Interim Management Statement

Barclays PLC

Interim Management Statement

30 September 2013

Table of Contents

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 entities consolidated under IFRS 10 Consolidated Financial Statements. Unless otherwise stated, the income statement analysis compares the nine months to 30 September 2013 to the corresponding nine months of 2012 and balance sheet comparatives relate to 30 June 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; and '€m' and '€bn' represent millions and thousands of millions of Euros respectively.

The comparatives have been restated to reflect the implementation of IFRS 10 Consolidated Financial Statements and IAS 19 Employee Benefits (Revised 2011), the reallocation of elements of the Head Office results to businesses and portfolio restatements between businesses, as detailed in our announcement on 16 April 2013.

Adjusted profit before tax and adjusted performance metrics have been presented to provide a more consistent basis for comparing business performance between periods. Adjusting items are considered to be significant and not representative of the underlying business performance. Items excluded from the adjusted measures are: the impact of own credit; gains on debt buy-backs; disposal of the investment in BlackRock, Inc.; 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); goodwill impairments; and losses on acquisitions and disposals. The regulatory penalties relating to the industry-wide investigation into the setting of interbank offered rates were not excluded from adjusted measures.

Relevant terms that are used in this document but are not defined under applicable regulatory guidance or International Financial Reporting Standards (IFRS) are explained in the Results glossary that can be accessed at www.Barclays.com/results

In accordance with Barclays' policy to provide meaningful disclosures that help investors and other stakeholders understand the financial position, performance and changes in the financial position of the Group, and having regard to the British Bankers' Association Disclosure Code and the Enhanced Disclosure Task Force recommendations, the information provided in this report goes beyond minimum requirements. Barclays continues to develop its financial reporting considering best practice and welcomes feedback from investors, regulators and other stakeholders on the disclosures that they would find most useful.

The information in this announcement, which was approved by the Board of Directors on 29 October 2013 does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2012 (subsequently restated on 6 September 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 and which did not make any statements under Section 498 of the Companies Act 2006, have been delivered to the Registrar of Companies in accordance with Section 441 of the Companies Act 2006.

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, original and revised commitments and targets in connection with the Transform Programme, deleveraging actions, estimates of capital expenditures and plans and objectives for future operations and other statements that are not historical fact. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. 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 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 domestic, 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 U.S. Securities and Exchange Commission (the SEC) including in our Annual Report on Form 20-F for the fiscal year ended 31 December 2012 and in our current report on Form 6K dated 16 September 2013, both of 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

"As we report third quarter performance for 2013, I feel positive about our business for three important reasons.

The first is that these results demonstrate the underlying strength of the Group, and the benefits of diversity, shown in the good progress made by several of our businesses in the quarter and year to date. I am particularly pleased with the performance of UK Retail and Business Banking, Barclaycard, Corporate Banking, and the Equities and Investment Banking units in the period. All of our businesses are well positioned to take advantage of improvements in the global macro environment, as we manage the Group through a slow and gradual economic recovery.

While the resilience of our performance is welcome, I am not complacent, and my Executive team know we must push harder in the final quarter and into 2014.

The second is that execution of the plan to meet the PRA leverage expectation of 3% by June 2014 is on track. In addition, we continue to reassess the balance sheet for further leverage reduction opportunities consistent with preserving our strong franchises, supporting lending to the UK economy, and meeting the Transform programme targets.

The third is clear evidence of growing momentum in the delivery of Transform, including the significant and early reduction of risk-weighted assets in our 'Exit Quadrant' portfolio, and in cost control where our 'cost to achieve' investments this year will generate significant benefits as soon as 2014.

Taken together, these represent good cause to feel confident about Barclays' prospects."

 Antony Jenkins, Chief Executive

Performance Highlights

1 The comparatives in this document have been restated to reflect the implementation of IFRS 10 Consolidated Financial Statements and IAS 19 Employee Benefits (Revised 2011), the reallocation of elements of Head Office results to businesses and portfolio restatements between businesses, as detailed in our announcement on 16 April 2013, accessible at http://group.barclays.com/about-barclays/investor-relations/investor-news.

