Barclays Plc · LSE:BARC
Barclays — Q4 2020 Earnings Presentation
63 slides from Barclays's earnings presentation, Feb 22, 2021
Slide 1: Barclays PLC FY 2020 Results
Barclays PLC FY 2020 Results 18 February 2021 | Barclays FY 2020 Results | 18 February 2021
Slide 2: Jes Staley, Barclays Group Chief Executive
Jes Staley Barclays Group Chief Executive | Barclays FY 2020 Results | 18 February 2021
Slide 3: Remained open for business throughout the COVID-19 pandemic
Remained open for business throughout the COVID-19 pandemic, helping support the economy Supporting Supporting Supporting our communities customers businesses and colleagues Supported customers in financial need Delivered UK Government support Used our reach to support communities with payment holid
Slide 4: Diversified banking model which provides resilience through economic cycles
Diversified banking model which provides resilience through economic cycles Diversified by Diversified by Diversified by customer and client geography income type Consumer and wholesale mix enabled Barclays has a global footprint with In a low rate environment, Barclays is the Group to generate 1% h
Slide 5: Resilient FY20 performance despite the COVID-19 pandemic
Resilient FY20 performance despite the COVID-19 pandemic FY20 Financial highlights1 Continue to support customers, clients, colleagues and communities. Barclays is well-placed to support the recovery £21.8bn Income Benefitted from our diversified business model as strong CIB income Pre-provision £7.
Slide 6: CIB returns improvement driven by material growth in market share of Markets
CIB returns improvement driven by material growth in market share of the Markets business since 2017 Total market share change of the Markets business (2017-20) $297bn Markets114 & 20% 300 1 US banks2 European banks2 $248bn $241bn $236bn Banking3 vs. FY17 industry 45% wallet 12 200 vs. FY17 £10.3bn
Slide 7: Consumer spending impacted by extended lockdowns while mortgage activity remains robust
Consumer spending impacted by extended lockdowns while mortgage activity remains robust Merchant acquiring Cards spending1 Mortgages turnover2 YoY change in monthly spend (%) YoY change in monthly turnover (%) Mortgage application values (£bn) 2021 continues to be affected by lockdowns, with Q420 mo
Slide 8: Ambition to be a net zero bank by 2050
Ambition to be a net zero bank by 2050 Ambition to be a net zero bank by 2050 • Already at net zero emissions from our own operations (Scope 1 and 2) • Announced in March 2020 our commitment to align our financing in all sectors with the goals of the Paris Agreement – Emissions for the clients we fi
Slide 9: Strong balance sheet underpinning returns potential
Strong balance sheet underpinning returns potential FY20 metrics1 Group targets Group RoTE Group RoTE/profitability Cost efficiency 3.2% >10% RoTE over time, with <60% cost: income ratio over Cost efficiency meaningful year on year time improvement in 2021 64% cost: income ratio2 CET1 ratio 15.1% CE
Slide 10: Tushar Morzaria, Barclays Group Finance Director
Tushar Morzaria Barclays Group Finance Director | Barclays FY 2020 Results | 18 February 2021
Slide 11: FY20 Group highlights
FY20 Group highlights Group PBT of £3.2bn (excl. litigation and conduct) despite the impact of the COVID-19 pandemic Financial performance1 • PBT down 48%, primarily driven by materially increased impairment charges due to the `` deterioration in economic outlook driven by the COVID-19 pandemic Inco
Slide 12: Income growth of 1% as strong CIB performance offset consumer headwinds
Income growth of 1% as strong CIB performance offset consumer business headwinds £21,632m +1% £21,766m Income -14% YoY 20,000 • Lower unsecured lending balances, lower UK rates, and COVID-19 customer support actions 19,400 £6,347m Barclays UK £7,353m -14% • Partial offsets from BBLS and CBILS, depos
Slide 13: Consumer businesses still facing headwinds from COVID-19 restrictions
Consumer businesses still facing headwinds from COVID-19 restrictions Barclays UK Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec • Experiencing downward pressure on consumer spending and -8% -9% -10% -10% -14% -18% -21% -19% -19% -20% -20% -21% Lower UK cards 10% unsecured lending balances in Q121,
