Barclays Plc · LSE:BARC
Barclays — Debt Investor Presentation (February 2013)
50 slides from Barclays's debt investor presentation, Feb 12, 2013
Slide 1: Fixed Income Investor Presentation
Fixed Income Investor Presentation Full-year 2012 results
Slide 2: Barclays overview
Barclays overview A global universal bank Key financial metrics as at 31 December 2012 • Major global financial services provider Total assets £1.5tr • 3 main businesses: Core tier I (Basel 2.5) 10.9% - Retail, Business Banking and Barclaycard - Corporate & Investment Banking, and Adj. gross leverag
Slide 3: Clear 2015 financial targets
Clear 2015 financial targets On 12 February 2012, Barclays announced its strategy to become the „Go-To‟ bank and set clear 2015 targets 2012 Results 2015 Targets Commentary Return on Target sustainable returns in excess of cost of equity 7.8% > Group CoE Improve quality of income and predictabil
Slide 4: 2012 results highlights
2012 results highlights “Through a prolonged difficult economic environment, our financial performance has been strong, and our 2012 results clearly demonstrate the good momentum in our businesses.” (A. Jenkins, CEO) • Adjusted income up 2% despite macroeconomic Full year 2012 2011 Change challenges
Slide 5: Balanced profit distribution across the Group
Balanced profit distribution across the Group Composition of adjusted profit before tax demonstrates the benefits of the universal banking model Adjusted PBT: £7,048m +26.1% Adjusted PBT: £5,590m Investment Bank, £4,063m Investment Bank, £2,965m Corporate Bank, £551m Wealth & Investment Corporate Ba
Slide 6: Strong asset quality
Strong asset quality Despite challenging macroeconomic environment, retail and wholesale portfolios continue to perform well, as evidenced by limited Credit Risk Loans (CRLs) and low loan loss rates 52.1% 47.9% 48.9% 49.7% 39.0%1 4.8% 5.1% 4.4% 3.9% 156bps 118bps 77bps 75bps FY 2009 FY 2010 FY 2011
Slide 7: Reduced exposure to the Eurozone periphery
Reduced exposure to the Eurozone periphery Direct exposures continue to be managed down, while redenomination risk has significantly reduced in Spain and Portugal Exposures by geography • Exposure to Spain, Italy, Portugal and Ireland decreased by 13% to £58.7bn over 2012, with sovereign £67.5bn Ire
Slide 8: Managed credit market exposure
Managed credit market exposure Since December 2008, Barclays has successfully reduced its exposure to Credit Market Exposures (CMEs) by 77.7% to £9.3bn 2008-2012 CME balances • CMEs arose before market dislocation in mid-2007 and have been actively managed down since 2008 £41.7bn -77.7% • Exposure m
Slide 9: Capital
Capital 9 | Full-year 2012 Fixed Income Investor Presentation | 12 February 2013
Slide 10: Capital ratios over time
Capital 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 2.5 10.8% 11.0% 10.9% £bn 10.0% 16.6% 16.9% 17.1% 16.4% 13.6% 13.5% 12.9% 13.3% 13.0% 5.6% 433 8.6% 383 398
Slide 11: Leverage ratios
Leverage ratios Barclays actively manages the volatility of its balance sheet and expects to see its adjusted leverage ratio reduce overtime x24 x22 x20 x18 Expected direction of travel for Group adj leverage x16 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Group adjusted leverage ratio (incl. l
Slide 12: Pro forma capital and RWAs
Pro forma capital and RWAs Barclays continues to manage the business to absorb changing regulation. Pro forma CET1 ratios are subject to finalisation of CRD IV rules and market conditions Reported Pro forma 1 Jan 2013 31 Dec 2012 CET1 Transitional CET1 Fully-loaded CT1 Capital (FSA 2009 definition)
Slide 13: Pro forma capital and RWAs ─ notes
