barc201407306k.htm
 
UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

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

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

UNDER THE SECURITIES EXCHANGE ACT OF 1934
 
July 30, 2014
 
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
Barclays announces Half Yearly Report - dated 30 July 2014
 




SIGNATURES

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

 
Date: July 30, 2014
 
 
By: /s/ Marie Smith
----------------------
Marie Smith
Assistant Secretary
 
 
 
 
BARCLAYS BANK PLC
(Registrant)



Date: July 30, 2014
By: /s/ Marie Smith
----------------------
Marie Smith
Assistant Secretary
 


 

Barclays PLC
Results Announcement

 
30 June 2014
 
 

 
Table of Contents
 
Results Announcement
Page
Performance Highlights
3-4
Group Chief Executive's Review
5
Group Finance Director's Review
6-8
Condensed Consolidated Financial Statements
9-13
Results by Business
  
· Personal and Corporate Banking
14-15
· Barclaycard
16-17
· Africa Banking
18-19
· Investment Bank
20-22
· Head Office
23-25
· Barclays Non-Core
26-27
Barclays Results by Quarter
28-29
Performance Management
  
· Returns and Equity
30-31
· Margins and Balances
32
Risk Management
  
· Overview
33
· Funding Risk - Liquidity
33-36
· Funding Risk - Capital
37-42
· Credit Risk
43-50
· Market Risk
51-52
Statement of Directors' Responsibilities
53
Independent Auditors' Review Report to Barclays PLC
54
Financial Statement Notes
55-88
Shareholder Information
89-90
   
 

 
 
BARCLAYS PLC, 1 CHURCHILL PLACE, LONDON, E14 5HP, UNITED KINGDOM. TELEPHONE: +44 (0) 20 7116 1000. COMPANY NO. 48839
 

 
Notes
 
The term Barclays or Group refers to Barclays PLC together with its subsidiaries. Unless otherwise stated, the income statement analysis compares the six months to 30 June 2014 to the corresponding six months of 2013 and balance sheet analysis as at 30 June with comparatives relating to 31 December 2013. The abbreviations '£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; '€m' and '€bn' represent millions and thousands of millions of Euros respectively; and 'C$m' and 'C$bn' represent millions and thousands of millions of Canadian Dollars respectively.
 
The comparatives have been restated to reflect the implementation of the Group structure changes and the reallocation of elements of the Head Office results under the revised business structure. These restatements were detailed in our announcement on 10 July 2014, accessible at http://www.barclays.com/barclays-investor-relations/results-and-reports. Balance sheet comparative figures have also been restated to adopt the offsetting amendments to IAS 32, Financial Instruments: Presentation.
 
Adjusted profit before tax, adjusted attributable profit and adjusted performance metrics have been presented to provide a more consistent basis for comparing business performance between periods. Adjusting items are considered to be significant and not representative of the underlying business performance. Items excluded from the adjusted measures are: the impact of own credit; the provision for Payment Protection Insurance redress payments and claims management costs (PPI redress); the provision for interest rate hedging products redress and claims management costs (interest rate hedging products redress); and goodwill impairment. As Management reviews adjusting items at a Group level, segmental results are presented excluding these items in accordance with IFRS 8: Operating Segments. Statutory and adjusted performance is reconciled at a Group level only.
 
Relevant terms that are used in this document but are not defined under applicable regulatory guidance or International Financial Reporting Standards (IFRS) are explained in the Results glossary that can be accessed at www.Barclays.com/results.
 
The information in this announcement, which was approved by the Board of Directors on 29 July 2014 does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2013, which included certain information required for the Joint Annual Report on Form 20-F of Barclays PLC and Barclays Bank PLC to the US Securities and Exchange Commission (SEC) and which contained an unqualified audit report under Section 495 of the Companies Act 2006 (which did not make any statements under Section 498 of the Companies Act 2006) have been delivered to the Registrar of Companies in accordance with Section 441 of the Companies Act 2006.
 
These results will be furnished as a Form 6-K to the SEC as soon as practicable following their publication. Once furnished with the SEC, copies of the Form 6-K will also be available from the Barclays Investor Relations website www.barclays.com/investorrelations and from the SEC's website at http://www.sec.gov.
 

 
Forward-looking statements
 
This document contains certain forward-looking statements within the meaning of Section 21E of the US Securities Exchange Act of 1934, as amended, and Section 27A of the US Securities Act of 1933, as amended, with respect to certain of the Group's plans and its current goals and expectations relating to its future financial condition and performance. Barclays cautions readers that no forward-looking statement is a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statements. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements sometimes use words such as 'may', 'will', 'seek', 'continue', 'aim', 'anticipate', 'target', 'projected', 'expect', 'estimate', 'intend', 'plan', 'goal', 'believe', 'achieve' or other words of similar meaning. Examples of forward-looking statements include, among others, statements regarding the Group's future financial position, income growth, assets, impairment charges and provisions, business strategy, capital, leverage and other regulatory ratios, payment of dividends (including dividend pay-out ratios), projected levels of growth in the banking and financial markets, projected costs or savings, original and revised commitments and targets in connection with the Transform Programme and Group Strategy Update, run-down of assets and businesses within Barclays Non-Core, estimates of capital expenditures and plans and objectives for future operations, projected employee numbers and other statements that are not historical fact. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. These may be affected by changes in legislation, the development of standards and interpretations under International Financial Reporting Standards (IFRS), evolving practices with regard to the interpretation and application of accounting and regulatory standards, the outcome of current and future legal proceedings and regulatory investigations, future levels of conduct provisions, the policies and actions of governmental and regulatory authorities, geopolitical risks and the impact of competition. In addition, factors including (but not limited to) the following may have an effect: capital, leverage and other regulatory rules (including with regard to the future structure of the Group) applicable to past, current and future periods; UK, US, Africa, Eurozone and global macroeconomic and business conditions; the effects of continued volatility in credit markets; market related risks such as changes in interest rates and foreign exchange rates; effects of changes in valuation of credit market exposures; changes in valuation of issued securities; volatility in capital markets; changes in credit ratings of the Group; the potential for one or more countries exiting the Eurozone; the implementation of the Transform Programme; and the success of future acquisitions, disposals and other strategic transactions. A number of these influences and factors are beyond the Group's control. As a result, the Group's actual future results, dividend payments, and capital and leverage ratios may differ materially from the plans, goals, and expectations set forth in the Group's forward-looking statements. Additional risks and factors are identified in our filings with the SEC including our Annual Report on Form 20-F for the fiscal year ended 31 December 2013, which are available on the SEC's website at http://www.sec.gov.

Any forward-looking statements made herein speak only as of the date they are made and it should not be assumed that they have been revised or updated in the light of new information or future events. Except as required by the Prudential Regulation Authority, the Financial Conduct Authority, the London Stock Exchange plc (the LSE) or applicable law, Barclays expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Barclays' expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. The reader should, however, consult any additional disclosures that Barclays has made or may make in documents it has published or may publish via the Regulatory News Service of the LSE and/or has filed or may file with the SEC.
 
 

 
 

 
Performance Highlights
 
 
Income Statement
 
 
Group performance
 
 
 
· Adjusted profit before tax was down 7% to £3,349m largely driven by currency movements and a reduction in the Investment Bank profitability, partially offset by improvements in Personal and Corporate Banking (PCB),
       Barclaycard, and Barclays Non-Core (BNC)
 
 
· Adjusted income decreased 12% to £13,332m whilst impairment reduced by 33% to £1,086m, resulting in a 9% decrease in net operating income to £12,246m
 
 
· Adjusted operating expenses were down 9% to £8,877m, including costs to achieve Transform (CTA) of £494m (2013: £640m) and litigation and conduct charges of £211m (2013: £126m), reflecting savings associated with prior
       Transform initiatives and currency movements
 
 
· Statutory profit before tax was £2,501m (2013: £1,677m), reflecting an additional £900m of provisions for PPI redress (2013: £1,350m) and the non-recurrence of a provision for interest rate hedging products redress compared to
      the prior year (2013: £650m)
 
 
· Adjusted Group attributable profit was £1,760m (2013: £2,055m). As a result adjusted Group return on average shareholders' equity reduced to 6.5% (2013: 7.8%) reflecting the equity raised from the rights issue in Q413 and the
      decrease in Core profit before tax partially offset by improvements in BNC
 
 
Core performance
 
 
 
· Profit before tax was down 10% to £3,840m, as improved performance across the majority of the Core businesses was more than offset by a reduction in Investment Bank profit
 
 
· Income decreased 7% to £12,674m, reflecting a 18% reduction in the Investment Bank, driven by a decrease in Markets and a reduction in Africa Banking due to currency movements, partially offset by growth in Barclaycard
      and PCB. Net interest income for PCB, Barclaycard and Africa Banking increased 3% to £5,564m reflecting strong savings, mortgage and card growth
 
 
· Credit impairment charges improved 13% to £937m. This reflected lower impairments in PCB as the improving economic environment had a positive impact on the majority of retail and wholesale portfolios in the UK and lower
      impairment in Africa Banking mortgages on a constant currency basis
 
 
· Operating expenses decreased £370m to £7,944m, reflecting improvements across each of the businesses as a result of Transform initiatives and currency movements partially offset by higher CTA charges of £453m (2013:
      £223m) and higher litigation and conduct charges of £177m (2013: £86m)
 
 
· Core return on equity decreased to 11.0% (2013: 15.1%)
 
 
Non-Core performance
 
 
 
· Loss before tax reduced by 27% to £491m. This reflected lower income, following asset disposals and risk reductions, to £658m (2013: £1,474m), more than offset by a £407m improvement in impairment to £149m and a 36%
      reduction in operating expenses to £934m including lower CTA of £41m (2013: £418m)
 
 
· Non-Core return on equity dilution improved to 4.5% (2013: 7.3%)
 
 
Balance Sheet, Leverage and Capital Management
 
 
· Fully loaded CRD IV Common Equity Tier 1 (CET1) ratio increased to 9.9% (2013: 9.1%) mainly driven by RWA reductions in BNC
 
 
· The PRA leverage ratio increased to 3.4% (2013: 3.0%), reflecting a reduction in the PRA leverage exposure of £99bn to £1,266bn and an increase in eligible PRA adjusted Tier 1 Capital to £43.2bn (2013: £40.5bn) principally 
      from an exchange of existing T1 instruments into new AT1 securities. The estimated BCBS 270 leverage ratio was 3.4%
 
 
· Net tangible asset value per share decreased to 279p (2013: 283p) and net asset value per share decreased to 327p (2013: 331p) primarily due to an increase in the number of shares in issue and a decrease in currency translation
      reserves
 
Performance Highlights
 
Barclays Group Results
for the six months ended
Adjusted
  
Statutory
 
30.06.14
30.06.13
YoY
  
30.06.14
30.06.13
YoY
 
£m
£m
% Change
  
£m
£m
% Change
Total income net of insurance claims
13,332
15,071
(12)
  
13,384
15,157
(12)
Credit impairment charges and other provisions
(1,086)
(1,631)
33
  
(1,086)
(1,631)
33
Net operating income
12,246
13,440
(9)
  
12,298
13,526
(9)
Operating expenses
(8,172)
(9,015)
9
  
(8,172)
(9,015)
9
Litigation and conduct1
(211)
(126)
(67)
  
(1,111)
(2,126)
48
Costs to achieve Transform
(494)
(640)
23
  
(494)
(640)
23
Total operating expenses
(8,877)
(9,781)
9
  
(9,777)
(11,781)
17
Other net expense
(20)
(68)
71
  
(20)
(68)
71
Profit before tax
3,349
3,591
(7)
  
2,501
1,677
49
Tax charge
(1,109)
(1,124)
1
  
(895)
(594)
(51)
Profit after tax
2,240
2,467
(9)
  
1,606
1,083
48
Non-controlling interests
(390)
(412)
5
  
(390)
(412)
5
Other equity interests2
(90)
-
    
(90)
-
  
Attributable profit
1,760
2,055
(14)
  
1,126
671
68
               
Performance Measures
              
Return on average tangible shareholders' equity2
7.5%
9.1%
    
4.9%
3.0%
  
Return on average shareholders' equity2
6.5%
7.8%
    
4.2%
2.6%
  
Cost: income ratio
67%
65%
    
73%
78%
  
Compensation: net operating income ratio
38%
38%
    
38%
38%
  
Loan loss rate
45bps
63bps
    
45bps
63bps
  
Basic earnings per share2
10.9p
15.2p
    
7.0p
5.0p
  
Dividend per share
2.0p
2.0p
    
2.0p
2.0p
  
               
Balance Sheet and Leverage
        
30.06.14
31.12.13
  
Net asset value per share
        
327p
331p
  
Net tangible asset value per share
        
279p
283p
  
PRA leverage exposure
        
£1,266bn
£1,365bn
  
Estimated BCBS 270 leverage exposure
        
£1,353bn
n/a
  
               
Capital Management
              
CRD IV fully loaded
              
Common equity tier 1 ratio3
        
9.9%
9.1%
  
Common equity tier 1 capital
        
£40.8bn
£40.4bn
  
PRA adjusted tier 1 capital
        
£43.2bn
£40.5bn
  
Risk weighted assets3
        
£411bn
£442bn
  
PRA leverage ratio
        
3.4%
3.0%
  
Estimated BCBS 270 leverage ratio
        
3.4%
n/a
  
               
Funding and Liquidity
              
Group liquidity pool
        
£134bn
£127bn
  
Estimated CRD IV liquidity coverage ratio
        
107%
96%
  
Loan: deposit ratio4
        
92%
91%
  
               
Adjusted Profit Reconciliation
        
30.06.14
30.06.13
  
Adjusted profit before tax
        
3,349
3,591
  
Own credit
        
52
86
  
Provision for PPI redress
        
(900)
(1,350)
  
Provision for interest rate hedging products redress
        
-
(650)
  
Statutory profit before tax
        
2,501
1,677
  


1 Litigation and conduct charges include regulatory fines, litigation settlements and conduct related customer redress.
2 The profit after tax attributable to other equity holders of £90m (2013: £nil) is offset by a tax credit recorded in reserves of £19m (2013: £nil). The net amount of £71m, along with non-controlling interests (NCI) is deducted from profit after tax in order to calculate earnings per share, return on average tangible shareholders' equity and return on average shareholders' equity.
3 Following the full implementation of CRD IV reporting in 2014, the previously reported 31 December 2013 RWAs have been revised by £6.9bn to £442bn and the fully loaded CET1 ratio revised by (0.2)% to 9.1%. These additional RWAs have been included within Head Office and Other Operations.
4 Loan: deposit ratio for PCB, Barclaycard, Africa Banking and Non-Core retail.

 

 
Performance Highlights
 
Barclays Core and Non-Core Results
for the six months ended
  

 
 
Barclays Core
  
Barclays Non-Core
 
30.06.14
30.06.13
% Change
  
30.06.14
30.06.13
% Change
 
£m
£m
    
£m
£m
  
Total income net of insurance claims
12,674
13,597
(7)
  
658
1,474
(55)
Credit impairment charges and other provisions
(937)
(1,075)
13
  
(149)
(556)
73
Net operating income
11,737
12,522
(6)
  
509
918
(45)
Operating expenses
(7,314)
(8,005)
9
  
(860)
(1,010)
15
Litigation and conduct
(177)
(86)
    
(33)
(39)
15
Costs to achieve Transform
(453)
(223)
    
(41)
(418)
90
Total operating expenses
(7,944)
(8,314)
4
  
(934)
(1,467)
36
Other net income/(expense)
47
56
(16)
  
(66)
(124)
47
Profit/(loss) before tax
3,840
4,264
(10)
  
(491)
(673)
27
Attributable profit/(loss)
2,224
2,675
(17)
  
(464)
(619)
25
               
Performance Measures
              
Return on average tangible shareholders' equity1
13.5%
19.3%
    
(6.0%)
(10.2%)
  
Return on average shareholders' equity1
11.0%
15.1%
    
(4.5%)
(7.3%)
  
Cost: income ratio
63%
61%
    
142%
100%
  
Basic earnings per share contribution
13.8p
19.8p
    
(2.9p)
(4.6p)
  
               
Capital Management
30.06.14
31.12.13
    
30.06.14
31.12.13
  
CRD IV fully loaded
              
Risk weighted assets
£324bn
£333bn
    
£87bn
£110bn
  
Average allocated tangible equity
£33bn
£29bn
    
£14bn
£16bn
  
Average allocated equity
£41bn
£37bn
    
£14bn
£17bn
  
               
 
 

 
Income by Business
30.06.14
30.06.13
  
 
£m
£m
% Change
Personal and Corporate Banking
4,361
4,305
1
Barclaycard
2,124
2,019
5
Africa Banking
1,773
2,055
(14)
Investment Bank
4,257
5,222
(18)
Head Office
159
(4)
  
Barclays Core
12,674
13,597
(7)
Barclays Non-Core
658
1,474
(55)
Barclays Group adjusted total income
13,332
15,071
(12)
       
   

 
Profit/(Loss) Before Tax by Business
30.06.14
30.06.13
  
 
£m
£m
% Change
Personal and Corporate Banking
1,468
1,197
23
Barclaycard
764
616
24
Africa Banking
484
547
(12)
Investment Bank
1,058
1,951
(46)
Head Office
66
(47)
  
Barclays Core
3,840
4,264
(10)
Barclays Non-Core
(491)
(673)
27
Barclays Group adjusted profit before tax
3,349
3,591
(7)
       
1 Return on average equity and average tangible equity for Barclays Non-Core represents its impact on the Group, being the difference between Barclays Group returns and Barclays Core returns.
 
 

 
Group Chief Executive Officer's Review
 
"In our strategy announcement on 8 May, we committed to simplify, focus and rebalance the Group to deliver higher and more sustainable returns across the cycle, while structurally reducing our cost base and strengthening our capital position.

We are making encouraging progress in executing this plan. Profits before tax in Personal & Corporate Banking and Barclaycard were up 23% and 24% respectively. Africa Banking also delivered a good performance with profits increasing 13% on a constant currency basis. Performance in the Investment Bank was impacted by the repositioning underway as well as difficult trading conditions in the quarter, but it is where we expected it to be at this point. The strong performance of our Banking division is demonstrating the attractiveness of our new origination-led strategy to our clients.

I am pleased with the very good start made in managing down assets in our new non-core unit, with risk-weighted assets reducing by £22bn in the first half. The return on equity drag has also dropped from 7.3% to 4.5% in the quarter, placing us well on track to meet our 3% 2016 target.

Structural cost reduction is vital to achieving strong returns, and we continued to make progress on reducing operating expenses while maintaining controls and improving customer and client experience. Headcount across the Group is now at the lowest level since 2007 and adjusted operating expenses, including CTA, reduced nearly £1bn reflecting cost reductions across all businesses in the half.

The Transform strategy we have been pursuing since February 2013 was designed to create a business which can accommodate external pressures, including the impact of legacy issues, as well as to deliver sustainable performance. Notwithstanding the additional provision taken for Payment Protection Insurance redress, we continued to build our capital strength, with the CRD IV CET1 ratio increasing to 9.9% as at 30 June, keeping us on track to achieve our target of exceeding 11% by 2016. The PRA leverage ratio also increased to 3.4%, as a result of on-going leverage exposure reductions and a successful liability management exercise in June which resulted in the issuance of £2.3bn of new AT1 securities. The estimated BCBS 270 leverage ratio was 3.4%.

As I reflect on the half, I am pleased with our performance, excited by the potential for the Group, and confident in our plans to become the 'Go-To' bank."

Antony Jenkins, Group Chief Executive
 
 

 
Group Finance Director's Review
 
Income Statement
 
 
Group performance
· Adjusted profit before tax was down 7% to £3,349m largely driven by currency movements and a reduction in the Investment Bank profitability, partially offset by improvements in Personal and Corporate Banking (PCB), Barclaycard, and Barclays Non-Core (BNC)
· Adjusted income decreased 12% to £13,332m whilst impairment reduced by 33% to £1,086m, resulting in a 9% decrease in net operating income to £12,246m
· Adjusted operating expenses were down 9% to £8,877m, including costs to achieve Transform (CTA) of £494m (2013: £640m) and litigation and conduct charges of £211m (2013: £126m), reflecting savings associated with prior Transform initiatives and currency movements
· Statutory profit before tax was £2,501m (2013: £1,677m), reflecting an additional £900m of provisions for PPI redress (2013: £1,350m) and the non-recurrence of a provision for interest rate hedging products redress compared to the prior year (2013: £650m)
· The effective tax rate on adjusted profit before tax increased to 33.1% (2013: 31.3%). The effective tax rate on statutory profit before tax remained constant at 35.8% (2013: 35.4%).
· Adjusted Group attributable profit was £1,760m (2013: £2,055m), resulting in an adjusted Group return on average shareholders' equity of 6.5% (2013: 7.8%) reflecting the equity raised from the rights issue in Q413 and the decrease in Core profit before tax partially offset by improvements in BNC performance
 
 
Core Performance
· Profit before tax was down 10% to £3,840m, as improved performance across the majority of the Core businesses was more than offset by a reduction in Investment Bank profit
· Income decreased 7% to £12,674m, reflecting a 18% reduction in the Investment Bank, driven by a decrease in Markets, and a reduction in Africa Banking due to currency movements, partially offset by growth in Barclaycard and PCB
- Net interest income increased 10% to £5,899m driven by strong savings and mortgage growth in PCB, volume growth in Barclaycard, and lower funding costs, partially offset by a reduction in Africa Banking due to currency movements
- Investment Bank income was down 18% to £4,257m driven by a 22% decrease in Markets income, partially offset by a 5% increase in Banking income
· Credit impairment charges improved 13% to £937m. This reflected:
- Lower impairments in PCB as an improving UK economic environment has a positive impact on the majority of retail and wholesale portfolios in the UK
- Lower impairment in Africa Banking mortgages, on a constant currency basis, driven by improvements mainly in the South Africa mortgages portfolio
- Stable impairment in Barclaycard as volume growth was largely offset by currency movements
- Releases across a number of counterparties coupled with low level of new charges in Investment Bank
· Operating expenses decreased £370m to £7,944m, reflecting improvements across each of the businesses as a result of Transform initiatives and currency movements partially offset by higher CTA charges of £453m (2013: £223m) and higher litigation and conduct charges of £177m (2013: £86m)
· Core return on equity decreased to 11.0% (2013: 15.1%)
 
 
Non-Core performance
 
· Loss before tax reduced by 27% to £491m. This reflected lower income, following asset disposals and risk reductions, to £658m (2013: £1,474m), more than offset by a £407m improvement in impairment to £149m and a 36% reduction in operating expenses to £934m including lower CTA of £41m (2013: £418m)
· Non-Core return on equity dilution improved to 4.5% (2013: 7.3%)
 
Group Finance Director's Review
 
Balance Sheet and Leverage
 
Balance Sheet
 
· Total assets as at 30 June 2014 decreased by 2% to £1,315bn compared to December 2013
- Derivative assets decreased by £17bn primarily due to weakening of USD, tightening of credit spreads, reduced activity and balance sheet reduction initiatives, offset by a decrease in major forward interest rates
- Reverse repurchase agreements decreased by £15bn primarily driven by lower matched book trading due to a focus on deleveraging the balance sheet
· Total loans and advances were £486bn (2013: £474bn) with a £13bn increase due to higher settlement balances, £6bn growth in PCB through UK mortgage lending and £2bn growth in Barclaycard. These were offset by a £7bn reduction in Non Core assets as lending was managed down
· Customer accounts increased by 3% to £444bn due to an increase in settlement balances
· Total shareholders' equity including non-controlling interests, was £65bn (2013: £64bn). Excluding non-controlling interests, shareholders' equity increased £2.6bn to £58bn, primarily reflecting a £2.3bn increase in other equity instruments AT1 instruments were issued to investors in exchange for the cancellation of preference shares and subordinated debt instruments
· Net asset value per share was 327p (2013: 331p) and net tangible asset value per share was 279p (2013: 283p). This decrease was mainly attributable to the increase in the total number of shares in issue and a £0.9bn decrease in currency translation reserve as GBP strengthened
 
 
Leverage exposure
 
· The PRA leverage exposure reduced by £99bn to £1,266bn driven by a reduction in potential future exposures (PFEs) on derivatives, securities financing transactions (SFTs) and currency movements, partially offset by an increase in settlement balances. The estimated Basel Committee on Banking Supervision (BCBS) leverage exposure was £1,353bn

 
Capital Management
 
· Fully loaded CRD IV CET1 ratio increased to 9.9% (2013: 9.1%) primarily due to RWA reductions
 
· CRD IV RWAs reduced £31bn to £411bn, primarily driven by reductions in BNC of £22bn, reflecting rundown and exit of securities and reductions in derivatives risk
 
· Fully loaded CRD IV CET1 capital increased by £0.4bn to £40.8bn as a result of retained earnings generated
 
· The PRA leverage ratio increased to 3.4% (2013: 3.0%), reflecting a reduction in the PRA leverage exposure of £99bn and an increase in eligible PRA adjusted Tier 1 Capital to £43.2bn (2013: £40.5bn). Barclays exceeded the minimum of 3% requested by the PRA as at 30 June 2014. From 1 July 2014 the PRA expects Barclays to meet the 3% minimum on a fully loaded BCBS 270 basis. The estimated BCBS leverage ratio on this basis was 3.4% as at 30 June 2014
 
Group Finance Director's Review
 
Funding and Liquidity
 
 
· The Group liquidity pool was £134bn (2013: £127bn), remaining within the expected normal operational range, while maintaining compliance with internal liquidity risk appetite and external regulatory requirements
 
· The pool consists mainly of cash and deposits with central banks and high quality government bonds
 
· The estimated Liquidity Coverage Ratio (LCR) was 107% (2013: 96%) based upon the CRD IV rules, as implemented by the European Banking Authority (EBA). This is equivalent to a surplus of £9bn above the 100% ratio (2013: shortfall of £6bn). The Group estimated LCR based on the Basel Standards published in January 2013 was 112% (2013: 102%)
 
· The loan to deposit ratio for PCB, Africa Banking and Barclaycard remained stable at 92% (2013: 91%). The loan to deposit ratio for the Group was broadly unchanged at 100% (2013: 101%)
 
· Total wholesale funding outstanding (excluding repurchase agreements) was £179bn (2013: £186bn), of which £86bn (2013: £82bn) matures in less than one year and £22bn (2013: £20bn) matures within one month
 
· The Group issued £9bn of term funding net of early redemptions during 2014. Additionally, £6bn of funding was raised through participation in the Bank of England's Funding for Lending Scheme. Barclays has £12bn of term funding maturing in the reminder of 2014 and £24bn in 2015. The Group expects to issue more public wholesale debt in the reminder of 2014 and 2015, in order to maintain a stable and diverse funding base by type, currency and distribution channel
 
Dividends
 
· A second interim dividend of 1.0p will be paid on 19 September 2014
 
Outlook
 
· 2014 will be a transition year as we continue to make investments and focus on balance sheet optimisation and cost reduction
 
Tushar Morzaria, Group Finance Director
 
 

 
Condensed Consolidated Financial Statements
 
Condensed Consolidated Income Statement (Unaudited)

 
   
Half Year Ended
Half Year Ended
Half Year Ended
Continuing Operations
  
30.06.14
31.12.13
30.06.13
 
Notes1
£m
£m
£m
Net interest income
  
6,082
6,023
5,577
Net fee and commission income
  
4,256
4,335
4,396
Net trading income
  
2,575
1,979
4,574
Net investment income
  
356
263
417
Net premiums from insurance contracts
  
336
345
387
Other income
  
19
74
74
Total income
  
13,624
13,019
15,425
Net claims and benefits incurred on insurance contracts
  
(240)
(241)
(268)
Total income net of insurance claims
  
13,384
12,778
15,157
Credit impairment charges and other provisions
  
(1,086)
(1,440)
(1,631)
Net operating income
  
12,298
11,338
13,526
         
Staff costs
2
(5,730)
(5,724)
(6,431)
Administration and general expenses
3
(3,147)
(4,467)
(3,350)
Operating expenses excluding provisions for PPI and interest rate hedging products redress
  
(8,877)
(10,191)
(9,781)
Provision for PPI redress
11
(900)
-
(1,350)
Provision for interest rate hedging products redress
11
-
-
(650)
Operating expenses
  
(9,777)
(10,191)
(11,781)
         
(Loss)/profit on disposal of undertakings and share of results of
        
associates and joint ventures
  
(20)
44
(68)
Profit before tax
  
2,501
1,191
1,677
Tax
4
(895)
(977)
(594)
Profit after tax :
  
1,606
214
1,083
         
Attributable to:
        
Ordinary equity holders of the parent:
  
1,126
(131)
671
Other equity holders2
  
90
-
-
Total equity holders of the parent2
  
1,216
(131)
671
Non-controlling interests
5
390
345
412
Profit after tax
  
1,606
214
1,083
         
Earnings per Share from Continuing Operations
        
Basic earnings/(loss) per ordinary share2
6
7.0p
(0.9p)
5.0p
Diluted earnings/(loss) per ordinary share2
6
7.0p
(0.9p)
4.8p
 
1 For notes to the Financial Statements see pages 55 to 88.
2 The profit after tax attributable to other equity holders of £90m (2013: £nil) is offset by a tax credit recorded in reserves of £19m (2013: £nil). The net amount of £71m, along with NCI, is deducted from profit after tax in order to calculate earnings per share.
 
