Barclays Plc · LSE:BARC
Barclays — Debt Investor Presentation (October 2022)
61 slides from Barclays's debt investor presentation, Oct 26, 2022
Slide 1: Q3 2022 Fixed Income Investor Presentation
Barclays PLC Q3 2022 Fixed Income Investor Presentation 26 October 2022
Slide 2: Performance
Performance
Slide 3: Targets and performance
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Targets and performance Medium term targets Q322 Q322 YTD RoTE >10% 12.5% 10.9% Cost: income ratio <60% 60% 66% CET1 Ratio 13-14% 13.8% 13.8% Announced H122 total capital return Capital returns equivale
Slide 4: Q322: Another quarter of strong returns and income growth
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Q322: Another quarter of strong returns and income growth Capital & Distributions c.15.35p1 per share (last 12m) Strong income momentum and returns across all three c.10.6% yield2 operating businesses
Slide 5: Group highlights: PBT up 6% with strong income growth
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Group highlights: PBT up 6% with strong income growth Q322 Performance Reported profit before tax (£m) £6.4bn1 £4.1bn1 Income Costs Q321: £5.5bn Q321: £3.5bn1 (493) 952 (132) 60% £0.4bn Cost : Income (2
Slide 6: Income: Growth across all three operating businesses
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Income: Growth across all three operating businesses Q322 Group income excl. impact of Over-issuance of Securities (£m)1 +17% 6,496 6,417 5,950 5,465 Record Q32 FICC performance +63% YoY (in USD) 5,16
Slide 7: Sensitivity to interest rates
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Sensitivity to interest rates Interest rate sensitivity Structural hedge Illustrative Group income impact from a 25bps upward Gross hedge income up 72% YoY parallel shift in interest rate curves (£m)1 3
Slide 8: Costs: FY22 outlook of c.£16.7bn; continuing focus on positive jaws
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Costs: FY22 outlook of c.£16.7bn1; continuing focus on positive jaws Operating costs excl. L&C (£m) FY22 costs incl. L&C expected to be c.£16.7bn1 +14% c.0.5 c.0.3 c.1.23 c.16.71 3,939 3,446 14.7 Q321 Q
Slide 9: CIB: Record Q3 FICC, offsetting subdued Investment Banking Fees
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT CIB: Record Q3 FICC1, offsetting subdued Investment Banking Fees Q322 Performance Income2 Income by business2 GBP (£m) GBP (£m) YoY % USD YoY %: £3.3bn2 £2.0bn2 Income Costs +5% Q321: £3.1bn Q321: £1.7b
Slide 10: CC&P: Strong income growth across all businesses
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT CC&P: Strong income growth across all businesses Q322 Performance Income GBP (£m) £1.2bn £0.8bn +54% Income Costs US Cards $27.2bn Q321: £0.8bn Q321: £0.6bn 1,244 End Net Receivables +29% vs Q321 67% £0
Slide 11: Barclays UK: Higher income supported by rising rates
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Barclays UK: Higher income supported by rising rates Q322 Performance Income NIM walk QoQ GBP (£m) £1.9bn £1.1bn +17% FY22 NIM guidance of 2.80% - 2.90%2 Income Costs (Q3 YTD NIM: 2.78%) Q321: £1.6bn Q3
Slide 12: Impact of the Over-issuance of Securities
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Impact of the Over-issuance of Securities Total Progress since H122 results FY21 H122 Q322 Impact Income from hedging arrangements 758 (466) 292 SEC monetary penalty Paid – in line with H122 when L&C
Slide 13: Outlook
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Outlook Returns Targeting a RoTE of greater than 10% in 2022 Diversified income streams position the Group well for the current economic and Income market environment including rising interest rates Cos
Slide 14: Asset Quality
Asset Quality
Slide 15: Balance sheet fortified for economic uncertainty
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Balance sheet fortified for economic uncertainty UK Mortgages (£bn) UK Cards (£bn) 90 day arrears rate Net loans and advances at amortised cost (L&A) 30 day arrears rate Net L&A 161.2 143.2 14.7 LTV >85
Slide 16: Impairment: Trend to through-the-cycle rate; provisioned for downside
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Impairment: Trend to through-the-cycle rate; provisioned for downside Balance sheet provisions for Expected Credit Losses1 (£bn) Loan loss rate (bps) 6.4 Total ECL 6.0 1.2 138 0.8 1.0 0.7 5.2 4.2 4.5 57
Slide 17: Macroeconomic variable assumptions (MEVs)
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Macroeconomic variable assumptions (MEVs) Q322 Q322 Baseline MEVs Q322 Downside 1 MEVs 2022 2023 2024 2022 2023 2024 UK GDP Annual growth 3.6% 0.3% 1.6% 3.5% -2.3% -0.4% UK unemployment Quarterly averag
Slide 18: Impairment: September 2022 coverage ratios
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Impairment: September 2022 coverage ratios Credit cards, unsecured loans and other retail lending Wholesale loans Impairment allowance Impairment allowance Gross Loans (£bn) Coverage ratio Gross Loans (
Slide 19: Impairment: September 2022 coverage ratios
