Analysis of results by business

	Barclays Capital

	The following section analyses the Group’s performance within the businesses, showing selected income and expenditure information extracted from the Group’s profit and loss account. As inter-business activities are included within these figures, the total income and expenditure for the businesses do not equate to the amounts reported in the Group’s results.

	Financial performance
		2000	1999	1998
		£m	£m	£m
	Net interest income	483	400	417
	Dealing profits	672	549	(38)
	Net fees and commissions	268	163	159
	Other operating income	39	40	42
	Total income	1,462	580	1,152
	Total costs	(998)	(805)	(701)
	Provisions for bad and
	doubtful debts	(61)	(36)	(160)
	Operating profit	403	311	(281)

Operating profit increased 30% to £403m reflecting continued strong performance in both the Rates and the Credit businesses. The growth in profits was achieved despite difficult market conditions in the second half of 2000. Dealing profits rose 22%, or £123m, to £672m. The Rates businesses continued to perform well, in particular interest rate derivatives. In the Credit businesses, equity derivatives and credit repackaging made good contributions but in the second half these were in part offset by difficult market conditions in the secondary bond market due to the widening of credit spreads. Risk management continued to be an important focus. Operating profit growth significantly exceeded the increase in risk utilisation; average daily value at risk (DVAR) increased 9%. Net interest income increased 21% to £483m primarily as a result of continued strong growth in revenues from structured capital markets and the credit portfolio. Net fees and commissions rose 64% to £268m reflecting the increased number and size of transactions completed in the Credit businesses. Fees and commissions growth was strong across all the Credit businesses, in particular primary loans, primary bonds and structured capital markets. Primary loans activity included large acquisition related lending across Europe, America and Asia, while in primary bonds, Barclays Capital strengthened its position in euros and maintained its leading position in sterling new issues. Provisions for bad and doubtful debts grew 69% to £61m (1999 £36m) and were mainly related to overseas exposures. Total costs rose 24% to £998m (1999 £805m). Revenue related costs grew due to higher performance related remuneration. There was also increased strategic investment in product, client coverage and distribution capabilities, most notably the distribution and coverage networks in Germany, France and Switzerland. Business as usual costs increased 4%, mainly reflecting growth in headcount in the second half of the year. Headcount increased by 8% over the previous year. The 1999 operating profit of £311m, compared to an operating loss of £281m in 1998, was a result of stability returning to the world credit markets.