Condensed Consolidated Financial Statements

Condensed Consolidated Statement of Profit or Loss and other Comprehensive Income (Unaudited)

 
         
   
Half Year Ended
Half Year Ended
Half Year Ended
Continuing Operations
  
30.06.14
31.12.13
30.06.13
 
Notes1
£m
£m
£m
Profit after tax
  
1,606
214
1,083
         
Other comprehensive loss that may be recycled to profit or loss:
        
Currency translation reserve
15
(1,056)
(2,278)
511
Available for sale reserve
15
341
(288)
(94)
Cash flow hedge reserve
15
254
(753)
(1,137)
Other
  
(53)
(57)
20
Total comprehensive loss that may be recycled to profit or loss
  
(514)
(3,376)
(700)
         
Other comprehensive gain/(loss) not recycled to profit or loss:
        
Retirement benefit remeasurements
12
236
(478)
(37)
         
Other comprehensive loss for the period
  
(278)
(3,854)
(737)
         
Total comprehensive profit/(loss) for the period
  
1,328
(3,640)
346
         
Attributable to:
        
Equity holders of the parent
  
1,064
(3,638)
232
Non-controlling interests
  
264
(2)
114
Total comprehensive profit/(loss) for the period
  
1,328
(3,640)
346
 
 
1 For notes, see pages 55 to 88.
 

Condensed Consolidated Financial Statements
 
Condensed Consolidated Balance Sheet (Unaudited)

 
   
As at
As at
Assets
  
30.06.14
31.12.13
 
Notes1
£m
£m
Cash and balances at central banks
  
44,047
45,687
Items in the course of collection from other banks
  
1,746
1,282
Trading portfolio assets
  
128,812
133,069
Financial assets designated at fair value
  
39,746
38,968
Derivative financial instruments
8
333,220
350,300
Loans and advances to banks
  
43,448
39,422
Loans and advances to customers
  
442,549
434,237
Reverse repurchase agreements and other similar secured lending
  
171,934
186,779
Available for sale investments
  
87,224
91,756
Current and deferred tax assets
4
4,461
5,026
Prepayments, accrued income and other assets
  
5,092
4,415
Investments in associates and joint ventures
  
704
653
Goodwill
  
4,829
4,878
Intangible assets
  
3,049
2,807
Property, plant and equipment
  
3,983
4,216
Retirement benefit assets
12
55
133
Total assets
  
1,314,899
1,343,628
       
Liabilities
      
Deposits from banks
  
62,167
55,615
Items in the course of collection due to other banks
  
1,958
1,359
Customer accounts
  
443,638
431,998
Repurchase agreements and other similar secured borrowing
  
173,669
196,748
Trading portfolio liabilities
  
56,815
53,464
Financial liabilities designated at fair value
  
62,248
64,796
Derivative financial instruments
8
326,501
347,118
Debt securities in issue
  
83,832
86,693
Accruals, deferred income and other liabilities
  
13,128
12,934
Current and deferred tax liabilities
4
1,429
1,415
Subordinated liabilities
10
19,301
21,695
Provisions
11
3,445
3,886
Retirement benefit liabilities
12
1,743
1,958
Total liabilities
  
1,249,874
1,279,679
       
Equity
      
Called up share capital and share premium
13
20,655
19,887
Other reserves
15
(154)
249
Retained earnings
  
33,241
33,186
Shareholders' equity attributable to ordinary shareholders of parent
  
53,742
53,322
Other equity instruments
14
4,326
2,063
Total equity excluding non-controlling interests
  
58,068
55,385
Non-controlling interests
5
6,957
8,564
Total equity
  
65,025
63,949
       
 
1 For notes, see pages 55 to 88.
 
 

 
Condensed Consolidated Financial Statements
 
Condensed Consolidated Statement of Changes in Equity (Unaudited)

 
Half Year Ended 30.06.14
Called up Share Capital and Share Premium1
Other Equity Instruments1
Other Reserves1
Retained Earnings
Total
Non-controlling Interests2
Total
Equity
 
£m
£m
£m
£m
£m
£m
£m
Balance at 1 January 2014
19,887
2,063
249
33,186
55,385
8,564
63,949
Profit after tax
-
90
-
1,126
1,216
390
1,606
Currency translation movements
-
-
(941)
-
(941)
(115)
(1,056)
Available for sale investments
-
-
345
-
345
(4)
341
Cash flow hedges
-
-
260
-
260
(6)
254
Retirement benefit remeasurements
-
-
-
237
237
(1)
236
Other
-
-
-
(53)
(53)
-
(53)
Total comprehensive income for the year
-
90
(336)
1,310
1,064
264
1,328
Issue of new ordinary shares
64
-
-
-
64
-
64
Issue of shares under employee share schemes
704
-
-
379
1,083
-
1,083
Issue and exchange of equity instruments
-
2,263
-
(155)
2,108
(1,527)
581
Other equity instruments coupons paid
-
(90)
-
19
(71)
-
(71)
Increase in treasury shares
-
-
(842)
-
(842)
-
(842)
Vesting of shares under employee share schemes
-
-
775
(775)
-
-
-
Dividends paid
-
-
-
(728)
(728)
(334)
(1,062)
Other reserve movements
-
-
-
5
5
(10)
(5)
Balance at 30 June 2014
20,655
4,326
(154)
33,241
58,068
6,957
65,025
               
Half Year Ended 31.12.13
              
Balance at 1 July 2013
13,988
-
3,233
33,862
51,083
9,054
60,137
(Loss)/profit after tax
-
-
-
(131)
(131)
345
214
Currency translation movements
-
-
(1,951)
-
(1,951)
(327)
(2,278)
Available for sale investments
-
-
(283)
-
(283)
(5)
(288)
Cash flow hedges
-
-
(746)
-
(746)
(7)
(753)
Retirement benefit remeasurements
-
-
-
(470)
(470)
(8)
(478)
Other
-
-
-
(57)
(57)
-
(57)
Total comprehensive income for the period
-
-
(2,980)
(658)
(3,638)
(2)
(3,640)
Issue of new ordinary shares
5,870
-
-
-
5,870
-
5,870
Issue of shares under employee share schemes
29
-
-
352
381
-
381
Issue of other equity instruments
-
2,063
-
-
2,063
-
2,063
Increase in treasury shares
-
-
(17)
-
(17)
-
(17)
Vesting of shares under employee share schemes
-
-
13
(13)
-
-
-
Dividends paid
-
-
-
(289)
(289)
(490)
(779)
Other reserve movements
-
-
-
(68)
(68)
2
(66)
Balance at 31 December 2013
19,887
2,063
249
33,186
55,385
8,564
63,949
               
Half Year Ended 30.06.13
              
Balance at 1 January 2013
12,477
-
3,674
34,464
50,615
9,371
59,986
Profit after tax
-
-
-
671
671
412
1,083
Currency translation movements
-
-
750
-
750
(239)
511
Available for sale investments
-
-
(96)
-
(96)
2
(94)
Cash flow hedges
-
-
(1,080)
-
(1,080)
(57)
(1,137)
Retirement benefit remeasurements
-
-
-
(33)
(33)
(4)
(37)
Other
-
-
-
20
20
-
20
Total comprehensive income for the period
-
-
(426)
658
232
114
346
Issue of new ordinary shares
750
-
-
-
750
-
750
Issue of shares under employee share schemes
761
-
-
337
1,098
-
1,098
Increase in treasury shares
-
-
(1,049)
-
(1,049)
-
(1,049)
Vesting of shares under employee share schemes
-
-
1,034
(1,034)
-
-
-
Dividends paid
-
-
-
(570)
(570)
(323)
(893)
Other reserve movements
-
-
-
7
7
(108)
(101)
Balance at 30 June 2013
13,988
-
3,233
33,862
51,083
9,054
60,137
               
               
 
1 Details of Share Capital, Other Equity Instruments and Other Reserves are shown on page 72 to 73.
2 Details of Non-controlling Interests are shown on page 58.
 

 
Condensed Consolidated Financial Statements
 
Condensed Consolidated Cash Flow Statement (Unaudited)
    

 
 
Half Year Ended
Half Year Ended
Half Year Ended
Continuing Operations
30.06.14
31.12.13
30.06.13
 
£m
£m
£m
Profit before tax
2,501
1,191
1,677
Adjustment for non-cash items
1,760
6,230
351
Changes in operating assets and liabilities
(3,082)
(42,699)
9,866
Corporate income tax paid
(586)
(764)
(794)
Net cash from operating activities
593
(36,042)
11,100
Net cash from investing activities
7,463
(6,017)
(16,628)
Net cash from financing activities
(2,202)
7,122
(1,212)
Effect of exchange rates on cash and cash equivalents
(1,380)
(3,125)
3,323
Net increase/(decrease) in cash and cash equivalents
4,474
(38,062)
(3,417)
Cash and cash equivalents at beginning of the period
81,754
119,816
123,233
Cash and cash equivalents at end of the period
86,228
81,754
119,816
 

 
 

 
Results by Business
 
Personal and Corporate Banking
            
Income Statement Information
Half Year ended
  
Half Year ended
  
Half Year ended
YoY %
 
30.06.14
  
31.12.13
  
30.06.13
Change
 
£m
  
£m
  
£m
  
Net interest income
3,057
  
3,033
  
2,860
7
Net fee and commission income
1,257
  
1,320
  
1,403
(10)
Other income
47
  
65
  
42
12
Total income
4,361
  
4,418
  
4,305
1
Credit impairment charges and other provisions
(230)
  
(322)
  
(299)
23
Net operating income
4,131
  
4,096
  
4,006
3
             
Operating expenses
(2,554)
  
(2,706)
  
(2,754)
7
Costs to achieve Transform
(115)
  
(292)
  
(92)
(25)
UK bank levy
-
  
(66)
  
-
-
Total operating expenses
(2,669)
  
(3,064)
  
(2,846)
6
             
Other net income
6
  
4
  
37
(84)
Profit before tax
1,468
  
1,036
  
1,197
23
Attributable profit
1,039
  
800
  
881
18
             
Balance Sheet Information and Key Facts
            
Loans and advances to customers at amortised cost
£216.7bn
  
£212.2bn
  
£211.3bn
  
Total assets
£268.1bn
  
£278.5bn
  
£288.3bn
  
Customer deposits
£298.3bn
  
£295.9bn
  
£289.5bn
  
Risk weighted assets - CRD IV fully loaded
£117.9bn
  
£118.3bn
  
n/a
  
Average allocated tangible equity
£13.0bn
  
£13.3bn
  
£13.1bn
  
Average allocated equity
£17.3bn
  
£17.5bn
  
£17.2bn
  
             
Average LTV of mortgage portfolio1
55%
  
56%
  
58%
  
Average LTV of new mortgage lending1
64%
  
64%
  
64%
  
             
Number of branches
1,546
  
1,560
  
1,577
  
             
Performance Measures
            
Return on average tangible equity
16.1%
  
12.0%
  
13.5%
  
Return on average equity
12.1%
  
9.1%
  
10.3%
  
Cost: income ratio
61%
  
69%
  
66%
  
Loan loss rate (bps)
21
  
29
  
28
  
 

 
 
1 Average LTV of mortgage portfolio and new mortgage lending calculated on the balance weighted basis.
 

 
Results by Business
 
Personal and Corporate Banking
 
Personal and Corporate Banking (PCB) comprises personal banking, mortgages, wealth and investment management and corporate banking. Through these businesses we serve the needs of our customers and clients in the UK and in selected international markets. Managing these businesses together will help drive product and customer segment capabilities as well as cost synergies through platform integration and leveraging expertise, particularly within digital channels.
 
The number of customers using digital channels continued to grow substantially; mobile banking users almost doubled to 3.0m customers and Pingit users more than doubled to 1.7m. PCB continued to support the UK economy advancing £2.3bn of net mortgage lending in the first half of the year and advancing £0.9bn of gross term lending to small businesses1 in addition to helping close to 60,000 start-ups.
 
Progress continues to be made on the Transform strategy. During H114, the business incurred £115m (2013: £92m) of costs to achieve Transform. Operational efficiency has been enhanced through ongoing rationalisation to focus on target markets and simplify operations, with continued investment in the customer experience across multiple channels.
 
Income Statement - H114 compared to H113
 
· Total income increased 1% to £4,361m driven by strong savings and mortgage growth partially offset by lower fees
 
· Net interest income increased 7% to £3,057m driven by strong savings and mortgage growth. Net interest margin was up 8bps to 296bps due to lower funding costs and lower customer deposit rates
 
· Net fee and commission income declined 10% to £1,257m primarily due to lower fees from current account and insurance products, and corporate banking
 
· Credit impairment charges reduced £69m to £230m due to the improving economic environment in the UK. Personal banking benefited from lower write-offs in overdrafts and in home loans. Corporate banking benefited from higher levels of releases and recoveries in the UK
 
· Operating expenses reduced 6% to £2,669m reflecting benefits from headcount reduction, partially offset by increased costs to achieve Transform of £115m (2013: £92m)
 
· Profit before tax increased 23% to £1,468m
 
 
Income Statement - Q214 compared to Q114
 
· Profit before tax increased 13% to £780m driven by £40m lower impairment due to the improving economic environment in the UK and higher levels of releases in corporate banking, in addition to £41m lower operating expenses reflecting benefits from Transform programmes
 
 
Balance Sheet - 30 June 2014 compared to 31 December 2013
 
· Loans and advances to customers increased £4.5bn to £216.7bn due to increases in mortgage balances and UK corporate loans
 
· Total assets decreased 4% to £268.1bn primarily driven by a reduction in the Group liquidity pool allocation partly offset by the increase in loans and advances to customers
 
· Customer deposits increased £2.4bn to £298.3bn due to increases in UK corporate and personal deposits, partially offset by net reductions in wealth and investment management deposits primarily driven by reduced institutional cash deposits
 
· RWAs reduced to £117.9bn (2013: £118.3bn) driven by changes in risk profile and the treatment of high quality liquidity assets, partially offset by balance sheet growth
 
1 Small businesses with a turnover of less than £5m.

 
Results by Business
 
Barclaycard
            
 
Half Year Ended
  
Half Year Ended
  
Half Year Ended
  
Income Statement Information
30.06.14
  
31.12.13
  
30.06.13
YoY
 
£m
  
£m
  
£m
% Change
Net interest income
1,500
  
1,444
  
1,385
8
Net fee and commission income
613
  
631
  
625
(2)
Other income
11
  
9
  
9
22
Total income
2,124
  
2,084
  
2,019
5
Credit impairment charges and other provisions
(537)
  
(556)
  
(540)
1
Net operating income
1,587
  
1,528
  
1,479
7
             
Operating expenses
(822)
  
(912)
  
(874)
6
Costs to achieve Transform
(36)
  
(44)
  
(5)
  
UK bank levy
-
  
(22)
  
-
-
Total operating expenses
(858)
  
(978)
  
(879)
2
             
Other net income
35
  
17
  
16
  
Profit before tax
764
  
567
  
616
24
Attributable profit
539
  
383
  
439
23
             
Balance Sheet Information and Key Facts
            
Loans and advances to customers at amortised cost
£33.2bn
  
£31.5bn
  
£30.1bn
  
Total assets
£36.2bn
  
£34.4bn
  
£34.3bn
  
Customer deposits
£5.9bn
  
£5.1bn
  
£4.4bn
  
Risk weighted assets - CRD IV fully loaded
£37.7bn
  
£35.7bn
  
n/a
  
Average allocated tangible equity
£4.6bn
  
£4.2bn
  
£4.0bn
  
Average allocated equity
£5.7bn
  
£5.4bn
  
£5.2bn
  
             
30 day arrears rates - UK cards
2.4%
  
2.4%
  
2.5%
  
30 day arrears rates - US cards
1.9%
  
2.1%
  
2.0%
  
             
Performance Measures
            
Return on average tangible equity
23.6%
  
18.2%
  
21.7%
  
Return on average equity
18.9%
  
14.3%
  
16.8%
  
Cost:income ratio
40%
  
47%
  
44%
  
Loan loss rate (bps)
311
  
334
  
342
  

Results by Business
 
Barclaycard
Barclaycard was largely unchanged by the Group Strategy Update, with the exception of the African Card business moving to Africa Banking and the UK secured lending portfolio moving to Barclays Non-Core.
 
Barclaycard continued to grow across all businesses, delivering 5% income growth, with a net increase of 2.3m customers since June 2013. Innovation remained a key priority, with the launch of the open-market bPay band - a wearable contactless payment device - and Barclaycard Anywhere, a new mobile point-of-sale solution that makes it easy for businesses to take card payments securely, anywhere in the UK.
 
On the journey to become the 'Go-To' bank for consumer payments, Barclaycard focuses on providing customers and clients with simple solutions that offer clear value. The business looks to improve the customer experience through operational enhancements, improved technical capability and digitalisation.
 
 
Income Statement - H114 compared to H113
 
 
· Income improved 5% to £2,124m reflecting net lending growth across the business
 
- UK income, including both the consumer and merchant sides of payments, increased by 8% to £1,368m reflecting net lending growth and lower funding costs
 
- International income remained flat at £756m reflecting higher customer asset balances in the US and Germany, offset by depreciation of USD against GBP
 
 
· Net interest income increased by 8% to £1,500m driven by volume growth. Net interest margin remained stable at 9.05% (2013: 9.03%). The impact of promotional offers and a change in product mix, with growth through the US partner portfolio, were offset by lower funding costs
 
 
· Net fees and commission income remained broadly stable at £613m (2013: £625m)
 
 
· Credit impairment charges remained flat at £537m (2013: £540m), with the impact of volume growth being offset by a reduction in impairment rates and depreciation of USD against GBP. Loan loss rates reduced by 31bps to 311bps and 30 day delinquency rates fell in UK and US consumer cards businesses
 
 
· Operating expenses reduced 2% to £858m driven by depreciation of USD against GBP, a VAT refund and improved efficiency, partially offset by costs associated with volume growth and costs to achieve Transform
 
 
· Profit before tax improved 24% to £764m
 
 
 
Income Statement - Q214 compared to Q114
 
 
· Profit before tax increased 8% to £396m driven by higher volumes
 
 
Balance Sheet - 30 June 2014 compared to 31 December 2013
 
 
· Total assets increased £1.8bn to £36.2bn driven by the increase in loans and advances to customers across the business
 
 
· Customer deposits increased by £0.8bn to £5.9bn due to funding initiatives in the US
 
 
· RWAs increased to £37.7bn (2013: £35.7bn) driven by increased customer lending
 
 

 
Results by Business
 
Africa Banking
          
Constant Currency1
 
Half Year
Ended
Half Year
Ended
Half Year
Ended
    
Half Year Ended
Half Year ended
  
Income Statement Information
30.06.14
31.12.13
30.06.13
YoY
  
30.06.14
30.06.13
YoY
 
£m
£m
£m
% Change
  
£m
£m
% Change
Net interest income
1,007
1,105
1,140
(12)
  
1,261
1,140
11
Net fee and commission income
527
633
621
(15)
  
661
621
6
Net premiums from insurance contracts
167
182
192
(13)
  
211
192
10
Net trading income
144
114
143
1
  
181
143
27
Other income
12
40
54
(78)
  
15
54
(72)
Total income
1,857
2,074
2,150
(14)
  
2,329
2,150
8
Net claims and benefits incurred under insurance contracts
(84)
(90)
(95)
12
  
(106)
(95)
(12)
Total income net of insurance claims
1,773
1,984
2,055
(14)
  
2,223
2,055
8
Credit impairment charges and other provisions
(196)
(205)
(274)
28
  
(249)
(274)
9
Net operating income
1,577
1,779
1,781
(11)
  
1,974
1,781
11
                 
Operating expenses
(1,082)
(1,221)
(1,230)
12
  
(1,344)
(1,230)
(9)
Costs to achieve Transform
(17)
(17)
(9)
(89)
  
(22)
(9)
  
UK bank levy
-
(42)
-
-
  
-
-
  
Total operating expenses
(1,099)
(1,280)
(1,239)
11
  
(1,366)
(1,239)
(10)
                 
Other net income
6
3
5
20
  
8
5
60
Profit before tax
484
502
547
(12)
  
616
547
13
Attributable profit
181
134
222
(18)
  
231
222
4
                 
                 
Balance Sheet Information and Key Facts
Half Year
Ended
Half Year
Ended
Half Year
Ended
    
Half Year Ended
Half Year ended
  
30.06.14
31.12.13
30.06.13
    
30.06.14
31.12.13
  
Loans and advances to customers at amortised cost
£33.8bn
£34.9bn
£38.7bn
    
£35.3bn
£34.9bn
  
Total assets
£52.4bn
£54.9bn
£61.2bn
    
£54.8bn
£54.9bn
  
Customer deposits
£33.2bn
£34.6bn
£37.9bn
    
£34.6bn
£34.6bn
  
Risk weighted assets - CRD IV fully loaded
£36.5bn
£38.0bn
n/a
          
Average tangible equity2
£2.7bn
£2.9bn
£3.4bn
          
Average equity2
£3.8bn
£4.1bn
£4.7bn
          
                 
Average LTV of mortgage portfolio3
61.2%
62.3%
63.7%
          
Average LTV of new mortgage lending3
75.0%
74.9%
74.1%
          
                 
Number of distribution points
1,369
1,396
1,433
          
                 
ZAR/£ - Period end
18.17
17.37
15.11
          
ZAR/£ - Average
17.82
15.94
14.20
          
                 
Performance Measures
                
Return on average tangible equity
13.3%
9.3%
13.0%
          
Return on average equity
9.6%
6.6%
9.4%
          
Cost: income ratio
62%
65%
60%
          
Loan loss rate (bps)
110
107
134
          

1 Constant currency results are calculated by converting ZAR results into GBP using the average H113 exchange rate for the income statement and the FY13 exchange rate for the balance sheet to eliminate the impact of movement in exchange rates between the two periods.
2 For Africa Banking the equity used for return on average equity is Barclays' share of the statutory equity of the BAGL entity (together with that of the Barclays Egypt and Zimbabwe businesses which remain outside the BAGL corporate entity), as well as the Barclays' goodwill on acquisition of these businesses. The tangible equity for return on tangible equity uses the same basis but excludes both Barclays' goodwill on acquisition and the goodwill and intangibles held within the BAGL statutory equity.
3 Average LTV of mortgage portfolio and new mortgage lending calculated on the balance weighted basis.
 
 
Results by Business
 
Africa Banking
 
The combined Africa Banking business is managed under three primary businesses: Retail and Business Banking (RBB); Wealth, Investment Management and Insurance (WIMI); Corporate and Investment Banking (CIB) as well as an Africa Head Office function.
 
The current focus areas of execution are:
 
·
The RBB turnaround strategy which is gaining early traction and key indicators around client numbers, cheque account growth, transactional deposits balances and debit card turnover are reflected in a stabilisation in income
 
·
CIB investment across Africa has seen the roll-out of BARX in markets across Africa and strong growth in income generated outside South Africa
 
·
WIMI growth in net premium income reflects the close collaboration with other business areas and also the expansion outside South Africa
 
Africa Banking results showed strong underlying momentum in H114, with constant currency profit before tax increasing 13%. Reported results were adversely affected by currency movements with the average ZAR for H114 compared to H113 depreciating 25% against GBP.
 
 
 
Income Statement - H114 compared to H113
 
·
Total income net of insurance claims declined 14% to £1,773m. On a constant currency basis, total income grew 8% reflecting balance sheet growth and strong non-interest income growth in the CIB Markets business, in addition to improved income in RBB despite modest balance sheet growth. WIMI showed modest growth, impacted by higher weather-related short term claims
 
·
Net interest income decreased 12% to £1,007m. On a constant currency basis, net interest income increased 11% driven by higher average loans and advances to customers in CIB, growth in RBB customer deposits and an increased net interest margin following the rise in the South African benchmark interest rate
 
·
Net fee and commission income decreased 15% to £527m. On a constant currency basis, net fee and commission income increased 6% reflecting strong performance particularly in cards
 
·
Credit impairment charges decreased 28% to £196m. On a constant currency basis, credit impairment charges reduced 9% driven by improvements mainly in the South Africa mortgages portfolio, partially offset by increased provisions in the cards portfolio. The loan loss rate improved 24bps to 110bps
 
·
Operating expenses decreased 11% to £1,099m. On a constant currency basis, operating expenses increased 10% largely reflecting increased spend on key initiatives including costs to achieve Transform, in addition to higher staff costs
 
·
Profit before tax decreased 12% to £484m. On a constant currency basis, profit before tax increased 13%
 
 
 
Income Statement - Q214 compared to Q114
 
 
·
Profit before tax of £244m (Q114: £240m) is largely in line with stronger performance in CIB
 
 
 
Balance Sheet - 30 June 2014 compared to 31 December 2013
 
·
Loans and advances to customers decreased 3% to £33.8bn. On a constant currency basis, loans and advances increased 1%
 
·
Total assets decreased by 5% to £52.4bn. On a constant currency basis, total assets were broadly in line
 
·
Customer deposits decreased 4% to £33.2bn. On a constant currency basis, customer deposits remained broadly in line
 
·
RWAs decreased 4% to £36.5bn. On a constant currency basis RWAs decreased 1% driven by lower operational risk
 
 

 
Results by Business
 
Investment Bank
            
 
Half Year Ended
  
Half Year Ended
  
Half Year Ended
  
Income Statement Information
30.06.14
  
31.12.13
  
30.06.13
YoY
 
£m
  
£m
  
£m
% Change
Net interest income
334
  
229
  
164
  
Net fee and commission income
1,726
  
1,622
  
1,610
7
Net trading income
2,137
  
1,792
  
3,177
(33)
Net investment income1
60
  
(10)
  
271
(78)
Total income
4,257
  
3,633
  
5,222
(18)
Credit impairment releases/(charges) and other provisions
26
  
(16)
  
38
(32)
Net operating income
4,283
  
3,617
  
5,260
(19)
             
Operating expenses
(2,943)
  
(2,979)
  
(3,193)
8
Costs to achieve Transform
(282)
  
(74)
  
(116)
  
UK bank levy
-
  
(236)
  
-
-
Total operating expenses
(3,225)
  
(3,289)
  
(3,309)
3
             
Profit before tax
1,058
  
328
  
1,951
(46)
Attributable profit
435
  
209
  
1,306
(67)
             
Balance Sheet Information
            
Trading portfolio assets
£101.2bn
  
£96.6bn
  
£107.4bn
  
Derivative financial instrument assets
£104.2bn
  
£108.7bn
  
£128.4bn
  
Reverse repurchase agreements and other similar secured lending
£83.0bn
  
£78.2bn
  
£93.1bn
  
Total assets
£447.8bn
  
£439.6bn
  
£515.5bn
  
Risk weighted assets - fully loaded CRD IV
£125.5bn
  
£126.0bn
  
n/a
  
Average allocated tangible equity
£14.9bn
  
£15.0bn
  
£16.0bn
  
Average allocated equity
£15.6bn
  
£15.6bn
  
£16.6bn
  
             
Performance measures
            
Return on average tangible equity
5.9%
  
2.8%
  
16.3%
  
Return on average equity
5.7%
  
2.7%
  
15.7%
  
Cost: income ratio
76%
  
91%
  
63%
  

             
Analysis of Total Income
            
             
Investment Banking fees
1,174
  
1,097
  
1,063
10
Lending2
169
  
110
  
215
(21)
Banking
1,343
  
1,207
  
1,278
5
Credit3
616
  
539
  
718
(14)
Equities
1,220
  
945
  
1,352
(10)
Macro3
1,056
  
951
  
1,629
(35)
Markets
2,892
  
2,435
  
3,699
(22)
Banking & Markets
4,235
  
3,642
  
4,977
(15)
Other1
22
  
(9)
  
245
(91)
Total income
4,257
  
3,633
  
5,222
(18)

1 Net investment income and other income includes the £259m gain recognised in Q2 2013 in respect of assets not yet received from the 2008 US Lehman acquisition.
2 Lending income includes net interest income, fee income and risk management income or losses. H114 net interest and fee income was £268m (2013: £264m), while risk management losses were £99m (2013: £49m). While net interest and fee income tends to be broadly stable over time, there is volatility in risk management income or losses.
3 Macro represents Rates, Currencies and Commodities income. Credit represents Credit, Securitised Products and Municipals income.
 
 
Results by Business
 
Investment Bank
 
 
The Investment Bank now consists of origination led and returns focused markets and banking businesses. Non-strategic and lower returning businesses have been moved to Barclays Non-Core, and the African Investment Banking business has been moved to Africa Banking. Investment Bank treasury operations have been moved to be reported where they are now managed alongside the Group treasury operations within Head Office and Other Operations.
 
 
Markets income reduced in H114 compared to H113 due to lower volatility and elevated activity in the prior year. In H114 strong growth was seen in the Banking franchise, which continued to outperform the market1 with Equity underwriting having experienced record half-yearly revenues.
 
 
The Investment Bank continued to make progress in delivering the Transform strategy, with a focus on driving cost and capital efficiency, strengthening the control environment, and capitalising on the build out of Equities and Banking. The business incurred costs to achieve Transform of £282m primarily related to restructuring across Europe, Asia and the Americas.
 
 
Income Statement - H114 compared to H113
 
 
· Total income decreased 18% to £4,257m including a 4% reduction due to a fair value adjustment in the prior year of £259m relating to the 2008 US Lehman acquisition and a 5% reduction due to currency movements. Excluding these items income decreased 10%
 
-
Investment Banking fee income increased 10% driven by increased financial advisory and record equity underwriting fees with debt underwriting largely in line with prior year
 
-
Markets income decreased 22%
 
·
Credit decreased 14% to £616m driven by lower client activity amid challenging trading conditions and tightening credit spreads
 
·
Equities decreased 10% to £1,220m due to declines in the cash equities business reflecting lower client volumes, partially offset by higher income in equity financing
 
·
Macro decreased 35% to £1,056m reflecting decreased volatility in currency markets and subdued client activity in rates
 
-
Other income decreased £223m to £22m primarily related to a fair value adjustment in the prior year of £259m as a result of greater certainty regarding the recoverability of certain assets not yet received from the 2008 US Lehman acquisition
 
· Net credit impairment release of £26m (2013: £38m) across a number of counterparties
 
·
Operating expenses decreased 3% to £3,225m due to lower compensation costs, benefits from Transform programmes, including business restructuring and operational streamlining, and favourable currency movements. This was partially offset by costs to achieve Transform of £282m (2013: £116m), primarily related to restructuring initiatives across Europe, Asia and the Americas, and litigation and conduct charges
 
· Including costs to achieve Transform, the cost: income ratio increased 13% to 76%
 
· Profit before tax decreased 46% to £1,058m
 

1 Source: Dealogic daily feed, 1 July 2014.
 
 
Results by Business
 
Income Statement - Q214 compared to Q213
 
· Total income decreased 16% to £2,154m including a 8% reduction due to a fair value adjustment in the prior year of £259m relating to the 2008 US Lehman acquisition and a 6% reduction due to currency movements. Excluding these items total income decreased 2%
 
-
Investment Banking fee income increased 35% to £661m driven by increased debt and equity underwriting deal issuance and financial advisory
 
-
Markets income decreased 16% to £1,403m
 
·     Credit increased 13% to £270m driven by increased income from securitised products
 
·
Equities decreased 16% to £629m due to a decline in client activity in cash equities as Q213 benefitted from improved global equity markets driven by increased market confidence
 
·       Macro decreased 27% to £504m reflecting lower client activity across rates and currency in Q214
 
· Operating expenses increased 12% to £1,594m due to costs to achieve Transform, including business restructuring and operational streamlining, and increased litigation and conduct charges more than offsetting savings from Transform programmes and favourable currency movements
 
· Profit before tax decreased 50% to £567m
 
 
Balance Sheet - 30 June 2014 compared to 31 December 2013
 
· Trading portfolio assets increased 5% to £101.2bn due to increased client demand for securitised products within Credit
 
· Derivative financial instrument assets decreased 4% to £104.2bn due to the strengthening of GBP against USD and reduced volumes
 
· Reverse repurchase agreements increased 6% to £83.0bn in line with mandated limits
 
· RWAs remained broadly in line at £125.5bn (2013: £126.0bn)
 
 

 
Results by Business
 
Head Office and Other Operations
    

 
 
Half year Ended
  
Half year Ended
  
Half year Ended
Income Statement Information
30.06.14
  
31.12.13
  
30.06.13
 
£m
  
£m
  
£m
Net interest income/(expense)
1
  
98
  
(166)
Net fee and commission expense
(181)
  
(69)
  
(48)
Net trading income
117
  
25
  
146
Net investment income
204
  
51
  
17
Net premiums from insurance contracts
9
  
12
  
13
Other income
9
  
29
  
34
Total income/(expense)
159
  
146
  
(4)
Credit impairment releases
-
  
3
  
-
Net operating income/(expense)
159
  
149
  
(4)
           
Operating expenses
(91)
  
(72)
  
(41)
Costs to achieve Transform
(2)
  
(22)
  
-
UK bank levy
-
  
(29)
  
-
Total operating expenses
(93)
  
(123)
  
(41)
           
Other net (expense)/income
(0)
  
6
  
(2)
Profit/(loss) before tax
66
  
32
  
(47)
Attributable profit/(loss)
30
  
84
  
(173)
           
Balance Sheet Information
          
Total assets
£41.7bn
  
£25.0bn
  
£45.6bn
Risk weighted assets - fully loaded CRD IV1
£6.0bn
  
£14.6bn
  
n/a
Average allocated tangible equity2
£(2.1bn)
  
£(6.4bn)
  
£(8.7bn)
Average allocated equity2
£(1.8bn)
  
£(6.0bn)
  
£(8.3bn)

1 Following the full implementation of CRD IV reporting in 2014, the previously reported 31 December 2013 RWAs have been revised by £6.9bn to £14.6bn.
2 Average allocated tangible equity and equity for the Head Office and Other Operations include risk weighted assets and capital deductions in Head Office and Other Operations, plus the residual balance of average ordinary shareholders' equity and tangible ordinary shareholders' equity caused by allocating equity at the target 10.5% of average risk weighted assets as opposed to the lower actual Core Tier 1 ratio of between 9.1 and 9.9% during H114.

