Barclays Plc · LSE:BARC
Barclays — Debt Investor Presentation (April 2020)
58 slides from Barclays's debt investor presentation, Apr 29, 2020
Slide 1: Barclays PLC Fixed Income Investor Presentation
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Barclays PLC Fixed Income Investor Presentation Q1 2020 Results Announcement 29 April 2020
Slide 2: Strategy, Targets and Guidance
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Strategy, Targets and Guidance
Slide 3: Resilient performance in Q120 reflecting the Group's diversified business model
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Resilient performance in Q120 reflecting the Group’s diversified business model Q120 Financial highlights Resilient operating performance delivered Group RoTE of 5.1% 5.1% RoTE
Slide 4: Diversification is a key strength of Barclays
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Diversification is a key strength of Barclays 10% Diversified by customer and client, 22% UK Consumer product, geography and currency Intl. Consumer & Payments Q120 Business Ba
Slide 5: Committed to supporting customers, business and the economy through COVID-19
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Barclays is committed to supporting customers, business and the economy through the COVID-19 pandemic • Supporting customers in financial need with repayment Supporting holiday
Slide 6: Support for customers in the UK
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Support for customers in the UK1 • Mortgage payment holidays granted for c.94,000 customers Mortgages • 12 month interest only payments granted Personal loans and • Repayment h
Slide 7: Support for business
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Support for business1 • £14bn three year lending fund for UK SMEs Existing lending • £50bn of lending limits available to UK clients and withholding fees • Free banking and ove
Slide 8: Support for our communities and colleagues
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Support for our communities and colleagues1 • Launched £100m Community Aid Package (£50m for charity partners primarily in the UK, US and India, and £50m to match colleague per
Slide 9: Our ambition is to be a net zero bank by 2050
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Our ambition is to be a net zero bank by 2050 Playing a leading role in tackling climate change 1 Our ambition is to be a net zero bank by 2050 • Includes net zero direct and i
Slide 10: ESG supporting society and our franchise
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY ESG supporting society and our franchise Five focus areas which encompass the underlying ESG factors most relevant to Barclays Select metrics1 Financing facilitated in social S
Slide 11: Intend to play a leading role in the climate change agenda
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Intend to play a leading role in the climate change agenda Size and scale to make a real difference in helping to accelerate the transition to a low-carbon economy Net Zero by
Slide 12: Performance
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Performance
Slide 13: Q120 Group highlights
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Q120 Group highlights Improved income performance driven by CIB, showing the benefits of diversification • Income increased 20%, reflecting strong performance in CIB and resili
Slide 14: Income increased 20% in Q120 driven by standout Markets performance
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Income increased 20% in Q120 driven by standout Markets performance £6.3bn £5.3bn • Income increased 44%, primarily driven by a particularly strong quarter for Markets, which w
Slide 15: Drivers of income headwinds in BUK and CC&P likely to persist throughout 2020
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Drivers of income headwinds in BUK and CC&P are likely to persist throughout 2020 Reduced rate environment in the UK and US Reduced spend YoY Early 2019 31 March 2020 ∆ Merchan
Slide 16: Cost control remains important, but short-term headwinds exist
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Cost control remains important, but short-term headwinds exist from spend on COVID-19 initiatives Cost: income ratio improvement in Q1201 Expected increased spend due to COVID-
Slide 17: Impairment charges increased across business lines due to the pandemic
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Impairment charges increased across business lines due to the onset of the pandemic Impairment charges (£m) Group loan loss rate (bps) 2,115 250 2000 223 CIB credit impairment
Slide 18: Impairment driven by single name charges and IFRS 9 model increases
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Impairment driven by single name charges and IFRS 9 model increases Components of impairment charge (£m) 300 150 1,190 2,115 405 370 Pre-COVID 19 Single name wholesale loan COV
Slide 19: Q120 IFRS 9 impairment movements
