Slide 1: Barclays PLC H1 2021 Results
Barclays PLC H1 2021 Results 28 July 2021
Slide 2: Jes Staley, Barclays Group Chief Executive
Jes Staley Barclays Group Chief Executive
Slide 3: H121 performance reflects continued benefits of diversification during the pandemic
H121 performance reflects continued benefits of diversification during the pandemic and net impairment releases Income Costs Robust profitability Group PBT of £5.0bn delivering EPS of 22.2p and a RoTE of 16.4% £11.3bn £7.2bn Strong CIB Record H121 income in Investment Banking and Equities1, helping
Slide 4: Diversified model provides resilience through economic cycles
Diversified model provides resilience through economic cycles Diversified by income type Diversified by customer and client Diversified by geography 6% 15% 14% 34% 32% H121 H121 H121 Group income Group income 52% Group income by type by customer1 by geography2 66% 22% 33% 11% 9% 5% 34% NII 66% Non N
Slide 5: Barclays continues to support client activity in capital markets
Barclays continues to support client activity in capital markets Global equity market capitalisation1 and bonds H121 Global Markets and Investment Banking fee income outstanding2 has increased 53% since 2018 has increased 36% since 2019 +53% $188tn vs. 2018 $174tn £5.9bn Global £5.5bn Markets & £4.1
Slide 6: Signs of consumer spending recovery during Q221
Signs of consumer spending recovery during Q221 driven by lockdown easing while mortgage activity remained robust Cards spending Merchant acquiring turnover Mortgage applications Change in monthly spend vs. 20191 (%) Change in monthly turnover vs. 20192 (%) Mortgage application values (£bn) 11% 8% 1
Slide 7: Ambition in Payments of c.£900m income growth over three years
Ambition in Payments of c.£900m income growth over three years CAGR income H120 H121 growth ambition FY20-FY23 (£m) Total payments 783 901 +15% (+c.£900m) FY20: £1.7bn c.20% Unified Payments1,2 203 202 flat (+c.£300m) FY20: £406m2 H121 Group £10.4bn income1 £0.9bn £11.3bn Barclays Cubed: Next- gen C
Slide 8: Environmental and Social stewardship central to our strategy
Environmental and Social stewardship central to our strategy • Ambition to be a net zero bank by 2050 and committed to align all our financing to the goals and timelines of the Paris Agreement • Plan to extend BlueTrackTM, our emissions measurement and tracking tool, beyond Energy and Power, to cove
Slide 9: Strong H121 profitability, increased capital distributions to shareholders
Strong H121 profitability, increased capital distributions to shareholders H121 metrics Group targets over the medium term Returns Returns Cost efficiency Group RoTE 16.4% Group RoTE >10% Cost efficiency Expect to deliver a RoTE Cost: income ratio <60% Cost: income ratio 64% above 10% in 2021 Capita
Slide 10: Tushar Morzaria, Barclays Group Finance Director
Tushar Morzaria Barclays Group Finance Director
Slide 11: H121 Group highlights
H121 Group highlights • Income decreased 3% YoY, reflecting currency headwinds. Excluding the impact of FX, income increased YoY, reflecting the benefits of the Group’s diversified income streams Income Costs £11.3bn £7.2bn • Costs increased to £7.2bn, reflecting structural cost actions of £321m, hi
Slide 12: Q221 Group highlights
Q221 Group highlights • Income of £5.4bn, up 1% YoY despite a 13% depreciation of average USD against GBP Income Costs − Improved income from the consumer businesses and Head Office broadly offset by lower CIB income vs a strong £5.4bn £3.7bn Q220 comparative Q220: £5.3bn Q220: £3.3bn • Q221 costs i
Slide 13: Income: Ongoing benefits from business diversification
