Barclays Plc · LSE:BARC
Barclays — Investor Day (June 2011)
58 slides from Barclays's investor day presentation, Jun 15, 2011
Slide 1: Barclays PLC 2011 Investor Seminar
Barclays PLC 2011 Investor Seminar 15 June 2011 Corporate and Investment Banking Wealth Achieving our targets
Slide 2: Corporate and Investment Banking
Corporate and Investment Banking Jerry del Missier and Rich Ricci Co-Chief Executives of Corporate and Investment Banking
Slide 3: Session structure
Session structure • Introduction • Barclays Capital • Barclays Corporate • Synergies • Conclusion
Slide 4: Session structure
Session structure • Introduction • Barclays Capital • Barclays Corporate • Synergies • Conclusion
Slide 5: Barclays Capital 2010 results
Barclays Capital 2010 results Top line Income (£bn) Fixed Income, Currencies Cost: Net Income 8.8 65% and Commodities (ex-own credit) Equities and Prime Services 2.0 Risk Weighted Assets £191bn Investment Banking 2.2 Return on Equity(1) 16% Principal Investments 0.3 Total 13.3 (1) Equity calculated
Slide 6: We have a market leading client franchise in FICC
We have a market leading client franchise in FICC Barclays Capital market share By region By client type Rank 1 3-4 4-5 Rank 1 1-2 3-4 3-4 11% 11% 10% 9% 9% 9% 7% EMEA Americas APAC Insurers Banks Hedge Asset Funds Managers Source: Oliver Wyman, Coalition
Slide 7: We will continue to strengthen leadership positions in our balanced FICC business
We will continue to strengthen leadership positions in our balanced FICC business FICC market share by business area (2010) Maintain and develop Manage size and Build on market leading positions “Flow Monster” positioning capitalize on returns 10% 10% 9% 8% 7% 6% 4% 4% Flow Rates Flow Credit FX Comm
Slide 8: We have positioned businesses that will be impacted by Basel 2.5/3
We have positioned businesses that will be impacted by Basel 2.5/3 in a way that limits future downside • Controlled risk-reward position in residential business Relative return profile for Securitisation (2010) • Focused on quality to generate higher returns than Securitised peers 1.3x products • R
Slide 9: We are seeing strong momentum in Investment Banking and Equities
We are seeing strong momentum in Investment Banking and Equities Americas Equities market share Investment Banking global cash fee share 9.6% 2009 3.9% Lehman 8.6% Q1 2011 share in 2007 7.1% 3.8% 3.6% 1.5% Primary Secondary 2008 2010 Source: Dealogic, Bloomberg
Slide 10: In Investment Banking we have posted impressive wins across the board
In Investment Banking we have posted impressive wins across the board Cash revenue by business area Mergers & Acquisitions Equity Capital Markets Leveraged Finance Debt Capital Markets CAGR 26% CAGR 60% CAGR 92% CAGR 130% 2008 2010 2008 2010 2008 2010 2008 2010 Proportion of Barclays Capital IBD rev
Slide 11: In Equities, we are seeing client momentum build
In Equities, we are seeing client momentum build and are on track to monetise this further Equities broker votes ranking - Europe #10 #9 #16 2009 2010 Q1 2011 UK equity and equity-linked issuance as bookrunner May 2010 (last twelve months) May 2011 (last twelve months) 22% 12% Barclays Capital 11% B
Slide 12: In Prime Services, we are leaders in fixed income
In Prime Services, we are leaders in fixed income and see a material upside in equity finance Client Balances Equity Finance competitor revenues (Total) (Q4 2010, £m) 240 200% Barclays Capital 120 0 2008 2010 #1 Ranked OTC Derivatives Clearing Provider Notional value of IRS portfolio cleared for a b
Slide 13: Continuing to strengthen our Asian presence
Continuing to strengthen our Asian presence is key to establishing a truly global franchise Revenue contribution of regions (2010) Asia Pacific build out plans • Goal: Top 5 Equity franchise in Asia Asia Pacific 9% 15% • Build local presence in Japan, HK, India (live as of May), Korea (H2 11), Equit
Slide 14: In summary, we have realistic plans to deliver our revenue growth targets
In summary, we have realistic plans to deliver our revenue growth targets Projected Revenue Growth (£bn) Equities Investment Banking 0.2-0.3 0.9-1.2 0.1-0.2 0.9-1.2 0.4-0.5 0.3-0.4 0.5-0.6 0.3-0.4 Americas EMEA APAC Total Americas EMEA APAC Total
Slide 15: We will continue to manage capital on a proactive basis
