Barclays Plc · LSE:BARC
Barclays — FY2009 Earnings Presentation
75 slides from Barclays's earnings presentation, Feb 16, 2010
Slide 1: Results Announcement Presentation 2009
Barclays PLC Results Announcement Presentation 2009
Slide 2: Slide 2
Slide 3: Barclays PLC 2009 Results
Barclays PLC 2009 Results 16th February 2010 1
Slide 4: Chris Lucas, Group Finance Director
Chris Lucas Group Finance Director 2
Slide 5: Summary
Summary • Profit before tax of £5.3bn before BGI gain • Underlying profit more than trebled • Strong income growth of 34% • Core Tier 1 capital ratio strengthened to 10.0% • Adjusted gross leverage reduced from 28x to 20x • Liquidity pool trebled 3
Slide 6: Group performance
Group performance 2009 2008 % Year ended £m £m change Profit before tax* 11,642 6,077 92 Less: Gain on acquisitions and disposals (6,579) (2,747) Own credit charge/(gain) 1,820 (1,663) Gains on debt buy-backs (1,249) (24) Underlying profit before tax* 5,634 1,643 243 * Figures include BGI results to
Slide 7: Financial summary
Financial summary 2009 2008 % Year ended £m £m change Income 30,986 23,115 34 Operating expenses (17,852) (14,366) 24 Impairment charges (8,071) (5,419) 49 Retained earnings 9,637 3,243 197 Cost : income ratio 58% 62% Earnings per share* 86.2p 59.3p Return on equity* 23.8% 16.5% Dividend per share 2
Slide 8: GRCB performance
GRCB performance 2009 2008 % Year ended £m £m change Income 16,097 15,093 7 Profit before tax 2,504 4,367 (43) Impairment 5,413 2,922 (85) Cost : income ratio 52% 53% 6
Slide 9: GRCB: divisional performance
GRCB: divisional performance 2009 2008 % PBT- Year ended £m £m change UK Retail Banking 612 1,369 (55) Barclays Commercial Bank 749 1,266 (41) Barclaycard 761 789 (4) GRCB - Western Europe 130 250 (48) GRCB - Emerging Markets (254) 141 - GRCB - Absa 506 552 (8) 7
Slide 10: UK Retail Banking: profit before tax
UK Retail Banking: profit before tax (£m) Liability margin compression 1,369 (755) Cost Other Impairment reduction movement (334) Asset driven & 154 (5) 612 other income Property 258 credits (75) 205 2008 2009 8
Slide 11: GRCB: divisional performance
GRCB: divisional performance 2009 2008 % PBT- Year ended £m £m change UK Retail Banking 612 1,369 (55) Barclays Commercial Bank 749 1,266 (41) Barclaycard 761 789 (4) GRCB - Western Europe 130 250 (48) GRCB - Emerging Markets (254) 141 - GRCB - Absa 506 552 (8) 9
Slide 12: GRCB: divisional performance
GRCB: divisional performance 2009 2008 % PBT- Year ended £m £m change UK Retail Banking 612 1,369 (55) Barclays Commercial Bank 749 1,266 (41) Barclaycard 761 789 (4) GRCB - Western Europe 130 250 (48) GRCB - Emerging Markets (254) 141 - GRCB - Absa 506 552 (8) 10
Slide 13: Barclays Commercial Bank: profit before tax
Barclays Commercial Bank: profit before tax (£m) Liability margin compression 1,266 (220) Impairment (560) Cost Other Fee reduction movement Asset driven & income 43 (39) 749 other income 65 Property 204 credits (10) 476 2008 2009 11
Slide 14: GRCB: divisional performance
GRCB: divisional performance 2009 2008 % PBT- Year ended £m £m change UK Retail Banking 612 1,369 (55) Barclays Commercial Bank 749 1,266 (41) Barclaycard 761 789 (4) GRCB - Western Europe 130 250 (48) GRCB - Emerging Markets (254) 141 - GRCB - Absa 506 552 (8) 12
Slide 15: GRCB: divisional performance (Barclaycard)
