Barclays Plc · LSE:BARC
Barclays — Debt Investor Presentation (July 2013)
59 slides from Barclays's debt investor presentation, Jul 30, 2013
Slide 1: Fixed Income Investor Presentation H1 2013 Results
Fixed Income Investor Presentation H1 2013 Results
Slide 2: Strategy and results update
STRATEGIC OVERVIEW CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX Strategy and results update
Slide 3: Barclays overview
STRATEGIC OVERVIEW CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX Barclays overview A global universal bank Key Key financial financial metrics metrics as as at at 30 30 June Jun 2013 2013 Major global financial services provider Total assets £1.5tr 3 main businesses:
Slide 4: H1 2013 results highlights
STRATEGIC OVERVIEW CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX H1 2013 results highlights “Our first half results demonstrate the strength of our business. We saw good momentum in our performance and – five months on – the execution of our Transform plan is progressin
Slide 5: Barclays Leverage Plan
STRATEGIC OVERVIEW CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX Barclays Leverage Plan Delivery of 3% PRA leverage ratio by June 2014 Leverage ratios (%) > 3.0 0.4 0.1 0.1 2.2 2 H1 2013 Rights issue Deleveraging AT1 issuance Other capital accretion & Target H1 2014 PRA
Slide 6: Revised Transform financial commitments
STRATEGIC OVERVIEW CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX Revised Transform financial commitments Original 2015 Revised Dates Targets Targets Return on Equity > CoE > CoE in 2016 2016 Operating Expenses £16.8bn £16.8bn 2015 Cost:Income Ratio mid-50s mid-50s 2015
Slide 7: Diversified profit distribution across the Group
STRATEGIC OVERVIEW CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX Diversified profit distribution across the Group Composition of adjusted profit before tax (excl. CTA) demonstrates the diversification benefits inherent in the universal banking model (£m) H1 2012 H1 2013
Slide 8: Capital & leverage
STRATEGIC OVERVIEW CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX Capital & leverage 8 | H1 2013 Fixed Income Investor Presentation | 30 July 2013
Slide 9: Capital and leverage ratios over time
STRATEGIC OVERVIEW CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX Capital and leverage ratios over time Our financial strength continues to serve us well in the current environment and remains a core component of our strategy going forward Basel 2 Basel 2.5 Basel 2 Basel
Slide 10: End-state capital structure
STRATEGIC OVERVIEW CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX End-state capital structure Our target capital structure embraces upcoming CRD IV requirements and ICB1 proposals 17.4% Total capital ratio 17.0% Total capital ratio Capital plans delivering PRA adjusted
Slide 11: Estimated capital and RWAs
STRATEGIC OVERVIEW CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX Estimated capital and RWAs Barclays continues to manage its business to absorb the impact of changing regulation on capital and RWA (£bn) 30 June 2013 CT1 Capital (FSA 2009 definition) 42.9 RWAs (Basel 2.5
Slide 12: Estimated CRD IV Capital and RWAs – notes
STRATEGIC OVERVIEW CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX Estimated CRD IV Capital and RWAs – notes Estimated Capital Ratios are based on/subject to the following: CRD IV, models and waivers We have estimated our CRD IV CET1 ratio, capital resources, RWAs and l
Slide 13: Estimated CRD IV Capital and RWAs – notes
STRATEGIC OVERVIEW CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX Estimated CRD IV Capital and RWAs – notes Estimated Capital Ratios are based on/subject to the following: RWAs It is assumed that corporates, pension funds and sovereigns that meet the eligibility condit
Slide 14: CRD IV / PRA leverage ratios
STRATEGIC OVERVIEW CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX CRD IV / PRA leverage ratios (2.5%) (0.0%) (0.3%) (0.0%) (0.3%) 5.3% 2.8% 2.5% 2.2% 2 Dec-12 adj. 1 FL CRD IV Dec-12 FL T1 Rebase to FL3 Revised CRD IV H1 2013 Jun-13 FL CET1 PRA Jun-13 PRA gross leverage
Slide 15: Liquidity & funding
STRATEGIC OVERVIEW CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX Liquidity & funding 15 | H1 2013 Fixed Income Investor Presentation | 30 July 2013
Slide 16: Balance sheet wholesale funding
STRATEGIC OVERVIEW CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX Balance sheet wholesale funding1 While the balance sheet totals £1.5tn, wholesale funding requirements are limited to £217bn as a consequence of its structure (£bn) Trading portfolio assets Reverse repurch
