition to the regular contributions
to meet the Group's share of the cost of benefits accruing over
each year.
In non-valuation years the Scheme Actuary prepares an annual
update of the funding position. The latest annual update was
carried out as at 30 September 2012 and showed a deficit of
GBP3.6bn.
13. Called Up Share Capital
Called up share capital comprises 16,417m (2013: 16,113m)
ordinary shares of 25p each. The increase was largely due to the
issuance of shares under employee share schemes.
As at 30 June 2014, there were no unexercised warrants (2013:
nil).
14. Other Equity Instruments
Other Equity Instruments of GBP4,326m (2013: GBP2,063m) include
Additional Tier 1 (AT1) securities issued by Barclays PLC during
2013 and 2014. During 2013, there were two separate issuances of
Fixed Rate Resetting Perpetual Subordinated Contingent Convertible
Securities, with principal amounts of $2bn and EUR1bn. In 2014,
there were three issuances of Fixed Rate Resetting Perpetual
Subordinated Contingent Convertible Securities, with principal
amounts of $1.2bn, EUR1.1bn and GBP0.7bn. The 2014 AT1 securities
were issued as part of an exchange of GBP1,527m of Barclays Bank
PLC preference shares (held as non controlling interests for
Barclays PLC) and GBP607m of subordinated debt instruments (Tier 1
Notes and Reserve Capital Instruments).
The exchange exercise involved Barclays PLC issuing AT1
securities to investors in exchange for Barclays Bank PLC
preference shares and Barclays Bank PLC subordinated debt
instruments held by the same investors. As part of the exercise,
Barclays Bank PLC issued three AT1 instruments to Barclays PLC.
Upon completion of the exercise, the preference shares and
subordinated debt instruments were cancelled by Barclays Bank
PLC.
The AT1 securities are perpetual securities with no fixed
maturity and are structured to qualify as AT1 instruments under CRD
IV.
15. Other Reserves
Currency Translation Reserve
As at 30 June 2014 there was a debit balance of GBP2,083m (2013:
GBP1,142m debit) in the currency translation reserve. The increase
of GBP941m (2013: GBP750m) principally reflected the depreciation
of USD against GBP. The currency translation reserve associated
with non-controlling interests increased by GBP115m (2013: GBP239m)
due to the depreciation of ZAR against GBP.
The recycling impact of the currency translation reserve
recognised in the income statement during the period was a GBP61m
net gain (2013: GBP2m).
Available for Sale Reserve
As at 30 June 2014 there was a credit balance of GBP493m (2013:
GBP148m) in the Available for sale reserve. The increase of GBP345m
(2013: GBP96m decrease) was largely driven by GBP2,014m gains from
changes in fair value on Government Bonds offset by GBP1,253m due
to fair value hedging, GBP212m of net gains transferred to net
profit and GBP123m of tax.
Cash Flow Hedging Reserve
The cash flow hedging reserve represents the cumulative gains
and losses on effective cash flow hedging instruments that will be
recycled to the income statement when the hedged transactions
affect profit or loss.
As at 30 June 2014 there was a credit balance of GBP533m (2013:
GBP273m credit) in the cash flow hedging reserve. The increase of
GBP260m (2013: GBP1,080m decrease) principally reflected GBP535m
increases in the fair value of interest rate swaps held for hedging
purposes as interest rate forward curves decreased, partly offset
by GBP212m gains transferred to net profit and a deferred tax debit
of GBP63m.
Treasury Shares
During the period GBP842m (2013: GBP1,049m) net purchases of
treasury shares were made, principally reflecting the increase in
shares held for the purposes of employee share schemes, and GBP775m
(2013: GBP1,034m) was transferred to retained earnings reflecting
the vesting of deferred share based payments.
16. Contingent Liabilities and Commitments
As at As at
30.06.14 31.12.13
GBPm GBPm
Guarantees and letters of credit pledged as collateral
security 13,777 15,226
Performance guarantees, acceptances and endorsements 5,062 5,958
Contingent liabilities 18,839 21,184
Documentary credits and other short-term trade related
transactions 1,098 780
Forward starting reverse repurchase agreements 24,492 19,936
Standby facilities, credit lines and other commitments 257,579 254,855
Further details on contingent liabilities relating to legal,
competition and regulatory matters can be found in Note 17.
17. Legal, competition and regulatory matters
Barclays PLC (BPLC), Barclays Bank PLC (BBPLC) and the Group
face legal, competition and regulatory challenges, many of which
are beyond our control. The extent of the impact on BPLC, BBPLC and
the Group of these matters cannot always be predicted but may
materially impact our operations, financial results, condition and
prospects.
Investigations into Certain Agreements
The Financial Conduct Authority (FCA) has alleged that BPLC and
BBPLC breached their disclosure obligations in connection with two
advisory services agreements entered into by BBPLC. The FCA has
imposed a GBP50m fine. BPLC and BBPLC are contesting the findings.
The United Kingdom (UK) Serious Fraud Office (SFO) is also
investigating these agreements and the US Department of Justice
(DOJ) and US Securities and Exchange Commission (SEC) are
investigating whether the Group's relationships with third parties
who help it to win or retain business are compliant with the US
Foreign Corrupt Practices Act.
Background Information
The FCA has investigated certain agreements, including two
advisory services agreements entered into by BBPLC with Qatar
Holding LLC (Qatar Holding) in June and October 2008 respectively,
and whether these may have related to BPLC's capital raisings in
June and November 2008.
The FCA issued warning notices (Warning Notices) against BPLC
and BBPLC in September 2013.
The existence of the advisory services agreement entered into in
June 2008 was disclosed but the entry into the advisory services
agreement in October 2008 and the fees payable under both
agreements, which amount to a total of GBP322m payable over a
period of five years, were not disclosed in the announcements or
public documents relating to the capital raisings in June and
November 2008. While the Warning Notices consider that BPLC and
BBPLC believed at the time that there should be at least some
unspecified and undetermined value to be derived from the
agreements, they state that the primary purpose of the agreements
was not to obtain advisory services but to make additional
payments, which would not be disclosed, for the Qatari
participation in the capital raisings.
The Warning Notices conclude that BPLC and BBPLC were in breach
of certain disclosure-related listing rules and BPLC was also in
breach of Listing Principle 3 (the requirement to act with
integrity towards holders and potential holders of the company's
shares). In this regard, the FCA considers that BPLC and BBPLC
acted recklessly. The financial penalty in the Warning Notices
against the Group is GBP50m. BPLC and BBPLC continue to contest the
findings.
Other Investigations
The FCA and the SFO have agreed that the FCA enforcement process
be stayed pending progress in the SFO's investigation into the
agreements referred to above, including the advisory services
agreements, in respect of which the Group has received and has
continued to respond to requests for further information. The DOJ
and the SEC are undertaking an investigation into whether the
Group's relationships with third parties who assist BPLC to win or
retain business are compliant with the US Foreign Corrupt Practices
Act. They are also investigating the same agreements. The US
Federal Reserve has requested to be kept informed.
Claimed Amounts/Financial Impact
It is not currently practicable to provide an estimate of the
financial impact of the actions described on the Group or what
effect, if any, that they might have upon the Group's operating
results, cash flows or financial position in any particular
period.
Swiss / US Tax Programme
In August 2013, the DOJ and the Swiss Federal Department of
Finance announced the Programme for Non-Prosecution Agreements or
Non-Targeted letters for Swiss Banks (Programme). This agreement
was the consequence of a long-running dispute between the US and
Switzerland regarding tax obligations of US related accounts held
in Swiss banks.
