Barclays Plc · LSE:BARC
Barclays — FY2016 Earnings Presentation
57 slides from Barclays's earnings presentation, Feb 23, 2017
Slide 1: Barclays PLC 2016 Financial Results
Barclays PLC 2016 Financial Results 23 February 2017
Slide 2: Jes Staley, Group Chief Executive Officer
Jes Staley Barclays Group Chief Executive Officer
Slide 3: Strong evidence of strategic progress in 2016
Strong evidence of strategic progress in 2016 • Barclays UK 19.3% Strong Core business 9.4% Core RoTE1 • Barclays International 8.0% Africa sell-down First stake sold and separation terms agreed Non-Core rundown Accelerated progress, closing ahead of schedule Focused on generating attractive and Gro
Slide 4: Announcing Non-Core closure six months early at June 2017
Announcing Non-Core closure six months early at June 2017 RWAs (£bn)1 Businesses RWAs (£bn)2 Significant deals announced Dec-14 Dec-16 As at or completed 30 June • IB offices in nine countries 2017 • Index business3 • Asia wealth • Southern European cards 18 7 110 • Italy retail • France retail 75 •
Slide 5: Africa sell-down on track with consistent capital guidance
Africa sell-down on track with consistent capital guidance Separation £765m phased 1 terms agreed contributions to BAGL agreed1 Major milestone Regulatory Approval for further sell-down 2 in the approval requested from relevant regulators simplification of Barclays Capital Guidance of >75bps 3 guida
Slide 6: Strong Core business performance in 2016
Strong Core business performance in 2016 Core Average allocated Income Cost: income ratio Profit before tax RoTE tangible equity £22.0bn 61% £6.4bn 9.4% £41.3bn 7% 1% 4% 1.8% £4.1bn Barclays UK Barclays International UK consumer and business bank differentiated by Diversified transatlantic wholesale
Slide 7: Barclays is a major contributor to the UK economy
Barclays is a major contributor to the UK economy Provided c.£70bn of Provided c.£19bn of lending to UK mortgage lending to businesses c.90,000 households Involved in c.160 UK Processed c.260bn of banking deals, with payments for UK c.£250bn of value consumers and businesses 24m Barclays UK customer
Slide 8: Strong Core business performance in 2016
Strong Core business performance in 2016 Core Average allocated Income Cost: income ratio Profit before tax RoTE tangible equity £22.0bn 61% £6.4bn 9.4% £41.3bn 7% 1% 4% 1.8% £4.1bn Barclays UK Barclays International UK consumer and business bank differentiated by Diversified transatlantic wholesale
Slide 9: Operational and technological strength will be a key advantage
Operational and technological strength will be a key advantage Barclays UK Barclays International Wealth, Barclaycard Corporate & Consumer, Personal Entrepreneurs Consumer Investment Cards & Banking & Business UK Bank Payments Banking Shared Platforms World-class operational architecture Technology
Slide 10: Diversification provides balance and stability
Diversification provides balance and stability c.50% c.35% Currency & income Geography income Customers & Corporate & Clients Consumer Investment Bank businesses1 £10.5bn Product £11.4bn income spectrum income Current accounts Wealth & Investments Payments Corporate banking Capital markets Mortgages
Slide 11: Driving cost efficiency towards our target
Driving cost efficiency towards our target Group costs (£bn)1 • 1% reduction in Group incentive awards granted in 2016 19.5 • £0.4bn charge due to 17.6 changes to 2016 compensation awards Group cost: 16.6 income ratio 15.0 target 13.4 <60% 2 2013 2014 2015 2016 2016 Core costs 61% Core cost: income
Slide 12: Capital position approaching our end-state
Capital position approaching our end-state Strong capital accretion in 2016… …and approaching our end-state CET1 level2 Discretionary actions and dividends • Non-Core restructuring • Preference share redemptions • Compensation adjustment • Real estate restructuring • Dividends paid End-state 12.3-12