We will continue to manage capital on a proactive basis as we have done in the past Risk weighted assets (£bn) For same period (2007-2010) 300 Growth in RWAs 7% Growth in top-line income 54% 200 Growth in PBT ex own credit 162% 100 0 Dec-07 Dec-08 Dec-09 Dec-10 Mar-11
Slide 16: This includes the continued sell-down of legacy assets
This includes the continued sell-down of legacy assets Credit market exposures (£bn) Activities in Plan 27 • Accelerated sell-down of Protium 24 assets following recent restructure 18 • Targeted reductions in illiquid credit assets • Continued divestment of commercial real estate portfolio • Further
Slide 17: Which will further reduce legacy asset RWAs by 2013
Which will further reduce legacy asset RWAs by 2013 Expected legacy asset RWAs (£bn) Equivalents 9 29 Published 29 5 14 RWAs Basel 2.5 Sell-down Basel 3 Pro forma Dec 10 (no impact) and other impact Basel 3 management (end 2013) actions
Slide 18: We are confident in our ability to manage RWAs to absorb Basel impacts
We are confident in our ability to manage RWAs to absorb Basel impacts Pro forma RWA requirement due to changes in regulation (£bn) 218 60 278 75 (53) 300 Q3 10 IMS (42) - (62) 66 206 40 Equivalents 15 191 246 250 - 270 Published 2010 Basel 2.5 Pro forma Basel 3 Sell-down Pro forma Basel 2.5 and oth
Slide 19: Session structure
Session structure • Introduction • Barclays Capital • Barclays Corporate • Synergies • Conclusion
Slide 20: We re-positioned Barclays Corporate to capture the significant opportunity
We re-positioned Barclays Corporate to capture the significant opportunity Banking revenue pools (2009, £bn) • The global corporate banking market Retail Banking represents a significant opportunity for Barclays Investment 67% 64% Banking • We established Barclays Corporate as a 89% distinct entity
Slide 21: While the UK franchise remains strong, Europe and Rest of the World generated high impairment and cost
While the UK franchise remains strong, Europe and Rest of the World generated high impairment and cost Barclays Corporate results (2010, £m) 2,974 1,909 1,696 Rest of World (1) 9% 10% • Revenues driven largely by our strong UK franchise Europe 14% 37% • Costs up due to good-will write-down in Russia
Slide 22: Our international strategy is to utilise existing Barclays capabilities
Our international strategy is to utilise existing Barclays capabilities to drive revenue while optimising costs Penetration of subsidiaries of Barclays Revenues from existing Barclays Capital Capital relationships relationships 25% 2x 12% 2010 2015 Target 2010 2015 Target Europe and Rest of World co
Slide 23: Spain is an attractive market and we have taken decisive action
Spain is an attractive market and we have taken decisive action • Actively managing underperforming portfolio Spain impairments (£m) via dedicated team of over 100 risk specialists 2008 2009 2010 Q1 2011 De-risked in Madrid 0 the • Proactively selling off biggest exposures in -450 portfolio portfoli
Slide 24: Consolidating our strong position in the UK is central to our strategy
Consolidating our strong position in the UK is central to our strategy going forward UK market share of primary banking UK PBT (£m) relationships (%, 2010) 1,062 30 Barclays 14% 25 Corporate 838 734 20 15 10 5 0 1st 2nd 3rd 4th Others 2008 2009 2010 Source: FAME
Slide 25: We are investing in capabilities to support our UK and international strategies
We are investing in capabilities to support our UK and international strategies • Developing market leading capabilities Estimated revenue uplift and addressing gaps Cash • Building Barclays.net to consolidate +70% Manage- electronic channel proposition ment • New product offerings include liquidity
Slide 26: We are actively managing capital
We are actively managing capital Barclays Corporate RWAs (£bn) Disciplined RWA utilisation 80 -8% • Freed up capital to deploy towards higher return businesses 40 • Improved the quality and maintained the size of overall loan book 0 2009 2010 UK funding balance (£bn) Closed the UK funding gap • Sign
Slide 27: Session structure
Session structure • Introduction • Barclays Capital • Barclays Corporate • Synergies • Conclusion
Slide 28: We are well placed to capitalise on revenue synergies
