Barclays Plc · LSE:BARC
Barclays — Q3 2022 Earnings Presentation
37 slides from Barclays's earnings presentation, Oct 26, 2022
Slide 1: Barclays PLC Q3 2022 Results
Barclays PLC Q3 2022 Results 26 October 2022
Slide 2: CEO Update, Financial Results, Appendix
i ii iii CEO Update Financial Results Appendix: Financials C.S. Venkatakrishnan Anna Cross Group CEO Group Finance Director
Slide 3: Q322: Another quarter of strong returns and income growth
Q322: Another quarter of strong returns and income growth Capital & Distributions c.15.35p1 per share (last 12m) Strong income momentum and returns across all three c.10.6% yield2 operating businesses 13.8% CET1 Ratio Approaching the challenging macroeconomic outlook with 286p TNAV per share cau
Slide 4: CEO Update, Financial Results, Appendix
i ii iii CEO Update Financial Results Appendix: Financials C.S. Venkatakrishnan Anna Cross Group CEO Group Finance Director
Slide 5: Group highlights: PBT up 6% with strong income growth
Group highlights: PBT up 6% with strong income growth Q322 Performance Reported profit before tax (£m) £6.4bn1 £4.1bn1 Income Costs Q321: £5.5bn Q321: £3.5bn1 (493) 952 (132) 60% £0.4bn Cost : Income (261) Impairment 39 Ratio Q321 £0.1bn Q321: 65% 9.4p 12.5% EPS RoTE Q321: 8.0p Q321: 11.4% 1,864 1,9
Slide 6: Income: Growth across all three operating businesses
Income: Growth across all three operating businesses Q322 Group income excl. impact of Over-issuance of Securities (£m)1 +17% 6,496 6,417 5,950 5,465 Record Q32 FICC performance +63% YoY (in USD) 5,160 CIB Reduced Investment Banking fees -54% YoY (in USD) 3,287 +5% 3,938 3,275 Transaction Bank
Slide 7: Sensitivity to interest rates
Sensitivity to interest rates Interest rate sensitivity Structural hedge Illustrative Group income impact from a 25bps upward Gross hedge income up 72% YoY parallel shift in interest rate curves (£m)1 3.05% Structural hedge c.500 Other c.165 0.93% c.350 Hedge yield 0.68% Average GBP 5yr 0.48% c.150
Slide 8: Costs: FY22 outlook of c.£16.7bn; continuing focus on positive jaws
Costs: FY22 outlook of c.£16.7bn1; continuing focus on positive jaws Operating costs excl. L&C (£m) FY22 costs incl. L&C expected to be c.£16.7bn1 +14% c.0.5 c.0.3 c.1.23 c.16.71 3,939 3,446 14.7 Q321 Q322 Over-issuance of 3 Securities 97 (503) FY21 L&C FX Other FY22 Outlook 2 Other L&C 32 164 Resta
Slide 9: Balance sheet fortified for economic uncertainty
Balance sheet fortified for economic uncertainty UK Mortgages (£bn) UK Cards (£bn) 90 day arrears rate Net loans and advances at amortised cost (L&A) 30 day arrears rate Net L&A 161.2 143.2 14.7 LTV >85% 9.0 2.3% of balances Balance paydown at high levels 0.2% 1.7% 0.1% (FY19: 4.1%) 1.0%1 across the
Slide 10: Impairment: Trend to through-the-cycle rate; provisioned for downside
Impairment: Trend to through-the-cycle rate; provisioned for downside Balance sheet provisions for Expected Credit Losses1 (£bn) Loan loss rate (bps) 6.4 Total ECL 6.0 1.2 138 0.8 1.0 0.7 5.2 4.2 4.5 57 53 55 44 36 20 15 Q222 Weighted Q322 Weighted Q322 Downside 1 Scenario Scenario Scenario Model EC
Slide 11: CIB: Record Q3 FICC, offsetting subdued Investment Banking Fees
CIB: Record Q3 FICC1, offsetting subdued Investment Banking Fees Q322 Performance Income2 Income by business2 GBP (£m) GBP (£m) YoY % USD YoY %: £3.3bn2 £2.0bn2 Income Costs +5% Markets Q321: £3.1bn Q321: £1.7bn1 3,287 FICC,1,546 +93% +63% Global 3,129 55% £46m charge Equities, 712 -6% -21% Cost : I
Slide 12: CC&P: Strong income growth across all businesses
CC&P: Strong income growth across all businesses Q322 Performance Income GBP (£m) £1.2bn £0.8bn +54% Income Costs US Cards $27.2bn Q321: £0.8bn Q321: £0.6bn 1,244 End Net Receivables +29% vs Q321 67% £0.2bn Cost : Income Impairment Ratio Q321: £0.1bn 808 Q321: 70% 824 +68% Private Bank £138.3bn Clie
Slide 13: Barclays UK: Higher income supported by rising rates
Barclays UK: Higher income supported by rising rates Q322 Performance Income NIM walk QoQ GBP (£m) £1.9bn £1.1bn +17% FY22 NIM guidance of 2.80% - 2.90%2 Income Costs (Q3 YTD NIM: 2.78%) Q321: £1.6bn Q321: £1.1bn 1,916 1,638 (0.02%) 0.17% 56% £0.1bn 421 +19% Cost: income Impairment 0.14% Ratio Q321:
