Barclays Plc · LSE:BARC
Barclays — Debt Investor Presentation (October 2014)
50 slides from Barclays's debt investor presentation, Oct 30, 2014
Slide 1: Barclays PLC Fixed Income Investor Presentation Q3 2014
Barclays PLC Fixed Income Investor Presentation Q3 2014 Interim Management Statement 30 October 2014 |
Slide 2: Performance Overview
PERFORMANCE OVERVIEW Performance Overview 2 | Fixed Income Investor Presentation – Q3 2014 IMS
Slide 3: Summary Group financials: Good Core results and Non-Core progress
PERFORMANCE OVERVIEW Summary Group financials: Good Core results and Non-Core progress Nine months ended – September (£m) 2013 2014 Financial performance Income 21,257 19,710 • Adjusted profit increased by 5% to £4.9bn as improvements in Impairment (2,353) (1,595) PCB and Barclaycard were partly off
Slide 4: Strengthening key financial metrics
PERFORMANCE OVERVIEW Strengthening key financial metrics (£bn) Jun-14 Sep-14 Highlights Total assets 1,315 1,366 • Key balance sheet metrics continues to strengthen Balance BCBS leverage exposure1 1,353 1,324 • Fully loaded capital metrics showed steady progress with fully Sheet loaded CRD IV CET ra
Slide 5: Core business performing well
PERFORMANCE OVERVIEW Core business performing well Nine months ended – September (£m) 2013 2014 Financial performance Income 19,414 18,682 • Good overall performance with PBT broadly in line at £5.6bn: Impairment (1,629) (1,429) − PCB and Barclaycard profits up 18% and 21% respectively; Total operat
Slide 6: Barclays Non-Core: Continued shrinkage and capital return
PERFORMANCE OVERVIEW Barclays Non-Core: Continued shrinkage and capital return Nine months ended – September (£m) 2013 2014 Highlights Income 1,843 1,028 • Loss before tax reduced by 33% to £648m as improvements in impairments and costs were partially offset by significant Impairment (724) (166) dec
Slide 7: Capital & Leverage
CAPITAL & LEVERAGE Capital & Leverage 7 | Fixed Income Investor Presentation – Q3 2014 IMS
Slide 8: Progressive strengthening of capital and leverage ratios
CAPITAL & LEVERAGE Progressive strengthening of capital and leverage ratios Fully loaded CRD IV CET1 ratio1 Highlights • Continue to show good progress on our CRD IV CET1 ratio and estimated BCBS leverage ratio towards 2016 targets Spain 10.4% c.20bps2 • Fully loaded CRDIV CET1 capital strengthened
Slide 9: RWAs: Well managed to support business growth and returns
RWAs: Well managed to support business growth and returns RWAs (£bn) Highlights • RWAs were up marginally on the quarter as reductions in Non-Core were offset by growth in Core businesses, and model 411 2 413 and methodology driven movements 4 (7) 3 c.8 1 Spain • Underlying reductions in Non-Core ma
Slide 10: Continued progress on the transition towards our target end-state capital structure
CAPITAL & LEVERAGE Continued progress on the transition towards our „target‟ end-state capital structure Evolution of capital structure Fully loaded CRD IV capital position ≥17% • Fully loaded CRD IV CET1 ratio at 10.2% on track to meet our target of > 11% in 2016. The ratio was well in excess of th
Slide 11: Progressive implementation of CET1 requirements
CAPITAL & LEVERAGE Progressive implementation of CET1 requirements Regulatory targets, excluding internal buffer Key assumptions in this illustration CRD IV minimum CET1 requirement • CET1 minimum requirements per PRA implementation of Pillar 2A met with CET1 capital (varies annually) Capital Requir
Slide 12: Managing CET1 ratio to mitigate risk of mandatory distribution restrictions
CAPITAL & LEVERAGE We intend to manage our CET1 capital ratio to mitigate against the risk of mandatory distribution restrictions CET1 requirements1 (as at 1 January except Q3 14) • Mandatory restrictions to discretionary distributions2 will apply to all European Minimum CET1 ratio Trajectory of ful
