Barclays Plc · LSE:BARC
Barclays — Q3 2023 Earnings Presentation
49 slides from Barclays's earnings presentation, Oct 24, 2023
Slide 1: Barclays PLC Q3 2023 Results Presentation
Barclays PLC Q3 2023 Results Presentation 24 October 2023
Slide 2: Presenters and agenda
i ii iii C.S. Venkatakrishnan Anna Cross Appendix: Financials Group CEO Group Finance Director
Slide 3: Q323 themes
Q323 themes Income Statement Delivered Q323 RoTE of 11.0% Q323 Q323 YTD Income £6.3bn £19.8bn Mixed market activity and competitive environment for UK retail deposits CIR 63% 61% LLR 42bps 43bps Evaluating material structural cost actions to help drive future returns PBT £1.9bn £6.4bn RoTE 11.
Slide 4: Reset level of Group returns in the last three years
Reset level of Group returns in the last three years Group RoTE Group returns level reset and stabilised since 2021 10% Continue to target above 10% RoTE in 20231 13.1% 12.5% 10.4% Will set out our capital allocation priorities, as well as revised financial targets for costs, returns and share
Slide 5: Presenters and agenda
i ii iii C.S. Venkatakrishnan Anna Cross Appendix: Financials Group CEO Group Finance Director
Slide 6: Performance highlights
Performance highlights Targets and guidance Q323 Q323 YTD RoTE >10% in 20231 11.0% 12.5% Cost: income ratio Low 60s % in 20231 63% 61% Loan loss rate 50-60bps through the cycle 42bps 43bps CET1 ratio 13-14% 14.0% Average Liquidity Coverage >100% regulatory minimum3 159% Ratio2 1 The Group is evaluat
Slide 7: Q323: Group RoTE of 11.0% with profit before tax of £1.9bn
Q323: Group RoTE of 11.0% with profit before tax of £1.9bn Performance Profit before tax (£bn) excluding the impact of the Over-issuance of Securities in Q3221 £6.3bn £3.9bn Income Costs Q322: £6.4bn1 Q322: £4.1bn1 63% £2.3bn (0.2) (0.1) 0.2 Cost: income Profit before (0.0) ratio impairment Q322: 64
Slide 8: Q323 Group income down 2% YoY
Q323 Group income down 2%1 YoY Group income (£bn) excluding the impact of the Over-issuance of Securities in Q3221 -£159m | -2%1 Group 6.4 6.3 5.5 -£43m | -2% Barclays UK2 5.5 5.2 1.9 c.£60m transfer of UK Wealth to CC&P 1.9 1.6 Rates and structural hedge benefits partially offset by product dyn
Slide 9: Q323 Group NII of £3.2bn; NIM of 3.98%
Q323 Group NII of £3.2bn; NIM1 of 3.98% Group net interest income (£bn) Group NIM1 3.44% 2.89% 2.90% 3.85% 3.98% +£179m | +6% Group NIM: 3.98%1 (+13bps YoY) 3.2 3.1 2.4 +£17m | +1% BUK NIM: 3.04% (+3bps YoY) 1.6 2.1 1.6 1.9 1.5 +£64m | +7% CC&P2 NIM: 8.88% (+47bps YoY) 1.3 1.3 1.0 0.9 0.7 +£94m | +1
Slide 10: Delivered Q323 operating costs below Q123 high point, as guided
Delivered Q323 operating costs below Q123 high point, as guided Group operating expenses (£bn) excluding the impact of the Over-issuance of Securities in Q3221 Group CIR 2023 Group cost: income ratio % in low 60s2 Guidance Q123 high point for Group and CIB operating costs2,3 64%1 57% 63% 63% Focus
Slide 11: Well provisioned balance sheet
Well provisioned balance sheet Balance sheet provisions for ECL1 (£bn) Macro assumptions used for impairment modelling 6.4 UK GDP2 UK unemployment3 6.1 0.3 Q223 Other PMAs 0.4 0.3 Q323 3.3% 4.4% Economic 4.3% uncertainty 0.3 4.1% adjustments 4.2% 1.6% 3.7% 0.9% 0.4% 1.4% Allowance pre- 5.8 0.4% 0.3%
