PERFORMANCE COMPARISON BETWEEN BARCLAYS BANK PLC & LLOYDS BANKING GROUP PLC

1. PERFORMANCE COMPARISON BETWEEN
BARCLAYS BANK PLC &
LLOYDS BANKING GROUP PLC
PRESENTED BY: Oluwasegun Akande - S11731546

2. INTRODUCTION
– Performance Measurement in the Banking Sector
 Compare to other sectors, a strong financial services industry must be built on stable
and sound foundations.
 A resilient banking sector is of critical economic importance.
 UK financial services in 2009 generated a trade surplus of £40bn and professional services firms a surplus
of £6bn. UK exports of financial services are 3 times larger than any other country, and 10 times those of
the US in 2008
This Presentation is Looking at :
 Financial Ratio Analysis Also, Looking at are …
 Profile of the two Banks
 KPIs, Financial & Business Ratios:
 Stakeholders Analysis in Banking Sector Comparison between Barclays Banks &
Lloyds Banking Group
 Factors Affecting Performance Measurement
in the Banking Sector  Investment appraisal techniques in
banking sectors
 Financial crisis and the failure of the UK
Regulatory framework  Cost control in banking sectors
 2011 Comparison at a Glance; Barclays Bank  Forecasts for Barclays & Lloyds
PLC & Lloyds Banking Group PLC
 Recommendations & Conclusion

3. FINANCIAL RATIOS ANALYSIS
LIQUIDITY RATIOS PROFITABILITY RATIOS
This determines how much profit
Liquidity ratios measure the a business has made, and then to
extent to which assets can be compare it with previous periods
turned into cash quickly or with other entities.
 Current Asset  Return on capital employed
 Acid Test  Gross profit
 Mark-up
 Net profit
INVESTMENT RATIOS EFFECIENCY RATIOS
Ratios that are primarily How efficiently an entity has
(although not exclusively) of been managed, i.e. how well its
interest to prospective investors. resources have been looked
after.
 Dividend yield
 Dividend cover  Stock turnover
 Earnings per share  Fixed assets turnover
 Price/earnings ratio  Trade debtor collection
 Capital gearing period
 Trade creditor payment
period
(Dyson 2008)

4. Source: FAME
Source:
PROFILES FOR BARCLAYS & LLOYDS TSB
Barclays Banks PLC Lloyds Banking Group PLC
Banking Classification UK Retail and Business Banking Retail (Biggest Retail Bank in the UK)
Trade Description A group engaged in the provision of Group is involved in a wide range of
retail and commercial banking, banking and financial services through
credit card, banking, wealth and branches and offices in the UK and
investment management services. overseas.
Date of Incorporation: October 04, 1971 October 21, 1985
Registered Number: 01026167 SC095000
Registered Office 1 Churchill Place, The Mound
London Edinburgh
E14 5HP Lothian
England EH1 1YZ
Scotland
Total Employees 151,300 122,979
As at Dec 31, 2010
No. of Recorded Subsidiaries 352 2,364
Legal Form Public quoted Public quoted. 41% owned by the
taxpayer following a massive
Government bail-out.
Source: FAME

5. STAKEHOLDERS ANALYSIS IN BANKING SECTORS
CUSTOMERS REGULATORS MANAGEMENT INVESTORS &
 Customer & EMPLOYEES SHAREHOLDERS
 Bank of
Satisfaction Financial services
England (the
employ over 1  Individual &
 Competitive Bank), million people, Institutional
Advantage
3.9% of all UK
 Customer  Financial employment.  Interest is mainly
on the Financial
Perceptions of Services Performance
Value  Business
Authority Measurement
Strategy
 Corporate Image (FSA) and formulation &  Using
alignment management‟s
 Switching Barriers  The Treasury own measures of
(e.g. transaction  Risk success really
costs, learning Management helps deepen
costs, loyal Collectively investors‟
customer responsible for  Corporate understanding of
discounts and
emotional costs) financial stability Culture progress and
movement in
 Principle of business.
 Customer Loyalty
Engagement
(Cohen & Gan 2006)

