Barclays Plc · LSE:BARC
Barclays — FY 2021 Earnings Presentation
60 slides from Barclays's earnings presentation, Feb 23, 2022
Slide 1: Barclays PLC FY 2021 Results
Barclays PLC FY 2021 Results 23 February 2022
Slide 2: C.S. Venkatakrishnan, Barclays Group Chief Executive
C.S. Venkatakrishnan Barclays Group Chief Executive
Slide 3: FY21: Record profit before tax and increased capital returns
FY21: Record profit before tax and increased capital returns Diversification Income • Record PBT of £8.4bn and 13.4% RoTE £21.9bn delivering Cost: income ratio Consumer • Well positioned for rising rates, strong UK mortgage and deposit 66% recovery volumes, and improving spend trends in the UK and U
Slide 4: Barclays' diversified strategy is delivering
Barclays’ diversified strategy is delivering Group RoTE >10% in 2021 Costs continue to be tightly managed 25.0% Statutory RoTE Statutory EPS (p) RoTE target:75 1 Total costs (excl. L&C ) (£bn) 1 L&C (£bn) CIR CIR target: 20.0% >10% 65 <60% 55 84% 85% 15.0% 37.5 45 18.5 16.3 15.5 16.2 15.4 20.0 80% 1
Slide 5: The real economy backdrop is supportive of Barclays' corporate and consumer businesses
The real economy backdrop is supportive of Barclays’ corporate and consumer businesses Interest rates (%) Change in monthly card spending vs. 20192 (%) GBP 5 Year UK base UK debit and US credit swap rate1 rate credit cards cards 18th Feb: 1.55 1.75 15 Jan-22: 7.43 1.25 5 0.75 18th Feb: 0.50 0.25 -5
Slide 6: How Barclays will continue to deliver value
How Barclays will continue to deliver value Our diversification, built to Strategic priorities to deliver double-digit returns sustain and grow Resilient through economic cycles Deliver next-generation, digitised consumer financial services A large scale retail and BUK business bank in the UK Delive
Slide 7: Strategic priorities underpinned by structural market and societal trends
Our strategic priorities to grow are underpinned by structural market and societal trends Deliver next-generation, digitised Capture opportunities as we transition Deliver sustainable growth in the CIB consumer financial services to a low-carbon economy The digital revolution continues Public and pr
Slide 8: Deliver next-generation, digitised consumer financial services
Deliver next-generation, digitised consumer financial services Building better products and services, leveraging our payments interconnections and improving our efficiency UK retail banking Payments US and UK consumer lending Investing in digital capabilities Realising value from our Payments Expand
Slide 9: Deliver sustainable growth in the CIB
Deliver sustainable growth in the CIB As the capital markets grow, we aim to maintain our market position as a top six global investment bank while investing in new capabilities and digital platforms Investment Banking Global Markets Corporate Banking Investing for growth Growing financing income st
Slide 10: Capture opportunities as we transition to a low-carbon economy
Capture opportunities as we transition to a low-carbon economy We want to be a trusted partner for our customers and clients as they transition Developing new green and Supporting clients with the transition Investing in sustainable innovation sustainable products Scaling-up of low-carbon technologi
Slide 11: Our Purpose underpins progress against our ESG strategy in 2021
Our Purpose underpins the strong progress we delivered against our ESG strategy in 2021 Our Purpose: • Achieved emissions reductions of -22%1 / -8%1 in Energy / Power portfolios The reason Barclays exists; • Founding member of NZBA2 and member of SMI FSTF3 the societal need we fulfil • Built experti
Slide 12: Prudently allocating capital while delivering attractive return of capital
Prudently allocating capital while delivering attractive return of capital to shareholders Attractive return of capital to shareholders - Total payout of 15p per share in respect of 20211 Strong organic capital generation from earnings Demand-led business growth and Target RoTE of >10% translates to
