38AK.L Regulatory News (38AK)

Barclays PLC

Interim Management Statement

31 March 2013

Table of Contents

BARCLAYS PLC, 1 CHURCHILL PLACE, LONDON, E14 5HP, UNITED KINGDOM. TELEPHONE: +44 (0) 20 7116 1000. COMPANY NO. 48839

Notes

The term Barclays or Group refers to Barclays PLC together with its subsidiaries. Unless otherwise stated, the income statement analysis compares the three months to 31 March 2013 to the corresponding three months of 2012 and balance sheet comparatives relate to 31 December 2012. The abbreviations '£m' and '£bn' represent millions and thousands of millions of pounds sterling respectively; the abbreviations '$m' and '$bn' represent millions and thousands of millions of US dollars respectively.

The comparatives have been restated to reflect the implementation of IFRS 10 Consolidated Financial Statements and IAS 19 Employee Benefits (Revised 2011), the reallocation of elements of the Head Office results to businesses and portfolio restatements between businesses, as detailed in our announcement on 16 April 2013.

Adjusted profit before tax and adjusted performance metrics have been presented to provide a more consistent basis for comparing business performance between periods. Adjusting items are considered to be significant and not representative of the underlying business performance. Items excluded from the adjusted measures are: the impact of own credit; gains on debt buy-backs; impairment and disposal of the investment in BlackRock, Inc.; the provision for Payment Protection Insurance redress payments and claims management costs (PPI redress); the provision for interest rate hedging products redress and claims management costs (interest rate hedging products redress); goodwill impairments; and gains and losses on acquisitions and disposals. The regulatory penalties relating to the industry-wide investigation into the setting of interbank offered rates have not been excluded from adjusted measures.

Relevant terms that are used in this document but are not defined under applicable regulatory guidance or International Financial Reporting Standards (IFRS) are explained in the Results glossary that can be accessed at www.barclays.com/results.

The financial information on which this Interim Management Statement is based, and other data set out in the appendices to this statement, are unaudited and have been prepared in accordance with Barclays' previously stated accounting policies described in the 2012 Annual Report.

In accordance with Barclays' policy to provide meaningful disclosures that help investors and other stakeholders understand the financial position, performance and changes in the financial position of the Group, and having regard to the British Bank Association Disclosure Code, the information provided in this report goes beyond minimum requirements. Barclays continues to develop its financial reporting considering best practice and welcomes feedback from investors, regulators and other stakeholders on the disclosures that they would find most useful.

The information in this announcement, which was approved by the Board of Directors on 23 April 2013, does not comprise statutory accounts or interim financial statements within the meaning of Section 434 of the Companies Act 2006 and IAS 34 Interim Financial Reporting respectively. Statutory accounts for the year ended 31 December 2012, which included certain information required for the Joint Annual Report on Form 20-F of Barclays PLC and Barclays Bank PLC to the US Securities and Exchange Commission (SEC) and which contained an unqualified audit report under Section 495 of the Companies Act 2006 and which did not make any statements under Section 498 of the Companies Act 2006, have been delivered to the Registrar of Companies in accordance with Section 441 of the Companies Act 2006.

For qualifying US and Canadian resident ADR holders, the interim dividend of 1p per ordinary share becomes 4p per ADS (representing four shares). The ADR depositary will mail the interim dividend on 7 June 2013 to ADR holders on the record on 3 May 2013.