Slide 12: Long-term prudent risk positioning in our credit card portfolios
Long-term prudent risk positioning in our credit card portfolios UK cards US cards Balances c.35% lower vs. FY19 with strong and stable credit quality Controlled portfolio growth with improved risk mix Repayment rates remain elevated across the risk spectrum 12% of outstandings <660 FICO1 sc
Slide 13: Loan loss rate guidance of 50-60bps through the cycle
Loan loss rate guidance of 50-60bps through the cycle Loan loss rate (bps) Credit impairment charges / (releases) (£m) 138 381 524 372 433 Group 113 BUK 59 Cards repayment rates remain high and 57 delinquencies stable 53 55 52 44 42 81 95 37 30 CC&P US cards balance growth +11% YoY 371 Delinqu
Slide 14: Barclays UK delivered 21.0% RoTE in Q323
Barclays UK delivered 21.0% RoTE in Q323 Performance Income (£bn) £1.9bn £1.0bn -2% Income Costs +1% excluding UK Wealth transfer Business Banking £23.0bn Q322: £1.9bn Q322: £1.1bn 2.0 Total assets -16% vs Q3222 1.9 1.9 56% YoY £59m 0.4 0.5 Cost: income 0.5 +12% Impairment ratio Q322: £0.1bn Q322: 5
Slide 15: Barclays UK deposit mix and FY23 NIM guidance
Barclays UK deposit mix and FY23 NIM guidance BUK deposit balances and mix (£bn) Net interest margin bridge (0.05%) QoQ 0.16% (0.16%) +£52.5bn -£3.7bn -£4.5bn -£6.6bn (0.06%) Deposit pricing, volume (0.07%) and mix effects 258 254 (Q223: -6bps) 250 243 3.22% 3.04% 62 60 206 59 57 Business Banking 8
Slide 16: Structural hedge income continuing to grow
Structural hedge income continuing to grow Another quarter of locking in future gross hedge income Q323 4.06% 4.57% GBP 5yr swap 0.67% 1.05% rate1 -0.01% >95% of expected income (c.£3.6bn) locked in for FY23 Q323 • £3.3bn at H123 Average 1.54% hedge yield 1.08% 0.94% 0.87% 0.69% c.£3.4bn of inco
Slide 17: Consumer, Cards & Payments income growth of 9% YoY
Consumer, Cards & Payments income growth of 9% YoY Performance Income (£bn) £1.4bn £0.8bn Income Costs +9% $30.2bn Q322: £1.2bn Q322: £0.8bn +5% excluding UK US cards: Wealth transfer 1.4 1.3 End Net Receivables +11% vs Q322 1.2 60% £0.4bn Cost: income Impairment ratio Q322: £0.2bn YoY Q322: 67% 0.8
Slide 18: Corporate & Investment Bank stable against a mixed backdrop
Corporate & Investment Bank stable against a mixed backdrop Performance Income (£bn)1 Income by business (£m)1 £3.1bn £2.0bn YoY % USD YoY %: Income Costs Q322: £3.3bn1 Q322: £2.0bn1 -47% -43% Investment -6%1 Advisory, 80 Banking ECM, 62 +48% +57% 65% £(20)m release 3.3 Cost: income 3.2 3.1 DCM, 233
Slide 19: Consistent capital and liquidity over time
Consistent capital and liquidity over time Historical performance 11.8% MDA1 hurdle 13.8% 14.0% CET1 ratio 13-14% target 2019 2020 2021 2022 Q323 82% 72% Loan: deposit ratio Prudent LDR over time 2019 2020 2021 2022 Q323 155% 159% Average Liquidity >100% regulatory minimum Coverage Ratio2 2019 2020
Slide 20: Strong CET1 ratio with significant headroom to MDA
Strong CET1 ratio with significant headroom to MDA Q323 CET1 ratio movements Key messages 5bps (3bps) (9bps) 10bps 14.0% 37bps Target RoTE of >10% translates to 13.8% (22bps) >c.150bps of annual CET1 ratio 13.6% accretion MDA o Generated c.130bps Q323 YTD hurdle 11.8% UK countercyclical buffer (
Slide 21: Diverse and stable franchise deposit base
