Barclays Plc · LSE:BARC
Barclays — Q1 2020 Earnings Presentation
45 slides from Barclays's earnings presentation, Apr 29, 2020
Slide 1: Barclays PLC Q1 2020 Results
Barclays PLC Q1 2020 Results 29 April 2020 | Barclays Q1 2020 Results | 29 April 2020
Slide 2: Jes Staley, Barclays Group Chief Executive
Jes Staley Barclays Group Chief Executive | Barclays Q1 2020 Results | 29 April 2020
Slide 3: Barclays is committed to supporting customers, business and the economy through COVID-19
Barclays is committed to supporting customers, business and the economy through the COVID-19 pandemic • Supporting customers in financial need with repayment Supporting holidays and fee waivers customers • Providing enhanced service for vulnerable customers and key workers • Extending support to hel
Slide 4: Support for customers in the UK
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 holidays granted for c.57,000 personal loan or point of sale point of sale financing finance customers • Overdraft interest w
Slide 5: Support for business
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 overdraft fees waived for 650,000 UK SMEs • 12-month capital repayment holidays for most loans over £25,000 • 3,760 Coronavirus
Slide 6: Support for our communities and colleagues
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 personal Supporting donations) communities • Extended LifeSkills and Digital Eagles programmes to support home schooling and fr
Slide 7: Our ambition is to be a net zero bank by 2050
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 indirect emissions, and for the business activities we finance around the world, across all sectors, by 2050 2 Our commitment
Slide 8: Resilient performance in Q120 reflecting the Group's diversified business model
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 Income increased 20%, driven by a particularly strong performance in CIB (+44%) £6.3bn Income Positive jaws of 20%1, result
Slide 9: Tushar Morzaria, Barclays Group Finance Director
Tushar Morzaria Barclays Group Finance Director | Barclays Q1 2020 Results | 29 April 2020
Slide 10: Q120 Group highlights
Q120 Group highlights Improved income performance driven by CIB, showing the benefits of diversification • Income increased 20%, reflecting strong performance in CIB and resilience in BUK and CC&P Financial performance1 `` businesses Income • Delivered positive cost: income jaws of 20%, with costs f
Slide 11: Income increased 20% in Q120 driven by standout Markets performance
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 was up 77% £3.6bn BI: CIB – Markets client flows have continued at healthy levels, and £2.5bn while it is too early to guide
Slide 12: Drivers of income headwinds in BUK and CC&P likely to persist throughout 2020
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 ∆ Merchant acquiring US cards UK cards Jan Feb Mar Q1 Total GBP base rate 75bps 10bps (65bps) 6.0% 4.0% 4.4% 0.9% Fed upper rate 175b
Slide 13: Cost control remains important, but short-term headwinds exist from COVID-19 spend
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-19 • Continue to support customers, business, Total communities and colleagues through: +20% Income +20% £6.3bn – £100m Comm
Slide 14: Impairment charges increased across business lines due to the onset of the pandemic
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 charges increased to £724m due to £405m in respect of single name wholesale BI: CIB 200 loan charges and exposure to the pro
Slide 15: Impairment driven by single name charges and IFRS 9 model increases
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 COVID-19 baseline scenario, Overlay for UK economic uncertainty Q120 scenario charges including support schemes sustained low o
Slide 16: Q120 IFRS 9 impairment movements
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 cards, unsecured loans and other retail lending Gross exposure (£m) Impairment allowance (£m) Coverage ratio Gross exposure (
Slide 17: Q120 Barclays UK
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 operating environment Income – Lower IEL in UK cards reflective of reduced borrowing 1,959 1,777 1,771 1,846 1,704 by customer
Slide 18: Q120 Barclays International
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 performance in CIB − Balanced and diversified business, with the US representing c.50% and the UK c.30% of income3 Income £4.6b
Slide 19: Q120 Barclays International: Corporate & Investment Bank
Q120 Barclays International: Corporate & Investment Bank RoTE of 12.1% driven by strong income performance and positive jaws Financial performance1 • Overall CIB income increased 44% to £3.6bn Income • Market’s income increased 77% Income – FICC increased 106%, with particularly strong GBP basis (£m
Slide 20: Q120 Barclays International: Consumer, Cards & Payments
Q120 Barclays International: Consumer, Cards & Payments RoTE of (22.6)% driven by increased impairment while the business generated positive jaws Financial performance1 • Income decreased 4%, due to lower balances on Q119 Q219 Q319 Q419 Q120 co-branded cards and reduced payments activity YoY Income
Slide 21: Head Office
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 investments Income – Certain other negative treasury items (£m) – Partially offset by hedge accounting gains (95) (110) (65)
Slide 22: Q120 TNAV movement
Q120 TNAV movement TNAV increased by 22p primarily reflecting reserve movements TNAV (pence per share) • TNAV increased by 22p to 284p: – 3.5p from profits – 11p from the pension re-measurement 3 4 reserve reflecting lower interest rates and 4 1 wider credit spreads 6 – 6p from currency translation