Forward-looking statements

This document contains certain forward-looking statements within the meaning of Section 21E of the US Securities Exchange Act of 1934, as amended, and Section 27A of the US Securities Act of 1933, as amended, with respect to certain of the Group's plans and its current goals and expectations relating to its future financial condition and performance. Barclays cautions readers that no forward-looking statement is a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statements. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements sometimes use words such as "may", "will", "seek", "continue", "aim", "anticipate", "target", "projected", "expect", "estimate", "intend", "plan", "goal", "believe", "achieve" or other words of similar meaning. Examples of forward-looking statements include, among others, statements regarding the Group's future financial position, income growth, assets, impairment charges and provisions, business strategy, capital ratios, leverage, payment of dividends, projected levels of growth in the banking and financial markets, projected costs, commitments in connection with the Transform Programme, estimates of capital expenditures and plans and objectives for future operations and other statements that are not historical fact. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, including, but not limited to, UK domestic, Eurozone and global macroeconomic and business conditions, the effects of continued volatility in credit markets, market related risks such as changes in interest rates and foreign exchange rates, effects of changes in valuation of credit market exposures, changes in valuation of issued notes, the policies and actions of governmental and regulatory authorities (including requirements regarding capital and Group structures and the potential for one or more countries exiting the Eurozone), changes in legislation, the further development of standards and interpretations under International Financial Reporting Standards ("IFRS") and prudential capital rules applicable to past, current and future periods, evolving practices with regard to the interpretation and application of standards, the outcome of current and future legal proceedings, the success of future acquisitions, disposals and other strategic transactions and the impact of competition, a number of such factors being beyond the Group's control. As a result, the Group's actual future results may differ materially from the plans, goals, and expectations set forth in the Group's forward-looking statements.

Any forward-looking statements made herein speak only as of the date they are made. Except as required by the Prudential Regulation Authority, the Financial Conduct Authority, the London Stock Exchange plc (the "LSE") or applicable law, Barclays expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Barclays' expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. The reader should, however, consult any additional disclosures that Barclays has made or may make in documents it has published or may publish via the Regulatory News Service of the LSE and/or has filed or may file with the US Securities and Exchange Commission.

Performance Highlights

"We set out in our Strategic Review in February our path to become the "Go-To" bank for all our stakeholders. While there remains much to do to build a stronger and more resilient Barclays, we are completely focused on executing our Transform programme and are making good early progress. 

Strategic cost management is a critical factor in delivering our commitments. We have recognised around £500m of 'costs to achieve Transform' in the first quarter, reflecting our immediate priorities to reduce our European retail branch network in order to focus on the mass-affluent segment and on re-positioning our equities and investment banking operations in Asia and Europe. As indicated in the Strategic Review, we expect to recognise a further £500m of costs to achieve Transform in 2013.

For the first quarter, adjusted profit before tax was £1.8bn including the costs to achieve, driven by good momentum across the businesses, particularly in the Investment Bank, Barclaycard and Wealth and Investment Management.

In our goal to become the 'Go-To' bank we have not chosen an easy path for Barclays, but we have chosen the right one."

Antony Jenkins, Chief Executive

Performance Highlights

1 The comparatives on pages 5 to 24 have been restated to reflect the implementation of IFRS 10 Consolidated Financial Statements and IAS 19 Employee Benefits (Revised 2011), the reallocation of elements of Head Office results to businesses and portfolio restatements between businesses, as detailed in our announcement on 16 April 2013.

2 Comprises: share of post-tax results of associates and joint ventures; profit or loss on disposal of subsidiaries, associates and joint ventures; and gains on acquisitions.

Barclays Results by Quarter

Group Performance Review

Income Statement

- Adjusted profit before tax decreased £609m to £1,786m, driven by costs to achieve Transform of £514m in Q1 13 and by non-recurrence of gains of £235m in relation to hedges of employee share awards during Q1 12

- Statutory profit before tax improved to £1,535m (Q1 12: loss of £525m), reflecting a significantly lower own credit charge of £251m (Q1 12: £2,620m)

- Adjusted return on average shareholders' equity decreased to 7.6% (Q1 12: 12.4%) with an improvement in statutory return on average shareholders' equity to 6.5% (Q1 12: negative 4.5%)