Slide 17: Liquidity pool
STRATEGIC OVERVIEW CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX Liquidity pool Barclays efficiently maintains a strong and high-quality liquidity pool consisting of unencumbered assets £138bn liquidity pool, with 86% held in cash, deposits with 2013-2015 strategy: ce
Slide 18: Funding
STRATEGIC OVERVIEW CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX Funding Diverse funding sources, across customer deposits and wholesale debt, provide protection against unexpected fluctuations £bn Group Loan to Deposit Ratio (LDR) has improved to 102% 138% 130% 124%
Slide 19: Wholesale funding
STRATEGIC OVERVIEW CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX Wholesale funding Despite reduced requirements for wholesale funding, Barclays maintains access to a variety of secured and unsecured funding sources across multiple currencies and maturities 2013 Diverse
Slide 20: Asset quality
STRATEGIC OVERVIEW CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX Asset quality 20 | H1 2013 Fixed Income Investor Presentation | 30 July 2013
Slide 21: Strong asset quality
STRATEGIC OVERVIEW CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX Strong asset quality Despite a challenging macroeconomic environment, retail and wholesale portfolios continue to perform well, as evidenced by limited Credit Risk Loans (CRLs) and declining loan loss rate
Slide 22: Impairments well contained
STRATEGIC OVERVIEW CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX Impairments well contained Reduction in credit impairment charges in H1 2013 reflects improvements in Corporate Banking and Africa RBB, partially offset by increases in other businesses Loan loss rate (bps
Slide 23: Reduced exposure to the Eurozone periphery
STRATEGIC OVERVIEW CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX Reduced exposure to the Eurozone periphery Barclays continues to manage down its direct exposures to the Eurozone periphery, while reducing redenomination risk in Spain and Portugal Exposures by geography
Slide 24: Exit Quadrant
STRATEGIC OVERVIEW CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX Exit Quadrant With a good track record in reducing legacy assets, we now focus on reducing our expanded Exit Quadrant portfolios £bn 94 15 12 14 68 34 14 11 25 Targeted 5 reduction 34 36 24 in IB positions
Slide 25: Credit ratings
STRATEGIC OVERVIEW CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX Credit ratings 25 | H1 2013 Fixed Income Investor Presentation | 30 July 2013
Slide 26: Rating and outlook changes
STRATEGIC OVERVIEW CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX Rating and outlook changes Despite re-rating of sector by all main rating agencies in the last 18 months, Barclays‟ rating remains strong and in line with peers‟ Barclays Bank plc 1 Jan 2012 31 Jul 2013 St
Slide 27: Credit rating management
STRATEGIC OVERVIEW CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX Credit rating management Barclays prudently manages the impact of credit ratings on the Group‟s funding and liquidity positions Provision of relevant information to credit rating agencies so they take in
Slide 28: Summary
STRATEGIC OVERVIEW CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX Summary A major global financial services provider with strong customer focus and client franchise Business Model Diversified businesses, in multiple geographies, delivering resilient underlying earnings S
Slide 29: Appendix
STRATEGIC OVERVIEW CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX Appendix 29 | H1 2013 Fixed Income Investor Presentation | 30 July 2013
Slide 30: Resilient performance
PERFORMANCE CAPITAL ASSET QUALITY LIQUIDITY & FUNDING REGULATION Resilient performance £m 8,771 8,167 8,081 8,108 7,440 7,445 7,563 7,750 7,549 7,734 7,287 7,238 7,384 7,337 7,001 7,002 6,867 6,213 2,395 1,754 1,822 1,977 1,694 1,944 1,865 1,786 1,805 1,569 1,256 1,273 1,471 1,310 1,395 1,090 1,141
Slide 31: Net interest income
Net interest income 2013 2012 Six months ended – June (£m) (£m) Customer assets 3,506 3,320 Customer liabilities 1,599 1,571 Total customer income1 5,105 4,891 Product structural hedge 433 487 Equity structural hedge 149 154 Other (59) (24) Total non-customer income1 523 617 Total RBB, Barclaycard,
Slide 32: Net interest margins and volumes
