Barclays Plc · LSE:BARC
Barclays — Q3 2013 Earnings Presentation
57 slides from Barclays's earnings presentation, Oct 30, 2013
Slide 1: Barclays PLC Q3 2013 Interim Management Statement
Barclays PLC Q3 2013 Interim Management Statement 30 October 2013
Slide 2: Q3 2013 financial progress
Q3 2013 financial progress Focus on earnings generation – and increasing capital strength PBT of £5.0bn for first nine months, down £1.2bn – Resilient retail and corporate performance – Lower income in IB FICC, notably from Exit Quadrant assets – Improved impairment – Costs to achieve Transform
Slide 3: Adjusted financial highlights
Adjusted financial highlights 2013 2012 Change Nine months ended – September (£m) (£m) (%) Income 21,516 22,494 (4) Impairment charges (2,353) (2,515) (6) Net operating income 19,163 19,979 (4) Operating expenses (13,403) (13,873) (3) (excluding costs to achieve Transform) Costs to achieve Transform
Slide 4: Adjusting items to profit before tax
Adjusting items to profit before tax 2013 2012 Nine months ended – September (£m) (£m) Statutory profit before tax 2,8511 962 Own credit charge 125 4,019 Gain on disposal of BlackRock investment - (227) Provision for PPI redress 1,350 1,000 Provision for interest rate hedging products redress 650 45
Slide 5: Adjusted financial performance measures
Adjusted financial performance measures Nine months ended – September 2013 2012 Return on average shareholders‟ equity 7.1% 9.7% Return on average tangible shareholders‟ equity 8.4% 11.5% Cost: income ratio1 66% 62% Basic earnings per share 21.9p 30.7p Dividend per share 3.0p 3.0p 1 For the nine mon
Slide 6: Adjusted income and profit/(loss) before tax by cluster
Adjusted income and profit/(loss) before tax by cluster Income Profit/(loss) before tax 2013 2012 Change 2013 2012 Change Nine months ended – September (£m) (£m) (%) (£m) (£m) (%) UK RBB 3,374 3,307 2 983 950 3 Europe RBB 512 547 (6) (815) (229) Africa RBB 1,995 2,207 (10) 344 217 59 Barclaycard 3,5
Slide 7: Analysis of Net Interest Income
Analysis of Net Interest Income 2013 2012 Nine months ended – September (£m) (£m) Customer assets 5,360 4,974 Customer liabilities 2,406 2,352 Total customer income1 7,766 7,326 Product structural hedge 644 731 Equity structural hedge 232 234 Other (90) (49) Total non-customer income1 786 916 Total
Slide 8: Drivers of Net Interest Income
Drivers of Net Interest Income Nine months ended – Sept 2012 (£m) 2013 (£m) Change Average customer assets 316,877 326,409 +3% Average customer liabilities 279,298 319,377 +14% Net Interest Margin (bps) 185 177 175 178 21 16 15 16 Non-customer margin Customer margin 164 161 160 162 Q3 YTD 2012 Q3 YT
Slide 9: Loan growth in the UK
Loan growth in the UK UK Funding for Lending Scheme UK eligible lending mortgage book (£bn) (£bn) 121.6 24 112.5 8.1% 22 22 21 20 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 30 September 12 30 September 13 8 | Barclays Q3 2013 Interim Management Statement | 30 October 2013
Slide 10: Investment Bank
Investment Bank 2013 2012 Change Nine months ended – September (£m) (£m) (%) Income 8,584 9,181 (7) Impairment charges (206) (205) Net operating income 8,378 8,976 (7) Operating expenses (5,373) (5,781) (7) (excluding costs to achieve Transform) Costs to achieve Transform (175) - Profit before tax 2
Slide 11: Investment Bank quarterly income - total
