Robert Edward Diamond - Group Chief Executive, President, Chief Executive of Corporate and Investment Banking and Wealth Management, Executive Director, Executive Director of Barclays Bank Plc and Member of Executive Committee Christopher Lucas - Chief Financial Officer, Group Finance Director, Executive Director, Chairman of Disclosure Committee, Member of Executive Committee and Group Finance Director of Barclays Bank PLC

Chris Manners - Morgan Stanley, Research Division John-Paul Crutchley - UBS Investment Bank, Research Division Thomas Rayner - Exane BNP Paribas, Research Division Michael Helsby - BofA Merrill Lynch, Research Division Andrew Coombs - Citigroup Inc, Research Division Ian Gordon - Investec Securities (UK), Research Division Fiona Swaffield - RBC Capital Markets, LLC, Research Division Edward Firth - Macquarie Research James Invine - Societe Generale Cross Asset Research Rahul Sinha Christopher Wheeler - Mediobanca Securities, Research Division Peter Toeman - HSBC, Research Division Michael Trippitt - Oriel Securities Ltd., Research Division Chintan Joshi - Nomura Securities Co. Ltd., Research Division Jon Kirk - Redburn Partners LLP, Research Division

Ladies and gentlemen, welcome to the Barclays Interim Management Statement Analyst and Investors Conference Call. I will now hand you over to Bob Diamond, Chief Executive.

Good morning. Thanks for joining. I'm here with Chris Lucas, Barclays Finance Director. Before Chris takes you through the numbers in more detail, I wanted to share a few thoughts and a few headlines. First, these results reflect a strong performance across our businesses. The environment has improved since the second half of last year, but frankly, continues to be challenging. We reported adjusted PBT of GBP 2.4 billion, 22% up on a strong first quarter last year. The statutory numbers include a large reversal in owned credit, which is both noncash and non-regulatory capital and a further provision for PPI. Our adjusted profit performance was driven by total income growth of 5% to just over GBP 8 billion. This positive momentum and earnings is both broadly based and well balanced. There was good underlying performance in every business. An encouraging start to the year in Investment Banking, an important turnaround in Corporate Banking and a strong performance in U.K. Retail and Business Banking in Barclaycard and in Wealth Management, where we are seeing the benefits of our Gamma investment program. The results were achieved with a continued focus on delivering against 4 key execution priorities. Let me just update you on progress on all 4 of those. First, we continue to be rock solid on capital, liquidity and funding. That is our primary execution priority. Our Core Tier 1 ratio remains strong at 10.9%. Our liquidity pool increased to GBP 173 billion. We raised GBP 12 billion of term funding in the first quarter, just about half our requirement for 2012. Secondly on returns. We delivered adjusted return on equity of 12.2% and an adjusted return on tangible equity of 14.3%. This is particularly encouraging as it was achieved in a relatively weak economic and low interest rate environment. Our 3 biggest businesses, our 3 largest businesses, delivered returns comfortably above our targets. U.K. Retail and Business Banking at 15% return on equity; Barclaycard, 20% return on equity; Investment Banking, 17% return on equity. Now progress will not be in a straight line as regulation still has to be implemented. This result does support our belief that we can achieve 13% returns over time. The third execution priority is income growth. Total income growth of 5% was driven by the increasing strength of our franchise in cards, in wealth, and in corporate. The turnaround in our corporate business is important. That's a really important business for us. Investment Bank income was broadly flat on a strong first quarter in 2011 and was up significantly on the second half of 2011. Our fourth execution priority is citizenship. We remain absolutely focused on supporting economic growth and job creation, particularly here in the United Kingdom. We were able to deliver gross new lending of over GBP 10 billion in the first quarter, half of that to businesses. We participated in the government's national loan guarantee scheme. We were able to deliver value to customers up front through our unique cash back mechanism. So overall, first quarter results demonstrate that we're making steady progress across our priorities, in a challenging and volatile environment. Let me hand over now to Chris to take you through some numbers.

