Barclays Plc · LSE:BARC
Barclays — Q3 2016 Earnings Presentation
39 slides from Barclays's earnings presentation, Oct 27, 2016
Slide 1: Barclays PLC Q3 2016 Financial Results
Barclays PLC Q3 2016 Financial Results 27 October 2016
Slide 2: Jes Staley, Group Chief Executive Officer
Jes Staley Barclays Group Chief Executive Officer
Slide 3: Tushar Morzaria, Group Finance Director
Tushar Morzaria Barclays Group Finance Director
Slide 4: Our strategy is on track with encouraging progress in Q316
Our strategy is on track with encouraging progress in Q316 Double digit Core returns: Underlying Core RoTE of 10.4%, with Barclays UK 21.1% and Barclays International 10.0%1 Robust capital ratios: CET1 ratio of 11.6% despite c.20bps pension deficit headwind – on track for end-state capital requireme
Slide 5: Statutory Group financials – Q316
Statutory Group financials – Q316 Three months ended (£m) Sep-16 Sep-15 % change Diversified by geography and consumer/wholesale mix Income 5,446 5,481 (1%) Diversified income by geography1 Impairment (789) (429) (84%) – Operating expenses (3,581) (3,552) (1%) – Litigation and conduct (741) (699) (6
Slide 6: Core: Underlying Return on Tangible Equity of 10.4%
Core: Underlying Return on Tangible Equity of 10.4% Business performance excluding notable items Profit/(loss) before tax (£m) Sep-16 Sep-15 % change Three months ended (£m) Sep-16 Sep-15 % change – Barclays UK 675 793 (15%) Income 5,869 5,070 16% – Barclays International 1,085 893 22% Impairment (7
Slide 7: 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 tangible equity (excluding notable items) 10.7% 13.4% 14.0% 9.8% Barclays UK 21.1% 11.3% 10.7% 11.0% 10.4% Barclays International 10.0% 7.1% 6.3% – Corporate & Investment Bank 9.2% – Consumer, Car
Slide 8: Barclays UK: Return on Tangible Equity of 21.1%
Barclays UK: Return on Tangible Equity of 21.1% Business performance excluding notable items Q316 performance metrics Three months ended (£m) Sep-16 Sep-15 % change • RoTE was 21.1%, with income growth and a reduction in costs generating Income 1,943 1,874 4% positive cost: income jaws • Income incr
Slide 9: Barclays UK: Resilient NIM and prudent growth in balances
Barclays UK: Resilient NIM and prudent growth in balances Income (£m) – Three months ended Sep-16 Sep-15 % change Stable income • NII increased by 5% to £1.6bn while NIM increased to 3.72%, Net interest income (NII) 1,569 1,499 5% including Treasury contributions, despite the base rate cut to 25bps
Slide 10: 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 cumulative unsecured lending – originated and fulfilled digitally £bn Barclays 5.5m 1.8 Mobile Mobile Banking +22% Banking users £1.7bn unsecured 1.6 lending originated and fulfilled
Slide 11: Barclays International: RoTE of 10.0%
Barclays International: RoTE of 10.0% Business performance excluding notable items Q316 performance metrics Three months ended (£m) Sep-16 Sep-15 % change • RoTE of 10.0% demonstrated the benefit of diversification across consumer – Corporate & Investment Bank (CIB) 2,795 2,374 18% lending and whole
Slide 12: Barclays International: Corporate & Investment Bank: RoTE of 9.2%
Barclays International: Corporate & Investment Bank: RoTE of 9.2% Business performance excluding notable items Q316 performance metrics Three months ended (£m) Sep-16 Sep-15 % change • Encouraging performance as 44% PBT increase generated an RoTE of Markets 1,408 1,094 29% 9.2%. Income, costs and RW
Slide 13: Barclays International: Consumer, Cards & Payments: RoTE of 14.8%
Barclays International: Consumer, Cards & Payments: RoTE of 14.8% Business performance excluding notable items Q316 performance metrics Three months ended (£m) Sep-16 Sep-15 % change • RoTE was 14.8%, benefitting from USD and EUR appreciation against GBP Income 1,056 849 24% • Continued growth in Ba
Slide 14: Non-Core: Continued good rundown momentum