Barclays Bank (Suisse) SA and Barclays Bank PLC Geneva Branch
were participating in the Programme; however, following a
structured review of their US related accounts, it was determined
that continued participation in the Programme was not warranted. As
a result, Barclays Bank (Suisse) SA and Barclays Bank PLC Geneva
Branch have withdrawn from the Programme.
Alternative Trading Systems and High-Frequency Trading
The SEC, the New York State Attorney General (NYAG) and
regulators in certain other jurisdictions have been investigating a
range of issues associated with alternative trading systems (ATSs,
also known as dark pools) and the activities of high-frequency
traders. The Group has been providing information to the relevant
regulatory authorities in response to their enquiries.
Recent Developments
On 25 June 2014, the NYAG filed a complaint against BPLC and
Barclays Capital Inc. (BCI) in the Supreme Court of the State of
New York (NY Supreme Court) alleging, amongst other things, that
BPLC and BCI engaged in fraud and deceptive practices in connection
with LX Liquidity Cross, the Group's SEC-registered ATS.
In addition, on 28 July 2014, BPLC was named as a defendant
along with four former or current directors of BPLC in a proposed
securities class action filed in the US District Court for the
Southern District of New York (SDNY Court). The complaint asserts
various claims under the US Securities Exchange Act of 1934,
principally that certain annual and other reports of BPLC contained
misstatements and omissions concerning LX Liquidity Cross. The
complaint was brought on behalf of a proposed class consisting of
all persons or entities that purchased or otherwise acquired
BPLC-issued American Depositary Shares (ADSs), and options
contracts to purchase or sell such ADSs, between 2 August 2011 and
25 June 2014.
BPLC is also one of a number of defendants, including several US
and international banks, named in proposed securities class actions
filed in the SDNY Court on various dates in 2014 alleging, among
other things, violations of the federal securities laws related to
high frequency trading.
It is possible that additional complaints relating to these or
similar matters may be brought in the future against BPLC and/or
its affiliates.
Claimed Amounts/Financial Impact
The complaints seek unspecified monetary damages and injunctive
relief. It is not currently practicable to provide an estimate of
the financial impact of the matters in this section or what effect,
if any, that these matters might have upon operating results, cash
flows or the Group's financial position in any particular
period.
FERC
The US Federal Energy Regulatory Commission (FERC) has filed a
civil action against BBPLC and certain of its former traders in the
US District Court in California seeking to collect on an order
assessing a $435m civil penalty and the disgorgement of $34.9m of
profits, plus interest, in connection with allegations that BBPLC
manipulated the electricity markets in and around California. BBPLC
and the former traders have filed a motion to dismiss the action
for improper venue or, in the alternative, to transfer it to the
Southern District of New York (SDNY), and a motion to dismiss the
complaint for failure to state a claim. The US Attorney's Office in
SDNY has informed BBPLC that it is looking into the same conduct at
issue in the FERC matter.
Background Information
In October 2012, FERC issued an Order to Show Cause and Notice
of Proposed Penalties (Order and Notice) against BBPLC and four of
its former traders in relation to the Group's power trading in the
western US. In the Order and Notice, FERC asserted that BBPLC and
its former traders violated FERC's Anti-Manipulation Rule by
manipulating the electricity markets in and around California from
November 2006 to December 2008, and proposed civil penalties and
profit disgorgement to be paid by BBPLC.
In July 2013, FERC issued an Order Assessing Civil Penalties in
which it assessed a $435m civil penalty against BBPLC and ordered
BBPLC to disgorge an additional $34.9m of profits plus interest
(both of which are consistent with the amounts proposed in the
Order and Notice).
In October 2013, FERC filed a civil action against BBPLC and its
former traders in the US District Court in California seeking to
collect the penalty and disgorgement amount. FERC's complaint in
the civil action reiterates the allegations previously made by FERC
in its October 2012 Order and Notice and its July 2013 Order
Assessing Civil Penalties.
In September 2013, BBPLC was contacted by the criminal division
of the US Attorney's Office in SDNY and advised that such office is
looking at the same conduct at issue in the FERC matter.
On 16 December 2013, BBPLC and its former traders filed a motion
to dismiss the action for improper venue or, in the alternative, to
transfer it to the SDNY Court, and a motion to dismiss the
complaint for failure to state a claim.
Claimed Amounts/Financial Impact
FERC has made claims against the Group totalling $469.9m, plus
interest, for civil penalties and profit disgorgement. This amount
does not necessarily reflect the Group's potential financial
exposure if a ruling were to be made against it.
Investigations into LIBOR, ISDAfix, other Benchmarks and Foreign
Exchange Rates
Regulators and law enforcement agencies from a number of
governments have been conducting investigations relating to BBPLC's
involvement in manipulating financial benchmarks and foreign
exchange rates. BBPLC has reached settlements with the relevant law
enforcement agency or regulator in certain of the investigations,
but others, including those set out in more detail below, remain
pending.
Background Information
The FCA, the US Commodity Futures Trading Commission (CFTC), the
SEC, the DOJ Fraud Section (DOJ-FS) and Antitrust Division
(DOJ-AD), the European Commission (Commission), the SFO, the
Monetary Authority of Singapore, the Japan Financial Services
Agency, the prosecutors' office in Trani, Italy and various US
state attorneys general are amongst various authorities conducting
investigations into submissions made by BBPLC and other financial
institutions to the bodies that set or compile various financial
benchmarks, such as LIBOR and EURIBOR and in connection with
efforts to manipulate certain benchmark currency exchange
rates.
On 27 June 2012, BBPLC announced that it had reached settlements
with the Financial Services Authority (FSA) (as predecessor to the
FCA), the CFTC and the DOJ-FS in relation to their investigations
and BBPLC agreed to pay total penalties of GBP290m, which were
reflected in operating expenses for 2012. The settlements were made
by entry into a Settlement Agreement with the FSA, a Settlement
Order with the CFTC (CFTC Order) and a Non-Prosecution Agreement
(NPA) with the DOJ-FS. In addition, BBPLC was granted conditional
leniency from the DOJ-AD in connection with potential US antitrust
law violations with respect to financial instruments that reference
EURIBOR. Summaries of the NPA and the CFTC Order are set out below.
The full text of the CFTC Order and the NPA are publicly available
on the websites of the CFTC and the DOJ, respectively.
FSA Settlement Agreement
The terms of the Settlement Agreement with the FSA are
confidential. However, the Final Notice of the FSA, which imposed a
financial penalty of GBP59.5m, is publicly available on the website
of the FCA. This sets out the FSA's reasoning for the penalty,
references the settlement principles and sets out the factual
context and justification for the terms imposed.
CFTC Order
In addition to a $200m civil monetary penalty, the CFTC Order
requires BBPLC to cease and desist from further violations of
specified provisions of the US Commodity Exchange Act (CEA) and
take specified steps to ensure the integrity and reliability of its
benchmark interest rate submissions, including LIBOR and EURIBOR,
and improve related internal controls. Amongst other things, the
CFTC Order requires BBPLC to:
-- make its submissions based on certain specified factors, with
BBPLC's transactions being given the greatest weight, subject to
certain specified adjustments and considerations;
-- implement firewalls to prevent improper communications,
including between traders and submitters;
-- prepare and retain certain documents concerning submissions
and retain relevant communications;
-- implement auditing, monitoring and training measures
concerning its submissions and related processes;
-- make regular reports to the CFTC concerning compliance with
the terms of the CFTC Order;
-- use best efforts to encourage the development of rigorous
standards for benchmark interest rates; and
-- continue to cooperate with the CFTC's ongoing investigation
of benchmark interest rates.
