Barclays Plc · LSE:BARC
Barclays — H1 2015 Earnings Presentation
46 slides from Barclays's earnings presentation, Jul 29, 2015
Slide 1: Barclays PLC 2015 Interim Results
Barclays PLC 2015 Interim Results 29 July 2015
Slide 2: John McFarlane, Barclays Executive Chairman
John McFarlane Barclays Executive Chairman
Slide 3: Accelerating delivery of shareholder value
Accelerating delivery of shareholder value Strategy – focus on what we are High performance ethic with 1 good at and where we are good at it 2 Value Creation 3 strong values and customer focus • Focus on 3 major core markets – UK, US • Increase revenue growth to at least • Evaluate the balance betwe
Slide 4: Tushar Morzaria, Barclays Group Finance Director
Tushar Morzaria Barclays Group Finance Director
Slide 5: Continued good progress in H1
GROUP CORE NON-CORE CONCLUSION Continued good progress in H1 Increased Group adjusted pre-tax profits by 11%, with Core up 10% Positive cost to income jaws: Group adjusted costs of £8.3bn, down 7% Core business continued to perform well: PBT of £4.2bn and RoE of 11.1% Further progress on Non-Core: £
Slide 6: Summary Group financials: H1 adjusted PBT up 11%
GROUP CORE NON-CORE CONCLUSION Summary Group financials: H1 adjusted PBT up 11% % H1 financial performance2 Six months ended – June (£m) 2014 2015 change Income 13,332 12,982 (3%) • Group PBT increased 11% to £3.7bn reflecting improvements in all Impairment (1,086) (973) 10% Core operating businesse
Slide 7: Progressive strengthening of key financial metrics
GROUP CORE NON-CORE CONCLUSION Progressive strengthening of key financial metrics Fully Loaded CET1 ratio1 Highlights • CET1 ratio increased to 11.1%, achieving our 2016 target 18 months early 9.9% 10.2% 10.3% 10.6% 11.1% 9.1% 9.5% − CET1 capital build of £0.2bn in the quarter to £42.0bn − RWAs redu
Slide 8: Q2 Core performance: Positive jaws and PBT up 6%
GROUP CORE NON-CORE CONCLUSION Q2 Core performance: Positive jaws and PBT up 6% Three months ended (£m) Jun-14 Jun-15 % change Financial performance Income 6,397 6,520 2% • PBT increased 6% to £2.1bn driven by particularly strong Impairment (456) (488) (7%) performance in the Investment Bank Total o
Slide 9: Core income: Growth in Q2 net interest income and margin
GROUP CORE NON-CORE CONCLUSION Core income: Growth in Q2 net interest income and margin Income1 (£m) – YoY % • Total income in our retail and corporate businesses1 grew 4% year- Jun-14 Mar-152 Jun-15 Three months ended change on-year to £4.3bn, driven by business growth in Barclaycard Total income 4
Slide 10: PCB: PBT up 10% excluding impact of US Wealth
GROUP CORE NON-CORE CONCLUSION PCB: PBT up 10% excluding impact of US Wealth1 Three months ended (£m) Jun-14 Jun-15 % change Impact of the US Wealth business1 – Illustrative Illustrative Jun-15 Three months ended (£m) Jun-15 % change – Personal 1,027 1,005 (2%) Income (12) 2,222 2% – Corporate 889 9
Slide 11: Barclaycard: Continued growth with PBT up 8%
GROUP CORE NON-CORE CONCLUSION Barclaycard: Continued growth with PBT up 8% Three months ended (£m) Jun-14 Jun-15 % change Financial performance Income 1,082 1,222 13% • PBT increased 8% resulting in an RoE of 19.7% Impairment (268) (273) (2%) • Income grew 13% to £1.2bn driven by business growth an
Slide 12: Africa Banking: RoE increased to 9.7% and RoTE of 13.2%
GROUP CORE NON-CORE CONCLUSION Africa Banking: RoE increased to 9.7% and RoTE of 13.2% Three months ended (£m) Jun-14 Jun-15 % change Financial performance1 Income 895 910 2% Based on average rates, ZAR depreciated against GBP by 4% in Q215 Impairment (100) (103) (3%) against Q214. Comments on busin