Slide 13: Steady progression on leverage ratio
CAPITAL & LEVERAGE Steady progression on leverage ratio BCBS leverage exposure1 (£bn) Highlights L&A and other assets2 Derivatives • Estimated BCBS leverage ratio improved further as a result of regulatory capital accretion and additional deleveraging SFTs Undrawn commitments BCBS leverage ratio1 •
Slide 14: Liquidity & Funding
LIQUIDITY & FUNDING Liquidity & Funding 14 | Fixed Income Investor Presentation – Q3 2014 IMS
Slide 15: Balance sheet is conservatively funded
LIQUIDITY & FUNDING Balance sheet is conservatively funded Balance sheet structure - £1.3tn (excl. BAGL), 30 Sep 14 (£bn) Highlights Derivatives, 378 Derivatives, 378 Derivative assets and liabilities largely matched Matched funding £680bn Trading portfolio assets and reverse repurchase agreemen
Slide 16: Maintaining a robust liquidity position
LIQUIDITY & FUNDING 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 Bonds Other Available Liquidity • Further strengthened liquidity position wit
Slide 17: Stable and diverse sources of funding
LIQUIDITY & FUNDING We maintain access to stable and diverse sources of funding, across customer deposits and wholesale debt Significant increase in deposit funding (£bn) Key messages 101% • Group Loan to Deposit Ratio (LDR) and the LDR for PCB, 110% 99% Barclaycard and Africa Banking broadly unchan
Slide 18: Diverse wholesale funding sources across products, currencies and maturities
LIQUIDITY & FUNDING Continue to access diverse wholesale funding sources across multiple products, currencies and maturities Wholesale funding by product (as at 30 June 2014) Key Messages Deposits from banks • Overall stock of wholesale funding continues to fall as we de- 7% 13% CDs and CPs lever th
Slide 19: Asset quality
ASSET QUALITY Asset quality 19 | Fixed Income Investor Presentation – Q3 2014 IMS
Slide 20: Continued strong asset quality
ASSET QUALITY Continued strong asset quality Impairment charge (£m) • Impairment continued to benefit from strong asset quality with Core impairment falling 12% to £1.4bn, with an impairment release in the Investment Bank and lower charges across all other businesses year-on-year 1,629 1,429 • PCB b
Slide 21: Group impairment improved 32%, with positive trends across businesses
ASSET QUALITY Group impairment improved 32%, with positive trends across businesses Retail loan loss rate (bps)1 Highlights H1 14 Q3 14 • Declining Loan Loss Rate (LLR) trend across the Group reflecting Barclays‟ well-managed 311 301 and conservative risk profile 162 139 • The Group annualised LLR o
Slide 22: Reduced exposure to Eurozone periphery
ASSET QUALITY Reduced exposure to Eurozone periphery1 Exposures by geography (£bn) Key Messages Spain Italy Portugal Ireland • Active management of exposure to Eurozone periphery countries 59.0 4.9 52.8 47.1 • Exposure to Spain, Italy, Portugal and Ireland reduced further, 7.9 6.7 6.3 4.6 down 11% t
Slide 23: Barclays Non-Core: Progress on RWAs and leverage reductions
ASSET QUALITY Barclays Non-Core: Progress on RWAs and leverage reductions RWA reduction (£bn) Highlights Businesses Securities and loans • RWA reductions since the year end have concentrated in securities and loans sales and paydowns Derivatives Operational risk and DTA • RWAs reduced by £6bn in Q3
Slide 24: Credit ratings
CREDIT RATING Credit ratings 24 | Fixed Income Investor Presentation – Q3 2014 IMS
Slide 25: Barclays' credit ratings remain strong and in line with peers'
