More detail can be found online at

www.barclays.com/annualreport

Business review

Total income by business segment    

UK Retail and Business Banking

Europe Retail and Business Banking

1. UK Retail and Business Banking

2. Europe Retail and Business Banking

3. Africa Retail and Business Banking

4. Barclaycard

5. Investment Bank

6. Corporate Banking

7. Wealth and Investment Management

£4,421m

A leading UK high street bank providing retail banking services and general insurance to individuals and business banking services to small and medium enterprises (SMEs)

£915m

A local presence for Barclays customers in Spain, Italy, Portugal and France, providing retail banking services to mass-affluent individuals and business banking services to SMEs

Africa Retail and Business Banking

Barclaycard

£3,157m

A leading pan-African retail and business bank serving customers and clients in 12 countries with a range of banking and bancassurance solutions

£4,170m

A leading international payments business, offering payments and lending to individuals, and a range of business services including card issuing and payment acceptance services

For more detailed information please refer to pages 16-23

Investment Bank

£11,722m

A global investment bank serving large corporate clients, financial institutions, governments and institutional investors with financial advisory, capital-raising, financing and risk management services

Corporate Banking

£2,918m

A leading provider of integrated cash management, financing and risk management solutions to large corporate clients in the UK and South Africa, and multinationals and financial institutions globally

Wealth and Investment Management

£1,815m

A premier global wealth manager and advisor, providing private and intermediary clients with international and private banking, investment management, fiduciary services and brokerage

Your Chairman’s view

The Chairman’s primary role is to provide leadership to the Board, creating the conditions for overall Board effectiveness and ensuring that Barclays satisfies its legal and regulatory responsibilities.

Here, Sir David Walker – who became Chairman in 2012 – takes the opportunity to provide his views on the performance of Barclays, the Board, and his priorities for the future.

The right culture

Changing Barclays culture is a critical component in rebuilding trust and real change is required. The Board and management have an essential role to play in promoting a culture that embeds appropriate and consistent values throughout the whole of the organisation, irrespective of location or seniority. We have already started work on changing the culture with the launch in January of Barclays new Purpose and Values. We have defined our Purpose as ‘Helping people achieve their ambitions – in the right way’. This is underpinned by five core values: Respect, Integrity, Service, Excellence and Stewardship. Antony Jenkins provides more detail on this work and the overall Transform Programme – designed to position Barclays as the ‘Go-To’ bank – in his CEO’s Review. Embedding the new Purpose and Values will take time but we are already changing the way we pay people to help accelerate that journey. Remuneration structures are being amended to ensure they take into account how results are delivered as well as the actual delivery of those results. We have already removed all sales commission for branch-based staff with performance now being measured against customer service metrics.

Running Barclays the right way

Changes will be made to the way Barclays is governed in order to reflect the new environment in which we are operating and reinforce the cultural change that we are putting in place. We were one of the first banks to create a Board Risk Committee and this served Barclays well during the financial crisis. It has primarily focused on financial risks, such as credit, market, capital and funding risk. However, we now need to ensure an equal focus on conduct and reputation risk. We have accordingly created a new Board Committee to scrutinise these areas of risk, including operational risk. The creation of such a committee will ensure that the existing Board Risk Committee can focus its attention on financial risk, while the new Board Conduct, Reputation and Operational Risk Committee can focus on ensuring that our business practices and culture appropriately reflect the needs of all of our stakeholders, especially our customers, in addition to focusing on other areas of non-financial risk.

Remuneration has been a key governance concern for many of our stakeholders. There is no doubt that pay in some parts of the industry became excessive in the years leading up to the financial crisis. We are determined to ensure that shareholders receive an increased share of the

income and pre-compensation profits earned by the Group. Significant progress was made in 2012 – incentive awards reduced by 16% overall and 20% in the Investment Bank, despite a material increase in adjusted profit before tax. We are determined to continue making progress in improving critical compensation ratios such as compensation to net operating income to the benefit of our shareholders.

The Barclays Board responded swiftly following the resignations of Marcus Agius and Bob Diamond as Chairman and CEO respectively in order to ensure stability was restored as quickly as possible, with Marcus Agius agreeing to act as full-time Chairman until a new Chairman and CEO had been appointed. It has also worked diligently to ensure Barclays survived during one of the most serious financial crises the world has faced. The Board and management deserve credit for Barclays profitable track record during this period.

