Barclays Plc · LSE:BARC
Barclays — Debt Investor Presentation (April 2013)
51 slides from Barclays's debt investor presentation, Apr 24, 2013
Slide 1: Fixed Income Investor Presentation
Fixed Income Investor Presentation Q1 2013 Interim Management Statement
Slide 2: Barclays overview
Barclays overview A global universal bank Key financial metrics as at 31 March 2013 • Major global financial services provider Total assets £1.6tr • 3 main businesses: Core tier I ratio (Basel 2.5) 11.0% - Retail, Business Banking and Barclaycard - Corporate & Investment Banking, and Fully-loaded CE
Slide 3: Q1 2013 results highlights
Q1 2013 results highlights “While there remains much to do to build a stronger and more resilient Barclays, we are completely focused on executing our Transform programme and are making good early progress” (A. Jenkins, CEO) Q1 13 Q1 12 • Adjusted income down 5%, primarily due to non- Change recurre
Slide 4: Balanced profit distribution across the Group
Balanced profit distribution across the Group Composition of adjusted profit before tax demonstrates the benefits of the universal banking model Adjusted PBT1: £2,300m Adjusted PBT1: £2,160m +6% Head Office & Other Operations, £86m Investment Bank, £1,431m Investment Bank, £1,182m Wealth & Investmen
Slide 5: Strong asset quality
Strong asset quality Despite challenging macroeconomic environment, retail and wholesale portfolios continue to perform well, as evidenced by limited Credit Risk Loans (CRLs) and low loan loss rates 51.6% 53.3% 47.9% 48.9% 49.7% 39.0%1 4.8% 5.1% 4.4% 3.2% 2.9% 156bps 118bps 77bps 70bps 56bps 2 FY 20
Slide 6: Reduced exposure to the Eurozone periphery
Reduced exposure to the Eurozone periphery Direct exposures continue to be managed down, while redenomination risk has significantly reduced in Spain and Portugal Exposures by geography • Exposure to Spain, Italy, Portugal and Ireland £67.5bn remained stable at £59.2bn over Q1 2013, while £5.7bn £59
Slide 7: Managed credit market exposure
Managed credit market exposure Since December 2008, Barclays has successfully reduced its exposure to Credit Market Exposures (CMEs) by c. 80% to £8.4bn 2008 - Q1 2013 CME balances1 • CMEs arose before market dislocation in mid-2007 and have been actively managed down since 2008 £41.7bn • Exposure m
Slide 8: Capital
Capital 8 | Q1 2013 Fixed Income Investor Presentation | 24 April 2013
Slide 9: Capital and leverage ratios over time
Capital and leverage ratios over time Our financial strength continues to serve us well in the current environment and remains a core component of our strategy going forward Basel 2 Basel 2.5 Basel 2 Basel 2.5 10.8% 11.0% 10.8% 11.0% 28x £bn 10.0% 16.6% 16.9% 16.4% 17.0% 17.2% 20x 20x 20x 20x 19x 13
Slide 10: Estimated capital and RWAs
Estimated capital and RWAs Barclays continues to manage the business to absorb changing regulation. Pro forma CET1 ratios are subject to finalisation of CRD IV rules and market conditions 31 March 2013 CT1 Capital (FSA 2009 definition) 43.8 RWAs (Basel 2.5) 397.9 CT1 Ratio (Basel 2.5) 11.0% CET1 Tra
Slide 11: Estimated capital and RWAs ─ notes
Estimated capital and RWAs ─ notes Estimated capital ratios are based on/subject to the following: CRD IV, models and waivers • We have estimated our CRD IV Common Equity Tier 1 (CET1) ratio, capital resources and RWAs assuming the rules were applied as at 31 March 2013 on both a transitional and fu
Slide 12: Estimated capital and RWAs ─ notes
Estimated capital and RWAs ─ notes Pro forma capital ratios are based on/subject to the following: RWAs • EU corporates, pension funds and sovereigns are assumed to be exempt from CVA volatility charge. As at 31 March 2013, EU exemptions reduced RWAs by approximately £8bn. The final CRD IV rules all
Slide 13: End-state capital structure
End-state capital structure Our “target” capital structure embraces upcoming CRD IV requirements and ICB1 proposals 17.2% Total 17.0% Total capital ratio capital ratio • The target capital structure anticipates: 3.9% - Expected 9.0% minimum CET1 ratio requirement £15.3bn under CRD IV, excluding coun
Slide 14: Liquidity & Funding