CREDIT RATING Barclays‟ credit ratings remain strong and in line with peers‟ As at 30 September 2014 Key Messages Barclays PLC Barclays Bank PLC • Current ratings reflect Barclays‟ “strong franchise”, “diverse revenue streams”, “good asset quality relative to Standard & Poor‟s peers”, “historically
Slide 26: Reserving for potential rating actions in the liquidity pool
CREDIT RATING Barclays manages and reserves for potential rating actions in the liquidity pool Contractual credit rating downgrade exposure • Potential outflows related to a multiple-notch credit (as at 31 December 2013) downgrade are included in the Liquidity Risk Appetite (LRA) Total cumulative ca
Slide 27: Summary
CREDIT RATING Summary • Diversified international bank focused on delivering improved and more sustainable returns Business model • Concentrating on our high growth opportunities where we have competitive advantage, eliminating marginal businesses and sharpening our focus on costs • Strengthened cap
Slide 28: Appendix - Strategy
APPENDIX - STRATEGY Appendix - Strategy 28 | Fixed Income Investor Presentation – Q3 2014 IMS
Slide 29: Repositioning and simplifying Barclays
APPENDIX - STRATEGY Repositioning and simplifying Barclays Rightsizing and focusing the Investment Bank Establishing a dedicated Non-Core unit and a new Personal & Corporate Banking business Allocating capital to growth businesses Delivering a structurally lower cost base Generating higher and more
Slide 30: 2016 Transform financial commitments
APPENDIX - STRATEGY 2016 Transform financial commitments 1 Capital CRD IV FL CET1 ratio >11.0% Group 2 Leverage Leverage ratio >4.0% 3 Dividend Payout ratio 40-50% 4 Returns Adjusted RoE >12% Barclays Core 5 Cost Adjusted operating expenses <£14.5bn Barclays Non-Core 6 Returns Drag on adjusted RoE <
Slide 31: Reorganising to a simpler, focused and balanced structure
APPENDIX - STRATEGY Reorganising to a simpler, focused and balanced structure Barclays Group1 Personal & Africa Investment Barclays Non-Core Barclaycard Corporate Banking Banking Bank (BNC) PBT £2,257m PBT £1,126m PBT £756m PBT £1,342m LBT £648m RWAs £120.0bn RWAs £38.6bn RWAs £37.9bn RWAs £127.9bn
Slide 32: Core Investment Bank: Building on competitive advantages
APPENDIX - STRATEGY 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 Equities Global Credit Right-sized Macro Markets • Exit Quadrant Assets • Ca
Slide 33: Reducing and reallocating RWAs to drive growth and returns
APPENDIX - STRATEGY <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 £436bn £436bn c.£400bn c.55% BNC BNC 26% c.115 c.50 <15% Retail and Commercial
Slide 34: Evolving balance of the Core business
APPENDIX - STRATEGY Evolving balance of the Core business Profit before tax of Core business: Q3 YTD 131 Profit before tax of Core business: Q3 YTD 141 Personal and Corporate Investment Banking Bank Personal and Corporate Banking Investment Non- Non- 1,342 Bank 1,907 2,156 Investment Investment 2,25
Slide 35: Core businesses expected to maintain average adjusted RoE >12%
APPENDIX - STRATEGY Core businesses expected to maintain average adjusted RoE >12% on a much higher equity base % Core >12 c.12 Non-Core c.3 drag <3% c.9-10 c.6 6.1 4.5 1.6 Group >9% 3.5 1.0 2013 Adjusting 2013 CTA 2013 Non-core 2013 2013-16 Proforma Income growth/ 2016 Core Statutory RoE items Adju
Slide 36: Operating expenses significantly reduced
APPENDIX - STRATEGY Operating expenses significantly reduced Operating expenses1 progress (£m) CTA outlook (£bn) (8%) CTA YTD Expected CTA 4,734 (14%) 1.3 4,500 4,282 4,223 4,130 0.7 4,042 3,879 0.8 0.2 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 FY 14 FY 15 FY 16 Litigation & 48 77 39 277 65 146 98 C
Slide 37: Group Cost targets
