Barclays Plc · LSE:BARC
Barclays — Debt Investor Presentation (July 2022)
41 slides from Barclays's debt investor presentation, Jul 28, 2022
Slide 1: Barclays PLC Fixed Income Investor Call H1 2022 Results
Barclays PLC Fixed Income Investor Call H1 2022 Results Announcement 28 July 2022 1 | Barclays H1 2022 Results | 28 July 2022
Slide 2: Anna Cross, Barclays Group Finance Director
Anna Cross Barclays Group Finance Director 2 | Barclays H1 2022 Results | 28 July 2022
Slide 3: Statutory PBT of £3.7bn and RoTE of 10.1% in H122
Statutory PBT of £3.7bn and RoTE of 10.1% in H122 Strong Income • Attributable profit of £2.5bn1 despite the net of tax impact of Over- operating £13.2bn issuance of Securities in the US2 of £(0.6)bn performance Cost: income ratio 69% Income • Group income up 10% YoY3 with diversified strategy deliv
Slide 4: Impairment: Q222 charge of £0.2bn, maintained appropriate coverage ratios
Impairment: Q222 charge of £0.2bn, reflecting lower unsecured lending balances and maintained appropriate coverage ratios 30 day arrears rates Credit card balances 1.6% 1.6% 1.6% BUK: UK cards 1.5% 1.4% End Net 15.9 11.2 9.6 9.5 9.2 9.6 Receivables 1.4% (£bn) Dec-19 Dec-20 Jun-21 Dec-21 Mar-22 Jun-2
Slide 5: Retaining management adjustments due to uncertainty
Retaining management adjustments due to uncertainty Macroeconomic variables (MEVs) Balance sheet impairment allowance and management adjustment Q222 Baseline MEVs Q222 Downside 1 MEVs Impairment allowance Write- P&L Other Dec-19 Mar-22 Jun-22 2022 2023 2024 2022 2023 2024 (£m) offs charge incl. FX A
Slide 6: Daniel Fairclough, Group Treasurer
Daniel Fairclough Group Treasurer 6 | Barclays H1 2022 Results | 28 July 2022
Slide 7: H122 highlights
H122 highlights1 Strong balance sheet evidenced across key metrics CET1 ratio 15.0% 15.1% 13.6% Prudently managed capital position; Capital MDA hurdle CET1 ratio of 13.6%, 10.9% with target of 13-14% Jun-21 Dec-21 Jun-22 UK leverage ratio 5.0% 5.2% 5.1% Stable leverage position; Leverage Reg min UK
Slide 8: Q222 CET1 ratio of 13.6%
Q222 CET1 ratio of 13.6% 42bps generated from profits more than offset by reserve movements and RWA growth QoQ CET1 ratio1 movements 42bps 17bps 27bps 17bps 9bps 6bps c.15bps 19bps 10bps due to net losses and 7bps due to incremental 13.6% hedges 13.5% 13.8% 13.8% 13.5% 13.6% 13.6% [x.x]% Mar-22 Attr
Slide 9: 13-14% CET1 ratio target continues to provide appropriate headroom
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 headroom 13-14% CET1 ratio target over the MDA hurdle, which is currently 10.9%1 • UK counte
Slide 10: Capital structure well managed
Capital structure well managed Prudent headroom above regulatory capital minimums Capital structure and requirements Balanced total capital structure • Continue to run a robust AT1 level and maintain conservative headroom ≥ 16.2% 19.9% • AT1 as a proportion of RWAs may vary due to seasonal and FX dr
Slide 11: MREL position well established
MREL position well established Expect c.£9bn of MREL issuance for 2022 plan, with c.£5.5bn remaining MREL position of £106.5bn as at Jun-221 2022 HoldCo issuance plan • Expect c.£9bn of MREL issuance, with c.£5.5bn remaining 30.9% 28.5% following c.£3.5bn of Senior and AT1 issuance YTD (£106.5bn) (£
Slide 12: Resolvability Assessment Framework – no shortcomings across all areas
Resolvability Assessment Framework – no shortcomings across all areas of assessment • On 10 June 2022, the BoE published its BoE’s assessment scale assessment on the resolvability of major No material UK banks Area for issues Substantive further Shortcoming Deficiency • Barclays was deemed to have n
Slide 13: High quality liquidity position
High quality liquidity position Strong liquidity position, with Group LCR well above regulatory requirements Comfortably exceeding minimum requirements Majority of pool held in cash and deposits at central banks 162% 161% 168% 159% 156% Minimum 5% requirement: 11% 100% H122 Group Liquidity pool1 Jun
