Barclays Plc · LSE:BARC
Barclays — Q1 2022 Earnings Presentation
52 slides from Barclays's earnings presentation, Apr 28, 2022
Slide 1: Barclays PLC Q1 2022 Results
Barclays PLC Q1 2022 Results 28 April 2022
Slide 2: C.S. Venkatakrishnan, Barclays Group Chief Executive
C.S. Venkatakrishnan Barclays Group Chief Executive
Slide 3: Resilient Q122 performance despite elevated L&C charges, Group income up 10% YoY
Resilient Q122 performance despite elevated L&C1 charges, with Group income up 10% YoY reflecting growth across all businesses Resilient • PBT of £2.2bn after absorbing £0.5bn of L&C charges, and 11.5% RoTE. Income profitability Direct Russia related risks well contained £6.5bn Cost: income ratio Co
Slide 4: Over-issuance of securities in the US
Over-issuance of securities in the US 2019 March 2022 Ongoing Timeline • Barclays Bank PLC (BBPLC) filed • BBPLC determined it exceeded • Barclays will conduct a rescission shelf-registration with an issuance issuance limit by c.$15bn offer to certain purchasers of limit of c.$20.8bn over 3 years af
Slide 5: Limited exposure to Russia, Ukraine and Belarus
Limited exposure to Russia, Ukraine and Belarus Barclays has no physical business operations in Russia, Ukraine, or Belarus • No physical presence in Russia, Ukraine or Belarus • No undertakings in Russia, Ukraine, or Belarus Proactive risk management of modest exposures 130 1,215 53 171 15 Dec-21 F
Slide 6: Global Markets: Performance drivers
Global Markets: Performance drivers Barclays’ Global Markets income running above historic levels Business mix 3 Q122: Q120-Q421 £2.7bn • Business and geographic diversification average: c.£1.8bn • Minimal exposure to Russia 2.5 • Limited commodities franchise 2 Proactive in managing risks Q114-Q419
Slide 7: Corporate and consumer businesses positioned well for the real economy backdrop
Barclays’ corporate and consumer businesses positioned well for the real economy backdrop Interest rates (%) Unemployment rate2 (%) GBP 5 Year UK base UK US swap rate1 rate 2.25 15 Mar-22: 1.75 1.87 10 1.25 Mar-22: 0.75 0.75 Mar-22: 3.60 5 0.25 -0.25 Feb-22: 3.80 0 Monthly YoY inflation3 (%) Nominal
Slide 8: Strategic priorities underpinned by structural market and societal trends
Our strategic priorities to grow are underpinned by structural market and societal trends Deliver next-generation, digitised Capture opportunities as we Deliver sustainable growth in the CIB consumer financial services transition to a low-carbon economy The digital revolution continues Public and pr
Slide 9: Our climate strategy and updates to our approach and targets
Our climate strategy and updates to our approach and targets In March 2020 Barclays announced its ambition to be a net zero bank by 2050, becoming one of the first banks to do so. We have a strategy to turn that ambition into action and have announced a number of important updates to our approach an
Slide 10: Resilient Q122 profitability, continue to target a RoTE >10% in 2022
Resilient Q122 profitability, continue to target a RoTE >10% in 2022 Q122 metrics Group targets over the medium term Returns Returns Cost efficiency Group RoTE 11.5% Group RoTE >10% Continue to target Cost: income ratio <60% a RoTE >10% in 2022 Cost efficiency Cost: income ratio 63% Capital adequacy
Slide 11: Anna Cross, Barclays Group Finance Director
Anna Cross Barclays Group Finance Director
Slide 12: Q122 Group highlights
Q122 Group highlights • Income up 10% driven by strong CIB income Income Costs • Costs up £0.5bn or 15% driven by higher L&C charges relating to over-issuance of securities in the US £6.5bn £4.1bn and customer remediation costs on a legacy loan portfolio Q121: £5.9bn Q121: £3.6bn − Costs excluding L
Slide 13: Income: 10% growth YoY
Income: 10% growth YoY Group income up 10% YoY (£m) 6,496 • Global Markets +26% 5,900 – FICC +37% and Equities +13% BI: Corporate & • Investment Banking fees -25% 5,415 5,465 Investment 5,160 – Advisory +13%, DCM -8% and ECM -81% Bank +10% YoY • Corporate -1% 3,938 – Transaction Banking +19% and Cor
Slide 14: Costs: Q122 costs increase largely driven by L&C charges