2 Attributable profit includes profit after tax and non-controlling interests.

3 Proforma post-rights issue capital metrics are prepared on the basis that new ordinary shares were issued and the cash received on 4 October 2013. For the purpose of calculating risk weighted assets, the information presented assumes proceeds of the Rights Issue are held at a 0% risk weight.

Performance Highlights

Group Performance Review

Income Statement

- Adjusted profit before tax was down 20% to £4,976m largely driven by costs to achieve Transform of £741m and a reduction in Investment Bank FICC income, including a £317m decrease in income from Exit Quadrant Assets, as disposals accelerated throughout 2013

- Statutory profit before tax improved to £2,851m (2012: £962m), reflecting a reduced own credit charge of £125m (2012: £4,019m)

- Adjusted return on average shareholders' equity decreased to 7.1% (2012: 9.7%) as a result of decrease in profits. Statutory return on average shareholders' equity improved to 3.1% (2012: negative 0.1%) 

- Adjusted income decreased 4% to £21,516m, reflecting a reduction of £657m in the Head Office and £597m in the Investment Bank

- Investment Bank income was down 7% to £8,584m driven by a decrease in FICC income, which included significantly reduced contributions from Exit Quadrant Assets. This was partially offset by increases in Equities and Prime Services and Investment Banking. Income decreased 22% on Q3 12 to £2,111m as lower activity in FICC was partially offset by improvements in Equities and Prime Services, and Investment Banking, due to commission gains and increased client deal activity

- Total net interest income decreased by £310m to £8,493m, with lower net interest income in Head Office and the Investment Bank offset by increased net interest income in the rest of the Group. Customer net interest income for RBB, Barclaycard, Corporate Banking and Wealth and Investment Management increased to £7,766m (2012: £7,326m) driven by growth in customer assets, offset by a decline in the net interest margin of 8bps to 177bps, largely due to the impact of reduced contributions from Group structural hedging activities, which decreased by £89m to £876m

- Credit impairment charges were down 6% to £2,353m, principally reflecting improvements in Corporate Banking, mainly due to lower charges in Europe, and Africa RBB, in part due to foreign currency movements. This was partially offset by increases in the other businesses in part due to the non-recurrence of impairment releases in 2012 in UKRBB and Barclaycard and deterioration in European mortgage recovery performance. The overall improvement in impairment when coupled with a 3% fall in loans and advances balances resulted in a lower annualised loan loss rate of 64 bps (2012: 66bps)

- Adjusted operating expenses increased by £271m to £14,144m, driven by costs to achieve Transform of £741m, partially offset by the non-recurrence of a £290m penalty relating to the setting of inter-bank offered rates in H1 12 and reduced performance accruals

- Group adjusted cost to income ratio was 66% (2012: 62%) with the increase attributable to costs to achieve Transform. The Investment Bank cost: income ratio increased to 65% (2012: 63%) and the compensation: income ratio increased to 41% (2012: 40%); excluding costs to achieve Transform, the ratio was in line at 40%

- The effective tax rate on statutory profit before tax was 36.5% (2012: 43.3%), which is higher than the UK tax rate of 23.25% (2012: 24.5%) principally due to profits taxed in countries with high local tax rates and non-deductable expenses. The effective tax rate on adjusted profit before tax was 31.3% (2012: 30.1%)

Group Performance Review

Balance Sheet and Leverage Exposure

- Total assets decreased by £128bn to £1,405bn from 30 June 2013 to 30 September 2013, primarily reflecting decreases in the mark to market value of derivative financial instruments, settlement balances, reverse repurchase agreements and other similar secured lending, cash and balances at central banks, as well as reductions in Exit Quadrant Assets. The strengthening of GBP against USD, EUR and ZAR also contributed to the decrease

- Total loans and advances decreased to £486bn (30 June 2013: £517bn) primarily due to lower settlement balances in the Investment Bank

