Barclays Plc · LSE:BARC
Barclays — Q1 2021 Earnings Presentation
55 slides from Barclays's earnings presentation, Apr 30, 2021
Slide 1: Barclays PLC Q1 2021 Results
Barclays PLC Q1 2021 Results 30 April 2021 | Barclays Q1 2021 Results | 30 April 2021
Slide 2: Jes Staley, Barclays Group Chief Executive
Jes Staley Barclays Group Chief Executive | Barclays Q1 2021 Results | 30 April 2021
Slide 3: Strong Q121 performance driven by continued robust CIB income and reduced impairment charges
Strong Q121 performance driven by continued robust CIB income and reduced impairment charges Q121 Financial highlights Diversified strategy continuing to deliver with a record quarterly Group PBT of £2.4bn1 delivering a RoTE of 14.7% £5.9bn Income Continued robust CIB performance with record income
Slide 4: Diversified banking model provides resilience through economic cycles
Diversified banking model provides resilience through economic cycles Diversified by Diversified by Diversified by customer and client geography income type 14% 21% 34% 31% Q121 FY20 Q121 Group income 52% Group income Group income 13% by customer1 by geography2 by type 36% 69% 6% 9% 10% 5% 40% 60% 5
Slide 5: Barclays is well positioned to monetise growth in capital markets activity
Barclays is well positioned to monetise growth in capital markets activity Global equity market capitalisation1 and bonds Q121 Markets and Banking fee income has increased outstanding2 has increased 44% since 2018 55% since 2019 +44% +55% $174tn $176tn vs. 2018 vs. Q119 Markets & £3.1bn £3.0bn Banki
Slide 6: Ambition to be a net zero bank by 2050
Ambition to be a net zero bank by 2050 Ambition to be a net zero bank by 2050 • Already at net zero emissions from our own operations (Scope 1 and 2) • Announced in March 2020 our commitment to align all our financing to the goals and timelines of the Paris Agreement – Emissions for the clients we f
Slide 7: Consumer spending recovered during Q121 while mortgage activity remained robust
Consumer spending recovered during Q121 while mortgage activity remained robust Merchant acquiring Cards spending Mortgages turnover3 Change in monthly spend YoY (%) Change in monthly turnover YoY (%) Mortgage application values (£bn) UK credit US credit UK debit and Corporate SME cards1 cards credi
Slide 8: Growth opportunities underscored by strong partnerships
Growth opportunities underscored by strong partnerships • Diversifying partnerships to balance the mix between airlines and retail portfolios – recently announced Gap Inc., AARP, and Emirates card program relationships US consumer bank • Broadening product offering, with Gap Inc. relationship coveri
Slide 9: Payments represents a c.£900m income growth opportunity over three years
Payments represents a c.£900m income growth opportunity for Barclays over three years Payments account for 8% of Group total income CAGR FY20-FY23 Lending is all BUK, Corporate • Integrated payments solution, focused on UK and CC&P lending c.20% £406m Unified Payments2 SMEs, Corporate, e-commerce, a
Slide 10: Barclays has built significant new payment capabilities in an evolving landscape
Barclays has built significant new payment capabilities in an evolving landscape Previously: enabling payments Now: enabling commerce Business intelligence Payment acceptance Fraud management Processing Payment Multichannel Processing Settlement acceptance tokenisation Dashboard Invoices Merchant Me
Slide 11: Barclays Unified Payments
Barclays Unified Payments Growth will be concentrated in UK SME, e-commerce and Europe as part of an integrated payments solution UK SME growth through digital An integrated payments solution UK and European expansion through capabilities and partnership channels for corporates in the UK and Europe
Slide 12: Digitisation of Commerce through Barclays Payments Ecosystem
Digitisation of Commerce through Barclays Payments Ecosystem Creating a multiway value-exchange ecosystem by connecting millions of consumers and businesses Barclays Cubed: Next-gen Commerce Wholesale payment fees c.1.9m 49 digitally engaged businesses using 92% consumers using iPortal adoption Next
Slide 13: Tushar Morzaria, Barclays Group Finance Director
Tushar Morzaria Barclays Group Finance Director | Barclays Q1 2021 Results | 30 April 2021
Slide 14: Q121 Group highlights
Q121 Group highlights Strong Q121 performance driven by continued robust CIB income and reduced impairment charges Financial performance • Income decreased 6% reflecting continued headwinds in BUK and CC&P. CIB income was broadly stable with `` strong performance in Equities and Banking in particula