DOJ Non-Prosecution Agreement
As part of the NPA, BBPLC agreed to pay a $160m penalty. In
addition, the DOJ agreed not to prosecute BBPLC for any crimes
(except for criminal tax violations, as to which the DOJ cannot and
does not make any agreement) related to BBPLC's submissions of
benchmark interest rates, including LIBOR and EURIBOR, contingent
upon BBPLC's satisfaction of specified obligations under the NPA.
In particular, under the NPA, BBPLC agreed for a period of two
years from 26 June 2012, amongst other things, to:
-- commit no US crimes whatsoever;
-- truthfully and completely disclose non-privileged information
with respect to the activities of BBPLC, its officers and
employees, and others concerning all matters about which the DOJ
inquires of it, which information can be used for any purpose,
except as otherwise limited in the NPA;
-- bring to the DOJ's attention all potentially criminal conduct
by BBPLC or any of its employees that relates to fraud or
violations of the laws governing securities and commodities
markets; and
-- bring to the DOJ's attention all criminal or regulatory
investigations, administrative proceedings or civil actions brought
by any governmental authority in the US by or against BBPLC or its
employees that alleges fraud or violations of the laws governing
securities and commodities markets.
BBPLC also agreed to cooperate with the DOJ and other government
authorities in the US in connection with any investigation or
prosecution arising out of the conduct described in the NPA, which
commitment shall remain in force until all such investigations and
prosecutions are concluded. BBPLC also continues to cooperate with
the other ongoing investigations.
In anticipation of the expiry of the two year period, Barclays
and DOJ-FS entered into a letter agreement which: (1) gives DOJ-FS
until 27 June 2015 to make a determination under the NPA solely as
to whether any of Barclays trading activities in the foreign
exchange market during the two year period from 26 June 2012
constituted the commission of a "United States crime"; and (2) with
respect to the ongoing investigation of those trading activities by
DOJ-FS and DOJ-AD, extends Barclays' obligation to disclose
non-privileged information in response to inquiries of the DOJ-FS
to 27 June 2015. The two year period under the NPA has otherwise
expired.
Investigations by the US State Attorneys General
Following the settlements announced in June 2012, 31 US state
attorneys general commenced their own investigations into LIBOR,
EURIBOR and the Tokyo Interbank Offered Rate. The NYAG, on behalf
of this coalition of attorneys general, issued a subpoena in July
2012 to BBPLC (and subpoenas to a number of other banks) to produce
wide-ranging information and has since issued additional
information requests to BBPLC for both documents and transactional
data. BBPLC is responding to these requests on a rolling basis.
Investigation by the SFO
In addition, following the settlements announced in June 2012,
the SFO announced in July 2012 that it had decided to investigate
the LIBOR matter, in respect of which BBPLC has received and
continues to respond to requests for information.
Investigations by the European Commission
The Commission has also been conducting investigations into the
manipulation of, amongst other things, EURIBOR. On 4 December 2013,
the Commission announced that it had reached a settlement with the
Group and a number of other banks in relation to anti-competitive
conduct concerning EURIBOR. The Group had voluntarily reported the
EURIBOR conduct to the Commission and cooperated fully with the
Commission's investigation. In recognition of this cooperation, the
Group was granted full immunity from the financial penalties that
would otherwise have applied.
ISDAfix Investigation
Regulators and law enforcement agencies, including the CFTC and
the FCA, are also conducting separate investigations into
historical practices with respect to ISDAfix, amongst other
benchmarks. BBPLC has received and continues to respond to
subpoenas and requests for information from various authorities
including the CFTC and the FCA.
Foreign Exchange Trading Investigation
Various regulatory and enforcement authorities, including the
FCA, the CFTC, the DOJ, the SEC, the New York State Department of
Financial Services and the Hong Kong Monetary Authority are
investigating foreign exchange trading, including possible attempts
to manipulate certain benchmark currency exchange rates or engage
in other activities that would benefit their trading positions.
Certain of these investigations involve multiple market
participants in various countries. BBPLC has received enquiries
from certain of these authorities related to their particular
investigations, and from other regulators interested in foreign
exchange issues. The Group is reviewing its foreign exchange
trading covering a several year period at least through October
2013 and is cooperating with the relevant authorities in their
investigations.
For a discussion of litigation arising in connection with these
investigations see "LIBOR and other Benchmarks Civil Actions" and
"Civil Actions in Respect of Foreign Exchange Trading" below.
Claimed Amounts/Financial Impact
It is not currently practicable to provide an estimate of the
financial impact of the matters in this section or what effect, if
any, that these matters might have upon operating results, cash
flows or the Group's financial position in any particular period.
Amongst other things, a breach of any of the NPA provisions could
lead to prosecutions in relation to BBPLC's benchmark interest rate
submissions and could have significant consequences for BBPLC's
current and future business operations in the US.
LIBOR and other Benchmarks Civil Actions
A number of individuals and corporates in a range of
jurisdictions have threatened or brought civil actions against the
Group and other banks in relation to manipulation of LIBOR and/or
other benchmark rates. The lawsuits seek an unspecified amount of
damages with the exception of five lawsuits, in which the
plaintiffs are seeking a combined total in excess of $1.25bn in
actual damages against all defendants, including BBPLC, plus
punitive damages. While several of such cases have been dismissed,
others remain pending and their ultimate impact is unclear.
Background Information
Following the settlements of the investigations referred to
above in "Investigations into LIBOR, ISDAfix, other benchmarks and
foreign exchange rates", a number of individuals and corporates in
a range of jurisdictions have threatened or brought civil actions
against the Group in relation to LIBOR and/or other benchmarks.
The majority of the USD LIBOR cases, which have been filed in
various US jurisdictions, have been consolidated for pre-trial
purposes before a single Judge in the SDNY Court (MDL Court).
The complaints are substantially similar and allege, amongst
other things, that BBPLC and the other banks individually and
collectively violated provisions of the US Sherman Antitrust Act,
the CEA, the US Racketeer Influenced and Corrupt Organizations Act
(RICO) and various state laws by manipulating USD LIBOR rates.
The lawsuits seek unspecified damages with the exception of five
lawsuits, in which the plaintiffs are seeking a combined total in
excess of $1.25bn in actual damages against all defendants,
including BBPLC, plus punitive damages. Some of the lawsuits also
seek trebling of damages under the US Sherman Antitrust Act and
RICO.
The proposed class actions purport to be brought on behalf of
(amongst others) plaintiffs that (i) engaged in USD LIBOR-linked
over-the-counter transactions (OTC Class); (ii) purchased USD
LIBOR-linked financial instruments on an exchange (Exchange-Based
Class); (iii) purchased USD LIBOR-linked debt securities (Debt
Securities Class); (iv) purchased adjustable-rate mortgages linked
to USD LIBOR; or (v) issued loans linked to USD LIBOR.
USD LIBOR Cases in MDL Court
In March 2013, the MDL Court issued a decision dismissing the
majority of claims against BBPLC and other panel bank defendants in
three lead proposed class actions (Lead Class Actions) and three
lead individual actions (Lead Individual Actions).
Following the decision, the plaintiffs in the Lead Class Actions
sought permission to either file an amended complaint or appeal an
aspect of the March 2013 decision. In August 2013 and June 2014,
the MDL Court denied the majority of the motions presented in the
Lead Class Actions. As a result, the:
-- Debt Securities Class has been dismissed entirely;
-- the claims of the Exchange-Based Class have been limited to claims under the CEA; and
-- the claims of the OTC Class have been limited to claims for
unjust enrichment and breach of the implied covenant of good faith
and fair dealing.