- Total liabilities decreased £126bn to £1,347bn from 30 June 2013 to 30 September 2013, primarily reflecting decreases in derivative financial liabilities, repurchase agreements and other similar secured borrowing, and customer accounts including settlement balances. The strengthening of GBP against USD, EUR and ZAR also contributed to the decrease

- Estimated fully loaded CRD IV leverage exposure reduced to £1,481bn (30 June 2013: £1,559bn) driven by a reduction in settlement balances, lower potential future exposures on derivatives and decreases in cash balances at central banks in line with our efforts to optimise the size of the liquidity pool

- Total shareholders' equity including non-controlling interests, was £58.2bn (30 June 2013: £60.1bn). Excluding non-controlling interests, shareholders' equity decreased £1.6bn to £49.4bn. This reflects a decrease of £1.2bn in currency translation reserve, driven by the strengthening of GBP against USD, EUR and ZAR, a decrease of £0.8bn due to an increase in retirement benefit liabilities partially offset by an increase of £0.5bn due to retained profits during the quarter

- Net asset value per share was 384p (30 June 2013: 397p) and the net tangible asset value per share was 323p (30 June 2013: 336p)

- During Q3 13 the Group's net on-balance sheet exposures to Spain, Italy, Portugal, Ireland, Cyprus and Greece reduced by 6% to £53.9bn (30 June 2013: £57.2bn)

- As at 30 September 2013, utilisation of  the provisions for PPI redress resulted in a reduction in the provision by £387m to £1,263m, while utilisation of the provision for Interest Rate Hedging Products redress resulted in a decrease in the provision by £56m to £1,293m. Utilisation of the provisions during Q3 13 was in line with expectations and there has been no significant change to the estimates of future expected costs

Capital Management

- Core Tier 1 capital decreased by £1.0bn to £42.0bn from 30 June 2013 to 30 September 2013,principally due to foreign currency movements of £1.5bn, partially offset by capital generated from earnings after the impact of dividends paid. Estimated CRD IV fully loaded CET1 capital was £37.4bn (30 June 2013: £38.1bn)

- RWAs decreased £16bn to £371bn from 30 June 2013 to 30 September 2013, driven by reductions  in exposures of £8bn, principally relating to Exit Quadrant RWAs, and foreign currency movements of £8bn. This reduction was primarily in the Investment Bank, where RWAs reduced 7% to £157bn. On a CRD IV basis, estimated Group RWAs reduced by £24bn to £448bn from 30 June 2013 to 30 September 2013, within which Exit Quadrant RWAs reduced by £15bn to £53bn

- As a result, the Core Tier 1 ratio strengthened to 11.3% (30 June 2013: 11.1%)

- Barclays estimated fully loaded CET1 ratio assuming the final rules were applied as at 30 September 2013 is approximately 8.4% (30 June 2013: 8.1%). The estimated transitional CET1 ratio was approximately 10.4% (30 June 2013: 10.0%)

- The estimated fully loaded CRD IV leverage ratio assuming the rules were applied as at 30 September 2013 was 2.5% (30 June 2013: 2.5%). The estimated PRA leverage ratio, assuming consistent additional deductions from CET1 capital as at 30 June 2013 of £4.1bn, would result in a PRA leverage ratio of 2.2% (30 June 2013: 2.2%)

- The rights issue will increase capital by £5.8bn, which if applied as at 30 September 2013 would have increased the Core Tier 1 ratio to 12.9%, the estimated fully loaded CRD IV Common Equity Tier 1 ratio to 9.6%, the estimated fully loaded CRD IV leverage ratio to 2.9% and the estimated PRA leverage ratio to 2.6%

Group Performance Review

Funding and Liquidity1

- Consistent with our plans to optimise the size of the liquidity pool, within our established liquidity risk appetite framework, the Group liquidity pool reduced £8bn during Q3 13 to £130bn2 as at 30 September 2013. It remains in excess of our internal and regulatory requirements. During the first nine months of 2013, the month end liquidity pool ranged from £130bn to £157bn (Full Year 2012: £150bn to £173bn)

