38AK.L Regulatory News (38AK)

Barclays PLC

Interim Management Statement

31 March 2012

Q112 Interim Management Statement"Barclays first quarter results are an encouraging start to the year and demonstrate continued progress across our execution priorities. We achieved an adjusted return on equity that exceeded 12%, driven by strong results in UK RBB, Barclaycard, and Wealth and Investment Management and improved performances in Corporate and Investment Banking. Our rock solid capital, funding and liquidity positions remain a source of competitive advantage and enabled us to fund a substantial proportion of our 2012 term funding requirements.

The environment in which we operate remains unpredictable but we have a proven ability to adapt and grow our businesses in the face of external change. We will be proactive and seek to lead the agenda on recovery and resolution planning, which is a critical step to eradicate "too big to fail", while continuing to remain closely engaged with regulatory agencies and governments. Our strong mix of businesses, emphasis on serving customers and clients, and our focus on execution give me confidence in delivering on our return targets for shareholders."

Bob Diamond, Chief Executive

1 Adjusted performance measures and profit before tax exclude the impact of £2,620m (2011: £351m) own credit reversal, £300m (2011: £nil) provision for PPI redress and £nil (2011: £2m) gains on acquisitions and disposals.

Q112 Interim Management Statement

Q112 Interim Management Statement

Barclays Performance

Q112 Interim Management Statement

In order to execute our strategy and deliver long-term sustainable shareholder value we continue to make progress on our four execution priorities:

Capital, Funding and Liquidity

- Core Tier 1 ratio remained strong at 10.9% (31 December 2011: 11.0%), with Core Tier 1 capital broadly flat and risk weighted assets increasing 1% to £394bn. Adjusted gross leverage was 21x (31 December 2011: 20x) and 18x (31 December 2011: 17x) excluding the liquidity pool

- Maintained a strong liquidity position with a liquidity pool of £173bn (31 December 2011: £152bn). The increase from December 2011 is due to significant term debt issuance and strong wholesale and customer inflows. Over 90% of the liquidity pool is held in central bank deposits and highly liquid government bonds

- Net asset value per share declined to 445p (31 December 2011: 456p) and net tangible asset value per share declined to 381p (31 December 2011: 391p) principally due to the own credit reversal

Returns

- Adjusted return on average shareholders' equity improved to 12.2% (2011: 10.2%) and adjusted return on average tangible shareholders' equity improved to 14.3% (2011: 12.3%). These returns on a statutory basis declined to (4.0%) (2011: 8.1%) and (4.6%) (2011: 9.7%) respectively due to the increased own credit reversal

- Adjusted profit before tax of £2,445m up 22%. Statutory loss before tax of £475m (2011: £1,655 profit) reflecting £2,620m own credit reversal and an additional PPI provision of £300m

- Impairment charges and other credit provisions of £778m down 16%, resulting in an annualised loan loss rate of 63bps (Q1 2011: 76bps)

- The cost to income ratio improved to 61% (2011: 62%). Operating expenses excluding PPI provision up 2% to £4,949m (2011: £4,842m)

- First quarter dividend of 1.0p per share (2011: 1.0p)

Income Growth

- Income excluding own credit up 5% to £8,138m. Including own credit, income was down 25% to £5,518m. Own credit reversal of £2,620m driven by improved credit spreads on Barclays financial liabilities designated at fair value

- The net interest margin for Retail and Business Banking (RBB), Corporate Banking and Wealth and Investment Management declined 7bps to 1.86%, reflecting stable customer margins and reduced contributions from structural hedging activities

- Adjusted net operating income increased 8% to £7,360m with impairment charges down 16% to £778m. Statutory net operating income down 27% to £4,740m reflecting £2,620m own credit reversal

- Positive operating leverage of 3% as income grew 5% while operating expenses increased 2%

Citizenship

- Gross new lending to UK households and businesses of £10.1bn (2011: £10.1bn), of which £5.0bn (2011: £4.5bn) to businesses