6. FACTORS AFFECTING PERFORMANCE
MEASUREMENT IN BANKING SECTOR
 Much Focus on financial measures, such as, Earnings per Share (EPS). Return
on Investment (ROI) and Return on Equity (ROE).
 Emergence of contemporary system such performance measurement matrix (Keegan et al., 1989).
SMART pyramid (Lynch and Cross, 1991). the balanced scorecard (Kaplan and Norton, 1992). result
and determinants framework (Fitzgerald et al., 1991). The performance prism (Neely et al., 2001) and
Comparative business scorecard (Kanji and Moura, 2002).
ECONOMIC TECHNOLOGICAL SOCIO-CULTURAL PRESSURES FOR
ENVIRONMENT ENVIRONMENT AND POLITICAL CHANGE
 Negative economic  technological ENVIRONMENT  Mimetic pressures
conditions place advancements  Most Banks in the
pressure on seem to make UK are  Coercive pressures
organizations to banks offer a transnational (e.g. Central bank‟s
increase wider variety of institutions regulatory control,
profitability customer services, Financial legislations)
(Burney, 1999). not only to fulfill  Adopt consistent
making it difficult the needs of Performance  Normative pressures
for management to customers, but measurement (Professionals,
focus on improving also to achieve practices with Strategic Orientation,
and measuring non- economies of international the corporate culture &
financial scale and to be practices. top management.) –
performance. competitive. Professionals is the
most dominant
influence
(Rahat Munir, Kevin Baird 2008)

7. FINANCIAL CRISIS AND THE FAILURE OF THE UK
REGULATORY FRAMEWORK
UK‟s „TRIPARTITE‟ THIS SYSTEM FAILED IN A EMERGING CONSENSUS
REGULATORY NUMBER OF IMPORTANT ON THE FUNDAMENTAL
SYSTEM WAYS CAUSES OF THE
CRISIS
 Bank of England
(the Bank),  To identify the problems  Global economic
that were building up in imbalances;
 Financial Services the financial system;
Authority (FSA)  Mispriced and
and  To take steps to misunderstood risk;
mitigate them before
 The Treasury they led to significant  Unsustainable funding
instability in financial and business models
– collectively markets; and for banks;
responsible for
financial stability  to deal adequately with  Excessive build up of
the crisis when it did debt across the
break, especially financial system; and
during the first part of
the crisis in the summer  The growth of an
of 2007. unregulated „shadow
banking‟ system

8. Source: FAME
Source:
2011 COMPARISON AT A GLANCE
Lloyds 2011 (£m) Barclays 2011 (£m)
Total Asset 970,546 1,563,402
Total Liabilities 923,952 1,498,232
Shareholder Equity 45,920 65,170
Operating expenses (10,621) (20,772)
Net Income 21,123 26,780
Profit (Loss) Before Tax (3,542) 5,974
2011 ANNUAL REPORTS 2011 ANNUAL REPORTS
(Operating Expenses, Net Income & PBT) (Total Asset, Total Liabilities, Shareholder
Lloyds 2011 (£m) Barclays 2011 (£m) Equity)
26,780 Lloyds 2011 (£m) Barclays 2011 (£m)
21,123
1,563,402 1,498,232
5,974
970,546 923,952
Operating expenses Net Income Profit Before Tax
(3,542)
(10,621) 45,920 65,170
(20,772) Total Asset Total Liabilities Shareholder Equity

9. KPIs, FINANCIAL & BUSINESS RATIOS
2,500,000
2,000,000
1,500,000
£ Million
1,000,000 2007 2008 2009 2010 2011
Barclays (Total Assets) 1,227,583 2,053,029 1,379,148 1,490,038 1,563,402
500,000 Lloyds (Total Assets) 353,346 436,033 1,027,255 991,574 970,546
0 Barclays (Income) 23,523 21,153 29,094 32,214 33,123
2007 2008 2009 2010 2011 Lloyds (Income) 10,696 9,868 23,278 24,956 20,771
Barclays (Profit After Tax) 5126 5249 3512 4172 3,616
Barclays (Total Assets) Lloyds (Total Assets)
Lloyds (Profit After Tax) 3,288 772 2,827 -320 -2,787
35,000 6000
30,000 5000
4000
25,000 3000
20,000 2000
1000
15,000
0
£ Million
10,000 -1000 2007 2008 2009 2010 2011
5,000 -2000
-3000
0
-4000
2007 2008 2009 2010 2011
Barclays (Profit After Tax)
Barclays (Income) Lloyds (Income) Lloyds (Profit After Tax)