Slide 14: Costs increased 1%, with neutral cost: income jaws
Costs increased 1%, with neutral cost: income jaws1 FY20 costs of £13.7bn1 Cost: income ratio of 63%1 Of which structural Total +1% £13,585m £13,733m c.£150m c.£370m costs cost actions £13,585m +1% £13,733m Non-compensation +1% Bank Levy £6,242m £6,296m costs £226m +32% £299m Performance costs £1,45
Slide 15: Impairment charge increased £2.9bn due to expected future customer and client stress
Impairment charge increased £2.9bn due to expected future customer and client stress caused by the pandemic Group loan 55bps 138bps All divisions experienced increased impairment in 2020, due to the loss rate (bps) £4,838m deterioration in economic outlook Impairment increased to £1.5bn reflecting h
Slide 16: Balance sheet impairment allowances significantly strengthened
Balance sheet impairment allowances significantly strengthened, including management adjustments Baseline scenario macroeconomic variables (MEVs) Dec-19 MEVs Dec-20 MEVs Expected • Baseline UK and US macroeconomic variables worst have been revised 2021 2022 2021 2022 2023 point2 − The Dec-20 baselin
Slide 17: Increased coverage across all portfolios
Increased coverage across all portfolios, with unsecured lending coverage ratio at 12.3% Credit cards, unsecured loans and other retail lending Wholesale loans Gross exposure (£m) Impairment allowance (£m) Coverage ratio Gross exposure (£m) Impairment allowance (£m) Coverage ratio 60,180 52,035 46,5
Slide 18: Q420 Group highlights
Q420 Group highlights Barclays continued to be profitable in the fourth quarter with a strong balance sheet Financial performance1 • Income decreased 7% as continued strong performance in CIB, in both Markets and Banking, was `` offset by continued headwinds in BUK and CC&P Income £4.9bn Q419: £5.3b
Slide 19: Q420 Barclays UK
Q420 Barclays UK Barclays UK continued to support customers in a challenging operating environment • Income decreased 17% reflecting the challenging Financial performance1 Q419 Q120 Q220 Q320 Q420 operating environment − Impact of lower unsecured lending balances and UK Income rates, partially offse
Slide 20: Q420 Barclays International
Q420 Barclays International Resilient performance with stable income and impairment, and lower costs Financial performance1 • Income was stable at £3.5bn, reflecting strong Balanced income profile across performance in CIB, offset by lower income in businesses and geographies Income CC&P £3.5bn Q419
Slide 21: Q420 Barclays International: Corporate & Investment Bank
Q420 Barclays International: Corporate & Investment Bank Record Q4 income1 and positive cost: income jaws Financial performance2 • CIB income increased 14% to £2.6bn Income • Markets income increased 19%, reflecting the best Income ever Q4 on a comparable basis1 for both FICC and GBP basis (£m) USD
Slide 22: Q420 Barclays International: Consumer, Cards & Payments
Q420 Barclays International: Consumer, Cards & Payments Lower income partially offset by reduction in costs and impairment Q419 Q120 Q220 Q320 Q420 Financial performance1 • Income decreased 25% due to lower US card balances and reduced payments income 1,138 1,027 876 848 Income Total 421 364 694 • C
Slide 23: Head Office
Head Office Q419 Q320 Q420 • Q420 negative income of £171m including: − Funding costs on legacy capital instruments, including £85m from Income (110) (127) repurchases of some of the Barclays Bank (£m) (171) PLC 7.625% Contingent Capital Notes − Negative treasury items − Hedge accounting losses (56)
Slide 24: CET1 ratio increased 130bps YoY and 50bps QoQ
CET1 ratio increased 130bps YoY and 50bps QoQ CET1 ratio was 390bps above the MDA hurdle of 11.2% as at Dec-20 YoY CET1 ratio1 movements 35bps 6bps 29bps 122bps 40bps 91bps 203bps Includes: 14.6% • 45bps IFRS 9 15.1% 15.4% 15.1% 15.1% 13.8% 13.8% 14.2% 14.2% transitional relief • 30bps software amor
Slide 25: CET1 ratio flightpath to target range of 13-14%
CET1 ratio flightpath to target range of 13-14% 24bps 13-14% 23bps • PVA relief: 15bps 15.1% • 14.9% IFRS 9 relief 14.7% 14.7% 14.7% 15.1% amortisation: 9bps Dec-20 1 Reduction of Share buyback Rebased 1-Jan-21 Organic capital Additional Capital CET1 target range regulatory support announced 2 CET1