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Impairment: September 2022 coverage ratios UK cards US cards Impairment allowance Impairment allowance Gross Loans (£bn) Coverage ratio Gross Loans (£bn) Coverage ratio (£bn) (£bn) Dec-19 Dec-21 Sep-22
Slide 20: Impairment: Wholesale exposures and UK/US cards arrears rates
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Impairment: Wholesale exposures and UK/US cards arrears rates Wholesale and selected sector exposure Wholesale lending excl. Selected sectors (£bn/coverage ratio %) Gross loans Debt Securities (£bn) Exp
Slide 21: Capital & Leverage
Capital & Leverage
Slide 22: Capital
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Capital Q322 CET1 ratio movements Future considerations • Pensions – expected accelerated impact c.(30)bps (Q422) 22bps 3bps 43bps 12bps 17bps • UK countercyclical buffer (CCyB) - to be re- introduced a
Slide 23: RWA
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT RWA Q322 RWA movements 2.2 4.5 10.7 350.8 1.3 0.9 344.5 1 Jun-22 Reversal of hedges from Book size Acquisition and disposals FX Other Sep-22 Over-issuance of Securities Q322 YTD RWA movements 0.5 23.0 1
Slide 24: CET1 ratio within 13-14% target range and above minimum requirements
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT CET1 ratio within 13-14% target range and above minimum requirements CET1 minimum requirements UK leverage minimum requirements MDA1 10.9% CCB 2.5% Reg Min 3.775% G-SII 1.5% 13.8% G-SII 0.525% Pillar 2A
Slide 25: Capital structure well managed
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Capital structure well managed Capital structure and requirements Balanced total capital structure • Continue to run a robust level of AT1 capital and maintain conservative headroom ≥16.2% total 20.3% t
Slide 26: IFRS 9 transitional relief of c.20bps as at Sep-22
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT IFRS 9 transitional relief of c.20bps as at Sep-22 2020 regulatory action gave further relief for impairments IFRS 9 transitional relief CET1 add-back (£bn) • 75% transitional relief for modified impair
Slide 27: Pensions
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Pensions Pensions surplus • The UK Retirement Fund (UKRF), the Group’s main pension scheme, was in an accounting surplus of £4.3bn as at 30 September 2022, reflecting £24.4bn fair value of scheme assets
Slide 28: Balance Sheet Management
Balance Sheet Management
Slide 29: MREL position well established
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT MREL position well established MREL position of £111.9bn as at Sep-221 2022 HoldCo issuance • Successfully executed c.£9bn of MREL issuance 31.9% (£111.9bn) • Continue to look for issuance opportunities
Slide 30: HoldCo issuance of c.£9bn executed in 2022
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT HoldCo issuance of c.£9bn executed in 2022 2022 HoldCo issuance by currency1 Annual HoldCo issuance volume (£bn) and currency1 12.1 11.5 12.1 11.0 January: EUR 1.25bn Senior 8.6 c.9 8.2 6.1 May: EUR 1.0
Slide 31: High quality liquidity position and stable deposits
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT High quality liquidity position and stable deposits Comfortably exceeding minimum requirements Deposits (£bn) and loan: deposit ratio evolution 800 82% 90% 168% 71% 70% 70% 72% 161% 156% 151% 700 70% Mi
Slide 32: Wholesale funding composition as at 30 June 2022
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Wholesale funding composition as at 30 June 20221 1-3 3-6 6-12 Total 1-2 2-3 3-4 4-5 As at 30 June 2022 (£bn) <1 month >5 years Total months months months <1 year years years years years Barclays PLC (t
Slide 33: Credit Ratings
Credit Ratings
Slide 34: Strategic priority to maintain strong ratings
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT 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
Slide 35: Barclays rating composition for senior debt
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Barclays rating composition for senior debt Moody’s Standard & Poor’s Fitch BPLC BBPLC BBUKPLC BPLC BBPLC BBUKPLC BPLC BBPLC BBUKPLC Adjusted Baseline baa2 baa2 a3 Stand-Alone Credit Profile bbb+ Viabil
Slide 36: ESG
ESG
Slide 37: We continued to advance our ESG agenda in Q322: YTD progress
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT We continued to advance our ESG agenda in Q322: YTD progress Environment Social Governance Three-year partnership with Oxford Targeted £1,200 pay rise for 35,000 University to support clients in the UK
Slide 38: We measure our progress against key metrics and targets
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT We measure our progress against key metrics and targets Targets as at FY21 FY21 H122 updates GHG emissions Scope 1 and 2 (market- -90% (2025)1 -86%2 -82%3 based) reduction against 2018 baseline Emission
Slide 39: Key updates to our approach and targets as part of Say on Climate
