bar201603016k.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
 
March 01, 2016
 
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
 
 
Final Results dated 01 March 2016





 



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: March 01, 2016
 
 
By: /s/ Patrick Gonsalves
----------------------
Patrick Gonsalves
Deputy Secretary
 
 

 
 
BARCLAYS BANK PLC
(Registrant)


Date: March 01, 2016
 
 
By: /s/ Patrick Gonsalves
----------------------
Patrick Gonsalves
Joint Secretary
 
 



 

 
Barclays Bank PLC
Results Announcement
31 December 2015
Table of Contents
 
 
Results Announcement
 
Page
 
Basis of Preparation
1
 
Statement of Directors' Responsibilities
2
 
Condensed Consolidated Income Statement
3
 
Condensed Consolidated Statement of Profit or Loss and other Comprehensive Income
4
 
Condensed Consolidated Balance Sheet
5
 
Condensed Consolidated Statement of Changes in Equity
6
 
Condensed Consolidated Cash Flow Statement
7
 
Financial Statement Notes
8
 
Appendix
 
 
Barclays PLC Results Announcement
10
 
BARCLAYS BANK PLC, 1 CHURCHILL PLACE, LONDON, E14 5HP, UNITED KINGDOM. TELEPHONE: +44 (0) 20 7116 1000. COMPANY NO. 1026167
 
 
 
 
Notes
 
The term Barclays or Group refers to Barclays PLC together with its subsidiaries and the term Barclays Bank PLC Group refers to Barclays Bank PLC together with its subsidiaries. Unless otherwise stated, the income statement analysis compares the year ended 31 December 2015 to the corresponding twelve months of 2014 and balance sheet analysis as at 31 December 2015 with comparatives relating to 31 December 2014. The abbreviations '£m' and '£bn' represent millions and thousands of millions of Pounds Sterling respectively; and the abbreviations '$m' and '$bn' represent millions and thousands of millions of US Dollars respectively; '€m' and '€bn' represent millions and thousands of millions of Euros respectively.
 
References throughout this document to 'provisions for ongoing investigation and litigation including Foreign Exchange' means 'provisions held for certain aspects of ongoing investigations involving certain authorities and litigation including Foreign Exchange.'
 
Adjusted profit before tax, adjusted attributable profit and adjusted performance metrics have been presented to provide a more consistent basis for comparing business performance between periods. Adjusting items are considered to be significant but not representative of the underlying business performance. Items excluded from the adjusted measures are: the impact of own credit; provisions for UK customer redress; gain on US Lehman acquisition assets; provision for ongoing investigations and litigation including Foreign Exchange; losses on sale relating to the Spanish and Portuguese businesses; Education, Social Housing and Local Authority (ESHLA) valuation revision; and gain on valuation of a component of the defined retirement benefit liability. As management reviews adjusting items at a Group level, results by business are presented excluding these items. The reconciliations of adjusted to statutory performance is done at a Group level only.
 
Relevant terms that are used in this document but are not defined under applicable regulatory guidance or International Financial Reporting Standards (IFRS) are explained in the Results glossary that can be accessed at www.Barclays.com/results.
 
The information in this announcement, which was approved by the Board of Directors on 29 February 2016 does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2015, which includes 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 contains an unqualified audit report under Section 495 of the Companies Act 2006 (which does not make any statements under Section 498 of the Companies Act 2006) 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 20-F to the SEC as soon as practicable following their publication. Once furnished to the SEC, copies of the Form 20-F will also be available from the Barclays Investor Relations website www.barclays.com/investorrelations and from the SEC's website at http://www.sec.gov.
 
Barclays is a frequent issuer in the debt capital markets and regularly meets with investors via formal road-shows and other ad hoc meetings. Consistent with its usual practice, Barclays expects that from time to time over the coming quarter it will meet with investors globally to discuss these results and other matters relating to the Group.
 
Forward Looking Statement
 
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 the Group. Barclays cautions readers that no forward-looking statement is a guarantee of future performance and that actual results or other financial condition or performance measures could differ materially from those contained in the forward-looking statements. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements sometimes use words such as 'may', 'will', 'seek', 'continue', 'aim', 'anticipate', 'target', 'projected', 'expect', 'estimate', 'intend', 'plan', 'goal', 'believe', 'achieve' or other words of similar meaning. Examples of forward-looking statements include, among others, statements regarding the Group's future financial position, income growth, assets, impairment charges and provisions, business strategy, capital, leverage and other regulatory ratios, payment of dividends (including dividend pay-out ratios), projected levels of growth in the banking and financial markets, projected costs or savings, original and revised commitments and targets in connection with the strategic cost programme and the Group Strategy Update, run-down of assets and businesses within Barclays Non-Core, estimates of capital expenditures and plans and objectives for future operations, projected employee numbers and other statements that are not historical fact. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. These may be affected by changes in legislation, the development of standards and interpretations under International Financial Reporting Standards, evolving practices with regard to the interpretation and application of accounting and regulatory standards, the outcome of current and future legal proceedings and regulatory investigations, future levels of conduct provisions, the policies and actions of governmental and regulatory authorities, geopolitical risks and the impact of competition. In addition, factors including (but not limited to) the following may have an effect: capital, leverage and other regulatory rules (including with regard to the future structure of the Group) applicable to past, current and future periods; UK, US, Africa, Eurozone and global macroeconomic and business conditions; the effects of continued volatility in credit markets; market related risks such as changes in interest rates and foreign exchange rates; effects of changes in valuation of credit market exposures; changes in valuation of issued securities; volatility in capital markets; changes in credit ratings of any entities within the Group or any securities issued by such entities; the potential for one or more countries exiting the Eurozone; the implementation of the strategic cost programme; and the success of future acquisitions, disposals and other strategic transactions. A number of these influences and factors are beyond the Group's control. As a result, the Group's actual future results, dividend payments, and capital and leverage ratios may differ materially from the plans, goals, and expectations set forth in the Group's forward-looking statements. Additional risks and factors which may impact the Group's future financial condition and performance are identified in our filings with the SEC (including, without limitation, our Annual Report on Form 20-F for the fiscal year ended 31 December 2015), which are available on the SEC's website at www.sec.gov.
 
Subject to our obligations under the applicable laws and regulations of the United Kingdom and the United States in relation to disclosure and ongoing information, we undertake no obligation to update publicly or revise any forward looking statements, whether as a result of new information, future events or otherwise
 
Basis of Preparation
 
More extensive disclosures are contained in the Barclays PLC Results Announcement for the year ended 31 December 2015, attached, including risk exposures and business performance, which are materially the same as those for Barclays Bank PLC.
 
Barclays Bank PLC is a wholly owned subsidiary of Barclays PLC, which is the Group's ultimate parent company. The business activities of Barclays Bank PLC Group and Barclays PLC Group are fundamentally the same as the only difference is the holding company, Barclays PLC. Reporting differences between Barclays Bank PLC and Barclays PLC are driven by the holding company and resulting differences in funding structures. The significant differences are described below.
 
Instrument Type
Barclays PLC
£m
Barclays Bank PLC
£m
     Primary reason for difference
Preference shares
-
5,486
     Preference shares and capital notes issued by Barclays Bank PLC are included within share capital
     in Barclays Bank PLC, and presented as non-controlling interests in the financial statements of
     Barclays PLC Group.
Other shareholders' equity
-
485
Non-controlling interests (NCI)
6,054
1,914
Treasury shares
(68)
-
     Barclays PLC shares held for the purposes of employee share schemes and for trading
     are recognised as available for sale investments and trading portfolio assets respectively within
     Barclays Bank PLC. Barclays PLC deducts these treasury shares from shareholders' equity.
 
Capital Redemption Reserve (CRR)
394
        24
     Arising from the redemption or exchange of Barclays PLC or Barclays Bank PLC shares
     respectively.
 
Barclays Bank PLC Contingent Capital Notes (CCNs)
Barclays Bank PLC has in issue two series of contingent capital notes (CCNs). These both pay interest and principal to the holder unless the consolidated CRD IV CET 1 ratio (FSA October 2012 transitional statement) of Barclays PLC falls below 7%, in which case they are cancelled from the consolidated perspective. The coupon payable on the CCNs is higher than a market rate of interest for a similar note without this risk.
 
The accounting for these instruments differs between the consolidated financial statements of Barclays PLC and Barclays Bank PLC as follows:
 
In the case of the 7.625% CCN issuance, the cancellation is effected by an automatic legal transfer of title from the holder to Barclays PLC. In these circumstances, Barclays Bank PLC remains liable to Barclays PLC. Barclays Bank PLC does not benefit from the cancellation feature although it pays a higher than market rate for a similar note, and therefore the initial fair value of the note recognised was higher than par. The difference between fair value and par is amortised to the income statement over time.
In the case of the 7.75% CCN issuance, the cancellation is directly effected in Barclays Bank PLC. For Barclays Bank PLC, the cancellation feature is separately valued from the host liability as an embedded derivative with changes in fair value reported in the income statement. The initial fair value of the host liability recognised was higher than par by the amount of the initial fair value of the derivative and the difference is amortised to the income statement over time.
 
Cash flow hedge
 
Barclays Bank PLC is no longer expected to be exposed to floating rate cash flows on assets which had previously been designated in cash flow hedges. This is as a direct result of anticipated bank ring fencing and the anticipated transfer of these assets to an entity which is not expected to be consolidated by Barclays Bank PLC (although is expected to be consolidated by Barclays PLC).
 
As a result, Barclays Bank PLC has recycled amounts which had been deferred into the cash flow hedge reserve pertaining to these cash flows and has prospectively discontinued its hedge accounting relationships on these cash flows, which has increased its income statement volatility. During Q4 2015 this has resulted in a net pre-tax income of £692m.
 
 
Statement of Directors' Responsibilities
 
Each of the Directors (the names of whom are set out below) confirm that:
 
 
  -
to the best of their knowledge, the condensed consolidated financial statements (set out on pages 3 to 8), which have been prepared in accordance with the IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole. The condensed consolidated financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2015 included in the Annual Report; and
 
  -
to the best of their knowledge, the management information (set out on pages 3 to 8) includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
 
 
Signed on behalf of the Board by
 
Jes Staley                                                         Tushar Morzaria
Group Chief Executive                                     Group Finance Director
 
Barclays Bank PLC Board of Directors:
 
Chairman
John McFarlane
Executive Directors
Jes Staley (Group Chief Executive)
Tushar Morzaria (Group Finance Director)
Non-executive Directors
Mike Ashley
Tim Breedon CBE
Crawford Gillies
Sir Gerry Grimstone
Reuben Jeffery III
Wendy Lucas-Bull
Dambisa Moyo
Frits van Paasschen
Diane de Saint Victor
Diane Schueneman
Stephen Thieke
Condensed Consolidated Income Statement (audited)
 
   
Year Ended
Year Ended
 
Continuing Operations
 
31.12.15
31.12.14
 
 
Notes1
£m
£m
 
Net interest income
 
13,313
12,138
 
Net fee and commission income
 
7,916
8,188
 
Net trading income
 
3,627
3,310
 
Net investment income
 
1,138
1,328
 
Net premiums from insurance contracts
 
709
669
 
Other income
 
52
182
 
Total income
 
26,755
25,815
 
Net claims and benefits incurred on insurance contracts
 
(533)
(480)
 
Total income net of insurance claims
 
26,222
25,335
 
Credit impairment charges and other provisions
 
(2,114)
(2,168)
 
Net operating income
 
24,108
23,167
 
         
Staff costs
 
(9,960)
(11,005)
 
Administration and general expenses
 
(10,717)
(9,418)
 
Operating expenses
 
(20,677)
(20,423)
 
         
Loss on disposal of undertakings and share of results of associates and joint ventures
 
(590)
(435)
 
Profit before tax
 
2,841
2,309
 
Tax
 
(1,603)
(1,455)
 
Profit after tax
 
1,238
854
 
         
Attributable to: 
       
Equity holders of the parent
 
911
528
 
Non-controlling interests
1
327
326
 
Profit after tax
 
1,238
854
 
             

 
1 For notes specific to Barclays Bank PLC see page 8 and for those that also relate to Barclays PLC see pages 47 to 54 in the Barclays PLC Results Announcement.
2 Net investment income in 2014 includes the £461m gain on US Lehman acquisition assets.