Liquidity & Funding 14 | Q1 2013 Fixed Income Investor Presentation | 24 April 2013
Slide 15: Balance sheet funding (as at December 2012 pre-restatement)
Balance sheet funding (as at 31 December 2012 pre-restatement) While the balance sheet totals £1.5tn, wholesale funding requirements are limited to £239.5bn as a consequence of its structure £bn Assets Liabilities 1 1,436 466 460 347 347 328 303 101 150 138 145 87 Total gross Derivative financial Re
Slide 16: Liquidity pool
Liquidity pool Barclays continues to maintain a strong and high-quality liquidity pool that consists exclusively of unencumbered assets £bn 154 152 150 127 18 11 19 141 125-150 • Liquidity pool of £141bn, with 87% held in cash, 12 40 36 19 deposits with central banks and high quality 46 34 55 76 gov
Slide 17: Funding
Funding Diverse funding sources, across customer deposits and wholesale debt, provide protection against unexpected fluctuations £bn 138% 130% 124% 118% 110% • Group Loan to Deposit Ratio (LDR) has 105% decreased overtime to 105% as at Q1 2013 • LDR improvement in Q1 driven by ING Direct 462 420 428
Slide 18: Wholesale funding
Wholesale funding Despite reduced requirements for wholesale funding, Barclays maintains access to a variety of secured and unsecured funding sources across multiple currencies and maturities 2013 Diverse wholesale funding base1 (as at 31 December 2012) • Total wholesale funding of £235bn as at 31 M
Slide 19: Credit Ratings
Credit Ratings 19 | Q1 2013 Fixed Income Investor Presentation | 24 April 2013
Slide 20: Rating & outlook changes
Rating & outlook changes Despite re-rating of sector by all main rating agencies in the last 18 months, Barclays‟ rating remains strong and in line with peers‟ Barclays Bank plc 2012 Rating & Outlook Changes 1 January 2012 31 March 2013 Standard & Poor's Long Term A+ (Stable) A+ (Negative) Short Ter
Slide 21: Credit rating management
Credit rating management Barclays prudently manages the impact of credit ratings on the Group‟s funding and liquidity positions • Potential outflows related to a multiple-notch credit downgrade are included in the Liquidity Risk Appetite (LRA) stress testing and a portion of the liquidity pool is re
Slide 22: Barclays' debt
Barclays’ debt Strong credit (A+/A2/A, S&P/Moody‟s/Fitch) Prudent liquidity & balance sheet management • Global universal bank with diversified portfolio of • Liquidity pool well in excess of internal and customer-focused businesses regulatory minimum requirements • Prudent risk approach to growth o
Slide 23: Appendix
Appendix All figures in this section have been restated in line with the restatement document released on 16 April 2013 unless otherwise stated Transform slides make reference to the slides used for the result of the strategic review in February 2012 (pre-restatement) 23 | Q1 2013 Fixed Income Inves
Slide 24: Transform slides - Clear 2015 financial targets
Transform slides - Clear 2015 financial targets On 12 February 2012, Barclays announced its strategy to become the „Go-To‟ bank and set clear 2015 targets 2012 Results 2015 Targets Commentary Return on Target sustainable returns in excess of cost of equity 7.8% > Group CoE Improve quality of inc
Slide 25: Resilient performance
Resilient performance1 £m 2,3 Adjusted Income Adjusted PBT Bank Levy (2012: £345m; 2011: £325m) 8,771 8,167 8,081 7,750 8,108 7,734 7,440 7,445 7,287 7,563 7,238 7,549 7,384 7,001 7,002 6,867 6,213 1,977 2,395 1,569 1,754 1,822 1,694 1,944 1,865 1,786 1,090 1,256 1,141 1,273 1,471 1,310 1,395 501 Q1
Slide 26: Adjusting items to profit before tax
Adjusting items to profit before tax1 Q1 13 Q4 12 Q3 12 Q2 12 Q1 12 (£m) (£m) (£m) (£m) (£m) Adjusted profit before tax 1,786 1,395 1,865 1,944 2,395 Own credit (251) (560) (1,074) (325) (2,620) Impairment and gain/(loss) on disposal of - - - 227 - BlackRock investment Provision for PPI redress - (6
Slide 27: Adjusted profit/(loss) before tax by business
Adjusted profit/(loss) before tax by business1 Q1 13 Q1 12 Change (£m) (£m) (%) UK RBB 299 232 29 Europe RBB (462) (72) - Africa RBB 81 132 (39) Barclaycard 363 347 5 Retail and Business Banking 281 639 (56) Investment Bank 1,315 1,182 11 Corporate Banking 183 203 (10) Corporate and Investment Banki
