barc201207276k.htm
 
UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549
 
 
FORM 6-K
 
 
REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13A-16 OR 15D-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934
 
July 27, 2012
 
Barclays PLC and

Barclays Bank PLC
(Names of Registrants)
 
 
 1 Churchill Place

London E14 5HP
England
(Address of Principal Executive Offices)

 
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.

 
Form 20-F x           Form 40-F

 
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 
Yes           No x

 
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b):

 
This Report is a joint Report on Form 6-K filed by Barclays PLC and Barclays
Bank PLC. All of the issued ordinary share capital of Barclays Bank PLC is
owned by Barclays PLC.

 
This Report comprises:

 
Information given to The London Stock Exchange and furnished pursuant to
General Instruction B to the General Instructions to Form 6-K.


 
 
EXHIBIT INDEX
 
 
Half Yearly Report dated July 27, 2012







 




SIGNATURES

 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, each of the registrants has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
 
 
 
BARCLAYS PLC
(Registrant)

 
Date: July 27, 2012
 
 
By: /s/ Patrick Gonsalves
----------------------
Patrick Gonsalves
Deputy Secretary
 
 
 
 
BARCLAYS BANK PLC
(Registrant)



Date: July 27, 2012
 
 
By: /s/ Patrick Gonsalves
----------------------
Patrick Gonsalves
Joint Secretary
 
 


Barclays PLC
Results Announcement
 
30 June 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 

 
 
 
Table of Contents
 
 
 
Interim Results Announcement
Page
Performance Highlights
2
Chairman's Statement
4
Group Finance Director's Review
5
Barclays Results by Quarter
8
Condensed Consolidated Financial Statements
9
Results by Business
  
- Retail and Business Banking
  
-   UK
14
-   Europe
16
-   Africa
18
-   Barclaycard
20
- Corporate and Investment Banking
  
-   Investment Bank
22
-   Corporate Banking
24
- Wealth and Investment Management
28
- Head Office and Other Operations
30
Business Results by Quarter
31
Performance Management
  
- Returns and Equity
33
- Margins and Balances
34
Risk Management
36
- Funding Risk - Capital
37
- Funding Risk - Liquidity
40
- Credit Risk
45
- Market Risk
70
Statement of Directors' Responsibilities
71
Independent Auditors' Review Report
72
Financial Statement Notes
73
Shareholder Information
91
Index
92
 
 
 
 
BARCLAYS PLC, 1 CHURCHILL PLACE, LONDON, E14 5HP, UNITED KINGDOM. TELEPHONE: +44 (0) 20 7116 1000. COMPANY NO. 48839
 

 

 
 
 
 
 
 
The term Barclays or Group refers to Barclays PLC together with its subsidiaries. Unless otherwise stated, the income statement analyses compare the six months to 30 June 2012 to the corresponding six months of 2011 and balance sheet comparisons relate to the corresponding position at 31 December 2011. The abbreviations '£m' and '£bn' represent millions and thousands of millions of pounds Sterling respectively; the abbreviations '$m' and '$bn' represent millions and thousands of millions of US dollars respectively.
 
 
Adjusted profit before tax and adjusted performance metrics have been presented to provide a more consistent basis for comparing business performance between periods. Adjusting items are considered to be significant and one-off in nature and hence not representative of the underlying business performance. Items excluded from the adjusted measures are: the impact of own credit; gains on debt buy-backs; impairment and disposal of the investment in BlackRock, Inc.; the provision for Payment Protection Insurance (PPI) redress; the provision for interest rate hedging products redress; goodwill impairments; and gains and losses on acquisitions and disposals. The regulatory penalties relating to the industry-wide investigation into the setting of interbank offered rates have not been excluded from adjusted measures.
 
 
Relevant terms that are used in this document but are not defined under applicable regulatory guidance or International Financial Reporting Standards (IFRS) are explained in the Results glossary that can be accessed at http://group.barclays.com/about-barclays/investor-relations#institutional-investors.
 
 
In accordance with Barclays policy to provide meaningful disclosures that help investors and other stakeholders understand the financial position, performance and changes in the financial position of the Group, and having regard to the BBA Disclosure Code, the information provided in this report goes beyond minimum requirements. Barclays continues to develop its financial reporting considering best practice and welcomes feedback from investors, regulators and other stakeholders on the disclosures that they would find most useful.
 
 
The information in this announcement, which was approved by the Board of Directors on 26 July 2012, does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2011, which included certain information required for the Joint Annual Report on Form 20-F of Barclays PLC and Barclays Bank PLC to the US Securities and Exchange Commission (SEC) and which contained an unqualified audit report under Section 495 of the Companies Act 2006 and which did not make any statements under Section 498 of the Companies Act 2006, have been delivered to the Registrar of Companies in accordance with Section 441 of the Companies Act 2006.
 
 
These results will be furnished as a Form 6-K to the SEC as soon as practicable following their publication. Once filed 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 (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", "expect", "estimate", "intend", "plan", "goal", "believe" or other words of similar meaning. Examples of forward-looking statements include, among others, statements regarding the Group's future financial position, income growth, assets, impairment charges, business strategy, capital ratios, leverage, payment of dividends, projected levels of growth in the banking and financial markets, projected costs, estimates of capital expenditures and plans and objectives for future operations and other statements that are not historical fact. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, including, but not limited to, UK domestic, Eurozone and global economic and business conditions, the effects of continued volatility in credit markets, market related risks such as changes in interest rates and exchange rates, effects of changes in valuation of credit market exposures, changes in valuation of issued notes, the policies and actions of governmental and regulatory authorities (including requirements regarding capital and Group structures and the potential for one or more countries exiting the Euro), changes in legislation, the further development of standards and interpretations under IFRS applicable to past, current and future periods, evolving practices with regard to the interpretation and application of standards under IFRS, the outcome of current and future litigation, the success of future acquisitions and other strategic transactions and the impact of competition - a number of such factors being beyond the Group's control. As a result, the Group's actual future results may differ materially from the plans, goals, and expectations set forth in the Group's forward-looking statements.
 
Any forward-looking statements made herein speak only as of the date they are made. Except as required by the UK Financial Services Authority (FSA), the London Stock Exchange plc (LSE) or applicable law, Barclays expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this announcement to reflect any change in Barclays expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. The reader should, however, consult any additional disclosures that Barclays has made or may make in documents it has filed or may file with the LSE and/or the SEC.
 
 

 
 

 
 

 
Performance Highlights
 
"We continue to deliver a good financial performance in the context of the current macroeconomic environment. Our competitive position continues to grow and our financial strength is serving us well in this period of uncertainty and volatility. 
 
These remain challenging times for Barclays, as well as the industry, and we are sorry for what has happened because of recent events. However our leadership continues to focus on the delivery of our financial performance targets and on building a platform for sustainable long term growth. Our customers and clients are at the heart of what we do. I am confident we can and will repair the reputational damage done to our business in their eyes and those of all our stakeholders."
 
 
Marcus Agius, Chairman
 
-
Adjusted profit before tax up 13% to £4,227m with improvements of 15% in Retail and Business Banking (RBB) and 11% in Corporate and Investment Banking, and 38% in Wealth and Investment Management, demonstrating the benefits of the universal banking model
 
-
Statutory profit before tax down 71% to £759m, including an own credit charge of £2,945m
 
-
Adjusted return on average shareholders' equity increased to 9.9% (2011: 9.3%) with improvements in five of seven businesses and Investment Bank achieved nearly 15% despite difficult market conditions
 
-
Adjusted income was up 1% at £15,475m despite macroeconomic challenges and the continuing low interest rate environment
 
-
Income at Investment Bank improved 4% to £6,496m. Q2 12 income in Investment Bank was £3,032m, up 5% on Q2 11 and down 12% on Q1 12
 
-
Credit impairment charges were flat at £1,832m, reflecting improvements across many businesses, offset principally by increased levels at Investment Bank where there was a net release of £111m in 2011
 
-
Operating expenses, excluding the first quarter £300m (2011: £1,000m) provision for PPI and second quarter £450m (2011: nil) provision for interest rate hedging products redress, were down 3% to £9,491m. This reduction was achieved after absorbing regulatory penalties of £290m relating to the industry-wide investigation into the setting of interbank offered rates
 
-
During the first six months of 2012, sovereign exposures to Spain, Italy, Portugal, Ireland, Greece and Cyprus reduced 22% to £5.6bn. In order to mitigate redenomination risk, the Group continues to reduce local funding mismatches in Spain and Portugal
 
-
Core Tier 1 ratio remained strong at 10.9% (31 December 2011: 11.0%), having absorbed the impact of the final dividend for 2011, treasury share purchases and pension contributions. Risk weighted assets were stable at £390bn
 
-
The Group continues to access both secured and unsecured term funding markets and raised £20bn of term funding in the first half of 2012 with £27bn of term maturities for full year 2012. Liquidity pool increased to £170bn (31 December 2011: £152bn) and the loan to deposit ratio continued to improve to 111% (2011: 118%)


 

 
Performance Highlights
 
Barclays Unaudited Results
Adjusted1
  
Statutory
 
30.06.12
30.06.11
    
30.06.12
30.06.11
  
 
£m
£m
% Change
  
£m
£m
% Change
Total income net of insurance claims
15,475
15,299
1
  
12,757 
15,330 
(17)
Credit impairment charges and other provisions
(1,832)
(1,828)
-
  
(1,832)
(1,828)
- 
Net operating income
13,643
13,471
1
  
10,925 
13,502 
(19)
Operating expenses
(9,491)
(9,782)
(3)
  
(10,241)
(10,829)
(5)
Other net income/(expense)2
75
36
    
75 
(29)
  
Profit before tax
4,227
3,725
13
  
759 
2,644 
(71)
Profit after tax 
3,069
2,822
9
  
480 
1,983 
(76)
               
Performance Measures
              
Return on average shareholders' equity
9.9%
9.3%
    
0.3%
5.9%
  
Return on average tangible shareholders' equity
11.5%
11.3%
    
0.3%
7.1%
  
Return on average risk weighted assets
1.6%
1.4%
    
0.2%
1.0%
  
Cost: income ratio
61%
64%
    
80%
71%
  
Loan loss rate
71bps
74bps
    
71bps
74bps
  
               
Basic earnings per share
21.8p
19.6p
    
0.6p
12.5p
  
Dividend per share
2.0p
2.0p
    
2.0p
2.0p
  
               
Capital and Balance Sheet
        
30.06.12
31.12.11
  
Core Tier 1 ratio
        
10.9%
11.0%
  
Risk weighted assets
        
£390bn
£391bn
- 
Adjusted gross leverage
        
20x
20x
- 
Group liquidity pool
        
£170bn
£152bn
12 
Net asset value per share
        
443p
456p
(3)
Net tangible asset value per share
        
379p
391p
(3)
Loan: deposit ratio
        
111%
118%
  
 
 
 
Adjusted1
  
Statutory
Profit/(Loss) Before Tax by Business
30.06.12
30.06.11
    
30.06.12
30.06.11
  
 
£m
£m
% Change
  
£m
£m
% Change
UK
746 
704 
6 
  
446 
304 
47 
Europe
(92)
(161)
(43)
  
(92)
(161)
(43)
Africa
274 
342 
(20)
  
274 
342 
(20)
Barclaycard
753 
571 
32 
  
753 
(76)
  
Retail and Business Banking
1,681 
1,456 
15 
  
1,381 
409 
238 
Investment Bank
2,268 
2,310 
(2)
  
2,268 
2,310 
(2)
Corporate Banking
346 
54 
    
(104)
(10)
  
Corporate and Investment Banking
2,614 
2,364 
11 
  
2,164 
2,300 
(6)
Wealth and Investment Management
121 
88 
38 
  
121 
88 
38 
Head Office and Other Operations
(189)
(183)
3 
  
(2,907)
(153)
  
Total profit before tax
4,227 
3,725 
13 
  
759 
2,644 
(71)
               
 
 
Income by Geographic Region3 
              
UK
6,571 
6,266 
5 
  
3,626 
6,279 
(42)
Europe
2,190 
2,189 
-   
  
2,190 
2,226 
(2)
Americas
3,797 
3,720 
2 
  
4,024 
3,687 
9 
Africa and Middle East
2,303 
2,501 
(8)
  
2,303 
2,501 
(8)
Asia
614 
623 
(1)
  
614 
637 
(4)
Total   
15,475 
 15,299 
 1 
  
12,757 
 15,330 
(17)
 
 
 
 
  1 
Adjusted performance measures, income by geography and profit before tax exclude the impact of £2,945m (2011: gain of £89m) own credit loss, £227m (2011: loss of £58m) gain on disposal of strategic investment in BlackRock, Inc. Adjusted performance measures and profit before tax also exclude £300m (2011: £1,000m) provision for PPI redress, £450m (2011: £nil) provision for interest rate hedging products redress, £nil (2011: loss of £65m) gains on acquisitions and disposals and  £nil (2011: £47m) goodwill impairment.
 
  2
 Other net 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.
 
  3
 Total income net of insurance claims based on counterparty location.
 
 

 
 

 
Chairman's Statement
 
We are pleased to report a good set of results to 30 June 2012, as they reflect our continued hard work in supporting our customers and clients, delivering our financial objectives and managing risk. We continue to improve our market position across many of our key products and segments and our financial strength is serving us well in today's challenging environment. Our commitment to maintain Barclays position as a leading global universal bank, underpinned by a diverse set of businesses, remains unchanged.
 
The recent events have been challenging for Barclays and all those who work for the Group. We continue to address the operational and control issues raised in connection with our LIBOR settlement with the US and UK authorities, many of which have been resolved over the course of the investigation. However, as a consequence of recent events, the Board of Directors is now focused on identifying and recruiting a new Chief Executive as well as a Chairman of the Board. During this interim period, my role as Chairman of the Executive Committee is to provide stability and continuity for our customers and stakeholders. We have a mandate from the Board that goes beyond a simple caretaking role.   
 
Barclays has proven itself as a strong business that delivers resilient performance. The solid divisional leadership and customer focus of Antony Jenkins, Rich Ricci, Tom Kalaris and Maria Ramos continues. The depth of the Barclays management team, our relentless focus on customers and clients, and our steady financial performance gives me confidence in our ability to achieve continued growth in our businesses in difficult times. Our commitment to building a strong franchise over time based on the prudent management of our resources and delivering 13% Return on Equity remains unchanged.
 
Our Citizenship agenda is now more important than ever; we have ambitious commitments that we must deliver and continue to evolve to address the issues that matter most to those we serve. We must focus on getting the fundamentals right - serving our customers and clients with integrity and maintaining the highest standards of service - while reviewing our business values and working to become more transparent. In this regard, the Board has asked Anthony Salz to lead an independent, third party, review of business practices, engaging all Barclays stakeholders and with the intention of publishing the review findings and recommendations. This global review will 1) assess the bank's current values, principles and standard of operation; 2) test how well these are reflected in the bank's decision-making processes; 3) assess whether or not the appropriate training, development, incentives, and disciplinary processes are in place; and 4) determine to what extent each of these aspects need to change. We understand that we will be judged on our deeds and not our words.
 
The talent and hard work of our colleagues will play a vital role in achieving this. In the first half of 2012, they helped us deliver £20.5bn in gross new lending to UK households and businesses. Recognising the importance of helping new entrepreneurs, we launched an initiative to support up to 24,000 start-up businesses in the UK over the next three years. We also raised over £450bn in financing for businesses and governments globally. In the UK, our apprenticeship scheme is supporting young people into employment, we have already welcomed 120 new apprentices and are on track to recruit over 450 by the end of the year. Around half of our colleagues are actively involved in community investment programmes and, in the first half of 2012 alone, over 44,000 provided their time, skills and money to help disadvantaged people. This resulted in 160,000 of volunteering hours in local communities and £12.3m raised for charity.
 
We are sorry for the issues that have emerged over recent weeks and recognise that we have disappointed our customers and shareholders. I speak for all of Barclays people when I say how determined we are to regain the full confidence of all our stakeholders; customers and clients, investors, regulators and staff alike.
 
 
 
Marcus Agius, Chairman
 
 

 
 

 
Group Finance Director's Review
 
For the first six months of 2012 we reported a good performance as adjusted profits increased 13% year on year, despite continuing difficult market conditions. Our Core Tier 1 ratio was robust at 10.9%, while funding and liquidity remained strong.
 
Income Statement
 

-
Statutory profit before tax was £759m (2011: £2,644m), including an own credit charge of £2,945m (2011: gain of £89m). Adjusted profit before tax increased 13% to £4,227m. Adjusted results provide a more consistent basis for comparing business performance between periods
 
-
Adjusted return on average shareholders' equity increased to 9.9% (2011: 9.3%) with improvements in five of seven businesses and Investment Bank achieved nearly 15%, an encouraging performance in difficult market conditions
 
-
Adjusted income increased 1% to £15,475m, despite continued low interest rates and continuing difficult macroeconomic conditions
 
-
Customer net interest income from RBB, Corporate Banking and Wealth and Investment Management increased 2% to £4.9bn. The net interest margin declined 8bps to 189bps, driven by a 7bps decrease in non-customer margin reflecting reduced contributions from structural hedges. Average customer assets for these businesses increased 1% to £317.9bn and average customer liabilities increased 4% to £277.4bn
 
-
Total income in Investment Bank increased 4% to £6,496m driven by improved performances in Rates and Commodities, partially offset by declines in market volumes and lower corporate deal activity
 
-
Credit impairment charges were flat at £1,832m, reflecting improvements across many businesses, offset principally by increased levels at the Investment Bank where there was a net release of £111m in 2011
 
 
-
Loans and advances balances were up 5% and the annualised loan loss rate reduced to 71bps (Full Year 2011: 77bps; Half Year 2011: 74bps). While delinquency trends improved in cards portfolios and UK unsecured lending during 2012, home loans in Europe experienced some deterioration as a result of the adverse credit conditions. South Africa home loans impairment increased reflecting focus on reducing the recoveries portfolio during the first six months of 2012 which led to higher write offs. Credit metrics in the wholesale portfolios have remained generally stable, however, the Investment Bank experienced higher charges primarily relating to ABS CDO Super Senior positions and higher losses on single name exposures
 
 
-    
The credit risk loans (CRL) coverage ratio increased slightly as CRL balances and impairment allowances fell 8% and 6%, respectively
 
-
Operating expenses, excluding the £300m (2011: £1,000m) provision for PPI and £450m (2011: nil) provision for interest rate hedging products redress, were down 3% to £9,491m
 
 
-    
Performance costs reduced by 14% to £1,422m despite a deferred bonus charge of £655m (2011: £458m). Investment Bank performance costs reduced 19% to £1,028m, compared to a 2% decrease in profit before tax and the compensation: income ratio reduced to 39% (2011: 45%)
 
 
-    
Non-performance costs decreased by 1% to £8,069m after absorbing regulatory penalties of £290m in the Investment Bank and Head Office and Other Operations relating to the industry-wide investigation into the setting of interbank offered rates. Overall increases in regulatory and legal costs, continued business investment and the impact of acquisitions in 2011, were more than offset by reductions in other non-performance costs, in line with the Group's cost saving initiatives
 
-
The adjusted cost: income ratio decreased to 61% (2011: 64%). At the Investment Bank the cost: net operating income ratio was flat at 64%
 
-
The effective tax rate on statutory profit before tax was 36.8% (H1 11: 25.0%), principally due to profits taxed in countries with high local tax rates and non-deductible expenses. The increase in the tax rate compared to H1 11 reflects the recognition in 2011 of previously unrecognised deferred tax assets in the US branch of Barclays Bank PLC. The effective tax rate on adjusted profit before tax was 27.4% (H1 11: 24.2%)



 

 
Group Finance Director's Review
 
Balance Sheet
 


-
Total assets increased to £1,631bn (2011: £1,564bn), reflecting increases across a number of asset categories, notably a £19bn increase in cash and balances at central banks, a £23bn increase in loans and advances to customers (primarily in relation to settlement balances) and a £21bn increase in reverse repurchase agreements.  These were partially offset by a £21bn reduction in derivative financial instrument assets
 
-
Total customer accounts increased 12% to £409bn primarily in relation to settlement balances
 
-
The Group's loan to deposit ratio continued to improve to 111% (2011: 118%)
 
-
Total shareholders' equity (including non-controlling interests) at 30 June 2012 was £63.7bn (2011: £65.2bn). Excluding non-controlling interests, shareholders' equity decreased £1.4bn to £54.2bn, principally reflecting negative reserve movements, notably the £1.0bn net purchase of treasury shares for deferred compensation awards, £0.5bn of dividends paid and £0.5bn currency reserve movements, partially offset by profit after tax
 
-
Net asset value per share decreased 3% to 443p and the net tangible asset value per share decreased 3% to 379p
 
-
Adjusted gross leverage remained stable at 20x and moved within a month end range of 20x to 23x. Excluding the liquidity pool, adjusted gross leverage remained flat at 17x

 
Capital Management
 

-
As at 30 June 2012, the Group's Core Tier 1 ratio was 10.9% (31 December 2011: 11.0%) after absorbing a 26bps impact from pensions, principally reflecting the additional pension contributions made in April 2012 and deducting future contributions expected over the next 5 years
 
-
The Group continued to generate Core Tier 1 capital from retained earnings (excluding own credit, which is added back for regulatory capital purposes). Retained earnings of £2.3bn were more than offset by other movements in Core Tier 1 capital including pension movements, share purchases, dividends and currency reserve movements
 
-
Risk weighted assets remained stable at £390bn (2011: £391bn), principally reflecting increases in operational and market risk, offset by reductions in counterparty risk and credit risk
 
-
In May 2012, the investment in BlackRock, Inc. was sold for net proceeds of £3.5bn, recognising a gain on sale of £227m. This holding would have resulted in a negative Core Tier 1 capital impact under Basel 3


Funding and Liquidity
 
 
The liquidity pool as at 30 June 2012 was £170bn (31 December 2011: £152bn) which is towards the top of the month-end range for the period of £152bn to £173bn (Full Year 2011: £140bn to £167bn). The liquidity pool is held unencumbered and is not used to support payment or clearing requirements, which are treated as part of our regular business funding. It is intended to offset stress outflows and comprises the following cash and unencumbered assets.
 
 
 
 
Cash and Deposits with Central Banks1 
Government Bonds2 
Other Available Liquidity
Total3 
 
£bn
£bn
£bn
£bn
As at 30.06.12
124 
32 
14 
170 
As at 31.12.11
105 
36 
11 
152 
 


-
RBB, Corporate Banking and Wealth and Investment Management activities are largely funded by customer deposits with the remainder covered by funding secured against customer loans and advances.  As at 30 June 2012, the loan to deposit ratio for these businesses was 106% (31 December 2011: 111%) and the loan to deposit and secured funding ratio was 94% (31 December 2011: 101%)
 
-
The Investment Bank's activities are primarily funded through wholesale markets. As at 30 June 2012 total wholesale funding outstanding (excluding repurchase agreements) was £263bn (31 December 2011: £265bn). £118bn of wholesale funding matures in less than one year (31 December 2011: £130bn)

 
 
1     Of which over 95% (31 December 2011: over 95%) is placed with the Bank of England, US Federal Reserve, European Central Bank, Bank of Japan and Swiss National Bank.
2     Of which over 70% (31 December 2011: over 80%) are comprised of UK, US, Japanese, French, German, Danish and Dutch securities.
3     £149bn (31 December 2011: £140bn) of which is FSA eligible.

 


Group Finance Director's Review
 
-
Barclays continues to attract deposits in unsecured money markets and to raise additional secured and unsecured term funding in a variety of markets. During H1 12, the Group raised £19.9bn of term funding, including £10.2bn of senior unsecured and £9.7bn of secured term funding
 
-
The Group has £11bn of term funding maturing in the remainder of 2012 (31 December 2011: £27bn), and a further £18bn maturing in 2013
 
-
The Group's liquidity pool and wholesale funds continue to be well diversified across major currencies
 
 
 
 
Exposures to Selected Eurozone Countries
 
-
During H1 12, sovereign exposures to Spain, Italy, Portugal, Ireland, Greece and Cyprus reduced by 22% to £5.6bn
 
-
-
Spanish and Portuguese sovereign exposures reduced 13% to £2.2bn and 27% to £0.6bn respectively due to the disposal of available for sale government bonds held for the purpose of interest rate hedging and liquidity, that have been replaced by interest rate swaps with alternative counterparties
 
-
-
Italian sovereign exposures decreased 27% to £2.6bn principally due to a redemption in government bonds held for trading
 
-
Retail loans and advances in Spain, Italy and Portugal decreased 5% to £39.6bn, while lending to corporates decreased 13% to £10.0bn reflecting continued prudent risk management of portfolios. CRL coverage ratios in the retail and wholesale portfolios for Spain, Italy and Portugal have remained broadly stable
 
-
During 2012, mitigating actions have been taken to reduce the local net funding mismatch including the drawdown of €8.2bn in the European Central Bank's three year LTRO in Spain and Portugal and additional deposit taking in Spain. As a result, the Group reduced the aggregate net local balance sheet funding mismatch from £12.1bn to £2.5bn in Spain and from £6.9bn to £3.7bn in Portugal during the six months to 30 June 2012
 
Other Matters
 
-
In June 2012, Barclays reached settlement with the FSA and US authorities regarding investigations into submissions made by Barclays and other panel members to the bodies that set various interbank offered rates. Barclays agreed to pay total penalties of £290m
 
-
Following an increase in PPI claim volumes, the PPI provision was increased by £300m in the first quarter of 2012, bringing the cumulative charge to £1,300m. Claims volumes remain unpredictable, although have recently been trending downwards. As at 30 June 2012, £894m of the total £1,300m provision had been utilised
 
-
On 29 June 2012, the FSA announced that it had reached agreement with a number of UK banks (including Barclays) in relation to a review and redress exercise to be carried out in respect of interest rate hedging products sold to small and medium sized enterprises. A provision of £450m has been recognised based on initial estimates relating to the appropriate implementation of the agreement, although the ultimate cost of this exercise is uncertain
 
Dividends
 
-
It is our policy to declare and pay dividends on a quarterly basis. We will pay a second interim cash dividend for 2012 of 1p per share on 7 September 2012
 
Outlook
-
Performance during July continues to be ahead of the prior year. Nevertheless, we continue to be cautious about the environment in which we operate and will maintain the Group's strong capital, leverage and liquidity positions
 
 
Chris Lucas, Group Finance Director
 
 

 
 

 
 
Barclays Results by Quarter
 
Barclays Results by Quarter
Q212
Q112
  
Q411
Q311
Q211
Q111
 
£m
£m
  
£m
£m
£m
£m
Adjusted basis  
              
Total income net of insurance claims  
7,337 
8,138 
  
6,212 
7,001 
7,549 
7,750 
Credit impairment charges and other provisions  
(1,054)
(778)
  
(951)
(1,023)
(907)
(921)
Net operating income  
6,283 
7,360 
  
5,261 
5,978 
6,642 
6,829 
Operating expenses (excluding UK bank levy)  
(4,542)
(4,949)
  
(4,414)
(4,659)
(4,940)
(4,842)
UK bank levy  
- 
- 
  
(325)
- 
- 
- 
Other net income
41 
34 
  
6 
18 
19 
17 
Adjusted profit before tax  
1,782 
2,445 
  
528 
1,337 
1,721 
2,004 
   
              
Adjusting items  
              
Own credit  
(325)
(2,620)
  
(263)
2,882 
440 
(351)
Gains on debt buy-backs  
- 
- 
  
1,130 
- 
- 
- 
Impairment and gain/(loss) on disposal of BlackRock investment
227 
- 
  
- 
(1,800)
(58)
- 
Provision for PPI redress
- 
(300)
  
- 
- 
(1,000)
- 
Provision for interest rate hedging products redress
(450)
- 
  
- 
- 
- 
- 
Goodwill impairment  
- 
- 
  
(550)
- 
(47)
- 
(Losses)/gains on acquisitions and disposals  
- 
- 
  
(32)
3 
(67)
2 
Statutory profit/(loss) before tax
1,234 
(475)
  
813 
2,422 
989 
1,655 
   
              
Adjusted basic earnings per share  
8.2p
13.6p
  
1.2p
6.9p
8.9p
10.7p
Adjusted cost: income ratio  
62%
61%
  
76%
67%
65%
62%
Basic earnings per share  
5.1p
(4.5p)
  
2.9p
9.7p
4.0p
8.5p
Cost: income ratio  
69%
95%
  
75%
47%
75%
65%
               
 
 
Adjusted Profit/(Loss) Before Tax by Business
Q212
Q112
  
Q411
Q311
Q211
Q111
 
£m
£m
  
£m
£m
£m
£m
UK
412 
334 
  
222 
494 
416 
288 
Europe
(49)
(43)
  
(125)
52 
(102)
(59)
Africa
97 
177 
  
269 
219 
195 
147 
Barclaycard
404 
349 
  
259 
378 
275 
296 
Retail and Business Banking
864 
817 
  
625 
1,143 
784 
672 
Investment Bank
1,002 
1,266 
  
267 
388 
977 
1,333 
Corporate Banking
127 
219 
  
37 
113 
33 
21 
Corporate and Investment Banking
1,129 
1,485 
  
304 
501 
1,010 
1,354 
Wealth and Investment Management
61 
60 
  
54 
65 
42 
46 
Head Office and Other Operations
(272)
83 
  
(455)
(372)
(115)
(68)
Total profit before tax
1,782 
2,445 
  
528 
1,337 
1,721 
2,004 
 

 
 

 
Condensed Consolidated Financial Statements
 
Condensed Consolidated Income Statement (Unaudited)
   
Half Year Ended
Half Year Ended
Half Year Ended
Continuing Operations
  
30.06.12
31.12.11
30.06.11
 
Notes1 
£m
£m
£m
Net interest income
2
6,112 
6,012 
6,189 
Net fee and commission income
  
4,249 
4,203 
4,419 
Net trading income
  
1,584 
3,764 
3,896 
Net investment income
  
371 
1,711 
652 
Net premiums from insurance contracts
  
516 
507 
569 
Net gain/(loss) on disposal of investment in BlackRock, Inc.
  
227 
- 
(58)
Gains on debt buy-backs and extinguishments
  
- 
1,130 
- 
Other income/(expense)
  
61 
(21)
60 
Total income  
  
13,120 
17,306 
15,727 
Net claims and benefits incurred on insurance contracts
  
(363)
(344)
(397)
Total income net of insurance claims
  
12,757 
16,962 
15,330 
Credit impairment charges and other provisions
  
(1,832)
(1,974)
(1,828)
Impairment of investment in BlackRock, Inc.
  