 
Condensed Consolidated Statement of Profit or Loss and other Comprehensive Income (audited)
   
Year Ended
Year Ended
Continuing Operations
 
31.12.15
31.12.14
 
Notes1
£m
£m
Profit after tax
 
1,238
854
       
Other comprehensive (loss)/income that may be recycled to profit or loss:
     
Currency translation reserve
 
(476)
486
Available for sale reserve
 
(246)
426
Cash flow hedge reserve
 
(1,146)
1,540
Other
 
19
(19)
Total comprehensive (loss)/income that may be recycled to profit or loss
 
(1,849)
2,433
       
Other comprehensive income/(loss) not recycled to profit or loss:
     
Retirement benefit remeasurements
 
914
205
       
Other comprehensive (loss)/income for the period
 
(935)
2,638
       
Total comprehensive income for the period
 
303
3,492
       
Attributable to:
     
Equity holders of the parent
 
457
3,245
Non-controlling interests
1
(154)
247
Total comprehensive income/(loss) for the period
 
303
3,492

 
1
For notes specific to Barclays Bank PLC see page 8 and for those that also relate to Barclays PLC see pages 47 to 54 in the Barclays PLC Results Announcement.


 
Condensed Consolidated Balance Sheet (audited)
   
As at
As at
   
31.12.15
31.12.14
Assets
Notes1
£m
£m
Cash and balances at central banks
 
49,711
39,695
Items in the course of collection from other banks
 
1,011
1,210
Trading portfolio assets
 
77,398
114,755
Financial assets designated at fair value
 
76,830
38,300
Derivative financial instruments
 
327,870
440,076
Available for sale financial investments
 
90,304
86,105
Loans and advances to banks
 
41,829
42,657
Loans and advances to customers
 
399,217
427,767
Reverse repurchase agreements and other similar secured lending
 
28,187
131,753
Current tax assets and deferred tax assets
 
4,880
4,464
Prepayments, accrued income and other assets
 
10,391
19,178
Investments in associates and joint ventures
 
573
711
Goodwill
 
4,605
4,887
Intangible assets
 
3,617
3,293
Property, plant and equipment
 
3,468
3,786
Retirement benefit assets
 
836
56
Total assets
 
1,120,727
1,358,693
       
Liabilities
     
Deposits from banks
 
47,080
58,390
Items in the course of collection due to other banks
 
1,013
1,177
Customer accounts
 
418,307
427,868
Repurchase agreements and other similar secured borrowing
 
25,035
124,479
Trading portfolio liabilities
 
33,967
45,124
Financial liabilities designated at fair value
 
91,745
56,972
Derivative financial instruments
 
324,252
439,320
Debt securities in issue
 
69,150
86,099
Subordinated liabilities
 
21,955
21,685
Accruals, deferred income and other liabilities
 
16,609
24,547
Current tax and deferred tax liabilities
 
1,030
1,278
Provisions
 
4,142
4,135
Retirement benefit liabilities
 
423
1,574
Total liabilities
 
1,054,708
1,292,648
       
Equity
     
Called up share capital and share premium
3
14,472
14,472
Other reserves
 
933
2,322
Retained earnings
 
43,350
42,650
Shareholders' equity attributable to ordinary shareholders of the parent
 
58,755
59,444
Other equity instruments
4
5,350
4,350
Total equity excluding non-controlling interests
 
64,105
63,794
Non-controlling interests
1
1,914
2,251
Total equity
 
66,019
66,045
       
Total liabilities and equity
 
1,120,727
1,358,693

 
1
For notes specific to Barclays Bank PLC see page 8 and for those that also relate to Barclays PLC see pages 47 to 54 in the Barclays PLC Results Announcement.


 
Condensed Consolidated Statement of Changes in Equity (audited)
               
 
Called up Share Capital and Share Premium1
Other Equity Instruments1
Other Reserves
Retained Earnings
Total
Non-controlling Interests2
Total
Equity
Year Ended 31.12.15
£m
£m
£m
£m
£m
£m
£m
Balance at 1 January 2015
14,472
4,350
2,322
42,650
63,794
2,251
66,045
Profit after tax
-
345
-
566
911
327
1,238
Other comprehensive profit after tax for the period
-
-
(1,389)
935
(454)
(481)
(935)
Issue and exchange of equity instruments
-
1,000
-
-
1,000
-
1,000
Redemption of preference shares
-
-
-
-
-
-
-
Coupons paid on other equity instruments
-
(345)
-
70
(275)
-
(275)
Equity settled share schemes
-
-
-
571
571
-
571
Vesting of Barclays PLC shares under share-based payment schemes
-
-
-
(755)
(755)
-
(755)
Dividends paid
-
-
-
(876)
(876)
(209)
(1,085)
Dividends paid on preference shares and other shareholders' equity
-
-
-
(343)
(343)
-
(343)
Capital contribution from Barclays PLC
-
-
-
560
560
-
560
Other reserve movements
-
-
-
(28)
(28)
26
(2)
Balance at 31 December 2015
14,472
5,350
933
43,350
64,105
1,914
66,019
               
Year Ended 31.12.14
£m
£m
£m
£m
£m
£m
£m
Balance at 1 January 2014
14,494
2,078
(233)
44,670
61,009
2,211
63,220
Profit after tax
-
250
-
278
528
326
854
Other comprehensive profit after tax for the period
-
-
2,531
186
2,717
(79)
2,638
Issue and exchange of equity instruments
(15)
2,272
16
(1,683)
590
-
590
Redemption of preference shares
(7)
-
8
(792)
(791)
-
(791)
Coupons paid on other equity instruments
-
(250)
-
54
(196)
-
(196)
Equity settled share schemes
-
-
-
693
693
-
693
Vesting of Barclays PLC shares under share-based payment schemes
-
-
-
(866)
(866)
-
(866)
Dividends paid
-
-
-
(821)
(821)
(190)
(1,011)
Dividends paid on preference shares and other shareholders' equity
-
-
-
(441)
(441)
-
(441)
Capital contribution from Barclays PLC
-
-
-
1,412
1,412
-
1,412
Other reserve movements
-
-
-
(40)
(40)
(17)
(57)
Balance at 31 December 2014
14,472
4,350
2,322
42,650
63,794
2,251
66,045
 
 
1
Details of share capital and other equity Instruments are shown on page 8.
2
Details of Non-controlling Interests are shown on page 8.


 
Condensed Consolidated Cash Flow Statement (audited)
 
 
Year Ended
Year Ended
Continuing Operations
31.12.15
31.12.14
 
£m
£m
Profit before tax
2,841
2,309
Adjustment for non-cash items
5,340
4,728
Changes in operating assets and liabilities
8,906
(17,538)
Corporate income tax paid
(1,643)
(1,590)
Net cash from operating activities
15,444
(12,091)
Net cash from investing activities
(8,434)
10,661
Net cash from financing activities
243
(1,414)
Effect of exchange rates on cash and cash equivalents
824
(431)
Net increase/(decrease) in cash and cash equivalents
8,077
(3,275)
Cash and cash equivalents at beginning of the period
78,479
81,754
Cash and cash equivalents at end of the period
86,556
78,479
 
 
Financial Statement Notes
 
1. Non-controlling Interests
 
                 
     
Profit Attributable to Non-controlling Interest
 
Equity Attributable to Non-controlling Interest
 
     
Year Ended
Year Ended
 
As at
As at
 
     
31.12.15
31.12.14
 
31.12.15
31.12.14
 
     
£m
£m
 
£m
£m
 
Barclays Africa Group Limited
   
325
320
 
1,902
2,247
 
Other non-controlling interests
   
2
6
 
12
4
 
Total
   
327
326
 
1,914
2,251
 
                 
                     
2. Dividends on Ordinary Shares
 
 
Year Ended 31.12.15
Year Ended 31.12.14
Dividends paid during the period
£m
£m
Final dividend paid during period
476
512
Interim dividends paid during period
400
309
Total
876
821
 
Ordinary dividends were paid to enable Barclays PLC to fund its dividend to shareholders.
 
3. Called Up Share Capital
 
Ordinary Shares
 
At 31 December 2015 and 31 December 2014 the issued ordinary share capital of Barclays Bank PLC, comprised 2,342 million ordinary shares of £1 each.
 
Preference Shares
 
At 31 December 2015 the issued preference share capital of Barclays Bank PLC comprised 1,000 (2014: 1,000) Sterling Preference Shares of £1 each; 31,856 (2014: 31,856) Euro Preference Shares of €100 each; 20,930 (2014: 20,930) Sterling Preference Shares of £100 each; 58,133 (2014: 58,133) US Dollar Preference Shares of $100 each; and 237 million (2014: 237 million) US Dollar Preference Shares of $0.25 each.
 
4. Other Equity Instruments
 
Other Equity Instruments of £5,350m (2014: £4,350m) include Additional Tier 1 (AT1) securities issued by Barclays Bank PLC. The AT1 securities are perpetual securities with no fixed maturity and are structured to qualify as AT1 instruments under CRD IV.
In 2015 there was one issuance of Fixed Rate Resetting Perpetual Subordinated Contingent Convertible Securities, with a principal amount of £1.0bn
 
 
Appendix: Barclays PLC Results Announcement
 
Barclays PLC
Results Announcement
31 December 2015
Table of Contents
 
Results Announcement
Page
 
Group Chief Executive Officer - Strategy Update
2-4
 
Performance Highlights
6-8
 
Group Chief Executive Officer's Review
9
 
Group Finance Director's Review
10-12
 
 
Results by Business
 
· Personal and Corporate Banking
14-15
 
· Barclaycard
16-17
 
· Africa Banking
18-19
 
· Investment Bank
20-21
 
· Head Office
22
 
· Barclays Non-Core
24-25
 
Quarterly Results Summary
26-27
 
Quarterly Core Results by Business
28-32
 
 
Performance Management
 
 
· Returns and equity by Business
33-34
 
· Margins and balances
35
 
· Remuneration
36-37
 
 
Risk Management
 
 
· Funding Risk - Liquidity
38-40
 
· Funding Risk - Capital
41-44
 
· Credit Risk
45
 
Statement of Director's Responsibilities
46
 
Condensed Consolidated Financial Statements
47-50
 
Financial Statement Notes
51-54
 
Shareholder Information
55
 
BARCLAYS PLC, 1 CHURCHILL PLACE, LONDON, E14 5HP, UNITED KINGDOM. TELEPHONE: +44 (0) 20 7116 1000. COMPANY NO. 48839
 
Notes
 
The term Barclays or Group refers to Barclays PLC together with its subsidiaries. Unless otherwise stated, the income statement analysis compares the year ended 31 December 2015 to the corresponding twelve months of 2014 and balance sheet analysis as at 31 December 2015 with comparatives relating to 31 December 2014. 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; and the abbreviations '€m' and '€bn' represent millions and thousands of millions of Euros respectively.
 
