Barclays Plc · LSE:BARC
Barclays — Debt Investor Presentation (July 2021)
30 slides from Barclays's debt investor presentation, Jul 28, 2021
Slide 1: Barclays PLC Fixed Income Investor Call
Barclays PLC Fixed Income Investor Call H1 2021 Results Announcement 28 July 2021
Slide 2: Tushar Morzaria, Group Finance Director
Tushar Morzaria Barclays Group Finance Director
Slide 3: H121 Group highlights
H121 Group highlights • Income decreased 3% YoY, reflecting currency headwinds. Excluding the impact of FX, income increased YoY, reflecting the benefits of the Group’s diversified income streams Income Costs £11.3bn £7.2bn • Costs increased to £7.2bn, reflecting structural cost actions of £321m, hi
Slide 4: Impairment: Q221 net release of £0.8bn
Impairment: Q221 net release of £0.8bn, due to improved macro outlook, lower unsecured balances and benign credit environment Impairment (£m) Drivers of impairment release Net impairment release of £520m reflecting the improved 1,623 macroeconomic outlook and reduced unsecured lending balances BUK −
Slide 5: Improved macroeconomic variables drove the impairment release
Improved macroeconomic variables drove the impairment release Macroeconomic variables (MEVs) MEVs used in Q121 results Q221 MEVs Change in MEVs • Q221 baseline UK and US MEVs improved materially from those used to derive the Q121 expected credit 2021 2022 2023 2021 2022 2023 2021 2022 2023 loss calc
Slide 6: Kathryn McLeland, Group Treasurer
Kathryn McLeland Group Treasurer
Slide 7: H121 highlights
H121 highlights Strong balance sheet evidenced across key metrics CET1 ratio 14.2% 15.1% 15.1% MDA Prudently managing the Group’s capital Capital hurdle 11.2% position; CET1 ratio of 15.1%, with 390bps headroom to MDA Jun-20 Dec-20 Jun-21 MREL ratio (RWA basis) 33.7% 32.4% 32.7% Min req Fully loaded
Slide 8: CET1 ratio increased to 15.1% driven by profits and lower RWAs
CET1 ratio increased to 15.1% driven by profits and lower RWAs CET1 ratio was 390bps above the MDA hurdle of 11.2% as at Jun-21 QoQ CET1 ratio1 movements 28bps 12bps 5bps 11bps 5bps 34bps 61bps 15.0% 14.9% 14.9% 15.1% 14.6% 14.6% 14.8% 14.7% [X] Mar-21 Attributable profit, Reduction in Dividend UK D
Slide 9: CET1 ratio target range continues to be 13-14%
CET1 ratio target range continues to be 13-14%, but expect to remain above that in 2021 Near-term CET1 ratio flightpath 13-14% 17bps 11bps 15.1% 14.8% 1 Jun-21 Share buyback Q3 scheduled 2 Rebased CET1 ratio Organic Headwinds Capital CET1 target range pension contribution capital generation distribu
Slide 10: Continue to target appropriate headroom above the MDA hurdle
Continue to target appropriate headroom above the MDA hurdle Illustrative evolution of minimum CET1 requirements and buffers • Barclays intends to manage its CET1 ratio in the range of 13-14% over the planning cycle, and Dec-201: Jun-211: Target: continues to target an appropriate headroom over 15.1
Slide 11: Group leverage position appropriately managed
Group leverage position appropriately managed Minimum leverage requirements and buffers under the UK regime • Headroom to minimum leverage requirement of 120bps in Q221, while the RWA-based CET1 ratio remains our primary regulatory constraint Dec-201: Jun-211: • Following the BoE’s Financial Policy
Slide 12: MREL position well placed to meet 2022 requirements
MREL position well placed to meet 2022 requirements Expect c.£8bn of MREL issuance in 2021; £5.3bn equivalent issued in H121 Fully loaded MREL position of £103.3bn as at Jun-211 Well advanced on 2021 HoldCo issuance plan • Issued £5.3bn of MREL in H121 across Senior and Tier 2 form 33.7% 29.6% • Con
Slide 13: Capital structure well established
Capital structure well established Expect to hold prudent headroom above AT1 and Tier 2 minimums Illustrative evolution of regulatory capital structure Well managed and balanced total capital structure ≥ 16.7% • BBPLC issued capital instruments are to be included as MREL until 1 22.3% January 20222,
Slide 14: High quality liquidity position
