Barclays Plc · LSE:BARC
Barclays — Debt Investor Presentation (March 2015)
57 slides from Barclays's debt investor presentation, Mar 3, 2015
Slide 1: Barclays PLC Fixed Income Investor Presentation
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Barclays PLC Fixed Income Investor Presentation 2014 Full Year Results 3 March 2015 |
Slide 2: Financial highlights
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Financial highlights Increased adjusted pre-tax profits by 12% – Core up 3%, Non-Core losses down 24% Costs excluding CTA £16.9bn, ahead of £17bn guidance Building capital: CET1 ratio 10.5% and BCBS leve
Slide 3: Performance Overview
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Performance Overview |
Slide 4: Summary Group financials: Adjusted profits up 12%
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Summary Group financials: Adjusted profits up 12% Year ended – December (£m) 2013 2014 Financial performance Income 27,896 25,728 • Adjusted profit before tax increased by 12% to £5.5bn as PCB Impairment
Slide 5: Strengthening key financial metrics
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Strengthening key financial metrics (£bn) Dec-13 Sep-14 Dec-14 Highlights Total assets 1,344 1,366 1,358 • Continued strengthening of all key balance sheet metrics Balance • Good progress on capital posi
Slide 6: Core business performing well
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Core business performing well Highlights Year ended – December (£m) 2013 2014 Financial performance Income 25,603 24,678 • PBT up 3% at £6.7bn: Impairment (2,171) (2,000) − PCB and Barclaycard profits up
Slide 7: Continued shrinkage and capital return in Non-Core
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Continued shrinkage and capital return in Non-Core Year ended – December (£m) 2013 2014 Highlights – Businesses 1,498 1,101 • Loss before tax reduced by 24% to £1,180m as improvements in impairments and
Slide 8: Capital & Leverage
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Capital & Leverage |
Slide 9: Good progress on CET1 ratio towards 2016 Transform target
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Good progress on CET1 ratio towards 2016 Transform target Fully loaded (FL) CRD IV CET1 ratio progression1 RWA reduction (£bn) CET1 40 42 41 Capital (9%) +120bps Spain c.16bps2 o/w Spain (£5bn)2 >11% 442
Slide 10: RWAs: Well managed to support business growth and returns
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW RWAs: Well managed to support business growth and returns RWAs (£bn) Highlights • RWAs reduced by £40.6bn, or £46bn including the sale of the Spanish businesses, reflecting excellent progress on the rund
Slide 11: Barclays Non-Core: Outperforming on RWA
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Barclays Non-Core: Outperforming on RWA RWA reduction bridge (£bn) RWA by type (£bn) Operational risk and DTA Securities and loans Derivatives1 Businesses 110 110 19 11 81 5 75 Target = 80 75 19 5 Spain2
Slide 12: Continued progress on transition towards target end-state capital structure
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Continued progress on the transition towards our „target‟ end-state capital structure Evolution of capital structure Fully loaded CRD IV capital position • Fully loaded CRD IV CET1 ratio at 10.3% (10.2%
Slide 13: Managing CET1 ratio against mandatory distribution restrictions
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW We intend to manage our CET1 capital ratio to mitigate against the risk of mandatory distribution restrictions CET1 requirements1 (as at 1 January except FY14) • Mandatory restrictions to discretionary d
Slide 14: Leverage ratio progression ahead of plan
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Leverage ratio progression ahead of plan Leverage ratio progression1 Leverage exposure reduction (£trn)1 T1 41 45 46 Capital (9%) BCBS 270 +30bps impact >4% 1.36 1.35 1.32 3.7% 1.23 3.4% 3.0% 1 Dec-13 Ju
Slide 15: Steady progression on leverage ratio
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Steady progression on leverage ratio BCBS leverage exposure1 (£bn) Highlights L&A and other assets2 Derivatives • Leverage exposures during Q4 14 decreased by £91bn to £1,233bn SFTs Undrawn commitments B
Slide 16: Liquidity & Funding
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Liquidity & Funding |
Slide 17: Transition towards a holding company capital and funding model
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Transition towards a holding company capital and funding model Expected creditor hierarchy during transition1 Barclays position • Barclays has started to issue capital and term senior unsecured 1st OpCo
Slide 18: Barclays PLC Parent company accounts
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Barclays PLC Parent company accounts Barclays PLC Parent Company Balance Sheet Extract from notes to Parent Company Balance Sheet Balance sheet 46 Barclays PLC (the Parent Company) 2014 2013 Investment i
Slide 19: Proxy Total Loss Absorbing Capacity (TLAC)
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Proxy Total Loss Absorbing Capacity (TLAC)1 (£bn) Dec-14 • Proactive transition towards a HoldCo funding and capital model positions us well to meet potential future TLAC PRA transitional Common Equity T
Slide 20: Balance sheet is conservatively funded
