Barclays Plc · LSE:BARC
Barclays — FY2014 Earnings Presentation
49 slides from Barclays's earnings presentation, Mar 3, 2015
Slide 1: Barclays PLC 2014 Full Year Results
Barclays PLC 2014 Full Year Results 3 March 2015 1 |
Slide 2: Antony Jenkins, Barclays Group Chief Executive
Antony Jenkins Barclays Group Chief Executive 2 |
Slide 3: 2016 Transform targets
GROUP CORE NON-CORE CONCLUSION 2016 Transform targets 2016 Target 2014 Capital CRD IV FL CET1 ratio >11.0% 10.5%1 Group Leverage Leverage ratio >4.0% 3.8%1 Dividend Payout ratio 40-50% 38% Returns Adjusted RoE >12% 10.9%2 Barclays Core Cost Adjusted operating expenses <£14.5bn £15.1bn2 Barclays Non-
Slide 4: Tushar Morzaria, Barclays Group Finance Director
Tushar Morzaria Barclays Group Finance Director 4 |
Slide 5: Summary Group financials: Adjusted profits up 12%
GROUP CORE NON-CORE CONCLUSION Summary Group financials: Adjusted profits up 12% Year ended – December (£m) 2013 2014 Financial performance Income 27,896 25,728 • Adjusted profit before tax increased by 12% to £5.5bn as PCB and Impairment (3,071) (2,168) Barclaycard continued to grow profits. This w
Slide 6: Strengthening key financial metrics
GROUP CORE NON-CORE CONCLUSION Strengthening key financial metrics Fully loaded CRD IV CET1 ratio1 TNAV (pence per share) 10.5% Spain2 285 10.2% 10.3% 283 9.9% 9.5% 9.1% Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Dec-13 Dec-14 Leverage ratio3 Dividends paid to shareholders (£m) 3.8% • FY14 dividend per shar
Slide 7: Core business performing well
GROUP CORE NON-CORE CONCLUSION Core business performing well Highlights Year ended – December (£m) 2013 2014 Financial performance Income 25,603 24,678 • PBT up 3% at £6.7bn: Impairment (2,171) (2,000) − PCB and Barclaycard profits up 29% and 13% respectively Total operating expenses (17,048) (16,05
Slide 8: Core income – growth in NII
GROUP CORE NON-CORE CONCLUSION Core income – growth in NII Core income year ended – December (£m) 2013 2014 • Improved performance in PCB and Barclaycard income Personal and Corporate Banking 8,723 8,828 − PCB grew NII 7% driven by lending and deposit growth and margin improvement Barclaycard 4,103
Slide 9: Continued strong asset quality
GROUP CORE NON-CORE CONCLUSION Continued strong asset quality Impairment charge (£m) Highlights • Credit impairment charges improved 8% to £2bn, reflecting lower impairments in PCB and Africa Banking 8% • PCB benefitted from the improving economic environment in the UK, particularly for Corporate wh
Slide 10: PCB: Profits up 29%
GROUP CORE NON-CORE CONCLUSION PCB: Profits up 29% Year ended – December (£m) 2013 2014 Financial performance Income 8,723 8,828 • Total income increased 1% to £8.8bn due to balance growth and Impairment (621) (482) improved savings margins in Personal Total operating expenses (5,910) (5,475) • Net
Slide 11: PCB: Positive jaws delivering reduction in cost: income ratio
GROUP CORE NON-CORE CONCLUSION PCB: Positive jaws delivering reduction in cost: income ratio 65 64 Cost: income ratio 63 (excluding CTA and bank levy) 59 60 57 55 55 1,376 1,378 1,388 1,318 1,298 1,256 1,232 1,219 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Operating expenses (excluding CTA, BL)
Slide 12: Barclaycard: Profits up 13%
GROUP CORE NON-CORE CONCLUSION Barclaycard: Profits up 13% Financial Year ended performance – December (£m) 2013 2014 Financial performance Income 4,103 4,356 • Strong customer number and asset growth across all geographies Impairment (1,096) (1,183) • Income increased 6%, reflecting growth in the U
Slide 13: Africa Banking: Constant currency profits up 13%
GROUP CORE NON-CORE CONCLUSION Africa Banking: Constant currency profits up 13% 2013 Financial performance Year ended1 – December (£m) 2013 Constant 2014 Currency Constant currency basis Income 4,039 3,435 3,664 • PBT increased by 13%, driven by 7% income Impairment (479) (406) (349) growth and a 14