- Adjusted income decreased 5% to £7,734m, driven by non-recurrence of gains of £235m in relation to hedges of employee share awards in Head Office in Q1 12. Investment Bank income was up 1% at £3,463m driven by increases in Equities and Prime Services, and Investment Banking, partially offset by a decrease in Fixed Income, Currency and Commodities, and was up 34% on Q4 12

- Customer net interest income for RBB, Barclaycard, Corporate Banking and Wealth and Investment Management was broadly stable at £2,509m (Q1 12: £2,449m). Total net interest income remained stable at £2,775m (Q1 12: £2,721m) while the growth in assets offset the net interest margin decline of 4bps to 179bps

- Credit impairment charges were down 10% to £706m, principally reflecting improvements in the Investment Bank and Corporate Banking, partially offset by increases in Europe RBB and Africa RBB

- The annualised loan loss rate decreased to 56 bps (Q1 12: 63bps)

- Challenging local economic conditions have led to some stress and higher impairment in the Europe and South Africa home loan portfolios

- Credit metrics in the wholesale portfolios have generally shown some improvement during Q1 13, although conditions in Europe remain challenging

- Adjusted operating expenses were up 7% to £5,296m, principally reflecting costs to achieve Transform of £514m

- Following the launch of the Transform programme, the costs to achieve Transform in Q1 13 related to restructuring principally in Europe RBB, with headcount reducing by nearly 2,000 and thedistribution network reducing by 30%, and in the Corporate and Investment Bank, where we are reducing headcount by 1,800. The below table summarises the Q1 13 costs to achieve Transform by business

- Non-performance costs excluding costs to achieve Transform decreased 2% to £3,978m with the non-recurrence of a £115m charge relating to the setting of inter-bank offered rates in Q1 12

- Performance costs excluding costs to achieve Transform reduced 10% to £804m and the compensation: income ratio in the Investment Bank improvedto 41% (Q1 12: 43%)

- The adjusted cost: income ratio increased to 68% (Q1 12: 61%). The Investment Bank cost: net operating income ratio improved to 62% (Q1 12: 65%)

Group Performance Review

Balance Sheet

·; Total assets increased to £1,596bn (2012: £1,488bn), principally reflecting increases in reverse repurchase agreements and other similar secured lending, loans and advances to customers and available for sale investments

·; Total loans and advances increased to £501bn (2012: £464bn) due to higher settlement balances in the Investment Bank and the acquisition of ING Direct UK

·; Total shareholders' equity, including non-controlling interests, was £61.4bn (2012: £60.0bn). Excluding non-controlling interests, shareholders' equity increased £1.5bn to £52.1bn, reflecting a £1.5bn increase in share capital and share premium, including the exercise of warrants. There was also an increase of £1.1bn in currency translation reserves, partially offset by a £0.5bn reduction due to an increase in retirement benefit liabilities and dividends paid of £0.4bn

·; Net asset value per share was 405p (2012: 414p) and the net tangible asset value per share was 344p (2012: 349p). The decrease was mainly attributable to an increase in shares issued, including the exercise of warrants

·; Adjusted gross leverage was 20x (2012: 19x). Excluding the liquidity pool, adjusted gross leverage increased to 17x (2012: 16x)

Capital Management

·; The Core Tier 1 ratio strengthened to 11.0% (2012: 10.8%)

·; Core Tier 1 capital increased by £2.1bn to £43.8bn, due to foreign currency movements of £1.1bn, the exercise of outstanding warrants of £0.8bn and £0.6bn of capital generated from earnings which excludes the impact of own credit, after absorbing the impact of dividends paid

·; Risk weighted assets increased by £11bn to £398bn, primarily driven by foreign currency movements

·; We have estimated our CRD IV Common Equity Tier 1 (CET1) ratio on both a transitional and fully loaded basis assuming the rules were applied as at 31 March 2013 using a consistent basis to the reported 2012 year end position. Barclays estimated transitional CET1 ratio is approximately 10.8% (2012: 10.6%) and the estimated fully loaded CET1 ratio is approximately 8.4% (2012: 8.2%). We are currently reviewing the CRD IV rules approved by the European Parliament on 16 April 2013 and will provide an updated view on the estimated impact in our half year results announcement