- 
(1,800)
- 
Net operating income
  
10,925 
13,188 
13,502 
         
Staff costs
3
(5,469)
(5,297)
(6,110)
Administration and general expenses
4
(3,474)
(3,232)
(3,124)
Depreciation of property, plant and equipment
  
(337)
(322)
(351)
Amortisation of intangible assets
  
(211)
(222)
(197)
Operating expenses excluding goodwill impairment, UK bank levy and provisions for PPI and interest rate hedging products redress
  
(9,491)
(9,073)
(9,782)
Goodwill impairment
  
- 
(550)
(47)
Provision for PPI redress
  
(300)
- 
(1,000)
Provision for interest rate hedging products redress
  
(450)
- 
- 
UK bank levy
  
- 
(325)
- 
Operating expenses
  
(10,241)
(9,948)
(10,829)
         
Profit/(loss) on disposals of undertakings and share of results of associates and joint ventures
  
75
(5)
(29)
Profit before tax
  
759 
3,235 
2,644 
Tax
6
(279)
(1,267)
(661)
Profit after tax
  
480 
1,968 
1,983 
         
Attributable to:
        
Equity holders of the parent
  
70 
1,509 
1,498 
Non-controlling interests
7
410 
459 
485 
Profit after tax
  
480 
1,968 
1,983 
         
Earnings per Share from Continuing Operations
        
Basic earnings per ordinary share
8
0.6p
12.6p
12.5p
Diluted earnings per ordinary share
8
0.6p
12.1p
11.9p
 
 
 
  
 
  
 
  
1        For notes to the Financial Statements see pages 73 to 90.

 

 
Condensed Consolidated Financial Statements
 
Condensed Consolidated Statement of Profit or Loss and other Comprehensive Income (Unaudited)
         
   
Half Year Ended
Half Year Ended
Half Year Ended
Continuing Operations
  
30.06.12
31.12.11
30.06.11
 
Notes1 
£m
£m
£m
Profit after tax
  
480 
1,968 
1,983 
         
Other Comprehensive Income that may be recycled to profit or loss:
        
Currency translation differences
17
(614)
(817)
(790)
Available for sale financial assets
17
(199)
1,059 
315 
Cash flow hedges
17
242 
1,351 
(88)
Other
  
48 
(97)
23 
Other comprehensive income for the period
  
(523)
1,496 
(540)
         
Total comprehensive income for the period
  
(43)
3,464 
1,443 
         
Attributable to:
        
Equity holders of the parent
  
(410)
3,402 
1,174 
Non-controlling interests
  
367 
62 
269 
Total comprehensive income for the period
  
(43)
3,464 
1,443 
 
 
 
 
 
1      For notes, see pages 73 to 90.

 

 
Condensed Consolidated Financial Statements
 
Condensed Consolidated Balance Sheet (Unaudited)
   
As at
As at
As at
Assets
  
30.06.12
31.12.11
30.06.11
 
Notes1 
£m
£m
£m
Cash and balances at central banks
  
126,062 
106,894 
86,916 
Items in the course of collection from other banks
  
2,598 
1,812 
1,317 
Trading portfolio assets
  
166,300 
152,183 
181,799 
Financial assets designated at fair value
  
45,928 
36,949 
39,122 
Derivative financial instruments
10
517,685 
538,964 
379,854 
Loans and advances to banks
  
48,777 
47,446 
58,751 
Loans and advances to customers
  
454,728 
431,934 
441,983 
Reverse repurchase agreements and other similar secured lending
  
174,392 
153,665 
196,867 
Available for sale financial investments
  
68,922 
68,491 
81,837 
Current and deferred tax assets
6
3,244 
3,384 
3,007 
Prepayments, accrued income and other assets
  
5,892 
4,563 
6,030 
Investments in associates and joint ventures
  
489 
427 
576 
Goodwill and intangible assets
12
7,861 
7,846 
8,541 
Property, plant and equipment
  
5,909 
7,166 
6,196 
Retirement benefit assets
15
2,478 
1,803 
126 
Total assets
  
1,631,265 
1,563,527 
1,492,922 
         
Liabilities
        
Deposits from banks
  
94,467 
91,116 
84,188 
Items in the course of collection due to other banks
  
1,671 
969 
1,324 
Customer accounts
  
408,550 
366,032 
373,374 
Repurchase agreements and other similar secured borrowing
  
245,833 
207,292 
247,635 
Trading portfolio liabilities
  
51,747 
45,887 
77,208 
Financial liabilities designated at fair value
  
94,855 
87,997 
92,473 
Derivative financial instruments  
10
507,351 
527,910 
366,536 
Debt securities in issue
  
124,968 
129,736 
144,871 
Accruals, deferred income and other liabilities
  
12,326 
12,580 
12,952 
Current and deferred tax liabilities
6
1,377 
2,092 
1,100 
Subordinated liabilities
 13 
22,089 
24,870 
26,786 
Provisions  
14
1,851 
1,529 
2,074 
Retirement benefit liabilities
15
490 
321 
412 
Total liabilities
  
1,567,575 
1,498,331 
1,430,933 
         
Shareholders' Equity
        
Shareholders' equity excluding non-controlling interests
  
54,205 
55,589 
51,572 
Non-controlling interests
7
9,485 
9,607 
10,417 
Total shareholders' equity
  
63,690 
65,196 
61,989 
         
Total liabilities and shareholders' equity
  
1,631,265 
1,563,527 
1,492,922 
 
 
 
 
 
1      For notes, see pages 73 to 90.

 

 
Condensed Consolidated Financial Statements
 
Condensed Consolidated Statement of Changes in Equity (Unaudited)
Half Year Ended 30.06.12
Called up Share Capital and Share Premium1 
Other Reserves1 
Retained Earnings
Total
Non-controlling Interests2 
Total
Equity
 
£m
£m
£m
£m
£m
£m
Balance at 1 January 2012
12,380 
3,837 
39,372 
55,589 
9,607 
65,196 
Profit after tax
- 
- 
70 
70 
410 
480 
Currency translation movements
- 
(543)
- 
(543)
(71)
(614)
Available for sale investments
- 
(218)
- 
(218)
19 
(199)
Cash flow hedges
- 
234 
- 
234 
8 
242 
Other
- 
- 
47 
47 
1 
48 
Total comprehensive income for the period
- 
(527)
117 
(410)
367 
(43)
Issue of shares under employee share schemes
82 
- 
369 
451 
- 
451 
Increase in treasury shares
- 
(955)
- 
(955)
- 
(955)
Vesting of shares under employee share schemes
- 
912 
(912)
- 
- 
- 
Dividends paid
- 
- 
(488)
(488)
(364)
(852)
Other reserve movements
- 
- 
18 
18 
(125)
(107)
Balance at 30 June 2012
12,462 
3,267 
38,476 
54,205 
9,485 
63,690 
             
Half Year Ended 31.12.11
            
Balance at 1 July 2011
12,361 
1,291 
37,920 
51,572 
10,417 
61,989 
Profit after tax
- 
- 
1,509 
1,509 
459 
1,968 
Currency translation movements
- 
(401)
- 
(401)
(416)
(817)
Available for sale investments
- 
1,057 
- 
1,057 
2 
1,059 
Cash flow hedges
- 
1,338 
- 
1,338 
13 
1,351 
Other
- 
- 
(101)
(101)
4 
(97)
Total comprehensive income for the period
- 
1,994 
1,408 
3,402 
62 
3,464 
Issue of shares under employee share schemes
19 
- 
477 
496 
- 
496 
Decrease in treasury shares
- 
388 
- 
388 
- 
388 
Vesting of shares under employee share schemes
- 
76 
(76)
- 
- 
- 
Dividends paid
- 
- 
(241)
(241)
(364)
(605)
Redemption of Reserve Capital Instruments
- 
- 
- 
- 
(528)
(528)
Other reserve movements
- 
88 
(116)
(28)
20 
(8)
Balance at 31 December 2011
12,380 
3,837 
39,372 
55,589 
9,607 
65,196 
             
             
Half Year Ended 30.06.11
            
Balance at 1 January 2011
12,339 
1,754 
36,765 
50,858 
11,404 
62,262 
Profit after tax
- 
- 
1,498 
1,498 
485 
1,983 
Currency translation movements
- 
(608)
- 
(608)
(182)
(790)
Available for sale investments
- 
323 
- 
323 
(8)
315 
Cash flow hedges
- 
(48)
- 
(48)
(40)
(88)
Other
- 
- 
9 
9 
14 
23 
Total comprehensive income for the period
- 
(333)
1,507 
1,174 
269 
1,443 
Issue of shares under employee share schemes
22 
- 
361 
383 
- 
383 
Increase in treasury shares
- 
(553)
- 
(553)
- 
(553)
Vesting of shares under employee share schemes
- 
423 
(423)
- 
- 
- 
Dividends paid
- 
- 
(419)
(419)
(363)
(782)
Redemption of Reserve Capital Instruments
- 
- 
- 
- 
(887)
(887)
Other reserve movements
- 
- 
129 
129 
(6)
123 
Balance at 30 June 2011
12,361 
1,291 
37,920 
51,572 
10,417 
61,989 
             
             
 
 
 
 
1    Details of Share Capital and Other Reserves are shown on page 81.
2    Details of Non-controlling interests are shown on page 76. Included within other reserve movement of £125m, £91m relates to the disposal of the Iveco Finance business.  

 

 
Condensed Consolidated Financial Statements
 
Condensed Consolidated Cash Flow Statement (Unaudited)
    
 
Half Year Ended
Half Year Ended
Half Year Ended
Continuing Operations
30.06.12
31.12.11
30.06.11
 
£m
£m
£m
Profit before tax
759 
3,235 
2,644 
Adjustment for non-cash items
6,998 
5,089 
3,104 
Changes in operating assets and liabilities
24,150 
(10,362)
27,055 
Corporate income tax paid
(889)
(796)
(890)
Net cash from operating activities
31,018 
(2,834)
31,913 
Net cash from investing activities
(2,232)
13,553 
(15,465)
Net cash from financing activities
(3,861)
(3,112)
(2,849)
Effect of exchange rates on cash and cash equivalents
(2,424)
(1,350)
(1,583)
Net increase in cash and cash equivalents
22,501 
6,257 
12,016 
Cash and cash equivalents at beginning of the period
149,673 
143,416 
131,400 
Cash and cash equivalents at end of the period
172,174 
149,673 
143,416 
       
 
 
 
 

 
 

 
Results by Business
 
UK Retail and Business Banking
                
 
Half Year Ended
Half Year Ended
Half Year Ended
  
Income Statement Information
  
30.06.12
    
31.12.11
  
30.06.11
YoY
   
£m
    
£m
  
£m
% Change
Net interest income
  
1,612 
    
1,788 
  
1,625 
(1)
Net fee and commission income
  
568 
    
566 
  
591 
(4)
Net investment income
  
- 
    
17 
  
- 
  
Net premiums from insurance contracts
  
39 
    
43 
  
49 
(20)
Other income/(expense)
  
3 
    
1 
  
(2)
  
Total income
  
2,222 
    
2,415 
  
2,263 
(2)
Net claims and benefits incurred under insurance contracts
  
(17)
    
(13)
  
(9)
  
Total income net of insurance claims
  
2,205 
    
2,402 
  
2,254 
(2)
Credit impairment charges and other provisions
  
(122)
    
(261)
  
(275)
(56)
Net operating income
  
2,083 
    
2,141 
  
1,979 
5 
                 
Operating expenses (excluding provision for PPI redress)
  
(1,337)
    
(1,427)
  
(1,275)
5 
Provision for PPI redress
  
(300)
    
- 
  
(400)
(25)
Operating expenses
  
(1,637)
    
(1,427)
  
(1,675)
(2)
                 
Other net income
  
- 
    
2 
  
- 
  
Profit before tax
  
446 
    
716 
  
304 
47 
                 
Adjusted profit before tax1 
  
746 
    
716 
  
704 
6 
 
 
                 
Balance Sheet Information
                
Loans and advances to customers at amortised cost
  
£123.4bn
    
£121.2bn
  
£117.9bn
  
Customer deposits
  
£113.9bn
    
£111.8bn
  
£108.3bn
  
Total assets
  
£130.8bn
    
£127.8bn
  
£123.7bn
  
Risk weighted assets
  
£36.0bn
    
£34.0bn
  
£34.2bn
  
 
 
                 
 
Adjusted1 
  
Statutory
  
Performance Measures
30.06.12
31.12.11
30.06.11
  
30.06.12
31.12.11
30.06.11
  
Return on average equity
16.6%
14.8%
15.0%
  
9.9%
14.8%
6.4%
  
Return on average risk weighted assets
3.3%
3.0%
3.0%
  
1.9%
3.0%
1.3%
  
Cost: income ratio
61%
59%
57%
  
74%
59%
74%
  
Loan loss rate (bps)
19 
42 
46 
  
19 
42 
46 
  
 
 
                 
Key Facts
  
30.06.12
    
31.12.11
  
30.06.11
  
90 day arrears rates - UK personal loans
  
1.4%
    
1.7%
  
2.1%
  
90 day arrears rates - home loans
  
0.3%
    
0.3%
  
0.3%
  
Number of UK current accounts
  
12.0m
    
11.9m
  
11.7m
  
Number of UK savings accounts
  
15.6m
    
15.1m
  
15.0m
  
Number of UK mortgage accounts
  
932,000 
    
930,000 
  
925,000 
  
Number of Barclays Business customers
  
790,000 
    
785,000 
  
779,000 
  
Average LTV of mortgage portfolio
  
44%
    
44%
  
43%
  
Average LTV of new mortgage lending
  
55%
    
54%
  
53%
  
Number of branches
  
1,614 
    
1,625 
  
1,634 
  
Number of ATMs
  
3,984 
    
3,629 
  
3,361 
  
Number of employees (full time equivalent)
  
34,100 
    
34,100 
  
34,200 
  
 
 
 
 
1         Adjusted profit before tax and adjusted performance measures exclude the impact of the provision for PPI redress of £300m (H2 11 £nil; H1 11: £400m).
 

 

 
Results by Business
 
UK Retail and Business Banking
 
Income Statement - H1 12 compared to H1 11
 
-
Adjusted profit before tax improved 6% to £746m. Profit before tax improved 47% to £446m after £300m (2011: £400m) provision for PPI redress
 
 
-    
Solid new mortgage lending and deposit inflows as reflected in balance sheet growth
 
 
-
Continued reduction in impairment in personal unsecured lending
 
-
Income declined 2% to £2,205m driven by lower net fees and commissions
 
-
Net interest income declined 1% to £1,612m with net interest margin down 7bps to 139bps including reduced contributions from structural hedges
 
 
-
Customer asset margin decreased 17bps to 108bps reflecting higher funding rates
 
 
-
Average customer assets increased 5% to £122.3bn driven by 6% growth in average mortgage balances
 
 
-
Customer liability margin increased 14bps to 97bps reflecting an increase in funding rates and therefore the value generated from customer liabilities
 
 
-
Average customer liabilities increased 3% to £110.5bn due to savings deposit growth
 
-
Net fee and commission income down 4% to £568m following closure of the branch-based element of the financial planning business in Q1 2011 and lower overdraft fees
 
-
Credit impairment charges decreased 56% to £122m with annualised loan loss rate of 19bps (2011: 46bps)
 
 
-
Personal unsecured lending impairment improved 62% to £61m with 90 day arrears rates on UK personal loans improving 70bps to 1.4%
 
-
Operating expenses decreased 2% to £1,637m. Excluding the provision for PPI redress of £300m (2011: £400m), operating expenses increased 5% including higher PPI related operating costs
 
-
Adjusted return on average equity improved to 16.6% (2011: 15.0%). Return on average equity improved to 9.9% (2011: 6.4%)
 
-
Income Statement - Q2 12 compared to Q1 12
 
-
Adjusted profit before tax improved 23% to £412m, reflecting a 5% increase in income and a 39% reduction in impairment charges due to a non-recurring provision release. Profit before tax improved £378m to £412m, reflecting the PPI redress provision of £300m recognised in Q1 12
 
-
Balance Sheet - 30 June 2012 compared to 31 December 2011
 
-
Total loans and advances to customers increased 2% to £123.4bn driven by growth in mortgage balances
 
 
-
Mortgage balances of £110.0bn at 30 June 2012 (31 December 2011: £107.8bn). Gross new mortgage lending of £7.8bn (30 June 2011: £7.6bn) and mortgage redemptions of £5.6bn (30 June 2011: £4.9bn), resulted in net new mortgage lending of £2.2bn (30 June 2011: £2.7bn)
 
 
-
Average Loan to Value (LTV) ratio on the mortgage portfolio (including buy to let) on a current valuation basis was 44% (31 December 2011: 44%). Average LTV of new mortgage lending was 55% (31 December 2011: 54%)
 
-
Total customer deposits increased 2% to £113.9bn primarily driven by growth in savings from ISAs and bonds
 
-
Risk weighted assets increased 6% to £36.0bn as a result of methodology changes and an increase in mortgage balances
 
 
 
 

 
Results by Business
 
Europe Retail and Business Banking
                
 
Half Year Ended
Half Year Ended
Half Year Ended
  
Income Statement Information
  
30.06.12
    
31.12.11
  
30.06.11
YoY
   
£m
    
£m
  
£m
% Change
Net interest income  
  
309 
    
428 
  
358 
(14)
Net fee and commission income
  
152 
    
210 
  
219 
(31)
Net trading income
  
4 
    
4 
  
5 
  
Net investment income
  
27 
    
58 
  
33 
(18)
Net premiums from insurance contracts
  
220 
    
209 
  
254 
(13)
Other income/(expense)
  
11
    
(56)
  
7 
  
Total income
  
723 
    
853 
  
876 
(17)
Net claims and benefits incurred under insurance contracts
  
(237)
    
(231)
  
(272)
(13)
Total income net of insurance claims
  
486 
    
622 
  
604 
(20)
Credit impairment charges and other provisions
  
(157)
    
(145)
  
(116)
35 
Net operating income
  
329 
    
477 
  
488 
(33)
                 
Operating expenses (excluding goodwill impairment)
  
(428)
    
(554)
  
(657)
(35)
Goodwill impairment
  
- 
    
(427)
  
- 
  
Operating expenses  
  
(428)
    
(981)
  
(657)
(35)
                 
Other net income  
  
7 
    
4 
  
8 
(13)
Loss before tax
  
(92)
    
(500)
  
(161)
(43)
                 
Adjusted loss before tax1 
  
(92)
    
(73)
  
(161)
(43)
 
 
                 
Balance Sheet Information
                
Loans and advances to customers at amortised cost
  
£41.2bn
    
£43.6bn
  
£46.0bn
  
Customer deposits
  
£18.4bn
    
£16.4bn
  
£19.1bn
  
Total assets
  
£48.1bn
    
£51.3bn
  
£56.7bn
  
Risk weighted assets
  
£16.6bn
    
£17.4bn
  
£17.9bn
  
 
 
                 
 
Adjusted1 
  
Statutory
  
Performance Measures
30.06.12
31.12.11
30.06.11
  
30.06.12
31.12.11
30.06.11
  
Return on average equity
(6.2%)
(2.7%)
(9.3%)
  
(6.2%)
(34.1%)
(9.3%)
  
Return on average risk weighted assets
(0.8%)
(0.4%)
(1.4%)
  
(0.8%)
(5.2%)
(1.4%)
  
Cost: income ratio
88%
89%
109%
  
88%
158%
109%
  
Loan loss rate (bps)
75 
56 
50 
  
75 
56 
50 
  
 
 
                 
Key Facts
  
30.06.12
    
31.12.11
  
30.06.11
  
30 day arrears rates - cards
  
6.2%
    
5.9%
  
6.7%
  
90 day arrears rate - home Loans
  
0.8%
    
0.7%
  
0.6%
  
Number of customers
  
2.6m
    
2.7m
  
2.7m
  
                 
Number of branches  
  
951 
    
978 
  
1,120 
  
Number of sales centres
  
228 
    
250 
  
247 
  
Number of distribution points
  
1,179 
    
1,228 
  
1,367 
  
                 
Number of employees (full time equivalent)
  
8,000 
    
8,500 
  
9,300 
  
 
 
 
 
  
 
  
 
 
 
1        Adjusted profit before tax and adjusted performance measures excludes the impact of goodwill impairment £nil (H2 11: £427m; H1 11: £nil).
 
 
 
Results by Business
 
Europe Retail and Business Banking
 
Income Statement - H1 12 compared to H1 11
 
 
- Loss before tax improved to £92m (2011: £161m) reflecting on-going strategic actions to reposition the business
 
 
 
-    Lower costs following restructuring charges in 2011 and subsequent cost savings
 
 
 
-    Reduction in funding mismatch driven by the active management of retail assets, particularly in Spain
 
 
- Income declined 20% to £486m reflecting the challenging economic environment across Europe
 
 
- Net interest income declined 14% to £309m reflecting lower asset and liability balances, partially offset by higher liability margins
 
 
 
-    Customer asset margin decreased 14bps to 80bps with net interest margin down to 108bps (2011: 118bps), driven by higher funding rates
 
 
 
-    Average customer assets decreased 3% to £42.0bn driven by active management to reduce funding mismatch
 
 
 
-    Customer liability margin increased 6bps to 47bps mainly due to re-pricing initiatives
 
 
 
-    Average customer liabilities decreased 14% to £15.5bn reflecting competitive pressures
 
 
- Net fee and commission income declined 31% to £152m, reflecting lower income from Italy mortgage sales and lower sales of investment products
 
 
- Net premiums from insurance contracts declined 13% to £220m, with a corresponding 13% decline in net claims and benefits to £237m
 
 
- Credit impairment charges increased 35% to £157m reflecting deterioration in credit performance in Spain and Portugal as economic conditions continued to worsen 
 
 
 
-    Loan loss rate increased to 75bps (2011: 50bps)
 
 
 
-    90 day arrears rate for home loans deteriorated to 80bps (30 June 2011: 60bps)
 
 
- Operating expenses decreased 35% to £428m, reflecting restructuring charges of £129m in 2011 and subsequent cost savings
 
 
- Return on average equity improved to negative 6.2% (2011: negative 9.3%) reflecting the improved loss before tax
 
 
Income Statement - Q2 12 compared to Q1 12
 
 
- Loss before tax of £49m (Q1 12: £43m) reflecting worsening delinquency trends on Spanish and Italian mortgages
 
 
Balance Sheet - 30 June 2012 compared to 31 December 2011
 
 
- Loans and advances to customers decreased 6% to £41.2bn reflecting currency movements and strategy to reduce the net funding mismatch. This change has driven a 6% reduction in total assets to £48.1bn
 
 
- Customer deposits increased 12% to £18.4bn, reflecting active management to improve liquidity and reduce the funding mismatch
 
 
- Risk weighted assets decreased 5% to £16.6bn reflecting reduced loans and advances to customers
 
 

 
 

 
Results by Business
 
Africa Retail and Business Banking
                
 
Half Year Ended
Half Year Ended
Half Year Ended
  
Income Statement Information
  
30.06.12
    
31.12.11
  
30.06.11
YoY
   
£m
    
£m
  
£m
% Change
Net interest income  
  
897 
    
1,021 
  
957 
(6)
Net fee and commission income
  
561 
    
584 
  
612 
(8)
Net trading income
  
43 
    
27 
  
43 
- 
Net investment income
  
8 
    
26 
  
30 
  
Net premiums from insurance contracts
  
214 
    
216 
  
216 
(1)
Other income
  
10 
    
29 
  
25 
  
Total income
  
1,733 
    
1,903 
  
1,883 
(8)
Net claims and benefits incurred under insurance contracts
  
(108)
    
(102)
  
(113)
(4)
Total income net of insurance claims
  
1,625 
    
1,801 
  
1,770 
(8)
Credit impairment charges and other provisions
  
(321)
    
(196)
  
(270)
19 
Net operating income
  
1,304 
    
1,605 
  
1,500 
(13)
                 
Operating expenses  
  
(1,033)
    
(1,118)
  
(1,161)
(11)
                 
Other net income
  
3 
    
3 
  
3 
  
Profit before tax
  
274 
    
490 
  
342 
(20)
                 
Adjusted profit before tax1 
  
274 
    
488 
  
342 
(20)
 
 
                 
Balance Sheet Information
                
Loans and advances to customers at amortised cost
  
£34.1bn
    
£34.4bn
  
£39.9bn
  
Customer deposits
  
£22.3bn
    
£22.6bn
  
£24.2bn
  
Total assets
  
£47.4bn
    
£48.2bn
  
£55.1bn
  
Risk weighted assets
  
£27.9bn
    
£30.3bn
  
£32.7bn
  
 
 
                 
 
Adjusted1
  
Statutory
  
Performance Measures
30.06.12
31.12.11
30.06.11
  
30.06.12
31.12.11
30.06.11
  
Return on average equity
7.6%
11.5%
7.9%
  
7.6%
11.7%
7.9%
  
Return on average risk weighted assets
1.3%
2.0%
1.4%
  
1.3%
2.0%
1.4%
  
Cost: income ratio
64%
62%
66%
  
64%
62%
66%
  
Loan loss rate (bps)
182 
107 
130 
  
182 
107 
130 
  
 
 
                 
Key Facts
  
30.06.12
    
31.12.11
  
30.06.11
  
90 day arrears rate - South African home loans
  
2.8%
    
3.2%
  
3.5%
  
Number of customers
  
14.8m
    
14.5m
  
14.5m
  
Number of ATMs
  
10,365 
    
10,068 
  
9,816 
  
                 
Number of branches  
  
1,342 
    
1,354 
  
1,317 
  
Number of sales centres
  
106 
    
139 
  
189 
  
Number of distribution points
  
1,448 
    
1,493 
  
1,506 
  
                 
Number of employees (full time equivalent)
  
42,700 
    
43,800 
  
45,500 
  
 
 
 
1        Adjusted profit before tax and adjusted performance measures excludes the impact of profit on disposals of subsidiaries, associates and joint ventures of £nil (H2 11: £2m; H1 11: £nil).  

 

 
Results by Business
 
Africa Retail and Business Banking
 
Income Statement - H1 12 compared to H1 11
 
 
- Profit before tax declined 20% to £274m
 
 
 
-    Higher credit impairment in the South African home loans portfolio
 
 
 
-    Adverse currency movements due to depreciation of major African currencies against Sterling
 
 
- Income declined 8% to £1,625m driven by currency movements, partially offset by modest pricing increases and volume growth
 
 
- Net interest income declined 6% to £897m with the net interest margin up 16bps to 318bps primarily due to a change in composition to higher margin business
 
 
 
-    Customer asset margin increased 15bps to 310bps reflecting a change in composition towards higher margin business and lower funding rates
 
 
 
-    Average customer assets decreased 14% to £34.4bn, driven by currency movements and a modest decrease in the mortgage book
 
 
 
-    Customer liability margin increased 8bps to 266bps driven by improving margins across a number of African countries partially offset by a decline in South Africa
 
 
 
-    Average customer liabilities decreased 7% to £22.3bn, driven by currency movements partially offset by 10% underlying growth in deposits in South Africa where Absa remains a leader in customer deposits
 
 
- Net fee and commission income declined 8% to £561m driven by currency movements, partially offset by modest pricing increases and volume growth
 
 
- Credit impairment charges increased 19% to £321m reflecting higher impairment charges in the South African home loans portfolio due to higher write-offs
 
 
- Operating expenses decreased 11% to £1,033m primarily driven by currency movements and tight cost control
 
 
- Adjusted return on average equity decreased to 7.6% (2011: 7.9%)
 
 
Income Statement - Q2 12 compared to Q1 12
 
 
- Profit before tax of £97m (Q1 12: £177m) driven by higher impairments in South Africa retail mortgages and currency movements
 
 
Balance Sheet - 30 June 2012 compared to 31 December 2011
 
 
- Loans and advances to customers decreased 1% to £34.1bn and total assets decreased 2% to £47.4bn mainly due to currency movements
 
 
- Customer deposits decreased 1% to £22.3bn due to currency movements partially offset by growth in deposits in South Africa
 
 
- Risk weighted assets decreased 8% to £27.9bn primarily driven by changes in exposure risk weightings and currency movements
 
 

 
 

 
Results by Business
 
Barclaycard
                
 
Half Year Ended
Half Year Ended
Half Year Ended
  
Income Statement Information
  
30.06.12
    
31.12.11
  
30.06.11
YoY
   
£m
    
£m
  
£m
% Change
Net interest income
  
1,394 
    
1,490 
  
1,370 
2 
Net fee and commission income
  
604 
    
600 
  
571 
6 
Net trading loss
  
(4)
    
(4)
  
(3)
  
Net investment income
  
- 
    
10 
  
- 
  
Net premiums from insurance contracts
  
22 
    
21 
  
21 
  
Other income
  
11 
    
5 
  
15 
  
Total income
  
2,027 
    
2,122 
  
1,974 
3 
Net claims and benefits incurred under insurance contracts
  
(1)
    
1 
  
(2)
  
Total income net of insurance claims
  
2,026 
    
2,123 
  
1,972 
3 
Credit impairment charges and other provisions
  
(460)
    
(611)
  
(648)
(29)
Net operating income
  
1,566 
    
1,512 
  
1,324 
18 
                 
Operating expenses (excluding provision for PPI redress and goodwill impairment)  
  
(830)
    
(888)
  
(771)
8 
Provision for PPI redress
  
- 
    
- 
  
(600)
  
Goodwill impairment
  
- 
    
- 
  
(47)
  
Operating expenses
  
(830)
    
(888)
  
(1,418)
(41)
                 
Other net income
  
17 
    
13 
  
18 
(6)
Profit/(loss) before tax
  
753 
    
637 
  
(76)
  
                 
Adjusted profit before tax1 
  
753 
    
637 
  
571 
32 
 
 
                 
Balance Sheet Information
                
Loans and advances to customers at amortised cost
  
£30.6bn
    
£30.1bn
  
£28.3bn
  
Customer deposits
  
£2.0bn
    
£0.6bn
  
£0.6bn
  
Total assets
  
£34.6bn
    
£33.8bn
  
£32.5bn
  
Risk weighted assets
  
£33.1bn
    
£34.2bn
  
£34.0bn
  
 
 
                 
 
Adjusted1 
  
Statutory
  
Performance Measures
30.06.12
31.12.11
30.06.11
  
30.06.12
31.12.11
30.06.11
  
Return on average equity
22.0%
17.1%
17.7%
  
22.0%
17.1%
(3.6%)
  
Return on average risk weighted assets
3.3%
2.5%
2.7%
  
3.3%
2.5%
(0.3%)
  
Loan loss rate (bps)
285 
376 
420 
  
285 
376 
420 
  
Cost: income ratio
41%
42%
39%
  
41%
42%
72%
  
 
 
                 
Key Facts
  
30.06.12
    
31.12.11
  
30.06.11
  
30 day arrears rates - UK cards
  
2.7%
    
2.7%
  
3.0%
  
30 day arrears rates - US cards
  
2.5%
    
3.1%
  
3.2%
  
30 day arrears rates - South Africa cards
  
5.1%
    
4.9%
  
5.4%
  
Total number of Barclaycard customers
  
23.0m
    
22.6m
  
22.2m
  
Total average customer assets
  
£31.8bn
    
£31.1bn
  
£29.4bn
  
Number of retailer relationships
  
89,000 
    
87,000 
  
90,000 
  
Number of employees (full time equivalent)
  
10,600 
    
10,400 
  
10,400 
  
 
 
 
1        Adjusted profit before tax and adjusted performance measures excludes the impact of the provision for PPI redress of £nil (H2 11: £nil; H1 11: £600m) and goodwill impairment of £nil (H2 11: £nil; H1 11: £47m).

 

 
Results by Business
 
Barclaycard
 
Income Statement - H1 12 compared to H1 11
 
 
- Adjusted profit before tax improved 32% to £753m.  Profit before tax increased by £829m to £753m reflecting £600m provision for PPI redress and £47m goodwill impairment in FirstPlus secured lending portfolio, both
       charged in H1 11
 
 
 
-    International profit increased driven by significant improvement in the US
 
 
 
-    UK consumer card profit increased due to balance growth and 2011 portfolio acquisitions
 
 
 
-    Solid profit growth within the Business Payments portfolio due to higher volumes
 
 
- Income improved 3% to £2,026m reflecting continued growth across the business and contributions from 2011 portfolio acquisitions, partially offset by higher funding rates
 
 
 
-    UK income increased by 2% to £1,281m including contribution from 2011 portfolio acquisitions offset by higher funding rates
 
 
 
-    International income improved 3% to £745m reflecting higher US outstanding balances partially offset by increased funding rates
 
 
- Net interest income increased by 2% to £1,394m driven by volume growth, partially offset by lower net interest margin of 881bps (2011: 939bps) including an adverse impact from structural hedges
 
 
 
-    Average customer assets increased 8% to £31.8bn due to 2011 portfolio acquisitions and business growth, partially offset by the continued run-off of FirstPlus
 
 
 
-    Customer asset margin was down 5bps to 953bps due to higher funding rates
 
 
- Net fee and commission income improved 6% to £604m due to increased business volumes
 
 
- Credit impairment charges decreased 29% to £460m
 
 
 
-    Loan loss rate reduced to 285bps (2011: 420bps) principally driven by lower charges in the cards portfolios, reflecting improved underlying delinquency performance
 
 
 
-    30 day arrears rates for consumer cards in UK down 30bps to 2.7%, in the US down 70bps to 2.5% and in South Africa down 30bps to 5.1%
 
 
- Operating expenses decreased 41% to £830m. Excluding the provision for PPI redress and FirstPlus goodwill impairment, operating expenses increased 8% reflecting 2011 portfolio acquisitions, investment spend and PPI
       related operating costs
 
 
- Adjusted return on average equity improved to 22.0% (2011: 17.7%). Return on average equity improved to 22.0% (2011: negative 3.6%)
 
 
Income Statement - Q2 12 compared to Q1 12
 
 
- Profit before tax improved 16% to £404m driven by higher income reflecting seasonal trends and business growth       
 
 
Balance Sheet - 30 June 2012 compared to 31 December 2011
 
 
- Total assets increased 2% to £34.6bn in line with loans and advances to customers, primarily within the US
 
 
- Customer deposits increased by £1.4bn due to business funding initiatives in the US and Germany
 
 
- Risk weighted assets decreased 3% to £33.1bn, driven by impairment trends and a change in risk weightings more than offsetting volume growth
 
 

 
 

 
Results by Business
 
Investment Bank
                
 
Half Year Ended
Half Year Ended
Half Year Ended
  
Income Statement Information
  
30.06.12
    
31.12.11
  
30.06.11
YoY
   
£m
    
£m
  
£m
% Change
Net interest income
  
426 
    
666 
  
511 
(17)
Net fee and commission income
  
1,527 
    
1,483 
  
1,543 
(1)
Net trading income
  
4,269 
    
1,544 
  
3,720 
15 
Net investment income
  
270 
    
382 
  
491 
(45)
Other income/(expense)
  
4 
    
(3)
  
(2)
  
Total income
  
6,496 
    
4,072 
  
6,263 
4 
Credit impairment charges and other provisions
  
(323)
    
(204)
  
111 
  
Net operating income
  
6,173 
    
3,868 
  
6,374 
(3)
                 
Operating expenses
  
(3,933)
    
(3,216)
  
(4,073)
(3)
                 
Other net income   
  
28 
    
3 
  
9 
  
Profit before tax
  
2,268 
    
655 
  
2,310 
(2)
                 
Adjusted profit before tax
  
2,268 
    
655 
  
2,310 
(2)
 
 
 
Balance Sheet Information and Key Facts
                
Loans and advances to banks and customers at amortised cost
  
£185.9bn
    
£158.6bn
  
£180.7bn
  
Customer deposits
  
£114.5bn
    
£83.1bn
  
£92.0bn
  
Total assets
  
£1,225.4bn
    
£1,158.4bn
  
£1,076.0bn
  
Assets contributing to adjusted gross leverage
  
£650.4bn
    
£604.0bn
  
£653.6bn
  
Risk weighted assets
  
£190.6bn
    
£186.7bn
  
£190.0bn
  
Average DVaR (95%)
  
£42m
    
£65m
  
£48m
  
Number of employees (full time equivalent)1 
  
23,300 
    
23,600 
  
23,600 
  
 
 
 
                 
 
Adjusted
  
Statutory
    
Performance Measures
30.06.12
31.12.11
30.06.11
  
30.06.12
31.12.11
30.06.11
    
Return on average equity
14.9%
5.0%
15.6%
  
14.9%
5.0%
15.6%
    
Return on average risk weighted assets
1.7%
0.6%
1.8%
  
1.7%
0.6%
1.8%
    
Cost: income ratio  
61%
79%
65%
  
61%
79%
65%
    
Cost: net operating income ratio  
64%
83%
64%
  
64%
83%
64%
    
Compensation: income ratio
39%
49%
45%
  
39%
49%
45%
    
Average income per employee (000s)1
£276
£170
£259
  
£276
£170
£259
    
Loan loss rate (bps)
35 
22 
(6)
  
35 
22 
(6)
    
                   
                   
                   
                   
                   
                   
                   
                   
                   
                   
                   
                   
     
                       
 
1        H2 11 and H1 11 comparatives have been revised to reflect the transfer of 400 and 500 respectively of dedicated shared service employees to Wealth and Investment Management.

