Barclays Plc · LSE:BARC
Barclays — Q3 2019 Earnings Presentation
57 slides from Barclays's earnings presentation, Oct 25, 2019
Slide 1: Barclays PLC Q3 2019 Results
Barclays PLC Q3 2019 Results 25 October 2019 1 | Barclays Q3 2019 Results | 25 October 2019
Slide 2: Jes Staley, Barclays Group Chief Executive
Jes Staley Barclays Group Chief Executive 2 | Barclays Q3 2019 Results | 25 October 2019
Slide 3: Q319 Group highlights
Q319 Group highlights Resilient performance delivering a 10.2% RoTE, excluding L&C Returns1 Attributable profit of £1.2bn resulted in RoTE of 10.2% Income1 Income 8% higher YoY, driving 9% positive cost: income jaws Cost Cost: income ratio of 59% in the third quarter control1 CET1 ratio of 13.4% pos
Slide 4: Tushar Morzaria, Barclays Group Finance Director
Tushar Morzaria Barclays Group Finance Director 4 | Barclays Q3 2019 Results | 25 October 2019
Slide 5: Q319 YTD Group highlights
Q319 YTD Group highlights Group RoTE of 9.7% with 2% positive cost: income jaws • All businesses generated RoTEs in excess of 9% for Financial performance1 the nine months and for each quarter, excluding L&C RoTE1 Income • Income increased 2%, despite the challenging Q1 Q2 Q3 YTD income environment
Slide 6: Q319 Group highlights
Q319 Group highlights Generated attributable profit of £1.2bn and 9% positive cost: income jaws • Income increased 8% driven by a 17% increase in CIB and a 7% increase in CC&P Financial performance1 • Q319 costs of £3.3bn reflected cost efficiency measures across the Group and drove positive Income
Slide 7: Q319 Barclays UK
Q319 Barclays UK RoTE of 21.2% with 1% positive cost: income jaws and an improved risk profile in UK cards • Strong RoTE of 21.2%, with 1% positive cost: Q318 Q418 Q119 Q219 Q319 Financial performance1 income jaws • Income decreased 3% YoY reflecting lower 1,896 1,863 1,777 Income 367 1,771 1,846 in
Slide 8: Q319 Barclays International
Q319 Barclays International Diversified business delivered a third consecutive quarter of double digit returns • Achieved RoTE of 10.0% Income balanced across Financial performance1 • Balanced and diversified business, with businesses and geographies Income US representing c.55% and UK c.30% of inco
Slide 9: Q319 Barclays International: Corporate & Investment Bank
Q319 Barclays International: Corporate & Investment Bank Robust performance with RoTE of 9.2% and significantly positive cost: income jaws of 17% • RoTE of 9.2%, reflecting positive operating leverage Financial performance1 from a 17% increase in income and flat costs Income Income • Markets income
Slide 10: Q319 Barclays International: Consumer, Cards & Payments
Q319 Barclays International: Consumer, Cards & Payments RoTE of 14.0% with steady growth in US Cards and investments across CC&P businesses • Income increased 7% partially reflecting the Q318 Q418 Q119 Q219 Q319 Financial performance1 non-recurrence of a £41m negative YoY revaluation of Visa Inc. pr
Slide 11: Head Office
Head Office Q318 Q219 Q319 • Q319 negative income included: – c.£30m residual negative income impact from legacy capital instruments following redemption of the 14% RCI Income in Q219 (£m) (57) (136) (55) – Hedge accounting expenses – Certain negative treasury items – Partially offset by the Absa Gr
Slide 12: 2019 cost guidance remains unchanged
2019 cost guidance remains unchanged Cost control remains on track as we continue to prioritise cost efficiency measures Absolute cost reduction 2018 to 2019 (£bn)1 2019 cost flexibility • Expect to reduce 2019 costs below £13.6bn2 (based on 1.27 USD/GBP FX rate) through: – Management focus on cost
Slide 13: TNAV progression