Slide 13: Record FY21 profitability, increased capital distributions
Record FY21 profitability, increased capital distributions FY21 metrics Group targets over the medium term Returns Returns Cost efficiency Group RoTE 13.4% Group RoTE >10% Cost: income ratio <60% Cost efficiency Cost: income ratio 66% Capital adequacy Capital adequacy Capital distributions CET1 rati
Slide 14: Tushar Morzaria, Barclays Group Finance Director
Tushar Morzaria Barclays Group Finance Director
Slide 15: FY21 Group highlights
FY21 Group highlights • Income of £21.9bn up 1%, despite a 8% depreciation of average USD against GBP Income Costs − BUK income increased 3%, CC&P income decreased 3%, and CIB income decreased 1% £21.9bn £14.4bn • Costs increased 4% to £14.4bn, due to higher structural cost actions and performance c
Slide 16: Income: ongoing benefits from business diversification
Income: ongoing benefits from business diversification enabling increased revenue YoY Group income +1% YoY despite an 8% USD/GBP depreciation (£m) 21,766 21,940 • Strong mortgage volumes and margins Barclays UK: • Non-recurrence of prior year COVID-19 customer +3% YoY support actions 6,347 • Partial
Slide 17: Mortgage growth continues, well positioned for rising rates
Mortgage growth continues, well positioned for rising rates and optimistic about recovery in unsecured lending Mortgages Group NII interest rate sensitivity BUK: Mortgage 155.2 157.4 158.1 1.5 143.3 148.3 balances (£bn) Dec-19 Dec-20 Jun-21 Sep-21 Dec-21 GBP 5 Year 1.0 swap rate2 (%) • Strong mortga
Slide 18: Costs: FY21 increase driven by structural cost actions and performance costs
Costs: FY21 increase driven by higher structural cost actions and performance costs, with flat base costs (£m) FY21 total costs +4% YoY (£m) FY21 base costs flat YoY (£m) 14,439 241 280 13,886 170 32 299 4,394 4,302 FY21 2,120 2,366 base 13,886 costs 14,439 flat YoY 6,693 6,835 at £12.0bn 472 674 1
Slide 19: FY21 structural cost actions predominantly BUK transformation and real estate
FY21 structural cost actions predominantly related to BUK transformation spend and real estate charge Structural cost actions (£m) FY21 structural cost actions increased to £648m 648 • Charge taken in Head Office in Q221 to vacate a Real estate London office building by the end of 2022 charge − Expe
Slide 20: FY22 base costs expected to be modestly higher than £12.0bn
FY22 base costs expected to be modestly higher than £12.0bn due to inflationary pressures and planned investment spend FY21 to FY22 costs outlook (£m) 14,439 Structural cost actions 648 Key drivers of base costs2 Performance costs 1,745 • Demand-led growth • Strategic investments • Technology produc
Slide 21: Impairment: FY21 net release of £0.7bn
Impairment: FY21 net release of £0.7bn, reflecting lower unsecured lending balances and a net release in the CIB Impairment charge / (release) (£m) Drivers of impairment charge / (release) 4,838 Impairment release of £365m driven by an improved macroeconomic outlook and lower unsecured lending balan
Slide 22: Dec-21 coverage ratios remain strong
Dec-21 coverage ratios remain strong Credit cards, unsecured loans and other retail lending Wholesale loans Gross exposure (£bn) Impairment allowance (£bn) Coverage ratio Gross exposure (£bn) Impairment allowance (£bn) Coverage ratio 60.2 3.4 5.7 8.1% 12.3% 8.8% 0.8% 1.5% 0.8% 151.7 4.9 144.3 2.8 10
Slide 23: Q421 Group highlights
Q421 Group highlights • Income of £5.2bn, up 4% driven by improved income from BUK and CCP, with stable CIB income Income Costs • Costs down 3%, reflecting efficiency savings, reduced performance costs and lower bank levy, partially offset by higher £5.2bn £3.7bn BUK structural cost actions and inve
Slide 24: Q421 Barclays UK