Thanks, Bob, and good morning. We're using adjusted numbers this morning as usual, because they give a better understanding of the operating trends in the business. These numbers exclude a reversal on owned credit of GBP 2.6 billion, arising from an improvement in our credit spreads and a further provision for PPI of GBP 300 million. You'll find the statutory numbers in the document together with details of a small restatement related to some activities in Absa, which are now reported in Corporate Banking. In general, my comments compare the first quarter this year with the first quarter last year. Let's start with the headlines. On an adjusted basis, profits increased 22% to GBP 2.4 billion. Total income grew 5% to GBP 8.1 billion and impairment improved 16%. As a result, net operating income grew 8%, while costs increased 2% and the cost/income ratio improved to 61%. Return on equity rose to 12.2%, above our cost of equity at 11.5% and return on tangible equity grew to 14.3%. Earnings per share went up from 10.7p to 13.6p and we've announced a dividend of 1p for the first quarter. We look forward to increasing the dividend once the industry has certainty of our new capital requirements. I'll talk briefly about the individual businesses before I move on to capital, liquidity and funding, impairment and costs. U.K. Retail and Business Banking profits increased 16% to GBP 334 million and the impairment charges almost halved to GBP 76 million, driven mainly by unsecured lending. Income was broadly stable at just over GBP 1 billion, with growth in current accounts, savings and mortgages offset by a reduction in fee income. Costs grew 2% to GBP 666 million. Europe retail and business banking reported a loss of GBP 43 million, which is a 27% improvement on the same period last year. Income declined 18% GBP to 243 million and impairment charges increased GBP 3 million to GBP 72 million, as lower charges in Spain were offset by increases in Italy and Portugal. Costs fell 25% to GBP 217 million, reflecting the benefit of restructuring activity in 2011. Profits in Africa, RBB, increased 20% to GBP 177 million despite adverse movements in exchange rates. Income declined 4% to GBP 830 million. Impairment charges declined 26%, as delinquency trends and recoveries improved and costs fell 5%. On a local currency basis, income grew 3% and costs were broadly flat. Barclaycard profits increased 18% to GBP 349 million. Income was up 3% to GBP 990 million, as growth from acquisitions was partially offset by higher funding costs. Impairment decreased 24% and costs were up – sorry, costs were up 13%, as a result of the Egg MBNA and new promise acquisitions in 2011. Total income in the Investment Bank of GBP 3.5 billion was up 91% on the fourth quarter of 2011 and 3% on the first. This is an encouraging start to the year. Revenues in fixed income, currency and commodities increased 9% on the first quarter last year. Equities grew 1% and income decreased on our advisory business, reflecting lower market volumes. Performance costs reduced by 2%, nonperformance costs increased, driven by regulatory and legal costs of GBP 115 million. Excluding this, they fell 2% as a result of headcount reductions and efficiency savings across the business. The cost to net operating come ratio was within our target range at 63%. And taken together, this has resulted in profits of nearly GBP 1.3 billion for the quarter. We've made a lot of progress in Corporate Banking where profits increased to GBP 219 million. Income grew 10%, driven by a gain of GBP 78 million in the valuation of loans held at fair value; impairment reduced 27%; while cost declined 10%. Within this, U.K. Corporate Banking profits grew 29% to GBP 268 million. Europe reported a loss of GBP 76 million, which is a 60% improvement resulting from much lower impairment charges in Spain, as well as reduced costs. Profits in other corporate markets improved to GBP 27 million. Wealth and Investment Management increased profits by 30% to GBP 60 million. Income grew 7% to GBP 451 million. Cost grew 5%, reflecting ongoing investment and clients' assets grew GBP 8 billion to GBP 172 billion. Head office reported a profit of GBP 83 million, compared to a loss of GBP 68 million last year. This reflects a one-off gain from closed employee share award hedges, partially offset by higher regulatory costs. Moving now on to capital liquidity and funding. Our Core Tier 1 ratio remained strong at 10.9%, despite a small increase in risk-weighted assets. We have nothing to add to what we told you in February about the impact of Basel III, but we continue to make good progress with our preparations and we'll update you in the second half. Our liquidity pool was GBP 173 billion at the end of March. Over 90% of this consists of FSA-eligible assets, including GBP 130 billion held at central banks. Our wholesale funding maturities for 2012 are GBP 27 billion and we've raised GBP 12 billion during the first quarter, GBP 7 billion of which was unsecured. Adjusted gross leverage was 21x and 18x, excluding our low-risk liquidity pool. Turning to impairment. The loan loss rate reduced from 76 to 63 basis points against the long-term average of 93 basis points. Impairment in retail banking continued to improve, though at a slower rate than last year, while the trend was broadly steady in Corporate and Investment Banking. Costs increased 2% to GBP 4.9 billion, excluding PPI. The PPI provision of GBP 300 million, resulting from an increase in claims, was booked in U.K. Retail and Business Banking and represents our best estimate based on the recent pattern of claims. Despite income growth, performance costs of GBP 900 million were held flat year-on-year. Nonperformance costs amounted to GBP 4 billion, as the benefits of restructuring were offset by strategic investment in Barclaycard and Wealth, as well as regulatory and legal costs in the investment bank. As a result, the cost/income ratio improved to 61%. We're on course to achieve our nonperformance cost savings of GBP 2 billion by 2013. Turning to the outlook. While performance has been encouraging since the beginning of the year, market conditions are challenging and it's too early to determine trends for the full year. So to sum up, we've reported profits of GBP 2.4 billion, with profit growth in 6 of our 7 businesses. Income grew 5% to over GBP 8 billion, our Core Tier 1 ratio was strong at 10.9% and our return on equity increased to 12.2%. There was a strong performance in all of our businesses and a better balance between them, with an encouraging start in the investment bank, a significant turnaround in Corporate Banking and strong results in U.K. Retail and Business Banking, Barclaycard and Wealth Management. Thanks very much indeed. I'll now hand you back to Bob.

