Barclays Plc · LSE:BARC
Barclays — Q1 2015 Earnings Presentation
38 slides from Barclays's earnings presentation, Apr 29, 2015
Slide 1: Barclays PLC Q1 2015 Results Announcement
Barclays PLC Q1 2015 Results Announcement 29 April 2015
Slide 2: Tushar Morzaria, Barclays Group Finance Director
Tushar Morzaria Barclays Group Finance Director
Slide 3: Q1 financial highlights
GROUP CORE NON-CORE CONCLUSION Q1 financial highlights Increased adjusted pre-tax profits by 9% – Core up 14% Core business continued to performed well with PBT of £2.1bn and RoE of 10.9% Further progress on shrinking Non-Core and releasing capital; RWAs down to £65bn Building capital: CET1 ratio in
Slide 4: Summary Group financials: Adjusted profits up 9%
GROUP CORE NON-CORE CONCLUSION Summary Group financials: Adjusted profits up 9% Three months ended – March (£m) 2014 2015 % change Financial performance Income 6,650 6,430 (3%) • Adjusted profit before tax increased 9% Impairment (548) (477) 13% • Adjusted income decreased 3%, due to Non-Core run-do
Slide 5: Strengthening key financial metrics
GROUP CORE NON-CORE CONCLUSION Strengthening key financial metrics Fully Loaded CET1 ratio1 Highlights • Progressive strengthening of key balance sheet metrics 10.2% 10.3% 10.6% • CET1 capital increased to £42bn and RWAs reduced to £396bn, 9.5% 9.9% 9.1% improving the CET1 ratio to 10.6% • Leverage
Slide 6: Core business performing well: Positive jaws and PBT up 14%
GROUP CORE NON-CORE CONCLUSION Core business performing well: Positive jaws and PBT up 14% Three months ended – March (£m) 2014 2015 % change Financial performance Income 6,277 6,420 2% • PBT up 14% at £2.1bn: Impairment (481) (448) 7% − PCB profits up 14% Total operating expenses (3,969) (3,885) 2%
Slide 7: Core income: Growth in net interest income and margin
GROUP CORE NON-CORE CONCLUSION Core income: Growth in net interest income and margin Core income (£m) Total income NII • Improved income performance across all businesses Three months ended – March 2014 2015 2014 2015 ∆ • NII for our retail and corporate businesses2 grew 6%, reflecting Personal and
Slide 8: Continued strong Core asset quality
GROUP CORE NON-CORE CONCLUSION Continued strong Core asset quality Impairment charge (£m) Highlights • Credit impairment improved 7% to £448m, principally reflecting lower impairments in PCB 7% • PCB benefitted from the improving economic environment in the UK, resulting in lower default rates and c
Slide 9: Core operating costs
GROUP CORE NON-CORE CONCLUSION Core operating costs Core operating costs1 (£bn) Highlights Staff costs Other operating costs Costs to achieve Transform • Core operating costs decreased by 2% year on year driven by savings from Transform programmes principally in the Investment Bank and 4.0 2% 3.9 PC
Slide 10: PCB: Profits up 14%
GROUP CORE NON-CORE CONCLUSION PCB: Profits up 14% Three months ended – March (£m) 2014 2015 % change Financial performance – Personal 1,026 1,009 (2%) • Income was in line at £2,174m: – Corporate 879 907 3% − Personal income reduced 2% driven by a reduction in fee – Wealth 268 258 income and mortga
Slide 11: Barclaycard: Income up 9% and RoE of nearly 17%
GROUP CORE NON-CORE CONCLUSION Barclaycard: Income up 9% and RoE of nearly 17% Three months ended – March (£m) 2014 2015 % change Financial performance Income 1,042 1,135 9% • Income increased 9% to £1,135m driven by US cards and Barclaycard Business Solutions Impairment (269) (290) (8%) Total opera
