Barclays Plc · LSE:BARC
Barclays — FY2012 Earnings Presentation
59 slides from Barclays's earnings presentation, Feb 12, 2013
Slide 1: Investor Presentation 2012 Results
Investor Presentation 2012 Results
Slide 2: Overview of 2012
Overview of 2012 Income growth in the IB supported by stable customer net interest income in other businesses Adjusted income up at £29,043m despite macroeconomic challenges and the continuing low interest rate environment Income at the Investment Bank improved 13% to £11,722m driven by increase
Slide 3: Index
Index Slide Slide Group financial highlights 4-7 Business performance (cont.) - Income 8 - Europe RBB 26-27 - Impairment 9 - Investment Bank 28-31 - Costs 10 - Corporate Bank 33-34 - Capital, funding & liquidity 11-16 - Wealth & Investment Mgmt 35-36 - Balance sheet 17 - Eurozone summary 18 Business
Slide 4: Balanced Profit Distribution Across the Group
Balanced Profit Distribution Across the Group Composition of adjusted profit before tax demonstrates the benefits of the universal banking model Adj. PBT: £7,048m +26% Adj. PBT: £5,590m Investment Bank, £4,063m Investment Bank, £2,965m Wealth & Investment Wealth & Investment Corporate Bank, £551m Ma
Slide 5: Latest Financial Highlights
Latest Financial Highlights (as at 31 December 2012) “Through a prolonged difficult economic environment, our financial performance has been strong, and our 2012 results clearly demonstrate the good momentum in our businesses” (Antony Jenkins, CEO) • Adjusted income up 2% despite macroeconomic 2012
Slide 6: Adjusting items to profit before tax
Adjusting items to profit before tax Q412 Q312 Q212 Q112 Q411 Q311 (£m) (£m) (£m) (£m) (£m) (£m) Adjusted profit before tax 1,094 1,727 1,782 2,445 528 1,337 Own credit (560) (1,074) (325) (2,620) (263) 2,882 Gains on debt buy-backs - - - - 1,130 - Impairment and gain/(loss) on - - 227 - - (1,800) d
Slide 7: Adjusted return on equity (RoE) increased to 7.8%
Adjusted return on equity (RoE) increased to 7.8% RoE improvements in five of seven businesses with the Investment Bank achieving 13.7% return on equity (%) FY 2011 RoE FY 2012 RoE 6.6% Group 7.8% 14.9% UK RBB 16.0% 17.4% Barclaycard 22.1% 9.7% Africa RBB 3.8% (6.0%) Europe RBB (8.0%) 10.4% Investme
Slide 8: NIM lower due to smaller contribution from hedges
NIM lower due to smaller contribution from hedges Customer margin £m FY 20111 FY 20121 Non-customer margin Non-customer income 2,140 1,338 Customer Income 9,849 9,816 Average Assets 318,429 319,420 Basis points Average Liabilities 270,902 283,069 203 185 36 22 167 163 FY 2011 FY 2012 1 Numbers refer
Slide 9: Adjusted impairment down 5% to £3,596m
Adjusted impairment down 5% to £3,596m Impairment improvement principally reflecting improvements in the UK businesses 3,802 3,596 £m FY 2012 FY 2011 1,259 1,147 979 872 646 536 466 460 328 269 261 93 41 38 UK RBB Europe RBB Africa RBB Barclaycard Investment Corporate Wealth and IM Group Bank Bankin
Slide 10: Cost to income ratio improved to 64%
Cost to income ratio improved to 64% (2011: 67%) Cost remains a core focus given the flat income environment in which many of our businesses currently operate (£m) 28,512 +2% 29,043 Performance costs Non-performance costs 19,180 (3%) 18,539 2,527 (4%) 2,425 (3%) 16,653 16,114 FY 2011 FY 2012 FY 2011
Slide 11: Solid capital, funding and liquidity
Solid capital, funding and liquidity Our financial strength continues to serve us well in the current environment and remains a core component of our strategy going forward 31 Dec 31 Dec • CT1 ratio of 10.9% remained strong reflecting a As at 2012 2011 slight decrease in CT1 equity at £42.1bn and re