Slide 23: Q120 CET1 ratio decreased to 13.1%
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: – 35bps from cancellation of the FY19 dividend 69bps 100bps – 100bps of profits pre-credit impairment charges 35bps 97bps Offset
Slide 24: Q120 RWAs growth
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 March lending activities, including RCF drawdowns, which resulted Dec-19 295.1 in a £7.2bn increase in RWAs – RCF drawdowns in A
Slide 25: Prudently managing the Group's capital position
Prudently managing the Group’s capital position Group’s CET1 ratio managed to maintain appropriate headroom above the maximum distributable amount (MDA) hurdle Illustrative evolution of minimum CET1 requirements and buffers • Barclays intends to manage its capital position to Q120: 13.1%1 enable it
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 Q120 UK leverage ratios1: • The RWA based CET1 ratio remains our primary regulatory constraint Spot: 4.5% • The Group currently has one leverage requirement, as Average: 4.5% me
Slide 27: High quality liquidity position
High quality liquidity position High quality and prudently positioned liquidity pool, with Group LCR well above regulatory requirements Group LCR comfortably exceeding minimum requirement Majority of pool held in cash and deposits with central banks Liquidity Coverage Ratio (LCR) 8% 169% 154% 160% 1
Slide 28: Conservative loan: deposit ratio
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) Deposits2 (£bn) LDR L&A composition2 83% 82% 79% Q120 153 14 29 128 39 11 £374bn FY19 152 15 27 92 41 13 £339bn Deposits compo
Slide 29: High quality funding position with reduced reliance on short-term funding
High quality funding position with reduced reliance on short-term funding Diversified funding profile with strong deposit base Well positioned for future MREL requirements • Issued £2bn equivalent of 2% Deposits MREL year to date 8% 30.6% OpCo debt 29.3% – Continue to expect a 8% FY19 further c.£5-6
Slide 30: Financial targets
Financial targets 2020 performance expected to reflect the challenging environment, including headwinds from COVID-19 Q120 highlights Group targets Group RoTE Group RoTE Cost efficiency 5.1% <60% cost: income ratio >10% over time1 over time1 Cost efficiency 52% cost: income ratio CET1 ratio Capital
Slide 31: Appendix
Appendix | Barclays Q1 2020 Results | 29 April 2020
Slide 32: Diversification is a key strength of Barclays
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 Banking Group income Corporate 38% by customer1 16% Markets Banking fees Countercyclical benefits from 5% consumer and wholesa
Slide 33: Exposure to sectors vulnerable to the COVID-19 environment
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 retail lending • Our exposure to vulnerable sectors (excluding Oil & Gas) totalled £26.4bn • Majority of exposure (>70%) is
Slide 34: Limited oil and gas exposures and robust risk management
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 as at 31 December 2019 Other corporate lending Oil and Gas Home loans Other retail lending • Our exposure to Oil & Gas is we
Slide 35: Retail portfolios in the UK and US prudently positioned ahead of the crisis
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 65.4% 67.1% 67.9% appetite UK mortgage • c.50% average LTV of mortgage book stock balance secured growth within • Buy-to-Let mo
Slide 36: Level 3 assets significantly reduced in recent years
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 0.4 Other Derivative financial assets ESHLA 3.2 FV assets ESHLA 8.5 FV assets 4.8 £27.0bn £14.4bn Financial assets 3.7 designa
Slide 37: ESG supporting society and our franchise
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 Scope 1 and 2 carbon emission and environmental segments reduction against 2018 baseline 2019 2018 2017 28.5 31.7 34.8 (53%)∆
Slide 38: Intend to play a leading role in the climate change agenda
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 2050 Increased restrictions in sensitive energy sectors Scope 1 and 2 : Coal Oil sands Net zero by 2030 Operational GHG emis
Slide 39: Financial results tables
Financial results tables | Barclays Q1 2020 Results | 29 April 2020
Slide 40: Q120 Group
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 (2,115) (448) Attributable profit 604 1,084 (44%) – Operating costs (3,253) (3,257) – Litigation and conduct (10) (61) 84% Pe
Slide 41: Q120 Barclays UK
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%) – Barclaycard Consumer UK 436 490 (11%) – Business Banking 300 323 (7%) Attributable profit 178 424 (58%) Income 1,704 1,777 (4%
Slide 42: Q120 Barclays International
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 (28%) – CC&P 1,027 1,065 (4%) Attributable profit 529 804 (34%) Income 4,644 3,570 30% – CIB (724) (52) Performance measures –
Slide 43: Q120 Barclays International: CIB and Consumer, Cards & Payments
Q120 Barclays International: Corporate & Investment Bank and Consumer, Cards & Payments CIB business performance – CC&P business performance – Mar-20 Mar-19 % change three months ended (£m) Mar-20 Mar-19 % change three months ended (£m) – FICC 1,858 902 Income 1,027 1,065 (4%) – Equities 564 467 21%
Slide 44: Q120 Head Office
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) (39) 87% Total operating expenses (16) (91) 82% Other net income/(expenses) 2 (22) Loss before tax (104) (220) 53% Performanc
Slide 45: 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