- Cash and deposits with central banks accounted for £61bn of the liquidity pool (30 June 2013: £71bn)3, Government bonds accounted for £49bn (30 June 2013: £47bn)4, and other available liquidity accounted for £20bn (30 June 2013: £20bn)

- The Group estimated itsLiquidity Coverage-Ratio (LCR) at 107% at the end of Q3 13 (30 June 2013: 111%) based upon the latest standards published by the Basel Committee. This is equivalent to a surplus of £9bn above the 100% ratio (30 June 2013: £14bn)5. The reduction since 30 June 2013 is consistent with our plans to optimise the size of the liquidity pool

- The customer loan to deposit ratio for RBB, Corporate Banking and Wealth and Investment Management was unchanged at 94% (30 June 2013: 94%). The loan to deposit ratio for the Group decreased to 100% as at 30 September 2013 (30 June 2013: 102%)5

- The Investment Bank activities are primarily funded through wholesale markets. The Investment Bank does not rely on customer funding from RBB, Barclaycard, Corporate Banking and Wealth and Investment Management. Total Group wholesale funding outstanding (excluding repurchase agreements) was £198bn (30 June 2013: £217bn ), of which £85bn matures in less than one year (30 June 2013: £93bn) and £25bn matures within one month (30 June 2013: £30bn). The Group has £3bn of term funding maturing in the remainder of 2013 and £24bn maturing in 2014

Dividends

- We will pay a third interim dividend for 2013 of 1.0p per share on 13 December 2013 resulting in a 3.0p dividend year to date

Outlook

- We continue to remain cautious about the environment in which we operate and our focus remains on costs, capital, leverage and returns to drive sustainable performance improvements

1 Liquidity risk is managed separately at Absa Group due to local currency and funding requirements. Unless stated otherwise, all disclosures in this section exclude Absa.

2 £123bn (30 June 2013: £132bn) of which is eligible to count towards the LCR as per the Basel standards. 

3 Of which over 95% (30 June 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% (30 June 2013: over 80%) are comprised of UK, US, Japanese, French, German, Danish, Swiss and Dutch securities.

5 The LCR and customer loan to deposit ratio are calculated on a consolidated basis including Absa.

Results by Business

 2013 compared to 2012

- Income increased 2% to £3,374m driven by strong mortgage growth and contribution from Barclays Direct (previously ING Direct UK, acquired during Q1 13). The net interest margin was down 9bps to 128bps primarily reflecting reduced contribution from structural hedges. The customer asset margin increased 11bps to 120bps driven by higher customer margin on newly written mortgages

- Credit impairment charges increased £61m to £259m due to provision releases in 2012 relating to unsecured lending and mortgages. 90 day arrears rates on UK personal loans improved to 1.2% (2012: 1.4%) with arrears rates on home loans flat at 0.3%

- Adjusted operating expenses were flat at £2,159m after absorbing costs to achieve Transform of £56m

- Adjusted profit before tax improved 3% to £983m. Statutory profit before tax improved by £223m to £323m principally due to the lower provision for PPI redress

Q3 13 compared to Q2 13

- Adjusted profit before tax improved 5% to £351m. Statutory profit before tax improved by £678m to £351m reflecting the provision for PPI redress taken in Q2 13

- Loans and advances to customers were broadly in line at £135.5bn (30 June 2013: £135.4bn) including Barclays Direct assets of £4.9bn (30 June 2013: £5.3bn). Customer deposits were broadly in line at £133.3bn (30 June 2013: £133.2bn) reflecting a continued reduction in the portfolio acquired as part of the ING Direct UK acquisition to £7.4bn (30 June 2013: £9.8bn), offset by an increase in non-ING Direct UK customer deposits of 2%

- Total assets decreased 2% to £156.9bn primarily reflecting a reduction of liquidity pool assets

- RWAs have remained broadly flat at £43.2bn

1 Adjusted attributable profit includes profit after tax and non-controlling interests.

Results by Business

2013 compared to 2012

- Income declined by 6% to £512m reflecting actions taken to reduce the volume of new assets written, particularly in Spain and Italy, to address the continuing economic challenges across Europe, partially offset by an increase due to foreign currency movements. The net interest margin was broadly in line at 79bps (2012: 78bps)