Slide 14: Growing deposit base
Growing deposit base Material deposit growth since the start of the pandemic, with balances remaining elevated Deposit dynamics and outlook Deposit (£bn) and loan: deposit ratio evolution • Deposits grew by £22bn QoQ mainly driven by continued growth in corporate deposits 82% • Conservatively planni
Slide 15: Structural hedge
Structural hedge Structural hedge programme update Dec-19 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Structural hedge dynamics FY21 H122 Hedge 1,415 879 Total hedge income (£m) notional 224 228 238 256 (£bn) 171 188 192 198 Average hedge balances (£bn) 204 237 Yield on hedge (%) 0.69 0.74 3.0
Slide 16: Strategic priority to maintain strong ratings
Strategic priority to maintain strong ratings Current Senior Long and Moody’s Standard & Poor’s Fitch Short Term ratings Baa2 BBB A Barclays PLC Positive Positive Stable P-2 A-2 F1 Barclays Bank PLC A1 A A+ Stable Positive Stable (BBPLC) P-1 A-1 F1 Counterparty risk Resolution Derivative assessment
Slide 17: Sustainable finance activities through Treasury
Sustainable finance activities through Treasury Sustainable Impact Capital Programme Mission Strategy Portfolio as at H122 Accelerate the transition to a net Invest in propositions that are strategic, zero future by investing £175m impactful and economic: between 2020-25 in: Supporting Barclays’ goa
Slide 18: Q&A
Q&A 18 | Barclays H1 2022 Results | 28 July 2022
Slide 19: Appendix
Appendix 19 | Barclays H1 2022 Results | 28 July 2022
Slide 20: Strong H122 profitability, continue to target a RoTE >10% in 2022
Strong H122 profitability, continue to target a RoTE >10% in 2022 H122 metrics Group targets over the medium term Returns Returns Cost efficiency Group RoTE 10.1% Group RoTE >10% Cost efficiency Continue to target Cost: income ratio <60% a RoTE >10% in 2022 Cost: income ratio 69% Capital adequacy CE
Slide 21: Barclays is 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% Interest rates Impairment Cost dynamics £(0.5)bn NII uplift from higher Increased credit Investment spend rates impairment, but below Post-tax modelled Inflationary pressures 1 pre-COVID-19 l
Slide 22: Interest rate sensitivity
Interest rate sensitivity Illustrative sensitivity of Group NII to a parallel shift in interest rate curves1 • This analysis assumes an instantaneous 25bps parallel shift in interest NII impact of parallel shifts rate curves and a 25bps shock to the underlying bank rate Year 1 Year 2 Year 3 in inter
Slide 23: IFRS 9 transitional relief of c.20bps as at Jun-22
IFRS 9 transitional relief of c.20bps as at Jun-22 Constructive regulatory action in Q220 gave greater relief for Stage 1 and 2 impairments • 75% transitional relief for modified impairment post Dec-19 applied in 2022 • Transitional relief schedule for static component per original schedule • Total
Slide 24: Group leverage position appropriately managed
Group leverage position appropriately managed Illustrative evolution of minimum leverage requirements and buffers under the UK regime • Q222 headroom to minimum leverage requirement of 130bps • The RWA-based CET1 ratio is expected to remain our primary UK Spot: 5.1% regulatory constraint through the
Slide 25: H122 CET1 ratio of 13.6%
H122 CET1 ratio of 13.6% 94bps generated from profits more than offset by regulatory changes and RWA growth QoQ YTD CET1 CET1 ratio ratio11 movements movements 94bps c.80bps 23bps 44bps 37bps 18bps 31bps 8bps 15.1% 14.5% 14.9% 14.1% 13.9% 13.6% 13.6% 13.6% Dec-21 Attributable Regulatory Fair Value R
Slide 26: RWA increase driven by book growth and FX
RWA increase driven by book growth and FX QoQ RWA movements (£bn) (1.4) 9.0 (0.1) 6.6 1.7 [x.x] 344.5 328.8 337.0 337.0 328.8 330.5 2 Mar-22 Hedges from Over- Book size Acquisition FX Other Jun-22 issuance of Securities and disposals 1 YTD RWA movements (£bn) (2.8) 12.3 (0.2) 10.0 4.5 344.5 6.6 335.