Slide 26: High quality and conservatively positioned liquidity and funding position
High quality and conservatively positioned liquidity and funding position Comfortably exceeding minimum requirements Conservative loan: deposit ratio2 Loans3 (£bn) Deposits3 (£bn) LDR Liquidity Coverage Ratio (LCR) 83% 82% 70% 71% 181% 169% 160% 162% Minimum requirement: 100% 495 481 395 416 31-Dec-
Slide 27: Outlook: Diversification allowing resumption of capital returns to shareholders
Outlook: Diversification allowing resumption of capital returns to shareholders Returns Expect meaningful year-on-year RoTE improvement in 2021 The Group continues to benefit from diversification. Income outlook for the consumer Income businesses remain challenging while the CIB franchise remains we
Slide 28: Appendix
Appendix | Barclays FY 2020 Results | 18 February 2021
Slide 29: Barclays investment proposition
Barclays investment proposition Our scale, geographic reach and diversification make us a universal bank, delivering financial expertise around the world 1 2 3 4 Resilience through Strong balance sheet Growth opportunities Sustainable impact diversification supporting returns We are a British univer
Slide 30: Support for customers in the UK
Support for customers in the UK1 • Mortgage payment holidays granted for c.128,000 accounts Mortgages • 12 month interest only payments granted Personal loans and • Payment holidays granted for c.119,000 personal loan and point of sale finance point of sale financing accounts • Provided an interest
Slide 31: Support for businesses
Support for businesses1 • £14bn three year lending fund for UK SMEs Existing lending • Over £50bn of lending limits available to UK clients and withholding fees • Free banking and overdraft fees waived for 650,000 UK SMEs • 12-month capital repayment holidays for most loans over £25,000 • c.330,000
Slide 32: Support for our communities and colleagues
Support for our communities and colleagues1 • £100m committed to the COVID-19 Community Aid Package Supporting for charities delivering COVID-19 relief in our communities communities • Extended LifeSkills and Digital Eagles programmes to support home schooling and fraud prevention • 70,000 of 83,000
Slide 33: Barclays' climate journey
Barclays’ climate journey March 2020 • Announced ambition to be net zero • Updated restrictions for sensitive energy sectors May 2020 • Climate resolution passed at Annual General Meeting November 2020 • Update on methodology and targets for aligning our financed emissions 2021 onwards • Continuing
Slide 34: Structural Hedge and Interest rate sensitivity
Structural Hedge and Interest rate sensitivity Structural Hedge Program update • The Group’s combined gross equity and product structural hedge contribution was £0.4bn in Q420 and £1.7bn in FY20. The net structural hedge contribution was £0.3bn in Q420 and £1.2bn in FY20 • The combined structural he
Slide 35: Key macroeconomic variable assumption trends
Key macroeconomic variable assumption trends GDP (re-based to 2019) Unemployment rate1 110 14.0% 13.0% 105 12.0% 10.0% 100 7.4% 8.0% 95 6.0% 90 4.0% 85 2.0% 80 0.0% Q120 Q220 Q320 Q420 Q121 Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223 Q323 Q423 2019 2020 2021 2022 2023 House price index (re-based to
Slide 36: Retail portfolios in the UK and US were prudently positioned coming into the crisis
Retail portfolios in the UK and US were prudently positioned coming into the crisis FY19 H120 FY20 • Risk actions taken at pandemic outset to mitigate £143.3bn £145.2bn £148.3bn potential economic impact UK 67.9% 68.4% 67.6% • Mortgage balance growth achieved in lower LTV mortgage UK segments balanc
Slide 37: Increased coverage across unsecured portfolios
Increased coverage across unsecured portfolios, with UK and US cards coverage ratios of 16.6% and 14.3% respectively UK cards US cards Gross exposure (£m) Impairment allowance (£m) Coverage ratio Gross exposure (£m) Impairment allowance (£m) Coverage ratio 16,457 13,639 11,911 1,736 2,179 1,980 10.5
Slide 38: Wholesale exposures are diversified and well covered