Slide 13: Approaching the end of Barclays’ restructuring
Approaching the end of Barclays’ restructuring 1 Non-Core rundown Closing Non-Core six months early at 30 June 2017 2 Africa sell-down On track with significant milestone reached Building shared 3 Driving operational reliability, scalability and efficiency architecture 4 Capital strength Capital pos
Slide 14: Tushar Morzaria, Group Finance Director
Tushar Morzaria Barclays Group Finance Director
Slide 15: Our strategy is on track with encouraging progress in 2016
Our strategy is on track with encouraging progress in 2016 Core RoTE of 9.4%, with Barclays UK RoTE of 19.3% Robust Core returns and Barclays International RoTE 8.0%1 CET1 ratio of 12.4%, with 100bps ratio accretion Strong capital generation in 2016 and 80bps in Q416 £22bn reduction in RWAs in 2016
Slide 16: FY16 Statutory Group results
FY16 Statutory Group results Year ended – December (£m) 2016 2015 % change FY16 performance metrics Income 21,451 22,040 (3%) • Profit before tax increased 182% to £3.2bn Impairment (2,373) (1,762) (35%) − £2.9bn reduction in notable items to a £0.4bn loss – Operating expenses (14,565) (13,723) (6%)
Slide 17: FY16 and Q4 Core financials excluding notable items
FY16 and Q4 Core financials excluding notable items Year ended – December (£m) Three months ended (£m) 2016 2015 % change Dec-16 Dec-15 % change Income 22,035 20,502 7% 5,365 4,691 14% Impairment (2,251) (1,628) (38%) (606) (522) (16%) – Operating expenses (including bank levy) (13,390) (12,532) (7%
Slide 18: Generating a consistently strong Core RoTE on an increasing tangible equity base
Generating a consistently strong Core RoTE on an increasing tangible equity base Core return on average allocated tangible equity excluding notable items 13.4% 14.0% 11.3% 11.0% 11.0% 10.7% 10.7% 10.4% 9.8% 8.7% 7.1% 6.3% 5.8% Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 RoTE RoTE excluding UK bank
Slide 19: Barclays UK: Robust RoTE of 17.1% as PBT increased 7%
Barclays UK: Robust RoTE of 17.1% as PBT increased 7% Business performance excluding notable items Q416 performance metrics Three months ended (£m) Dec-16 Dec-15 % change • Increased PBT and positive jaws delivered an improved RoTE of 17.1% – Personal Banking 934 945 (1%) • Income was maintained at
Slide 20: Barclays UK: Resilient NIM and prudent growth in balances
Barclays UK: Resilient NIM and prudent growth in balances Income (£m) – Three months ended Dec-16 Dec-15 % change Stable income Net interest income (NII) 1,502 1,509 - • Broadly stable NIM of 3.56% in Q416, with NII maintained at £1.5bn – Net interest margin (NIM) 3.56% 3.58% − Growth in balances an
Slide 21: Barclays UK: Growth through leadership in digital banking
Barclays UK: Growth through leadership in digital banking Significant growth in digital banking year-on-year Annual unsecured lending originated and fulfilled digitally £bn Barclays 5.7m 2.5 Mobile Mobile Banking +21% Banking users Over £2bn unsecured lending 9.5m 2.0 originated and fulfilled digita
Slide 22: Barclays International: Encouraging performance in CIB and strong growth in CC&P
Barclays International: Encouraging performance in CIB and strong growth in Consumer, Cards & Payments Business performance excluding notable items Q416 performance metrics Three months ended (£m) Dec-16 Dec-15 % change • Income increased by 21% to £3.6bn highlighting the strong momentum in the – Co
Slide 23: Barclays International: Corporate & Investment Bank
Barclays International: Corporate & Investment Bank Income increase demonstrating franchise strength Business performance excluding notable items Q416 performance metrics Three months ended (£m) Dec-16 Dec-15 % change • Strongest Q4 income performance in three years, with improved performance in bot