10. KPIs, FINANCIAL & BUSINESS RATIOS - Profitability Ratios
Lloyds Barclays Lloyds Barclays Lloyds Barclays
2010 2010 2009 2009 2008 2008
Return on Shareholders Fund 0.61 10.27 2.41 8.15 7.17 14.65
ROCE 0.22 9.43 2.3 5.28 2.79 7.98
Return on Total Asset 0.03 0.41 0.1 0.33 0.19 0.29
Profitability Ratio for 2010 Profitability Ratio for 2009
Lloyds 2010 Barclays 2010
Lloyds 2009 Barclays 2009
10.27 9.43 8.15
5.28
2.41 2.3
0.61 0.22 0.03 0.41 0.1 0.33
Return on ROCE Return on Total Return on ROCE Return on Total
Shareholders Asset Shareholders Asset
Fund Fund
 Barclays Bank is a more profitable business
Profitability Ratio for 2008 compare to Lloyds Banking Group. This
Lloyds 2008 Barclays 2008 performance could be attributed to the
management of Barclays Bank PLC. Most
time, management of an organization seem to
14.65 be the difference maker. This could be
buttressed by the article on FT.com captioned
7.17 7.98 “Barclays co-heads each get more than £9m” -
By Sharlene Goff (March 14, 2012 )
2.79
0.19 0.29
 According to FT.com, acquisition HBOS was a
bad investment that contributed to their poor
Return on ROCE Return on Total performance captioned “Lloyds in £42bn bill
Shareholders Asset
Fund
from toxic HBOS” - By Patrick Jenkins and
Adam Jones (February 26, 2010 10:22 pm)

11. KPIs, FINANCIAL & BUSINESS RATIOS – Structure Ratios
Lloyds Barclays Lloyds Barclays Lloyds Barclays
2010 2010 2009 2009 2008 2008
Current Ratio 1.12 1.03 0.27 1.05 1.03 1.03
Luquidity Ratio 1.12 1.03 0.27 1.05 1.03 1.03
Shareholders Liquidity Ratio 0.56 11.18 21.41 1.84 0.64 1.2
Solvency Ratio 4.56 3.97 4.21 4.06 2.58 2.01
Gearing Ratio 814.52 0 4.67 54.61 157.16 912.12
Structure Ratio for 2008 Structure Ratio for 2009
Lloyds 2008 Lloyds 2009 Barclays 2009
2.58 21.41
2.01
1.2
1.03 1.03 1.03 1.03
0.64
4.21 4.06
1.84
1.05 1.05
0.27 0.27
Current Ratio Luquidity Shareholders Solvency Current Ratio Luquidity Shareholders Solvency Ratio
Ratio Liquidity Ratio Ratio Ratio Liquidity Ratio

12. KPIs, FINANCIAL & BUSINESS RATIOS
– Structure Ratios
STRUCTURE RATIOS
Structure Ratio for 2010
Lloyds 2010 Barclays 2010  The current ratio & liquidity ratio of Lloyds Banking group
in year 2009 show that the group could not have been able
11.18 to meet its financial obligation. It is clear indication of over
trading on their part and this probably have caused the
bank a financial crises. Massive business expansion with
100% rise in number of employee from 66,473 to 132,000
could have contributed to this.
 The solvency ratio of Lloyds shows that its over
dependency on outside sources for long-term financial
4.56 support.
3.97
1.12 1.03 1.12 1.03
0.56
Current Ratio Luquidity Ratio Shareholders Solvency Ratio
Liquidity Ratio
(Dyson, 2008) (Walker, 2009)

