BARC Barclays Plc

RNS No 6737p
BARCLAYS PLC
16th February 1999


BARCLAYS PLC - SUMMARY PART 1

For further information please contact:
Leigh Bruce, Director, Corporate Communications, Barclays PLC
Tel: 0171 699 2658
 
                               BARCLAYS PLC
                              RESULTS FOR 1998:
                                ANNUAL REVIEW
                                      
Barclays profit before tax for 1998 was #1,918 million.  Earnings per share
stood at 88.4p.  Post-tax return on equity was 17%.  This was achieved against a
background of a weakening economic climate in the United Kingdom and much of the
rest of the world as well as turbulent conditions in the international credit
markets.  Barclays contribution to the settlement of the long standing Atlantic
litigation resulted in a charge of #76 million, which also had a detrimental
effect on the Group's results.

We have continued to reshape our business around the changing demands of our
customers.  From April 1998 Barclays was organised into four business groups
- Retail Financial Services, Barclays Global Investors, Corporate Banking
and Barclays Capital.  Our overseas operations - substantial businesses in
themselves - were incorporated into this framework.  Each business has
international capability and presence.  We are now organised so that we
reflect our customers' needs, offering the right service and right product
at the right time.

Retail Financial Services provides a broad range of services and products
through multiple delivery channels serving a substantial customer base.
Profit before tax grew strongly by 18% to #1,519 million.  This reflected
good performances from UK mortgages, consumer lending and savings, and from
the insurance and stockbroking business.  Barclaycard continues to trade
strongly in the intensely competitive cards market.  Elsewhere there were
good contributions from Barclays Offshore Services, European Retail Banking
and Barclays Private Banking.  The businesses in Africa and the Caribbean
performed well.

Corporate Banking had another good year and continued to build on its
strength in the UK medium and large corporate sectors where it held strong
market shares.  The business is investing further, with particular emphasis
on payments and liquidity management, so that it can provide customers with
a European capability and international reach.  The euro conversion
programme was extremely successful and we are now able to provide a wide
range of euro products.  Profit before tax increased by 6% to #972 million
partly as a result of strong volume growth in both assets and liabilities.
It also benefited from low provisions reflecting high levels of releases and
recoveries, which are not expected to occur in 1999.

Corporate Banking and Barclays Capital are becoming more closely aligned in
the interests of our large corporate and institutional customers who are
becoming more sophisticated in the services they require and their attitude
to credit.  This is a continuing strategic priority.

Barclays Capital recorded an operating loss of #265 million in 1998 compared
to an operating profit of #252 million in 1997.  Its results were dominated
by two factors; the Russian government's default on its domestic debt
obligations in August and the ensuing effect on credit markets around the
world.  Default by a major country on its domestic currency debt is a rare
event.  That said, management took a number of actions.  We have closed non-
client related proprietary trading activities, reduced emerging market and
corporate bond positions and managed down our financing exposure to hedge
funds without incurring any losses.  Weighted risk assets and total assets
reduced by 18% and 23% respectively in the second half of the year.

Barclays Global Investors (BGI) is deepening its relationships with
institutional clients through the development of a broader, enhanced product
range.  BGI continues to invest in building a leading global institutional
fund management business maintaining its position in the market as a world
leader.  Operating profit improved slightly to #52 million (1997: #51
million).  Adjusting for disposals, underlying profit rose by 15%.  Total
assets under management grew by 20% to #370 billion during the year.

Costs grew by 5% for the ongoing business.  Part of this increase is
associated with euro and Year 2000 preparations, on which we spent a total
of #160 million on the euro and Year 2000 (1997: #60 million).  In 1999 and
thereafter, we expect to spend no more than #120 million.

We recognise the need to reduce costs, which have been the subject of
considerable attention for all of the businesses during the second half of
the year.  We expect that in 1999 total underlying and investment costs will
be held at 1998 levels.  The business transformation programme announced by
Barclaycard in September is one example of what we are seeking to achieve,
the effect of which should reduce its costs by 15% over the course of the
next three years.

Our capital position remains strong, with a tier 1 ratio of 7.4% and the
risk asset ratio at 10.7%.  We continue to remain disciplined in the level
of capital we maintain in the business and estimate that we need
shareholders' funds of #6.6 billion to #7.0 billion for our current
portfolio of businesses, allowing for future growth potential.  The total
dividend for the year is being increased by 16% to 43.0p.  We continue to
maintain a progressive dividend policy and believe that cover of slightly
over two times remains appropriate over the economic cycle.

In 1998 we returned #500 million of capital to shareholders through share
buy-backs.  Our current expectations are to buy-back capital of around #500
million in 1999.

The UK economy has entered a more difficult phase over the last six months.
In recent years we have enhanced our risk management techniques, improving
both the quality and spread of our retail and corporate lending portfolios.
In 1998 our strong growth in chosen lending sectors reflects increased
corporate merger and acquisition financing requirements, a switch to
traditional bank finance from debt capital raisings, increased market share
as a result of the work we have done to enhance our overall customer
relationship and a better confidence in our understanding of the risk.  We
believe our businesses are well prepared to meet the more challenging
business climate.

We are delighted with the appointment of Michael O'Neill as Group Chief
Executive who will join us at the end of next month.  He has a proven track
record and under his leadership the Group will benefit from his knowledge
and experience in the financial services industry.

We ended last year and began 1999 on a strong note.  Neither the Russian
losses nor the management changes in November caused the Group to pause in
its forward momentum.  All four divisions are currently performing strongly,
business quality is good and the Group is well capitalised.  The April
reorganisation has been successfully implemented and the prospects for cost
reduction and revenue enhancement are good.



Andrew Buxton                      Sir Peter Middleton
Chairman                           Deputy Chairman and Chief Executive
                           


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