Barclays Plc · LSE:BARC
Barclays — IPO Roadshow (March 2015)
56 slides from Barclays's IPO roadshow presentation, Mar 9, 2015
Slide 1: Barclays PLC Fixed Income Investor Presentation 2014 Full Year Results
Free Writing Prospectus Filed Pursuant to Rule 433 Reg. Statement No. 333-195645 Barclays PLC Fixed Income Investor Presentation 2014 Full Year Results 3 March 2015
Slide 2: Financial highlights
Financial highlights Increased adjusted pre-tax profits by 12% – Core up 3%, Non-Core losses down 24% Costs excluding CTA £16.9bn, ahead of £17bn guidance 1 Building capital: CET1 ratio 10.5% and BCBS leverage ratio 3.8% Core business performed well with PBT of £6.7bn and RoE of 9.2% (10.9% ex-CTA)
Slide 3: Performance Overview
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Performance Overview
Slide 4: Summary Group financials: Adjusted profits up 12%
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Summary Group financials: Adjusted profits up 12% Year ended – December (£m) 2013 2014 Financial performance Income 27,896 25,728 • Adjusted profit before tax increased by 12% to £5.5bn as PCB Impairment
Slide 5: Strengthening key financial metrics
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Strengthening key financial metrics (£bn) Dec-13 Sep-14 Dec-14 Highlights Total assets 1,344 1,366 1,358 • Continued strengthening of all key balance sheet metrics Balance • Good progress on capital posi
Slide 6: Core business performing well
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Core business performing well Highlights Year ended – December (£m) 2013 2014 Financial performance Income 25,603 24,678 • PBT up 3% at £6.7bn: Impairment (2,171) (2,000) – PCB and Barclaycard profits up
Slide 7: Continued shrinkage and capital return in Non-Core
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Continued shrinkage and capital return in Non-Core Year ended – December (£m) 2013 2014 Highlights – Businesses 1,498 1,101 • Loss before tax reduced by 24% to £1,180m as – Securities and Loans 642 117 i
Slide 8: Capital & Leverage
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Capital & Leverage
Slide 9: Good progress on CET1 ratio towards 2016 Transform target
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Good progress on CET1 ratio towards 2016 Transform target Fully loaded (FL) CRD IV CET1 ratio progression 1 RWA reduction (£bn) CET1 40 42 41 Capital (9%) +120bps Spain c.16bps 2 o/w Spain (£5bn) 2 >11%
Slide 10: RWAs: Well managed to support business growth and returns
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING RWAs: Well managed to support business growth and returns RWAs (£bn) Highlights • RWAs reduced by £40.6bn, or £46bn including the sale of the Spanish businesses, reflecting excellent progress on the rund
Slide 11: Barclays Non-Core: Outperforming on RWA
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Barclays Non-Core: Outperforming on RWA RWA reduction bridge (£bn) RWA by type (£bn) Operational risk and DTA Securities and loans 1 Derivatives Businesses 110 110 19 11 81 5 75 Target = 80 75 2 19 5 Spa
Slide 12: Continued progress on the transition towards our 'target' end-state capital structure
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Continued progress on the transition towards our ‘target’ end-state capital structure Evolution of capital structure Fully loaded CRD IV capital position • Fully loaded CRD IV CET1 ratio at 10.3% (10.2%
Slide 13: We intend to manage our CET1 capital ratio to mitigate against distribution restrictions
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING We intend to manage our CET1 capital ratio to mitigate against the risk of mandatory distribution restrictions 1 CET1 requirements (as at 1 January except FY14) • Mandatory restrictions to discretionary
Slide 14: Leverage ratio progression ahead of plan
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Leverage ratio progression ahead of plan Leverage ratio progression 1 Leverage exposure reduction (£trn) 1 T1 Capital 41 45 46 (9%) BCBS 270 impact +30bps >4% 1.36 1.35 1.32 3.7% 1.23 3.4% 3.0% Dec-131 J
Slide 15: Steady progression on leverage ratio
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Steady progression on leverage ratio BCBS leverage exposure1 (£bn) Highlights L&A and other assets 2 Derivatives • Leverage exposures during Q4 14 decreased by £91bn to £1,233bn SFTs Undrawn commitments
Slide 16: Liquidity & Funding
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Liquidity & Funding
Slide 17: Transition towards a holding company capital and funding model
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Transition towards a holding company capital and funding model 1 Expected creditor hierarchy during transition Barclays position • Barclays has started to issue capital and term senior unsecured debt out
Slide 18: Barclays PLC Parent company accounts
PERFORMANCE CAPITAL & LIQUIDITY LIQUIDITY & & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING FUNDING Barclays PLC Parent company accounts Barclays PLC Parent Company Balance Sheet Extract from notes to Parent Company Balance Sheet Balance sheet 46 Barclays PLC (the Parent Company) 20
Slide 19: Proxy Total Loss Absorbing Capacity (TLAC)