GRCB: divisional performance 2009 2008 % PBT- Year ended £m £m change Barclaycard Total income 4,042 3,219 26 Operating expenses (1,494) (1,422) 5 Impairment charges (1,798) (1,097) 64 Profit before tax 761 789 (4) 13
Slide 16: GRCB: divisional performance
GRCB: divisional performance 2009 2008 % PBT- Year ended £m £m change UK Retail Banking 612 1,369 (55) Barclays Commercial Bank 749 1,266 (41) Barclaycard 761 789 (4) GRCB - Western Europe 130 250 (48) GRCB - Emerging Markets (254) 141 - GRCB - Absa 506 552 (8) 14
Slide 17: GRCB: divisional performance (Western Europe)
GRCB: divisional performance 2009 2008 % PBT- Year ended £m £m change GRCB - Western Europe Total income 1,723 1,455 18 Operating expenses (1,113) (960) 16 Impairment charges (667) (297) 125 Profit before tax 130 250 (48) 15
Slide 18: GRCB: divisional performance
GRCB: divisional performance 2009 2008 % PBT- Year ended £m £m change UK Retail Banking 612 1,369 (55) Barclays Commercial Bank 749 1,266 (41) Barclaycard 761 789 (4) GRCB - Western Europe 130 250 (48) GRCB - Emerging Markets (254) 141 - GRCB - Absa 506 552 (8) 16
Slide 19: GRCB: divisional performance (Emerging Markets)
GRCB: divisional performance 2009 2008 % PBT- Year ended £m £m change GRCB - Emerging Markets Total income 1,045 994 5 Operating expenses (852) (688) 24 Impairment charges (471) (165) 185 Profit before tax (254) 141 - 17
Slide 20: GRCB: divisional performance
GRCB: divisional performance 2009 2008 % PBT- Year ended £m £m change UK Retail Banking 612 1,369 (55) Barclays Commercial Bank 749 1,266 (41) Barclaycard 761 789 (4) GRCB - Western Europe 130 250 (48) GRCB - Emerging Markets (254) 141 - GRCB - Absa 506 552 (8) 18
Slide 21: GRCB: divisional performance (Absa)
GRCB: divisional performance 2009 2008 % PBT- Year ended £m £m change GRCB - Absa Total income 2,549 2,198 16 Operating expenses (1,469) (1,305) 13 Impairment charges (567) (347) 63 Profit before tax 506 552 (8) 19
Slide 22: IBIM: divisional performance
IBIM: divisional performance 2009 2008 % PBT- Year ended £m £m change Barclays Capital 2,464 1,302 89 Barclays Global Investors 7,079 595 Barclays Wealth 145 671 20
Slide 23: Barclays Capital: income summary
Barclays Capital: income summary 2009 2008 % Year ended £bn £bn change Top-line income 17.9 9.9 81 Credit market losses (4.4) (6.3) Own credit (1.8) 1.7 Total income 11.6 5.2 122 Credit market impairment (1.7) (1.8) Other impairment (0.9) (0.7) Net income 9.0 2.8 222 21
Slide 24: Barclays Capital: analysis of top-line income
Barclays Capital: analysis of top-line income 2009 2008 % Top-line income – Year ended £bn £bn change Fixed income, currency and commodities 13.0 7.4 76 Equities and prime services 2.8 1.2 147 Investment banking 2.2 1.0 108 Principal investments (0.1) 0.3 - 17.9 9.9 81 22
Slide 25: Barclays Capital: diversification of income
1,000 2,000 3,000 5,000 -1,000 0 Ra te s Cr ed In it ve s Ba tm nk en in t g Top-line Income (£m) Eq ui tie M s or tg & age AB s S 23 Em M erg ar in ke g Co ts m m od iti es Cu rr en cy Se Pr rv im ic e es In P ve ri st nc m ip en al 2009 2008 2007 Barclays Capital: diversification of income ts
Slide 26: Barclays Capital: credit market exposures
Barclays Capital: credit market exposures £bn Exposure 2009 movement Exposure Net sales/ Write- FX/ 31 Dec 09 31 Dec 08 payments downs Other US residential 3.3 (5.1) (1.8) (0.6) 10.8 mortgages Commercial mortgages 8.2 (0.6) (2.5) (1.0) 12.3 and property Leveraged finance 5.5 (3.1) (0.4) - 9.0 Monoli
Slide 27: Barclays Capital: cost base
