Retail Markets
| 2007 £m |
2006 £m |
2005 £m |
|
|---|---|---|---|
| Net interest income | 4,760 | 4,604 | 4,404 |
| Non-interest income | 4,030 | 3,851 | 3,678 |
| Total income | 8,790 | 8,455 | 8,082 |
| Direct expenses | |||
| – staff costs | 1,699 | 1,616 | 1,539 |
| – other | 742 | 748 | 788 |
| 2,441 | 2,364 | 2,327 | |
| Insurance net claims | 518 | 488 | 486 |
| Contribution before impairment losses | 5,831 | 5,603 | 5,269 |
| Impairment losses | 1,200 | 1,311 | 1,148 |
| Contribution | 4,631 | 4,292 | 4,121 |
| Allocation of Manufacturing costs | 1,748 | 1,724 | 1,665 |
| Operating profit | 2,883 | 2,568 | 2,456 |
| £bn | £bn | £bn | |
| Total banking assets | 125.1 | 118.4 | 113.0 |
| Loans and advances to customers – gross | |||
| – mortgages | 72.0 | 69.7 | 64.6 |
| – personal | 21.5 | 20.5 | 21.0 |
| – cards | 8.4 | 8.2 | 8.7 |
| – business | 20.2 | 18.1 | 16.7 |
| Customer deposits* | 130.4 | 115.5 | 105.2 |
| Investment management assets – excluding deposits | 42.1 | 34.9 | 31.4 |
| Risk-weighted assets | 80.8 | 77.0 | 79.2 |
*customer deposits exclude bancassurance
2007 compared with 2006
Retail Markets delivered a strong performance in 2007 with operating profit rising by 12% to £2,883 million as a result of good income growth, tight expense control and reduced impairment costs. Total income rose 4% to £8,790 million, and income net of claims also grew by 4% to £8,272 million.
These strong results reflect the emphasis on savings and investment products, our focus on profitability rather than volume in consumer lending, and significant investment in our Wealth Management business in the UK and Asia. Customer deposits increased by 13% to £130.4 billion, while loans and advances grew by 5% to £122.1 billion.
The full year results show momentum developing in the business, with operating profit in the second half of the year 14% higher than in the same period of 2006.
Expenses have been kept under tight control, with efficiency gains allowing us to invest and grow the business. Impairment losses maintained the improvement witnessed in the first half of the year, falling by 8% for the year as a whole. Arrears trends on credit cards and unsecured personal loans continued to improve, as did the quality of our asset base.
Risk-weighted assets rose by 5% to £80.8 billion at the end of 2007.
2006 compared with 2005
Retail Markets achieved a good performance in 2006, with total income rising by 5% to £8,455 million. Contribution before impairment losses increased by 6% to £5,603 million, contribution by 4% to £4,292 million and operating profit by 5% to £2,568 million.
Responding to evolving demand from its customers, Retail Markets has added to its capabilities in deposits and investment products and has been rewarded by strong growth in these areas. Lending growth has been centred on high quality residential mortgages and small business loans, while personal unsecured lending was flat, as we limited our activity in the direct loans market and customer demand remained subdued. We have used our full range of brands to address markets flexibly, focusing on the most appropriate products and channels in the light of prevailing market conditions. Expenses have been kept under tight control, with additional investment in our business offset by efficiency gains and the benefits of combining Retail Banking and Direct Channels into a unified business.
Customer recruitment has been centred on our branch channels, where we have achieved good growth in savings accounts and are joint market leader for personal current accounts. Our commitment to customer service, through the largest network of branches and ATMs in the UK, is reflected in our industry-leading customer satisfaction ratings.
Average risk-weighted assets fell by 3%, reflecting a change in business mix toward mortgage lending as well as careful balance sheet management, including increased use of securitisations.
© 2008