 

 
Results by Business
 
Investment Bank
 
Income Statement - H1 12 compared to H1 11
 
 
- Profit before tax decreased 2% to £2,268m driven by 4% income growth and 3% improvement in operating expenses more than offset by higher credit impairment charges
 
 
 
 
Half Year Ended
Half Year Ended
Half Year Ended
  
Analysis of Total Income
30.06.12
31.12.11
30.06.11
YoY
 
£m
£m
£m
%  Change
Fixed Income, Currency and Commodities
4,364 
2,409 
3,916 
11 
Equities and Prime Services
973 
643 
1,108 
(12)
Investment Banking
1,010 
895 
1,132 
(11)
Principal Investments
149 
125 
107 
39 
Total income
6,496 
4,072 
6,263 
4 
 
 
- Total income increased 4% to £6,496m
 
 
 
-    Fixed Income, Currency and Commodities (FICC) income increased 11% to £4,364m, reflecting improved performances in Rates and Commodities partly offset by lower contributions from Securitised Products
 
 
 
-    Equities and Prime Services income decreased 12% to £973m, with reduced performance in cash equities and equity derivatives driven by declines in market volumes
 
 
 
-    Investment Banking income decreased 11% to £1,010m. Equity and debt underwriting were impacted by lower deal activity partly offset by growth in financial advisory
 
 
 
-    Total income for the second quarter of £3,032m increased 5% on the second quarter of 2011. FICC income increased 15%, Equities and Prime Services income was down 25%, and Investment Banking income was down 4%
 
 
- Credit impairment charge of £323m (2011: release of £111m) reflecting charges primarily relating to ABS CDO Super Senior positions and higher losses on single name exposures. There was a non-recurring release of £223m
       in the prior year
 
 
- Operating expenses reduced 3% to £3,933m, due to a 19% decrease in total performance costs. This was partially offset by a £193m charge relating to the Investment Banking allocation of the £290m penalty arising
       from the industry wide investigation into the setting of interbank offered rates. The remaining £97m has been charged to the Head Office and Other Operations
 
 
- Cost to net operating income ratio of 64% (2011: 64%) within target range of 60% to 65%. Compensation to income ratio improved to 39% (2011: 45%)
 
 
- Return on average equity of 14.9% (2011: 15.6%) and return on average risk weighted assets of 1.7% (2011: 1.8%)
 
 
Income Statement - Q2 12 compared to Q1 12
 
 
- Profit before tax decreased to £1,002m (Q1 12: £1,266m) driven by a decline in income and higher credit impairment charges, partially offset by a 17% improvement in operating expenses primarily due to performance costs
 
 
- Income of £3,032m decreased 12% on the first quarter of 2012 with an improved seasonal trend compared to 2011
 
 
Balance Sheet - 30 June 2012 compared to 31 December 2011
 
 
- Assets contributing to adjusted gross leverage increased 8% to £650bn reflecting increases in cash and central bank deposits and reverse repurchase agreements. Total assets increased 6% to £1,225bn reflecting the
       above, and an increase in settlement balances partially offset by a decrease in the fair value of gross derivative assets
 
 
- Credit market exposures reduced £2.5bn to £12.7bn, primarily driven by sales of commercial real estate loans and properties
 
 
- Risk weighted assets increased 2% to £191bn driven by increases in operational risk and market risk, mainly due to methodology changes, partially offset by a reduction in counterparty risk and foreign currency movements
 
 

 
 

 
Results by Business
 
Corporate Banking
                
 
Half Year Ended
Half Year Ended
Half Year Ended
  
Income Statement Information
  
30.06.12
    
31.12.11
  
30.06.11
YoY
   
£m
    
£m
  
£m
% Change
Net interest income
  
957 
    
1,141 
  
1,014 
(6)
Net fee and commission income
  
489 
    
497 
  
508 
(4)
Net trading income/(expense)
  
70 
    
(128)
  
29 
141 
Net investment income
  
9 
    
21 
  
8 
  
Other income
  
2 
    
9 
  
9 
  
Total income
  
1,527 
    
1,540 
  
1,568 
(3)
Credit impairment charges and other provisions
  
(425)
    
(535)
  
(612)
(31)
Net operating income
  
1,102 
    
1,005 
  
956 
15 
                 
Operating expenses (excluding goodwill impairment and provision for interest rate hedging products redress)
  
(754)
    
(858)
  
(901)
(16)
Goodwill impairment
  
- 
    
(123)
  
- 
  
Provision for interest rate hedging products redress
  
(450)
    
- 
  
- 
  
Operating expenses
  
(1,204)
    
(981)
  
(901)
34 
                 
Other net expense
  
(2)
    
(6)
  
(65)
  
(Loss)/profit before tax
  
(104)
    
18 
  
(10)
  
                 
Adjusted profit before tax1 
  
346 
    
150 
  
54 
  
 
 
                 
Balance Sheet Information and Key Facts
                
Loans and advances to customers at amortised cost
  
£64.0bn
    
£66.9bn
  
£66.2bn
  
Loans and advances to customers at fair value
  
£17.3bn
    
£17.2bn
  
£14.4bn
  
Customer deposits
  
£88.5bn
    
£85.2bn
  
£84.5bn
  
Total assets
  
£87.8bn
    
£91.2bn
  
£87.1bn
  
Risk weighted assets
  
£69.3bn
    
£72.8bn
  
£72.0bn
  
Number of employees (full time equivalent)
  
10,600 
    
11,200 
  
13,200 
  
 
 
                 
 
Adjusted1
  
Statutory
  
Performance Measures
30.06.12
31.12.11
30.06.11
  
30.06.12
31.12.11
30.06.11
  
Return on average equity
6.0%
2.8%
0.6%
  
(3.3%)
(0.8%)
(1.2%)
  
Return on average risk weighted assets
0.7%
0.3%
0.1%
  
(0.3%)
(0.1%)
(0.1%)
  
Loan loss rate (bps)
123 
145 
173 
  
123 
145 
173 
  
Cost: income ratio
49%
56%
57%
  
79%
64%
57%
  
 
 
1     Adjusted profit before tax and adjusted performance measures exclude the impact of goodwill impairment of £nil (H2 11: £123m, H1 11: £nil), provision for interest rate hedging products redress of £450m
       (H2 11: £nil, H1 11: £nil) and loss on disposal of £nil (H2 11: £9m, H1 11: £64m).

 

 
Results by Business
 
Corporate Banking
        
         
Half Year Ended 30 June 2012
UK
Europe
RoW
Total
Income Statement Information
£m
£m
£m
£m
Income
1,150 
173 
204 
1,527 
Credit impairment charges and other provisions
(146)
(277)
(2)
(425)
Operating expenses (excluding provision for interest rate hedging products redress)
(515)
(76)
(163)
(754)
Provision for interest rate hedging products redress
(450)
- 
- 
(450)
Other net expense
(2)
- 
- 
(2)
Profit/(loss) before tax
37 
(180)
39 
(104)
         
Adjusted profit/(loss) before tax
487 
(180)
39 
346 
         
Balance Sheet Information
        
Loans and advances to customers at amortised cost
£51.1bn
£7.5bn
£5.4bn
£64.0bn
Loans and advances to customers at fair value
£17.2bn
- 
£0.1bn
£17.3bn
Customer deposits
£72.6bn
£5.6bn
£10.3bn
£88.5bn
Risk weighted assets
£49.9bn
£11.5bn
£7.9bn
£69.3bn
 
 
         
Half Year Ended 31 December 2011
        
Income Statement Information
        
Income
1,064 
240 
236 
1,540 
Credit impairment charges and other provisions
(192)
(288)
(55)
(535)
Operating expenses (excluding goodwill impairment)
(541)
(117)
(200)
(858)
Goodwill impairment
- 
(123)
- 
(123)
Other net income/(expense)
3 
- 
(9)
(6)
Profit/(loss) before tax
334 
(288)
(28)
18 
         
Adjusted profit/(loss) before tax
334 
(165)
(19)
150 
         
Balance Sheet Information
        
Loans and advances to customers at amortised cost
£50.6bn
£11.2bn
£5.1bn
£66.9bn
Loans and advances to customers at fair value
£17.2bn
- 
- 
£17.2bn
Customer deposits
£69.9bn
£5.6bn
£9.7bn
£85.2bn
Risk weighted assets
£49.9bn
£15.4bn
£7.5bn
£72.8bn
 
 
         
Half Year Ended 30 June 2011
        
Income Statement Information
        
Income
1,135 
200 
233 
1,568 
Credit impairment charges and other provisions
(163)
(428)
(21)
(612)
Operating expenses
(558)
(131)
(212)
(901)
Other net expense
(1)
- 
(64)
(65)
Profit/(loss) before tax
413 
(359)
(64)
(10)
         
Adjusted profit/(loss) before tax
413 
(359)
- 
54 
         
Balance Sheet Information
        
Loans and advances to customers at amortised cost
£48.9bn
£12.5bn
£4.8bn
£66.2bn
Loans and advances to customers at fair value
£14.4bn
- 
- 
£14.4bn
Customer deposits
£67.5bn
£7.2bn
£9.8bn
£84.5bn
Risk weighted assets
£47.1bn
£17.2bn
£7.7bn
£72.0bn

 

 
Results by Business
 
Corporate Banking
 
 
Income Statement - H1 12 compared to H1 11
 
- Adjusted profit before tax improved £292m to £346m, primarily driven by improved credit impairment in Europe and improved operating expenses. Loss before tax was £104m (2011: £10m) including a gain of £68m
       (2011: gain of £21m) in the net valuation of fair value loans and a £450m provision for interest rate hedging products redress
 
 
 
-    UK adjusted profit before tax improved 18% to £487m reflecting improved operating expenses and credit impairment. UK profit before tax decreased £376m to £37m after £450m provision for interest rate
      hedging products redress
 
 
 
-    Europe loss before tax improved £179m to £180m driven by improved credit impairment charges in Spain and improved operating expenses, partially offset by non-recurring income from exited businesses
 
 
 
-    Rest of the World profit before tax improved £103m to £39m including a prior year loss on disposal of Barclays Bank Russia (BBR). Excluding this item, Rest of the World profit before tax improved £39m
 
 
- Net interest income decreased 6% to £957m reflecting increased funding rates and non-recurring income from exited businesses
 
 
- Credit impairment charges reduced 31% to £425m. Overall loan loss rates improved to 123bps (2011: 173bps)
 
 
 
-    Impairment charges in Spain reduced £115m to £184m, primarily as a result of ongoing action to reduce exposure within the property and construction sector
 
 
- Operating expenses excluding a £450m provision for interest rate hedging products redress improved 16% to £754m,  principally due to prior year restructuring including the exit of BBR. Adjusted cost to income ratio
       improved to 49% (2011: 57%)
 
 
- Adjusted return on average equity improved to 6.0% (2011: 0.6%). Return on average equity was negative 3.3% (2011: negative 1.2%)
 
 
Income Statement - Q2 12 compared to Q1 12
 
 
- Adjusted profit before tax decreased £92m to £127m including a loss of £10m (Q1 12: gain of £78m) in the net valuation of fair value loans. Excluding this item, adjusted profit before tax of £137m was broadly in line
        with the previous quarter
 
 
- Loss before tax decreased £542m to £323m after £450m provision for interest rate hedging products redress
 
 
Balance Sheet - 30 June 2012 compared to 31 December 2011
 
 
- Total assets down £3.4bn to £87.8bn driven by reduced balances in Europe
 
 
- Customer deposits increased 4% to £88.5bn with increased balances in the UK
 
 
- Risk weighted assets decreased 5% to £69.3bn reflecting lower net exposures in Europe
 

 

 
Results by Business
 
 
 
 
 
 
 

 
 

 
Results by Business
 
Wealth and Investment Management
                
 
Half Year Ended
Half Year Ended
Half Year Ended
  
Income Statement Information
  
30.06.12
    
31.12.11
  
30.06.11
YoY
   
£m
    
£m
  
£m
% Change
Net interest income
  
419 
    
429 
  
369 
14 
Net fee and commission income
  
467 
    
473 
  
470 
(1)
Net trading income/(expense)
  
5 
    
(4)
  
9 
  
Net investment income
  
- 
    
- 
  
- 
  
Other income/(expense)
  
1 
    
(2)
  
- 
  
Total income
  
892 
    
896 
  
848 
5 
Credit impairment charges and other provisions
  
(19)
    
(22)
  
(19)
- 
Net operating income
  
873 
    
874 
  
829 
5 
                 
Operating expenses
  
(751)
    
(753)
  
(740)
1 
                 
Other net expense
  
(1)
    
(2)
  
(1)
  
Profit before tax
  
121 
    
119 
  
88 
38 
                 
Adjusted profit before tax
  
121 
    
119 
  
88 
38 
 
 
                 
Balance Sheet Information and Key Facts
                
Loans and advances to customers at amortised cost
  
£19.8bn
    
£18.8bn
  
£17.6bn
  
Customer deposits
  
£50.0bn
    
£46.5bn
  
£44.4bn
  
Total assets
  
£22.2bn
    
£20.9bn
  
£19.8bn
  
Risk weighted assets
  
£14.0bn
    
£13.1bn
  
£12.7bn
  
Client assets
  
£176.1bn
    
£164.2bn
  
£169.5bn
  
Number of employees (full time equivalent)1 
  
8,000 
    
8,100 
  
8,400 
  
 
 
                 
 
Adjusted
  
Statutory
  
Performance Measures
30.06.12
31.12.11
30.06.11
  
30.06.12
31.12.11
30.06.11
  
Return on average equity
10.0%
12.2%
9.6%
  
10.0%
12.2%
9.6%
  
Return on average risk weighted assets
1.5%
1.7%
1.3%
  
1.5%
1.7%
1.3%
  
Cost: income ratio
84%
84%
87%
  
84%
84%
87%
  
Loan loss rate (bps)
19 
23 
21 
  
19 
23 
21 
  
                 
                 
                 
                 
                 
                 
                 
                 
   
 
1        H2 11 and H1 11 comparatives have been revised to reflect the transfer of 400 and 500 respectively of dedicated shared service employees to Wealth and Investment Management.
 
 

 

 
Results by Business
 
Wealth and Investment Management
 
 
Income Statement - H1 12 compared to H1 11
 
 
- Profit before tax increased 38% to £121m
 
 
 
-    Wealth and Investment Management continues to execute its strategic investment programme with a focus on building productive capacity and delivering a step change in the client experience
 
 
 
-    Delivery against these objectives has been strong over the last two and a half years, with significant front office hiring and material improvements to technology platforms driving efficiencies as well as improved 
      service to clients
 
 
- Income improved 5% to £892m primarily driven by an increase in the High Net Worth businesses:
 
 
 
-    Net interest income grew 14% to £419m. Net interest margin increased to 125bps from 122bps with average loans up £2.3bn to £19.2bn and average customer deposits up £4.3bn to £48.2bn. The growth in
      deposits was primarily driven by an enhanced banking proposition in the High Net Worth businesses and a shift in client investment appetite towards holding cash in volatile market conditions
 
 
 
-    Net fee and commission income decreased 1% to £467m due to reduced client activity in challenging market conditions
 
 
- Operating expenses increased 1% to £751m as the continued cost of the strategic investment programme was partially offset by additional cost control initiatives
 
 
- Return on average equity increased to 10.0% (2011: 9.6%)
 
 
Income Statement - Q2 12 compared to Q1 12
 
 
- Profit before tax remained stable at £61m (Q1 12: £60m)
 
 
Balance Sheet - 30 June 2012 compared to 31 December 2011
 
 
- Customer deposits increased 8% to £50.0bn and loans and advances to customers increased 5% to £19.8bn driven by growth in the High Net Worth businesses
 
 
- Client assets increased to £176.1bn (2011: £164.2bn) driven by net new assets in the High Net Worth businesses offset by market, foreign exchange and other movements
 
 
- Risk weighted assets increased 7% to £14.0bn principally due to growth in lending balances
 
 

 
 

 
Results by Business
 
Head Office and Other Operations
  
 
Half Year Ended
Half Year Ended
Half Year Ended
  
Income Statement Information
  
30.06.12
    
31.12.11
  
30.06.11
  
   
£m
    
£m
  
£m
  
Adjusted total income/(expense) net of insurance claims1 
  
218 
    
(243)
  
20 
  
Own credit
  
(2,945)
    
2,619 
  
89 
  
Gains on debt buy-backs
  
- 
    
1,130 
  
- 
  
Gain/(loss) on disposal of investment in BlackRock, Inc.
  
227 
    
- 
  
(58)
  
Total (expense)/income net of insurance claims
  
(2,500)
    
3,506 
  
51 
  
Credit impairment (charges)/release and other provisions
  
(5)
    
- 
  
1 
  
Impairment of investment in BlackRock, Inc.
  
- 
    
(1,800)
  
- 
  
Net operating (expense)/income
  
(2,505)
    
1,706 
  
52 
  
                 
Operating expenses (excluding bank levy)
  
(425)
    
(259)
  
(204)
  
UK bank levy
  
- 
    
(325)
  
- 
  
Operating expenses
  
(425)
    
(584)
  
(204)
  
                 
Other net income/(expense)
  
23 
    
(22)
  
(1)
  
(Loss)/profit before tax
  
(2,907)
    
1,100 
  
(153)
  
                 
Adjusted loss before tax2 
  
(189)
    
(827)
  
(183)
  
 
 
                 
Balance Sheet Information and Key Facts
                
Total assets
  
£35.0bn
    
£31.9bn
  
£41.9bn
  
Risk weighted assets
  
£2.7bn
    
£2.5bn
  
£1.7bn
  
Number of employees (full time equivalent)
  
1,700 
    
1,400 
  
1,500 
  
 
 
 
 
Income Statement - H1 12 compared to H1 11
 
 
- Adjusted loss before tax increased 3% to £189m
 
 
 
-    Income improved to £218m (2011: £20m), principally due to a one-time gain relating to hedges of employee share awards that were closed out during Q1 12
 
 
 
-    Operating expenses increased to £425m (2011: £204m) due to higher regulatory costs and a £97m charge relating to the allocation to Head Office and Other Operations of the £290m penalty arising
     from the industry wide investigation into the setting of interbank offered rates
 
 
- Statutory loss before tax increased to £2,907m (2011: £153m) reflecting an own credit charge of £2,945m (2011: gain of £89m), partially offset by the gain on sale of the strategic investment in Blackrock, Inc. of £227m
       (2011: £58m loss)
 
 
- The 2012 impact of the UK bank levy, which is calculated by reference to the Group's liabilities as at 31 December 2012, has not been reflected in these results in accordance with IFRS. The total cost for 2012, due to be
       recognised in the fourth quarter, is expected to be approximately £360m
 
 
Income Statement - Q2 12 compared to Q1 12
 
 
- Adjusted loss before tax of £272m (Q1 12: profit before tax £83m) principally reflects the non recurrence of gain on hedges of employee share awards that were closed out in Q1 12 and the penalty arising from the
       investigation into interbank offered rates recognised in Q2 12. Loss before tax improved to £370m (Q1 12: £2,537m), reflecting reduced own credit charges and the Q2 12 gain on sale of the investment BlackRock, Inc.
 
 
Balance Sheet - 30 June 2012 compared to 31 December 2011
 
 
- Total assets increased to £35.0bn (31 December 2011: £31.9bn) reflecting growth in the liquidity bond portfolio, partially offset by the sale of the strategic investment in Blackrock, Inc.
 
 
- Risk weighted assets increased 8% to £2.7bn
 
 
 
1        Includes net interest income of £98m (H2 11: expense of £950m; H1 11: expense of £15m).
 
2     Adjusted performance measures and profit before tax exclude the impact of £2,945m (2011: gain of £89m) own credit loss, £nil (2011: £1m loss) gains on acquisitions and disposals and £227m (2011: loss of £58m)
       gain on disposal of strategic investment in BlackRock, Inc.
 
 

 
 

 
Business Results by Quarter
 
UK RBB
Q212
Q112
  
Q411
Q311
Q211
Q111
 
£m
£m
  
£m
£m
£m
£m
Adjusted basis  
              
Total income net of insurance claims  
1,128 
1,077 
  
1,129 
1,273 
1,170 
1,084 
Credit impairment charges and other provisions  
(46)
(76)
  
(156)
(105)
(131)
(144)
Net operating income  
1,082 
1,001 
  
973 
1,168 
1,039 
940 
Operating expenses  
(671)
(666)
  
(752)
(675)
(622)
(653)
Other net income/(expense)
1 
(1)
  
1 
1 
(1)
1 
Adjusted profit before tax  
412 
334 
  
222 
494 
416 
288 
   
              
Adjusting items  
              
Provision for PPI redress  
- 
(300)
  
- 
- 
(400)
- 
Statutory profit before tax  
412 
34 
  
222 
494 
16 
288 
 
 
Europe RBB
              
Adjusted basis  
              
Total income net of insurance claims  
243 
243 
  
247 
375 
309 
295 
Credit impairment charges and other provisions  
(85)
(72)
  
(83)
(62)
(47)
(69)
Net operating income  
158 
171 
  
164 
313 
262 
226 
Operating expenses  
(211)
(217)
  
(291)
(263)
(368)
(289)
Other net income
4 
3 
  
2 
2 
4 
4 
Adjusted (loss)/profit before tax  
(49)
(43)
  
(125)
52 
(102)
(59)
   
              
Adjusting items  
              
Goodwill impairment  
- 
- 
  
(427)
- 
- 
- 
Statutory (loss)/profit before tax  
(49)
(43)
  
(552)
52 
(102)
(59)
 
 
Africa RBB
              
Adjusted basis  
              
Total income net of insurance claims  
795 
830 
  
861 
940 
906 
864 
Credit impairment charges and other provisions  
(214)
(107)
  
(88)
(108)
(126)
(144)
Net operating income  
581 
723 
  
773 
832 
780 
720 
Operating expenses  
(485)
(548)
  
(505)
(613)
(586)
(575)
Other net income
1 
2 
  
1 
- 
1 
2 
Adjusted profit before tax  
97 
177 
  
269 
219 
195 
147 
   
              
Adjusting items  
              
Gains on acquisitions and disposals  
- 
- 
  
- 
2 
- 
- 
Statutory profit before tax  
97 
177 
  
269 
221 
195 
147 
 
 
Barclaycard
              
Adjusted basis  
              
Total income net of insurance claims  
1,036 
990 
  
983 
1,140 
1,012 
960 
Credit impairment charges and other provisions  
(228)
(232)
  
(271)
(340)
(344)
(304)
Net operating income  
808 
758 
  
712 
800 
668 
656 
Operating expenses  
(412)
(418)
  
(458)
(430)
(400)
(371)
Other net income
8 
9 
  
5 
8 
7 
11 
Adjusted profit before tax  
404 
349 
  
259 
378 
275 
296 
   
              
Adjusting items  
              
Provision for PPI redress  
- 
- 
  
- 
- 
(600)
- 
Goodwill impairment  
- 
- 
  
- 
- 
(47)
- 
Statutory profit/(loss) before tax  
404 
349 
  
259 
378 
(372)
296 
               

 

 
Business Results by Quarter
 
Investment Bank
Q212
Q112
  
Q411
Q311
Q211
Q111
 
£m
£m
  
£m
£m
£m
£m
Adjusted and statutory basis  
              
Fixed Income, Currency and Commodities  
1,968 
2,396 
  
971 
1,438 
1,715 
2,201 
Equities and Prime Services  
423 
550 
  
305 
338 
563 
545 
Investment Banking  
501 
509 
  
506 
389 
520 
612 
Principal Investments  
140 
9 
  
36 
89 
99 
8 
Total income  
3,032 
3,464 
  
1,818 
2,254 
2,897 
3,366 
Credit impairment (charges)/releases and other provisions  
(248)
(75)
  
(90)
(114)
80 
31 
Net operating income  
2,784 
3,389 
  
1,728 
2,140 
2,977 
3,397 
Operating expenses  
(1,788)
(2,145)
  
(1,458)
(1,758)
(2,006)
(2,067)
Other net income/(expense)
6 
22 
  
(3)
6 
6 
3 
Adjusted profit before tax and profit before tax
1,002 
1,266 
  
267 
388 
977 
1,333 
 
 
Corporate Banking
              
Adjusted basis  
              
Total income net of insurance claims  
703 
824 
  
710 
830 
817 
751 
Credit impairment charges and other provisions  
(218)
(207)
  
(252)
(283)
(327)
(285)
Net operating income  
485 
617 
  
458 
547 
490 
466 
Operating expenses  
(357)
(397)
  
(422)
(436)
(459)
(442)
Other net (expense)/income
(1)
(1)
  
1 
2 
2 
(3)
Adjusted profit before tax  
127 
219 
  
37 
113 
33 
21 
   
              
Adjusting items  
              
Goodwill impairment  
- 
- 
  
(123)
- 
- 
- 
Provision for interest rate hedging products redress
(450)
- 
  
- 
- 
- 
- 
Losses on disposal  
- 
- 
  
(9)
- 
(64)
- 
Statutory (loss)/profit before tax  
(323)
219 
  
(95)
113 
(31)
21 
 
 
Wealth and Investment Management
              
Adjusted and statutory basis  
              
Total income net of insurance claims  
441 
451 
  
449 
447 
426 
422 
Credit impairment charges and other provisions  
(12)
(7)
  
(10)
(12)
(9)
(10)
Net operating income  
429 
444 
  
439 
435 
417 
412 
Operating expenses  
(367)
(384)
  
(384)
(369)
(375)
(365)
Other net expenses
(1)
- 
  
(1)
(1)
- 
(1)
Adjusted profit before tax and profit before tax
61 
60 
  
54 
65 
42 
46 
               
 
 
Head Office and Other Operations
              
Adjusted basis  
              
Total (expense)/income net of insurance claims  
(41)
259 
  
15 
(258)
12 
8 
Credit impairment (charges)/releases and other provisions  
(3)
(2)
  
(1)
1 
(3)
4 
Net operating (expense)/income  
(44)
257 
  
14 
(257)
9 
12 
Operating expenses (excluding UK bank levy)  
(251)
(174)
  
(144)
(115)
(124)
(80)
UK bank levy  
- 
- 
  
(325)
- 
- 
- 
Other net income
23 
- 
  
- 
- 
- 
- 
Adjusted (loss)/profit before tax  
(272)
83 
  
(455)
(372)
(115)
(68)
   
              
Adjusting items  
              
Own credit  
(325)
(2,620)
  
(263)
2,882 
440 
(351)
Impairment and gain/(loss) on disposal of BlackRock investment
227 
- 
  
- 
(1,800)
(58)
- 
Gains on debt buy-backs  
- 
- 
  
1,130 
- 
- 
- 
(Losses)/gains on acquisitions and disposals  
- 
- 
  
(23)
1 
(3)
2 
Statutory (loss)/profit before tax  
(370)
(2,537)
  
389 
711 
264 
(417)
 

 
 

 
Performance Management
 
Returns and Equity by Business
 
 
Returns on average equity and average tangible equity are calculated using profit after tax and non-controlling interests for the period, divided by average allocated equity or tangible equity as appropriate. Average allocated equity has been calculated as 10% of average risk weighted assets for each business, adjusted for capital deductions, including goodwill and intangible assets, reflecting the assumptions the Group uses for capital planning purposes. The higher capital level currently held, reflecting as at 30 June 2012 Core Tier 1 capital ratio of 10.9%, is allocated to Head Office and Other Operations. Average allocated tangible equity is calculated using the same method but excludes goodwill and intangible assets.
 
 
 
 
Adjusted1
  
Statutory
 
Half Year Ended
Half Year Ended
Half Year Ended
  
Half Year Ended
Half Year Ended
Half Year Ended
Return on Average Equity
30.06.12
31.12.11
30.06.11
  
30.06.12
31.12.11
30.06.11
 
%
%
%
  
%
%
%
UK RBB
16.6%
14.8%
15.0%
  
9.9%
14.8%
6.4%
Europe RBB
(6.2%)
(2.7%)
(9.3%)
  
(6.2%)
(34.1%)
(9.3%)
Africa RBB
7.6%
11.5%
7.9%
  
7.6%
11.7%
7.9%
Barclaycard
22.0%
17.1%
17.7%
  
22.0%
17.1%
(3.6%)
Investment Bank
14.9%
5.0%
15.6%
  
14.9%
5.0%
15.6%
Corporate Banking
6.0%
2.8%
0.6%
  
(3.3%)
(0.8%)
(1.2%)
Wealth and Investment Management
10.0%
12.2%
9.6%
  
10.0%
12.2%
9.6%
Group excluding Head Office and Other Operations
12.8%
7.5%
11.2%
  
10.4%
5.1%
7.6%
Head Office and Other Operations impact
(2.9%)
(3.6%)
(1.9%)
  
(10.1%)
0.6%
(1.7%)
Total
9.9%
3.9%
9.3%
  
0.3%
5.7%
5.9%
               
 
Adjusted1
  
Statutory
Return on Average Tangible Equity
%
%
%
  
%
%
%
UK RBB
32.2%
28.5%
28.7%
  
19.2%
28.5%
12.3%
Europe RBB
(7.0%)
(3.5%)
(12.5%)
  
(7.0%)
(44.8%)
(12.5%)
Africa RBB2 
11.1%
18.2%
14.2%
  
11.1%
18.3%
14.2%
Barclaycard
29.4%
22.5%
23.5%
  
29.4%
22.5%
(4.8%)
Investment Bank
15.5%
5.1%
16.2%
  
15.5%
5.1%
16.2%
Corporate Banking
6.4%
3.0%
0.6%
  
(3.4%)
(0.8%)
(1.2%)
Wealth and Investment Management
14.0%
16.7%
13.2%
  
14.0%
16.7%
13.2%
Group excluding Head Office and Other Operations
15.0%
9.3%
13.6%
  
12.2%
6.5%
9.4%
Head Office and Other Operations impact
(3.5%)
(4.7%)
(2.3%)
  
(11.9%)
0.2%
(2.3%)
Total
11.5%
4.6%
11.3%
  
0.3%
6.7%
7.1%
               
 
Average Equity
  
Average Tangible Equity
 
£m
£m
£m
  
£m
£m
£m
UK RBB
6,772 
6,795 
6,847 
  
3,493 
3,535 
3,588 
Europe RBB
2,325 
2,722 
2,683 
  
2,042 
2,067 
1,997 
Africa RBB
2,612 
2,599 
2,651 
  
1,120 
1,066 
1,002 
Barclaycard
4,660 
4,675 
4,594 
  
3,491 
3,546 
3,459 
Investment Bank
20,778 
20,106 
20,896 
  
20,057 
19,386 
20,113 
Corporate Banking
7,306 
7,420 
7,479 
  
6,947 
6,940 
6,978 
Wealth and Investment Management
1,894 
1,752 
1,695 
  
1,359 
1,284 
1,233 
Head Office and Other Operations 3 
8,710 
7,033 
3,679 
  
8,711 
7,031 
3,678 
Total
55,057 
53,102 
50,524 
  
47,220 
44,855 
42,048 
 
 
 
 
 
 
 
 
 
 
 
 
 
1     Adjusted performance metrics exclude the impact of own credit gain, gains on debt buy-backs, impairment  and gain/loss on disposal of BlackRock, Inc.,  provision for PPI redress, provision for interest rate hedging
       products redress, goodwill impairment and (loss)/gain on acquisitions and disposals.
2     The return on average tangible equity for Africa RBB has been calculated based on average tangible equity including amounts relating to Absa Group's non-controlling interests.
3     Includes risk weighted assets and capital deductions in Head Office and Other Operations, plus the residual balance of average shareholders' equity and tangible equity.  

 

 
Performance Management
 
Margins and Balances
      
 
Half Year
Half Year
Half Year
 
Ended
Ended
Ended
Analysis of Net Interest Income
30.06.12
31.12.11
30.06.11
 
£m
£m
£m
RBB, Corporate Banking and Wealth and Investment Management customer income:
      
- Customer assets
 3,335 
 3,478 
 3,505 
- Customer liabilities
 1,564 
 1,552 
 1,314 
Total
 4,899 
 5,030 
 4,819 
RBB, Corporate Banking and Wealth and Investment Management non-customer income:
      
- Product structural hedge1 
 487 
 540 
 628 
- Equity structural hedge2 
 119 
 643 
 181 
- Other
 83 
 83 
 65 
Total RBB, Corporate Banking and Wealth and Investment Management net interest income
 5,588 
 6,296 
 5,693 
Investment Bank
 426 
 666 
 511 
Head Office and Other Operations
 98 
(950)
(15)
Group net interest income  
 6,112 
 6,012 
 6,189 
 
 
RBB, Corporate Banking and Wealth and Investment Management net interest income (NII)
 
Barclays distinguishes the relative net interest contribution from customer assets and customer liabilities, and separates this from the contribution delivered by non-customer income, which principally arises from Group hedging activities.
 
 
Customer interest income
 
 
- Customer NII increased 2% to £4,899m, driven by increases in the customer liability margin and growth in average customer asset and liability balances. Customer liabilities grew due to increases in retail savings
       products and corporate deposits in the UK
 
 
- The customer asset margin declined to 2.11% (2011: 2.23%), reflecting an increase in funding rates across RBB, Corporate Banking and Wealth and Investment Management businesses. This was partially offset by a
       move towards higher margin business in Africa RBB
 
 
- The customer liability margin increased to 1.13% (2011: 0.99%) reflecting increased funding rates and therefore value generated from RBB, Corporate Banking and Wealth and Investment Management customer liabilities
 
 
Non-customer interest income
 
 
- Non-customer NII decreased 21% to £689m, reflecting a reduction in the benefits from Group hedging activities. Group hedging activities utilise structural interest rate hedges to mitigate the impact of the low
       interest rate environment on customer liabilities and the Group's equity
 
 
- Product structural hedges generated a lower contribution of £487m (2011: £628m), as hedges were maintained in this period of continued low interest rates. Based on current interest rate curves and the on-going
       hedging strategy, fixed rate returns on product structural hedges are expected to continue to make a significant but declining contribution in H2 2012 and 2013
 
 
- The contribution from equity structural hedges in RBB, Corporate Banking and Wealth and Investment Management decreased to £119m (2011: £181m) following the sale of hedging instruments in H2 11 and the
       continued low interest rate environment
 
 
Other Group interest income
 
 
- Head Office and Other Operations NII of £98m (2011: £15m expenses) principally reflects an increase in income transferred from trading income within Head Office relating to interest rate swaps used for hedge accounting
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1     Product structural hedges convert short term interest margin volatility on product balances (such as non-interest bearing current accounts and managed rate deposits) into a more stable medium term rate and are built
        on a monthly basis to achieve a targeted maturity profile. Product structural hedge income for H1 11 has been revised to £628m (previously reported as £711m).
 
 
2    Equity structural hedges are in place to manage the volatility in net earnings generated by businesses on the Group's equity, with the impact allocated to businesses in line with their economic capital usage.
 