Wholesale exposures are diversified and well covered, especially in selected vulnerable sectors Wholesale exposure as at FY20 (1.5% coverage ratio) • Well diversified portfolio across sector and geography FY20 Coverage • Majority of exposure (>65%) is to clients internally rated £18.7bn ratio(Q320)
Slide 39: Payment holiday balances outstanding are at low levels
Payment holiday balances outstanding are at low levels despite the continued impacts of the pandemic UK mortgages1 UK cards1 Total payment holidays granted (£bn) Total payment holidays granted (£m) 18.0 20.7 21.6 22.3 23.0 810 873 959 1,032 Gross on 0.4 Gross on 644 6.7 210 balance sheet £2.2bn 17.9
Slide 40: TNAV movement
TNAV movement TNAV increased 7p YoY to 269p YoY TNAV movements (pence per share) • TNAV increased by 7p to 269p due to: – 8.8p of earnings 1 1 3 – 5p of positive cash flow hedge and other 3 3 reserve movements 1 9 • Partially offset by: 269 262 – 3p reduction in the own credit reserve – 3p reduction
Slide 41: RWAs increased by £11.1bn YoY and decreased by £4.5bn QoQ
RWAs increased by £11.1bn YoY and decreased by £4.5bn QoQ YoY RWAs movements (£bn) 1.7 2.6 4.9 9.1 6.6 3.6 0.9 303.6 306.2 300.4 295.1 295.1 297.6 296.8 296.8 1 Dec-19 Credit risk - Credit risk - Credit risk - reg. Counterparty credit Market risk FX Other Dec-20 book quality net lending tailwinds ri
Slide 42: IFRS 9 transitional relief as at Dec-20 at c.80bps
IFRS 9 transitional relief as at Dec-20 at c.80bps Impairment migration to stage 3 would lead to capital impact as it is not eligible for transitional relief Constructive regulatory action in Q220 gave greater relief Prudently positioned CET1 ratio for stage 1 and 2 impairments in the event of stage
Slide 43: Constructive regulatory actions in 2020
Constructive regulatory actions in 2020 Many regulatory actions in place for the medium term Expected timeline and beyond FY20 FY21 FY22 FY23 FY24 Q1 Q2 Q3 CET1 requirement • Modification of Pillar 2A requirement1 CET1 capital • IFRS 9 transitional relief on new COVID-19 related expected credit loss
Slide 44: Material increase in headroom above MDA hurdle
Material increase in headroom above MDA hurdle CET1 ratio target in the range of 13-14% Illustrative evolution of minimum CET1 requirements and buffers • Barclays intends to manage its CET1 ratio in the Dec-191: Dec-201: range of 13-14%, to enable it to support 13.8% +130bps 15.1% Target: customers
Slide 45: Managing evolving future Group minimum leverage requirements
Managing evolving future Group minimum leverage requirements Minimum leverage requirements and buffers under the UK regime • Headroom to minimum leverage requirement of 150bps in Q4, while the RWA based CET1 ratio remains our primary regulatory constraint Dec-191: Dec-201: UK Spot: 5.1% UK Spot: 5.3
Slide 46: 2021 pension update
2021 pension update CET1 ratio headwinds from pension reduction contributions fully incorporated into prudent capital plan and CET1 target • As at 31 December 2020, the Group’s IAS 19 pension surplus across all schemes was £1.5bn (December 2019: £1.8bn). The UK Retirement Fund (UKRF), which is the G
Slide 47: Barclays is set up to continue serving clients based in the EU
Barclays is set up to continue serving clients based in the EU EU subsidiary operational with client on-boarding substantially complete • Barclays has been able to provide undisrupted services in the European footprint to service key markets European Union (EU) throughout the Brexit transition perio
Slide 48: Financial results tables
Financial results tables | Barclays FY 2020 Results | 18 February 2021
Slide 49: FY20 other items of interest
FY20 other items of interest Year ended (£m) Dec-20 Dec-19 Income Strategic investment gain relating to the IPO of Tradeweb - 180 Corporate & Investment Bank (Markets) Valuation loss on Barclays’ preference shares in Visa Inc. (101) - Consumer, Cards and Payments Mark-to-market losses on legacy inve
Slide 50: FY20 Group
FY20 Group Year ended (£m) Dec-20 Dec-19 % change Excluding litigation and conduct – year Dec-20 Dec-19 % change ended (£m) Income 21,766 21,632 1% Profit before tax 3,218 6,206 (48%) Impairment (4,838) (1,912) (153%) Attributable profit 1,638 4,194 (61%) – Operating costs (13,434) (13,359) (1%) Per
Slide 51: FY20 Barclays UK
