Barclays Plc · LSE:BARC
Barclays — Q1 2014 Earnings Presentation
32 slides from Barclays's earnings presentation, May 6, 2014
Slide 1: Barclays PLC 2014 Q1 Interim Management Statement
Barclays PLC 2014 Q1 Interim Management Statement 6 May 2014
Slide 2: Tushar Morzaria, Barclays Group Finance Director
Tushar Morzaria Barclays Group Finance Director
Slide 3: Performance highlights
FINANCIAL DIVISIONAL CONCLUSION PERFORMANCE PERFORMANCE OVERVIEW Performance highlights • Resilient performance across the traditional banking franchises despite FX headwinds, partially offset by significant weakness in FICC income Income • Increase in net interest income driven by volume growth wit
Slide 4: Steady performance by traditional banking franchises, offset by weakness in FICC
FINANCIAL DIVISIONAL CONCLUSION PERFORMANCE PERFORMANCE OVERVIEW Steady performance by traditional banking franchises, offset by weakness in FICC Three months ended – March (£m) 2013 2014 Financial Performance Income 7,734 6,650 • Income reflected growth in UK Retail and Barclaycard, offsetting weak
Slide 5: Continued strong financial fundamentals, providing a platform for long-term sustainable returns
FINANCIAL DIVISIONAL CONCLUSION PERFORMANCE PERFORMANCE OVERVIEW Continued strong financial fundamentals, providing a platform for long-term sustainable returns (£bn) Dec-13 Mar-14 • Key balance sheet and capital measures continued to trend in the right direction Leverage exposure1 1,365 1,326 Total
Slide 6: Well positioned for future minimum anticipated requirements
FINANCIAL DIVISIONAL CONCLUSION PERFORMANCE PERFORMANCE OVERVIEW Well positioned for future minimum anticipated requirements Barclays Regulatory Date Exceeds Mar-14 benchmark required target Fully-loaded On Targeting fully-loaded CET1 ratio Capital 9.6% 10.4%2 2019 CET1 ratio1 Track of >10.5% in 201
Slide 7: Net interest income - driven by volume growth
FINANCIAL DIVISIONAL CONCLUSION PERFORMANCE PERFORMANCE OVERVIEW Net interest income - driven by volume growth Customer assets and liabilities £bn 630 654 655 • Average customer assets plus liabilities were up 4% YoY, driven principally by increases in deposits 350.0 Customer liabilities1,2 330.0 31
Slide 8: Asset quality trends remain favourable
FINANCIAL DIVISIONAL CONCLUSION PERFORMANCE PERFORMANCE OVERVIEW Asset quality trends remain favourable Impairment charge and CRLs £m • Annualised loan loss rate of 45bps, down from peak of 156bps 800 2.9% 2.6% 0.035 CRL as % of gross L&A 700 600 0.03 0.025 in 2009 • Impairment in Corporate Banking
Slide 9: On track to better 2014 cost guidance of £17.5bn
FINANCIAL DIVISIONAL CONCLUSION PERFORMANCE PERFORMANCE OVERVIEW On track to better 2014 cost guidance of £17.5bn £bn Operating expenses progress (£m) Staff costs Other opex Q113 Q114 Net CTA Anticipated savings from operating operating decrease spend to Costs to achieve expenses¹ expenses¹ YoY date
Slide 10: UK RBB – improving income and cost efficiency
FINANCIAL DIVISIONAL CONCLUSION PERFORMANCE OVERVIEW UK RBB – improving income and cost efficiency Three months ended - March 2013 (£m) 2014 (£m) Financial Performance Income 1,067 1,145 • Continued growth in income of 7% driven by strong growth in balances YoY Impairment (89) (80) Operating expense
Slide 11: Barclaycard – continued growth with strong returns