 

 
Performance Management
 
 
- Investment Bank NII decreased 17% to £426m, due to a reduction in interest income from credit market exposures
 
 
- Total Group income from equity structural hedges decreased to £378m (2011: £583m) including £259m (2011: £402m) that was allocated to the Investment Bank and Head Office
 
 
Net Interest Margin
 
- The net interest margin for RBB, Corporate Banking and Wealth and Investment Management decreased to 1.89% (2011: 1.97%), reflecting the reduction in contribution from Group hedging activities. Consistent with
       prior periods the net interest margin is expressed as a percentage of the sum of average customer assets and liabilities, to reflect the impact of the margin generated on retail and commercial banking liabilities
 
 
- The net interest margin expressed as a percentage of average customer assets only, declined to 3.53% (2011: 3.63%)1
 
 
 
Analysis of Net Interest Margin
            
 
UK RBB
Europe RBB
Africa RBB1 
Barclaycard
Corporate Banking1 
Wealth and Investment Management
Total RBB, Corporate and Wealth
Half Year Ended 30.06.12
%
%
%
%
%
%
%
Customer asset margin
1.08 
0.80 
3.10 
9.53 
1.20 
0.65 
2.11 
Customer liability margin
0.97 
0.47 
2.66 
n/m
1.08 
1.11 
1.13 
Non-customer generated margin
0.37 
0.36 
0.25 
(0.73)
0.16 
0.27 
0.23 
               
Net interest margin
1.39 
1.08 
3.18 
8.81 
1.29 
1.25 
1.89
               
Average customer assets (£m)
 122,343 
 42,044 
 34,369 
 31,830 
 68,162 
 19,152 
 317,900 
Average customer liabilities (£m)
 110,540 
 15,523 
 22,345 
n/m
 80,758 
 48,246 
 277,412 
               
Half Year Ended 31.12.11
              
Customer asset margin
1.18 
0.82 
2.89 
9.47 
1.40 
0.78 
2.15 
Customer liability margin
0.90 
0.90 
2.91 
n/m
0.99 
1.05 
1.12 
Non-customer generated margin
0.50 
0.54 
0.52 
0.02 
0.31 
0.39 
0.42 
               
Net interest margin
1.55 
1.38 
3.42 
9.49 
1.50 
1.36 
2.10 
               
Average customer assets (£m)
 120,015 
 44,133 
 35,992 
 31,155 
 71,027 
 18,045 
 320,367 
Average customer liabilities (£m)
 108,408 
 17,379 
 23,274 
n/m
 80,268 
 44,718 
 274,047 
               
Half Year Ended 30.06.11
              
Customer asset margin
1.25 
0.94 
2.95 
9.58 
1.54 
0.77 
2.23 
Customer liability margin
0.83 
0.41 
2.58 
n/m
0.89 
0.94 
0.99 
Non-customer generated margin
0.41 
0.40 
0.21 
(0.18)
0.22 
0.33 
0.30 
               
Net interest margin
1.46 
1.18 
3.02 
9.39 
1.42 
1.22 
1.97 
               
Average customer assets (£m)
 116,977 
 43,360 
 39,943 
 29,408 
 69,760 
 16,849 
 316,297 
Average customer liabilities (£m)
 107,007 
 18,029 
 23,914 
n/m
 74,430 
 43,994 
 267,374 
 
 
- Customer asset and liability margins reflect a year on year increase in the Group's internal funding rates, which are based on the cost to the Group of alternative funding in the wholesale market. The increase in funding
       rates has had an adverse impact to customer asset margins and a benefit to customer liability margins
 
 
- The Group's 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 wholesale funding at a rate that is
       driven by prevailing market rates and includes a term premium. The objective is to price internal funding for assets and liabilities in line with the cost of alternative funding, which ensures there is consistency between
       retail and wholesale sources
 
 
 
1     2011 comparatives have been revised to reflect certain corporate banking activities previously reported in Africa RBB which are now included within Corporate Banking. Africa RBB comparatives have
       additionally been revised to include gross cheque advances and cheque deposits within average assets and average liabilities respectively where these were previously reported net. The H1 11 net interest margin
       expressed as a percentage of average customer assets only is therefore revised to 3.63% (previously reported as 3.64%).
 
 

 
 

 
Risk Management
 
Overview
 
 
- Barclays has clear risk management objectives, and a well-established strategy and framework for managing risk. The approach to identifying, assessing, controlling, reporting and managing risks is formalised in the
       Principal Risks Framework. The framework, which groups risk into four Principal Risks categories, is unchanged in 2012. Further detail on how these risks are managed may be found in the 2011 Annual Report and Accounts
 
 
- The uncertainties currently associated with the Group's Principal Risks are described below: 
 
Principal Risks and Associated Uncertainties1
  
Topics Covered
Page
Funding Risk
      
·    Impact of Basel 3 as regulatory rules are finalised
·    Impacts on capital ratios of weak profit performance
·    Volatility in cost of funding due to economic uncertainty
·    Reduction in available depositor and wholesale funding
·    Changes in the value of local assets and liabilities due to the potential exit of one or more countries from the Euro
  
·    Capital base, risk weighted assets, balance sheet leverage and significant regulatory changes
·    Liquidity pool and funding structure
·    Local Eurozone balance sheet funding exposures
37
 
40
62
Credit Risk
      
·    Impact of potentially deteriorating sovereign credit quality, particularly debt servicing and refinancing capability
·    Extent and sustainability of economic recovery, including impact of austerity measures on the European economies
·    Increase in unemployment due to a weaker economy, fiscal tightening and other measures
·    Impact of rising inflation and potential interest rate rises on consumer debt affordability and corporate profitability
·    Possibility of further falls in residential property prices in the US, UK, South Africa and Western Europe
·    Potential liquidity shortages increasing counterparty risks
·    Potential for large single name losses and deterioration in specific sectors and geographies
·    Possible deterioration in remaining credit market exposures
  
·    Total assets by valuation basis and underlying asset class
·    Loans and advances to customers and banks
·    Impairment, potential credit risk loans and coverage ratios
·    Retail credit risk
·    Wholesale credit risk
·    Investment Bank credit market exposures
·    Group exposures to Eurozone countries
·    Credit derivatives referencing Eurozone sovereign debt
45
 46
48
51
  56 
69
58
60
Market Risk
      
·    Reduced client activity leading to lower returns
·    Decreases in market liquidity due to economic uncertainty
·    Impact on income from uncertain interest and exchange rate environment
·    Underperformance of pension asset returns
  
·    Analysis of market risk and, in particular, Investment Bank's DvaR
·    Analysis of interest margins
·    Retirement benefit liabilities
70
35
81
Operational Risk
      
·    Implementation of strategic change and integration programmes across the Group
·    Continued regulatory and change programmes, driven by the global economic climate
·    Impact of new, wide ranging, legislation in various countries coupled with a changing regulatory landscape
·    Increasingly litigious environment
·    The crisis management agenda and breadth of regulatory change required in global financial institutions
  
·    Significant litigation matters
·    Significant competition and regulatory matters which could lead to penalties and/or the need for redress
83
87
 
 
 
 
 
 
1        The associated uncertainties may affect more than one Principal Risk.
 
 

 
 

 
Funding Risk
 
Key Capital Ratios
As at
As at
As at
 
30.06.12
31.12.11
30.06.11
Core tier 1
10.9%
11.0%
11.0%
Tier 1
13.3%
12.9%
13.5%
Total capital
16.5%
16.4%
16.9%
       
Capital Resources
£m
£m
£m
Shareholders' equity (excluding non-controlling interests) per balance sheet
 54,205 
 55,589 
 51,572 
       
Non-controlling interests per balance sheet
9,485 
9,607 
10,417 
- Less: Other tier 1 capital - preference shares
(6,225)
(6,235)
(6,294)
- Less: Other tier 1 capital - Reserve Capital Instruments
- 
- 
(437)
- Less: Non-controlling tier 2 capital
(564)
(573)
(552)
Other regulatory adjustments
(171)
(138)
(259)
       
Regulatory adjustments and deductions:
      
Own credit cumulative gain (net of tax)
(492)
(2,680)
(690)
Defined benefit pension adjustment
(2,260)
(1,241)
139 
Unrealised losses on available for sale debt securities
83 
555 
171 
Unrealised gains on available for sale equity (recognised as tier 2 capital)
(95)
(828)
- 
Cash flow hedging reserve
(1,676)
(1,442)
(104)
Goodwill and intangible assets
(7,574)
(7,560)
(8,223)
50% excess of expected losses over impairment (net of tax)
(500)
(506)
(419)
50% of securitisation positions
(1,663)
(1,577)
(1,959)
Other regulatory adjustments
23 
95 
175 
Core tier 1 capital
 42,576 
 43,066 
 43,537 
       
Other tier 1 capital:
      
Preference shares
6,225 
6,235 
6,294 
Tier 1 notes1 
521 
530 
1,017 
Reserve Capital Instruments
2,874 
2,895 
5,206 
       
Regulatory adjustments and deductions:
      
50% of material holdings
(285)
(2,382)
(2,480)
50% tax on excess of expected losses over impairment
100 
129 
(41)
Total tier 1 capital
 52,011 
 50,473 
 53,533 
       
Tier 2 capital:
      
Undated subordinated liabilities
1,648 
1,657 
1,637 
Dated subordinated liabilities
12,488 
15,189 
15,646 
Non-controlling tier 2 capital
564 
573 
552 
Reserves arising on revaluation of property
21 
25 
29 
Unrealised gains on available for sale equity
95 
828 
- 
Collectively assessed impairment allowances
1,783 
2,385 
2,517 
       
Tier 2 deductions:
      
50% of material holdings
(285)
(2,382)
(2,480)
50% excess of expected losses over impairment (gross of tax)
(601)
(635)
(419)
50% of securitisation positions
(1,663)
(1,577)
(1,959)
       
Total capital regulatory adjustments and deductions:
      
Investments that are not material holdings or qualifying holdings
(1,209)
(1,991)
(1,761)
Other deductions from total capital
(565)
(597)
(559)
Total regulatory capital  
 64,287 
 63,948 
 66,736 
 
 
 
 
 
 
1      Tier 1 notes are included in subordinated liabilities in the consolidated balance sheet.
 

 

 
Funding Risk
 
- In the first half of 2012, Core Tier 1 capital decreased by £0.5bn to £42.6bn. Whilst the Group generated £2.3bn Core Tier 1 capital from retained profits (excluding own credit, which is added back for regulatory
       capital purposes), this was more than offset by other movements in Core Tier 1 capital, principally:
 
 
 
-    £1.0bn increase in the deduction for defined benefit pensions, driven by an additional contribution made to the UK Retirement Fund in April 2012 and deducting expected future deficit contributions over the next
      five years in addition to the pension asset recognised on the Group's balance sheet
 
 
 
-    £0.5bn cash dividends paid during 2012, relating to the 2011 final dividend and the first interim dividend for 2012
 
 
 
-    £0.5bn net reduction from the impact of share awards
 
 
 
-    £0.5bn reduction due to foreign currency movements, primarily due to depreciation of the US Dollar, South African Rand and Euro against Sterling
 
 
- Total Capital Resources increased by £0.3bn principally as a result of the sale of the stake in BlackRock, Inc. resulting in a £3.4bn increase in capital (reflecting lower deductions for material holdings offset by gains
       on the available for sale investment being recognised in retained profits), offset by the redemption of £2.2bn dated subordinated liabilities
 
 
 
 
Total Assets by Business
  
Risk Weighted Assets by Business
Assets and Risk Weighted Assets by Business
As at
30.06.12
As at
31.12.11
As at
30.06.11
  
As at
30.06.12
As at
31.12.11
As at
30.06.11
 
£m
£m
£m
  
£m
£m
£m
UK RBB
130,776 
127,845 
123,745 
  
36,038 
33,956 
34,216 
Europe RBB
48,109 
51,310 
56,699 
  
16,563 
17,436 
17,916 
Africa RBB 
47,398 
48,243 
55,064 
  
27,909 
30,289 
32,671 
Barclaycard
34,596 
33,838 
32,513 
  
33,149 
34,186 
33,983 
Investment Bank
1,225,409 
1,158,350 
1,076,018 
  
190,553 
186,700 
189,952 
Corporate Banking 
87,758 
91,190 
87,132 
  
69,328 
72,842 
72,044 
Wealth and Investment Management
22,205 
20,866 
19,814 
  
13,998 
13,076 
12,664 
Head Office and Other Functions 
35,014 
31,885 
41,937 
  
2,685 
2,514 
1,704 
Total
1,631,265 
1,563,527 
1,492,922 
  
390,223 
390,999 
395,150 
               
 
 
Risk Weighted Assets by Risk
As at
As at
As at
 
30.06.12
31.12.11
30.06.11
 
£m
£m
£m
Credit risk
239,543 
245,224 
247,101 
Counterparty risk
      
 - Internal model method
30,165 
33,131 
27,072 
 - Non-model method
4,496 
4,953 
14,009 
Market risk
      
 - Modelled - VaR
23,885 
26,568 
10,692 
 - Modelled - Charges add-on and Non-VaR  
21,343 
17,560 
7,784 
 - Standardised
28,320 
27,823 
52,561 
Operational risk
42,471 
35,740 
35,931 
Total risk weighted assets
390,223 
390,999 
395,150 
 
 
- Total assets increased to £1,631bn (2011: £1,564bn), reflecting increases across a number of asset categories, notably a £19bn increase in cash and balances at central banks, a £23bn increase in loans and advances to
       customers (primarily in relation to settlement balances) and a £21bn increase in reverse repurchase agreements.  These were partially offset by a £21bn reduction in derivative financial instrument assets
 
 
- Group risk weighted assets remained stable at £390bn, reflecting:
 
 
 
-    £5.7bn reduction in credit risk exposures, mainly from Corporate Banking and RBB, owing to changes in the risk weighting portfolio mix combined with methodology changes
 
 
 
-    £3.4bn decrease in counterparty risk primarily driven by market movements and business reduction in Investment Bank
 
 
 
-    £1.6bn increase in Investment Bank market risk exposures primarily due to methodology changes
 
 
 
-    £6.7bn increase in operational risk exposures following the annual review of key risk scenarios across all business areas
 

 

 
Funding Risk
 
Balance Sheet Leverage
As at
30.06.12
As at
31.12.11
As at
30.06.11
 
£m
£m
£m
Total assets1 
1,631,265 
1,563,527 
1,492,922 
Counterparty netting
(425,616)
(440,592)
(304,097)
Collateral on derivatives
(51,421)
(51,124)
(33,394)
Net settlement balances and cash collateral
(97,181)
(61,913)
(84,158)
Goodwill and intangible assets
(7,861)
(7,846)
(8,541)
Customer assets held under investment contracts2 
(1,661)
(1,681)
(1,524)
Adjusted total tangible assets
1,047,525 
1,000,371 
1,061,208 
Total qualifying Tier 1 capital
52,011 
50,473 
53,533 
Adjusted gross leverage
20 
20 
20 
Adjusted gross leverage (excluding liquidity pool)
17 
17 
17 
Ratio of total assets to shareholders' equity
26 
24 
24 
Ratio of total assets to shareholders' equity (excluding liquidity pool)
23 
22 
22 
 
 
- Barclays continues to manage its balance sheet within limits and targets for balance sheet usage
 
 
- Adjusted gross leverage was 20x (31 December 2011: 20x) as the 3% increase in qualifying Tier 1 capital to £52bn was offset by the 5% increase in adjusted total tangible assets to £1,048bn
 
 
- At month ends during 2012, the ratio moved in a range from 20x to 23x (Full Year 2011: 20x to 23x) primarily due to fluctuations in collateralised reverse repurchase lending and high quality trading portfolio assets
 
 
- Adjusted total tangible assets include cash and balances at central banks of £126.1bn (31 December 2011: £106.9bn). Excluding these balances, the balance sheet leverage would be 18x (31 December 2011: 18x).
       Excluding the whole liquidity pool, leverage would be 17x (31 December 2011: 17x)
 
 
- The ratio of total assets to total shareholders' equity was 26x (31 December 2011: 24x) and moved within a month end range of 25x to 28x (Full Year 2011: 24x to 28x), driven by fluctuations noted above and changes in gross
        interest rate derivatives and settlement balances
 
Implementation of Basel 3 - Impact on Regulatory Capital
 
 
- Member States, the European Commission and the European Parliament are in the process of finalising the new capital requirements regulation, capital requirements directive and associated binding technical
       standards (collectively known as CRDIV) that implement the Basel 3 proposals within the EU.  In summary Basel 3 and CRDIV aims to:
 
 
 
-    Increase the quantity and quality of capital, by implementing more stringent requirements for the eligibility of capital instruments, higher minimum capital ratios and changes to the regulatory deductions from
      shareholders' equity
 
 
 
-    Improve measures to address procyclicality and excessive credit growth as well as promote conservation of capital, by building up capital buffers that can be drawn down in periods of stress
 
 
 
-    Strengthen counterparty credit risk measures by introducing higher capital requirements for OTC derivative transactions and trades cleared via central counterparties
 
 
 
-    Constrain excess leverage, by introducing a non-risk based leverage ratio that acts as a supplementary measure to the risk based capital requirements
 
 
 
-    Introduce a new liquidity framework, which includes two minimum liquidity metrics: a 30-day liquidity coverage ratio which measures resilience to short-term liquidity stress, and a 1-year net stable funding ratio which
      measures the stability of long term structural funding
 
 
The European Commission and European Parliament were due to finalise CRDIV by the end of July, for implementation by 1 January 2013. However, there are a number of areas still under consideration and the EU requirements are not expected to be finalised until October 2012.
 
 
 
 
1        Includes Liquidity Pool £170bn (31 December 2011: £152bn).
 
 
2       Comprising financial assets designated at fair value and associated cash balances.
 
 
 
 

 
 

 
Funding Risk
 
Funding and Liquidity
 
Barclays has a comprehensive Liquidity Risk Management Framework (the Liquidity Framework) for managing the Group's liquidity risk. The Liquidity Framework meets the FSA's standards and is designed to ensure that the Group maintains sufficient financial resources of appropriate quality for the Group's funding profile. This is achieved via a combination of policy formation, review and governance, analysis, stress testing, limit setting and monitoring. Together, these meet internal and regulatory requirements. 
 
 
Regulatory requirements are complied with at the Group and entity level, with the Liquidity Risk Appetite (LRA) providing a consistent Group wide perspective that supplements these requirements.  Under the Liquidity Framework, the Group has established the LRA, which is the level of liquidity risk the Group chooses to take in pursuit of its business objectives and in meeting its regulatory obligations. The LRA is measured with reference to the liquidity pool as a percentage of anticipated stressed net contractual and contingent outflows for each of three stress scenarios.
 
 
The stress outflows are used to determine the size of the Group liquidity pool, which represents those resources immediately available to meet outflows in a stress.  In addition to the liquidity pool, the Liquidity Framework provides for other management actions, including generating liquidity from other liquid assets on the Group's balance sheet in order to meet additional stress outflows, or to preserve or restore the liquidity pool in the event of a liquidity stress.
 
 
Liquidity Pool
 
The Group liquidity pool as at 30 June 2012 was £170bn (31 December 31 2011: £152bn) which is towards the top of the month-end range for the period of £152bn to £173bn (Full Year 2011: £140bn to £167bn). The liquidity pool is held unencumbered and is not used to support payment or clearing requirements.  Such requirements are treated as part of our regular business funding. The liquidity pool is intended to offset stress outflows and comprises the following cash and unencumbered assets.
 
 
 
 
Cash and Deposits with Central Banks1 
Government Bonds2 
Other Available Liquidity
Total3 
 
£bn
£bn
£bn
£bn
As at 30.06.12
124 
32 
14 
170 
As at 31.12.11
105 
36 
11 
152 
 
 
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 as a percentage of anticipated stressed net contractual and contingent outflows for each of three stress scenarios. These scenarios are aligned to the FSA's prescribed stresses and cover a market-wide stress event, a Barclays-specific stress event and a combination of the two. Under normal market conditions, the liquidity pool must be in excess of 100% of three months' anticipated outflows for a market-wide stress and one month's anticipated outflows for each of the Barclays-specific and combined stresses. As at 30 June 2012, the liquidity pool as a percentage of the anticipated net outflows under each of the stress scenarios was:
 
 
 
 
Market wide
  
Barclays-specific
  
Combined
Liquidity pool as a percentage of anticipated net outflows
3 month
  
1 month
  
1 month
As at 30.06.12
141%
  
115%
  
124%
As at 31.12.11
127%
  
107%
  
118%
 
 
The Group also monitors compliance against anticipated Basel 3 metrics, including the Liquidity Coverage Ratio (LCR) and the Net Stable Funding Ratio (NSFR). As at 30 June 2012, the Group met 97% of the expected LCR requirement (31 December 2011: 82%) and was compliant with the expected NSFR requirement at 101% (31 December 2011: 97%).  The Group is on track to exceed 100% of the requirements under Basel 3 for both ratios required by 2015 and 2018 respectively.
 
 
 
 
 
 
 
1     Of which over 95% (31 December 2011: over 95%) is placed with the Bank of England, US Federal Reserve, European Central Bank, Bank of Japan and Swiss National Bank.             
 
2     Of which over 70% (31 December 2011: over 80%) are comprised of UK, US, Japanese, French, German, Danish and Dutch securities.
 
3     £149bn (31 December 2011: £140bn) of which is FSA eligible.
 

 

 
Funding Risk
 
Deposit Funding
          
     
As at
30.06.12
  
As at 31.12.11
Funding of Loans and Advances to Customers1 
  
Loans and Advances to Customers
Customer Deposits
Loan to Deposit Ratio
Loan to Deposit Ratio
   
£bn
£bn
%
%
RBB
  
229.3 
156.6 
 146 
 146 
Corporate Banking1 
  
64.0 
88.5 
 72 
 83 
Wealth and Investment Management
  
19.8 
50.0 
 40 
 40 
Total funding excluding secured
  
313.1 
295.1 
 106 
 111 
Secured funding
  
n/a 
37.2 
n/a 
n/a 
Sub-total including secured funding
  
313.1 
332.3 
 94 
 101 
           
RBB, Corporate Banking & Wealth and Investment Management
  
313.1 
295.1 
 106 
 111 
Investment Bank
  
58.7 
46.7 
 126 
 138 
Head Office and Other Operations
  
0.9 
- 
- 
- 
Trading settlement balances and cash collateral
  
82.0 
66.8 
 123 
 142 
Total
  
454.7 
408.6 
 111 
 118 
               
 
RBB, Corporate Banking and Wealth and Investment Management activities are largely funded by customer deposits with the remainder covered by funding secured against customer loans and advances.  As at 30 June 2012, the loan to deposit ratio for these businesses was 106% (31 December 2011: 111%) and the loan to deposit and secured funding ratio was 94% (31 December 2011: 101%).
 
 
The total loan to deposit ratio as at 30 June 2012 was 111% (31 December 2011: 118%) and the loan to deposit and long-term funding ratio was 73% (31 December 2011: 75%).
 
 
The excess of Investment Bank loans and advances over customer deposits of £12.0bn (31 December 2011: £17.4bn) is funded with long-term debt and equity.
 
 
Included within RBB, Corporate Banking and the Investment Bank are Absa Group related balances totalling £38.0bn of loans and advances to customers funded by £33.4bn of customer deposits and the balance of £4.6bn (31 December 2011: £5.0bn) is funded with wholesale borrowing. This is managed separately by the Absa Group due to local currency and funding requirements.  Absa manages its funding position conservatively, relative to local practices, which has a high structural dependence on wholesale funding sources.  This dependence is a function of customer behaviour in relation to savings in South Africa as a whole, where there is a higher concentration of cash in investment funds than in bank savings.
 
Wholesale Funding
 
 
Funding of Other Assets2 as at 30 June 2012
 
Assets
£bn
  
Liabilities
£bn
         
Trading Portfolio Assets
 126 
  
Repurchase agreements
 246 
Reverse repurchase agreements
 120 
      
         
Reverse repurchase agreements
 50 
  
Trading Portfolio Liabilities
50 
         
Derivative Financial Instruments
 515 
  
Derivative Financial Instruments
 505 
         
Liquidity pool
 170 
  
Less than 1 year wholesale debt
 118 
Other assets 3 
 152 
  
Greater than 1 year wholesale debt and equity
 204 
 
 
 
 
1        In addition Corporate Banking also holds £17.3bn (31 December 2011: £17.2bn) loans and advances as financial assets held at fair value.
 
2        Excludes balances relating to the Absa Group, which are managed separately due to local currency and funding requirements.
 
3        Predominantly available for sale investments, trading portfolio assets, financial assets designated at fair value and loans and advances to banks.
 

 

 
Funding Risk
 
- Trading portfolio assets are largely funded by repurchase agreements. The majority of reverse repurchase agreements (i.e. secured lending) are matched by repurchase agreements. 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 largely offset once netted against
       cash collateral received and paid
 
 
- The majority of the liquidity pool is funded by wholesale debt maturing in less than one year
 
 
- Other assets (mainly being available for sale investments, trading portfolio assets and loans and advances to banks) are largely matched by wholesale debt maturing over an average of 5 years and equity
 
 
- Repurchase agreements and other secured funding are largely collateralised by government issued bonds and other highly liquid securities. The percentage of secured funding using each asset class as collateral is set
      out below
 
 
 
Secured Funding by Asset Class
Govt
Agency
MBS
ABS
Corporate
Equity
 Other
 
%
%
%
%
%
%
%
As at 30.06.12
63 
7 
11 
2 
7 
7 
3 
As at 31.12.11
66 
6 
9 
3 
7 
7 
2 
 
 
Composition of Wholesale Funding1
 
As at 30 June 2012 total wholesale funding outstanding (excluding repurchase agreements) was £263bn (31 December 2011: £265bn). £118bn of wholesale funding matures in less than one year (31 December 2011: £130bn) of which £23bn relates to term funding2. £145bn of wholesale funding has a residual maturity of over one year. 
 
 
The Group has £75bn of privately placed senior unsecured notes in issue. The Group issues these notes through a variety of distribution channels including intermediaries and private banks and a large proportion of end users of these products are individual retail investors.
 
 
 
 
Not more than one months
Over one month but not more than three months
Over three months but not more than six months
Over six months but not more than one year
Sub-total less than one year
Over one year but not more than three years
Over three years
Total1 
 
£bn
£bn
£bn
£bn
£bn
£bn
£bn
£bn
Deposits from Banks
16.7 
7.2 
3.0 
0.5 
27.4 
6.7 
1.5 
35.6 
CDs and CP
12.2 
15.4 
13.5 
3.7 
44.8 
2.4 
0.8 
48.0 
Asset Backed Commercial Paper
4.7 
3.3 
0.1 
- 
8.1 
- 
- 
8.1 
Senior unsecured (Public benchmark)
- 
2.4 
- 
3.4 
5.8 
11.3 
13.9 
31.0 
Senior unsecured (Privately placed)
1.4 
2.7 
3.9 
9.5 
17.5 
20.3 
37.5 
75.3 
Covered bonds/ABS
- 
0.3 
0.7 
1.9 
2.9 
10.4 
14.4 
27.7 
Subordinated liabilities
- 
- 
- 
0.6 
0.6 
0.3 
20.1 
21.0 
Other3 
6.8 
1.7 
1.4 
0.9 
10.8 
1.4 
3.6 
15.8 
Total
41.8 
33.0 
22.6 
20.5 
117.9 
52.8 
91.8 
262.5 
                 
Of which secured
6.9 
5.2 
2.0 
2.6 
16.7 
11.5 
14.6 
42.8 
Of which unsecured
34.9 
27.8 
20.6 
17.9 
101.2 
41.3 
77.2 
219.7 
 
 
1     The composition of wholesale funds comprises the balance sheet reported Deposits from Banks, Financial liabilities at Fair Value and Debt Securities in Issue split by product and Subordinated Liabilities, excluding
       cash collateral and settlement balances, liabilities to customers under investment contracts and Absa Group balances of £74bn in total. Included within deposits from banks are £6.6bn of liabilities drawn down
       in the European Central Bank's 3 year long-term refinancing operation (LTRO).
 
 
2     Term funding maturities comprise public benchmark and privately placed senior unsecured notes, covered bonds/ABS and subordinated debt where the original maturity of the instrument was more than 1 year. In
       addition, at 30 June 2012, £4bn of these instruments were not counted towards term financing as they had an original maturity of less than 1 year.
 
 
3     Primarily comprised of fair value deposits and secured financing of physical gold.
 

 

 
Funding Risk
 
The liquidity risk is carefully managed primarily through the LRA stress tests, against which the liquidity pool is held. Although not a requirement, as at 30 June 2012, the liquidity pool was equivalent to more than one year of wholesale debt maturities.
 
 
Excluding wholesale funding of the liquidity pool, the average maturity of wholesale funding was in excess of 65 months.
 
 
Term Financing
 
Barclays continues to attract deposits in unsecured money markets and raise additional secured and unsecured term funding in a variety of markets.  During H1 12 the Group raised £19.9bn of term funding comprising:
 
 
- £3.5bn equivalent of public benchmark senior unsecured
 
 
- £6.7bn equivalent of privately placed senior unsecured
 
 
- £9.7bn equivalent of secured1
 
 
The Group has £11bn of term funding maturing in the remainder of 2012 (31 December 2011: £27bn) and a further £18bn maturing in 2013.
 
 
Currency Profile
 
As at 30 June 2012 the Group's wholesale funds and liquidity pool were well diversified by major currency as follows:
 
 
 
 
USD
EUR
GBP
Other
Currency Split by Product Type
%
%
%
%
Deposits from Banks
14 
58 
16 
12 
CDs and CP
51 
29 
20 
- 
Asset Backed Commercial Paper
82 
11 
7 
- 
Senior unsecured
31 
32 
15 
22 
Covered bonds/ABS
22 
57 
20 
1 
Subordinated Debt
30 
26 
43 
1 
Wholesale debt
33 
37 
19 
11 
         
Currency composition of liquidity pool
20 
48 
14 
18 
 
 
- To manage cross-currency refinancing risk Barclays manages to FX cash-flow limits, which limit the risk at specific maturities
 
 
- The Group's liquidity pool is also well diversified by major currency in order to meet potential stress outflows under the three LRA stress scenarios, which the Group monitors for major currencies
 
 
Credit Rating
 
 
In addition to monitoring and managing key metrics related to the financial strength of Barclays, the Group subscribes to independent credit rating agency reviews by Standard & Poor's, Moody's, Fitch and DBRS.
 
 
 
Credit Ratings as at 26 July 2012
Standard & Poor's
Moody's
Fitch
DBRS
Barclays Bank PLC
        
Long Term
A+(Negative)
A2(Negative)
A(Stable)
AA(Negative)
Short Term
A-1
P-1
F1
R-1(Negative)
 
 
On 21 June 2012 Moody's concluded its ratings review of banks and securities firms with global capital market operations by repositioning the ratings of 15 firms including Barclays, resulting in Barclays Bank PLC long-term issuer rating being downgraded from Aa3 to A2.  Barclays was fully reserving for maximum contractual outflows as a result of the ratings action in its liquidity pool and is now reserving for a further 2 notch downgrade in the liquidity pool as of 30 June 2012.  There has been no significant change in deposit funding or wholesale funding in relation to the ratings action.
 
 
1        Comprised of covered bonds and ABS and bilateral secured funding of greater than one year.
 

 

 
Funding Risk
 
Further credit rating downgrades could result in contractual outflows to meet collateral requirements on existing contracts.  The below table shows contractual collateral requirements following one and two notch long-term and associated short-term simultaneous downgrades across all credit rating agencies, which are fully reserved for in the liquidity pool.  These numbers do not assume any management or restructuring actions that could be taken to reduce posting requirements.
 
 
These outflows do not include the potential liquidity impact from loss of unsecured funding, such as from money market funds, or loss of secured funding capacity.  However, unsecured and secured funding stresses are included in the LRA stress scenarios and a portion of the liquidity pool is held against these risks. 
 
 
Credit ratings downgrades could also result in increased costs or reduced capacity to raise funding.
 
 
 
Contractual credit rating downgrade exposure
Cumulative cash outflow
1 notch long-term and associated short-term downgrade
£11bn
2 notch long-term and associated short-term downgrade
£20bn
 

 
 

 
Credit Risk
 
Analysis of Total Assets by Valuation Basis
    
     
 Accounting Basis
  
Sub Analysis
Assets as at 30.06.12
Total Assets
  
 
Cost Based
Measure
Fair Value
  
Credit Market Exposures1 
 
£m
  
£m
£m
  
£m
Cash and balances at central banks
126,062 
  
126,062 
- 
  
- 
             
Items in the course of collection from other banks
2,598 
  
2,598 
- 
  
- 
             
Debt securities
131,940 
  
- 
131,940 
  
1,172 
Equity securities
30,446 
  
- 
30,446 
  
- 
Traded loans
1,805 
  
- 
1,805 
  
- 
Commodities2 
2,109 
  
- 
2,109 
  
- 
Trading portfolio assets
166,300 
  
- 
166,300 
  
1,172 
             
Loans and advances
22,451 
  
- 
22,451 
  
2,124 
Debt securities
6,420 
  
- 
6,420 
  
- 
Equity securities
4,811 
  
- 
4,811 
  
- 
Other financial assets3 
10,924 
  
- 
10,924 
  
- 
Held in respect of linked liabilities to customers under investment contracts
1,322 
  
- 
1,322 
  
- 
Financial assets designated at fair value
45,928 
  
- 
45,928 
  
2,124 
             
Derivative financial instruments
517,685 
  
- 
517,685 
  
973 
             
Loans and advances to banks
48,777 
  
48,777 
- 
  
- 
             
Loans and advances to customers
454,728 
  
454,728 
- 
  
5,298 
             
Banks
70,267 
  
70,267 
- 
  
- 
Customers
104,125 
  
104,125 
- 
  
- 
Reverse repurchase agreements and other similar secured lending
174,392 
  
174,392 
- 
  
- 
             
Debt securities  
68,236 
  
- 
68,236 
  
250 
Equity securities
686 
  
- 
686 
  
- 
Available for sale financial investments
68,922 
  
- 
68,922 
  
250 
             
Other assets
25,873 
  
23,033 
2,840 
  
2,674 
             
Total assets as at 30.06.12
1,631,265 
  
829,590 
801,675 
  
12,491 
             
Total assets as at 31.12.11
1,563,527 
  
764,012 
799,515 
  
14,981 
 
 
 
1     Further analysis of Investment Bank credit market exposures is on pages 69 to 70. Undrawn commitments of £201m (31 December 2011: £180m) are off-balance sheet and therefore not included in the table above.
 
