Barclays Plc · LSE:BARC
Barclays — Q3 2015 Earnings Presentation
39 slides from Barclays's earnings presentation, Oct 29, 2015
Slide 1: Barclays PLC Q3 2015 Results Announcement
Barclays PLC Q3 2015 Results Announcement 29 October 2015
Slide 2: Tushar Morzaria, Barclays Group Finance Director
Tushar Morzaria Barclays Group Finance Director
Slide 3: Continued progress in 2015 year to date
Continued progress in 2015 year to date Increased Group adjusted pre-tax profits by 4%, with Core up 7% Positive cost to income jaws: Group adjusted costs of £12.5bn, down 5% Core business continued to perform well: PBT of £6.0bn and RoE of 10.5% Further progress on Non-Core: £2.5bn of equity releas
Slide 4: Summary Group financials: adjusted PBT up 4% in 2015 YTD
Summary Group financials: adjusted PBT up 4% in 2015 YTD % Ninth months ended – September (£m) 2014 2015 change Nine months financial performance2 Income 19,710 19,090 (3%) • PBT increased 4% to £5.2bn reflecting improved PBT in all Core Impairment (1,595) (1,468) 8% operating businesses – Operating
Slide 5: Progressive strengthening of key capital metrics
Progressive strengthening of key capital metrics Fully-loaded CET1 ratio1 • CET1 ratio increased 200bps since Dec-13 to 11.1% enabling us to 200bps achieve our 2016 target 18 months early c.12.1% • In line with guidance, the CET1 ratio was flat in Q315 Significant conduct and − Fully-loaded CET1 cap
Slide 6: Q3 Core performance: Profit growth across all operating businesses
Q3 Core performance: Profit growth across all operating businesses1 Three months ended (£m) Sep-14 Sep-15 % change Profit before tax (£m) Sep-14 Sep-15 % change Income 6,008 6,102 2% – Barclaycard 362 508 40% Impairment (492) (470) 4% – Investment Bank 284 317 12% – Operating expenses (3,557) (3,626
Slide 7: PCB: PBT up 8% and RoE of 14.4%
PCB: PBT up 8% and RoE of 14.4% Three months ended (£m) Sep-14 Sep-15 % change Financial performance – Personal 1,061 1,018 (4%) • Highest quarterly RoE since 2012 of 14.4% – Corporate 902 935 4% • PBT increased 8% to £855m – Wealth 273 227 (17%) • Income decreased 3% to £2,180m Income 2,236 2,180 (
Slide 8: Digital is Barclays' biggest branch
Digital is Barclays’ biggest branch PCB Retail September 2015 2014 2013 Digitally active 5.3m 6.3m 6.7m Barclays Mobile Banking (BMB) Customers 2.3m 3.6m 4.5m Payments and transfers £13.3bn £16.1bn £18.4bn1 (monthly) Unsecured lending completed digitally end to end £0.5bn £1.05bn £1.18bn1 (yearly) O
Slide 9: Barclaycard: Continued growth; PBT up 40% and RoE 22.5%
Barclaycard: Continued growth; PBT up 40% and RoE 22.5% Three months ended (£m) Sep-14 Sep-15 % change Financial performance Income 1,123 1,292 15% • Record profit in Q3 and year to date 2015 Impairment (284) (285) - − PBT increased 40% to £0.5bn. RoE improved to 22.5% – Operating expenses (449) (48
Slide 10: Africa Banking: RoTE of 13.3% in a challenging environment
Africa Banking: RoTE of 13.3% in a challenging environment Three months ended (£m) Sep-14 Sep-15 % change Constant currency1 Sep-14 Sep-15 % change Income 928 861 (7%) Income 828 861 4% Impairment (74) (69) 7% Impairment (65) (69) (6%) – Operating expenses (572) (536) 6% – Operating expenses (513) (
Slide 11: Investment Bank: PBT up 12% with a 9% increase in income
Investment Bank: PBT up 12% with a 9% increase in income Three months ended (£m) Sep-14 Sep-15 % change Financial performance Banking 547 657 20% • Profit before tax increased 12% to £317m Markets 1,120 1,154 3% • Total income increased 9% to £1.8bn – Credit 255 228 (11%) − Banking increased 20% to
Slide 12: Non-Core: Continued shrinkage and capital recycling
Non-Core: Continued shrinkage and capital recycling Three months ended (£m) Sep-14 Jun-15 Sep-15 Highlights – Businesses 327 153 199 • Period end allocated equity reduced by £3.6bn year-on-year – Securities and Loans 106 (42) (138) to £8.5bn – Derivatives (63) (79) (55) • RWAs reduced by £26bn year-
Slide 13: Non-Core: Reductions across every measure
Non-Core: Reductions across every measure RWAs by type (£bn) Leverage exposure by type (£bn) 50% 60% 110 382 Trade unwinds: -£2bn 2772 752 Model and market 18 57 movements: +£3bn 39 18 554 166 1524 10 9 5 114 7 31 22 20 26 27 c.20 83 83 16 12 10 107 9 9 9 56 42 Dec-13 Dec-14 Jun-15 Sept-15 2017 Jun-