TNAV progression TNAV broadly stable with accretion of 8p more than offset by 9p of L&C TNAV (pence per share) • TNAV reduced by 1p to 274p in the quarter, as increases of: – 7.2p of earnings per share 2 1 – 3p due to currency 3 2 283 translation reserve 7 2 3 9 movements, as the USD/GBP exchange ra
Slide 14: CET1 ratio progression
CET1 ratio progression 13.4% with strong capital generation from profits CET1 ratio1 CET1 • CET1 ratio of 13.4% £42.9bn £41.9bn reflecting: capital: – c.60bps from the benefit 21bps 6bps of removing the 48bps 13bps operational risk RWA floor 24bps – c.50bps of profits 14.0% generated in the quarter
Slide 15: CET1 ratio benefited from removal of operational risk RWA floor
Q319 CET1 ratio of 13.4% benefited from the removal of the operational risk RWA floor by c.60bps c.60bps positive CET1 ratio impact from change in operational risk regulatory treatment1 Old basis New basis Change • Following discussions with regulators, we have removed the operational risk RWA floor
Slide 16: High quality funding position with conservatively positioned liquidity pool and LDR
High quality funding position with a conservatively positioned liquidity pool and LDR Well prepared for Brexit and macroeconomic uncertainties Diversified funding profile with strong deposit base Well positioned for future MREL requirements Deposits • Issued £8.2bn equivalent 2% 31.3% 8% 30.4% of MR
Slide 17: Focused on profitability and returning capital to shareholders
Focused on profitability and returning capital to shareholders Q319 highlights Group targets CET1 ratio CET1 ratio2 Capital returns 13.4% Target increased from Progressive ordinary dividend, c.13% to c.13.5% supplemented by Dividends following the benefit of removing share buybacks as operational ri
Slide 18: Appendix
Appendix 18 | Barclays Q3 2019 Results | 25 October 2019
Slide 19: Diversified and prudently positioned
Diversified and prudently positioned Well prepared for Brexit and macroeconomic uncertainties Diversified income mix by geography and product Diversified funding 5% 2% 9% 8% 20% 18% 9% H119 H119 Group Q319 Group 8% Group income by 50% 11% income by funding geography2 18% business1 6% sources3 37% 63
Slide 20: Think digital, think Barclays UK
Think digital, think Barclays UK Building meaningful relationships with our 24 million customers Changing the shape of our business Front end digitisation Delivering sustainable Investing in digital talent, Automation income generation through cyber resilience digital transformation and digital tech
Slide 21: Barclays International: Improving share in the CIB
Barclays International: Improving share in the CIB Gaining share in Markets and Banking Markets1 Banking fees2 20bps 30bps XXX XXX XX XX XX XXX 4.3% 4.5% 4.1% 4.4% H118 H119 FY18 Q319 YTD Overall 20bps gain of market share in Global Markets, Q319 YTD fee share rank of #6 globally and #5 based on
Slide 22: Barclays International: Consumer, Cards & Payments opportunities
Barclays International: Consumer, Cards & Payments opportunities Portfolio of leading franchises with high returns and growth potential Cards & Payments #9 US credit card receivables1 Barclays Strong market US position and Consumer delivering Bank growth $15.6bn Retail deposits #2 Merchant acquirer
Slide 23: Prudently managing credit risk in both the UK and US
Prudently managing credit risk in both the UK and US Conservatively positioned in the face of Brexit and the consumer credit cycle in the US H118 FY18 H119 £134.4bn £136.5bn £138.3bn • Focus on growing mortgage book within risk 67.1% appetite UK 64.4% 65.4% UK mortgage • c.50% average LTV of mortgag
Slide 24: Strong Group CET1 and leverage ratios