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Q120 IFRS 9 impairment movements Retail impairment build driven by IFRS 9, while wholesale loans largely relate to single name charges and oil exposure Wholesale loans Credit c
Slide 20: Q120 Barclays UK
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Q120 Barclays UK RoTE of 6.8% reflecting a challenging operating environment • Income decreased 4% to £1.7bn in a challenging Financial performance1 Q119 Q219 Q319 Q419 Q120 op
Slide 21: Q120 Barclays International
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Q120 Barclays International Strong income growth offset by higher impairment resulting in RoTE of 6.5% Financial performance1 • Income grew 30% to £4.6bn, reflecting strong per
Slide 22: Q120 Barclays International: Corporate & Investment Bank
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Q120 Barclays International: Corporate & Investment Bank RoTE of 12.1% driven by strong income performance and positive jaws Financial performance1 • Overall CIB income increas
Slide 23: Q120 Barclays International: Consumer, Cards & Payments
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Q120 Barclays International: Consumer, Cards & Payments RoTE of (22.6)% driven by increased impairment while the business generated positive jaws Financial performance1 • Incom
Slide 24: Head Office
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Head Office Q119 Q419 Q120 • Q120 negative income of £65m included: – c.£30m residual negative income impact from legacy capital instruments – Mark-to-market losses on legacy i
Slide 25: Financial targets
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Financial targets 2020 performance expected to reflect the challenging environment, including headwinds from COVID-19 Q120 highlights Group targets Group RoTE Group RoTE Cost e
Slide 26: Capital & Leverage
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Capital & Leverage
Slide 27: Q120 CET1 ratio decreased to 13.1%
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Q120 CET1 ratio decreased to 13.1% Primarily reflecting RWA growth partially offset by profits and FY19 dividend cancellation CET1 ratio1 • CET1 ratio of 13.1% reflecting: – 35
Slide 28: Q120 RWAs growth
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Q120 RWAs growth Largely driven by March lending activity, including RCF drawdowns and market volatility Total RWAs (£bn) • Credit risk RWAs increase principally driven by Marc
Slide 29: Prudently managing the Group's capital position
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Prudently managing the Group’s capital position Group’s CET1 ratio managed to maintain appropriate headroom above the maximum distributable amount (MDA) hurdle Illustrative evo
Slide 30: Managing evolving future Group minimum leverage requirements
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Managing evolving future Group minimum leverage requirements Minimum leverage requirements and buffers under the UK regime Q120 UK leverage ratios1: • The RWA based CET1 ratio
Slide 31: Capital structure well established
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Capital structure well established Expect to hold prudent headroom above AT1 and Tier 2 minimums Illustrative evolution of regulatory capital structure Well managed and balance
Slide 32: Managing the call and maturity profiles of BPLC and BBPLC capital instruments
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Managing the call and maturity profiles of BPLC and BBPLC capital instruments BPLC capital call and maturity profile (£bn) BPLC AT1 capital as at 31 March 20201 BPLC Tier 2 cap
Slide 33: MREL, Funding and Liquidity
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY MREL, Funding and Liquidity
Slide 34: Successfully transitioning to a HoldCo funding model
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Successfully transitioning to a HoldCo funding model Continue to expect £7-8bn of MREL issuance in 2020 HoldCo MREL position and expected requirement Well advanced on 2022 Hold
Slide 35: Continued progress in HoldCo issuance
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Continued progress in HoldCo issuance Annual HoldCo issuance volume materially lower compared to 2016-18 (£bn)1 AT1 Tier 2 Senior unsecured 13.4 12.1 12.2 11.5 6.2 8.6 Target:
Slide 36: Balanced HoldCo funding profile by debt class and tenor
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Balanced HoldCo funding profile by debt class and tenor Barclays PLC AT1 Tier 2 Senior unsecured 19% By 14% product £58bn 68% BPLC AT1 capital BPLC Tier 2 capital BPLC Senior u
Slide 37: High quality liquidity position
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY High quality liquidity position High quality and prudently positioned liquidity pool, with Group LCR well above regulatory requirements Group LCR comfortably exceeding minimum
Slide 38: Conservative loan: deposit ratio
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Conservative loan: deposit ratio Loan growth from RCF drawdowns more than offset by deposit growth Conservative loan: deposit ratio1 L&A and deposits composition2 L&A2 (£bn) De