- Raised approximately £1.5bn of loans under the UK Government's National Loan Guarantee Scheme, intended to reduce the cost of credit to eligible small and medium sized enterprises

- Raised £266bn of funding for institutions globally, including £86bn for governments and public sector entities

Q112 Interim Management Statement

We comment below on matters of particular interest:

Funding and Liquidity

- The Group liquidity pool as at 31 March 2012 was £173bn (31 December 2011: £152bn) and moved within a month-end range of £152bn to £173bn during the quarter. The liquidity pool is held unencumbered and is not used to support payment or clearing requirements. It is intended to offset stress outflows and comprises the following cash and unencumbered assets:

- RBB, Corporate Banking and Wealth and Investment Management activities are largely funded by customer deposits with the remainder covered by funding secured against customer loans and advances. As at 31 March 2012, the loan to deposit ratio for these businesses was 110% (31 December 2011: 111%) and the loan to deposit and secured funding ratio was 97% (31 December 2011: 101%)

- The Investment Bank's activities are primarily funded through wholesale markets. As at 31 March 2012 total wholesale funding outstanding (excluding repurchase agreements) was £290bn (31 December 2011: £265bn). £144bn of wholesale funding matures in less than one year (31 December 2011: £130bn)

- Barclays continues to attract deposits in unsecured money markets and to raise additional secured and unsecured term funding in a variety of markets. During Q1 2012 the Group raised £12bn of term funding, including £7bn of unsecured medium term notes and structured notes and £5bn of covered bonds and asset backed securities

- The Group has term funding maturities of £27bn for full year 2012, including £10bn that matured in Q1, and a further £16bn maturing in 2013

- As previously disclosed, Euro funding gaps in Spain and Portugal were reduced through accessing €8.2bn of the European Central Bank's long-term refinancing operation in February

- The Group's liquidity pool and wholesale funds continue to be well diversified by major currency

Operating Expenses

- Operating expenses excluding the PPI provision increased 2% to £4,949m (2011: £4,842m):

- Performance costs remained flat at £898m (2011: £896m) despite 5% income growth and increased prior year deferrals

- Non-performance costs increased by 3%, largely reflecting increases in regulatory and legal costs, continued business investment and the impact of acquisitions in 2011, partially offset by reductions in other non-performance costs, in line with the Group's cost saving initiative

- The cost to income ratio improved to 61% (2011: 62%) and the Investment Bank's cost to net operating income ratio was 63%, within the target range

- As previously disclosed, Barclays observed a recent increase in PPI claim volumes. Redress payments are now expected to exceed original expectations and a further £300m has been provided as at 31 March 2012. There are a number of assumptions under-pinning the provision, many of which remain subjective with uncertain trends

1 Of which over 95% is placed with the Bank of England, US Federal Reserve, European Central Bank, Bank of Japan and Swiss National Bank.

2 Of which over 75% is comprised of UK, US, Japanese, French, German and Dutch securities.

3 £154bn of which is FSA eligible.

Q112 Interim Management Statement

Credit Impairment

- Credit impairment charges reduced 16% to £778m with lower charges across most businesses

- Lower impairment charges within RBB reflected generally improving delinquency rates. Impairment charges in Europe RBB were moderately higher as adverse credit conditions led to higher delinquency and charge-off rates

- Higher impairment charges in the Investment Bank reflected the non recurrence of a release of £190m in the prior year

- Impairment charges were lower in Corporate Banking, primarily driven by a reduction in Spain 

- With loans and advances balances remaining broadly unchanged, the improvement in loan impairment resulted in a lower annualised loan loss rate of 63bps (Q1 2011: 76bps). This loan loss rate was also lower than the full year rate for 2011 of 77bps

- While delinquency trends were generally stable in the majority of retail portfolios during Q1 2012, mortgage portfolios in Europe experienced slight deterioration as a result of the adverse credit conditions. Credit metrics in the wholesale portfolios have also remained generally stable