Non-Core: Continued good rundown momentum Business performance excluding notable items Q316 performance metrics Three months ended (£m) Sep-16 Jun-16 Mar-16 • Loss before tax decreased to £94m in the quarter mainly due to Other net – Businesses 181 181 196 income of £498m – Securities and loans (34)
Slide 15: Priority is to close Non-Core in 2017
Priority is to close Non-Core in 2017 RWAs (£bn)1 Quarterly income (£m) • Continued good execution of the Non-Core rundown while preserving capital • Businesses income of £181m – will reduce as announced disposals complete − Net RWA reduction of c.£3bn in Q316 • Securities and loans income improved
Slide 16: Non-Core rundown guidance
Non-Core rundown guidance Income (£m) Costs (£m) Q316 FY16 FY17 FY18 FY14 FY15 YTD Guidance Guidance Guidance £1,363 of costs incurred in Q3 YTD Non-Core closed Businesses £558m Non-Core closed Securities and loans £(363)m 1,299 2017 Income ex. 971 Derivatives £(504)m ESHLA FV cost guidance: £400m-£
Slide 17: 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 L&A • Remain well-positioned, having maintained a consistently prudent risk CRL 104% 116% 86% 70% 72% 79% appetite since the financial crisis coverage • Comprehensive review of i
Slide 18: Continued focus on cost discipline and efficiency
Continued focus on cost discipline and efficiency Group cost progression and Core guidance (£bn) Cost initiatives Total operating expenses, excluding conduct and litigation, and other notable items Real estate • Reduction in real estate footprint, resulting in structurally lower annual costs Targeti
Slide 19: Good progress in TLAC funding and liability management and strong liquidity metrics
Good progress in TLAC funding and liability management and strong liquidity metrics TLAC/MREL at 18.4% as of Sep-161,2 LCR3 well above minimum requirements CET1 AT1 Tier 2 Senior Unsecured 18.4% £11bn Future minimum 133% 15.1% HoldCo issuance HoldCo Snr: regulatory 124% 124% 125% 4.1% (£15.4bn) requ
Slide 20: CET1 ratio progression impacted by one-off items
CET1 ratio progression impacted by one-off items Fully Loaded CET1 ratio1 Organic capital 250bps accretion BAGL selldown and 0.4% c.100bps Non-Core disposals2 Conduct and litigation • Discount rate fell from 2.79% to 2.31% • Defined UK pension scheme moved into 11.4% 11.6% deficit of £1.1bn in Q316
Slide 21: Our strategy is on track with encouraging progress
Our strategy is on track with encouraging progress Core business delivering double digit returns on a materially higher equity base Non-Core closure on track in 2017, with continued good rundown momentum Continued focus on costs in Core and Non-Core, progressing towards Group cost: income ratio targ
Slide 22: Barclays PLC Q3 2016 Financial Results
Barclays PLC Q3 2016 Financial Results 27 October 2016
Slide 23: Appendices
Appendices
Slide 24: Transatlantic Consumer, Corporate & Investment Bank
Transatlantic Consumer, Corporate & Investment Bank Barclays Barclays PLC PLC1 Barclays UK Barclays International Non-Core Africa Banking UK consumer and business bank differentiated by Diversified transatlantic Aim to achieve scale and digital innovation wholesale and consumer bank Expect to close
Slide 25: Group financials excluding notable items – Q316
Group financials excluding notable items – Q316 Performance excluding notable items Diversified Consumer, Corporate & Investment Bank Three months ended (£m) Sep-16 Sep-15 % change Q316 Core income by product1 Income 5,710 5,286 8% Impairment (789) (429) (84%) – Operating expenses (3,581) (3,552) (1
Slide 26: Core income and margins – Q316
Core income and margins – Q316 Income1 (£m) – Three months ended Sep-16 Sep-15 % change • Barclays UK NII increased 5% to £1.6bn due to deposit repricing initiatives and Treasury contributions – Barclays UK 1,569 1,499 5% − NIM increased to 3.72% – Barclays International2 1,139 947 20% • Barclays In