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Balance sheet is conservatively funded Balance Highlights sheet structure - £1.3tn (excluding BAGL), 31 Dec 14 Derivatives, 438 Derivatives, 438 Derivative assets and liabilities matched Matched Trad
Slide 21: Robust liquidity position, pool well in excess of requirements
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Maintaining a robust liquidity position, with pool well in excess of internal and external minimum requirements High quality liquidity pool (£bn) Key messages Cash & Deposits at Central Banks Government
Slide 22: Stable and diverse sources of funding
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW We maintain access to stable and diverse sources of funding, across customer deposits and wholesale debt Broadly self-funded retail businesses1(£bn) Key messages 91% 92% • Group Loan to Deposit Ratio (LD
Slide 23: Diverse wholesale funding across products, currencies and maturities
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Continue to access diverse wholesale funding sources across multiple products, currencies and maturities Wholesale funding by product (as at 31 December 2014) Key Messages Depostis from banks • Overall s
Slide 24: Asset quality
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Asset quality |
Slide 25: Continued strong asset quality
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Continued strong asset quality Impairment charge (£m) Highlights • Credit impairment charges improved 8% to £2bn, reflecting lower impairments in PCB and Africa Banking 8% • PCB benefitted from the impro
Slide 26: Group impairment improved 29%, with positive trends across businesses
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Group impairment improved 29%, with positive trends across businesses Retail loan loss rate (bps) Highlights Dec-13 Dec-14 • Declining Loan Loss Rate (LLR) trend across 332 308 the Group reflecting Barcl
Slide 27: Reduced exposure to Eurozone periphery
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Reduced exposure to Eurozone periphery Exposures by geography (£bn)1 Key Messages Spain Italy Portugal Ireland • The vast majority of the exposures to Spain have been disposed of as of 2 January 2015 59.
Slide 28: Risk – Minimising potential headwinds
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Risk – Minimising potential headwinds Passing stress tests – stressed CET1 ratios 7.0% 7.1% 7.0% • Barclays has always maintained internal stress tests Barclays CET1 • Barclays passed both the PRA and EB
Slide 29: Credit ratings
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Credit ratings 29 | Barclays Full Year 2014 Fixed Income Investor Presentation
Slide 30: Barclays' credit ratings remain strong and in line with peers'
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Barclays‟ credit ratings remain strong and in line with peers‟ As at 3 March 2015 Key Messages Barclays PLC Barclays Bank PLC • Current ratings reflect Barclays‟ “strong franchise”, “diverse revenue stre
Slide 31: Rating agencies evolving approach to bank ratings
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Rating agencies evolving approach to bank ratings S&P • 3 February 2015 announcement placed the OpCo ratings of most UK, German and Austrian banks on „CreditWatch with Negative implications‟ to reflect t
Slide 32: Reserving for potential rating actions in the liquidity pool
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Barclays manages and reserves for potential rating actions in the liquidity pool Contractual credit rating downgrade exposure Key messages (as at 31 December 2014) Contractual outflows Total cumulative c
Slide 33: Summary
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Summary • Diversified international bank focused on delivering improved and more sustainable returns Business model • Concentrating on high growth opportunities where we have competitive advantage, elimi
Slide 34: Appendix
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Appendix |
Slide 35: Repositioning and simplifying Barclays
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Repositioning and simplifying Barclays Rightsizing and focusing the Investment Bank Establishing a dedicated Non-Core unit and a new Personal and Corporate Banking business Allocating capital to growth b
Slide 36: 2016 Transform targets
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW 2016 Transform targets 2016 Target 2014 Capital CRD IV FL CET1 ratio >11.0% 10.5%1 Group Leverage Leverage ratio >4.0% 3.8%1 Dividend Payout ratio 40-50% 38% Returns Adjusted RoE >12% 10.9%2 Barclays Cor
Slide 37: Simpler, focused and balanced structure
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Simpler, focused and balanced structure Barclays Group Personal and Africa Investment Barclays Non-Core Barclaycard Corporate Banking Banking Bank (BNC) PBT £2,885m PBT £1,339m PBT £984m PBT £1,377m LBT
Slide 38: Reducing and reallocating RWAs to drive growth and returns
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW <15% Reducing and reallocating RWAs to drive growth and returns 2013 pre-resegmentation (£bn) 2013 post-resegmentation estimate (£bn) 2016 guidance (£bn) Leverage exposure £1.4tn £1.4tn c.£1.1tn1 RWAs £4
Slide 39: Core Investment Bank: Building on competitive advantages
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Core Investment Bank: Building on competitive advantages Core Investment Bank Non-Core Investment Bank RWAs: c.£120bn RWAs: c.£90bn 20131 FY Leverage exposure: c.£490bn Leverage exposure: c.£340bn Global