Income: Ongoing benefits from business diversification, with lower YoY CIB offset by partial recovery in consumer businesses Group income +1% YoY (£m) 5,900 5,338 5,415 5,204 4,941 1,576 Income +11% YoY primarily driven by increased mortgage 1,467 balances and improved margins, and non-recurrence of
Slide 14: Unsecured lending remains subdued while mortgage performance remains strong
Unsecured lending remains subdued, despite the recent recovery in spend, while mortgage performance remains strong Unsecured lending Structural hedge 1.5 BUK: Lower UK cards End 12.9 12.1 11.2 9.9 9.6 5Y GBP SONIA Net Receivables swap rate (%) 1.0 (£bn) Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 0.5 CC&P: H
Slide 15: Costs: Q221 YoY increase driven by structural cost actions
Costs: Q221 YoY increase driven by structural cost actions of £0.3bn, predominantly relating to the real estate review (£m) Quarterly costs up 10% YoY (£m) H1 base costs broadly in line YoY (£m) 3,826 7,231 3,578 3,653 3,467 299 321 Structural cost actions 3,330 6,593 78 1,039 1,097 1,092 Performanc
Slide 16: H121 structural cost actions primarily related to the real estate charge
H121 structural cost actions primarily related to the real estate charge taken in Q221 Structural cost actions (£m) • H121 structural cost actions of £321m, primarily related to the real estate charge taken in Q221 to vacate a London office building by the end of 2022 • Expected to result in annual
Slide 17: FY21 costs, excluding structural cost actions and performance costs, expected c.£12bn
FY21 costs, excluding structural cost actions and performance costs, expected to be broadly in line with FY20 at c.£12bn FY20 to FY21 costs outlook (£m) 13,886 Key drivers of base costs2 Structural cost actions 368 Performance costs 1,504 • Business demand-led • Strategic investments • Technology •
Slide 18: Impairment: Q221 net release of £0.8bn
Impairment: Q221 net release of £0.8bn, due to improved macro outlook, lower unsecured balances and benign credit environment Impairment (£m) Drivers of impairment release Net impairment release of £520m reflecting the improved 1,623 macroeconomic outlook and reduced unsecured lending balances BUK −
Slide 19: Improved macroeconomic variables drove the impairment release
Improved macroeconomic variables drove the impairment release Macroeconomic variables (MEVs) MEVs used in Q121 results Q221 MEVs Change in MEVs • Q221 baseline UK and US MEVs improved materially from those used to derive the Q121 expected credit 2021 2022 2023 2021 2022 2023 2021 2022 2023 loss calc
Slide 20: Jun-21 coverage ratios in unsecured and wholesale loans remain above pre-pandemic levels
Jun-21 coverage ratios in unsecured and wholesale loans remain above pre-pandemic levels given ongoing uncertainty Credit cards, unsecured loans and other retail lending Wholesale loans Gross exposure (£bn) Impairment allowance (£bn) Coverage ratio Gross exposure (£bn) Impairment allowance (£bn) Cov
Slide 21: Q221 Barclays UK
Q221 Barclays UK RoTE of 29.1% reflected a £0.5bn impairment release. FY21 NIM expected to be at the top end of the guided range • Income increased 11% YoY primarily driven by increased Q220 Q320 Q420 Q121 Q221 mortgage balances and improved margins, and non- 1,467 1,550 1,626 1,576 1,623 Income Cos
Slide 22: Q221 Barclays International
Q221 Barclays International RoTE of 15.6% driven by a net impairment release and resilient operating performance • Income decreased 5% YoY Income Costs − Balanced income profile across businesses and 22% Global £3.8bn £2.2bn geographies Markets Q220: £4.0bn Q220: £2.2bn • 13% depreciation of average
Slide 23: Q221 Barclays International: Corporate & Investment Bank