Net interest margins and volumes Total UK Europe Africa Barclay- Corporate Wealth interest Six months ended – June 2013 Total1 RBB RBB RBB card Banking and IM income1 (£m) Net interest margin (%): 1.27 0.81 3.11 8.36 1.23 1.08 1.77 5,628 Of which customer margin (%) 1.03 0.45 2.94 8.61 1.14 0.94 1.6
Slide 33: Adjusting items to profit before tax
PERFORMANCE CAPITAL ASSET QUALITY LIQUIDITY & FUNDING REGULATION Adjusting items to profit before tax1 2013 2012 Change Six months ended – June (£m) (£m) (%) Statutory profit before tax 1,6771 871 Own credit (gain)/charge (86) 2,945 Gain on disposal of BlackRock investment - (227) Provision for PPI
Slide 34: Adjusted profit before tax by cluster
PERFORMANCE CAPITAL ASSET QUALITY LIQUIDITY & FUNDING REGULATION Adjusted profit before tax by cluster1 2013 2012 Change Six months ended – June (£m) (£m) (%) UK RBB 632 592 7 Europe RBB (709) (148) Africa RBB 212 183 16 Barclaycard 775 751 3 Investment Bank 2,389 2,242 7 Corporate Banking 402 311 2
Slide 35: Impact of costs to achieve Transform
PERFORMANCE CAPITAL ASSET QUALITY LIQUIDITY & FUNDING REGULATION Impact of costs to achieve Transform Six months ended – June Costs to Profit before Return on Cost:Income Adjusted performance measures by business, achieve tax average equity ratio excluding costs to achieve Transform Transform (£m) (
Slide 36: Transform – costs update
PERFORMANCE CAPITAL ASSET QUALITY LIQUIDITY & FUNDING REGULATION Transform – costs update Over the next 3 years, results will be affected by „cost to achieve‟ charges, delivering benefits to cost base and customer proposition beyond 2015 (£bn) Adjusted operating expenses Cost to achieve Operating ex
Slide 37: Adjusted Return on Equity (RoE)
PERFORMANCE CAPITAL ASSET QUALITY LIQUIDITY & FUNDING REGULATION Adjusted Return on Equity (RoE) RoE improvements in three of seven businesses, with the Investment Bank achieving 15.4% and Barclaycard 19.3% (%) H1 2012 RoE H1 2013 RoE 1 7.8% 10.6% Group 12.2% 12.2% UK RBB Europe RBB (49.1%) (10.9%)
Slide 38: Movements in CRD IV and PRA leverage ratios
PERFORMANCE CAPITAL ASSET QUALITY LIQUIDITY & FUNDING REGULATION Movements in CRD IV and PRA leverage ratios Revised CRD IV FY 12 FY 12 H1 13 H1 13 (£bn) & other revised Pillar 3 movements RA refinements estimate1 Derivative financial assets 469 - 469 (66) 403 Reverse repurchase agreements and other
Slide 39: Notes on exposure measure adjustments
PERFORMANCE CAPITAL ASSET QUALITY LIQUIDITY & FUNDING REGULATION Notes on exposure measure adjustments Derivatives netting adjustment: Regulatory netting applied across asset and liability mark-to-market derivative positions, pursuant to legally enforceable bi-lateral netting agreements and otherw
Slide 40: RWAs by Business
PERFORMANCE CAPITAL ASSET QUALITY LIQUIDITY & FUNDING REGULATION RWAs by Business Risk weighted assets were broadly flat; increase in business activity offset by currency movements, methodology and model changes 30 Jun 13 31 Dec 12 As at (£m) (£m) UK RBB 43,609 39,088 Europe RBB 16,733 15,795 Africa
Slide 41: Stable exposure to the Eurozone periphery
PERFORMANCE CAPITAL ASSET QUALITY LIQUIDITY & FUNDING REGULATION Stable exposure to the Eurozone periphery1 Spain Italy Portugal Ireland Total As at 30 June 2013 (£m) (£m) (£m) (£m) (£m) Sovereign 292 1,967 388 26 2,673 Corporate 4,976 1,489 1,357 1,144 8,966 Residential mortgages 13,546 16,034 3,59
Slide 42: Spanish exposures
PERFORMANCE CAPITAL ASSET QUALITY LIQUIDITY & FUNDING REGULATION Spanish exposures Retail Gross mortgage exposure by location of outstanding balances2 Average balance weighted marked to market LTV of 65.7% 0.7% of home loans greater than 90 days in arrears1. Barcelona Corporate c.13% £3.1bn ne
Slide 43: Portuguese exposures
PERFORMANCE CAPITAL ASSET QUALITY LIQUIDITY & FUNDING REGULATION Portuguese exposures Retail Gross mortgage exposure by location of outstanding balances2 Average balance weighted LTVs of 79.7% 0.4% of home loans greater than 90 days in arrears1 Corporate £1.1bn net lending to corporates and £0
Slide 44: Italian exposures
PERFORMANCE CAPITAL ASSET QUALITY LIQUIDITY & FUNDING REGULATION Italian exposures Retail Gross mortgage exposure by location of outstanding balances2 Average valuation weighted marked to market LTVs of 46.6% 1.0% of home loans greater than 90 days in arrears1 Milan c.10% Corporate £1bn net le
Slide 45: Liquidity & funding management framework
PERFORMANCE CAPITAL ASSET QUALITY LIQUIDITY & FUNDING REGULATION Liquidity & funding management framework Barclays has developed a dynamic liquidity framework and a diversified funding base, while maintaining protection against unexpected fluctuations Liquidity risk framework Funding structure Liq