We are well placed to capitalise on revenue synergies between Barclays Capital and Barclays Corporate Cross-sales between Barclays Capital Revenues from ECM and DCM transactions and Barclays Corporate with Barclays Corporate clients Barclays Corporate products to 16% Barclays Capital CAGR clients >2
Slide 29: With our investments nearly complete, our cost base has now stabilised
With our investments nearly complete, we believe that our cost base has now stabilised Total Cost Base (£m) 6,000 Barclays Corporate Barclays Capital 3,000 0 H1 H2 H1 H2 H1 H2 2 x Q1 2008 2008 2009 2009 2010 2010 2011
Slide 30: Cost synergies will enable us to deliver £250-300m in run-rate efficiencies
Cost synergies between the businesses will enable us to deliver £250-300m in run-rate efficiencies Target cost savings (£m) 250 - 300 300 150 0 Shared Off-shoring Cost Target cost infrastructure, management savings spans and layers
Slide 31: Session structure
Session structure • Introduction • Barclays Capital • Barclays Corporate • Synergies • Conclusion
Slide 32: Our commitments - Corporate and Investment Banking
Our commitments - Corporate and Investment Banking Barclays Corporate Barclays Capital Returns Returns • 11% global RoE • 15% RoE on Basel 3 basis • 14% UK RoE Income Income • Strong growth in cash management, • Gaining market share in Equities and trade finance and cross-sales Investment Banking •
Slide 33: Barclays Wealth
Barclays Wealth Thomas L. Kalaris, Chief Executive
Slide 34: A highly attractive opportunity
A highly attractive opportunity Revenue and PBT (£bn) Industry Trends Latin America Asia Pacific ME & Africa Europe • Demographically driven growth Japan North America CAGR „10 –„15 • Fragmented competitive landscape 161.9 9.3% 8.2% 1.5% • Industry in flux 121.8 112.8 102.3 11.4% • High quality reve
Slide 35: A record of delivery
A record of delivery Net income and PBT (£m) Net income PBT CAGR +9% 1,271 • Established in 2005 from legacy 911 businesses • Transformation from “banking plus” to full service wealth manager CAGR +16% 78 143 • Significant expansion in footprint 2005(1) 2009 • Grew from 27th largest wealth manager C
Slide 36: An ambition to build a top tier wealth manager
An ambition to build a “top tier” wealth manager Objectives Market leading reputation for performance and service Material increase in scale Meaningful contribution of Wealth to Barclays PBT
Slide 37: A focused definition of top tier
A focused definition of top tier • HNW private client orientation Segmentation • Significant scale in target segment / Scale • “Large boutique” player • Leading edge behavioural finance techniques • Focus on “intelligent performance” Proposition • Technologically-enabled approach to client service •
Slide 38: A differentiated proposition
A differentiated proposition 1. A step change in the client experience What 2. A significant increase in productive capacity Leading Institutional Seamless Robust and Integrated edge How calibre client client scalable client investment advisors processes execution knowledge approach
Slide 39: The strategy delivers a one firm approach
The strategy delivers a “one firm” approach 1. Infrastructure and platforms 2. Referrals and coverage 3. Expertise and execution • Banking and payments utility • Retail network referrals • Research • Cards engine • Bilateral arrangements with • Distribution • Shared services construct investment ban
Slide 40: Project Gamma is a programme of investment to deliver against the ambition
Project Gamma is a programme of investment to deliver against the ambition Investment profile (£m) Net income and return trajectory (£bn) 350 2.3 CAGR+15% 1.5 2010 2011 2012 2013 2014 Total 2010 2013 Client facing professionals RoE 9% 17-18% Infrastructure
Slide 41: Investment is focused on growing the HNW segment and proposition
Investment is focused on growing the HNW segment and proposition Net income bridge (£bn) HNW Businesses 2.3 1.5 2010 UK US Global Other 2013 Markets Deposits £bn 45 50-60 AuM £bn 119 170-200 Margin ~90bps >90bps
Slide 42: The first 15 months of delivery are on track versus plan
The first 15 months of delivery are on track versus plan Hiring and Productivity Platform 15 Month Hiring Record US 82 • Extensive data remediation UK 84 • New client on-boarding tool Global HNW 119 • Roll-out of CRM platform Total 285 • Deployment of portfolio management 2009-10 YoY Productivity Up
