Corporate
2007 Performance
Underlying profit before tax in Corporate increased by 31% to £2,320m (2006 £1,776m). This was primarily driven by a strong performance from our non-interest income revenue streams, with underlying non-interest income having increased by 66% to £1,746m (2006 £1,053m).
Underlying operating expenses increased by 9% resulting in an improved cost:income ratio at 23.2% (2006 26.9%).
Credit quality remained sound in 2007 although defaults were at a higher level than the historically low figures seen in 2006. Impairment losses increased by 40% to £602m (2006 £429m), representing 0.61% of average advances (2006 0.50%).
Loans and advances to customers increased by 22% to £109.3bn (2006 £89.6bn), largely due to strong originations and lower levels of refinancing and sell-down activity in the second half of the year.
| Income Statement | Year ended 31.12.2007 £m |
Year ended 31.12.2006 £m |
| Underlying net interest income | 2,061 | 1,964 |
| Underlying non-interest income | 1,746 | 1,053 |
| Commitment fees | 63 | 45 |
| Guarantee fees | 25 | 27 |
| International fees | 16 | 49 |
| Transaction fees | 59 | 63 |
| Underwriting fees | 129 | 93 |
| Other | 140 | 104 |
| Fees and commission income | 432 | 381 |
| Fees and commission expense | (32) | (23) |
| Profit on sale of investment securities | 463 | 224 |
| Operating lease rental income | 1,307 | 1,021 |
| Other operating income | 354 | 159 |
| Share of profits of associates and jointly controlled entities | 232 | 156 |
| Operating lease depreciation | (973) | (796) |
| Impairment on investment securities | (37) | (69) |
| Underlying net operating income | 3,807 | 3,017 |
| Underlying operating expenses | (885) | (812) |
| Staff | (507) | (467) |
| Accommodation, repairs and maintenance | (6) | (4) |
| Technology | (16) | (16) |
| Marketing and communication | (35) | (32) |
| Depreciation: Property and equipment and intangible assets | (45) | (31) |
| Other | (125) | (97) |
| Sub total | (734) | (647) |
| Recharges: | ||
| Technology | (51) | (50) |
| Accommodation | (53) | (53) |
| Other shared services | (47) | (62) |
| Underlying operating profit before provisions | 2,922 | 2,205 |
| Impairment losses on loans and advances | (602) | (429) |
| Underlying profit before tax | 2,320 | 1,776 |
| Net interest margin | 2.06% | 2.25% |
| Impairment losses as a % of average advances | 0.61% | 0.50% |
| Cost:income ratio | 23.2% | 26.9% |
| Loans and advances to customers | £109.3bn | £89.6bn |
| Risk weighted assets | £129.0bn | £106.5bn |
| Customer deposits | £44.1bn | £39.5bn |