Slide 1: Barclays PLC 2018 Full Year Results
Barclays PLC 2018 Full Year Results 21 February 2019
Slide 2: Jes Staley, Barclays Group Chief Executive
Jes Staley Barclays Group Chief Executive
Slide 3: Barclays Group is positioned to deliver strong and sustainable returns
Barclays Group is positioned to deliver strong and sustainable returns for shareholders Transatlantic consumer and wholesale bank Barclays UK (BUK) Barclays International (BI) Market leading UK retail bank, combining digital Diversified bank across Cards & Payments, Corporate innovation and scale, w
Slide 4: Tushar Morzaria, Barclays Group Finance Director
Tushar Morzaria Barclays Group Finance Director
Slide 5: FY18 Group highlights
FY18 Group highlights Group RoTE of 8.5%, excluding litigation and conduct, delivering improved shareholder returns Financial performance1 Improved RoTE of 8.5%, with profits up RoTE1 20% Income £21.1bn FY17 FY18 FY17: £21.1bn Positive jaws with lower absolute costs, despite investments Group3 8
Slide 6: Resilient income performance in challenging market conditions
Resilient income performance in challenging market conditions £21.1bn £21.1bn • Volume growth within prudent risk appetite 7.4 7.4 BUK • Focus on secured lending, with mortgage balances up £4.4bn • Markets incomes up 9% YoY, in challenging market conditions 9.9 • Corporate lending income reduced as
Slide 7: Improving cost efficiency is creating capacity to invest
Improving cost efficiency is creating capacity to invest, driving operating leverage Absolute cost reduction 2017 to 2019 (£bn)1 14.2 13.9 13.6-13.9 BX generating significant Capacity productivity to invest Q4 4.0 3.9 savings Q3 3.3 3.3 Q2 3.4 3.3 Targeting Attractive medium cost: income term growth
Slide 8: Prudently managing credit risk in both the UK and US
Prudently managing credit risk in both the UK and US Conservatively positioned in the UK in the face of Brexit and the consumer credit cycle in the US Q417 Q118 Q218 Q318 Q418 • Focus on growing mortgage book within £132.1bn £134.4bn £136.5bn conservative risk appetite UK 63.8% 64.4% 65.4% Up £4.4bn
Slide 9: TNAV – three consecutive quarters of accretion
TNAV – three consecutive quarters of accretion post IFRS 9 and US DoJ impacts in Q1 TNAV (pence per share) Principally in Q1 4 22 6 288 13 276 13 262 Dec-17 Profits Dividends Pref/AT1 Accounting Litigation Dec-18 (ex. L&C redemption policy change & conduct and IFRS 9) (IFRS 9) • TNAV finished 2018 a
Slide 10: CET1 ratio progression
CET1 ratio progression 13.2% with strong capital generation and significant headwinds eliminated in 2018 CET1 ratio1 Eliminated significant L&C headwinds in Q118 16bps 140bps 53bps 33bps 9bps 13.9% 71bps 13.3% 13.2% Dec-17 Profits Dividends Redemption of Pension RWA and other Litigation Dec-18 (ex.