13. KPIs, FINANCIAL & BUSINESS RATIOS – Trends in Percentage
GROWTH IN ASSET, INCOME & PROFIT OVER THE LAST 5 YEARS (TRENDS IN %)
2008 - '07 2009 - '08 2010 - '09 2011 - '10
Total Asset (Barclays) 67.24 -32.82 8.04 4.92
Total Income (Barclays) -10.08 37.54 10.72 2.82
Profit (Barclays) 2.40 -33.09 18.79 -13.33
Total Asset (Lloyds) 23.40 135.59 -3.47 -2.12
Total Income (Lloyds) -7.74 135.89 7.21 -16.77
Profit (Lloyds) -76.52 266.19 -111.32 -1151.94
Asset Trends in % Income Trends in %
160.00 160.00
140.00 140.00
120.00 120.00
100.00 100.00
80.00
80.00
60.00
60.00
40.00
40.00
20.00
0.00 20.00
-20.00 2008 - '07 2009 - '08 2010 - '09 2011 - '10 0.00
-40.00 -20.00 2008 - '07 2009 - '08 2010 - '09 2011 - '10
-60.00 -40.00
Total Asset (Barclays) Total Asset (Lloyds) Total Income (Barclays) Total Income (Lloyds)

14. (Milis et al. n.d.)(ACCOUNTANTS n.d.)
KPIs, FINANCIAL & BUSINESS RATIOS – Trends in Percentage
Profit Trends in %
400.00
200.00
0.00
2008 - '07 2009 - '08 2010 - '09 2011 - '10
-200.00
-400.00
-600.00
-800.00
-1000.00
-1200.00
-1400.00
Profit (Barclays) Profit (Lloyds)
TRENDS IN PERCENTAGE
 Except for the Asset trend that seem to be getting stable for Lloyds banking Group, all others which include income and profit
trends are noise-diving.
 Although the income trend for Barclays Bank is also noise-diving but there is a relative stability in its profitability ; a good cost
saving strategy and effective risk management can be deduced.

15. INVESTMENT APPRAISAL TECHNIQUES
The most important investment appraisal techniques are concerned not only with
what cash flows will arise in the future as a result of the project, but also with the
timing of those cash flows. For what reasons might earlier, perhaps
smaller, forecast cash inflows be preferred than later, perhaps larger, cash
inflows?
INVESTMENT TECHNIQUES INVESTMENT/SPROJECTS IN A
DECISION-MAKING BANK & CATEGORY OF BENEFITS
PROCESS
Banks could be involved in any type
 Net Present Value
of investments/projects; IS services
investment, Business Acquisition and
 Origination of  Accounting Rate of
so on are common to Banks
proposals Return
Use of these Traditional techniques
 Project screening.  Payback Period
might not be sufficient to evaluate an
investments/projects such as IS
 Analysis and  Internal Rate Of Return
service
acceptance (Graphical Approach &
Interpolation Method)
Category of benefits
 Monitoring and
review  Tangible benefits
 Intangible benefits
(Milis et al. n.d.)(ACCOUNTANTS n.d.)

16. COST CONTROL IN THE UK BANKING SECTOR
Cost control has taken on a new priority at the UK‟s banks. Since the crisis,
market participants have been grappling with cost to income ratio strains
and a more challenging regulatory and competitive landscape. And with
revenue growth becoming increasingly difficult to source, bank executives
have stepped up their focus on cutting costs wherever possible in a bid to
make their organizations more efficient and agile.

17. COST CONTROL IN THE UK BANKING SECTOR
The problems with the cost efficiency ratios stem from a combination of factors on both sides of
the cost to income equation:
 Banks are struggling to grow top line revenues across many areas of their businesses.
 growth in revenues, a number of institutions are seeking to expand their emerging market
operations.
 Catalogue of national and international regulatory initiatives in the wake of the financial
crisis is continuing to add to the cost line.
 Payment Protection Insurance (PPI) – as banks‟ recent provisions demonstrate
 Lastly, the Government announced in February, 2012 that it would increase the bank levy to
£2.5 billion this year,