Slide 15: Ongoing strength in CIB income while consumer businesses impacted by the pandemic
Ongoing strength in CIB income while consumer businesses continued to be impacted by the pandemic (£m) 6,283 5,900 5,338 1,704 5,204 Income -8% YoY reflecting deposit margin compression from lower 4,941 1,576 Barclays UK interest rates and lower interest earning lending (IEL) balances, partly offset
Slide 16: Unsecured lending remains subdued, while mortgage performance and yield curve helpful
Unsecured lending remains subdued, while strong mortgage performance and the steeper yield curve are helpful Unsecured lending Structural hedge BUK: Lower -34% YoY 1.5 UK cards End 14.9 5Y GBP sonia 12.9 12.1 11.2 Net Receivables 9.9 swap rate (%) 1.0 (£bn) Q120 Q220 Q320 Q420 Q121 0.5 CC&P: Lower -
Slide 17: Costs increased 10%, with a 61% cost: income ratio
Costs increased 10%, with a 61% cost: income ratio (£m) 3,826 • Costs increased to £3.6bn, driven by higher variable 3,578 Bank Levy compensation accruals reflective of improved returns and 3,467 299 continued investment in businesses, partly offset by foreign 3,263 3,330 exchange movements and effi
Slide 18: Q121 impairment charge significantly reduced to £55m
Q121 impairment charge significantly reduced to £55m (£m) Drivers of Q121 impairment charge 2,115 Impairment charges decreased to £77m from reduced unsecured portfolio exposures, in part driven by lockdown Barclays UK measures 481 Group loan − UK cards 30 and 90 day arrears rates were 1.6% and loss
Slide 19: Improved MEVs not reflected in Q121 ECL charge
Improved MEVs not reflected in Q121 ECL charge, with continued management adjustment for macro uncertainty Sensitivity to current macroeconomic variables MEVs used in Q121 results Current MEVs Indicative change in MEVs • Q121 baseline UK and US macroeconomic variables (MEVs) were rolled forward from
Slide 20: Mar-21 coverage ratios materially in line with Dec-20
Mar-21 coverage ratios on respective portfolios materially in line with Dec-20 Credit cards, unsecured loans and other retail lending Wholesale loans Gross exposure (£m) Impairment allowance (£m) Coverage ratio Gross exposure (£m) Impairment allowance (£m) Coverage ratio 60,180 46,513 43,237 4,884 5
Slide 21: Mar-21 unsecured lending coverage ratios materially in line with Dec-20
Mar-21 unsecured lending coverage ratios materially in line with Dec-20 UK cards US cards Gross exposure (£m) Impairment allowance (£m) Coverage ratio Gross exposure (£m) Impairment allowance (£m) Coverage ratio 16,457 11,911 10,494 1,736 1,980 1,833 10.5% 16.6% 17.5% 22,516 17,114 15,699 2,059 2,45
Slide 22: Q121 Barclays UK
Q121 Barclays UK RoTE of 12.0% with resilient NIM of 2.54% in a challenging operating environment Income decreased 8% YoY reflecting the challenging Q120 Q220 Q320 Q420 Q121 Financial performance • operating environment 1,704 1,467 1,550 1,626 1,576 Income − Impact of lower unsecured lending balance
Slide 23: Q121 Barclays International
Q121 Barclays International RoTE of 17.7%, driven by reduced impairment and resilient operating performance Financial performance • Income decreased 5% YoY Balanced income profile across − Income diversified by business and businesses and geographies Income geography £4.4bn Q120: £4.6bn • 8% depreci
Slide 24: Q121 Barclays International: Corporate & Investment Bank
Q121 Barclays International: Corporate & Investment Bank RoTE of 17.9% driven by continued strength in income and reduced impairment • CIB income remained broadly stable YoY at £3.6bn, Financial performance Income despite the 8% depreciation of average USD vs. GBP GBP basis (£m) USD basis4 ($m) Inco
Slide 25: Q121 Barclays International: Consumer, Cards & Payments
Q121 Barclays International: Consumer, Cards & Payments RoTE of 16.5% driven by lower impairment, whilst continuing to invest in the business Q120 Q220 Q320 Q420 Q121 Financial performance • Income decreased 22% YoY reflecting lower 1,027 US cards balances and reduced payments 694 876 848 805 Income
Slide 26: Q121 Head Office
Q121 Head Office Q120 Q420 Q121 • Negative income of £75m including: − Hedge accounting losses Income (65) (75) − Funding costs on legacy capital (£m) (171) instruments − Negative treasury items (80) − Expect c.£300m negative income in FY21 Costs (16) (absent resumption of the ABSA (264) (£m) divide
Slide 27: CET1 ratio decreased 50bps QoQ
CET1 ratio decreased 50bps QoQ CET1 ratio was 350bps above the MDA hurdle of 11.1% as at Mar-21 QoQ CET1 ratio1 movements 23bps 42bps 23bps 55bps 13bps • PVA relief: 14bps • IFRS 9 relief amortisation: 9bps 15.1% 14.9% 14.7% 14.7% 14.7% 14.8% 14.6% 14.6% Dec-20 Reduction of Share Rebased 1-Jan-21 At