Slide 12: Capital Ratios and Leverage
Capital Ratios and Leverage Our financial strength continues to serve us well in the current environment and remains a core component of our strategy going forward Basel 2 Basel 2.5 Basel 2 Basel 2.5 11.0% 10.9% 28x £bn 10.8% 10.0% 17.1% 16.6% 16.9% 16.4% 20x 20x 20x 19x 13.6% 13.0% 13.5% 12.9% 13.3
Slide 13: Pro forma Core Capital ratios
Pro forma Core Capital ratios We continue to manage the business to absorb changing regulation. Pro forma CT1 ratios are subject to finalisation of Basel 3 rules and market conditions (%) Reported ratio Transitional CRD IV ratio Fully loaded CRD IV ratio 11.0 10.9 10.6 8.2 31 Dec 11 31 Dec 12 01 Jan
Slide 14: Pro forma CRD IV capital and RWAs
Pro forma CRD IV capital and RWAs Reported Pro forma 1 Jan 2013 31 Dec 2012 CET1 Transitional CET1 Fully-loaded CT1 Capital (FSA 2009 definition) 42.1 42.1 IFRS10 impact (introduced on 1 Jan 2013) (0.4) CT1 Capital post-IFRS 10 (FSA 2009 definition) 41.7 RWAs (Basel 2.5) 387 387 CT1 Ratio (Basel 2.5
Slide 15: Pro forma CRD IV capital and RWAs - Notes
Pro forma CRD IV capital and RWAs - Notes Pro forma Capital Ratios are based on/subject to the following: CRD IV, models and waivers • The proforma ratios, capital computations and RWAs are based on our interpretation of CRD IV rules and expectation of how these rules will be implemented. They assum
Slide 16: Pro forma CRD IV capital and RWAs - Notes
Pro forma CRD IV capital and RWAs - Notes Pro forma Capital Ratios are based on/subject to the following: RWAs • It is assumed that EU corporates, pension funds and sovereigns are exempt from CVA volatility charge. • It is assumed all CCPs will implement CPSS-IOSCO’s “Principles for Financial Market
Slide 17: Balance Sheet funding
Balance Sheet funding Whilst the balance sheet totals £1.5tn, wholesale funding requirements are limited to £240bn as a consequence of its structure balances in £ billion Assets Liabilities 1,436 466 460 347 347 328 303 101 150 138 145 87 Total Gross Derivative financial Repo financing, and Customer
Slide 18: Reduced Exposure to the Eurozone Periphery
Reduced Exposure to the Eurozone Periphery Direct exposures continue to be managed down, whilst redenomination risk has significantly reduced Exposures by Geography • Exposure to Spain, Italy, Portugal and Ireland decreased £67.5bn by 13% to £58.7bn over 2012, with sovereign -13.0% Ireland, £5.7 £58
Slide 19: Results by Business
Results by Business # BARCLAYS
Slide 20: UK Retail and Business Banking
UK Retail and Business Banking Returns performance driven by solid new mortgage lending and deposit inflows, a continued reduction in impairment and ongoing cost control 2012 2011 Change Full year (£m) (£m) (%) Income 4,421 4,656 (5) Impairment charges (269) (536) (50) Net operating income 4,152 4,1
Slide 21: UK Retail and Business Banking
UK Retail and Business Banking 2012 compared to 2011 • Income declined 5% to £4,421m reflecting higher funding costs and reduced contribution from structural hedges, including non recurrence of gains from the disposal of hedging instruments in 2011 • Credit impairment charges decreased 50% to £269m
Slide 22: Barclaycard
Barclaycard Strong performance driven by solid profit growth within the UK and International businesses 2012 2011 Change Full year (£m) (£m) (%) Income 4,170 4,095 2 Impairment charges (979) (1,259) (22) Net operating income 3,191 2,836 13 Operating expenses (excluding provision for PPI (1,715) (1,6
Slide 23: Barclaycard