Strong Group CET1 and leverage ratios Fully loaded and transitional CET1 ratio Fully loaded CET1 ratio IFRS 9 transitional benefit • Transitional CET1 ratio was stable QoQ at 13.4%, reflecting: 13.3%1 13.4%1 13.4%1 – c.60bps from the benefit of removing the operational risk 13.2%1 12.4% RWA floor 11
Slide 25: Prudently managing the Group's capital position
Prudently managing the Group’s capital position Group’s CET1 managed to remain above the regulatory minimum, pass stress tests, and absorb any PRA buffer Q319 CET1 ratio1 13.4% Distribution restrictions c.13.5% target • Barclays’ headroom is currently 1.4% above our current MDR Mandatory Distributio
Slide 26: Managing evolving future Group minimum leverage requirements
Managing evolving future Group minimum leverage requirements Minimum leverage requirements and buffers under the UK regime • We continue to view leverage as a backstop measure in Q319 Leverage ratios1: determining the capital Barclays holds. Our business mix means the risk based RWA measure of capit
Slide 27: High quality liquidity position
High quality liquidity position Conservatively positioned liquidity pool, LDR and lower reliance on short-term wholesale funding Highly liquid, comfortably exceeding minimum requirement Conservative loan: deposit ratio2 L&A3 (£bn) Deposits3 (£bn) LDR Liquidity Coverage Ratio (LCR) 83% 83% 83% 82% 82
Slide 28: Focus on ESG
Focus on ESG Growing momentum on key Environmental, Social and Governance factors across the firm Progress on key ESG factors Sustainability & Citizenship commitments Capital and Products • Continued to build green and sustainable finance platform across business lines £150bn social and environmenta
Slide 29: Fixed Income slides
Fixed Income slides 29 | Barclays Q3 2019 Results | 25 October 2019
Slide 30: Transition to 2022 capital structure well established
Transition to 2022 capital structure well established Expect to maintain prudent headroom above AT1 and Tier 2 minimums Illustrative evolution of regulatory capital structure Well managed and balanced total capital structure ≥19.3% • BBPLC issued capital instruments are expected to be included as 21
Slide 31: Managing call and maturity profiles of BPLC and BBPLC capital instruments
Managing the call and maturity profiles of BPLC and BBPLC capital instruments BPLC capital call and maturity profile (£bn) BPLC AT1 capital as at 30 September 20191 BPLC Tier 2 capital as at 30 September 20191 • Redemption of three AT1 First call date By contractual maturity as applicable By next ca
Slide 32: ADI position supports strong distribution capacity
ADI position supports strong distribution capacity Distribution capacity as at 31 December 2018 (£m) Distributable items ADI Barclays PLC dividend payments Barclays PLC AT1 coupons • Barclays PLC has significant ADIs1 to cover dividends on ordinary shares and AT1 distributions • Barclays has never m
Slide 33: Successfully transitioning to a HoldCo funding model
Successfully transitioning to a HoldCo funding model Completed c.£8bn of expected MREL issuance in 2019 HoldCo MREL position and expected requirement Well advanced on 2022 HoldCo issuance plan 31.2% • Issued £8.2bn equivalent of MREL year to date and completed 30.4% the 2019 HoldCo issuance plan, in
Slide 34: Continued progress in HoldCo issuance
Continued progress in HoldCo issuance HoldCo issuance by year1 (£bn) 2019 YTD HoldCo issuance by currency3 AT1 Tier 2 Senior unsecured 13.4 12.1 12.2 March: USD 2bn AT1 11.5 6.2 8.2 April: USD 750m Senior tap 6.1 9.3 10.2 1.8 3.5 1.2 May: USD 2bn Senior 2.9 5.4 1.7 3.5 2.5 1.9 1.1 May: GBP 600m Seni
Slide 35: Balanced HoldCo funding profile by debt class and tenor