 
Results by Business
 
Head Office and Other Operations
 
Head Office and Other Operations now include treasury operations previously reported in the Investment Bank, while the Africa Head Office function has been transferred to Africa Banking

 
Income Statement - H114 compared to H113
 
· Total income increased to £159m (2013: expense of £4m) predominantly driven by a net gain of £69m from foreign exchange recycling arising from the restructure of group subsidiaries
 
· Operating expenses increased £52m to £93m, mainly due to litigation and conduct charges
 
· Profit before tax of £66m moved from a loss of £47m in 2013
 
 
Income Statement - Q214 compared to Q114
 
·
Profit before tax of £6m (Q114: £60m) due to operating expenses increasing £49m to £71m, mainly due to litigation and conduct charges
 
 
Balance Sheet - 30 June 2014 compared to 31 December 2013
 
· Total assets increased to £41.7bn (2013: £25.0bn) primarily reflecting an increase in surplus Group liquidity pool assets
 
· RWAs decreased to £6.0bn (2013: £14.6bn). Excluding the impact of the £6.9bn comparative revisions, the decrease was primarily driven by changes in the treatment of high quality liquidity assets.
 
 

 
Results by Business
 
Barclays Non-Core
            
 
Half Year
Ended
  
Half Year
Ended
  
Half Year
Ended
  
Income Statement Information
30.06.14
  
31.12.13
  
30.06.13
YoY
 
£m
  
£m
  
£m
% Change
Net interest income
183
  
113
  
194
(6)
Net fee and commission income
314
  
198
  
185
70
Net trading income
116
  
327
  
1,000
(88)
Net premiums from insurance contracts
147
  
140
  
166
(11)
Other income
53
  
192
  
101
(48)
Total income
813
  
970
  
1,646
(51)
Net claims and benefits incurred under insurance contracts
(155)
  
(152)
  
(172)
10
Total income net of insurance claims
658
  
818
  
1,474
(55)
Credit impairment charges and other provisions
(149)
  
(344)
  
(556)
73
Net operating income
509
  
474
  
918
(45)
             
Operating expenses
(893)
  
(1,149)
  
(1,049)
15
Costs to achieve Transform
(41)
  
(120)
  
(418)
90
UK bank levy
-
  
(109)
  
-
  
Total operating expenses
(934)
  
(1,378)
  
(1,467)
36
             
Other net (expense)/income
(66)
  
14
  
(124)
47
Loss before tax
(491)
  
(890)
  
(673)
27
Attributable loss
(464)
  
(1,271)
  
(619)
25
             
Balance Sheet Information
            
Loans and advances to banks and customers at amortised cost
£75.5bn
  
£81.9bn
  
£95.9bn
  
Loans and advances to customers at fair value
£17.0bn
  
£17.6bn
  
£18.6bn
  
Trading portfolio assets
£22.9bn
  
£30.7bn
  
£41.5bn
  
Derivative financial instrument assets
£227.0bn
  
£239.3bn
  
£301.9bn
  
Reverse repurchase agreements and other similar secured lending
£86.8bn
  
£104.7bn
  
£123.6bn
  
Total assets
£468.6bn
  
£511.2bn
  
£623.0bn
  
Customer deposits
£28.6bn
  
£29.3bn
  
£34.2bn
  
Risk weighted assets - CRD IV fully loaded
£87.5bn
  
£109.9bn
  
n/a
  
Average allocated tangible equity
£14.2bn
  
£16.3bn
  
£17.2bn
  
Average allocated equity
£14.5bn
  
£16.5bn
  
£17.5bn
  
             
Performance Measures
            
Return on average tangible equity1
(6.0%)
  
(9.6%)
  
(10.2%)
  
Return on average equity1
(4.5%)
  
(7.5%)
  
(7.3%)
  
Cost: income ratio
142%
  
168%
  
99%
  
Loan loss rate (bps)
45
  
81
  
114
  

 
             
Analysis of Total Income
            
Businesses
564
  
662
  
822
(31)
Securities and Loans
147
  
171
  
570
(74)
Derivatives
(53)
  
(15)
  
82
  
Total Income
658
  
818
  
1,474
(55)

1 Return on average equity and average tangible equity for Barclays Non-Core represents its impact on the Group, being the difference between Barclays Group returns and Barclays Core returns.

 

 
Results by Business
 
 
Barclays Non-Core
 
 
Barclays Non Core (BNC) groups together businesses and assets that are no longer strategically attractive to Barclays and are being managed under three broad categories:
 
 
· Businesses, including all of Europe Retail
 
·
Securities and Loans, incorporating Investment Bank portfolio assets and the UK corporate long term fair value loan portfolio
 
· Derivatives, including the pre-CRD IV Rates portfolio
 
 
These businesses and assets will be exited over time with actions already undertaken during H114.
 
 
Income Statement - H114 compared to H113
 
· Total income net of insurance claims decreased 55% to £658m
 
- Businesses income decreased 31% to £564m due to exit from non strategic principal businesses and reduced European retail income
 
- Securities and Loans decreased 74% to £147m primarily driven by active rundown of securities, fair value adjustments on wholesale loan portfolios and favourable market movements for certain securitised products in 2013
 
- Derivatives income reduced £135m to an expense of £53m reflecting reduced income from the pre-CRD IV Rates portfolio and hedging activities
 
· Credit impairment charges improved by £407m to £149m primarily driven by a prior year charge against a single name exposure, better credit performance in retail and lower charges on the wholesale portfolio, reflecting actions to reduce exposures to the Spanish property and construction sectors
 
· Operating expenses decreased 36% to £934m reflecting
 
- Benefits from Transform programmes, including reduction in compensation costs, Europe retail employees and distribution points
 
- Cost to achieve Transform reduced by £377m to £41m reflecting the significant restructuring in Europe retail in H113
 
· Other net expense reduced £58m to £66m due to a lower valuation adjustment recognised in Q2 in respect of contractual obligations to trading partners, based in locations affected by the Group Strategy Update
 
· Loss before tax decreased £182m to £491m
 
 
Income Statement - Q214 compared to Q114
 
·
Loss before tax increased £183m to £337m reflecting exits from non-strategic principal businesses and rundown of securities, coupled with a valuation adjustment recognised in respect of contractual obligations to trading partners
 
 
Balance Sheet - 30 June 2014 compared to 31 December 2013
 
· Loans and advances to banks and customers at amortised cost reduced 8% to £75.5bn driven by asset reduction activity as part of the Transform strategy and currency movements
 
· Trading portfolio assets decreased 25% to £22.9bn due to exiting of positions
 
· Derivative financial instrument assets decreased 5% to £227.0bn due to balance sheet reduction initiatives, including trade maturities
 
· Reverse repurchase agreements and other similar lending decreased 17% to £86.8bn predominately driven by lower matched book trading due a focus on deleveraging the balance sheet
 
· Customer deposits reduced 2% to £28.6bn due to currency movements and reduced customer balances
 
· RWAs reduced 20% to £87.5bn reflecting rundown and exit of securities and reductions in derivative risk
 
 

 
Barclays Results by Quarter
 
Barclays Group Results by Quarter
Q214
Q114
  
Q413
Q313
Q213
Q113
  
Q412
Q312
 
£m
£m
  
£m
£m
£m
£m
  
£m
£m
Adjusted basis
                    
Total income net of insurance claims
6,682
6,650
  
6,639
6,445
7,337
7,734
  
6,867
7,002
Credit impairment charges and other provisions
(538)
(548)
  
(718)
(722)
(925)
(706)
  
(825)
(805)
Net operating income
6,144
6,102
  
5,921
5,723
6,412
7,028
  
6,042
6,197
Operating expenses
(4,188)
(4,195)
  
(4,777)
(4,262)
(4,359)
(4,782)
  
(4,345)
(4,353)
Costs to achieve Transform
(254)
(240)
  
(468)
(101)
(126)
(514)
  
-
-
UK bank levy
-
-
  
(504)
-
-
-
  
(345)
-
Total operating expenses
(4,442)
(4,435)
  
(5,749)
(4,363)
(4,485)
(5,296)
  
(4,690)
(4,353)
Other net (expense)/income
(46)
26
  
19
25
(122)
54
  
43
21
Adjusted profit before tax
1,656
1,693
  
191
1,385
1,805
1,786
  
1,395
1,865
                     
Adjusting items
                    
Own credit
(67)
119
  
(95)
(211)
337
(251)
  
(560)
(1,074)
Provision for PPI redress
(900)
-
  
-
-
(1,350)
-
  
(600)
(700)
Provision for interest rate hedging products
redress
-
-
  
-
-
(650)
-
  
(400)
-
Goodwill impairment
-
-
  
(79)
-
-
-
  
-
-
Statutory profit/(loss) before tax
689
1,812
  
17
1,174
142
1,535
  
(165)
91
Statutory profit/(loss) after tax
391
1,215
  
(514)
728
39
1,044
  
(364)
(13)
                     
Attributable to:
                    
Ordinary equity holders of the parent
161
965
  
(642)
511
(168)
839
  
(589)
(183)
Other equity holders
41
49
  
-
-
-
-
  
-
-
Non-controlling interests
189
201
  
128
217
207
205
  
225
170
                     
Adjusted basic earnings/(loss) per share
5.4p
5.5p
  
(2.8p)
5.4p
7.7p
7.5p
  
6.7p
7.8p
Adjusted cost: income ratio
66%
67%
  
87%
68%
61%
68%
  
68%
62%
Basic earnings per share
1.0p
6.0p
  
(4.5p)
3.8p
(1.2p)
6.3p
  
(4.5p)
(1.4p)
Cost: income ratio
82%
66%
  
89%
70%
85%
71%
  
90%
85%
                     
 

 
Barclays Core
                    
Total income net of insurance claims
6,397
6,277
  
6,189
6,076
6,773
6,824
  
6,115
6,278
Credit impairment charges and other provisions
(456)
(481)
  
(542)
(554)
(558)
(517)
  
(600)
(628)
Net operating income
5,941
5,796
  
5,647
5,522
6,215
6,307
  
5,515
5,650
Operating expenses
(3,738)
(3,753)
  
(4,114)
(3,776)
(3,853)
(4,239)
  
(3,844)
(3,906)
Costs to achieve Transform
(237)
(216)
  
(365)
(84)
(64)
(158)
  
-
-
UK bank levy
-
-
  
(395)
-
-
-
  
(263)
-
Total operating expenses
(3,975)
(3,969)
  
(4,874)
(3,860)
(3,917)
(4,397)
  
(4,107)
(3,906)
Other net income
27
20
  
15
15
13
43
  
21
12
Profit before tax
1,993
1,847
  
788
1,677
2,311
1,953
  
1,429
1,756
                     

 
Barclays Non-Core
                    
                     
Total income net of insurance claims
285
373
  
450
368
564
911
  
752
724
Credit impairment charges and other provisions
(82)
(67)
  
(176)
(168)
(367)
(189)
  
(226)
(177)
Net operating income
203
306
  
274
200
197
722
  
526
547
Operating expenses
(451)
(442)
  
(664)
(485)
(507)
(542)
  
(500)
(447)
Costs to achieve Transform
(17)
(24)
  
(103)
(17)
(62)
(356)
  
-
-
UK bank levy
-
-
  
(109)
-
-
-
  
(82)
-
Total operating expenses
(468)
(466)
  
(876)
(502)
(569)
(898)
  
(582)
(447)
Other net (expense)/income
(72)
6
  
4
10
(135)
11
  
21
9
(Loss)/profit before tax
(337)
(154)
  
(598)
(292)
(507)
(165)
  
(35)
109
                     
Business Results by Quarter
 
 
Q214
Q114
  
Q413
Q313
Q213
Q113
  
Q412
Q312
Personal and Corporate Banking
£m
£m
  
£m
£m
£m
£m
  
£m
£m
Total income net of insurance claims
2,188
2,173
  
2,166
2,252
2,192
2,113
  
2,153
2,151
Credit impairment charges and other provisions
(95)
(135)
  
(169)
(153)
(165)
(134)
  
(191)
(152)
Net operating income
2,093
2,038
  
1,997
2,099
2,027
1,979
  
1,962
1,999
Operating expenses
(1,256)
(1,298)
  
(1,388)
(1,318)
(1,378)
(1,376)
  
(1,337)
(1,356)
Costs to achieve Transform
(58)
(57)
  
(219)
(73)
(55)
(37)
  
-
-
UK bank levy
-
-
  
(66)
-
-
-
  
(49)
-
Total operating expenses
(1,314)
(1,355)
  
(1,673)
(1,391)
(1,433)
(1,413)
  
(1,386)
(1,356)
Other net income
1
5
  
3
1
7
30
  
3
7
Profit before tax
780
688
  
327
709
601
596
  
579
650

 
                     
Barclaycard
                    
Total income net of insurance claims
1,082
1,042
  
1,034
1,050
1,030
989
  
987
956
Credit impairment charges and other provisions
(268)
(269)
  
(266)
(290)
(272)
(268)
  
(265)
(259)
Net operating income
814
773
  
768
760
758
721
  
722
697
Operating expenses
(420)
(402)
  
(457)
(455)
(424)
(450)
  
(472)
(401)
Costs to achieve Transform
(23)
(13)
  
(38)
(6)
(5)
-
  
-
-
UK bank levy
-
-
  
(22)
-
-
-
  
(15)
-
Total operating expenses
(443)
(415)
  
(517)
(461)
(429)
(450)
  
(487)
(401)
Other net income
25
10
  
5
12
7
9
  
5
7
Profit before tax
396
368
  
256
311
336
280
  
240
303

 
                     
Africa Banking
                    
Total income net of insurance claims
895
878
  
980
1,004
1,016
1,039
  
1,064
1,043
Credit impairment charges and other provisions
(100)
(96)
  
(104)
(101)
(131)
(143)
  
(164)
(192)
Net operating income
795
782
  
876
903
885
896
  
900
851
Operating expenses
(545)
(537)
  
(616)
(605)
(597)
(633)
  
(605)
(660)
Costs to achieve Transform
(8)
(9)
  
(15)
(2)
(9)
-
  
-
-
UK bank levy
-
-
  
(42)
-
-
-
  
(34)
-
Total operating expenses
(553)
(546)
  
(673)
(607)
(606)
(633)
  
(639)
(660)
Other net income
2
4
  
-
3
4
1
  
12
3
Profit before tax
244
240
  
203
299
283
264
  
273
194
                     
Investment Bank
                    
   Investment Banking fees
661
513
  
571
526
488
575
  
621
461
   Lending
66
103
  
68
42
141
74
  
42
(38)
Banking
727
616
  
639
568
629
649
  
663
423
   Credit
270
346
  
231
308
239
479
  
248
356
   Equities
629
591
  
421
524
750
602
  
419
490
   Macro
504
552
  
494
457
689
940
  
609
841
Markets
1,403
1,489
  
1,146
1,289
1,678
2,021
  
1,276
1,687
Banking & Markets
2,130
2,105
  
1,785
1,857
2,307
2,670
  
1,939
2,110
Other
24
(2)
  
(3)
(6)
252
(7)
  
(8)
(8)
Total income
2,154
2,103
  
1,782
1,851
2,559
2,663
  
1,931
2,102
Credit impairment releases/(charges) and other provisions
7
19
  
(6)
(10)
10
28
  
21
(24)
Net operating income
2,161
2,122
  
1,776
1,841
2,569
2,691
  
1,952
2,078
Operating expenses
(1,442)
(1,501)
  
(1,606)
(1,373)
(1,429)
(1,764)
  
(1,360)
(1,489)
Costs to achieve Transform
(152)
(130)
  
(71)
(3)
-
(116)
  
-
-
UK bank levy
-
-
  
(236)
-
-
-
  
(139)
-
Total operating expenses
(1,594)
(1,631)
  
(1,913)
(1,376)
(1,429)
(1,880)
  
(1,499)
(1,489)
Profit/(loss) before tax
567
491
  
(137)
465
1,140
811
  
453
589

 
                     
Head Office
                    
Total income/(expense) net of insurance claims
78
81
  
227
(81)
(24)
20
  
(20)
26
Credit impairment releases/(charges) and other provisions
-
-
  
3
-
-
-
  
(1)
(1)
Net operating income/(expense)
78
81
  
230
(81)
(24)
20
  
(21)
25
Operating expenses
(76)
(15)
  
(47)
(25)
(25)
(16)
  
(70)
-
Costs to achieve Transform
5
(7)
  
(22)
-
5
(5)
  
-
-
UK bank levy
-
-
  
(29)
-
-
-
  
(26)
-
Total operating expenses
(71)
(22)
  
(98)
(25)
(20)
(21)
  
(96)
-
Other net (expense)/income
(1)
1
  
7
(1)
(5)
3
  
1
(5)
Profit/(loss) before tax
6
60
  
139
(107)
(49)
2
  
(116)
20
 

 
Performance Management
 
Returns and Equity by Business
 
Returns on average equity and average tangible equity are calculated as profit for the period attributable to ordinary equity holders of the parent (adjusted for the offset by the tax credit recorded in reserves in respect of coupons on other equity instruments) divided by average allocated equity or average allocated tangible equity for the period as appropriate, excluding non-controlling and other equity interests for businesses, apart from Africa Banking (see below). Average allocated equity has been calculated as 10.5% of average CRD IV fully loaded risk weighted assets for each business, adjusted for CRD IV fully loaded capital deductions, including goodwill and intangible assets, reflecting the assumptions the Group uses for capital planning purposes. The excess of the equity so allocated over the Group equity, reflecting CRD IV fully loaded Common Equity Tier 1 capital ratio of 9.9% as at 30 June 2014 being below 10.5%, is allocated as negative equity to Head Office and Other Operations. Average allocated tangible equity is calculated using the same method but excludes goodwill and intangible assets.
 
For Africa Banking the equity used for return on average equity is Barclays share of the statutory equity of the BAGL entity (together with that of the Barclays Egypt and Zimbabwe businesses which remain outside the BAGL corporate entity), as well as the Barclays' goodwill on acquisition of these businesses. The tangible equity for return on tangible equity uses the same basis but excludes both the Barclays' goodwill on acquisition and the goodwill and intangibles held within the BAGL statutory equity.
 
   

 
 
Half year ended
Half year ended
Half year ended
 
30.06.14
31.12.13
30.06.13
Return on Average Equity
%
%
%
Personal and Corporate Banking
12.1%
9.1%
10.3%
Barclaycard
18.9%
14.3%
16.8%
Africa Banking
9.6%
6.6%
9.4%
Investment Bank
5.7%
2.7%
15.7%
Barclays Core excluding Head Office
10.4%
7.2%
13.0%
Head Office impact1
0.6%
1.6%
2.1%
Barclays Core
11.0%
8.8%
15.1%
Barclays Non-Core impact1
(4.5%)
(7.5%)
(7.3%)
Barclays Group adjusted total
6.5%
1.3%
7.8%
       
   

 
 
Half year ended
Half year ended
Half year ended
 
30.06.14
31.12.13
30.06.13
Return on Average Tangible Equity
%
%
%
Personal and Corporate Banking
16.1%
12.0%
13.5%
Barclaycard
23.6%
18.2%
21.7%
Africa Banking
13.3%
9.3%
13.0%
Investment Bank
5.9%
2.8%
16.3%
Barclays Core excluding Head Office
12.5%
8.6%
15.6%
Head Office impact1
1.0%
2.5%
3.7%
Barclays Core
13.5%
11.1%
19.3%
Barclays Non-Core impact1
(6.0%)
(9.6%)
(10.2%)
Barclays Group adjusted total
7.5%
1.5%
9.1%
       

1 Return on average equity and average tangible equity for Head Office and Barclays Non-Core represents their impact on Barclays Core and the Group respectively.
 
 
Performance Management
 
 

 
 
Half year ended
Half year ended
Half year ended
 
30.06.14
31.12.13
30.06.13
Profit/(Loss) Attributable to Ordinary Equity Holders of the Parent1
£m
£m
£m
Personal and Corporate Banking
1,044
800
881
Barclaycard
540
383
439
Africa Banking
181
134
222
Investment Bank
441
209
1,306
Head Office
31
84
(173)
Barclays Core
2,237
1,610
2,675
Barclays Non-Core
(458)
(1,271)
(619)
Barclays Group adjusted total
1,779
339
2,056
       
 
Average Equity
 
Half year ended
Half year ended
Half year ended
 
30.06.14
31.12.13
30.06.13
 
£bn
£bn
£bn
Personal and Corporate Banking
17.3
17.5
17.2
Barclaycard
5.7
5.4
5.2
Africa Banking
3.8
4.1
4.7
Investment Bank
15.6
15.6
16.6
Head Office2
(1.8)
(6.0)
(8.3)
Barclays Core
40.6
36.6
35.4
Barclays Non-Core
14.5
16.5
17.5
Barclays Group total
55.1
53.1
52.9
       
 
Average Tangible Equity
 
Half year ended
Half year ended
Half year ended
 
30.06.14
31.12.13
30.06.13
 
£bn
£bn
£bn
Personal and Corporate Banking
13.0
13.3
13.1
Barclaycard
4.6
4.2
4.0
Africa Banking
2.7
2.9
3.4
Investment Bank
14.9
15.0
16.0
Head Office2
(2.1)
(6.4)
(8.7)
Barclays Core
33.1
29.0
27.8
Barclays Non-Core
14.2
16.3
17.2
Barclays Group total
47.3
45.3
45.0
 
 
1 The profit after tax attributable to other equity holders of £90m (2013: £nil) is offset by a tax credit recorded in reserves of £19m (2013: £nil) allocated across the businesses. The net amount of £71m, along with NCI, is deducted from profit after tax in order to calculate return on average tangible shareholders' equity and return on average shareholders' equity. Hence, H114 attributable profit of £1,760m has been adjusted for the tax credit recorded in reserves of £19m (2013: £nil).
 
2 Includes risk weighted assets and capital deductions in Head Office and Other Operations, plus the residual balance of average ordinary shareholders' equity and tangible ordinary shareholders' equity.
 
 

 
Performance Management
 
Margins and Balances1
              
 
Half Year Ended 30.06.14
  
Half Year Ended 30.06.13
 
Net Interest Income
Average customer assets
Net interest margin
  
Net Interest Income
Average customer assets
Net interest margin
 
£m
£m
%
  
£m
£m
%
Personal and Corporate Banking
3,057
208,160
2.96
  
2,860
200,104
2.88
Barclaycard
1,500
33,410
9.05
  
1,385
30,932
9.03
Africa Banking
1,007
34,574
5.87
  
1,140
40,489
5.68
Total Personal and Corporate Banking, Barclaycard and Africa Banking
5,564
276,144
4.06
  
5,385
271,525
4.00
Investment Bank
334
      
164
    
Head Office and Other Operations
1
      
(166)
    
Core
5,899
      
5,383
    
Non-Core
183
      
194
    
Total Net Interest Income
6,082
      
5,577
    
 
· Total PCB, Barclaycard and Africa Banking NII increased 3% to £5,564m due to:
 
- An increase in average customer assets to £276.1bn (2013: £271.5bn) with growth in PCB mortgage and savings and Barclaycard, partially offset by reductions in Africa Banking as the ZAR depreciated against GBP
 
- Net interest margin increased 6bps to 4.06% primarily due to lower customer deposit rates in PCB and lower funding costs
 
· Group NII increased to £6.1bn (2013: £5.6bn) including structured hedge contributions of £0.8bn (2013: £0.8bn). Equity structural hedge income increased as the weighted average life of the hedge was expanded. This was offset by lower product structural hedges driven by the maintenance of the hedge in a continuing low rate environment
 
· Net interest margin reflects movements in the Group's internal funding rates which are based on the cost to the Group of alternative funding in wholesale markets. The internal funding rate prices intra-group funding and liquidity to appropriately give credit to businesses with net surplus liquidity and to charge those businesses in need of alternative funding at a rate that is driven by prevailing market rates and includes a term premium.
 
 
Quarterly analysis for PCB, Barclaycard and Africa Banking:
        
 
 
Quarter Ended 30.06.14
Quarter Ended 31.03.14
 
Net Interest Income
Average customer assets
Net interest margin
Net Interest Income
Average customer assets
Net interest margin
 
£m
£m
%
£m
£m
%
Personal and Corporate Banking
1,529
209,040
2.93
1,528
207,433
2.99
Barclaycard
754
33,904
8.92
746
32,911
9.19
Africa Banking
504
34,660
5.83
503
34,488
5.91
Total Personal and Corporate Banking, Barclaycard and Africa Banking
2,787
277,604
4.03
2,777
274,832
4.10

 
1 Margins are calculated as net interest income over average customer assets.
 
 

 
Risk Management
 
Risk Management and Principal Risks
 
Barclays risk management responsibilities are laid out in the Enterprise Risk Management Framework (ERMF), which creates clear ownership and accountability, with the purpose that the Group's most significant risk exposures are understood and managed in accordance with agreed risk appetite, and that there is regular reporting of both risk exposures and the operating effectiveness of controls. It includes those risks incurred by Barclays that are foreseeable, continuous, and material enough to merit establishing specific bank-wide control frameworks. These are known as Key Risks and are grouped into six Principal Risks.
 
Further detail on these risks and how they are managed is available from the 2013 Annual Report and Accounts or online at www.barclays.com/investorrelations. There has been no significant change to the Key Risks, risk management or principal uncertainties during the period or expected for the remaining six months of the financial year.
 
The following section gives an overview of the performance in Funding Risk - Liquidity, Funding Risk - Capital, Credit Risk and Market Risk for the period.
 
 
Funding & Liquidity
 
Barclays has a comprehensive Liquidity Risk Management Framework (the Liquidity Framework) for managing the Group's liquidity risk.
 
Liquidity risk is managed separately at Barclays Africa Group Limited (BAGL) due to local currency and funding requirements. Unless stated otherwise, all disclosures in this section exclude BAGL and they are reported on a stand-alone basis. Adjusting for local requirements, BAGL liquidity risk is managed on a consistent basis to Barclays Group.
 
 
Liquidity stress testing
 
Under the Liquidity Framework, the Group has established a Liquidity Risk Appetite (LRA), which is measured with reference to the liquidity pool compared to anticipated stressed net contractual and contingent outflows under a variety of stress scenarios. These scenarios cover a market-wide stress event, a Barclays-specific stress event and a combination of the two. Under normal market conditions, the liquidity pool is managed to be at least 100% of 90 days of anticipated outflows for a market-wide stress and 30 days of anticipated outflows for each of the Barclays-specific and combined stresses. Of these, the 30 day Barclays-specific scenario requires the largest liquidity pool to meet its stress outflows.
 
Since June 2010 the Group has reported its liquidity position against Individual Liquidity Guidance (ILG) provided by the PRA. The Group also monitors its position against anticipated CRD IV and Basel 3 metrics, including the Liquidity Coverage Ratio (LCR) and the Net Stable Funding Ratio (NSFR)1.
 
As at 30 June 2014 the Group estimated its LCR at 107% (2013: 96%) based upon the CRD IV rules, as implemented by EBA. This is equivalent to a surplus of £9bn (2013: shortfall of £6bn). The Group estimated its LCR at 112% (2013: 102%) based on the Basel standards published in January 2013.
 
As at 30 June 2014, the Group held eligible liquid assets in excess of 100% of net stress outflows for both the 30 day Barclays-specific LRA scenario and the CRD IV LCR as implemented by the EBA:
 
Compliance with internal and regulatory stress tests
Barclays' LRA
(30 day Barclays specific requirement)2
  
Estimated CRD IV LCR1
 
£bn
  
£bn
Eligible liquidity buffer
134
  
141
Net stress outflows
125
  
132
Surplus
9
  
9
       
Liquidity pool as a percentage of anticipated net outflows as at 30 June 2014
107%
  
107%
Liquidity pool as a percentage of anticipated net outflows as at 31 December 2013
104%
  
96%
 
1 The methodology for estimating the LCR and NSFR is based on an interpretation of the CRD IV and Basel III standards respectively and includes a number of assumptions which are subject to change prior to the finalisation of CRD IV rules on these metrics. The estimated LCR and NSFR in this section include BAGL.
 
2 Of the three stress scenarios monitored as part of the LRA, the 30 day Barclays specific scenario results in the lowest ratio at 107% (2013: 104%). This compares to 128% (2013: 127%) under the 90 day market-wide scenario and 114% (2013: 112%) under the 30 day combined scenario.
 
 

 
Funding Risk - Liquidity
 
The LRA and LCR surpluses were within the expected normal operating range, while maintaining compliance with internal liquidity risk appetite and external regulatory requirements. This includes maintaining an LCR of at least 100% based upon the CRD IV rule ahead of the regulatory requirement.
 
Barclays estimated its NSFR at 98% (2013: 95%) based on its current interpretation of the January 2014 BCBS consultation. This includes the requirement for 50% required stable funding against short-term reverse repos from non-banks. Without this requirement, which did not exist in 2010 original Basel proposal, the NSFR would have been 113%. Further changes to the rules are expected prior to the Basel Committee's finalisation of the rules and implementation by local regulators ahead of the target 2018 compliance date.
 
Barclays plans to maintain its surplus to the internal and regulatory stress requirements at an efficient level. Barclays will continue to monitor the money markets closely, in particular for early indications of the tightening of available funding. In these conditions, the nature and severity of the stress scenarios are reassessed and appropriate action taken with respect to the liquidity pool. This may include further increasing the size of the pool or monetising the pool to meet stress outflows.
 
 
Liquidity pool
 
The Group liquidity pool was £134bn (2013: £127bn). During 2014, the month-end liquidity pool ranged from £134bn to £156bn (2013: £127bn to £157bn), and the month-end average balance was £145bn (2013: £144bn). The liquidity pool is held unencumbered and is not used to support payment or clearing requirements.
 
Composition of the Group Liquidity Pool
            
   
Liquidity Pool 30.06.2014
Liquidity pool of which PRA eligible1
Liquidity pool of which CRD IV LCR-eligible2
Liquidity Pool 31.12.2013
       
Level 1
Level 2A
  
As at 30.06.2014
  
£bn
£bn
£bn
£bn
£bn
Cash and deposits with central banks3
  
42
41
40
-
43
             
Government bonds4
            
AAA rated
  
58
57
58
-
52
AA+ to AA- rated
  
11
10
11
-
9
Other government bonds
  
1
-
1
-
1
Total Government bonds
  
70
67
70
-
62
             
Other
            
Supranational bonds and multilateral development banks
  
6
3
6
-
3
Agencies and agency mortgage-backed securities
  
8
-
5
3
10
Covered bonds (rated AA- and above)
  
5
-
-
5
6
Other
  
3
-
-
-
3
Total other
  
22
3
11
8
22
             
Total as at 30 June 2014
  
134
111
121
8
  
Total as at 31 December 2013
  
127
104
109
11
  
 
Barclays manages the liquidity pool on a centralised basis. As at 30 June 2014, 92% (2013: 90%) of the liquidity pool was located in Barclays Bank PLC and was available to meet liquidity needs across the Barclays Group. The residual liquidity pool is held predominantly within Barclays Capital Inc (BCI). The portion of the liquidity pool outside of Barclays Bank PLC is held against entity-specific stressed outflows and regulatory requirements.
 
 
1 £111bn (2013: £104bn) of the liquidity pool is PRA eligible as per BIPRU 12.7. In addition, there are £10bn (2013: £9bn) of Level 2 assets available, as per PRA's announcement in August 2013 that certain assets specified by PRA as Level 2 assets can be used on a transitional basis.
 