One more thought and then we'll open it up for questions. So as we look forward, as Chris and I and the executive team look forward to the balance of 2012, it's all about execution, but in particular, there are 2 real priorities for us during 2012. The first, unsurprisingly, is to manage the business in a way that continues our journey to deliver returns comfortably above the cost of equity on a sustainable basis. The second is very important and it's to continue to commit a significant amount of energy, time, focus to developing a credible resolution plan that can be endorsed by both our regulators here in the U.K. and in the U.S. Ultimately, the eradication of too big to fail is a critical initiative for the industry, for United Kingdom, for Barclays. We're pleased to see Paul Tucker, the deputy governor of the Bank of England, chairing the key committee of FSB under Mark Carney on this initiative. We've put ourselves up to be a test case, and we think 2012 is a critical year to advance this important piece of regulation. With that, again, thank you for being here. It's an encouraging start to the year. The environment remains uncertain. It's all about execution, execution, execution. We're happy to take your questions.

[Operator Instructions] And the first question today comes from Chris Manners of Morgan Stanley. Chris Manners - Morgan Stanley, Research Division: I just had sort of a couple of questions if I may. The first one was on impairment charges. I know that Robert gave guidance of about GBP 3.8 billion for the year that you're annualizing at GBP 3.1 billion in the first quarter, with U.K. looking a lot better and Spain charges also looking low. Just wondering if we could get a little bit more color around the guidance in those sort of early warning indication in Spain? And secondly, just on the net interest margin, 1.86% in the quarter on your sort of banking business, as it were, I mean that was obviously quite a big drop from the second half as we'd anticipated. Is that a sort of sensible run rate for the rest of the year? Or are there other crosswinds that are going to maybe notch that down a little bit?

Chris, thank you. Let me try and answer both of those. Robert did indeed give guidance around GBP 3.8 million. I think it's fair to say that the trends we've seen have been slightly better than those underlying his prediction. And we have probably seen the impact of the economy less so than maybe we thought. I think if we were to ask him to update that number, he would bring the GBP 3.8 million down to about GBP 3.4 million. And that reflects, predominantly, better experience than expected in the core markets in the U.K. and the U.S. Spain is a situation where the numbers speak for themselves. When we went back a couple of years ago, we said one of the things we really wanted to do was to get on top of impairment quickly, and that meant both increasing the number of resource on workouts and providing earlier than we may otherwise have done. So when you look at the trend, the big provisions we took were in 2009, 2010 and we've seen lower provisions since then and I think that just reflects differences in timing. In relation to the net interest margin, you're right, it's about 7 basis points different. And if you look at the second half of last year, there was quite a bit of nonrecurring; we had gains on sales of portfolios whereas if you look at the first quarter, it's pretty clean. It's the customer margin being earned as you'd expect, adjusted for the normal runoff of the hedges. I think what we saw in the first quarter is a pretty good guide as to how we should look at it going forward.

The next question today comes from JP Crutchley from UBS. John-Paul Crutchley - UBS Investment Bank, Research Division: John-Paul here -- JP here. Two questions if I can. Maybe one for Bob and one for Chris. Maybe the easy one first, on the head office. Obviously, you've pointed to the hedge gain and -- but you also alluded to high reg rating cost. I guess it'll be inputs of that maybe but the one off gain, obviously, won't be repeated, but the regulator cost may well be. I just wondered if you could comment on whether we should be looking for a higher level of costs in the central element going forward and what should we think about that. The second question was maybe a slightly more strategic question about the investment bank. I guess over time, you've obviously largely been seen as a fixed income shop and you've clearly been certainly broadening out the business lines and diversifying the business. And I guess if you look at that graph you showed where, a look at the revenue drivers of the business, it's still the sentiment numbers. The P&L is heavily driven by the FICC franchise as opposed to the equities and investment banking franchise. I just wondered if – well, maybe you could comment about how you feel about the diversification, the buildout, the progress you're making in building a bigger, more global investment bank is proceeding against some of the plans you had?

Sure. Thanks, JP. Let me start with that and then I'll ask Chris to answer the question on -- or fill you in on his thoughts on head office. We are absolutely delighted with the decision to acquire the Lehman's business in the U.S. I think part of that decision that was critical for us and goes somewhat unrecognized was the decision not to buy the business in Europe and Asia. We didn't feel it had anywhere near the same quality as the U.S. franchise. And so we are able to build getting the right people in the right roles and do it in a way that building out the equity and advisory and corporate brokering platform in an environment where these businesses are not big users of risk and not big users of capital. So they were a very good balance in this regulatory environment. One of the things I think you'll find interesting is we're one of very few number banks that increased the profitability of equities in the first quarter this year versus the first quarter last year. Low base sometimes is helpful in that. The pipeline's terrific. Clearly, the environment for the new issue equity market has not been positive, but there is no hesitation on our part that this was the right strategic move. The execution has been fantastic. The market is a bit slow, and I'm not sure in the fullness of time that hasn't worked in our favor. So very positive on that. Chris, can I ask you to talk about head office?

Thank you. Head office, as you know, by its very nature, is difficult to predict. But we said if you look at the long-term numbers, it's about GBP 200 million a quarter. And if I was to give people some help, it's about GBP 800 million a year. Within this quarter, we had the gain on hedging of employee share schemes, which is the hedge we put on of about 15 months ago now, and as you can imagine, fair value. The hedge is closed. It was run up to March and there is no further hedging in place. It made about GBP 200 million, that sort of number. The FSCS or the regulatory costs are, I think, going to recur in some level, but it's very hard to predict what that level is. And that, in this, is about GBP 60 million. But I hope that gives you the quantum of the nonrecurring items.