- Credit impairment charges increased by £26m to £209m principally due to foreign currency movements, and higher impairment balances against forbearance and higher risk mortgage customers, reflecting the current economic conditions across Europe. The overall 90 day arrears rate reduced slightly to 91bps (2012: 93bps)

- Operating expenses increased £380m to £982m primarily reflecting costs to achieve Transform of £357m, relating to restructuring costs to significantly downsize the distribution network, with the remaining increase driven by foreign currency movements

- Other net expense increased £145m to £136m due to a valuation adjustment recognised in respect of contractual obligations to trading partners, based in locations affected by our restructuring plans

- Loss before tax increased to £815m (2012: £229m) principally due to costs to achieve Transform and an increase in other net expense

Q3 13 compared to Q2 13

- Loss before tax decreased to £106m (Q2 13: £247m) largely as a result of the decrease in other net expense

- Income reduced 9% to £160m with seasonality driving reduced sales of mortgages and investment products

- Loans and advances reduced 4% to £38.2bn due to actions taken to reduce the volume of new assets written. Customer deposits reduced 5% to £16.7bn due to customer attrition driven by continued competitive pressure

- Total assets reduced 6% to £45.8bn principally due to a reduction in loans and advances and foreign currency movements

- RWAs remained broadly flat at £16.8bn, driven by a reduction in exposures and depreciation of EUR against GBP, offset by a change in risk profile driven by market conditions

1 Attributable loss includes loss after tax and non-controlling interests.

Results by Business

2013 compared to 2012

· Based on average rates the ZAR depreciated against GBP by 15% on 2012. The deterioration was a significant contributor to the movement in the reported results. Other currency movements are considered insignificant

· Income declined 10% to £1,995m driven by foreign currency movements, partially offset by fair value adjustments on the commercial property finance portfolio in the prior year. Excluding these items income remained broadly steady despite pressure on transaction volumes in a subdued economic environment. The net interest margin was down 7bps to 314bps through a decrease in the customer asset margin and reduced contribution from structural hedges

· Credit impairment charges decreased by 46% to £265m driven by foreign currency movements, in addition to lower charges in the South African home loans recovery book and business banking portfolio. The 90 day arrears rates on home loans improved to 0.7% (2012: 2.2%). These lower charges were partly offset by a slight deterioration in the South African unsecured lending portfolio, which was reflective of the challenging economic environment. 90 day arrears rates on unsecured lending remained broadly in line at 3.3% (2012: 3.4%)

· Operating expenses decreased 8% to £1,391m. On a constant currency basis, costs remained well contained given inflation in South Africa of approximately 6%

· Profit before tax increased 59% to £344m, despite currency depreciation, primarily due to higher 2012 provisions on the South African home loans recovery book and fair value adjustments on the commercial property finance portfolio in the prior year

Q3 13 compared to Q213

· The closing ZAR rate depreciated against GBP by 7% from 30 June 2013. The deterioration was a significant contributor to the movement in the reported results. Other currency movements are considered insignificant

· Profit before tax increased to £132m (Q2 13: £131m), despite continued depreciation of the ZAR, driven by lower credit impairment charges in the South African home loans recovery book

· Loans and advances to customers decreased 7% to £25.8bn and customer deposits decreased 4% to £17.4bn mainly due to foreign currency movements. On a constant currency basis loans and advances were broadly in line, while customer deposits grew following new products launched

· Total assets decreased 5% to £35.6bn. On a constant currency basis total assets were broadly in line

· RWAs decreased 5% to £24.1bn, primarily driven by the depreciation of ZAR against GBP

1 Attributable profit/(loss) includes profit after tax and non-controlling interests.

Results by Business

2013 compared to 2012

· Income increased 11% to £3,566m reflecting continued net lending growth across the business, lower impact from structural hedges and contributions from 2012 acquisitions. The customer asset margin remained broadly stable at 9.45% (2012: 9.52%)

