Barclays Plc · LSE:BARC
Barclays — H1 2012 Earnings Presentation
53 slides from Barclays's earnings presentation, Jul 27, 2012
Slide 1: Investor Presentation 2012 H1 Results
Investor Presentation 2012 H1 Results
Slide 2: Overview for the first half of 2012
Overview for the first half of 2012 Improved returns and profitability despite macroeconomic challenges Adjusted return on equity increased to 9.9% (2011: 9.3%) with improvements in five of seven businesses Adjusted PBT up 13% to £4,227m with improvements of 15% in Retail and Business Banking (R
Slide 3: Index – 2012 H1 Results
Index – 2012 H1 Results Slide Slide Group financial highlights 4-5 Business performance (cont) - Income 6 - Barclaycard 24-25 - Costs 7-9 - Investment bank 26-28 - PBT 10 - Corporate bank 30-31 - Returns 11 - Wealth & Investment Mgmt 32-33 - Capital, funding & liquidity 12-15 Eurozone periphery expo
Slide 4: Financial highlights
Financial highlights Adjusted profits up 13% with improvements of 15% in Retail and Business Banking (RBB), 11% in Corporate and Investment Banking, and 38% in Wealth and Investment Management Six months ended – 2012 2011 Change • Adjusted income was up despite macroeconomic June (£m) (£m) (%) chall
Slide 5: Adjusting items to profit before tax
Adjusting items to profit before tax Q212 Q112 Q411 Q311 Q211 Q111 Six months ended – June (£m) (£m) (£m) (£m) (£m) (£m) Adjusted profit before tax 1,782 2,445 528 1,337 1,721 2,004 Own credit (325) (2,620) (263) 2,882 440 (351) Gains on debt buy-backs - - 1,130 - - - Impairment and gain/(loss) on 2
Slide 6: Adjusted income up 1% to £15,475m
Adjusted income up 1% to £15,475m Income outperformance in the IB supported by growth in customer net interest income in other businesses 15,475 15,299 £m 6,496 6,263 2,2542,205 1,9722,026 1,770 1,625 1,5681,527 829 873 604 486 UK RBB Europe RBB Africa RBB Barclaycard Investment Corporate Wealth and
Slide 7: Cost to income ratio improved to 61% (2011: 64%)
Cost to income ratio improved to 61% (2011: 64%) Cost remains a core focus given the flat income environment in which many of our businesses currently operate £m +1% 15,475 Performance costs 15,299 Non-performance costs (3%) 9,782 9,491 1,648 (14%) 1,422 (1%) 8,134 8,069 H1 2011 H1 2012 H1 2011 H1 2
Slide 8: Non-performance cost savings
Non-performance cost savings On target to meet non-performance cost savings of £2bn by 2013 despite on-going regulatory cost pressures and continued business investment Actuals Targets £17.5bn-£18bn 2010 Medium Term Plan £2bn £16.4bn Savings Target £15.5bn-£16bn Pre 2010 2010 2011 2012E 2013E Note:
Slide 9: Adjusted non-performance costs
Adjusted non-performance costs Target non-performance cost run-rate of £15.5bn achieved, additional investment in business to be funded on a pay-as-you-go basis through further cost reductions £m 290 808 453 8,134 8,069 7,779 H1 2011 Cost reduction Investment, H1 2012 LIBOR H1 2012 regulatory and ex
Slide 10: Adjusted profit/(loss) before tax by business
Adjusted profit/(loss) before tax by business Improvements of 15% in Retail and Business Banking (RBB) and 11% in Corporate and Investment Banking, demonstrating the benefits of the universal banking model 2012 2011 Change Six months ended – June (£m) (£m) (%) UK RBB 746 704 6 Europe RBB (92) (161)
Slide 11: Adjusted return on equity (RoE) increased to 9.9%
Adjusted return on equity (RoE) increased to 9.9% RoE improvements in five of seven businesses with the Investment Bank achieving c15% return on equity in difficult market conditions H1 2011 RoE H1 2012 Average equity allocation H1 2012 RoE 9.3% Group - £55.1bn¹ 9.9% 15.0% UK RBB - £6.7bn 16.6% -9.3
Slide 12: 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 30 Jun 31 Dec • CT1 ratio of 10.9% despite the 26bps adverse impact As at resulting from additional pension contributions 2012
Slide 13: Pro forma Core Tier 1 ratios
