“Barclays performed very strongly in 2004 delivering record profit before tax, up 20% at £4,603m. There was good momentum across all the business divisions and broadly based income growth. The results confirm that our strategy is delivering.” Naguib Kheraj, Group Finance Director

	Performance Highlights	2004 £m		2003 £m
	Operating income	13,945		12,411
	Operating expenses	(8,350	)	(7,253	)
	Provisions for bad and doubtful debts	(1,091	)	(1,347	)
	Profit before tax	4,603		3,845
	Profit after tax	3,314		2,769
	Economic profit	1,885		1,430

Profit before tax at £4,603m was up 20%. Return on average shareholders’ funds was 19% and the total dividend payout rose 17%. Earnings per share increased 21%. Economic profit1 was up 32%, well ahead of our goal and a reflection of tight capital management as well as good business performance. Our capital position remained healthy, with a tier 1 ratio of 7.6%. Income rose 12%. This increase was broadly based and was a key driver of the Group’s strong performance. We continued to invest heavily and this was reflected in costs which were 15% higher. Provisions fell by 19%, reflecting a sharp fall in non-performing and potential problem loans as well as good asset quality.

There was good growth in profit before tax across all our business divisions with momentum in the core UK businesses and in our global product businesses. Our increasingly diverse and distinctive business mix is well positioned for future growth.

UK Banking grew profit before tax by 9%, driven primarily by a very strong performance in UK Business Banking, where profit before tax was up 19%, and broadly flat profit before tax performance in UK Retail Banking. At a seminar for investors in October 2004, UK Banking committed to a goal of reducing its cost:income ratio by 2% per annum for each of the three years 2005, 2006 and 2007.

UK Business Banking performed strongly with good income growth, up 8%, tight cost management and very good risk management accentuated by one large recovery.

In UK Retail Banking the focus in 2004 was on restructuring the business which included investing heavily in additional customer facing staff, upgrading branch management and investing in technology. There were encouraging signs of progress in 2004 with good balance growth in current accounts, premier and small business but a weaker contribution from mortgages where the impact of a decline in the back book, rising base rates and a fall in early redemption income impacted its contribution. Costs increased 3% with almost half of the increase attributable to the new regulatory environment, particularly in the mortgage and general insurance businesses. Provisions fell 44%, reflecting the overall quality of the loan portfolio but also a release of provisions in the mortgage business.

Profit before tax in Private Clients and International was up 60%. The improved performance in this division reflected the benefits of prior year investments (organic and non-organic) helped by stronger markets. This included a significantly improved performance from the closed life assurance activities.