Barclays Plc · LSE:BARC
Barclays — FY2017 Earnings Presentation
57 slides from Barclays's earnings presentation, Feb 22, 2018
Slide 1: Barclays PLC 2017 Financial Results
Barclays PLC 2017 Financial Results 22 February 2018
Slide 2: Jes Staley, Barclays Group Chief Executive Officer
Jes Staley Barclays Group Chief Executive Officer
Slide 3: Diversified Transatlantic Consumer and Wholesale Bank
Diversified Transatlantic Consumer and Wholesale Bank Move from restructuring to shareholder returns Restructuring completed in 2017 Focus on improved returns to shareholders Africa sell down completed Non-Core closed RoTE >9% in 2019 targets1 >10% in 2020 Group ServCo launched Structural
Slide 4: Operational highlights: improved profitability in 2017
Operational highlights: improved profitability in 2017 FY17 Group highlights Barclays UK Continued support for the UK with gross lending of £30bn3 Income 2% £21.1bn Mortgage growth of £4bn, while maintaining pricing and underwriting discipline Continued stable asset quality reflecting ongoing
Slide 5: Now focused on profitability and returning capital to shareholders
Now focused on profitability and returning capital to shareholders Group targets Revised dividend policy >9% in 2019 2017: 3.0p dividend RoTE1 Dividend >10% in 2020 2018: 6.5p dividend3 Barclays understands the importance of the ordinary dividend for our shareholders. c.13% Barclays is therefore com
Slide 6: Tushar Morzaria, Barclays Group Finance Director
Tushar Morzaria Barclays Group Finance Director
Slide 7: FY17 Group highlights
FY17 Group highlights A year of strong strategic progress and improved profitability Financial performance Strategic milestones achieved ahead of schedule Income 2% £21.1bn (FY16: £21.5bn) • Sell down of BAGL on 1 June 2017 • Non-Core closed on 1 July 2017 PBT 10% £3.5bn (FY16: £3.2bn) Improve
Slide 8: Q417 Group highlights
Q417 Group highlights Improved operational efficiency and capital strength Financial performance Continued capital accretion Income 1% • CET1 ratio up 20bps on Sep-17 at 13.3% £5.0bn (Q416: £5.0bn) – Including US DTA write-down impact of c.20bps PBT 72% US tax reform impact £93m (Q416: £330m)
Slide 9: Q417 Barclays UK results
Q417 Barclays UK results Growth in customer balances, with disciplined pricing and prudent risk management Financial performance Q416 Q117 Q217 Q317 Q417 YoY Stable income from growth in L&A and Income 2% deposits while maintaining pricing and +2% underwriting discipline Total 326 330 286 351 330
Slide 10: Q417 Barclays International results
Q417 Barclays International results CIB impacted by low levels of volatility, while CC&P benefitted from the repositioning of US Cards Financial performance CIB impacted by low volatility and client Balance across businesses Income 8% activity compared to a strong Q416 Q417 income (£m) £3.3bn (Q4
Slide 11: Q417 Barclays International: Corporate & Investment Bank results
Q417 Barclays International: Corporate & Investment Bank results Resilient income performance despite low market volatility and strong prior year comparator Financial performance1 Income Total CIB income reduced against a GBP basis (£m) USD basis3 ($m) Income 11% strong prior year comparator Q415
Slide 12: Q417 Barclays International: Consumer, Cards & Payments results
Q417 Barclays International: Consumer, Cards & Payments results Investing for growth across CC&P, while repositioning to a lower risk mix in US Cards Financial performance1 Q416 Q117 Q217 Q317 Q417 YoY Underlying growth in US Cards Income 1% • Net L&A grew 12% in USD, excluding +5% the $1.6bn of
Slide 13: Head Office
Head Office Post Non-Core integration Q416 Q117 Q217 Q317 Q417 Negative income in Q417 reflected the net impact of treasury operations 84 6 Q417 operating expenses included costs Income1 (9) (167) associated with integrated Non-Core (£m) (82) assets and businesses, and higher L&C Loss before t
Slide 14: Operating costs
Operating costs Reconfiguring the cost base to improve efficiency and profitability Group costs (£bn)1 2017 costs Reduced Group costs by 5% YoY in 20171 5% 2017 cost base in line with guidance 15.0 Q417 costs of £3.6bn, excluding UK bank levy and L&C 14.2 0.9 Included digital spend, SRP cos
Slide 15: Capital strength
Capital strength Within our end-state CET1 ratio target range CET1 ratio progression in Q417 26bps 4bps 24bps c.13% 11bps 13.3% 1.5-2.0% Management buffer1 20bps 11.4% 13.1% 0.5% Countercyclical Buffer Stress CRD IV capacity: MDR hurdle c.4.5-5.0% 2.5% Capital Conservation Buffer • 11bps from the pr