· Credit impairment charges increased 25% to £950m driven by higher assets, including the impact of portfolio acquisitions, and non-recurrence of provision releases in 2012. While the loan loss rate increased in South Africa to 545 bps (2012: 194 bps) reflecting a change in product mix following recent acquisitions and the challenging economic environment, the loan loss rates in UK and US consumer credit cards remained stable at 374bps (2012: 361 bps) and 291 bps (2012: 293 bps), respectively. 30 day arrears rates for consumer cards in UK were down 10bps to 2.4%, in the US were down 40bps to 2.1% and in South Africa were up 380bps to 8.7%

· Adjusted operating expenses increased 12% to £1,472m reflecting business growth including 2012 portfolio acquisitions and higher operating losses

· Adjusted profit before tax increased 2% to £1,172m, while statutory profit before tax decreased to £482m (2012: £997m) due to the provision for PPI redress

 Q3 13 compared to Q2 13

· Adjusted profit before tax decreased 4% to £397m driven by higher operating expenses. Statutory profit before tax improved by £675m to £397m reflecting the provision for PPI redress taken in Q2 13

· Loans and advances to customers remained stable at £34.6bn (30 June 2013: £34.7bn) reflecting business growth, offset by the impact of depreciation of USD against GBP. Customer deposits increased to £4.8bn (30 June 2013: £4.5bn) due to funding initiatives in the US and Germany

· Total Assets decreased by £1.1bn to £38.1bn driven by a reduction in non-customer assets

· RWAs remained broadly flat at £38.7bn

1 Adjusted attributable profit includes profit after tax and non-controlling interests.

Results by Business

2013 compared to 2012

- Total income decreased 7% to £8,584m, including a reduction of £317m relating to Exit Quadrant Assets

- FICC income decreased 22% to £4,508m

- Macro Products and Credit Products income decreased 23% and 9% to £2,485m and £1,951m respectively, reflecting the market impact due to uncertainty around central banks' tapering of quantitative easing programmes. Europe and US were particularly impacted, whilst Asia benefitted from improved currency income. The prior year benefited from the European Long Term Refinancing Operation (LTRO) in Q1 12, and the ECB bond buying programme and reduced benchmark interest rate in Q3 12

- Exit Quadrant Assets income reduced £317m to £72m as the disposal of exit assets accelerated throughout 2013, with the prior year benefitting from gains on US residential mortgage assets and sale of and gains on US commercial real estate assets

- Equities and Prime Services income increased 26% to £2,176m, reflecting commission gains, due to improved market confidence and higher client activity in Prime Services

- Investment Banking income increased 6% to £1,611m driven by equity and debt underwriting, due to increased client activity and favourable market conditions

- Principal Investments and Other income of £289m included a fair value adjustment of £259m as a result of greater certainty regarding the recoverability of certain assets not yet received from the 2008 US Lehman acquisition

1 Macro Products represent Rates, Currency and Commodities income. Credit Products represent Credit and Securitised Product income. Exit Quadrant Assets consist of the Investment Bank Exit Quadrant business units as detailed on page 27.

2 Attributable profit includes profit after tax and non-controlling interests.

3 As at 30 September 2013 loans and advances included £124.2bn of loans and advances to customers (including settlement balances of £50.4bn and cash collateral of £34.7bn) and loans and advances to banks of £36.2bn (including settlement balances of £9.5bn and cash collateral of £14.3bn). Customer deposits included £50.2bn relating to settlement balances and £26.6bn relating to cash collateral

Results by Business

- Net credit impairment charges of £206m (2012: £205m) driven by a charge against a single name exposure in Q2 13

- Operating expenses reduced 4% to £5,548m, including £175m of costs to achieve Transform related to restructuring. The reduction in operating expenses was driven by the ongoing cost savings partially offset by £257m of costs relating to infrastructure improvement, including investments to meet the requirements of the Dodd-Frank Act, CRD IV and other regulatory reporting change projects. 2012 included a £193m penalty relating to the setting of inter-bank offered rates

- Including costs to achieve Transform, cost: income ratio increased 2% to 65%. Compensation: income ratio increased to 41% (2012: 40%)