Subsequent to the MDL Court's March 2013 decision, the
plaintiffs in the Lead Individual Actions filed a new action in
California state court (since moved to the MDL Court) based on the
same allegations as those initially alleged in the proposed class
action cases discussed above. The Debt Securities Class attempted
to appeal the dismissal of their action to the U.S. Court of
Appeals for the Second Circuit (Second Circuit), but the Second
Circuit dismissed the appeal as untimely on the grounds that the
MDL Court had not reached a decision resolving all of the claims in
the consolidated actions. The U.S. Supreme Court has agreed to
review the dismissal of the Debt Securities Class' appeal.
Depending on the decision of the U.S. Supreme Court and further
proceedings in the MDL Court, various plaintiffs may attempt to
bring appeals of some or all of the MDL Court's decisions in the
future.
Additionally, a number of other actions before the MDL Court
remain stayed, pending further proceedings in the Lead Class
Actions.
Until there are further decisions, the ultimate impact of the
MDL Court's decisions will be unclear, although it is possible that
the decisions will be interpreted by courts to affect other
litigation, including the actions described below, some of which
concern different benchmark interest rates.
Additional USD LIBOR Case in the SDNY
An additional individual action was commenced on 13 February
2013 in the SDNY against BBPLC and other panel bank defendants. The
plaintiff alleged that the panel bank defendants conspired to
increase USD LIBOR, which caused the value of bonds pledged as
collateral for a loan to decrease, ultimately resulting in the sale
of the bonds at a low point in the market. This action is not
assigned to the MDL Court; it is proceeding on a different schedule
before a different judge in the SDNY. The panel bank defendants
have moved to dismiss the action, and their motion is now fully
submitted to the court.
Securities Fraud Case in the SDNY
BPLC, BBPLC and BCI have also been named as defendants along
with four former officers and directors of BBPLC in a proposed
securities class action pending in the SDNY in connection with
BBPLC's role as a contributor panel bank to LIBOR. The complaint
asserts claims under the US Securities Exchange Act of 1934,
principally alleging that BBPLC's Annual Reports for the years 2006
to 2011 contained misstatements and omissions concerning (amongst
other things) BBPLC's compliance with its operational risk
management processes and certain laws and regulations. The
complaint also alleges that BBPLC's daily USD LIBOR submissions
constituted false statements in violation of US securities law. The
complaint was brought on behalf of a proposed class consisting of
all persons or entities that purchased BPLC-sponsored American
Depositary Receipts on a US securities exchange between 10 July
2007 and 27 June 2012. In May 2013, the district court granted
BBPLC's motion to dismiss the complaint in its entirety. The
plaintiffs appealed, and, in April 2014, the Second Circuit issued
an order upholding the dismissal of certain of the plaintiffs'
claims, but reversing the dismissal of the plaintiffs' claims that
BBPLC's daily USD LIBOR submissions constituted false statements in
violation of US securities law. The action will be remanded back to
the district court for further proceedings.
Complaint in the US District Court for the Central District of
California
In July 2012, a purported class action complaint in the US
District Court for the Central District of California was amended
to include allegations related to USD LIBOR and name BBPLC as a
defendant. The amended complaint was filed on behalf of a purported
class that includes holders of adjustable rate mortgages linked to
USD LIBOR. BBPLC moved to dismiss all of the plaintiffs' claims
and, in October 2012, the district court granted the motion to
dismiss. The plaintiffs appealed the dismissal to the US Court of
Appeals for the Ninth Circuit (Ninth Circuit), and, in March 2014,
the Ninth Circuit issued an order reversing dismissal of the
proposed class action, which reinstated most of the plaintiffs'
claims. The action has now been remanded back to the district court
for further proceedings, and one of the plaintiffs has indicated
she will file a fourth amended complaint in August 2014.
Japanese Yen LIBOR Case in SDNY
An additional class action was commenced in April 2012 in the
SDNY against BBPLC and other Japanese Yen LIBOR panel banks by a
plaintiff involved in exchange-traded derivatives. The complaint
also names members of the Japanese Bankers Association's Euroyen
Tokyo Interbank Offered Rate (Euroyen TIBOR) panel, of which BBPLC
is not a member. The complaint alleges, amongst other things,
manipulation of the Euroyen TIBOR and Yen LIBOR rates and breaches
of the CEA and US Sherman Antitrust Act between 2006 and 2010. The
defendants filed a motion to dismiss and, on 28 March 2014, the
Court issued a decision granting in part and denying in part that
motion. Specifically, the court dismissed the plaintiff's antitrust
claims in full, but sustained the plaintiff's CEA claims. The
defendants have moved for reconsideration of the decision
concerning the CEA claims, and the plaintiff has moved for leave to
file a third amended complaint adding additional claims, including
a RICO claim.
EURIBOR Cases
On 12 February 2013, a Euribor-related class action was filed
against BPLC, BBPLC and BCI and other Euribor panel banks. The
plaintiffs assert antitrust, CEA, RICO, and unjust enrichment
claims. In particular, BBPLC is alleged to have conspired with
other Euribor panel banks to manipulate Euribor. The lawsuit is
brought on behalf of purchasers and sellers of NYSE LIFFE Euribor
futures contracts, purchasers of Euro currency-related futures
contracts and purchasers of other derivative contracts (such as
interest rate swaps and forward rate agreements that are linked to
Euribor) during the period 1 June 2005 through 31 March 2011.
In addition, BBPLC has been granted conditional leniency from
the DOJ-AD in connection with potential US antitrust law violations
with respect to financial instruments that reference EURIBOR. As a
result of that grant of conditional leniency, BBPLC is eligible for
(i) a limit on liability to actual rather than treble damages if
damages were to be awarded in any civil antitrust action under US
antitrust law based on conduct covered by the conditional leniency
and (ii) relief from potential joint-and-several liability in
connection with such civil antitrust action, subject to BBPLC
satisfying the DOJ-AD and the court presiding over the civil
litigation of fulfilment of its cooperation obligations.
Non-US Cases
In addition to US actions, legal proceedings have been brought
or threatened against the Group in connection with alleged
manipulation of LIBOR and EURIBOR, in a number of jurisdictions.
The first such proceeding in England and Wales was brought by
Graiseley Properties Limited for trial in the High Court of Justice
and was settled on confidential terms in April 2014. The number of
such proceedings in non US jurisdictions, the benchmarks to which
they relate, and the jurisdictions in which they may be brought are
anticipated to increase over time.
Claimed Amounts/Financial Impact
It is not currently practicable to provide an estimate of the
financial impact of the actions described on the Group or what
effect, if any, that they might have upon the Group's operating
results, cash flows or financial position in any particular
period.
Civil Actions in Respect of Foreign Exchange Trading
Since November 2013, a number of civil actions have been filed
in the SDNY on behalf of proposed classes of plaintiffs alleging
manipulation of foreign exchange markets under the US Sherman
Antitrust Act and New York state law and naming several
international banks as defendants, including BBPLC.
Recent Developments
The SDNY Court, before whom all the cases are pending, has
combined all actions alleging a class of U.S. persons in a single
consolidated action and has directed that this consolidated action
be coordinated for pretrial and other proceedings with two cases
making similar allegations on behalf of a Norwegian class and a
Korean class, respectively. The defendants, including BBPLC, have
moved to dismiss the complaints.
Claimed Amounts/Financial Impact
It is not currently practicable to provide an estimate of the
financial impact of the actions described on the Group or what
effect, if any, that they might have upon the Group's operating
results, cash flows or financial position in any particular
period.