Investment Bank quarterly income - total (£m) Total Income Total income • Q3 2013 vs. Q3 2012 down 22% • Q3 2013 vs. Q2 2013 down 30% 3,436 3,463 3,024 3,010 2,721 2,594 2,111 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 10 | Barclays Q3 2013 Interim Management Statement | 30 October 2013
Slide 12: Investment Bank quarterly income
Investment Bank quarterly income (£m) 2,319 2,190 1,761 1,675 1,494 1,378 940 825 706 645 620 591 615 558 528 525 523 515 509 493 454 FICC Equities and Prime Services Investment Banking Q3 13 vs. (44%) 23% 6% Q3 12 11 | Barclays Q3 2013 Interim Management Statement | 30 October 2013
Slide 13: Investment Bank quarterly income - FICC
Investment Bank quarterly income - FICC (£m) • FICC income excluding Exit Quadrant down 34% (735) • Exit Quadrant CRD IV RWAs down to £40bn 1,675 (276) (217) 940 748 701 472 484 (242) 226 (16) Total FICC Macro Products Credit Products Exit Quadrant Assets Total FICC Macro Products Credit Products Ex
Slide 14: Progress in Equities and Investment Banking
Progress in Equities and Investment Banking Leveraging the Equities build out – Up 26% vs. 2012 Investment Banking wins: – 39 Corporate Broking mandates, including three recent wins – Acting on major M&A/financing deals e.g. Verizon – Good pipeline in M&A, DCM and ECM 13 | Barclays Q3 2013 Inter
Slide 15: Impairment down 6% to £2.4bn
Impairment down 6% to £2.4bn (£m) Q3 YTD 2012 2,515 Q3 YTD 2013 2,353 950 763 645 490 376 259 265 198 183 209 205 206 88 25 UK RBB Europe RBB Africa RBB Barclaycard Investment Corporate Wealth and IM Group Bank Banking 2013 YTD LLR (bps) 25 71 134 347 17 74 51 64 Movement 14 | Barclays Q3 2013 Inter
Slide 16: Operating expenses excluding CTA down 3%
Operating expenses excluding CTA down 3% (£m) Total operating expenses (ex CTA) Costs to achieve Transform • 9m 2013 vs. 9m 2012 down 3% Adjusted operating expenses • Q3 2013 vs. Q3 2012 down 2% • Q3 2013 vs. Q2 2013 down 2% 514 126 101 4,965 4,690 4,782 4,555 4,353 4,359 4,262 Q1 12 Q2 12 Q3 12 Q4
Slide 17: Cost targets
Cost targets (£bn) Costs to achieve Transform Adjusted operating expenses 19.7 1.2 18.5 5% 1.0 17.3 4% 0.5 18.5 18.5 17.5 16.8 2012 2013 2014 2015 Estimate Estimate Target 16 | Barclays Q3 2013 Interim Management Statement | 30 October 2013
Slide 18: Stronger capital ratios
Stronger capital ratios (%) Core Tier 1 Estimated Fully Loaded CRD IV CET1 11.1 11.3 9.6 8.1 8.4 30 Jun 13 30 Sept 13 30 Jun 13 30 Sept 131 30 Sept 131 Pre-Rights Proforma Issue Post-Rights Issue 1 For details and basis of calculation, see slides 40-42 17 | Barclays Q3 2013 Interim Management Statem
Slide 19: Capital, leverage and funding measures
Capital, leverage and funding measures As at 30 Sept 13 30 June 13 31 Dec 12 Liquidity pool £130bn £138bn £150bn Group Loan: deposit ratio 100% 102% 110% Core Tier 1 capital £42.0bn £42.9bn £41.7bn Fully loaded CET1 capital £37.4bn £38.1bn £37.3bn CRD IV RWAs £448.1bn £471.5bn £468.0bn Fully loaded
Slide 20: Closing comments
Closing comments Current trading Businesses remain in good shape Managing down Exit Quadrant assets Executing Leverage Plan Accelerating cost actions as we move into 2014 19 | Barclays Q3 2013 Interim Management Statement | 30 October 2013
Slide 21: Tushar Morzaria
Tushar Morzaria Barclays Group Finance Director
Slide 22: Estimated CRD IV Leverage Ratio
Estimated CRD IV Leverage Ratio Q3 13 (£bn) 31 Dec 121 30 Jun 13 movements 30 Sept 13 Total assets (IFRS balance sheet) 1,488 1,533 (128) 1,405 Derivative financial IFRS assets 469 403 356 Derivatives netting adjustment (390) (324) (287) Potential Future Exposure (PFE) add-on 287 308 295 Derivative