- Profit before tax decreased 12% to £2,852m

Q3 13 compared to Q3 12

- Income decreased 22% to £2,111m, including a reduction of £242m relating to Exit Quadrant Assets

- FICC income decreased 44% to £940m, reflecting lower activity in Macro and Credit Products driven by market declines due to uncertainty around central banks tapering of quantitative easing programmes, with the US being the most impacted region. There were losses of £16m (Q3 12: gains of £226m) related to accelerated disposals of Exit Quadrant Assets, with the prior year including gains on US residential mortgage assets

- Equities and Prime Services income increased 23% to £645m driven by stronger performances in cash equities and equity derivatives as markets improved on prior year

- Investment Banking income increased 6% to £525m as improved fee income in financial advisory and increased deal issuance for equity underwriting were partially offset by declines in debt underwriting activity

- Operating expenses decreased 6% to £1,628m as lower performance costs were partially offset by expenditure of £94m on infrastructure improvement including investments to meet regulatory requirements, including the Dodd-Frank Act and CRD IV

- Profit before tax decreased 53% to £463m

Q3 13 compared to Q2 13

- Income decreased 30% to £2,111m

- FICC income decreased 32% to £940m primarily reflecting lower activity in Macro Products driven by a decrease in client flow across the Rates, Commodities and Currency businesses, due to the impact of market uncertainty around central banks' tapering of quantitative easing programmes

- Equities and Prime Services income decreased 22% to £645m as performance was impacted by the seasonal slowdown

- Investment Banking income decreased 1% to £525m, reflecting lower debt and equity underwriting partially offset by increased financial advisory activity

- Principal Investments and Other income declined significantly due to a one-off gain in the second quarter of £259m relating to a fair value adjustment as a result of greater certainty regarding the recoverability of certain assets not yet received from the 2008 US Lehman acquisition

- Net credit impairment charges improved to £25m (Q213: £195m) as the prior quarter reflected a charge against a single name exposure

- Operating expenses decreased 7% to £1,628m (Q2 13: £1,750m) including a £47m reduction in costs to achieve Transform to £6m

- Profit before tax decreased 57% to £463m

- Total Assets decreased by £108.6bn to £935.2bn, primarily reflecting decreases in reverse repurchase agreements, settlement balances and derivative financial instruments, in addition to the strengthening of GBP against USD and EUR

- RWAs decreased 7% to £157.2bn, driven by Exit Quadrant RWAs, the strengthening of GBP against USD and EUR, and a reduction in sovereign exposures. CRD IV RWAs reduced 8% to £234bn, including a reduction in Exit Quadrant RWAs of £15bn

Results by Business

2013 compared to 2012

- Total income increased 2% to £2,351m reflecting an increase in UK income, partially offset by a reduction in gains on fair value items to £45m (2012: £61m), principally related to the Education, Social Housing and Local Authority portfolio, and non-recurring income from a reduction in Exit Quadrant assets in Europe and previously exited businesses. The net interest margin was broadly in line at 124bps (2012: 126bps), as reduced customer liability margin was largely offset by an increase in customer asset margin

- Credit impairment charges reduced 42% to £376m largely driven by UK and Europe. Loan loss rates improved to 74bps (2012: 126bps)

- UK impairment reduced by £91m to £126m, reflecting reduced impairment against large corporate clients

- Europe impairment charges reduced by £168m to £248m, following ongoing action to reduce exposure to the property and construction sector in Spain

- Adjusted operating expenses increased 3% to £1,299m, driven by costs to achieve Transform of £54m related to restructuring costs in Europe and Rest of the World. Statutory operating expenses increased 14% to £1,949m after charging an additional £650m provision for interest rate hedging products redress (2012: £450m)

1 Adjusted attributable profit includes profit after tax and non-controlling interests.

Results by Business

- Adjusted profit before tax increased 70% to £678m; driven by

- UK adjusted profit before tax increased 26% to £799m driven by increased income and lower credit impairment charges