Barclays Capital: cost base 2009 2008 Year ended £m £m Operating Expenses (6,592) (3,774) Cost : total income 57% 72% Compensation : total income 38% 44% Cost : net income ratio 73% 134% 25
Slide 28: IBIM: divisional performance
IBIM: divisional performance 2009 2008 % PBT- Year ended £m £m change Barclays Capital 2,464 1,302 89 Barclays Global Investors Profit before tax pre gain 748 595 26% Gain on sale 6,331 - Barclays Wealth 145 671 26
Slide 29: IBIM: divisional performance
IBIM: divisional performance 2009 2008 % PBT- Year ended £m £m change Barclays Capital 2,464 1,302 89 Barclays Global Investors 7,079 595 Barclays Wealth Profit before tax pre gain 145 241 Gain on sale and profits of life - 430 business 27
Slide 30: Head Office
Head Office 2009 2008 % PBT- Year ended £m £m change Head Office Functions & Other Operations Net interest (loss) / income (507) 182 - Other income 1,186 26 - Operating expenses (570) (451) 26 Impairment charges (16) (30) (47) Loss before tax (550) (858) (36) 28
Slide 31: Margins in retail, commercial and private banking businesses
Margins in retail, commercial and private banking businesses 2008 2009 236 207 207 211 172 131 Liability Margin Asset Margin Net Interest Margin 29
Slide 32: Balance sheet
Balance sheet £bn 31 Dec 09 31 Dec 08 change Total assets 1,379 2,053 (674) Derivative assets 417 985 (568) Loans & advances 461 510 (49) Other assets 501 558 (57) Group liquidity pool 127 43 84 30
Slide 33: Adjusted gross leverage
Adjusted gross leverage £bn 31 Dec 09 31 Dec 08 Total assets 1,379 2,053 Derivative gross-up (374) (917) AUM on balance sheet (1) (69) Settlement balances (26) (30) Goodwill & Intangible assets (9) (10) Adjusted tangible assets 969 1,027 Tier 1 capital 49 37 Adjusted gross leverage 20x 28x 31
Slide 34: Strengthening capital
Strengthening capital Risk Weighted Assets Core Tier 1 / Tier 1 Capital Capital Ratios (£bn) (£bn) (%) 433 383 49.6 13.0% 37.3 8.6% 24.4 38.4 5.6% 10.0% 2008 2009 2008 2009 2008 2009 RWA Additional Tier 1 Additional Tier 1 Core Tier 1 Core Tier 1 32
Slide 35: Liquidity
Liquidity • Group liquidity trebled to £127bn • Loan to deposit ratio improved from 138% to 130% • Loan to deposit and long term funding ratio improved from 93% to 81% • £17bn of senior debt issued in public markets 33
Slide 36: Barclays Capital: unsecured liabilities
Barclays Capital : unsecured liabilities 26 mths 300 Average Term 250 14 mths 200 Rebased 150 >1 Yr 100 50 <6 m 0 Dec - 08 Jun - 08 Dec - 09 34
Slide 37: Summary
Summary • Profit before tax of £5.3bn before BGI gain • Underlying profit more than trebled • Strong income growth of 34% • Core Tier 1 capital ratio strengthened to 10.0% • Adjusted gross leverage reduced from 28x to 20x • Liquidity pool trebled 35
Slide 38: Robert Le Blanc, Chief Risk Officer
Robert Le Blanc Chief Risk Officer 36
Slide 39: Topics
Topics • Impairment Review • Portfolio Trends • Market Risk • Themes and Outlook for 2010 37
Slide 40: 2009 Impairment Planning
2009 Impairment Planning 170 Outcome 130-150bps 135bps 130 Loan Loss Rate 90 Retail (bps) Group 50 Wholesale (Steady FX and Balance Sheet) FY 07 FY 08 FY 09 38
Slide 41: Impairment Trend
Impairment Trend 2008 2009 Loan impairment charge £4,913 £7,358 AFS /reverse repo charge £506 £713 bps Total impairment charge £5,419 £8,071 250 226 200 Barclays Loan Loss Rate 156 bps 150 20 Year Average = 91bps 100 50 0 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 39
