Barclays Plc · LSE:BARC
Barclays — Q1 2018 Earnings Presentation
45 slides from Barclays's earnings presentation, Apr 26, 2018
Slide 1: Barclays PLC Q1 2018 Financial Results
Barclays PLC Q1 2018 Financial Results 26 April 2018
Slide 2: Jes Staley, Barclays Group Chief Executive
Jes Staley Barclays Group Chief Executive
Slide 3: Double digit returns across both operating businesses
Double digit returns across both operating businesses Continued strong execution of our strategy Q118 performance1 Barclays UK – RoTE of 15.7%1 Mortgage growth of c.£1bn in Q118 with c.25,000 mortgage completions Group RoTE 11.0% (Q117: 2.0%) Consistent pricing discipline and prudent risk appeti
Slide 4: Diversified Transatlantic Consumer and Wholesale Bank
Diversified Transatlantic Consumer and Wholesale Bank Focused on improving RoTE and increasing cash returns to shareholders Driving double digit returns1 Increasing cash returns to shareholders Clear pathway to achieving Group returns targets Settled legacy RMBS litigation with US Department of
Slide 5: Tushar Morzaria, Barclays Group Finance Director
Tushar Morzaria Barclays Group Finance Director
Slide 6: Q118 Group highlights
Q118 Group highlights Double digit returns1 and resolution of material legacy conduct matter Financial performance1 Focus on improved profitability and returns with Group RoTE of 11.0%1 • Double digit returns in BUK of 15.7%1 and BI of 13.6%1 Income 8% £5.4bn (Q117: £5.8bn)2 Impairment decrease
Slide 7: Q118 Barclays UK results
Q118 Barclays UK results Underlying growth in customer balances and ongoing investment in digital banking, with RoTE of 15.7%1 Financial performance1 Income was flat excluding the Q117 Q217 Q317 Q417 Q118 YoY non-recurrence of Visa gain in Q117 and customer remediation -3% Income 3% Total 330 286
Slide 8: Q118 Barclays International results
Q118 Barclays International results Strong CIB performance and continued investment for growth in CC&P Financial performance1 RoTE improved to 13.6%1, with double digit Balance across businesses returns across CIB and CC&P Income 8% Income impacted by 12% depreciation of Consumer, Cards £3.8bn
Slide 9: Q118 Barclays International: Corporate & Investment Bank results
Q118 Barclays International: Corporate & Investment Bank results Improved Markets income and Banking fee share gains delivered 13.0% RoTE Financial performance1 Markets income increased 21% in USD Income • Equities up 43% driven by derivatives and equity financing GBP basis (£m) USD basis2 ($m) In
Slide 10: Q118 Barclays International: Consumer, Cards & Payments results
Q118 Barclays International: Consumer, Cards & Payments results Investing in growth across CC&P businesses Financial performance1 Income decrease reflected FX and effect of Q117 Q217 Q317 Q417 Q118 repositioning the US Cards portfolio YoY towards a lower risk mix +10% Income 7% • Underlying incom
Slide 11: Head Office
Head Office Post Non-Core integration Negative income in Q118 reflected Q117 Q217 Q317 Q417 Q118 • c.£90m impact from certain legacy capital instrument funding costs, 84 including £14% RCIs 6 Income • Hedge accounting associated with (82) (167) historical swap positions, with drag (£m) (238) expec
Slide 12: IFRS 9 and impairment
IFRS 9 and impairment IFRS 9 day 1 impact Q118 impairment Increase in impairment stock of £2.8bn on 1 Jan 2018 BUK impairment included a single name charge, while Decrease in shareholders’ equity of £2.2bn post-tax underlying credit metrics were broadly stable and economic conditions steady
Slide 13: Operating cost focus underpinning RoTE targets