FINANCIAL DIVISIONAL CONCLUSION PERFORMANCE OVERVIEW Barclaycard – continued growth with strong returns Three months ended - March 2013 (£m) 2014 (£m) Financial Performance Income 1,153 1,184 • Continued growth in UK and International businesses Impairment (303) (311) • Income grew by 3% from busine
Slide 12: Corporate – turnaround continues with significant increase in profitability
FINANCIAL DIVISIONAL CONCLUSION PERFORMANCE OVERVIEW Corporate – turnaround continues with significant increase in profitability Three months ended - March 2013 (£m) 2014 (£m) Financial Performance Income 772 722 • Improved UK income performance offset by £58m reduction in the fair value loan portfo
Slide 13: Africa, Europe RBB, Wealth – turnaround or repositioning plans underway
FINANCIAL DIVISIONAL CONCLUSION PERFORMANCE OVERVIEW Africa, Europe RBB, Wealth – turnaround or repositioning plans underway Africa RBB: Three months ended - March 2013 (£m) 2014 (£m) Performance reflecting strong market positions across Africa Income 668 567 • Rand depreciation of 30% year on year
Slide 14: Investment Bank – continued tough FICC environment
FINANCIAL DIVISIONAL CONCLUSION PERFORMANCE OVERVIEW Investment Bank – continued tough FICC environment Three months ended - March 2013 (£m) 2014 (£m) Financial Performance FICC 2,073 1,230 • Total income declined 28% driven primarily by a 41% reduction in FICC and further decline in Exit Quadrant a
Slide 15: Investment Bank – quarterly income trend
FINANCIAL DIVISIONAL CONCLUSION PERFORMANCE OVERVIEW Investment Bank – quarterly income trend Q114 Business Mix Equity and Investment Banking (£m) (£m) -5% YoY • Equities and Prime Services income decreased 5% YoY with declines in 825 Flat YoY cash equities and equity derivatives as prior year benef
Slide 16: Conclusion
FINANCIAL DIVISIONAL CONCLUSION PERFORMANCE OVERVIEW Conclusion Focus on balance sheet optimisation, cost reduction and returns Capital and leverage ratios strengthened Cost programme delivering results Strength in traditional banking franchises 16 | Barclays Q1 2014 Results | 6 May 2014
Slide 17: Legal Disclaimer
Legal 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
Slide 18: Appendix
Appendix
Slide 19: Adjusted Return on Average Equity (RoE)
Adjusted Return on Average Equity (RoE) RoE1 – Three months ended – March 2013 RoE2 – Three months ended – March 2014 7.6% Group 6.4% 11.0% UK RBB 12.4% 17.0% Barclaycard (13.0%) 18.6% 4.9% Corporate Banking 7.0% 1.2% Africa RBB 2.6% (61.9)% Europe RBB (13.0)% 7.6% Wealth and Investment Management 5
Slide 20: Impact of costs to achieve Transform
Impact of costs to achieve Transform Three months ended – March 2014 Costs to achieve Profit Return on Cost: income Adjusted performance measures by business, Transform before tax average equity1 ratio excluding costs to achieve Transform (£m) (£m) (%) (%) UK RBB 31 391 13.5 59 Barclaycard 13 436 19
Slide 21: Broad contribution by diverse businesses
Broad contribution by diverse businesses Income Profit Before Tax Three months ended – March (£m) 2013 2014 2013 2014 UK RBB 1,067 1,145 299 360 Barclaycard 1,153 1,184 363 423 Corporate Banking 772 722 183 260 Africa RBB 668 567 81 101 Europe RBB 176 146 (462) (88) Wealth and Investment Management
Slide 22: Net interest margins and volumes
Net interest margins and volumes UK Barclay- Corporate Africa Europe Wealth Total1 RBB card Banking RBB RBB and IM Three months ended – March 2014 Net interest margin (%) 1.32 8.19 1.24 3.39 0.77 1.06 1.79 Of which customer margin (%) 1.11 8.39 1.12 2.91 0.42 0.99 1.62 Three months ended – December
Slide 23: Analysis of Net Interest Income
