Barclays PLC - Pre-Close Briefing
16 Junho 1999 - 4:31AM
UK Regulatory
RNS No 9091w
BARCLAYS PLC
16 June 1999
PRE-CLOSE BRIEFINGS WITH ANALYSTS
Barclays PLC ("Barclays") will be meeting analysts ahead of its close period
for the half-year ended 30th June 1999 and is issuing this statement in line
with the practice first adopted in December 1998.
All the Group's businesses made a good start to the year. Key trends
affecting the performance so far this year are as follows:
Net interest income: Within Retail Financial Services there is further
strong growth in UK consumer lending, including extended credit balances at
Barclaycard. In Corporate Banking there is steady loan growth in UK
corporates and leasing and asset finance.
Average UK retail and corporate deposits have seen growth since the
beginning of 1999 broadly in line with the market growth rates.
In the first quarter of 1999, the overall Group interest margin was similar
to the 1998 full year interest margin.
Net fees and commissions income has shown good growth within Wealth
Management throughout the United Kingdom, the rest of Europe and the
Caribbean reflecting the continuing strength of the global financial
markets. At Barclaycard, net fees and commissions in credit and debit card
transactions for the first four months of 1999 were at similar levels to the
same period of last year.
Corporate Banking is benefiting from growth in lending-based and foreign
exchange commissions since the beginning of 1999.
Barclays Global Investors' assets under management were #417 billion at 30th
April 1999 compared with #370 billion at 31st December 1998.
Barclays Capital's dealing profits have been good, with strong contributions
in the Rates business from government bonds, interest rate derivatives and
foreign exchange. In the Credit business there have been good performances
in primary and secondary corporate bond trading.
Costs of the ongoing business in this full year are expected to be at the
1998 level (#4,877 million), excluding the restructuring charge of up to
#400 million (in respect of the recently announced programme to reduce the
workforce primarily in UK Retail and Corporate Banking by 6,000 jobs by the
end of the year).
This year's costs for the first half of 1999 are expected to be around half
of the anticipated costs for the year.
Provisions for bad and doubtful debts: Within Retail Financial Services the
net provisions charge for the first six months of 1999 will be higher than
the second half of 1998, primarily as a result of increased lending volumes.
The net provisions charge in Corporate Banking is expected to be at a
similar level to the second six months of 1998 with a continuing reduction
in releases and recoveries offset by a lower level of new and increased
provisions.
Weighted risk assets grew by 4% overall in the first four months of 1999,
adjusting for a reduction of #1.2bn in weighted risk assets relating to
Merck Finck & Co which was sold during the period.
The sale of Merck Finck & Co for approximately DM500m (approximately #170m)
was at a #20m premium to net asset value. In addition there will be a
charge of some #140m in respect of goodwill to the profit and loss account
in the first half of 1999.
As at the close of business on 15th June 1999 for the year to date, Barclays
has purchased for cancellation 7.2 million of its ordinary shares at a cost
of #134 million.
APPENDIX:
As a result of a change in reporting of the Group structure in 1999 and a
change in accounting policy, this appendix provides restated comparative
figures for the major changes.
Reporting of Group structure in 1999 - major changes from 1998
Retail Financial Services has re-organised the management of its business
around customer segments to deliver services and products through three
principal business groupings - Retail Customers, Wealth Management and
Barclaycard. Retail Customers and Wealth Management have absorbed the
relevant customer segment from the previous business groupings of UK Retail
Banking, International Premier, Private, Savings and Investment and Africa
and Caribbean, with Barclaycard remaining unaffected.
Retail Customers comprises UK Retail Banking (excluding UK Premier), the
African business, UK retail mutual funds and Barclays Life. Wealth
Management comprises the former International Premier, Private, Savings and
Investment business (excluding UK retail mutual funds and Barclays Life), UK
Premier and the Caribbean business.
Certain internal charges have been re-allocated between Retail Financial
Services and Corporate Banking. In addition, Retail Financial Services has
revised its presentation of income and costs within its profit and loss
account. There is no effect on total Group revenue or costs as a result of
these changes.
Change in accounting policy
A change in policy has arisen from the adoption in 1999 of Financial
Reporting Standard 12 "Provisions, Liabilities and Assets" (FRS12).
The Group has a number of vacant leasehold properties where unavoidable
costs exceed anticipated income for which a provision is now required under
FRS12. Previously costs and income in relation to these properties were only
recognised as they arose.
The change in policy has resulted in a prior year adjustment and the profit
and loss accounts and balance sheets for previous years have been restated.
This has resulted in a net charge to shareholders' funds of #81m as at 1st
January 1999 comprising the cumulative impact of prior year reductions in
net interest income, net provisions for property costs and associated tax
credits. Comparative figures have been restated with the effect that
shareholders' funds have been reduced by #63m at 1st January 1998. Profit
before tax for 1998 and 1997 has been reduced by #23m and increased by #3m
respectively.