Slide 23: Focus on Leverage Exposure reduction
Focus on Leverage Exposure reduction Leverage Exposure at Category 30 Sept 13 Comments (£bn) Overall balance sheet Refine capital allocation framework → risk-weighted 1,481 management measures supplemented by leverage lens Key exposure categories: Enhance netting arrangements Derivatives 364 O
Slide 24: Appendix: Business Results
Appendix 1 Business Results # BARCLAYS
Slide 25: Adjusted Return on Equity (RoE)
Adjusted Return on Equity (RoE) Q3 YTD 2012 RoE Q3 YTD 2013 RoE1 9.7% Group 7.1% 13.0% UK RBB 12.6% (12.2%) Europe RBB (39.2%) (0.0%) Africa RBB 2.4% 20.8% Barclaycard 19.4% 13.0% Investment Bank 12.3% 3.5% Corporate Banking 7.7% 8.6% Wealth and Investment Mgmt 1.8% 1 Includes effect of costs to ach
Slide 26: Impact of costs to achieve Transform
Impact of costs to achieve Transform Nine months ended – September 2013 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) (£m) (%) (%) UK RBB (56) 1,039 13.3 62 Europe RBB (357
Slide 27: UK Retail and Business Banking
UK Retail and Business Banking 2013 2012 Change Nine months ended – September (£m) (£m) (%) Income 3,374 3,307 2 Impairment charges (259) (198) 31 Net operating income 3,115 3,109 - Operating expenses (excluding costs to achieve (2,103) (2,159) (3) Transform and provision for PPI redress) Costs to a
Slide 28: Europe Retail and Business Banking
Europe Retail and Business Banking 2013 2012 Change Nine months ended – September (£m) (£m) (%) Income 512 547 (6) Impairment charges (209) (183) 14 Net operating income 303 364 (17) Operating expenses (625) (602) 4 (excluding costs to achieve Transform) Costs to achieve Transform (357) - Other net
Slide 29: Africa Retail and Business Banking
Africa Retail and Business Banking 2013 2012 Change Nine months ended – September (£m) (£m) (%) Income 1,995 2,207 (10) Impairment charges (265) (490) (46) Net operating income 1,730 1,717 1 Operating expenses (1,380) (1,505) (8) (excluding costs to achieve Transform) Costs to achieve Transform (11)
Slide 30: Barclaycard
Barclaycard 2013 2012 Change Nine months ended – September (£m) (£m) (%) Income 3,566 3,204 11 Impairment charges (950) (763) 25 Net operating income 2,616 2,441 7 Operating expenses (excluding costs to achieve (1,461) (1,318) 11 Transform and provision for PPI) Costs to achieve Transform (11) - Adj
Slide 31: Investment Bank
Investment Bank 2013 2012 Change Nine months ended – September (£m) (£m) (%) Income 8,584 9,181 (7) Impairment charges (206) (205) Net operating income 8,378 8,976 (7) Operating expenses (5,373) (5,781) (7) (excluding costs to achieve Transform) Costs to achieve Transform (175) - Profit before tax 2
Slide 32: Corporate Banking
Corporate Banking 2013 2012 Change Nine months ended – September (£m) (£m) (%) Income 2,351 2,300 2 Impairment charges (376) (645) (42) Net operating income 1,975 1,655 19 Operating expenses (excluding provision for interest rate (1,245) (1,260) (1) hedging products redress and costs to achieve Tran
Slide 33: Wealth and Investment Management
Wealth and Investment Management 2013 2012 Change Nine months ended – September (£m) (£m) (%) Income 1,380 1,337 3 Impairment charges (88) (25) Net operating income 1,292 1,312 (2) Operating expenses (1,171) (1,144) 2 (excluding costs to achieve Transform) Costs to achieve Transform (77) - Profit be