Slide 12: Africa Banking: Profits up 23%
GROUP CORE NON-CORE CONCLUSION Africa Banking: Profits up 23% Three months ended – March (£m) 2014 2015 % change Financial performance1 Income 878 948 8% Currency movements had a limited effect on Q1 year on year comparisons. Discussion of business performance is therefore based on Impairment (96) (
Slide 13: Investment Bank: Profits up 37%
GROUP CORE NON-CORE CONCLUSION Investment Bank: Profits up 37% Three months ended – March (£m) 2014 2015 % change Q4 14 % change Banking 616 632 3% 638 (1)% Markets 1,489 1,517 2% 1,028 48% – Credit 346 274 (21%) – Equities 591 619 5% Financial performance – Q1 15 vs. Q1 14 – Macro 552 624 13% • PBT
Slide 14: Barclays Non-Core: Continued shrinkage and capital recycling
GROUP CORE NON-CORE CONCLUSION Barclays Non-Core: Continued shrinkage and capital recycling Three months ended – March (£m) 2014 2015 Highlights – Businesses 301 122 • Period end equity reduced by £5.2bn to £9.7bn, including a £1.3bn reduction in Q1 – Securities and Loans 87 (73) – Derivatives (15)
Slide 15: Barclays Non-Core: Income and cost development
GROUP CORE NON-CORE CONCLUSION Barclays Non-Core: Income and cost development Non-Core quarterly income (£m) Non-Core quarterly costs – excluding litigation, CTA and BL (£m) (48%) 564 450 481 464 456 441 368 373 370 419 285 321 329 219 22 10 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 13 Q3 1
Slide 16: Barclays Non-Core: Further RWA reduction
GROUP CORE NON-CORE CONCLUSION Barclays Non-Core: Further RWA reduction RWA reduction bridge (£bn) Leverage exposure by type (£bn) 1 Operational risk Securities and loans Derivatives Businesses Businesses Securities and loans Derivatives Other 110 382 2 75 278 65 18 236 18 11 13 45 114 180 101 31 31
Slide 17: 2016 Transform targets
GROUP CORE NON-CORE CONCLUSION 2016 Transform targets 2016 Target Q1 2015 Capital CRD IV FL CET1 ratio >11.0% 10.6% Group Leverage Leverage ratio >4.0% 3.7% Dividend Payout ratio 40-50% 1p1 Returns Adjusted RoE >12% 11.6%2 Barclays Core Cost Adjusted operating expenses <£14.5bn £3.8bn3 Barclays Non-
Slide 18: Barclays PLC Q1 2015 Results Announcement
Barclays PLC Q1 2015 Results Announcement 29 April 2015
Slide 19: 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 20: Appendix
Appendix
Slide 21: Simpler, focused and balanced structure
Simpler, focused and balanced structure Barclays Group Personal and Africa Investment Barclaycard Barclays Non-Core Corporate Banking Banking Bank PBT £787m PBT £366m PBT £295m PBT £675m LBT £256m RWAs £123bn RWAs £40bn RWAs £39bn RWAs £123bn RWAs £65bn Adjusted results1 Income £6.4bn Risk weighted
Slide 22: Adjusted return on average equity (RoE)
Adjusted return on average equity (RoE) RoE and RoTE – Three months ended – March 2014 RoE and RoTE – Three months ended – March 2015 RoE RoTE 11.1% 12.9% Personal and Corporate Banking 14.7% 17.1% 18.2% 16.6% Barclaycard 22.6% 21.0% 11.1% 10.8% Africa Banking 15.5% 14.7% 6.1% 9.1% Investment Bank 6
Slide 23: Impact of costs to achieve Transform
Impact of costs to achieve Transform Three months ended – March 2015 Costs to achieve Profit/(loss) Return on Cost: income Adjusted performance measures by business Transform before tax1 average equity1,2 ratio1 (£m) (£m) (%) (%) Personal and Corporate Banking 42 829 13.6% 58% Barclaycard 25 391 17.