Slide 24: Barclays International: Consumer, Cards & Payments
Barclays International: Consumer, Cards & Payments Strong income and balance growth Business performance excluding notable items Q416 performance metrics Three months ended (£m) Dec-16 Dec-15 % change • PBT increased 4%, generating an RoTE of 13.2% Income 1,061 871 22% • Continued growth across all
Slide 25: Non-Core: Accelerated rundown throughout 2016
Non-Core: Accelerated rundown throughout 2016 Business performance excluding notable items Q416 vs. Q316 performance metrics Three months ended Year ended • Loss before tax increased to £788m in the quarter primarily due to (£m) lower other net income and increased negative income Dec-16 Sep-16 2016
Slide 26: Intend to close Non-Core six months early at June 2017
Intend to close Non-Core six months early at June 2017 with c.£25bn of RWAs RWAs – Rundown and guidance (£bn)1 Income – Quarterly progression (£m) 110 44 10 32 c.25 17 7 12 Q415 Q116 Q216 Q316 Q416 8 8 9 5 (68) Dec-13 Sep-16 Dec-16 Jun-17 (159) (242) Guidance (344) (419) Businesses Derivatives Secur
Slide 27: Non-Core 2017 loss before tax expected to be approximately £1bn
Non-Core 2017 loss before tax expected to be approximately £1bn, weighted towards the first half of the year Income (£m) Costs (£m) FY17 FY18 FY14 FY15 FY16 Guidance Guidance 3,014 2,546 Businesses £485m Income ex. Securities & loans £(245)m ESHLA FV Derivatives £(1,011)m 1,831 1,299 971 c.£400m res
Slide 28: Underlying stable trends reflect prudent approach to credit risk management
Underlying stable trends reflect prudent approach to credit risk management Prudent risk management Retail CRL % of gross loans and advances (L&A) 104% 119% • Remain well-positioned, having maintained a consistently prudent risk CRL 91% 79% 70% 74% appetite since the financial crisis coverage • Impa
Slide 29: Aligning income statement recognition more closely with performance awards
Aligning income statement recognition more closely with performance awards Reduction of 1% in incentive awards granted, but changes to 2016 compensation awards increased the income statement charge by £395m % Increase in current year bonus Acceleration of income (£m) 2016 2015 change 1 / reduction i
Slide 30: Strong liquidity metrics and good progress in MREL funding
Strong liquidity metrics and good progress in MREL funding and liability management LCR1 well above minimum requirements HoldCo MREL at 19.8% as at Dec-162 28.0% 2022 requirements subject to BoE review by end- G-SIB: 1.5% 2020 including the recapitalisation of P2A 24.0% CCB: 2.5% G-SIB: 1.5% P2A: 4%
Slide 31: Continued CET1 ratio progression in 2016
Continued CET1 ratio progression in 2016 Fully Loaded CET1 ratio1 Current expected capital requirements3 330bps 12.3-12.8% Expected 0.8% regulatory 1.5-2.0% Management buffer CET1 level: 10.8% Stress capacity4 (incl. management 2.5% Capital conservation buffer): c.4.0-4.5% - Defined UK pension schem
Slide 32: Our strategy is on track with encouraging progress
Our strategy is on track with encouraging progress Secret Benefits of diversification by customer, product and geography showing through Core business delivering attractive returns on a materially higher equity base Intend to close Non-Core six months early at June 2017 with c.£25bn of RWAs On track
Slide 33: Barclays PLC 2016 Financial Results
Barclays PLC 2016 Financial Results 23 February 2017
Slide 34: Appendices
Appendices
Slide 35: Notable Items – FY15 and FY16
Notable Items – FY15 and FY16 2016 Barclays Notable items (£m) Barclays UK Head Office Core Non-Core Group International Total income – Own credit - - (35) (35) - (35) – Gain on disposal of Barclays’ share of Visa Europe 151 464 - 615 - 615 Limited Litigation and conduct – Provisions for UK customer