Slide 42: 2009 Loan Impairment Charge
2009 Loan Impairment Charge FY 09 £7,358m Observed LLR 156bps £m FY 08 £4,913m 2009: 184 bps Observed LLR 95bps 2,500 Retail LLR 2008: 116 bps 2009: 133 bps Wholesale LLR 2,000 2008: 82 bps 1,500 2,002 1,000 1,915 1,312 1,517 1,021 500 1,205 1,008 693 535 464 419 180 Retail Retail BarCap BarCap Comm
Slide 43: Group Impairment Allowances
Group Impairment Allowances 10.8 64% 8.8 6.6 4.9 Balances (£bn) Jun-08 Dec 08 Jun 09 Dec-09 41
Slide 44: Impaired Asset Coverage Ratios
Impaired Asset Coverage Ratios 71% Retail Other 69% 69% 66% 48% 44% 42% 41% Group 42% 40% Corporate (incl. CME) 35% 32% 18% Retail Mortgages 13% 13% (UK + Intl) 10% H1 08 H2 08 H1 09 H2 09 42
Slide 45: UK Mortgages – Arrears rate
UK Mortgages – Arrears rate Percentage of loans >3 months in arrears Council of Mortgage Lenders (CML) Barclays 43
Slide 46: UK Unsecured (Cards + Loans)
UK Unsecured (Cards + Loans) Annual 6.9% Net Charge Off 6.7% 5.6% 5.6% >90 Day Delinquency 1.7% 2.3% 2.1% 1.8% Balances (£bn) Unsecured Loans 7.7 7.8 7.5 7.2 Cards 10.4 10.6 10.6 11.4 H1 08 H2 08 H1 09 H2 09 44
Slide 47: UK Cards Delinquency Trends
UK Cards Delinquency Trends LLR 514bp 589bp Total 7.8% 7.3% Delinquency 6.9% 6.9% 6.9% Early Cycle Delinquency 6.4% 5.8% 5.5% 5.3% 5.0% 1.5% 1.6% 1.9% Late Cycle 1.4% 1.4% Delinquency (>90 Day) Dec 07 Jun 08 Dec 08 Jun 09 Dec 09 45
Slide 48: US Cards
US Cards 9.0% Annual 7.8% Net Charge Off 5.4% 5.3% >90 Day 3.2% 3.3% Delinquency 2.2% 2.3% 7.8 6.9 7.5 Balances (£bn) 3.4 H1 08 H2 08 H1 09 H2 09 46
Slide 49: UK Commercial Bank Loan Impairment
UK Commercial Bank Loan Impairment Loan Loss Rate 166 143 (bps) 77 42 1.7 1.8 1.2 Credit Risk Loans 0.9 (£bn) H1 08 H2 08 H1 09 H2 09 47
Slide 50: Barclays Capital Loan Impairment
Barclays Capital Loan Impairment Loan Loss Rate 140 (bps) 116 86 80 6.3 6.4 5.7 4.8 Credit Risk Loans (£bn) H1 08 H2 08 H1 09 H2 09 48
Slide 51: GRCB International Loan Impairment
GRCB International Loan Impairment 171 178 Loan Loss Rate 104 7.0 (bps) 74 5.7 3.6 Credit Risk Loans 1.9 (£bn) H1 08 H2 08 H1 09 H2 09 49
Slide 52: Single-Name Corporate Losses in 2009
Single-Name Corporate Losses in 2009 Impairment Charge (£m) Largest single name charge 109 Average of next top ten charges 59 45 35 34 18 8 13 5 3 Barclays Western Emerging BCB Absa Capital Europe Markets (UK) Corporate 50
Slide 53: BarCap: Distribution of Daily Revenue
BarCap: Distribution of Daily Revenue 100 2008 2009 80 Business Days 60 40 20 0 <-30 -30 to 0 0 to 30 30 to 60 60 to 90 >90 £m 51
Slide 54: BarCap: DVaR during 2009
BarCap: DVaR during 2009 Daily Trading Income > + – 25% of DVaR £120m DVaR £60m Avg. £0m -£60m DVaR -£120m Dec 08 Mar 09 Jun 09 Sep 09 Dec 09 52
Slide 55: BarCap: Risk-adjusted revenue performance
BarCap: Risk-adjusted revenue performance Average Monthly Revenue Ratio = SD of Revenue 6 month Average H1 05 H2 05 H1 06 H2 06 H1 07 H2 07 H1 08 H2 08 H1 09 H2 09 53
Slide 56: Barclays Group: Risk-adjusted performance
Barclays Group: Risk-adjusted performance Income Coverage of Impairment £31bn £23bn £23bn £22bn £17bn Total Income £14bn Extreme £12bn Stress £11bn £11bn 38% £10bn 26% 23% Impairment/Total Income % 23% 13% Severe 10% 11% 10% 12% 8% 8% 9% Stress 2000 01 02 03 04 05 06 07 08 09 10 54
Slide 57: Planning Assumptions for 2010
Planning Assumptions for 2010 Consensus view: • Moderate economic growth • Interest Rates to remain low • More stable house prices • Unemployment to remain high 55