The next question today is from Tom Rayner of Exane BNP Paribas. Thomas Rayner - Exane BNP Paribas, Research Division: A couple of questions, please. The first on the investment bank. Second on sort of the balance sheet movements. Could you give me a sort of feel for the sort of level of commitment to your cost ratios on a full year basis because you started off Q1 last year pretty good at 61%. You're a little bit higher than that Q1 this year. I'm just wondering what, if there's any sort of caveats around the ultimate revenue outcome as to whether you get back inside your sort of 60%, 65% target range. And also, if you could comment on Asia, you do flag up Asia as being part of the good performance in the first quarter. But if you look at the geographic breakdown of revenue, Asia doesn't look to be hugely material. So I wonder if you could comment on how Asia is driving your Investment Banking business, please?

Sure. Thanks, Tom. I think starting with Japan -- starting with Asia. Japan was a really strong performer. It's a business there where we have real scale. It's a business where we have real competitive edge. So we're very pleased with how Asia's performing. And I would say if there was a one part of the business that was at the top of our list of good performance, it would've been Japan. Sorry, in cost/income ratio, we're absolutely committed to 60% to 65%. I should've started with that. I think the context we take things in is we don't expect the second half of 2011 to be the kind of environment that one plans around. You're always prepared for it if it happens, but we think that's the outlier. And I would keep in mind that very strong performance across all these businesses, but that wasn't a robust environment in the first quarter. It's still low economic growth around the world. It's still kind of 0 interest rate policy in the major economies and to see a 9% increase in FICC in this environment versus a good first quarter last year, shows the strength of the franchise, rated #1 both in the U.S. and around the world. And it's the market share gains, it's not really a robust environment. So a 17% return on equity in the quarter for Investment Banking is pleasing to me because it wasn't what I would've considered a real robust environment. Thomas Rayner - Exane BNP Paribas, Research Division: Okay. The second one, maybe Chris, because there seems to be some confusion with some people in the market this morning on reconciling the year-end position both in terms of tangible equity and capital -- regulatory capital, with the Q1 position given the statutory earnings. And I understand there are a number of one-offs, including an impact of some of the share rewards. Could you maybe just help us understand the underlying sort of movements in those numbers, please, sort of year end to Q1?

Yes, there is quite a bit going on. But if you look at the move on attributable profit from a regulatory perspective, you have attributable profit excluding one-offs of about GBP 1.7 billion. From that, you have to deduct PPI of GBP 200 million. You then got a thing that comes in and out, owned credit, but let's ignore that. We've then got dividends that paid, and of course the fourth quarter dividend is the large one. So that's about GBP 400 million. And I think if you put all that together, you get to a regulatory retained profit of GBP 1.1 billion and that is the number you'll recognize. CNAV is another reconciliation. Why don't we take that offline and we'll get the team to walk through it.

The next question this morning is from Michael Helsby from Bank of America Merrill Lynch. Michael Helsby - BofA Merrill Lynch, Research Division: I've just got a couple of quick questions. Firstly, on overall hedge contribution. I think it was GBP 3.3 billion last year. I was wondering if you could give us a number for what it is in the first quarter? And just on BarCap costs. I think you deferred about 75% of the variable comp in BarCap last year. I was wondering if you could give us a percentage for what it's been in the first quarter.

I think on the BarCap comp, you want to think of accruals from past years as broadly offsetting in-year awards. It could be this year that the past awards were a little bit higher than the in-year awards, but they're fairly close, Michael. So I don't think it's one to worry about. It's a fairly accurate reflection.

And in terms of impact on net interest margin, the hedging contribution in the first quarter was about GBP 400 million, that sort of number, which is lower than the clean run rate, because as you know, hedges are rolling off and replaced their rates. So there is none of the sizable one-off items that you saw last year. So that's much closer to the normal run rate we'd expect. I think the key point, from my perspective, is when I look at the margin, although I'm seeing a degradation of the hedge, I'm seeing volume growth and customer margins increase and that I think is showing the offset of the impact of the hedges. Michael Helsby - BofA Merrill Lynch, Research Division: Okay, so GBP 400 million.

The next question today is from Andrew Coombs of Citigroup. Andrew Coombs - Citigroup Inc, Research Division: If I could ask one question, please, on the fixed income result and then just a follow-up on PPI. Firstly on the fixed income results. I mean clearly it's been a very good quarter for yourselves of 9% year-on-year. Perhaps you could just elaborate on which product in particular have been driving that improvement. And also just give us an idea of the inventory gains driving that result relative to the customer-driven revenues, perhaps, and then in turn what you are using as a normalized fixed income result to divide your 60% to 65% cost income target? My second question is on the PPI. Noted that you made -- you had GBP 435 million claims at the year-end versus the GBP 1 billion provision that you previously made. So just interested to know where that GBP 435 million claims figure has moved to today?