Diverse and stable franchise deposit base CIB Corporates: £208bn3, +5% BUK: Personal Banking £186bn, -3% CIB: Corporate Bank £169bn 72% insured o >20% insured4 >75% of relationships 5+ years o c.60% of UK relationships 5+ years o No sector concentration >16% Corporates Total CC&P: Private Bank
Slide 22: Prudently managed LCR supported by a highly liquid balance sheet
Prudently managed LCR supported by a highly liquid balance sheet Average LCR1 81% of Liquidity Pool held in cash HTC £20bn FVOCI 6% £44bn 13% Liquidity Pool £335bn Cash £271bn 160% 159% 157% 156% 156% 157% 157% 159% >98% of cash placed with BoE, US Fed, ECB, BoJ, SNB Debt securities mostly held
Slide 23: Outlook
Outlook Targeting a cost: income ratio percentage in the low 60s in 2023, investing for growth whilst progressing towards the Group’s Costs medium-term target of below 60%. Separately, the Group is evaluating actions to reduce structural costs to help drive future returns, which may result in materi
Slide 24: Appendix: Financials
i ii iii C.S. Venkatakrishnan Anna Cross Appendix: Financials Group CEO Group Finance Director
Slide 25: We continued to advance our ESG agendas - update as at H123
We continued to advance our ESG agendas - update as at H123 Environment • Updated our Forestry and Agricultural Commodities Statement in Q223, with enhanced requirements for forestry, palm oil and soy and the inclusion of South American beef • Extended Greener Home Reward pilot registrations until J
Slide 26: Q323 YTD: Group RoTE of 12.5% with profit before tax of £6.4bn
Q323 YTD: Group RoTE of 12.5% with profit before tax of £6.4bn Performance Profit before tax (£bn) excluding the impact of the Over-issuance of Securities1 £19.8bn £12.0bn Income Costs Q322 YTD: Q322 YTD: 0.9 0.8 0.5 £18.9bn1 £11.8bn1 0.6 61% £7.8bn Cost: income Profit before ratio impairment Q322 Y
Slide 27: Q223 combination of the Private Bank and Barclays UK Wealth business
Q223 combination of the Private Bank and Barclays UK Wealth business Creating a Top 5 largest UK Private Bank and Wealth Management business and largest bank owned1 As at the point of transfer in Q223 Barclays UK Wealth CC&P Combined Combined entity transferred Private Bank entity as at Q323 Q323 YT
Slide 28: CRE exposure is modest and well managed
CRE exposure is modest and well managed - update as at H123 June 2023: 4.7%1 of customer loans and advances (L&A), with a weighted average LTV of 49%2 Well diversified portfolio across sectors and underlying counterparties Prudent lending policy for over three decades Customer L&A3 £349bn Furt
Slide 29: Macroeconomic variables
Macroeconomic variables Q323 Upside 2 Upside 1 Baseline Downside 1 Downside 2 2023 2024 2025 2023 2024 2025 2023 2024 2025 2023 2024 2025 2023 2024 2025 UK GDP1 0.8% 4.0% 3.3% 0.6% 2.2% 2.4% 0.4% 0.4% 1.4% 0.3% (1.9)% (0.3)% 0.2% (4.2)% (2.1)% UK unemployment2 4.0% 3.7% 3.5% 4.1% 4.0% 3.9% 4.1% 4.4%
Slide 30: Macroeconomic variables
Macroeconomic variables Q223 Upside 2 Upside 1 Baseline Downside 1 Downside 2 2023 2024 2025 2023 2024 2025 2023 2024 2025 2023 2024 2025 2023 2024 2025 UK GDP1 1.2% 4.1% 3.2% 0.8% 2.5% 2.4% 0.3% 0.9% 1.6% (0.1)% (2.1)% 0.6% (0.5)% (5.0)% (0.4)% UK unemployment2 3.9% 3.6% 3.5% 4.0% 4.0% 3.9% 4.1% 4.