Slide 14: Investment Bank: New strategy underpinning Q4 performance
GROUP CORE NON-CORE CONCLUSION Investment Bank: New strategy underpinning Q4 performance Year ended – December (£m) 2013 2014 Q4 13 Q4 14 % Change – Banking 2,485 2,528 639 638 – – Markets 6,134 5,040 1,146 1,028 (10%) – Other (23) 20 (3) - Income 8,596 7,588 1,782 1,666 (7%) Impairment release 22 1
Slide 15: Investment Bank: Downward trend in compensation charge
GROUP CORE NON-CORE CONCLUSION Investment Bank: Downward trend in compensation charge Investment Bank operating expenses (£m) Investment Bank – Compensation actions 6,598 • Headcount down by 2,100 net CTA1 190 6,225 8% Bank levy 236 ex- 1 • Incentive awards down 24% CTA 337 218 • Role based pay intr
Slide 16: Barclays Non-Core: Continued shrinkage and capital return
GROUP CORE NON-CORE CONCLUSION Barclays Non-Core: Continued shrinkage and capital return Year ended – December (£m) 2013 2014 Highlights – Businesses 1,498 1,101 • Loss before tax reduced by 24% to £1,180m as improvements in impairments and costs were partially offset by significant declines – Secur
Slide 17: Barclays Non-Core: Income and cost profile
GROUP CORE NON-CORE CONCLUSION Barclays Non-Core: Income and cost profile Non-Core quarterly income (£m) Non-Core quarterly costs – excluding litigation, CTA and BL (£m) 38% 911 564 450 o/w UAE 529 481 disposal 464 456 419 441 368 373 370 £119m 321 329 285 22 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 1
Slide 18: Barclays Non-Core: Outperforming on RWA
GROUP CORE NON-CORE CONCLUSION Barclays Non-Core: Outperforming on RWA RWA reduction bridge (£bn) RWA by type (£bn) Operational risk and DTA Securities and loans Derivatives1 Businesses 110 110 19 11 81 5 75 Target = 80 75 19 5 Spain2 13 31 45 31 Revised 22 Target 16 9 9 Dec-13 Disposals Efficiencie
Slide 19: Operating expenses significantly reduced
GROUP CORE NON-CORE CONCLUSION Operating expenses significantly reduced Operating expenses progress – excluding CTA (£bn) Highlights • Transform saves: − FTE reductions from 18.7 Investment Bank front office 0.6 restructuring, branch network transformation in UK and Africa and 0.5 restructuring of t
Slide 20: Financial highlights
GROUP CORE NON-CORE CONCLUSION Financial highlights Increased adjusted pre-tax profits by 12% – Core up 3%, Non-Core losses down 24% Costs excluding CTA £16.9bn, ahead of £17bn guidance Building capital: CET1 ratio 10.5% and BCBS leverage ratio 3.8%1 Core business performed well with PBT of £6.7bn a
Slide 21: Antony Jenkins, Barclays Group Chief Executive
Antony Jenkins Barclays Group Chief Executive 21 |
Slide 22: The Barclays Balanced Scorecard
GROUP CORE NON-CORE CONCLUSION The Barclays Balanced Scorecard Metric Actual 2013 Actual 2014 Target 2018 Customer & Client PCB, Barclaycard and Africa Banking weighted average ranking of 3rd1 4th 1st Relationship Net Promoters Score® (NPS) vs. peer sets Client Franchise Rank: Weighted average ranki
Slide 23: Financial highlights
GROUP CORE NON-CORE CONCLUSION Financial highlights Increased adjusted pre-tax profits by 12% – Core up 3%, Non-Core losses down 24% Costs excluding CTA £16.9bn, ahead of £17bn guidance Building capital: CET1 ratio 10.5% and BCBS leverage ratio 3.8%1 Core business performed well with PBT of £6.7bn a
Slide 24: Barclays PLC 2014 Full Year Results
Barclays PLC 2014 Full Year Results 3 March 2015 24 |
Slide 25: 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 26: Appendix
Appendix 26 |
Slide 27: Simpler, focused and balanced structure
Simpler, focused and balanced structure Barclays Group Personal and Africa Investment Barclays Non-Core Barclaycard Corporate Banking Banking Bank (BNC) PBT £2,885m PBT £1,339m PBT £984m PBT £1,377m LBT £1,180m RWAs £120.2bn RWAs £39.9bn RWAs £38.5bn RWAs £122.4bn RWAs £75.3bn Adjusted results1 Inco