Slide 40: Retail and Corporate
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Retail and Corporate Retailbefore Profit and Corporate tax of Coreperformance business: FY131 Profit before tax of Core business: FY141 Personal and Corporate Investment Banking Bank Personal and Corpora
Slide 41: PCB: Profits up 29%
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW PCB: Profits up 29% Year ended – December (£m) 2013 2014 Financial performance Income 8,723 8,828 • Total income increased 1% to £8.8bn due to balance growth and Impairment (621) (482) improved savings m
Slide 42: Barclaycard: Profits up 13%
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Barclaycard: Profits up 13% Financial Year ended performance – December (£m) 2013 2014 Financial performance Income 4,103 4,356 • Strong customer number and asset growth across all Impairment (1,096) (1,
Slide 43: Africa Banking: Constant currency profits up 13%
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Africa Banking: Constant currency profits up 13% 2013 Financial performance Year ended1 – December (£m) 2013 Constant 2014 Currency Constant currency basis Income 4,039 3,435 3,664 • PBT increased by 13%
Slide 44: Investment Bank: New strategy underpinning Q4 performance
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Investment Bank: New strategy underpinning Q4 performance Year ended – December (£m) 2013 2014 Q4 13 Q4 14 % Change – Banking 2,485 2,528 639 638 – – Markets 6,134 5,040 1,146 1,028 (10%) – Other (23) 20
Slide 45: Group cost targets
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Group cost targets Group cost guidance1 (£bn) Core cost targets1 (£bn) Core cost target 10% 18.7 Original Guidance = £17.5bn 8% Revised Guidance = £17bn 16.9 c.16.3 16.4 15.1 <14.5 FY13 FY14 FY15 Target
Slide 46: Operating expenses significantly reduced
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Operating expenses significantly reduced Operating expenses progress – excluding CTA (£bn) Highlights • Transform saves: − FTE reductions from 18.7 Investment Bank front office 0.6 restructuring, branch
Slide 47: Core operating costs
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Core operating costs Core operating expenses (£bn) Highlights Staff costs Other operating costs Costs to achieve Transform • Core costs (excluding CTA) decreased by 8% year-on-year driven 17.0 by Transfo
Slide 48: Investment Bank: Downward trend in compensation charge
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Investment Bank: Downward trend in compensation charge Investment Bank operating expenses (£m) Investment Bank – Compensation actions 6,598 • Headcount down by 2,100 net CTA1 190 6,225 • Incentive awards
Slide 49: Core income – growth in NII
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Core income – growth in NII Core income year ended – December (£m) 2013 2014 • Improved performance in PCB and Barclaycard income Personal and Corporate Banking 8,723 8,828 − PCB grew NII 7% driven by le
Slide 50: Wholesale funding composition as at December 2014
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Wholesale funding composition as at December 20141 >1 month >3 months >6 months >9 months Total >1 year but >2 years As at 31 December 2014 (£bn) ≤1 month but ≤3 but ≤6 but ≤12 but ≤12 ≤1 year ≤2 years b
Slide 51: Reduced exposure to the Eurozone
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Reduced exposure to the Eurozone As at 31 December 2014 (£m) Spain Italy Portugal Ireland Total Sovereign 108 1,716 105 37 1,966 Financial institutions 14,043 485 7 3,175 17,710 Corporate 1,149 1,128 531
Slide 52: Statutory bail-in power under UK Banking Act and BRRD
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW In line with the European Bank Recovery & Resolution Directive the UK Banking Act now includes a statutory bail-in power Overview Considerations for Bondholders • Statutory bail-in of debt is a key part
Slide 53: Contact – Debt Investor Relations Team
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW Contact – Debt Investor Relations Team Richard Caven Sofia Lonnqvist +44 (0)20 7116 2809 +44 (0)20 7116 5716 richard.caven@barclays.com sofia.lonnqvist@barclays.com Website: barclays.com/barclays-investo
Slide 54: Disclaimer
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX OVERVIEW 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 an
Slide 55: Disclaimer (continued)
Disclaimer (continued) Barclays has filed a registration statement (including a prospectus) and has filed, or will file, a prospectus supplement with the U.S. Securities and Exchange Commission (“SEC”) for the offering of securities to which this document relates. Before you invest, you should read
Slide 56: Disclaimer (continued)
Disclaimer (continued) • Adjusted total operating expenses represents operating expenses excluding the provisions for PPI and interest rate hedging redress; provision for ongoing investigations and litigation relating to Foreign Exchange; and goodwill impairment. A reconciliation to IFRS is presente
Slide 57: Disclaimer (continued)
Disclaimer (continued) • Liquidity Coverage Ratio (LCR) is calculated according to the Commission Delegated Regulation of October 2014 that supplements Regulation (EU) 575/2013 (CRDIV) published by the European Commission in June 2013. The metric is a ratio that is not yet fully implemented in local