Slide 58: Impairment Outlook for 2010
Impairment Outlook for 2010 • Retail credit trends continue to gradually improve • Wholesale trends stabilise and improve later in year • CME and AFS impairment reduced • Single-name loss difficult to predict 56
Slide 59: John Varley, Group Chief Executive
John Varley Group Chief Executive 57
Slide 60: 2009 Scorecard
2009 Scorecard • Strategic momentum • Capital and liquidity • Returns before growth • RWAs and RoRWAs • Balance sheet size and leverage • Gathering deposits • Positive ‘jaws’ 58
Slide 61: 2009 Lending Commitment
2009 Lending Commitment • £11 billion commitment • £35 billion gross new lending • Half to households; half to businesses • Supported more business start-ups 59
Slide 62: Key objectives: 2009 and 2010
Key objectives: 2009 and 2010 • Staying close to customers and clients • Managing our risks • Maintaining strategic momentum 60
Slide 63: Staying close to customers and clients
Staying close to customers and clients • Global Retail Banking • Absa • Corporate and Investment Banking – Barclays Corporate – Barclays Capital • Barclays Wealth 61
Slide 64: Global Retail Banking goals
Global Retail Banking goals • Profit growth • Improved loan to deposit ratio • Depth, not breadth • Generation of net equity 62
Slide 65: Staying close to customers and clients
Staying close to customers and clients • Global Retail Banking • Absa • Corporate and Investment Banking – Barclays Corporate – Barclays Capital • Barclays Wealth 63
Slide 66: Managing our risks
Managing our risks • 2010 loan losses • Stress testing • Regulatory reforms 64
Slide 67: Maintaining strategic momentum
Maintaining strategic momentum • Top 3 position for Barclays Capital • Sustained profits in international retail and local business • Barclaycard international growth • Barclays Corporate international growth • Barclays Wealth growth plan • Group shape 65
Slide 68: Remuneration: Objectives
Remuneration: Objectives • FSA and FSB compliance • Capital ratio enhancement • Implementation of strategy 66
Slide 69: Remuneration: Architecture
Remuneration: Architecture • Increased deferral by 70% • 100% deferral for Group and Barclays Capital ExCos • No dilution • Clawback • Risk-adjustment 67
Slide 70: Remuneration: Outcomes
Remuneration: Outcomes • 2009 discretionary compensation • Policy for UK bank payroll tax • Attract and retain best people • Managing business investment, capital ratios, dividends and pay 68
Slide 71: Dividends
Dividends • Resumption in 2009 • Conservative profile • Progressive policy 69
Slide 72: Goals
Goals Input goals Output goal • Economic profit • Balance sheet size and leverage • RWAs and RoRWAs Top quartile Total • Core Tier 1 capital Shareholder Return • RoE • Funding and liquidity • Jaws • Dividends 70
Slide 73: Appendices
Appendices 71
Slide 74: Capital management
Capital management Other net Core Tier 1 Bridge Conversion Exercise of Liability Management movement Warrants 0.1% of MCNs 0.3% 10.0% Attributable 0.2% 1.0% profit Sale of BGI 0.5% 2.0% Underlying Capital RWAs deductions 0.7% (0.4%) 5.6% 2008 2009 72
Slide 75: Remuneration
Remuneration • Total Group 2009 discretionary cash payments : £1.5bn • Additional long term awards of £1.2bn vesting over 3 years and subject to clawback • 73% of new long term awards in equity • 5,000 employees received long term awards Average total Average total Average total discretionary 2009 (