Slide 34: Head Office and Other Operations
Head Office and Other Operations 2013 2012 Nine months ended – September (£m) (£m) Total adjusted (expense)/income (246) 411 Impairment charges - (6) Adjusted net operating (expense)/income (246) 405 Operating expenses (45) (104) (excluding costs to achieve Transform) Costs to achieve Transform - -
Slide 35: Net interest margins and volumes
Net interest margins and volumes UK Europe Africa Barclay- Corporate Wealth Nine months ended – Sept 2013 Total1 RBB RBB RBB card Banking and IM Net interest margin (%) 1.28 0.79 3.14 8.36 1.24 1.04 1.77 Of which customer margin (%) 1.05 0.43 2.95 8.59 1.14 0.93 1.61 Average customer assets (£m) 133
Slide 36: Net interest margins and volumes
Net interest margins and volumes UK Europe Africa Barclay- Corporate Wealth Three months ended – Sept 2013 Total1 RBB RBB RBB card Banking and IM Net interest margin (%) 1.31 0.75 3.23 8.39 1.25 1.00 1.78 Of which customer margin (%) 1.08 0.39 2.98 8.57 1.13 0.96 1.62 Average customer assets (£m) 13
Slide 37: Cost analysis
Cost analysis (£m) Costs to achieve Transform Corporate Performance costs 54 Africa RBB UK RBB 11 Non-performance costs 56 Barclaycard 14,144 11 Wealth 741 77 1,714 13,403 11,689 Europe RBB IB 357 175 Q3 YTD 2013 Q3 YTD 2013 Costs to achieve Transform 36 | Barclays Q3 2013 Interim Management Stateme
Slide 38: Stable exposure to the Eurozone periphery
Stable exposure to the Eurozone periphery Spain Italy Portugal Ireland As at 30 September 2013 (£m) (£m) (£m) (£m) Sovereign 316 2,495 357 49 Financial institutions 859 434 37 3,648 Corporate 3,474 1,472 1,087 1,165 Residential mortgages 13,030 15,550 3,481 105 Other retail lending 2,415 1,963 1,649
Slide 39: Appendix: Leverage, Capital and Balance Sheet
Appendix 2 Leverage, Capital and Balance Sheet
Slide 40: End-state capital structure
End-state capital structure Our target capital structure anticipates the implementation of CRD IV, ICB1 and RRD2 proposals 17.8% 17.0% Capital plans delivering PRA adjusted 7% fully loaded CET1 Total capital ratio Total capital ratio ratio by December 2013 4% Fully loaded CRD IV CET1 ratio of 10
Slide 41: Estimated capital and RWAs
Estimated capital and RWAs (£bn) 30 Sept 2013 CT1 Capital (FSA 2009 definition) 42.0 RWAs (CRD III) 371.1 CT1 Ratio (CRD III) 11.3% CRD IV impact on CT1 Capital: CET1 Transitional1 CET1 Fully-loaded1 Conversion from securitisation deductions to RWAs 0.7 0.7 Adjustments not impacted by Prudential Val
Slide 42: Estimated CRD IV Capital and RWAs – notes
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 leverage based on the final CRD IV text assuming the rules applied as at 30 September 2013 on bo
Slide 43: Estimated CRD IV Capital and RWAs – notes
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 conditions are exempt from CVA volatility charges It is assumed all Central Clearing Counterparties
Slide 44: Capital Resources
Capital Resources 30 Sept 13 30 Jun 13 31 Dec 12 As at (£m) (£m) (£m) Shareholders‟ equity (excluding NCIs) 49,436 51,083 50,615 Qualifying NCIs 1,981 2,281 2,450 Regulatory adjustments and deductions: Own credit cumulative loss1 741 593 804 Unrealised gains/losses on available for sale debt securit
Slide 45: RWAs by Business
RWAs by Business 30 Sept 13 30 June 13 As at (£m) (£m) UK RBB 43,209 43,609 Europe RBB 16,836 16,733 Africa RBB 24,148 25,492 Barclaycard 38,739 38,801 Investment Bank 157,185 168,842 Corporate Banking 70,544 73,120 Wealth and Investment Management 16,995 16,979 Head Office and Other Operations 3,42