All right. Andrew, let me start with your questions on fixed income currencies and commodities. I think it was mostly fixed income you were asking about. So a very clean quarter. I think there's virtually no inventory gains if you would think of it that way. It was very much a flow quarter. When you think about rates and credit, it was heavily weighted toward rates. It wasn't as active a period in credit as we've seen the last couple. So governments and kind of the whole rates franchise. The other part of it that was very, very solid was our capital markets business. So the fund raising business, if I can say, the new issue business was very strong. I think you asked about the cost/income ratio again. 60% to 65% is very much what we're committed to.

And Andrew, in terms of PPI, by the end of the first quarter, we had spent and paid and addressed about GBP 650 million. Andrew Coombs - Citigroup Inc, Research Division: That's GBP 650 million, sorry?

Yes, 6-5-0, which we've now got a total reserve of GBP 1.3 billion.

The next question today is from Ian Gordon of Investec. Ian Gordon - Investec Securities (UK), Research Division: Sorry, it's just a further follow-up on BarCap costs and the dynamics of the cost/income ratio. Obviously, you referenced the very strong revenue trends, which helped you deliver the 63% in the quarter and I note that the 4% cost growth is after absorbing some regulated provisioning. Frankly, I would take your comments around the revenues as pointing to something rather stronger than the GBP 2.5 billion a quarter consensuses implicitly pricing in for the rest of the year. My question is, if revenues are in that ballpark, are you committed to taking a fresh look at costs were I think your net headcount reduction was only around 3% last year, and it feels from your comments and it feels from your market share gains and your positioning, that you're positioning for a stronger out term?

Yes, we're trying not to look forward with a lot of prediction-ing. And it's quite hard to kind of factor in how you see the rest of the year playing out. And I think most people would say April was a bit slower than the first 3 months. On the other hand, the pipeline is really, really strong. I mean the amount of equity business and advisory business if the environment improved a bit. So I could kind of make an argument that our outlook for the year is better than what we've seen or I can make an argument that it's worse. I do think we should take the second half of '11 as the outlier, particularly the fourth quarter for the industry was pretty much closed up. So I'm kind of balanced there and I would love to be in a position that if we had the robust environment, I do think that this business has gained so much in market share, there's such a deep client base. It really is a flow business that we can begin discussing whether we're at the low end of the range in costs or going below it. I look forward to having that conversation with you, but I'd rather wait until we get a robust environment back.

The next question is this morning is from Fiona Swaffield of the Royal Bank of Canada. Fiona Swaffield - RBC Capital Markets, LLC, Research Division: Two areas. Firstly, I don't know if it's appropriate to maybe have an update on Basel III, whether you could tell us how you're getting on with your mitigation because you can't really see much in the Basel 2.5 numbers. And then just a follow-up on BarCap cost/income again, sorry, but the compensation ratio, obviously shows that you've got discipline there on the bonus, but is that a representative level going forward?

Well, I'll talk about that just quickly first. Just keep in mind, I would say, in the first quarter that these are accruals for the year and should be thought of as directional, but there's not a lot more than that in the comp ratios at this point. Chris, do you want to touch on either or both of the questions?

Yes. In terms of Basel III, we updated you in February and I think I would describe work as ongoing and continuing to plan. There is a very significant amount of work that is involved. And realistically, to see a meaningful change, I think it's better to wait until the half year or the Investor Day where we will be absolutely giving you the very latest update. But at the moment, I would characterize it as work in progress, but a lot of it going on.

And the next question today is from Ed Firth from Macquarie. Edward Firth - Macquarie Research: Just a couple of quick questions. One, can you update us on the coverage ratio? So I guess some idea of how NPLs have performed or how they are compared with the full year? And the second question I had was just on funding. You highlight, I think, GBP 144 billion of wholesale funding that's maturing in less than one year. Is that a number that you're happy with? Is that the sort of a long run average rate, or would expect to see that come down as you restructure the business?

Two questions, Ed. In terms of nonperforming lending coverage, it's pretty flat quarter-on-quarter. So there's very little change since the end of the year. And again, that's not surprising in a 3-month period. In terms of the funding, we're very comfortable with the level of wholesale funding that we run largely because we have good experience of being able to raise the funding in the wholesale markets when we need it. So I think we set out for you at the end of the year how we saw the funded nature of the balance sheet and the offset between the accounting for derivatives and then into the wholesale funding. And I think we remain very comfortable with the level of funding we've got and the level of secured to unsecured, level of wholesale to retail.

Your next question today is from James Invine from Societe Generale. James Invine - Societe Generale Cross Asset Research: I've just got a couple of quick questions, please. The first is on the dividend. Chris, you said at the beginning that you were looking forward to increasing it when the industry has certainty on capital requirements. Were you referring just to the 1p interim dividend? Or does that comment relate to the whole 6p full year dividend from last year?