Slide 13: Investment Bank: PBT up 35% with double digit RoE
GROUP CORE NON-CORE CONCLUSION Investment Bank: PBT up 35% with double digit RoE Three months ended (£m) Jun-14 Jun-15 % change Financial performance Banking 727 708 (3%) • The returns focused strategy generated strong performance, as Markets 1,403 1,442 3% income remained consistent, while efficien
Slide 14: Non-Core: Continued shrinkage and capital recycling
GROUP CORE NON-CORE CONCLUSION Non-Core: Continued shrinkage and capital recycling Three months ended (£m) Jun-14 Mar-15 Jun-15 Highlights – Businesses 245 122 153 • Period end allocated equity reduced by £4.4bn year-on-year to – Securities and Loans 66 (73) (42) £8.3bn, including a £1.4bn reduction
Slide 15: Non-Core: Further RWA and leverage reductions
GROUP CORE NON-CORE CONCLUSION Non-Core: Further RWA and leverage reductions RWA reduction RWAs by type (£bn) bridge (£bn) Leverage exposure by type (£bn) 48% 57% 110 382 2 75 2772 65 18 Original 18 236 2016 11 57 13 guidance 10 114 £180bn 166 101 5 31 31 26 83 c.20 107 99 16 15 12 56 9 8 9 39 23 22
Slide 16: Group adjusted operating expenses - delivery to date
GROUP CORE NON-CORE CONCLUSION Group adjusted operating expenses - delivery to date Year-on-year progress – excluding CTA (£bn) 8.4 0.4 0.1 0.1 0.1 7.9 H114 Non-Core Investment PCB Head Africa Barclaycard H115 Bank Office Banking Quarterly progression – excluding UK Bank Levy (£bn) 66% 64% Cost: inc
Slide 17: Path to achieving 2016 Core cost target
GROUP CORE NON-CORE CONCLUSION Path to achieving 2016 Core cost target Restructuring and Rightsizing Industrialisation Innovation • Removing excess capacity as a result of • Automation, simplification and rationalisation • Providing a digital client experience business model, organisational or portf
Slide 18: Q2 financial highlights
GROUP CORE NON-CORE CONCLUSION Q2 financial highlights Increased Group adjusted pre-tax profits by 12%, with Core up 6% Core business continued to perform well: PBT of £2.1bn and RoE of 11.0% Further progress on Non-Core: £1.4bn of capital released and RWAs reduced £8bn Building capital: CET1 ratio
Slide 19: Barclays PLC 2015 Interim Results
Barclays PLC 2015 Interim Results 29 July 2015
Slide 20: Appendices
Appendices
Slide 21: Another quarter of steady progress…
Another quarter of steady progress… Quarterly adjusted PBT (£bn) has increased year over year… Quarterly adjusted costs (£bn) have reduced year over year… 11% 12% 16% 15% 8% 6% 1% >100% 1.9 1.8 5.21 1.6 1.7 1.7 1.4 4.4 4.3 4.41 4.4 4.4 0.2 4.1 4.2 0.6 Q313 Q314 Q413 Q414 Q114 Q115 Q214 Q215 Q313 Q31
Slide 22: Double digit returns in the Core business on a higher equity base
Double digit returns in the Core business on a higher equity base, and reduced Non-Core drag RoE RoTE Core 11.3% 46.7 11.0% 41.6 13.8% 13.3% 34.0 38.6 Q214 Q215 RoE Average allocated RoTE Average allocated equity (£bn) tangible equity (£bn) Non Core 13.7 13.5 9.3 9.1 RoE RoTE (3.2%) Average allocate
Slide 23: Double digit returns in the Core business and improved IB returns
Double digit returns in the Core business and improved IB returns Q214 Q215 24.7% 24.9% 19.7% 19.7% 17.5% 14.9% 13.8% 13.1% 13.2% 13.3% 12.2% 11.2% 11.3% 11.5% 11.3% 11.0% 9.7% 8.1% 5.3% 5.6% RoE RoTE RoE RoTE RoE RoTE RoE RoTE RoE RoTE PCB Barclaycard Africa Banking Investment Bank Core 23 | Barcla
Slide 24: Impact of costs to achieve