Analysis of Net Interest Income Three months ended – March (£m) 2013 2014 Customer assets 1,723 1,788 Customer liabilities 786 825 Total RBB, Corporate Banking and Wealth & IM customer income 2,509 2,613 Product structural hedge 220 191 Equity structural hedge 72 103 Other (26) (22) Total RBB, Corpo
Slide 24: Balance sheet funding
Balance sheet funding Total balance sheet as at 31 March 14 of £1.3tn (excl. BAGL5) Highlights (£bn) Derivatives, 328 Derivatives, 328 Derivative assets and liabilities largely matched Matched funding £708bn Trading portfolio assets and reverse repurchase agreements Reverse repo, 187 Repo, 196 a
Slide 25: Continued strengthening of our leverage ratio
Continued strengthening of our leverage ratio PRA leverage exposure1 (£bn) Highlights L&A and other assets2 Derivatives • Estimated PRA leverage ratio improved further as a result SFTs Undrawn commitments of regulatory capital accretion and additional deleveraging PRA leverage ratio1 • As at 31 Marc
Slide 26: Transitioning towards our 'target' end-state capital structure
Transitioning towards our ‘target’ end-state capital structure Evolution of capital structure Fully loaded CRD IV capital position • Fully loaded (FL) CRD IV CET1 ratio increased by 37bps to 9.6%, demonstrating good progress towards our 10.5% target in 2015 ≥17% 1.4% P2A – CET1 • The ratio was well
Slide 27: Continued progress on RWAs
Continued progress on RWAs CRD IV RWAs (£bn) (3.0) (1.1) (1.6) (0.7) 0.2 435.6 429.2 429.4 31 December Book size Acquisition and Book quality Foreign exchange Other 2 31 March 2014 2013 disposals movement 1 1 Foreign exchange movement does not include movements for IMM, Modelled Market Risk of Exit
Slide 28: RWAs by Business
RWAs by Business (£bn) December 2013 March 2014 UK RBB 44.1 44.0 Barclaycard 40.5 41.2 Corporate Banking 70.5 67.9 Africa RBB 22.8 21.9 Europe RBB 16.2 15.8 Wealth and Investment Management 17.3 17.2 Investment Bank 221.6 218.9 Head Office and Other Operations 2.5 2.5 Group 435.6 429.4 28 | Barclays
Slide 29: Capital Resources
Capital Resources1 (£m) 31 December 2013 31 March 2014 Shareholders' equity (excluding non controlling interests) per the balance sheet 55,385 56,393 Less: Other equity instruments (recognised as AT1 capital) (2,063) (2,063) Adjustment to retained earnings for foreseeable dividends (640) (411) Minor
Slide 30: Estimated CRD IV Capital and RWAs – notes
Estimated CRD IV Capital and RWAs – notes Estimated Capital Ratios are based on/subject to the following: CRD IV as implemented by the Prudential Regulation Authority The new Capital Requirements Regulation and amended Capital Requirements Directive have implemented Basel 3 within the EU (collective
Slide 31: Estimated CRD IV Capital and RWAs – notes
Estimated CRD IV Capital and RWAs – notes Estimated Capital Ratios are based on/subject to the following: RWAs • The PRA has confirmed Barclays model approvals under CRD IV, with certain provisions reflecting relevant changes to the rules and guidance; the impact of which has been reflected in our C
Slide 32: Continued reduction in legacy assets, we now focus on reducing our Exit Quadrant portfolios
Continued reduction in legacy assets, we now focus on reducing our Exit Quadrant portfolios (£bn) 94 15 20 11 18 56 34 11 5 23 34 18 Dec-12 Legacy Derivative Mar-14 CRD IV RWAs reduction efficiencies CRD IV RWAs Portfolio assets excluding derivatives1 Pre CRD-IV rates Corporate/monoline derivatives