Costs: Q122 costs increase largely driven by L&C charges (£m) Q122 total costs increased £0.5bn YoY (£m) Q122 base costs up YoY (£m) Increase largely driven by L&C of £0.5bn Base costs (L&C) 4,111 111 17 490 3,578 137 Base costs (Other) 2,239 1,887 Higher YoY 4,111 3,578 driven by 779 £490m 572 incr
Slide 15: Barclays now expects total FY22 costs to be around £15.0bn
Barclays now expects total FY22 costs to be around £15.0bn1 FY212 to FY22 costs outlook (£bn) 14.7 c.15.0 Structural cost actions 0.6 Key drivers of base costs4 Performance costs 1.7 • Demand-led • Strategic • Technology • Includes Q122 L&C growth investments productivity charges of £0.5bn relating
Slide 16: Impairment: Q122 charge of £0.1bn, lower unsecured lending balances
Impairment: Q122 charge of £0.1bn, reflecting lower unsecured lending balances and maintained appropriate coverage ratios Components of impairment charge / (release) (£m) UK and US cards coverage ratios Stage 1 and 2 impairment 40 36.6% 35.2% Stage 3 impairment 30 21.6% Loan loss rate 12.8% 12.8% 80
Slide 17: Q122 Barclays UK
Q122 Barclays UK RoTE of 15.6% reflecting higher rates, partially offset by mortgage margin compression, with Q122 NIM of 2.62% • Income up 5% capturing the benefit from rising Q121 Q221 Q321 Q421 Q122 Income Costs interest rates 1,576 1,623 1,638 1,699 1,649 Total 295 318 335 386 310 £1.6bn £1.0bn
Slide 18: Q122 Barclays International
Q122 Barclays International RoTE of 14.8% driven by strong income growth, offset by litigation and conduct provisions • Income up 10% Income Costs − Diversified income profile across businesses 18% Global £4.8bn £3.0bn and geographies Markets Q121: £4.4bn Q121: £2.5bn Business Investment • 3% apprec
Slide 19: Q122 Barclays International: Corporate & Investment Bank
Q122 Barclays International: Corporate & Investment Bank RoTE of 17.1%, with strong performances in FICC and Equities offsetting lower Investment Banking fees • CIB income up 10% Q121 Q122 Q121 Q122 GBP basis USD basis3 Income Costs • Global Markets income up 26%: higher activity, 3,589 +22% £3.9bn
Slide 20: Q122 Barclays International: Consumer, Cards & Payments
Q122 Barclays International: Consumer, Cards & Payments RoTE of (1.5)% reflecting higher income more than offset by customer remediation costs relating to a legacy portfolio • Income up 10% Q121 Q221 Q321 Q421 Q122 Income Costs 840 878 886 − Payments income up 44% driven by higher 805 808 £0.9bn £0.
Slide 21: Q122 Head Office
Q122 Head Office Q121 Q221 Q321 Q421 Q122 • Q122 income of £23m including: − One-off gain of £86m from the sale Income 23 and leaseback of UK data centres, (£m) (110) partially offset by: (75) (27) (49) − Hedge accounting losses (80) (114) (86) − Funding costs on legacy capital Costs (155) (325) ins
Slide 22: High quality and robust liquidity and funding positions
High quality and robust liquidity and funding positions Liquidity coverage ratio (LCR) Loan: deposit ratio2 Loans (£bn) Deposits (£bn) LDR 168% 82% 160% 162% 159% 71% 70% 68% Minimum requirement: 100% 31-Dec-19 31-Dec-20 31-Dec-21 31-Mar-22 519 547 481 Liquidity 416 372 211 266 291 320 339 343 362 p
Slide 23: Q122 CET1 ratio of 13.8%
Q122 CET1 ratio of 13.8% Capital accretion primarily offset by L&C relating to over-issuance of securities in the US and RWA growth QoQ CET1 ratio1 movements c.30bps c.80bps 51bps 10bps 19bps2 6bps 31bps 15.1% c.12bps relates to US over- 14.8% 14.3% issuance 13.9% hedges 14.1% 14.1% 13.9% 13.9% 13.8
Slide 24: 13-14% CET1 ratio target continues to provide appropriate headroom above MDA hurdle
13-14% CET1 ratio target continues to provide appropriate headroom above evolving MDA hurdle Illustrative evolution of minimum CET1 requirements and buffers 13-14% CET1 ratio target • CET1 ratio target of 13-14%, with an appropriate headroom over the MDA hurdle, which is currently 11.0%1 13.8% • Tar
Slide 25: Outlook
Outlook Returns • Barclays continues to target a RoTE of >10% in 2022 • Barclays’ diversified income streams position the Group well for the current economic and Income market environment and rising interest rates • Given £0.5bn of litigation and conduct charges in Q122 and current expectations for
Slide 26: Appendix
Appendix
Slide 27: Well-positioned to deliver sustainable double digit returns