Operating cost focus underpinning RoTE targets Improving the mix of the cost base to drive higher returns Targeting cost: income ratio Further absolute cost reduction BX generating significant below 60% in 2019 by 2019 (£bn)1 operational leverage 73% Process automation 14.2 • Standardised front to
Slide 14: Strong profit generation offset by RMBS settlement and PPI
Strong profit generation offset by RMBS settlement and PPI Generating capacity for attractive capital returns to shareholders over time CET1 ratio1 impacted materially by L&C 42bps 13bps Target of 13.3% 20bps 10bps 13.3% 61bps c.13% c.13% 1.5-2.0% Management buffer 2 12.7% 0.5% CCyB 2.5% CCB 1.5% G-
Slide 15: Tangible Net Asset Value
Tangible Net Asset Value TNAV (pence per share) – Dec-17 to Mar-18 CET1 ratio neutral1 7 1 Expect 4 TNAV accretion 276 3 2 275 13 from here, 11 driven by profits 251 2 Dec-17 Profits Currency Cash flow Employee Other IFRS 9 Litigation Mar-18 (ex. L&C) translation hedging share day 1 & conduct reserv
Slide 16: Focused on profitability and returning capital to shareholders
Focused on profitability and returning capital to shareholders Q118 highlights Group targets >9% in 2019 RoTE2 >10% in 2020 Double digit returns – Group 11.0%1 c.13% Successful set-up of UK ring-fenced bank CET1 ratio 150-200 bps above regulatory minimum level Settled legacy RMBS litigation with US
Slide 17: Barclays PLC Q1 2018 Financial Results
Barclays PLC Q1 2018 Financial Results 26 April 2018
Slide 18: Appendix
Appendix
Slide 19: Litigation & conduct and other items – Q118 vs. prior year
Litigation & conduct and other items – Q118 vs. prior year Litigation & conduct (£m) Q118 Q117 RMBS (1,420) - Head Office PPI (400) - Barclays UK Other (141) (28) Group (across divisions) Total (1,961) (28) Other items of interest (£m) Income US Card asset sale - 192 Barclays International Valuation
Slide 20: Q118 Group results
Q118 Group results Three months ended (£m) Mar-18 Mar-17 % change Excluding L&C – Three months ended (£m) Mar-18 Mar-17 % change Income 5,358 5,823 (8%) Operating expenses (3,364) (3,591) 6% Impairment (288) (527) 45% PBT 1,725 1,710 1% – Operating expenses (excluding L&C) (3,364) (3,591) 6% Attribu
Slide 21: Q118 Barclays UK results
Q118 Barclays UK results Business performance Excluding L&C – Three months ended (£m) Mar-18 Mar-17 % change Three months ended (£m) Operating expenses (1,005) (959) (5%) Mar-18 Mar-17 % change PBT 581 704 (17%) – Personal Banking 889 944 (6%) – Barclaycard Consumer UK 527 498 6% Attributable profit
Slide 22: Barclays UK: Significant opportunity with our 24 million customers
Barclays UK: Significant opportunity with our 24 million customers by leveraging digital and data Significant growth in digital banking – YoY Developments NPS Mobile Online Mobile 6.6m +15% Banking1 Active users +54 +36 +59 +42 10.4m Digital Digitally active +6% customers 5.4m unique customers log i
Slide 23: Q118 Barclays International results
Q118 Barclays International results Business performance Excluding L&C – Three months ended (£m) Mar-18 Mar-17 % change Three months ended (£m) Operating expenses (2,300) (2,435) 6% Mar-18 Mar-17 % change PBT 1,428 1,369 4% – CIB 2,799 2,782 1% – CC&P 1,009 1,356 (26%) Attributable profit 985 846 16
Slide 24: Q118 CIB and Consumer, Cards and Payments results
Q118 Barclays International: Corporate & Investment Bank and Consumer, Cards and Payments results CIB Business performance CC&P Business performance Three months ended (£m) % change % change Three months ended (£m) Mar-18 Mar-17 % change Mar-18 Mar-17 GBP basis USD basis Income 1,009 1,356 (26%) – F