·; In April, Barclays issued a further $1.0bn of Tier 2 contingent capital notes and repurchased existing Tier 2 instruments for a similar amount, as a step in transitioning towards its end state CRD IV capital structure

Funding and Liquidity

- The liquidity pool as at 31 March 2013 was £141bn (2012: £150bn)

- As at 31 March 2013, the Group estimates it was compliant with the Liquidity Coverage Ratio (LCR) requirement at 110% (2012: 126%) based upon the latest standards published by the Basel Committee. This is equivalent to a surplus of £13bn above a 100% LCR requirement (2012: £32bn)

- RBB, Corporate Banking and Wealth and Investment Management activities are largely funded by customer deposits with the remaining funding secured against customer loans and advances. At 31 March 2013, the customer loan to deposit ratio for these businesses was 98% (2012: 102%)

1 Of which over 95% (2012: over 95%) was placed with the Bank of England, US Federal Reserve, European Central Bank, Bank of Japan and Swiss National Bank.

2 Of which over 80% (2012: over 80%) of securities are comprised of UK, US, Japan, France, Germany, Denmark and the Netherlands.

3 £134bn (2012: £144bn) of which is eligible to count towards the LCR as per the Basel standards.

Group Performance Review

- The Investment Bank activities are primarily funded through wholesale markets. As at 31 March 2013, total Group wholesale funding outstanding excluding repurchase agreements was £235bn (2012: £240bn), of which £98bn matures in less than one year (2012: £102bn) and £36bn matures within one month (2012: £29bn)

- The Group has term funding maturities of £11bn for the remainder of 2013. However, with expected deposit growth and reduction in legacy assets, funding needs are likely to be lower. In addition, a significant portion of the Group's 2013 funding needs were pre-funded in 2012

Exposures to Selected Eurozone Countries

- During Q1 13 the Group's net on-balance sheet exposures to Spain, Italy, Portugal, Ireland, Cyprus and Greece remained flatat £59.4bn (2012: £59.3bn)

- The Group continues to monitor developments in Cyprus and has taken steps to mitigate any financial and operational risks as appropriate. The Group's exposure to Cyprus remains minimal at £177m

Other matters

- As of 31 March 2013, £1.9bn of the total £2.6bn PPI redress provision raised to date has been utilised leaving a residual provision of £0.7bn. The volume of customer initiated claims has continued to decline in Q1 13 while proactive mailing of customers is now 45% complete with 335,000 of the applicable 750,000 policy holders mailed to date. Barclays will continue to monitor actual claims volumes and the assumptions underlying the calculation of its PPI provision. It is possible that the eventual costs may materially differ from current estimates. Based on claims experience to date and anticipated future volumes, the remaining provision of £0.7bn reflects Barclays best current estimate of future expected PPI redress payments and claims management costs

- The Interest Rate Hedging Product redress provision at 31 March 2013 was £759m (2012: £814m), after utilisation of £55m during Q1 13, primarily related to administrative costs. The provision reflects Barclays best current estimate of the ultimate cost. It will be kept under ongoing review as the main redress and review exercise progresses, as further information regarding the extent and nature of amounts payable across the impacted population emerges

Dividends

- It is our policy to declare and pay dividends on a quarterly basis. We will pay a first interim cash dividend for 2013 of 1.0p per share on 7 June 2013

Outlook

- The good start to the year has continued into the second quarter across our businesses. Although the macroeconomic environment remains unpredictable, as part of the Transform programme, we continue to focus on costs, returns and capital to drive sustainable performance improvements

Results by Business

·; On 5 March 2013, Barclays acquired ING Direct UK. This part of the business will be known as Barclays Direct