2 The LCR-eligible assets presented in this table represent only those assets which are also eligible for the Group liquidity pool and do not include any Level 2B assets as defined by the Basel Committee on Banking Supervision.
 
3 Of which over 95% (2013: over 95%) was placed with the Bank of England, US Federal Reserve, European Central Bank, Bank of Japan and Swiss National Bank.
 
4 Of which over 85% (2013: over 85%) are comprised of UK, US, Japanese, French, German, Danish, Swiss and Dutch securities.
 
 

 
 
Funding Risk - Liquidity
 
Deposit Funding
As at 30.06.2014
  
As at 31.12.13
LiquidityFunding of Loans and Advances to Customers
(including BAGL)
Loans and Advances to Customers
Customer Deposits
Loan to Deposit Ratio
  
Loan to Deposit Ratio
 
£bn
£bn
%
  
%
Personal and Corporate banking
217
298
      
Barclaycard
33
6
      
Non-Core (retail)
39
16
      
Africa Banking
34
33
      
Total Retail funding
323
353
92
  
91
           
Investment Bank, Non-Core (wholesale) and Other1
120
91
      
Total
443
444
100
  
101
 
PCB, Africa Banking, Barclaycard and Non-Core (retail) are largely funded by customer deposits. The loan to deposit ratio for these businesses was 92% (2013: 91%). The customer deposits in excess of loans and advances are primarily used to fund liquidity buffer requirements for these businesses. The Investment Bank is funded with wholesale liabilities and does not rely on customer deposit funding from these businesses. The loan to deposit ratio for the Group was broadly unchanged at 100% (2013: 101%).
 
As at 30 June 2014, £125bn (2013: £122bn) of total customer deposits were insured through the UK Financial Services Compensation Scheme and other similar schemes. In addition to these customer deposits, there were £3bn (2013: £3bn) of other liabilities insured or guaranteed by governments.

 
Wholesale Funding
 
Funding of Other Assets as at 30 June 2014

 
Assets
£bn
  
Liabilities
£bn
         
Trading Portfolio Assets
59
  
Repurchase agreements
174
Reverse repurchase agreements
115
      
         
Reverse repurchase agreements
57
  
Trading Portfolio Liabilities
57
         
Derivative Financial Instruments
332
  
Derivative Financial Instruments
325
         
Liquidity pool 2
104
  
Less than 1 year wholesale debt
86
Other unencumbered assets3
129
  
Greater than 1 year wholesale debt and equity
154
 
· Trading portfolio assets are largely funded by repurchase agreements with 60% (2013: 63%) secured against highly liquid assets4. The weighted average maturity of these repurchase agreements secured against less liquid assets was 67 days (2013: 69 days)
 
· The majority of reverse repurchase agreements are matched by repurchase agreements. As at 30 June 2014, 72% (2013: 76%) of matched book activity was secured against highly liquid assets4. The remainder of reverse repurchase agreements are used to settle trading portfolio liabilities
 
· Derivative assets and liabilities are largely matched. A substantial proportion of balance sheet derivative positions qualify for counterparty netting and the remaining portions are largely offset once netted against cash collateral received and paid
 
· The Group liquidity pool is primarily funded by wholesale debt with the remainder being funded by customer deposits
 
· Other assets are largely matched by term wholesale debt and equity
 

1 Includes trading settlements and cash collateral balances of £84bn (2013: £71bn) relating to loans and advances to customers and £75bn (2013: £62bn) relating to customer deposits.
2 The portion of the liquidity pool estimated to be funded by wholesale funds.
3 Predominantly available for sale investments, trading portfolio assets, financial assets designated at fair value and loans and advances to banks.
4 Highly liquid assets are limited to government bonds, US agency securities and US agency mortgage-backed securities.
 

 

 
Funding Risk - Liquidity
 
 
Composition of wholesale funding
 
As at 30 June 2014 total wholesale funding outstanding (excluding repurchase agreements) was £179bn (2013: £186bn). £86bn (2013: £82bn) of wholesale funding matures in less than one year of which £25bn1 (2013: £23bn) relates to term funding.
 
 
Outstanding wholesale funding comprised of £35bn (2013: £35bn) secured funding and £144bn (2013: £151bn) unsecured funding.
 
Maturity profile2
Not more than one month
Over one month but not more than three months
Over three months but not more than six months
Over six months but not more than nine months
Over nine months but not more than one year
Sub-total less than one year
Over one year but not more than two years
Over two years but not more than five years
Over five years
Total
 
£bn
£bn
£bn
£bn
£bn
£bn
£bn
£bn
£bn
£bn
Deposits from Banks
10.0
6.8
1.0
4.6
0.1
22.5
0.3
0.2
-
23.0
Certificates of Deposit and Commercial Paper
2.4
8.8
6.4
3.7
3.0
24.3
0.5
1.1
0.4
26.3
Asset Backed Commercial Paper
2.8
2.5
0.1
-
-
5.4
-
-
-
5.4
Senior unsecured (Public benchmark)
1.5
0.1
0.1
2.0
0.6
4.3
2.6
7.6
6.2
20.7
Senior unsecured (Privately placed)
1.3
2.4
2.5
4.1
3.1
13.4
7.8
15.5
11.9
48.6
Covered bonds/ABS
-
3.2
0.2
4.0
1.7
9.1
3.8
4.1
7.3
24.3
Subordinated liabilities
-
-
-
0.1
-
0.1
-
2.8
15.6
18.5
Other3
3.5
1.4
0.7
0.5
0.3
6.4
2.2
1.4
2.1
12.1
Total as at 30 June 2014
21.5
25.2
11.0
19.0
8.8
85.5
17.2
32.7
43.5
178.9
Of which secured
5.0
6.7
0.9
4.5
1.9
19.0
4.2
4.4
7.4
35.0
Of which unsecured
16.5
18.5
10.1
14.5
6.9
66.5
13.0
28.3
36.1
143.9
Total as at 31 December 2013
20.3
24.0
15.5
15.9
6.3
82.0
27.1
33.8
42.6
185.5
Of which secured
4.6
3.7
1.4
3.5
0.7
13.9
7.3
6.5
7.2
34.9
Of which unsecured
15.7
20.3
14.1
12.4
5.6
68.1
19.8
27.3
35.4
150.6
 
Outstanding wholesale funding includes £49bn (2013: £50bn) of privately placed senior unsecured notes in issue. These notes are issued through a variety of distribution channels including intermediaries and private banks. A large proportion of end users of these products are individual retail investors.
 
The liquidity risk of wholesale funding is carefully managed primarily through the LRA stress tests, against which the liquidity pool is held. Although not a requirement, the liquidity pool exceeded wholesale funding maturing in less than one year by £48bn (2013: £45bn).
 
The average maturity of wholesale funding net of the liquidity pool was at least 80 months (2013: 69 months).
 
 
Term financing
 
The Group issued £9bn of term funding net of early redemptions during H1 2014. In addition, the Group raised £6bn through participation in the Bank of England's Funding for Lending Scheme. Barclays has £12bn of term funding maturing in the reminder of 2014 and £24bn in 2015.
 
The Group expect to issue more public wholesale debt in the remainder of 2014, in order to maintain a stable and diverse funding base by type, currency and distribution channel.
 
 
Barclays Africa Group Limited
 
·
Liquidity risk is managed separately at BAGL due to local currency, funding and regulatory requirements
 
·
In addition to the Group liquidity pool, BAGL held £5bn (2013: £4bn) of liquidity pool assets against BAGL-specific anticipated stressed outflows. The liquidity pool consists of South African government bonds and Treasury bills
 
·
The BAGL loan to deposit ratio was 104% (2013: 103%)
 
·
As at 30 June 2014, BAGL had £8bn of wholesale funding outstanding (2013: £9bn), of which £5bn matures in less than one year (2013: £6bn)
 
 
 
1 Term funding maturities comprise public benchmark and privately placed senior unsecured notes, covered bonds/asset-backed securities (ABS) and subordinated debt where the original maturity of the instrument was more than 1 year.
2 The composition of wholesale funds comprises the balance sheet reported Deposits from Banks, Financial liabilities at Fair Value, Debt Securities in Issue and Subordinated Liabilities, excluding cash collateral and settlement balances. It does not include collateral swaps, including participation in the Bank of England's Funding for Lending Scheme. Included within deposits from banks are £4bn of liabilities drawn in the European Central Bank's 3 year LTRO.
3 Primarily comprised of fair value deposits £4bn and secured financing of physical gold £5bn.
 
 

 
Funding Risk - Capital
 
CRD IV Capital
 
The Capital Requirements Regulation and Capital Requirements Directive implemented Basel 3 within the EU (collectively known as CRD IV) on 1 January 2014. The rules are supplemented by Regulatory Technical Standards and the PRA's rulebook, including the implementation of transitional rules. However, rules and guidance are still subject to change as certain aspects of CRD IV are dependent on final technical standards and clarifications to be issued by the EBA and adopted by the European Commission and the PRA. All capital, RWA and leverage calculations reflect Barclays' interpretation of the current rules.
 
Capital Ratios
As at
As at
30.06.14
31.12.13
Fully Loaded Common Equity Tier 11
9.9%
9.1%
PRA Transitional Common Equity Tier 12
9.8%
9.1%
PRA Transitional Tier 1
12.7%
11.3%
PRA Transitional Total Capital
16.0%
15.0%
     
Capital Resources
£m
£m
Shareholders' equity (excluding non controlling interests) per the balance sheet
58,068
55,385
- Less: Other equity instruments (recognised as AT1 capital)
(4,326)
(2,063)
Adjustment to retained earnings for foreseeable dividends
(596)
(640)
     
Minority Interests (amount allowed in consolidated CET1)
1,171
1,238
     
Other regulatory adjustments and deductions
    
Additional value adjustments
(2,492)
(2,479)
Goodwill and intangible assets3
(7,828)
(7,618)
Deferred tax assets that rely on future profitability excluding temporary differences
(1,062)
(1,045)
Fair value reserves related to gains or losses on cash flow hedges3
(532)
(270)
Excess of expected losses over impairment
(2,036)
(2,106)
Gains or losses on liabilities at fair value resulting from own credit3
612
600
Other regulatory adjustments
(172)
(119)
Direct and indirect holdings by an institution of own CET1 instruments
(25)
(496)
Fully Loaded CET1 Capital
40,782
40,387
Regulatory adjustments relating to unrealised gains3
(513)
(180)
PRA Transitional CET1 Capital
40,269
40,207
     
Additional Tier 1 (AT1) capital
    
Capital instruments and the related share premium accounts
4,326
2,063
Qualifying AT1 capital (including minority interests) issued by subsidiaries
7,592
9,726
Less instruments issued by subsidiaries subject to phase out
(114)
(1,849)
Other regulatory adjustments and deductions
(28)
-
Transitional Additional Tier 1 capital
11,776
9,940
PRA Transitional Tier 1 capital
52,045
50,147
     
Tier 2 (T2) capital
    
Qualifying T2 capital (including minority interests) issued by subsidiaries
13,783
16,834
Less instruments issued by subsidiaries subject to phase out
-
(522)
Other regulatory adjustments and deductions
(85)
(12)
PRA Transitional Total regulatory capital
65,743
66,447
 
·
As at 30 June 2014, Barclays' fully loaded Tier 1 capital was £45,364m, and the fully loaded Tier 1 ratio was 11.0%. Fully loaded total regulatory capital was £61,740m and the fully loaded total capital ratio was 15.0%. The fully loaded Tier 1 capital and total capital measures are calculated without applying the transitional provisions set out in CRD IV and assessing compliance of AT1 and T2 instruments against the relevant criteria in CRD IV
 
·
The transitional total capital is calculated on the basis of PRA rules in the December 2013 publication of PS 7/134, reflecting the minimum Capital Requirements Regulation (CRR) transitional path for the grandfathering of existing capital instruments within certain limits
 

1 Following the full implementation of CRD IV reporting in 2014, the previously reported 31 December 2013 RWAs have been revised by £6.9bn to £442bn and the fully loaded CET1 ratio revised by (0.2)% to 9.1%. As at 31 March 2014, these figures were a £5.7bn increase and a 0.1% decrease respectively. These additional RWAs have been included within Head Office and Other Operations.
2 The CRD IV CET1 ratio (FSA October 2012 transitional statement) as applicable to Barclays' Tier 2 Contingent Capital Notes was 12.0% based on £49.3bn of transitional CRD IV CET1 capital and £411bn RWAs.
3 The capital impacts of these items are net of tax.
4 PS 7/13 refers to PRA policy statement PS7/13 on strengthening capital standards published in December 2013.

 
Funding Risk - Capital
 
Movement in fully loaded Common Equity Tier 1 (CET1) Capital
Six Months
Ended
30.06.14
£m
Opening Common Equity Tier 1 capital
40,387
   
Profit for the period
1,216
Movement in own credit1
12
Movement in dividends
(755)
Retained regulatory capital generated from earnings
473
   
Movement in reserves - net impact of share awards
305
Movement in available for sale reserves
345
Movement in currency translation reserves
(941)
Retirement benefit remeasurements
237
Other reserves movements
(205)
Other reserves movements
(259)
   
Movement in regulatory adjustments and deductions:
  
Minority interests
(67)
Additional value adjustments
(13)
Goodwill and intangible assets1
(210)
Deferred tax assets that rely on future profitability excluding those arising from temporary differences
(17)
Negative amounts resulting from the calculation of expected loss amounts
70
Direct and indirect holdings by an institution of own CET1 instruments
471
Other regulatory adjustments
(53)
Closing Common Equity Tier 1 capital
40,782
 
·
Fully loaded Common Equity Tier 1 ratio increased to 9.9% (2013: 9.1%) reflecting an increase in CET1 capital of £0.4bn to £40.8bn and a £31bn decrease in RWAs.
 
·
Barclays generated £1.2bn capital from profits. After adjusting for own credit, dividends paid and regulatory foreseeable dividends, retained regulatory capital generated from earnings increased CET1 capital by £0.5bn. Other material movements in CET1 were:
 
 
-
£0.5bn decrease in the deduction for holdings for own Common Equity Tier 1 instruments following further management actions
 
 
-
£0.9bn reduction due to currency movements primarily driven by strengthening of GBP against USD, ZAR and EUR
 
 
-
£0.3bn increase due to gains in the available for sale reserve
 
·
Transitional total capital decreased by £0.7bn to £65.7bn due to the increase in fully loaded CET1 offset by the removal of gains in the available for sale reserves in CET1 and a T2 redemption of dated subordinated liabilities
 
·
During Q2 2014, Barclays PLC issued Fixed Rate Resetting Perpetual Subordinated Contingent Convertible Securities as part of an exchange of £1.5bn of Barclays Bank PLC preference shares and £0.6bn of Tier 1 notes and Reserve Capital Instruments. The Barclays PLC instruments are full end point compliant Additional Tier 1 capital and replace previously grandfathered instruments
 
1 The capital impacts of these items are net of tax.

Funding Risk - Capital
 
Risk Weighted Assets by Risk Type and Business

 
   
Counterparty
  
Operational
Total
 
Credit risk
credit risk
Market risk
risk
  
As at 30 June 2014
£m
£m
£m
£m
£m
Personal & Corporate Banking
100,680
1,064
15
16,176
117,935
Barclaycard
32,176
-
-
5,505
37,681
Africa Banking
29,088
456
1,314
5,604
36,462
Investment Bank
40,044
27,214
38,585
19,621
125,464
Head Office and Other Operations
3,818
395
577
1,185
5,975
Total Core
205,806
29,129
40,491
48,091
323,517
Barclays Non Core
37,898
23,138
17,842
8,592
87,470
Total risk weighted assets
243,704
52,267
58,333
56,683
410,987
           

 
As at 31 December 2013
          
Personal & Corporate Banking
102,385
823
57
15,020
118,285
Barclaycard
30,033
-
-
5,627
35,660
Africa Banking
29,242
538
1,429
6,837
38,046
Investment Bank
38,517
30,711
38,677
18,096
126,001
Head Office and Other Operations1
6,390
2,158
4,968
1,089
14,605
Total Core
206,567
34,230
45,131
46,669
332,597
Barclays Non Core
48,797
25,861
27,574
7,642
109,874
Total risk weighted assets
255,364
60,091
72,705
54,311
442,471

 
   
Risk weighted assets by risk and approach
  
   
As at 30 June 2014
£m
- Standardised
77,892
- Internal ratings based
165,812
Credit risk
243,704
- Internal model method
37,537
- Non-model method
14,730
Counterparty risk
52,267
- Standardised
24,125
- Modelled - VaR
34,208
Market risk
58,333
Operational risk
56,683
Total risk weighted assets
410,987
   

 
Movement analysis of risk weighted assets

 
   
Counterparty
  
Operational
  
 
Credit risk
credit risk
Market risk
risk
Total
Risk weighted assets
£bn
£bn
£bn
£bn
£bn
As at 1 January 2014
255.4
60.1
72.7
54.3
442.5
Book size
7.2
(12.9)
(10.0)
-
(15.7)
Acquisitions and disposals
(4.5)
-
-
-
(4.5)
Book quality
(2.1)
(1.1)
1.2
-
(2.0)
Model updates
3.7
3.2
(0.3)
2.4
9.0
Methodology and policy
(9.0)
0.4
(5.1)
-
(13.7)
Foreign exchange movement
(4.3)
-
-
-
(4.3)
Other
(2.7)
2.6
(0.2)
-
(0.3)
As at 30 June 2014
243.7
52.3
58.3
56.7
411.0

1 Following the full implementation of CRD IV reporting in 2014, the previously reported 31 December 2013 RWAs have been revised by £6.9bn to £14.6bn.

 
Funding Risk - Capital
 
RWAs decreased £31.5bn to £411.0bn, driven by:

·
Book size decreased RWAs by £15.7bn, primarily driven by risk reductions in the trading book within BNC, offset by balance sheet growth in PCB and increased customer lending in Barclaycard

·
Acquisitions and disposals decreased RWAs by £4.5bn, primarily driven by disposals in BNC

·
Book quality improved, resulting in a RWA reduction of £2.0bn, primarily driven by changes in risk profile within the Investment Bank and PCB

·
Model updates increased RWAs by £9.0bn, driven by a revision of probability of default metrics for wholesale portfolios and the annual operational risk refresh

·
Methodology and policy changes decreased RWAs by £13.7bn, primarily driven by changes to the treatment of high quality liquidity assets, offset by the early adoption of LGD floors for wholesale exposures

·
Foreign exchange movements decreased RWAs by £4.3bn, primarily driven by the appreciation of GBP against ZAR, USD and EUR

 
Leverage ratio requirements
 
CRD IV introduces a non-risk based leverage ratio that is intended to act as a supplementary measure to the risk-based capital measures. While CRD IV does not currently impose a binding requirement, the PRA requested Barclays to meet a 3% CRD IV adjusted leverage ratio - 'PRA leverage ratio' - by June 2014. ThePRA leverage ratio is calculated based on fully loaded CRD IV Tier 1 capital adjusted for certain PRA defined deductions, and a PRA adjusted CRD IV leverage exposure measure.
 
 
On 12 January 2014, the Basel Committee finalised its revised standards for calculating the Basel 3 leverage ratio. These standards included a number of changes that would require amendment to CRD IV to retain international consistency. The legislative process to implement these changes is underway and final rules are expected later in 2014. In June 2014 the PRA issued Supervisory Statement SS3/13 and updated their supervisory expectation with a 3% end point leverage ratio based on the revised Basel 3 calculation basis that is applicable from 1 July 2014. For the purposes of calculating this ratio, the PRA adjustments to leverage exposures and Tier 1 capital will no longer apply.
 
Barclays has disclosed an estimated 'BCBS 270 leverage ratio' based on its understanding of the latest requirements that are expected to be included in the revised CRD IV text and guidance from regulators. The final rules may result in a different calculation methodology when implemented in the revised CRD IV text.
 
PRA leverage ratio calculation
For an overview of the basis of preparation for the PRA leverage ratio, please refer to the December 2013 Results Announcement.
 
Revised BCBS 270 leverage ratio calculation
 
The revised rules contain a number of differences to the way elements of leverage exposure are measured under the current CRD IV rules. Key differences areas follows:
 
·
Counterparty credit risk on derivatives is reduced due to application of eligible collateral, and an exposure value introduced for net written credit derivatives
 
·
Counterparty credit risk on SFTs changes as a result of the removal of haircuts, however cash receivables must be retained on the balance sheet and can only be netted in certain circumstances
 
·
Regulatory add-ons relating to off balance sheet undrawn commitments are based on the credit conversion factors used in the standardised approach to credit risk
 
Funding Risk - Capital
 
Estimated Leverage
        
 
IFRS
BCBS 270
PRA
PRA
 
Balance
Leverage
Leverage
Leverage
 
Sheet
exposure
exposure
exposure
 
As at
As at
As at
As at
 
30.06.14
30.06.14
30.06.14
31.12.13
Leverage exposure
£bn
£bn
£bn
£bn
         
Derivatives
        
IFRS derivative financial instruments
333
333
333
355
Mark-to-market and margin netting adjustments for derivatives
  
(298)
(268)
(288)
Cash collateral pledged on derivatives
48
17
39
48
Potential Future Exposure on derivatives
  
195
195
249
Net written credit protection
  
29
-
-
Total derivatives
  
276
299
364
         
Securities Financing Transactions (SFTs)
        
IFRS Reverse repurchase agreements and other similar secured lending
172
199
172
187
Remove IFRS SFTs
  
-
(172)
(187)
Counterparty risk leverage exposure measure for SFTs
  
29
60
92
Total Securities Financing Transactions
  
228
60
92
         
Other assets and adjustments
        
Loans and advances and other assets
762
762
762
752
Weighted undrawn commitments
  
105
177
179
Regulatory deductions and other adjustments
  
(18)
(32)
(22)
Total other assets and adjustments
  
849
907
909
         
Total fully loaded leverage exposure
1,315
1,353
1,266
1,365
         
         
   
BCBS 270
PRA
PRA
   
Leverage
Leverage
Leverage
   
ratio
ratio
ratio
   
As at
As at
As at
   
30.06.14
30.06.14
31.12.13
CET1 capital
  
40.8
40.8
40.4
Additional Tier 1 capital
  
4.6
4.6
2.3
Tier 1 capital
  
45.4
45.4
42.7
PRA deductions to CET1 capital
    
(2.2)
(2.2)
PRA adjusted Tier 1 capital
  
45.4
43.2
40.5
         
Fully loaded leverage ratio
  
3.4%
3.4%
3.0%
 
·
The PRA leverage exposure reduced by £99bn to £1,266bn. The decrease was primarily driven by reductions in derivatives PFE and the regulatory exposure for SFTs
 
 
-
£54bn reduction in derivative PFE as a result of £18bn reduction due to trade compression and tear ups, £13bn reduction due to change of basis of preparation principally relating to sold options, £10bn reduction due to netting and other optimisations and other reductions due to currency movements
 
 
-
£32bn reduction in SFTs primarily driven by netting, collateral and other optimisations as well as other reductions due to currency movements
 
 
 
Funding Risk - Capital
 
·
The estimated BCBS 270 leverage exposure of £1,353bn represents an £87bn increase on the PRA leverage exposure driven by a change in the treatment of SFTs, derivatives and off balance sheet undrawn commitments
 
 
-  
£181bn increase in SFTs exposure due to the inclusion of £212bn of on and off balance sheet cash receivables and the change in regulatory counterparty credit risk exposure add on resulting in a £31bn decrease due to the removal of haircuts
 
-  
£23bn decrease in derivatives due £52bn reduction in counterparty credit risk exposure as a result of applying eligible derivatives collateral, offset by £29bn increase due to the incremental exposure value for net written credit derivatives
 
 
- 
£72bn reduction in undrawn commitments due the application of credit conversion factors to the exposure as used in the standardised approach to credit risk
 
 

 
Credit Risk
 
Analysis of Retail and Wholesale Loans and Advances and Impairment
    

 
               
As at 30.06.14
Gross
L&A
Impairment Allowance
L&A Net of Impairment
Credit
Risk Loans
CRLs % of Gross L&A
Loan Impairment Charges1
Loan Loss Rates
 
£m
£m
£m
£m
%
£m
bps
Personal & Corporate Banking
143,839
1,302
142,537
2,648
1.8
133
19
Africa Banking
20,820
700
20,120
1,175
5.6
167
162
Barclaycard
34,854
1,607
33,247
1,606
4.6
537
311
Barclays Core
199,513
3,609
195,904
5,429
2.7
837
85
               
Barclays Non-Core
37,383
823
36,560
2,233
6.0
101
54
Total Group Retail
236,896
4,432
232,464
7,662
3.2
938
80
               
Investment Bank
117,259
31
117,228
43
-
(26)
(4)
Personal & Corporate Banking
80,451
611
79,840
1,852
2.3
97
24
Africa Banking
15,263
263
15,000
633
4.1
29
38
Head Office and Other Operations
2,496
-
2,496
-
-
-
-
Barclays Core
215,469
905
214,564
2,528
1.2
100
9
               
Barclays Non-Core
40,598
1,629
38,969
2,705
6.7
72
36
Total Group Wholesale
256,067
2,534
253,533
5,233
2.0
172
14
               
Group Total
492,963
6,966
485,997
12,895
2.6
1,110
45
               
Traded Loans
3,074
n/a
3,074
        
Loans and advances designated at fair value
18,454
n/a
18,454
        
Loans and advances held at fair value
21,528
n/a
21,528
        
               
Total loans and advances
514,491
6,966
507,525
        
               
As at 31.12.13
              
Personal & Corporate Banking
140,742
1,325
139,417
2,703
1.9
357
25
Africa Banking
21,586
674
20,912
1,205
5.6
388
180
Barclaycard
33,024
1,517
31,507
1,541
4.7
1,096
332
Barclays Core
195,352
3,516
191,836
5,449
2.8
1,841
94
               
Barclays Non-Core
40,867
856
40,011
2,118
5.2
320
78
Total Group Retail
236,219
4,372
231,847
7,567
3.2
2,161
91
               
Investment Bank
104,468
-
104,468
-
-
(30)
(3)
Personal & Corporate Banking
77,674
701
76,973
1,861
2.4
264
34
Africa Banking
15,793
352
15,441
722
4.6
89
56
Head Office and Other Operations
3,072
-
3,072
-
-
(3)
(10)
Barclays Core
201,007
1,053
199,954
2,583
1.3
320
16
               
Barclays Non-Core
43,691
1,833
41,858
3,148
7.2
581
133
Total Group Wholesale
244,698
2,886
241,812
5,731
2.3
901
37
               
Group Total
480,917
7,258
473,659
13,298
2.8
3,062
64
               
Traded Loans
1,647
n/a
1,647
        
Loans and advances designated at fair value
18,695
n/a
18,695
        
Loans and advances held at fair value
20,342
n/a
20,342
        
               
Total loans and advances
501,259
7,258
494,001
        
 
 
1 Excluding impairment charges on available for sale investments and reverse repurchase agreements.
 

 
Credit Risk
 
 
·
Loans and advances to customers and banks at amortised cost net of impairment increased to £486.0bn (2013: £473.7bn)
 
 
-
Investment Bank increased by £12.8bn to £117.2bn reflecting an increase in cash collateral and settlement balances driven principally by higher trading volumes
 
 
-
PCB increased £6.0bn to £222.4bn driven by UK mortgage growth and an increase in corporate lending
 
Analysis of Impairment
 
Credit impairment charges and other provisions by business
      
 
Half Year Ended 30.06.14
Half Year Ended 31.12.13
Half Year Ended 30.06.13
 
£m
£m
£m
Personal and Corporate Banking
230
322
299
Barclaycard
537
556
540
Africa Banking
196
201
276
Investment Bank
(26)
8
(38)
Head Office
-
(3)
-
Barclays Core
937
1,084
1,077
Barclays Non-Core
173
344
557
Total loan impairment charge1
1,110
1,428
1,634
Impairment charges on available for sale investments
(19)
1
-
Impairment of reverse repurchase agreements
(5)
11
(3)
Total credit impairment charges and other provisions
1,086
1,440
1,631
 
·
Impairment charges on loans and advances decreased 32% to £1,110m reflecting lower charges in Barclays Non-Core, Africa Banking and PCB
 
 
-
Non-Core decreased 69% to £173m driven by the non-recurrence of single name exposure charge of £224m in the prior year as well as the on-going actions to reduce corporate exposure in Iberia
 
 
-
Africa decreased 29% to £196m principally due to lower charges in the South Africa home loans portfolio and depreciation of ZAR against GBP
 
 
-
PCB decreased 23% to £230m reflecting improvements in personal banking, mortgages and corporates as the economic environment improved
 
 
-
Lower overall impairment charges led to a decrease in the loan loss rate to 45bps (2013: 64bps)
 
 
1 Includes charges of £25m (2013: £17m) in respect of undrawn facilities and guarantees.
 

 
Credit Risk
 
 
Analysis of Loans and Advances to Customers and Banks
 
             

 
Loans and Advances at Amortised Cost Net of Impairment Allowances, by Industry Sector and Geography

 
             
As at 30th June 2014
United Kingdom
Europe
Americas
Africa and Middle East
Asia
Total
 
£m
£m
£m
£m
£m
£m
Banks
7,351
12,768
10,825
2,280
6,082
39,306
Other financial institutions
27,260
22,175
46,524
2,793
7,604
106,356
Home loans
131,849
32,440
771
13,631
331
179,022
Cards, unsecured loans and other personal lending
29,273
6,259
14,117
3,831
1,376
54,856
Construction and property
18,006
2,434
1,157
2,022
478
24,097
Other
41,255
12,685
8,048
16,183
4,189
82,360
Net loans and advances to customers and banks
254,994
88,761
81,442
40,740
20,060
485,997
Impairment allowance
3,000
2,203
665
1,033
65
6,966
Gross loans and advances to customers and banks
257,994
90,964
82,107
41,773
20,125
492,963
             
Loans and Advances at FV
16,571
1,479
2,758
643
77
21,528
             
As at 31st December 2013
            
Banks
5,796
12,353
10,154
2,394
6,691
37,388
Other financial institutions
22,052
17,719
49,157
6,118
8,124
103,170
Home loans
129,591
34,752
782
14,051
351
179,527
Cards, unsecured loans and other personal lending
28,168
6,792
12,630
3,842
1,283
52,715
Construction and property
18,155
2,402
956
2,288
150
23,951
Other
39,381
12,513
7,450
13,444
4,120
76,908
Net loans and advances to customers and banks
243,143
86,531
81,129
42,137
20,719
473,659
Impairment allowance
2,980
2,486
654
1,079
59
7,258
Gross loans and advances to customers and banks
246,123
89,017
81,783
43,216
20,778
480,917
             
Loans and Advances at FV
15,992
1,974
1,617
700
59
20,342
 
Credit Risk

Analysis of Potential Credit Risk Loans and Coverage Ratios
        

 
 