Slide 27: Jun-22 coverage ratios remain strong
Jun-22 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 8.1% 8.8% 7.3% 177.0 3.4 52.6 4.9 0.8% 0.8% 0.7% 151.7 2.7 45
Slide 28: Jun-22 UK and US cards coverage ratios remain robust
Jun-22 UK and US cards coverage ratios remain robust UK cards US cards Gross exposure (£bn) Impairment allowance (£bn) Coverage ratio Gross exposure (£bn) Impairment allowance (£bn) Coverage ratio 16.5 0.8 1.7 10.5% 12.8% 10.9% 23.3 22.5 0.9 9.1% 10.6% 8.4% 1.5 1.3 65.1% 67.0% 67.5% 18.0 2.1 2.1 5.1
Slide 29: Wholesale exposures are diversified and appropriately covered
Wholesale exposures are diversified and appropriately covered, including in selected sectors Wholesale and selected sector exposure Wholesale Wholesale lending excl. Debt Securities Selected sectors (£bn/coverage ratio %) 52.6 (£bn) excl. Debt Hospitality & Leisure 38.9 (1.6%) Securities 130.9 130.9
Slide 30: Retail portfolios in the UK and US continue to be appropriately positioned
Retail portfolios in the UK and US continue to be appropriately positioned • Strong balance growth supported by elevated market 158.2 159.7 demand UK 148.3 mortgage 143.3 UK • Arrears levels at multi-year lows 69.5% 68.6% balance 67.9% 67.5% mortgages • 50.8% average balance weighted LTV of mortgage
Slide 31: Continue to target c.£9bn of HoldCo issuance for 2022 plan
Continue to target c.£9bn of HoldCo issuance for 2022 plan Annual HoldCo issuance volume (£bn)1,2 2022 HoldCo issuance by currency2 13.4 January: EUR 1.25bn Senior 12.1 11.5 12.1 11.0 6.2 8.6 Target: c.9 8.2 May: EUR 1bn Senior 6.1 9.3 10.2 8.3 1.8 4.0 5.9 2.9 1.1 June: GBP 1.25bn AT1 5.4 2.0 1.7 3.
Slide 32: Pension deficit reduction contributions
Pension deficit reduction contributions Potential acceleration of CET1 ratio headwinds from pension reduction contributions • During 2019 and 2020, the UK Retirement Fund (UKRF), the Group’s main pension scheme, subscribed for non-transferable listed senior fixed rate notes for £1.25bn. As a result
Slide 33: Strong legal entity capital and liquidity positions
Strong legal entity capital and liquidity positions Continue to manage legal entity capital ratios with appropriate headroom to requirements Barclays PLC Accounting and regulated sub-group Accounting sub-group Barclays Bank UK PLC (BBUKPLC) sub-group Barclays Bank PLC (BBPLC) sub-group Barclays Bank
Slide 34: We continued to advance our ESG agenda in H122
We continued to advance our ESG agenda in H122 • Scope 1 and 2 emissions: -82%1 reduction against 2018 baseline • Green financing: facilitated £11bn2 in H122 (2018-H122: £74bn2) • Sustainable Impact Capital Programme: £27m of own capital invested in H122 (2020-H122: £81m) • Met LifeSkills programme
Slide 35: Update on Over-issuance of Securities
Update on Over-issuance of Securities Barclays PLC and Barclays Bank PLC (BBPLC) each filed a Form 20-F/A, completing the restatement process Commenced £1bn share buyback announced at FY21 Key updates since BBPLC filed an automatic shelf registration on Form F-3, under which it can issue unlim
Slide 36: Overview of financial impacts from Over-issuance of Securities
Overview of financial impacts from Over-issuance of Securities ` £m FY21 Q122 Q222 H122 • Post-tax net impact of £581m in Income from hedging arrangements - - 758 758 H122 of which £341m in Q222 L&C charge for estimated rescission losses1 (220) (320) (984) (1,304) • Total L&C charges relating to Ove
Slide 37: H122/Q222 Group impacts from Over-issuance of Securities
H122/Q222 Group impacts from Over-issuance of Securities Six months ended (£m) Jun-22 (Statutory) Adjustments Jun-22 (Adjusted) Income 13,204 (758) 12,446 Costs (9,127) 1,469 (7,658) Profit before tax 3,733 711 4,445 Attributable profit 2,475 581 3,056 RoTE 10.1% 2.4% 12.5% Cost: income ratio 69% (7
Slide 38: H121/Q221 Group impacts from Over-issuance of Securities
H121/Q221 Group impacts from Over-issuance of Securities Six months ended (£m) Jun-21 (Statutory) Adjustments Jun-21 (Adjusted) Income 11,315 - 11,315 Costs (7,308) 77 (7,231) Profit before tax 4,902 77 4,979 Attributable profit 3,752 60 3,812 RoTE 16.1% 0.3% 16.4% Cost: income ratio 65% (1)% 64% Th
Slide 39: H122/Q222 BI and CIB impacts from Over-issuance of Securities
H122/Q222 BI and CIB impacts from Over-issuance of Securities Barclays International (BI) Corporate and Investment Bank (CIB) Jun-22 Jun-22 Jun-22 Jun-22 Six months ended (£m) Adjustments Six months ended (£m) Adjustments (Statutory) (Adjusted) (Statutory) (Adjusted) Income 9,940 (758) 9,182 Income
Slide 40: H121/Q221 BI and CIB impacts from Over-issuance of Securities
H121/Q221 BI and CIB impacts from Over-issuance of Securities Barclays International (BI) Corporate and Investment Bank (CIB) Jun-21 Jun-21 Jun-21 Jun-21 Six months ended (£m) Adjustments Six months ended (£m) Adjustments (Statutory) (Adjusted) (Statutory) (Adjusted) Income 8,218 - 8,218 Income 6,57
Slide 41: 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