Slide 11: Strongly capital generative and at our target CET1 ratio
Strongly capital generative and at our target CET1 ratio Managing the CET1 ratio above the regulatory minimum level, to pass stress tests and absorb the PRA buffer FY18 CET1 ratio: 13.2% • Strong capital generation with significant headwinds removed in 2018 c.13% target • CET1 ratio of 13.2% benchma
Slide 12: High quality funding position with conservative liquidity pool and stable LDR
High quality funding position with a conservatively positioned liquidity pool and stable LDR Well prepared for Brexit and macroeconomic uncertainties Diversified funding profile with strong deposit base Well positioned for future MREL requirements HoldCo MREL position Expected requirement2 2% 8% Dep
Slide 13: Q418 Group highlights
Q418 Group highlights Improved income and further TNAV accretion Financial performance1 Income Income grew by 1% while costs decreased by 2%2, generating positive jaws £5.1bn Q417: £5.0bn Q4 bank levy was £269m (Q417 £365m) Costs2 £3.9bn Q417: £4.0bn Impairment increased £70m to £643m, reflect
Slide 14: Q418 Barclays UK
Q418 Barclays UK Further growth in secured lending and customer deposit balances Stable income with Q4 NIM of 3.20% Q417 Q118 Q218 Q318 Q418 Financial performance1 • Continued growth in secured lending – Income mortgage balance growth of £0.6bn in Total 330 295 343 367 350 Q4 £1.9bn Q417: £1.9bn i
Slide 15: Q418 Barclays International
Q418 Barclays International Improved returns with focused investment in the businesses Financial performance1 Balanced and diversified business, with US Income balanced across businesses c.50% and UK c.30% of income and geographies Income £3.2bn Q417: £3.3bn 3% appreciation of average USD agains
Slide 16: Q418 Barclays International: Corporate & Investment Bank
Q418 Barclays International: Corporate & Investment Bank Continued growth in market share Markets income decreased 2% Income Financial performance1 (down 7% in USD) in challenging Income market conditions GBP basis (£m) USD basis3 ($m) • Equities increased 4%, driven by Q417 Q418 Q417 Q418 £2.2bn
Slide 17: Q418 Barclays International: Consumer, Cards & Payments
Q418 Barclays International: Consumer, Cards & Payments Continued underlying growth in US Cards and investments across CC&P businesses Income grew 6% excluding treasury Q417 Q118 Q218 Q318 Q418 Financial performance1 YoY operations of c.£60m, previously in Head Income Office +4% £1.1bn Q417: £1.1b
Slide 18: Reduced Head Office drag
Reduced Head Office drag Q417 Q318 Q418 • Q418 negative income includes: – c.£90m impact from certain legacy capital instrument (57) (predominantly 14% RCI) funding Income (11) (167) costs per quarter (£m) – Q418 hedge accounting drag more than offset by hedge ineffectiveness and mark-to- market gai
Slide 19: Focused on profitability and returning capital to shareholders
Focused on profitability and returning capital to shareholders FY18 highlights Group targets >9% in 2019 Group RoTE of 8.5%1 RoTE2 >10% in 2020 CET1 CET1 ratio of 13.2% at target c.13% ratio3 66% Group cost: income ratio £13.6-13.9bn guidance for 20191 Costs with positive jaws1 Cost: income ratio <6
Slide 20: Jes Staley, Barclays Group Chief Executive
Jes Staley Barclays Group Chief Executive
Slide 21: Delivering sustainable and improved returns
Delivering sustainable and improved returns Focused on increased cash returns to shareholders Strategy is delivering: Return on Tangible Equity1 improved returns Targeting Group RoTE of >9% in 2019 and >10% in 20202 Capital strength: 13.2% CET1 ratio at target of c.13% FY173 Increasing capital distr
Slide 22: Diversified and prudently positioned
Diversified and prudently positioned Well prepared for Brexit and macroeconomic uncertainties Diversified income mix by geography and product Diversified funding 2% 4% 10% 8% 8% 20% 8% Group 19% Group Group 9% income by income by 52% funding business1 18% 36% geography sources3 2 6% 63% 13% 12% 12%