- The Group credit risk loans (CRL) coverage ratio remained broadly stable as both CRL balances and impairment allowances fell moderately

Exposures to Selected Eurozone Countries

- During Q1 sovereign exposures to Spain, Italy, Portugal, Ireland and Greece reduced by 16% to £6.0bn

- Spanish and Portuguese sovereign exposures reduced 15% to £2.2bn and 27% to £0.6bn respectively due to the disposal of available for sale government bonds held for the purpose of interest rate hedging and liquidity, that have been replaced by interest rate swaps with alternative counterparties

- Italian sovereign exposures reduced 14% to £3.0bn reflecting trading activity throughout the quarter

- Ireland exposures decreased 11% to £5.1bn, principally reflecting lending to financial institutions. Exposures to domestic Irish banks remain minimal

- Exposure to Greece remains minimal

- Retail lending in Spain, Italy, and Portugal remained flat while lending to corporates decreased 9% to £10.6bn reflecting continued prudent risk management of portfolios. CRL coverage ratios in the retail and wholesale portfolios for Spain, Italy and Portugal have remained broadly stable

Dividends

- It is our policy to declare and pay dividends on a quarterly basis. We will pay a first interim cash dividend for 2012 of 1p per share on 8 June 2012

Outlook

- Performance since the beginning of the year has been encouraging. We are pleased with the development of the competitive positions across our businesses and have improved our adaptability to the changing environment. However, the continued challenging market conditions mean it is too early to establish the trend for the year

Q112 Interim Management Statement

- Income remained in line with prior year at £1,077m (2011: £1,084m) as increased net interest income was offset by a reduction in fees and commissions

- Credit impairment charges decreased 47% to £76m driven by continuing reduction in personal unsecured impairment charges

- Operating expenses excluding a £300m provision for PPI redress increased 2% to £666m. Statutory operating expenses increased to £966m (2011: £653m)

- Income declined 18% to £243m driven by continuing adverse economic conditions and higher funding costs

- Credit impairment charges increased slightly to £72m (2011: £69m) reflecting higher delinquency and charge-off rates due to adverse economic conditions

- Operating expenses decreased 25% to £217m reflecting restructuring activity in 2011

Q112 Interim Management Statement

- Income declined 4% to £830m driven by currency movements partially offset by increased fees and commissions income in local currency

- Credit impairment charges decreased 26% to £107m reflecting continued improvement in delinquency trends and recoveries

- Operating expenses reduced by 5% to £548m driven by currency movements, with underlying cost growth managed at lower than inflationary levels

·; Income improved 3% to £990m reflecting continued growth across the business and contributions from portfolio acquisitions, partially offset by higher funding costs

·; Credit impairment charges decreased 24% to £232m reflecting improved underlying delinquency performance with lower bankruptcies and charge-offs resulting in lower loan loss rates

·; Operating expenses increased 13% to £418m mainly due to portfolio acquisitions in 2011

1 Certain corporate banking activities in Africa, previously reported in Africa Retail and Business Banking, are now included within Corporate Banking. 2011 comparatives have been revised to reflect this change. See page 21 for further details.

Q112 Interim Management Statement

- Total income increased 3% to £3,464m

- Fixed Income, Currency and Commodities (FICC) income increased 9% with strong growth in Asia; improved performances in Rates and Emerging Markets were partly offset by lower contributions from Credit and Securitised Products

- Equities and Prime Services income was broadly in line with prior year, despite lower volumes in the equity markets

- Investment Banking income decreased 17% reflecting weaker performances in equity underwriting due to the muted issuance environment

- Total income was up 91% on Q4 2011 reflecting increases of 147% in FICC, 80% in Equities and Prime Services and 1% Investment Banking

- Credit impairment charge of £75m (2011: £31m release), reflecting non recurrence of a release of £190m in the prior year

- Operating expenses increased 4% to £2,145m, reflecting a £115m increase in provision for regulatory and legal costs, partially offset by non-performance cost savings. Cost to net operating income ratio of 63%, within the target range