Barclaycard 2012 Compared to 2011 • Income increased 2% to £4,170m reflecting continued growth across the business and contributions from portfolio acquisitions. This was partially offset by higher funding costs, non-recurrence of gains from the disposal of hedging instruments in 2011 and depreciati
Slide 24: Africa Retail and Business Banking
Africa Retail and Business Banking Higher credit impairment in the South African home loans portfolio and adverse currency movements have both impacted performance as we deliver our One Africa strategy 2012 2011 Change Full year (£m) (£m) (%) Income 3,157 3,571 (12) Impairment charges (646) (466) 39
Slide 25: Africa Retail and Business Banking
Africa Retail and Business Banking 2012 Compared to 2011 • Income declined 12% to £3,157m. Excluding currency movements income declined 2% reflecting non- recurrence of gains from the disposal of Group hedging instruments in 2011, with underlying businesses across Africa remaining flat • Credit impa
Slide 26: Europe Retail and Business Banking
Europe Retail and Business Banking Performance deteriorated as macro economic environment continues to have a significant drag on income and impairment 2012 2011 Change Full year (£m) (£m) (%) Income 915 1,226 (25) Impairment charges (328) (261) 26 Net operating income 587 965 (39) Operating expense
Slide 27: Europe Retail and Business Banking
Europe Retail and Business Banking 2012 Compared to 2011 • Income declined 25% to £915m reflecting the challenging economic environment across Europe and non- recurrence of gains from disposal of hedging instruments in 2011 • Credit impairment charges increased 26% to £328m due to deterioration in c
Slide 28: Investment Bank
Investment Bank Strong income performance with costs tightly managed and impairment largely affected by one-off items. RoE of 13.7% in challenging environment 2012 2011 Change Full year (£m) (£m) (%) Income 11,722 10,335 13 Impairment charges (460) (93) Net operating income 11,262 10,242 10 Operatin
Slide 29: Investment Bank
Investment Bank 2012 Compared to 2011 • Total income increased 13% to £11,722m ─ Fixed Income, Currency and Commodities (FICC) income improved 17% to £7,403m, reflecting higher contributions from the Rates, Emerging Markets, Commodities, Securitised Products and Credit businesses, partially offset b
Slide 30: Investment Bank quarterly income
Investment Bank quarterly income (£m) Total Income Total income Q1 • Q4 2012 vs Q4 2011 up 43% Q2 • Q4 2012 vs Q3 2012 down 2% Q3 Q4 3366 3464 2897 3032 2633 2593 2254 1818 2011 2012 30 | Barclays 2012 Results Investor Presentation | 12 February 2013 | 12 February 2012
Slide 31: Investment Bank quarterly income
Investment Bank quarterly income (£m) Q1 2011 2,396 Q2 2011 2,201 Q3 2011 1,968 Q4 2011 1,715 Q1 2012 1,581 1,438 1,458 Q2 2012 Q3 2012 Q4 2012 971 612 626 545 563 550 534 484 520 506 509 501 487 423 389 338 305 FICC Equities and Prime Services Investment Banking Q4 12 v (8%) (9%) 29% Q3 12 Q4 12 v
Slide 32: Intentionally left blank
Intentionally left blank # BARCLAYS
Slide 33: Corporate Banking
Corporate Banking UK performance remains strong, with improving international businesses and good cost control. 14% growth in customer deposits reflects strength of franchise in challenging markets 2012 2011 Change Full year (£m) (£m) (%) Income 2,918 3,108 (6) Impairment charges (872) (1,147) (24)
Slide 34: Corporate Banking
Corporate Banking 2012 Compared to 2011 • Adjusted profit before tax improved £347m to £551m including a gain of £71m (2011: loss of £111m) in the net valuation of fair value items, primarily driven by improved credit impairment in Europe and UK and lower operating expenses. Statutory loss before ta