Barclays is well-positioned to deliver sustainable double digit returns 1 2.2% 2 £(1.0)bn 1.0% £(0.5)bn Interest rates Impairment Cost dynamics NII uplift from higher Increased credit Investment spend rates impairment, but below Inflationary pressures pre-COVID-19 levels Post-tax model
Slide 28: Mortgage growth continues, well positioned for rising rates
Mortgage growth continues, well positioned for rising rates and optimistic about recovery in unsecured lending Change in monthly card spending1 Mortgages 20.1% 17.7% BUK: Mortgage 158.1 159.1 13.7% 143.3 148.3 151.9 9.3% balances (£bn) 7.4% Dec-19 Dec-20 Mar-21 Dec-21 Mar-22 • Strong mortgage flow f
Slide 29: Structural hedge
Structural hedge Structural hedge program update Dec-19 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 • The Group’s combined gross equity and product structural hedge contribution was £378m in Q122 (Q121: £350m) Hedge notional • The combined structural hedge notional as at Mar-22 was (£bn) 224 228 238 £
Slide 30: Interest rate sensitivity
Interest rate sensitivity Illustrative sensitivity of Group NII to a parallel shift in interest rate curves1 • This analysis assumes an instantaneous 25bps parallel shift in Impact of parallel shifts Year 1 Year 2 Year 3 interest rate curves and a 25bps shock to the underlying bank rate in interest
Slide 31: Total payments income growth opportunity of c.£900m over three years
Total payments income growth opportunity of c.£900m over three years from FY20-FY23 Q122 vs. Q121 FY20 FY21 Q121 Q122 % change (£m) Total payments 1,657 1,940 396 521 +32% Payments1 4062 458 Q122 Group 93 134 +44% £6.0bn income £0.5bn £6.5bn Next-gen Commerce 6313 483 Wholesale +18% 128 151 payment
Slide 32: Retaining management adjustments due to uncertainty
Retaining management adjustments due to uncertainty Baseline macroeconomic variables (MEVs) MEVs used in Q421 results Q122 MEVs Change in MEVs • Q122 baseline UK and US MEVs have 2022 2023 2024 2022 2023 2024 2022 2023 2024 been rolled forward by one quarter from Annual Q421 UK GDP 4.9% 2.3% 1.9% 5.
Slide 33: Mar-22 coverage ratios remain strong
Mar-22 coverage ratios remain strong Credit cards, unsecured loans and other retail lending Wholesale loans Gross exposure (£bn) Impairment allowance (£bn) Coverage ratio Gross exposure (£bn) Impairment allowance (£bn) Coverage ratio 60.2 8.1% 8.8% 8.5% 159.9 3.4 151.7 2.8 0.8% 0.8% 0.7% 4.9 2.8 45.
Slide 34: Mar-22 UK and US cards coverage ratios above pre-pandemic levels
Mar-22 UK and US cards coverage ratios still meaningfully above pre-pandemic levels UK cards US cards Gross exposure (£bn) Impairment allowance (£bn) Coverage ratio Gross exposure (£bn) Impairment allowance (£bn) Coverage ratio 16.5 22.5 0.8 1.7 10.5% 12.8% 12.8% 1.5 9.1% 10.6% 10.4% 18.0 18.2 65.1%
Slide 35: Wholesale exposures are diversified and appropriately covered
Wholesale exposures are diversified and appropriately covered, including in selected sectors Wholesale and selected sector exposure Wholesale lending (£bn) Selected sectors (£bn/coverage ratio %) 46.3 159.9 23.8 (2.1%) Wholesale 0.6 (8.5%) Air Travel 23.8 0.6 (2.8%) Selected Sectors 1.6 (3.3%) Group
Slide 36: Retail portfolios in the UK and US appropriately positioned
Retail portfolios in the UK and US continue to be appropriately positioned • Strong balance growth supported by elevated demand 158.2 and stamp duty relief UK 148.3 143.3 • Arrears levels at multi-year lows mortgage UK 69.5% balance 67.9% 67.5% mortgages • 50.7% average balance weighted LTV of mortg
Slide 37: QoQ TNAV per share movements
QoQ TNAV per share movements QoQ TNAV movements (pence per share) 4 2 5 15 8 1 291 294 Dec-21 Earnings Own credit Pension Currency Cash flow FVOCI Mar-22 reserve remeasurement translation hedge reserve reserve reserve • TNAV per share increased 3p to 294p due to • Offset by: – +8p of earnings – -15p
Slide 38: RWAs increased QoQ driven by regulatory changes and CIB lending
RWAs increased QoQ driven by regulatory changes and CIB lending RWA movements (£bn) (1.4) 3.3 3.4 2.8 6.6 328.8 328.8 326.9 323.5 314.1 320.7 314.1 1 Dec-21 Regulatory US over-issuance Book size FX Other Mar-22 changes from hedges 1 Jan 2022 1 FX on credit risk, counterparty credit risk and standard
Slide 39: IFRS 9 transitional relief of c.20bps as at Mar-22