18. FORECAST FOR BARCLAYS BANK & LLOYDS BANKING GROUP
BARCLAYS BANK PLC LLOYDS BANKING GROUP PLC
Asset Quality Barclays is ready to remain Likelihood of improved asset quality as a
confident on credit asset quality result of the accelerated efforts to reduce
risk-weighted assets (RWAs) and improve
the funding and risk profiles
Cost Saving Barclays has identified up to £2 Lloyds is targeting annual cost savings of
billion in potential savings by £1.5 billion per annum in 2014 (£1.7 billion of
2013, with a savings target of £1 run-rate savings by end 2014).
billion at Group level
Market Forecast As of Apr 20, 2012, the As of Apr 20, 2012, the consensus forecast
consensus forecast amongst 3 amongst 31 polled investment analysts
polled investment analysts covering Lloyds Banking Group PLC advises
covering Barclays PLC (ADR) that the company will outperform the
advises investors to purchase market. This has been the consensus
equity in the company. This has forecast since the sentiment of investment
been the consensus forecast analysts improved on Apr 05, 2012.
since the sentiment of
investment analysts improved on
Apr 14, 2012. The previous
consensus forecast advised that
Barclays PLC (ADR) would
outperform the market.

19. RECOMMENDATION & CONCLUSION
Aside the Financial crises which affected all banks and the whole economy at large, the
investment decision of Lloyds Managements in the acquisition HBOS caused the poor
performance. This has greatly increased the level of nonperforming assets and elevated
Lloyds' credit risk exposure and impairment provisions.
Lloyds has a recognizable underlying earnings power, but considerably weak profitability
because of its low net interest margin, elevated expense base, and most importantly high
credit costs
Barclays Bank PLC seem to have a better management staff with a sound business strategy.
Barclays Bank was ranked amongst the top performers in the banking industry globally.
Creating a good relationship with the clients, risk management and improving the strategic
momentum of the Bank
RECOMMENDATION
 Lloyds: Proper investment appraisal should be carried out subsequently in any acquisition and
investment.
 Lloyds & Barclays: Cost saving campaign within the organization that will sensitize all employees
 Barclays: Continuous good relationship with the clients, risk management and improving the
strategic momentum of the Bank

20. REFERENCES
BOOKS & JOURNALS
 Cohen, D. & Gan, C., 2006. CUSTOMER SATISFACTION A STUDY OF BANK CUSTOMER RETENTION IN NEW
:
ZEALAND. Most, (109).
 Dyson, J.R., 2008. Ratio analysis. ACCOUNTING FOR NON-ACCOUNTING STUDENTS Seventh Edition John R.
Dyson ACNA_A01.QXD 2/20/08 7:10 AM Page iii, 7th Editio, pp.223-232.
 KPMG, 2011. UK Banks Performance Benchmarking Report. Europe.
:
 Rahat Munir, Kevin Baird, S.P., 2008. CHANGES IN PERFORMANCE MEASUREMENT SYSTEM IN BANKING
SECTOR AN ANALYTICAL FRAMEWORK Rahat Munir , Kevin Baird , Sujatha Perera. Management
:
Accounting, pp.1-24.
 TREASURY, H., 2010. A new approach to financial regulation:,
 Walker, J., 2009. 6.7 Assessing liquidity 170. Accounting in a Nutshell: Accounting for the Non-specialist Third
Edition Janet Walker AMSTERDAM • BOSTON • HEIDELBERG • LONDON NEW YORK
• OXFORD • PARIS • SAN DIEGO SAN FRANCISCO • SINGAPORE • SYDNEY
&#8226.
WEBSITES & PORTALS
 http://fame2.bvdep.com/version-
201244/SSOLogin.serv?product=fameneo&loginpostback=true&ssotoken=7P0QjUmCOG5UE60jtsv3xQ%3d%3d accessed
April 03, 2012 at 12:43pm
 http://group.barclays.com/Investor-Relations/Financial-results-and-publications/Annual-Reports accessed April 16, 2012 at
16:57pm
 http://2011.lloydsbankinggroup-annualreport.com/ accessed April 16, 17:08pm
 http://www.ft.com/cms/s/0/5ccc7970-22a8-11df-8942-00144feab49a.html#axzz1sbaH1sFk accessed April 20, 2012
 http://www.ft.com/cms/s/0/0d08b136-6e02-11e1-baa5-00144feab49a.html#axzz1sbaH1sFk accessed April 20, 2012

21. THANK
YOU