Barclays Plc · LSE:BARC
Barclays — H1 2014 Earnings Presentation
41 slides from Barclays's earnings presentation, Jul 30, 2014
Slide 1: Barclays PLC 2014 Interim Results
Barclays PLC 2014 Interim Results 30 July 2014
Slide 2: Antony Jenkins, Barclays Group Chief Executive
Antony Jenkins Barclays Group Chief Executive
Slide 3: Good progress with tangible results
GROUP CORE NON-CORE CONCLUSION Good progress with tangible results Core business performed well with PBT of £3.8bn and RoE of 11% Investment Bank re-positioning on track Good start to Barclays Non-Core rundown Costs excluding CTA down for second consecutive quarter, with headcount lowest since 2007
Slide 4: 2016 Transform financial commitments
GROUP CORE NON-CORE CONCLUSION 2016 Transform financial commitments 1 Capital CRD IV FL CET1 ratio >11.0% Group 2 Leverage Leverage ratio >4.0% 3 Dividend Payout ratio 40-50% 4 Returns Adjusted RoE >12% Barclays Core 5 Cost Adjusted operating expenses <£14.5bn Barclays Non-Core 6 Returns Drag on adj
Slide 5: Tushar Morzaria, Barclays Group Finance Director
Tushar Morzaria Barclays Group Finance Director
Slide 6: Good Core performance with Non-Core reductions on track
GROUP CORE NON-CORE CONCLUSION Good Core performance with Non-Core reductions on track Core business producing • Core RoE of 11% (incl. CTA) double-digit returns • RoTE of 13.5% • Group CET1 ratio increased to 9.9% Capital and leverage ratios • PRA leverage exposure reduced by £99bn to £1,266bn cont
Slide 7: Summary Group financials
GROUP CORE NON-CORE CONCLUSION Summary Group financials Six months ended – June (£m) 2013 2014 Financial performance Income 15,071 13,332 • Adjusted profit fell by 7% to £3.3bn, driven largely by a 12% Impairment (1,631) (1,086) reduction in income, primarily in the Investment Bank Total operating e
Slide 8: Strengthening key financial metrics
GROUP CORE NON-CORE CONCLUSION Strengthening key financial metrics As at: Dec-13 Jun-14 Highlights • CET1 increased to 9.9%, tracking towards 2016 target of >11% Fully-loaded CET1 ratio1 9.1% 9.9% Capital / • PRA leverage ratio reached 3.4%, tracking towards 2016 target PRA leverage ratio2 3.0% 3.4%
Slide 9: Core business performing well and as expected
GROUP CORE NON-CORE CONCLUSION Core business performing well and as expected Highlights Six months ended – June (£m) 2013 2014 Financial performance Income 13,597 12,674 • Good performance in Core business, despite weakness in Impairment (1,075) (937) Investment Bank, with PBT down 10% to £3.8bn Tot
Slide 10: Core customer assets and NIM growth driving NII
GROUP CORE NON-CORE CONCLUSION Core customer assets and NIM growth driving NII Core income Six months ended – June (£m) 2013 2014 • Steady performance in PCB and Barclaycard Personal and Corporate Banking 4,305 4,361 − PCB grew NII 7% driven by strong savings and mortgage growth, while fee income de
Slide 11: Core impairment reduced across all businesses
GROUP CORE NON-CORE CONCLUSION Core impairment reduced across all businesses Impairment charge £m • Continued improvement in asset quality, with Core impairment Impairment falling 13% to £937m, with reductions across all businesses 1,200 charge 1,000 800 • Expect credit risk metrics and conditions t
Slide 12: Costs reduced across the Core business
GROUP CORE NON-CORE CONCLUSION Costs reduced across the Core business Core operating expenses (£bn) Highlights Costs to achieve Transform Other opex • Significant cost reductions from Transform programme, Litigation and conduct Staff costs bringing sustainable benefits • Core costs down 4.5%, across
Slide 13: Personal and Corporate Banking – good progress in H1
GROUP CORE NON-CORE CONCLUSION Personal and Corporate Banking – good progress in H1 Six months ended – June (£m) 2013 2014 Financial performance Income 4,305 4,361 • Largest business by PBT made good progress in H1 Impairment (299) (230) • Income increased by 1%, driven by strong savings and mortgag
Slide 14: Barclaycard – growth across all businesses and geographies
GROUP CORE NON-CORE CONCLUSION Barclaycard – growth across all businesses and geographies Six months ended – June (£m) 2013 2014 Financial performance Income 2,019 2,124 • Encouraging growth across all businesses and geographies with income up by 5%, despite USD depreciation Impairment (540) (537) −
Slide 15: Africa Banking – income growth and good credit performance