Impact of costs to achieve Three months ended – June 2015 Return on Cost: Costs to Profit/(loss) average income Adjusted performance measures by business achieve before tax1 equity1,2 ratio1 (£m) (£m) (%) (%) PCB 97 806 12.9% 57% Barclaycard 31 460 21.1% 41% Africa Banking 7 252 10.3% 61% Investment
Slide 25: Net interest margins and balances
Net interest margins and balances Three months ended – June 2015 Average Total income Non-interest income Net interest income Net interest margin1 customer assets (£m) (£m) (£m) (%) (£m) PCB 2,210 608 1,602 215,069 2.99 Barclaycard 1,222 339 883 38,025 9.31 Africa Banking 910 389 521 35,610 5.87 Tot
Slide 26: Continued strong Core asset quality
Continued strong Core asset quality Impairment charge (£m) Highlights 44 41 45 • Impairment increased 7% year-on-year to £488m LLR (bps) − LLR remained broadly flat at 45bps reflecting stable retail performance and a lack of any notable single name charges in (7%) wholesale • PCB impairment increase
Slide 27: Continued reduction in Core operating expenses
Continued reduction in Core operating expenses Core operating expenses1 (£bn) Highlights • Core costs reduced 2% year-on-year to £3.9bn driven by savings from 2% strategic cost programmes principally in the Investment Bank and PCB • PCB costs increased 3%, though excluding the impact of US Wealth2,
Slide 28: Group and Core cost targets
Group and Core cost targets Group cost guidance1 (£bn) Core cost target1 (£bn) 18.7 c.16.3 16.9 Non-Core 16.4 15.1 Core <14.5 FY13 FY14 FY15 Target FY13 FY14 FY16 Target Costs to achieve £1.2bn £1.2bn c.£0.7bn2 (CTA) 1 Excludes provisions for UK customer and FX redress, goodwill impairment and CTA |
Slide 29: Non-Core: Income and cost development
Non-Core: Income and cost development Non-Core income Quarterly quarterly (£m) income (£m) Non-Core costs Quarterly quarterly – excluding costs – excluding litigation, CTA litigation, and UKCTA Bank andLevy BL (£m) (£m) 207 (253) 234 450 464 Europe 368 373 370 456 419 441 329 retail 285 321 business
Slide 30: Tangible Net Asset Value
Tangible Net Asset Value Tangible net asset value (pence per share) Highlights TNAV per share decreased 9p in the quarter to 279p • Adjusted profits in the quarter contributed 7p per share • Dividend distributions resulted in a 4p per share reduction in TNAV due to the payment of 4.5p of dividends i
Slide 31: Movement in Common Equity Tier 1 capital
Movement in Common Equity Tier 1 capital CET1 capital movement (£bn) 0.4 1.2 0.6 0.3 0.2 0.5 1.3 0.5 41.8 0.2 42.0 Mar-15 Profit for the Own credit Dividends Net impact of Available for Currency Retirement Additional Other1 Jun-15 period share schemes sale reserve translation benefits value reserve
Slide 32: RWAs: Closely managed to support business growth and capital ratio accretion
RWAs: Closely managed to support business growth and capital ratio accretion RWAs (£bn)1 Highlights • RWAs reduced by £19bn reflecting underlying trading book reductions in the Non-Core and Investment Bank 396 1 • In Core, the Investment bank reduction was partially offset by business growth of mort
Slide 33: Leverage ratio increased to 4.1%
Leverage ratio increased to 4.1% Leverage exposure1 (£bn) Highlights L&A and other assets2 Derivatives • Improvement in leverage ratio driven by decrease in leverage exposure and growth in capital SFTs Undrawn commitments Leverage ratio1 • Leverage exposures during Q2 15 decreased by £116bn to £1,13
Slide 34: Fixed Income Slides
Fixed Income Slides
Slide 35: Continued strengthening of CET1 ratio
Continued strengthening of CET1 ratio Fully loaded (FL) CRD IV CET1 ratio progression1 RWA reduction (£bn)1 +50bps (5%) 11.1% >11% 442 10.3% 10.6% 9.1% 402 396 c.400 377 Dec-13 Dec-14 Mar-15 Jun-15 2016 Dec-13 Dec-14 Mar-15 Jun-15 2016 Target Guidance • FL CRD IV CET1 ratio grew 50bps in Q2 2015 to
