Preliminary results year ended 31 December 2008
05 March 2009
9. Group debt cost and other interest
| 2008 £m |
2007 £m |
|
|---|---|---|
| External | ||
| Subordinated debt | (229) | (179) |
| Other | (57) | (80) |
| Internal | (197) | (179) |
| Net finance income on pensions schemes | 104 | 75 |
| Total | (379) | (363) |
Group debt costs and other interest of £379 million (2007: £363 million) comprise internal and external interest on borrowings, subordinated debt and intra-group loans not allocated to local business operations. External interest costs increased to £286 million (2007: £259 million) reflecting higher interest in subordinated debt, due to the hybrid debt issue in May 2008 and August 2008, offset by lower commercial paper interest as proceeds from the issue were used to repay some commercial paper. Internal interest costs increased to £197 million (2007: £179 million) driven by changes to our internal loan balances.
Also included is UK net pension income which represents the expected return on pension scheme assets less the interest charge on pension scheme liabilities. Net pension income increased to £104 million (2007: £75 million) reflecting higher expected rates of return on assets offset by higher discount rates on liabilities.
Interest on the £990 million direct capital instrument issued in 2004 is not included within group debt costs as it is instead treated as an appropriation of profits retained in the period.