Q421 Barclays UK RoTE of 16.8% including structural cost actions, with FY21 NIM of 2.52% in line with guidance • Income increased 4% primarily driven by improved Q420 Q121 Q221 Q321 Q421 mortgage margins and increased balances, partially 1,626 1,576 1,623 1,638 1,699 Income Costs offset by lower uns
Slide 25: Q421 Barclays International
Q421 Barclays International RoTE of 10.4% driven by resilient income and operating performance • Income increased 1% Income Costs − Balanced income profile across businesses and geographies 25% Global £3.5bn £2.3bn 30% Markets Q420: £3.5bn Q420: £2.4bn • 2% depreciation of average USD against GBP wa
Slide 26: Q421 Barclays International: Corporate & Investment Bank
Q421 Barclays International: Corporate & Investment Bank RoTE of 10.2%, with improved profitability driven by stable income performance and a net impairment release • CIB income stable at £2.6bn as strong investment banking Q421 Q421 FY20 FY21 fees offset weaker global markets revenues (USD) (GBP) (
Slide 27: Q421 Barclays International: Consumer, Cards & Payments
Q421 Barclays International: Consumer, Cards & Payments RoTE of 11.7% reflecting improved income, lower impairment and investment for growth in US cards • Income increased 4% Q420 Q121 Q221 Q321 Q421 Income Costs − Payments income increased 29% driven by higher 848 840 878 805 808 £0.9bn £0.6bn turn
Slide 28: Q421 Head Office
Q421 Head Office Q420 Q121 Q221 Q321 Q421 • Q421 negative income of £49m including: − Hedge accounting losses (75) (49) Income (27) (110) (171) − Funding costs on legacy capital (£m) instruments − Negative treasury items (80) (114) • Q421 costs of £155m included costs related to Costs (155) (264) th
Slide 29: High quality and robust liquidity and funding positions
High quality and robust liquidity and funding positions Liquidity coverage ratio (LCR) Loan: deposit ratio2 Loans3 (£bn) Deposits3 (£bn) LDR 82% 160% 162% 161% 168% 71% 69% 70% Minimum requirement: 100% 481 510 519 31-Dec-19 31-Dec-20 30-Sep-21 31-Dec-21 416 339 343 353 362 Liquidity 211 266 293 291
Slide 30: Year-end CET1 ratio of 15.1%
Year-end CET1 ratio of 15.1% Profits contributed 208bps of capital accretion in 2021, with capital distribution of 72bps QoQ CET1 ratio1 movements 8bps 37bps 35bps 20bps 15.4% 15.1% 15.1% 15.4% 15.7% 15.3% Sep-21 Attributable profit Dividend RWA growth Other movements Dec-21 accrual CET1 capital £47
Slide 31: Re-based CET1 ratio of c.14%
Re-based CET1 ratio of c.14% Reflects c.30bps for announced share buyback and c.80bps expected impact from regulatory changes Near-term CET1 ratio flightpath c.30bps • Having absorbed the impact of c.80bps of c.80bps regulatory items on 1 Jan 2022, no further significant regulatory headwinds are exp
Slide 32: 13-14% CET1 ratio target provides headroom above MDA hurdle
13-14% CET1 ratio target continues to provide appropriate headroom above evolving MDA hurdle Illustrative evolution of minimum CET1 requirements and buffers • CET1 ratio target of 13-14%, with an appropriate 13-14% CET1 ratio target headroom over the MDA hurdle, which is currently 11.1%1 Appropriate
Slide 33: Well-positioned to deliver sustainable double digit returns
Barclays is well-positioned to deliver sustainable double digit returns 1 2.2% 2 £(1.0)bn 1.0% £(0.5)bn Interest rates Impairment Cost dynamics NII uplift from higher Increased credit Investment spend rates impairment, but below Inflationary pressures pre-COVID-19 levels Post-tax model
Slide 34: Outlook
Outlook • Barclays’ diversified income streams position the Group well for the ongoing economic recovery Income and rising interest rates • Impairment charge is expected to remain below pre-COVID-19 pandemic levels in coming Impairment quarters given reduced unsecured lending balances and an improve
Slide 35: Appendix
Appendix
Slide 36: Diversified model underpins resilient performance through cycles
Diversified model underpins resilient performance through cycles Diversified by income type Diversified by customer and client Diversified by geography 6% 16% 15% 33% 37% FY21 FY21 FY21 Group income Group income 51% Group income by type by customer1 29% by geography2 63% 23% 11% 10% 5% 37% NII 63% N