Balanced HoldCo funding profile by debt class and tenor Barclays PLC AT1 Tier 2 Senior 20% By 15% product £55bn 66% BPLC AT1 capital BPLC Tier 2 capital BPLC Senior unsecured debt as at 30 September 20191 as at 30 September 20191 as at 30 September 20191 First call date By contractual maturity as ap
Slide 36: Illustrative UK approach to resolution
Illustrative UK approach to resolution1 OpCo waterfall Intercompany investments HoldCo waterfall • Total OpCo losses which exceed its equity • Losses are transmitted to HoldCo • The loss on HoldCo’s investment from step 2 is capacity are allocated to OpCo investors in through write-down of its alloc
Slide 37: Legal entity structure of the Group since April 2018
Legal entity structure of the Group since April 2018 Barclays PLC Barclays International Barclays UK and Head Office1 Market leading UK retail bank, combining digital Diversified bank across Cards & Payments, innovation and scale, with 24 million customers Corporate & Investment Banking and Private
Slide 38: Diversified funding sources across all legal entities
Diversified funding sources across all legal entities1 Majority of funding within legal entities through deposits Barclays PLC 55 28 8% 4% 414 71 11% 63% H119: 4% 23 £659bn2 9% 56 2% Barclays Bank UK PLC 3 Barclays Bank PLC 3 13 15 2 43 1% 10 Key: 6% 4% 11% 26 11 4% Deposits 11 8% 4% Shareholders’ e
Slide 39: Deposit and wholesale funding sources of Barclays Bank UK PLC and Barclays Bank PLC
Deposit and wholesale funding sources of Barclays Bank UK PLC and Barclays Bank PLC Barclays PLC Barclays Bank UK PLC Barclays Bank PLC (and subsidiaries) H119 FY18 H119 FY18 Personal Banking 156 154 Corporate and Investment Bank 145 136 Deposit funding2 201 197 215 199 Business Banking 45 43 Consum
Slide 40: Wholesale funding composition as at 30 June 2019
Wholesale funding composition as at 30 June 20191 <1 1-3 3-6 6-12 Total 1-2 2-3 3-4 4-5 As at 30 June 2019 (£bn) >5 years Total month months months months <1 year years years years years Barclays PLC (the Parent company) Senior unsecured - - 1.6 0.8 2.4 2.9 3.4 4.0 8.5 13.8 35.0 (Public benchmark) S
Slide 41: Ratings remain a key priority
Ratings remain a key priority Focus on strategy execution and achieving performance targets to improve ratings Current Senior Long and We solicit ratings from S&P, Fitch and Moody’s for Standard & Poor’s Fitch Moody’s Short Term ratings the HoldCo and both its OpCos that sit immediately beneath it •
Slide 42: Barclays rating composition for senior debt
Barclays rating composition for senior debt Standard & Poor’s Fitch Moody’s BPLC BBPLC BBUKPLC BPLC BBPLC BBUKPLC BPLC BBPLC BBUKPLC Stand-Alone Credit Profile bbb+ Viability Rating1 a a a Baseline Credit Assessment baa3 baa3 a3 Anchor bbb+ Operating environment aa to a+ Macro profile Strong+ Strong
Slide 43: Barclays rating composition for subordinated debt
Barclays rating composition for subordinated debt Standard & Poor’s Fitch Moody’s Baseline Stand-alone Stand-Alone Viability bbb+ a a Credit baa3 baa3 rating Credit Profile Rating Assessment BPLC BBPLC BPLC BBPLC BPLC BBPLC T2 T2 T2 T1 T2 AT1 LT2 UT2 T1 T2 AT1 LT2 UT2 T1 T2 AT1 LT2 UT2 Coco Coco Coc
Slide 44: Preparation for continuity of business in the event of Brexit
Preparation for continuity of business in the event of Brexit Plans have been implemented to support activity with European clients through expanded Barclays Bank Ireland • Barclays Bank Ireland (BBI) is now fully operational and Indicative BBI as at 31 December 20182 significant activity with Europ
Slide 45: Financial results tables
Financial results tables 45 | Barclays Q3 2019 Results | 25 October 2019
Slide 46: Other items of interest – Q319 YTD and Q319 vs. prior year