Slide 28: CET1 ratio flightpath to target range of 13-14%
CET1 ratio flightpath to target range of 13-14% 13-14% c.40bps 11bps 14.6% Potentially occurring 14.9% 14.2% 14.1% 14.1% in Q221, subject to completion of PRA review 1 Mar-21 Reversal of software Apr-21 scheduled Rebased CET1 ratio Organic Headwinds Capital CET1 target range amortisation pension con
Slide 29: High quality and conservatively positioned liquidity and funding position
High quality and conservatively positioned liquidity and funding position Comfortably exceeding minimum requirements Conservative loan: deposit ratio2 Loans3 (£bn) Deposits3 (£bn) LDR Liquidity Coverage Ratio (LCR) 83% 82% 71% 69% 169% 160% 162% 161% Minimum requirement: 100% 481 499 395 416 31-Dec-
Slide 30: Outlook: Barclays continues to benefit from diversification
Outlook: Barclays continues to benefit from diversification Returns Expect meaningful year-on-year RoTE improvement in 2021 The CIB franchise remains well positioned while the income outlook for the consumer Income businesses remains uncertain, despite early signs of spend recovery Expect full year
Slide 31: Appendix
Appendix | Barclays Q1 2021 Results | 30 April 2021
Slide 32: Strong balance sheet underpinning returns potential
Strong balance sheet underpinning returns potential Q121 metrics Group targets Group RoTE Group RoTE/profitability Cost efficiency 14.7% >10% RoTE over time, with <60% cost: income ratio over meaningful year on year time improvement in 2021 Cost efficiency 61% cost: income ratio CET1 ratio Capital d
Slide 33: Barclays investment proposition
Barclays investment proposition Our scale, geographic reach and diversification make us a universal bank, delivering financial expertise around the world 1 2 3 4 Resilience through Strong balance sheet Growth opportunities Sustainable impact diversification supporting returns We are a British univer
Slide 34: Barclays' climate journey
Barclays’ climate journey March 2020 • Announced ambition to be net zero • Updated restrictions for sensitive energy sectors May 2020 • Climate resolution passed at Annual General Meeting November 2020 • Update on methodology for aligning our financed emissions • Targets set in Power and Energy sect
Slide 35: Split of payments income by division
Split of payments income by division Divisional split of FY20 payments linked income Split of FY20 CC&P income CC&P BUK CIB £1,656m £464m £800m £392m Unified Payments1 £406m £406m £406m Unified Payments1 Private Bank £707m CC&P FY20 Barclays Cubed: Next- income gen Commerce £482m £247m £235m W
Slide 36: Structural hedge and interest rate sensitivity
Structural hedge and interest rate sensitivity Structural hedge program update • The Group’s combined gross equity and product structural hedge contribution was £0.3bn in Q121 • The combined structural hedge notional as at Mar-21 was £192bn with an average duration of 2.5 to 3 years • Expect gross s
Slide 37: Retail portfolios in the UK and US continue to be prudently positioned
Retail portfolios in the UK and US continue to be prudently positioned FY19 H120 FY20 • Risk actions taken at pandemic outset to mitigate £143.3bn £145.1bn £148.3bn potential economic impact UK 67.9% 68.4% 67.6% • Mortgage balance growth achieved in lower LTV mortgage UK segments balance secured • 5
Slide 38: Wholesale exposures are diversified and well covered
Wholesale exposures are diversified and well covered, especially in selected vulnerable sectors Wholesale exposure as at FY20 (1.5% coverage ratio) • Well diversified portfolio across sector and geography FY20 Coverage • Majority of exposure (>65%) is to clients internally rated £18.7bn ratio(Q320)
Slide 39: Q121 TNAV movement
Q121 TNAV movement TNAV (pence per share) 1 4 10 3 2 2 1 1 269 267 Dec-20 Earnings Repurchase of Cash flow Currency FVOCI reserve Own credit Pension Other Mar-21 shares hedge reserve translation reserve remeasurement movements reserve • TNAV decreased by 2p to 267p due to: – 4p cash flow hedge reser
Slide 40: RWAs increased by £7.2bn QoQ
RWAs increased by £7.2bn QoQ QoQ RWA movements (£bn) 1.7 • RWAs increased £7.2bn QoQ to £313.4bn, reflecting: 5.1 − £5.1bn increase in Market Risk 0.7 RWAs driven by increased 2.4 client and trading activity 0.6 − £2.4bn increase in Credit Risk RWAs from net lending, largely driven by increased CIB
Slide 41: IFRS 9 transitional relief as at Mar-21 at c.70bps