Civil Actions in Respect of the Gold Fix
Since March 2014, a number of civil complaints have been filed
in US federal courts, each on behalf of a proposed class of
plaintiffs, alleging that Barclays entities and other members of
The London Gold Market Fixing Ltd. manipulated the prices of gold
and gold derivative contracts in violation of the CEA, the US
Sherman Antitrust Act, and state antitrust and consumer protection
laws.
Claimed Amounts/Financial Impact
It is not currently practicable to provide an estimate of the
financial impact of the potential exposure of the actions described
or what effect, if any, that they might have upon operating
results, cash flows or the Group's financial position in any
particular period.
US Residential Mortgage Related Activity and Litigation
The Group's activities within the US residential mortgage sector
during the period from 2005 through 2008 included:
-- Sponsoring and underwriting of approximately $39bn of private-label securitisations;
-- Economic underwriting exposure of approximately $34bn for
other private-label securitisations;
-- Sales of approximately $0.2bn of loans to government sponsored enterprises (GSEs); and
-- Sales of approximately $3bn of loans to others.
In addition, during this time period, approximately $19.4bn of
loans (net of approximately $500m of loans sold during this period
and subsequently repurchased) were also originated and sold to
third parties by mortgage originator affiliates of an entity that
the Group acquired in 2007 (Acquired Subsidiary).
In connection with its loan sales and certain private-label
securitisations the Group provided certain loan level
representations and warranties (R&Ws), which if breached may
require the Group to repurchase the related loans. On 30 June 2014,
the Group had unresolved repurchase requests relating to loans with
a principal balance of approximately $2.2bn at the time they were
sold, and civil actions have been commenced by various parties
alleging that the Group must repurchase such loans. In addition,
the Group is party to a number of lawsuits filed by purchasers of
residential mortgage-backed securities (RMBS) asserting statutory
and/or common law claims and has entered into tolling agreements
with certain institutional purchasers of RMBS concerning their
potential claims. The current outstanding face amount of RMBS
related to such pending and threatened claims against the Group as
of 30 June 2014 was approximately $1.5bn.
RMBS Repurchase Requests
Background
In connection with the Group's loan sales and sponsored
private-label securitisations, the Group provided certain R&Ws
generally relating to the underlying mortgages, the property,
mortgage documentation and/or compliance with law. The Group was
the sole provider of R&Ws with respect to:
-- Approximately $5bn of Group sponsored securitisations;
-- Approximately $0.2bn of sales of loans to GSEs; and
-- Approximately $3bn of loans sold to others.
-- In addition, the Acquired Subsidiary provided R&Ws on all
of the $19.4bn of loans it sold to third parties.
Other than approximately $1bn of loans sold to others for which
R&Ws expired prior to 2012, there are no stated expiration
provisions applicable to the R&Ws made by the Group or the
Acquired Subsidiary. The Group's R&Ws with respect to the $3bn
of loans sold to others are related to loans that were generally
sold at significant discounts and contained more limited R&Ws
than loans sold to GSEs, the loans sold by the Acquired Subsidiary
or the Group sponsored securitisations.
R&Ws on the remaining Group sponsored securitisations were
primarily provided by third party originators directly to the
securitisation trusts with a Group subsidiary, as depositor for the
securitisation, providing more limited R&Ws.
Under certain circumstances, the Group and/or the Acquired
Subsidiary may be required to repurchase the related loans or make
other payments related to such loans if the R&Ws are
breached.
The unresolved repurchase requests received on or before 30 June
2014 associated with all R&Ws made by the Group or the Acquired
Subsidiary on loans sold to GSEs and others and private-label
activities had an original unpaid principal balance of
approximately $2.2bn at the time of such sale.
Substantially all of the unresolved repurchase requests
discussed above relate to civil actions that have been commenced by
the trustees for certain RMBS securitisations in which the trustees
allege that the Group and/or the Acquired Subsidiary must
repurchase loans that violated the operative R&Ws. The trustees
in these actions have also alleged that the operative R&Ws may
have been violated with respect to a greater (but unspecified)
amount of loans than the amount of loans previously stated in
specific repurchase requests made by such trustees.
Claimed Amounts/Financial Impact
It is not currently practicable to provide an estimate of the
financial impact of the actions described on the Group or what
effect, if any, that they might have upon the Group's operating
results, cash flows or financial position in any particular
period.
RMBS Securities Claims
Background
As a result of some of the RMBS activities described above, the
Group is party to a number of lawsuits filed by purchasers of RMBS.
In April 2014, the Group settled RMBS related lawsuits brought by
the US Federal Housing Finance Agency (FHFA). However, the Group
remains party to a number of similar lawsuits filed by purchasers
of RMBS sponsored and/or underwritten by the Group between 2005 and
2008. As a general matter, these lawsuits allege, amongst other
things, that the RMBS offering materials allegedly relied on by
such purchasers contained materially false and misleading
statements and/or omissions and generally demand rescission and
recovery of the consideration paid for the RMBS and recovery of
monetary losses arising out of their ownership. The Group has also
entered into tolling agreements with certain institutional
purchasers of RMBS that have threatened to assert claims of various
types against the Group in connection with the sale of RMBS
sponsored and/or underwritten by the Group.
In addition, the Group has received inquiries, including
subpoenas, from various regulatory and governmental authorities,
including the DOJ, regarding its mortgage-related activities, and
is cooperating with such inquiries.
The original face amount of RMBS related to the pending and
threatened civil actions against the Group total approximately
$4.1bn, of which approximately $1.5bn was outstanding as at 30 June
2014.
Cumulative realised losses reported on these RMBS as at 30 June
2014 were approximately $0.9bn.
Recent Developments
On 24 April 2014, the Group settled RMBS litigation brought by
the FHFA against BBPLC and certain of its affiliates for $280m.
These litigations related to allegedly materially false and
misleading statements and/or omissions that were allegedly
reflected in offering materials for RMBS purchased by the Federal
National Mortgage Association (Fannie Mae) and Federal Home Loan
Mortgage Corporation (Freddie Mac).
Claimed Amounts/Financial Impact
If the Group were to lose the pending and threatened actions the
Group believes it could incur a loss of up to the outstanding
amount of the RMBS at the time of judgement (taking into account
further principal payments after 30 June 2014), plus any cumulative
losses on the RMBS at such time and any interest, fees and costs,
less the market value of the RMBS at such time and less any
provisions taken to date.
The Group has estimated the total market value of these RMBS as
at 30 June 2014 to be approximately $1bn. The Group may be entitled
to indemnification for a portion of such losses.
Lehman Brothers
Since September 2009, the Group has been engaged in litigation
with various entities that have sought to challenge certain aspects
of the transaction pursuant to which BCI and other companies in the
Group acquired most of the assets of Lehman Brothers Inc. (LBI) in
September 2008, as well as the court order (Order) approving the
sale (Sale). The Order was upheld by the courts and is no longer
being challenged. Lower courts have ruled for the Group on certain
claims and against the Group on certain claims with respect to its
rights over assets it claims from the Sale and an appeal process is
currently pending before the Second Circuit. The Second Circuit's
ruling could result in additional recoveries or losses for the
Group and may be subject to further appeals or proceedings.
Background Information
In September 2009, motions were filed in the United States
Bankruptcy Court for the SDNY (Bankruptcy Court) by Lehman Brothers
Holdings Inc. (LBHI), the SIPA Trustee for Lehman Brothers Inc.
(Trustee) and the Official Committee of Unsecured Creditors of
Lehman Brothers Holdings Inc. (Committee). All three motions
challenged certain aspects of the Sale, as well as the Order. The
claimants sought an order voiding the transfer of certain assets to
BCI, requiring BCI to return to the LBI estate any excess value BCI
allegedly received, and declaring that BCI is not entitled to
certain assets that it claims pursuant to the Sale documents and
the Order (Rule 60 Claims).