Slide 35: Wealth and Investment Management
Wealth and Investment Management Strong delivery against strategic programme with significant front office hiring and technology improvements driving efficiencies as well as improved service to clients 2012 2011 Change Full year (£m) (£m) (%) Income 1,815 1,744 4 Impairment charges (38) (41) (7) Net
Slide 36: Wealth and Investment Management
Wealth and Investment Management 2012 Compared to 2011 • Income improved 4% to £1,815m primarily driven by an increase in the High Net Worth businesses • Operating expenses decreased 2% to £1,463m as cost control initiatives were partially offset by the continued cost of the strategic investment pro
Slide 37: Appendix
Appendix # BARCLAYS
Slide 38: Barclays Overview
Barclays Overview A Global Universal Bank Key Financial Metrics as at 31 Dec 2012 • Major global financial services provider Total Assets £1.5tr • 3 main businesses: Core Tier I (Basel 2.5) 10.9% - Retail and Business Banking (RBB), - Corporate & Investment Banking, and Adj. Gross Leverage Ratio 19x
Slide 39: Analysis of net interest margin
Analysis of net interest margin RBB, Total RBB, Corporate Corporate Wealth and As at 31 December 2012 UK RBB Europe RBB Africa RBB Barclaycard Corporate and Wealth Banking IM and Wealth interest income Customer asset margin (%) 1.07 0.83 3.26 9.39 1.14 0.65 2.11 6,723 Customer liability margin (%) 0
Slide 40: Analysis of net interest income
Analysis of net interest income Nine months ended 31 Dec 12 31 Dec 11 RBB, Corporate Banking and Wealth and Investment Management - Customer asset income 6,723 6,983 - Customer liability income 3,093 2,866 Total customer net interest income 1 9,816 9,849 Total non-customer net interest income1 1,338
Slide 41: Total incentive awards granted
Total incentive awards granted Full year 2012 (£m) 2011 (£m) Current year cash bonus 852 832 Current year shares bonus 15 66 Total current year bonus 867 898 Deferred cash bonus 489 618 Deferred share bonus 498 634 Total deferred bonus 987 1,252 Bonus pool 1,854 2,150 Commissions, commitments and ot
Slide 42: Income Statement charge
Income Statement charge Full year 2012 (£m) 2011 (£m) Charges relating to deferred bonuses 1,223 995 Other performance costs 1,202 1,532 Performance costs 2,425 2,527 Salaries and other compensation costs 5,981 6,277 Total compensation costs 9,786 10,414 Non compensation staff costs 661 993 Total st
Slide 43: Income Statement charge for deferred bonuses
Income Statement charge for deferred bonuses Full year 2012 (£m) 2011 (£m) Deferred bonuses from 2009 and earlier bonus pools 153 405 Deferred bonuses from 2010 bonus pool 404 590 Deferred bonuses from 2011 bonus pool 666 - Deferred bonuses from 2012 bonus pool - - Income statement charge for deferr
Slide 44: Strong asset quality
Strong asset quality Despite challenging macroeconomic environment, retail and wholesale portfolios are performing well, as evidenced by limited Credit Risk Loans (CRLs) and low loan loss rates 51.7% 50.4% 52.1% 47.9% 49.3% 49.7% 48.9% 39.0%* 4.8% 5.1% 4.5% 4.6% 4.4% 3.8% 3.9% 156bp 118bp 118bp 74bp
Slide 45: Mortgage book – delinquency & LTV summary
Mortgage book – delinquency & LTV summary as at 31 December 2012 >90 day MTM New Proportion Gross L&A As at 31 December 2012 arrears LTV LTV >85% LTV (£m) (%) (%) (%) (%) UK 114,766 0.3 45.5 56.4 9.3 South Africa 15,773 1.6 44.2 64.7 20.0 Spain 13,551 0.7 64.6 62.8 23.2 Italy 15,529 1.0 46.7 55.4 4.