GROUP CORE NON-CORE CONCLUSION Africa Banking – income growth and good credit performance Constant Financial performance Six months ended – June (£m) 2013 2014 currency • PBT on a constant currency basis increased by 13%, Income 2,055 1,773 2,223 driven by 8% income growth and a 9% reduction in cred
Slide 16: Investment Bank – early signs of progress
GROUP CORE NON-CORE CONCLUSION Investment Bank – early signs of progress Six months ended – June (£m) 2013 2014 Q2 13 Q2 14 GBP change USD change2 - Banking 1,278 1,343 629 727 +16% +28% - Markets 3,699 2,892 1,678 1,403 (16%) (8%) - Other 245 22 252 24 Income 5,222 4,257 2,559 2,154 (16%) (7%) Impa
Slide 17: Barclays Non-Core – good start to RWA reduction
GROUP CORE NON-CORE CONCLUSION Barclays Non-Core – good start to RWA reduction Six months ended – June (£m) 2013 2014 Highlights Income 1,474 658 • Attributable loss before tax reduced by 25% following significant declines in income, impairment and cost Impairment (556) (149) Total operating expense
Slide 18: Barclays Non-Core – income and cost on track
GROUP CORE NON-CORE CONCLUSION Barclays Non-Core – income and cost on track H114 vs H113 Non-Core adjusted income splits (£m) Businesses - retail Businesses - non-retail • Non-retail business reduction of £185m due to winding down and Securities and Loans Derivatives exiting principal businesses • O
Slide 19: Barclays Non-Core – encouraging progress on RWA reductions
GROUP CORE NON-CORE CONCLUSION Barclays Non-Core – encouraging progress on RWA reductions RWA reduction (£bn) Highlights Businesses Securities and Loans • RWA reductions concentrated in Securities and Loans Derivatives Operational Risk and DTA • Sales and paydowns accounted for £12bn of the RWA decr
Slide 20: Costs reduced across all businesses
GROUP CORE NON-CORE CONCLUSION Costs reduced across all businesses Operating expenses progress (£m) H113 operating H114 operating CTA spend Net decrease YoY Savings initiatives from CTA expenses¹ expenses¹ to date • 1,700 FTE reduction from increased customers‟ self-serve PCB 2,754 2,554 200 499 • I
Slide 21: Progressive strengthening of capital and leverage ratios
GROUP CORE NON-CORE CONCLUSION Progressive strengthening of capital and leverage ratios Fully loaded CRD IV CET1 ratio (%)1 • Continue to show good progress on our CRD IV CET1 ratio and estimated PRA leverage ratio towards 2016 targets • CRD IV CET1 ratio reached 9.9% at the end of June 2014, repres
Slide 22: TNAV – underlying profit growth offset by FX impact and PPI
GROUP CORE NON-CORE CONCLUSION TNAV – underlying profit growth offset by FX impact and PPI Tangible net asset value Highlights • TNAV reduced by 4p over the past six months to 279p Excluding − Excluding the movement in the currency translation reserve, currency TNAV would have been up 2p at 285p tra
Slide 23: Good Core performance with Non-Core reductions on track
GROUP CORE NON-CORE CONCLUSION Good Core performance with Non-Core reductions on track Core business producing double digit returns Capital and leverage ratios continuing to improve steadily Non-Core reductions on track TNAV reduced to 279p 23 | Barclays 2014 Interim Results | 30 July 2014
Slide 24: Antony Jenkins, Barclays Group Chief Executive
Antony Jenkins Barclays Group Chief Executive
Slide 25: 2016 Transform financial commitments
GROUP CORE NON-CORE CONCLUSION 2016 Transform financial commitments 1 Capital CRD IV FL CET1 ratio >11.0% Group 2 Leverage Leverage ratio >4.0% 3 Dividend Payout ratio 40-50% 4 Returns Adjusted RoE >12% Barclays Core 5 Cost Adjusted operating expenses <£14.5bn Barclays Non-Core 6 Returns Drag on adj
Slide 26: Legal Disclaimer
Legal Disclaimer 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 with
Slide 27: Appendix
Appendix
Slide 28: Reorganising to a simpler, focused and balanced structure
Reorganising to a simpler, focused and balanced structure Barclays Group – H1 2014 Personal & Africa Investment Barclays Non-Core Barclaycard Corporate Banking Banking Bank (BNC) PBT £1,468m PBT £764m PBT £484m PBT £1,058m LBT £491m RoE 12.1% RoE 18.9% RoE 9.6% RoE 5.7% RoE drag 4.5% RWAs £117.9bn R
Slide 29: Adjusted Return on Average Equity (RoE)
Adjusted Return on Average Equity (RoE) RoE – Six months ended – June 2013 RoE – Six months ended – June 2014 10.3% Personal and Corporate Banking 12.1% 16.8% Barclaycard 18.9% 9.4% Africa Banking 9.6% 15.7% Investment Bank 5.7% 2.1% Head Office impact1 0.6% 15.1% Core 11.0% (7.3%) Barclays Non-Core