Pro forma capital and RWAs ─ notes Pro forma capital ratios are based on/subject to the following: CRD IV, models and waivers • The proforma ratios, capital computations and RWAs are based on our interpretation of the draft July 2011 CRD IV rules and best expectation of how these draft rules will be
Slide 14: Pro forma capital and RWAs ─ notes
Pro forma capital and RWAs ─ notes Pro forma capital ratios are based on/subject to the following: RWAs • It is assumed that EU corporates, pension funds and sovereigns are exempt from CVA volatility charge • It is assumed all CCPs will implement CPSS-IOSCO’s “Principles for Financial Market Infrast
Slide 15: RWA projections
RWA projections Significant savings from optimisation expected to generate headroom for growth in selected businesses, and mitigate additional regulatory changes and volatility from the impact of CRD IV1 £81bn CRD IV & IFRS 10 £75bn optimisation £27bn (£23bn) (£20bn) £25bn £47bn (£19bn) £29bn (£13bn
Slide 16: Transitional CET1 ratio projections
Transitional CET1 ratio projections We believe that we can achieve a transitional CET1 ratio well above 10.5% by 20151 2.0% (1.1%) 0.2% (0.3%) 11.7% 10.9% 10.6% 2 31-Dec-12 CRD IV & 01-Jan-13 Legacy & 2014/2015 Warrant exercise 31-Dec-15 CET1 ratio (CT1 Ratio) IFRS 10 Impact (CET1 Ratio) optimisatio
Slide 17: End-state capital structure
End-state capital structure Our “target” capital structure embraces upcoming CRD IV requirements and ICB1 proposals 17.1% Total 17.0% Total capital ratio capital ratio 3.8% £14.4bn • The target capital structure anticipates: T2 5.0% T2 / senior - Expected 9.0% minimum CET1 ratio requirement unsecure
Slide 18: Liquidity & Funding
Liquidity & Funding 18 | Full-year 2012 Fixed Income Investor Presentation | 12 February 2013
Slide 19: Balance sheet funding
Balance sheet funding While the balance sheet totals £1.5tn, wholesale funding requirements are limited to £239.5bn as a consequence of its structure £bn Assets Liabilities 1 1,436 466 460 347 347 328 303 101 150 138 145 87 Total gross Derivative financial Repo financing, and Customer Customer Liqui
Slide 20: Liquidity pool
Liquidity pool Barclays continues to maintain a strong and high-quality liquidity pool that consists exclusively of unencumbered assets £bn 154 152 150 127 18 11 19 125-150 • Liquidity pool of £150bn, with 87% held in cash, 12 36 deposits with central banks and high quality 40 34 46 c.55% government
Slide 21: Funding
Funding Diverse funding sources, across customer deposits and wholesale debt, provide protection against unexpected fluctuations £bn 138% 130% 124% 118% 110% • Group Loan to Deposit Ratio (LDR) decreased overtime to 110% as at 31 December 2012 • Customer deposits, excl. Absa, trading 462 420 428 432
Slide 22: Wholesale funding
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 £28bn of term issuance in 2012 Diverse wholesale funding base1 (as at 31 December 2012) • £3.4bn of public b
Slide 23: Term funding plans
Term funding plans • Funding plan sized to meet business needs, while ensuring compliance with Liquidity Risk Appetite (LRA) and regulatory requirements • Reduced funding requirements due to increased deposit taking and legacy asset run-off • Commitment to maintain access to a diversified funding ba
Slide 24: Senior unsecured medium-term notes (public & private)
Senior unsecured medium-term notes (public & private) Barclays is a major Medium-Term Notes (MTNs) issuer, with MTNs representing c.37% of its total wholesale funding, or £89.5bn, as at 31 December 2012 Highlights MTNs are an important source of funding diversity • MTN programme is an important comp
Slide 25: Secured funding