Slide 16: Impacts of US tax reform and IFRS 9
Impacts of US tax reform and IFRS 9 Tax rate IFRS 9 Guidance Estimated impacts2 US federal corporate income tax rate Increase in impairment stock of £2.8bn reduced from 35% to 21% Decrease in TNAV per share of 13p Group effective tax rate in future periods expected to be in the mid-20s Est
Slide 17: Focused on profitability and returning capital to shareholders
Focused on profitability and returning capital to shareholders Group targets >9% in 2019 RoTE2 13.3% CET1 ratio within the end-state >10% in 2020 target range c.13% 2017 dividend confirmed at 3.0p with CET1 ratio 150-200 bps above intention to pay 2018 dividend of 6.5p1 regulatory minimum level
Slide 18: Barclays PLC 2017 Financial Results
Barclays PLC 2017 Financial Results 22 February 2018
Slide 19: Appendix
Appendix
Slide 20: Material and other items – FY17 and Q417 vs. prior year
Material and other items – FY17 and Q417 vs. prior year Material items (£m) FY17 FY16 Q417 Q416 Income Own credit1 - (35) - 46 Head Office Gain on the disposal of Barclays’ share of Visa Europe Limited - 615 - - Barclays International 464 / Barclays UK 151 Litigation and conduct Charges for PPI (700
Slide 21: FY17 Group results
FY17 Group results Year ended (£m) 2017 2016 % change FY17 performance metrics Income 21,076 21,451 (2%) • Income declined 2% to £21.1bn reflecting a £613m decrease in Impairment (2,336) (2,373) 2% Barclays International and a £262m reduction in Head Office, – Operating expenses partially offset by
Slide 22: FY17 Barclays UK and Barclays International results
FY17 Barclays UK and Barclays International results Barclays UK Barclays International Year ended (£m) 2017 2016 % change Year ended (£m) 2017 2016 % change – Personal Banking 3,823 3,891 (2%) – CIB 9,878 10,533 (6%) – Barclaycard Consumer UK 1,977 2,022 (2%) – CC&P 4,504 4,462 1% – Wealth, Entrepre
Slide 23: FY17 Corporate & Investment Bank and Consumer, Cards & Payments results
FY17 Corporate & Investment Bank and Consumer, Cards & Payments results Corporate & Investment Bank Consumer, Cards & Payments Year ended (£m) 2017 2016 % change Year ended (£m) 2017 2016 % change – Macro 1,634 2,304 (29%) Income 4,504 4,462 1% – Credit 1,241 1,185 5% Impairment (1,293) (1,095) (18%
Slide 24: FY17 Head Office results
FY17 Head Office results Business performance Year ended (£m) 2017 2016 1 Income (159) 103 Impairment (17) - – Operating expenses (277) (135) (excluding UK bank levy and L&C) – UK bank levy (41) (2) – Litigation & conduct (151) (27) Operating expenses (469) (164) Other net (expenses)/income (189) 12
Slide 25: Q417 Group results
Q417 Group results Three months ended (£m) Dec-17 Dec-16 % change Q417 performance metrics Income 5,022 4,992 1% • Income increased 1% to £5.0bn, as lower losses related to Non-Core Impairment (573) (653) 12% and a 2% increase in Barclays UK offset weak market conditions in – Operating expenses Barc
Slide 26: Q417 Barclays UK results
Q417 Barclays UK results Business performance Q417 performance metrics Three months ended (£m) Dec-17 Dec-16 % change • Income was broadly stable – Personal Banking increased 9% due to an update to EIR – Personal Banking 1,020 934 9% modelling, continued deposit growth and repricing actions – Barcla
Slide 27: Q417 Barclays UK income
Q417 Barclays UK income Income (£m) – Three months ended Dec-17 Dec-16 % change Q417 performance metrics NII 1,540 1,502 3% • NIM decreased 24bps to 332bps due to the integration of – NIM 3.32% 3.56% the ESHLA portfolio Non-interest income 330 326 1% – NIM was 361bps excluding ESHLA, in line with gu
Slide 28: 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 On average, customers Average customer interactions per annum are logging onto Mobile 6.4m +18% Mobile Banking Barclays Mobile Banking1 Active us
Slide 29: Q417 Barclays International results
Q417 Barclays International results Business performance Q417 performance metrics Three months ended (£m) Dec-17 Dec-16 % change • Income decreased 8% to £3.3bn driven by CIB, which was impacted by low market volatility and a strong prior year comparator, partially – CIB 2,252 2,531 (11%) offset by
Slide 30: Q417 Barclays International: Corporate & Investment Bank results