APPENDIX - STRATEGY Group Cost targets Group cost guidance1 (£bn) Core cost targets1 (£bn) Original Group cost target and interim guidance Revised Group cost guidance Core cost targets 19 18.7 c.(9%) c.(13%) 19 18 18 c.(10%) c.17 17 c.16.3 17 c.16.2 16 16 15 15 <14.5 14 14 13 13 2013 2014 2015 2013
Slide 38: Appendix - Data
APPENDIX - DATA Appendix - Data 38 | Fixed Income Investor Presentation – Q3 2014 IMS
Slide 39: Core customer assets and NIM growth driving NII
APPENDIX - DATA Core customer assets and NIM growth driving NII Core income Nine months ended – September (£m) 2013 2014 • Steady performance in PCB and Barclaycard income Personal and Corporate Banking 6,557 6,597 − PCB grew NII 6.6% driven by improved savings margins and Barclaycard 3,069 3,247 mo
Slide 40: Capital resources
APPENDIX - DATA Capital resources1 (£m) 30 June 2014 30 September 2014 Shareholders' equity (excluding non controlling interests) per the balance sheet 58,068 59,571 Less: other equity instruments (recognised as AT1 capital) (4,326) (4,317) Adjustment to retained earnings for foreseeable dividends (
Slide 41: Estimated leverage exposure
APPENDIX - DATA Estimated leverage exposure1 BCBS 270 Leverage exposure (£bn) 30 June 2014 30 September 2014 Derivative financial instruments 333 383 Cash collateral 60 60 Reverse repurchase agreements 172 158 Loans and advances and other assets 750 765 Total IFRS assets 1,315 1,366 Derivatives nett
Slide 42: Wholesale funding composition as at H1 14
APPENDIX - DATA Wholesale funding composition as at H1 141 >3 >6 >1 month >9 months >1 year >2 years months months Total As at 30 June 2014 (£bn) ≤1 month but ≤3 but ≤12 but ≤2 but ≤5 >5 years Total but ≤6 but ≤12 ≤1 year months months years years months months Deposits from banks 10.0 6.8 1.0 4.6 0
Slide 43: Reduced exposure to the Eurozone
APPENDIX - DATA Reduced exposure to the Eurozone As at 30 June 2014 (£m) Spain Italy Portugal Ireland Total Sovereign 134 1,898 165 30 2,227 Financial institutions 753 681 43 2,972 4,449 Corporate 2,736 1,377 653 1,394 6,160 Residential mortgages 11,710 14,284 3,187 92 29,273 Other retail lending 1,
Slide 44: Statutory bail-in power under the UK Banking Act
APPENDIX - DATA In line with the European Bank Recovery & Resolution Directive the UK Banking Act will include a statutory bail-in power Overview Considerations for Bondholders • Statutory bail-in of debt is a key part of the regulatory response to the • The BRRD introduces seniority of deposits fro
Slide 45: CRD IV - Regulatory timeline
APPENDIX - DATA CRD IV - Regulatory timeline Timeframe based on Capital Requirements Regulation (CRR) and Capital Requirements Directive (CRD) published in June 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 2019 Capital requirements Phased-in c
Slide 46: Contact - Debt Investor Relations Team
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-investor-relations.html 46 | Fixed Income Investor Presentation – Q3 2014 IMS
Slide 47: Disclaimer
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 any offer to buy any securities or financial instruments or any advice or recommendation with respe
Slide 48: 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 49: Disclaimer (continued)
Disclaimer (continued) • Adjusted income and adjusted total income net of insurance claims represents total income net of insurance claims excluding the impact of own credit; and the gain on US Lehman acquisition assets. A reconciliation to IFRS is presented on page 17 of the October 30 Form 6-K; •
Slide 50: Disclaimer (continued)
Disclaimer (continued) • „Constant Currency Basis‟ excludes the impact of foreign currency conversion to GBP when comparing financial results in two different financial periods. ZAR has been translated into GBP at prior-year average exchange rates to eliminate the impact of movement in exchange rate