Slide 30: Impact of Costs to achieve Transform
Impact of Costs to achieve Transform Six months ended – June 2014 Costs to Return on Profit Cost : income achieve average Adjusted performance measures by business Transform before tax1 equity1,2 ratio1 (£m) (%) (£m) (%) Personal and Corporate Banking 115 1,583 13.1 59 Barclaycard 36 799 19.8 39 Afr
Slide 31: Net interest margins and balances
Net interest margins and balances1 Six months ended – June 2013 Six months ended – June 2014 Average Average Net interest Net interest Net interest Net interest customer customer income margin income margin assets assets (£m) (%) (£m) (%) (£m) (£m) Personal and Corporate Banking 2,860 200,104 2.88 3
Slide 32: Group Cost targets
Group Cost targets Group cost guidance1 (£bn) Core cost targets1 (£bn) Original Group cost target and interim guidance Revised Group cost guidance Core cost targets 19 18.7 c.(9%) c.(13%) 19 18 18 c.(10%) c.17 17 c.16.3 17 c.16.2 16 16 15 15 <14.5 14 14 13 13 2013 2014 2015 2013 2016 Costs to achiev
Slide 33: Investment Bank – quarterly progression
Investment Bank – quarterly progression Q2 on Q2 change in business mix Banking (£m) (£m) +16% 727 663 649 629 639 616 Inv. 568 Banking 423 488 Inv. Investment Lending Banking Banking Banking fees 141 661 £727m Lending Lending 66 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Macro 689 Macro 504 Ma
Slide 34: Broad contribution by diverse businesses
Broad contribution by diverse businesses Income Profit Before Tax Six months ended – June (£m) 2013 2014 2013 2014 Personal and Corporate Banking 4,305 4,361 1,197 1,468 Barclaycard 2,019 2,124 616 764 Africa Banking 2,055 1,773 547 484 Investment Bank 5,222 4,257 1,951 1,058 Head Office (4) 159 (47
Slide 35: RWAs by Business
RWAs by Business (£bn) December 2013 June 2014 Personal and Corporate Banking 118.3 117.9 Barclaycard 35.7 37.7 Africa Banking 38.0 36.5 Investment Bank 126.0 125.5 Head Office 14.6 6.0 Total Core 332.6 323.5 Barclays Non-Core 109.9 87.5 Group 442.5 411.0 35 | Barclays 2014 Interim Results | 30 July
Slide 36: Continued progress on the transition towards target end-state capital structure
Continued progress on the transition towards „target‟ end-state capital structure Evolution of capital structure Fully loaded CRD IV capital position • FLCRD IV CET1 ratio at 9.9% on track to meet target of >11% in 2016. The ratio was well in excess of the 7% PRA regulatory target1 ≥17% • Robust buf
Slide 37: Plan incorporates the progressive implementation of CET1 requirements
Plan incorporates the progressive implementation of CET1 requirements Regulatory targets, excluding internal buffer Key assumptions in this illustration CRD IV minimum CET1 requirement • CET1 minimum requirements per PRA implementation of CRR Pillar 2A met with CET1 capital (varies annually) • Pilla
Slide 38: Continue to strengthen our leverage ratio and reduce leverage exposure
Continue to strengthen our leverage ratio and reduce leverage exposure PRA leverage exposure1 (£bn) Highlights L&A and other assets2 Derivatives • Estimated PRA leverage ratio improved further as a result of regulatory capital accretion and additional deleveraging SFTs Undrawn commitments PRA levera
Slide 39: Balance sheet is conservatively funded
Balance sheet is conservatively funded Total balance sheet as at 30 June 2014 of £1.3tn (excl. BAGL) Highlights (£bn) Derivative assets and liabilities largely matched Derivatives, 325 Derivatives, 325 Matched funding £663bn Trading portfolio assets and reverse repurchase agreements Reverse repo
Slide 40: Capital resources
Capital resources1 (£m) 31 December 2013 30 June 2014 Shareholders' equity (excluding non controlling interests) per the balance sheet 55,385 58,068 Less: other equity instruments (recognised as AT1 capital) (2,063) (4,326) Adjustment to retained earnings for foreseeable dividends (640) (596) Minori
Slide 41: Estimated leverage exposure
Estimated leverage exposure PRA Leverage exposure BCBS 270 Leverage exposure (£bn) 31 December 2013 30 June 2014 30 June 2014 IFRS derivative financial instruments 355 333 333 Mark-to-market and margin netting adjustments for derivatives (288) (268) (298) Cash collateral pledged on derivatives 48 39