Comparatives pre Q214 have been restated to reflect the implementation of the Group structure changes and the reallocation of elements of the Head Office results under the revised business structure. These restatements were detailed in our announcement on 10 July 2014, accessible at www.barclays.com/barclays-investor-relations/results-and-reports.
 
References throughout this document to 'provisions for ongoing investigations and litigation including Foreign Exchange' mean 'provisions held for certain aspects of ongoing investigations involving certain authorities and litigation including Foreign Exchange.'
 
Adjusted profit before tax, adjusted attributable profit and adjusted performance metrics have been presented to provide a more consistent basis for comparing business performance between periods. Adjusting items are considered to be significant but not representative of the underlying business performance. Items excluded from the adjusted measures are: the impact of own credit; provisions for UK customer redress; gain on US Lehman acquisition assets; provisions for ongoing investigations and litigation including Foreign Exchange; losses on sale relating to the Spanish, Portuguese and Italian businesses; impairment of goodwill and other assets relating to businesses being disposed; revision of Education, Social Housing, and Local Authority (ESHLA) valuation methodology; and gain on valuation of a component of the defined retirement benefit liability. As management reviews adjusting items at a Group level, results by business, Core and Non-Core are presented excluding these items. The reconciliation of adjusted to statutory performance is done at a Group level only.
 
Relevant terms that are used in this document but are not defined under applicable regulatory guidance or International Financial Reporting Standards (IFRS) are explained in the Results glossary that can be accessed at www.barclays.com/results.
 
The information in this announcement, which was approved by the Board of Directors on 29 February 2016, does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2015, which included certain information required for the Joint Annual Report on Form 20-F of Barclays PLC and Barclays Bank PLC to the US Securities and Exchange Commission (SEC) and which contained an unqualified audit report under Section 495 of the Companies Act 2006 (which did not make any statements under Section 498 of the Companies Act 2006) have been delivered to the Registrar of Companies in accordance with Section 441 of the Companies Act 2006.
 
These results will be furnished as a Form 20-F to the SEC as soon as practicable following their publication. Once furnished with the SEC, copies of the Form 20-F will also be available from the Barclays Investor Relations website www.barclays.com/investorrelations and from the SEC's website at www.sec.gov.
 
Barclays is a frequent issuer in the debt capital markets and regularly meets with investors via formal road-shows and other ad hoc meetings. Consistent with its usual practice, Barclays expects that from time to time over the coming quarter it will meet with investors globally to discuss these results and other matters relating to the Group.
 
Forward-looking statements
 
This document contains certain forward-looking statements within the meaning of Section 21E of the US Securities Exchange Act of 1934, as amended, and Section 27A of the US Securities Act of 1933, as amended, with respect to the Group. Barclays cautions readers that no forward-looking statement is a guarantee of future performance and that actual results or other financial condition or performance measures could differ materially from those contained in the forward-looking statements. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements sometimes use words such as 'may', 'will', 'seek', 'continue', 'aim', 'anticipate', 'target', 'projected', 'expect', 'estimate', 'intend', 'plan', 'goal', 'believe', 'achieve' or other words of similar meaning. Examples of forward-looking statements include, among others, statements regarding the Group's future financial position, income growth, assets, impairment charges and provisions, business strategy, capital, leverage and other regulatory ratios, payment of dividends (including dividend pay-out ratios), projected levels of growth in the banking and financial markets, projected costs or savings, original and revised commitments and targets in connection with the strategic cost programme and the Group Strategy Update, rundown of assets and businesses within Barclays Non-Core, estimates of capital expenditures and plans and objectives for future operations, projected employee numbers and other statements that are not historical fact. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. These may be affected by changes in legislation, the development of standards and interpretations under International Financial Reporting Standards, evolving practices with regard to the interpretation and application of accounting and regulatory standards, the outcome of current and future legal proceedings and regulatory investigations, future levels of conduct provisions, the policies and actions of governmental and regulatory authorities, geopolitical risks and the impact of competition. In addition, factors including (but not limited to) the following may have an effect: capital, leverage and other regulatory rules (including with regard to the future structure of the Group) applicable to past, current and future periods; UK, US, Africa, Eurozone and global macroeconomic and business conditions; the effects of continued volatility in credit markets; market related risks such as changes in interest rates and foreign exchange rates; effects of changes in valuation of credit market exposures; changes in valuation of issued securities; volatility in capital markets; changes in credit ratings of any entities within the Group or any securities issued by such entities; the potential for one or more countries exiting the Eurozone; the implementation of the strategic cost programme; and the success of future acquisitions, disposals and other strategic transactions. A number of these influences and factors are beyond the Group's control. As a result, the Group's actual future results, dividend payments, and capital and leverage ratios may differ materially from the plans, goals, and expectations set forth in the Group's forward-looking statements. Additional risks and factors which may impact the Group's future financial condition and performance are identified in our filings with the SEC (including, without limitation, our Annual Report on Form 20-F for the fiscal year ended 31 December 2015), which are available on the SEC's website at www.sec.gov.
 
Subject to our obligations under the applicable laws and regulations of the United Kingdom and the United States in relation to disclosure and ongoing information, we undertake no obligation to update publicly or revise any forward looking statements, whether as a result of new information, future events or otherwise.
 
Group Chief Executive Officer - Strategy Update
 
In addition to our financial results for 2015 released today, I am announcing initiatives to accelerate our strategy and simplify the Group, as we prepare for regulatory ring-fencing requirements.
 
2015 results show our Core business is a strong base on which to build, with Core adjusted earnings per share of 25.7p, as detailed in the rest of this results release
Barclays has a clear path to deliver strong returns to shareholders whilst maintaining focus on our values
Simplification of the Group to focus on two core divisions - Barclays UK and Barclays Corporate & International
Package of measures to deliver our strategy and manage through remaining legacy headwinds:
 
Intention to sell down stake in Barclays Africa Group Limited (BAGL) to a level which permits accounting and regulatory deconsolidation over the next two to three years
 
One-time enlargement of Non-Core, with transfer of approximately £8bn risk weighted assets (RWAs): accelerated run down particularly in 2016, reconfirming guidance of around £20bn RWAs for Non-Core by end of 2017 despite perimeter enlargement
 
Full year 2015 dividend of 6.5p; intention to pay 3.0p dividend for 2016 and 2017. Expect to pay out a significant proportion of earnings in dividends to shareholders over time
 
Cost guidance for 2016 of £12.8bn for new core (excluding BAGL)
New Group financial targets focused on Return on Tangible Equity, Common Equity Tier 1 ratio, and Cost:Income ratio
 
Barclays - Transatlantic Consumer, Corporate and Investment Bank
 
At the heart of Barclays strategy is to build on our strength as a transatlantic Consumer, Corporate and Investment bank anchored in the two financial centres of the world, London and New York.
 
We continue to optimise our geographic footprint as we pursue improved returns, while strengthening our capital ratios still further. Barclays recently announced that the Investment Bank is closing offices in nine countries, and we are now announcing our intention to move to a non-controlling, non-consolidated investment in BAGL over time, subject to regulatory and shareholder approvals if and as required.
 
The proposed reduction in the stake in BAGL and accelerated rundown of Barclays Non-Core over 2016 and 2017 will result in a dramatically simplified Group, clearly focused on its key operating businesses, which from today will be run in two divisions:
 
1. Barclays UK
 
   Barclays UK is a personal and business banking franchise with true scale, built around our customers' needs with innovation at its core. It comprises our UK retail banking operations, our UK consumer credit cards business, our    UK-based wealth offering, and corporate banking for smaller businesses. With around 22 million retail customers, and  almost one million business banking clients, we are a pre-eminent UK financial services provider. This division
   will become our UK ring-fenced bank by 2019. On an indicative basis we estimate that this division would have approximately £70bn of RWAs, £200bn of leverage exposure and a loan to deposit ratio of around 95% as at
   31 December 2015.
 
 
2. Barclays Corporate & International
 
    Barclays Corporate & International is a diversified transatlantic business comprising our corporate banking franchise, which is market leading in the UK with strong international growth opportunities, our top-tier investment bank, a
    strong and growing US and international cards business, our international wealth offering, and leading payments capability through both corporate banking and the Barclaycard merchant acquiring expertise. Barclays Corporate &
    International has scale in wholesale banking and consumer lending, strength in our key markets, excellent growth potential, and good balance in its revenue streams, delivering further resilience and diversification. On an indicative
    basis we estimate that this division would have approximately £195bn of RWAs, £575bn of leverage exposure, and a loan to deposit ratio of around 85% as at 31 December 2015.
 
We expect that both divisions, when separately assessed, would support solid investment grade credit ratings; and both generated double digit returns on tangible equity on a proforma adjusted basis for 2015. We will be publishing a restatement document reflecting the new divisional structure ahead of our first quarter results in April.
 
Their creation as sibling divisions, which will become our ring fenced and non-ring fenced legal entities in due course, simplifies the Group and concentrates Barclays' competitive advantages in the right places. The simplified structure will allow investors to see much more clearly the opportunity for us to generate sustainable returns and growth in the near future.
 
Proposed selldown of BAGL
 
We are today announcing our intention to sell down our 62.3% interest in our African business, BAGL, over the coming two to three years, to a level which will permit us to deconsolidate it from an accounting and regulatory perspective, subject to shareholder and regulatory approvals if and as required.
 
BAGL is a well-diversified business and a high quality franchise. However the stake in BAGL presents specific challenges to Barclays as owners, such as the level of capital held in respect of BAGL, the international reach of the UK Bank Levy, the GSIB buffer, and MREL/TLAC and other regulatory requirements. BAGL is today reporting a 17% return on equity for 2015 in its standalone local currency results versus the 8.7% return reported for Africa Banking in Barclays' results.
 
Non-Core rundown
 
We have more than halved the size of Barclays Non-Core from its starting point in 2013 of £110bn of RWAs to £47bn.
 
We are leveraging the track record and expertise of our Non-Core management team by making a one-time expansion of the Non-Core perimeter with further businesses we plan to exit over 2016 and 2017, principally those from the Investment Bank recently announced, our Egypt and Zimbabwe businesses (which are not owned by BAGL), our Southern European cards businesses, and our Asian Wealth business. This adds around £8bn of RWAs to Non-Core as at the end of 2015.
 