Slide 28: Retail and Corporate
Retail and Corporate Retailbefore Profit and Corporate tax of Coreperformance business: FY131 Profit before tax of Core business: FY141 Personal and Corporate Investment Banking Bank Personal and Corporate Banking Investment 1,377 2,020 Retail and Corporate Bank 2,233 2,885 69% 79% 984 1,049 Africa
Slide 29: Diverse and balanced business mix
Diverse and balanced business mix Income Profit before tax Year ended – December (£m) 2013 2014 2013 2014 Personal and Corporate Banking 8,723 8,828 2,233 2,885 Barclaycard 4,103 4,356 1,183 1,339 Africa Banking 4,039 3,664 1,049 984 Investment Bank 8,596 7,588 2,020 1,377 Head Office 142 242 (15) 9
Slide 30: Adjusted return on average equity (RoE)
Adjusted return on average equity (RoE) RoE and RoTE – Year ended – December 2013 RoE and RoTE – Year ended – December 2014 RoE RoTE 9.7% 11.9% 12.7% Personal and Corporate Banking 15.8% 15.5% 16.0% 19.9% Barclaycard 19.9% 8.1% 9.3% 11.3% Africa Banking 12.9% 8.2% 2.7% 8.5% Investment Bank 2.8% 1.6%
Slide 31: Impact of costs to achieve Transform
Impact of costs to achieve Transform Year ended – December 2014 Return on Adjusted performance measures by business Costs to achieve Profit/(loss) average Cost: income Transform before tax1 equity1,2 ratio1 (£m) (£m) (%) (%) Personal and Corporate Banking 400 3,285 13.7% 57% Barclaycard 118 1,457 17
Slide 32: Net interest margins and balances
Net interest margins and balances1 Year ended – December 2013 Year ended – December 2014 Average Average Net interest customer Net interest Net interest customer Net interest income assets margin income assets margin (£m) (£m) (%) (£m) (£m) (%) Personal and Corporate Banking 5,893 202,497 2.91 6,298
Slide 33: Investment Bank: Quarterly progression
Investment Bank: Quarterly progression Q4 on Q4 change in income (£m) Banking (£m) Lending Investment Banking fees (0.2%) 727 663 649 638 629 639 616 568 547 Inv. Banking Inv. 571 Banking Banking 527 £638m Lending 68 Lending 111 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Macro 494 Macro M
Slide 34: TNAV
TNAV Tangible net asset value (pence per share) Highlights • TNAV decreased 2p over the past three months to 285p • £1.2bn increase in the cash flow hedging reserve due to a 2 decrease in the forward interest rate curve which resulted in mark 5 to market gains 4 • The strengthening of USD against GB
Slide 35: Group cost targets
Group cost targets Group cost guidance1 (£bn) Core cost targets1 (£bn) Core cost target 10% 18.7 Original Guidance = £17.5bn 8% Revised Guidance = £17bn 16.9 c.16.3 16.4 15.1 <14.5 FY13 FY14 FY15 Target FY13 FY14 FY16 Costs to achieve Transform £1.22bn £1.2bn c.£0.7bn2 (CTA) 1 Excludes provisions fo
Slide 36: Core operating costs
Core operating costs Core operating expenses (£bn) Highlights Staff costs Other operating costs Costs to achieve Transform • Core costs (excluding CTA) decreased by 8% year-on-year driven 17.0 by Transform saves as well as currency movements 0.7 16.1 8% • Transform initiatives delivered significant
Slide 37: Good progress on CET1 ratio towards 2016 Transform target
Good progress on CET1 ratio towards 2016 Transform target Fully loaded (FL) CRD IV CET1 ratio progression1 RWA reduction (£bn) CET1 40 42 41 Capital (9%) +120bps Spain c.16bps2 o/w Spain (£5bn)2 >11% 442 10.2% 10.3% 413 9.1% 402 c.400 Dec-13 Sep-14 Dec-14 2016 Dec-13 Sep-13 Dec-14 2016 Target Guidan
Slide 38: Progressive implementation of CET1 requirements
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 Pillar 2A met with CET1 capital (varies annually) Capital Requirements Regulation (
Slide 39: Leverage ratio progression ahead of plan