2     Commodities primarily consist of physical inventory positions.
 
3     These instruments consist primarily of reverse repurchase agreements designated at fair value.
 
 

 
 

 
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
             
As at 30.06.12
United Kingdom
Europe
Americas
Africa and Middle East
Asia
Total
 
£m
£m
£m
£m
£m
£m
Banks
9,888 
15,843 
12,958 
1,909 
3,610 
44,208 
Other financial institutions
23,923 
28,794 
59,261 
2,804 
4,548 
119,330 
Manufacturing
6,269 
2,862 
1,435 
1,573 
604 
12,743 
Construction
3,651 
658 
1 
1,270 
48 
5,628 
Property
14,924 
2,786 
670 
3,576 
287 
22,243 
Government
486 
3,653 
1,389 
3,090 
1,925 
10,543 
Energy and water
1,748 
2,400 
1,657 
917 
274 
6,996 
Wholesale and retail distribution and leisure
11,888 
2,541 
1,135 
1,738 
129 
17,431 
Business and other services
16,144 
4,635 
1,312 
3,407 
529 
26,027 
Home loans
114,756 
36,669 
552 
18,719 
578 
171,274 
Cards, unsecured loans and other personal lending
26,202 
5,518 
9,553 
5,335 
468 
47,076 
Other
8,171 
2,933 
1,378 
7,001 
523 
20,006 
Net loans and advances to customers and banks
238,050 
109,292 
91,301 
51,339 
13,523 
503,505 
Impairment allowance
(3,653)
(2,635)
(2,155)
(1,436)
(67)
(9,946)
             
As at 31.12.11
            
Banks
9,251 
13,503 
13,349 
2,956 
5,648 
44,707 
Other financial institutions
18,474 
20,059 
44,965 
2,264 
3,888 
89,650 
Manufacturing
6,185 
3,341 
1,396 
1,439 
543 
12,904 
Construction
3,391 
771 
32 
348 
65 
4,607 
Property
16,230 
3,193 
869 
3,600 
212 
24,104 
Government
493 
3,365 
907 
3,072 
1,031 
8,868 
Energy and water
1,599 
2,448 
2,165 
818 
384 
7,414 
Wholesale and retail distribution and leisure
10,308 
3,008 
656 
2,073 
161 
16,206 
Business and other services
16,473 
4,981 
1,584 
2,907 
355 
26,300 
Home loans
112,260 
38,508 
566 
19,437 
501 
171,272 
Cards, unsecured loans and other personal lending
27,409 
6,417 
9,293 
6,158 
785 
50,062 
Other
8,363 
5,554 
1,312 
7,471 
586 
23,286 
Net loans and advances to customers and banks
230,436 
105,148 
77,094 
52,543 
14,159 
479,380 
Impairment allowance
(4,005) 
(2,920) 
(2,128) 
(1,446) 
(98) 
(10,597) 

 

 
Credit Risk
 
Loans and Advances Held at Fair Value, by Industry Sector and Geography
    
             
As at 30.06.12
United Kingdom
Europe
Americas
Africa and Middle East
Asia
Total
 
£m
£m
£m
£m
£m
£m
Banks
- 
435 
159 
339 
- 
933 
Other financial institutions1 
38 
567 
1,034 
135 
30 
1,804 
Manufacturing
174 
72 
80 
5 
13 
344 
Construction
171 
- 
- 
19 
6 
196 
Property
8,442 
895 
835 
96 
2 
10,270 
Government
5,624 
1 
- 
30 
24 
5,679 
Energy and water
29 
179 
343 
61 
3 
615 
Wholesale and retail distribution and leisure
64 
12 
113 
79 
4 
272 
Business and other services
3,314 
35 
305 
40 
- 
3,694 
Other
92 
78 
38 
184 
57 
449
Total
 17,948 
 2,274 
 2,907 
 988 
 139 
24,256 
             
As at 31.12.11
            
Banks
 11 
 364 
 10 
 126 
 1 
512 
Other financial institutions1 
 142 
 76 
 892 
 134 
 21 
1,265 
Manufacturing
 16 
 211 
 154 
 7 
 18 
406 
Construction
 158 
 - 
 - 
 19 
 2 
179 
Property
 8,443 
 1,147 
 575 
 133 
 3 
10,301 
Government
 5,609 
 - 
 - 
 19 
 8 
5,636 
Energy and water
 32 
 203 
 46 
 104 
 - 
385 
Wholesale and retail distribution and leisure
 63 
 15 
 243 
 36 
 2 
359 
Business and other services
 3,381 
 76 
 201 
 34 
 - 
3,692 
Other
 90 
 66 
 55 
 317 
 71 
599 
Total
 17,945 
 2,158 
 2,176 
 929 
 126 
23,334 
             
Impairment Allowance
      
 
Half Year Ended
Half Year Ended
Half Year Ended
 
30.06.12
31.12.11
30.06.11
 
£m
£m
£m
At beginning of period
10,597 
11,621 
12,432 
Acquisitions and disposals
(73)
- 
(18)
Exchange and other adjustments
(168)
(361)
(79)
Unwind of discount
(109)
(118)
(125)
Amounts written off
(2,201)
(2,601)
(2,564)
Recoveries
95 
165 
100 
Amounts charged against profit
1,805 
1,891 
1,875 
At end of period
9,946 
10,597 
11,621 
       
 
 
1        Included within Other financial institutions (Americas) are £558m (31 December 2011: £693m) of loans backed by retail mortgage collateral.
 

 

 
Credit Risk
 
 
 
Credit Impairment Charges and Other Provisions by Business
         
 
Loans and advances1 
Available for Sale Financial Investments2 
Reverse Repurchase Agreements
Total
Half Year Ended 30.06.12
£m
£m
£m
£m
UK RBB
122 
- 
- 
122 
Europe RBB
157 
- 
- 
157 
Africa RBB
321 
- 
- 
321 
Barclaycard  
460 
- 
- 
460 
Investment Bank3 
324 
- 
(1)
323 
Corporate Banking
418 
7 
- 
425 
Wealth and Investment Management
19 
- 
- 
19 
Head Office and Other Operations
1 
4 
- 
5 
Total
1,822 
11 
(1)
1,832 
         
Half Year Ended 31.12.11
        
UK RBB
261 
- 
- 
261 
Europe RBB
125 
20 
- 
145 
Africa RBB
196 
- 
- 
196 
Barclaycard  
611 
- 
- 
611 
Investment Bank3 
180 
26 
(2)
204 
Corporate Banking
522 
13 
- 
535 
Wealth and Investment Management
22 
- 
- 
22 
Head Office and Other Operations
(1)
1 
- 
- 
Total
1,916 
60 
(2)
1,974 
         
Half Year Ended 30.06.11
        
UK RBB
275 
- 
- 
275 
Europe RBB
116 
- 
- 
116 
Africa RBB
270 
- 
- 
270 
Barclaycard  
648 
- 
- 
648 
Investment Bank3 
(51)
(14)
(46)
(111)
Corporate Banking
598 
14 
- 
612 
Wealth and Investment Management
19 
- 
- 
19 
Head Office and Other Operations
(1)
- 
- 
(1)
Total
1,874 
- 
(46)
1,828 
 
 
- Impairment charges on loans and advances improved 3% from the first half of 2011 to £1,822m reflecting:
 
 
 
-    Lower impairment in UK RBB, Barclaycard and Corporate Banking,
 
 
 
-    Partially offset by higher charges in some international businesses, notably in Europe and South Africa, and a higher charge in Investment Bank
 
 
- The impairment charge of £10m against available for sale assets and reverse repurchase agreements relates to charges in Corporate Banking and Head Office and Other Operations. This compared with a release of £46m in the
       prior year
 
 
- Further detail can be found in the Retail and Wholesale Credit Risk sections on pages 51 to 57
 
 
 
 
1     Includes charges of £17m (2011: £1m release) in respect of undrawn facilities and guarantees.
 
 
2     Excludes £nil (2011: £1,800m) impairment of BlackRock, Inc. recorded in Head Office and Other Operations.
 
 
3     Credit market related charges within Investment Bank comprised a net £135m charge (H2 11: £62m charge; H1 11: £76m write back) against loans and advances and £2m write back (H2 11: £2m charge;
        H1 11: £37m write back) against available for sale assets.
 

 

 
Credit Risk
 
Credit Risk Loans and Coverage Ratios
            
                 
 
CRLs
  
Impairment Allowance
  
CRL Coverage
 
As at
As at
  
As at
As at
  
As at
As at
 
30.06.12
31.12.11
  
30.06.12
31.12.11
  
30.06.12
31.12.11
 
£m
£m
  
£m
£m
  
%
%
Home loans
3,545 
3,790 
  
826 
834 
  
23.3 
22.0 
Cards, unsecured and other retail lending
6,000 
6,626 
  
4,195 
4,540 
  
69.9 
68.5 
Retail
9,545 
10,416 
  
5,021 
5,374 
  
52.6 
51.6 
                 
Wholesale
10,196 
10,926 
  
4,925 
5,223 
  
48.3 
47.8 
                 
Group
19,741 
21,342 
  
9,946 
10,597 
  
50.4 
49.7 
 
 
Credit Risk Loans
 
- Overall, Credit Risk Loan (CRL) balances decreased by 8% in the first half of 2012 reflecting improvements in both the wholesale and retail portfolios.
 
 
- CRL balances  in the wholesale portfolio decreased 7% primarily due to:
 
 
 
-    Investment Banking, where lower balances principally reflected asset sales and paydowns
 
 
 
-    Corporate Banking, where lower balances principally reflected a high level of write-offs in the UK and the disposal of the Iveco Finance business in Europe
 
 
- CRL balances in the retail portfolio decreased 8%, primarily due to:
 
 
 
-    Barclaycard, where reductions principally reflected lower recovery balances in UK Cards, due to asset sales; in US Cards due to lower charge-offs and higher write-offs; and in UK Secured Lending due to an
      update in the write-off policy
 
 
 
-    UK RBB, where reductions reflected falling recovery balances across the majority of portfolios
 
 
 
-    This was partially offset by higher balances in Europe RBB principally in the Spanish and Italian mortgage books
 
 
Coverage Ratios
 
- The CRL coverage ratio increased slightly to 50.4% (2011: 49.7%) reflecting increases in:
 
 
 
-    the wholesale portfolio ratio to 48.3% (2011: 47.8%)
 
 
 
-    the retail portfolio ratio to 52.6% (2011: 51.6%)
 
 
 
 
 
 
 

 
Credit Risk
 
Retail and Wholesale Loans and Advances to Customers and Banks
    
               
As at 30.06.12
Gross
L&A
Impairment Allowance
L&A Net of Impairment
Credit
Risk Loans
CRLs % of Gross L&A
Loan Impairment Charges1 
Loan Loss Rates2
 
£m
£m
£m
£m
%
£m
bps
Total retail
240,903 
5,021 
235,882 
9,545 
4.0 
978 
82 
               
Wholesale - customers
223,719 
4,873 
218,846 
10,161 
4.5 
842 
76 
Wholesale - banks
48,829 
52 
48,777 
35 
0.1 
2 
1 
Total wholesale
272,548 
4,925 
267,623 
10,196 
3.7 
844 
62 
               
Loans and advances at
513,451 
9,946 
503,505 
19,741 
3.8 
1,822 
71 
amortised cost
              
               
Loans and advances held
24,256 
na
24,256 
        
at fair value
              
Total loans and advances
537,707 
9,946 
527,761 
        
               
As at 31.12.11
              
Total retail
241,138 
5,374 
235,764 
10,416 
4.3 
2,422 
100 
               
Wholesale - customers
201,348 
5,178 
196,170 
10,892 
5.4 
1,362 
68 
Wholesale - banks
47,491 
45 
47,446 
34 
0.1 
6 
1 
Total wholesale
248,839 
5,223 
243,616 
10,926 
4.4 
1,368 
55 
               
Loans and advances at
489,977 
10,597 
479,380 
21,342 
4.4 
3,790 
77 
amortised cost
              
               
Loans and advances held
23,334 
na
23,334 
        
at fair value
              
Total loans and advances
513,311 
10,597 
502,714 
        
 
 
- Gross loans and advances to customers and banks at amortised cost increased 5% principally reflecting an increase in settlement balances
 
 
- This growth, combined with lower impairment charges on loans and advances resulted in a lower annualised loan loss rate of 71bps (2011 Full Year: 77bps)
 
 
- Further detail can be found in the Retail Credit Risk and Wholesale Credit Risk sections on pages 51 to 57
 
 
 
 
 
1     Total credit impairment, comprising impairment on loans and advances and charges in respect of undrawn facilities and guarantees, see page 48.
 
 
2     The loan loss rates for 30 June 2012 have been calculated on an annualised basis. The loan loss rates for 31 December 2011 have been calculated on the twelve months ended 31 December 2011.
 
 

 
 

 
Credit Risk
 
Retail Credit Risk
        
               
Retail Loans and Advances at Amortised Cost
    
As at 30.06.12
Gross L&A
Impairment Allowance
L&A Net of Impairment
Credit Risk Loans
CRLs % of Gross L&A
Loan Impairment Charges3
Loan Loss  Rates
 
£m
£m
£m
£m
%
£m
bps
UK RBB
 122,284 
 1,403 
 120,881 
 2,713 
 2.2 
 100 
 16 
Europe RBB1 
 42,198 
 721 
 41,477 
 1,833 
 4.3 
 157 
 75 
Africa RBB
 25,591 
 770 
 24,821 
 2,087 
 8.2 
 257 
 202 
Barclaycard
 31,908 
 1,890 
 30,018 
 2,321 
 7.3 
 446 
 281 
Corporate Banking2 
 1,207 
 145 
 1,062 
 145 
 12.0 
 1 
 17 
Wealth and Investment Management
 17,715 
 92 
 17,623 
 446 
 2.5 
 17 
 19 
Total
 240,903 
 5,021 
 235,882 
 9,545 
 4.0 
 978 
 82 
               
As at 31.12.11
              
UK RBB
 120,312 
 1,623 
 118,689 
 3,014 
2.5 
 491 
 41 
Europe RBB1 
 44,488 
 684 
 43,804 
 1,708 
3.8 
 241 
 54 
Africa RBB
 26,363 
 731 
 25,632 
 2,362 
9.0 
 386 
 146 
Barclaycard
 31,738 
 2,069 
 29,669 
 2,821 
8.9 
 1,232 
 388 
Corporate Banking2 
 1,453 
 188 
 1,265 
 182 
12.5 
 49 
 337 
Wealth and Investment Management
 16,784 
 79 
 16,705 
 329 
2.0 
 23 
 14 
Total 
 241,138 
 5,374 
 235,764 
 10,416 
4.3 
 2,422 
 100 
 
 
- Overall, gross loans and advances to customers in the retail portfolios remained broadly stable during the first half of 2012 reflecting movements in:
 
 
 
-    UK RBB, where a 2% increase primarily reflected growth in home loan balances
 
 
 
-    Europe RBB, where a 5% decrease was mainly due to the depreciation in the value of the Euro against Sterling and a strategy to reduce the net funding mismatches to the higher risk Eurozone countries
 
 
 
-    Wealth and Investment Management, where a 6% increase mainly reflected growth in collateralised lending to High Net Worth individuals
 
 
 
-    Balances in Barclaycard and Africa RBB remained broadly flat
 
 
- The loan impairment charge improved 22% to £978m compared with H1 11, mainly as a result of lower charges across UK RBB and Barclaycard businesses with the principal drivers being:
 
 
 
-    UK RBB, primarily due to an improvement in recoveries in Consumer Lending, a one time benefit from refunds of payment protection insurance that increased recoveries in Consumer Lending, and a release 
      of a provision booked in a prior period in home loans for backlogs in litigation, which have now been resolved
 
 
 
-    Barclaycard, principally reflecting improved delinquency rates in consumer cards
 
 
This was partially offset by higher charges in:
 
 
 
-    Europe RBB where credit impairment charges increased 35% to £157m reflecting deterioration in credit performance in Spain and Portugal as economic conditions continued to worsen
 
 
 
-    Africa RBB, where a 17% increase principally resulted from higher impairment charges in the South African home loan recoveries book. Increased focus on reducing the recoveries portfolio during H1 12 resulted in
      higher write-offs. Coverage was also increased to account for the lower recoverability of insolvencies, which take longer to foreclose and have a higher cost of foreclosure
 
 
- Lower overall impairment charges coupled with stable loan balances led to a fall in the annualised loan loss rate to 82bps (FY 11: 100bps)
 
 
1        Europe RBB includes loans and advances to business customers at amortised cost.
 
 
2       Corporate Banking primarily includes retail portfolios in India and UAE.
 
 
3      Loan impairment charge as at December 2011 is the charge incurred over the period of 12 months.
 

 

 
Credit Risk
 
Analysis of Retail Gross Loans & Advances to Customers
  
           
As at 30.06.12
Secured Home Loans
Credit Cards,
Overdrafts and
Unsecured Loans
Other Secured Retail
Lending1 
Business Lending
Total Retail
 
£m
£m
£m
£m
£m
UK RBB
 110,004 
 7,054 
 - 
 5,226 
122,284 
Europe RBB
 35,227 
 4,663 
 - 
 2,308 
42,198 
Africa RBB
 18,938 
 2,671 
 3,244 
 738 
25,591 
Barclaycard
 - 
 28,956 
 2,952 
 - 
31,908 
Corporate Banking
 377 
 555 
 259 
 16 
1,207 
Wealth and Investment Management
 7,554 
 1,794 
 8,367 
 - 
17,715 
Total
 172,100 
 45,693 
 14,822 
 8,288 
240,903 
           
As at 31.12.11
          
UK RBB
 107,775 
 7,351 
 - 
 5,186 
120,312 
Europe RBB
 37,099 
 4,994 
 - 
 2,395 
44,488 
Africa RBB
 19,691 
 2,715 
 3,405 
 552 
26,363 
Barclaycard
 - 
 28,557 
 3,181 
 - 
31,738 
Corporate Banking
 421 
 728 
 284 
 20 
1,453 
Wealth and Investment Management
 7,120 
 1,860 
 7,804 
 - 
16,784 
Total
 172,106 
 46,205 
 14,674 
 8,153 
241,138 
 
 
- Secured home loans and credit cards, overdrafts and unsecured loans are analysed on pages 52 and 54, respectively
 
 
Secured Home Loans
 
- The principal home loan portfolios listed below account for 93% (December 2011: 93%) of total home loans in the Group's retail portfolios
 
 
- Total home loans to retail customers remained stable. New lending was also stable to meet customer demand whilst maintaining a broadly stable risk appetite
 
 
- Home loans as a proportion of retail gross loans and advances remained broadly unchanged at 71%
 
 
 
Home Loans Principal Portfolios2 
      
As at 30.06.12
Gross Loans and Advances
> 90 Day
Arrears
Gross
Charge-off
Rates
Recoveries
Proportion of
Outstanding Balances
Recoveries
Impairment
Coverage Ratio
 
£m
%
%
%
%
UK
110,004 
0.3 
0.5 
0.5 
14.2 
South Africa
16,752 
2.8 
3.2 
6.7 
28.9 
Spain
13,886 
0.7 
1.0 
1.7 
28.7 
Italy
15,450 
1.0 
0.7 
1.6 
27.5 
Portugal
3,747 
0.6 
1.4 
2.4 
23.0 
           
As at 31.12.11
          
UK
107,775 
0.3 
0.6 
0.6 
15.3 
South Africa
17,585 
3.2 
3.7 
6.9 
19.4 
Spain
14,918 
0.5 
0.6 
1.6 
32.5 
Italy
15,935 
1.0 
0.5 
1.3 
29.3 
Portugal
3,891 
0.6 
1.1 
2.0 
15.0 
 
 
1     Other Secured Retail Lending includes Absa Vehicle and Auto Finance in Africa RBB, FirstPlus in Barclaycard and Investment Leverage portfolio in Wealth and Investment Management.
 
 
2     Excluded from the above analysis are: Wealth home loans, which are managed on an individual customer exposure basis, France home loans and other small home loans portfolios.
 

 

 
Credit Risk
 
- Arrears rates remained steady in the UK as targeted balance growth and better customer affordability continued to be supported by the low base rate environment
 
 
- Arrears rates and gross charge-off rates for South Africa home loans decreased reflecting improvements in portfolio performance. However, increased focus on reducing the recoveries portfolio during H1 12 resulted in
       higher write-offs. Coverage was also increased to account for the lower recoverability of insolvencies, which take longer to foreclose and have a higher cost of foreclosure
 
 
- Credit performance of home loans in Europe continued to worsen as economic conditions deteriorated further. In Spain Home Loans, the recoveries impairment coverage ratio decreased partly due to completion of a
       higher number of foreclosures in process. The overall impairment allowance for the whole book increased by 8% with overall coverage increasing from 63bps to 73bps since December 2011
 
 
 
Home Loans - Distribution of Balances by LTV (Updated Valuations)1 
                       
 
UK
South Africa
  
Spain2
Italy
Portugal2
 
30.06.12
31.12.11
30.06.12
31.12.11
  
30.06.12
31.12.11
30.06.12
31.12.11
30.06.12
31.12.11
 
%
%
%
%
  
%
%
%
%
%
%
<=75%
78.3 
77.6 
60.3 
58.8 
  
67.7 
72.1 
73.1 
70.7 
44.1 
49.0 
>75% and <=80%
7.8 
7.5 
8.8 
8.7 
  
6.4 
6.6 
17.3 
16.8 
8.8 
11.4 
>80% and <=85%
5.2 
5.3 
8.3 
8.3 
  
6.1 
5.7 
7.7 
10.2 
12.4 
13.7 
>85% and <=90%
3.2 
3.6 
6.9 
7.2 
  
5.0 
4.0 
1.1 
1.3 
11.6 
9.4 
>90% and <=95%
2.2 
2.4 
4.7 
5.3 
  
3.6 
2.6 
0.4 
0.5 
8.7 
8.8 
>95%
3.4 
3.6 
10.9 
11.7 
  
11.1 
9.0 
0.5 
0.5 
14.4 
7.7 
                       
Marked to market LTV %3
44.3 
44.3 
45.0 
45.2 
  
62.7 
60.1 
46.5 
46.9 
73.1 
69.6 
Average LTV on new mortgages 
55.3 
54.0 
62.9 
61.2 
  
62.5 
61.3 
56.2 
59.6 
60.6 
67.7 
New mortgages proportion above 85% LTV 
4.8 
0.8 
33.3 
29.9 
  
5.2 
1.3 
-
- 
4.6 
5.5 
                       
 
30.06.12
30.06.11
30.06.12
30.06.11
  
30.06.12
30.06.11
30.06.12
30.06.11
30.06.12
30.06.11
New mortgages (£m)
7,800 
7,600 
504 
725 
  
115 
343 
516 
1,750 
68 
275 
 
 
- Credit quality of the principal home loan portfolios reflected relatively conservative levels of high LTV lending and moderate LTV on existing portfolios
 
 
- During the first half of 2012, using current valuations, the average LTV of principal home loans portfolios remained broadly stable in UK, South Africa and Italy. However, they increased in Spain and Portugal as a
       result of continued decline in the current value of residential property
 
 
- The increase in average LTV for new mortgage business in the UK was driven by the launch of a 90% LTV product, reflecting an increase in risk appetite on higher LTV lending. The volume in this sector is constrained
        by risk limits
 
 
- In line with expectations, new lending significantly reduced in the first half of 2012 across Europe home loan portfolios due to lending policy tightening. The average LTV on new mortgages for Spain increased moderately
       and was within Group approved risk profile. While new mortgages proportion above 85% LTV increased in the first half of 2012, they remain broadly flat on an absolute basis
 
 
- In the UK, buy to let mortgages comprised 6% of the total stock (2011: 6%)
 
 
 
 
1     Excluded from the above analysis are: Wealth home loans, which are managed on an individual customer exposure basis, France home loans and other small home loans portfolios.
 
2     Spain and Portugal marked to market methodology based on balance weighted approach.
 
3     Portfolio marked to market based on the most updated valuation and includes recoveries balances. Updated valuations reflect the application of the latest house price index available in the country as at
       30 June 2012 to calculate the Average MTM Portfolio LTV as at 30 June 2012.
 

 

 
Credit Risk
 
Credit Cards, Overdrafts and Unsecured Loans
 
- The principal portfolios listed below account for 83% (December 2011: 82%) of total Credit Cards, Overdrafts and Unsecured Loans in the Group's retail portfolios
 
 
 
Principal Portfolios
As at 30.06.12
Gross Loans and Advances
30 Day
Arrears
90 Day
Arrears
Gross
Charge-off
Rates
Recoveries
Proportion of
Outstanding Balances
Recoveries Impairment Coverage Ratio
 
£m
%
%
%
%
%
UK cards1,2
14,686 
2.7 
1.2 
5.1 
6.3 
80.7 
US cards3 
8,510 
2.5 
1.2 
5.7 
3.1 
89.3 
UK personal loans
5,030 
3.0 
1.4 
5.3 
17.7 
79.9 
Barclays Partner Finance
2,224 
2.0 
1.0 
4.1 
6.1 
77.5 
South Africa cards  
1,874 
5.1 
2.5 
4.1 
6.0 
77.0 
Europe RBB cards4 
1,616 
6.2 
2.8 
9.2 
15.4 
91.4 
Italy salary advance loans5 
1,518 
2.0 
1.0 
8.8 
8.0 
11.5 
South Africa personal loans
1,115 
6.7 
4.1 
8.7 
7.3 
75.0 
UK overdrafts
1,225 
5.8 
3.8 
8.4 
16.1 
91.8 
             
As at 31.12.11
            
UK cards1,2
14,692 
2.7 
1.2 
6.2 
6.8 
85.2 
US cards3 
8,303 
3.1 
1.5 
7.6 
3.5 
92.1 
UK personal loans
5,166 
3.4 
1.7 
6.5 
19.0 
82.8 
Barclays Partner Finance
2,122 
2.4 
1.3 
4.6 
6.3 
84.8 
South Africa cards  
1,816 
4.9 
2.7 
5.5 
6.7 
72.9 
Europe RBB cards4 
1,684 
5.9 
2.6 
10.1 
13.8 
89.5 
Italy salary advance loans5 
1,629 
2.6 
1.3 
6.3 
6.6 
11.7 
South Africa personal loans
1,164 
6.4 
3.9 
8.3 
6.9 
72.4 
UK overdrafts
1,322 
6.0 
3.9 
9.7 
17.5 
90.6 
 
 
- Total Credit Cards, Overdrafts and Unsecured Loans remained broadly stable with the increase in card portfolios due to acquisitions being offset by decreases in unsecured loans and overdraft portfolios
 
 
- In the first half of 2012, arrears rates improved in the main UK and US portfolios and also in the smaller Italian salary advance loans portfolio. Arrears rates in the European Cards portfolios deteriorated marginally
       in the same period, reflecting the difficult economic environment. The South African card portfolio deteriorated marginally due to slightly increased risk appetite but performance remains within expectations
 
 
- 90 day arrears remained stable at 1.2% (2011: 1.2%) in UK Cards. Arrears improved to 1.2% (2011: 1.5%) in US Cards, reflecting a continued move towards better asset quality and a continued shift in mix to
       Partner originations, which has historically produced lower delinquencies and losses
 
 
 
 
 
 
1     UK cards includes balances related to the acquired Egg credit card assets, which totalled £1.7bn at acquisition. The outstanding acquired balances have been excluded from the recoveries impairment coverage ratio
       on the basis that the portfolio has been recognised on acquisition at fair value during 2011 (with no related impairment allowance). Impairment allowances have been recognised as appropriate where these relate
       to the period post acquisition.
 
2     UK cards includes Barclays Branded Card and Partnership Card assets.
 
3     Risk metrics exclude the impact of the $1.4bn Upromise portfolio acquired in December 2011.
 
4     Europe RBB cards includes Spain, Portugal and Italy card assets.
 
 
5     The recoveries impairment coverage ratio for Italy salary advance loans is lower than other unsecured portfolios as these loans are extended to customers where the repayment is made via a salary deduction at
       source by qualifying employers and Barclays is insured in the event of termination of employment or death. Recoveries represent balances where insurance claims are pending that we believe are largely
      recoverable, hence the lower coverage.
 

 

 
Credit Risk
 
Retail Forbearance Programmes
 
Forbearance Programmes on Principal Credit Cards, Overdrafts, Unsecured Loan and Home Loans Portfolios
 
 
- Forbearance on the Group's principal portfolios in the US, UK and Europe are presented below
 
 
- The level of forbearance extended to customers in other retail portfolios is not material and, typically, is not a significant factor in the management of customer relationships. However, should forbearance in any of these
       portfolios become material, they will be added to this disclosure
 
 
Principal Portfolios
Gross L&A Subject to Forbearance Programmes
Forbearance Programmes Proportion of Outstanding Balances
Impairment Coverage on Gross L&A Subject to Forbearance Programmes
Marked to Market LTV of Home Loan Forbearance Balances
As at 30.06.12
£m
%
%
%
Home Loans
        
UK
1,631 
1.5 
0.8 
31.7 
Spain
177 
1.3 
5.4 
66.0 
Italy
185 
1.2 
2.3 
47.6 
         
Credit Cards, Overdrafts and Unsecured Loans
        
UK cards1,2
995 
6.6 
38.0 
n/a
UK personal loans
186 
3.7 
28.5 
n/a
US cards
111 
1.6 
18.5 
n/a
         
As at 31.12.11
        
Home Loans
        
UK
1,613 
 1.5 
 0.8 
 31.6 
Spain
145 
 1.0 
 3.7 
 67.4 
Italy
171 
 1.1 
 2.6 
 46.5 
         
Credit Cards, Overdrafts and Unsecured Loans
        
UK cards1,2
989 
 6.5 
 38.2 
n/a
UK personal loans
201 
 3.8 
 29.5 
n/a
US cards
125 
 1.7 
 19.7 
n/a
 
 
- Retail forbearance is available to customers experiencing financial difficulties. Forbearance solutions take a number of forms depending on the extent of the financial dislocation. Short term solutions focus on
       temporary reductions to contractual payments and switches from capital and interest payments to interest only. For customers with longer term financial difficulties, term extensions are offered, which may also
      include interest rate concessions
 
 
- Loans in forbearance in the principal home loans portfolios increased 3% to £1,993m, mainly due to an increase in Spain home loans
 
 
- Within UK home loans, term extensions account for over 80% of forbearance balances, the majority of the remainder being switches from repayment to interest only. An additional £1.6bn of interest only mortgages
       have received a term extension since January 2008 but in these cases the contractual monthly payments did not alter. These have not been classified as forbearance in the above analysis
 
 
- In Spain, all forbearance accounts are full account restructures. In Italy, the majority of balances relate to specific schemes required by the Government (e.g. debt relief scheme following the earthquake of 2009) and
       amendments are weighted towards payment holidays and interest suspensions
 
 
- Loans in forbearance in the principal Credit Cards, Overdrafts and Unsecured Loans portfolios decreased 2% to £1,292m
 
 
- Impairment allowances against UK cards forbearance decreased, reflecting improved expectations on debt repayment. As a result, the impairment coverage ratio decreased during the first half of 2012
 
 
 
1     UK cards includes Barclays Branded Card and Partnership Card assets.
 
 
2     UK cards includes balances related to the acquired Egg credit card assets, which totalled £1.7bn at acquisition. The outstanding acquired balances have been excluded from the recoveries impairment coverage
       ratio on the basis that the portfolio has been recognised on acquisition at fair value during 2011 (with no related impairment allowance). Impairment allowances have been recognised as appropriate where
       these relate to the period post acquisition.
 

 

 
Credit Risk
 
Wholesale Credit Risk
        
               
Wholesale Loans and Advances at Amortised Cost1 
        
               
 
 
As at 30.06.12
Gross
L&A
Impairment Allowance
L&A Net of Impairment
Credit
Risk Loans
CRLs % of Gross L&A
Loan Impairment Charges
Loan Loss Rates
 
£m
£m
£m
£m
%
£m
bps
UK RBB
 2,844 
 66 
 2,778 
241 
8.5 
 22 
 156 
Africa RBB
 9,952 
 278 
 9,674 
839 
8.4 
 64 
 129 
Barclaycard2 
 589 
 7 
 582 
5 
0.8 
 14 
 478 
Investment Bank3 
 188,414 
 2,494 
 185,920 
4,631 
2.5 
 324 
 35 
Corporate Banking
 67,034 
 2,010 
 65,024 
4,117 
6.1 
 417 
 125 
- UK
 53,765 
 433 
 53,332 
 1,243 
2.3 
 143 
 53 
- Europe
 8,716 
 1,474 
 7,242 
 2,714 
31.1 
 273 
 630 
- Rest of World
 4,553 
 103 
 4,450 
 160 
3.5 
 1 
 4 
Wealth and Investment Management
 2,441 
 52 
 2,389 
329 
13.5 
 2 
 16 
Head Office and Other Functions
 1,274 
 18 
 1,256 
34 
2.7 
1 
 16 
Total
 272,548 
 4,925 
 267,623 
10,196 
3.7 
 844 
 62 
               
As at 31.12.11
              
UK RBB
 2,743 
 63 
 2,680 
285 
10.4 
 45 
 164 
Africa RBB
 9,729 
 294 
 9,435 
720 
7.4 
 80 
 82 
Barclaycard2 
 476 
 8 
 468 
3 
0.6 
 27 
 567 
Investment Bank3 
 161,194 
 2,555 
 158,639 
5,253 
3.3 
 129 
 8 
Corporate Banking
 70,268 
 2,235 
 68,033 
4,312 
6.1 
 1,071 
 152 
- UK
 53,668 
 545 
 53,123 
 1,267 
2.4 
 345 
 64 
- Europe
 12,576 
 1,574 
 11,002 
 2,876 
22.9 
 699 
 556 
- Rest of World
 4,024 
 116 
 3,908 
 169 
4.1 
 27 
 67 
Wealth and Investment Management
 2,471 
 51 
 2,420 
317 
12.8 
 18 
 73 
Head Office and Other Functions
 1,958 
 17 
 1,941 
36 
1.8 
 (2)
nm
Total
 248,839 
 5,223 
 243,616 
10,926 
4.4 
 1,368 
 55 
 
- Gross loans and advances to customers and banks increased 10% to £273bn principally as a result of a rise of 17% in the Investment Bank to £188bn. For more detail, see analysis of Investment Bank wholesale loans
       and advances on page 57
 
 
- This was partially offset by a 5% decrease in balances in Corporate Banking  primarily in Europe due to the disposal of the Iveco Finance business and a reduction in Spanish exposures
 
 
- The loan impairment charge increased 37% to £844m compared to 30 June 2011 (£617m), reflecting a charge of £324m (2011: £51m release) in Investment Bank, which primarily related to ABS CDO Super Senior positions
       and higher losses on single name exposures. The increase from the prior year was mostly due to a non-recurring release of £223m in the Investment Bank during 2011
 
 
- Loan impairment charges reduced by 28% in Corporate Banking, principally due to lower impairment charges in Spain reflecting ongoing initiatives to reduce exposure within the property and construction sector
 
 
- The higher impairment  charge coupled with the higher loan balances resulted in an annualised loan loss rate of 62bps (Full Year 2011: 55bps)
 
 
 
 
1     Loans and advances to business customers in Europe RBB are included in the Retail Loans and Advances to Customers at Amortised Cost table on page 51.
 
2     Barclaycard wholesale loans and advances represent corporate credit and charge cards.
 
3     Investment Bank gross loans and advances include cash collateral and settlement balances of £111bn as at 30 June 2012 and £97.7bn as at 30 June 2011. Excluding these balances CRLs as a proportion of gross
       loans and advances were 5.98 % and 6.1% respectively.
 