Despite the enlargement of the Non-Core perimeter we are still guiding to Non-Core RWAs of £20bn at the end of 2017. As we accelerate the Non-Core rundown we anticipate incurring restructuring costs in Non-Core of close to £400m in 2016 and are guiding to negative income for 2016 broadly in line with the quarterly run rate of around £200m reported in Q4, excluding any incremental Education, Social Housing, and Local Authority (ESHLA) portfolio mark-to-market movements. The Non-Core perimeter enlargement adds approximately £600m to underlying Non-Core costs, but we expect to exit the majority of these in the course of 2016.
 
Dividends
 
We have declared a final dividend of 3.5p per share, making 6.5p in total for 2015. However, we intend to pay a dividend of 3.0p for 2016 and 2017. We expect to set appropriate dividends as Core and Group earnings become aligned through Non-Core run down and reduction of legacy headwinds, and we expect to pay out a significant proportion of earnings in dividends to shareholders over time. We will pay dividends semi-annually from 2016 rather than quarterly.
 
Financial Progress and Targets
 
We expect the combination of this dividend reduction and the BAGL sell-down will contribute at least 100 basis points of proforma accretion to the Group's CET1 ratio over the next two to three years, supplementing organic capital ratio accretion.
 
We will continue to manage down our Non-Core costs and the Core cost base, and are guiding to 2016 costs for the new core (excluding BAGL) - of £12.8bn, excluding conduct and litigation and other notable items.
 
We are also simplifying our financial targets for the Group going forward to focus on three key metrics, and will be aiming to achieve these targets in a reasonable timeframe, in order to deliver shareholder value:
 
Return on Tangible Equity (RoTE): As we reduce the Non-Core drag on Group returns, the Group's RoTE will converge towards the Core RoTE, and achieve attractive returns for shareholders
CET1 ratio: Our target will be to run the Group's CET1 ratio at 100-150 basis points above our regulatory minimum level
Cost:Income ratio: Our target is to reduce the Group's Cost:Income ratio to below 60%
 
Jes Staley, Group Chief Executive Officer
 
Performance Highlights
 
2015 results were characterised by the continued execution of the strategy
 
·
Group adjusted total income net of insurance claims decreased 5% to £24,528m, with Core total income in line at £24,692m (2014: £24,678m) and Non-Core total income reducing to a net expense of £164m (2014: income of £1,050m)
 
·
Driving efficiency remains a significant focus for the Group, with total adjusted operating expenses reducing 6% to £16,998m. Adjusted operating expenses excluding costs to achieve reduced 4% to £16,205m, driven by savings from strategic cost programmes
 
·
The Core business performed well reflecting continued good progress. This resulted in a 3% increase in profit before tax to £6,862m, with improvements in all Core operating businesses, including Africa Banking on a constant currency basis
 
·
The improved profit before tax in the Core business was driven by positive cost to income jaws across all Core operating businesses. Combined with the increase in average allocated equity of £5bn to £47bn, the return on average equity for the Core business was 9.0% (2014: 9.2%) and the return on average tangible equity was 10.9% (2014: 11.3%)
 
·
The accelerated rundown of the Non-Core business resulted in a 2% reduction in Group adjusted profit before tax to £5,403m due to a 24% increase in the Non-Core loss before tax to £1,459m
 
·
Strong progress in the rundown of the Non-Core business continued, with a further reduction in risk weighted assets of £29bn to £47bn contributing to the increase in the CET1 ratio. Non-Core leverage exposure decreased to £121bn (2014: £277bn). The announced sales of the Portuguese and Italian retail businesses in H215, due to be completed in H116, are expected to result in a further £2.5bn reduction in Non-Core risk weighted assets. Non-Core period end allocated equity reduced to £7bn (2014: £11bn)
 
·
Group capital and leverage ratios continued to strengthen. The fully loaded common equity tier 1 (CET1) ratio increased 110 basis points to 11.4% driven by a reduction in risk weighted assets of £44bn to £358bn. The leverage ratio increased 80 basis points to 4.5% driven by a reduction in leverage exposure of £205bn to £1,028bn
 
·
Statutory profit before tax reduced 8% to £2,073m after absorbing net losses on adjusting items of £3,330m (2014: £3,246m)
 
·
A final dividend for 2015 of 3.5p per share will be paid, resulting in a total 6.5p dividend per share for the year
 
Significant adjusting items:
 
·
Additional provisions relating to payment protection insurance (PPI) of £1,450m were made in Q415 based on an updated estimate of future redress and associated costs following a slower than expected decline in claims volumes during H215. It also reflects the Financial Conduct Authority's proposals for the introduction of the proposed 2018 complaints deadline, and proposed rules and guidance concerning the handling of PPI complaints in the light of the 2014 Supreme Court ruling in Plevin v Paragon Personal Finance Ltd. Total provisions for UK customer redress in 2015 were £2,772m (2014: £1,110m), of which £2,200m (2014: £1,270m) related to PPI redress
 
·
A loss of £261m was recognised in Q415 relating to the announced sale of the Italian retail banking branch network, which is due to complete in Q216. Total losses on sale relating to the Spanish, Portuguese and Italian businesses in 2015 were £580m (2014: £446m)
 
·
Additional provisions of £167m for ongoing investigations and litigation including Foreign Exchange were made in Q415, including the settlement reached with the New York Department of Financial Services in November 2015, in respect of its investigation into electronic trading of Foreign Exchange. Total provisions Performance Highlights in 2015 were £1,237m (2014: £1,250m)

 
Barclays Group results 
Adjusted
 
Statutory
for the year ended 
31.12.15
31.12.14
   
31.12.15
31.12.14
 
 
£m
£m
% Change
 
£m
£m
% Change
Total income net of insurance claims
24,528
25,728
(5)
 
25,454
25,288
1
Credit impairment charges and other provisions
(2,114)
(2,168)
2
 
(2,114)
(2,168)
2
Net operating income
22,414
23,560
(5) 
 
23,340
23,120
1
Operating expenses
(15,351)
(15,993)
4
 
(15,021)
(15,993)
6
UK bank levy
(476)
(462)
(3)
 
(476)
(462)
(3)
Litigation and conduct
(378)
(449)
16
 
(4,387)
(2,809)
(56)
Operating expenses excluding costs to achieve 
(16,205)
(16,904) 
4
 
(19,884)
(19,264)
(3) 
Costs to achieve
(793)
(1,165)
32
 
(793)
(1,165)
32
Total operating expenses
(16,998)
(18,069)
6
 
(20,677)
(20,429)
(1) 
Other net (expenses)/income
(13)
11
   
(590)
(435)
(36)
Profit before tax
5,403
5,502
(2) 
 
2,073
2,256
(8) 
Tax charge
(1,690)
(1,704)
1
 
(1,450)
(1,411)
(3)
Profit after tax
3,713
3,798
(2) 
 
623
845
(26) 
Non-controlling interests
(672)
(769)
13
 
(672)
(769)
13
Other equity holders1
(345)
(250)
(38)
 
(345)
(250)
(38)
Attributable profit/(loss) 
2,696
2,779
(3) 
 
(394)
(174)
 
               
Performance measures 
             
Return on average tangible shareholders' equity1
5.8%
5.9%
   
(0.7%)
(0.3%)
 
Average tangible shareholders' equity (£bn)
48
48
   
48
47
 
Return on average shareholders' equity1
4.9%
5.1%
   
(0.6%)
(0.2%)
 
Average shareholders' equity (£bn)
56
56
   
56
55
 
Cost: income ratio
69%
70%
   
81%
81%
 
Loan loss rate (bps)
47
46
   
47
46
 
               
Basic earnings per share1
16.6p
17.3p
   
(1.9p)
(0.7p)
 
Dividend per share
6.5p
6.5p
   
6.5p
6.5p
 
               
Balance sheet and leverage 
             
Net tangible asset value per share
       
275p
285p
 
Net asset value per share
       
324p
335p
 
Leverage exposure
       
£1,028bn
£1,233bn
 
               
Capital management 
             
CRD IV fully loaded 
             
Common equity tier 1 ratio
       
11.4%
10.3%
 
Common equity tier 1 capital
       
£40.7bn
£41.5bn
 
Tier 1 capital
       
£46.2bn
£46.0bn
 
Risk weighted assets
       
£358bn
£402bn
 
Leverage ratio
       
4.5%
3.7%
 
               
Funding and liquidity 
             
Group liquidity pool 
       
£145bn
£149bn
 
Estimated CRD IV liquidity coverage ratio
       
133%
124%
 
Loan: deposit ratio2
       
86%
89%
 
               
Adjusted profit reconciliation 
             
Adjusted profit before tax
       
5,403
5,502
 
Provisions for UK customer redress
 
(2,772)
(1,110)
 
Provisions for ongoing investigations and litigation including Foreign Exchange
 
(1,237)
(1,250)
 
Losses on sale relating to the Spanish, Portuguese and Italian businesses
 
(580)
(446)
 
Gain on US Lehman acquisition assets
 
496
461
 
Own credit
       
430
34
 
Gain on valuation of a component of the defined retirement benefit liability
 
429
-
 
Impairment of goodwill and other assets relating to businesses being disposed
 
(96)
-
 
Revision of ESHLA valuation methodology
 
-
(935)
 
Statutory profit before tax
       
2,073
2,256
 

 
1
The profit after tax attributable to other equity holders of £345m (2014: £250m) is offset by a tax credit recorded in reserves of £70m (2014: £54m). The net amount of £275m (2014: £196m), along with non-controlling interests (NCI) is deducted from profit after tax in order to calculate earnings per share, return on average tangible shareholders' equity and return on average shareholders' equity.
2
Loan: deposit ratio for PCB, Barclaycard, Africa Banking and Non-Core retail.



 
Barclays Core and Non-Core adjusted results for the year ended 
Barclays Core
 
Barclays Non-Core
31.12.15
31.12.14
   
31.12.15
31.12.14
 
 
£m
£m
% Change
 
£m
£m
% Change
Total income net of insurance claims
24,692
24,678
-
 
(164)
1,050
 
Credit impairment charges and other provisions
(2,036)
(2,000)
(2)
 
(78)
(168)
54
Net operating income/(expenses)
22,656
22,678
-
 
(242)
882
 
Operating expenses
(14,478)
(14,483)
-
 
(873)
(1,510)
42
UK bank levy
(398)
(371)
(7)
 
(78)
(91)
14
Litigation and conduct
(230)
(251)
8
 
(148)
(198)
25
Operating expenses excluding costs to achieve 
(15,106)
(15,105) 
-
 
(1,099)
(1,799)
39
Costs to achieve
(693)
(953)
27
 
(100)
(212)
53
Total operating expenses 
(15,799)
(16,058) 
2
 
(1,199)
(2,011)
40
Other net income/(expenses)
5
62
(92)
 
(18)
(51)
65
Profit/(loss) before tax
6,862
6,682
3
 
(1,459)
(1,180)
(24) 
Tax (charge)/credit
(1,749)
(1,976)
11
 
59
272
(78)
Profit/(loss) after tax
5,113
4,706
9
 
(1,400)
(908)
(54) 
Non-controlling interests
(610)
(648)
6
 
(62)
(121)
49
Other equity holders
(284)
(194)
(46)
 
(61)
(56)
(9)
Attributable profit/(loss)
4,219
3,864
9
 
(1,523)
(1,085)
(40)
               
Performance measures 
             
Return on average tangible equity1
10.9%
11.3%
   
(5.1%)
(5.4%)
 