Q417 Barclays International: Corporate & Investment Bank results Business performance Q417 performance metrics Three months ended (£m) Dec-17 Dec-16 % change • Income reduced 11% to £2.3bn primarily as a result of low market volatility and client activity – Macro 320 505 (37%) • Impairment increased
Slide 31: Q417 Barclays International: Consumer, Cards & Payments results
Q417 Barclays International: Consumer, Cards & Payments results Business performance Q417 performance metrics Three months ended (£m) Dec-17 Dec-16 % change • Income increased 1% reflecting underlying growth in US Cards, partially offset by the impact of repositioning the US Cards portfolio Income 1
Slide 32: Q417 Head Office results
Q417 Head Office results Business performance Q417 performance metrics Three months ended (£m) Dec-17 Dec-16 • Loss before tax was £365m Income1 (167) (9) • Income reduced by £158m primarily due to the net impact of Impairment (3) - treasury operations – Operating expenses (76) 15 • Operating expens
Slide 33: Non-Core
Non-Core • The Non-Core segment was closed on 1 July 2017 with the residual assets and liabilities reintegrated into Barclays UK, Barclays International and Head Office • Financial results up until 30 June 2017 are presented in the Non-Core segment within the Group’s results for the year ended 31 De
Slide 34: Simplifying our business divisions for structural reform
Simplifying our business divisions for structural reform Barclays PLC Barclays PLC1 Barclays UK Barclays International Head Office1 UK consumer and business bank differentiated Diversified wholesale Incorporates by scale and digital innovation and consumer bank re-integrated Non-Core assets Division
Slide 35: Income and margins – Q417
Income and margins – Q417 NII (£m) – Three months ended Dec-17 Dec-16 % change Q417 performance metrics – Barclays UK 1,540 1,502 3% • Combined Barclays UK and Barclays International1 NIM decreased 3bps – Barclays International1 to 367bps 1,071 1,110 (4%) – Barclays UK NIM declined to 332bps, includ
Slide 36: Interest rate sensitivity
Interest rate sensitivity Illustrative sensitivity of Group NII to a 100bps parallel upward shift in interest rates1 Change in NII (£m) Commentary / assumptions Year 1 Year 2 Year 3 • This analysis is based on the modelled performance of the consumer and corporate banking book, and includes the impa
Slide 37: IFRS 9 guidance
IFRS 9 guidance Estimated IFRS 9 impact1 (based on 31 December 2017 numbers) Estimated impact TNAV2 CET1 • Estimated TNAV reduction of c.13p per share, based on increase in (£bn) (£bn) impairment stock, net of tax relief, effective 1 January 2018 Increase in impairment stock (2.8) • Fully loaded CET
Slide 38: Reconfiguring the cost base to improve profitability
Reconfiguring the cost base to improve profitability Current Improving mix of spend Future Digital and data capabilities £14.2bn Electronic Rates trading platform Merchant acquiring platform Optimising branch footprint Increasing focus on £13.6- more profitable 13.9bn Decreasing spend Improv
Slide 39: Stable underlying trends reflect prudent approach to credit risk management
Stable underlying trends reflect prudent approach to credit risk management Retail CRL % of Gross L&A Prudent risk management Dec-16 Dec-17 CRL coverage • Remain well-positioned, having maintained a 4.1% 82% 89% consistently prudent risk appetite since the financial 3.7% crisis 2.1% 2.0% • In US Car
Slide 40: Tangible Net Asset Value
Tangible Net Asset Value TNAV (pence per share) – Sep-17 to Dec-17 Q417 highlights 2 • TNAV decreased by 5p in the quarter to 276p reflecting: 281 – 2p of losses after tax, excluding the impact of US DTA re-measurement 5 1 – 5p reduction as a result of the US DTA re-measurement 3 276 • Partially off
Slide 41: Abbreviations
Abbreviations AFS Available for sale L&A Loans and advances £ GBP Great British Pound BAGL Barclays Africa Group Limited LBT Loss before tax $ USD United States Dollar BBPLC Barclays Bank PLC L&C Litigation & conduct BoE Bank of England LDR Loan: deposit ratio BEAT Base Erosion Anti-Abuse Tax LLR Lo
Slide 42: Fixed income appendix
Fixed income appendix
Slide 43: Further improved CET1 and leverage ratios
Further improved CET1 and leverage ratios Fully loaded CET1 ratio • CET1 ratio increased by 90bps in the year to 13.3% driven largely by: 90bps − c.90bps of organic profit generation from continuing operations − c.60bps reflecting the proportional consolidation of BAGL to 14.9% and the associated re