 

 
Credit Risk
 
Wholesale Forbearance
 
- Wholesale client relationships are individually managed and lending decisions are made with reference to specific circumstances and on bespoke terms
 
 
- Forbearance occurs when Barclays, for reasons relating to the actual or perceived financial difficulty of an obligor, grants a concession below current Barclays standard terms (e.g. lending criteria that differ from
       current lending terms), that would not otherwise be considered. This includes all troubled debt restructures granted below our standard rates
 
 
- Where a concession is granted that is not a result of financial difficulty and/or is within our current standard terms, the concession would not be considered as forbearance
 
 
- The Group Watchlist (WL)/Early Warning List (EWL) and Forbearance Policy requires that a permanent record is retained of all individual cases of forbearance, and upon granting forbearance the obligor is placed on
       WL/EWL. The obligor then remains on WL/EWL and is flagged as being in forbearance for a minimum of 12 months from the date forbearance is applied
 
 
- Impairment is assessed on an individual basis and recognised where relevant impairment triggers have been reached including where customers are in arrears and require renegotiation of terms
 
 
- The control framework includes regular sampling to ensure watch list and impairment policies are enforced as defined and to ensure that all assets have suitable levels of impairment applied. Portfolios are subject to
        independent assessment
 
 
 
Analysis of Investment Banking Wholesale Loans and Advances at Amortised Cost
    
As at 30.06.12
Gross
L&A
Impairment Allowance
L&A Net of Impairment
Credit Risk Loans
CRLs % of Gross L&A
Loan Impairment Charges
Loan Loss Rates
 
£m
£m
£m
£m
%
£m
bps
Loans and advances to banks
              
Interbank lending
15,990 
52 
15,938 
51 
0.3 
5 
6 
Cash collateral and settlement balances
29,287 
- 
29,287 
- 
- 
- 
- 
Loans and advances to customers
              
Corporate lending
37,253 
515 
36,738 
1,166 
3.1 
149 
80 
Government lending
2,757 
- 
2,757 
- 
- 
- 
- 
ABS CDO Super Senior
3,269 
1,654 
1,615 
3,269 
100.0 
131 
806 
Other wholesale lending
17,886 
273 
17,613 
145 
0.8 
39 
44 
Cash collateral and settlement balances
81,972 
- 
81,972 
- 
- 
- 
- 
Total
188,414 
2,494 
185,920 
4,631 
2.5 
324 
35 
               
As at 31.12.11
              
Loans and advances to banks
              
Interbank lending
19,655 
45 
19,610 
34 
0.2 
(5)
(3)
Cash collateral and settlement balances
23,066 
- 
23,066 
- 
- 
- 
- 
Loans and advances to customers
              
Corporate lending
38,326 
730 
37,596 
1,515 
4.0 
194 
51 
Government lending
3,276 
- 
3,276 
- 
- 
- 
- 
ABS CDO Super Senior
3,390 
1,548 
1,842 
3,390 
100.0 
6 
18 
Other wholesale lending
20,840 
232 
20,608 
314 
1.5 
(66)
(32)
Cash collateral and settlement balances
52,641 
- 
52,641 
- 
- 
- 
- 
Total
161,194 
2,555 
158,639 
5,253 
3.3 
129 
8 
 
 
- Investment Bank wholesale loans and advances increased 17% to £188,414m driven by higher settlement balances offset by a reduction in interbank and other wholesale lending
 
- Included within corporate lending and other wholesale lending portfolios are £3,270m (2011: £3,204m) of loans backed by retail mortgage collateral classified within financial institutions
 
 
 
 
 
 
 
 
 

 
 

 
Credit Risk
 
Group Exposures to Eurozone Countries
 
 
- The Group recognises the 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
 
 
- Risks associated with a potential partial break-up of the Euro area include:
 
 
 
-    Direct credit and market risk exposures arising from potential sovereign default and/or arising from exposures to retail and corporate customers and counterparties within the countries (see below)
 
 
 
-    Credit and market risk exposures relating to wholesale and retail customers and counterparties in other Eurozone countries arising as a result of economic slowdown or default (see page 59)
 
 
 
-    Indirect exposures relating to credit derivative exposures that reference Eurozone sovereign debt (see page 60) 
 
 
 
-    Redenomination risk arising on the mismatch in currency funding of local Eurozone balance sheets in the event that one or more countries exit the Euro (see page 60)
 
 
- The Group has performed and continues to perform stress tests to model the event of a break-up of the Eurozone area.  Contingency planning has also been undertaken based on a series of potential scenarios that
       might arise from an escalation in the crisis. Multiple tests have been run to establish the impact on customers, systems, processes and staff in the event of the most plausible scenario(s). Further tests are planned
       in H2 2012. Where issues have been identified, appropriate remedial actions have either been completed or are underway
 
 
Direct credit and market risk exposures
 
 
- The following table shows Barclays total exposure to Eurozone countries monitored internally as being higher risk and thus being the subject of particular management focus. Detailed analysis on these countries is on
        pages 62 to 68, and the basis of preparation is on page 61
 
 
 
           
Total net on-balance sheet exposure
Off-balance sheet contingent liabilities and commitments
  
           
Total exposure
As at 30.06.12
Sovereign
Financial institutions
Corporate
Residential mortgages
Other retail lending
 
£m
£m
£m
£m
£m
£m
£m
£m
Spain
 2,207 
 1,082 
 5,117 
 13,645 
 2,988 
 25,039 
 3,244 
 28,283 
Italy
 2,551 
 270 
 2,500 
 15,447 
 2,134 
 22,902 
 2,616 
 25,518 
Portugal
588 
 45 
 2,415 
 3,510 
 1,879 
 8,437 
 2,740 
 11,177 
Ireland
 211 
4,222 
 1,109 
 91 
 105 
 5,738 
 1,570 
 7,308 
Cyprus
 8 
 6 
 130 
 51 
 6 
 201 
 122 
 323 
Greece
 1 
 1 
 59 
 8 
 19 
 88 
 20 
 108 
                 
As at 31.12.11
                
Spain
 2,530 
 987 
 5,345 
 14,654 
 3,031 
 26,547 
 3,842 
 30,389 
Italy
 3,493 
 669 
 2,918 
 15,934 
 2,335 
 25,349 
 3,140 
 28,489 
Portugal
 810 
 51 
 3,295 
 3,651 
 2,053 
 9,860 
 2,536 
 12,396 
Ireland
 244 
 4,311 
 977 
 94 
 86 
 5,712 
 1,582 
 7,294 
Cyprus
 15 
 - 
 128 
 51 
 2 
 196 
 127 
 323 
Greece
 14 
 2 
 67 
 5 
 18 
 106 
 26 
 132 
 
 
- During the first half of 2012 the Group's sovereign exposure to Spain, Italy, Portugal, Ireland, Cyprus and Greece reduced by 22% to £5.6bn
 
 
 
-    Spanish sovereign exposure reduced 13% to £2.2bn due to the disposal of available for sale government bonds, held for the purpose of interest rate hedging and liquidity, which have been replaced by interest rate
      swaps with alternative counterparties
 
 
 
-    Italian sovereign exposure decreased 27% to £2.6bn principally due to a reduction in government bonds held at fair value
 
 
 
-    Portuguese sovereign exposure reduced 27% to £0.6bn due to a reduction in government bonds held as available for sale
 

 

 
Credit Risk
 
 
- Italian non-sovereign exposures decreased £1.5bn to £20.4bn, principally due to a £0.5bn decrease in residential mortgages (with an average LTV of 46.5%), and a £0.4bn reduction in exposures to financial institutions
 
 
- Ireland exposures remained flat at £5.7bn, with exposure to domestic Irish banks remaining minimal
 
 
- Exposure to Cyprus, which received external support for its funding during the period, remained flat at £0.2bn
 
 
- Exposure to Greece remains minimal
 
 
- Retail lending in Spain, Italy and Portugal decreased 5% to £39.6bn while lending to corporates decreased 13% to £10.0bn reflecting continued prudent risk management of portfolios
 
 
Exposures to other Eurozone countries
 
 
- Barclays has net exposures to other Eurozone countries as set out below. The net exposures are shown as they provide the best measure of counterparty credit risk. Exposures to individual countries that are less than £1bn
       are reported in aggregate under Other
 
 
 
As at 30.06.12
Sovereign
Financial institutions
Corporate
Residential mortgages
Other retail lending
Total net on-balance sheet exposure
Off-balance sheet contingent liabilities and commitments
Total exposure
 
£m
£m
£m
£m
£m
£m
£m
£m
France
 3,867 
 4,350 
 3,432 
 2,612 
 267 
 14,528 
 6,949 
 21,477 
Germany
 1,170 
 5,377 
 2,985 
 26 
 1,605 
 11,163 
 6,457 
 17,620 
Netherlands
 2,513 
 4,646 
 1,857 
 16 
 23 
 9,055 
 1,918 
 10,973 
Luxembourg
 24 
 3,104 
 551 
 100 
 91 
 3,870 
 760 
 4,630 
Belgium
 2,670 
 88 
 303 
 10 
 4 
 3,075 
 1,660 
 4,735 
Austria
 675 
 300 
 178 
 5 
 1 
 1,159 
 182 
 1,341 
Other
 772 
 136 
 91 
 30 
 42 
 1,071 
 479 
 1,550 
                 
As at 31.12.11
                
France
 4,189 
 4,969 
 4,232 
 2,796 
 260 
 16,446 
 8,121 
 24,567 
Germany
 3,444 
 2,570 
 2,963 
 14 
 1,551 
 10,542 
 6,623 
 17,165 
Netherlands
 244 
 4,596 
 1,807 
 14 
 4 
 6,665 
 1,899 
 8,564 
Luxembourg
 - 
 2,557 
 809 
 103 
 85 
 3,554 
 765 
 4,319 
Belgium
 2,033 
 42 
 282 
 10 
 - 
 2,367 
 881 
 3,248 
Austria
 134 
 360 
237 
 5 
 2 
738 
 119 
 857 
Other
 500 
 50 
78 
 35 
 43 
 706 
 496 
 1,202 
 
 
 
 
 
 

 

 
Credit Risk
 
Credit Derivatives Referencing Eurozone Sovereign Debt
 
 
- The Group enters into credit mitigation arrangements (principally credit default swaps and total return swaps) primarily for risk management purposes for which the reference asset is government debt. These have the net
       effect of reducing the Group's exposure in the event of sovereign default
 
 
 
As at 30.06.12
Spain
Italy
Portugal
Ireland
Cyprus
Greece
 
£m
£m
£m
£m
£m
£m
Fair value
            
- Bought
400 
541 
225 
166 
1 
- 
- Sold
(389)
(443)
(218)
(173)
(1)
- 
Net derivative fair value
11 
98 
7 
(7)
- 
- 
             
Contract notional amount
            
- Bought
(2,773)
(4,040)
(1,126)
(1,177)
(4)
- 
- Sold
2,545 
3,621 
1,048 
1,077 
4 
- 
Net derivative notional amount
(228)
(419)
(78)
(100)
- 
- 
             
Net protection from credit derivatives in the event of sovereign default (notional less fair value)
(217)
(321)
(71)
(107)
- 
- 
 
 
- Credit derivatives are arrangements whereby the default risk of an asset (reference asset) is transferred from the buyer to the seller of the protection
 
 
- The majority of credit derivatives referencing sovereign assets are bought and sold to support customer transactions and for risk management purposes
 
 
- The contract notional amount represents the value of the reference asset being insured, while the fair value represents the change in the value of the reference asset, adjusted for the credit worthiness of the
       counterparty providing the protection
 
 
- The net derivative notional amount represents a reduction in exposures and should be considered alongside the direct exposures as disclosed in the preceding pages
 
 
- In addition, the Group has indirect sovereign exposure through the guarantee of certain savings and investment funds, which hold a proportion of their assets in sovereign debt. As at 30 June 2012, the net liability in
       respect of these guarantees was £45m (31 December 2011: £41m)
 
 
Eurozone balance sheet funding mismatches
 
- Redenomination risk is the risk of financial loss to the Group should one or more countries exit from the Euro, leading to the devaluation of local balance sheet assets and liabilities.  The Group is directly
       exposed to redenomination risk where there is a mismatch between the level of locally denominated assets and funding
 
 
- Within Barclays, retail banking, corporate banking and wealth activities in the Eurozone are generally booked locally within each country. Locally booked external customer assets and liabilities, primarily loans and
       advances to customers and customer deposits, are predominantly denominated in Euros. The remaining funding mismatch between local external assets and liabilities is met through local funding secured against
       customer loans and advances, with any residual mismatch funded through the Group
 
 
- Barclays continues to monitor and take mitigating actions to limit the potential impact of the Eurozone volatility on local balance sheet funding
 
 
- During 2012, a series of mitigating actions has been taken to reduce local net funding mismatches including the drawdown of €8.2bn in the European Central Bank's three year LTRO in Spain and Portugal and
       additional deposit taking in Spain. As a result of these mitigating actions the Group reduced the aggregate net funding mismatch in local balance sheets from £12.1bn to £2.5bn in Spain and from £6.9bn to
       £3.7bn in Portugal during the six months to 30 June 2012
 
 
- In Italy, where the risk of redenomination is judged to be significantly lower, net funding by the Group as at 30 June 2012 is materially unchanged at £11.9bn compared to 31 December 2011. Collateral is
      available to support additional secured funding in Italy should the risk of redenomination increase
 

 

 
Credit Risk
 
 
- Direct exposure to Greece is very small with negligible net funding required from Group. For Ireland there is no local balance sheet funding requirement by the Group as total liabilities in this country exceed total assets
 
 
Detailed Eurozone credit exposures tables
 
 
Basis of preparation
 
- Further detail for the Eurozone countries deemed as higher risk and that are the subject of particular market focus is disclosed in the following tables (pages 62 to 68)
 
 
- The following tables are prepared on the same basis as the 2011 Results Announcement and present the direct balance sheet exposure to credit risk by country, with the totals reflecting allowance for impairment, netting and
       cash collateral held where appropriate
 
 
- Trading and derivatives balances relate to investment banking activities, principally as market-maker for government bond positions. Positions are held at fair value, with daily movements taken through profit and loss. Assets
       and liabilities are presented by counterparty type, whereby positions are netted to the extent allowable under IFRS excluding cross border netting for multinational counterparties. Cash collateral is then presented by
       counterparty to give a net credit exposure
 
 
- Available for sale assets are principally investments in government bonds and other debt securities held for the purposes of interest rate hedging and liquidity for local banking activities. Balances are reported on a
       fair value basis, with movements in fair value going through equity
 
 
- Loans and advances held at amortised cost1 comprise: (i) retail lending portfolios, predominantly mortgages secured on residential property; and (ii) corporate lending portfolios, largely reflecting established corporate banking businesses in Spain, Italy and Portugal and investment banking services provided to multinational and large national corporate clients. Settlement balances and cash collateral are excluded from this analysis
 
 
- Sovereign exposures reflect direct exposures to central and local governments2, the majority of which are used for hedging interest rate risk relating to local activities. These positions are being actively replaced 
       by non-government instruments such as interest rate swaps. The remaining portion is actively managed reflecting our role as a leading primary dealer, market-maker and liquidity provider to our clients
 
 
- Financial institution and corporate exposures reflect the country of operations of the counterparty (including foreign subsidiaries and without reference to cross-border guarantees)
 
 
- Retail exposures reflect the country of residence of retail customers
 
 
- Exposures on loans and advances to other geographies including Europe as a whole are set out on page 46
 
 
- Off-balance sheet exposure consists primarily of undrawn commitments and guarantees issued to third parties on behalf of our corporate clients. Information on the terms and potential limitations of such facilities is
       presented on page 83
 
 
 
1     The Group also enters into reverse repurchase agreements and other similar secured lending, which are fully collateralised.
 
 
2     In addition, the Group held cash with the central banks of these countries totalling £0.4bn as at 30 June 2012. Other immaterial balances with central banks are classified within loans to financial institutions.
 

 

 
Credit Risk
 
Spain
Trading Portfolio
  
Derivatives
Designated at FV Through P&L
      
Fair Value through Profit and Loss
Trading Portfolio Assets
Trading Portfolio Liabilities
Net
 Trading Portfolio
  
Gross Assets
Gross Liabilities
Cash Collateral
Net Derivatives
Total
as at
30.06.12
  
Total
as at
31.12.11
 
£m
£m
£m
  
£m
£m  
£m
£m
£m
£m
  
£m
Sovereign
 1,063 
 (831)
 232 
  
 67 
 (67)
 - 
 - 
 - 
 232 
  
 - 
Financial institutions
 385 
 (159)
 226 
  
 8,327 
 (7,548)
 (779)
 - 
 141 
 367 
  
 221 
Corporate
 996 
 (326)
 670 
  
 393 
 (81)
 - 
 312 
 309 
 1,291 
  
 629 
                         
 
 
                       
Total
as at
31.12.11
         
Available for Sale Assets as at 30.06.12
  
Fair Value through Equity
  
Cost1 
AFS Reserve
  
Total
  
         
£m  
£m
  
£m
  
£m
Sovereign
        
 2,084 
  
 (158)
  
 1,926 
  
 2,468 
Financial institutions
        
 495 
  
 (28)
  
467 
  
 490 
Corporate
          
 5 
  
 - 
  
 5 
  
 2 
 
 
                       
Total
as at
31.12.11
 
 Held at Amortised Cost
      
Loans and Advances as at 30.06.12
  
     
Gross  
  
Impairment Allowances
  
Total
  
           
£m  
  
£m
  
£m
  
£m
Sovereign
          
 49 
  
 - 
  
 49 
  
 62 
Financial institutions
        
 259 
  
 (11)
  
 248 
  
 276 
Residential mortgages
        
 13,724 
  
 (79)
  
 13,645 
  
 14,654 
Corporate
          
 4,903 
  
 (1,082)
  
 3,821 
  
 4,714 
Other retail lending
        
 3,068 
  
 (80)
  
 2,988 
  
 3,031 
                         
 
 
                   
Total
as at
30.06.12
  
Total
as at
31.12.11
Contingent Liabilities and Commitments
              
                     
                   
£m
  
£m
Sovereign
                  
 162 
  
 188 
Financial institutions
                
 17 
  
 22 
Residential mortgages
                
 14 
  
 20 
Corporate
                  
 2,027 
  
 2,510 
Other retail lending
                
 1,024 
  
 1,102 
 
 
- Sovereign
 
 
 
-    Largely AFS holdings in government bonds
 
 
 
-    No impairment and £158m (2011: £51m) cumulative loss held in the AFS reserve
 
 
- Financial institutions
 
 
 
-    £367m (2011: £221m) held at fair value through profit and loss, predominantly debt securities held by the Investment Bank to support trading and market making activities
 
 
 
-    £467m (2011: £490m) AFS assets with £28m (2011: £17m) cumulative loss held in the AFS reserve
 
 
- Residential mortgages
 
 
 
-    Fully secured on residential property with average marked to market LTV of 62.7% (2011: 60.1%), which is reflected in the CRL coverage of 26% (2011: 28%)
 
 
 
-    90 day arrears rates and annualised loan loss rates have increased above 2011 levels
 
 
- Corporate
 
 
 
-    £3,821m (2011: £4,714m) net lending to corporates with impairment allowance of £1,082m (2011: £1,187m) and CRL coverage of 54% (2011: 57%)
 
1     'Cost' refers to the fair value of the asset at recognition, less any impairment booked. 'AFS Reserve' is the cumulative fair value gain or loss on the assets that is held in equity. 'Total' is the fair value of the assets
       at the balance sheet date.

 

 
Credit Risk
 
 
-    Lending to property and construction industry of £1,556m (2011: £1,866m) which is largely secured on real estate collateral, with impairment allowance of £795m (2011: 810m) and CRL coverage of 58% (2011: 49%)
 
 
 
-    Balances on early warning lists peaked in September 2009. Portfolio kept under close review and impairment incurred as appropriate
 
 
 
-    Corporate impairment in Spain was at its highest level in H1 2010 when commercial property declines were reflected earlier in the cycle
 
 
 
-    £368m (2011: £488m) Investment Bank lending to multinational and large national corporates, which continues to perform
 
 
- Other retail lending
 
 
 
-    £1,045m (2011: £1,115m) credit cards and unsecured loans. Early and late cycle arrears rates and charge-off rates in credit cards and unsecured loans were stable in the first half of 2012
 
 
 
-    £1,542m (2011: £1,529m) lending to small and medium enterprises (SMEs), largely secured against commercial property
 
 
- Contingent liabilities and commitments of £2,027m (2011: £2,510m) to corporate customers and £1,024m (2011: £1,102m) principally to undrawn facilities to SMEs and undrawn credit lines
 
 
 
Italy
Trading Portfolio
  
Derivatives
Designated at FV through P&L
      
Fair Value through Profit and Loss
Trading Portfolio Assets
Trading Portfolio Liabilities
Net
 Trading Portfolio
  
Gross Assets
Gross Liabilities
Cash Collateral
Net Derivatives
Total
as at 30.06.12
  
Total
as at
31.12.11
 
£m
£m
£m
  
£m
£m  
£m
£m
£m
£m
  
£m
Sovereign
 2,411 
 (2,102)
 309 
  
 1,293 
 (1,004)
 - 
 289 
 - 
 598 
  
 1,144 
Financial institutions
 163 
 (153)
 10 
  
 6,413 
 (4,614)
 (1,799)
 - 
 119 
 129 
  
 456 
Corporate
 122 
 (122)
 - 
  
 418 
 (246)
 - 
 172 
 243 
 415 
  
 171 
                         
 
 
                       
Total
as at
31.12.11
Fair Value through Equity
  
Available for Sale Assets as at 30.06.12
  
         
Cost1 
AFS Reserve
Total
  
         
£m  
£m
£m
  
£m
Sovereign
        
 2,020 
  
 (80)
  
1,940 
  
 2,334 
Financial institutions
        
 132 
  
 (5)
  
 127 
  
 138 
Corporate
          
 29 
  
 1 
  
30 
  
 27 
                         
 
 
                       
Total
as at
31.12.11
Held at Amortised Cost
  
Loans and Advances as at 30.06.12
  
           
Gross  
  
Impairment Allowances
  
Total
  
           
£m  
  
£m
  
£m
  
£m
Sovereign
          
 13 
  
 - 
  
 13 
  
 15 
Financial institutions
        
 14 
  
 - 
  
 14 
  
 75 
Residential mortgages
        
 15,542 
  
 (95)
  
 15,447 
  
 15,934 
Corporate
          
 2,210 
  
 (155)
  
 2,055 
  
 2,720 
Other retail lending
        
 2,325 
  
 (191)
  
 2,134 
  
 2,335 
                         
 
 
                   
Total
as at
30.06.12
  
Total
as at
31.12.11
Contingent Liabilities and Commitments
              
                     
                   
£m
  
£m
Financial institutions
                
 13 
  
 17 
Residential mortgages
                
 60 
  
 101 
Corporate
                  
 1,668 
  
 2,034 
Other retail lending
                
 875 
  
988 
 
 
 
 
 
1     'Cost' refers to the fair value of the asset at recognition, less any impairment booked. 'AFS Reserve' is the cumulative fair value gain or loss on the assets that is held in equity. 'Total' is the fair value of the assets
       at the balance sheet date.
 

 

 
Credit Risk
 
- Sovereign
 
 
 
-    Largely holdings in government bonds held at fair value
 
 
 
-    £309m (2011: £566m) trading portfolio and £1,940m (2011: £2,334m) AFS assets with £80m (2011: £123m) cumulative loss held in the AFS reserve
 
 
- Financial institutions
 
 
 
-    Predominantly investments in debt securities, including £127m (2011: £138m) AFS assets and £10m (2011: £287m) trading portfolio, the majority held by the Investment Bank to support trading and market making activities
 
 
- Residential mortgages
 
 
 
-    Fully secured on residential property with average marked to market LTVs of 46.5% (2011: 46.9%)
 
 
 
-    90 day arrears rates were stable in H1 12
 
 
 
-    The CRL coverage of 23% (2011: 25%) reflects the above
 
 
- Corporate
 
 
 
-    Focused on large corporate clients with very limited exposure to property sector
 
 
 
-    Balances in early warning lists broadly stable since December 2011
 
 
 
-    Majority of exposures categorised as Strong or Satisfactory
 
 
- Other retail lending
 
 
 
-    £1,503m (2011: £1,615m) Italian salary advance loans (repayment deducted at source by qualifying employers and Barclays is insured in the event of termination of employment or death). Arrears rates on salary loans
       improved in H1 12 while charge-off rates deteriorated in the same period
 
 
 
-    £432m (2011: £483m) credit cards and other unsecured loans. While arrears rates have marginally deteriorated, the charge-off rates have improved within the cards portfolio
 
 
- Contingent liabilities and commitments of £1,668m (2011: £2,034m) to corporate customers and £875m (2011: £988m) principally undrawn credit card lines
 

 

 
Credit Risk
 
Portugal
Trading Portfolio
  
Derivatives
Designated at FV through P&L
      
Fair Value through Profit and Loss
Trading Portfolio Assets
Trading Portfolio Liabilities
Net
 Trading Portfolio
  
Gross Assets
Gross Liabilities
Cash Collateral
Net Derivatives
Total
as at 30.06.12
  
Total
as at
31.12.11
 
£m
£m
£m
  
£m
£m  
£m
£m
£m
£m
  
£m
Sovereign
 64 
 (64)
 - 
  
 262 
 (262)
 - 
 - 
 - 
 - 
  
 69 
Financial institutions
 16 
 (4)
 12 
  
 293 
 (293)
 - 
 - 
 - 
 12 
  
 11 
Corporate
 47 
 (23)
 24 
  
 454 
 (212)
 (4)
 238 
 - 
 262 
  
 328 
 
 
                         
                       
Total
Fair Value through Equity
  
Available for Sale Assets as at 30.06.12
  
as at
         
Cost1 
AFS Reserve
Total
  
31.12.11
         
£m  
£m
£m
  
£m
Sovereign
        
 606 
  
 (56)
  
 550 
  
 716 
Financial institutions
        
 2 
  
 - 
  
 2 
  
 2 
Corporate
          
 536 
  
 (2)
  
 534 
  
 677 
                         
 
 
 
                       
Total
as at 31.12.11
Held at Amortised Cost
  
Loans and Advances as at 30.06.12
  
           
Gross  
Impairment
Allowances
  
Total
  
           
£m  
  
£m
  
£m
  
£m
Sovereign
          
 38 
  
 - 
  
 38 
  
 25 
Financial institutions
        
 31 
  
 - 
  
 31 
  
 38 
Residential mortgages
        
 3,534 
  
 (24)
  
 3,510 
  
 3,651 
Corporate
          
 1,849 
  
 (230)
  
 1,619 
  
 2,290 
Other retail lending
        
 2,047 
  
 (168)
  
 1,879 
  
 2,053 
                         
 
 
                   
Total
as at
30.06.12
  
Total
as at
31.12.11
Contingent Liabilities and Commitments
              
                     
                   
£m
  
£m
Sovereign
                  
 4 
  
 3 
Financial institutions
                
 8 
  
 3 
Residential mortgages
                
 39 
  
 52 
Corporate
                  
 1,240 
  
 1,101 
Other retail lending
                
 1,449 
  
 1,377 
 
 
- Sovereign
 
 
 
-    Largely AFS government bonds
 
 
 
-    No impairment and £56m (2011: £159m) cumulative loss held in the AFS reserve
 
 
- Residential mortgages
 
 
 
-    Fully secured on residential property with average marked to market LTVs of 73.1% (2011: 69.6%)
 
 
 
-    CRL coverage of 21% (2011: 14%)
 
 
- Corporate
 
 
 
-    Net loans and advances of £1,619m (2011: £2,290m), which includes exposures to the property and construction sectors of £306m (2011: £541m) secured, in part, on real estate collateral
 
 
 
-    CRL coverage of 45% (2011: 44%), reflecting a total of £512m (2011: £443m) CRLs and an impairment allowance of £230m (2011: £194m)
 
 
 
-    Commercial paper of £534m (2011: £677m) held as AFS assets at fair value with identified impairment of £11m (2011: £8m). These assets are typically of short term maturity and, reflecting local business practice, are
      issued by corporate customers in place of overdraft facilities
 
 
 
1     'Cost' refers to the fair value of the asset at recognition, less any impairment booked. 'AFS Reserve' is the cumulative fair value gain or loss on the assets that is held in equity. 'Total' is the fair value of the assets
        at the balance sheet date.
 

 

 
Credit Risk
 
- Other retail lending
 
 
 
-    £988m (2011: £1,052m) credit cards and unsecured loans. During the first half of 2012, arrears rates in cards portfolio rose while charge-off rates improved marginally
 
 
 
-    £645m (2011: £739m) of lending to small and medium enterprises, largely secured against commercial property
 
 
 
-    CRL coverage of 65% (2011: 78%) and reflects the level of exposure to credit cards and unsecured loans
 
 
- Contingent liabilities and commitments of £1,240m (2011: £1,101m) to corporate customers and £1,449m (2011: £1,377m) principally undrawn facilities to SME and undrawn credit card lines
 
Ireland
Trading Portfolio
  
Derivatives
Designated at FV through P&L
      
Fair Value through Profit and Loss
Trading Portfolio Assets
Trading Portfolio Liabilities
Net
 Trading Portfolio
  
Gross Assets
Gross Liabilities
Cash Collateral
Net Derivatives
Total
as at
30.06.12
  
Total
as at
31.12.11
 
£m
£m
£m
  
£m
£m  
£m
£m
£m
£m
  
£m
Sovereign
 20 
 (20)
 - 
  
 - 
 - 
 - 
 - 
 - 
 - 
  
 39 
Financial institutions
 1,308 
 (43)
 1,265 
  
 4,421 
 (4,170)
 (251)
 - 
 530 
 1,795 
  
 1,561 
Corporate
 119 
 (38)
 81 
  
 248 
 (77)
 (80)
 91 
 66 
 238 
  
 52 
                         
 
 
                       
Total
Fair Value through Equity
  
Available for Sale Assets as at 30.06.12
  
as at
         
Cost1 
AFS Reserve
Total
  
31.12.11
         
£m  
£m
£m
  
£m
Sovereign
        
 216 
  
 (5)
  
 211 
  
 205 
Financial institutions
        
 54 
  
 (25)
  
29 
  
 249 
Corporate
          
 3 
  
 - 
  
 3 
  
 - 
 
 
                       
Total
as at 31.12.11
Held at Amortised Cost
  
Loans and Advances as at 30.06.12
  
           
Gross  
  
Impairment Allowances
  
Total
  
           
£m  
  
£m
  
£m
  
£m
Financial institutions
          
 2,556 
  
 (158)
  
 2,398 
  
 2,501 
Residential mortgages
        
 99 
  
 (8)
  
 91 
  
 94 
Corporate
          
 889 
  
 (21)
  
 868 
  
 925 
Other retail lending
          
 105 
  
 - 
  
 105 
  
 86 
 
 
                   
Total
as at
30.06.12
  
Total
as at
31.12.11
Contingent Liabilities and Commitments
              
                     
                   
£m
  
£m
Financial institutions2 
                  
 548 
  
 702 
Corporate 
                  
 1,013 
  
 872 
Other retail lending
                
 9 
  
 8 
 
- Sovereign
 
 
 
-    £211m AFS (2011: £205m) with £5m (2011: £10m) cumulative loss held in the AFS reserve
 
 
- Financial institutions
 
 
 
-    Exposure focused on financial institutions with investment grade credit ratings
 
 
 
-    Exposure to Irish banks amounted to £82m (2011: £58m)
 
 
 
-    £0.9bn (2011: £1.3bn) of loans relate to issuers domiciled in Ireland whose principal business and exposures are outside of Ireland
 
 
 
 
 
 
 
  1
'Cost' refers to the fair value of the asset at recognition, less any impairment booked. 'AFS Reserve' is the cumulative fair value gain or loss on the assets that is held in equity. 'Total' is the fair value of the assets at the balance sheet date.
  2 
 The comparative figure has been restated following the re-designation of counterparties from the year end.