Slide 31: Impairment: September 2023 coverage ratios
Impairment: September 2023 coverage ratios Retail credit cards Corporate loans Impairment allowance Impairment allowance Gross loans (£bn) Coverage ratio Gross loans (£bn) Coverage ratio (£bn) (£bn) Dec-22 Sep-23 Dec-22 Sep-23 Dec-22 Sep-23 Dec-22 Sep-23 Dec-22 Sep-23 Dec-22 Sep-23 Total 37.6 39.0 3
Slide 32: Impairment: September 2023 coverage ratios
Impairment: September 2023 coverage ratios UK cards US cards Gross loans (£bn) Coverage ratio Gross loans (£bn) Coverage ratio Dec-22 Sep-23 Dec-22 Sep-23 Dec-22 Sep-23 Dec-22 Sep-23 Total 9.9 10.2 7.6% 6.3% Total 25.8 26.7 8.1% 9.7% Stage 1 7.1 7.8 1.8% 2.1% Stage 1 21.8 22.1 1.5% 1.7% Stage 2 2.6
Slide 33: Impairment: Q323 corporate loan exposure
Impairment: Q323 corporate loan exposure Corporate loans and selected sector exposure Commentary Gross loans and Corporate loans (£bn) c.38% synthetic protection2 against c.£51bn advances and debt £411bn Financial Institutions 44.3 of funded on-balance sheet exposure in the securities Other 50.9 C
Slide 34: Risk weighted assets
Risk weighted assets Q323 RWA movements (£bn) (0.2) 5.7 (0.6) 341.9 336.9 1 Jun-23 Book size FX Other Sep-23 Q323 YTD RWA movements (£bn) 0.7 (3.2) 2.2 5.7 341.9 336.5 1 Dec-22 Book size Acquisitions and disposals FX Other Sep-23 1 Foreign exchange movements does not include the impact of foreign ex
Slide 35: CET1 ratio within 13-14% target range
CET1 ratio within 13-14% target range CET1 minimum requirements UK leverage minimum requirements MDA1 11.8% CCyB 0.9% CCB 2.5% Reg Min 4.075% CCLB 0.3% G-SII 1.5% 14.0% G-SII 0.525% Pillar 2A 2.4% 5.0% 4.6% BoE minimum leverage 3.25% requirement Pillar 1 4.5% Sep-23 Sep-23 2 UK Leverage Sep-23 UK sp
Slide 36: Operating with a prudent buffer to each tier of capital requirements
Operating with a prudent buffer to each tier of capital requirements AT1 and T2 needs managed on a total capital basis Balanced total capital structure Operating with prudent buffers at each part of the capital stack to Total capital manage FX and RWA movements ratio: 20.0% Have flexibility in t
Slide 37: TNAV per share
TNAV per share QoQ TNAV movements (pence per share) 3 2 (3) 5 10 8 316 291 Jun-23 Attributable profit Cash flow hedge Currency translation Share buyback Goodwill and Dividends paid Sep-23 reserve reserve Intangibles YTD TNAV movements (pence per share) 6 5 (8) (3) (3) (2) (2) 28 316 295 Dec-22 Attri
Slide 38: Q323 Group Financial Highlights
Q323 Group Financial Highlights Three months ended (£m) Sep-23 Sep-22 % change The prior year includes impacts from the Over-issuance of Securities; £0.5bn income Income 6,258 5,951 +5% – Operating expenses (3,949) (3,939) reduction and £0.5bn reduction in litigation and conduct charges – Litigation
Slide 39: Q323 Barclays UK Financial Highlights
Q323 Barclays UK Financial Highlights Three months ended (£m) Sep-23 Sep-22 % change Income down 2% YoY due to the transfer of UK Wealth to CC&P, with the benefit from – Personal Banking 1,165 1,212 -4% – Barclaycard Consumer UK 238 283 -16% rising interest rates broadly offset by product dynamics –
Slide 40: Q323 Barclays International Financial Highlights