Slide 44: Managing evolving future minimum CET1 levels
Managing evolving future minimum CET1 levels Illustrative evolution of minimum CET1 requirements and buffers Minimum CRD IV CET1 requirement Countercyclical Buffer (CCyB) • End-state CET1 ratio expectation of c.13% 2017 Pillar 2A CET1 requirement CRDIV Mandatory distribution restrictions (MDR) hurdl
Slide 45: Managing capital position above mandatory distribution restrictions and stress test hurdles
Managing capital position above mandatory distribution restrictions and stress test hurdles Barclays’ expected MDA thresholds and systemic reference points for 2017 BoE stress test Minimum CRD IV CET1 requirement Distribution restrictions and management buffer 2017 Pillar 2A CET1 requirement Future
Slide 46: Leverage requirements
Leverage requirements Requirements Disclosure obligations Basis of preparation 01 Jan 2018 01 Jan 2019 01 Jan 2022 FY17 Q118 onwards Today 01 Jan 20223 Pillar 1 3.25% 3.25% G-SIB 0.394% 0.525% FPC expected 1. Spot basis 1. Spot basis CCyB 0.2% to review the Per CRR2 less central bank UK regime and a
Slide 47: 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 21.5% • Transitional total capital ratio increased to 21.5% (Dec-16: 19.6%), Total capital ratio while the fully loaded total capital ratio inc
Slide 48: MREL issuance remains on track
MREL issuance remains on track HoldCo MREL position and requirement including requisite buffers Well advanced on HoldCo issuance plan 2018 issuance plan – currently expect c.£10bn equivalent issuance 29.1% in 20182 CCyB: 0.5% • Issued £11.5bn equivalent of MREL in 2017, with maturities / call dates
Slide 49: High level of liquidity with a conservatively positioned liquidity pool
High level of liquidity with a conservatively positioned liquidity pool LCR continues to remain in prudential surplus • Liquidity pool increased £55bn in the year to £220bn, whilst LCR increased to 154% from 131%, equivalent to a surplus of 157% £75bn to the end state 100% requirement 154% • Increas
Slide 50: Robust group funding profile
Robust group funding profile Improved loan: deposit ratio (based on total retail and corporate funding) Conservative and stable funding profile (£bn) L&A to customers (£bn) Customer deposits (£bn) LDR Customer deposits Sub. Debt2 Secured term funding CD, CP and other deposits Unsecured term funding
Slide 51: Structural Reform Programme
Structural Reform Programme Final phase of ring-fencing execution and plans in place to serve EU clients post Brexit Ring-fencing requirements: Brexit preparation: Plans in place to expand Barclays Bank Ireland (BBI) in advance of Delivery on track for April 2018 migration March 2019 to support acti
Slide 52: Ratings remain a key strategic priority
Ratings remain a key strategic priority Current Senior Long and Future ratings expectations of BBUKPLC and BBPLC Fitch Moody’s Standard and Poor’s • Rating agencies have made various statements on Short Term ratings their expectation of ratings post ring-fencing − Fitch has assigned expected ratings
Slide 53: Continued progress on Group legal structure
Continued progress on Group legal structure Barclays PLC Barclays International Barclays UK constructs and Head Office1 Divisional UK consumer and business bank Diversified wholesale differentiated by scale and digital innovation and consumer bank Group Service Company2 • Provides critical services
Slide 54: P&L bridge from Barclays PLC to pro forma Barclays Bank PLC
P&L bridge from Barclays PLC (BPLC) consolidated to pro forma Barclays Bank PLC (BBPLC) post ring-fencing BPLC BPLC to BBPLC BBPLC Less pro forma Pro forma FY17 (£m) consolidated differences consolidated BBUKPLC BBPLC Total income 21,076 (139) 20,937 (7,087) 13,850 Credit impairment charges and othe
Slide 55: Breakdown of pro forma BBUKPLC and BBPLC P&Ls post ring-fencing
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 Pro forma division and other Pro forma division and other FY17 (£m) Barclays UK Barclays Non-Core BBUKPLC consolidation BBPLC consolidation division Int'l division division1 adjustments a
Slide 56: Balance Sheet bridge to pro forma BBUKPLC and BBPLC post ring-fencing
Balance Sheet bridge to pro forma BBUKPLC and BBPLC post ring-fencing BPLC to o/w o/w BPLC BBPLC FY17 (£m) 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 repurch
Slide 57: Disclaimer
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 recommendation with re