Slide 23: Investments in CIB starting to deliver
Investments in CIB starting to deliver Strategy in place to further improve returns Corporate Banking RoTE improvement in CIB • Expand client relationships by adding low capital intensive transaction banking and payments services 140bps • Improve loan book returns and reduce exposure where opportun
Slide 24: Evolving Group capital allocation
Evolving Group capital allocation c.60% of Group RWAs are allocated to lending activities to consumers and businesses Corporate loan book2 Consumer lending/payments3 • Improve client returns • Focus of investment spend on lending c.30% c.30% and growth • Add transaction banking Group • Low capital i
Slide 25: Pivoting to sustainable growth over the next 3-5 years
Pivoting to sustainable growth over the next 3-5 years Investing in medium-term growth initiatives to drive income and returns • Extend leading digital banking proposition UK Retail • Strategic partnerships to broaden customer offerings • Build platform for connected value Medium-term • Digital capa
Slide 26: Capacity to invest and increase cash returns to shareholders
Capacity to invest and increase cash returns to shareholders Highly capital generative business with material headwinds to retained earnings addressed Strong capital position at target of c.13% c.140bps capital accretion Material capital 13.2% CET1 ratio from profits1 in FY18 headwinds addressed All
Slide 27: Conclusion
Conclusion Improving returns on capital Increasing distributions to shareholders Strong capital, liquidity and funding positions Cost efficiency creating operating leverage Investing in medium term growth initiatives 27 | Barclays 2018 Full Year Results | 21 February 2019
Slide 28: Appendix
Appendix
Slide 29: Think digital, think Barclays UK
Think digital, think Barclays UK Building meaningful relationships with our 24 million customers Changing the shape of our business Front end digitisation Delivering sustainable income generation #1 Investing in digital Used mobile banking talent, cyber resilience through digital app in the UK and d
Slide 30: Barclays International: Improving share in the CIB
Barclays International: Improving share in the CIB Gaining share in Markets and maintaining strong Banking franchise Markets1 Banking fees2 70bps 20bps 40bps XXX XX XXX XX 4.0% 3.9% 4.6% 4.0% 4.1% 4.2% 4.2% 3.6% FY17 FY18 FY17 FY18 FY15 FY16 FY17 FY18 FICC Equities Global Markets ranking improved
Slide 31: Barclays International: Consumer, Cards & Payments opportunities
Barclays International: Consumer, Cards & Payments opportunities Portfolio of leading franchises with high returns and growth potential Cards & Payments #9 US credit card receivables1 Barclays Strong market US position and #5 Co-brand card issuer2 Consumer delivering Bank growth $14bn Retail deposit
Slide 32: Interest rate sensitivity
Interest rate sensitivity Illustrative sensitivity of Group NII to a 100bps parallel upward shift in interest rates1 Change in NII (£m) Commentary/Assumptions • This analysis is based on the modelled performance of the consumer and corporate banking book, and includes the impact Illustrative 50% pas
Slide 33: Fixed Income
Fixed Income
Slide 34: Strong Group CET1 and leverage ratios
Strong Group CET1 and leverage ratios Fully loaded and transitional CET1 ratio Fully loaded CET1 ratio IFRS 9 transitional benefit • Transitional CET1 ratio was flat quarter-on-quarter at 13.2% • Transitional CET1 ratio decreased by 10bps in the year to 13.3% 13.2% 13.2%1 13.2% with: 12.4% 11.4% − 1
Slide 35: Strongly capital generative and at target CET1 ratio