Q221 Barclays International: Corporate & Investment Bank RoTE of 14.8% driven by improved profitability, including a net impairment release • CIB income decreased 10% YoY to £3.0bn including the Q220 Q221 Q220 Q221 impact of 13% depreciation of average USD vs. GBP GBP basis USD basis Income Costs £3
Slide 24: Q221 Barclays International: Consumer, Cards & Payments
Q221 Barclays International: Consumer, Cards & Payments RoTE of 21.8% reflecting a net impairment release, Unified Payments income recovery and continued investment • Income increased 21% YoY reflecting non-recurrence of Q220 Q320 Q420 Q121 Q221 the Q220 £101m Visa loss, increased Unified Payments,
Slide 25: Q221 Head Office
Q221 Head Office Q220 Q320 Q420 Q121 Q221 • Negative income of £27m included: − Hedge accounting losses (75) Income (139) (127) (171) (27) − Funding costs on legacy capital (£m) instruments − Negative treasury items (109) (92) (80) Partially offset by one time mark-to-market Costs (264) gains on leg
Slide 26: CET1 ratio increased to 15.1% driven by profits and lower RWAs
CET1 ratio increased to 15.1% driven by profits and lower RWAs CET1 ratio was 390bps above the MDA hurdle of 11.2% as at Jun-21 QoQ CET1 ratio1 movements 28bps 12bps 5bps 11bps 5bps 34bps 61bps 15.0% 14.9% 14.9% 15.1% 14.6% 14.6% 14.8% 14.7% [X] Mar-21 Attributable profit, Reduction in Dividend UK D
Slide 27: CET1 ratio target range continues to be 13-14%
CET1 ratio target range continues to be 13-14%, but expect to remain above that in 2021 Near-term CET1 ratio flightpath 13-14% 17bps 11bps 15.1% 14.8% 1 Jun-21 Share buyback Q3 scheduled 2 Rebased CET1 ratio Organic Headwinds Capital CET1 target range pension contribution capital generation distribu
Slide 28: High quality and robust liquidity and funding positions
High quality and robust liquidity and funding positions Liquidity coverage ratio (LCR) Loan: deposit ratio2 Loans3 (£bn) Deposits3 (£bn) LDR 169% 83% 82% 160% 162% 162% 71% 70% Minimum requirement: 100% 481 501 31-Dec-18 31-Dec-19 31-Dec-20 30-Jun-21 395 416 326 339 343 349 Liquidity 227 211 266 291
Slide 29: Outlook: Barclays continues to benefit from diversification
Outlook: Barclays continues to benefit from diversification Returns • Barclays expects to deliver a RoTE above 10% in 2021 Impairment • The quarterly impairment run rate is expected to remain below historical levels in coming quarters Costs • Excluding structural cost actions and performance costs,
Slide 30: Appendix
Appendix
Slide 31: Barclays investment proposition
Barclays investment proposition Our scale, geographic reach and diversification make us a universal bank 1 2 3 4 Resilience through Strong balance sheet Growth opportunities Sustainable impact diversification supporting returns We are a British universal bank Our diversified model offers us We under
Slide 32: 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 33: Barclays ESG ratings
Barclays ESG ratings Barclays’ strategy and performance on ESG factors is evaluated by a range of external agencies, with whom we actively engage, underpinning our view that clear and credible ESG information is critical to enable effective decision- making 2020: 23.9 2020: 1/10 2019: 31.6 2019: 1/1
Slide 34: 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 £689m in H121 (H120: £866m) • The combined structural hedge notional as at Jun-21 was £198bn (Jun-20: £174bn), with an average duration of
Slide 35: Jun-21 unsecured lending coverage ratios still above pre-pandemic levels
Jun-21 unsecured lending coverage ratios still materially above pre- pandemic levels UK cards US cards Gross exposure (£bn) Impairment allowance (£bn) Coverage ratio Gross exposure (£bn) Impairment allowance (£bn) Coverage ratio 16.5 1.8 10.5% 17.5% 14.2% 22.5 9.1% 14.3% 12.4% 1.7 0.8 1.5 1.4 2.8 2.