Other items of interest – Q319 YTD and Q319 vs. prior year Material items – nine months ended (£m) Q319 YTD Q318 YTD L&C PPI provision (1,400) (400) Barclays UK DoJ RMBS - (1,420) Head Office Other L&C across divisions (282) (327) Group Revaluation of Visa Inc. preference shares - (41) Consumer, Car
Slide 47: Q319 YTD Group
Q319 YTD Group Nine months ended (£m) Sep-19 Sep-18 % change Excluding L&C – nine months ended (£m) Sep-19 Sep-18 % change Income 16,331 16,063 2% Profit before tax 4,942 5,267 (6%) Impairment (1,389) (825) (68%) Attributable profit 3,391 3,685 (8%) – Operating costs (10,051) (10,003) – Litigation a
Slide 48: Q319 Group
Q319 Group Three months ended (£m) Sep-19 Sep-18 % change Excluding L&C – three months ended (£m) Sep-19 Sep-18 % change Income 5,541 5,129 8% Profit before tax 1,814 1,566 16% Impairment (461) (254) (81%) Attributable profit 1,233 1,135 9% – Operating costs (3,293) (3,329) 1% – Litigation and condu
Slide 49: Q319 YTD Barclays UK
Q319 YTD Barclays UK Nine months ended (£m) Sep-19 Sep-18 % change Excluding L&C – nine months ended (£m) Sep-19 Sep-18 % change – Personal Banking 2,945 3,008 (2%) Profit before tax 1,899 2,034 (7%) – Barclaycard Consumer UK 1,459 1,582 (8%) Attributable (loss)/profit 1,332 1,417 (6%) – Business Ba
Slide 50: Q319 Barclays UK
Q319 Barclays UK Three months ended (£m) Sep-19 Sep-18 % change Excluding L&C – three months ended (£m) Sep-19 Sep-18 % change – Personal Banking 1,035 1,021 1% Profit before tax 793 794 – Barclaycard Consumer UK 472 551 (14%) Attributable profit 550 558 (1%) – Business Banking 339 324 5% Income 1,8
Slide 51: Q319 YTD Barclays International
Q319 YTD Barclays International Nine months ended (£m) Sep-19 Sep-18 % change Excluding L&C – nine months ended (£m) Sep-19 Sep-18 % change – CIB 7,917 7,614 4% Profit before tax 3,508 3,654 (4%) – CC&P 3,306 3,191 4% Attributable profit 2,445 2,692 (9%) Income 11,223 10,805 4% – CIB (127) 185 Perfo
Slide 52: Q319 Barclays International
Q319 Barclays International Three months ended (£m) Sep-19 Sep-18 % change Excluding L&C – three months ended (£m) Sep-19 Sep-18 % change – CIB 2,617 2,235 17% Profit before tax 1,137 882 29% – CC&P 1,133 1,055 7% Attributable profit 801 713 12% Income 3,750 3,290 14% – CIB (31) 3 Performance measur
Slide 53: Q319 YTD Barclays International: CIB and CC&P
Q319 YTD Barclays International: Corporate & Investment Bank and Consumer, Cards & Payments CIB business performance CC&P business performance % change Nine months ended (£m) Sep-19 Sep-18 Nine months ended (£m) Sep-19 Sep-18 % change GBP basis – FICC 2,638 2,293 15% Income 3,306 3,191 4% – Equities
Slide 54: Q319 Barclays International: CIB and CC&P
Q319 Barclays International: Corporate & Investment Bank and Consumer, Cards & Payments CIB business performance CC&P business performance % change % change Three months ended (£m) Sep-19 Sep-18 Three months ended (£m) Sep-19 Sep-18 % change GBP basis USD basis – FICC 816 688 19% 11% Income 1,133 1,
Slide 55: Head Office – Q319 YTD and Q319
Head Office – Q319 YTD and Q319 Nine months ended (£m) Sep-19 Sep-18 Three months ended (£m) Sep-19 Sep-18 Income (286) (262) Income (55) (57) Impairment charges (23) 9 Impairment charges (8) 4 – Operating costs (155) (159) – Operating costs (59) (64) – Litigation and conduct (128) (1,585) – Litigat
Slide 56: Abbreviations
Abbreviations ABS Asset-backed Securities FICC Fixed Income, Currencies and Commodities RCI Reserve Capital Instrument ADI Available Distributable Items FPC Financial Policy Committee RMBS Residential Mortgage-Backed Securities ALAC Additional Loss-Absorbing Capacity GMP Guaranteed Minimum Pensions
Slide 57: Disclaimer
Disclaimer Important Notice The terms Barclays or Barclays 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 of