Secured funding High-quality assets and contained encumbrance levels allow Barclays to maintain access to secured funding Highlights Wholesale secured funding (as at 31 December 2012) Secured term funding backed by prime assets, including residential mortgages, credit cards and corporate loans, wi
Slide 26: Contingent Capital Notes (CCNs)
Contingent Capital Notes (CCNs) Barclays successfully issued its inaugural contingent capital note in November 2012, as the Group transitions to its end-state CRD IV / ICB capital structure Key features On 14 November 2012, Barclays Bank PLC priced US$3bn of SEC registered, USD-denominated, CCNs a
Slide 27: Credit Ratings
Credit Ratings 27 | Full-year 2012 Fixed Income Investor Presentation | 12 February 2013
Slide 28: 2012 rating & outlook changes
2012 rating & outlook changes Despite re-rating of sector by all main rating agencies in the last 12 months, Barclays‟ rating remains strong and in line with peers‟ Barclays Bank plc 2012 Rating & Outlook Changes 1 January 2012 31 December 2012 Standard & Poor's Long Term A+ (Stable) A+ (Negative) S
Slide 29: Credit rating management
Credit rating management Barclays prudently manages the impact of credit ratings on the Group‟s funding and liquidity positions • Potential outflows related to a multiple-notch credit downgrade are included in the Liquidity Risk Appetite (LRA) stress testing and a portion of the liquidity pool is re
Slide 30: Barclays' debt
Barclays’ debt Strong credit (A+/A2/A, S&P/Moody‟s/Fitch) Prudent liquidity & balance sheet management • Global universal bank with diversified portfolio of • Liquidity pool well in excess of internal and customer-focused businesses regulatory minimum requirements • Prudent risk approach to growth o
Slide 31: Appendix
Appendix 31 | Full-year 2012 Fixed Income Investor Presentation | 12 February 2013
Slide 32: Resilient performance
Resilient performance Despite challenging macroeconomic conditions, Barclays has performed well and consistently remained profitable throughout the financial crisis and Eurozone turmoil £m 1 Adjusted Income Adjusted PBT Bank Levy (2012: £345m; 2011: £325m) 8,771 8,167 8,081 7,750 8,138 7,440 7,445 7
Slide 33: Adjusting items to profit before tax
Adjusting items to profit before tax Q412 Q312 Q212 Q112 Q411 Q311 Q211 Q111 (£m) (£m) (£m) (£m) (£m) (£m) (£m) (£m) Adjusted profit before tax 1,094 1,727 1,782 2,445 528 1,337 1,721 2,004 Own credit (560) (1,074) (325) (2,620) (263) 2,882 440 (351) Gains on debt buy-backs - - - - 1,130 - - - Impai
Slide 34: Adjusted profit/(loss) before tax by business
Adjusted profit/(loss) before tax by business 2012 2011 Change As at 31 December (£m) (£m) (%) UK RBB 1,472 1,420 4 Europe RBB (239) (234) 2 Africa RBB 468 830 (44) Barclaycard 1,506 1,208 25 Retail and Business Banking 3,207 3,224 (1) Investment Bank 4,063 2,965 37 Corporate Banking 551 204 Corpora
Slide 35: Reduced exposure to the Eurozone periphery
Reduced exposure to the Eurozone periphery1 Spain Italy Portugal Ireland Total As at 31 December 2012 (£m) (£m) (£m) (£m) (£m) Sovereign 1,690 2,669 637 11 5,007 Corporate 4,135 1,962 1,958 1,127 9,182 Residential mortgages 13,305 15,591 3,474 112 32,482 Financial institutions 1,488 528 48 3,768 5,8
Slide 36: Spanish exposures
Spanish exposures Retail Gross mortgage exposure by location of Average indexed LTV of 65% outstanding balances Average retail customer age 48; less than 1% of mortgage balances with customers aged under 25 0.7% of home loans greater than 90 days in arrears1. Barcelona c.13% Corporate £3.3bn
Slide 37: Portuguese exposures
Portuguese exposures Retail Gross mortgage exposure by location of Average indexed LTV of 78% outstanding balances Average retail customer age 42; less than 1% of mortgage balances with customers aged under 25 0.7% of home loans greater than 90 days in arrears1. Corporate Porto £1.4bn gross