Slide 46: Wholesale funding composition
PERFORMANCE CAPITAL ASSET QUALITY LIQUIDITY & FUNDING REGULATION Wholesale funding composition ≤1 month >1 month >3 months >6 months Total >1 year but >2 years Total As at 30 June 2013 but ≤3 but ≤6 but ≤12 ≤1 year ≤2 years months months months (£bn) (£bn) (£bn) (£bn) (£bn) (£bn) (£bn) (£bn) Deposit
Slide 47: Term funding plans
PERFORMANCE CAPITAL ASSET QUALITY LIQUIDITY & FUNDING REGULATION Term funding plans1 Commitment to maintain access to a diversified funding base, across different products and multiple currencies Reduced funding requirements due: – Higher than expected deposit growth – Run down of legacy assets
Slide 48: Unsecured medium-term notes and subordinated liabilities
PERFORMANCE CAPITAL ASSET QUALITY LIQUIDITY & FUNDING REGULATION Unsecured medium-term notes and subordinated liabilities Barclays is a major Medium-Term Notes (MTNs) issuer, with private and public MTNs and subordinated liabilities representing c.46% of its total wholesale funding, or £100.5bn, as
Slide 49: Secured funding
PERFORMANCE CAPITAL ASSET QUALITY LIQUIDITY & FUNDING REGULATION Secured funding High-quality assets and contained encumbrance levels allow Barclays to maintain access to secured funding Highlights Wholesale secured funding Secured term funding backed by prime assets, including residential mortgag
Slide 50: Contingent Capital Notes (CCNs)
PERFORMANCE CAPITAL ASSET QUALITY LIQUIDITY & FUNDING REGULATION Contingent Capital Notes (CCNs) Barclays sees significant value in contingent capital notes and has issued US$4.0bn of this subordinated debt as the Group transitions to its end-state CRD IV / ICB capital structure Strategy US$4.0bn of
Slide 51: Barclays funding cost
PERFORMANCE CAPITAL ASSET QUALITY LIQUIDITY & FUNDING REGULATION Barclays funding cost 5-year USD Z-spread (as at 30 June 2013)1 272 231 242 245 195 196 144 156 120 126 131 87 94 102 105 BNP Paribas Nomura HSBC Bank of America Credit Suisse Societe Generale Citigroup Goldman Sachs JP Morgan Barclays
Slide 52: UK banking reform
PERFORMANCE CAPITAL ASSET QUALITY LIQUIDITY & FUNDING REGULATION UK banking reform Barclays backs initiatives to improve stability of the UK banking system and support a sustainable economy, however, requires alignment with international regulation and careful consideration of implementation costs P
Slide 53: Basel 3 Regulatory Timeline
PERFORMANCE CAPITAL ASSET QUALITY LIQUIDITY & FUNDING REGULATION Basel 3 Regulatory Timeline Initial timeframe mentioned below is delayed in the EU – alternative dates have yet to be communicated H1 2010 1 Jan 2011 1 Jan 2012 1 Jan 2013 1 Jan 2014 1 Jan 2015 1 Jan 2016 1 Jan 2017 1 Jan 2018 1 Jan 20
Slide 54: Debt investor relations contact information
Debt investor relations contact information Richard Caven Oihana Bessonart Sofia Lonnqvist +44 (0)20 7116 2809 +44 (0)20 7116 6327 +44 (0)20 7116 5716 richard.caven@barclays.com oihana.bessonart@barclays.com sofia.lonnqvist@barclays.com Website: group.barclays.com/about-barclays/investor-relations#d
Slide 55: Legal disclaimers
Legal disclaimers 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 wit
Slide 56: Legal disclaimers
Legal disclaimers Forward-looking Statements This document contains certain forward-looking statements within the meaning of Section 21E of the US Securities Exchange Act of 1934, as amended, and Section 27A of the US Securities Act of 1933, as amended, with respect to certain of the Barclays Group‟
Slide 57: Legal disclaimers
Legal disclaimers Certain non-IFRS measures This document includes certain non-IFRS measures. These non-IFRS measures are important to understanding the background of, and rationale for, the rights Issue as well as the Group‟s capital and leverage position in light of the implementation of CRD IV an
Slide 58: Legal disclaimers
Legal disclaimers Certain non-IFRS measures (continued) This document includes certain non-IFRS measures in connection with the Group‟s results for the half-year ended 30 June 2013. Barclays management believes that the non- IFRS measures included in this document provide valuable information to rea
Slide 59: Legal disclaimers
Legal disclaimers Certain non-IFRS measures (continued) Adjusted return on average risk weighted assets represents adjusted profit after tax, divided by average risk weighted assets. The comparable IFRS measure is return on average risk weighted assets, which represents profit after tax divided by a