Barclays Plc · LSE:BARC
Barclays — Debt Investor Presentation (July 2015)
54 slides from Barclays's debt investor presentation, Jul 29, 2015
Slide 1: Barclays PLC Fixed Income Investor Presentation H1 2015
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM Barclays PLC Fixed Income Investor Presentation H1 2015 Interim Management Statement 29 July 2015 | Barclays H1 2015 Fixed Income Investor Presentation
Slide 2: Continued good progress in H1
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM 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%
Slide 3: Accelerating delivery of shareholder value
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM 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 stron
Slide 4: Performance Overview
PERFORMANCE PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW OVERVIEW & STRUCTURAL REFORM Performance Overview | Barclays H1 2015 Fixed Income Investor Presentation
Slide 5: Summary Group financials: H1 adjusted PBT up 11%
PERFORMANCE PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW OVERVIEW & STRUCTURAL REFORM Summary Group financials: H1 adjusted PBT up 11% % Six months ended – June (£m) 2014 2015 H1 financial performance2 change Income 13,332 12,982
Slide 6: Strengthening key financial metrics
PERFORMANCE PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW OVERVIEW & STRUCTURAL REFORM Strengthening key financial metrics Fully Loaded CET1 ratio1 Highlights • Progressive strengthening of key balance sheet metrics 10.2% 10.3% 10.
Slide 7: Q2 Core performance: Positive jaws and PBT up 6%
PERFORMANCE PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW OVERVIEW & STRUCTURAL REFORM 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% • PB
Slide 8: Non-Core: Continued shrinkage and capital recycling
PERFORMANCE PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW OVERVIEW & STRUCTURAL REFORM Non-Core: Continued shrinkage and capital recycling Three months ended (£m) Jun-14 Mar-15 Jun-15 Highlights – Businesses 245 122 153 • Period en
Slide 9: Capital & Leverage
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM Capital & Leverage | Barclays H1 2015 Fixed Income Investor Presentation
Slide 10: Continued strengthening of CET1 ratio
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM 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
Slide 11: RWAs: Closely managed to support business growth and capital ratio accretion
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM RWAs: Closely managed to support business growth and capital ratio accretion RWAs (£bn)1 Highlights • RWAs reduced by £19bn reflecting underlying trading book reduct
Slide 12: Non-Core: Further RWA and leverage reductions
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM 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
Slide 13: Continued progress on the transition towards end-state capital structure
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM Continued progress on the transition towards end-state capital structure Evolution of capital structure blahloaded CRD IV capital position Fully • Transitional and f
Slide 14: Maintaining robust capital buffers above mandatory distribution restrictions
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM Significant management focus on maintaining robust capital buffers above future mandatory distribution restrictions CET1 requirements1 (as at 1 January except H1) •
Slide 15: Leverage ratio strengthened further towards target
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM 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% 1.2
Slide 16: Leverage ratio increased to 4.1%
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM 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
Slide 17: Holding company transition and structural reform
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM Holding company transition and structural reform | Barclays H1 2015 Fixed Income Investor Presentation
Slide 18: Barclays PLC parent company accounts
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM 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
Slide 19: Refinancing out of Holding Company supports achieving future TLAC requirements
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM Refinancing out of Holding Company supports achieving future Total Loss Absorbing Capacity (TLAC)1 requirements • Proactive transition towards a HoldCo funding and c
Slide 20: Managing the risk profile of HoldCo term senior unsecured debt
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM 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 Deliver
Slide 21: Progressing with plans for structural reform
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM Progressing with plans for structural reform Evolving group structure Implications for bondholders Barclays PLC (HoldCo) Barclays PLC • Progressive issuer of AT1 and
Slide 22: Liquidity & Funding
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM Liquidity & Funding | Barclays H1 2015 Fixed Income Investor Presentation
Slide 23: Maintaining a robust liquidity position
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM Maintaining a robust liquidity position, with pool well in excess of internal and external minimum requirements High quality liquidity pool (£bn) Key messages • Stab
Slide 24: Access to stable and diverse sources of funding
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM 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%
Slide 25: Diverse wholesale funding sources across products, currencies and maturities
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM Continue to access diverse wholesale funding sources across multiple products, currencies and maturities Wholesale funding by product Key messages Depostis from bank
Slide 26: Asset quality
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM Asset quality | Barclays H1 2015 Fixed Income Investor Presentation
Slide 27: Continued strong Core asset quality
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM 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
Slide 28: Group impairment below long-term trends