 

 
Credit Risk
 
- Corporate
 
 
 
-    £868m (2011: £925m) net loans and advances, including a significant proportion to other multinational entities domiciled in Ireland, whose principal businesses and exposures are outside of Ireland
 
 
 
-    The portfolio continues to perform and has not been impacted materially by the decline in the property sector
 
 
- Other lending of £196m (2011: £180m), including £91m (2011: £94m) secured on residential property
 
 
- Contingent liabilities and commitments of 1,013m (2011: £872m) to corporate customers
 
Greece
Trading Portfolio
  
Derivatives
Designated at FV through P&L
      
Fair Value through Profit and Loss
Trading Portfolio Assets
Trading Portfolio Liabilities
Net
 Trading Portfolio
  
Gross Assets
Gross Liabilities
Cash Collateral
Net Derivatives
Total
as at
30.06.12
  
Total
as at
31.12.11
 
£m
£m
£m
  
£m
£m  
£m
£m
£m
£m
  
£m
Sovereign
 - 
 - 
 - 
  
 - 
 - 
 - 
 - 
 - 
 - 
  
 8 
Financial institutions
 1 
 - 
 1 
  
 917 
 (54)
 (863)
 - 
 - 
 1 
  
 2 
Corporate
 2 
 - 
 2 
  
 - 
 - 
 - 
 - 
 - 
 2 
  
 3 
 
 
 
Fair Value through Equity
  
Available for Sale Assets as at 30.06.12
  
as at
         
Cost1 
AFS Reserve
Total
  
31.12.11
         
£m  
£m
  
£m
  
£m
Sovereign
        
 1 
  
 - 
  
 1 
  
 6 
                         
 
 
Held at Amortised Cost
  
Loans and Advances as at 30.06.12
    
           
Gross  
  
Impairment Allowances
  
Total
  
           
£m  
  
£m
  
£m
  
£m
Residential mortgages
        
 8 
  
 - 
  
 8 
  
 5 
Corporate
          
 57 
  
 - 
  
 57 
  
 64 
Other retail lending
        
 28 
  
 (9)
  
 19 
  
 18 
 
 
 
Contingent Liabilities and Commitments
            
Total
as at
30.06.12
  
Total
as at
31.12.11
               
                     
                   
£m
  
£m
Financial institutions
                
 - 
  
 1 
Corporate
                  
 3 
  
 3 
Other retail lending
                
 17 
  
 22 
 
 

 

 
Credit Risk
 
 
 
Cyprus
Trading Portfolio
  
Derivatives
Designated at FV through P&L
      
Fair Value through Profit and Loss
Trading Portfolio Assets
Trading Portfolio Liabilities
Net
 Trading Portfolio
  
Gross Assets
Gross Liabilities
Cash Collateral
Net Derivatives
Total
as at
30.06.12
  
Total
as at
31.12.11
 
£m
£m
£m
  
£m
£m  
£m
£m
£m
£m
  
£m
Sovereign
 1 
 - 
 1 
  
 - 
 - 
 - 
 - 
 - 
 1 
  
 - 
Financial institutions
 6 
 - 
 6 
  
 59 
 (30)
 (29)
 - 
 - 
 6 
  
 - 
Corporate
 - 
 - 
 - 
  
 28 
 (8)
 (5)
 15 
 - 
 15 
  
 11 
 
 
                         
                       
Total
as at
31.12.11
Held at Amortised Cost
  
Loans and Advances as at 30.06.12
  
           
Gross  
Impairment
Allowances
  
Total
  
           
£m  
  
£m
  
£m
  
£m
Sovereign
          
 7 
  
 - 
  
 7 
  
 15 
Residential mortgages
        
 51 
  
 - 
  
 51 
  
 51 
Corporate
          
 130 
  
 (15)
  
 115 
  
 117 
Other retail lending
        
 6 
  
 - 
  
 6 
  
 2 
 
 
                         
                   
Total
  
Total
Contingent Liabilities and Commitments
            
as at
  
as at
                   
30.06.12
  
31.12.11
                   
£m
  
£m
Residential mortgages
                
 1 
  
 - 
Corporate
                  
 101 
  
 107 
Other retail lending
                
 20 
  
 20 
 
 
 

 
 

 
Credit Risk
 
Investment Bank Credit Market Exposures1
 
 
 
           
Half Year Ended 30.06.12
 
As at 30.06.12
As at 31.12.11
As at 30.06.12
As at 31.12.11
  
Fair Value (Losses)/ Gains and Net Funding
Impairment Release/ (Charge)
Total (Losses)/ Gains
US Residential Mortgages
$m
$m
£m
£m
  
£m
£m
£m
ABS CDO Super Senior
2,535 
2,844 
1,615 
1,842 
  
(14)
(131)
(145)
US sub-prime and Alt-A2 
1,621 
2,134 
1,033 
1,381 
  
52 
(9)
43 
                 
Commercial Mortgages
                
Commercial real estate loans and properties
6,655 
8,228 
4,240 
5,329 
  
81 
- 
81 
Commercial Mortgaged Backed Securities2 
1,208 
1,578 
770 
1,022 
  
54 
- 
54 
Monoline protection on CMBS
10 
14 
6 
9 
  
- 
- 
- 
                 
Other Credit Market  
                
Leveraged Finance3 
6,090 
6,278 
3,880 
4,066 
  
(28)
7 
(21)
SIVs, SIV -Lites and CDPCs
- 
9 
- 
6 
  
(1)
- 
(1)
Monoline protection on CLO and other
1,351 
1,729 
861 
1,120 
  
(47)
- 
(47)
CLO and Other assets2 
450 
596 
287 
386 
  
44 
- 
44 
                 
Total
19,920 
23,410 
12,692 
15,161 
  
141 
(133)
8 
 
 
- Investment Bank credit market exposures arose before the market dislocation in mid-2007 and now primarily relate to commercial real estate and leveraged finance
 
 
- Credit market exposures decreased by £2,469m to £12,692m, reflecting net sales and paydowns and other movements of £2,221m, foreign exchange movements of £256m, offset by net fair value gains and impairment
       charges of £8m. Net sales, paydowns and other movements of £2,221m included:
 
 
 
-    £1,020m of commercial real estate loans and properties including sale of 100% stake in Archstone for £857m ($1,338m)
 
 
 
-    £362m US sub-prime and Alt-A
 
 
 
-    £290m commercial mortgage-backed securities
 
 
 
-    £193m monoline protection on CLO and other
 
 
 
-    £161m leveraged finance, primarily relating to one counterparty
 
 
- Barclays has entered into an agreement to sell Baubecon, a real estate portfolio, for approximately €1.2bn (£1bn) with completion expected in Q3 2012
 
 
 
1     As the majority of exposure is held in US Dollars, the exposures above are shown in both US Dollars and Sterling.
 
 
2     Collateral assets of £1,695m (31 December 2011: £2,272m) previously underlying the Protium loan are now included within the relevant asset classes as the assets are now managed alongside similar
       credit market exposures.  These assets comprised:  US sub-prime and Alt-A £679m (31 December 2011:  £965m), commercial mortgage-backed securities £729m (31 December 2011: £921m), CLO and
      Other assets £287m (31 December 2011: £386m).
 
 
3     Includes undrawn commitments of £201m (31 December 2011: £180m).
 
 

 
 

 
Market Risk
 
Analysis of Investment Bank's Market Risk Exposure
 
- Investment Bank uses Daily Value at Risk (DVaR) as one of the measures for trading market risk management. The calculation is based on historical simulation of the most recent two years of data and is monitored
       daily. For internal risk management purposes DVaR is calculated at a 95% confidence interval
 
 
- Market risk appetite is reviewed and approved by the Board Risk Committee at least annually
 
 
Half Year Ended 30.06.12
  
Half Year Ended 31.12.11
  
Half Year Ended 30.06.11
DVaR (95%)
Daily Avg
High1 
Low1 
  
Daily Avg
High1 
Low1 
  
Daily Avg
High1 
Low1 
 
£m
£m
£m
  
£m
£m
£m
  
£m
£m
£m
Interest rate risk
13 
22 
8 
  
13 
21 
7 
  
22 
47 
11 
Spread risk
38 
68 
28 
  
56 
69 
32 
  
33 
49 
25 
Commodity risk
6 
9 
4 
  
10 
14 
7 
  
14 
18 
9 
Equity risk
10 
17 
6 
  
16 
30 
9 
  
21 
34 
11 
Foreign exchange risk
6 
10 
3 
  
5 
8 
2 
  
4 
7 
2 
Diversification effect
(31)
na
na
  
(35)
na
na
  
(46)
na
na
Total DVaR
42 
75 
29 
  
65 
88 
48 
  
48 
71 
33 
                       
Expected shortfall2 
53 
91 
36 
  
81 
113 
58 
  
60 
97 
43 
                       
3W3 
86 
138 
52 
  
137 
202 
98 
  
104 
176 
67 
 
 
- Investment Bank's average total DVaR for H1 12 was 35% lower than H2 11. The decrease in total DVaR was primarily due to reductions in Spread, Equity and Commodity risk
 
 
- Average Expected Shortfall and 3W, measures of tail risk, were both lower than 2011. The reduction in risk measures reflects a more cautious risk profile in 2012
 
 
 
 
 
 
 
 
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.
 
 
2     The average of all one day hypothetical losses beyond the 95% confidence level DVaR.
 
 
3     The average of the three largest one day estimated losses.
 
 

 
 

 
Statement of Directors' Responsibilities
 
The Directors confirm to the best of their knowledge that the condensed consolidated interim financial statements set out on pages 9 to 13 and 73 to 90 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 4.2.7 and 4.2.8 namely:
 
 
- An indication of important events that have occurred during the six months ended 30 June 2012 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 2012 and any material changes in the related party transactions described in the last Annual Report
 
 
On behalf of the Board
 
 
 
 
 
 
 
 
 
 
 
Marcus Agius                                                                                                                                      Chris Lucas
 
 
Chairman                                                                                                                                                Group Finance Director
 
 

 
 

 
Independent Auditors' Review Report to Barclays PLC
 
Introduction
 
We have been engaged by Barclays PLC to review the condensed set of consolidated interim financial statements in the interim results announcement for the six months ended 30 June 2012, which comprises the condensed consolidated income statement on page 9, condensed consolidated statement of profit or loss and other comprehensive income on page 10, condensed consolidated balance sheet on page 11, condensed consolidated statement of changes in equity on page 12, condensed consolidated cash flow statement on page 13 and related notes on pages 73 to 90. 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.
 
 
Directors' Responsibilities1,2
 
The interim results announcement 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 Services Authority.
 
 
As disclosed in the 'Accounting Policies' section, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed consolidated interim financial statements included in this interim results announcement have been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.
 
 
Our Responsibility
 
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 the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, 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.
 
 
Scope of Review
 
We conducted our review in accordance with the 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.
 
 
Conclusion
 
Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial statements in the interim results announcement for the six months ended 30 June 2012 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 Services Authority.
 
 
 
PricewaterhouseCoopers LLP
Chartered Accountants London,
United Kingdom
26 July 2012
 
 
 
 
 
 
 
 
 
 
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
 
 
The Results Announcement has been prepared in accordance with IAS 34 Interim Financial Reporting, using the same accounting policies and methods of computation as those used in the 2011 Annual Report.
 
 
There have been no accounting developments since those disclosed in the 2011 Annual Report that are expected to have a material impact on the Group's 2012 results. There have been and are expected to be a number of significant changes to the Group's financial reporting after 2012 as a result of amended or new accounting standards that have been or will be issued by the IASB. The most significant of these are as follows:
 
 
Effective from 1 January 2013:
 
 
- From 1 January 2013, the Group will adopt IAS 19 Employee Benefits revised. The main impact of the revision is the removal of the ability to defer actuarial gains and losses as part of its pension assets and liabilities.
       The Group will also include changes in net pension liabilities or assets that do not arise from regular cost, interest (on the net pension liabilities or assets) or contributions, within Other Comprehensive Income.
       Details of the financial and capital impact of these changes are detailed in note 15, page 81
 
 
- IFRS 10 Consolidated Financial Statements will require the Group to apply different criteria to determine the entities that are included in the Group's consolidated financial statements. It is not yet possible to estimate
       the financial effects of adopting the standard
 
Effective from 1 January 2015:
 
- IFRS 9 Financial Instruments will change the classification and therefore the measurement of its financial assets, the calculation of impairment and hedge accounting. In addition to these changes, the portion of gains
       and losses arising from changes in the Group's credit rating included in changes in the value of the Group's issued debt securities held at fair value through profit or loss will be included in other comprehensive income
       rather than the income statement. The proposals have yet to be finalised and it is therefore not yet possible to estimate the financial effects.
 
For more information on the changes, refer to the Barclays 2011 Annual Report.
 
Going Concern
 
The Group's business activities and financial position, the factors likely to affect its future development and performance, and its objectives and policies in managing the financial risks to which it is exposed and its capital are discussed in the Results by Business, Performance Management and Risk Management sections.
 
 
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.    Net Interest Income
      
 
Half Year
Half Year
Half Year
 
Ended
Ended
Ended
 
30.06.12
31.12.11
30.06.11
 
£m
£m
£m
Cash and balances with central banks
169 
206 
186 
Available for sale financial investments
1,683 
1,029 
1,108 
Loans and advances to banks
185 
192 
158 
Loans and advances to customers
8,471 
8,681 
8,590 
Other
178 
285 
154 
Interest income
10,686 
10,393 
10,196 
       
Deposits from banks
(171)
(221)
(145)
Customer accounts
(1,864)
(1,494)
(1,032)
Debt securities in issue
(1,583)
(1,711)
(1,813)
Subordinated liabilities
(817)
(910)
(903)
Other
(139)
(45)
(114)
Interest expense
(4,574)
(4,381)
(4,007)
       
Net interest income
6,112 
6,012 
6,189 
 

 
 

 
Financial Statement Notes
 
3.   Staff Costs
 
 
Half Year Ended
Half Year Ended
Half Year Ended
 
30.06.12
31.12.11
30.06.11
 
£m
£m
£m
Current year bonus accrual1 
539 
99 
856 
Deferred bonus charge
655 
537 
458 
Sales commissions, commitments and other incentives1 
228 
243 
334 
Performance costs
1,422 
879 
1,648 
Salaries
2,991 
3,113 
3,164 
Non-performance employee share plans
57 
100 
67 
Social security costs2 
369 
316 
400 
Post retirement benefits
315 
380 
347 
Total compensation costs
5,154 
4,788 
5,626 
       
Bank payroll tax
17 
38 
38 
Other3 
298 
471 
446 
Non compensation costs
315 
509 
484 
       
Total Staff costs
5,469 
5,297 
6,110 
       
Total employees  
      
Full time equivalent
139,000 
141,100 
146,100 
 
- Total staff costs reduced 10% to £5,469m, principally reflecting reductions in the current year bonus accrual and salaries, partially offset by the increased impact of prior year deferrals
 
 
- No awards have yet been granted in relation to the 2012 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
 
 
- Group performance costs reduced 14% to £1,422m, compared to a 13% increase in adjusted profit before tax
 
 
 
-    The Group compensation: income ratio4 reduced to 33% (Full Year 2011: 37%; Half Year 2011: 37%) 
 
 
 
-    The deferred bonus charge increased 43% to £655m, principally reflecting the increased levels of deferrals relating to the 2011 bonus pool
 
 
- Investment Bank performance costs reduced 19% to £1,028m, compared to a 2% decrease in profit before tax
 
 
 
-    Investment Bank compensation: income ratio reduced to 39% (Full Year 2011: 47%; Half Year 2011: 45%)
 
 
 
-    Performance costs included a deferred bonus charge of £597m (2011: £432m)
 
 
- The expected charge relating to future periods for bonus awards granted but not yet expensed as at 30 June 2012 was £1.4bn (31 December 2011: £2.0bn)
 
 
- Salaries decreased 5% to £2,991m in line with the 5% reduction in total employees to 139,000. This reduction primarily related to restructuring activity in Europe RBB, Africa RBB and Corporate Banking outside of the UK
 
 
 
 
1        The total current year bonus cost for 2011 included £57m over accrual for the full year.
 
2       Includes social security costs relating to salaries, bonuses and other incentives.
 
3        Includes staff training, redundancy and recruitment.
 
4       Total compensation costs divided by total adjusted income net of insurance claims.
 
4
 
 

 
 

 
Financial Statement Notes
 
4.  Administration and General Expenses
 
 
Half Year  Ended
Half Year  Ended
Half Year  Ended
 
30.06.12
31.12.11
30.06.11
 
£m
£m
£m
Property and equipment
892 
856 
907 
Outsourcing and professional services
1,023 
971 
898 
Operating lease rentals
307 
335 
324 
Marketing, advertising and sponsorship
257 
323 
262 
Subscriptions, publications, stationery and communications
367 
364 
376 
Travel and accommodation
157 
168 
160 
Other administration and general expenses
468 
209 
191 
Impairment of property, equipment and intangible assets
3 
6 
6 
Administration and general expenses
3,474 
3,232 
3,124 
 
 
Administration and general expenses increased 11% to £3,474 (2011: £3,124m) reflecting the higher regulatory costs and the £290m penalty relating to the industry wide investigation into the setting of interbank offered rates which is included within Other administration and general expenses.
 
 
 
5.            UK Bank Levy
 
UK legislation was enacted in July 2011 to introduce an annual bank levy, which is calculated by reference to the Group's year end liabilities. The levy resulted in an additional operating expense of £325m for the year ended 31 December 2011. The total cost for 2012 is expected to be approximately £360m, all of which is due to be recognised on 31 December 2012 in accordance with IFRS.
 
 
 
6.           Tax
 
The tax charge for H1 12 was £279m (2011: £661m) representing an effective tax rate of 36.8% (2011: 25.0%). The increase in the effective tax rate compared to 2011 reflects the recognition in 2011 of previously unrecognised deferred tax assets in the US branch of Barclays Bank PLC.
 
The effective tax rate for both periods differs from the UK tax rate of 24.5% (2011: 26.5%) because of non taxable gains and income, the effect of profits and losses outside of the UK being taxed at local statutory tax rates that are different to the UK statutory tax rate, non-creditable taxes and non-deductible expenses, and in H1 11, the impact of recognising deferred tax assets previously unrecognised.
 
 
               
 
Assets
  
Liabilities
Current and Deferred Tax Assets and Liabilities
30.06.12
31.12.11
30.06.11
  
30.06.12
31.12.11
30.06.11
 
£m
£m
£m
  
£m
£m
£m
Current tax
266  
374  
265  
  
(353)
(1,397)
(487)
Deferred tax
2,978  
3,010  
2,742  
  
(1,024)
(695)
(613)
Total
3,244  
3,384  
3,007  
  
(1,377)
(2,092)
(1,100)
 
 
The deferred tax asset of £2,978m (31 December 2011: £3,010m) mainly relates to amounts in the Barclays Group US Inc. tax group, the US Branch of Barclays Bank Plc and the Spanish tax group. As at 30 June 2012, the deferred tax asset in the Spanish tax group is recoverable, as supported by the latest business forecasts updated for the current economic environment in Spain. The asset has reduced to £608m (31 December 2011: £696m) reflecting a lower anticipated tax recovery rate.
 
 

 
 

 
Financial Statement Notes
 
7.       Non-controlling Interests
 
Profit Attributable to Non-controlling Interest
  
Equity Attributable to Non-controlling Interest
 
Half Year Ended
Half Year Ended
Half Year Ended
  
Half Year Ended
Half Year Ended
Half Year Ended
 
30.06.12
31.12.11
30.06.11
  
30.06.12
31.12.11
30.06.11
 
£m
£m
£m
  
£m
£m
£m
Barclays Bank PLC Issued:
              
- Preference shares
232 
234 
231 
  
5,942 
5,929 
5,948 
- Reserve Capital Instruments (RCIs)
- 
12 
34 
  
- 
- 
529 
- Upper Tier 2 instruments
2 
2 
1 
  
589 
586 
586 
Absa Group Limited
154 
204 
197 
  
2,842 
2,861 
3,110 
Other non-controlling interests
22 
7 
22 
  
112 
231 
244 
Total
410 
459 
485 
  
9,485 
9,607 
10,417 
 
 
RCIs with a nominal value of $1.25bn and $0.75bn were redeemed at Barclays option in June and December 2011 respectively.
 
 

 
 
 
8.         Earnings Per Share
      
 
Half Year Ended
Half Year Ended
Half Year Ended
 
30.06.12
31.12.11
30.06.11
 
£m
£m
£m
Profit attributable to equity holders of the parent
 70 
 1,509 
 1,498 
Dilutive impact of convertible options
-
2 
(2)
Profit attributable to equity holders of the parent including dilutive impact of convertible options
 70 
 1,511 
 1,496 
Impact of adjusting items1 
2,589 
(525)
 839 
Adjusted Profit attributable to equity holders of the parent including dilutive impact of convertible options
 2,659 
 986 
 2,335 
Basic weighted average number of shares in issue2 
12,215m
11,976m
11,938m
Number of potential ordinary shares
317m
511m
651m
Diluted weighted average number of shares
12,532m
12,487m
12,589m
       
Basic earnings per ordinary share  
0.6p
12.6p
12.5p
Diluted earnings per ordinary share
0.6p
12.1p
11.9p
Adjusted earnings per ordinary share
21.8p
8.2p
19.6p
 
 
9.           Dividends on Ordinary Shares
 
 
It is Barclays policy to declare and pay dividends on a quarterly basis. The first interim cash dividend for 2012 of 1p per share was paid on 8 June 2012. The Board has decided to pay on 7 September 2012, a second dividend for 2012 of 1p per ordinary share to shareholders on the share register on 10 August 2012, making a total for the first half of 2012 of 2p (2011: 2p).
 
 
 
 
Half Year Ended 30.06.12
  
Half Year Ended 31.12.11
  
Half Year Ended 30.06.11
Dividends Paid During the Period
Per Share
Total
  
Per Share
Total
  
Per Share
Total
 
Pence
£m
  
Pence
£m
  
Pence
£m
Final dividend paid during period
3.0p
 366 
  
- 
- 
  
2.5p
298 
Interim dividends paid during period
1.0p
 122 
  
2.0p
241 
  
1.0p
121 
 
 
For qualifying US and Canadian resident ADR holders, the interim dividend of 1p per ordinary share becomes 4p per ADS (representing four shares). The ADR depositary will post the interim dividend on 7 September 2012 to ADR holders on the record at close of business on 10 August 2012.
 
 
 
 
 
1     Adjusted performance measures exclude the impact of own credit, gains on debt buy-backs, impairment and gain/(loss)on disposal of BlackRock investment, provision for PPI redress, provision for interest rate
       hedging products redress, goodwill impairment and  (losses) on acquisitions and disposals as detailed on page 8.  The tax impact of these items is a charge of £879m (H2 11: credit of £845m; H1 11: charge of £242m).
 
 
2     The number of basic weighted average number of shares excludes Treasury shares held in employee benefit trusts for trading.
 
 

 
 

 
Financial Statement Notes
 
10.       Derivative Financial Instruments
        
 
Contract Notional
Amount
  
Fair Value
As at 30.06.12
  
Assets
Liabilities
 
£m
  
£m
£m
Foreign exchange derivatives
5,067,266 
  
58,663 
(63,369)
Interest rate derivatives
38,549,480 
  
374,353 
(357,665)
Credit derivatives
1,926,860 
  
48,100 
(46,539)
Equity and stock index and commodity derivatives
1,504,099 
  
31,582 
(34,917)
Derivative assets/(liabilities) held for trading
47,047,705
  
512,698 
(502,490)
         
Derivatives in Hedge Accounting Relationships
        
Derivatives designated as cash flow hedges
210,141 
  
2,760 
(1,414)
Derivatives designated as fair value hedges
133,581 
  
2,121 
(3,388)
Derivatives designated as hedges of net investments
10,246 
  
106 
(59)
Derivative assets/(liabilities) designated in hedge accounting relationships
353,968 
  
4,987 
(4,861)
         
Total recognised derivative assets/(liabilities)
47,401,673
  
517,685 
(507,351)
         
As at 31.12.11
        
Foreign exchange derivatives
4,452,874 
  
63,822 
(67,280)
Interest rate derivatives
35,541,980 
  
372,570 
(357,440)
Credit derivatives
1,886,650 
  
63,312 
(61,348)
Equity and stock index and commodity derivatives
1,214,487 
  
35,602 
(38,484)
Derivative assets/(liabilities) held for trading
43,095,991 
  
535,306 
(524,552)
         
Derivatives in Hedge Accounting Relationships
        
Derivatives designated as cash flow hedges
157,149 
  
2,150 
(1,726)
Derivatives designated as fair value hedges
74,375 
  
1,447 
(1,238)
Derivatives designated as hedges of net investments
12,010 
  
61 
(394)
Derivative assets/(liabilities) designated in hedge accounting relationships
243,534 
  
3,658 
(3,358)
         
Total recognised derivative assets/(liabilities)
43,339,525 
  
538,964 
(527,910)
         
As at 30.06.11
        
Foreign exchange derivatives
3,965,712 
  
54,186 
(57,176)
Interest rate derivatives
37,739,893 
  
238,645 
(220,854)
Credit derivatives
2,085,191 
  
45,883 
(44,169)
Equity and stock index and commodity derivatives
1,268,250 
  
39,090 
(41,907)
Derivative assets/(liabilities) held for trading
45,059,046 
  
377,804 
(364,106)
         
Derivatives in Hedge Accounting Relationships
        
Derivatives designated as cash flow hedges
164,846 
  
891 
(848)
Derivatives designated as fair value hedges
98,245 
  
1,077 
(1,116)
Derivatives designated as hedges of net investments
15,405 
  
82 
(466)
Derivative assets/(liabilities) designated in hedge accounting relationships
278,496 
  
2,050 
(2,430)
         
Total recognised derivative assets/(liabilities)
45,337,542 
  
379,854 
(366,536)
 
The fair value of gross derivative assets decreased by 4% to £518bn (31 December 2011: £539bn) reflecting the impact of optimisation initiatives to reduce gross derivative exposures, and the tightening of credit spreads, offset by decreases in the major forward curves.
 
 
Derivative asset exposures would be £477bn (31 December 2011: £492bn) lower than reported under IFRS if netting were permitted for assets and liabilities with the same counterparty or for which we hold cash collateral. Derivative liabilities would be £463bn (31 December 2011: £478bn) lower reflecting counterparty netting and collateral placed.
 
 

 
 

 
Financial Statement Notes
 
11.         Financial Instruments Held at Fair Value
 
 
The table below shows the financial assets and liabilities that are recognised and measured at fair value analysed by level within the fair value hierarchy.
 
 
 
 
Valuations Based on
    
 
Quoted Market Prices
Observable Inputs
Significant Unobservable Inputs
    
 
(Level 1)
(Level 2)
(Level 3)
  
Total
As at 30.06.12
£m
£m
£m
  
£m
Trading portfolio assets
71,695 
86,130 
8,475 
  
166,300 
Financial assets designated at fair value
9,469 
28,919 
7,540 
  
45,928 
Derivative financial assets
1,902 
507,126 
8,657 
  
517,685 
Available for sale assets
31,377 
34,571 
2,974 
  
68,922 
Total Assets
114,443 
656,746 
27,646 
  
798,835 
           
Trading portfolio liabilities
(25,387)
(26,251)
(109)
  
(51,747)
Financial liabilities designated at fair value
(51)
(92,002)
(2,802)
  
(94,855)
Derivative financial liabilities
(1,887)
(498,776)
(6,688)
  
(507,351)
Total Liabilities
(27,325)
(617,029)
(9,599)
  
(653,953)
           
As at 31.12.11
          
Trading portfolio assets
61,530 
81,449 
9,204 
  
152,183 
Financial assets designated at fair value
4,179 
24,091 
8,679 
  
36,949 
Derivative financial assets
2,550 
525,147 
11,267 
  
538,964 
Available for sale assets
30,857 
34,761 
2,873 
  
68,491 
Total Assets
99,116 
665,448 
32,023 
  
796,587 
           
Trading portfolio liabilities
(26,155)
(19,726)
(6)
  
(45,887)
Financial liabilities designated at fair value
(39)
(84,822)
(3,136)
  
(87,997)
Derivative financial liabilities
(2,263)
(517,066)
(8,581)
  
(527,910)
Total Liabilities
(28,457)
(621,614)
(11,723)
  
(661,794)
           
As at 30.06.11
          
Trading portfolio assets
53,259 
117,703 
10,837 
  
181,799 
Financial assets designated at fair value
5,875 
22,304 
10,943 
  
39,122 
Derivative financial assets
3,001 
368,690 
8,163 
  
379,854 
Available for sale assets
44,945 
34,139 
2,753 
  
81,837 
Total Assets
107,080 
542,836 
32,696 
  
682,612 
           
Trading portfolio liabilities
(36,919)
(40,282)
(7)
  
(77,208)
Financial liabilities designated at fair value
(100)
(88,862)
(3,511)
  
(92,473)
Derivative financial liabilities
(2,424)
(358,930)
(5,182)
  
(366,536)
Total Liabilities
(39,443)
(488,074)
(8,700)
  
(536,217)

 

 
Financial Statement Notes
 
11.         Financial Instruments Held at Fair Value (continued)
 
There were no material transfers between Level 1 and Level 2 during the period.
 
 
The significant movements in the Level 3 positions during the period ended 30 June 2012 are as follows:
 
 
- Purchases of £3.7bn primarily comprising £1.7bn in non asset backed debt instruments, £0.6bn in asset backed products, £0.4bn  in commercial real estate loans and £0.1bn in equity products
 
 
- Sales of £4.3bn primarily comprising £1.4bn of non asset backed debt instruments, £0.9bn in private equity, £0.7bn of asset backed products and £0.1bn of commercial real estate loans
 
 
- Settlements of £1bn including £0.3bn on commercial real estate loans, £0.3bn on other loans, £0.2bn on non asset backed debt instruments, £0.1bn on FX products and £0.1bn on interest rate products
 
 
- Net transfers out of £0.4bn, primarily comprising transfers of credit products, interest rate products and non asset backed debt instruments, for which fair values have become more observable
 
 
Net losses on the fair value of Level 3 assets recognised in the income statement totalled £0.6bn (30 June 2011: loss of £0.3bn) 
 
 
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, was as follows:
 
 
 
 
Half Year Ended
Half Year Ended
Half Year Ended
 
30.06.12
31.12.11
30.06.11
 
£m
£m
£m
Opening balance
117 
146 
137 
Additions
35 
68 
25 
Amortisation and releases
(8)
(97)
(16)
Closing balance
144 
117 
146 
 
 
As part of our risk management processes stress tests on the significant unobservable parameters are applied to generate a range of potentially possible alternative valuations. The results of the most recent stress test showed a potential to increase the fair values by up to £1.5bn (2011: £2.0bn) or to decrease the fair values by up to £1.6bn (2011: £2.1bn) with substantially all the potential effect being recorded in the income statement rather than equity. It is not possible to reliably stress the £1.9bn receivable included within Level 3 assets arising from the Lehman acquisition since its value is dependent in large part on the outcome of legal proceedings. Further detail is provided in note 19.
 
 
The stresses applied take account of the nature of valuation techniques used, as well as the availability and reliability of observable proxy and historical data. In all cases, an assessment is made to determine the suitability of available data. The sensitivity methodologies are based on a range, standard deviation or spread data of a reliable reference source or a scenario based on alternative market views. The level of shift or scenarios applied is considered for each product and varies according to the quality of the data and variability of underlying markets.
 
 

 
 

 
Financial Statement Notes
 
12.    Goodwill and Intangible Assets
 
As at
As at
As at
 
30.06.12
31.12.11
30.06.11
 
£m
£m
£m
Goodwill
5,295 
5,305 
6,107 
Intangible assets
2,566 
2,541 
2,434 
Total
7,861 
7,846 
8,541 
 
 
Goodwill principally comprised £3,144m held in UK RBB (31 December 2011: £3,145), £922m in Africa RBB (31 December 2011: £947m), £529m in Barclaycard (31 December 2011: £505m) and £391m in Wealth and Investment Management (31 December 2011: £391m).
 
 
Goodwill is reviewed for indicators of impairment quarterly and tested for impairment on an annual basis by comparing the carrying value to its recoverable amount. There has been no goodwill impairment during 2012. Impairment charges of £597m were recognised during 2011 against goodwill in FirstPlus and Spain.
 
 

 
 
 
13.    Subordinated Liabilities
 
As at
As at
As at
 
30.06.12
31.12.11
30.06.11
 
£m
£m
£m
Opening balance as at 1 January
24,870 
28,499 
28,499 
Issuances
- 
880 
880 
Redemptions
(2,153)
(5,116)
(2,434)
Other
(628)
607 
(159)
Total dated and undated subordinated liabilities as at period end
22,089 
24,870 
26,786 
 
 
During the six months ended 30 June 2012 redemptions comprised: Callable Floating Rate Subordinated Notes 2017 ($1,500m) of £946m and (€1,500m) of £1,200m and other redemptions of £7m. There were no new issuances during 2012.
 
 

 
 
 
14.       Provisions
      
 
As at
As at
As at
 
30.06.12
31.12.11
30.06.11
 
£m
£m
£m
Redundancy and restructuring
163 
216 
317 
Undrawn contractually committed facilities and guarantees
222 
230 
219 
Onerous contracts
107 
116 
67 
Payment Protection Insurance redress
406 
565 
998 
Interest rate hedging product redress
450 
-
-
Litigation
187 
140 
117 
Sundry provisions
316 
262 
356 
Total
1,851 
1,529 
2,074 
 
 
Payment protection insurance redress
 
 
Following the conclusion of the Judicial Review, a provision for PPI redress of £1bn was raised in Q2 11 based on FSA guidelines and industry experience in resolving such claims. In early 2012 Barclays observed an increase in PPI claim volumes and consequently, a further £0.3bn was provided in Q1 12.  As of 30 June 2012, £0.9bn of the total £1.3bn had been utilised leaving a residual provision of £0.4bn. 
 
 
As previously disclosed, the provision calculations are based on a number of assumptions, many of which remain subjective. The most significant assumption continues to be customer claims volumes, which remain unpredictable, although have recently been trending downwards.  Based upon the review of experience to date, the remaining provision is considered the best estimate to cover expected future settlements. It is possible the eventual outcome may differ from the current management estimates.
 
 
 
 
 
 
 

 

 
Financial Statement Notes
 
14.       Provisions (continued)
 
 
Interest rate hedging product redress
 
 
On 29 June 2012, the FSA announced that it had reached agreement with a number of UK banks (including Barclays) in relation to a review and redress exercise to be carried out in respect of interest rate hedging products sold to small and medium sized enterprises.  A provision of £450m, reflecting £350m for the costs of redress and £100m to reflect the widening of credit spreads since the original products were entered into (and which we expect to unwind over the life of the new arrangements), has been recognised.  The ultimate cost of this exercise is uncertain and the provision is based on a number of initial estimates relating to the appropriate implementation of the agreement.  These estimates primarily relate to the number of customers that will be subject to the review, and to the extent and nature of any redress payable.  In this context, the appropriate provision level will be kept under ongoing review.
 
 

 
15.         Retirement Benefits
 
 
The Group's IAS 19 pension deficit across all schemes as at 30 June 2012 was £1.3bn (31 December 2011: £0.2bn). This reflects net recognised assets of £2.0bn (31 December 2011: £1.5bn) and unrecognised actuarial losses of £3.2bn (31 December 2011: £1.7bn). The net recognised assets comprised retirement benefit assets of £2.5bn (31 December 2011: £1.8bn) and liabilities of £0.5bn (31 December 2011: £0.3bn).
 
 
The Group's main scheme is the UK Retirement Fund (UKRF). As at 30 June 2012, the UKRF had £2.2bn assets recognised on the balance sheet (31 December 2011: £1.7bn) and on an IAS 19 basis the scheme liabilities exceeded the assets by £0.7bn (31 December 2011: surplus of £0.3bn). The most significant reason for the change in the IAS 19 position was a reduction in the net discount rate, driven by falls in AA corporate bond yields, partially offset by the deficit contribution paid over in the year.
 
 
The latest triennial funding valuation of the UKRF was carried out with an effective date of 30 September 2010, and showed a deficit of £5.0bn. The Bank and Trustee agreed a funding plan to eliminate the deficit in the fund. As part of this plan, deficit contributions of £1.8bn were paid to the fund in December 2011 and a further £0.5bn in April 2012. Further deficit contributions are payable from 2017 to 2021 starting at £0.7bn for 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.
 
 
The latest annual funding update prepared by the Scheme Actuary as at 30 September 2011 showed a funding deficit of £6.4bn, which was prior to the payment of contributions referred to above in December 2011.
 
 
As indicated in Note 1, from 1 January 2013, the Group will adopt IAS 19 revised. Had the Group adopted the revisions in these interim financial statements the net recognised position would reduce by £3.2bn (31 December 2011: £1.7bn) resulting in a liability of £1.2bn (31 December 2011: £0.2bn). Profit after tax for the period ended 30 June 2012 would have been lower by £11m (H2 11: £41m; H1 11: £42m) and other comprehensive income lower by £1.1bn (H2 11: £0.2bn; H1 11: £1.0bn). Shareholders equity would have been reduced by £2.4bn (31 December 2011: £1.3bn) and additional deferred tax assets of £0.8bn (31 December 2011: £0.5bn) would have been recognised. Due to uncertainties surrounding market factors, such as interest rates, it is not possible to estimate the impact on the full year financial statements.
 
 

 
 
16.         Share Capital and Warrants
 
 
Called up share capital comprises 12,235 million (2011: 12,199 million) ordinary shares of 25p each.
 
 
As at 30 June 2012, there were unexercised warrants to subscribe for 379.2 million (2011: 379.2 million) new ordinary shares at a price of £1.97775. The warrants may be exercised at any time up to close of business on 31 October 2013.
 