Strongly capital generative and at target CET1 ratio Managing the Group CET1 ratio above the regulatory minimum level, to pass stress tests and absorb the PRA buffer FY18 CET1 ratio: 13.2% Favourable drawdown in 2018 BoE Stress Test compared to 2017, c.13% target reflecting de-risking and reduced CE
Slide 36: Prudently managing the Group's capital position
Prudently managing the Group’s capital position Managing the Group CET1 ratio above the regulatory minimum level, to pass stress tests and absorb the PRA buffer FY18 CET1 ratio: 13.2% Favourable drawdown in 2018 BoE stress test compared to major UK peers c.13% target Barclays Bank A Bank B Bank C He
Slide 37: Prudently managing the Group's capital position
Prudently managing the Group’s capital position Managing the Group CET1 ratio above the distribution restrictions minimum Pillar 1 requirement Countercyclical Buffer (CCyB) Distribution restrictions Pillar 2A CET1 requirement CRD IV Mandatory Distribution Restrictions (MDR) hurdle G-SII buffer BoE s
Slide 38: Managing evolving future Group minimum leverage requirements
Managing evolving future Group minimum leverage requirements Illustrative evolution of minimum leverage requirements and buffers under the UK regime BoE minimum leverage requirement Regulatory minimum leverage requirement Leverage requirements G-SII leverage buffer BoE stress test hurdle rate for 20
Slide 39: Transition to CRD IV capital structure well established
Transition to CRD IV capital structure well established Expect to hold prudent headroom above AT1 and Tier 2 minimums Illustrative evolution of CRD IV capital structure Well managed and balanced total capital structure • BBPLC issued capital instruments are expected to qualify as MREL, until 1 Janua
Slide 40: Managing call and maturity profiles of capital instruments
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 December 20181 BPLC T2 capital as at 31 December 20181 • Whilst unable to comment on future calls 4.4 for specific instruments, the call and maturity 3
Slide 41: ADI position supports strong distribution capacity
ADI position supports strong distribution capacity Distribution capacity as at 31-Dec-18 (£m) Distributable items ADI Barclays PLC dividend payments Barclays PLC AT1 coupons • Barclays PLC has significant Available Distributable Items (ADIs)1 to cover dividends on ordinary shares and AT1 distributio
Slide 42: Successfully transitioning to HoldCo funding model
Successfully transitioning to HoldCo funding model Currently expect c.£8bn of MREL issuance in 2019 HoldCo MREL position and expected requirement Well advanced on HoldCo issuance plan • Completed 2018 HoldCo issuance plan and partially pre-funded 30.0% 2019 plan in Q418 CCyB: 0.5% CCB: 2.5% • Issued
Slide 43: Continued progress in HoldCo issuance
Continued progress in HoldCo issuance whilst diversifying the markets we access 14% of issuance in 2018 was in non-G3 currencies HoldCo issuance and maturities/redemptions by year1 2018 HoldCo issuance by currency Senior unsecured Total: £12.2bn Total: (£2.4bn) T2 Total: £11.9bn HoldCo Snr: £10.2bn
Slide 44: Balanced HoldCo funding profile by debt class and tenor
Balanced HoldCo funding profile by debt class and tenor Barclays PLC AT1 Tier 2 Senior 14% 20% By product £49bn 66% BPLC AT1 capital BPLC T2 capital BPLC Senior unsecured debt as at 31 December 20181 as at 31 December 20181 as at 31 December 20181 4.5 12.3 2.3 6.4 2.1 5.2 4.6 0.9 0.8 2.6 3.0 1.1 1.6
Slide 45: High quality liquidity position
High quality liquidity position Conservatively positioned liquidity pool, stable LDR and reduced reliance on short-term wholesale funding Highly liquid, comfortably exceeding minimum requirement Conservative loan: deposit ratio3 Loans and advances4 (£bn) Deposits4 (£bn) LDR Liquidity Coverage Ratio
Slide 46: Illustrative UK approach to resolution
