Barclays Plc · LSE:BARC
Barclays — Debt Investor Presentation (February 2022)
34 slides from Barclays's debt investor presentation, Feb 23, 2022
Slide 1: Barclays PLC Fixed Income Investor Call
Barclays PLC Fixed Income Investor Call FY 2021 Results Announcement 23 February 2022 1 | Barclays FY 2021 Results | 23 February 2022
Slide 2: Tushar Morzaria, Barclays Group Finance Director
Tushar Morzaria Barclays Group Finance Director 2 | Barclays FY 2021 Results | 23 February 2022
Slide 3: FY21 Group highlights
FY21 Group highlights • Income of £21.9bn up 1%, despite a 8% depreciation of average USD against GBP Income Costs − BUK income increased 3%, CC&P income decreased 3%, and CIB income decreased 1% £21.9bn £14.4bn • Costs increased 4% to £14.4bn, due to higher structural cost actions and performance c
Slide 4: Outlook
Outlook • Barclays’ diversified income streams position the Group well for the ongoing economic recovery Income and rising interest rates • Impairment charge is expected to remain below pre-COVID-19 pandemic levels in coming Impairment quarters given reduced unsecured lending balances and an improve
Slide 5: Daniel Fairclough, Interim Group Treasurer
Daniel Fairclough Interim Group Treasurer 5 | Barclays FY 2021 Results | 23 February 2022
Slide 6: FY21 highlights
FY21 highlights Strong balance sheet evidenced across key metrics CET1 ratio 15.1% 15.1% 15.1% Prudently managing the Group’s capital position; Capital MDA hurdle CET1 ratio of 15.1%, with target of 13-14% 11.1% Dec-20 Jun-21 Dec-21 UK leverage ratio 5.3% 5.0% 5.3% UK leverage exposure of £1,136bn,
Slide 7: Year-end CET1 ratio of 15.1%
Year-end CET1 ratio of 15.1% Profits contributed 208bps of capital accretion in 2021, with capital distribution of 72bps YoY CET1 ratio1 movements 33bps 39bps 40bps 21bps 44bps 208bps 29bps 16.9% 15.1% 16.5% 15.1% 15.1% 16.1% 15.9% 15.1% 15.4% Dec-20 Attributable Dividends Buybacks Reduction in Pens
Slide 8: Re-based CET1 ratio of c.14%
Re-based CET1 ratio of c.14% Reflects c.30bps for announced share buyback and c.80bps expected impact from regulatory changes Near-term CET1 ratio flightpath c.30bps • Having absorbed the impact of c.80bps of c.80bps regulatory items on 1 Jan 2022, no further significant regulatory headwinds are exp
Slide 9: Prudently allocating capital while delivering attractive return of capital to shareholders
Prudently allocating capital while delivering attractive return of capital to shareholders Attractive return of capital to shareholders - Total payout of 15p per share in respect of 20211 Strong organic capital generation from earnings Demand-led business growth and Target RoTE of >10% translates to
Slide 10: 13-14% CET1 ratio target continues to provide appropriate headroom above evolving MDA hurdle
13-14% CET1 ratio target continues to provide appropriate headroom above evolving MDA hurdle Illustrative evolution of minimum CET1 requirements and buffers • CET1 ratio target of 13-14%, with an appropriate 13-14% CET1 ratio target headroom over the MDA hurdle, which is currently 11.1%1 Appropriate
Slide 11: Capital structure well managed
Capital structure well managed Expect to hold prudent headroom above Tier 1 and total capital minimums Illustrative evolution of regulatory capital structure Balanced total capital structure • Aim to manage our capital structure in an efficient manner: ≥ 16.6% 22.3% − Continue to run a robust AT1 le
Slide 12: MREL position well established
MREL position well established Expect c.£9bn of MREL issuance for 2022 MREL position of £108.2bn as at Dec-211 2022 HoldCo issuance plan • Expect c.£9bn of MREL issuance across Senior, Tier 2 and AT1, with 34.4% 29.2% c.£8bn remaining following c.£1bn of Senior issuance YTD (£108.2bn) (£93.6bn) • Ex
Slide 13: Sustainable finance activities through Treasury
Sustainable finance activities through Treasury Investing in sustainable innovation Other green activities Mandate to invest £175m between 2020-25 in £3.4bn green bond investment portfolio size sustainability-focussed start-ups; £54m already deployed. 3% 13% Green bond 5% Agriculture 2021 Renewable
Slide 14: High quality liquidity position
High quality liquidity position Strong liquidity position, with Group LCR well above regulatory requirements Majority of pool held in cash and deposits at central banks Comfortably exceeding minimum requirements 162% 161% 162% 161% 168% 6% Minimum 10% requirement: 100% FY21 Group Liquidity pool1 Dec
Slide 15: Conservative loan: deposit ratio
Conservative loan: deposit ratio Stable LDR YoY, reflecting a solid deposit base Conservative loan: deposit ratio (LDR) (£bn)1,2 BUK CIB CC&P Head Office LDR 82% 71% 70% 519 481 69 416 65 64 343 362 339 189 19 13 15 175 34 41 30 146 92 100 92 240 261 194 206 205 209 L&A Deposits L&A Deposits L&A Dep
Slide 16: Strategic priority to maintain strong ratings
Strategic priority to maintain strong ratings Current Senior Long and Moody’s Standard & Poor’s Fitch Short Term ratings Baa2 BBB A Barclays PLC Positive Positive Stable P-2 A-2 F1 Barclays Bank PLC A1 A A+ Stable Positive Stable (BBPLC) P-1 A-1 F1 Counterparty risk Resolution Derivative assessment