Leverage ratio progression ahead of plan Leverage ratio progression1 Leverage exposure reduction (£trn)1 T1 41 45 46 Capital (9%) BCBS 270 +30bps impact >4% 1.36 1.35 1.32 3.7% 1.23 3.4% 3.0% 1 Dec-13 Jun-14 Dec-14 2016 Dec-13 Jun-14 Sep-14 Dec-14 Target • Leverage ratio up significantly to 3.7%, or
Slide 40: Steady progression on leverage ratio
Steady progression on leverage ratio BCBS leverage exposure1 (£bn) Highlights L&A and other assets2 Derivatives • Leverage exposures during Q4 14 decreased by £91bn to £1,233bn SFTs Undrawn commitments BCBS leverage ratio1 • Loans and advances and other assets decreased by £52bn to £713bn primarily
Slide 41: Proxy Total Loss Absorbing Capacity (TLAC)
Proxy Total Loss Absorbing Capacity (TLAC)1 (£bn) Dec-14 • Proactive transition towards a HoldCo funding and capital model positions us well to meet potential future TLAC PRA transitional Common Equity Tier 1 capital 41 requirements PRA transitional Additional Tier 1 regulatory capital 11 • While re
Slide 42: Continued progress on the transition towards our target end-state capital structure
Continued progress on the transition towards our „target‟ end-state capital structure Evolution of capital structure Fully loaded CRD IV capital position • Fully loaded CRD IV CET1 ratio at 10.3% (10.2% on PRA transitional basis) ≥17% on track to meet our target of > 11% in 2016. The ratio was well
Slide 43: RWAs: Well managed to support business growth and returns
RWAs: Well managed to support business growth and returns RWAs (£bn) Highlights • RWAs reduced by £40.6bn, or £46bn including the sale of the Spanish businesses, reflecting excellent progress on the rundown of Non-Core, allowing for growth in Core businesses 442 9 1 • Non-Core RWAs reduced £35bn to
Slide 44: Capital resources
Capital resources1 (£m) 30 September 2014 31 December 2014 Shareholders' equity (excluding non controlling interests) per the balance sheet 59,571 59,567 Less: other equity instruments (recognised as AT1 capital) (4,317) (4,322) Adjustment to retained earnings for foreseeable dividends (787) (615) M
Slide 45: Leverage exposure
Leverage exposure1 BCBS 270 Leverage exposure (£bn) 30 September 2014 31 December 2014 Derivative financial instruments 383 440 Cash collateral 60 73 Reverse repurchase agreements 158 132 Loans and advances and other assets 765 713 Total IFRS assets 1,366 1,358 Derivatives netting (345) (395) Adjust
Slide 46: Maintaining a robust liquidity position
Maintaining a robust liquidity position, with pool well in excess of internal and external minimum requirements High quality liquidity pool (£bn) Key messages Cash & Deposits at Central Banks Government Bonds Other Available Liquidity • Further strengthened liquidity position with the Group liquidit
Slide 47: Access to stable and diverse sources of funding
We maintain access to stable and diverse sources of funding, across customer deposits and wholesale debt Broadly self-funded retail businesses1(£bn) Key messages 91% 92% • Group Loan to Deposit Ratio (LDR) and the LDR for PCB, 89% Barclaycard and Africa Banking broadly unchanged at 100% and 380 360
Slide 48: Passing stress tests – stressed CET1 ratios
Passing stress tests – stressed CET1 ratios Barclays CET1 stressed ratio UK Peers CET1 stressed ratio • Barclays has always maintained internal stress tests • Barclays passed both the PRA and EBA stress tests in 7.1% 2014, with stressed CET1 ratios ahead of UK peers 7.0% 7.0% • Under the PRA test, t
Slide 49: Shrinking Level 3 assets
Shrinking Level 3 assets Spain now sold, and ESHLA re-marked (£bn) 2.2 Other 1.3 Available for sale investments ESHLA 17.4 4.7 Derivative financial assets 31 December Other 2014 17.0 Financial assets 2.5 £47.8bn designated at fair value Spain 13.4 6.3 Trading portfolio assets 49 | Barclays Full Year