It relates to the full dividend. We like the quarterly approach, with 3 fixed amounts in the quarters, together with a variable amount in the fourth quarter. But we look at it as the 6p as you've described. And it will be that I would use as the starting point in discussions around dividend policy and the increase. James Invine - Societe Generale Cross Asset Research: And then the second question was just on the risk-weighted assets in the investment bank. They are up, I think it was about GBP 4 billion in the quarter. But at the end of last year, you said that – well, I think you implied, that they were about GBP 30 billion lower due to activity levels. Clearly, activity levels are higher in the first quarter given your revenue line. So I was just wondering if you can talk me through the progression there. What's the offset of the higher activity levels?

What I can do is just give you some flavor for how we saw the GBP 4 billion. I should point out the GBP 4 billion is 1% of the risk-weighted assets. So it feels to me, still, sort of very well controlled. But if you look at the movement from GBP 391 billion to GBP 394 billion, there is a reduction in RWAs of business activity offset by further methodology enhancements and methodology enhancements tend to be additive to risk-weighted assets rather than reductions. There's some adjustment to operational risk and then there's some FX. So when you look at the progression, there's what I would describe as small amounts of many movements rather than anything that's really very significant.

The next question today is from Rahul Sinha from JPMorgan.

If I can ask a question on Spain, could you elaborate how you see your performance there, which has obviously been improving in the last few quarters, in context of the more challenging environment more recently. I think you also made a comment in the press call today that you saw the restructuring is complete. So I'd be grateful for any further details there. And that's my first question. The second question is around U.K. retail. Again, if you could draw a bit more color around what is the underlying demand for loans, have you seen any change this year relative to last year in terms of the trends of the economy? And is there anything that would make you a bit more cautious. I think you are sounding a bit more cautious on the U.K. economy in general. Anything specific that you might flag up for us?

Well, thank you. Let me take a crack at both of those and ask Chris if he wants to add. We have made real progress in executing in Spain on exactly what we had said to you a year ago, which is that given the environment, our business needed to cut 20% to 25% on the cost base and that was the headcount, that's the branches. It was all kind of in that 20%, 25% area. And get far more focused through what will be a period of pretty dramatic restructuring. I don't think if we imply that we're done that's probably a bit of an over statement. I think we've made a lot of progress. There is more to do. We're happy with the decision we made to get the business much more focused on the area where we have real expertise, which is in the higher end of retail banking and the way that fits with our corporate bank, with our Wealth Management business and with our Investment Banking business. So listen, it's tough in Spain. I think you can see in the results that our restructuring is having an impact as costs are much lower and we're probably never done in some ways in terms of continuing to refocus that business, but lots of progress. I would say that in the U.K., we're winning market share in most every product in U.K. Retail and Business Banking. It's not because of robust demand. If anything, demand is muted for exactly as you said, there is concern about the economy. But our business feels good in terms of picking up market share.

The next question today comes from Christopher Wheeler of Mediobanca. Christopher Wheeler - Mediobanca Securities, Research Division: Just a couple of questions on the investment bank. First of all, in terms of your VaR, can you give some indication as to how it moved in the third quarter within the -- sorry, first quarter in the investment bank, compared to the first quarter of last year and the fourth quarter of last year? In addition to that, I think you just sort of replicated what Deutsche said this morning about their fixed income revenues being almost predominantly driven by client activity and that the strong numbers have been about market gains, which I think you would agree with in your case. Could you give us some idea of where those market gains have been by product and by geography?

Well first of all, the market gains have been very broad and we're happy to give you some of the research that Greenwich research and others do about our market share, our market rankings but they've been pretty much across the piece. To reiterate what I said earlier, I think in the first quarter, the business has been lighter on the credit side versus last year and stronger on governments and rates and stronger on debt capital markets but that's just a quarter. We would expect potentially -- that changes from quarter-to-quarter. In terms of VaR, it's down slightly on previous periods.

Yes, it's down about 5%. Christopher Wheeler - Mediobanca Securities, Research Division: Sorry, was that first quarter against fourth quarter or...

First quarter 2011 versus first quarter 2012. Christopher Wheeler - Mediobanca Securities, Research Division: Okay. And just roughly, what do you think it's down on the fourth quarter? Because that's where there's been a big drop in the market this year?

It's a bit flat, actually, I think. Flattish. It's not a material change.

The next question today is from Peter Toeman of HSBC. Peter Toeman - HSBC, Research Division: Bob, you mentioned the resolution regime is a sort of critical element in meeting sort of U.K.'s new regulatory requirements. I wondered, is there a possibility, do you think, of some sort of trade off here that institutions, which are actually able to convince the authorities they have an appropriate resolution regime might get some leeway under other aspects of the ring fence? Are you having maybe a lower plaque requirement?

Well, I'm not thinking of this at all in relation to the Independent Commission on Banking or the ring fence, but I think it's a fair question. I'd say it differently. I think if there had been effective resolution plans in place, where regulators were comfortable saying in the U.S. and the U.K. that if there was a problem in a large bank, we know how to manage it and resolve it, without systemic risk to customers and clients of the financial system, we probably never would have gone to an Independent Commission on Banking and we probably never would've gone to a ring fence. But that's a different way to say. I do think it's an opportunity to reduce many of the buffers above the 7% equity that Basel recommends and/or above the 7%, in our case 2%, of G-SIFI. And I think it would give a lot of confidence to the regulators in drawing a line under things. It would give a lot of confidence to political leaders that taxpayer money will never again be put at risk. I think these things are critically important to get the confidence back, to get banks really operating effectively as an industry, working closely with the private sector and driving economic growth. So I think it's a huge initiative. We believe it's important enough to the industry and ourselves and our shareholders. But we're only not doing a lot of work, Peter, but we're committed both to the U.S., the Fed and the FDIC and also here in the U.K. with the FSA to be a test case.