- Compensation to income ratio improved to 42% (2011: 44%)

Q112 Interim Management Statement

- Profit before tax improved £198m to £219m including a gain of £78m (2011: loss of £7m) in the net valuation of fair value loans. Excluding this item, profit before tax of £141m (2011: £28m) reflected improved impairment charges, lower operating expenses and growth in Cash Management products

- UK profit before tax improved 29% to £268m reflecting the gains on fair value loans and improved income performance

- Europe loss before tax improved £116m to £76m principally due to reduced impairment charges in Spain of £94m (2011: £175m) and lower operating expenses

- Rest of the World profit before tax improved to £27m reflecting the benefits derived from the exit of Barclays Bank Russia and lower impairment charges

·; Profit before tax increased 30% to £60m as benefits begin to flow through from the strategic investment programme

·; Income increased by 7% to £451m and operating expenses increased 5% to £384m

·; Client assets increased to £172bn (31 December 2011: £164bn) driven by net new assets in High Net Worth businesses and favourable markets

1 Certain corporate banking activities in Africa, previously reported in Africa Retail and Business Banking, are now included within Corporate Banking Rest of World. 2011 comparatives have been revised to reflect this change. See page 21 for further details.

Q112 Interim Management Statement

- Adjusted profit before tax of £83m (2011: loss of £68m) reflecting a one-time gain relating to hedges of employee share awards that were closed out during Q1, partially offset by higher regulatory costs

- The impact of the UK bank levy, for which legislation was enacted in July 2011, has not been reflected in these results in accordance with International Financial Reporting Standards. The total cost for 2012 is expected to be approximately £350m

- In Q1 the fair value of Barclays investment in BlackRock, Inc. increased by 11% to £4.5bn. For regulatory capital purposes, the £1.3bn increase in fair value since 30 September 2011 is not included in the Group's Core Tier 1 capital

- Own credit reversal of £2,620m driven by improved credit spreads on Barclays financial liabilities designated at fair value

Income by Geographic Segment2

Q112 Interim Management Statement

Other Information

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More information on Barclays can be found on our website: www.barclays.com

Notes

The term Barclays or Group refers to Barclays PLC together with its subsidiaries. Unless otherwise stated, the income statement analyses compare the 3 months to 31 March 2012 to the corresponding 3 months of 2011 and balance sheet comparatives relate to 31 December 2011. 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.

Adjusted profit before tax and adjusted performance measures have been presented to provide a more consistent basis for comparing business performance between periods. These measures exclude: the impact of own credit; gains on debt buy-backs; loss on disposal of a portion of the Group's strategic investment in BlackRock, Inc.; the impairment of the investment in BlackRock, Inc.; the provision for PPI redress; goodwill impairments; and gains and losses on acquisitions and disposals of subsidiaries, associates and joint ventures.

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 2011 Annual Report. A glossary of terms is available online at www.barclays.com/annualreport.

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 8 June 2012 to ADR holders on the record on 4 May 2012.

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", "expect", "estimate", "intend", "plan", "goal", "believe" 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, business strategy, capital ratios, leverage, payment of dividends, projected levels of growth in the banking and financial markets, projected costs, 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 economic and business conditions, the effects of continued volatility in credit markets, market related risks such as changes in interest rates and 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 Euro), changes in legislation, the further development of standards and interpretations under IFRS applicable to past, current and future periods, evolving practices with regard to the interpretation and application of standards under IFRS, the outcome of current and future litigation, the success of future acquisitions 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 are as at the date they are made. Except as required by the UK Financial Services Authority (FSA), the London Stock Exchange plc (LSE) or applicable law, Barclays expressly disclaims any obligation or undertaking to release publicly updates or revisions to forward-looking statements 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 filed or may file with the LSE and/or the US Securities and Exchange Commission (SEC).

Q112 IMS Appendix I - Quarterly Results Summary

Q112 IMS Appendix I - Quarterly Results Summary