Pro forma Core Tier 1 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 % 11.3 10.9 10.3 9.7 9.2 8.6 30 Jun 12 (Basel 2.5) 31 Dec 12 (Basel 2.5) 01 Jan 13 (Basel 3) 31 Dec 13 (Basel 3) Repo
Slide 14: Pro forma Capital and RWAs
Pro forma Capital and RWAs Reported Pro forma Pro forma Pro forma Jun 12 Dec 12 Jan 13 Dec 13 CT1 Capital (Basel 2.5) 42.6 44.3 44.3 48.3 Basel 3 impact on CT1 Capital 1.1 1.1 CT1 Capital (Basel 3) 45.3 49.4 RWA (Basel 2.5) 390 390 390 390 Credit Valuation Adjustment 55 55 Securitisation 42 42 Other
Slide 15: Pro forma Capital and RWAs ─ Notes
Pro forma Capital and RWAs ─ Notes Notes on Basel 3 Core Tier 1 pro formas • Pro forma capital reflects consensus estimates for retained earnings from 22 sell-side analysts, including consensus dividend payout. Barclays neither endorses nor verifies the estimates used • Pro forma capital at 31 Dec 2
Slide 16: Balance sheet
Balance sheet Whilst the balance sheet totals £1.6tn, wholesale funding requirements are limited to £263bn as a consequence of its structure £1,571bn1 £515bn £505bn Assets Liabilities £407bn £407bn £335bn £308bn £118bn £170bn £145bn £144bn £89bn Total Gross Derivative Repo financing, Customer Custom
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Intentionally left blank BARCLAYS
Slide 18: 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 Six months ended – June (£m) (£m) (%) Income 2,205 2,254 (2) Impairment charges (122) (275) (56) Net operating in
Slide 19: UK Retail and Business Banking
UK Retail and Business Banking • Income declined 2% with: ─ net interest income down 1% as net interest margin declined 7bps to 139bps due to reduced contributions from structural hedges; and ─ net fee and commission income down 4% following closure of the branch-based financial planning business in
Slide 20: Europe Retail and Business Banking
Europe Retail and Business Banking Performance improvement with 2011 restructuring lowering costs significantly. However macro economic environment continues to have a significant drag on income and impairment 2012 2011 Change Six months ended – June (£m) (£m) (%) Income 486 604 (20) Impairment char
Slide 21: Europe Retail and Business Banking
Europe Retail and Business Banking • Income declined 20% reflecting the challenging economic environment across Europe and: ─ net interest income down 14% reflecting lower asset and liability balances, partially offset by higher liability margins; and ─ net fee and commission income down 31% reflect
Slide 22: 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 Six months ended – June (£m) (£m) (%) Income 1,625 1,770 (8) Impairment charges (
Slide 23: Africa Retail and Business Banking
Africa Retail and Business Banking • Income declined 8% driven by currency movements, partially offset by modest pricing increases and volume growth with: ─ net interest income down 6% with the net interest margin up 16bps to 318bps primarily due to a change in composition to higher margin business;
Slide 24: Barclaycard
Barclaycard Strong performance driven by increased volumes in main portfolios, lower impairment and an increase in net fees and commissions from payments business 2012 2011 Change Six months ended – June (£m) (£m) (%) Income 2,026 1,972 3 Impairment charges (460) (648) (29) Net operating income 1,56
Slide 25: Barclaycard
Barclaycard • Income improved 3% with improvements of 2% in the UK and 3% outside the UK and: ─ net interest income up 2% driven by volume growth, partially offset by lower net interest margin of 881bps (2011: 939bps) including an adverse impact from structural hedges; and ─ net fee and commission i
Slide 26: Investment Bank
Investment Bank Strong income performance (up 4% with an improved quarterly seasonal trend vs ‘11), costs tightly managed, impairment largely affected by one-off items. RoE nearly 15% in challenging environment 2012 2011 Change Six months ended – June (£m) (£m) (%) Income 6,496 6,263 4 Impairment ch
Slide 27: Investment Bank