Slide 27: Barclays UK and Barclays International analysis
Barclays UK and Barclays International analysis Barclays UK – Q316 Barclays International – Q316 Split of income (£m)1 Split of impairment (£m)2 Split of income (£m)1 12 412 47 1,056 970 970 1,408 561 291 1,386 Split of loans and advances to customers (£bn) Split of customer deposits (£bn) 15 16 48
Slide 28: Head Office and Africa Banking summary financials – Q316
Head Office and Africa Banking summary financials – Q316 Business performance excluding notable items Africa Banking – Three months ended (£m) Sep-16 Sep-15 % change Head Office – Three months ended (£m) Sep-16 Sep-15 Income 982 822 19% Income Impairment (96) (66) (45%) 75 (26) Impairment Total oper
Slide 29: Breakdown of RoTE by business – Q316
Breakdown of RoTE by business – Q316 Return on average tangible equity (%)1 Q315 Q316 25.8% 24.7% 21.1% 14.8% 11.3% 10.4% 10.1% 9.6% 10.0% 9.2% 6.7% 7.5% Group 2 Core Barclays UK Barclays International Corporate & Consumer, Cards Investment Bank & Payments Average allocated tangible equity (£bn)1 47
Slide 30: Tangible Net Asset Value movements – Q316
Tangible Net Asset Value movements – Q316 TNAV (pence per share) – Jun-16 to Sep-16 Q316 highlights • TNAV declined modestly by 2p per share in the 4 quarter to 287p 6 4 − £0.9bn of profit after tax excluding PPI 1 6 contributed 6p 1 289 − £0.6bn PPI charge reduced TNAV by 4p 287 − Payment of the in
Slide 31: Common Equity Tier 1 capital progression – Q316
Common Equity Tier 1 capital progression – Q316 CET1 capital (£bn) 0.8 0.8 0.4 0.2 0.2 0.2 43.2 0.8 42.4 2 Jun-16 Profit for Dividends Other Net impact of Minority PVA Other Sep-16 the period 1 paid and qualifying retirement interests foreseen reserves benefits Q316 CET1 capital movement (£bn) – pos
Slide 32: Fixed Income Slides
Fixed Income Slides
Slide 33: 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 CET1 minimum levels and internal management buffer 2016 Pillar 2A CET1 requirement2 BoE stress test systemic refer
Slide 34: Managing capital position for regulatory minimum levels and stress testing
Managing capital position for regulatory minimum levels and stress testing Barclays’ expected systemic reference points for 2016 BoE stress test1,2 Minimum CRD IV CET1 requirement Mandatory distribution restrictions hurdle4 Future CET1 ratio1 = 2016 Pillar 2A CET1 requirement3 BoE stress test system
Slide 35: Continued strong leverage position
Continued strong leverage position Leverage ratio1 Highlights Leverage exposure (£bn) Q316 1,365 1,233 1,155 1,185 • Leverage ratio of 4.2% as at 30 September 2016, an improvement of c.120bps since 1,028 December 2013 • The ratio remained flat over the quarter as the underlying profit generation of
Slide 36: Illustrative MREL/TLAC requirements
Illustrative MREL/TLAC requirements Illustrative MREL/TLAC needs to meet future requirements1 c.£6bn p.a. / • Proactive refinancing from HoldCo and liability management £33bn in exercises executed to date position us well for future aggregate requirements Sep-16 = 22.9% to 1 Jan 20221: ≥24% • While
Slide 37: Progress on structural reform of Group legal structure
Progress on structural reform of Group legal structure Barclays PLC1 Barclays UK Barclays International constructs Divisional To be transferred under UK consumer and business bank2 Barclays PLC Diversified transatlantic wholesale differentiated by scale and digital innovation and consumer bank Futur
Slide 38: Anticipated funding sources of future UK ring-fenced bank and Barclays Bank PLC
Anticipated funding sources of future UK ring-fenced bank and Barclays Bank PLC (and subsidiaries) Barclays PLC1 Barclays UK Barclays International constructs Divisional UK consumer and business bank2 differentiated by scale Diversified transatlantic wholesale and digital innovation and consumer ban
Slide 39: 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