Slide 14: Core income: Growth in Q3 net interest income and margin
Core income: Growth in Q3 net interest income and margin Income (£m) – YoY % • Total income in our retail and corporate businesses1 increased 1% Three months ended Sep-14 Jun-15 Sep-15 change year-on-year to £4.3bn driven primarily by business growth in – Net interest income 2,949 3,006 3,009 2% Bar
Slide 15: Group, Core and Non-Core cost guidance
Group, Core and Non-Core cost guidance Group adjusted cost targets/guidance1 (£bn) Non-Core £2.4bn SRP implementation costs 18.7 Core Bank Levy and Absorbing SRP litigation and conduct costs implementation costs, UK Bank Levy and conduct Underlying Core costs and litigation costs 2.3 16.9 c.16.3 0.6
Slide 16: Core RoE guidance for 2016 updated to 11%
Core RoE guidance for 2016 updated to 11% Return on Equity1 (%) >12.0 11.6 10.9 11.0 2014 9m Original Increased SRP Updated 2015 2016 Target Tax Implementation Costs 2016 Guidance Average allocated equity (£bn) 42 47 2014 9m Original Updated 2015 2016 Target 2016 Guidance 1 Excluding Costs to Achiev
Slide 17: Progress on targets/updated guidance
Progress on targets/updated guidance Target/Guidance Sep-15 Status Capital Fully-loaded CET1 ratio in 2016 >11% 11.1% Leverage Leverage ratio in 2016 >4% 4.2% Group adjusted costs1 in 2014 £17.0bn £16.9bn in 2014 Costs Group adjusted costs1 in 2015 £16.3bn £11.9bn c.£16.3bn Accelerated Non-Cor
Slide 18: Barclays PLC Q3 2015 Results Announcement
Barclays PLC Q3 2015 Results Announcement 29 October 2015
Slide 19: Appendices
Appendices
Slide 20: Solid returns in the Core business on a higher equity base
Solid returns in the Core business on a higher equity base RoE RoTE Core 47.7 11.5% 11.4% 43.0 35.2 39.6 9.5% 9.5% Q314 Q315 RoE Average allocated RoTE Average allocated equity (£bn) tangible equity (£bn) 12.6 Non-Core 12.4 8.4 8.3 RoE drag RoTE drag Average allocated Average allocated equity (£bn)
Slide 21: Increased returns across all Core operating businesses
Increased returns across all Core operating businesses Q314 28.3% Q315 22.5% 21.8% 19.2% 17.8% 17.5% 14.4% 13.4% 13.1% 13.3% 11.5% 11.4% 9.5% 9.7% 9.5% 9.5% 5.2% 5.5% 3.1% 3.3% RoE RoTE RoE RoTE RoE RoTE RoE RoTE RoE RoTE PCB Barclaycard Africa Banking Investment Bank Core1 1 Includes Head Office |
Slide 22: Core RoE excluding CTA of 10.7%
Core RoE excluding CTA of 10.7% Three months ended – September 2015 Profit/(loss) Return on Cost:income Costs to achieve Adjusted performance measures by business before tax1 average equity1,2 ratio1 (£m) (£m) (%) (%) PCB 65 920 15.5% 55% Barclaycard 27 535 23.7% 37% Africa Banking 7 258 10.3% 62% I
Slide 23: Net interest margins and balances
Net interest margins and balances Three months ended – September 2015 Average Total income Non-interest income Net interest income Net interest margin1 customer assets (£m) (£m) (£m) (%) (£m) PCB 2,180 574 1,606 214,505 2.97 Barclaycard 1,292 388 904 38,721 9.26 Africa Banking 861 362 499 33,205 5.9
Slide 24: Limited commodities exposures and robust risk management
Limited commodities exposures and robust risk management Limited exposure of which with all exposures to commodities sector… vast majority are high quality… well balanced to manage risk… Total Wholesale Primary & Trading Limits: Our exposure to Oil & Gas is well balanced, with no large concentration
Slide 25: Continuous reduction in CRL balances reflecting prudent credit risk management
Continuous reduction in CRL balances reflecting Barclays prudent approach to credit risk management Increasing coverage of Group Credit Risk Loans (CRLs) Retail CRL % of Gross L&A and stable LLR Dec-14 Sep-15 CRLs % of Gross L&A Loan loss rate 58% 62% 6.0% 6.1% CRL coverage 5.1% 4.8% 4.6% 3.7% 2.0%
Slide 26: Group adjusted operating expenses – delivery to date
Group adjusted operating expenses – delivery to date Year-on-year progress – excluding CTA (£bn) 12.4 0.5 0.2 11.9 0.1 0.1 0.1 YTD Non-Core PCB Investment Africa Head Barclaycard YTD Sept 14 Bank Banking Office Sept 15 26 | Barclays Q3 2015 Results Announcement | 29 October 2015
Slide 27: Tangible Net Asset Value – 10p increase in Q315
Tangible Net Asset Value – 10p increase in Q315 Tangible net asset value (pence per share) Highlights TNAV per share increased 10p in the quarter to 289p • Adjusted profits in the quarter contributed 5p per share 2 2 1 • Dividend distributions resulted in a 1p per share reduction 289 • Additional pr