2013 compared to 2012

·; Income was flat at £1,067m reflecting additional income from Barclays Direct and good mortgage growth offset by reduced contribution from structural hedges. Other net income of £25m relates to a gain on acquisition of ING Direct UK

·; Credit impairment charges increased £13m to £89m due to increased impairment in unsecured lending

- Loan loss rate was stable at 27bps (Q1 12: 25bps)

- 90 day arrears rates improved 16bps on UK Personal Loans to 1.4% and increased 4bps on UK mortgages to 0.3%

·; Adjusted operating expenses decreased 7% to £704m driven in part by reduced Financial Services Compensation Scheme costs

·; Adjusted profit before tax improved 29% to £299m, while statutory profit before tax improved by £367m to £299m principally due to the non-recurrence of the Q1 12 provision for PPI redress of £300m

·; Adjusted return on average equity improved to 11.3% (Q1 12: 9.6%). Statutory return on average equity increased to 11.3% (Q1 12: negative 3.5%)

Q1 13 compared to Q412

- Adjusted profit before tax improved 9% to £299m principally due to the acquisition of ING Direct UK, offset partially by higher impairment. Statutory profit before tax improved by £354m to £299m reflecting the non-recurrence of the Q4 12 provision for PPI redress of £330m

- Loans and advances to customers increased 5% to £134.3bn with customer deposits growing 13% to £130.8bn, both reflecting the ING Direct UK acquisition which added £11.4bn customer deposits and £5.3bn mortgage balances

- Risk weighted assets increased 9% to £42.6bn primarily reflecting the ING Direct UK acquisition and other mortgage asset growth

Results by Business

2013 compared to 2012

- Income declined by 6% to £176m driven by lower net interest income and lower fees and commissions, as a result of reduced mortgage volumes and lower sales of investment products partially offset by foreign currency movements. The customer net interest margin remained stable at 44bps (Q1 12: 44bps)

- Credit impairment charges increased by £16m to £70m as a result of increased recovery balances and deterioration in loss given default within the Spanish and Portuguese home loan portfolios

- Operating expenses increased £362m to £571m largely reflecting costs to achieve Transform of £356m related to restructuring costs to significantly downsize the distribution network

- Loss before tax increased to £462m (Q1 12: £72m) principally due to cost to achieve Transform

Q113 compared to Q4 12

- Loss before tax increased to £462m (Q4 12: £114m) largely as a result of costs to achieve Transform of £356m

- Income increased 9% to £176m driven by higher income from sales of investment products

- Risk weighted assets increased 4% to £16.4bn primarily driven by foreign currency movements

Results by Business

2013compared to 2012

·; Income declined 13% to £668m largely driven by foreign currency movements relating to the depreciation of major African currencies against Sterling. Excluding the impact of foreign currency movements income remained under pressure with lower transaction volumes.

·; The economic environment in South Africa remained challenging for consumers and credit impairment charges increased £8m to £114m principally reflecting higher loss given default rates and higher charge-offs in the South African home loans recovery book

·; Operating expenses decreased 10% to £474m largely due to foreign currency movements with costs in local currency broadly in line with Q1 12

·; Profit before tax decreased 39% to £81m. Excluding the impact of foreign currency movements, profit before tax decreased 24%. Return on average equity declined to 1.6%(Q1 12: 4.6%)

Q1 13 compared to Q412

·; Profit before tax decreased 23% to £81m due to a seasonal reduction in transaction volumes, partially offset by lower impairments in the commercial property portfolio in South Africa

·; Both loans and advances to customers and customer deposits decreased by 1% to £29.7bn and £19.3bn respectively, driven by foreign currency movements

·; Risk weighted assets remained broadly stable at £24.9bn

Results by Business

2013 compared to 2012

·; Income increased 12% to £1,153m reflecting continued growth across the business predominantly in the UK and US, contributions from Q1 12 acquisitions and stable customer asset margins