Slide 37: Total payments income growth opportunity of c.£900m over three years
Total payments income growth opportunity of c.£900m over three years from FY20-FY23 FY20 FY21 (£m) Total payments 1,657 1,940 +17% Payments1 458 +13% 4062 FY21 Group £20.0bn income £1.9bn £21.9bn Next-gen Commerce 6313 +31% 483 Wholesale payment fees Total payments represents 9% of Group income Inte
Slide 38: Barclays Unified Payments
Barclays Unified Payments We are seeing growth across our 3 pillars in UK SME, e-commerce and Europe as part of an integrated payments solution UK SME growth through digital An integrated payments solution UK and European expansion through capabilities and partnership channels for corporates in the
Slide 39: Structural hedge
Structural hedge Structural hedge program update Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 • The Group’s combined gross equity and product structural hedge contribution was £371m in Q421 (Q321: £353m) Hedge notional • The combined structural hedge notional as at Dec-21 was £228b
Slide 40: Interest rate sensitivity
Interest rate sensitivity Illustrative sensitivity of Group NII to a parallel shift in interest rate curves1 • This analysis assumes an instantaneous parallel shift in interest rate curves Impact of parallel shifts Year 1 Year 2 Year 3 • Around two thirds of the Group income benefit from the illustr
Slide 41: Retaining management adjustments due to economic uncertainty
Retaining management adjustments due to economic uncertainty Baseline macroeconomic variables (MEVs) MEVs used in Q321 results Q421 MEVs Change in MEVs • Q421 baseline UK and US MEVs have improved from Q321, including unemployment forecasts in both the 2021 2022 2023 2021 2022 2023 2021 2022 2023 UK
Slide 42: Dec-21 UK and US cards coverage ratios above pre-pandemic levels
Dec-21 UK and US cards coverage ratios still meaningfully above pre-pandemic levels UK cards US cards Gross exposure (£bn) Impairment allowance (£bn) Coverage ratio Gross exposure (£bn) Impairment allowance (£bn) Coverage ratio 2.0 16.5 10.5% 16.6% 12.8% 22.5 9.1% 14.3% 10.6% 0.8 1.7 1.5 2.5 0.6 17.
Slide 43: Wholesale exposures are diversified and appropriately covered
Wholesale exposures are diversified and appropriately covered, especially in selected vulnerable sectors Wholesale and vulnerable sector exposure Wholesale lending (£bn) Selected sectors (£bn/coverage ratio %) 45.8 151.7 16.4 16.4 (2.1%) Wholesale 0.5 (9.7%) Air Travel Selected Sectors 0.6 (2.8%) Gr
Slide 44: Retail portfolios in the UK and US appropriately positioned
Retail portfolios in the UK and US continue to be appropriately positioned • Strong balance growth supported by elevated demand and stamp duty relief 158.2 UK 148.3 mortgage 143.3 UK • Arrears levels at multi-year lows 69.5% balance 67.9% 67.5% mortgages • 50.7% average balance weighted LTV of mortg
Slide 45: QoQ and YoY TNAV per share movements
QoQ and YoY TNAV per share movements QoQ TNAV movements (pence per share) 7 1 5 4 2 287 292 Sep-21 Earnings Repurchase of shares Cash flow hedge reserve Pension Other movements Dec-21 remeasurement • TNAV per share increased 5p to 292p due to • Partly offset by: – +7p of earnings – -5p cash flow hed
Slide 46: RWAs increased QoQ and YoY driven by market risk
RWAs increased QoQ and YoY driven by market risk QoQ RWA movements (£bn) 0.3 0.7 12.3 314.1 313.5 313.5 307.5 3.6 2.4 303.9 301.5 301.5 1 Sep-21 Credit risk Counterparty credit risk Market risk FX Other Dec-21 excl. disposals YoY RWA movements (£bn) 0.7 0.3 9.1 314.4 314.1 314.1 2.2 2.0 306.2 306.0
Slide 47: IFRS 9 transitional relief of c.40bps as at Dec-21
IFRS 9 transitional relief of c.40bps as at Dec-21 Constructive regulatory action in Q220 gave greater relief for Stage 1 and 2 impairments • 100% transitional relief for modified impairment post Dec-19 applied until end-2021 • Transitional relief schedule for static component per original schedule