Criticism has, however, been levied at both the Board and senior management for their role in the events which resulted in the resignations last July. With the benefit of hindsight, there was a failure to recognise sufficiently that the environment in which banks operate had changed. A key lesson from the events of last summer is to underline the need for the Board to step back periodically from the detail and to take stock of the changing external strategic and operating environment. The Board will be assisted in this by the addition of two new Directors who have recently been appointed: Tim Breedon, the former Chief Executive of Legal & General Group plc, and Diane de Saint Victor, the General Counsel of ABB Limited. Tim brings to the Board deep financial services experience and a shareholder perspective, while Diane brings specific experience of legal and compliance issues in a global business and in helping to embed cultural change. Further Board appointments will be made during 2013. Marcus Agius and Alison Carnwath both left the Board last year. I want to thank Marcus for his dedicated contribution as Barclays Chairman through an extraordinarily difficult 5-year period for the banking sector between 2007-2012 and, in particular, for the effectiveness and dignity of his leadership in the demanding phase of transition after Bob Diamond stepped down and before I became Chairman later in the year. I want also to thank Bob Diamond for the very significant positive contribution that he made during his 16 years with Barclays. Sir Andrew Likierman will be retiring from the Board at the AGM having served nine years as a Director. I would like to thank Andrew for his contribution to the Board over this period, particularly as a member of the Board Audit and Risk Committees. I would also like to thank Alison Carnwath for her contribution to the Board.

Responding to regulation

There is now emerging more clarity on the future shape of the regulatory environment, although the precise details still need to be resolved. It is, however, clear that intensive and intrusive regulation is here to stay, together with higher levels and quality of capital and liquidity. It is also clear that there will be significant structural reform in the shape of a ring-fenced bank in the UK and other reforms in the US, including the prospective need to create an intermediate US holding company with its own capital and liquidity to hold Barclays US subsidiaries. We will respond positively to these developments and are already beginning the process of establishing a ring-fenced bank here in the UK. We aim to continue to lead the sector in ensuring that we can eliminate the ‘too big to fail’ problem through our work on recovery and resolution planning.

The new regulatory environment will require changes to both business models and cost structures. The Transform Programme and Strategic Review that Antony Jenkins sets out in his CEO’s Review is designed to address precisely these issues. However, care does need to be taken to ensure that regulation does not go too far. A healthy banking sector earning returns above the cost of equity is essential to economic growth. It is important to ensure that the rightly increased focus by the regulator on conduct supervision does not inadvertently result in the withdrawal of services and the restriction of choice.

£44bn

We provided £44bn in gross new lending to UK households and businesses in 2012

112,000

We supported the creation of 112,000 new businesses in the UK

500

We welcomed over 500 apprentices in January 2013 and are on track to meet our commitment to recruit 1,000 apprentices by the middle of this year

£64.5m

We invested a total of £64.5m in community programmes globally in 2012, with 68,000 Barclays employees providing their time, skills and money to charitable causes

750,000

We continue to innovate for the benefit of our customers and clients; for example through PayTag we have enabled over 750,000 mobile phones to make contactless payments across three countries, and through Pingit, the first mobile payment application in Europe, we have won numerous industry awards

£3.2bn

We are a major taxpayer, with our total tax contribution amounting to £3.2bn in 2012, in addition to taxes paid on behalf of employees, customers and clients

Conclusion

I feel immensely privileged to be Chairman of this great organisation at such an important point in its history. Barclays has a proud and successful history. Its reputation has, however, been badly damaged by recent events and it is crucial to restore trust in the eyes of stakeholders. I am pleased to say that work is well underway under the leadership of Antony Jenkins to do just that.

I have been impressed since joining Barclays by the quality of its people and of its businesses. I would like particularly to thank our 140,000 employees worldwide who have shown commitment and loyalty to both Barclays and our customers and clients. It is because of them that I am confident in Barclays future.

Sir David Walker

Chairman

Being the ‘Go-To’ bank means being the instinctive partner of choice for anyone looking to do banking business, whether a small business, first-time house buyer, or a large corporate undertaking a complex merger or acquisition deal. Customers and clients will benefit from being firmly in the centre of everything we do. For further information on becoming the ‘Go-To’ bank, please see page 8.

2012 was unquestionably a difficult year for Barclays and the banking industry. Serious mistakes were made and trust badly damaged. Significant change is needed. But while I am determined that we will not repeat the mistakes of the past, I also recognise that Barclays remains a great business and we need to reshape it to meet the needs of all stakeholders – colleagues, customers, clients, broader society and, of course, our shareholders.

Becoming the ‘Go-To’ bank

I have defined Barclays goal as becoming the ‘Go-To’ bank. Quite simply, this means that in future Barclays will be the instinctive partner of choice for anyone looking to do banking business, whether a small business, first-time house buyer or a large corporate undertaking a complex merger or acquisition deal. I want Barclays to be recognised not just for our performance, but for the values we embody in everything we do. If we can achieve this then we will become both the rational and emotional bank of choice for people regardless of the transaction they are looking to make.

This goal is ambitious. The changes we are making are fundamental and the plans we have announced comprehensive. But without them, Barclays will not prosper in what is an ever-changing environment.