Slide 24: Net interest margins and balances
Net interest margins and balances Three months ended – March 2014 Three months ended – March 2015 Average Average Net interest Net interest Net interest Net interest customer customer income margin1 income margin1 assets assets (£m) (%) (£m) (%) (£m) (£m) Personal and Corporate Banking 1,528 207,433
Slide 25: Tangible Net Asset Value
Tangible Net Asset Value Tangible net asset value (pence per share) Highlights • TNAV per share increased 3p from December 2014 to 288p, driven by: 5 1 − The strengthening of USD against GBP led to a £0.8bn 7 increase in the currency translation reserve and a 5p per 2 share improvement 3 − Adjusted
Slide 26: Group and Core cost targets
Group and Core cost targets Group cost guidance1 (£bn) Core cost target1 (£bn) 18.7 Original Guidance = £17.5bn Revised Guidance = £17bn 16.9 c.16.3 16.4 15.1 <14.5 FY13 FY14 FY15 Target FY13 FY14 FY16 Target Costs to achieve £1.2bn £1.2bn c.£0.7bn2 Transform (CTA) 1 Excludes provisions for PPI, IRH
Slide 27: Continued progress on CET1 ratio despite adjusting items
Continued progress on CET1 ratio despite adjusting items Fully loaded (FL) CRD IV CET1 ratio progression1 RWA reduction (£bn)1 CET1 40 41 42 Capital +30bps (1%) >11% 442 10.3% 10.6% 9.1% 402 396 c.400 Dec-13 Dec-14 Mar-15 2016 Dec-13 Dec-14 Mar-15 2016 Target Guidance • FL CRD IV CET1 ratio up 30bps
Slide 28: RWAs: Closely managed to support business growth and capital ratio accretion
RWAs: Closely managed to support business growth and capital ratio accretion RWAs (£bn) Highlights • RWAs reduced by £6bn reflecting continued progress on the run- down of Non-Core, and growth in Core businesses 402 7 1 • Core business growth of £7bn driven by growth in PCB due to 9 increased corpor
Slide 29: Progressive implementation of CET1 requirements
Progressive implementation of CET1 requirements Regulatory CET1 targets Key assumptions in this illustration PRA regulatory minimum1 • CET1 minimum requirements per PRA implementation of Capital CRD IV regulatory minimum Requirements Regulation (CRR) Pillar 2A met with CET1 capital (varies annually)
Slide 30: Leverage ratio on track for 2016 target
Leverage ratio on track for 2016 target Leverage ratio progression1 Leverage exposure (£trn)1 T1 41 46 46 BCBS 270 Capital impact 1.36 1.35 >4% 3.7% 3.7% 1.26 1.23 3.0% 1 Dec-13 Dec-14 Mar-15 2016 Dec-13 Jun-14 Dec-14 Mar-15 Target • Leverage ratio at 3.7% well on track to meet 2016 Transform target
Slide 31: Leverage ratio maintained at 3.7%
Leverage ratio maintained at 3.7% Leverage exposure1 (£bn) Highlights L&A and other assets2 Derivatives • Leverage exposures during Q1 15 increased by £22bn to £1,255bn SFTs Undrawn commitments • Loans and advances and other assets increased by £19bn to £709bn Leverage ratio1 primarily due to a seas
Slide 32: Proxy Total Loss Absorbing Capacity (TLAC)
Proxy Total Loss Absorbing Capacity (TLAC)1 (£bn) Mar-15 • Proactive transition towards a HoldCo funding and capital model positions us well to meet potential future TLAC requirements PRA transitional Common Equity Tier 1 capital 42 • While requirements remain to be set, Barclays current expectation
Slide 33: 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 (HoldCo) of the 2014 Q1 15 Barclays Group Notes £m £m • The HoldCo’s primary assets currently are its investments in, and Assets loans and advances made to, its so
Slide 34: 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 10.6% on track to meet our target of > 11% ≥17% in 2016. The ratio was well in excess of the 7% PRA regulatory
Slide 35: Capital resources
Capital resources1 (£m) 31 December 2014 31 March 2015 Shareholders' equity (excluding non controlling interests) per the balance sheet 59,567 60,693 Less: other equity instruments (recognised as AT1 capital) (4,322) (4,323) Adjustment to retained earnings for foreseeable dividends (615) (981) Minor
Slide 36: Leverage exposure
Leverage exposure Leverage exposure1 (£bn) 31 December 2014 31 March 2015 Derivative financial instruments 440 480 Cash collateral 73 80 Reverse repurchase agreements 132 124 Loans and advances and other assets 713 732 Total IFRS assets 1,358 1,416 Regulatory consolidation adjustments (8) (8) Deriva
Slide 37: 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 • Stable liquidity position with the Group liquidity pool maintai
Slide 38: We maintain 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% • Group Loan to Deposit Ratio (LDR) and the LDR for PCB, Barclaycard 89% 89% 360 and Africa Banking at 101% and 89% respectively1 340