Slide 14: Capital: 13.8% CET1 ratio within 13-14% target range
Capital: 13.8% CET1 ratio within 13-14% target range Q322 CET1 ratio movements 13.8% 22bps 3bps 43bps 17bps 13.6% 12bps MDA Hurdle 10.9% 1 Jun-22 Attributable Distributions Fair value through Other Reversal of hedges from Other Sep-22 2 profit Comprehensive Income Over-issuance of (including FX) Sec
Slide 15: Targets and performance
Targets and performance Medium term targets Q322 Q322 YTD RoTE >10% 12.5% 10.9% Cost: income ratio <60% 60% 66% CET1 Ratio 13-14% 13.8% 13.8% Announced H122 total capital return Capital returns equivalent to c.5.25p per share1 Progressive ordinary dividend, 2.25p dividend per share2 supplemented wit
Slide 16: Outlook
Outlook Returns Targeting a RoTE of greater than 10% in 2022 Diversified income streams position the Group well for the current economic and Income market environment including rising interest rates Costs FY22 total operating expenses are expected to be around £16.7bn1 Expect the credit impairment c
Slide 17: CEO Update, Financial Results, Appendix
i ii iii CEO Update Financial Results Appendix: Financials C.S. Venkatakrishnan Anna Cross Group CEO Group Finance Director
Slide 18: Impact of the Over-issuance of Securities
Impact of the Over-issuance of Securities Total Progress since H122 results FY21 H122 Q322 Impact Income from hedging arrangements 758 (466) 292 SEC monetary penalty Paid – in line with H122 when L&C charge for rescission offer losses (220) (1,304) 503 (1,021) monetary penalty was provisioned PBT
Slide 19: Macroeconomic variable assumptions (MEVs)
Macroeconomic variable assumptions (MEVs) Q322 Q322 Baseline MEVs Q322 Downside 1 MEVs 2022 2023 2024 2022 2023 2024 UK GDP Annual growth 3.6% 0.3% 1.6% 3.5% -2.3% -0.4% UK unemployment Quarterly average 3.9% 4.4% 3.9% 4.1% 6.3% 6.5% US GDP Annual growth 1.6% 1.1% 1.5% 1.5% -1.6% -0.5% US unemployme
Slide 20: Impairment: September 2022 coverage ratios
Impairment: September 2022 coverage ratios Credit cards, unsecured loans and other retail lending Wholesale loans Impairment allowance Impairment allowance Gross Loans (£bn) Coverage ratio Gross Loans (£bn) Coverage ratio (£bn) (£bn) Dec-19 Dec-21 Sep-22 Dec-19 Dec-21 Sep-22 Dec-19 Dec-21 Sep-22 Dec
Slide 21: Impairment: September 2022 coverage ratios
Impairment: September 2022 coverage ratios UK cards US cards Impairment allowance Impairment allowance Gross Loans (£bn) Coverage ratio Gross Loans (£bn) Coverage ratio (£bn) (£bn) Dec-19 Dec-21 Sep-22 Dec-19 Dec-21 Sep-22 Dec-19 Dec-21 Sep-22 Dec-19 Dec-21 Sep-22 Dec-19 Dec-21 Sep-22 Dec-19 Dec-21
Slide 22: Impairment: Wholesale exposures and UK/US cards arrears rates
Impairment: Wholesale exposures and UK/US cards arrears rates Wholesale and selected sector exposure Wholesale lending excl. Selected sectors (£bn/coverage ratio %) Gross loans Debt Securities (£bn) Exposure Coverage • c.30% of the Wholesale book is secured, increasing to >60% Wholesale excl. Debt S
Slide 23: QoQ and YTD TNAV per share movements
QoQ and YTD TNAV per share movements QoQ TNAV movements (pence per share) 4 2 5 11 10 30 3 4 297 286 Jun-22 Earnings Share buyback Dividends paid Pension Currency Cash flow hedge FVOCI reserve Own credit Sep-22 remeasurement translation reserve reserve reserve YTD TNAV movements (pence per share) 22
Slide 24: CET1 capital and RWAs
CET1 capital and RWAs Q322 YTD CET1 ratio movements Future considerations • Pensions – expected accelerated impact c.(30)bps c.80bps (Q422) 129bps 67bps • UK countercyclical buffer (CCyB) - to be re- 33bps 16bps 33bps 27bps introduced at 1% in Q422 and subsequently rising 15.1% 13.8% to 2% in Q323 –
Slide 25: Pensions
Pensions Pensions surplus • The UK Retirement Fund (UKRF), the Group’s main pension scheme, was in an accounting surplus of £4.3bn as at 30 September 2022, reflecting £24.4bn fair value of scheme assets and £20.1bn of defined benefit obligations • The next triennial actuarial valuation of the UKRF i
Slide 26: We continued to advance our ESG agenda in Q322: YTD progress