Retail Financial Services (restated)
1998 31.12.98 30.6.98 1997
#m #m #m #m
Net interest income 2,831 1,445 1,386 2,603
Net fees and 1,698 868 830 1,655
commissions
Income from long-term 109 62 47 61
assurance business
Other operating income 62 42 20 52
Total income 4,700 2,417 2,283 4,371
Total costs (2,809) (1,438) (1,371) (2,724)
Provisions for bad and (390) (199) (191) (374)
doubtful debts
Operating profit 1,501 780 721 1,273
before impact of the
1997 Finance Act
Life-fund charge - - - (28)
Operating profit 1,501 780 721 1,245
The operating profit for Retail Financial Services is represented by the
following groupings:
1998 31.12.98 30.6.98 1997
#m #m #m #m
Retail Customers 839 441 398 738
Barclaycard 338 170 168 253
Wealth Management 324 169 155 254
Operating profit 1,501 780 721 1,245
Retail Customers
This business provides a wide range of services and products to personal and
small business customers throughout the United Kingdom and in parts of
Africa. These services are provided through a network of branches and ATMs,
and through direct channels such as the telephone and the internet.
Barclaycard
Barclaycard is the largest credit card business in Europe, with operations
in the United Kingdom, Germany, France and Spain. It offers a full range of
credit card services to individual customers, together with card payment
facilities to retailers and other businesses.
Wealth Management
This business serves affluent and high net worth clients globally, with
relationship based services and bespoke products, particularly in the areas
of banking, asset management and long-term financial planning.
Corporate Banking (restated)
1998 31.12.98 30.6.98 1997
#m #m #m #m
Net interest income 1,214 613 601 1,136
Net fees and 613 313 300 579
commissions
Other operating income 24 11 13 14
Total income 1,851 937 914 1,729
Total costs (862) (448) (414) (828)
Provisions for bad and 2 (42) 44 39
doubtful debts
Operating profit 991 447 544 940
before impact of the
Finance Acts
Write down of leases (40) - (40) (77)
Operating profit 951 447 504 863
Profit before tax by business grouping (restated)
1998 31.12.98 30.6.98 1997
#m #m #m #m
Retail Financial 1,501 780 721 1,273
Services
Corporate Banking 991 447 544 940
Barclays Capital (270) (426) 156 247
Barclays Global 52 23 29 51
Investors
Businesses in 48 24 24 93
Transition*
Other operations (203) (111) (92) (53)
Head Office functions (60) (35) (25) (52)
Goodwill amortisation (12) (6) (6) (12)
Provision for (76) (76) - -
litigation settlement
1,971 620 1,351 2,487
Former BZW businesses (33) (14) (19) (219)
Exceptional items 1 5 (4) (425)
Write down of leases (40) - (40) (77)
Life fund charge - - - (28)
Write down of fixed (4) (4) - (19)
asset investments
1,895 607 1,288 1,719
* excludes the results of former BZW businesses which are shown separately.
Selected financial highlights (restated)
1998 31.12.98 30.6.98 1997
#m #m #m #m
RESULTS
Net interest income* 4,353 2,211 2,142 4,103
Non-interest income* 3,063 1,371 1,692 3,216
Operating income* 7,416 3,582 3,834 7,319
Operating expenses* (4,877) (2,523) (2,354) (4,601)
Operating profit* 1,971 620 1,351 2,487
Profit before tax 1,895 607 1,288 1,719
Profit attributable to 1,317 431 886 1,133
shareholders
Profit retained 671 17 654 570
*Figures exclude the results of the former BZW businesses and are stated
prior to the impact of the Finance (No.2) Act 1997 and the Finance Act
1998.
PER ORDINARY SHARE P P P P
Earnings 87.2 28.9 58.3 74.6
Earnings for the 89.6 29.6 60.0 109.3
ongoing business
Net asset value 519 519 519 494
31.12.98 30.6.98 31.12.97
#m #m #m
BALANCE SHEET
Shareholders funds 7,842 7,822 7,557
RISK ASSET RATIO % % %
Tier 1 7.3 7.2 7.2
Total 10.6 10.4 9.9
This information is intended to be indicative of the comparative data to be
included in future results announcements.
For further information please contact:
Investor Relations Media Relations
Ian Roundell Leigh Bruce
0171 699 2961 0171 699 2658
Emma Savage Maria Darby
0171 699 2960 0171 699 2970
This document contains certain forward-looking statements with respect to the
financial condition and results of operations of Barclays, which by their
nature involve risk and uncertainty because they relate to events and depend
on circumstances that may occur in the future. There are a number of factors
that could cause actual results and developments to differ materially from
those expressed or implied by these forward-looking statements. These factors
include, but are not limited to, changes in economic conditions in countries
in which Barclays conducts its business and internationally elsewhere, as well
as future exchange and interest rates, interest margins, the level of deposits
taken and the level of lending by Barclays. A more detailed list of these
factors is contained on page 1 of Barclays Annual Report for 1998.
END
MSCFFMFBLLABMIL
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