Slide 43: Financial performance has been strong
Financial performance has been strong Financial Performance (£m) HNW Business Performance Net income 2010 v 09 1,512 PBT Net income Growth(%) 1,271 UK 25% US 35% 143 163 2009 2010 Gamma spend - £112m Global 32% HNW YoY Net income +19% YoY% Growth PBT +14% Client Assets 15% Client assets +8% HNW RMs
Slide 44: Execution and growth in new markets has been robust
Execution and growth in new markets has been robust INDIA JAPAN • One of the fastest growing JAPAN • Second largest Wealth “new” markets market globally • Broad-based Barclays Tokyo CHINA • Historically foreign brands footprint INDIA have been unsuccessful • Launched Wealth onshore Hong Kong Mumbai
Slide 45: Our commitments
Our commitments Income growth Mid-teen compound annual growth Cost management <80% CIR Strong returns 17-18% RoE £250-300bn in client assets World class franchise Strong net liability position High quality earnings stream
Slide 46: Achieving our targets
Achieving our targets Chris Lucas, Barclays Finance Director
Slide 47: Income – growth initiatives £4.3-6.4bn
Income – growth initiatives RBB BarCap £1.5-2.0bn additional income £1.8-2.4bn additional income by 2013 from Equities and IB by 2013 BarCorp Wealth £0.5-1.0bn additional income £0.5-1.0bn additional income by 2013 by 2013 £4.3-6.4bn additional income target
Slide 48: Maintain focus on risk-adjusted income
Maintain focus on risk-adjusted income Total income (£m) Average DVaR (£m) (RHS) Total impairment (£m) 8,516 8,568 7,719 8,065 100 8,000 7,599 7,399 7,040 6,765 6,291 80 6,000 60 4,000 40 2,000 20 2,309 2,247 1,658 1,857 1,508 1,572 1,218 1,374 921 0 0 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111
Slide 49: Key operating expenses initiatives
Key operating expenses initiatives • Cost reduction principles – One Barclays – Reducing complexity – Synergies and economies of scale • Up to £2bn of potential savings identified by 2013 relative to original run rate plan – At least £1bn to be delivered by 2013
Slide 50: Operating expenses
Operating expenses Non performance costs – pro-forma Target £16.8bn £16.5bn Cost savings target Bank levy Investment/ underlying £1bn £0.4bn growth 2010 2013
Slide 51: Risk Weighted Assets pro forma under Basel 3
Risk Weighted Assets pro forma under Basel 3 RWAs (£bn) 97 489 (46) 40 438 398 Basel 2 2010 Market risk Basel 2.5 Basel 2.5 2011 Basel 3 add-ons Further management Basel 3 2013 including equivalents actions
Slide 52: Capital path
Capital path Pro forma Core Tier 1 ratios under Basel 3 at 31 December 2013 Consensus retained earnings 2.8% Outstanding warrants 11.2% 10.8% 0.2% Net RWA 11.2% effect from Unrecognised pension 10.0% Basel 2.5/3 Organic RWA liability (2.1%) growth/ (0.5%) additional dividends Basel 2 2010 Basel 3 20
Slide 53: Roadmap to 13% RoE by business
Roadmap to 13% RoE by business 2010 RoE (1) by business 2013 targets at 10% CT1 15% BarCap 15-16% (-7%) BarCorp 10-11% 12% RBB - Africa 13-14% 11% RBB - UK 14-15% 13% Barclays 13% RBB - Barclaycard 16-17% 0% RBB - Europe 4-5% 9% Wealth 17-18% 13% Target (1) Published RoE adjusted for 10% CT1 capital
Slide 54: Citizenship
Citizenship Bob Diamond, Barclays Chief Executive
Slide 55: Appendix
Appendix Chris Lucas, Barclays Finance Director
Slide 56: Notes
Notes Slide – Risk Weighted Assets pro forma under Basel 3 • 2013 pro forma RWAs are presented for illustrative purposes only. • The Basel 3 RWA add-ons are estimates based on current interpretation of Basel 3 proposals and include RWAs for counterparty credit risk, securitisation deductions and 250
Slide 57: Economic assumptions
Economic assumptions 2011 Interest Rates (%) Inflation (CPI) (YoY %) GDP Growth (YoY %) UK 0.75 4.5 1.7 US 0.25 3.2 2.8 Eurozone 1.75 2.8 1.7 South Africa 6.00 4.9 3.7 2012 Interest Rates (%) Inflation (CPI) (YoY %) GDP Growth (YoY %) UK 1.25 2.5 2.1 US 1.00 2.1 3.3 Eurozone 2.25 1.9 1.7 South Afric
Slide 58: Economic assumptions
Economic assumptions 2013 Interest Rates (%) Inflation (CPI) (YoY %) GDP Growth (YoY %) UK 2.25 2.0 2.4 US 2.00 2.5 2.8 Eurozone 2.75 1.8 2.0 South Africa 8.50 5.8 4.5 2014 Interest Rates (%) Inflation (CPI) (YoY %) GDP Growth (YoY %) UK 3.00 2.0 2.5 US 2.75 2.5 2.8 Eurozone 3.00 1.8 2.0 South Afric