The next question this morning is from Mike Trippitt from Oriel Securities. Michael Trippitt - Oriel Securities Ltd., Research Division: Two questions. Trying to get back to the sort of near-term on Barclays Capital. I mean, obviously good performance in Q1, but you've talked about strong rates and performance, April feels a little slower. Equities backlog is there, but you need a better market. Would -- it feels to me we should still apply the usual seasonality sort of looking into Q2. I mean would you want to dissuade me from that view? And secondly, could you just give a bit more on the moving parts on nonperformance costs. I think they're up 3% versus Q1 '11. I'm really just trying to understand how much of the GBP 2 billion target that you've achieved in Q1 '12.

Let me take the first and then ask Chris to talk about the cost, what's going on here with the costs and the GBP 2 billion that we have committed to. I think in terms of the Investment Banking business, Mike, if we could -- this would be fairly easy if we actually knew what the environment was going to be for the balance of the year. We don't see much seasonal change in the second quarter, frankly, in a typical year. And we can make -- you can make a case both ways, that there has been consolidation. I think our investment bank in Barclays has clearly been one of the winners of consolidation and market share, of the buildout of equity and advisory platform. You're never complete but it's really doing well, top 4 in global M&A. 28 corporate brokerage assignments in the U.K. There's a lot of good progress here. So if there was a whiff of good news or positive news in a better market environment, you could make a case for a pretty strong year. And on the other hand, if you make the case that it's going to be kind of a weak economy and continued 0 interest rates, we'll perform very well relatively, but it's not going to be as robust to market and you'll still have a bit of a pipeline going into next year. So I hope that helps. I just -- I don't think any of us know how the year is going to play out. We're prepared for both scenarios. And frankly, I think there's very few investment banks, I would say a handful, that are prepared -- that are in line to perform well in both environments.

In terms of where we are on the cost program, the best starting place is, we'll take the total cost, we'll strip out some of the nonrecurring pieces. But if you take nonperformance costs out, stripped out performance cost, if you take nonperformance costs, it'd be increased by about 3%. If you take out of there the increase in regulatory and legal, you're about flat in the first quarter. And when we look at the trajectory of how we're going to save GBP 2 billion, we had the GBP 0.7 billion, GBP 0.8 billion on an annualized basis in 2011, which will get you to about GBP 1.2 billion. And then you've got the balance in 2012 and 2013. So we had seen the 2011 cost reductions come through because we pointed out that it was flat or slightly below prior years. And we've started to see about GBP 100 million of further savings in 2012 recognizing that we've got to get GBP 1.2 billion, GBP 400 million, GBP 400 million to get to the GBP 2 billion. So we're making the progress we expected. It will be -- for us to continue to do that through the balance of this year and then into 2013, with the GBP 2 billion number in 2013 in terms of cost base. Michael Trippitt - Oriel Securities Ltd., Research Division: Okay, I think I need to work that one through again. Can I ask the question in a different way? The consensus for 2012 costs is GBP 19.3 billion. I mean can you comment on that figure?

Yes, we've seen that number, GBP 2 billion is taken off of a MTP, medium-term plan number that we've got. So the way I would look at it is to take last year's costs, add on the additional amount to get to consensus and then take the GBP 2 billion off of the 2013 total cost base. And the 2013 total cost base, well, the reduction from it is made up in 3 parts: GBP 1.2 billion savings are out of 2011, GBP 400 million in 2012 and GBP 400 million in 2013. That's the run rate from the reduction program.

The next question today comes from Chintan Joshi of Nomura. Chintan Joshi - Nomura Securities Co. Ltd., Research Division: Three follow-up questions from me, please. Firstly on PPI, could you give us a feel of how the claims have developed in the first quarter? And the GBP 300 million additional provisioning that you have taken, is that representative of any acceleration that you are expecting through the rest of the year or similar trends as in Q1?

We saw, in terms of trends, quite a significant uptick in claims in March and that is what has driven us to increase the provision. So we have taken into account the payments we're making and the number of claims we're receiving and we think that's appropriate. What we will do is keep it under review. But as we sit here today, based on current history of claims, we think we're appropriately provided. Chintan Joshi - Nomura Securities Co. Ltd., Research Division: So you're not expecting the March uptick to expect through the rest of the year?

We're expecting there to be the increased number of claims. We're also looking at the number of valid claims that we make payments on. And if you look at both of those together and then look out into the future, that forms the basis of our estimate of provisioning. Chintan Joshi - Nomura Securities Co. Ltd., Research Division: Okay. The second question on mortgage trends. We've seen a number of banks increase their SVRs. I just wanted to ask you, kind of at a broad level, do you think the industry needs to increase SVRs further to offset the funding costs? Or you think we are not far from an appropriate level?