Illustrative UK approach to resolution1 OpCo waterfall Intercompany investments HoldCo waterfall • Total OpCo losses which exceed its equity • Losses are transmitted to HoldCo • The loss on HoldCo’s investment from step 2 capacity are allocated to OpCo investors in through write-down of its is alloc
Slide 47: Divisions
Legal entity restructuring of the Group completed post ring-fencing in April 2018 Barclays PLC Barclays International Barclays UK and Head Office1 Market leading UK retail bank, combining digital Diversified bank across Cards & Payments, Corporate & innovation and scale, with 24 million customers In
Slide 48: Strong legal entity capital positions
Strong legal entity capital positions Group expects to accommodate all legal entity capital requirements within Group CET1 ratio target of c.13% Barclays PLC Accounting and regulated sub-group Accounting sub-group Barclays Bank UK PLC sub-group Barclays Bank PLC sub-group Barclays Bank UK PLC (solus
Slide 49: Diversified Funding Sources across all legal entities
Diversified Funding Sources across all legal entities1 Majority of funding within legal entities through deposits Barclays PLC 53 30 8% 5% 395 69 63% 11% Total: 3% 16 Barclays Bank UK PLC 3 £624bn2 Barclays Bank PLC 3 8% 49 15 2% 40 1 1% 10 12 Key: 6% 4% 10 11% 29 4% 11 Deposits 8% 5% Shareholders’
Slide 50: Deposit and wholesale funding sources of Barclays Bank UK PLC and Barclays Bank PLC
Deposit and wholesale funding sources of Barclays Bank UK PLC and Barclays Bank PLC Barclays PLC Barclays Bank UK PLC Barclays Bank PLC (and subsidiaries) Personal Banking 154 Corporate and Investment Bank 136 Deposit funding 197 197 Business Banking 43 Consumer, Cards & Payments 61 Certificates of
Slide 51: Wholesale funding composition as at 31 December 2018
Wholesale funding composition as at 31 December 20181 <1 1-3 3-6 6-12 Total 1-2 2-3 3-4 4-5 As at 31 December 2018 (£bn) >5 years Total month months months months <1 year years years years years Barclays PLC (the Parent company) Senior unsecured - - - 1.6 1.6 1.1 4.4 1.3 6.7 16.3 31.4 (Public benchm
Slide 52: Ratings remain a key priority
Ratings remain a key priority Focus on strategy execution and achieving performance targets to improve ratings Current Senior Long and All ratings on stable outlooks Standard & Poor’s Fitch Moody’s Short Term ratings We solicit ratings from S&P, Fitch and Moody’s for the HoldCo and both its OpCos th
Slide 53: Barclays rating composition for senior debt
Barclays rating composition for senior debt Standard & Poor’s Fitch Moody’s BPLC BBPLC BBUKPLC BPLC BBPLC BBUKPLC BPLC BBPLC BBUKPLC Baseline Credit Stand-Alone Credit Profile bbb+ Viability Rating1 a a a baa3 baa3 a3 Assessment Operating Anchor bbb+ aa to a+ Macro profile Strong+ Strong+ Strong+ en
Slide 54: Barclays rating composition for subordinated debt
Barclays rating composition for subordinated debt Standard & Poor’s Fitch Moody’s Baseline Stand-alone Stand-Alone Viability bbb+ a a Credit baa3 baa3 rating Credit Profile Rating Assessment BPLC BBPLC BPLC BBPLC BPLC BBPLC T2 T2 T2 T1 T2 AT1 LT2 UT2 T1 T2 AT1 LT2 UT2 T1 T2 AT1 LT2 UT2 Coco Coco Coc
Slide 55: Preparation for continuity of business in the event of Brexit
Preparation for continuity of business in the event of Brexit Plans in place to support activity with European clients through expanded Barclays Bank Ireland (BBI) Expect to be operational by March 2019 having received Pro-forma BBI as at 31 December 20182 Central Bank of Ireland approval to proce
Slide 56: Financial results tables
Financial results tables
Slide 57: Other items of interest – FY18 and Q418 vs. prior year
Other items of interest – FY18 and Q418 vs. prior year Material items (£m) FY18 FY17 Q418 Q417 Litigation and conduct RMBS (1,420) - - - Head Office Charges for PPI (400) (700) - - Barclays UK Provision in respect of Foreign Exchange matters - (240) (240) Barclays International Tax Re-measurement of
Slide 58: Q418 Group