Q323 Barclays International Financial Highlights Three months ended (£m) Sep-23 Sep-22 % change Income up 9%. Excluding the impact of the Over-issuance of Securities in the prior year Income 4,442 4,065 +9% – Operating costs (2,816) (2,776) -1% income is down 2%. – Litigation and conduct (10) 396 −
Slide 41: Q323 Corporate & Investment Bank Financial Highlights
Q323 Corporate & Investment Bank Financial Highlights Three months ended (£m) Sep-23 Sep-22 % change CIB income is up 9%. Excluding the impact of the Over-issuance of Securities in the – FICC 1,147 1,546 -26% – Equities 675 246 +174% prior year income is down 6%1 Global Markets 1,822 1,792 +2% – Adv
Slide 42: Q323 Consumer Cards & Payments Financial Highlights
Q323 Consumer Cards & Payments Financial Highlights Three months ended (£m) Sep-23 Sep-22 % change Income up 9%1 with growth across International Cards & Consumer Bank and Private – International Cards & Consumer Bank 890 824 +8% – Private Bank 331 270 +23% Bank – Payments 139 150 -7% − Internationa
Slide 43: Q323 Head Office Financial Highlights
Q323 Head Office Financial Highlights Three months ended (£m) Sep-23 Sep-22 % change Income of £(57)m Income (57) (30) -90% – Operating costs (75) (94) +20% − Primarily reflecting hedge accounting and treasury items – Litigation and conduct 1 (54) Total operating expenses (74) (148) +50% Operating e
Slide 44: Q323 YTD Group Financial Highlights
Q323 YTD Group Financial Highlights Nine months ended (£m) Sep-23 Sep-22 % change The prior year includes impacts from the Over-issuance of Securities; £0.3bn income Income 19,780 19,155 +3% gain and £1.0bn litigation and conduct charges – Operating costs (11,979) (11,209) -7% – Litigation and condu
Slide 45: Q323 YTD Barclays UK and Barclays International
Q323 YTD Barclays UK Q323 YTD Barclays International Nine months ended (£m) Sep-23 Sep-22 % change Nine months ended (£m) Sep-23 Sep-22 % change – Personal Banking 3,662 3,311 +11% Income 14,164 14,005 +1% – Barclaycard Consumer UK 722 824 -12% – Operating costs (8,519) (7,818) -9% – Business Bankin
Slide 46: Q323 YTD CIB and CC&P
Q323 YTD CIB Q323 YTD CC&P Nine months ended (£m) Sep-23 Sep-22 % change Nine months ended (£m) Sep-23 Sep-22 % change – FICC 4,121 4,719 -13% – International Cards & Consumer Bank 2,625 2,053 +28% – Equities 1,942 2,709 -28% – Private Bank 884 729 +21% Global Markets 6,063 7,428 -18% – Payments 435
Slide 47: Q323 YTD Head Office Financial Highlights
Q323 YTD Head Office Financial Highlights Nine months ended (£m) Sep-23 Sep-22 % change Income (179) (139) -29% – Operating costs (220) (239) +8% – Litigation and conduct (4) (54) +93% Total operating expenses (224) (293) +24% Other net expenses (5) (26) +81% Loss before impairment (408) (458) +11%
Slide 48: Exchange rates and share count information
Exchange rates and share count information QoQ % YTD % YoY % Exchange rates Sep-23 Jun-23 Dec-22 Sep-22 change change change Period end – USD/GBP 1.22 1.27 1.21 1.12 (4)% 1% 9% YTD average – USD/GBP 1.24 1.23 1.24 1.26 1% - (2)% 3 month average – USD/GBP 1.27 1.25 1.17 1.18 2% 9% 8% Period end – EUR
Slide 49: 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