IFRS 9 transitional relief of c.20bps as at Mar-22 Constructive regulatory action in Q220 gave greater relief for Stage 1 and 2 impairments • 75% transitional relief for modified impairment post Dec-19 applied in 2022 • Transitional relief schedule for static component per original schedule • Total
Slide 40: Pension deficit reduction contributions
Pension deficit reduction contributions Potential acceleration of CET1 ratio headwinds from pension reduction contributions • During 2019 and 2020, the UK Retirement Fund (UKRF), the Group’s main pension scheme, subscribed for non-transferable listed senior fixed rate notes for £1.25bn. As a result
Slide 41: Group leverage position appropriately managed
Group leverage position appropriately managed Minimum leverage requirements and buffers under the UK regime • Q122 headroom to minimum leverage requirement of 120bps • The RWA-based CET1 ratio is expected to remain our primary UK Spot: 5.0% regulatory constraint through the cycle UK Average: 4.8% •
Slide 42: Financial results tables
Financial results tables
Slide 43: Q122 notable items
Q122 notable items 2021 L&C re- Three months ended (£m) Mar-22 Mar-21 apportionment Income One-off gain from the sale and leaseback of UK data centres 86 - Head Office Litigation & Conduct – Over-issuance of securities in the US1 (320) (220) - CIB – Customer remediation costs on legacy loan portfoli
Slide 44: Q122 split of payments income by division
Q122 split of payments income by division Mar-22 Mar-21 % change Three months ended (£m) BUK CIB CC&P Total BUK CIB CC&P Total BUK CIB CC&P Total Payments - - 134 134 - - 93 93 - - 44% 44% Barclays Cubed / Wholesale 79 72 1 151 69 59 - 128 14% 22% - 18% payment fees Interchange and FX fees 176 46 13
Slide 45: Q122 Group
Q122 Group Three months ended (£m) Mar-22 Mar-21 % change Income 6,496 5,900 +10% Impairment charges (141) (55) -156% – Operating costs (3,588) (3,545) -1% – Litigation and conduct (523) (33) Total operating expenses (4,111) (3,578) -15% Other net (expenses) / income (10) 132 Profit before tax 2,234
Slide 46: Q122 Barclays UK
Q122 Barclays UK Three months ended (£m) Mar-22 Mar-21 % change – Personal Banking 1,022 923 +11% – Barclaycard Consumer UK 276 315 -12% – Business Banking 351 338 +4% Income 1,649 1,576 +5% – Personal Banking 21 (22) – Barclaycard Consumer UK (44) (36) -22% – Business Banking (25) (19) -32% Impairm
Slide 47: Q122 Barclays International
Q122 Barclays International Three months ended (£m) Mar-22 Mar-21 % change Income 4,824 4,399 +10% Impairment (charges) / releases (101) 22 – Operating costs (2,505) (2,438) -3% – Litigation and conduct (513) (21) Total operating expenses (3,018) (2,459) -23% Other net income 8 9 -11% Profit before
Slide 48: Q122 Barclays International: Corporate & Investment Bank
Q122 Barclays International: Corporate & Investment Bank Three months ended (£m) Mar-22 Mar-21 % change – FICC 1,644 1,204 +37% – Equities 1,052 932 +13% Global Markets 2,696 2,136 +26% – Advisory 185 163 +13% – Equity capital markets 47 243 -81% – Debt capital markets 416 453 -8% Investment Banking
Slide 49: Q122 Barclays International: Consumer, Cards & Payments
Q122 Barclays International: Consumer, Cards & Payments Three months ended (£m) Mar-22 Mar-21 % change – International Cards and Consumer 538 533 +1% Bank – Private Bank 214 179 +20% – Payments 134 93 +44% Income 886 805 +10% Impairment charges (134) (21) – Operating costs (584) (552) -6% – Litigati
Slide 50: Q122 Head Office
Q122 Head Office Three months ended (£m) Mar-22 Mar-21 % change Income 23 (75) Impairment releases 8 - – Operating costs (85) (71) -20% – Litigation and conduct (1) (9) +89% Total operating expenses (86) (80) -8% Other net (expenses) / income (18) 123 Loss before tax (73) (32) -128% Attributable los
Slide 51: Exchange rates and share count information
Exchange rates and share count information QoQ % YoY % Exchange rates Mar-22 Dec-21 Mar-21 change change Period end - USD/GBP 1.31 1.35 1.38 -3% -5% 3 month average - USD/GBP 1.34 1.35 1.38 -1% -3% Period end - EUR/GBP 1.19 1.19 1.18 - +1% 3 month average - EUR/GBP 1.20 1.18 1.14 +2% +5% Share count
Slide 52: Disclaimer
Disclaimer Important Notice The terms Barclays or Group refer to Barclays PLC together with its subsidiaries. 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 bu