CRLs
  
PPLs
  
PCRLs
 
As at
As at
  
As at
As at
  
As at
As at
 
30.06.14
31.12.13
  
30.06.14
31.12.13
  
30.06.14
31.12.13
 
£m
£m
  
£m
£m
  
£m
£m
Personal & Corporate Banking
2,648
2,703
  
215
241
  
2,863
2,944
Africa Banking
1,175
1,205
  
182
194
  
1,357
1,399
Barclaycard
1,606
1,541
  
188
182
  
1,794
1,723
Barclays Core
5,429
5,449
  
585
617
  
6,014
6,066
                 
Barclays Non-Core
2,233
2,118
  
76
91
  
2,309
2,209
Total Group Retail
7,662
7,567
  
661
708
  
8,323
8,275
                 
Investment Bank
43
-
  
91
106
  
134
106
Personal & Corporate Banking
1,852
1,861
  
745
840
  
2,597
2,701
Africa Banking
633
722
  
108
112
  
741
834
Head Office and Other Operations
-
-
  
-
-
  
-
-
Barclays Core
2,528
2,583
  
944
1,058
  
3,472
3,641
                 
Barclays Non-Core
2,705
3,148
  
82
42
  
2,787
3,190
Total Group Wholesale
5,233
5,731
  
1,026
1,100
  
6,259
6,831
                 
Group Total
12,895
13,298
  
1,687
1,808
  
14,582
15,106
                 
 
Impairment allowance
  
CRL coverage
  
PCRL coverage
 
As at
As at
  
As at
As at
  
As at
As at
 
30.06.14
31.12.13
  
30.06.14
31.12.13
  
30.06.14
31.12.13
 
£m
£m
  
%
%
  
%
%
Personal & Corporate Banking
1,302
1,325
  
49.2
49.0
  
45.5
45.0
Africa Banking
700
674
  
59.6
55.9
  
51.6
48.2
Barclaycard
1,607
1,517
  
100.1
98.4
  
89.6
88.0
Barclays Core
3,609
3,516
  
66.5
64.5
  
60.0
58.0
                 
Barclays Non-Core
823
856
  
36.9
40.4
  
35.6
38.8
Total Group Retail
4,432
4,372
  
57.8
57.8
  
53.3
52.8
                 
Investment Bank
31
-
  
72.1
-
  
23.1
-
Personal & Corporate Banking
611
701
  
33.0
37.7
  
23.5
26.0
Africa Banking
263
352
  
41.5
48.8
  
35.5
42.2
Head Office and Other Operations
-
-
  
-
-
  
-
-
Barclays Core
905
1,053
  
35.8
40.8
  
26.1
28.9
                 
Barclays Non-Core
1,629
1,833
  
60.2
58.2
  
58.4
57.5
Total Group Wholesale
2,534
2,886
  
48.4
50.4
  
40.5
42.2
                 
Group Total
6,966
7,258
  
54.0
54.6
  
47.8
48.0
 
 
·
Credit Risk Loans (CRLs) decreased 3.0% to £12.9bn
 
 
·
CRLs in wholesale portfolios decreased 8.7% to £5.2bn. This is primarily driven by Non-Core reflecting on-going actions to reduce corporate exposures in Iberia
 
 
·
CRLs in retail portfolios have remained stable at £7.7bn. The increase in Non-Core has been offset by a decrease in Africa Banking reflecting improvements in the home loans portfolio
 
 
·
Group's CRL coverage ratio was stable at 54.0% (2013: 54.6%)
 
Credit Risk
 
Analysis of Forbearance Programmes
            

 
 
Balances
  
Impairment Allowance
  
Allowance Coverage
 
As at
As at
  
As at
As at
  
As at
As at
 
30.06.14
31.12.13
  
30.06.14
31.12.13
  
30.06.14
31.12.13
 
£m
£m
  
£m
£m
  
%
%
Personal & Corporate Banking
2,533
2,814
  
78
90
  
3.1
3.2
Africa Banking
308
338
  
41
50
  
13.3
14.8
Barclaycard
1,044
1,064
  
353
358
  
33.8
33.6
Barclays Core
3,885
4,216
  
472
498
  
12.1
11.8
                 
Barclays Non-Core
754
786
  
76
83
  
10.1
10.6
Total Retail
4,639
5,002
  
548
581
  
11.8
11.6
                 
Investment Bank
229
476
  
4
8
  
1.7
1.7
Personal & Corporate Banking
1,587
1,569
  
265
260
  
16.7
16.6
Africa Banking
129
159
  
14
14
  
10.9
8.8
Barclays Core
1,945
2,204
  
283
282
  
14.6
12.8
                 
Barclays Non-Core
976
1,181
  
462
609
  
47.3
51.5
Total Wholesale
2,921
3,385
  
745
891
  
25.5
26.3
                 
Group Total
7,560
8,387
  
1,293
1,472
  
17.1
17.6
 
 
· Balances in forbearance decreased by 10% to £7.6bn reflecting falls in the majority of businesses. Overall coverage remained broadly stable at 17.1% (2013: 17.6%)
 
 
· Retail forbearance decreased 7% to £4,639m primarily as a result of reductions in PCB, mainly due to a decrease in UK home loans
 
 
· Wholesale forbearance reduced by 14% to £2,921m primarily driven by the exit of a single Investment Bank counterparty from the forbearance portfolio and further reductions across the Non-Core portfolios

Analysis of Specific Core Portfolios/Businesses
 
Secured home loans
 
 
· Total home loans to retail core customers grew by 2% to £141bn
 
 
· The principal home loan portfolios listed below account for 97% (2013: 97%) of total home loans in the Group's retail core portfolios and principally comprise first lien mortgages
 
Home loans principal portfolios
        

 
 
Gross loans and advances
> 90 Day
arrears
> 90 Day
arrears,
including
recoveries
Annualised gross
charge-off
rates
Recoveries
proportion of
outstanding
balances
Recoveries
impairment
coverage ratio
As at 30.06.14
£m
%
%
%
%
%
             
 
PCB - UK
125,221
0.2
0.7
0.4
0.4
15.7
 
Africa Banking - South Africa
11,544
0.7
5.6
1.9
4.9
32.6
               
As at 31.12.13
            
             
 
PCB - UK
122,880
0.3
0.8
0.5
0.5
14.7
 
Africa Banking- South Africa
12,172
0.7
6.2
2.6
5.6
34.7

 
Credit Risk
 
· UK: The home loans portfolio grew by 2% to £125bn. As a result of the ongoing low base rate environment and conservative credit policy, arrears and charge-off rates remained stable. Buy to let home loans of £10bn (2013: £9bn) represent 8% (2013: 8%) of total balances. The 90 day arrears rates for Buy to let home loans remained steady at 15bps while balance weighted portfolio LTV improved to 61.6% (2013: 62.9%), due to an increase in average house prices
 
· South Africa: Gross loans and advances of £11.5bn (2013: £12.2bn) were broadly unchanged on a constant currency basis. The improvement in the charge-off rates was due to the continued strong performance of new lending. The decrease in recoveries balances was driven by a combination of the ongoing strategy of reducing this segment of the portfolio and lower charge-off rates
 
· Non-Core Europe: Gross loans and advances to Spain and Italy reduced 7% to £26.4bn reflecting the amortisation of existing portfolios and reduced new business flows. The 90 days arrears rates excluding recoveries remained broadly stable in 2014 with Spain at 0.7% (2013: 0.7%) and Italy at 1.2% (2013: 1.1%)
 
Home loans principal portfolios - distribution of balances by LTV
       
PCB
UK
Africa Banking
South Africa
   
           
30.06.14
31.12.13
30.06.14
31.12.13
           
%
%
%
%
<=75%
          
86.9
84.2
72.2
69.6
>75% and <=80%
          
5.8
6.9
8.3
8.8
>80% and <=85%
          
3.1
3.4
6.4
7.1
>85% and <=90%
          
1.9
2.1
4.5
4.8
>90% and <=95%
          
1.0
1.3
3.0
3.3
>95% and <=100%
          
0.6
0.8
1.7
1.9
>100%
          
0.7
1.3
3.9
4.5
                   
Portfolio Marked To Market LTV:
Balance weighted %
          
54.5
56.3
61.2
62.3
Portfolio Marked To Market LTV:
Valuation weighted %
          
42.4
43.6
41.4
42.1
                   
For > 100% LTV:
                  
Balances £m
          
910
1,596
442
540
Marked to market collateral £m
          
813
1,411
369
452
Average LTV: Balance weighted %
          
116.9
120.5
123.7
123.1
Average LTV: Valuation weighted %
          
111.9
113.2
119.9
119.5
% Balances in Recovery Book
          
4.0
3.2
42.0
45.6
 
·
House price appreciation in the UK and South Africa led to a reduction on the average LTV of the home loan portfolios
 
·
UK: Balances with >100% LTV reduced 43% to £910m, primarily due to an increase in average house prices
 
·
South Africa: Balances with >100% LTV reduced 18% to £442m, primarily due to decrease in the size of the recoveries book
 
 
Home loans principal portfolios - new lending
  
 
PCB - UK
Africa Banking - South Africa
 
30.06.14
30.06.13
30.06.14
30.06.13
New Bookings (£m)
10,162
7,652
591
532
New Mortgages Proportion Above 85% LTV (%)1
5.0
2.9
32.9
28.1
Average LTV on New Mortgages: Balance weighted (%)1
64.4
63.9
75.0
74.1
Average LTV on New Mortgages: Valuation weighted (%)1
57.2
56.8
65.6
63.8
 
· UK: New bookings grew by 33% to £10.2bn, reflective of the increased confidence in the housing market. The higher proportion of bookings above 85% LTV is due to increased appetite for lending into this segment, but remains at conservative levels
 
· South Africa: Proportion of new home loans above 85% LTV increased to 32.9% (2013: 28.1%) due to a revised strategy in H2 13 which allows a greater proportion of higher LTV loans to be booked for customers with high credit quality

 
1
UK figures were restated following a detailed review of the LTVs post migration to a new data management system.



 
Credit Risk
 
Exposures to interest only home loans
 
·
Interest only mortgages comprise £52.5bn (2013: £52.6bn) of the total £125bn (2013: £123bn) UK home loans portfolio. Of these, £43bn (2013: £45bn) are owner-occupied with the remaining £9bn (2013: £8bn) buy-to-let
 
Exposure to interest only owner-occupied home loans
As at
As at
30.06.14
31.12.13
Interest only balances (£m)1
43,354
44,543
90 days arrears (%)
0.2
0.3
Total Impairment Coverage (bps)
2
2
Marked to market LTV: Balance weighted %
52.6
54.2
Marked to market LTV: Valuation weighted %
40.8
42.4
 
· In line with the overall portfolio's performance, risk indicators remained stable with the average balance weighted LTV for owner-occupied interest only balances reduced to 52.6% (2013: 54.2%) and 90 day arrears remained low at 0.2% (2013: 0.3%)
 
 
Credit cards, overdrafts and unsecured loans
 
· Gross loans and advances in credit cards, overdrafts and unsecured loans in the Group's retail core portfolios increased 3% to £44.7bn (2013: £43.4bn)
 
· The principal portfolios listed below account for 95% (2013: 94%) of total and increased by 4% to £42.4bn (2013: £40.7bn) with increases in US cards, UK cards and Barclays Partner Finance being offset by decreases in South Africa Personal Loans and UK overdrafts
 
Principal Portfolios
Gross Loans and Advances
30 Day
Arrears, excluding recoveries
90 Day
Arrears, excluding recoveries
Annualised Gross
Charge-off
Rates
Recoveries
Proportion of
Outstanding Balances
Recoveries Impairment Coverage Ratio
As at 30.06.14
£m
%
%
%
%
%
 
Barclaycard - UK cards
16,185
2.4
1.2
4.4
4.9
83.7
 
Barclaycard - US cards 2
11,565
1.9
0.9
3.8
1.8
88.0
 
Barclaycard - Barclays Partner Finance
3,055
1.6
0.8
2.3
2.9
75.9
 
Barclaycard - Germany cards
1,308
2.5
1.0
3.9
3.5
74.9
 
Barclaycard - Iberia cards
1,011
6.5
2.7
7.9
8.9
88.2
 
PCB - UK personal loans
5,110
2.5
1.3
3.2
14.5
79.3
 
PCB - UK overdrafts
1,165
4.9
3.5
7.1
15.8
94.9
 
Africa Banking - South Africa cards
2,255
9.5
5.1
7.3
5.5
69.5
 
Africa Banking - South Africa personal loans
782
5.6
2.8
8.5
7.7
71.4
               
As at 31.12.13
            
 
Barclaycard - UK cards
15,937
2.4
1.1
4.4
4.6
86.2
 
Barclaycard - US cards
10,301
2.1
1.0
4.0
1.8
86.6
 
Barclaycard - Barclays Partner Finance 3
2,765
1.6
0.8
2.9
3.2
83.2
 
Barclaycard - Germany cards 4
1,290
2.5
1.0
3.7
3.2
73.5
 
Barclaycard - Iberia cards
1,036
5.7
2.4
10.7
9.9
84.8
 
PCB - UK personal loans
4,958
2.7
1.2
4.6
15.8
79.4
 
PCB - UK overdrafts
1,307
4.8
3.3
7.6
14.5
94.5
 
Africa Banking - South Africa cards
2,224
8.1
4.3
7.3
5.1
70.7
 
Africa Banking - South Africa personal loans
906
5.4
2.6
7.9
7.4
70.4
 
1 Includes forborne interest-only loans.
2 US Airways portfolio of US$745m, which was brought onto the balance sheet in Q2 14, is included within Gross Loans and Advances but excluded from the risk metrics.
3 Gross Loans and Advances have been revised to include the Secure Motor portfolio of £266m.
4 Germany cards recovery figures have been restated to align to the Barclays Group charge-off policy and Gross Loans and Advances have been revised to exclude Personal Loans and Fundy Loans portfolios totaling £879m.
 
 

 
Credit Risk
 
·
UK cards: Recovery coverage reduced to 83.7% (2013: 86.2%) following the write off of accounts in late 2013 where repayments were below that required by Barclays group policy
 
·
US cards: Significant improvement in arrears rates was driven by a targeted growth strategy focused on high quality customers and low-risk Partnerships
 
·
UK personal loans: Charge-off rates reduced due to the improved performance of new bookings following changes to credit criteria in 2013
 
·
South Africa cards: The arrears rate deterioration reflected the maturation of lower quality business in the Edcon portfolio booked pre-2014
 

 
Group exposures to Eurozone countries
 
·
The Group recognises the credit and market risk resulting from the ongoing volatility in the Eurozone and continues to monitor events closely while taking coordinated steps to mitigate the risks associated with the challenging economic environment
 
·
During H114 the Group's net on-balance sheet exposures to Spain, Italy, Portugal, Ireland, Cyprus and Greece reduced by 11% to £47.4bn principally due a fall of 31% in Financial Institutions due to loan repayments; and residential mortgage exposure decreasing 7% to £29.3bn due to lower volumes of new lending
 
·
As at 30 June 2014, the local net funding deficit in Italy was €10.8bn (2013: €11.6bn) and the deficit in Portugal was €2.6bn (2013: €3.0bn). The net funding surplus in Spain was €2.4bn (2013: €3.1bn)
 
· The following table shows Barclays exposure to Eurozone countries monitored internally as being higher risk and thus being the subject of particular management focus. The basis of preparation is consistent with that described in the 2013 Annual Report
 
· The net exposure provides the most appropriate measure of the credit risk to which the Group is exposed. The gross exposure is also presented below, alongside off-balance sheet contingent liabilities and commitments
 
 

 
             
Net on-balance Sheet exposure
  
Gross on-balance sheet exposure
Contingent liabilities and commitments
           
Other
  
     
Financial
  
Residential
retail
  
 
Sovereign
institutions
Corporate
mortgages
lending
  
As at 30.06.14
£m
£m
£m
£m
£m
£m
  
£m
£m
Spain
  
134
753
2,736
11,710
1,984
17,317
  
25,198
3,335
Italy
  
1,898
681
1,377
14,284
1,592
19,832
  
26,396
2,773
Portugal
  
165
43
653
3,187
1,370
5,418
  
5,793
1,575
Ireland
  
30
2,972
1,394
92
88
4,576
  
8,217
1,521
Cyprus
  
42
2
118
20
41
223
  
322
28
Greece
  
-
27
35
6
6
74
  
1,119
2
Total
  
2,269
4,478
6,313
29,299
5,081
47,440
  
67,045
9,234
                     
As at 31.12.13
                  
Spain
  
184
1,029
3,203
12,537
2,292
19,245
  
26,474
3,253
Italy
  
1,556
417
1,479
15,295
1,881
20,628
  
27,341
3,124
Portugal
  
372
38
891
3,413
1,548
6,262
  
6,608
2,288
Ireland
  
67
5,032
1,356
103
100
6,658
  
10,051
2,047
Cyprus
  
-
7
106
19
43
175
  
256
66
Greece
  
8
5
51
6
12
82
  
903
3
Total
  
2,187
6,528
7,086
31,373
5,876
53,050
  
71,633
10,781
 
 
Market Risk
 
Traded Market Risk
 
During H114 average DVaR in the trading book reduced in line with lower levels of market activity
 
Analysis of Management VaR
 
·
The table below shows the total Management VaR on a diversified basis by risk factor. Total Management VaR includes all trading positions in the Investment Bank, Non-Core and Africa Banking
 
·
Limits are applied against each risk factor VaR as well as total Management VaR, which are then cascaded further by risk managers to each business
 
·
Average management VaR fell during the period reflecting the lower levels of market volatility than observed in H113 and reduced overall positioning. During the period Management VaR fell to a level as low as £18m
 
 
Six months ended 30.06.14
  
Six months ended 31.12.13
  
Six months ended 30.06.13
Management VaR (95%)
Daily Avg
High1
Low1
  
Daily Avg
High1
Low1
  
Daily Avg
High1
Low1
 
£m
£m
£m
  
£m
£m
£m
  
£m
£m
£m
Credit risk
12
15
9
  
16
21
12
  
21
25
17
Interest rate risk
10
14
6
  
11
16
7
  
14
24
6
Spread risk
5
8
3
  
7
9
5
  
15
21
7
Basis risk
6
8
4
  
9
13
7
  
13
17
9
Equity risk
12
23
8
  
11
17
6
  
10
21
5
Commodity risk
3
8
2
  
4
6
2
  
5
8
4
Foreign exchange risk
4
6
2
  
3
7
2
  
4
7
2
Inflation risk
3
4
2
  
3
5
2
  
4
8
2
Diversification effect
(32)
-
-
  
(38)
-
-
  
(55)
-
-
Total Management VaR
23
31
18
  
26
33
21
  
31
39
23
 
·
In H114, Equity VaR replaced Credit VaR as the single largest contributor, which was reflected in the level of activity and revenue performance from the Equity business
 
·
The three main contributors to total DVaR were equity, credit and interest rate risks. From average H113 levels, average DVaR fell for spread risk by £10m (67%), credit risk by £9m (43%), basis risk by £7m (54%) and interest rate risk by £4m (29%). Average DVaR for the Group fell by £8m (26%)
 
·
The business remained within the Management VaR limits agreed with the Board Financial Risk Committee throughout H114 for both risk type VaR and total VaR
 
·
For regulatory market risk capital calculations, VaR is calculated at the 99% level. The model is subject to daily back-testing, where it is compared to profit and loss results. The VaR model has performed well in back-testing and maintains its Green categorisation, as defined by the PRA
 
 
1 The high and low DVaR figures reported for each category did not necessarily occur on the same day as the high and low DVaR reported as a whole. Consequently a diversification effect balance for the high and low DVaR figures would not be meaningful and is therefore omitted from the above table.
 

 
Market Risk
 
Analysis of Net Interest Income Sensitivity
 
Annual Earnings at Risk (AEaR) is the primary income risk metric used to measure and control non-traded market risk exposure. AEaR measures net interest income sensitivity over the next twelve months after instantaneous 200bp parallel shocks up and down are applied to the current yield curve. 200bp shocks are consistent with industry best practice and are supported by banking regulators.
 
The table below shows sensitivity analysis on the pre-tax net interest income for the non-trading financial assets and financial liabilities held at 31 May 2014 and 31 December 2013.
 
The main model assumptions are:
 
 
·
The balance sheet is projected on a static basis (kept flat over the horizon) so all changes in AEaR sensitivity are linked to the interest rate shock, rather than variations in balances
 
 
·
Balances are adjusted for an assumed behavioural profile. This includes the treatment of fixed rate loans including mortgages
 
 
·
The parallel shock down is subject to an interest rate floor at 0%
 
Net interest income sensitivity (AEaR) by business unit
      
Period ended 31.05.141
Personal & Corporate Banking
£m
Barclaycard
£m
Africa
£m2
Non-core
£m
Other
£m3
Total
£m
+200bps
412
(74)
28
2
(66)
302
+100bps
224
(35)
14
1
(53)
151
-100bps
(418)
24
(14)
(1)
(8)
(417)
-200bps
(461)
24
(26)
(1)
(17)
(481)
             
Period ended 31.12.13
            
+200bps
373
(84)
19
9
(92)
225
+100bps
195
(42)
9
5
(57)
110
-100bps
(315)
25
(8)
(1)
56
(243)
-200bps
(352)
26
(15)
(1)
49
(293)
 
Total AEaR from a -200bp shock increased by 64% to £(481)m (2013: £(293)m). For a +200bp shock, total AEaR increased by 34% to £302m (Dec 13: £225m) predominantly due to the following changes in PCB:
 
·
The inclusion of re-pricing lag risk within the overall AEaR numbers from May 14
 
·
A steepening of the forecast base rate path (next base rate rise expected to occur in December 14 against a previous expectation of February 15) allowing larger shocks to funding income on liability products
 
 
1 Based on May 2014 data, being the latest available.
2 Excluding Investment banking operations.
3 Other consists of Group Treasury and adjustments made for hedge ineffectiveness.
 
 

 
Statement of Directors' Responsibilities
 
The Directors (who are listed below) confirm that the condensed consolidated interim financial statements set out on pages 9 to 13 and 55 to 88 have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union, and that the interim management report herein includes a fair review of the information required by Disclosure and Transparency Rules 4.2.7R and 4.2.8R namely:
 
· an indication of important events that have occurred during the six months ended 30 June 2014 and their impact on the condensed consolidated interim financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year
 
· material related party transactions in the six months ended 30 June 2014 and any material changes in the related party transactions described in the last Annual Report
 
 
Signed on behalf of the Board by
 
Antony Jenkins                                                                                                                     Tushar Morzaria
Group Chief Executive                                                                                                           Group Finance Director

 
Barclays PLC Board of Directors:
 
Chairman
Sir David Walker
Executive Directors
Antony Jenkins (Group Chief Executive)
Tushar Morzaria (Group Finance Director)
Non-executive Directors
Mike Ashley
Tim Breedon
Crawford Gillies
Reuben Jeffery
Wendy Lucas-Bull
Dambisa Moyo
Frits van Paasschen
Sir Michael Rake
Diane de Saint Victor
Sir John Sunderland
Steve Thieke
 

 
Independent Auditors' Review Report to Barclays PLC
 
Report on the condensed consolidated interim financial statements
 
Our conclusion
We have reviewed the condensed consolidated interim financial statements, defined below, in the interim results announcement of Barclays PLC for the six months ended 30 June 2014. Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
 
This conclusion is to be read in the context of what we say in the remainder of this report.
 
What we have reviewed
The condensed consolidated interim financial statements, which are prepared by Barclays PLC, comprise:
 
 
·
the Condensed Consolidated Income Statement for the six months ended 30 June 2014;
 
 
·
the Condensed Consolidated Statement of Profit or Loss and other Comprehensive income for the period then ended;
 
 
·
the Condensed Consolidated Balance Sheet as at 30 June 2014;
 
 
·
the Condensed Consolidated Statement of Changes in Equity for the period then ended;
 
 
·
the Condensed Consolidated Cash Flow Statement for the period then ended; and
 
 
·
the related notes to the condensed consolidated interim financial statements.
 
As disclosed in note 1, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
 
The condensed consolidated interim financial statements included in the interim results announcement have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
 
What a review of condensed consolidated financial statements involves
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We have read the other information contained in the interim results announcement and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated interim financial statements.


Responsibilities for the condensed consolidated interim financial statements and the review
 
Our responsibilities and those of the directors1,2
The interim results announcement including the condensed consolidated interim financial statements, is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the interim results announcement in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
 
Our responsibility is to express to the company a conclusion on the condensed consolidated interim financial statements in the interim results announcement based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure and Transparency Rules of the Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
 
PricewaterhouseCoopers LLP
Chartered Accountants
London, United Kingdom
29 July 2014
 
 
1 The maintenance and integrity of the Barclays website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.
2 Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
 
 

 
Financial Statement Notes
 
1. Basis of preparation
 
These condensed interim financial statements for the six months ended 30 June 2014 have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority (previously the Financial Services Authority) and with IAS 34, 'Interim financial reporting', as adopted by the European Union. The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2013, which have been prepared in accordance with IFRSs as adopted by the European Union.

The accounting policies and methods of computation used in these condensed interim financial statements are the same as those used in the 2013 Annual Report, except as detailed below:

IAS 32 Financial Instruments: Presentation

IAS 32, Amendments to Offsetting Financial Assets and Financial Liabilities, which was adopted by the Group on 1 January 2014, clarified the circumstances in which netting is permitted; in particular what constitutes a currently legally enforceable right of set-off and the circumstances in which gross settlement systems may be considered equivalent to net settlement. The financial impact for the group to the 31 December 2013 balance sheet is to gross up certain financial assets and financial liabilities (mainly derivatives and settlement balances) by £31.4bn that were previously reported net.

Other reporting changes

As a result of the business reorganisation outlined in the Group Strategy Update on 8 May 2014, the Group has made changes to the composition of its business segments for the purposes of reporting in accordance with IFRS 8. For more details of the changes made please refer to the Restatement Document published on 10 July 2014, which outlines the impact on the Group's previously reported segmental results from the Group structure changes and the subsequent reallocation of elements of the Head Office results to the businesses post the resegmentation. The Head Office allocation and resegmentation only affects the reported results of the individual businesses and does not impact the consolidated primary financial statements.

Future accounting developments

IFRS 9 Financial Instruments

IFRS 9 will change the classification and therefore the measurement of the Group's financial assets, the recognition of impairment and hedge accounting. In addition to these changes, the effect of changes in the Group's own credit risk on the fair value of financial liabilities that the group designates at fair value through profit and loss will be included in other comprehensive income rather than the income statement. A final version of the standard was issued in July 2014. The new Standard will come into effect on 1 January 2018 subject to EU Endorsement.

IFRS 15 Revenue from Contracts with Customers

The International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) have jointly issued a converged standard on the recognition of revenue from contracts with customers. The impact for the Group of the new standard is currently being assessed. The standard will be effective for annual reporting periods beginning on or after 1 January 2017 with retrospective application, subject to EU Endorsement.

For more information on future accounting changes, refer to the Barclays 2013 annual report.
 
Going Concern
 
The Directors confirm they are satisfied that the Group has adequate resources to continue in business for the foreseeable future. For this reason, they continue to adopt the going concern basis for preparing accounts.
 
 

 
2. Staff Costs
 
 
Half Year Ended
Half Year Ended
Half Year Ended
 
30.06.14
31.12.13
30.06.13
Compensation costs
£m
£m
£m
Deferred bonus charge
573
492
655
Current year bonus charges
430
446
511
Sales commissions, commitments and other incentives
111
246
204
Performance costs
1,114
1,184
1,370
Salaries
2,510
2,278
2,703
Social security costs
363
339
376
Post retirement benefits
327
340
348
Other compensation costs
296
325
353
Total compensation costs
4,610
4,466
5,150
       
Other resourcing costs
      
Outsourcing
532
562
522
Redundancy and restructuring
253
304
383
Temporary staff costs
263
270
281
Other
72
122
95
Total other resourcing costs
1,120
1,258
1,281
       
Total staff costs
5,730
5,724
6,431
       
 

 
Total staff costs decreased 11% to £5,730m, principally reflecting an19% decrease in performance costs, a 7% decrease in salaries and a 34% decrease in redundancy and restructuring.
 
Group compensation costs decreased 10% to £4,610m with the Group compensation: adjusted net operating income ratio remaining at 38% (2013: 38%). Group performance costs reduced 19% to £1,114m primarily reflecting lower deferred and current year bonus charges. There was an expected charge of £1.1bn (2013: £1.2bn) relating to future periods for bonus awards granted but not yet expensed as at 30 June 2014.
 
No awards have yet been granted in relation to the 2014 bonus pool as decisions regarding incentive awards are not taken by the Remuneration Committee until the performance for the full year can be assessed. The current year bonus charge for the first six months represents an accrual for estimated costs in accordance with accounting requirements.
 
Other resourcing costs decreased by 13% to £1,120m primarily due to a reduction in redundancy and restructuring costs of 34% to £253m due to a number of Transform initiatives occurring particularly in Europe.
 
3. Administration and General Expenses
 
 
Half Year Ended
Half Year Ended
Half Year Ended
 
30.06.14
31.12.13
30.06.13
 
£m
£m
£m
Infrastructure costs
      
Property and equipment
727
711
899
Depreciation of property, plant and equipment
292
316
331
Operating lease rentals
288
325
320
Amortisation of intangible assets
251
246
234
Impairment of property, equipment and intangible assets
10
101
48
Total infrastructure costs
1,568
1,699
1,832
       
Other costs
      
Consultancy, legal and professional fees
729
712
541
Subscriptions, publications, stationery and communications
378
479
390
Marketing, advertising and sponsorship
260
326
257
Travel and accommodation
97
154
153
UK bank levy
-
504
-
Goodwill impairment
-
79
-
Other administration and general expenses
115
514
177
Total other costs
1,579
2,768
1,518
       
Total administration and general expenses
3,147
4,467
3,350
 
Administration and general expenses have decreased 6% to £3,147m. This was driven by decreased infrastructure and other costs due to the Transform program which is offset by an increase in litigation and conduct charges.
 
 

 
4. Tax
 
 
Assets
  
Liabilities
Current and Deferred Tax Assets and Liabilities
30.06.14
31.12.13
  
30.06.14
31.12.13
 
£m
£m
  
£m
£m
Current tax
216
219
  
(1,076)
(1,042)
Deferred tax
4,245
4,807
  
(353)
(373)
Total
4,461
5,026
  
(1,429)
(1,415)

The tax charge for H114 was £895m (2013: £594m), representing an effective tax rate of 35.8% (2013: 35.4%). The effective tax rate is higher than the UK statutory tax rate of 21.5% (2013: 23.25%) mainly due to profits outside of the UK taxed at higher local statutory tax rates, non-creditable taxes and non-deductible expenses, partially offset by the effect of non-taxable gains and income and deferred tax asset measurement adjustments.
 
The deferred tax asset of £4,245m (2013: £4,807m) mainly relates to amounts in the UK, US and Spain.
 

 
               
5. Non-controlling Interests
 
 
Profit Attributable to Non-controlling Interest
  
Equity Attributable to Non-controlling Interest
 
Half Year ended
Half Year ended
Half Year ended
  
As at
As at
As at
 
30.06.14
31.12.13
30.06.13
  
30.06.14
31.12.13
30.06.13
 
£m
£m
£m
  
£m
£m
£m
Barclays Bank PLC Issued:
              
- Preference shares
237
171
239
  
4,341
5,868
5,948
- Upper Tier 2 instruments
1
1
1
  
486
485
486
Barclays Africa Group Limited
149
185
158
  
2,126
2,204
2,509
Other non-controlling interests
3
(12)
14
  
4
7
111
Total
390
345
412
  
6,957
8,564
9,054
 
Equity attributable to non-controlling interests decreased by £1,607m to £6,957m due to £1,527m of Barclays Bank Plc preference shares being bought back and cancelled as part of the Additional Tier 1 (AT1) exchange exercise detailed in Note 14.
 