 

 
 
17.         Other Reserves
 
 
Currency Translation Reserve
 
Currency translation movements in 2012 of £614m (30 June 2011: £790m), including £71m (30 June 2011: £182m) associated with non-controlling interests, were largely due to the depreciation of the US Dollar, Rand and Euro against Sterling. During the period, £20m gain (2011: £3m loss) from the currency translation reserve was recognised in the income statement.
 
 
 
 

 

 
Financial Statement Notes
 
17.         Other Reserves (continued)
 
 
Available for Sale Reserve
 
The available for sale reserve decreased £218m  (30 June 2011: increased £323m), largely driven by £511m gains transferred to the income statement, including the disposal of BlackRock, Inc., a £130m decrease due to the impact of current and deferred tax movements, offset by £423m net gains from changes in fair value.
 
 
Cash Flow Hedge Reserve
 
The cash flow hedge reserve represents the cumulative gains and losses on effective cash flow hedging instruments that will be recycled to the income statement when hedged transactions affect profit or loss.
 
 
The increase in the cash flow hedge reserve of £234m (30 June 2011: £48m decrease) principally reflected increases in the fair value of interest rate swaps held for hedging purposes partially offset by gains transferred to net profit.
 
 
Treasury Shares
 
During the period £955m (2011: £553m) net purchases of treasury shares were made principally reflecting the increase in shares held for the purposes of employee share schemes, and £912m (2011: £423m) was transferred from retained earnings reflecting the vesting of deferred share based payments.
 
 

 
 
 
18.       Contingent Liabilities and Commitments
      
 
As at
As at
As at
 
30.06.12
31.12.11
30.06.11
 
£m
£m
£m
Securities lending arrangements
 42,609 
 35,996 
 32,977 
Guarantees and letters of credit pledged as collateral security
 14,995 
 14,181 
 12,886 
Performance guarantees, acceptances and endorsements
 7,120 
 8,706 
 9,257 
Contingent liabilities
 64,724 
 58,883 
 55,120 
       
Documentary credits and other short-term trade related transactions
 1,299 
 1,358 
 1,392 
       
Standby facilities, credit lines and other commitments
 245,853 
 240,282 
 232,624 
 
 
Securities Lending Arrangements
 
Up to the disposal of Barclays Global Investors on 1 December 2009, the Group facilitated securities lending arrangements for its managed investment funds whereby securities held by funds under management were lent to third parties. Borrowers provided cash or investment grade assets as collateral equal to 100% of the market value of the securities lent plus a margin of 2%-10%. The Group agreed with BlackRock, Inc. to continue to provide indemnities to support these arrangements until the 30 November 2012. The fair value of the collateral held as at 30 June 2012 was £43,773m (31 December 2011: £37,072m) and that of the stock lent was £42,609m (31 December 2011: £35,996m). 
 
 
The Financial Services Compensation Scheme
 
The Financial Services Compensation Scheme (the FSCS) is the UK's compensation scheme for customers of authorised institutions that are unable to pay claims. It provides compensation to depositors in the event that UK licensed deposit taking institutions are unable to meet their claims. The FSCS raises levies on UK licensed deposit taking institutions to meet such claims based on their share of UK deposits on 31 December of the year preceding the scheme year (which runs from 1 April to 31 March).
 
 
Compensation has previously been paid out by the FSCS funded by loan facilities totalling approximately £18bn provided by HM Treasury to FSCS in support of FSCS's obligations to the depositors of banks declared in default.  In April 2012, the FSCS agreed revised terms on the loan facilities including a 70bps increase in the interest rate payable to 12 month LIBOR plus 100 basis points.  The facilities are expected to be repaid wholly from recoveries from the failed deposit takers, except for an estimated shortfall of £0.8bn which the FSCS has announced it intends to collect in annual levies for 2013, 2014 and 2015, in addition to the ongoing interest changes on the outstanding loans.
 
 
 
 

 

 
Financial Statement Notes
 
18          Contingent Liabilities and Commitments (continued)
 
 
Investment Bank US Mortgage Activities
 
Barclays activities within the US residential mortgage sector during the period of 2005 through 2008 included: sponsoring and underwriting of approximately $39bn of private-label securitisations; underwriting of approximately $34bn of other private-label securitisations; sales of approximately $150m of loans to government sponsored enterprises (GSEs); and sales of approximately $3bn of loans to others. Some of the loans sold to Barclays were originated by a Barclays subsidiary.  Barclays also performed servicing activities through its US residential mortgage servicing business which Barclays acquired in Q4 2006 and subsequently sold in Q3 2010.
 
 
In connection with Barclays loan sales and some of its sponsored private-label securitisations, Barclays made certain loan level representations and warranties (R&Ws) generally relating to the underlying borrower, property and/or mortgage documentation. Under certain circumstances, Barclays may be required to repurchase the related loans or make other payments related to such loans if the R&Ws are breached. As of 30 June 2012, Barclays R&Ws in respect of approximately $1bn of loans sold to others had expired. The R&Ws with respect to the balance of the loans sold to others were not subject to expiration provisions. However, such loans were generally sold at significant discounts and contained more limited R&Ws than loans sold to GSEs. Third party originators provided loan level R&Ws directly to the securitisation trusts for approximately $34bn of the $39bn in Barclays sponsored securitisations. Barclays or a subsidiary provided loan level R&Ws to the securitisation trusts for approximately $5bn of the Barclays sponsored securitisations. R&Ws made by Barclays in respect of such securitised loans, and the loans sold by Barclays to GSEs, are not subject to expiration provisions. Total unresolved repurchase requests associated with all loans sold to others and private-label activities were $24m at 30 June 2012.  Current provisions are adequate to cover estimated losses associated with outstanding repurchase claims. However, based upon a large number of defaults occurring in US residential mortgages, there is a potential for additional claims for repurchases.
 
 
Claims against Barclays as an underwriter of RMBS (Residential Mortgage Backed Securities) offerings have been brought in certain civil actions. See Note 19 - Legal Proceedings. Additionally, Barclays has received inquiries from various regulatory and governmental authorities regarding its mortgage-related activities and is cooperating with such inquiries.
 
 
It is not practicable to provide an estimate of the financial impact of the potential exposure in relation to the foregoing matters.
 
19.         Legal Proceedings
 
 
Lehman Brothers Holdings Inc.
 
On 15 September 2009, motions were filed in the United States Bankruptcy Court for the Southern District of New York (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 transaction pursuant to which BCI and other companies in the Group acquired most of the assets of Lehman Brothers Inc. (LBI) in September 2008 and the Court Order approving such sale (Sale). The claimants were seeking an order voiding the transfer of certain assets to BCI; requiring BCI to return to the LBI estate alleged excess value BCI received; and declaring that BCI is not entitled to certain assets that it claims pursuant to the sale documents and Order approving the Sale (Rule 60 Claims). On 16 November 2009, LBHI, the Trustee and the Committee filed separate complaints in the Court asserting claims against BCI based on the same underlying allegations as the pending motions and seeking relief similar to that which is requested in the motions. On 29 January 2010, BCI filed its response to the motions and also filed a motion seeking delivery of certain assets that LBHI and LBI have failed to deliver as required by the sale documents and the Court Order approving the Sale (together with the Trustee's competing claims to those assets, the Contract Claims). Approximately $4.3bn (£2.8bn) of the assets acquired as part of the acquisition had not been received by 30 June 2012, approximately $3.0bn (£1.9bn) of which were recognised as part of the accounting for the acquisition and are included in the balance sheet as at 30 June 2012. This results in an effective provision of $1.3bn (£0.8bn) against the uncertainty inherent in the litigation. 
 
 

 
 

 
Financial Statement Notes
 
19.         Legal Proceedings (continued)
 
 
On 22 February 2011, the Bankruptcy Court issued its Opinion in relation to these matters, rejecting the Rule 60 Claims and deciding some of the Contract Claims in the Trustee's favour and some in favour of BCI. On 15 July 2011, the Bankruptcy Court entered final Orders implementing its Opinion. Barclays and the Trustee each appealed the Bankruptcy Court's adverse rulings on the Contract Claims to the United States District Court for the Southern District of New York (District Court).  LBHI and the Committee did not pursue an appeal from the Bankruptcy Court's ruling on the Rule 60 Claims.  After briefing and argument, the District Court issued its Opinion on 5 June 2012 in which it reversed one of the Bankruptcy Court's rulings on the Contract Claims that had been adverse to Barclays and affirmed the Bankruptcy Court's other rulings on the Contract Claims.  On 17 July 2012, the District Court issued an amended Opinion, correcting certain errors but not otherwise affecting the rulings, and an agreed Judgment implementing the rulings in the Opinion.  Barclays and the Trustee have each filed a notice of appeal from the adverse rulings of the District Court to the United States Court of Appeals for the Second Circuit. 
 
 
Under the Judgment of the District Court, Barclays is entitled to receive:
 
 
- $1.1bn (£0.7bn) from the Trustee in respect of "clearance box" assets;
 
 
- property held at various institutions to secure obligations under the exchange-traded derivatives transferred to Barclays in the Sale (the ETD Margin), subject to the proviso that Barclays will be entitled to receive
       $507m (£0.3bn) of the ETD Margin only if and to the extent the Trustee has assets available once the Trustee has satisfied all of LBI's customer claims; and 
 
 
- $769m (£0.5bn) from the Trustee in respect of LBI's 15c3-3 reserve account assets only if and to the extent the Trustee has assets available once the Trustee has satisfied all of LBI's customer claims. 
 
 
A portion of the ETD Margin which has not yet been recovered by Barclays or the Trustee is held or owed by certain institutions outside the United States (including several Lehman affiliates that are subject to insolvency or similar proceedings).  Barclays cannot reliably estimate at this time how much of the ETD Margin held or owed by such institutions Barclays is ultimately likely to receive.  Further, Barclays cannot reliably estimate at this time if and to the extent the Trustee will have assets remaining available to it to pay Barclays the $507m (£0.3bn) in respect of ETD Margin or the $769m (£0.5bn) in respect of LBI's 15c3-3 reserve account assets after satisfying all of LBI's customer claims.  If the District Court's rulings were to be unaffected by future proceedings, Barclays estimates that after taking into account the effective provision of $1.3bn (£0.8bn) its loss would be approximately $0.9bn (£0.6bn), conservatively assuming no recovery by Barclays of any of the ETD Margin not yet recovered by Barclays or the Trustee that is held or owed by institutions outside the United States and no recovery by Barclays of the $507m (£0.3bn) in respect of ETD Margin or the $769m (£0.5bn) in respect of LBI's 15c3-3 reserve account assets.  Any such loss, however, is not considered probable and Barclays is satisfied with the current level of provision.
 
 
American Depositary Shares
 
Barclays Bank PLC, Barclays PLC and various current and former members of Barclays PLC's Board of Directors have been named as defendants in five proposed securities class actions (which have been consolidated) pending in the United States District Court for the Southern District of New York (the Court). The consolidated amended complaint, dated 12 February 2010, alleges that the registration statements relating to American Depositary Shares representing Preferred Stock, Series 2, 3, 4 and 5 (the ADS) offered by Barclays Bank PLC at various times between 2006 and 2008 contained misstatements and omissions concerning (amongst other things) Barclays portfolio of mortgage-related (including US subprime-related) securities, Barclays exposure to mortgage and credit market risk and Barclays financial condition. The consolidated amended complaint asserts claims under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933. On 5 January 2011, the Court issued an Order and, on 7 January 2011, judgment was entered, granting the defendants' motion to dismiss the complaint in its entirety and closing the case. On 4 February 2011, the plaintiffs filed a motion asking the Court to reconsider in part its dismissal order. On 31 May 2011, the Court denied in full the plaintiffs' motion for reconsideration. The plaintiffs have appealed both decisions (the grant of the defendants' motion to dismiss and the denial of the plaintiffs' motion for reconsideration) to the United States Court of Appeals for the Second Circuit.
 
 
Barclays considers that these ADS-related claims against it are without merit and is defending them vigorously. It is not practicable to estimate Barclays possible loss in relation to these claims or any effect that they might have upon operating results in any particular financial period.
 
 
 
 
 

 

 
Financial Statement Notes
 
19.         Legal Proceedings (continued)
 
 
US Federal Housing Finance Agency and Other Residential Mortgage-Backed Securities Litigation
 
The United States Federal Housing Finance Agency (FHFA), acting for two US government sponsored enterprises, Fannie Mae and Freddie Mac (collectively, the GSEs), filed lawsuits against 17 financial institutions in connection with the GSEs' purchases of residential mortgage-backed securities (RMBS).  The lawsuits allege, amongst other things, that the RMBS offering materials contained materially false and misleading statements and/or omissions.  Barclays Bank PLC and/or certain of its affiliates or former employees are named in two of these lawsuits, relating to sales between 2005 and 2007 of RMBS, in which Barclays Capital Inc. was lead or co-lead underwriter. 
 
Both complaints demand, amongst other things: rescission and recovery of the consideration paid for the RMBS; and recovery for the GSEs' alleged monetary losses arising out of their ownership of the RMBS.  The complaints are similar to other civil actions filed against Barclays Bank PLC and/or certain of its affiliates by other plaintiffs, including the Federal Home Loan Bank of Seattle, Federal Home Loan Bank of Boston, Federal Home Loan Bank of Chicago, Cambridge Place Investment Management, Inc., HSH Nordbank AG (and affiliates), Sealink Funding Limited, Landesbank Baden-Württemberg (and affiliates), Deutsche Zentral-Genossenschaftsbank AG (and affiliates) and Stichting Pensioenfonds ABP, relating to their purchases of RMBS.  Barclays considers that the claims against it are without merit and intends to defend them vigorously. 
 
The original amount of RMBS related to the claims against Barclays in these cases totalled approximately $7.6bn, of which approximately $2.4bn was outstanding as at 30 June 2012.  Cumulative losses reported on these RMBS as at 30 June 2012 were approximately $0.2bn.  If Barclays were to lose these cases it could incur a loss of up to the outstanding amount of the RMBS at the time of judgment (taking into account further principal payments after 30 June 2012) 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. Barclays has estimated the total market value of the RMBS as at 30 June 2012 to be approximately $1.3bn.  Barclays may be entitled to indemnification for a portion of any losses.
 
Devonshire Trust
 
On 13 January 2009, Barclays commenced an action in the Ontario Superior Court seeking an order that its early terminations earlier that day of two credit default swaps under an ISDA Master Agreement with the Devonshire Trust (Devonshire), an asset-backed commercial paper conduit trust, were valid.  On the same day, Devonshire purported to terminate the swaps on the ground that Barclays had failed to provide liquidity support to Devonshire's commercial paper when required to do so. On 7 September 2011, the Court ruled that Barclays early terminations were invalid, Devonshire's early terminations were valid and, consequently, Devonshire was entitled to receive back from Barclays cash collateral of approximately Canadian $533m together with accrued interest thereon.  Barclays is appealing the Court's decision.  If the Court's decision were to be unaffected by future proceedings, Barclays estimates that its loss would be approximately Canadian $500m, less any impairment provisions taken by Barclays for this matter.
 
 
LIBOR Civil Actions
 
Barclays and other banks have been named as defendants in class action lawsuits filed in United States Federal Courts in connection with their roles as contributor panel banks to US Dollar LIBOR, the first of which was filed on 15 April 2011.  The complaints are substantially similar and allege, amongst other things, that Barclays and the other banks individually and collectively violated various provisions of the Sherman Act, the Commodity Exchange Act and various state laws by suppressing US Dollar LIBOR rates.  Barclays is also named along with other banks in three individual lawsuits by Charles Schwab & Co., Inc. and/or its affiliates, which allege substantially similar claims, as well as violations of the Racketeer Influenced and Corrupt Organizations Act (RICO).  The lawsuits seek an unspecified amount of damages and trebling of damages under the Sherman and RICO Acts.
 
An additional class action was commenced on 30 April 2012 in the United States District Court for the Southern District of New York (SDNY) against Barclays and other Japanese Yen LIBOR panel banks by plaintiffs involved in exchange-traded derivatives.  The complaint also names members of the Japanese Bankers Association's Euroyen TIBOR panel, of which Barclays is not a member.  The complaint alleges, amongst other things, manipulation of the Euroyen TIBOR and Yen LIBOR rates and breaches of US antitrust laws between 2006 and 2010. 
 
 
 
 

 

 
Financial Statement Notes
 
19.         Legal Proceedings (continued)
 
 
A further class action was commenced on 6 July 2012 in the SDNY against Barclays and other EURIBOR panel banks by plaintiffs that purchased or sold EURIBOR-related financial instruments.  The complaint alleges, amongst other things, manipulation of the EURIBOR rate and breaches of the Sherman Act and the Commodity Exchange Act beginning as early as 1 January 2005 and continuing through to 31 December 2009. Barclays has been granted conditional leniency from the Antitrust Division of the Department of Justice (DOJ) 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, Barclays 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 Barclays satisfying the DOJ and the court presiding over the civil litigation of its satisfaction of its cooperation obligations.
 
 
Barclays has also been named as a defendant along with a current and former member of its Board of Directors in a proposed securities class action pending in the SDNY in connection with Barclays role as a contributor panel bank to LIBOR. The complaint alleges that Barclays Annual Reports for the years 2006-2011 contained misstatements and omissions concerning (amongst other things) Barclays compliance with its operational risk management processes and certain laws and regulations.  The complaint is brought on behalf of a proposed class consisting of all persons or entities (other than the defendants) that purchased Barclays sponsored American Depositary Receipts on an American securities exchange between 10 July 2007 and 27 June 2012.  The complaint asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act 1934.
 
 
It is not practicable to provide an estimate of the financial impact of the potential exposure of any of the actions described or what effect, if any, that they might have upon operating results, cash flows or Barclays financial position in any particular period.
 
 
See also page 87.
 
 
Other
 
Barclays is engaged in various other legal proceedings both in the United Kingdom and a number of overseas jurisdictions, including the United States, involving claims by and against it which arise in the ordinary course of business, including debt collection, consumer claims and contractual disputes. Barclays does not expect the ultimate resolution of any of these proceedings to which Barclays is party to have a material adverse effect on its results of operations, cash flows or the financial position of the Group and Barclays has not disclosed the contingent liabilities associated with these claims either because they cannot reliably be estimated or because such disclosure could be prejudicial to the conduct of the claims. Provisions have been recognised for those cases where Barclays is able reliably to estimate the probable loss where the probable loss is not de minimis.
 
 
20.      Competition and Regulatory Matters   
 
 
This note highlights some of the key competition and regulatory challenges facing Barclays, many of which are beyond our control. The extent of the impact of these matters on Barclays and the impact on Barclays of any other competition and regulatory matters in which Barclays is or may in the future become involved cannot always be predicted but may materially impact our businesses and earnings.
 
 
Regulatory change
 
 
The scale of regulatory change remains challenging with a significant tightening of regulation and changes to regulatory structures globally, especially for banks that are deemed to be of systemic importance. Concurrently, there is continuing political and regulatory scrutiny of the operation of the banking and consumer credit industries which, in some cases, is leading to increased or changing regulation which is likely to have a significant effect on the industry. Examples include Basel 3, the emerging proposals on bank resolution regimes and proposals relating to over-the-counter derivatives clearing and global systemically important banks.
 

 

 
Financial Statement Notes
 
20.      Competition and Regulatory Matters    (continued)
 
 
In the UK, the FSA's current responsibilities are to be reallocated between the Prudential Regulatory Authority (a subsidiary of the Bank of England) and a new Financial Conduct Authority. In addition, the Independent Commission on Banking (the ICB) completed its review of the UK banking system and published its final report on 12 September 2011. The ICB recommended (amongst other things) that: (i) the UK and EEA retail banking activities of a UK bank or building society should be placed in a legally distinct, operationally separate and economically independent entity (so-called "ring-fencing"); and (ii) the loss-absorbing capacity of ring-fenced banks and UK-headquartered global systemically important banks (such as Barclays Bank PLC) should be increased to levels higher than the Basel 3 proposals. The UK Government published a white paper setting out its proposals for taking forward implementation of the ICB recommendations in June 2012 and indicated that primary and secondary legislation will be completed by May 2015, with UK banks required to be compliant by 1 January 2019. Furthermore, in July 2012, the UK Parliament established a Parliamentary Commission on Banking Standards, which will consider and report on the professional standards and culture of the UK banking sector and corporate governance, transparency and conflicts of interest. The Parliamentary Commission is due to report in December 2012 its findings and proposals for any legislative changes.
 
 
The US Dodd-Frank Wall Street Reform and Consumer Protection Act contains far reaching regulatory reform. The full impact on Barclays businesses and markets will not be known until the principal implementing rules are adopted in final form by governmental authorities, a process which is underway and which will take effect over several years.
 
 
Interchange
 
 
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. These investigations may have an impact on the consumer credit industry as well as having the potential for the imposition of fines. Timing is uncertain but outcomes may be known within the next 2-4 years.
 
 
London Interbank Offered Rate (LIBOR)
 
 
The FSA, the US Commodity Futures Trading Commission (the CFTC), the SEC, the US Department of Justice Fraud Section (the DOJ-FS) and Antitrust Division and the European Commission are amongst various authorities conducting investigations (the Investigations) into submissions made by Barclays and other panel members to the bodies that set various interbank offered rates, such as LIBOR and the Euro Interbank Offered Rate (EURIBOR).
 
 
On 27 June 2012, Barclays announced that it had reached settlements with the FSA, the CFTC and the DOJ-FS in relation to the Investigations and Barclays has agreed to pay total penalties of £290m (Sterling equivalent), which have been reflected in operating expenses for 2012. The settlements were made by entry into a Settlement Agreement with the FSA, a Non-Prosecution Agreement with the DOJ-FS and a Settlement Order Agreement with the CFTC. In addition, Barclays has been granted conditional leniency from the Antitrust Division of the Department of Justice in connection with potential US antitrust law violations with respect to financial instruments that reference EURIBOR.
 
 
See also page 86.
 
 
On 6 July 2012, the UK Serious Fraud Office announced that it had decided formally to accept the LIBOR matter for investigation.
 
 
Interest Rate Hedging Products
 
 
See page 81.  
 
 

 
Other disclosure matters
 
The FSA has commenced an investigation involving Barclays and four current and former senior employees, including Chris Lucas, Group Finance Director. The FSA is investigating the sufficiency of disclosure in relation to fees payable under certain commercial agreements and whether these may have related to Barclays capital raisings in June and November 2008.
 
Barclays considers that it satisfied its disclosure obligations and confirms that it will cooperate fully with the FSA's investigation. 

 

 
Financial Statement Notes
 
21.         Related Party Transactions
 
Related party transactions in the half year ended 30 June 2012 were similar in nature to those disclosed in the Group's 2011 Annual Report. No related party transactions that have taken place in the six months to 30 June 2012 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 2011 Annual Report that could have a material effect on the financial position or performance of the Group in the first six months of the current financial year.
 
22.         Post Balance Sheet Events
 
 
On 2 July 2012, Marcus Agius announced his resignation as Chairman of Barclays PLC, confirming that a search would commence, with immediate effect, for an appropriate successor.  Mr Agius would remain in post until an orderly succession is assured and Sir Michael Rake was appointed Deputy Chairman.  In addition, and in response to the findings from the investigations by various regulatory authorities into submissions made by Barclays and other Panel members into the setting of various interbank offered rates, the Board confirmed that it would undertake an independent, third party review of Barclays business practices.
 
 
On 3 July, and with immediate effect, Bob Diamond resigned from the Boards of Barclays PLC and Barclays Bank PLC, and from his role as Chief Executive, and Jerry Del Missier resigned as Chief Operating Officer and relinquished his membership of the Executive Committee.  Mr Agius assumed the role of full-time Chairman and chair of the Executive Committee and is leading the search for a new Chief Executive, supported by Sir Michael Rake.
 
 
On 10 July, the Board announced that it had accepted Mr Diamond's voluntary offer to waive all of his unvested deferred bonus awards and long-term incentive share awards, with no compensation made in respect of the lapsed awards.  The Board also asked Mr Diamond to support the transition to the new Chief Executive as necessary, to which he agreed. Consistent with his contract of employment, Mr Diamond will receive up to 12 months' salary, pension allowance and other benefits; and he agreed to forgo his contractual entitlement to tax equalisation going forward.  The Board agreed with Mr Diamond that he will not receive any future bonus or incentive awards; nor will he receive any further compensation payment in connection with the termination of his employment.
 
 
On 24 July, the Board announced that Anthony Salz would lead an independent, third party, review of business practices. This global review will 1) assess the bank's current values, principles and standard of operation; 2) test how well these are reflected in the bank's decision-making processes; 3) assess whether or not the appropriate training, development, incentives, and disciplinary processes are in place; and 4) determine to what extent each of these aspects need to change. The review's findings and recommendations will be published, based on evidence gathered through extensive engagement with all of the bank's stakeholders and a thorough review of all pertinent documentary evidence.
 
 
 
 
 

 
 

 
Financial Statement Notes
 
23.         Segmental Reporting
 
 
There have been two changes to the Barclays business structure since 31 December 2011.
 
Single Barclays Brand
 
Following the move to a single Barclays brand certain business segments have been renamed as follows:
 
 
- Barclays Capital has been renamed Investment Bank
 
 
- Barclays Corporate has been renamed Corporate Banking
 
 
- Barclays Wealth has been renamed Wealth and Investment Management
 
 
- Head Office and Other Operations includes the results previously reported as the Investment Management segment comprising Barclays previous investment in BlackRock, Inc. and the residual elements
       relating to Barclays Global Investors
 
 
Restructure of Corporate Banking Activities in Africa
 
Certain corporate banking activities in Africa, previously reported under Africa RBB, are now included within Corporate Banking. These activities include approximately 800 clients as well as the Trade Finance and Electronic Banking channels relating to large corporate clients. This change has been made to further align client coverage and product ownership to better serve clients needs, and to align Africa to the reporting approach for the UK and Europe. The total amount of profit before tax transferred for the six months ended 31 December 2011 was £41m and for the six months ended 30 June 2011 was £37m.
 
The impacts of the transfers are considered to be immaterial and were disclosed in the 31 March 2012 Interim Management Statement. They have no impact on the overall Barclays results.  
 
The tables set out below analyse the results by business under the revised business structure.
 
 
 
Analysis of results by business
UK RBB
Europe RBB
Africa RBB
Barclaycard
RBB Total
Half Year Ended 30 June 2012
£m
£m
£m
£m
£m
Total income net of insurance claims
2,205 
486 
1,625 
2,026 
6,342 
Credit impairment charges and other provisions
(122)
(157)
(321)
(460)
(1,060)
Net operating income
2,083 
329 
1,304 
1,566 
5,282 
Operating expenses
(1,637)
(428)
(1,033)
(830)
(3,928)
Other income/(losses)1 
- 
7 
3 
17 
27 
Profit /(loss) before tax
446 
(92)
274 
753 
1,381 
           
Total assets  
130,776 
48,109 
47,398 
34,596 
260,879 
Analysis of results by business
Investment Bank
 
Corporate Banking
Wealth and Investment Management
Head Office
and Other
Operations
Group Total
Half Year Ended 30 June 2012 continued
£m
£m
£m
£m
£m
Total income net of insurance claims
6,496 
1,527 
892 
(2,500)
12,757 
Credit impairment charges and other provisions
(323)
(425)
(19)
(5)
(1,832)
Net operating income
6,173 
1,102 
873 
(2,505)
10,925 
Operating expenses
(3,933)
(1,204)
(751)
(425)
(10,241)
Other income/(losses)1 
28 
(2)
(1)
23 
75 
Profit /(loss) before tax
2,268 
(104)
121 
(2,907)
759 
           
Total assets  
1,225,409 
87,758 
22,205 
35,014 
1,631,265 
           
 
 
           
           
           
 
 
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.
 
 
 

 

 
Financial Statement Notes
 
23.         Segmental Reporting (continued)
 
Analysis of results by business
UK RBB
Europe RBB
Africa RBB
Barclaycard
RBB Total
Half Year Ended 31 December 2011
£m
£m
£m
£m
£m
Total income net of insurance claims
2,402 
622 
1,801 
2,123 
6,948 
Credit impairment charges and other provisions
(261)
(145)
(196)
(611)
(1,213)
Net operating income
2,141 
477 
1,605 
1,512 
5,735 
Operating expenses
(1,427)
(981)
(1,118)
(888)
(4,414)
Other income/(losses)1 
2 
4 
3 
13 
22 
Profit /(loss) before tax
716 
(500)
490 
637 
1,343 
           
Total assets  
127,845 
51,310 
48,243 
33,838 
261,236 
Analysis of results by business
Investment Bank
 
Corporate Banking
Wealth and Investment Management
Head Office
and Other
Operations
Group Total
Half Year Ended 31 December 2011 continued
£m
£m
£m
£m
£m
Total income net of insurance claims
4,072 
1,540 
896 
3,506 
16,962 
Credit impairment charges and other provisions
(204)
(535)
(22)
- 
(1,974)
Impairment of investment in BlackRock, Inc
- 
- 
- 
(1,800)
(1,800)
Net operating income
3,868 
1,005 
874 
1,706 
13,188 
Operating expenses
(3,216)
(981)
(753)
(584)
(9,948)
Other income/(losses)1 
3 
(6)
(2)
(22)
(5)
Profit /(loss) before tax
655 
18 
119 
1,100 
3,235 
           
Total assets  
1,158,350 
91,190 
20,866 
31,885 
1,563,527 
           
 
 
Analysis of results by business
UK RBB
Europe RBB
Africa RBB
Barclaycard
RBB Total
Half Year Ended 30 June 2011
£m
£m
£m
£m
£m
Total income net of insurance claims
2,254 
604 
1,770 
1,972 
6,600 
Credit impairment charges and other provisions
(275)
(116)
(270)
(648)
(1,309)
Net operating income
1,979 
488 
1,500 
1,324 
5,291 
Operating expenses
(1,675)
(657)
(1,161)
(1,418)
(4,911)
Other income/(losses)1 
- 
8 
3 
18 
29 
Profit /(loss) before tax
304 
(161)
342 
(76)
409 
           
Total assets  
123,745 
56,699 
55,064 
32,513 
268,021 
Analysis of results by business
Investment Bank
 
Corporate Banking
Wealth and Investment Management
Head Office
and Other
Operations
Group Total
Half Year Ended 30 June 2011 continued
£m
£m
£m
£m
£m
Total income net of insurance claims
6,263 
1,568 
848 
51 
15,330 
Credit impairment charges and other provisions
111 
(612)
(19)
1 
(1,828)
Net operating income
6,374 
956 
829 
52 
13,502 
Operating expenses
(4,073)
(901)
(740)
(204)
(10,829)
Other income/(losses)1 
9 
(65)
(1)
(1)
(29)
Profit /(loss) before tax
2,310 
(10)
88 
(153)
2,644 
           
Total assets  
1,076,018 
87,132 
19,814 
41,937 
1,492,922 
 
 
 
 
 
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 Timetable1 
Date
        
Ex-dividend date
8 August 2012
      
Dividend Record date
10 August 2012
      
Dividend Payment date
7 September 2012
      
Q3 2012 Interim Management Statement
31 October 2012
      
 
 
           
 
Half Year
Half Year
Half Year
    
 
Ended
Ended
Ended
Change
Change
Exchange Rates2 
30.06.12
31.12.11
30.06.11
31.12.113 
30.06.113 
Period end - US$/£
1.57 
1.54 
1.61 
(2%)
3%
Average - US$/£
1.58 
1.59 
1.62 
1%
3%
Period end - €/£
1.24 
1.19 
1.11 
(4%)
(10%)
Average - €/£
1.22 
1.15 
1.15 
(5%)
(5%)
Period end - ZAR/£
12.83 
12.52 
10.87 
(2%)
(15%)
Average - ZAR/£
12.52 
12.08 
11.14 
(4%)
(11%)
           
Share Price Data
    
30.06.12
31.12.11
30.06.11
Barclays PLC (p)
    
162.85 
176.05 
256.45 
Absa Group Limited (ZAR)
    
141.20 
141.00 
134.81 
 
 
           
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 20554 from the UK or +44 121 415 7004 from overseas.
 
 
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.
 
 
Dividend Reinvestment Plan
 
Shareholders may have their dividends reinvested in Barclays shares by joining the Barclays Dividend Reinvestment Plan (DRIP). The DRIP is a straightforward and cost-effective way of using your dividends to build your shareholding in Barclays. For further details, including application information, please visit www.barclays.com or alternatively contact: The Plan Administrator to Barclays DRIP, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, United Kingdom, or by telephoning 0871 384 20554 from the UK or +44 121 415 7004 from overseas.
 
 
 
 
 
 
 
 
 
 
1     Note that these announcement dates are provisional and subject to change.
 
 
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 to this number are charged at 8p per minute if using a BT landline. Call charges may vary if using other providers.
 
 

 
 

 
Index
 
 
Africa Retail and Business Banking
18
  
Liquidity pool
40
  
 
Accounting policies
73
  
Loans and advances to customers and banks
46
  
 
Administration and general expenses
75
  
Margins and balances
34
  
 
Balance sheet
11
  
Market risk
70
  
 
Balance sheet leverage
39
  
Net interest income
73
  
 
Barclaycard
20
  
Non-controlling interests
76
  
 
Capital ratios
37
  
Other reserves
81
  
 
Capital resources
37
  
Performance highlights
2
  
 
Cash flow statement
13
  
Principal risks
36
  
 
Competition and regulatory matters
86
  
Provisions
80
  
 
Contingent liabilities and commitments
82
  
Results by quarter
8, 31
  
 
Corporate Banking
24
  
Results timetable
91
  
 
Country exposures (selected Eurozone)
58
  
Retail credit risk
51
  
 
Credit impairment charges and other credit provisions
48
  
Retail forbearance programmes
55
  
 
Credit market exposures
69
  
Retirement benefits
81
  
 
Credit risk
45
  
Returns and equity by business
33
  
 
Credit risk loans
49
  
Risk weighted assets
38
  
 
Derivative financial instruments
77
  
Share capital
81
  
 
Dividends on ordinary shares
76
  
Share price data
91
  
 
Earnings per share
76
  
Staff costs
74
  
 
Europe Retail and Business Banking
16
  
Statement of profit or loss and other comprehensive income
10
  
 
Financial instruments held at fair value
78
  
Statement of changes in equity
12
  
 
Finance Director's review
5
  
Taxation
75
  
 
Funding and liquidity
40
  
Tier 1 capital ratio
37
  
 
Head Office and Other Operations
30
  
Total assets
38, 45
  
 
Income statement
9
  
UK Retail and Business Banking
14
  
 
Investment Bank
22
  
Wealth and Investment Management
28
  
 
Legal proceedings
83
  
Wholesale credit risk
56
  
             
 
The glossary of terms can be found on: http://group.barclays.com/about-barclays/investor-relations#institutional-investors