In January 2010, BCI filed its response to the motions and also
filed a motion seeking delivery of certain assets that LBHI and LBI
had failed to deliver as required by the Sale documents and the
Order (together with the Trustee's competing claims to those
assets, Contract Claims).
In 2011, the Bankruptcy Court rejected the Rule 60 Claims and
decided some of the Contract Claims in the Trustee's favour and
some in favour of the Group. The Group and the Trustee each
appealed the Bankruptcy Court's adverse rulings on the Contract
Claims to the SDNY Court. LBHI and the Committee did not appeal the
Bankruptcy Court's ruling on the Rule 60 Claims.
The SDNY Court issued an opinion in June 2012, reversing one of
the Bankruptcy Court's rulings on the Contract Claims that had been
adverse to the Group and affirming the Bankruptcy Court's other
rulings on the Contract Claims. In July 2012, the SDNY Court issued
an agreed judgement implementing the rulings in the opinion
(Judgement). Under the Judgement, the Group is entitled to
receive:
-- $1.1bn (GBP0.6bn) from the Trustee in respect of "clearance
box" assets (Clearance Box Assets); and
-- property held at various institutions in respect of the
exchange traded derivatives accounts transferred to BCI in the Sale
(ETD Margin).
Recent Developments
The Trustee has appealed the SDNY Court's adverse rulings to the
Second Circuit. The current judgement is stayed pending resolution
of the Trustee's appeal.
It appears that the Trustee may dispute the Group's entitlement
to certain of the ETD Margin even in the event the Group prevails
in the pending Second Circuit appeal. Moreover, there is
uncertainty regarding recoverability of a portion of the ETD Margin
not yet delivered to the Group that is held by an institution
outside the US. Thus, the Group cannot reliably estimate how much
of the ETD Margin the Group is ultimately likely to receive.
Claimed Amounts/Financial Impact
Approximately $4.3bn (GBP2.5bn) of the assets to which the Group
is entitled as part of the Sale had not been received by 30 June
2014. Approximately $2.7bn (GBP1.6bn) has been recognised as a
receivable on the balance sheet in respect of these assets. The
unrecognised amount, approximately $1.6bn (GBP1.0bn) as of 30 June
2014, effectively represents a provision against the uncertainty
inherent in the litigation and potential post-appeal proceedings
and issues relating to the recovery of certain assets held by an
institution outside the US.
If the SDNY Court's rulings are unaffected by future
proceedings, but conservatively assuming the Group does not receive
any ETD Margin that the Group believes may be subject to a
post-appeal challenge by the Trustee or to uncertainty regarding
recoverability, the Group will receive assets in excess of the
$2.7bn (GBP1.6bn) recognised as a receivable on the Group's balance
sheet as at 30 June 2014. The Group would then recognise a gain
equal to such excess.
In a worst case scenario in which the Second Circuit reverses
the SDNY Court's rulings and determines that the Group is not
entitled to any of the Clearance Box Assets or ETD Margin, the
Group estimates that, after taking into account its effective
provision, its total losses would be approximately $6bn (GBP3.5bn).
Approximately $3.4bn (GBP2.0bn) of that loss would relate to
Clearance Box Assets and ETD Margin previously received by the
Group and prejudgement and post-judgement interest on such
Clearance Box Assets and ETD Margin that would have to be returned
or paid to the Trustee.
In this context, the Group is satisfied with the valuation of
the asset recognised on its balance sheet and the resulting level
of effective provision.
Citibank Indemnity Action
On 11 March 2014, Citibank N.A. (Citi) and BBPLC settled an
action brought by Citi under an indemnity provided by BBPLC for
losses incurred by Citi between 17 and 19 September 2008 in
performing foreign exchange settlement services for LBI, as LBI's
designated settlement member with CLS Bank International.
American Depositary Shares
BPLC, BBPLC and various current and former members of BPLC's
Board of Directors have been named as defendants in five proposed
securities class actions consolidated in the SDNY Court, alleging
misstatements and omissions in registration statements for certain
American Depositary Shares offered by BBPLC.
Background Information
The consolidated amended complaint, filed in February 2010,
asserted claims under the Securities Act of 1933, alleging that
registration statements relating to American Depositary Shares
representing preferred stock, series 2, 3, 4 and 5 (Preferred Stock
ADS) offered by BBPLC at various times between 2006 and 2008
contained misstatements and omissions concerning (amongst other
things) BBPLC's portfolio of mortgage-related (including US
subprime-related) securities, BBPLC's exposure to mortgage and
credit market risk, and BBPLC's financial condition.
Recent Developments
The claims concerning the series 2, 3 and 4 offerings have been
dismissed on the basis that they were time barred. Although the
SDNY Court also dismissed the claims concerning the series 5
offering, the Second Circuit reversed the dismissal and ruled that
the plaintiffs should have been permitted to file a second amended
complaint in relation to the series 5 offering claims.
In June 2014, the SDNY Court denied defendants' motion to
dismiss with respect to the claims in the amended complaint
concerning the series 5 offering.
Claimed Amounts/Financial Impact
It is not currently practicable to provide an estimate of the
financial impact of the actions described on the Group or what
effect, if any, that they might have upon the Group's operating
results, cash flows or financial position in any particular
period.
Devonshire Trust
On 19 June 2014 BBPLC and Devonshire reached an agreement to
settle proceedings brought before the Ontario Superior Court in
connection with BBPLC's early terminations of two credit default
swaps under an ISDA Master Agreement with the Devonshire Trust
(Devonshire). The Court previously determined that Devonshire was
entitled to receive back from BBPLC cash collateral of
approximately C$533m together with accrued interest. The
implementation of the settlement is subject to certain conditions,
including noteholder and Court approval. BBPLC had previously
recognized an impairment provision in relation to these swaps, and
no incremental profit or loss for Barclays is expected as a result
of this settlement.
BDC Finance L.L.C.
BDC Finance L.L.C. (BDC) filed a complaint against BBPLC in the
NY Supreme Court alleging breach of a portfolio of total return
swaps governed by an ISDA Master Agreement (collectively, the
Agreement). A ruling was made against BBPLC, but an appeal is
pending before the New York State Court of Appeals. Parties related
to BDC have also sued BBPLC and BCI in Connecticut state court in
connection with BBPLC's conduct relating to the Agreement.
Background Information
In October 2008, BDC filed a complaint in the NY Supreme Court
alleging that BBPLC breached the Agreement when it failed to
transfer approximately $40m of alleged excess collateral in
response to BDC's October 2008 demand (Demand).
BDC asserts that under the Agreement BBPLC was not entitled to
dispute the Demand before transferring the alleged excess
collateral and that even if the Agreement entitled BBPLC to dispute
the Demand before making the transfer, BBPLC failed to dispute the
Demand.
BDC demands damages totalling $298m plus attorneys' fees,
expenses, and prejudgement interest.
In August 2012, the NY Supreme Court granted partial summary
judgement for BBPLC, ruling that BBPLC was entitled to dispute the
Demand before transferring the alleged excess collateral, but
determining that a trial was required to determine whether BBPLC
actually did so. The parties cross-appealed to the Appellate
Division of the NY Supreme Court (NY Appellate Division).
In September 2011, BDC's investment advisor, BDCM Fund Adviser,
L.L.C. and its parent company, Black Diamond Capital Holdings,
L.L.C. also sued BBPLC and BCI in Connecticut state court for
unspecified damages allegedly resulting from BBPLC's conduct
relating to the Agreement, asserting claims for violation of the
Connecticut Unfair Trade Practices Act and tortious interference
with business and prospective business relations. The parties have
agreed to a stay of that case.