Slide 28: Performance by cluster excluding cost to achieve
Performance by cluster excluding cost to achieve Costs to Adjusted Return on Cost: income As at 31 March 2013 achieve Profit before average ratio Transform tax equity (£m) (£m) (%) (%) UK RBB - 299 11.3 66 Europe RBB (356) (106) (16.0) 122 Africa RBB - 81 1.6 71 Barclaycard - 363 17.9 43 Investment
Slide 29: Exposure to the Eurozone periphery
Exposure to the Eurozone periphery1 Spain Italy Portugal Ireland Total Cyprus As at 31March 2013 (£m) (£m) (£m) (£m) (£m) (£m) Sovereign 1,816 2,247 661 31 4,755 - Corporate 4,033 1,660 1,587 1,208 8,488 101 Residential mortgages 13,587 15,847 3,591 108 33,133 39 Financial institutions 1,719 346 21
Slide 30: Spanish exposures
Spanish exposures1 (as at 31 December 2012) Retail Gross mortgage exposure by location of Average indexed LTV of 65% outstanding balances Average retail customer age 48; less than 1% of mortgage balances with customers aged under 25 0.7% of home loans greater than 90 days in arrears2. Barcelon
Slide 31: Portuguese exposures
Portuguese exposures1 (as at 31 December 2012) Retail Gross mortgage exposure by location of Average indexed LTV of 78% outstanding balances Average retail customer age 42; less than 1% of mortgage balances with customers aged under 25 0.7% of home loans greater than 90 days in arrears2. Corpo
Slide 32: Italian exposures
Italian exposures1 (as at 31 December 2012) Retail Gross mortgage exposure by location of Average indexed LTV of 47% outstanding balances Average retail customer age 47; less than 3% of mortgage balances with customers aged under 25 Milan 1.0% of home loans greater than 90 days in arrears2. c.
Slide 33: Credit market exposures
Credit market exposures 31 March 2013 FV (losses) Imp. (charge) Total (losses) Q1 13 Q4 12 / gains / release / gains (£m) (£m) (£m) (£m) (£m) ABS CDO Super Senior 991 992 72 - 72 US sub-prime and Alt-A 661 700 43 - 43 Commercial real estate loans and properties 2,722 2,727 4 - 4 Commercial Mortgage
Slide 34: Transform slide - Legacy asset RWAs
Transform slide - Legacy asset RWAs1 Barclays identified a pool of legacy assets, including 2012 CMEs, across the Investment Bank and European As at 31 December (£bn) businesses, to actively manage down Credit market exposures 10 Barclays enlarged the scope of legacy asset portfolio in order to
Slide 35: Calculation of adjusted gross leverage
Calculation of adjusted gross leverage Q1 13 Q4 12 (£bn) (£bn) Total assets 1,596 1,488 Counterparty netting (378) (388) Collateral on derivatives (47) (47) Net settlement balances and cash collateral (95) (72) Goodwill and intangible assets (8) (8) Customer assets held under investment contracts (2
Slide 36: Transform slide - Leverage ratios
Transform slide - Leverage ratios Barclays actively manages the volatility of its balance sheet and expects to see its adjusted leverage ratio reduce overtime x24 x22 x20 x18 Expected direction of travel for Group adj leverage x16 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Group adjusted lever
Slide 37: Capital resources
Capital resources Q1 13 Q4 12 (£m) (£m) Shareholders’ equity (ex. NCIs) 52,140 50,615 Net NCIs 2,370 2,450 Regulatory adjustments and deductions: Goodwill and intangible assets (7,623) (7,622) Own credit cumulative gain (net of tax) 1,034 804 Defined benefit pension adjustment 496 49 Unrealised loss
Slide 38: Transform slides - Transitional CET1 ratio projections
Transform slides - Transitional CET1 ratio projections We believe that we can achieve a transitional CET1 ratio well above 10.5% by 20151 2.0% (1.1%) 0.2% (0.3%) 11.7% 10.9% 10.6% 2 31-Dec-12 CRD IV & 01-Jan-13 Legacy & 2014/2015 Warrant exercise 31-Dec-15 CET1 ratio (CT1 Ratio) IFRS 10 Impact (CET1
Slide 39: Transform slides - RWA projections
Transform slides - RWA projections Significant savings from optimisation expected to generate headroom for growth in selected businesses, and mitigate additional regulatory changes and volatility from the impact of CRD IV1 £81bn CRD IV & IFRS 10 £75bn optimisation £27bn (£23bn) (£20bn) £25bn £47bn (