Investment Bank • Income improved 4% with: ─ FICC up 11%, reflecting improved performances in Rates and Commodities partly offset by lower contributions from Securitised Products ─ Equities and Prime Services down 12%, with reduced performance in cash equities and equity derivatives driven by declin
Slide 28: Investment Bank Q2 income up 5% vs. Q2 2011
Investment Bank Q2 income up 5% vs. Q2 2011 £m 3,464 Q2 2011 Total income 3,032 Q3 2011 2,897 • Q2 2012 vs Q2 2011 up 5% Q4 2011 • Q2 2012 vs Q1 2012 down 12% Q1 2012 2,396 Q2 2012 2,254 1,968 1,818 1,715 1,438 971 563 550 520 506 509 501 423 389 338 305 Total income FICC Equities and Prime Services
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Intentionally left blank BARCLAYS
Slide 30: Corporate Banking
Corporate Banking UK performance remains strong, supported by improving international businesses and good cost control. 4% growth in customer deposits reflects strength of franchise in challenging markets 2012 2011 Change Six months ended – June (£m) (£m) (%) Income 1,527 1,568 (3) Impairment charge
Slide 31: Corporate Banking
Corporate Banking • Income down 3% with net interest income down 6% reflecting increased funding costs and non-recurring income from exited businesses • Customer deposits increased 4% improving LDR to 72% from 83% • Impairment charges down 31% and loan loss rates improved to 123bps (2011: 173bps) wi
Slide 32: 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 Six months ended – June (£m) (£m) (%) Income 892 848 5 Impairment charges (19) (1
Slide 33: Wealth and Investment Management
Wealth and Investment Management • Income up 5% primarily driven by an increase in the High Net Worth businesses with: ─ net interest income up 14% as net interest margin increased to 125bps from 122bps with average loans up £2.3bn and average customer deposits up £4.3bn; and ─ net fee and commissio
Slide 34: Reduced exposure to the Eurozone periphery
Reduced exposure to the Eurozone periphery Ongoing active management of risks associated with Eurozone periphery. Direct exposures continue to be managed down whilst redenomination risk is significantly reduced in Spain and Portugal • Since year end net funding mismatches in Spain reduced from £12.1
Slide 35: Reduced exposure to the Eurozone periphery
Reduced exposure to the Eurozone periphery Total Eurozone exposure of £62.1bn comprised of £39.5bn of high quality retail assets, principally low LTV residential mortgages . Sovereign exposure has decreased 22% in H1 to £5.6bn Spain Italy Portugal Ireland As at 30 June 2012 (£m) (£m) (£m) (£m) Sover
Slide 36: Spanish exposures
Spanish exposures Retail Gross mortgage exposure by location of Average indexed LTV of 63% 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 arrears* c.13% Corporate £4.9bn
Slide 37: Portuguese exposures
Portuguese exposures Retail Gross mortgage exposure by location of Average indexed LTV of 73% outstanding balances Average retail customer age 40; less than 1% of mortgage balances with customers aged under 25 0.6% of home loans greater than 90 days in arrears* Corporate Porto c.15% £1.8bn g
Slide 38: Italian exposures
Italian exposures Retail Gross mortgage exposure by location of Average indexed LTV of 47% outstanding balances Average retail customer age 46; less than 3% of mortgage balances with customers aged under 25 Milan c.10% 1.0% of home loans greater than 90 days in arrears* Corporate Focused on
Slide 39: Appendix
Appendix 39 | Barclays 2012 Interim Results | 27 July 2012
Slide 40: Balanced profit distribution across the Group
Balanced profit distribution across the Group Total adjusted profit before tax: £4,227m Corporate Banking £346m RBB breakdown £746m UK Retail and Business Banking £274m Africa Investment Bank £1,681m £2,268m £753m Barclaycard (£92m) Europe Wealth and Investment Management £121m Head Office and Other
Slide 41: Analysis of net interest income
