Barclays Plc · LSE:BARC
Barclays — FY2002 Earnings Presentation
39 slides from Barclays's earnings presentation, Feb 13, 2003
Slide 1: Barclays PLC 2002 Preliminary Results
Barclays PLC 2002 Preliminary Results 13th February 2003
Slide 2: John Varley, Finance Director
John Varley Finance Director
Slide 3: Performance overview
Performance overview • Tough year in financial services • Our business models worked well • Good volume growth • Tight cost management • Well controlled risks • Strong capital position • Top quartile TSR • Ahead of target on Woolwich synergies
Slide 4: Group results
Group results (£ million unless otherwise stated) 2002 2001 % change Income 11,379 11,177 2 Costs (6,104) (6,067) 1 Provisions, of which (1,484) (1,149) 29 - South American Corporate Banking (132) (36) - Other provisions (1,352) (1,113) 21 Operating profit 3,780 3,951 -4 Earnings per share* 40.9p 43
Slide 5: Personal Financial Services
Personal Financial Services (£ millions) 2002 2001 % change Operating profit 1,027 949 8 Income 2,968 2,952 1 Costs (1,606) (1,624) -1 Provisions (334) (382) - 13
Slide 6: Barclays Private Clients
Barclays Private Clients (£ millions) 2002 2001 % change Operating profit 333 596 - 44 Income 1,323 1,547 - 14 Costs (944) (915) 3 Provisions (37) (36) 3
Slide 7: Barclaycard
Barclaycard (£ millions) 2002 2001 % change Operating profit 628 520 21 Income 1,582 1,386 14 Costs (552) (489) 13 Provisions (402) (374) 7
Slide 8: Business Banking
Business Banking (£ millions) 2002 2001 % change Operating profit 1,262 1,100 15 Income 2,508 2,382 5 Costs (1,018) (1,061) -4 Provisions (226) (210) 8
Slide 9: Barclays Africa
Barclays Africa (£ millions) 2002 2001 % change Operating profit 105 130 - 19 Income 275 312 - 12 Costs (143) (157) -9 Provisions (27) (25) 8
Slide 10: Barclays Capital
Barclays Capital (£ millions) 2002 2001 % change Operating profit 593 662 - 10 Income 2,239 2,087 7 Costs (1,312) (1,322) -1 Provisions (334) (103) 224
Slide 11: Barclays Global Investors
Barclays Global Investors (£ millions) 2002 2001 % change Operating profit 110 78 41 Income 550 523 5 Costs (439) (444) -1
Slide 12: Group banking interest margins
Group banking interest margins % Net interest margin at 31st December 2001 2.91 Movement in retail -0.06 Movement in wholesale -0.07 US/South American (incl NPLs) -0.03 Net interest margin at 31st December 2002 2.75
Slide 13: Pensions reporting
Pensions reporting • Large and prudently managed fund • Actuarial and accounting assessment at end 2002 show a surplus • FRS17 disclosure will indicate a deficit • Accounting presentation in transition - SSAP24, FRS17, IAS19 • Well placed to meet funding obligations over time
Slide 14: Operating expenses
Operating expenses • Total costs broadly flat • Rate of growth in BAU cost is falling • Headcount lower • Substantial ongoing strategic investment spend • Ahead of target on cost challenges
Slide 15: Provisions summary
Provisions summary • Provisions as a percentage of loan book stable half on half • RT rising in line with loan growth: no deterioration in the good book • Argentina risk under control and well reserved • Growth driven by “increased” rather than “new” • Stock of provisions is large
Slide 16: Potential Credit Risk Lendings
Potential Credit Risk Lendings 5,988 6,000 5,830 5,273 1,304 1,218 1,402 4,000 (£ millions) PPLs NPLs 4,526 4,770 2,000 3,871 0 31.12.02 30.06.02 31.12.01 NPL coverage 68% 61% 72% PCRL coverage 53% 49% 53%
Slide 17: Wholesale and retail risk
Wholesale and retail risk • Large corporate risk – “lumpy” provisioning – strong syndication skills – well rewarded for risk • SME – resilient – 85% of file in higher quality grades – well diversified portfolio • Retail – provisions as a percentage of loan book lower – proactive risk management in P
Slide 18: Capital management
Capital management • Rating: AA • Strong ratios: – tier 1: 8.2% – risk asset ratio: 12.8% • Dividend: 10% growth • Buybacks on the agenda
Slide 19: Cumulative economic profit performance versus goal
Cumulative economic profit performance versus goal Cumulative EP (£bn) 7 6.1 6 5 4.2 4 3 2.5 2 1.2 3.9 2.7 1 1.4 0 2000 2001 2002 2003 Cumulative actual Cumulative target
Slide 20: Performance versus relative TSR goal
Performance versus relative TSR goal Total Shareholder Return 1st January 2000 to 31st December 2002 (percentage) RBOS 55 HBOS 9 -4 Citigroup -6 BNP Paribas -7 HSBC -10 Standard Chartered -18 ABN Amro -28 BBV Argentaria -31 Lloyds TSB -32 Abbey National -37 Deutsche Bank -45 FTSE 100 -39
Slide 21: Additional Business Group Information
Additional Business Group Information
Slide 22: Personal Financial Services
PERSONAL FINANCIAL SERVICES • Openplan now has 2 million customers relative to our target for 2002 of 1.5 million. • Balances within Openplan from Barclays grew to £13.2bn, £10.3bn from savings and £2.9bn from mortgages. • 55% of customers choosing Openplan from Woolwich are new. • Attrition rates f