Q418 Group Three months ended (£m) Dec-18 Dec-17 % change Excluding L&C – Three months ended (£m) Dec-18 Dec-17 % change Income 5,073 5,022 1% PBT 434 476 (9%) Impairment (643) (573) (12%) Attributable loss (14) (943) 99% – Operating costs (3,624) (3,621) - – Bank levy (269) (365) 26% Performance me
Slide 59: Q418 Barclays UK
Q418 Barclays UK Business performance Excluding L&C – Three months ended (£m) Dec-18 Dec-17 % change Three months ended (£m) Dec-18 Dec-17 % change PBT 405 505 (20%) – Personal Banking 998 1,116 (11%) Attributable profit 244 282 (13%) – Barclaycard Consumer UK 522 445 17% – Business Banking 343 309
Slide 60: Q418 Barclays International
Q418 Barclays International Business performance Excluding L&C – Three months ended (£m) Dec-18 Dec-17 % change Three months ended (£m) Dec-18 Dec-17 % change PBT 248 261 (5%) – CIB 2,151 2,252 (4%) Attributable loss (38) (918) 96% – CC&P 1,070 1,067 - Performance measures Income 3,221 3,319 (3%) –
Slide 61: Q418 Barclays International: CIB and Consumer, Cards & Payments
Q418 Barclays International: Corporate & Investment Bank and Consumer, Cards & Payments CIB business performance CC&P business performance % change % change Three months ended (£m) Dec-18 Dec-17 Three months ended (£m) Dec-18 Dec-17 % change GBP basis USD basis – FICC 570 607 (6%) (11%) Income 1,070
Slide 62: Q418 Head Office
Q418 Head Office Head Office business performance Three months ended (£m) Dec-18 Dec-17 Income (11) (167) Impairment releases/(charges) 7 (3) – Operating costs (69) (76) – Bank levy (13) (41) – GMP charge (140) - – Litigation and conduct (12) (75) Operating expenses (234) (192) Other net income/(exp
Slide 63: FY18 Group
FY18 Group Year ended (£m) Dec-18 Dec-17 % change Excluding L&C – Year ended (£m) Dec-18 Dec-17 % change Income 21,136 21,076 - PBT 5,701 4,748 20% Impairment (1,468) (2,336) 37% Attributable profit/(loss) 3,530 (772) – Operating costs (13,627) (13,884) 2% – Bank levy (269) (365) 26% Performance mea
Slide 64: FY18 Barclays UK
FY18 Barclays UK Business performance Excluding L&C – Year ended (£m) Dec-18 Dec-17 % change Year ended (£m) Dec-18 Dec-17 % change PBT 2,439 2,506 (3%) – Personal Banking 4,006 4,214 (5%) Attributable profit 1,630 1,586 3% – Barclaycard Consumer UK 2,104 1,977 6% Performance measures – Business Ban
Slide 65: FY18 Barclays International
FY18 Barclays International Business performance Excluding L&C – Year ended (£m) Dec-18 Dec-17 % change Year ended (£m) Dec-18 Dec-17 % change PBT 3,902 3,544 10% – CIB 9,765 9,878 (1%) Attributable profit 2,547 1,107 – CC&P 4,261 4,504 (5%) Performance measures Income 14,026 14,382 (2%) RoTE 8.7% 4
Slide 66: FY18 Barclays International: CIB and Consumer, Cards & Payments
FY18 Barclays International: Corporate & Investment Bank and Consumer, Cards & Payments CIB business performance CC&P business performance Year ended (£m) Dec-18 Dec-17 % change Year ended (£m) Dec-18 Dec-17 % change – FICC 2,863 2,875 - Income 4,261 4,504 (5%) – Equities 2,037 1,629 25% Impairment
Slide 67: FY18 Head Office
FY18 Head Office Head Office business performance Year ended (£m) Dec-18 Dec-17 Income (273) (159) Impairment releases/(charges) 16 (17) – Operating costs (228) (277) – Bank levy (13) (41) – GMP charge (140) - – Litigation and conduct (1,597) (151) Total operating expenses (1,978) (469) Other net ex
Slide 68: Abbreviations
Abbreviations ABS Asset-backed Securities ECB European Central Bank P1 Pillar 1 ADI Available Distributable Items ECM Equity Capital Markets P2A Pillar 2A ALAC Additional Loss-Absorbing Capacity EMEA Europe, Middle East and Africa PBT Profit Before Tax AP Attributable Profit EPS Basic Earnings per S
Slide 69: Disclaimer
Disclaimer Important Notice 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 buy any securities or financial instruments, or any advice or recommendation with re