Average allocated tangible equity (£bn)
39
35
   
9
13
 
Return on average equity1
9.0%
9.2%
   
(4.1%)
(4.1%)
 
Average allocated equity (£bn)
47
42
   
9
13
 
Period end allocated equity (£bn)
48
45
   
7
11
 
Cost: income ratio
64%
65%
   
n/m
n/m
 
Loan loss rate (bps)
51
49
   
14
31
 
Basic earnings per share contribution
25.7p
24.0p
   
(9.1p)
(6.7p)
 
               
Capital management 
             
Risk weighted assets
£312bn
£327bn
   
£47bn
£75bn
 
Leverage exposure
£907bn
£956bn 
   
£121bn
£277bn
 

 
 
Year ended
31.12.15
Year ended
31.12.14
 
Income by business 
£m
£m
% Change
Personal and Corporate Banking
8,726
8,828
(1)
Barclaycard
4,927
4,356
13
Africa Banking
3,574
3,664
(2)
Investment Bank
7,572
7,588
-
Head Office
(107)
242
 
Barclays Core
24,692
24,678
-
Barclays Non-Core
(164)
1,050
 
Barclays Group adjusted total income
24,528
25,728
(5)
       

 
 
Year ended
31.12.15
Year ended
31.12.14
 
Profit/(loss) before tax by business 
£m
£m
% Change
Personal and Corporate Banking
3,040
2,885
5
Barclaycard
1,634
1,339
22
Africa Banking
979
984
(1)
Investment Bank
1,611
1,377
17
Head Office
(402)
97
 
Barclays Core
6,862
6,682
3
Barclays Non-Core
(1,459)
(1,180)
(24)
Barclays Group adjusted profit before tax
5,403
5,502
(2)

 
1
Return on average equity and average tangible equity for Barclays Non-Core represents its impact on the Group, being the difference between Barclays Group returns and Barclays Core returns. This does not represent the return on average equity and average tangible equity of the Non-Core business.
 
 
Group Chief Executive Officer's Review
 
"Our 2015 performance demonstrates the strength of Barclays' Core business, as well as the importance of continuing to make progress in running down Non-Core and controlling our costs to deliver the returns our shareholders deserve in a reasonable timeframe.
 
PCB and Barclaycard delivered excellent results, and Africa Banking also performed well despite currency headwinds. The Investment Bank year on year performance was stronger as the benefits of the strategy implemented since May 2014 were realised.
 
Risk weighted assets in the Non-Core were down further to £47bn, having more than halved since the unit was created, and maintaining this very good momentum is critical to our future success. Group adjusted operating expenses were nearly £100m below guidance, and we have seen our capital position strengthen further with our CET1 ratio increasing to 11.4% and our leverage ratio improving to 4.5%.
 
What all of this illustrates is that Barclays is fundamentally on the right path, and is, at its core, a very good business. There is of course more we need to do and areas where I believe we can move much faster to deliver the high performing Group that Barclays can and should be. 2016 will consequently be a year of accelerated delivery from a good base."
 
Jes Staley, Group Chief Executive Officer
 
 
Group Finance Director's Review
 
Income statement
 
Income statement commentary is based upon adjusted results unless otherwise stated.
 
Group performance
 
·
Profit before tax reduced 2% to £5,403m driven by a 24% increase in the Non-Core loss before tax to £1,459m, as a result of the continued rundown, partially offset by a 3% increase in Core profit before tax to £6,862m reflecting improvements in all Core operating businesses, including Africa Banking on a constant currency basis1
·
Income decreased 5% to £24,528m as Non-Core income reduced £1,214m to a net expense of £164m. Core income remained in line at £24,692m (2014: £24,678m)
·
Credit impairment charges reduced 2% to £2,114m with the loan loss rate remaining broadly in line at 47bps (2014: 46bps)
 
- Net on-balance sheet exposure to the oil and gas sector was £4.4bn (2014: £5.8bn), with contingent liabilities and commitments to this sector of £13.8bn (2014: £12.6bn). Impairment charges were £106m (2014: £1m). The ratio of the Group's net total exposures classified as strong and satisfactory was 97% (2014: 99%) of the total credit risk net exposure to this sector
 
·
Total operating expenses decreased 6% to £16,998m as a result of savings from strategic cost programmes, particularly in the Investment Bank and Personal and Corporate Banking (PCB), in addition to the continued rundown of Non-Core
 
- Costs to achieve decreased 32% to £793m. This included £82m of costs to achieve related to the sale of the US Wealth business
 
·
The effective tax rate on profit before tax was 31.3% (2014: 31.0%). This was less than the effective tax rate on statutory profit before tax mainly because it excluded the impact of adjusting items such as non-deductible provisions for ongoing investigations and litigation including Foreign Exchange and provisions for UK customer redress
·
Attributable profit was £2,696m (2014: £2,779m) resulting in a return on average shareholders' equity of 4.9% (2014: 5.1%) and a return on average tangible shareholders' equity of 5.8% (2014: 5.9%)
·
Statutory profit before tax was £2,073m (2014: £2,256m) which included £2,772m (2014: £1,110m) of additional provisions for UK customer redress; £1,237m (2014: £1,250m) of additional provisions for ongoing investigations and litigation including Foreign Exchange; £580m (2014: £446m) of losses on sale relating to the Spanish, Portuguese and Italian businesses; a £496m (2014: £461m) gain on US Lehman acquisition assets; an own credit gain of £430m (2014: £34m); a £429m (2014: £nil) gain on valuation of a component of the defined retirement benefit liability; and impairment of goodwill and other assets relating to businesses being disposed of £96m (2014: £nil). 2014 statutory profit before tax also included a loss of £935m (2015: £nil) relating to a revision to the ESHLA valuation methodology
·
The tax charge of £1,450m (2014: £1,411m) on statutory profit before tax of £2,073m (2014: £2,256m) represents an effective tax rate of 69.9% (2014: 62.5%)
 
 
Core performance
·
Profit before tax increased 3% to £6,862m with improvements in all Core operating businesses, including Africa Banking on a constant currency basis1, partially offset by a loss before tax in Head Office of £402m (2014: profit of £97m)
·
Income remained in line at £24,692m (2014: £24,678m)
 
-
Barclaycard income increased 13% to £4,927m primarily reflecting growth in US cards through continued focus on profitable asset growth
 
-
Investment Bank income remained broadly in line at £7,572m (2014: £7,588m) across Banking and Markets, with a 4% improvement in Macro, offset by a 5% reduction in Credit and a 2% reduction in Equities
 
-
PCB income decreased 1% to £8,726m. Excluding the US Wealth business, PCB income was in line with prior year, as Corporate income grew 5% from balance growth and improved deposit margins
 
-
Africa Banking income decreased 2% to £3,574m. On a constant currency basis1 income increased 7% reflecting good growth in Retail and Business Banking (RBB) and corporate banking in South Africa, and Wealth, Investment Management and Insurance (WIMI)
 
-
Net interest income in PCB, Barclaycard and Africa Banking increased 5% to £12,024m driven by margin improvement in Barclaycard and Africa Banking, and volume growth in both PCB and Barclaycard. Net interest margin increased 10bps to 4.18%
 
-
Head Office income decreased to a net expense of £107m (2014: income of £242m) reflecting the net expense from Treasury operations
·
Credit impairment charges increased 2% to £2,036m reflecting charges of £55m in the Investment Bank due to a number of single name exposures and a 6% increase in Barclaycard reflecting growth in the business and updates to impairment model methodologies, partially offset by a 22% reduction in PCB impairment due to the benign economic environment in the UK resulting in lower default rates and charges
·
Total operating expenses reduced 2% to £15,799m reflecting savings from strategic cost programmes, principally in the Investment Bank and PCB, and lower costs to achieve of £693m (2014: £953m). This was partially offset by increased Barclaycard operating expenses which grew 11% due to continued investment in business growth, and costs associated with the implementation of the structural reform programme in the Head Office
·
Attributable profit increased 9% to £4,219m while average allocated equity increased £5bn to £47bn as capital was redeployed from Non-Core, resulting in a Core return on average equity of 9.0% (2014: 9.2%) and return on average tangible equity of 10.9% (2014: 11.3%)

 
1
Constant currency results are calculated by converting ZAR results into GBP using the average exchange rate for 2015.
 
 
 
Non-Core performance
·
Loss before tax increased £279m to £1,459m reflecting:
 
-
A reduction in income of £1,214m to a net expense of £164m following assets and securities rundown, business sales, including the impact of the sales of the Spanish and UAE retail businesses, and fair value losses on the ESHLA portfolio of £359m (2014: £156m), of which £156m was in Q415, as gilt swap spreads widened
 
-
An improvement in credit impairment charges to £78m (2014: £168m) driven by higher recoveries in Europe and the sale of the Spanish business
 
-
A reduction of £812m in total operating expenses to £1,199m due to continued rundown of the business, including the sales of the Spanish and UAE retail businesses, reduced costs to achieve, and litigation and conduct charges
·
Non-Core return on average equity dilution was 4.1% (2014: 4.1%) reflecting a £4bn reduction in average allocated equity to £9bn. Period end allocated equity reduced £4bn to £7bn, as risk weighted assets reduced £29bn to £47bn
 
Capital, leverage and balance sheet
·
The fully loaded CRD IV CET1 ratio increased to 11.4% (2014: 10.3%) driven by a significant reduction in risk weighted assets of £44bn to £358bn
 
-
Risk weighted assets reduced £29bn to £47bn in the Non-Core business due to the sale of the Spanish business and a rundown of legacy structured and credit products. The Investment Bank decreased £14bn to £108bn mainly due to a reduction in securities and derivatives, and improved RWA efficiency
 
-
CET1 capital decreased £0.7bn to £40.7bn after absorbing adjusting items of £3.4bn after tax and dividends paid and foreseen of £1.4bn
·
The leverage ratio increased significantly to 4.5% (2014: 3.7%) driven by a reduction in the leverage exposure of 17% to £1,028bn
 
-
The decrease was predominantly due to the rundown of the Non-Core business of £156bn to £121bn primarily in reverse repurchase agreements, potential future exposure on derivatives and trading portfolio assets. Core leverage exposure decreased £49bn to £907bn reflecting reductions in trading portfolio assets, settlement balances and potential future exposure on derivatives
·
Balance sheet assets decreased 18% to £1,120bn
 
-
Across fair value and amortised cost classifications, repurchase and reverse repurchase agreements decreased £59bn and £54bn respectively due to reduced matched book trading and general firm financing due to balance sheet deleveraging
 
-
Trading portfolio assets decreased £37bn to £77bn primarily driven by balance sheet deleveraging resulting in lower securities positions and exiting of positions in Non-Core
 
-
Derivative assets decreased £112bn to £328bn consistent with the decrease in derivative liabilities of £115bn to £324bn. The decrease was mainly within interest rate and foreign exchange derivatives due to net trade reduction and an increase in major interest rate forward curves
·
Net asset value and net tangible asset value per share decreased to 324p (2014: 335p) and 275p (2014: 285p) respectively. This decrease was primarily attributable to adjusting items of £3.1bn after tax, dividends paid and a decrease in cash flow hedging reserve reflecting a reduction in the fair value of interest rate swaps held for hedging purposes in addition to gains recycled to the income statement
 