High quality liquidity position YTD liquidity position stable, with Group LCR well above regulatory requirements Comfortably exceeding minimum requirements Majority of pool held in cash and deposits with central banks 186% 181% 6% 162% 161% 162% Minimum 16% requirement: 100% H121 Group Liquidity poo
Slide 15: Conservative loan: deposit ratio
Conservative loan: deposit ratio LDR decreased 6% YoY, reflecting strong deposit growth in BUK and CIB Conservative loan: deposit ratio (LDR)1,2 BUK CIB CC&P Head Office LDR 82% 76% 71% 69% 70% 499 501 481 467 61 67 416 65 67 346 349 64 355 339 343 15 17 185 19 178 13 15 175 33 174 29 31 41 30 146 1
Slide 16: 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 17: 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 Stable 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 co
Slide 18: Kathryn McLeland, Group Treasurer
Kathryn McLeland Group Treasurer
Slide 19: Q&A
Q&A
Slide 20: Appendix
Appendix
Slide 21: Strong H121 profitability, increased capital distributions to shareholders
Strong H121 profitability, increased capital distributions to shareholders H121 metrics Group targets over the medium term Returns Returns Cost efficiency Group RoTE 16.4% Group RoTE >10% Cost efficiency Expect to deliver a RoTE Cost: income ratio <60% Cost: income ratio 64% above 10% in 2021 Capita
Slide 22: Jun-21 coverage ratios in unsecured and wholesale loans remain above pre-pandemic levels
Jun-21 coverage ratios in unsecured and wholesale loans remain above pre-pandemic levels given ongoing uncertainty Credit cards, unsecured loans and other retail lending Wholesale loans Gross exposure (£bn) Impairment allowance (£bn) Coverage ratio Gross exposure (£bn) Impairment allowance (£bn) Cov
Slide 23: Jun-21 unsecured lending coverage ratios still materially above pre-pandemic levels
Jun-21 unsecured lending coverage ratios still materially above pre- pandemic levels UK cards US cards Gross exposure (£bn) Impairment allowance (£bn) Coverage ratio Gross exposure (£bn) Impairment allowance (£bn) Coverage ratio 16.5 1.8 10.5% 17.5% 14.2% 22.5 9.1% 14.3% 12.4% 1.7 0.8 1.5 1.4 2.8 2.
Slide 24: RWAs remained broadly stable YTD and decreased by £6.9bn QoQ
RWAs remained broadly stable YTD and decreased by £6.9bn QoQ YTD RWA movements (£bn) 0.2 1.7 2.2 0.8 0.3 308.7 306.5 307.2 306.2 306.2 306.4 306.4 1 Dec-20 Credit risk Counterparty credit risk Market risk FX Other Jun-21 excl. disposals QoQ RWA movements (£bn) 2.8 1.5 4.8 0.0 0.8 313.4 310.6 310.6 3
Slide 25: IFRS 9 transitional relief of c.40bps as at Jun-21
IFRS 9 transitional relief of c.40bps as at Jun-21 Constructive regulatory action in Q220 gave greater relief Appropriately positioned CET1 ratio for stage 1 and 2 impairments in the event of stage migration • 100% transitional relief for modified impairment post Dec-19 applied until end-2021 • Tran
Slide 26: Strong progress in HoldCo issuance
Strong progress in HoldCo issuance Annual HoldCo issuance volume materially lower compared to 2016-18 (£bn)1,2 2021 YTD HoldCo issuance by currency2 13.4 12.1 12.1 11.5 March: 6.2 8.6 8.2 Target: c.8 USD 1bn Senior 6.1 9.3 10.2 4 1.8 March: 5.9 2.9 1.1 3.7 YTD: 5.4 1.7 USD 1bn Tier 2 2.5 1.9 3.5 1.2
Slide 27: Structural hedge and interest rate sensitivity
Structural hedge and interest rate sensitivity Structural hedge program update • The Group’s combined gross equity and product structural hedge contribution was £689m in H121 (H120: £866m) • The combined structural hedge notional as at Jun-21 was £198bn (Jun-20: £174bn), with an average duration of
Slide 28: 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 30 June 2021, the Group’s IAS 19 pension surplus across all schemes was £2.4bn (December 2020: £1.5bn). The UK Retirement Fund (UKRF)
Slide 29: Environmental and Social stewardship central to our strategy
Environmental and Social stewardship central to our strategy • Ambition to be a net zero bank by 2050 and committed to align all our financing to the goals and timelines of the Paris Agreement • Plan to extend BlueTrackTM, our emissions measurement and tracking tool, beyond Energy and Power, to cove
Slide 30: 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