 

 
6. Earnings Per Share
      
 
 
Half Year Ended
Half Year Ended
Half Year Ended
 
30.06.14
31.12.13
30.06.13
 
£m
£m
£m
Profit/(loss) attributable to ordinary equity holders of the parent1
1,126
(131)
671
Dilutive impact of convertible options
-
1
-
Tax credit on profit after tax attributable to other equity holders
19
-
-
Total profit/(loss) attributable to equity holders of the parent including tax credit on other equity
1,145
(130)
671
Basic weighted average number of shares in issue2
16,296
14,308
13,525
Number of potential ordinary shares
127
360
365
Diluted weighted average number of shares
16,423
14,668
13,890
       
Basic earnings/(loss) per ordinary share
7.0p
(0.9p)
5.0p
Diluted earnings/(loss) per ordinary share
7.0p
(0.9p)
4.8p

 
7. Dividends on Ordinary Shares
 
It is Barclays policy to declare and pay dividends on a quarterly basis. The first interim dividend for 2014 of 1p per share was paid on 23 June 2014. The Board has decided to pay on 19 September 2014, a second interim dividend for 2014 of 1p per ordinary share to shareholders on the share register on 8 August 2014, making a total for H114 of 2p (2013: 2p).
 
 
Half Year ended 30.06.14
  
Half Year Ended 31.12.13
  
Half Year Ended 30.06.13
Dividends Paid During the Period
Per Share
Total
  
Per Share
Total
  
Per Share
Total
 
Pence
£m
  
Pence
£m
  
Pence
£m
Final dividend paid during period
3.5p
564
  
-
-
  
3.5p
442
Interim dividends paid during period
1.0p
164
  
2.0p
289
  
1.0p
128
                 
 
For qualifying US and Canadian resident ADR holders, the second interim dividend of 1p per ordinary share becomes 4p per ADS (representing four shares). The ADR depositary will post the second interim dividend on 19 September 2014 to ADR holders on the record at close of business on 8 August 2014.
 
 
1 The profit after tax attributable to other equity holders of £90m (2013: £nil) is offset by a tax credit recorded in reserves of £19m (2013: £nil). The net amount of £71m, along with NCI, is deducted from profit after tax in order to calculate earnings per share.
2 The basic weighted average number of shares excludes Treasury shares held in employee benefit trusts or held for trading. The rights issue in October 2013 resulted in the issue of an additional 3,219m shares. In accordance with IAS33, a retrospective adjustment has been applied to the basic weighted average number of shares in issue for the prior periods which has resulted in a movement in earnings per share of 5.3p to of 5.0p for the half year ended 30 June 2013.
 
 

 
8. Derivative Financial Instruments
        
 
Contract Notional
Amount
  
Fair Value
As at 30.06.14
  
Assets
Liabilities
 
£m
  
£m
£m
Foreign exchange derivatives
4,331,867
  
39,519
(41,055)
Interest rate derivatives
31,655,700
  
240,332
(227,604)
Credit derivatives
1,246,563
  
23,571
(22,681)
Equity and stock index and commodity derivatives
1,332,423
  
27,813
(33,738)
Derivative assets/(liabilities) held for trading
38,566,553
  
331,235
(325,078)
         
Derivatives in Hedge Accounting Relationships
        
Derivatives designated as cash flow hedges
155,819
  
725
(338)
Derivatives designated as fair value hedges
159,810
  
1,168
(1,084)
Derivatives designated as hedges of net investments
3,179
  
92
(1)
Derivative assets/(liabilities) designated in hedge accounting relationships
318,808
  
1,985
(1,423)
         
Total recognised derivative assets/(liabilities)
38,885,361
  
333,220
(326,501)
         
As at 31.12.13
        
Foreign exchange derivatives
4,637,028
  
59,605
(64,765)
Interest rate derivatives
34,706,623
  
230,127
(217,326)
Credit derivatives
1,576,184
  
27,350
(27,068)
Equity and stock index and commodity derivatives
1,063,431
  
30,473
(36,686)
Derivative assets/(liabilities) held for trading
41,983,266
  
347,555
(345,845)
         
Derivatives in Hedge Accounting Relationships
        
Derivatives designated as cash flow hedges
160,809
  
899
(500)
Derivatives designated as fair value hedges
123,459
  
1,278
(752)
Derivatives designated as hedges of net investments
19,377
  
568
(21)
Derivative assets/(liabilities) designated in hedge accounting relationships
303,645
  
2,745
(1,273)
         
Total recognised derivative assets/(liabilities)
42,286,911
  
350,300
(347,118)
 
Derivative assets decreased by £17bn primarily due to a decrease in foreign exchange derivatives as GBP strengthened against USD and reduced trading activity; and a decrease in credit derivatives due to tightening of credit spreads and trade maturities, offset by an increase in interest rate derivatives due to a decrease in major forward interest rates.
 
Derivative asset exposures would be £305bn (2013: £321bn) lower than reported under IFRS if the netting of financial instruments and financial collateral were permitted for all amounts that are covered by enforceable netting arrangements, irrespective of whether the stricter requirements of IAS 32 were met. Similarly, derivative liabilities would be £301bn (2013: £317bn) lower. Netting posted on the balance sheet under IFRS for Derivative assets and liabilities was £164bn (2013: £265bn) and £165bn (2013: £265bn) respectively.
 
 

 
9. Fair value of assets and liabilities
 
This section should be read in conjunction with Note 18 "Fair value of assets and liabilities" of the 2013 Annual Report, which provides more detail about accounting policies adopted, valuation methodologies used in calculating fair value and, the valuation control framework which governs oversight of valuations.

Valuation

This section should be read in conjunction with Note 18 "Fair value of assets and liabilities" of the 2013 Annual Report, which provides more detail about the definitions of the three levels of the fair value hierarchy.

The following table shows the Group's assets and liabilities that are held at fair value disaggregated by valuation technique (fair value hierarchy) and balance sheet classification:
 
 
Valuation technique using
    
 
Quoted market prices
Observable inputs
Significant unobservable inputs
    
 
(Level 1)
(Level 2)
(Level 3)
  
Total
As at 30.06.14
£m
£m
£m
  
£m
Trading portfolio assets
53,012
69,391
6,409
  
128,812
Financial assets designated at fair value
12,131
9,213
18,402
  
39,746
Derivative financial assets
5,466
322,738
5,016
  
333,220
Available for sale assets
32,033
52,942
2,249
  
87,224
Investment property
-
-
362
  
362
Non current assets held for sale
-
-
30
  
30
Total assets
102,642
454,284
32,468
  
589,394
           
Trading portfolio liabilities
(34,694)
(22,098)
(23)
  
(56,815)
Financial liabilities designated at fair value
(5)
(60,584)
(1,659)
  
(62,248)
Derivative financial liabilities
(5,648)
(315,812)
(5,041)
  
(326,501)
Total liabilities
(40,347)
(398,494)
(6,723)
  
(445,564)
           
As at 31.12.13
£m
£m
£m
  
£m
Trading portfolio assets
54,363
72,285
6,421
  
133,069
Financial assets designated at fair value
11,188
9,010
18,770
  
38,968
Derivative financial assets
4,824
340,463
5,013
  
350,300
Available for sale assets
36,050
53,561
2,145
  
91,756
Investment property
-
-
451
  
451
Non current assets held for sale
-
-
114
  
114
Total assets
106,425
475,319
32,914
  
614,658
           
Trading portfolio liabilities
(29,450)
(24,014)
-
  
(53,464)
Financial liabilities designated at fair value
(98)
(63,058)
(1,640)
  
(64,796)
Derivative financial liabilities
(5,627)
(337,172)
(4,319)
  
(347,118)
Total liabilities
(35,175)
(424,244)
(5,959)
  
(465,378)

There are no assets or liabilities measured at fair value on a non-recurring basis.

 
The following table shows the Group's assets and liabilities that are held at fair value disaggregated by valuation technique (fair value hierarchy) and product type:
 
 
Assets
  
Liabilities
 
Valuation technique using
  
Valuation technique using
 
Quoted
market prices
(Level 1)
Observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
  
Quoted
market prices
(Level 1)
Observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
               
 
£m
£m
£m
  
£m
£m
£m
As at 30.06.14
              
Interest rate derivatives
-
241,060
1,151
  
-
(227,674)
(1,343)
Foreign exchange derivatives
-
39,521
104
  
-
(40,945)
(120)
Credit derivatives1
-
21,870
1,701
  
(26)
(22,011)
(644)
Equity derivatives
3,625
10,773
1,662
  
(3,661)
(15,768)
(2,420)
Commodity derivatives
1,841
9,514
398
  
(1,961)
(9,414)
(514)
Government and government sponsored debt
51,894
68,603
328
  
(14,275)
(16,183)
(15)
Corporate debt
307
22,037
3,268
  
-
(3,966)
(14)
Certificates of deposit, commercial paper and other money market instruments
4
953
-
  
-
(4,511)
-
Reverse repurchase and repurchase agreements
-
5,767
1
  
-
(5,713)
-
Non asset backed loans
-
3,395
16,000
  
(5)
(588)
(342)
Asset backed securities
2
17,676
1,885
  
-
(882)
(4)
Commercial real estate loans
-
-
1,219
  
-
-
-
Issued debt
-
148
-
  
-
(46,414)
(1,103)
Equity cash products
44,372
7,449
207
  
(20,419)
(2,165)
-
Funds and fund linked products
-
2,096
866
  
-
(2,056)
(44)
Physical commodities
477
2,206
-
  
-
(18)
-
Investment properties
-
-
362
  
-
-
-
Other2
120
1,216
3,316
  
-
(186)
(160)
Total
102,642
454,284
32,468
  
(40,347)
(398,494)
(6,723)
               
As at 31.12.13
              
Interest rate derivatives
-
231,218
1,031
  
-
(217,517)
(1,046)
Foreign exchange derivatives
-
60,111
117
  
-
(64,715)
(86)
Credit derivatives1
-
25,150
2,200
  
(26)
(26,262)
(780)
Equity derivatives
3,353
11,665
1,266
  
(3,926)
(16,237)
(1,867)
Commodity derivatives
1,471
12,319
399
  
(1,675)
(12,441)
(540)
Government and government sponsored debt
53,518
63,627
220
  
(17,833)
(17,758)
-
Corporate debt
1,005
34,247
3,040
  
(63)
(5,247)
(12)
Certificates of deposit, commercial paper and other money market instruments
-
1,493
-
  
(96)
(5,303)
(409)
Reverse repurchase and repurchase agreements
-
5,323
-
  
-
(5,306)
-
Non asset backed loans
-
2,493
16,132
  
-
-
-
Asset backed securities
-
15,141
2,112
  
-
(105)
-
Commercial real estate loans
-
-
1,198
  
-
-
-
Issued debt
-
54
1
  
-
(48,734)
(1,164)
Equity cash products
45,547
397
168
  
(11,554)
(704)
-
Funds and fund linked products
-
8,509
550
  
-
(3,369)
(54)
Physical commodities
1,155
3,048
-
  
-
(72)
-
Investment properties
-
-
451
  
-
-
-
Other2
376
524
4,029
  
(2)
(474)
(1)
Total
106,425
475,319
32,914
  
(35,175)
(424,244)
(5,959)
 
 
1 Credit derivatives also includes derivative exposure to Monoline insurers.
2 Other primarily includes receivables resulting from the acquisition of the North American businesses of Lehman Brothers, asset backed loans, private equity investments and non-current assets held for sale.
 
 
Assets and liabilities reclassified between Level 1 and Level 2
 
There were no transfers between level 1 and 2 during the period.
 
Level 3 movement analysis
 
The following table summarises the movements in the Level 3 balance during the year. The table shows gains and losses and includes amounts for all financial assets and liabilities transferred to and from Level 3 during the year. Transfers have been reflected as if they had taken place at the beginning of the year.
 
For the period ended 30 June 2014, net transfers into Level 3 totalled £576m primarily due to £426m of funds and fund linked products within trading assets and £77m of non asset backed loans classified as trading portfolio assets following a decrease in the observable market activity. Liabilities of £267m were also transferred in mainly in relation to issued debt classified as financial liabilities designated at fair value.

Transfers out of level 3 totalled £186m primarily due to a transfer out of non-asset backed loans of £92m within trading assets, £78m of non-asset backed loans classified as financial assets designated at fair value and £33m of private equity investments classified as available for sale financial investments in line with more observable market activity.
 
 
As at 01.01.14
Purchases
Sales
Issues
Settlements
Total gains and losses in the period recognised in the income statement
Total gains or losses recognised in OCI
Transfers
As at 30.06.14
Trading income
Other income
In
Out
                       
 
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
Government and government sponsored debt
161
22
(25)
-
(25)
(12)
-
-
3
-
124
Corporate debt
3,039
176
(195)
-
(2)
203
-
-
3
(10)
3,214
Asset backed securities
2,111
1,388
(1,611)
-
(109)
106
-
-
4
(5)
1,884
Non asset backed loans
176
52
(28)
-
(1)
13
-
-
77
(92)
197
Funds and fund linked products
494
-
(64)
-
-
(35)
-
-
426
-
821
Other
440
10
(301)
-
-
11
-
-
13
(4)
169
Trading portfolio assets
6,421
1,648
(2,224)
-
(137)
286
-
-
526
(111)
6,409
                       
Commercial real estate loans
1,198
994
(761)
-
(195)
(17)
-
-
-
-
1,219
Non asset backed loans
15,956
-
(43)
7
(72)
31
2
-
-
(78)
15,803
Asset backed loans
375
130
(376)
-
(4)
11
-
-
-
(7)
129
Private equity investments
1,168
19
(107)
-
(11)
1
27
-
-
-
1,097
Other
73
80
(36)
-
(12)
(5)
1
-
57
(4)
154
Financial assets designated at fair value
18,770
1,223
(1,323)
7
(294)
21
30
-
57
(89)
18,402
                       
Asset backed securities
1
-
-
-
-
-
-
-
-
-
1
Government and government sponsored debt
59
145
-
-
-
-
-
-
-
-
204
Other
2,085
15
(25)
-
-
3
(61)
29
31
(33)
2,044
Available for sale investments
2,145
160
(25)
-
-
3
(61)
29
31
(33)
2,249
                       
Investment property
451
-
(131)
-
-
(9)
-
-
51
-
362
                       
Non current assets held for sale
114
-
(84)
-
-
-
-
-
-
-
30
                       

 
 
As at 01.01.14
Purchases
Sales
Issues
Settlements
Total gains and losses in the period recognised in the income statement
Total gains or losses recognised in OCI
Transfers
As at 30.06.14
Trading income
Other income
In
Out
                       
 
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
Trading portfolio liabilities
-
(2)
-
-
-
(1)
-
-
(20)
-
(23)
                       
Certificates of deposit, commercial paper and other money market instruments
(409)
-
-
-
408
1
-
-
-
-
-
Issued debt
(1,164)
-
74
(13)
204
55
-
-
(267)
8
(1,103)
Other
(67)
(395)
50
(161)
3
4
(1)
-
-
11
(556)
Financial liabilities designated at fair value
(1,640)
(395)
124
(174)
615
60
(1)
-
(267)
19
(1,659)
                       
Interest rate derivatives
(15)
(120)
(16)
-
32
(242)
21
-
154
(6)
(192)
Credit derivatives
1,420
5
(14)
-
(68)
(168)
(22)
-
(66)
(30)
1,057
Equity derivatives
(601)
(143)
(14)
(172)
2
91
-
-
(11)
90
(758)
Commodity derivatives
(141)
-
(13)
(5)
5
3
(1)
-
63
(27)
(116)
Foreign exchange derivatives
31
136
(13)
(34)
38
(233)
-
-
58
1
(16)
Net derivative financial instruments1
694
(122)
(70)
(211)
9
(549)
(2)
-
198
28
(25)
                       
Total
26,955
2,512
(3,733)
(378)
193
(189)
(34)
29
576
(186)
25,745
 
Included in financial assets designated at fair value is the Education, Social Housing and Local Authority (ESHLA) loan portfolio of £15.8bn (2013:£15.6bn). The valuation of the ESHLA portfolio continues to be based on internally modelled spreads. Valuation uncertainty arises mainly from the long dated nature of the portfolio, the lack of active secondary market in the loans and the lack of observable loan spreads.
 
 
1 The derivative financial instruments are represented on a net basis. On a gross basis derivative financial assets as at 30 June 2014 totalled £5,016m (31 December 2013: £5,013m) and derivative financial liabilities totalled £5,041m (31 December 2013: £4,319m).
 
 
As at 01.01.13
  
Purchases
Sales
Issues
Settlements
  
Total gains and losses in the period recognised in the income statement
Total gains or losses recognised in OCI
  
Transfers
  
As at 31.12.13
   
Trading income
Other income
  
In
Out
  
                               
 
£m
  
£m
£m
£m
£m
  
£m
£m
£m
  
£m
£m
  
£m
Government and government sponsored debt
321
  
135
(199)
82
(23)
  
(3)
(11)
-
  
-
(141)
  
161
Corporate debt
3,136
  
84
(83)
-
-
  
(46)
-
-
  
-
(52)
  
3,039
Asset backed securities
3,614
  
2,773
(4,729)
-
(389)
  
831
-
-
  
50
(39)
  
2,111
Non asset backed loans
344
  
91
(281)
35
(37)
  
16
-
-
  
8
-
  
176
Funds and fund linked products
685
  
-
(64)
-
-
  
(95)
-
-
  
-
(32)
  
494
Other
414
  
46
(42)
-
(44)
  
44
-
-
  
34
(12)
  
440
Trading portfolio assets
8,514
  
3,129
(5,398)
117
(493)
  
747
(11)
-
  
92
(276)
  
6,421
                               
Commercial real estate loans
1,798
  
1,542
(1,717)
-
(526)
  
156
2
-
  
2
(59)
  
1,198
Non asset backed loans
2,021
  
390
(1)
-
(208)
  
(1,441)
(107)
-
  
15,317
(15)
  
15,956
Asset backed loans
564
  
595
(748)
-
(23)
  
106
-
-
  
-
(119)
  
375
Private equity investments
1,350
  
161
(134)
-
(87)
  
50
(139)
-
  
18
(51)
  
1,168
Other
353
  
11
(237)
-
(28)
  
(36)
(1)
-
  
105
(94)
  
73
Financial assets designated at fair value
6,086
  
2,699
(2,837)
-
(872)
  
(1,165)
(245)
-
  
15,442
(338)
  
18,770
                               
Asset backed securities
492
  
-
(521)
-
(29)
  
(1)
30
30
  
-
-
  
1
Government and government sponsored debt
46
  
13
-
-
(1)
  
-
1
-
  
-
-
  
59
Other
2,342
  
25
(77)
-
(471)
  
1
255
2
  
36
(28)
  
2,085
Available for sale investments
2,880
  
38
(598)
-
(501)
  
-
286
32
  
36
(28)
  
2,145
                               
Investment property
1,686
  
151
(1,210)
-
-
  
17
(31)
-
  
-
(162)
  
451
                               
Non current assets held for sale
-
  
-
-
-
-
  
-
-
-
  
114
-
  
114
                               
                               

 
 
As at 01.01.13
  
Purchases
Sales
Issues
Settlements
  
Total gains and losses in the period recognised in the income statement
Total gains or losses recognised in OCI
  
Transfers
  
As at 31.12.13
   
Trading income
Other income
  
In
Out
  
 
£m
  
£m
£m
£m
£m
  
£m
£m
£m
  
£m
£m
  
£m
Trading portfolio liabilities
(2)
  
(1)
-
-
-
  
1
-
-
  
-
2
  
-
                               
Certificates of deposit, commercial paper and other money market instruments
(760)
  
-
-
-
7
  
204
93
-
  
-
47
  
(409)
Issued debt
(1,439)
  
-
9
(67)
319
  
60
6
-
  
(205)
153
  
(1,164)
Other
(156)
  
(2)
1
-
(2)
  
(3)
3
-
  
-
92
  
(67)
Financial liabilities designated at fair value
(2,355)
  
(2)
10
(67)
324
  
261
102
-
  
(205)
292
  
(1,640)
                               
Interest rate derivatives
149
  
(26)
(1)
-
31
  
262
2
-
  
(26)
(406)
  
(15)
Credit derivatives
1,776
  
95
(66)
(2)
54
  
(488)
(81)
-
  
(74)
206
  
1,420
Equity derivatives
(608)
  
301
(1)
(394)
(48)
  
151
2
-
  
(85)
81
  
(601)
Commodity derivatives
117
  
(57)
-
(44)
42
  
66
1
-
  
(146)
(120)
  
(141)
Foreign exchange derivatives
(40)
  
-
-
-
145
  
(44)
1
-
  
(10)
(21)
  
31
Other
(164)
  
-
-
-
-
  
-
-
-
  
-
164
  
-
Net derivative financial instruments1
1,230
  
313
(68)
(440)
224
  
(53)
(75)
-
  
(341)
(96)
  
694
                               
Total
18,039
  
6,327
(10,101)
(390)
(1,318)
  
(192)
26
32
  
15,138
(606)
  
26,955
 
 
1 The derivative financial instruments are represented on a net basis. On a gross basis derivative financial assets as at 31 December 2013 totalled £5,013m (31 December 2012: £6,217m) and derivative financial liabilities totalled £4,319m (31 December 2012: £4,987m).
 
 
Unrealised gains and losses on Level 3 financial assets and liabilities
 
The following table discloses the unrealised gains and losses recognised in the year arising on Level 3 financial assets and liabilities held at the period end.
 
Unrealised gains and losses recognised during the period on Level 3 financial assets and liabilities held at period end
      

 
 
As at 30.06.14
  
As at 31.12.13
 
Income statement
Other compre- hensive income
Total
  
Income statement
Other compre- hensive income
Total
 
Trading income
Other income
  
Trading income
Other income
                   
 
£m
£m
£m
£m
  
£m
£m
£m
£m
Trading portfolio assets
284
-
-
284
  
222
-
-
222
Financial assets designated at fair value
(122)
34
-
(88)
  
(1,276)
10
-
(1,266)
Available for sale assets
5
(4)
32
33
  
-
(5)
27
22
Investment property
(10)
-
-
(10)
  
(27)
(31)
  
(58)
Trading portfolio liabilities
(1)
-
-
(1)
  
-
-
-
-
Financial liabilities designated at fair value
22
-
-
22
  
74
-
-
74
Net derivative financial instruments
(78)
(21)
-
(99)
  
(411)
(75)
-
(486)
Total
100
9
32
141
  
(1,418)
(101)
27
(1,492)
 
Valuation techniques and sensitivity analysis
 

Sensitivity analysis is performed on products with significant unobservable inputs (Level 3) to generate a range of reasonably possible alternative valuations. The sensitivity methodologies applied take account of the nature of valuation techniques used, as well as the availability and reliability of observable proxy and historical data and the impact of using alternative models.

Current year valuation and sensitivity methodologies are consistent with those described within note 18 'Fair value of assets and liabilities' in the 2013 Annual Report.
 
Sensitivity analysis of valuations using unobservable inputs
 
Fair value
Favourable changes
Unfavourable changes
Product type
Total
assets
Total
liabilities
Income
statement
Equity
Income
statement
Equity
 
£m
£m
£m
£m
£m
£m
As at 30.06.14
            
Interest rate derivatives
1,151
(1,343)
109
-
(108)
-
Foreign exchange derivatives
104
(120)
36
-
(36)
-
Credit derivatives
1,701
(644)
61
-
(208)
-
Equity derivatives
1,662
(2,420)
321
-
(321)
(0)
Commodity derivatives
398
(514)
40
-
(40)
-
Government and government sponsored debt
328
(15)
1
-
(1)
-
Corporate debt
3,268
(14)
10
-
(9)
(0)
Certificates of deposit, commercial paper and other money market instruments
-
-
-
-
-
-
Repurchase agreements
1
-
-
-
-
-
Non asset backed loans
16,000
(342)
123
-
(1,217)
-
Asset backed securities
1,885
(4)
89
1
(48)
(1)
Commercial real estate loans
1,219
-
56
-
(45)
-
Issued debt
-
(1,103)
-
-
-
-
Equity cash products
207
-
-
10
-
(10)
Funds and fund linked products
866
(44)
21
-
(21)
-
Physical commodities
-
-
-
-
-
-
Investment property
362
-
26
-
(12)
-
Other
3,316
(160)
225
64
(190)
(51)
Total
 
32,468
(6,723)
1,118
75
(2,256)
(62)
As at 31.12.13
            
Interest rate derivatives
1,031
(1,046)
246
-
(251)
-
Foreign exchange derivatives
117
(86)
32
-
(32)
-
Credit derivatives
2,200
(780)
145
-
(287)
-
Equity derivatives
1,266
(1,867)
234
-
(234)
-
Commodity derivatives
399
(540)
41
-
(41)
-
Government and government sponsored debt
220
-
1
-
(1)
-
Corporate debt
3,040
(12)
10
-
(4)
-
Certificates of deposit, commercial paper and other money market instruments
-
(409)
-
-
-
-
Non asset backed loans
16,132
-
151
-
(1,177)
-
Asset backed securities
2,112
-
104
1
(74)
(1)
Commercial real estate loans
1,198
-
61
-
(29)
-
Issued debt
1
(1,164)
-
-
-
-
Equity cash products
168
-
-
12
-
(12)
Funds and fund linked products
550
(54)
25
-
(25)
-
Investment property
451
-
22
-
(21)
-
Other
4,029
(1)
186
58
(182)
(47)
Total
32,914
(5,959)
1,258
71
(2,358)
(60)
 
The effect of stressing unobservable inputs to a range of reasonably possible alternatives alongside considering the impact of using alternative models would be to increase fair values by up to £1.2bn (31 December 2013: £1.3bn) or to decrease fair values by up to £2.3bn (31 December 2013: £2.4bn) with substantially all the potential effect impacting profit and loss rather than equity.
 
 
Significant unobservable inputs
 
The valuation techniques and significant unobservable inputs for assets and liabilities recognised at fair value and classified as Level 3, along with the range of values used for those significant unobservable inputs, are consistent with Note 18 'Fair value of assets and liabilities' in the 2013 Annual Report. The description of the significant unobservable inputs and the sensitivity of fair value measurement of the instruments categorised as Level 3 assets or liabilities to increases in significant unobservable inputs is also found in Note 18 'Fair value of assets and liabilities' of the 2013 Annual Report.
 
Fair value adjustments
 
Key balance sheet valuation adjustments that may be of interest from a financial statement user perspective are quantified below:
 
 
30.06.14
31.12.13
 
£m
£m
Bid-offer valuation adjustments
(366)
(406)
Other exit adjustments
(171)
(208)
Uncollateralised derivative funding
(83)
(67)
Derivative credit valuation adjustments:
    
- Monolines
(24)
(62)
- Other derivative credit valuation adjustments
(321)
(322)
Derivative debit valuation adjustments
220
310
 
· Bid offer and other exit adjustments have reduced by £40m to £366m and by £37m to £171m respectively during 2014 as a result of movements in market bid offer spreads
 
· Derivative credit valuation adjustments reduced by £39m to £345m in 2014 as a result of a reduction in monoline exposure and improvements in counterparty credit
 
· Uncollateralised derivative funding adjustments have increased by £16m to £83m
 
· Derivative debit valuation adjustments have reduced by £90m to £220m as a result of improvements in Barclays credit
 
 
Portfolio exemption
 
The Group uses the portfolio exemption in IFRS 13 Fair Value Measurement to measure the fair value of certain groups of financial assets and financial liabilities. Assets and liabilities are measured using the price that would be received to sell a net long position (i.e. an asset) for a particular risk exposure or to transfer a net short position (i.e. a liability) for a particular risk exposure in an orderly transaction between market participants at the balance sheet date under current market conditions.
 
Unrecognised gains as a result of the use of valuation models using unobservable inputs
 
The amount that has yet to be recognised in income that relates to the difference between the transaction price (the fair value at initial recognition) and the amount that would have arisen had valuation models using unobservable inputs been used on initial recognition, less amounts subsequently recognised, is as follows:
 
 
Half year ended
Half year ended
 
30.06.14
31.12.13
 
£m
£m
Opening balance
137
159
Additions
10
12
Amortisation and releases
(22)
(34)
Closing balance
125
137
 
The reserve held for unrecognised gains is predominantly related to derivative financial instruments.
 
Third party credit enhancements
 
Structured and brokered certificates of deposit issued by Barclays Group are insured up to $250,000 per depositor, by the Federal Deposit Insurance Corporation (FDIC) in the United States of America. The FDIC is funded by premiums that Barclays and other banks pay for deposit insurance coverage. The carrying value of these issued certificates of deposit that are designated under the IAS 39 fair value option includes this third party credit enhancement. The on balance sheet value of these brokered certificates of deposit amounted to £3.1bn at 30 June 2014.

Comparison of carrying amounts and fair values for assets and liabilities not held at fair value

Valuation methodologies employed in calculating the fair value of financial assets and liabilities measured at amortised cost are consistent with the 2013 Annual Report disclosure.

The following table summarises the fair value of financial assets and liabilities measured at amortised cost on the Group's balance sheet where carrying amount is not a reasonable approximation of fair value:
 
 
As at 30.06.14
  
As at 31.12.13
 
Carrying amount
Fair Value
  
Carrying amount
Fair Value
Financial assets
£m
£m
  
£m
£m
Loans and advances to banks
43,448
43,435
  
39,422
39,408
Loans and advances to customers:
          
-Home loans
179,022
166,169
  
179,527
170,793
-Credit cards, unsecured and other retail lending
62,412
61,975
  
64,551
63,944
-Finance lease receivables
5,471
5,424
  
5,827
5,759
-Corporate loans
195,644
192,648
  
184,332
180,499
Reverse repurchase agreements and other similar secured lending
171,934
171,934
  
186,779
186,756
           
Financial liabilities
          
Deposits from banks
(62,167)
(62,162)
  
(55,615)
(55,646)
Customer accounts:
          
-Current and demand accounts
(142,610)
(142,610)
  
(134,849)
(134,849)
-Savings accounts
(127,807)
(127,933)
  
(123,824)
(123,886)
-Other time deposits
(173,221)
(173,254)
  
(173,325)
(173,056)
Debt securities in issue
(83,832)
(84,919)
  
(86,693)
(87,022)
Repurchase agreements and other similar secured borrowing
(173,669)
(173,669)
  
(196,748)
(196,748)
Subordinated liabilities
(19,301)
(21,466)
  
(21,695)
(22,193)
 

 
10. Subordinated Liabilities
 
 
As at
As at
 
30.06.14
31.12.13
 
£m
£m
Opening balance as at 1 January
21,695
24,018
Issuances
23
700
Redemptions
(1,526)
(1,426)
Other
(891)
(1,597)
Total dated and undated subordinated liabilities as at period end
19,301
21,695

 
Subordinated liabilities decreased 11% to £19,301m. Redemptions included £821m Callable Fixed/Floating Rate Subordinated Notes (€1,000m) and £98m 8.80% Callable Subordinated Notes (ZAR 1,725m). In addition, £607m Tier One Notes and Reserve Capital Instruments were exchanged as part of the Additional Tier 1 (AT1) exchange exercise detailed in Note 14.
 
11. Provisions
    
 
As at
As at
 
30.06.14
31.12.13
 
£m
£m
Conduct Remediation
    
- Payment Protection Insurance redress
1,295
971
- Interest rate hedging product redress
648
1,169
- Other conduct
288
388
Litigation
358
485
Redundancy and restructuring
344
388
Undrawn contractually committed facilities and guarantees
180
165
Onerous contracts
108
100
Sundry provisions
224
220
Total
3,445
3,886

Payment Protection Insurance Redress

As at 31 December 2013, Barclays had recognised cumulative provisions totalling £3.95bn against the cost of Payment Protection Insurance (PPI) redress and associated processing costs. Utilisation of £2.98bn left a remaining balance of £0.97bn at that date.

During H114, utilisation has been £576m, down 15% compared to H113 (£680m) and 16% on H213 (£685m). As at 30 June 2014, 1.1m (31 December 2013: 1.0m) customer initiated claims1 had been received and processed. The monthly volume of claims received in H1 declined 22% compared to H113 and 10% versus H213. This rate of decline was slower than previously expected with an increased level of claims from Claims Management Companies (CMCs) experienced during Q2 14 in particular. CMC claims have reduced by only 39% from the peak in May 2012 compared to a drop in direct customer claims of 69%.

