BGI assets tops £1trn
GLOBAL - Barclays Global Investors saw its income grow 16% in 2007 through increased management fees and securities lending revenues while assets under management climbed to £1.04trn (€1.33trn).
Details of Barclays Group's 2007 results today revealed the asset manager - known largely for its passive investment expertise - saw profit before tax increase 3% from £714m in 2006 to £734m, although the firm's potential profits and income growth had been hit somewhat "by the 8% depreciation in the average value of the US dollar".
Its costs also increased by 25% as the firm is continuing to build its "infrastructure across multiple products and platforms to support future growth" but the more significant development is assets under management grew 13% from £927bn to £1.044trn, including net new assets of £42bn.
This is split to reveal indexed asset rose from £566bn in 2006 to £615bn while iShares - the exchange-traded funds division - saw assets increase from £147bn to £205bn and active management saw a £10bn increase to £224bn.
Some of this development is as a result of Barclays' acquisition of Indexchange Investment AG (Indexchange) - generating £12bn - but a further £66bn was because of favourable market movements against "£3bn of adverse exchange movements".
As a result of new inflows, the number of institutional clients BGI now manages rose from 2,900 to 3,000.
The firm today reported group profit of £7.1bn even after revealing it had made a £1.6bn writedown related to "net losses from credit market turbulence".
Barclays Capital saw a 5% increase in profit before tax to £2.33bn after net losses of £1.635bn.
"Impairment charges and other credit provisions" of £846m included £722m against asset-backed securities collateral debt obligations (CDOs) "Super Senior" exposures, £60m from other credit market exposures and £58m relating to drawn leveraged finance underwriting positions.
Elsewhere, the group also revealed the Barclays Group UK defined benefit £15,5bn (€20.68bn) pension fund now has a surplus of £668m, under IAS19 accounting rules, compared with a deficit of £475m at the same time last year.
According the firm's results statement, "among the reasons for the movement of £1.143bn was the increase in AA long-term corporate bond yields which resulted in a higher discount rate of 5.82% (31st December 2006: 5.12%), partially offset by lower than expected returns and an increase in the inflation assumption to 3.45% (31st December 2006: 3.08%)."
Across the group, the firm's IAS 19 pension surplus reached £393m compared with a deficit of £817m on December 31, 2006, alongside retirement benefit liabilities of £1.537bn, compared with £1.807bn in 2006.
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