Slide 36: Retail portfolios in the UK and US continue to be appropriately positioned
Retail portfolios in the UK and US continue to be appropriately positioned • Risk actions taken at pandemic outset to mitigate potential 145.1 148.3 155.2 economic impact UK • Despite the return to high LTV lending in H121, mortgage mortgage UK balance growth predominantly achieved in lower LTV 68.4
Slide 37: Wholesale exposures are diversified and appropriately covered
Wholesale exposures are diversified and appropriately covered, especially in selected vulnerable sectors Wholesale and vulnerable sector exposure Wholesale lending (£bn) Selected sectors (£bn/coverage ratio %) 43.5 144.8 17.4 (3.4%) Wholesale 0.6 (5.2%) 17.4 Air Travel Selected Sectors 0.7 (5.6%) 14
Slide 38: Q221 TNAV movement
Q221 TNAV movement TNAV (pence per share) 1 1 2 1 1 12 281 267 Mar-21 Earnings Dividends paid Repurchase of Own credit reserve Cash flow hedge Other movements Jun-21 shares reserve • TNAV increased by 14p to 281p due to • Partly offset by: – +12p of earnings – -1p cash flow hedge reserve due an incr
Slide 39: RWAs remained broadly stable YTD and decreased by £6.9bn QoQ
RWAs remained broadly stable YTD and decreased by £6.9bn QoQ YTD RWA movements (£bn) 0.2 1.7 2.2 0.8 0.3 308.7 306.5 307.2 306.2 306.2 306.4 306.4 1 Dec-20 Credit risk Counterparty credit risk Market risk FX Other Jun-21 excl. disposals QoQ RWA movements (£bn) 2.8 1.5 4.8 0.0 0.8 313.4 310.6 310.6 3
Slide 40: Continue to target appropriate headroom above the MDA hurdle
Continue to target appropriate headroom above the MDA hurdle Illustrative evolution of minimum CET1 requirements and buffers • Barclays intends to manage its CET1 ratio in the range of 13-14% over the planning cycle, and Dec-201: Jun-211: Target: continues to target an appropriate headroom over 15.1
Slide 41: IFRS 9 transitional relief of c.40bps as at Jun-21
IFRS 9 transitional relief of c.40bps as at Jun-21 Constructive regulatory action in Q220 gave greater relief Appropriately 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 • Tran
Slide 42: 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 30 June 2021, the Group’s IAS 19 pension surplus across all schemes was £2.4bn (December 2020: £1.5bn). The UK Retirement Fund (UKRF)
Slide 43: Group leverage position appropriately managed
Group leverage position appropriately managed Minimum leverage requirements and buffers under the UK regime • Headroom to minimum leverage requirement of 120bps in Q221, while the RWA-based CET1 ratio remains our primary regulatory constraint Dec-201: Jun-211: • Following the BoE’s Financial Policy
Slide 44: Financial results tables
Financial results tables
Slide 45: H121 notable items
H121 notable items Six months ended (£m) Jun-21 Jun-20 Income Valuation loss on Barclays’ preference shares in Visa Inc. - (101) Consumer, Cards and Payments Mark-to-market losses on legacy instruments - (51) Head Office Costs Structural cost actions - real estate review (266) - Head Office Other st
Slide 46: H121 Group
H121 Group Six months ended (£m) Jun-21 Jun-20 % change Income 11,315 11,621 -3% Impairment releases / (charges) 742 (3,738) – Operating expenses (7,132) (6,563) -9% – Litigation and conduct (99) (30) Total operating expenses (7,231) (6,593) -10% Other net income / (expenses) 153 (18) Profit before
Slide 47: H121 Barclays UK
H121 Barclays UK Six months ended (£m) Jun-21 Jun-20 % change – Personal Banking 1,910 1,794 +6% – Barclaycard Consumer UK 605 803 -25% – Business Banking 684 574 +19% Income 3,199 3,171 +1% – Personal Banking 50 (264) – Barclaycard Consumer UK 398 (697) – Business Banking (5) (103) Impairment relea
Slide 48: H121 Barclays International
H121 Barclays International Six months ended (£m) Jun-21 Jun-20 % change Income 8,218 8,654 -5% Impairment releases / (charges) 293 (2,619) – Operating expenses (4,606) (4,405) -5% – Litigation and conduct (84) (11) Total operating expenses (4,690) (4,416) -6% Other net income 22 10 Profit before ta