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING 1 Proxy Total Loss Absorbing Capacity (TLAC) (£bn) Dec-14 • Proactive transition towards a HoldCo funding and capital model positions us well to meet potential future PRA transitional Common Equity Tier
Slide 20: Balance sheet is conservatively funded
PERFORMANCE CAPITAL & LIQUIDITY LIQUIDITY & & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING FUNDING Balance sheet is conservatively funded Balance sheet structure -£1.3tn (excluding BAGL), 31 Dec 14 Derivatives, 438 Derivatives, 438 Derivative assets and liabilities matched Matched
Slide 21: Maintaining a robust liquidity position
PERFORMANCE CAPITAL & LIQUIDITY & APPENDIX ASSET QUALITY CREDIT RATING OVERVIEW LEVERAGE FUNDING Maintaining a robust liquidity position, with pool well in excess of internal and external minimum requirements High quality liquidity pool (£bn) Key messages Cash & Deposits at Central Banks Government
Slide 22: Continue to access diverse wholesale funding sources
PERFORMANCE CAPITAL & LIQUIDITY LIQUIDITY & & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING FUNDING Continue to access diverse wholesale funding sources across multiple products, currencies and maturities Wholesale funding by product (as at 31 December 2014) Key Messages • Overall s
Slide 23: Asset quality
PERFORMANCE CAPITAL & LIQUIDITY & APPENDIX ASSET QUALITY CREDIT RATING OVERVIEW LEVERAGE FUNDING Asset quality
Slide 24: Continued strong asset quality
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Continued strong asset quality Impairment charge (£m) Highlights • Credit impairment charges improved 8% to £2bn, reflecting lower impairments in PCB and Africa Banking 8% • PCB benefitted from the impro
Slide 25: Group impairment improved 29%, with positive trends across businesses
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Group impairment improved 29%, with positive trends across businesses Retail loan loss rate (bps) Highlights Dec-13 Dec-14 • Declining Loan Loss Rate (LLR) trend 332 308 across the Group reflecting Barcl
Slide 26: Reduced exposure to Eurozone periphery
PERFORMANCE CAPITAL & LIQUIDITY & ASSET ASSET QUALITY QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING 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 been disposed of as of 2 Ja
Slide 27: Risk – Minimising potential headwinds
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Risk – Minimising potential headwinds Passing stress tests – stressed CET1 ratios • Barclays has always maintained internal stress tests • Barclays passed both the PRA and EBA stress tests in 2014, Barcl
Slide 28: Credit ratings
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Credit ratings 28 | Barclays Full Year 2014 Fixed Income Investor Presentation
Slide 29: Barclays' credit ratings remain strong and in line with peers'
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Barclays’ credit ratings remain strong and in line with peers’ As at 3 March 2015 Key Messages Barclays Bank • Current ratings reflect Barclays’ “strong franchise”, Barclays PLC PLC “diverse revenue stre
Slide 30: Rating agencies evolving approach to bank ratings
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Rating agencies evolving approach to bank ratings S&P • 3 February 2015 announcement placed the OpCo ratings of most UK, German and Austrian banks on ‘CreditWatch with Negative implications’ to reflect t
Slide 31: Barclays manages and reserves for potential rating actions in the liquidity pool
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Barclays manages and reserves for potential rating actions in the liquidity pool Contractual credit rating downgrade exposure Key messages (as at 31 December 2014) Contractual outflows Total cumulative c
Slide 32: Summary
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Summary • Diversified international bank focused on delivering improved and more sustainable returns Business model • Concentrating on high growth opportunities where we have competitive advantage, elimi
Slide 33: Appendix
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Appendix
Slide 34: Repositioning and simplifying Barclays
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Repositioning and simplifying Barclays Rightsizing and focusing the Investment Bank Establishing a dedicated Non-Core unit and a new Personal and Corporate Banking business Allocating capital to growth b
Slide 35: 2016 Transform targets
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING 2016 Transform targets 2016 Target 2014 1 Capital CRD IV FL CET1 ratio >11.0% 10.5% 1 Group Leverage Leverage ratio >4.0% 3.8% Dividend Payout ratio 40-50% 38% 2 Returns Adjusted RoE >12% 10.9% Barclays
Slide 36: Simpler, focused and balanced structure
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Simpler, focused and balanced structure Barclays Group Personal and Africa Investment Barclays Non-Core Barclaycard Corporate Banking Banking Bank (BNC) PBT £2,885m PBT £1,339m PBT £984m PBT £1,377m LBT
Slide 37: Reducing and reallocating RWAs to drive growth and returns
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Reducing and reallocating RWAs to drive growth and returns 2013 post-resegmentation estimate 2013 pre-resegmentation (£bn) 2016 guidance (£bn) (£bn) 1 Leverage exposure £1.4tn £1.4tn c.£1.1tn RWAs £436bn
Slide 38: Core Investment Bank: Building on competitive advantages