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM Group impairment below long-term trends Increasing Group Credit Risk Loans (CRLs) coverage and Retail loan loss rate (LLR) (bps) stable LLR Dec-14 Jun-15 60% 58% 308
Slide 29: Reduced exposure to Eurozone periphery
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM Reduced exposure to Eurozone periphery Exposures by geography (£bn)1 Key Messages Spain Italy Portugal Ireland • The vast majority of the exposures to Spain have bee
Slide 30: Credit ratings
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM Credit ratings | Barclays H1 2015 Fixed Income Investor Presentation
Slide 31: Recent industry-wide credit rating agency actions
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM Recent industry-wide credit rating agency (CRA) actions reflect evolving bank resolution frameworks Ratings1 S&P Moody's Fitch • Barclays carries a stable outlook wi
Slide 32: Managing and reserving for potential rating actions in the liquidity pool
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM Barclays manages and reserves for potential rating actions in the liquidity pool Key Messages Contractual credit rating downgrade exposure • Barclays now has a stabl
Slide 33: Summary
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM Summary1 • Diversified international bank focused on delivering more sustainable and Strategy driving simpler, focused improved returns and balanced Group structure
Slide 34: Appendix
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM Appendix | Barclays H1 2015 Fixed Income Investor Presentation
Slide 35: PCB: PBT up 10% excluding impact of US Wealth
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM 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 Th
Slide 36: Barclaycard: Continued growth with PBT up 8%
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM 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
Slide 37: Africa Banking: RoE increased to 9.7% and RoTE of 13.2%
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM 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 rate
Slide 38: Investment Bank: PBT up 35% with double digit RoE
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM 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 str
Slide 39: Double digit returns in the Core business on a higher equity base
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM 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
Slide 40: Double digit returns in the Core business and improved IB returns
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM 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%
Slide 41: Group adjusted operating expenses - delivery to date
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM 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 Bar
Slide 42: Group and Core cost targets
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM 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 Ta
Slide 43: Continued reduction in Core operating expenses
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM 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% str
Slide 44: Wholesale funding composition
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM Wholesale funding composition1 >1 month >3 months >6 months >9 months Total >1 year but >2 years As at 30 June 2015 (£bn) ≤1 month but ≤3 but ≤6 but ≤12 but ≤12 ≤1 y
Slide 45: OpCo senior unsecured debt maturity profile
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM 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
Slide 46: UK Banking Act now includes a statutory bail-in power
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM In line with the European Bank Recovery & Resolution Directive the UK Banking Act now includes a statutory bail-in power Overview Considerations for Bondholders • St
Slide 47: Repositioning and simplifying Barclays
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM Repositioning and simplifying Barclays Rightsizing and focusing the Investment Bank Establishing a dedicated Non-Core unit and a new Personal and Corporate Banking b
Slide 48: Reducing and reallocating RWAs to drive growth and returns
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM <15% Reducing and reallocating RWAs to drive growth and returns 2013 pre-resegmentation (£bn) 2013 post-resegmentation estimate (£bn) 2016 guidance (£bn) Leverage ex
Slide 49: Core Investment Bank: Building on competitive advantages
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM Core Investment Bank: Building on competitive advantages Core Investment Bank Non-Core Investment Bank RWAs: c.£120bn RWAs: c.£90bn 20131 FY Leverage exposure: c.£49
Slide 50: Contact – Debt Investor Relations Team
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM Contact – Debt Investor Relations Team Lisa Bartrip Sofia Lonnqvist Dan Colvin +44 (0)20 7773 0708 +44 (0)20 7116 5716 +44 (0)20 7116 6533 lisa.bartrip@barclays.com
Slide 51: Disclaimer
PERFORMANCE HOLDCO TRANSITION CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW & STRUCTURAL REFORM Disclaimer Important Notice The information, statements and opinions contained in this presentation do not constitute a public offer under any applicable legislation
Slide 52: Disclaimer (continued)
Disclaimer (continued) Barclays has filed a registration statement (including a prospectus) and has filed, or will file, a prospectus supplement with the U.S. Securities and Exchange Commission (“SEC”) for the offering of securities to which this document relates. Before you invest, you should read
Slide 53: Disclaimer (continued)
Disclaimer (continued) • Adjusted total operating expenses represents operating expenses excluding goodwill impairment, provisions for UK customer redress, provisions for ongoing investigations and litigation primarily relating to Foreign Exchange and gain on valuation of a component of the defined
Slide 54: Disclaimer (continued)
Disclaimer (continued) • Liquidity Coverage Ratio (LCR) is calculated according to the Commission Delegated Regulation of October 2014 that supplements Regulation (EU) 575/2013 (CRDIV) published by the European Commission in June 2013. The metric is a ratio that is not yet fully implemented in local