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Operating profit for Barclaycard increased 4% to £418m.
Net interest income increased 12% to £548m benefiting
from continued strong growth in average UK extended
credit balances, which rose 19% year on year to £5.5bn.
This compared with the market growth rate of 13%. The
proportion of interest earning balances to non-interest
earning balances was maintained at over 70%.
The net interest margin reduced compared to 1999, mainly as
a result of the balance consolidation promotions of 2000 and
the increased range of rates available
to cardholders.
Recruitment of UK retail customers improved 15% on last year
to 740,000. Barclaycard has increased its share of the market
across most measures such as interest earning balances and
number of cards.
Fees and commissions increased 9% to £521m, principally
reflecting cardholder turnover which grew by 12% year on year.
Barclaycard’s international businesses in Europe recorded an
operating loss of £27m (1999 loss £16m). This resulted from
increased strategic investment expenditure and higher
provisions as the business continued to grow. Average
extended credit balances increased 58% and the number
of cards in issue overseas increased 16% to 1.2m.
Business as usual costs fell 2% despite a rise in fraud costs.
Strategic investment spend increased £19m, to £59m
representing the development of information management
capabilities, international expansion and e-commerce
businesses. Barclaycard continues to invest in chip technology
and fraud identification systems to mitigate growth in fraud.
Provisions for bad and doubtful debts increased by 41% to
£239m (1999 £170m). This increase was attributable to strong
lending growth across the UK and international businesses and
reflecting high levels of recruitment over the last two years.
Barclaycard has continued to build on its technological
developments. It was the first UK credit card company to offer
products on the web and now has 390,000 registered users of
its website for on-line services. It also has over 80,000 active
merchant relationships, of which over 4,400 are utilising
Barclaycard’s payment systems to provide shopping facilities
on-line. In 2000, Barclaycard launched a joint venture with
Nomura called IndigoSquare. This is an internet-based
shopping portal, designed to provide a comprehensive and
easy to use on-line shopping facility with products available
from 80 retailers. The goal is to have more than 350 retailers
supplying over 5 million products to 500,000 users by the end
of 2001. IndigoSquare represents a new business opportunity
providing Barclaycard with non-traditional revenue growth.
Barclaycard’s 1999 operating profit at £401m was 20% higher
than in 1998 following strong growth in extended credit
balances and merchant transaction volumes.
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