Slide 46: CRD III RWA Bridge
CRD III RWA Bridge (£bn) 0.5 (8.1) (8.1) 387.2 (0.4) 371.1 30 June 2013 Change in risk Business activity Foreign Exchange Methodology and 30 Sept 2013 parameters model changes 45 | Barclays Q3 2013 Interim Management Statement | 30 October 2013
Slide 47: Balance sheet funding (Q3 2013)
Balance sheet funding (Q3 2013) While the balance sheet totals £1.4tn (excl. Absa), wholesale funding requirements are limited to £198bn as a consequence of its structure Total balance sheet, £1,356bn (excl. Absa) Highlights (£bn) Derivatives Derivatives 349 349 Derivative assets and liabilities l
Slide 48: Barclays Exit Quadrant
Barclays Exit Quadrant With a good track record in reducing legacy assets, we now focus on reducing our expanded Exit Quadrant portfolios (£bn) 94 15 15 11 25 53 34 13 4 16 Targeted reduction 34 36 in IB positions 20 Dec 12 Legacy Derivatives Sept 13 Target IB Dec 15 CRD IV RWAs reduction efficienci
Slide 49: Appendix: Leverage Plan
Appendix 3 Leverage Plan # BARCLAYS
Slide 50: Original Transform financial commitments
Original Transform financial commitments 2012 Restated Original 2015 Results Targets Return on 9.0% > CoE Equity Operating £16.8bn £18.6bn Expenses Focus on Cost:Income 63% mid-50s Ratio CET1 ratio as limiting Pro forma £468bn £440bn B3 RWAs factor Core Transitional 10.8% CET1 >10.5% Capital Ratio D
Slide 51: PRA capital adequacy review
PRA capital adequacy review Capital adequacy review of major UK banks and building societies – results announced 20 Jun 2013 Barclays‟ plan to meet 7% PRA stressed CET1 ratio by 31 Dec 2013 confirmed The PRA introduced a minimum 3% leverage ratio target, calculated on a PRA-adjusted CET1 capit
Slide 52: Barclays Leverage Plan
Barclays Leverage Plan Leverage Plan agreed with the PRA to meet 3% target by 30 June 2014 Capital or capital equivalent actions of £12.8bn: 1) Rights issue raised £5.8bn (net of expenses) 2) Reduction of leverage exposure – £65-80bn (£2-2.5bn capital equivalent) – Already identified management acti
Slide 53: Rights Issue details
Rights Issue details £5.8bn proceeds (net of expenses) Underwritten on 30 July 2013 1 new share for every 4 existing shares Issue price 185 pence per Barclays share Shares went ex-rights on 18 September 2013 with a TERP of 276.2p Received acceptances of 94.63%, with the rump placed at 26
Slide 54: Reduction of leverage exposure
Reduction of leverage exposure Leverage plan includes £65-80bn reduction in CRD IV leverage exposure by 30 June 2014 Planned CRD IV Leverage Exposure Actions (as at 30 June 2013) (£bn) Potential Future Exposure on derivatives 30-35 Securities Financing Transactions 20-25 Liquidity pools assets 15-20
Slide 55: Barclays Leverage Plan
Barclays Leverage Plan Leverage ratios (%) > 3.0 0.1 0.4 0.1 2.2 H1 13 Rights issue Deleveraging 1 AT1 issuance Other capital Target H1 14 PRA net of expenses accretion & retained PRA leverage ratio earnings leverage ratio 1 Reflects already identified, low execution risk management actions; £2.0-2.
Slide 56: Revised Transform financial commitments
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 Pro forma B3 RWAs £440bn £440bn 2015 Core Capital Ratio Transitional >10.5% Fully loaded >10.5%
Slide 57: 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