Slide 49: H121 Barclays International: Corporate & Investment Bank
H121 Barclays International: Corporate & Investment Bank Six months ended (£m) Jun-21 Jun-20 % change – FICC 2,099 3,326 -37% – Equities 1,709 1,238 +38% Global Markets 3,808 4,564 -17% – Advisory 381 239 +59% – Equity capital markets 469 247 +90% – Debt capital markets 882 881 Investment Banking fe
Slide 50: H121 Barclays International: Consumer, Cards & Payments
H121 Barclays International: Consumer, Cards & Payments Six months ended (£m) Jun-21 Jun-20 % change – International Cards and Consumer Bank 1,050 1,257 -16% – Private Bank 393 362 9% – Unified Payments 202 102 98% Income 1,645 1,721 -4% Impairment releases / (charges) 21 (1,299) – Operating expense
Slide 51: H121 Head Office
H121 Head Office Six months ended (£m) Jun-21 Jun-20 % change Income (102) (204) +50% Impairment releases / (charges) 6 (55) – Operating expenses (412) (117) – Litigation and conduct 7 (8) Total operating expenses (405) (125) Other net income / (expenses) 131 (41) Loss before tax (370) (425) +13% At
Slide 52: H121 split of payments income by division
H121 split of payments income by division Jun-21 Jun-20 % change Six months ended (£m) BUK CIB CC&P Total BUK CIB CC&P Total BUK CIB CC&P Total Unified Payments - - 202 202 - - 2031 203 - - (1%) (1%) Barclays Cubed / Wholesale payment fees 1732 122 0 295 117 119 - 236 48% 3% - 25% Interchange and FX
Slide 53: Q221 notable items
Q221 notable items Three months ended (£m) Jun-21 Jun-20 Income Valuation loss on Barclays’ preference shares in Visa Inc. - (101) Consumer, Cards and Payments Mark-to-market losses on legacy instruments - (51) Head Office Costs Structural cost actions - real estate review (266) - Head Office Other
Slide 54: Q221 Group
Q221 Group Three months ended (£m) Jun-21 Jun-20 % change Income 5,415 5,338 +1% Impairment releases / (charges) 797 (1,623) – Operating expenses (3,587) (3,310) -8% – Litigation and conduct (66) (20) Total operating expenses (3,653) (3,330) -10% Other net income / (expenses) 21 (26) Profit before t
Slide 55: Q221 Barclays UK
Q221 Barclays UK Three months ended (£m) Jun-21 Jun-20 % change – Personal Banking 987 826 +19% – Barclaycard Consumer UK 290 367 -21% – Business Banking 346 274 +26% Income 1,623 1,467 +11% – Personal Banking 72 (130) – Barclaycard Consumer UK 434 (396) – Business Banking 14 (57) Impairment release
Slide 56: Q221 Barclays International
Q221 Barclays International Three months ended (£m) Jun-21 Jun-20 % change Income 3,819 4,010 -5% Impairment releases / (charges) 271 (1,010) – Operating expenses (2,168) (2,186) +1% – Litigation and conduct (63) (11) Total operating expenses (2,231) (2,197) -2% Other net income 13 4 Profit before t
Slide 57: Q221 Barclays International: Corporate & Investment Bank
Q221 Barclays International: Corporate & Investment Bank Three months ended (£m) Jun-21 Jun-20 % change – FICC 895 1,468 -39% – Equities 777 674 +15% Global Markets 1,672 2,142 -22% – Advisory 218 84 – Equity capital markets 226 185 +22% – Debt capital markets 429 463 -7% Investment Banking fees 873
Slide 58: Q221 Barclays International: Consumer, Cards & Payments
Q221 Barclays International: Consumer, Cards & Payments Three months ended (£m) Jun-21 Jun-20 % change Income 840 694 +21% Impairment charges 42 (414) – Operating expenses (545) (506) -8% – Litigation and conduct (62) (8) Total operating expenses (607) (514) -18% Other net income 13 1 Profit / (loss
Slide 59: Q221 Head Office
Q221 Head Office Three months ended (£m) Jun-21 Jun-20 % change Income (27) (139) +81% Impairment releases / (charges) 6 (30) – Operating expenses (341) (106) – Litigation and conduct 16 (3) Total operating expenses (325) (109) -198% Other net income / (expenses) 8 (43) Loss before tax (338) (321) -
Slide 60: 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