26th May 2005 07:01
Barclays PLC26 May 2005 26th May 2005 BARCLAYS PLC TRADING UPDATE Barclays PLC ("Barclays") will host a conference call at 09.00 (BST) today. Arecording of the conference call will be posted on the Investor Relationswebsite. Key trends set out below, unless stated otherwise, relate to the three months to31st March 2005 and are compared to the corresponding three months of 2004.Trends in income and expenses are expressed after the deduction of 'netinsurance claims and benefits paid' (see International Financial ReportingStandards section below for details). Group Performance Commentary John Varley, Group Chief Executive, commented: "Barclays has delivered goodprofit growth in the first quarter of 2005. We have accelerated theimplementation of our strategic agenda by organic investment and acquisition.This strategy is continuing to deliver positive results and greater portfoliodiversification by business type and geography." Individual Business Commentary UK Banking performed well and is making good progress towards achieving its 2005productivity target. UK Business Banking continued to perform strongly, as aresult of good income growth reflecting balance sheet momentum andwell-controlled risk. UK Retail Banking income was broadly flat with growth incurrent accounts offset by weaker income from the mortgage business and retailsavings. Operating expenses were well controlled and impairment losses were inline with expectations. Barclays Capital continued to deliver very strong profit growth reflecting thesuccessful impact of investment made in prior periods. Income growth was wellspread with both primary and secondary income higher. Operating expensesincreased at the same rate as net revenues, reflecting continued investment inthe business and performance related pay. Risk remained well controlled withimpairment losses in line with the 2004 experience. Barclays Global Investors continued its excellent broad based performancethrough a combination of good investment results, strong net new asset inflows,and further significant growth in exchange traded funds. Private Clients performed well. Income growth reflected good balance sheetvolumes and improved advisory activities. Operating expenses were broadly inline with the prior year. Private Clients - closed life assurance activities performance was broadlystable. Costs for endowment redress remained consistent with the 2004experience. Barclaycard income growth was good, reflecting a solid performance across thediversified UK cards and loans businesses and strong momentum in theInternational cards business. Barclaycard continued to see growth in average UKextended credit balances in cards and in loan balances. Operating expensesincreased, predominantly due to the inclusion of the Juniper business.Impairment losses rose significantly reflecting increased delinquent balancesand severity rates in the UK cards business and changes in recognitionmethodology. The impact of higher impairment losses, combined with the continuedinvestment in the business, more than offset the improved income performance. International Retail and Commercial Banking performed strongly. Income growthwas supported by balance sheet expansion in Spain, Italy, Portugal and Africa.Operating expenses increased reflecting continued investment in the business andvolume growth. The business benefited from investment realisations during thefirst quarter. Group Income Income growth was good and broad based, with a strong contribution from nettrading income and investment income and good growth in net interest income andfees and commissions. The impact of income from insurance activities and consequent claims andbenefits paid was significantly lower, reflecting the implementation of IFRS 4from 1st January 2005 and a decline in the investment returns attributable topolicyholders. Balance sheet growth since 1st January 2005 has been good. Retail and commercialbanking net interest margins were broadly stable relative to the full year 2004position. Group Operating Expenses Operating expenses increased in line with the rate of income growth. Theincrease was primarily attributable to continued investment in and expansion ofthe global product businesses, the development of International Retail andCommercial Banking and costs associated with the head office relocation. TheGroup cost:income ratio was stable. Risk Management The corporate businesses performed strongly with a continued fall in potentialcredit risk loans leading to lower impairment losses. The slowdown across the UKconsumer credit sector resulted in a rise in potential credit risk loans and aconsequent increase in impairment losses. The increase in delinquencies was mostnoticeable in credit cards with a significantly smaller impact in consumer loansand mortgages. The delinquency trends in overdrafts were broadly stable. Market risk continued to be well controlled. Average DVaR in Barclays Capitalduring the first quarter was in line with that of the second half of 2004. Recent Developments Barclays announced its intention to make a firm offer for up to 60% of theissued share capital of the South African bank Absa on 9th May 2005. Thetransaction is expected to be immediately accretive to earnings per share and tocontribute positive economic profit in the first full year followingacquisition. The transaction is expected to be financed from a combination ofavailable resources and preference share finance. 2005 Outlook In line with guidance given in February 2005, Barclays continues to targetdouble digit income growth with expense growth broadly in line with incomegrowth. The targets exclude the impact of any significant acquisitions anddisposals made in 2005. Based on current trends Barclays now expects impairmentlosses for 2005 to be somewhat higher than the last published Risk Tendency. International Financial Reporting Standards (IFRS) The IFRS Transition Report 2004/05 was published on 11th May 2005. The reportincluded the financial results for 2004 restated under IFRS together with theopening balance sheet position as at 1st January 2005. The 2005 results show the first time application of IAS 32 (FinancialInstruments: Disclosure and Presentation) and IAS 39 (Financial Instruments:Recognition and Measurements) including those impacts relating to liability andequity classifications, hedging, impairment and effective interest calculations. Under IFRS insurance business is consolidated on a line by line basis ratherthan the previous recognition of the change in embedded value and net premiumson insurance underwriting within other operating income. This has an impact onoperating income and operating expenses but no impact on profits. In addition, IFRS 4 (Insurance Contracts) requires the separation of investmentand insurance contracts and for these to be treated in accordance with theirclassification. Over half of the life assurance activities of the Group will beaccounted for as investment business in 2005 whereas all of these activitieswere accounted for as insurance business in 2004. Trading Update conference call and webcast details The Group Finance Director's briefing will be available as a live conferencecall at 09.00 (BST) on Thursday, 26th May 2005. The telephone number for UKcallers is 0845 301 4020 (+44 20 7663 4861 for all other locations), with theaccess code 'Barclays Trading Update'. The briefing will also be available as alive audio webcast on the Investor Relations website at:www.investorrelations.barclays.co.uk and a recording will be posted on thewebsite later. Timetable 2005 Interim Results Announcement Friday, 5th August 2005Ex Dividend Date Wednesday, 17th August 2005Dividend Record Date Friday, 19th August 2005Dividend Payment Date Monday, 3rd October 2005 All dates are provisional and subject to change. For further information please contact: Investor Relations Media RelationsMark Merson/James S Johnson Chris Tucker/Leigh Bruce+44 (0) 20 7116 5752/2927 +44 (0) 20 7116 6223/6083 This document contains certain forward-looking statements within the meaning ofSection 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 theGroup's plans and its current goals and expectations relating to its future financial condition and performance. 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 "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", or other words of similar meaning. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, including, but not limited to the further development of standards and interpretations under IFRS applicable to past, current and future periods, evolving practices with regard to the interpretation and application of standards under IFRS and pending tax elections with regards to certain subsidiaries as well as UK domestic and global economic and business conditions,market related risks such as changes in interest rates and exchange rates, the policies and actions of governmental and regulatory authorities, changes in legislation, the outcome of pending and future litigation and the impact of competition, a number of which factors are beyond the Group's control. As a result, the Group's actual future results may differ materially from the plans, goals, and expectations set forth in the Group's forward-looking statements. Anyforward-looking statements made by or on behalf of Barclays speak only as of thedate they are made. Barclays does not undertake to update forward-looking statements to reflect any changes in Barclays expectations with regard thereto or any changes 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 filed or may file with the SEC including its most recent Annual Report on Form 20-F. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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