Slide 28: RWAs: Closely managed to support business growth and capital ratio accretion
RWAs: Closely managed to support business growth and capital ratio accretion RWAs (£bn) Highlights • RWAs increased by £5bn in the quarter to £382bn, primarily driven by growth in the Core, notably in the Investment Bank and PCB • In Core, RWAs increased £7bn particularly in the Investment Bank and
Slide 29: Movement in Common Equity Tier 1 capital
Movement in Common Equity Tier 1 capital CET1 capital movement (£bn) 0.5 0.5 0.1 0.2 0.2 0.3 0.4 0.5 42.4 42.0 Jun-15 Profit for the Own credit Net impact of Available for sale Currency Retirement Additional value Other 1 Sep-15 period share schemes reserve translation benefits adjustments reserve (
Slide 30: Continued progress on the transition towards end-state capital structure
Continued progress on the transition towards end-state capital structure Evolution of capital structure blah Fully-loaded CRD IV capital position • Transitional and fully-loaded total capital ratios increased by 30bps to 17.7% 17.7% (Jun-15: 17.4%), and 16.5% (Jun-15: 16.2%) respectively, Total capi
Slide 31: Robust capital buffers above mandatory distribution restrictions
Significant management focus on maintaining robust capital buffers above future mandatory distribution restrictions • Maintained robust capital buffers above CET1 requirements1 (as at 1 January except Q315) minimum CET1 requirements and Contingent Minimum CRD IV requirement Indicative trajectory of
Slide 32: Leverage ratio increased to 4.2%
Leverage ratio increased to 4.2% Leverage exposure1 (£bn) Highlights L&A and other assets2 Derivatives • Improvement in leverage ratio in Q315 driven by AT1 issuance and CET1 capital growth SFTs Undrawn commitments • Leverage exposure up by £2bn to £1,141bn as the decrease achieved Leverage ratio1 i
Slide 33: Barclays PLC parent company accounts
Barclays PLC parent company accounts Barclays PLC parent company balance sheet Notes Balance sheet • Barclays PLC is the holding company of the Barclays Group As at As at As at 31 Dec-14 30 Jun-15 30 Sep-15 • The HoldCo’s primary assets currently are its investments in, and £m £m £m loans and advanc
Slide 34: Proactive refinancing out of HoldCo supports future TLAC requirements
Proactive refinancing out of HoldCo supports achieving future Total Loss Absorbing Capacity (TLAC)1 requirements (£bn) Sep-15 • Expect TLAC conformance to be achieved primarily through refinancing OpCo term senior unsecured debt out of the HoldCo PRA transitional Common Equity Tier 1 capital 42 • Wh
Slide 35: Progressing with plans for structural reform
Progressing with plans for structural reform Evolving group structure Implications for bondholders Barclays PLC (HoldCo) Barclays PLC • Measured issuer of AT1 and Tier 2 capital • Expect material increase in term senior unsecured funding over time as Barclays Bank PLC term senior Barclays Bank PLC u
Slide 36: Maintaining a robust liquidity position and well diversified funding profile
Maintaining a robust liquidity position and well diversified funding profile High quality liquidity pool (£bn) Liquidity – key messages 124% 118% • Robust liquidity position with the Group liquidity pool at £142bn and LCR1 96% LCR at 118%, providing a surplus to internal and external minimum 149 142
Slide 37: Wholesale funding composition
Wholesale funding composition1 >1 month >3 months >6 months >9 months >2 years Total >1 year but As at 30 September 2015 (£bn) ≤1 month but ≤3 but ≤6 but ≤9 but ≤12 ≤1 year ≤2 years but ≤5 >5 years Total months months months months years Barclays PLC Senior unsecured MTNs - - - - - - - 2.6 3.2 5.8 (
Slide 38: Barclays Bank PLC term senior unsecured debt maturity profile
Barclays Bank PLC term senior unsecured debt maturity profile BB PLC structured notes (£28bn total) BB PLC term senior unsecured debt (£21bn total) 9.4 6.4 3.6 0.9 2.2 3.8 5.3 4.1 4.3 0.2 3.5 1.3 1.8 1.5 0.6 0.5 0.2 0.2 Q415 2016 2017 2018 2019 2020 2021 2022 2023+ 38 | Barclays Q3 2015 Results Anno
Slide 39: Disclaimer
APPENDIX Disclaimer Important Notice 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 buy any securities or financial instruments, or any advice or recommendatio