Transforming Barclays

Our Transform Programme has three components. Turnaround, Return Acceptable Numbers and Sustain Forward Momentum.

Turnaround was the immediate task of stabilising the business and maintaining momentum after the settlement in relation to LIBOR and EURIBOR in the summer and its subsequent impact on Barclays reputation. I was determined that this would mean listening to all of our stakeholders. We have proactively looked to rebuild relationships with our regulators through frequent, transparent dialogue. We have engaged with politicians, the media, our customers and clients, and I have personally met dozens of investors and analysts. And of course, we have consulted thousands of our colleagues.

Each of these groups had one clear request – for Barclays to become a better bank. This is what we are striving to achieve and I thank everyone who engaged with us.

Your Chief Executive’s view

The role of the Group Chief Executive includes implementing the Group’s strategy as agreed by the Board. Here Antony provides his view on the events of 2012, and the ambition for Barclays for the future, along with the strategy to get us there.

Of course, at the same time, it was essential that we delivered our financial objectives and I believe that the results for 2012 show that we did not lose momentum during a very difficult year.

Aside from delivering an adjusted profit before tax of over £7bn, up 26% year on year, adjusted total income increased 2% to £29bn and impairments improved by 5% resulting in net income growth of 3% to £25.4bn. Charges of £1.6bn and £850m were incurred for PPI and interest rate hedging products redress respectively. Our capital, liquidity and funding also remained strong with a Core Tier 1 ratio of 10.9% and total capital ratio of 17.1%.

Our four largest businesses all increased returns on the previous year. There were strong performances from UK Retail and Business Banking and Barclaycard which reported returns of 16.0% and 22.1% respectively. The Investment Bank delivered returns of 13.7% and Corporate Banking continued its turnaround with returns of 5.5%, up from 1.7% in 2011.

We have a long way to go to become the ‘Go-To’ bank and the second element of Transform, Return Acceptable Numbers, outlines our plans to build on these strong foundations to deliver a Group return on equity above the Group’s cost of equity during the course of 2015 and beyond.

The economic outlook for the foreseeable future is subdued. This means we have to prioritise our investment and our focus rather than look to grow every business. More than ever, we need to focus on costs. This will be the strategic battleground for the financial services industry in the future and we must do things differently if we are to thrive.

Over the last few months, we have undertaken a comprehensive, end-to-end review of our operations, unprecedented in scope and detail. We have closely examined the external environment – now and in the future – looking at the economic context, the needs of our customers and clients, regulatory and stakeholder expectations, and the competitive landscape.

As you will read in this report, we are reshaping Barclays. We have made tough commercial decisions about those businesses not consistent with our financial targets or reputational criteria. But as a result we will build a universal bank that generates a return on equity sustainably in excess of the cost of equity in the course of 2015, while meeting our responsibilities to all our stakeholders.

The final part of Transform, Sustain Forward Momentum, defines how we will reach ‘Go-To’ by creating and sustaining a culture that delivers the right outcomes in the right way.

Purpose and Values

The notion that there must always be a choice between profits and a values-driven business is false. Barclays will only be a valuable business if it is a values-driven business. And we will become a valuable and sustainable institution for all our stakeholders by aligning behind a common purpose: ‘Helping people achieve their ambitions in the right way’ and adhering to our new core values: Respect, Integrity, Service, Excellence and Stewardship.

These values are not window dressing, nor are they part of an elaborate PR campaign. They are the foundations of our future and will define the work we will and will not do, and therefore the value we will create. For the past 30 years, banking has been progressively too aggressive, too focused on the short term, too disconnected from the needs of our customers and clients, and wider society and we lost our way. This cannot be allowed to happen again.

Our values will be the bedrock of our future success and the blueprint to define how we work together from now on. Our balanced scorecard (page 13) will create a holistic assessment of our performance for all of our stakeholders. This scorecard will underpin the performance assessment for our 125 most senior leaders this year and for all colleagues by the middle of 2014 and we will be transparent about the progress we are making against this scorecard.

This journey will not be easy. In 2013, overall returns will decrease as we take the action required to reshape our portfolio of businesses. We also see four key risks to achieving our plans – a major macroeconomic downturn, a significant unexpected change in regulation, legacy issues and failure to execute the plan.

We have been deliberately conservative in our planning to mitigate against a major downturn in the global economy, in addition to any significant and unexpected change in regulation. While a number of regulatory reforms have not yet been finalised, we believe that the direction of travel on the principal reforms is clear and our plans anticipate this new landscape as much as possible. Should the final shape of regulation differ from what we expect, Barclays track record demonstrates a clear ability to adapt while still delivering against our commitments.

With regard to legacy issues, we have a number of on-going areas of litigation and regulatory review and we have robust processes in place to address them. The execution of our plans is absolutely within our control. We know that. And we are aware of the importance of being able to track and assess our progress which is why we have made a series of financial and non-financial commitments with clear timescales. See page 12 for more information.