Slide 48: Pension deficit reduction contributions
Pension deficit reduction contributions CET1 ratio headwinds from pension reduction contributions fully incorporated into prudent capital plan and CET1 target • As at 31 December 2021, the Group’s IAS 19 pension surplus across all schemes was £3.6bn (December 2020: £1.5bn). The UK Retirement Fund (U
Slide 49: Group leverage position appropriately managed
Group leverage position appropriately managed Minimum leverage requirements and buffers under the UK regime Dec-211: • Headroom to minimum leverage requirement of 150bps in Q421, while the RWA-based CET1 ratio is expected to remain our primary UK Spot: 5.3% regulatory constraint through the cycle UK
Slide 50: Financial results tables
Financial results tables
Slide 51: FY21 notable items
FY21 notable items Year ended (£m) Dec-21 Dec-20 Income Valuation loss on Barclays’ preference shares in Visa Inc. - (101) Consumer, Cards and Payments Repurchases of some of the Barclays Bank PLC 7.625% Contingent Capital Notes - (85) Head Office Costs Structural cost actions - real estate review (
Slide 52: FY21 split of payments income by division
FY21 split of payments income by division Dec-21 Dec-20 % change Year ended (£m) BUK CIB CC&P Total BUK CIB CC&P Total BUK CIB CC&P Total 1 Unified Payments - - 458 458 - - 406 406 - - 13% 13% 2 Barclays Cubed / Wholesale payment fees 364 265 1 631 248 235 - 483 47% 13% - 31% Interchange and FX fees
Slide 53: FY21 Group
FY21 Group Year ended (£m) Dec-21 Dec-20 % change Three months ended (£m) Dec-21 Dec-20 % change Income 21,940 21,766 +1% Income 5,160 4,941 +4% Impairment releases / (charges) 653 (4,838) Impairment releases / (charges) 31 (492) – Operating costs (14,092) (13,434) -5% – Operating costs (3,514) (3,4
Slide 54: FY21 Barclays UK
FY21 Barclays UK Year ended (£m) Dec-21 Dec-20 % change Three months ended (£m) Dec-21 Dec-20 % change – Personal Banking 3,883 3,522 +10% – Personal Banking 983 895 +10% – Barclaycard Consumer UK 1,250 1,519 -18% – Barclaycard Consumer UK 352 354 -1% – Business Banking 1,403 1,306 +7% – Business Ba
Slide 55: FY21 Barclays International
FY21 Barclays International Year ended (£m) Dec-21 Dec-20 % change Three months ended (£m) Dec-21 Dec-20 % change Income 15,665 15,921 -2% Income 3,510 3,486 +1% Impairment releases / (charges) 288 (3,280) Impairment charges (23) (291) +92% – Operating costs (9,076) (8,765) -4% – Operating costs (2,
Slide 56: FY21 Barclays International: Corporate & Investment Bank
FY21 Barclays International: Corporate & Investment Bank % change % change Year ended (£m) Dec-21 Dec-20 % change Three months ended (£m) Dec-21 Dec-20 % change in USD in USD – FICC 3,448 5,138 -33% -28% – FICC 546 812 -33% -32% – Equities 2,967 2,471 +20% +28% – Equities 501 542 -8% -6% Global Mark
Slide 57: FY21 Barclays International: Consumer, Cards & Payments
FY21 Barclays International: Consumer, Cards & Payments Year ended (£m) Dec-21 Dec-20 % change Three months ended (£m) Dec-21 Dec-20 % change Total Income 3,331 3,445 -3% Total Income 878 848 +4% Impairment charges (185) (1,721) +89% Impairment charges (96) (239) +60% – Operating costs (2,258) (2,07
Slide 58: FY21 Head Office
FY21 Head Office Year ended (£m) Dec-21 Dec-20 % change Three months ended (£m) Dec-21 Dec-20 % change Income (261) (502) +48% Income (49) (171) +71% Impairment charges - (91) Impairment charges (5) (31) +84% – Operating costs (659) (399) -65% – Operating costs (152) (213) +29% – UK bank levy - (9)
Slide 59: Exchange rates and share count information
Exchange rates and share count information QoQ % YoY % Exchange rates Dec-21 Sep-21 Dec-20 change change Period end - USD/GBP 1.35 1.35 1.37 -1% YTD average - USD/GBP 1.38 1.39 1.28 -1% +8% 3 month average - USD/GBP 1.35 1.38 1.32 -2% +2% Period end - EUR/GBP 1.19 1.16 1.12 +3% +6% YTD average - EUR
Slide 60: 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