FY20 Barclays UK Year ended (£m) Dec-20 Dec-19 % change Excluding litigation and conduct – year Dec-20 Dec-19 % change ended (£m) – Personal Banking 3,522 4,009 (12%) Profit before tax 578 2,604 (78%) – Barclaycard Consumer UK 1,519 1,992 (24%) Attributable profit 343 1,813 (81%) – Business Banking
Slide 52: FY20 Barclays International
FY20 Barclays International Year ended (£m) Dec-20 Dec-19 % change Excluding litigation and conduct – year Dec-20 Dec-19 % change ended (£m) – CIB 12,476 10,231 22% Profit before tax 3,664 4,234 (13%) – CC&P 3,445 4,444 (22%) Attributable profit 2,258 2,906 (22%) Income 15,921 14,675 8% Performance
Slide 53: FY20 Barclays International: Corporate & Investment Bank
FY20 Barclays International: Corporate & Investment Bank Year ended (£m) Dec-20 Dec-19 % change Excluding litigation and conduct – year Dec-20 Dec-19 % change ended (£m) – FICC 5,138 3,364 53% Profit before tax 4,008 3,064 31% – Equities 2,471 1,887 31% Attributable profit 2,556 2,064 24% Markets 7,
Slide 54: FY20 Barclays International: Consumer, Cards & Payments
FY20 Barclays International: Consumer, Cards & Payments Year ended (£m) Dec-20 Dec-19 % change Excluding litigation and conduct – year Dec-20 Dec-19 % change ended (£m) Income 3,445 4,444 (22%) (Loss)/profit before tax (344) 1,170 (129%) Impairment (1,721) (1,016) (69%) Attributable (loss)/profit (2
Slide 55: FY20 Head Office
FY20 Head Office Year ended (£m) Dec-20 Dec-19 % change Excluding litigation and conduct – year Dec-20 Dec-19 % change ended (£m) Income (502) (396) (27%) Loss before tax (1,024) (632) (62%) Impairment charges (91) (27) >(200%) Attributable loss (963) (525) (83%) – Operating costs (399) (200) (100%)
Slide 56: Q420 other items of interest
Q420 other items of interest Three months ended (£m) Dec-20 Dec-19 Income Strategic investment gain relating to the IPO of Tradeweb - 55 Corporate & Investment Bank (Markets) Repurchases of some of the Barclays Bank PLC 7.625% Contingent Capital Notes (85) - Head Office Costs Structural cost actions
Slide 57: Q420 Group
Q420 Group Three months ended (£m) Dec-20 Dec-19 % change Excluding litigation and conduct – three Dec-20 Dec-19 % change months ended (£m) Income 4,941 5,301 (7%) Profit before tax 693 1,264 (45%) Impairment (492) (523) 6% Attributable profit 260 803 (68%) – Operating costs (3,480) (3,308) (5%) Per
Slide 58: Q420 Barclays UK
Q420 Barclays UK Three months ended (£m) Dec-20 Dec-19 % change Excluding litigation and conduct – three Dec-20 Dec-19 % change months ended (£m) – Personal Banking 895 1,064 (16%) Profit before tax 278 705 (61%) – Barclaycard Consumer UK 354 533 (34%) Attributable profit 153 481 (68%) – Business Ba
Slide 59: Q420 Barclays International
Q420 Barclays International Three months ended (£m) Dec-20 Dec-19 % change Excluding litigation and conduct – three Dec-20 Dec-19 % change months ended (£m) – CIB 2,638 2,314 14% Profit before tax 831 726 14% – CC&P 848 1,138 (25%) Attributable profit 450 461 (2%) Income 3,486 3,452 1% Performance m
Slide 60: Q420 Barclays International: Corporate & Investment Bank
Q420 Barclays International: Corporate & Investment Bank Three months ended (£m) Dec-20 Dec-19 % change Excluding litigation and conduct – three Dec-20 Dec-19 % change months ended (£m) – FICC 812 726 12% Profit before tax 759 438 73% – Equities 542 409 33% Attributable profit 411 251 64% Markets 1,
Slide 61: Q420 Barclays International: Consumer, Cards & Payments
Q420 Barclays International: Consumer, Cards & Payments Three months ended (£m) Dec-20 Dec-19 % change Excluding litigation and conduct – three Dec-20 Dec-19 % change months ended (£m) Income 848 1,138 (25%) Profit before tax 72 288 (75%) Impairment (239) (299) 20% Attributable profit 39 210 >(200%)
Slide 62: Q420 Head Office
Q420 Head Office Three months ended (£m) Dec-20 Dec-19 % change Excluding litigation and conduct – three Dec-20 Dec-19 % change months ended (£m) Income (171) (110) (55%) Loss before tax (416) (167) (149%) Impairment charges (31) (4) >(200%) Attributable loss (343) (139) (147%) – Operating costs (21
Slide 63: Disclaimer
Disclaimer Important Notice The terms Barclays or 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 offer to bu