Ultimately, we recognise that it will be for others to judge whether or not we have succeeded in our objectives. But we have a credible plan, a strong team and my commitment is absolute – we will do everything in our power to achieve our objective of becoming the ‘Go-To’ bank.

Antony Jenkins

Group Chief Executive

Becoming the ‘Go-To’ bank for our

customers and clients will require us

to develop deeper relationships more

efficiently and in the right way.

Creating a values-driven culture

Enhancing customer experience

Supporting society

We commissioned Anthony Salz to conduct an independent Group-wide review of the bank’s current practices. We intend to implement the findings of this review as we transform the organisation.

Barclays Pingit was awarded the accolade of 2012 Disruptive Service of the Year by Apple. This positive recognition by the technology world is for an innovation that has the potential to create a new market or business model. The App allows customers to send and receive money anytime, anywhere.

Our Corporate Banking business in the UK developed Cash-back for Business, which is a new initiative as part of the government’s Funding for Lending and provides additional funding upfront equal to 2% of the loan.

Our goal, purpose and values

Our goal and purpose represent a focal point for all colleagues that will guide our efforts and approach.

Barclays values, newly revised in this report, focus our approach to doing business – how we will work and serve – in the right way.

Improving our business controls

Creating opportunities for our colleagues

Helping with disaster relief

In December 2012, we created a new role of Head of Compliance and Government and Regulatory Relations, reporting directly to the CEO. To help build a more cohesive and effective function, all compliance colleagues and activity across Barclays now report to this individual and thus operate independently of any business and regional teams for management purposes.

Our new consolidated Africa operating model will provide increased opportunities for colleague mobility through the creation of short term intra-Africa secondments that will help colleagues to build international experience and further their careers through opportunities that may not be available in their home countries.

Along with 200 Barclays volunteers, the Investment Bank committed $1.5m to Hurricane Sandy Disaster Relief programme. This initiative is particularly close to the hearts of our US colleagues as much of the devastation occurred in their own or neighbouring communities.

Our path forward

Our balanced scorecard outlines the performance categories and objectives that will guide the behaviours for all our colleagues.

We are currently working on the full set of precise scorecard measures. The objectives below are illustrative of the type of objectives that may be selected.

Our balanced scorecard – measuring the success of our strategy

We understand the need to demonstrate tangible progress, not just talk about our good intentions. We are serious about making sure we live by these values, so they will play a significant role in how we measure and reward individual and business performance.

We will continue to pay for performance and we will continue to pay competitively for the best talent. However, in future, variable pay will depend on performance against our values as well as other targets.

A new performance assessment approach, based on a balanced scorecard, will be introduced for senior executives during 2013 and for all colleagues from the middle of 2014. This means all variable remuneration will depend on delivering performance in the way that is consistent with our values.

Adding further weight to doing business ‘in the right way’, we will launch a new Code of Conduct for all staff following (and including) recommendations from the Salz Review.

Customers and Clients

Delighting our customers and clients is fundamental to being their ‘Go-To’ bank. We want to be the provider of choice by ensuring that our customer service is top tier for the markets in which we operate.

Objectives

¡    Greater level of customer and client satisfaction

¡    More business from more customers and clients

Colleagues

Objectives

¡    Improved colleague engagement and satisfaction

¡    Diversity across our workforce

¡    Retention of high-performing colleagues

Citizenship

In striving to make Barclays the ‘Go-To’ bank, we must consider the impacts of our day-to-day business decisions on our stakeholders and wider society. We will ensure our decisions take account of external stakeholder needs in the short and long term and positively impact the communities in which we operate.

Objectives

¡    Improve external stakeholder perceptions

¡    Increase impact of community programmes

Conduct

We must be a values-driven business, becoming once again a trusted pillar and the ‘Go-To’ bank because of our behaviour. Success will be seen when our regulators view us as a model of constructive engagement. Our products and services will be designed and distributed to meet clients’ and customers’ needs consistent with our mutual risk appetite and will be priced appropriately.

Objectives

¡    Effective control environment

¡    Fewer customer complaints

Company

As a financial institution, we understand the importance of strong commercial performance. We are resilient as a firm as demonstrated by our 323 years in operation, but we will reinvigorate a focus on building to last, particularly in our financial strength.

Objectives

¡    Return on equity above the cost of equity

“How will you change the businesses in the

future, and how does that differ from what

the businesses look like today?”

The following pages show how Barclays operate at a divisional level and the services each of the businesses provide, along with the priorities for 2013 and beyond. Their divisional performance is included to help give context to overall 2012 performance.

Contribution to total income

£915m

Contribution to total income

£3,157m

Contribution to total income

£4,170m

Contribution to total income

£11,722m

Contribution to total income

£2,918m