In October 2013, the NY Appellate Division reversed the NY
Supreme Court's grant of partial summary judgement in favour of
BBPLC, and instead granted BDC's motion for partial summary
judgement, holding that BBPLC breached the Agreement. The NY
Appellate Division did not rule on the amount of BDC's damages,
which has not yet been determined by the NY Supreme Court.
Recent Developments
In January 2014 the NY Appellate Division granted BBPLC leave to
appeal its October 2013 decision to the NY Court of Appeals and the
appeal is pending.
Claimed Amounts/Financial Impact
BDC has made claims against the Group totalling $298m plus
attorneys' fees, expenses, and prejudgement interest. This amount
does not necessarily reflect the Group's potential financial
exposure if a ruling were to be made against it.
Credit Default Swap (CDS) Antitrust Investigations
The Commission and the DOJ-AD commenced investigations in the
CDS market, in 2011 and 2009, respectively. In July 2013 the
Commission addressed a Statement of Objections to BBPLC, 12 other
banks, Markit Ltd. and ISDA. The case relates to concerns that
certain banks took collective action to delay and prevent the
emergence of exchange traded credit derivative products.
If the Commission does reach a decision in this matter it has
indicated that it intends to impose sanctions. The Commission's
sanctions can include fines. The DOJ-AD's investigation is a civil
investigation and relates to similar issues. Barclays is also
contesting a proposed, consolidated class action alleging similar
issues that has been filed in the US.
Claimed Amounts/Financial Impact
It is not currently practicable to provide an estimate of the
financial impact of the actions described on the Group or what
effect, if any, that they might have upon the Group's operating
results, cash flows or financial position in any particular
period.
Interchange Investigations
The Office of Fair Trading, as well as other competition
authorities elsewhere in Europe, continues to investigate Visa and
MasterCard credit and debit interchange rates.
BBPLC receives interchange fees, as a card issuer, from
providers of card acquiring services to merchants. The key risks
arising from the investigations comprise the potential for fines
imposed by competition authorities, litigation and proposals for
new legislation.
Claimed Amounts/Financial Impact
It is not currently practicable to provide an estimate of the
financial impact of the matters in this section or what effect, if
any, that these matters might have upon operating results, cash
flows or the Group's financial position in any particular
period.
Interest Rate Hedging Products Redress
See Note 11. Provisions for a description of the FSA's review
and redress exercise in respect of interest rate hedging products
and the provisions recognized by the Group in connection with
it.
General
The Group is engaged in various other legal, competition and
regulatory matters both in the UK and a number of overseas
jurisdictions. It is subject to legal proceedings by and against
the Group which arise in the ordinary course of business from time
to time, including (but not limited to) disputes in relation to
contracts, securities, debt collection, consumer credit, fraud,
trusts, client assets, competition, data protection, money
laundering, employment, environmental and other statutory and
common law issues.
The Group is also subject to enquiries and examinations,
requests for information, audits, investigations and legal and
other proceedings by regulators, governmental and other public
bodies in connection with (but not limited to) consumer protection
measures, compliance with legislation and regulation, wholesale
trading activity and other areas of banking and business activities
in which the Group is or has been engaged.
At the present time, the Group does not expect the ultimate
resolution of any of these other matters to have a material adverse
effect on its financial position. However, in light of the
uncertainties involved in such matters and the matters specifically
described in this note, there can be no assurance that the outcome
of a particular matter or matters will not be material to the
Group's results of operations or cash flow for a particular period,
depending on, amongst other things, the amount of the loss
resulting from the matter(s) and the amount of income otherwise
reported for the reporting period.
The Group has not disclosed an estimate of the potential
financial effect on the Group of contingent liabilities where it is
not currently practicable to do so or, in cases where it is
practicable, where disclosure could prejudice the conduct of
matters. Provisions have been recognised for those cases where the
Group is able to reliably estimate probable losses.
18. Related Party Transactions
Related party transactions in the period ended 30 June 2014 were
similar in nature to those disclosed in the Group's 2013 Annual
Report. No related party transactions that have taken place in 2014
have materially affected the financial position or the performance
of the Group during this period and there were no changes in the
related parties transactions described in the 2013 Annual Report
that could have a material effect on the financial position or
performance of the Group in the current financial year.
19. Segmental Reporting
Personal
and Corporate Africa Investment
Analysis of results by business Banking Barclaycard Banking Bank
Half Year Ended 30 June 2014 GBPm GBPm GBPm GBPm
Total income net of insurance claims 4,361 2,124 1,773 4,257
Credit impairment charges and other
provisions (230) (537) (196) 26
============== =========== ========= ==========
Net operating income 4,131 1,587 1,577 4,283
Operating expenses (2,554) (822) (1,082) (2,943)
Costs to achieve Transform (115) (36) (17) (282)
Other net income(1) 6 35 6 -
============== =========== ========= ==========
Profit before tax 1,468 764 484 1,058
GBPbn GBPbn GBPbn GBPbn
Total assets 268.1 36.2 52.4 447.8
Barclays Barclays Barclays
Analysis of results by business Head Office Core Non-Core Group
Half Year Ended 30 June 2014 GBPm GBPm GBPm GBPm
Total income net of insurance claims 159 12,674 658 13,332
Credit impairment charges and other
provisions - (937) (149) (1,086)
============== =========== ========= ==========
Net operating income 159 11,737 509 12,246
Operating expenses (91) (7,491) (893) (8,383)
Costs to achieve Transform (2) (453) (41) (494)
Other net (expense)/income(1) - 47 (66) (20)
-------------- ----------- --------- ----------
Profit/(loss) before tax 66 3,840 (491) 3,349
GBPbn GBPbn GBPbn GBPbn
Total assets 41.7 846.2 468.6 1,314.9
Personal
and Corporate Africa Investment
Analysis of results by business Banking Barclaycard Banking Bank
Half Year Ended 31 December 2013 GBPm GBPm GBPm GBPm
Total income net of insurance claims 4,418 2,084 1,984 3,633
Credit impairment charges and other
provisions (322) (556) (205) (16)
Net operating income 4,096 1,528 1,779 3,617
Operating expenses (2,772) (934) (1,263) (3,215)
Costs to achieve Transform (292) (44) (17) (74)
Other net income(1) 4 17 3 -
Profit before tax 1,036 567 502 328
GBPbn GBPbn GBPbn GBPbn
Total assets 278.5 34.4 54.9 439.6
Barclays Barclays Barclays
Analysis of results by business Head Office Core Non-Core Group
Half Year Ended 31 December 2013 GBPm GBPm GBPm GBPm
Total income net of insurance claims 146 12,265 818 13,084
Credit impairment charges and other
provisions 3 (1,096) (344) (1,440)
Net operating income 149 11,169 474 11,644
Operating expenses (101) (8,285) (1,258) (9,543)
Costs to achieve Transform (22) (449) (120) (569)