- Europe loss before tax reduced by 27% to £217m principally due to improved credit impairment charges, partially offset by costs to achieve Transform and lower income reflecting the impact of exited business lines

- Rest of the World profit before tax increased by 52% to £96m, reflecting reduced operating expenses

- Statutory profit before tax increased to £28m (2012: loss of £51m) after the provision for interest rate hedging products redress

Q3 13 compared to Q2 13

- Adjusted profit before tax increased 26% to £276m, reflecting reduced operating expenses, an increase in UK income and reduced credit impairment charges in the UK and Europe, partially offset by a reduction in gains on fair value items to £1m (Q2 13 £12m). Statutory profit before tax increased to £276m (Q2 13: loss of £431m) after charging the additional provision for interest rate hedging products redress in Q2 13

- Loans and advances to customers declined 2% to £61.3bn driven by a reduction in client financing requirements in the UK and the rundown of Exit Quadrant assets in Europe. Customer deposits were broadly in line at £105.4bn (30 June 2013: £106.7bn)

- Total assets decreased £7.8bn to £112.6bn reflecting a reduction of liquidity pool assets

- RWAs decreased 4% to £70.5bn driven primarily by the depreciation of the EUR against GBP and a reduction in Exit Quadrant RWAs

Results by Business

2013 compared to 2012

- Income increased 3% to £1,380m, driven by the Americas and Asia regions. The net interest margin was down 20bps to 104bps primarily reflecting reduced contributions from structural hedges and reduced customer liability margin. Customer asset margin increased 19bps to 83bps

- Credit impairment charges increased £63m to £88m, largely reflecting the impact of deterioration of exposures on historical cases primarily in Europe. Q2 13 included a charge of £15m relating to secured lending on Spanish property 

- Operating expenses increased 9% to £1,248m largely reflecting costs to achieve Transform of £77m and the customer remediation provision in Q2 13 of £22m 

- Profit before tax decreased 68% to £54m primarily driven by costs to achieve Transform, customer remediation provision and increased impairment charges

Q3 13 compared to Q2 13

- Profit before tax increased £20m to £7m (Q2 13: loss of £13m) primarily due to the non-recurrence of the customer remediation provision, partially offset by an increase in costs to achieve Transform of £11m to £44m

- Loans and advances to customers of £22.2bn and customer deposits of £62.1bn were broadly in line, as growth driven by the High Net Worth businesses was offset by foreign currency movements

- Total Assets were broadly in line at £36.0bn (2013: £36.5) and RWAs remained flat at £17.0bn 

- Client Assets were broadly in line at £202.0bn (2013: £202.8bn)

1 Adjusted and statutory attributable profit includes profit after tax and non-controlling interests.

Results by Business

2013 compared to 2012

- Adjusted income declined to a net expense of £246m (2012: income of £411m), predominately due to the non-recurrence of gains related to hedges of employee share awards in Q1 12 of £235m and the residual net expense from treasury operations

- Operating expenses decreased to £45m (2012: £104m), driven by the non-recurrence of the £97m penalty arising from the industry wide investigation into the setting of inter-bank offered rates recognised in H1 12, offset by an increase in legal costs relating to regulatory investigations, in addition to costs from the Transform programme and Salz review

- Adjusted loss before tax increased to £292m (2012: profit of £321m). Statutory loss before tax improved to £417m (2012: £3,471m) including an own credit charge of £125m (2012: £4,019m) and the non-recurrence of the £227m gain on disposal of BlackRock investment in 2012

Q3 13 compared to Q2 13

- Adjusted loss before tax increased to £135m (Q2 13: £104m) driven by the ongoing impact of the raising of customer deposits across the Group, partially offset by a gain on debt buy back

- Statutory loss before tax increased to £346m (Q2 13: profit of £233m) including an own credit charge of £211m (Q2 13: gain of £337m)

- Total assets decreased 5% to £44.7bn and RWAs decreased 8% to £3.4bn, primarily reflecting a reduction of group liquidity pool assets

1 Adjusted attributable (loss)/profit includes loss after tax and non-controlling interests.

Appendix I - Quarterly Results Summary