·; Credit impairment charges increased 21% to £303m driven by higher volumes, including the impact of portfolio acquisitions, and non-recurrence of provision releases in Q1 12

- Impairment loan loss rates in consumer credit cards are trending at low levels in the UK and US

·; Operating expenses increased 11% to £496m due to business growth and the impact of portfolio acquisitions

·; Profit before tax improved 5% to £363m. Return on average equity improved to 17.9% (Q1 12: 17.8%)

Q113 compared to Q4 12

·; Adjusted profit before tax improved 8% to £363m due to business growth and non-recurring costs in relation to provisions for certain insurance products in Q4 12, partially offset by an increase in impairment due to contribution from acquisitions and foreign exchange movements. Statutory profit before tax improved by £298m reflecting the non-recurrence of the Q4 12 provision for PPI redress of £270m

·; Loans and advances to customers remained stable at £34.1bn (2012: £33.8bn) reflecting business growth and foreign currency movements which were offset by seasonal pay-downs. Customer deposits increased to £3.8bn (2012: £2.8bn) driven by business funding initiatives in the US

·; Risk weighted assets increased 3% to £39.0bn primarily driven by foreign currency movements and asset growth

Results by Business

2013 compared to 2012

- Total Income of £3,463m was up 1%, reflecting an improvement in Equities and Prime Services, and Investment Banking, offset by a decline in Fixed Income, Currency and Commodities (FICC)

- FICC income declined 6% to £2,190m, reflecting lower contributions from Rates, Commodities and Emerging Markets due to a strong Q1 12 where markets were supported by the European Long-Term Refinancing Operation. There were improvements in Credit and Securitised Products which benefitted from increased volumes and tightening of spreads on positive economic news at the start of the year

- Equities and Prime Services income increased 19% to £706m across US, Asia and European businesses, reflecting an improvement in global equity markets driven by increased market confidence, strong inflows and market share gains. An increase in client activity in Prime Services further improved the results

- Investment Banking income increased 8% to £558m, driven by higher income in equity underwriting reflecting increases in client activity and market share gains

- Net credit impairment release of £14m (Q1 12: £81m charge), including a release of £40m across a number of counterparties was offset by charges of £26m driven by a number of single name exposures

- Operating expenses decreased 1% to £2,170m, which included £88m relating to improving infrastructure to meet the requirements of Basel 3 and other regulatory reporting change projects and deliver cost efficiencies. Q1 13 included £116m of costs to achieve Transform related to restructuring costs. Q1 12 included a £115m charge relating to the setting of inter-bank offered rates

- Cost to net operating income ratio improved 3% to62%. The compensation to income ratio improved to 41% (Q1 12: 43%)

- Profit before tax increased 11% to £1,315m. Return on average equity improved to 16.3% (Q1 12: 13.8%)

Results by Business

Q113 compared to Q412

·; Income of £3,463m was up 34% on Q4 12 reflecting an increase in FICC income and Equities and Prime Services income, partially offset by a reduction in Investment Banking

- FICC income increased 47% to £2,190m, reflecting seasonally higher contributions from most business areas due to increased volumes and a rally in credit markets

- Equities and Prime Services income increased 56% to £706m, reflecting improved performance in cash equities and equity derivatives and continued strong performance in Prime Services driven by increased client activity

- Investment Banking income decreased 10% to £558m, reflecting the lower number of completed advisory deals in Q1 13 compared to Q4 12. The decrease in advisory was partially offset by higher income in equity underwriting

·; Operating expenses increased 17% to £2,170m, reflecting £116m costs to achieve Transform and a higher performance cost accrual driven by income growth

·; Profit before tax increased 73% to £1,315m

·; Assets contributing to adjusted gross leverage increased 12% to £637.6bn reflecting increases in reverse repurchase agreements and trading portfolio assets, partially offset by a decrease in cash and balances at central banks

·; Risk weighted assets increased 2% to £181.9bn primarily driven by foreign currency movements offset by a reduction in trading book sovereign exposures