Slide 25: Sustainable improvement in CIB returns, underpinned by strength in Markets
Sustainable improvement in CIB returns, underpinned by strength in Markets Market share Income gains FY173 growth Q1184 Rebuild of Markets leadership team complete Talent Experienced management, with track record of building and managing successful Markets franchises Markets 20bps 21% FICC 20
Slide 26: Head Office and Non-Core results
Head Office and Non-Core results Head Office Business performance Non-Core Business performance Three months ended (£m) Mar-18 Mar-17 Three months ended (£m) Mar-18 Mar-17 Income (238) (82) Income - (74) Impairment 6 - Impairment - (3) – Operating expenses (excluding L&C) (59) (49) – Operating expen
Slide 27: Income and margins – Q118
Income and margins – Q118 NII (£m) – Three months ended Mar-18 Mar-17 % change Q118 performance metrics – Barclays UK 1,493 1,511 (1%) • Combined Barclays UK and Barclays International1 NIM decreased – Barclays International 1 1,065 1,121 (5%) 13bps to 371bps – Other2 (370) (113) – Barclays UK NIM d
Slide 28: Abbreviations
Abbreviations AP Attributable Profit L&A Loans and advances £ GBP Great British Pound BAGL Barclays Africa Group Limited L&C Litigation & conduct $ USD United States Dollar BBPLC Barclays Bank PLC LBT Loss before tax BBUKPLC Barclays Bank UK PLC LDR Loan: deposit ratio BEAT Base Erosion Anti-Abuse T
Slide 29: Fixed income appendix
Fixed income appendix
Slide 30: Strong CET1 and leverage ratios
Strong CET1 and leverage ratios CET1 ratio • CET1 ratio decreased by 60bps in the quarter to 12.7% driven (60)bps largely by: − 42bps from organic capital generation from profits 13.3% 13.3% Offset by: 12.4% 12.7% − 61bps of litigation and conduct charges including 45bps 11.4% relating to the settle
Slide 31: Managing capital position above mandatory distribution restrictions
Managing capital position above mandatory distribution restrictions… Illustrative evolution of minimum CET1 requirements and buffers Minimum CRD IV CET1 requirement Capital Conservation Buffer (CCB) Distribution restrictions and management buffer 2017 Pillar 2A CET1 requirement Countercyclical Buffe
Slide 32: …and above stress test hurdles
…and above stress test hurdles Barclays’ expected hurdle rate for 2018 BoE stress test1 Minimum CRD IV CET1 requirement Countercyclical Buffer (CCyB) Stress tests 2017 Pillar 2A CET1 requirement Maximum and indicative • Barclays’ end state stress buffer is expected to be at least c.4.5-5.0% when G-S
Slide 33: Transition to CRD IV capital structure well established
Transition to CRD IV capital structure well established Illustrative evolution of CRD IV capital structure Well managed and balanced total capital structure • Transitional total capital ratio3 decreased to 20.3% (Dec-17: 21.5%), 20.3% while the fully loaded total capital ratio decreased to 19.4% (De
Slide 34: Leverage requirements
Leverage requirements Requirements Requirements Disclosure Disclosureobligations obligations Basis Basisof of preparation preparation 01- Jan-18 01-Jan-19 01-Jan-22 FY17 Q118 onwards Today 01-Jan -223 Pillar 1 3.25% 3.25% G-SIB 0.394% 0.525% CCyB - 0.2% FPC expected 1. Spot basis 1. Spot basis to re
Slide 35: MREL issuance remains on track
MREL issuance remains on track HoldCo MREL position and requirement Well advanced on HoldCo issuance plan including requisite buffers 29.1% 2018 issuance plan – currently expect c.£10bn equivalent CCyB: 0.5% issuance in 20182 • Issued £2.4bn equivalent of MREL in Q118, all in senior form, with CCB:
Slide 36: High quality liquidity and funding position
High quality liquidity and funding position with a conservatively positioned liquidity pool and stable LDR LCR remains in prudential surplus Loan: deposit ratio Loans and advances1 (£bn) Deposits1 (£bn) LDR 84% 84% 154% 147% 399 399 133% 131% 338 380 381 324 317 319 2 2 2 2 31-Dec-15 31-Dec-16 31-De
Slide 37: Robust group funding profile
Robust group funding profile Conservative and stable funding profile (£bn) Decrease in reliance on <1yr wholesale funding Customer deposits Sub. Debt1 Secured term funding < 1 month 1-3 months 3-6 months 6-12 months CD, CP and other deposits Unsecured term funding 1-2 years 2-5 years > 5 years £522b
Slide 38: Wholesale funding composition as at December 2017
Wholesale funding composition as at 31 December 20171 <1 1-3 3-6 6-12 Total 1-2 2-3 3-4 4-5 As at 31 December 2017 (£bn) >5 years Total month months months months <1 year years years years years Barclays PLC (the Parent company) Senior unsecured - 0.7 - 0.1 0.8 1.5 1.0 4.2 4.0 9.6 21.1 (public bench
Slide 39: Simplified business divisions, aligned to legal entity construct
Simplified business divisions, aligned to legal entity construct Barclays PLC Barclays International Barclays UK and Head Office1 Divisional constructs UK consumer and business bank Diversified wholesale differentiated by scale and digital innovation and consumer bank Personal Banking Consumer, Card
Slide 40: Preparation for Brexit
Preparation for Brexit Plans in place to serve EU clients post Brexit Brexit preparation: Plans in place to expand Barclays Bank Ireland (BBI) in advance of March 2019 to support activity with European clients • Continue to provide existing services to our clients through an expanded BBI • Expected
Slide 41: 2017 P&L bridge from Barclays PLC to pro forma Barclays Bank PLC
2017 P&L bridge from Barclays PLC consolidated to pro forma Barclays Bank PLC post ring-fencing FY17 (£m) BPLC BPLC to BBPLC BBPLC Less pro forma Pro forma consolidated differences consolidated BBUKPLC BBPLC Total income 21,076 (139) 20,937 (7,087) 13,850 Credit impairment charges and other provisio
Slide 42: 2017 Breakdown of pro forma BBUKPLC and BBPLC P&Ls
2017 Breakdown of pro forma BBUKPLC and BBPLC P&Ls post ring-fencing o/w Head Office o/w Head Office o/w o/w o/w H117 FY17 (£m) Pro forma division and other Pro forma division and other Barclays UK Barclays Non-Core BBUKPLC consolidation BBPLC consolidation division Int'l division division 1 adjustm
Slide 43: 2017 Balance Sheet bridge to pro forma BBUKPLC and BBPLC
2017 Balance Sheet bridge to pro forma BBUKPLC and BBPLC post ring-fencing BPLC to o/w o/w FY17 (£m) BPLC BBPLC BBPLC pro forma pro forma consolidated consolidated differences BBUKPLC1 BBPLC1 Assets Cash, balances at central banks and financial investments 229,998 1 229,999 40,426 189,573 Reverse re
Slide 44: Ratings remain a key strategic priority
Ratings remain a key strategic priority Current Senior Long and Confirmed ratings of BPLC, BBPLC and BBUKPLC Fitch Moody’s Standard and Poor’s Rating agencies have now finalised their ratings for the Short Term ratings holding company, ring-fenced bank and non ring- fenced bank − Fitch assigned rati
Slide 45: Disclaimer
Disclaimer Important Notice The information, statements and opinions contained in t his pres entation do not constitute a public offer under a ny applicable legislation, an offer to sell or s olicitation of any offer to buy any securities or financial instruments, or any advice or recommendation wit