Funding and liquidity
·
The Group maintained a surplus to its internal and regulatory requirements. The liquidity pool was £145bn (2014: £149bn) and the Liquidity Coverage Ratio (LCR) was 133% (2014: 124%), equivalent to a surplus of £37bn (2014: £30bn). Barclays plans to maintain its surplus at an adequate level to the internal and regulatory stress requirements, whilst considering risks to market funding conditions and its liquidity position
·
Wholesale funding outstanding excluding repurchase agreements reduced to £142bn (2014: £171bn). The Group issued £9bn of term funding net of early redemptions, of which £4bn was in public and private senior unsecured debt issued by the holding company, Barclays PLC. During Q415, Barclays PLC also issued EUR Tier 2 securities of £1bn equivalent. All the capital and debt proceeds raised by Barclays PLC have been used to subscribe for instruments at Barclays Bank PLC, the operating company with a ranking corresponding to the securities issued by Barclays PLC
 
Other matters
·
Additional UK customer redress provisions of £2,772m (2014: £1,110m) were recognised. This included:
 
-
Charges of £2,200m relating to PPI, including an additional provision of £1,450m in Q415 based on an updated estimate of future redress costs. This update follows a slower than expected decline in claims volumes during H215. It also reflects the Financial Conduct Authority's proposals for the introduction of the proposed 2018 complaints deadline, and proposed rules and guidance concerning the handling of PPI complaints in the light of the 2014 Supreme Court ruling in Plevin v Paragon Personal Finance Ltd
 
-
Q315 provision for £290m redress costs in relation to historic pricing practices associated with certain foreign exchange transactions for certain customers between 2005 and 2012
 
-
£282m provision for Packaged Bank Account redress costs in H115
·
Additional provisions of £1,237m (2014: £1,250m) were recognised in relation to ongoing investigations and litigation including Foreign Exchange. This included:
 
-
Provisions of £167m in Q415, including the settlement of £100m reached with the New York Department of Financial Services in November 2015 in respect of its investigation into electronic trading of Foreign Exchange
 
-
Provisions of £270m in Q315 relating to the settlement of two residential mortgage backed securities claims with the National Credit Union Administration and the settlement of certain other legacy benchmark litigation
 
-
Additional provisions of £800m in H115 for ongoing investigations and litigation primarily relating to Foreign Exchange. Settlements of £1,608m were reached in Q215 with a number of authorities in relation to industry-wide investigations into certain sales and trading practices in the Foreign Exchange market and an industry-wide investigation into the setting of the US Dollar ISDAFIX benchmark
·
Losses on sale relating to the Spanish, Portuguese and Italian businesses of £580m (2014: £446m) included a loss of £261m in Q415 on the announced sale of the Italian retail banking branch network, which is due to complete in Q216. This is in addition to the £201m loss on the announced sale of the Portuguese retail business in Q315, which is due to complete in Q116 and the loss of £118m recognised in H115 relating to the sale of the Spanish business
·
£496m (2014: £461m) gain on US Lehman acquisition assets was recognised in Q215. Barclays reached a settlement with the Securities Investor Protection Act Trustee for Lehman Brothers Inc. (LBI) to resolve outstanding litigation between the parties relating to the acquisition of most of the assets of LBI in September 2008
·
Own credit gain of £430m (2014: £34m) was recognised in the year
·
£429m (2014: £nil) gain was recognised in H115 as the valuation of a component of the defined retirement benefit liability was revised to use the long term Consumer Price Index rather than the Retail Price Index, consistent with statutory provisions
·
Impairment of goodwill and other assets relating to businesses being disposed of £96m (2014: £nil)
·
2014 included a valuation revision of £935m (2015: £nil) against the ESHLA portfolio due to a change in the valuation methodology, incorporating information on external parties and the factors they may take into account when valuing these assets, thereby moving the asset valuations away from Libor-based discounting
 
Dividends
·
A final dividend for 2015 of 3.5p per share will be paid on 5 April 2016, resulting in a total 6.5p dividend per share for the year
 
Q1 Outlook
·
In the Investment Bank, income in January and February was broadly in line with the same period last year. However in light of current market conditions, and on the back of a particularly strong March in 2015, we do not expect as strong a performance for the whole of Q1 this year
·
Non-Core income in Q116 is expected to deteriorate further as a result of the impact of continued gilt swap spread widening on the fair valuation of the ESHLA portfolio
 
Tushar Morzaria, Group Finance Director
 
 
Results by Business
 
Personal and Corporate Banking 
Year ended
31.12.15
Year ended
31.12.14
 
Income statement information 
£m
£m
% Change
Net interest income
6,438
6,298
2
Net fee, commission and other income
2,288
2,530
(10)
Total income
8,726
8,828
(1)
Credit impairment charges and other provisions
(378)
(482)
22
Net operating income 
8,348
8,346
-
Operating expenses
(4,774)
(4,951)
4
UK bank levy
(93)
(70)
(33)
Litigation and conduct
(109)
(54)
 
Costs to achieve
(292)
(400)
27
Total operating expenses 
(5,268)
(5,475)
4
Other net (expenses)/income
(40)
14
 
Profit before tax 
3,040
2,885
5
Attributable profit
2,179
2,058
6
       
 
As at 31.12.15
As at 31.12.14
 
Balance sheet information 
£bn
£bn
 
Loans and advances to customers at amortised cost
218.4
217.0
 
Total assets
287.2
285.0
 
Customer deposits
305.4
299.2
 
Risk weighted assets
120.4
120.2
 
       
Performance measures 
Year ended
31.12.15
Year ended
31.12.14
 
Return on average tangible equity
16.2%
15.8%
 
Average allocated tangible equity (£bn)
13.6
13.1
 
Return on average equity
12.1%
11.9%
 
Average allocated equity (£bn)
18.2
17.5
 
Cost: income ratio
60%
62%
 
Loan loss rate (bps)
17
21
 
Net interest margin
2.99%
3.00%
 
       
Analysis of total income 
£m
£m
% Change
Personal
4,054
4,159
(3)
Corporate
3,754
3,592
5
Wealth
918
1,077
(15)
Total income
8,726
8,828
(1)
       
 
As at 31.12.15
As at 31.12.14
 
Analysis of loans and advances to customers at amortised cost 
£bn
£bn
 
Personal
137.0
136.8
 
Corporate
67.9
65.1
 
Wealth
13.5
15.1
 
Total loans and advances to customers at amortised cost
218.4
217.0
 
       
Analysis of customer deposits 
     
Personal
151.3
145.8
 
Corporate
124.4
122.2
 
Wealth
29.7
31.2
 
Total customer deposits
305.4
299.2
 

 
2015 compared to 2014
 
·
Profit before tax improved 5% to £3,040m driven by the continued reduction in operating expenses and lower impairment due to the benign economic environment in the UK. The reduction in operating expenses was delivered through strategic cost programmes including the restructure of the branch network and technology improvements to increase automation. Corporate performed strongly with income increasing 5% through growth in both lending and cash management
 
·
PCB results were significantly impacted by customer redress in, and the sale of, the US Wealth business. Excluding the US Wealth business, profit before tax improved 12% to £3,277m
 
·
Total income reduced 1% to £8,726m. Excluding the US Wealth business income remained flat
 
 
-
Personal income decreased 3% to £4,054m driven by a reduction in fee income and mortgage margin pressure, partially offset by improved deposit margins and balance growth
 
 
-
Corporate income increased 5% to £3,754m due to balance growth in both lending and deposits and improved deposit margins, partially offset by reduced margins in the lending business
 
 
-
Wealth income reduced 15% to £918m primarily as a result of the impact of customer redress in, and the sale of, the US Wealth business. Excluding the US Wealth business income decreased 2%
 
 
-
Net interest income increased 2% to £6,438m driven by growth in Corporate balances and the change in the overdraft proposition in June 2014
 
 
-
Net interest margin remained broadly in line at 2.99% (2014: 3.00%) as mortgage margin pressure and lower Corporate lending margins were partially offset by increased margins on Corporate and Personal deposits, and the benefit of the change in the overdraft proposition
 
 
-
Net fee, commission and other income reduced 10% to £2,288m driven primarily by the impact of the change in the overdraft proposition and customer redress in the US
 
·
Credit impairment charges improved 22% to £378m due to the benign economic environment in the UK resulting in lower default rates and charges across all businesses. The loan loss rate reduced 4bps to 17bps
 
·
Total operating expenses reduced 4% to £5,268m reflecting savings realised from strategic cost programmes, relating to restructuring of the branch network and technology improvements, and lower costs to achieve, partially offset by increased litigation and conduct charges
 
·
Loans and advances to customers increased 1% to £218.4bn due to increased Corporate lending
 
·
Total assets increased 1% to £287.2bn driven by the growth in loans and advances to customers
 
·
Customer deposits increased 2% to £305.4bn primarily driven by the Personal and Corporate businesses
 
·
RWAs were broadly flat at £120.4bn (2014: £120.2bn)
 



 
Barclaycard 
Year ended
31.12.15
Year ended
31.12.14
 
Income statement information 
£m
£m
% Change
Net interest income
3,520
3,044
16
Net fee, commission and other income
1,407
1,312
7
Total income
4,927
4,356
13
Credit impairment charges and other provisions
(1,251)
(1,183)
(6)
Net operating income 
3,676
3,173
16
Operating expenses
(1,927)
(1,727)
(12)
UK bank levy
(42)
(29)
(45)
Costs to achieve
(106)
(118)
10
Total operating expenses
(2,075)
(1,874)
(11)
Other net income
33
40
(18)
Profit before tax 
1,634
1,339
22
Attributable profit
1,106
938
18
       
 
As at 31.12.15
As at 31.12.14
 
Balance sheet information 
£bn
£bn
 
Loans and advances to customers at amortised cost
39.8
36.6
 
Total assets
47.4
41.3
 
Customer deposits
10.2
7.3
 
Risk weighted assets
41.3
39.9
 
       
Performance measures 
Year ended
31.12.15
Year ended
31.12.14
 
Return on average tangible equity
22.3%
19.9%
 
Average allocated tangible equity (£bn)
5.0
4.7
 
Return on average equity
17.7%
16.0%
 
Average allocated equity (£bn)
6.3
5.9
 
Cost: income ratio
42%
43%
 
Loan loss rate (bps)
289
308
 
Net interest margin
9.13%
8.75%
 

 
2015 compared to 2014
 
·
Profit before tax increased 22% to £1,634m. Strong growth was delivered through the diversified consumer and merchant business model with asset growth across all geographies. The cost to income ratio improved to 42% (2014: 43%) whilst investment in business growth continued. The business focus on risk management was reflected in stable 30 day delinquency rates and improved loan loss rates
 
·
Total income increased 13% to £4,927m driven primarily by business growth in US cards and the appreciation of the average USD rate against GBP
 
 
-
Net interest income increased 16% to £3,520m driven by business growth. Net interest margin also improved to 9.13% (2014: 8.75%) reflecting growth in interest earning lending
 
 
-
Net fee, commission and other income increased 7% to £1,407m due to growth in payment volumes, partially offset by the impact of rate capping from European Interchange Fee Regulation
 