Slide 36: Robust capital buffers above future mandatory distribution restrictions
Significant management focus on maintaining robust capital buffers above future mandatory distribution restrictions CET1 requirements1 (as at 1 January except H1) • Maintained robust capital buffers above minimum CET1 requirements and Contingent Minimum CRD IV requirement Trajectory of fully loaded
Slide 37: Continued progress on the transition towards end-state capital structure
Continued progress on the transition towards end-state capital structure Evolution of capital structure blahloaded CRD IV capital position Fully • Transitional and fully loaded total capital ratios increased by 60bps to 17.4% (Mar 15: 16.8%), and 60bps to 16.2% (Mar 15: 15.6%) 17.4% ≥17% respectivel
Slide 38: Leverage ratio strengthened further towards target
Leverage ratio strengthened further towards target Leverage ratio progression1 Leverage exposure (£trn)1 BCBS 270 +40bps impact (9%) 1.36 >4% 1.26 3.7% 3.7% 4.1% 1.23 3.0% 1.14 1 Dec-13 Dec-14 Mar-15 Jun-15 2016 Dec-13 Dec-14 Mar-15 Jun-15 Target • Leverage ratio grew by 40bps to 4.1% (Mar 2015: 3.7
Slide 39: 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 FY 14 H1 15 • The HoldCo’s primary assets currently are its investments in, and Notes £m £m loans and advances made to, its sole subsidiary,
Slide 40: Refinancing out of Holding Company supports achieving future TLAC
Refinancing out of Holding Company supports achieving future Total Loss Absorbing Capacity (TLAC)1 requirements • Proactive transition towards a HoldCo funding and capital model (£bn) Jun-15 positions us well to meet potential future TLAC requirements PRA transitional Common Equity Tier 1 capital 42
Slide 41: Managing the risk profile of Holding Company term senior unsecured debt
Managing the risk profile of Holding Company term senior unsecured debt today and in end-state Managing HoldCo term senior debt credit profile in transition1 Delivering robust credit profile for HoldCo term senior unsecured investors in end-state3 External term Refinancing profile senior unsecured B
Slide 42: Progressing with plans for structural reform
Progressing with plans for structural reform Evolving group structure Implications for bondholders Barclays PLC (HoldCo) Barclays PLC • Progressive issuer of AT1 and Tier 2 capital • Expect material increase in term senior unsecured funding over time as Barclays Bank PLC term senior unsecured Barcla
Slide 43: 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% 121% • Stable liquidity position with the Group liquidity pool at £145bn, LCR1 96% providing a surplus to internal and external minimum requirements 149 145 •
Slide 44: Recent industry-wide credit rating agency actions
Recent industry-wide credit rating agency (CRA) actions reflect evolving bank resolution frameworks Ratings1 S&P Moody's Fitch • Barclays carries a stable outlook with S&P, Standalone rating bbb+ Baa2 a Moody’s and Fitch Barclays PLC (B PLC - HoldCo) • Recent industry-wide CRA announcements Senior l
Slide 45: OpCo senior unsecured debt maturity profile
OpCo senior unsecured debt maturity profile • Expect to refinance £22bn of OpCo vanilla term unsecured debt out of the HoldCo over time, around half of which matures by 1 Jan 2019 • Additional flexibility to meet future TLAC-requirement through partial refinancing of OpCo structured notes out of the
Slide 46: 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