IFRS 9 transitional relief as at Mar-21 at c.70bps Constructive regulatory action in Q220 gave greater relief Prudently positioned CET1 ratio for stage 1 and 2 impairments in the event of stage migration • 100% transitional relief for modified impairment post Dec-19 applied until end-2021 14.6% • Tr
Slide 42: Constructive regulatory actions in 2020
Constructive regulatory actions in 2020 Many regulatory actions in place for the medium term Expected timeline and beyond FY20 FY21 FY22 FY23 FY24 Q1 Q2 Q3 CET1 requirement • Modification of Pillar 2A requirement1 CET1 capital • IFRS 9 transitional relief on new COVID-19 related expected credit loss
Slide 43: CET1 ratio target in the range of 13-14%
CET1 ratio target in the range of 13-14% Continue to target appropriate headroom above MDA hurdle Illustrative evolution of minimum CET1 requirements and buffers • Barclays intends to manage its CET1 ratio in the Dec-201: Mar-211: range of 13-14%, to enable it to support 15.1% 14.6% Target: customer
Slide 44: Group leverage position prudently managed
Group leverage position prudently managed Minimum leverage requirements and buffers under the UK regime • Headroom to minimum leverage requirement of 120bps in Q1, while the RWA based CET1 ratio remains our primary regulatory constraint Dec-201: Mar-211: UK Spot: 5.3% UK Spot: 5.0% • The Group curre
Slide 45: Pension deficit reduction contributions
Pension deficit reduction contributions CET1 ratio headwinds from pension reduction contributions fully incorporated into prudent capital plan and CET1 target • As at 31 December 2020, the Group’s IAS 19 pension surplus across all schemes was £1.5bn (December 2019: £1.8bn). The UK Retirement Fund (U
Slide 46: Barclays is set up to continue serving clients based in the EU
Barclays is set up to continue serving clients based in the EU EU subsidiary operational with client on-boarding substantially complete • Barclays has been able to provide undisrupted services in the EU footprint to service key markets European Union (EU) throughout the Brexit transition period and
Slide 47: Financial results tables
Financial results tables | Barclays Q1 2021 Results | 30 April 2021
Slide 48: Q121 other items of interest
Q121 other items of interest Three months ended (£m) Mar-21 Mar-20 Litigation & Conduct Litigation & Conduct across divisions (33) (10) Group Other net income Fair value gain on Barclays investment in the Business Growth Fund 120 - Head Office 48 | Barclays Q1 2021 Results | 30 April 2021
Slide 49: Q121 Group
Q121 Group Three months ended (£m) Mar-21 Mar-20 % change Income 5,900 6,283 -6% Impairment charges (55) (2,115) +97% – Operating expenses (3,545) (3,253) -9% – Litigation and conduct (33) (10) Total operating expenses (3,578) (3,263) -10% Other net income 132 8 Profit before tax 2,399 913 +163% Tax
Slide 50: Q121 Barclays UK
Q121 Barclays UK Three months ended (£m) Mar-21 Mar-20 % change – Personal Banking 923 968 -5% – Barclaycard Consumer UK 315 436 -28% – Business Banking 338 300 +13% Income 1,576 1,704 -8% – Personal Banking (22) (134) +84% – Barclaycard Consumer UK (36) (301) +88% – Business Banking (19) (46) +59%
Slide 51: Q121 Barclays International
Q121 Barclays International Three months ended (£m) Mar-21 Mar-20 % change – CIB 3,594 3,617 -1% – CC&P 805 1,027 -22% Income 4,399 4,644 -5% – CIB 43 (724) – CC&P (21) (885) +98% Impairment releases / (charges) 22 (1,609) – Operating expenses (2,438) (2,219) -10% – Litigation and conduct (21) - Tot
Slide 52: Q121 Barclays International: Corporate & Investment Bank
Q121 Barclays International: Corporate & Investment Bank Three months ended (£m) Mar-21 Mar-20 % change – FICC 1,204 1,858 -35% – Equities 932 564 +65% Markets 2,136 2,422 -12% – Advisory 163 155 +5% – Equity capital markets 243 62 +292% – Debt capital markets 453 418 +8% Banking fees 859 635 +35% –
Slide 53: Q121 Barclays International: Consumer, Cards & Payments
Q121 Barclays International: Consumer, Cards & Payments Three months ended (£m) Mar-21 Mar-20 % change Income 805 1,027 -22% Impairment charges (21) (885) +98% – Operating expenses (552) (529) -4% – Litigation and conduct (20) - Total operating expenses (572) (529) -8% Other net income 8 6 +33% Prof
Slide 54: Q121 Head Office
Q121 Head Office Three months ended (£m) Mar-21 Mar-20 % change Income (75) (65) -15% Impairment charges - (25) – Operating expenses (71) (11) – Litigation and conduct (9) (5) -80% Total operating expenses (80) (16) Other net income 123 2 Loss before tax (32) (104) +69% Attributable loss (25) (99) +
Slide 55: 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