·
Credit impairment charges increased 6% to £1,251m primarily reflecting asset growth and updates to impairment model methodologies, partially offset by improved performance in UK Cards. Delinquency rates remained broadly stable and the loan loss rate reduced 19bps to 289bps
 
·
Total operating expenses increased 11% to £2,075m due to continued investment in business growth, the appreciation of the average USD rate against GBP and the impact of one-off items, including a write-off of intangible assets of £55m relating to the withdrawal of the Bespoke product
 
·
Loans and advances to customers increased 9% to £39.8bn reflecting growth across all geographies
 
·
Total assets increased 15% to £47.4bn primarily due to the increase in loans and advances to customers
 
·
Customer deposits increased 40% to £10.2bn driven by the deposits funding strategy in the US
 
·
RWAs increased 4% to £41.3bn primarily driven by the growth in the US cards business
 

 
         
Constant currency1 
Africa Banking 
Year ended
31.12.15
Year ended
31.12.14
   
Year ended
31.12.15
Year ended
31.12.14
 
Income statement information 
£m
£m
% Change
 
£m
£m
% Change
Net interest income
2,066
2,093
(1)
 
2,066
1,908
8
Net fee, commission and other income
1,668
1,741
(4)
 
1,668
1,583
5
Total income
3,734
3,834
(3)
 
3,734
3,491
7
Net claims and benefits incurred under insurance contracts
(160)
(170)
6
 
(160)
(155)
(3)
Total income net of insurance claims
3,574
3,664
(2)
 
3,574
3,336
7
Credit impairment charges and other provisions
(352)
(349)
(1)
 
(352)
(317)
(11)
Net operating income 
3,222
3,315
(3) 
 
3,222
3,019
7
Operating expenses
(2,169)
(2,244)
3
 
(2,169)
(2,051)
(6)
UK bank levy
(52)
(45)
(16)
 
(52)
(45)
(16)
Litigation and conduct
-
(2)
   
-
(2)
 
Costs to achieve
(29)
(51)
43
 
(29)
(46)
37
Total operating expenses 
(2,250)
(2,342)
4
 
(2,250)
(2,144)
(5) 
Other net income
7
11
(36)
 
7
10
(30)
Profit before tax 
979
984
(1) 
 
979
885
11
Attributable profit
332
360
(8)
 
332
320
4
               
 
As at 31.12.15
As at 31.12.14
   
As at 31.12.15
As at 31.12.14
 
Balance sheet information 
£bn
£bn
   
£bn
£bn
 
Loans and advances to customers at amortised cost
29.9
35.2
   
29.9
27.6
 
Total assets
49.9
55.5
   
49.9
43.8
 
Customer deposits
30.6
35.0
   
30.6
27.6
 
Risk weighted assets
33.9
38.5
   
33.9
31.3
 
               
Performance measures 
Year ended
31.12.15
Year ended
31.12.14
         
Return on average tangible equity
11.7%
12.9%
         
Average allocated tangible equity (£bn)
2.8
2.8
         
Return on average equity
8.7%
9.3%
         
Average allocated equity (£bn)
3.8
3.9
         
Cost: income ratio
63%
64%
         
Loan loss rate (bps)
109
93
         
Net interest margin
6.06%
5.95%
         

 
1
Constant currency results are calculated by converting ZAR results into GBP using the average exchange rate for the year ended 31 December 2015 for the income statement and the 31 December 2015 closing exchange rate for the balance sheet to eliminate the impact of movement in exchange rates between the reporting periods.


 
2015 compared to 2014
 
·
Profit before tax decreased 1% to £979m and total income net of insurance claims decreased 2% to £3,574m. The ZAR depreciated against GBP by 10% based on average rates and by 28% based on the closing exchange rate in 2015. The deterioration was a significant contributor to the movement in the reported results of Africa Banking and therefore the discussion of business performance below is based on results on a constant currency basis
 
Results on a constant currency basis
 
·
Profit before tax increased 11% to £979m reflecting an increase of 18% in operations outside South Africa and an increase of 9% in South Africa despite the challenging macroeconomic environment. Good growth was delivered in the focus areas of Retail and Business Banking (RBB) and corporate banking in South Africa, and Wealth, Investment Management and Insurance (WIMI), whilst performance in the corporate business outside South Africa was impacted by higher impairment
 
·
Total income net of insurance claims increased 7% to £3,574m
 
 
-
Net interest income increased 8% to £2,066m driven by higher average customer advances in Corporate and Investment Banking (CIB) and strong growth in customer deposits in RBB. Net interest margin increased 11bps to 6.06% primarily due to improved asset margins in retail in South Africa
 
 
-
Net fee, commission and other income increased 5% to £1,668m reflecting increased transactional income in RBB, partially offset by lower investment banking income in South Africa
 
·
Credit impairment charges increased 11% to £352m driven by an increase in single name exposures and additional coverage on performing loans. The loan loss rate increased 16bps to 109bps
 
·
Total operating expenses increased 5% to £2,250m reflecting inflationary impacts, partially offset by savings from strategic cost programmes including the restructure of the branch network, technology improvements and property rationalisation
 
·
Loans and advances to customers increased 8% to £29.9bn driven by strong CIB growth
 
·
Total assets increased 14% to £49.9bn primarily due to the increase in loans and advances to customers
 
·
Customer deposits increased 11% to £30.6bn reflecting strong growth in the RBB business
 
·
RWAs increased 8% to £33.9bn primarily due to an increase in corporate lending
 

 
Investment Bank 
Year ended
31.12.15
Year ended
31.12.14 
 
Income statement information 
£m
£m
% Change
Net interest income
588
647
(9)
Net trading income
3,859
3,735
3
Net fee, commission and other income
3,125
3,206
(3)
Total income
7,572
7,588
-
Credit impairment (charges)/releases and other provisions
(55)
14
 
Net operating income 
7,517
7,602
(1)
Operating expenses
(5,362)
(5,504)
3
UK bank levy
(203)
(218)
7
Litigation and conduct
(107)
(129)
17
Costs to achieve
(234)
(374)
37
Total operating expenses 
(5,906)
(6,225) 
5
Profit before tax 
1,611
1,377
17
Attributable profit
804
397
 
       
 
As at 31.12.15
As at 31.12.14 
 
Balance sheet information 
£bn
£bn
 
Loans and advances to banks and customers at amortised cost1
92.2
106.3
 
Trading portfolio assets
65.1
94.8
 
Derivative financial instrument assets
114.3
152.6
 
Derivative financial instrument liabilities
122.2
160.6
 
Reverse repurchase agreements and other similar secured lending2
25.5
64.3
 
Financial assets designated at fair value2
48.1
8.9
 
Total assets
375.9
455.7
 
Risk weighted assets
108.3
122.4
 
       
Performance measures 
Year ended
31.12.15
Year ended
31.12.14 
 
Return on average tangible equity
6.0%
2.8%
 
Average allocated tangible equity (£bn)
13.9
14.6
 
Return on average equity
5.6%
2.7%
 
Average allocated equity (£bn)
14.8
15.4
 
Cost: income ratio
78%
82%
 
       
Analysis of total income 
£m
£m
% Change
Investment banking fees
2,093
2,111
(1)
Lending
436
417
5
Banking
2,529
2,528
-
Credit
995
1,044
(5)
Equities
2,001
2,046
(2)
Macro
2,034
1,950
4
Markets
5,030
5,040
-
Banking & Markets
7,559
7,568
-
Other
13
20
(35)
Total income
7,572
7,588
-

 
1
As at 31 December 2015 loans and advances included £74.8bn (2014: £86.4bn) of loans and advances to customers (including settlement balances of £18.6bn (2014: £25.8bn) and cash collateral of £24.8bn (2014: £32.2bn)), and loans and advances to banks of £17.4bn (2014: £19.9bn) (including settlement balances of £1.6bn (2014: £2.7bn) and cash collateral of £5.7bn (2014: £6.9bn)).
2
During 2015, new reverse repurchase agreements and other similar secured lending in certain businesses have been designated at fair value to better align to the way the business manages the portfolio's risk and performance. Included within financial assets designated at fair value are reverse repurchase agreements designated at fair value of £42.5bn (2014: £3.4bn).
 
2015 compared to 2014
 
·
Profit before tax increased 17% to £1,611m. Income remained flat despite reductions in RWAs. Focusing on its home markets of the UK and US, the business continued to build on existing strengths in the face of challenging market conditions. Costs decreased as a result of improved cost efficiency and a reduction in costs to achieve
 
·
Total income was broadly flat at £7,572m (2014: £7,588m), including the appreciation of the average USD rate against GBP
 
 
-
Banking income was flat at £2,529m (2014: £2,528m). Investment Banking fee income reduced 1% to £2,093m driven by lower equity underwriting fees, partially offset by higher financial advisory and debt underwriting fees. Lending income increased to £436m (2014: £417m) due to lower losses on fair value hedges
 
 
-
Markets income was broadly flat at £5,030m (2014: £5,040m)
 
   
-
Credit income decreased 5% to £995m driven by lower income in securitised products as a result of the accelerated strategic repositioning in this asset class and lower income from distressed credit. This was partially offset by higher income as a result of client driven credit flow trading
 
   
-
Equities income decreased 2% to £2,001m driven by lower client activity in EMEA in equity derivatives, partially offset by higher performance in cash equities
 
   
-
Macro income increased 4% to £2,034m due to higher income in rates and currency products reflecting increased market volatility and client activity
 
·
Credit impairment charges of £55m (2014: release of £14m) arose from a number of single name exposures
 
·
Total operating expenses decreased 5% to £5,906m reflecting a 5% reduction in compensation costs to £3,423m and lower costs to achieve. Further cost savings were achieved from strategic cost programmes, including business restructuring, operational streamlining and real estate rationalisation, partially offset by the appreciation of the average USD rate against GBP
 
·
Derivative financial instrument assets and liabilities decreased 25% to £114.3bn and 24% to £122.2bn respectively, due to net trade reduction and increases in major interest rate forward curves
 
·
Trading portfolio assets decreased 31% to £65.1bn primarily driven by balance sheet deleveraging, resulting in lower securities positions
 
·
Total assets decreased 18% to £375.9bn due to a decrease in derivative financial instrument assets, trading portfolio assets, and settlement and cash collateral balances within loans and advances to banks and customers
 
·
RWAs decreased 12% to £108.3bn mainly due to a reduction in securities and derivatives, and improved RWA efficiency

 
Head Office
Year ended
31.12.15
Year ended
31.12.14 
Income statement information 
£m
£m
Net operating (expense)/income 
(107)
242
Operating expenses
(246)
(57)
UK bank levy
(8)
(9)
Litigation and conduct
(14)
(66)
Costs to achieve
(32)
(10)
Total operating expenses 
(300)
(142) 
Other net income/(expenses)
5
(3)
(Loss)/profit before tax 
(402)
97
Attributable (loss)/profit
(202)
112
     
 
As at 31.12.15
As at 31.12.14 
Balance sheet information
£bn
£bn
Total assets
56.4
49.1
Risk weighted assets
7.7
5.6
 
2015 compared to 2014
 
·
The loss before tax of £402m (2014: profit of £97m) was primarily due to the net expense from Treasury operations and costs relating to the implementation of the structural reform programme
 