Other net income(1) 6 30 14 44
Profit/(loss) before tax 32 2,465 (890) 1,576
GBPbn GBPbn GBPbn GBPbn
Total assets 25.0 832.4 511.2 1,343.6
1 Other income/(expense) represents: 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.
Personal
and Corporate Africa Investment
Analysis of results by business Banking Barclaycard Banking Bank
Half Year Ended 30 June 2013 GBPm GBPm GBPm GBPm
Total income net of insurance claims 4,305 2,019 2,055 5,222
Credit impairment charges and other
provisions (299) (540) (274) 38
Net operating income 4,006 1,479 1,781 5,260
Operating expenses (2,754) (874) (1,230) (3,193)
Costs to achieve Transform (92) (5) (9) (116)
Other net income(1) 37 16 5 -
Profit before tax 1,197 616 547 1,951
GBPbn GBPbn GBPbn GBPbn
Total assets 288.3 34.3 61.2 515.5
Barclays Barclays Barclays
Analysis of results by business Head Office Core Non-Core Group
Half Year Ended 30 June 2013 GBPm GBPm GBPm GBPm
Total income net of insurance claims (4) 13,597 1,474 15,071
Credit impairment charges and other
provisions - (1,075) (556) (1,631)
Net operating income (4) 12,522 918 13,440
Operating expenses (41) (8,091) (1,049) (9,141)
Costs to achieve Transform - (223) (418) (640)
Other net (expense)/income(1) (2) 56 (124) (68)
(Loss)/profit before tax (47) 4,264 (673) 3,591
GBPbn GBPbn GBPbn GBPbn
Total assets 45.6 944.9 623.0 1,567.9
Provision
Barclays Provision for interest Barclays
Reconciliation of adjusted Group for PPI rate hedging Goodwill Group
basis to statutory basis Adjusted Own credit redress products Impairment Statutory
Half Year Ended 30 June
2014 GBPm GBPm GBPm GBPm GBPm GBPm
Total income net of insurance
claims 13,332 52 - - - 13,384
Credit impairment charges
and other provisions (1,086) - - - - (1,086)
Net operating income 12,246 52 - - - 12,298
Operating expenses (8,383) - (900) - - (9,283)
Costs to achieve Transform (494) - - - - (494)
Other losses (20) - - - - (20)
Profit/(loss) 3,349 52 (900) - - 2,501
Half Year Ended 31 December
2013 GBPm GBPm GBPm GBPm GBPm GBPm
Total income net of insurance
claims 13,084 (306) - - - 12,778
Credit impairment charges
and other provisions (1,440) - - - - (1,440)
Net operating income 11,644 (306) - - - 11,338
Operating expenses (9,543) - - - (79) (9,622)
Costs to achieve Transform (569) - - - - (569)
Other income 44 - - - - 44
Profit/(loss) 1,576 (306) - - (79) 1,191
Half Year Ended 30 June
2013 GBPm GBPm GBPm GBPm GBPm GBPm
Total income net of insurance
claims 15,071 86 - - - 15,157
Credit impairment charges
and other provisions (1,631) - - - - (1,631)
Net operating income 13,440 86 - - - 13,526
Operating expenses (9,141) - (1,350) (650) - (11,141)
Costs to achieve Transform (640) - - - - (640)
Other losses (68) - - - - (68)
Profit/(loss) 3,591 86 (1,350) (650) - 1,677
1 Other income/(losses) represents: 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.
Shareholder Information
Results Timetable(1) Date
Ex-dividend date 6 August 2014
Dividend Record date 8 August 2014
Scrip reference share price set and made 13 August 2014
available to shareholders
Cut off time of 4.30 pm (London time) 29 August 2014
for the receipt of Mandate Forms or Revocation
Forms (as applicable)
Dividend Payment date /first day of dealing 19 September 2014
in New Shares
Q3 2014 Interim Management Statement 30 October 2014
For qualifying US and Canadian resident ADR holders, the second
interim dividend of 1p per ordinary share becomes 4p per ADS (representing
four shares). The ADR depositary will post the second interim dividend
on 19 September 2014 to ADR holders on the record at close of business
on 8 August 2014.
Half Half Half
Year Year Year
Ended Ended Ended Change Change
Exchange Rates(2) 30.06.14 31.12.13 30.06.13 31.12.13 30.06.13(3)
Period end - US$/GBP 1.71 1.65 1.52 4% 12%
Average - US$/GBP 1.67 1.58 1.54 5% 8%
3 month average - US$/GBP 1.68 1.62 1.54 4% 10%
Period end - EUR/GBP 1.25 1.20 1.17 4% 7%
Average - EUR/GBP 1.22 1.18 1.18 3% 3%
3 month average - EUR/GBP 1.23 1.19 1.18 3% 4%
Period end - ZAR/GBP 18.17 17.37 15.11 5% 20%
Average - ZAR/GBP 17.82 15.94 14.20 12% 26%
3 month average - ZAR/GBP 17.76 16.43 14.57 8% 22%
Share Price Data 30.06.14 31.12.13 30.06.13
Barclays PLC (p) 212.80 271.95 278.45
Barclays Africa Group Limited (formerly
Absa Group Limited) (ZAR) 161.50 132.25 148.50
For Further Information Please Contact
Investor Relations Media Relations
Charlie Rozes +44 (0) 20 7116 5752 Giles Croot +44 (0) 20 7116
6132
More information on Barclays can be found on our website: www.barclays.com
Registered Office
1 Churchill Place, London, E14 5HP, United Kingdom. Tel: +44 (0)
20 7116 1000. Company number: 48839
Registrar
The Registrar to Barclays, Aspect House, Spencer Road, Lancing,
West Sussex BN99 6DA United Kingdom.
Tel: 0871 384 2055(4) from the UK or +44 121 415 7004 from
overseas.
1 Note that these announcement dates are provisional and subject
to change. Any changes to the Scrip Dividend Programme dates will
be made available at Barclays.com/dividends.
2 The average rates shown above are derived from daily spot
rates during the year used to convert foreign
currency transactions into Sterling for accounting purposes.
3 The change is the impact to Sterling reported information.
4 Calls cost 8p per minute plus network extras. Lines open
8.30am to 5.30pm UK time, Monday to Friday excluding UK public
holidays.
Shareholder Information
Listing
The principal trading market for Barclays PLC ordinary shares is
the London Stock Exchange. Trading on the New York Stock Exchange
is in the form of ADSs under the ticker symbol 'BCS'. Each ADS
represents four ordinary shares of 25p each and is evidenced by an
ADR. The ADR depositary is JP Morgan Chase Bank, whose
international telephone number is +1-651-453-2128, domestic
telephone number is 1-800-990-1135 and address is JPMorgan Chase
Bank, PO Box 64504, St. Paul, MN 55164-0504, USA.
Barclays PLC Scrip Dividend Programme
Shareholders may have their dividends reinvested in Barclays
shares by joining the Barclays PLC Scrip Dividend Programme (the
Programme). At the Barclays 2013 Annual General Meeting,
shareholders approved the introduction of the Programme to replace
the Barclays Dividend Reinvestment Plan. The Programme enables
shareholders, if they wish, to receive new fully paid ordinary
shares in Barclays PLC instead of a cash dividend, without
incurring dealing costs or stamp duty. The Programme was initially
offered for the second interim dividend, paid on 13 September 2013,
and for any dividends paid thereafter (subject to the Directors
making the Programme available for each dividend).
For further details, including the full Terms and Conditions and
information about how to join or leave the Programme, please visit
Barclays.com/dividends or alternatively contact: The Registrar to
Barclays, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA
United Kingdom, or by telephoning 0871 384 2055(1) from the UK or
+44 121 415 7004 from overseas.
Global Systemically Important Institutions
Barclays is required by the PRA following an EBA request to
publicly disclose the Global Systemically Important Institutions
template for the reporting period 31 December 2013. This will be
available at:
www.barclays.com/barclays-investor-relations/investor-news.html on
31 July 2014.
1 Calls cost 8p per minute plus network extras. Lines open
8.30am to 5.30pm UK time, Monday to Friday excluding UK public
holidays.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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