Slide 23: Barclays Private Clients
BARCLAYS PRIVATE CLIENTS • FTSE 100 declined by 24% in 2002. • Globally affluent and high net worth client numbers increased 3% to 970,000, excluding the impact of the Caribbean transaction. • £85bn of total customer funds were managed. • The number of relationship managers in the UK has increased b
Slide 24: Barclaycard
BARCLAYCARD • Barclaycard has 10.4 million customers, primarily in the UK and Europe. • In the UK alone, 1 in every 5 credit cards is a Barclaycard. • Barclaycard increased market share of extended credit balances during the year. • Average extended credit balances amounted to more than 75% of total
Slide 25: Business Banking
BUSINESS BANKING • Business Banking has a relationship with 530,000 customers. • Market share of relationships in UK was been maintained at 23%. • Customers rate us first in the market for service and price. • Over 4,000 customer facing staff now using VAPM (Value Aligned Performance Measurement) te
Slide 26: Barclays Capital
BARCLAYS CAPITAL • Remained in 1st position for issuing sterling denominated debt with a 20% share. • Top arranger of European syndicated loans. • 2nd position in European all debt league table with 8% share. • 5th position in the global all debt league table with 4% share. • Only firm in the top 10
Slide 27: Barclays Global Investors
BARCLAYS GLOBAL INVESTORS • BGI has over 2,300 institutional clients in 44 countries. • £56bn net new assets were attracted in 2002. Assets under management are £462bn. • More than half of the net new assets were from new clients. • Investment performance in our active strategies continued to be exc
Slide 28: Appendices
© Appendices BARCLAYS
Slide 29: Capital ratios
APPENDIX 1 Capital ratios (percentage) Tier 1 Risk Asset Ratio Ratio 31 December 2001 7.8 12.5 Retained profit 0.6 0.6 Tier 1 notes issued 0.6 0.6 Other qualifying debt issued (net) 0.0 0.5 Share buy backs (net) -0.3 -0.3 Volume change in WRAs -0.6 -1.1 Other 0.1 -0.0 31 December 2002 8.2 12.8
Slide 30: Woolwich integration update
APPENDIX 2 Woolwich integration update Expected phasing of pre-tax synergies (£ millions) Year ended: 2001 2002 2003 2004 Revenue synergies 30 150 295 360 Attributable operating costs (25) (80) (105) (110) Net revenue synergies 5 70 190 250 Cost savings 75 120 140 150 Total operating profit impact 8
Slide 31: Diversification of portfolio
APPENDIX 3 Diversification of portfolio UK, Europe and US loans and advances to customers Dec 2002 Dec 1991 29% 40% 33% 6% 60% 5% 13% 14% £155bn £81bn Retail Corporate - Property & Construction Corporate - Manufacturing Corporate - Other
Slide 32: Risk Tendency
APPENDIX 4 Risk Tendency At 31st December 2002, group risk tendency = £1,375m (31st December 2001 = £1,245m) Last 12 months provisions charge Risk Tendency 500 435 402 370 334 334 (£ millions) 280 250 226 210 37 45 30 27 0 Personal Barclays Barclaycard Business Barclays Barclays Financial Private Cl
Slide 33: Country risk - Argentina
APPENDIX 5 Country risk - Argentina 1000 864 (£ millions) 500 460 315 251 168 0 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Loan book
Slide 34: The underlying movement in BAU costs
APPENDIX 6 The underlying movement in BAU costs is shown as follows Total business as usual costs 2001 4.628 Inflation and volume 220 New business 212 Other reinvestment 210 Life fund sales force costs 44 Woolwich savings (63) Disposals 107 Imputed business as usual costs 2002 before savings 5,358 S
Slide 35: Cost programme
APPENDIX 7 Cost programme £90m £1bn 1,000 £365m £910m (£ millions) £285m 500 £260m 0 2000 2001 2002 2000- 2003 Goal 2002
Slide 36: Coverage ratios
APPENDIX 8 Coverage ratios December 2002 Corporate Personal Mortgages Group & Financials unsecured Total* Total non-performing loans (£m) 1,579 2,118 564 4,526 Typical default impact (3) 30% (1) 70% (1) 10% Total severity estimate (£m) 474 1,483 56 Specific & general provisions (£m) 1,089 1,725 72 3
Slide 37: Income growth versus cost growth
APPENDIX 9 Income growth versus cost growth Cost income delta Cost income delta excluding life fund Pre-Providian 10 9% 8% 6% 5 4% 2% 1% 0 -5 -3% % -6% -10 -15 -17% -20 Business Barclays Barclays Barclays Barclaycard Banking Investors Financial Personal Services Barclays Private Capital Clients Afri
Slide 38: Cost:income benchmarking
APPENDIX 10 Cost:income benchmarking 2001 Full year upper quartile cost income ratio 100% 2002 Full year Barclays cost income ratio 80% 73% Cost income ratio 69% 67% 59% 59% 50% 54% 50% 50% 52% 45% 41% 36% 35% 0% Financial Personal Barclays Business Barclays Barclays Investors Barclaycard Banking Cl
Slide 39: Forward-looking statements
This document contains certain forward-looking statements within the meaning of Section 21E of the US Securities Exchange Act of 1934, as amended, and Section 27A of the US Securities Act of 1933, as amended, with respect to certain of the Group’s plans and its current goals and expectations relatin