·
Net operating income decreased to an expense of £107m (2014: income of £242m) primarily reflecting the net expense from Treasury operations and the non-recurrence of gains in 2014, including net gains from foreign exchange recycling arising from the restructure of Group subsidiaries
 
·
Total operating expenses increased £158m to £300m primarily due to costs relating to the implementation of the structural reform programme and an increase in costs to achieve, partially offset by reduced litigation and conduct charges
 
·
Total assets increased £7.3bn to £56.4bn due to an increase in the element of the liquidity buffer held centrally

 
Barclays Non-Core 
Year ended
31.12.15
Year ended
31.12.14
 
Income statement information 
£m
£m
% Change
Net interest income
249
214
16
Net trading income
(805)
120
 
Net fee, commission and other income
765
1,026
(25)
Total income
209
1,360
(85)
Net claims and benefits incurred under insurance contracts
(373)
(310)
(20)
Total income net of insurance claims
(164)
1,050
 
Credit impairment charges and other provisions
(78)
(168)
54
Net operating income 
(242)
882
 
Operating expenses
(873)
(1,510)
42
UK bank levy
(78)
(91)
14
Litigation and conduct
(148)
(198)
25
Costs to achieve
(100)
(212)
53
Total operating expenses 
(1,199)
(2,011)
40
Other net expenses
(18)
(51)
65
Loss before tax 
(1,459)
(1,180)
(24)
Attributable loss
(1,523)
(1,085)
(40)
       
 
As at 31.12.15
As at 31.12.14
 
Balance sheet information 
£bn
£bn
 
Loans and advances to banks and customers at amortised cost1
45.9
63.9
 
Derivative financial instrument assets
210.3
285.4
 
Derivative financial instrument liabilities
198.7
277.1
 
Reverse repurchase agreements and other similar secured lending2
2.4
49.3
 
Financial assets designated at fair value2
20.1
22.2
 
Total assets
303.1
471.5
 
Customer deposits
14.9
21.6
 
Risk weighted assets
46.6
75.3
 
Leverage exposure
121.3
277.5
 
       
Performance measures 
Year ended
31.12.15
Year ended
31.12.14
 
Return on average tangible equity impact3
(5.1%)
(5.4%)
 
Average allocated tangible equity (£bn)
8.9
13.2
 
Return on average equity impact3
(4.1%)
(4.1%)
 
Average allocated equity (£bn)
9.0
13.4
 
Period end allocated equity (£bn)
7.2
11.0
 
       
Analysis of total income net of insurance claims 
£m
£m
% Change
Businesses
613
1,101
(44)
Securities and loans
(481)
117
 
Derivatives
(296)
(168)
(76)
Total income net of insurance claims
(164)
1,050
 

 
1
As at 31 December 2015 loans and advances included £35.2bn (2014: £51.6bn) of loans and advances to customers (including settlement balances of £0.2bn (2014: £1.6bn) and cash collateral of £19.0bn (2014: £22.1bn)) and loans and advances to banks of £10.6bn (2014: £12.3bn) (including settlement balances of £nil (2014: £0.3bn) and cash collateral of £10.1bn (2014: £11.3bn)).
2
During 2015, new reverse repurchase agreements and other similar secured lending in certain businesses have been designated at fair value to better align to the way the business manages the portfolio's risk and performance. Included within financial assets designated at fair value are reverse repurchase agreements designated at fair value of £1.4bn (2014: £1.0bn)
3
Return on average equity and average tangible equity for Barclays Non-Core represents its impact on the Group. This does not represent the return on average equity and average tangible equity of the Non-Core business.
 
2015 compared to 2014
 
·
Loss before tax increased 24% to £1,459m driven by continued progress in the exit of Businesses, Securities and loans, and Derivative assets. RWAs reduced £29bn to £47bn including a £10bn reduction in Derivatives, £9bn reduction in Securities and loans, and Business reductions from the completion of the sales of the Spanish and UK Secured Lending businesses. The announced sales of the Portuguese and Italian retail businesses, which are due to be completed in H116, are expected to result in a further £2.5bn reduction in RWAs
 
·
Total income net of insurance claims reduced to an expense of £164m (2014: income of £1,050m)
 
 
-
Businesses income reduced 44% to £613m due to the impact of the sale of the Spanish business and the sale and rundown of legacy portfolio assets
 
 
-
Securities and loans income reduced to an expense of £481m (2014: income of £117m) primarily driven by fair value losses and funding costs on the ESHLA portfolio, the active rundown of securities, exit of historical investment bank businesses and the non-recurring gain on the sale of the UAE retail banking portfolio in 2014. Fair value losses on the ESHLA portfolio were £359m (2014: £156m), of which £156m was in Q415, as gilt swap spreads widened
 
 
-
Derivatives income reduced 76% to an expense of £296m reflecting the active rundown of the portfolios and funding costs
 
·
Credit impairment charges improved 54% to £78m due to higher recoveries in Europe and the sale of the Spanish business
 
·
Total operating expenses improved 40% to £1,199m reflecting savings from the sales of the Spanish, UAE retail, commodities, and several principal investment businesses, as well as a reduction in costs to achieve, and conduct and litigation charges
 
·
Loans and advances to banks and customers reduced 28% to £45.9bn due to the reclassification of £5.5bn of loans relating to the announced sales of the Portuguese and Italian businesses to assets held for sale, and the rundown and exit of historical investment bank assets
 
·
Derivative financial instrument assets and liabilities decreased 26% to £210.3bn and 28% to £198.7bn respectively, largely as a result of trade reduction
 
·
Total assets decreased 36% to £303.1bn due to reduced reverse repurchase agreements and other similar secured lending, and lower derivative financial instrument assets
 
·
Leverage exposure reduced £156.2bn to £121.3bn primarily in reverse repurchase agreements, potential future exposure on derivatives and trading portfolio assets
 
·
RWAs decreased £28.7bn to £46.6bn and period end equity decreased £3.8bn to £7.2bn primarily driven by the sale of the Spanish business, the active rundown of legacy structured and credit products, and derivative trade unwinds
 
 
Quarterly Results Summary
 
Barclays results by quarter 
Q415
Q315
Q215
Q115
 
Q414
Q314
Q214
Q114
£m
£m
£m
£m
 
£m
£m
£m
£m
Adjusted basis 
                 
Total income net of insurance claims 
5,438
6,108
6,552
6,430
 
6,018
6,378
6,682
6,650
Credit impairment charges and other provisions 
(646)
(495)
(496)
(477)
 
(573)
(509)
(538)
(548)
Net operating income 
4,792
5,613
6,056
5,953
 
5,445
5,869
6,144
6,102
Operating expenses
(3,697)
(3,842)
(3,897)
(3,915)
 
(3,942)
(3,879)
(4,042)
(4,130)
UK bank levy 
(476)
-
-
-
 
(462)
-
-
-
Litigation and conduct
(106)
(138)
(77)
(57)
 
(140)
(98)
(146)
(65)
Costs to achieve
(254)
(223)
(196)
(120)
 
(339)
(332)
(254)
(240)
Total operating expenses
(4,533)
(4,203)
(4,170)
(4,092)
 
(4,883)
(4,309)
(4,442)
(4,435)
Other net (expenses)/income
(12)
17
(37)
19
 
1
30
(46)
26
Adjusted profit before tax
247
1,427
1,849
1,880
 
563
1,590
1,656
1,693
                   
Adjusting items 
                 
Provisions for UK customer redress
(1,450)
(290)
(850)
(182)
 
(200)
(10)
(900)
-
Provisions for ongoing investigations and litigation including Foreign Exchange
(167)
(270)
-
(800)
 
(750)
(500)
-
-
Losses on sale relating to the Spanish, Portuguese and Italian businesses
(261)
(201)
-
(118)
 
(82)
(364)
-
-
Gain on US Lehman acquisition assets
-
-
496
-
 
-
461
-
-
Own credit 
(175)
195
282
128
 
(62)
44
(67)
119
Gain on valuation of a component of the defined retirement benefit liability
-
-
-
429
 
-
-
-
-
Impairment of goodwill and other assets relating to businesses being disposed
(96)
-
-
-
 
-
-
-
-
Revision of ESHLA valuation methodology
-
-
-
-
 
(935)
-
-
-
Statutory (loss)/profit before tax
(1,902)
861
1,777
1,337
 
(1,466)
1,221
689
1,812
Tax (charge)/credit
(236)
(208)
(394)
(612)
 
85
(601)
(298)
(597)
Statutory (loss)/profit after tax
(2,138)
653
1,383
725
 
(1,381)
620
391
1,215
                   
Attributable to: 
                 
Ordinary equity holders of the parent
(2,422)
417
1,146
465
 
(1,679)
379
161
965
Other equity holders
107
79
79
80
 
80
80
41
49
Non-controlling interests
177
157
158
180
 
218
161
189
201
                   
Balance sheet information 
£bn
£bn
£bn
£bn
 
£bn
£bn
£bn
£bn
Total assets
1,120.0
1,236.5
1,196.7
1,416.4
 
1,357.9
1,365.7
1,314.9
1,362.1
Risk weighted assets
358.4
381.9
376.7
395.9
 
401.9
412.9
411.1
436.3
                   
Adjusted performance measures 
                 
Return on average tangible shareholders' equity
(1.9%)
6.7%
9.1%
9.0%
 
1.7%
7.1%
7.5%
7.6%
Average tangible shareholders' equity (£bn)
48.0
47.9
47.7
48.7
 
48.9
47.6
47.5
47.2
Return on average shareholders' equity
(1.6%)
5.7%
7.8%
7.7%
 
1.5%
6.1%
6.4%
6.5%
Average shareholders' equity (£bn)
56.2
56.1
56.0
57.0
 
57.1
55.6
55.3
54.8
Cost: income ratio 
83%
69%
64%
64%
 
81%
68%
66%
67%
Loan loss rate (bps)
58
40
41
37
 
48
42
44
45
Basic (loss)/earnings per share 
(1.3p)
4.8p
6.5p
6.6p
 
1.3p
5.2p
5.4p
5.5p
                   
Statutory performance measures 
                 
Return on average tangible shareholders' equity
(20.1%)
3.6%
9.8%
4.0%
 
(13.8%)
3.4%
1.4%
8.4%
Average tangible shareholders' equity (£bn)
47.8
47.6
47.2
48.1
 
48.3
46.8
46.7
46.4
Return on average shareholders' equity
(17.1%)
3.1%
8.4%
3.4%
 
(11.8%)
2.9%
1.2%
7.2%
Average shareholders' equity (£bn)
56.0
55.8
55.5
56.3
 
56.4
54.8
54.5
54.0
Cost: income ratio 
119%
76%
68%
71%
 
116%
70%
81%
66%
Basic (loss)/earnings per share 
(14.4p)
2.6p
7.0p
2.9p
 
(10.2p)
2.4p
1.0p
6.0p

 
Barclays Core 
Q415
Q315
Q215
Q115
 
Q414
Q314
Q214
Q114
Income statement information 
£m
£m
£m
£m
 
£m
£m
£m
£m
Total income net of insurance claims 
5,650
6,102
6,520
6,420
 
5,996
6,008
6,397
6,277
Credit impairment charges and other provisions 
(630)
(470)
(488)
(448)
 
(571)
(492)
(456)