Slide 36: FY16 and Q4 Group financials excluding notable items
FY16 and Q4 Group financials excluding notable items Year ended – December (£m) Three months ended (£m) 2016 2015 % change Dec-16 Dec-15 % change Income 20,871 21,114 (1%) 4,946 4,623 7% Impairment (2,373) (1,762) (35%) (653) (554) (18%) – Operating expenses (14,565) (14,056) (4%) (3,812) (3,451) (1
Slide 37: FY16 Barclays UK and Barclays International financials
FY16 Barclays UK and Barclays International financials excluding notable items Barclays UK Barclays International Year ended (£m) 2016 2015 % change Year ended (£m) 2016 2015 % change Income 7,366 7,343 - – Corporate & Investment Bank 10,533 9,954 6% Impairment (896) (706) (27%) – Consumer, Cards &
Slide 38: FY16 Corporate & Investment Bank and Consumer, Cards & Payments financials
FY16 Corporate & Investment Bank and Consumer, Cards & Payments financials excluding notable items Corporate & Investment Bank Consumer, Cards & Payments Year ended (£m) 2016 2015 % change Year ended (£m) 2016 2015 % change Markets 5,279 4,844 9% Income 3,998 3,297 21% – Credit 1,185 824 44% Impairm
Slide 39: FY16 and Q416 Head Office financials
FY16 and Q416 Head Office financials ex. notable items Year ended – December (£m) Three months ended (£m) 2016 2015 Dec-16 Dec-15 Income 138 (92) (55) (110) Impairment - - - - – Operating expenses (135) (272) 15 (64) – Bank levy (2) (8) (2) (8) – Litigation and conduct (27) (14) (1) 6 Total operatin
Slide 40: FY16 and Q416 Africa Banking financials
FY16 and Q416 Africa Banking financials Year ended – December (£m) Three months ended (£m) 2016 2015 % change Dec-16 Dec-15 % change Income 3,746 3,414 10% 1,067 814 31% Impairment (445) (353) (26%) (105) (93) (13%) – Operating expenses (2,345) (2,091) (12%) (727) (501) (45%) – Bank levy (65) (50) (
Slide 41: Core income and margins – Q416
Core income and margins – Q416 Income (£m)1 – Three months ended Dec-16 Dec-15 % change • Core income increased 14% driven by a 31% increase in non-interest income – Barclays UK 1,502 1,509 - • Barclays UK NII was maintained at £1.5bn as growth in balances and – Barclays International2 1,110 991 12%
Slide 42: Barclays UK and Barclays International analysis
Barclays UK and Barclays International analysis Barclays UK – Q416 Barclays International – Q416 Split of income (£m) Split of impairment (£m) Split of income (£m) 12 387 50 1,061 1,176 934 934 507 118 Split of loans and advances to customers (£bn) Split of customer deposits (£bn) 1,354 15 16 50 139
Slide 43: Breakdown of RoTE by business – FY16
Breakdown of RoTE by business – FY16 Return on average tangible equity1 FY15 FY16 21.1% 19.3% 18.9% 19.1% 11.2% 9.4% 9.5% 8.0% 8.2% 5.8% 6.1% 4.4% Group Core 2 Barclays UK Barclays International Corporate & Consumer, Cards Investment Bank & Payments Average allocated tangible equity (£bn)1 48.1 49.0
Slide 44: Tangible Net Asset Value
Tangible Net Asset Value TNAV (pence per share) – Dec-15 to Dec-16 FY16 highlights TNAV per share increased 15p in the year to 290p 5 8 • Profit after tax contributed 8p per share to TNAV • Dividend distributions of £0.8bn in relation to a 3.5p final 290 dividend payment for 2015 and a 1p 2016 inter
Slide 45: Strong CET1 and leverage ratio progression
Strong CET1 and leverage ratio progression Fully Loaded CET1 ratio1 • The CET1 ratio increased to 12.4% (Dec-15: 11.4%) reflecting an increase in CET1 capital of £4.5bn to £45.2bn, despite RWAs increasing by £7bn to £366bn: – Increase in CET1 capital was largely driven by profits of £2.1bn generated
Slide 46: Common Equity Tier 1 ratio progression
Common Equity Tier 1 ratio progression CET1 ratio progression – Dec-15 to Dec-16 FY16 CET1 ratio drivers 0.2% CET1 ratio increased 100bps to 12.4% driven by an increase to capital of £4.5bn including: 0.8% 0.1% 0.3% 0.1% 12.4% • £2.1bn of profits generated during the period 0.6% 0.2% • £3.7bn increa