We have a very small SVR portfolio. So from my perspective, we look at the funding costs and the ability to pass that on as we've seen in the margins being pretty flat. And I think we were able to reprice to meet the increase in funding cost. Chintan Joshi - Nomura Securities Co. Ltd., Research Division: Okay. And finally, on liquidity buffers, as I see about, I think, a GBP 20 billion, GBP 25 billion increase in the quarter. Your peers have talked about regulatory requirements having increased liquidity requirements. Just wanted some comments from you regarding what that is costing you currently and do you think these requirements will be further increased down the line?

Yes, the increase in our liquidity buffer comes from basically customer activity and depositing with us rather than anything that the regulators have required or requested. In terms of cost, we gave you last year an estimate of about GBP 800 million worth of cost. That is slightly reduced as we said we would. But it's still a very significant level of the cost that we're bearing.

Our final question this morning is from Jon Kirk from Redburn. Jon Kirk - Redburn Partners LLP, Research Division: Actually I've got 3 questions I'm afraid, if that's okay. The first one is on your -- on the business model within your investment bank. Obviously you made this comment, as have Deutsche this morning, that your revenue is driven by flow rather than any inventory gains. I wondered if you could just give us some ideas as to why that is? Is it simply the way that markets performed in the first quarter that's driven that? Or is it a change in underlying business model that's driven that? That's my first question.

Well, let me start with that one and then we will have time with for your follow-ons. It's become common for people to use the phrase flow monster. The business that we built here, the business that Jerry and Rich built has always been focused on customers and clients. And as you'll recall, we exited proprietary trading in 1998. And I think what you're seeing is the market share gains are going to 3 or 4 firms that have always been the most committed to client flow, investment in technology. So if you see the impact of our BARX platform on our market share and our client gains, this is, in my mind, a function of the kind of market environment that was in the first quarter and our business model. There wasn't a change in business model. And I think where you'll see less impact in the first quarter are those firms that don't have that kind of market share or investment in technology in this environment. So I think the environment fits our business model. I don't think, just to repeat what I said earlier, we should be looking at the first quarter for fixed income as a robust environment. I think there were a handful of firms that did quite well because they had high market share. Jon Kirk - Redburn Partners LLP, Research Division: Okay. So just to clarify, the first quarter, the fact that it was all kind of non-inventory gains that were in there is not reflecting a big change in business model or…

Not at all, no. In fact, what we have said pretty openly is when you see really trending markets where there are big trading gains, we tend to underperform. And when you see market environments like this, which is really around client flow, we tend to outperform. Jon Kirk - Redburn Partners LLP, Research Division: Okay. Just moving on. The second one was on costs, actually. Again, within the Investment Banking industry, could you give us some ideas, or some guidance really, on how easy it is to manage staff cost these days, because it has historically been a kind of competitive market for talent. I think that's changing now. Is it becoming easier to manage staff costs?

I don't think -- I can't think of a thing in the banking business that I would refer to as easy right now. We're committed to 60% to 65%. I've said this before, John, I think the key thing is, we wake up every morning knowing that the investment bank at Barclays needs to be able to earn 15% sustainable returns and it has to do that in the new environment of higher capital. So we're very committed to our business model and performing at those kind of levels. So the 60% to 65% range for cost/income ratio is actually very serious and well thought out. Jon Kirk - Redburn Partners LLP, Research Division: Yes and I suppose -- thank you for that. I guess what I'm asking is, the 60% to 65% range is only really achievable if everyone in the industry sort of plays ball, if you like, and price rationally et cetera. And I'm just wondering whether you've seen a change in behavior in the last sort of 3, or 6, or 12 months where there's a lot more rational levels of staff pay and customer pricing, et cetera?

Well, there's been consolidation, but it's been a pretty weak environment out there. But we've never felt disadvantaged in terms of people wanting to join our firm. Jon Kirk - Redburn Partners LLP, Research Division: Okay, great. As for my third final question was just this comment that you made earlier – or Chris made, I think actually, about resolution plans and how that could lead to a potentially lower G-SIFI charge; I think it was you, Bob, actually. Have you had guidance now, are regulators saying to you that if you come to a sort of very strong and credible resolution regime -- resolution plan, then we may consider cutting your G-SIFI charge? Or is that just something you plan to go back to them with as part of a negotiation?

No, I didn't mean to imply that the G-SIFI surcharge would be cut. I think at various times there are capital buffers that go above that. And I think it will give the regulators comfort that buffers above the Basel minimum of 7% and then the G-SIFI charge of 2% probably won't be necessary. I didn't mean to imply -- someday, somehow that may be revisited, but I certainly -- we don't have anything in our planning horizon that there's going to be change in the SIFI or the G-SIFI charge. Apologies if I said it poorly. Thank you all for joining. I think it was a strong first quarter. I think it's a pretty clean set of numbers. It really represents the underlying strength of our execution and our businesses. Appreciate your time and your questions. Thank you.