The appropriate provision is determined by reference to a number of key assumptions which involve significant management judgement and modelling:

 
· Customer initiated claim volumes - claims received but not yet processed as at 30 June and an estimate of future claims
 
· Proactive response rate - volume of claims in response to proactive mailing
 
· Uphold rate - the percentage of claims that are upheld as being valid upon review
 
· Average claim redress - the expected average payment to customers for upheld claims based on the type and age of the policy/policies

An additional provision of £900m was recognised in June 2014, as a result of the lower than expected decline in claims, related referrals of cases to the Financial Ombudsman Service (FOS) and associated operational costs. As at 30 June 2014, cumulative utilisation has been £3.56bn, leaving a remaining provision of £1.3bn.

The assumptions underlying the provision remain subjective, in particular due to the uncertainty associated with future claims levels, which include complaints driven by CMC activity. The current provision represents Barclays' best estimate of all future expected costs of PPI redress, however, due to the level of uncertainty regarding future complaint volumes it is possible the eventual outcome may differ from the current estimate. If this were to be material, the provision will be increased or decreased accordingly.

The following table details, by key assumption, actual data through to 30 June 2014, forecast assumptions used in the provision calculation and a sensitivity analysis illustrating the impact on the provision if the future expected assumptions prove too high or too low.
 
1 Total claims received to date, which include those received via CMCs but exclude those for which no PPI policy exists and excluding responses to proactive mailing. This sensitivity includes the associated costs of FOS referrals and operating costs.
 
Assumption
Cumulative actual
to 30.06.14
Future Expected
Sensitivity Analysis increase/decrease
in provision
  
Customer initiated claims received and processed1
1,120k
330k
50k = £98m
  
Proactive mailing
680k
320k
50k =£18m
  
Response rate to proactive mailing
28%
20%
1% = £5m
  
Average uphold rate per claim2
76%
80%
1% = £7m
  
Average redress per valid claim3
£1,797
£1,668
£100 = £38m
  
 
Interest Rate Hedging Product Redress
 
 
£m
As at 31 December 2013
1,169
Increase in provision in period
-
Utilisation of provision in period
(521)
As at 30 June 2014
648

As at 30 June 2014, the provision for interest rate hedging product redress was £648m after H114 utilisation of £521m primarily due to the payment of redress to customers. Redress outcomes have been communicated to approximately 95% of the non-sophisticated customers covered by the review. Over 60% of the customers covered by the review have now been paid all redress due or are not due redress.

.
There has been no significant change to the estimate of future costs and the group expects the provision to be sufficient to cover the cost of completing redress. No provision has been recognised in relation to possible incremental consequential loss claims (over and above 8% per annum simple interest and an allowance for tax rate differentials). As at 30 June 2014, no significant incremental consequential loss claims from customers categorised as non-sophisticated had been agreed. Incremental consequential loss claims and claims from sophisticated customers will be monitored and future provisions will be recognised to the extent an obligation resulting in a probable outflow is identified.
 
 
1 Total claims received to date, including those received via CMCs but excluding those for which no PPI policy exists and excluding responses to proactive mailing. This sensitivity includes the associated costs of FOS referrals and operating costs.
2 Average uphold rate per claim excludes those for which no PPI policy exists.
3 Average redress stated on a per policy basis.
 

 
12. Retirement Benefits
 
As at 30 June 2014, the Group's IAS 19 (Revised) pension deficit across all schemes was £1.7bn (2013: £1.8bn). The UK Retirement Fund (UKRF), which is the Group's main scheme, had a deficit of £1.3bn (2013: £1.4bn).

The movement for the UKRF is largely due to an increase in asset values, which was partially offset by an increase in defined benefit obligation. The increase in defined benefit obligation can be linked to a decrease in discount rate to 4.31% (2013: 4.46%), partially offset by a decrease in long term expected inflation to 3.34% (2013: 3.42%).

The triennial funding valuation of the UKRF is currently underway with an effective date of 30 September 2013. Contribution requirements, including any deficit recovery plans, will be agreed between the Group and Trustee by the end of 2014. The previous triennial funding valuation at 30 September 2010 showed a deficit of £5.0bn. Under the agreed recovery plan, deficit contributions of £1.8bn were paid to the fund in December 2011 and a further £0.5bn paid in April 2012. Further deficit contributions are payable from 2017 to 2021 starting at £0.7bn in 2017 and increasing by approximately 3.5% per annum until 2021. These deficit contributions are in addition to the regular contributions to meet the Group's share of the cost of benefits accruing over each year.

In non-valuation years the Scheme Actuary prepares an annual update of the funding position. The latest annual update was carried out as at 30 September 2012 and showed a deficit of £3.6bn.
 

 
13. Called Up Share Capital
 
Called up share capital comprises 16,417m (2013: 16,113m) ordinary shares of 25p each. The increase was largely due to the issuance of shares under employee share schemes.
 
As at 30 June 2014, there were no unexercised warrants (2013: nil).

 
14. Other Equity Instruments
 
Other Equity Instruments of £4,326m (2013: £2,063m) include Additional Tier 1 (AT1) securities issued by Barclays PLC during 2013 and 2014. During 2013, there were two separate issuances of Fixed Rate Resetting Perpetual Subordinated Contingent Convertible Securities, with principal amounts of $2bn and €1bn. In 2014, there were three issuances of Fixed Rate Resetting Perpetual Subordinated Contingent Convertible Securities, with principal amounts of $1.2bn, €1.1bn and £0.7bn. The 2014 AT1 securities were issued as part of an exchange of £1,527m of Barclays Bank PLC preference shares (held as non controlling interests for Barclays PLC) and £607m of subordinated debt instruments (Tier 1 Notes and Reserve Capital Instruments).
 
The exchange exercise involved Barclays PLC issuing AT1 securities to investors in exchange for Barclays Bank PLC preference shares and Barclays Bank PLC subordinated debt instruments held by the same investors. As part of the exercise, Barclays Bank PLC issued three AT1 instruments to Barclays PLC. Upon completion of the exercise, the preference shares and subordinated debt instruments were cancelled by Barclays Bank PLC.
 
The AT1 securities are perpetual securities with no fixed maturity and are structured to qualify as AT1 instruments under CRD IV.
 
 
15. Other Reserves
 
Currency Translation Reserve
 
As at 30 June 2014 there was a debit balance of £2,083m (2013: £1,142m debit) in the currency translation reserve. The increase of £941m (2013: £750m) principally reflected the depreciation of USD against GBP. The currency translation reserve associated with non-controlling interests increased by £115m (2013: £239m) due to the depreciation of ZAR against GBP.
 
The recycling impact of the currency translation reserve recognised in the income statement during the period was a £61m net gain (2013: £2m).
 
 
Available for Sale Reserve
 
As at 30 June 2014 there was a credit balance of £493m (2013: £148m) in the Available for sale reserve. The increase of £345m (2013: £96m decrease) was largely driven by £2,014m gains from changes in fair value on Government Bonds offset by £1,253m due to fair value hedging, £212m of net gains transferred to net profit and £123m of tax.
 
 
Cash Flow Hedging Reserve
 
The cash flow hedging reserve represents the cumulative gains and losses on effective cash flow hedging instruments that will be recycled to the income statement when the hedged transactions affect profit or loss.
 
As at 30 June 2014 there was a credit balance of £533m (2013: £273m credit) in the cash flow hedging reserve. The increase of £260m (2013: £1,080m decrease) principally reflected £535m increases in the fair value of interest rate swaps held for hedging purposes as interest rate forward curves decreased, partly offset by £212m gains transferred to net profit and a deferred tax debit of £63m.
 
 
Treasury Shares
 
During the period £842m (2013: £1,049m) net purchases of treasury shares were made, principally reflecting the increase in shares held for the purposes of employee share schemes, and £775m (2013: £1,034m) was transferred to retained earnings reflecting the vesting of deferred share based payments.
 
16. Contingent Liabilities and Commitments
    
 
As at
As at
 
30.06.14
31.12.13
 
£m
£m
Guarantees and letters of credit pledged as collateral security
13,777
15,226
Performance guarantees, acceptances and endorsements
5,062
5,958
Contingent liabilities
18,839
21,184
Documentary credits and other short-term trade related transactions
1,098
780
Forward starting reverse repurchase agreements
24,492
19,936
Standby facilities, credit lines and other commitments
257,579
254,855

 
Further details on contingent liabilities relating to legal, competition and regulatory matters can be found in Note 17.

 
 
17. Legal, competition and regulatory matters
 
Barclays PLC (BPLC), Barclays Bank PLC (BBPLC) and the Group face legal, competition and regulatory challenges, many of which are beyond our control. The extent of the impact on BPLC, BBPLC and the Group of these matters cannot always be predicted but may materially impact our operations, financial results, condition and prospects.
 
 
Investigations into Certain Agreements
 
The Financial Conduct Authority (FCA) has alleged that BPLC and BBPLC breached their disclosure obligations in connection with two advisory services agreements entered into by BBPLC. The FCA has imposed a £50m fine. BPLC and BBPLC are contesting the findings. The United Kingdom (UK) Serious Fraud Office (SFO) is also investigating these agreements and the US Department of Justice (DOJ) and US Securities and Exchange Commission (SEC) are investigating whether the Group's relationships with third parties who help it to win or retain business are compliant with the US Foreign Corrupt Practices Act.
 
Background Information
 
The FCA has investigated certain agreements, including two advisory services agreements entered into by BBPLC with Qatar Holding LLC (Qatar Holding) in June and October 2008 respectively, and whether these may have related to BPLC's capital raisings in June and November 2008.
 
The FCA issued warning notices (Warning Notices) against BPLC and BBPLC in September 2013.
 
The existence of the advisory services agreement entered into in June 2008 was disclosed but the entry into the advisory services agreement in October 2008 and the fees payable under both agreements, which amount to a total of £322m payable over a period of five years, were not disclosed in the announcements or public documents relating to the capital raisings in June and November 2008. While the Warning Notices consider that BPLC and BBPLC believed at the time that there should be at least some unspecified and undetermined value to be derived from the agreements, they state that the primary purpose of the agreements was not to obtain advisory services but to make additional payments, which would not be disclosed, for the Qatari participation in the capital raisings.
 
The Warning Notices conclude that BPLC and BBPLC were in breach of certain disclosure-related listing rules and BPLC was also in breach of Listing Principle 3 (the requirement to act with integrity towards holders and potential holders of the company's shares). In this regard, the FCA considers that BPLC and BBPLC acted recklessly. The financial penalty in the Warning Notices against the Group is £50m. BPLC and BBPLC continue to contest the findings.
 
Other Investigations
 
The FCA and the SFO have agreed that the FCA enforcement process be stayed pending progress in the SFO's investigation into the agreements referred to above, including the advisory services agreements, in respect of which the Group has received and has continued to respond to requests for further information. The DOJ and the SEC are undertaking an investigation into whether the Group's relationships with third parties who assist BPLC to win or retain business are compliant with the US Foreign Corrupt Practices Act. They are also investigating the same agreements. The US Federal Reserve has requested to be kept informed.
 
Claimed Amounts/Financial Impact
 
It is not currently practicable to provide an estimate of the financial impact of the actions described on the Group or what effect, if any, that they might have upon the Group's operating results, cash flows or financial position in any particular period.
 
Swiss / US Tax Programme
 
In August 2013, the DOJ and the Swiss Federal Department of Finance announced the Programme for Non-Prosecution Agreements or Non-Targeted letters for Swiss Banks (Programme). This agreement was the consequence of a long-running dispute between the US and Switzerland regarding tax obligations of US related accounts held in Swiss banks.
 
Barclays Bank (Suisse) SA and Barclays Bank PLC Geneva Branch were participating in the Programme; however, following a structured review of their US related accounts, it was determined that continued participation in the Programme was not warranted. As a result, Barclays Bank (Suisse) SA and Barclays Bank PLC Geneva Branch have withdrawn from the Programme.
 
Alternative Trading Systems and High-Frequency Trading
 
The SEC, the New York State Attorney General (NYAG) and regulators in certain other jurisdictions have been investigating a range of issues associated with alternative trading systems (ATSs, also known as dark pools) and the activities of high-frequency traders. The Group has been providing information to the relevant regulatory authorities in response to their enquiries.
 
Recent Developments
 
On 25 June 2014, the NYAG filed a complaint against BPLC and Barclays Capital Inc. (BCI) in the Supreme Court of the State of New York (NY Supreme Court) alleging, amongst other things, that BPLC and BCI engaged in fraud and deceptive practices in connection with LX Liquidity Cross, the Group's SEC-registered ATS.
 
In addition, on 28 July 2014, BPLC was named as a defendant along with four former or current directors of BPLC in a proposed securities class action filed in the US District Court for the Southern District of New York (SDNY Court). The complaint asserts various claims under the US Securities Exchange Act of 1934, principally that certain annual and other reports of BPLC contained misstatements and omissions concerning LX Liquidity Cross. The complaint was brought on behalf of a proposed class consisting of all persons or entities that purchased or otherwise acquired BPLC-issued American Depositary Shares (ADSs), and options contracts to purchase or sell such ADSs, between 2 August 2011 and 25 June 2014.
 
BPLC is also one of a number of defendants, including several US and international banks, named in proposed securities class actions filed in the SDNY Court on various dates in 2014 alleging, among other things, violations of the federal securities laws related to high frequency trading.
 
It is possible that additional complaints relating to these or similar matters may be brought in the future against BPLC and/or its affiliates.
 
Claimed Amounts/Financial Impact
 
The complaints seek unspecified monetary damages and injunctive relief. It is not currently practicable to provide an estimate of the financial impact of the matters in this section or what effect, if any, that these matters might have upon operating results, cash flows or the Group's financial position in any particular period.
 
FERC
 
The US Federal Energy Regulatory Commission (FERC) has filed a civil action against BBPLC and certain of its former traders in the US District Court in California seeking to collect on an order assessing a $435m civil penalty and the disgorgement of $34.9m of profits, plus interest, in connection with allegations that BBPLC manipulated the electricity markets in and around California. BBPLC and the former traders have filed a motion to dismiss the action for improper venue or, in the alternative, to transfer it to the Southern District of New York (SDNY), and a motion to dismiss the complaint for failure to state a claim. The US Attorney's Office in SDNY has informed BBPLC that it is looking into the same conduct at issue in the FERC matter.
 
Background Information
 
In October 2012, FERC issued an Order to Show Cause and Notice of Proposed Penalties (Order and Notice) against BBPLC and four of its former traders in relation to the Group's power trading in the western US. In the Order and Notice, FERC asserted that BBPLC and its former traders violated FERC's Anti-Manipulation Rule by manipulating the electricity markets in and around California from November 2006 to December 2008, and proposed civil penalties and profit disgorgement to be paid by BBPLC.
 
In July 2013, FERC issued an Order Assessing Civil Penalties in which it assessed a $435m civil penalty against BBPLC and ordered BBPLC to disgorge an additional $34.9m of profits plus interest (both of which are consistent with the amounts proposed in the Order and Notice).
 
In October 2013, FERC filed a civil action against BBPLC and its former traders in the US District Court in California seeking to collect the penalty and disgorgement amount. FERC's complaint in the civil action reiterates the allegations previously made by FERC in its October 2012 Order and Notice and its July 2013 Order Assessing Civil Penalties.
 
In September 2013, BBPLC was contacted by the criminal division of the US Attorney's Office in SDNY and advised that such office is looking at the same conduct at issue in the FERC matter.
 
On 16 December 2013, BBPLC and its former traders filed a motion to dismiss the action for improper venue or, in the alternative, to transfer it to the SDNY Court, and a motion to dismiss the complaint for failure to state a claim.
 
Claimed Amounts/Financial Impact
 
FERC has made claims against the Group totalling $469.9m, plus interest, for civil penalties and profit disgorgement. This amount does not necessarily reflect the Group's potential financial exposure if a ruling were to be made against it.
 
Investigations into LIBOR, ISDAfix, other Benchmarks and Foreign Exchange Rates
 
Regulators and law enforcement agencies from a number of governments have been conducting investigations relating to BBPLC's involvement in manipulating financial benchmarks and foreign exchange rates. BBPLC has reached settlements with the relevant law enforcement agency or regulator in certain of the investigations, but others, including those set out in more detail below, remain pending.
 
Background Information
 
The FCA, the US Commodity Futures Trading Commission (CFTC), the SEC, the DOJ Fraud Section (DOJ-FS) and Antitrust Division (DOJ-AD), the European Commission (Commission), the SFO, the Monetary Authority of Singapore, the Japan Financial Services Agency, the prosecutors' office in Trani, Italy and various US state attorneys general are amongst various authorities conducting investigations into submissions made by BBPLC and other financial institutions to the bodies that set or compile various financial benchmarks, such as LIBOR and EURIBOR and in connection with efforts to manipulate certain benchmark currency exchange rates.
 
On 27 June 2012, BBPLC announced that it had reached settlements with the Financial Services Authority (FSA) (as predecessor to the FCA), the CFTC and the DOJ-FS in relation to their investigations and BBPLC agreed to pay total penalties of £290m, which were reflected in operating expenses for 2012. The settlements were made by entry into a Settlement Agreement with the FSA, a Settlement Order with the CFTC (CFTC Order) and a Non-Prosecution Agreement (NPA) with the DOJ-FS. In addition, BBPLC was granted conditional leniency from the DOJ-AD in connection with potential US antitrust law violations with respect to financial instruments that reference EURIBOR. Summaries of the NPA and the CFTC Order are set out below. The full text of the CFTC Order and the NPA are publicly available on the websites of the CFTC and the DOJ, respectively.
 
FSA Settlement Agreement
 
The terms of the Settlement Agreement with the FSA are confidential. However, the Final Notice of the FSA, which imposed a financial penalty of £59.5m, is publicly available on the website of the FCA. This sets out the FSA's reasoning for the penalty, references the settlement principles and sets out the factual context and justification for the terms imposed.
 
CFTC Order
 
In addition to a $200m civil monetary penalty, the CFTC Order requires BBPLC to cease and desist from further violations of specified provisions of the US Commodity Exchange Act (CEA) and take specified steps to ensure the integrity and reliability of its benchmark interest rate submissions, including LIBOR and EURIBOR, and improve related internal controls. Amongst other things, the CFTC Order requires BBPLC to:
 
 
· make its submissions based on certain specified factors, with BBPLC's transactions being given the greatest weight, subject to certain specified adjustments and considerations;
 
 
· implement firewalls to prevent improper communications, including between traders and submitters;
 
 
· prepare and retain certain documents concerning submissions and retain relevant communications;
 
 
· implement auditing, monitoring and training measures concerning its submissions and related processes;
 
 
· make regular reports to the CFTC concerning compliance with the terms of the CFTC Order;
 
 
· use best efforts to encourage the development of rigorous standards for benchmark interest rates; and
 
 
· continue to cooperate with the CFTC's ongoing investigation of benchmark interest rates.
 
DOJ Non-Prosecution Agreement
 
As part of the NPA, BBPLC agreed to pay a $160m penalty. In addition, the DOJ agreed not to prosecute BBPLC for any crimes (except for criminal tax violations, as to which the DOJ cannot and does not make any agreement) related to BBPLC's submissions of benchmark interest rates, including LIBOR and EURIBOR, contingent upon BBPLC's satisfaction of specified obligations under the NPA. In particular, under the NPA, BBPLC agreed for a period of two years from 26 June 2012, amongst other things, to:
 
 
· commit no US crimes whatsoever;
 
 
· truthfully and completely disclose non-privileged information with respect to the activities of BBPLC, its officers and employees, and others concerning all matters about which the DOJ inquires of it, which information can be used for any purpose, except as otherwise limited in the NPA;
 
 
· bring to the DOJ's attention all potentially criminal conduct by BBPLC or any of its employees that relates to fraud or violations of the laws governing securities and commodities markets; and
 
 
· bring to the DOJ's attention all criminal or regulatory investigations, administrative proceedings or civil actions brought by any governmental authority in the US by or against BBPLC or its employees that alleges fraud or violations of the laws governing securities and commodities markets.
 
BBPLC also agreed to cooperate with the DOJ and other government authorities in the US in connection with any investigation or prosecution arising out of the conduct described in the NPA, which commitment shall remain in force until all such investigations and prosecutions are concluded. BBPLC also continues to cooperate with the other ongoing investigations.
 
In anticipation of the expiry of the two year period, Barclays and DOJ-FS entered into a letter agreement which: (1) gives DOJ-FS until 27 June 2015 to make a determination under the NPA solely as to whether any of Barclays trading activities in the foreign exchange market during the two year period from 26 June 2012 constituted the commission of a "United States crime"; and (2) with respect to the ongoing investigation of those trading activities by DOJ-FS and DOJ-AD, extends Barclays' obligation to disclose non-privileged information in response to inquiries of the DOJ-FS to 27 June 2015. The two year period under the NPA has otherwise expired.
 
Investigations by the US State Attorneys General
 
Following the settlements announced in June 2012, 31 US state attorneys general commenced their own investigations into LIBOR, EURIBOR and the Tokyo Interbank Offered Rate. The NYAG, on behalf of this coalition of attorneys general, issued a subpoena in July 2012 to BBPLC (and subpoenas to a number of other banks) to produce wide-ranging information and has since issued additional information requests to BBPLC for both documents and transactional data. BBPLC is responding to these requests on a rolling basis.
 
Investigation by the SFO
 
In addition, following the settlements announced in June 2012, the SFO announced in July 2012 that it had decided to investigate the LIBOR matter, in respect of which BBPLC has received and continues to respond to requests for information.
 
Investigations by the European Commission
 
The Commission has also been conducting investigations into the manipulation of, amongst other things, EURIBOR. On 4 December 2013, the Commission announced that it had reached a settlement with the Group and a number of other banks in relation to anti-competitive conduct concerning EURIBOR. The Group had voluntarily reported the EURIBOR conduct to the Commission and cooperated fully with the Commission's investigation. In recognition of this cooperation, the Group was granted full immunity from the financial penalties that would otherwise have applied.
 
ISDAfix Investigation
 
Regulators and law enforcement agencies, including the CFTC and the FCA, are also conducting separate investigations into historical practices with respect to ISDAfix, amongst other benchmarks. BBPLC has received and continues to respond to subpoenas and requests for information from various authorities including the CFTC and the FCA.
 
Foreign Exchange Trading Investigation
 
Various regulatory and enforcement authorities, including the FCA, the CFTC, the DOJ, the SEC, the New York State Department of Financial Services and the Hong Kong Monetary Authority are investigating foreign exchange trading, including possible attempts to manipulate certain benchmark currency exchange rates or engage in other activities that would benefit their trading positions. Certain of these investigations involve multiple market participants in various countries. BBPLC has received enquiries from certain of these authorities related to their particular investigations, and from other regulators interested in foreign exchange issues. The Group is reviewing its foreign exchange trading covering a several year period at least through October 2013 and is cooperating with the relevant authorities in their investigations.
 
For a discussion of litigation arising in connection with these investigations see "LIBOR and other Benchmarks Civil Actions" and "Civil Actions in Respect of Foreign Exchange Trading" below.
 
Claimed Amounts/Financial Impact
 
It is not currently practicable to provide an estimate of the financial impact of the matters in this section or what effect, if any, that these matters might have upon operating results, cash flows or the Group's financial position in any particular period. Amongst other things, a breach of any of the NPA provisions could lead to prosecutions in relation to BBPLC's benchmark interest rate submissions and could have significant consequences for BBPLC's current and future business operations in the US.
 
LIBOR and other Benchmarks Civil Actions
 
A number of individuals and corporates in a range of jurisdictions have threatened or brought civil actions against the Group and other banks in relation to manipulation of LIBOR and/or other benchmark rates. The lawsuits seek an unspecified amount of damages with the exception of five lawsuits, in which the plaintiffs are seeking a combined total in excess of $1.25bn in actual damages against all defendants, including BBPLC, plus punitive damages. While several of such cases have been dismissed, others remain pending and their ultimate impact is unclear.
 
Background Information
 
Following the settlements of the investigations referred to above in "Investigations into LIBOR, ISDAfix, other benchmarks and foreign exchange rates", a number of individuals and corporates in a range of jurisdictions have threatened or brought civil actions against the Group in relation to LIBOR and/or other benchmarks.
 
The majority of the USD LIBOR cases, which have been filed in various US jurisdictions, have been consolidated for pre-trial purposes before a single Judge in the SDNY Court (MDL Court).
 
The complaints are substantially similar and allege, amongst other things, that BBPLC and the other banks individually and collectively violated provisions of the US Sherman Antitrust Act, the CEA, the US Racketeer Influenced and Corrupt Organizations Act (RICO) and various state laws by manipulating USD LIBOR rates.
 
The lawsuits seek unspecified damages with the exception of five lawsuits, in which the plaintiffs are seeking a combined total in excess of $1.25bn in actual damages against all defendants, including BBPLC, plus punitive damages. Some of the lawsuits also seek trebling of damages under the US Sherman Antitrust Act and RICO.
 
The proposed class actions purport to be brought on behalf of (amongst others) plaintiffs that (i) engaged in USD LIBOR-linked over-the-counter transactions (OTC Class); (ii) purchased USD LIBOR-linked financial instruments on an exchange (Exchange-Based Class); (iii) purchased USD LIBOR-linked debt securities (Debt Securities Class); (iv) purchased adjustable-rate mortgages linked to USD LIBOR; or (v) issued loans linked to USD LIBOR.
 
USD LIBOR Cases in MDL Court
 
In March 2013, the MDL Court issued a decision dismissing the majority of claims against BBPLC and other panel bank defendants in three lead proposed class actions (Lead Class Actions) and three lead individual actions (Lead Individual Actions).
 
Following the decision, the plaintiffs in the Lead Class Actions sought permission to either file an amended complaint or appeal an aspect of the March 2013 decision. In August 2013 and June 2014, the MDL Court denied the majority of the motions presented in the Lead Class Actions. As a result, the:
 
 
·
Debt Securities Class has been dismissed entirely;
 
 
·
the claims of the Exchange-Based Class have been limited to claims under the CEA; and
 
 
·
the claims of the OTC Class have been limited to claims for unjust enrichment and breach of the implied covenant of good faith and fair dealing.
 
Subsequent to the MDL Court's March 2013 decision, the plaintiffs in the Lead Individual Actions filed a new action in California state court (since moved to the MDL Court) based on the same allegations as those initially alleged in the proposed class action cases discussed above. The Debt Securities Class attempted to appeal the dismissal of their action to the U.S. Court of Appeals for the Second Circuit (Second Circuit), but the Second Circuit dismissed the appeal as untimely on the grounds that the MDL Court had not reached a decision resolving all of the claims in the consolidated actions. The U.S. Supreme Court has agreed to review the dismissal of the Debt Securities Class' appeal. Depending on the decision of the U.S. Supreme Court and further proceedings in the MDL Court, various plaintiffs may attempt to bring appeals of some or all of the MDL Court's decisions in the future.
 
Additionally, a number of other actions before the MDL Court remain stayed, pending further proceedings in the Lead Class Actions.
 
Until there are further decisions, the ultimate impact of the MDL Court's decisions will be unclear, although it is possible that the decisions will be interpreted by courts to affect other litigation, including the actions described below, some of which concern different benchmark interest rates.
 
Additional USD LIBOR Case in the SDNY
 
An additional individual action was commenced on 13 February 2013 in the SDNY against BBPLC and other panel bank defendants. The plaintiff alleged that the panel bank defendants conspired to increase USD LIBOR, which caused the value of bonds pledged as collateral for a loan to decrease, ultimately resulting in the sale of the bonds at a low point in the market. This action is not assigned to the MDL Court; it is proceeding on a different schedule before a different judge in the SDNY. The panel bank defendants have moved to dismiss the action, and their motion is now fully submitted to the court.
 
Securities Fraud Case in the SDNY
 
BPLC, BBPLC and BCI have also been named as defendants along with four former officers and directors of BBPLC in a proposed securities class action pending in the SDNY in connection with BBPLC's role as a contributor panel bank to LIBOR. The complaint asserts claims under the US Securities Exchange Act of 1934, principally alleging that BBPLC's Annual Reports for the years 2006 to 2011 contained misstatements and omissions concerning (amongst other things) BBPLC's compliance with its operational risk management processes and certain laws and regulations. The complaint also alleges that BBPLC's daily USD LIBOR submissions constituted false statements in violation of US securities law. The complaint was brought on behalf of a proposed class consisting of all persons or entities that purchased BPLC-sponsored American Depositary Receipts on a US securities exchange between 10 July 2007 and 27 June 2012. In May 2013, the district court granted BBPLC's motion to dismiss the complaint in its entirety. The plaintiffs appealed, and, in April 2014, the Second Circuit issued an order upholding the dismissal of certain of the plaintiffs' claims, but reversing the dismissal of the plaintiffs' claims that BBPLC's daily USD LIBOR submissions constituted false statements in violation of US securities law. The action will be remanded back to the district court for further proceedings.
 
Complaint in the US District Court for the Central District of California
 
In July 2012, a purported class action complaint in the US District Court for the Central District of California was amended to include allegations related to USD LIBOR and name BBPLC as a defendant. The amended complaint was filed on behalf of a purported class that includes holders of adjustable rate mortgages linked to USD LIBOR. BBPLC moved to dismiss all of the plaintiffs' claims and, in October 2012, the district court granted the motion to dismiss. The plaintiffs appealed the dismissal to the US Court of Appeals for the Ninth Circuit (Ninth Circuit), and, in March 2014, the Ninth Circuit issued an order reversing dismissal of the proposed class action, which reinstated most of the plaintiffs' claims. The action has now been remanded back to the district court for further proceedings, and one of the plaintiffs has indicated she will file a fourth amended complaint in August 2014.
 
Japanese Yen LIBOR Case in SDNY
 
An additional class action was commenced in April 2012 in the SDNY against BBPLC and other Japanese Yen LIBOR panel banks by a plaintiff involved in exchange-traded derivatives. The complaint also names members of the Japanese Bankers Association's Euroyen Tokyo Interbank Offered Rate (Euroyen TIBOR) panel, of which BBPLC is not a member. The complaint alleges, amongst other things, manipulation of the Euroyen TIBOR and Yen LIBOR rates and breaches of the CEA and US Sherman Antitrust Act between 2006 and 2010. The defendants filed a motion to dismiss and, on 28 March 2014, the Court issued a decision granting in part and denying in part that motion. Specifically, the court dismissed the plaintiff's antitrust claims in full, but sustained the plaintiff's CEA claims. The defendants have moved for reconsideration of the decision concerning the CEA claims, and the plaintiff has moved for leave to file a third amended complaint adding additional claims, including a RICO claim.
 
EURIBOR Cases
 
On 12 February 2013, a Euribor-related class action was filed against BPLC, BBPLC and BCI and other Euribor panel banks. The plaintiffs assert antitrust, CEA, RICO, and unjust enrichment claims. In particular, BBPLC is alleged to have conspired with other Euribor panel banks to manipulate Euribor. The lawsuit is brought on behalf of purchasers and sellers of NYSE LIFFE Euribor futures contracts, purchasers of Euro currency-related futures contracts and purchasers of other derivative contracts (such as interest rate swaps and forward rate agreements that are linked to Euribor) during the period 1 June 2005 through 31 March 2011.
 