Slide 46: Credit cards, overdrafts and unsecured loans – delinquency summary
Credit cards, overdrafts and unsecured loans – delinquency summary as at 31 December 2012 Gross >30 day >90 day Recoveries imp. Gross L&A charge-off As at 31 December 2012 arrears arrears coverage ratio (£m) rates (%) (%) (%) (%) UK cards 15,434 2.5 1.1 4.9 80.4 US cards 9,296 2.4 1.1 5.0 90.7 UK pe
Slide 47: Balance Sheet summary
Balance Sheet summary 31 Dec 12 31 Dec 11 (£bn) (£bn) Total assets 1,490 1,564 Including Derivative financial instruments 469 539 Loans and advances to customers 426 432 Total liabilities 1,427 1,498 Including Derivative financial instruments 462 528 Customer accounts 386 366 Shareholders’ equity 63
Slide 48: Calculation of adjusted gross leverage
Calculation of adjusted gross leverage 31 Dec 12 31 Dec 11 As at (£bn) (£bn) Total assets 1,490 1,564 Counterparty netting (388) (441) Collateral on derivatives (47) (51) Net settlement balances and cash collateral (72) (62) Goodwill and intangible assets (8) (8) Customer assets held under investmen
Slide 49: Capital resources
Capital resources 31 Dec 12 31 Dec 11 As at (£m) (£m) Shareholders’ equity (ex. NCIs) 53,586 55,589 Net NCIs 2,450 2,661 Regulatory adjustments and deductions Goodwill and intangible assets (7,622) (7,560) Own credit cumulative gain (net of tax) 804 (2,680) Defined benefit pension adjustment* (2,445
Slide 50: RWAs by business
RWAs by business 31 Dec 12 31 Dec 11 As at (£m) (£m) UK RBB 38,783 33,956 Europe RBB 17,112 17,436 Africa RBB 27,008 30,289 Barclaycard 36,464 34,186 Investment Bank 178,019 186,700 Corporate Banking 67,973 72,842 Wealth and Investment Management 15,833 13,076 Head Office and Other Operations 5,666
Slide 51: Investment Bank credit market exposures
Investment Bank credit market exposures Barclays continues to reduce its credit market exposure, managing for value Period ended 31 Dec 12 FV (losses) Imp. (charge) Total (losses) 31 Dec 12 31 Dec 11 As at / gains / release / gains (£m) (£m) (£m) (£m) (£m) ABS CDO Super Senior 1,387 1,842 (33) (232)
Slide 52: Managed Credit Market Exposure
Managed Credit Market Exposure Since December 2008, Barclays has successfully reduced its exposure the Credit Market Exposure (CME) portfolio by 78% to £9.3bn 2008-2012 CME Balances • CMEs arose before market dislocation in mid-2007 and has been actively managed down since 2008 £41.7bn -78.0% • Expo
Slide 53: Wholesale debt maturity table as at 31 December 2012
Wholesale debt maturity table as at 31 December 2012 3-12 Total <1 Total >1 <1 month 1-3 months Total As at 31 December 2012 months year year (£bn) (£bn) (£bn) (£bn) (£bn) (£bn) Deposits from banks 10.8 8.7 2.2 21.7 8.8 30.5 Certificates of deposit and commercial paper 5.8 23.4 15.9 45.1 3.3 48.4 As
Slide 54: 2012 Rating & Outlook Changes
2012 Rating & Outlook Changes Despite re-rating of sector by all main rating agencies in the last 12 months, Barclays rating remains strong and in line with peers’ Barclays Bank plc 2012 Rating & Outlook Changes 1 January 2012 31 December 2012 Standard & Poor's Long Term A+ (Stable) A+ (Negative) Sh
Slide 55: Reduced exposure to the Eurozone periphery
Reduced exposure to the Eurozone periphery Total Eurozone exposure of £59.0bn comprised of £38.8bn of high quality retail assets, principally low LTV residential mortgages. Sovereign exposure has decreased 29% in 2012 to £5.0bn Spain Italy Portugal Ireland As at 31 December 2012 (£m) (£m) (£m) (£m)
Slide 56: Spanish exposures
Spanish exposures Retail Gross mortgage exposure by location of Average indexed LTV of 65% outstanding balances Average retail customer age 48; less than 1% of mortgage balances with customers aged under 25 Barcelona 0.7% of home loans greater than 90 days in arrears1 c.13% Corporate £3.3bn
Slide 57: Portuguese exposures
Portuguese exposures Retail Gross mortgage exposure by location of Average indexed LTV of 78% outstanding balances Average retail customer age 42; less than 1% of mortgage balances with customers aged under 25 0.7% of home loans greater than 90 days in arrears1 Corporate Porto c.15% £1.4bn n
Slide 58: Italian exposures
Italian exposures Retail Gross mortgage exposure by location of Average indexed LTV of 47% outstanding balances Average retail customer age 47; less than 3% of mortgage balances with customers aged under 25 Milan c.10% 1.0% of home loans greater than 90 days in arrears1 Corporate Focused on
Slide 59: Legal disclaimers
Legal disclaimers Important Notice The information, statements and opinions contained in this document do not constitute a public offer under any applicable legislation or an offer to sell or solicitation of any offer to buy any securities or financial instruments or any advice or recommendation wit