Slide 38: Italian exposures
Italian exposures Retail Gross mortgage exposure by location of Average indexed LTV of 47% outstanding balances Average retail customer age 47; less than 3% of mortgage balances with customers aged under 25 Milan 1.0% of home loans greater than 90 days in arrears1. c.10% Corporate Focused on
Slide 39: Credit market exposures
Credit market exposures Year end 2012 FV (losses) Imp. (charge) Total (losses) 2012 2011 As at 31 December / gains / release / gains (£m) (£m) (£m) (£m) (£m) ABS CDO Super Senior 1,387 1,842 (33) (232) (265) US sub-prime and Alt-A 698 1,381 83 (22) 61 Commercial real estate loans and properties 2,72
Slide 40: Legacy asset RWAs
Legacy asset RWAs1 Barclays identified a pool of legacy assets, including 2012 CMEs, across the Investment Bank and European As at 31 December (£bn) businesses, to actively manage down Credit market exposures 10 Barclays enlarged the scope of legacy asset portfolio in order to further reduce pos
Slide 41: Calculation of adjusted gross leverage
Calculation of adjusted gross leverage 2012 2011 As at 31 December (£bn) (£bn) Total assets 1,490 1,564 Counterparty netting (388) (441) Collateral on derivatives (47) (51) Net settlement balances and cash collateral (72) (62) Goodwill and intangible assets (8) (8) Customer assets held under investm
Slide 42: Capital resources
Capital resources 2012 2011 As at 31 December (£m) (£m) Shareholders’ equity (ex. NCIs) 53,586 55,589 Net NCIs 2,450 6,235 Regulatory adjustments and deductions: Goodwill and intangible assets (7,662) (7,560) Own credit cumulative gain (net of tax) 804 (2,680) Defined benefit pension adjustment (2,4
Slide 43: Liquidity & funding management framework
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 Liquidity framework meets FSA standards Barclays maintains access
Slide 44: Wholesale funding composition
Wholesale funding composition >1 month >3 months >6 months Total ≤1 >1 year ≤1 month >2 years Total but ≤3 but ≤6 but ≤12 year but ≤2 As at 31 December 2012 months months months years (£bn) (£bn) (£bn) (£bn) (£bn) (£bn) (£bn) (£bn) Deposits from banks 10.8 8.7 1.5 0.7 21.7 1.6 7.2 30.5 Certificates
Slide 45: Encumbrance (as at 31 December 2012)
Encumbrance (as at 31 December 2012) Barclays closely monitors the mix of secured and unsecured funding sources and maintains a significant portion of its balance sheet unencumbered 19% assets1 encumbrance ratio (excl. reverse repos) • Asset encumbrance arises from collateral pledged against secured
Slide 46: Barclays funding cost
Barclays funding cost 234 211 • 5-year USD Z-spread (as at 31 Dec 2012)1 203 164 168 143 130 131 111 112 113 95 101 88 75 Goldman HSBC Generale Deutsche BNP Paribas UBS JPMorgan Credit Suisse Morgan Citigroup RBS Barclays America Nomura Macquarie Stanley Bank of Societe Sachs Bank • 5-year CDS vs. i
Slide 47: Basel 3
Basel 3 Regulatory Timeline • Initial timeframe mentioned below is now expected to be 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 2019 Capital Phased-in capital requirements Re
Slide 48: UK banking reform
UK banking reform Barclays backs initiatives to improve stability of UK banking system and support a sustainable economy, however, requires alignment with international regulation and careful consideration of implementation costs Proactively thinking about structural reforms / ring-fenced structure
Slide 49: 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 50: 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
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