Slide 40: Liquidity & funding management framework
Liquidity & funding management framework Barclays has developed a dynamic liquidity framework and a diversified funding base, while maintaining protection against unexpected fluctuations Liquidity risk framework Funding structure Liquidity framework meets the Prudential Barclays maintains access
Slide 41: Wholesale funding composition
Wholesale funding composition1 (as at 31 December 2012) >1 month >3 months >6 months Total ≤1 >1 year ≤1 month >2 years Total but ≤3 but ≤6 but ≤12 year but ≤2 As at 31 December 2012 months months months years (£bn) (£bn) (£bn) (£bn) (£bn) (£bn) (£bn) (£bn) Deposits from banks 10.8 8.7 1.5 0.7 21.7
Slide 42: Term funding plans
Term funding plans1 (as at 31 December 2012) • Funding plan sized to meet business needs, while ensuring compliance with Liquidity Risk Appetite (LRA) and regulatory requirements • Reduced funding requirements due to increased deposit taking and legacy asset run-off • Commitment to maintain access t
Slide 43: Senior unsecured medium-term notes
Senior unsecured medium-term notes1 (as at 31 December 2012) Barclays is a major Medium-Term Notes (MTNs) issuer, with private and public MTNs representing c.37% of its total wholesale funding, or £89.5bn, as at 31 December 2012 Highlights MTNs are an important source of funding diversity • MTN prog
Slide 44: Contingent Capital Notes (CCNs)
Contingent Capital Notes (CCNs) Barclays sees significant value in contingent capital notes and has issued US$4.0bn of this subordinated debt as the Group transitions to its end-state CRD IV / ICB capital structure Strategy US$4.0bn of CCNs raised through two global trades Build a 2% CCN layer, co
Slide 45: Secured funding (as at December 2012)
Secured funding (as at 31 December 2012) High-quality assets and contained encumbrance levels allow Barclays to maintain access to secured funding Highlights Wholesale secured funding (as at 31 December 2012) Secured term funding backed by prime assets, including residential mortgages, credit card
Slide 46: Encumbrance (as at December 2012)
Encumbrance1 (as at 31 December 2012) Barclays closely monitors the mix of secured and unsecured funding sources and maintains a significant portion of its balance sheet unencumbered 19% assets2 encumbrance ratio (excl. reverse repos) • Asset encumbrance arises from collateral pledged against secure
Slide 47: Barclays funding cost
Barclays funding cost 227 • 5-year USD Z-spread (as at 31 Mar 2013)1 185 154 140 121 127 131 119 101 104 75 81 83 86 75 HSBC BNP Paribas UBS JPMorgan Bank of America Credit Suisse Citigroup Societe Generale Goldman Sachs RBS Nomura Barclays Deutsche Bank Morgan Stanley Macquarie • 5-year CDS vs. iTr
Slide 48: Basel 3 Regulatory Timeline
Basel 3 Regulatory Timeline • Initial timeframe mentioned below is delayed in the EU – alternative dates have yet to be communicated H1 2010 1 Jan 2011 1 Jan 2012 1 Jan 2013 1 Jan 2014 1 Jan 2015 1 Jan 2016 1 Jan 2017 1 Jan 2018 1 Jan 2019 Capital Phased-in capital requirements Requirements Supervis
Slide 49: UK banking reform
UK banking reform Barclays backs initiatives to improve stability of UK banking system and support a sustainable economy, however, requires alignment with international regulation and careful consideration of implementation costs Proactively thinking about structural reforms / ring-fenced structure
Slide 50: Debt investor relations contact information
Debt investor relations contact information Richard Caven Oihana Bessonart Sofia Lonnqvist +44 (0)20 7116 2809 +44 (0)20 7116 6327 +44 (0)20 7116 5716 richard.caven@barclays.com oihana.bessonart@barclays.com sofia.lonnqvist@barclays.com Website: group.barclays.com/about-barclays/investor-relations#d
Slide 51: Legal disclaimers
Legal disclaimers Important notice The information, statements and opinions contained in this document do not constitute a public offer under any applicable legislation or an offer to sell or solicitation of any offer to buy any securities or financial instruments or any advice or recommendation wit