Slide 17: Q&A
Q&A 17 | Barclays FY 2021 Results | 23 February 2022
Slide 18: Appendix
Appendix 18 | Barclays FY 2021 Results | 23 February 2022
Slide 19: Record FY21 profitability, increased capital distributions
Record FY21 profitability, increased capital distributions FY21 metrics Group targets over the medium term Returns Returns Cost efficiency Group RoTE 13.4% Group RoTE >10% Cost: income ratio <60% Cost efficiency Cost: income ratio 66% Capital adequacy Capital adequacy Capital distributions CET1 rati
Slide 20: Barclays is 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 21: Structural hedge
Structural hedge Structural hedge program update Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 • The Group’s combined gross equity and product structural hedge contribution was £371m in Q421 (Q321: £353m) Hedge notional • The combined structural hedge notional as at Dec-21 was £228b
Slide 22: Interest rate sensitivity
Interest rate sensitivity Illustrative sensitivity of Group NII to a parallel shift in interest rate curves1 • This analysis assumes an instantaneous parallel shift in interest rate curves Impact of parallel shifts Year 1 Year 2 Year 3 • Around two thirds of the Group income benefit from the illustr
Slide 23: IFRS 9 transitional relief of c.40bps as at Dec-21
IFRS 9 transitional relief of c.40bps as at Dec-21 Constructive regulatory action in Q220 gave greater relief for Stage 1 and 2 impairments • 100% transitional relief for modified impairment post Dec-19 applied until end-2021 • Transitional relief schedule for static component per original schedule
Slide 24: Group leverage position appropriately managed
Group leverage position appropriately managed Minimum leverage requirements and buffers under the UK regime Dec-211: • Headroom to minimum leverage requirement of 150bps in Q421, while the RWA-based CET1 ratio is expected to remain our primary UK Spot: 5.3% regulatory constraint through the cycle UK
Slide 25: RWAs increased QoQ and YoY driven by market risk
RWAs increased QoQ and YoY driven by market risk QoQ RWA movements (£bn) 0.3 0.7 12.3 314.1 313.5 313.5 307.5 3.6 2.4 303.9 301.5 301.5 1 Sep-21 Credit risk Counterparty credit risk Market risk FX Other Dec-21 excl. disposals YoY RWA movements (£bn) 0.7 0.3 9.1 314.4 314.1 314.1 2.2 2.0 306.2 306.0
Slide 26: Retaining management adjustments due to economic uncertainty
Retaining management adjustments due to economic uncertainty Baseline macroeconomic variables (MEVs) MEVs used in Q321 results Q421 MEVs Change in MEVs • Q421 baseline UK and US MEVs have improved from Q321, including unemployment forecasts in both the 2021 2022 2023 2021 2022 2023 2021 2022 2023 UK
Slide 27: Dec-21 coverage ratios remain strong
Dec-21 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 3.4 5.7 8.1% 12.3% 8.8% 0.8% 1.5% 0.8% 151.7 4.9 144.3 2.8 10
Slide 28: Dec-21 UK and US cards coverage ratios still meaningfully above pre-pandemic levels
Dec-21 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 2.0 16.5 10.5% 16.6% 12.8% 22.5 9.1% 14.3% 10.6% 0.8 1.7 1.5 2.5 0.6 17.
Slide 29: Wholesale exposures are diversified and appropriately covered, especially in selected vulnerable sectors
Wholesale exposures are diversified and appropriately covered, especially in selected vulnerable sectors Wholesale and vulnerable sector exposure Wholesale lending (£bn) Selected sectors (£bn/coverage ratio %) 45.8 151.7 16.4 16.4 (2.1%) Wholesale 0.5 (9.7%) Air Travel Selected Sectors 0.6 (2.8%) Gr
Slide 30: Strong progress in HoldCo issuance
Strong progress in HoldCo issuance Annual HoldCo issuance volume (£bn)1,2 2021 HoldCo issuance by currency2 13.4 12.1 11.5 12.1 March: USD 1bn Senior 11.0 8.6 Target: c.9 March: USD 1bn Tier 2 6.2 8.2 6.1 9.3 10.2 8.3 March: EUR 1bn Tier 2 1.8 4.0 5.9 May: EUR 2bn Senior 2.9 1.1 5.4 1.7 2.5 3.5 1.2
Slide 31: Pension deficit reduction contributions
Pension deficit reduction contributions CET1 ratio headwinds from pension reduction contributions fully incorporated into prudent capital plan and CET1 target • As at 31 December 2021, the Group’s IAS 19 pension surplus across all schemes was £3.6bn (December 2020: £1.5bn). The UK Retirement Fund (U
Slide 32: Strong legal entity capital and liquidity positions
Strong legal entity capital and liquidity positions Continue to manage legal entity capital ratios with appropriate headroom to requirements Barclays PLC Accounting and regulated sub-group Accounting sub-group Barclays Bank UK PLC (BBUKPLC) sub-group Barclays Bank PLC (BBPLC) sub-group Barclays Bank
Slide 33: Our Purpose underpins the strong progress we delivered against our ESG strategy in 2021
Our Purpose underpins the strong progress we delivered against our ESG strategy in 2021 Our Purpose: • Achieved emissions reductions of -22%1 / -8%1 in Energy / Power portfolios The reason Barclays exists; • Founding member of NZBA2 and member of SMI FSTF3 the societal need we fulfil • Built experti
Slide 34: 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
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