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Corporate Banking operating profit increased 13% to £1,070m
in 2000. This reflected the combined effect of continued
growth in total income of 7%, a significant increase in strategic
investment and an increase in overseas provision levels.
Net interest income rose 6%. Average customer lending
balances increased 10% to £47bn as a result of strong growth
in UK lending and in the rest of Europe. Average customer
deposit balances increased 6% to £37bn.
UK middle market lending volumes grew strongly, resulting
from the implementation of the new sales strategy, providing
relationship managers with a more focused sales management
approach, together with mobile working technology. Lending
growth was concentrated towards larger and higher quality
customers and as a result the overall quality of the portfolio
has improved. The Sales Financing product range, which
includes factoring and invoice discounting, saw rapid growth
in total volumes, up 63% to £7.1bn. This resulted from the
ongoing investment programme to develop this business.
Growth in customer lending within the rest of Europe was
predominantly in the established operations in Germany and
France. Lending exposure to Latin America fell.
UK lending margins were maintained in line with the improved
quality of the lending portfolio. Overseas margins were held as
stability returned to Latin American markets.
The growth in average UK deposits was stronger in branch
based accounts which attract a higher margin compared with
treasury deposit products. As a result, the overall deposit margin
was maintained, despite competitive pressures and a reduced
contribution from non-interest bearing current accounts.
Net fees and commissions increased 9% to £752m. Lending
related fees rose strongly as a result of the growth in the use
of on and off balance sheet financing products and strong
sales of products relating to structured trade and export
finance. Money transmission income reduced slightly due to
intensifying competitive pressure. Foreign exchange related
income increased in line with volume growth. Increased use
of electronic products, such as BusinessMaster, has led to over
35% of UK corporate customers now being registered for
these services.
The loss from associated undertakings primarily reflected
the Group’s Brazilian associate, Banco Barclays e Galicia SA.
Costs excluding strategic investment fell 6%, with the
continued reduction in headcount and the sale of Dial
(the contract hire business) in June 2000 being contributory
factors. There was a significant increase in strategic
investment to £93m (1999 £37m) including investment in
Barclays B2B.com and enhancements to the Corporate
Banking middle market franchise.
In collaboration with Accenture and Oracle, Barclays B2B.com
was created in 2000 to e-enable the delivery of business
services to companies with a turnover of between £5m and
£250m. Its initial offering, the Barclays B2B exchange, has
created a secure marketplace enabling buyers and sellers
to benefit from lower processing costs and increased
management control in their business transactions. Barclays
B2B.com had over 2,000 businesses registered to trade on-line
at the end of 2000.
The net provisions charge increased to £124m (1999 £120m)
and included a charge for two larger non-UK items. The net
charge was also impacted by lower levels of releases and
recoveries at £76m (1999 £85m). UK provisions, while showing
a slightly rising trend, currently remain at relatively low levels.
Corporate Banking operating profit in 1999 (excluding the
impact of a £40m write down in lease receivables in 1998),
reduced by £44m or 4% to £947m as a result of a reduction
in the level of releases and recoveries to £86m (1998 £168m).
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