Slide 47: Managing evolving future minimum CET1 levels
Managing evolving future minimum CET1 levels Illustrative evolution of minimum CET1 requirements and buffers1 Minimum CRD IV CET1 requirement Mandatory distribution restrictions hurdle3 • New end-state expectation of 12.3-12.8% reflects: 2017 Pillar 2A CET1 requirement2 BoE stress test systemic refe
Slide 48: Managing capital position above mandatory distribution restrictions and stress test hurdles
Managing capital position above mandatory distribution restrictions and stress test hurdles1 Barclays’ expected MDA thresholds and systemic reference points for 2017 BoE stress test2 Minimum CRD IV CET1 requirement Distribution restrictions and management Future CET1 ratio = 2017 Pillar 2A CET1 requ
Slide 49: Manageable MREL requirements through proactive issuance
Manageable MREL requirements through proactive issuance1 HoldCo MREL position and requirements based on Nov-16 BoE policy statement1 HoldCo issuance plan of c.£10bn for 20172 Incremental • Our indicative MREL issuance for 2017 is c.£10bn of which HoldCo issuance we have already issued £4.7bn equival
Slide 50: Evolving CRD IV capital structure transitioning to HoldCo over time
Evolving CRD IV capital structure transitioning to HoldCo over time Illustrative evolution of CRD IV capital structure1 Well managed and balanced total capital structure 19.6% • Transitional and fully-loaded total capital ratios both increased by 80bps in Total capital ratio Q4 16 to 19.6% (Sep-16:
Slide 51: Continued strong leverage position
Continued strong leverage position Leverage ratio1 Highlights Leverage exposure (£bn) Q416 1,365 1,233 • The 40bps increase was mainly due to a £60bn decrease in the leverage 1,185 1,125 1,028 exposure, alongside a £2bn increase in CET1 capital • The decrease in leverage exposure reflects Non-Core r
Slide 52: High level of liquidity and conservative funding profile
High level of liquidity and conservative funding profile LCR1 continues to remain in prudential surplus Conservative and stable funding profile (£bn – excludes BAGL) Customer deposits Sub. Debt2 Secured term funding Short-term debt and other deposits Unsecured term funding 133% 131% 124% 125% £522bn
Slide 53: Progress on Group legal structure
Progress on Group legal structure Barclays PLC1 Barclays UK Barclays International constructs Divisional UK consumer and business bank Diversified transatlantic wholesale differentiated by scale and digital innovation and consumer bank Group Service Company Provides critical services to Barclays UK
Slide 54: Structural reform plan is on track achieving critical milestones as planned
Structural reform plan is on track achieving critical milestones as planned H2 2017 Group Service Company setup H1 2018 Legal entity separation Milestones completed Milestones completed Legal entity re-positioned and rated Barclays UK and Barclays International established as operating divisions
Slide 55: Ratings are a key strategic priority
Ratings are a key strategic priority Senior Long Term/ Rating priorities Fitch Standard & Poor’s Moody's Short Term ratings • Barclays is committed to maintaining solid investment grade ratings • We intend to create as much stability in the ratings Barclays PLC A BBB Baa2 of Barclays PLC and Barclay
Slide 56: Level 3 assets
Level 3 assets 31 December 2015 (£bn) 31 December 2016 (£bn) 0.5 Other Non current assets 6.0 classified as held for disposal ESHLA Derivative ESHLA FV assets 8.5 financial assets FV assets 8.5 Other £36.6bn 16.0 £27.0bn 20.6 Other 18.5 Financial assets 9.9 designated at fair value Trading 2.1 portf
Slide 57: Disclaimer
Disclaimer Important Notice 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 buy any securities or financial instruments, or any advice or recommendation with re