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Core Investment Bank: Building on competitive advantages Core Investment Bank Non-Core Investment Bank RWAs: c.£120bn RWAs: c.£90bn Leverage exposure: c.£490bn Leverage exposure: c.£340bn Global equities
Slide 39: Retail and Corporate
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Retail and Corporate 1 1 Profit before tax of Core business: FY13 Profit before tax of Core business: FY14 Personal and Corporate Investment Personal Banking Bank and Corporate Banking Investment Retail
Slide 40: PCB: Profits up 29%
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING PCB: Profits up 29% Year ended – December (£m) 2013 2014 Financial performance Income 8,723 8,828 • Total income increased 1% to £8.8bn due to balance growth and improved savings margins in Personal Impa
Slide 41: Barclaycard: Profits up 13%
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Barclaycard: Profits up 13% Year ended – December (£m) 2013 2014 Financial performance Income 4,103 4,356 • Strong customer number and asset growth across all Impairment (1,096) (1,183) geographies Total
Slide 42: Africa Banking: Constant currency profits up 13%
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Africa Banking: Constant currency profits up 13% 1 2013 Financial performance Year ended – December (£m) 2013 Constant 2014 Currency Constant currency basis Income 4,039 3,435 3,664 • PBT increased by 13
Slide 43: Investment Bank: New strategy underpinning Q4 performance
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Investment Bank: New strategy underpinning Q4 performance Year ended – December (£m) 2013 2014 Q4 13 Q4 14 % Change – Banking 2,485 2,528 639 638 – – Markets 6,134 5,040 1,146 1,028 (10%) – Other (23) 20
Slide 44: Group cost targets
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Group cost targets 1 1 Group cost guidance (£bn) Core cost targets (£bn) Core cost target 10% 18.7 Original Guidance = £17.5bn 8% Revised Guidance = £17bn 16.9 c.16.3 16.4 15.1 <14.5 FY13 FY14 FY15 Targe
Slide 45: Operating expenses significantly reduced
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Operating expenses significantly reduced Operating expenses progress – excluding CTA (£bn) Highlights • Transform saves: FTE reductions from Investment Bank front 18.7 office restructuring, 0.6 branch ne
Slide 46: Core operating costs
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Core operating costs Core operating expenses (£bn) Highlights Staff costs Other operating costs Costs to achieve Transform • Core costs (excluding CTA) decreased by 8% year-on-year driven by Transform sa
Slide 47: Investment Bank: Downward trend in compensation charge
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Investment Bank: Downward trend in compensation charge Investment Bank operatingexpenses (£m) Investment Bank – Compensation actions 6,598 • Headcount down by 2,100 net CTA 1 190 8% 6,225 • Incentive awa
Slide 48: Core income – growth in NII
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Core income – growth in NII Core income year ended – December • Improved performance in PCB and Barclaycard income 2013 2014 (£m) PCB grew NII 7% driven by lending and deposit growth Personal and Corpora
Slide 49: Wholesale funding composition as at December 2014
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Wholesale funding composition as at December 2014 1 >1 month >3 months >6 months >9 months Total >1 year but >2 years As at 31 December 2014 (£bn) 1 month but 3 but 6 but 12 but 12 but 5 >5 years Total 1
Slide 50: Reduced exposure to the Eurozone
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING Reduced exposure to the Eurozone As at 31 December 2014 (£m) Spain Italy Portugal Ireland Total Sovereign 108 1,716 105 37 1,966 Financial institutions 14,043 485 7 3,175 17,710 Corporate 1,149 1,128 531
Slide 51: UK Banking Act now includes a statutory bail-in power
PERFORMANCE CAPITAL & LIQUIDITY & ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW LEVERAGE FUNDING In line with the European Bank Recovery & Resolution Directive the UK Banking Act now includes a statutory bail-in power Overview Considerations for Bondholders • Statutory bail-in of debt is a key part
Slide 52: Contact – Debt Investor Relations Team
Contact – Debt Investor Relations Team Richard Caven Sofia Lonnqvist +44 (0)20 7116 2809 +44 (0)20 7116 5716 richard.caven@barclays.com sofia.lonnqvist@barclays.com Website: barclays.com/barclays-investor-relations.html 52 | Barclays Full Year 2014 Fixed Income Investor Presentation
Slide 53: Disclaimer
Disclaimer Important Notice The information, statements and opinions contained in this document do not constitute a public offer under any applicable legislation or an offer to sell or solicitation of any offer to buy any securities or financial instruments or any advice or recommendation with respe
Slide 54: 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 55: Disclaimer (continued)
Disclaimer (continued) • Adjusted total operating expenses represents operating expenses excluding the provisions for PPI and interest rate hedging redress; provision for ongoing investigations and litigation relating to Foreign Exchange; and goodwill impairment. A reconciliation to IFRS is presente
Slide 56: 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