In addition, BBPLC has been granted conditional leniency from the DOJ-AD in connection with potential US antitrust law violations with respect to financial instruments that reference EURIBOR. As a result of that grant of conditional leniency, BBPLC is eligible for (i) a limit on liability to actual rather than treble damages if damages were to be awarded in any civil antitrust action under US antitrust law based on conduct covered by the conditional leniency and (ii) relief from potential joint-and-several liability in connection with such civil antitrust action, subject to BBPLC satisfying the DOJ-AD and the court presiding over the civil litigation of fulfilment of its cooperation obligations.
 
Non-US Cases
 
In addition to US actions, legal proceedings have been brought or threatened against the Group in connection with alleged manipulation of LIBOR and EURIBOR, in a number of jurisdictions. The first such proceeding in England and Wales was brought by Graiseley Properties Limited for trial in the High Court of Justice and was settled on confidential terms in April 2014. The number of such proceedings in non US jurisdictions, the benchmarks to which they relate, and the jurisdictions in which they may be brought are anticipated to increase over time.
 
Claimed Amounts/Financial Impact
 
It is not currently practicable to provide an estimate of the financial impact of the actions described on the Group or what effect, if any, that they might have upon the Group's operating results, cash flows or financial position in any particular period.
 
Civil Actions in Respect of Foreign Exchange Trading
 
Since November 2013, a number of civil actions have been filed in the SDNY on behalf of proposed classes of plaintiffs alleging manipulation of foreign exchange markets under the US Sherman Antitrust Act and New York state law and naming several international banks as defendants, including BBPLC.
 
Recent Developments
 
The SDNY Court, before whom all the cases are pending, has combined all actions alleging a class of U.S. persons in a single consolidated action and has directed that this consolidated action be coordinated for pretrial and other proceedings with two cases making similar allegations on behalf of a Norwegian class and a Korean class, respectively. The defendants, including BBPLC, have moved to dismiss the complaints.
 
Claimed Amounts/Financial Impact
 
It is not currently practicable to provide an estimate of the financial impact of the actions described on the Group or what effect, if any, that they might have upon the Group's operating results, cash flows or financial position in any particular period.
 
Civil Actions in Respect of the Gold Fix
 
Since March 2014, a number of civil complaints have been filed in US federal courts, each on behalf of a proposed class of plaintiffs, alleging that Barclays entities and other members of The London Gold Market Fixing Ltd. manipulated the prices of gold and gold derivative contracts in violation of the CEA, the US Sherman Antitrust Act, and state antitrust and consumer protection laws.
 
Claimed Amounts/Financial Impact
 
It is not currently practicable to provide an estimate of the financial impact of the potential exposure of the actions described or what effect, if any, that they might have upon operating results, cash flows or the Group's financial position in any particular period.
 
US Residential Mortgage Related Activity and Litigation
 
The Group's activities within the US residential mortgage sector during the period from 2005 through 2008 included:
 
 
·
Sponsoring and underwriting of approximately $39bn of private-label securitisations;
 
 
·
Economic underwriting exposure of approximately $34bn for other private-label securitisations;
 
 
·
Sales of approximately $0.2bn of loans to government sponsored enterprises (GSEs); and
 
 
·
Sales of approximately $3bn of loans to others.
 
In addition, during this time period, approximately $19.4bn of loans (net of approximately $500m of loans sold during this period and subsequently repurchased) were also originated and sold to third parties by mortgage originator affiliates of an entity that the Group acquired in 2007 (Acquired Subsidiary).
 
In connection with its loan sales and certain private-label securitisations the Group provided certain loan level representations and warranties (R&Ws), which if breached may require the Group to repurchase the related loans. On 30 June 2014, the Group had unresolved repurchase requests relating to loans with a principal balance of approximately $2.2bn at the time they were sold, and civil actions have been commenced by various parties alleging that the Group must repurchase such loans. In addition, the Group is party to a number of lawsuits filed by purchasers of residential mortgage-backed securities (RMBS) asserting statutory and/or common law claims and has entered into tolling agreements with certain institutional purchasers of RMBS concerning their potential claims. The current outstanding face amount of RMBS related to such pending and threatened claims against the Group as of 30 June 2014 was approximately $1.5bn.
 
RMBS Repurchase Requests
 
Background
 
In connection with the Group's loan sales and sponsored private-label securitisations, the Group provided certain R&Ws generally relating to the underlying mortgages, the property, mortgage documentation and/or compliance with law. The Group was the sole provider of R&Ws with respect to:
 
 
·
Approximately $5bn of Group sponsored securitisations;
 
 
·
Approximately $0.2bn of sales of loans to GSEs; and
 
·      
Approximately $3bn of loans sold to others.
 
 
·
In addition, the Acquired Subsidiary provided R&Ws on all of the $19.4bn of loans it sold to third parties.
 
Other than approximately $1bn of loans sold to others for which R&Ws expired prior to 2012, there are no stated expiration provisions applicable to the R&Ws made by the Group or the Acquired Subsidiary. The Group's R&Ws with respect to the $3bn of loans sold to others are related to loans that were generally sold at significant discounts and contained more limited R&Ws than loans sold to GSEs, the loans sold by the Acquired Subsidiary or the Group sponsored securitisations.
 
R&Ws on the remaining Group sponsored securitisations were primarily provided by third party originators directly to the securitisation trusts with a Group subsidiary, as depositor for the securitisation, providing more limited R&Ws.
 
Under certain circumstances, the Group and/or the Acquired Subsidiary may be required to repurchase the related loans or make other payments related to such loans if the R&Ws are breached.
 
The unresolved repurchase requests received on or before 30 June 2014 associated with all R&Ws made by the Group or the Acquired Subsidiary on loans sold to GSEs and others and private-label activities had an original unpaid principal balance of approximately $2.2bn at the time of such sale.
 
Substantially all of the unresolved repurchase requests discussed above relate to civil actions that have been commenced by the trustees for certain RMBS securitisations in which the trustees allege that the Group and/or the Acquired Subsidiary must repurchase loans that violated the operative R&Ws. The trustees in these actions have also alleged that the operative R&Ws may have been violated with respect to a greater (but unspecified) amount of loans than the amount of loans previously stated in specific repurchase requests made by such trustees.
 
Claimed Amounts/Financial Impact
 
It is not currently practicable to provide an estimate of the financial impact of the actions described on the Group or what effect, if any, that they might have upon the Group's operating results, cash flows or financial position in any particular period.
 
RMBS Securities Claims
 
Background
 
As a result of some of the RMBS activities described above, the Group is party to a number of lawsuits filed by purchasers of RMBS. In April 2014, the Group settled RMBS related lawsuits brought by the US Federal Housing Finance Agency (FHFA). However, the Group remains party to a number of similar lawsuits filed by purchasers of RMBS sponsored and/or underwritten by the Group between 2005 and 2008. As a general matter, these lawsuits allege, amongst other things, that the RMBS offering materials allegedly relied on by such purchasers contained materially false and misleading statements and/or omissions and generally demand rescission and recovery of the consideration paid for the RMBS and recovery of monetary losses arising out of their ownership. The Group has also entered into tolling agreements with certain institutional purchasers of RMBS that have threatened to assert claims of various types against the Group in connection with the sale of RMBS sponsored and/or underwritten by the Group.
 
In addition, the Group has received inquiries, including subpoenas, from various regulatory and governmental authorities, including the DOJ, regarding its mortgage-related activities, and is cooperating with such inquiries.
 
The original face amount of RMBS related to the pending and threatened civil actions against the Group total approximately $4.1bn, of which approximately $1.5bn was outstanding as at 30 June 2014.
 
Cumulative realised losses reported on these RMBS as at 30 June 2014 were approximately $0.9bn.
 
Recent Developments
 
On 24 April 2014, the Group settled RMBS litigation brought by the FHFA against BBPLC and certain of its affiliates for $280m. These litigations related to allegedly materially false and misleading statements and/or omissions that were allegedly reflected in offering materials for RMBS purchased by the Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac).
 
Claimed Amounts/Financial Impact
 
If the Group were to lose the pending and threatened actions the Group believes it could incur a loss of up to the outstanding amount of the RMBS at the time of judgement (taking into account further principal payments after 30 June 2014), plus any cumulative losses on the RMBS at such time and any interest, fees and costs, less the market value of the RMBS at such time and less any provisions taken to date.
 
The Group has estimated the total market value of these RMBS as at 30 June 2014 to be approximately $1bn. The Group may be entitled to indemnification for a portion of such losses.
 
Lehman Brothers
 
Since September 2009, the Group has been engaged in litigation with various entities that have sought to challenge certain aspects of the transaction pursuant to which BCI and other companies in the Group acquired most of the assets of Lehman Brothers Inc. (LBI) in September 2008, as well as the court order (Order) approving the sale (Sale). The Order was upheld by the courts and is no longer being challenged. Lower courts have ruled for the Group on certain claims and against the Group on certain claims with respect to its rights over assets it claims from the Sale and an appeal process is currently pending before the Second Circuit. The Second Circuit's ruling could result in additional recoveries or losses for the Group and may be subject to further appeals or proceedings.
 
Background Information
 
In September 2009, motions were filed in the United States Bankruptcy Court for the SDNY (Bankruptcy Court) by Lehman Brothers Holdings Inc. (LBHI), the SIPA Trustee for Lehman Brothers Inc. (Trustee) and the Official Committee of Unsecured Creditors of Lehman Brothers Holdings Inc. (Committee). All three motions challenged certain aspects of the Sale, as well as the Order. The claimants sought an order voiding the transfer of certain assets to BCI, requiring BCI to return to the LBI estate any excess value BCI allegedly received, and declaring that BCI is not entitled to certain assets that it claims pursuant to the Sale documents and the Order (Rule 60 Claims).
 
In January 2010, BCI filed its response to the motions and also filed a motion seeking delivery of certain assets that LBHI and LBI had failed to deliver as required by the Sale documents and the Order (together with the Trustee's competing claims to those assets, Contract Claims).
 
In 2011, the Bankruptcy Court rejected the Rule 60 Claims and decided some of the Contract Claims in the Trustee's favour and some in favour of the Group. The Group and the Trustee each appealed the Bankruptcy Court's adverse rulings on the Contract Claims to the SDNY Court. LBHI and the Committee did not appeal the Bankruptcy Court's ruling on the Rule 60 Claims.
 
The SDNY Court issued an opinion in June 2012, reversing one of the Bankruptcy Court's rulings on the Contract Claims that had been adverse to the Group and affirming the Bankruptcy Court's other rulings on the Contract Claims. In July 2012, the SDNY Court issued an agreed judgement implementing the rulings in the opinion (Judgement). Under the Judgement, the Group is entitled to receive:
 
 
·
$1.1bn (£0.6bn) from the Trustee in respect of "clearance box" assets (Clearance Box Assets); and
 
 
·
property held at various institutions in respect of the exchange traded derivatives accounts transferred to BCI in the Sale (ETD Margin).
 
Recent Developments
 
The Trustee has appealed the SDNY Court's adverse rulings to the Second Circuit. The current judgement is stayed pending resolution of the Trustee's appeal.
 
It appears that the Trustee may dispute the Group's entitlement to certain of the ETD Margin even in the event the Group prevails in the pending Second Circuit appeal. Moreover, there is uncertainty regarding recoverability of a portion of the ETD Margin not yet delivered to the Group that is held by an institution outside the US. Thus, the Group cannot reliably estimate how much of the ETD Margin the Group is ultimately likely to receive.
 
Claimed Amounts/Financial Impact
 
Approximately $4.3bn (£2.5bn) of the assets to which the Group is entitled as part of the Sale had not been received by 30 June 2014. Approximately $2.7bn (£1.6bn) has been recognised as a receivable on the balance sheet in respect of these assets. The unrecognised amount, approximately $1.6bn (£1.0bn) as of 30 June 2014, effectively represents a provision against the uncertainty inherent in the litigation and potential post-appeal proceedings and issues relating to the recovery of certain assets held by an institution outside the US.
 
If the SDNY Court's rulings are unaffected by future proceedings, but conservatively assuming the Group does not receive any ETD Margin that the Group believes may be subject to a post-appeal challenge by the Trustee or to uncertainty regarding recoverability, the Group will receive assets in excess of the $2.7bn (£1.6bn) recognised as a receivable on the Group's balance sheet as at 30 June 2014. The Group would then recognise a gain equal to such excess.
 
In a worst case scenario in which the Second Circuit reverses the SDNY Court's rulings and determines that the Group is not entitled to any of the Clearance Box Assets or ETD Margin, the Group estimates that, after taking into account its effective provision, its total losses would be approximately $6bn (£3.5bn). Approximately $3.4bn (£2.0bn) of that loss would relate to Clearance Box Assets and ETD Margin previously received by the Group and prejudgement and post-judgement interest on such Clearance Box Assets and ETD Margin that would have to be returned or paid to the Trustee.
 
In this context, the Group is satisfied with the valuation of the asset recognised on its balance sheet and the resulting level of effective provision.
 
Citibank Indemnity Action
 
On 11 March 2014, Citibank N.A. (Citi) and BBPLC settled an action brought by Citi under an indemnity provided by BBPLC for losses incurred by Citi between 17 and 19 September 2008 in performing foreign exchange settlement services for LBI, as LBI's designated settlement member with CLS Bank International.
 
American Depositary Shares
 
BPLC, BBPLC and various current and former members of BPLC's Board of Directors have been named as defendants in five proposed securities class actions consolidated in the SDNY Court, alleging misstatements and omissions in registration statements for certain American Depositary Shares offered by BBPLC.
 
Background Information
 
The consolidated amended complaint, filed in February 2010, asserted claims under the Securities Act of 1933, alleging that registration statements relating to American Depositary Shares representing preferred stock, series 2, 3, 4 and 5 (Preferred Stock ADS) offered by BBPLC at various times between 2006 and 2008 contained misstatements and omissions concerning (amongst other things) BBPLC's portfolio of mortgage-related (including US subprime-related) securities, BBPLC's exposure to mortgage and credit market risk, and BBPLC's financial condition.
 
Recent Developments
 
The claims concerning the series 2, 3 and 4 offerings have been dismissed on the basis that they were time barred. Although the SDNY Court also dismissed the claims concerning the series 5 offering, the Second Circuit reversed the dismissal and ruled that the plaintiffs should have been permitted to file a second amended complaint in relation to the series 5 offering claims.
 
In June 2014, the SDNY Court denied defendants' motion to dismiss with respect to the claims in the amended complaint concerning the series 5 offering.
 
Claimed Amounts/Financial Impact
 
It is not currently practicable to provide an estimate of the financial impact of the actions described on the Group or what effect, if any, that they might have upon the Group's operating results, cash flows or financial position in any particular period.
 
Devonshire Trust
 
On 19 June 2014 BBPLC and Devonshire reached an agreement to settle proceedings brought before the Ontario Superior Court in connection with BBPLC's early terminations of two credit default swaps under an ISDA Master Agreement with the Devonshire Trust (Devonshire). The Court previously determined that Devonshire was entitled to receive back from BBPLC cash collateral of approximately C$533m together with accrued interest. The implementation of the settlement is subject to certain conditions, including noteholder and Court approval. BBPLC had previously recognized an impairment provision in relation to these swaps, and no incremental profit or loss for Barclays is expected as a result of this settlement.
 
BDC Finance L.L.C.
 
BDC Finance L.L.C. (BDC) filed a complaint against BBPLC in the NY Supreme Court alleging breach of a portfolio of total return swaps governed by an ISDA Master Agreement (collectively, the Agreement). A ruling was made against BBPLC, but an appeal is pending before the New York State Court of Appeals. Parties related to BDC have also sued BBPLC and BCI in Connecticut state court in connection with BBPLC's conduct relating to the Agreement.
 
Background Information
 
In October 2008, BDC filed a complaint in the NY Supreme Court alleging that BBPLC breached the Agreement when it failed to transfer approximately $40m of alleged excess collateral in response to BDC's October 2008 demand (Demand).
 
BDC asserts that under the Agreement BBPLC was not entitled to dispute the Demand before transferring the alleged excess collateral and that even if the Agreement entitled BBPLC to dispute the Demand before making the transfer, BBPLC failed to dispute the Demand.
 
BDC demands damages totalling $298m plus attorneys' fees, expenses, and prejudgement interest.
 
In August 2012, the NY Supreme Court granted partial summary judgement for BBPLC, ruling that BBPLC was entitled to dispute the Demand before transferring the alleged excess collateral, but determining that a trial was required to determine whether BBPLC actually did so. The parties cross-appealed to the Appellate Division of the NY Supreme Court (NY Appellate Division).
 
In September 2011, BDC's investment advisor, BDCM Fund Adviser, L.L.C. and its parent company, Black Diamond Capital Holdings, L.L.C. also sued BBPLC and BCI in Connecticut state court for unspecified damages allegedly resulting from BBPLC's conduct relating to the Agreement, asserting claims for violation of the Connecticut Unfair Trade Practices Act and tortious interference with business and prospective business relations. The parties have agreed to a stay of that case.
 
In October 2013, the NY Appellate Division reversed the NY Supreme Court's grant of partial summary judgement in favour of BBPLC, and instead granted BDC's motion for partial summary judgement, holding that BBPLC breached the Agreement. The NY Appellate Division did not rule on the amount of BDC's damages, which has not yet been determined by the NY Supreme Court.
 
Recent Developments
 
In January 2014 the NY Appellate Division granted BBPLC leave to appeal its October 2013 decision to the NY Court of Appeals and the appeal is pending.
 
Claimed Amounts/Financial Impact
 
BDC has made claims against the Group totalling $298m plus attorneys' fees, expenses, and prejudgement interest. This amount does not necessarily reflect the Group's potential financial exposure if a ruling were to be made against it.
 
Credit Default Swap (CDS) Antitrust Investigations
 
The Commission and the DOJ-AD commenced investigations in the CDS market, in 2011 and 2009, respectively. In July 2013 the Commission addressed a Statement of Objections to BBPLC, 12 other banks, Markit Ltd. and ISDA. The case relates to concerns that certain banks took collective action to delay and prevent the emergence of exchange traded credit derivative products.
 
If the Commission does reach a decision in this matter it has indicated that it intends to impose sanctions. The Commission's sanctions can include fines. The DOJ-AD's investigation is a civil investigation and relates to similar issues. Barclays is also contesting a proposed, consolidated class action alleging similar issues that has been filed in the US.
 
Claimed Amounts/Financial Impact
 
It is not currently practicable to provide an estimate of the financial impact of the actions described on the Group or what effect, if any, that they might have upon the Group's operating results, cash flows or financial position in any particular period.
 
Interchange Investigations
 
The Office of Fair Trading, as well as other competition authorities elsewhere in Europe, continues to investigate Visa and MasterCard credit and debit interchange rates.
 
BBPLC receives interchange fees, as a card issuer, from providers of card acquiring services to merchants. The key risks arising from the investigations comprise the potential for fines imposed by competition authorities, litigation and proposals for new legislation.
 
Claimed Amounts/Financial Impact
 
It is not currently practicable to provide an estimate of the financial impact of the matters in this section or what effect, if any, that these matters might have upon operating results, cash flows or the Group's financial position in any particular period.
 
Interest Rate Hedging Products Redress
 
See Note 11. Provisions for a description of the FSA's review and redress exercise in respect of interest rate hedging products and the provisions recognized by the Group in connection with it.
 
General
 
The Group is engaged in various other legal, competition and regulatory matters both in the UK and a number of overseas jurisdictions. It is subject to legal proceedings by and against the Group which arise in the ordinary course of business from time to time, including (but not limited to) disputes in relation to contracts, securities, debt collection, consumer credit, fraud, trusts, client assets, competition, data protection, money laundering, employment, environmental and other statutory and common law issues.
 
The Group is also subject to enquiries and examinations, requests for information, audits, investigations and legal and other proceedings by regulators, governmental and other public bodies in connection with (but not limited to) consumer protection measures, compliance with legislation and regulation, wholesale trading activity and other areas of banking and business activities in which the Group is or has been engaged.
 
At the present time, the Group does not expect the ultimate resolution of any of these other matters to have a material adverse effect on its financial position. However, in light of the uncertainties involved in such matters and the matters specifically described in this note, there can be no assurance that the outcome of a particular matter or matters will not be material to the Group's results of operations or cash flow for a particular period, depending on, amongst other things, the amount of the loss resulting from the matter(s) and the amount of income otherwise reported for the reporting period.
 
The Group has not disclosed an estimate of the potential financial effect on the Group of contingent liabilities where it is not currently practicable to do so or, in cases where it is practicable, where disclosure could prejudice the conduct of matters. Provisions have been recognised for those cases where the Group is able to reliably estimate probable losses.
 
 
18. Related Party Transactions
 
Related party transactions in the period ended 30 June 2014 were similar in nature to those disclosed in the Group's 2013 Annual Report. No related party transactions that have taken place in 2014 have materially affected the financial position or the performance of the Group during this period and there were no changes in the related parties transactions described in the 2013 Annual Report that could have a material effect on the financial position or performance of the Group in the current financial year.
 
 

 
19. Segmental Reporting
 
Analysis of results by business
Personal and Corporate Banking
Barclaycard
Africa Banking
Investment Bank
Half Year Ended 30 June 2014
£m
£m
£m
£m
Total income net of insurance claims
4,361
2,124
1,773
4,257
Credit impairment charges and other provisions
(230)
(537)
(196)
26
Net operating income
4,131
1,587
1,577
4,283
Operating expenses
(2,554)
(822)
(1,082)
(2,943)
Costs to achieve Transform
(115)
(36)
(17)
(282)
Other net income1
6
35
6
-
Profit before tax
1,468
764
484
1,058
         
 
£bn
£bn
£bn
£bn
Total assets
268.1
36.2
52.4
447.8
         
Analysis of results by business
Head Office
Barclays Core
Barclays Non-Core
Barclays Group
Half Year Ended 30 June 2014
£m
£m
£m
£m
Total income net of insurance claims
159
12,674
658
13,332
Credit impairment charges and other provisions
-
(937)
(149)
(1,086)
Net operating income
159
11,737
509
12,246
Operating expenses
(91)
(7,491)
(893)
(8,383)
Costs to achieve Transform
(2)
(453)
(41)
(494)
Other net (expense)/income1
-
47
(66)
(20)
Profit/(loss) before tax
66
3,840
(491)
3,349
         
 
£bn
£bn
£bn
£bn
Total assets
41.7
846.2
468.6
1,314.9
         

 
Analysis of results by business
Personal and Corporate Banking
Barclaycard
Africa Banking
Investment Bank
Half Year Ended 31 December 2013
£m
£m
£m
£m
Total income net of insurance claims
4,418
2,084
1,984
3,633
Credit impairment charges and other provisions
(322)
(556)
(205)
(16)
Net operating income
4,096
1,528
1,779
3,617
Operating expenses
(2,772)
(934)
(1,263)
(3,215)
Costs to achieve Transform
(292)
(44)
(17)
(74)
Other net income1
4
17
3
-
Profit before tax
1,036
567
502
328
         
 
£bn
£bn
£bn
£bn
Total assets
278.5
34.4
54.9
439.6
         
Analysis of results by business
Head Office
Barclays Core
Barclays Non-Core
Barclays Group
Half Year Ended 31 December 2013
£m
£m
£m
£m
Total income net of insurance claims
146
12,265
818
13,084
Credit impairment charges and other provisions
3
(1,096)
(344)
(1,440)
Net operating income
149
11,169
474
11,644
Operating expenses
(101)
(8,285)
(1,258)
(9,543)
Costs to achieve Transform
(22)
(449)
(120)
(569)
Other net income1
6
30
14
44
Profit/(loss) before tax
32
2,465
(890)
1,576
         
 
£bn
£bn
£bn
£bn
Total assets
25.0
832.4
511.2
1,343.6
 
 
1 Other income/(expense) represents: share of post-tax results of associates and joint ventures; profit or (loss) on disposal of subsidiaries, associates and joint ventures; and gains on acquisitions.
 
Analysis of results by business
Personal and Corporate Banking
Barclaycard
Africa Banking
Investment Bank
Half Year Ended 30 June 2013
£m
£m
£m
£m
Total income net of insurance claims
4,305
2,019
2,055
5,222
Credit impairment charges and other provisions
(299)
(540)
(274)
38
Net operating income
4,006
1,479
1,781
5,260
Operating expenses
(2,754)
(874)
(1,230)
(3,193)
Costs to achieve Transform
(92)
(5)
(9)
(116)
Other net income1
37
16
5
-
Profit before tax
1,197
616
547
1,951
         
 
£bn
£bn
£bn
£bn
Total assets
288.3
34.3
61.2
515.5
         
Analysis of results by business
Head Office
Barclays Core
Barclays Non-Core
Barclays Group
Half Year Ended 30 June 2013
£m
£m
£m
£m
Total income net of insurance claims
(4)
13,597
1,474
15,071
Credit impairment charges and other provisions
-
(1,075)
(556)
(1,631)
Net operating income
(4)
12,522
918
13,440
Operating expenses
(41)
(8,091)
(1,049)
(9,141)
Costs to achieve Transform
-
(223)
(418)
(640)
Other net (expense)/income1
(2)
56
(124)
(68)
(Loss)/profit before tax
(47)
4,264
(673)
3,591
         
 
£bn
£bn
£bn
£bn
Total assets
45.6
944.9
623.0
1,567.9
         

 
Reconciliation of adjusted basis to statutory basis
Barclays Group
Adjusted
Own credit
Provision for PPI redress
Provision for interest rate hedging products
Goodwill Impairment
Barclays Group
Statutory
Half Year Ended 30 June 2014
£m
£m
£m
£m
£m
£m
Total income net of insurance claims
13,332
52
-
-
-
13,384
Credit impairment charges and other provisions
(1,086)
-
-
-
-
(1,086)
Net operating income
12,246
52
-
-
-
12,298
Operating expenses
(8,383)
-
(900)
-
-
(9,283)
Costs to achieve Transform
(494)
-
-
-
-
(494)
Other losses
(20)
-
-
-
-
(20)
Profit/(loss)
3,349
52
(900)
-
-
2,501
             
Half Year Ended 31 December 2013
£m
£m
£m
£m
£m
£m
Total income net of insurance claims
13,084
(306)
-
-
-
12,778
Credit impairment charges and other provisions
(1,440)
-
-
-
-
(1,440)
Net operating income
11,644
(306)
-
-
-
11,338
Operating expenses
(9,543)
-
-
-
(79)
(9,622)
Costs to achieve Transform
(569)
-
-
-
-
(569)
Other income
44
-
-
-
-
44
Profit/(loss)
1,576
(306)
-
-
(79)
1,191
             
Half Year Ended 30 June 2013
£m
£m
£m
£m
£m
£m
Total income net of insurance claims
15,071
86
-
-
-
15,157
Credit impairment charges and other provisions
(1,631)
-
-
-
-
(1,631)
Net operating income
13,440
86
-
-
-
13,526
Operating expenses
(9,141)
-
(1,350)
(650)
-
(11,141)
Costs to achieve Transform
(640)
-
-
-
-
(640)
Other losses
(68)
-
-
-
-
(68)
Profit/(loss)
3,591
86
(1,350)
(650)
-
1,677
 
 
1 Other income/(losses) represents: share of post-tax results of associates and joint ventures; profit or (loss) on disposal of subsidiaries, associates and joint ventures; and gains on acquisitions.
 
 

 
Shareholder Information
 
Results Timetable1
Date
        
Ex-dividend date
6 August 2014
Dividend Record date
8 August 2014
Scrip reference share price set and made available to shareholders
13 August 2014
Cut off time of 4.30 pm (London time) for the receipt of Mandate Forms or Revocation Forms (as applicable)
29 August 2014
Dividend Payment date /first day of dealing in New Shares
19 September 2014
Q3 2014 Interim Management Statement
30 October 2014

 
           
For qualifying US and Canadian resident ADR holders, the second interim dividend of 1p per ordinary share becomes 4p per ADS (representing four shares). The ADR depositary will post the second interim dividend on 19 September 2014 to ADR holders on the record at close of business on 8 August 2014.

 
           
 
Half Year
Half Year
Half Year
    
 
Ended
Ended
Ended
Change
Change
Exchange Rates2
30.06.14
31.12.13
30.06.13
31.12.13
30.06.133
Period end - US$/£
1.71
1.65
1.52
4%
12%
Average - US$/£
1.67
1.58
1.54
5%
8%
3 month average - US$/£
1.68
1.62
1.54
4%
10%
Period end - €/£
1.25
1.20
1.17
4%
7%
Average - €/£
1.22
1.18
1.18
3%
3%
3 month average - €/£
1.23
1.19
1.18
3%
4%
Period end - ZAR/£
18.17
17.37
15.11
5%
20%
Average - ZAR/£
17.82
15.94
14.20
12%
26%
3 month average - ZAR/£
17.76
16.43
14.57
8%
22%
           
Share Price Data
    
30.06.14
31.12.13
30.06.13
Barclays PLC (p)
    
212.80
271.95
278.45
Barclays Africa Group Limited (formerly Absa Group Limited) (ZAR)
    
161.50
132.25
148.50
           
For Further Information Please Contact
          
           
Investor Relations
Media Relations
Charlie Rozes +44 (0) 20 7116 5752
Giles Croot +44 (0) 20 7116 6132
           
More information on Barclays can be found on our website: www.barclays.com
 
Registered Office
 
1 Churchill Place, London, E14 5HP, United Kingdom. Tel: +44 (0) 20 7116 1000. Company number: 48839
 
 
Registrar
 
The Registrar to Barclays, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA United Kingdom.
 
Tel: 0871 384 20554 from the UK or +44 121 415 7004 from overseas.
 
1 Note that these announcement dates are provisional and subject to change. Any changes to the Scrip Dividend Programme dates will be made available at Barclays.com/dividends.
2 The average rates shown above are derived from daily spot rates during the year used to convert foreign currency transactions into Sterling for accounting purposes.
3 The change is the impact to Sterling reported information.
4 Calls cost 8p per minute plus network extras. Lines open 8.30am to 5.30pm UK time, Monday to Friday excluding UK public holidays.
 

 
 
Shareholder Information
 
Listing
 
The principal trading market for Barclays PLC ordinary shares is the London Stock Exchange. Trading on the New York Stock Exchange is in the form of ADSs under the ticker symbol 'BCS'. Each ADS represents four ordinary shares of 25p each and is evidenced by an ADR. The ADR depositary is JP Morgan Chase Bank, whose international telephone number is +1-651-453-2128, domestic telephone number is 1-800-990-1135 and address is JPMorgan Chase Bank, PO Box 64504, St. Paul, MN 55164-0504, USA.
 
Barclays PLC Scrip Dividend Programme
 
Shareholders may have their dividends reinvested in Barclays shares by joining the Barclays PLC Scrip Dividend Programme (the Programme). At the Barclays 2013 Annual General Meeting, shareholders approved the introduction of the Programme to replace the Barclays Dividend Reinvestment Plan. The Programme enables shareholders, if they wish, to receive new fully paid ordinary shares in Barclays PLC instead of a cash dividend, without incurring dealing costs or stamp duty. The Programme was initially offered for the second interim dividend, paid on 13 September 2013, and for any dividends paid thereafter (subject to the Directors making the Programme available for each dividend).

For further details, including the full Terms and Conditions and information about how to join or leave the Programme, please visit Barclays.com/dividends or alternatively contact: The Registrar to Barclays, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA United Kingdom, or by telephoning 0871 384 20551 from the UK or +44 121 415 7004 from overseas.

Global Systemically Important Institutions
 
Barclays is required by the PRA following an EBA request to publicly disclose the Global Systemically Important Institutions template for the reporting period 31 December 2013. This will be available at: www.barclays.com/barclays-investor-relations/investor-news.html on 31 July 2014.

 
1 Calls cost 8p per minute plus network extras. Lines open 8.30am to 5.30pm UK time, Monday to Friday excluding UK public holidays.