Slide 39: High quality funding position with reduced reliance on short-term funding
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY High quality funding position with reduced reliance on short-term funding Diversified funding profile with strong deposit base Well positioned for future MREL requirements • Is
Slide 40: Illustrative UK approach to resolution
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Illustrative UK approach to resolution1 OpCo waterfall Intercompany investments HoldCo waterfall • Total OpCo losses which exceed its equity • Losses are transmitted to HoldCo
Slide 41: Credit Ratings
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Credit Ratings
Slide 42: Ratings remain a key priority
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Ratings remain a key priority Focus on strategy execution and performance targets to improve ratings Current Senior Long and We solicit ratings from Moody’s, S&P and Fitch for
Slide 43: Barclays rating composition for senior debt
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Barclays rating composition for senior debt Moody’s Standard & Poor’s Fitch BPLC BBPLC BBUKPLC BPLC BBPLC BBUKPLC BPLC BBPLC BBUKPLC Adj. Baseline Credit baa2 baa2 a3 Stand-Alo
Slide 44: Barclays rating composition for subordinated debt
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Barclays rating composition for subordinated debt Moody’s Standard & Poor’s Fitch Adj. Baseline Stand-alone Stand-Alone Viability Credit baa2 baa2 bbb+ a a rating Assessment Cr
Slide 45: Asset Quality
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Asset Quality
Slide 46: Exposure to certain sectors vulnerable to COVID-19
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Exposure to certain sectors vulnerable to the current environment caused by COVID-19 Exposure as at 31 December 2019 Other corporate lending Vulnerable sectors Home loans Other
Slide 47: Limited oil and gas exposures and robust risk management
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Limited oil and gas exposures and robust risk management Q120 impairment included a charge of £300m, representing a 50% probability of a $20 oil price throughout 2020 Exposure
Slide 48: Retail portfolios in the UK and US prudently positioned ahead of the crisis
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Retail portfolios in the UK and US prudently positioned ahead of the crisis FY18 H119 FY19 £136.5bn £138.3bn £143.3bn • Have focused on growing mortgage book within risk UK 65.
Slide 49: Level 3 assets significantly reduced in recent years
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Level 3 assets significantly reduced in recent years One third relates to fair valued ESHLA1 loans 31 December 2016 (£bn) 31 December 2019 (£bn) Breakdown of £9.6bn of other 0.
Slide 50: Appendix
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Appendix
Slide 51: Q120 Group
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Q120 Group Three months ended (£m) Mar-20 Mar-19 % change Excluding L&C – three months ended (£m) Mar-20 Mar-19 % change Income 6,283 5,252 20% PBT 923 1,544 (40%) Impairment (
Slide 52: Q120 Barclays UK
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Q120 Barclays UK Three months ended (£m) Mar-20 Mar-19 % change Excluding L&C – three months ended (£m) Mar-20 Mar-19 % change – Personal Banking 968 964 PBT 200 588 (66%) – Ba
Slide 53: Q120 Barclays International
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Q120 Barclays International Three months ended (£m) Mar-20 Mar-19 % change Excluding L&C – three months ended (£m) Mar-20 Mar-19 % change – CIB 3,617 2,505 44% PBT 822 1,137 (2
Slide 54: Q120 Barclays International: CIB and Consumer, Cards & Payments
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Q120 Barclays International: Corporate & Investment Bank and Consumer, Cards & Payments CIB business performance – CC&P business performance – Mar-20 Mar-19 % change three mont
Slide 55: Q120 Head Office
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Q120 Head Office Three months ended (£m) Mar-20 Mar-19 % change Income (65) (95) 32% Impairment charges (25) (12) – Operating costs (11) (52) 79% – Litigation and conduct (5) (
Slide 56: Abbreviations
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Abbreviations ALAC Additional Loss-Absorbing Capacity FICC Fixed Income, Currencies and Commodities P1 Pillar 1 AT1 Additional Tier 1 FPC Financial Policy Committee P2A Pillar
Slide 57: Contact – Debt Investor Relations Team
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Contact – Debt Investor Relations Team Version 2 Dan Colvin Lis Nguyen Robert Georgiou +44 (0)20 7116 6533 +44 (0)20 7116 1065 +44 (0)20 7116 0446 daniel.colvin@barclays.com li
Slide 58: Disclaimer
STRATEGY, TARGETS CAPITAL MREL, FUNDING PERFORMANCE CREDIT RATINGS ASSET QUALITY APPENDIX & GUIDANCE & LEVERAGE & LIQUIDITY Disclaimer Important Notice The terms Barclays or Group refer to Barclays PLC together with its subsidiaries. The information, statements and opinions contained in this present