Analysis of net interest income As at 30 Jun 12 31 Dec 12 30 Jun 11 RBB, Corporate Banking and Wealth and Investment Management customer income: - Customer assets 3,335 3,478 3,505 - Customer liabilities 1,564 1,552 1,314 Total 4,899 5,030 4,819 RBB, Corporate Banking and Wealth and Investment Manag
Slide 42: Analysis of net interest margin
Analysis of net interest margin Total RBB, Corporate Wealth and As at 30 June 2012 UK RBB Europe RBB Africa RBB Barclaycard Corporate Banking IM and Wealth Customer asset margin (%) 1.08 0.80 3.10 9.53 1.20 0.65 2.11 Customer liability margin (%) 0.97 0.47 2.66 n/m 1.08 1.11 1.13 Non-customer genera
Slide 43: Capital resources
Capital resources 30 Jun 12 31 Dec 11 As at (£m) (£m) Shareholders’ equity (ex. NCIs) 54,205 55,589 Net NCIs 2,525 2,661 Regulatory adjustments and deductions: Goodwill and intangible assets (7,574) (7,560) Own credit cumulative gain (net of tax) (492) (2,680) Defined benefit pension adjustment1 (2,
Slide 44: RWAs by business
RWAs by business 30 Jun 12 31 Dec 11 As at (£m) (£m) UK RBB 36,038 33,956 Europe RBB 16,563 17,436 Africa RBB 27,909 30,289 Barclaycard 33,149 34,186 Investment Bank 190,553 186,700 Corporate Banking 69,328 72,842 Wealth and Investment Management 13,998 13,076 Head Office and Other Operations 2,685
Slide 45: RWAs by risk
RWAs by risk 30 Jun 12 31 Dec 11 As at (£bn) (£bn) Credit risk 239,543 245,224 Counterparty risk: Internal model method 30,165 33,131 Non-model method 4,496 4,953 Market risk: Modelled – VaR 23,885 26,568 Modelled – charges add-on and non-VaR 21,343 17,560 Standardised 28,320 27,823 Operational risk
Slide 46: Investment Bank credit market exposures
Investment Bank credit market exposures Six months ended 30 Jun 12 FV (losses) Imp. (charge) Total (losses) 30 Jun 12 31 Dec 11 As at / gains / release / gains (£m) (£m) (£m) (£m) (£m) ABS CDO Super Senior 1,615 1,842 (14) (131) (145) US sub-prime and Alt-A 1,033 1,381 52 (9) 43 Commercial real esta
Slide 47: Mortgage book – delinquency & LTV summary
Mortgage book – delinquency & LTV summary >90 day MTM New Proportion Gross L&A As at 30 June 2012 arrears LTV LTV >85% LTV (£m) (%) (%) (%) (%) UK 110,004 0.3 44.3 55.3 8.8 South Africa 16,752 2.8 45.0 62.9 22.5 Spain 13,886 0.7 62.7 62.5 19.7 Italy 15,450 1.0 46.5 56.2 2.0 Portugal 3,747 0.6 73.1 6
Slide 48: Credit cards, overdrafts and unsecured loans – delinquency summary
Credit cards, overdrafts and unsecured loans – delinquency summary >30 day >90 day Gross Recoveries imp. Gross L&A As at 30 June 2012 arrears arrears charge-off rates coverage ratio (£m) (%) (%) (%) (%) UK cards 14,686 2.7 1.2 5.1 80.7 US cards 8,510 2.5 1.2 5.7 89.3 UK personal loans 5,030 3.0 1.4
Slide 49: Calculation of adjusted gross leverage
Calculation of adjusted gross leverage 30 Jun 12 31 Dec 11 As at (£bn) (£bn) Total assets 1,631.3 1,563.5 Counterparty netting (425.6) (440.6) Collateral on derivatives (51.4) (51.1) Net settlement balances and cash collateral (97.2) (61.9) Goodwill and intangible assets (7.9) (7.8) Customer assets
Slide 50: Wholesale debt maturity table
Wholesale debt maturity table Total <1 Total >1 <1 month 1-3 months 3-12 months Total As at 30 June 2012 year year (£bn) (£bn) (£bn) (£bn) (£bn) (£bn) Deposits from banks 16.7 7.2 3.5 27.4 8.2 35.6 Certificates of deposit and commercial paper 12.2 15.4 17.2 44.8 3.2 48.0 Asset backed commercial pape
Slide 51: Barclays Bank PLC credit rating
Barclays Bank PLC credit rating Standard & Credit Ratings as at 27 July 2012 Moody's Fitch DBRS Poor's Long Term A+(Negative) A2(Negative) A(Stable) AA(Negative) Short Term A-1 P-1 F1 R-1 • Credit rating downgrades could result in contractual outflows to meet collateral requirements on existing cont
Slide 52: Investor Relations contact information
Investor Relations contact information Charlie Rozes Kathryn McLeland +44 (0)20 7116 5752 +44 (0)20 7116 4943 [email protected] [email protected] Richard Caven James Johnson Sarah Crouch +44 (0)20 7116 2809 +44 (0)20 7116 7233 +44 (0)20 7116 3440 [email protected] james
Slide 53: 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