Results by Business

2013 compared to 2012

- Total income decreased 9% to £772m reflecting a reduction in gains on fair value items to £31m (Q1 12: £78m), increased funding costs, non-recurring income from exited businesses and reduction in legacy portfolios in Europe, partially offset by an increase in UK product income

- Credit impairment charges reduced 38% to £130m. Loan loss rate improved to 74bps (Q1 12: 117bps)

- UK impairment reduced by £54m to £30m, partly reflecting increased recoveries in 2013

- Europe impairment charges reduced by £26m to £98m with ongoing action to reduce exposure to the property and construction sector in Spain

- Operating expenses increased 5% to £459m, reflecting coststo achieve Transform of £37m related to restructuring costs in Europe, partially offset by the benefits of prior year restructuring

Results by Business

- Profit before tax decreased 10% to £183m. Return on average equity declined to 6.1% (Q1 12: 6.6%)

- UK profit before tax improved 8% to £269m driven by increased product income, lower impairment and operating expenses, partially offset by lower gains on fair value items

- Europe loss before tax increased 44% to £114m principally due to costs to achieve Transform and lower income reflecting the impact of exited business lines, partially offset by improved credit impairment charges of £98m (Q1 12: £124m) largely driven by reduced exposure to the property and construction sector in Spain

- Rest of the World profit before tax decreased by 13% to £28m, reflecting lower income due to exited businesses partially offset by improved operating expenses as a result of prior year restructuring

Q1 13 compared to Q4 12

- Adjusted profit before tax tripled to £183m, reflecting reduced impairment charges in the UK and Europe and gains on fair value items of £31m (Q4 12: £10m). Statutory profit before tax improved by £522m reflecting the non-recurrence of the Q4 12 provision for interest rate hedging products redress of £400m

- Customer deposits increased 4% to £103.3bn primarily within the UK. Loans and advances to customers remained stable at £64.8bn

Results by Business

2013 compared to 2012

- Income increased by 4% to £469m driven by the High Net Worth businesses. Net Interest income increased driven by growth in deposit and lending balances primarily in the High Net Worth businesses. Net fee and commission income remained broadly in line

- Operating expenses of £400m were broadly flat against Q1 12 as ongoing costs of the strategic investment programme were offset by cost control initiatives

- Profit before tax increased 20% to £60m. Return on average equity increased to 7.9% (Q1 12: 7.0%)

Q1 13 compared to Q4 12

- Profit before tax decreased 43% to £60m primarily due to increased funding costs and costs of the ongoing strategic investment programme

- Loans and advances to customers increased 5% to £22.2bn and customer deposits increased 8% to £58.3bn primarily driven by growth in the High Net Worth businesses

- Client assets increased to £200.2bn (2012: £186.0bn) driven by net new assets in the High Net Worth businesses and favourable market movements

Results by Business

2013 compared to 2012

- Adjusted income loss of £34m (Q1 12: income of £317m) deteriorated principally due to the non-recurrence of gains related to hedges of employee share awards in Q1 12 of £235m

- Operating expenses of £22m (Q1 12: gain of £1m) increased by £23m, including costs related to the Salz review and costs to achieve Transform

- Adjusted loss before tax of £53m (Q1 12: profit of £321m). Statutory loss before tax of £304m (Q1 12: £2,299m) included an own credit charge of £251m (Q1 12: £2,620m)

Q1 13 compared to Q4 12

- Adjusted expense of £34m reduced from £53m in Q4 12

- Operating expenses decreased by £55m to £22m mainly due the non-recurrence of costs relating to the Transform strategic review and the bank levy, and a reduction in costs arising from litigation and regulatory investigations

- Adjusted loss before tax improved to £53m (Q4 12: £132m). Statutory loss before tax of £304m (Q4 12: £692m) included an own credit charge of £251m (Q4 12: £560m)

Appendix I - Quarterly Results Summary