We continued to advance our ESG agenda in Q322: YTD progress Environment Social Governance Three-year partnership with Oxford Targeted £1,200 pay rise for 35,000 University to support clients in the UK colleagues in the UK most affected by the agriculture sector to achieve net zero cost of living In
Slide 27: Q322 Group Financial Highlights
Q322 Group Financial Highlights Three months ended (£m) Sep-22 Sep-21 % change Income excluding loss from hedging arrangements up 17% YoY with continued momentum in Income 5,951 5,465 +9% Credit impairment (charges)/releases (381) (120) both Consumer, Cards and Payments (CC&P) and Barclays UK. Withi
Slide 28: Q322 Barclays UK Financial Highlights
Q322 Barclays UK Financial Highlights Three months ended (£m) Sep-22 Sep-21 % change Income up 17% YoY capturing the benefit from rising interest rates - Personal Banking 1,212 990 +22% - Barclaycard Consumer UK 283 293 -3% − NIM increased 30bps QoQ to 3.01% - Business Banking 421 355 +19% Income 1,
Slide 29: Q322 Barclays International Financial Highlights
Q322 Barclays International Financial Highlights Three months ended (£m) Sep-22 Sep-21 % change Income up 3%, diversified income profile across businesses and geographies Income 4,065 3,937 +3% Credit impairment (charges)/releases (295) 18 − Income excluding the £466m loss from hedging arrangements
Slide 30: Q322 Corporate & Investment Bank Financial Highlights
Q322 Corporate & Investment Bank Financial Highlights Three months ended (£m) Sep-22 Sep-21 % change Income down 10% - FICC 1,546 803 +93% - Equities 246 757 -68% − Income excluding the £466m loss from hedging arrangements relating to the Over-issuance of Global Markets 1,792 1,560 +15% Securities u
Slide 31: Q322 Consumer Cards & Payments Financial Highlights
Q322 Consumer Cards & Payments Financial Highlights Three months ended (£m) Sep-22 Sep-21 % change Income up 54% -International Cards & Consumer Bank 824 490 +68% - Private Bank 270 188 +44% − International Cards and Consumer Bank income up 68% driven by higher interest - Payments 150 130 +15% Total
Slide 32: Q322 Head Office Financial Highlights
Q322 Head Office Financial Highlights Three months ended (£m) Sep-22 Sep-21 % change Q322 Income of £(30)m driven by Income (30) (110) -73% Credit impairment (charges)/releases (5) (1) − £(31)m loss on sale from disposal of remaining stake in Absa Group Limited (Absa) in – Operating costs (94) (95)
Slide 33: Q322 YTD Group Financial Highlights
Q322 YTD Group Financial Highlights Nine months ended (£m) Sep-22 Sep-21 % change Income excluding loss from hedging arrangements up 12% YoY reflecting growth across all Income 19,155 16,780 +14% Credit impairment (charges)/releases (722) 622 three operating businesses – Operating costs (11,209) (10
Slide 34: Q322 YTD BUK Q322 YTD BI
Q322 YTD BUK Q322 YTD BI Nine months ended (£m) Sep-22 Sep-21 % change Nine months ended (£m) Sep-22 Sep-21 % change - Personal Banking 3,311 2,900 +14% Income 14,005 12,155 +15% - Barclaycard Consumer UK 824 898 -8% Credit impairment (charges)/releases (605) 311 - Business Banking 1,154 1,039 +11%
Slide 35: Q322 YTD CIB Q322 YTD CC&P
Q322 YTD CIB Q322 YTD CC&P Nine months ended (£m) Sep-22 Sep-21 % change Nine months ended (£m) Sep-22 Sep-21 % change - FICC 4,719 2,902 +63% -International Cards & Consumer Bank 2,053 1,540 +33% - Equities 2,709 2,466 +10% - Private Bank 729 581 +25% Global Markets 7,428 5,368 +38% - Payments 431
Slide 36: Q322 YTD Head Office; Exchange rates and share count information
Q322 YTD Head Office Nine months ended (£m) Sep-22 Sep-21 % change Income (139) (212) -34% Credit impairment (charges)/releases 12 5 – Operating costs (239) (507) -53% – Litigation and conduct (54) (12) Total operating expenses (293) (519) -44% Other net (expenses)/income (26) 209 Loss before tax (4
Slide 37: Disclaimer
Disclaimer Important Notice The terms Barclays or Group refer to Barclays PLC together with its subsidiaries. The information, statements and opinions contained in this presentation do not constitute a public offer under any applicable legislation, an offer to sell or solicitation of any offer to bu