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Key updates to our approach and targets as part of Say on Climate advisory vote at 2022 AGM • Emissions reduction: o -90% Scope 1 and 2 GHG emissions (market-based) against a 2018 baseline by 2025 Achie
Slide 40: Reducing our financed emissions – methodology
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Reducing our financed emissions – methodology • Using the IEA NZE2050 1.5°C scenario to derive benchmarks and to set our 2030 targets Scenarios – • Previously used the IEA SDS scenario to set our 2025 t
Slide 41: Restrictive policies – thermal coal mining
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Restrictive policies – thermal coal mining We have announced a tightening of our thermal coal policy, including final phase-out dates for financing of thermal coal mining Barclays’ thermal coal mining p
Slide 42: Restrictive policies – coal-fired power generation
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Restrictive policies – coal-fired power generation We have announced a tightening of our thermal coal policy, including final phase-out dates for financing of coal-fired power generation Barclays’ coal-
Slide 43: 2021 BoE CBES results and climate risk approach
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT 2021 BoE CBES1 results indicated that the profitability drag is manageable although banks have more to do on climate risk Key challenges for the sector Our approach and next steps Data availability Corp
Slide 44: Continued engagement on the transition towards a nature-positive economy
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Continued engagement on the transition towards a nature-positive economy Addressing nature and biodiversity considerations in our financing and operations • Financing restrictions that seek to address n
Slide 45: Executing our Diversity, Equity and Inclusion (DEI) strategy
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Executing our Diversity, Equity and Inclusion (DEI) strategy against five DEI priorities, through the lens of six core agendas Our focus areas Attracting and hiring a diverse Introducing ‘Equity’ 1. wor
Slide 46: Providing support to those in need
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Providing support to those in need How we are supporting How we are supporting our UK retail Ukraine and its citizens customers with the cost of living crisis Providing financial assistance directly Edu
Slide 47: Expanding our sustainable finance activities through specialist teams
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Expanding our sustainable finance activities through specialist teams Green Home and Buy-to-Let Mortgages Corporate and Investment Bank c.£0.7bn Lead manager on Austria’s inaugural €4bn Green Bond, Sust
Slide 48: Barclays remains focused on maturing its resilience capability
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Barclays remains focused on maturing its resilience capability Robust processes in place with strong foundations Established intelligence-led impact Digital Economic Crime upstream detection Resilience
Slide 49: Appendix
Appendix
Slide 50: Q322 Group Financial Highlights
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Q322 Group Financial Highlights Three months ended (£m) Sep-22 Sep-21 % change Income excluding loss from hedging arrangements up 17% YoY with continued momentum in Income 5,951 5,465 +9% Credit impairm
Slide 51: Q322 Barclays UK Financial Highlights
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Q322 Barclays UK Financial Highlights Three months ended (£m) Sep-22 Sep-21 % change Income up 17% YoY capturing the benefit from rising interest rates - Personal Banking 1,212 990 +22% - Barclaycard Co
Slide 52: Q322 Barclays International Financial Highlights
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Q322 Barclays International Financial Highlights Three months ended (£m) Sep-22 Sep-21 % change Income up 3%, diversified income profile across businesses and geographies Income 4,065 3,937 +3% Credit i
Slide 53: Q322 Corporate & Investment Bank Financial Highlights
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Q322 Corporate & Investment Bank Financial Highlights Three months ended (£m) Sep-22 Sep-21 % change Income down 10% - FICC 1,546 803 +93% - Equities 246 757 -68% − Income excluding the £466m loss from
Slide 54: Q322 Consumer Cards & Payments Financial Highlights
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Q322 Consumer Cards & Payments Financial Highlights Three months ended (£m) Sep-22 Sep-21 % change Income up 54% -International Cards & Consumer Bank 824 490 +68% - Private Bank 270 188 +44% − Internati
Slide 55: Q322 Head Office Financial Highlights
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Q322 Head Office Financial Highlights Three months ended (£m) Sep-22 Sep-21 % change Q322 Income of £(30)m driven by Income (30) (110) -73% Credit impairment (charges)/releases (5) (1) − £(31)m loss on
Slide 56: Q322 YTD Group Financial Highlights
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Q322 YTD Group Financial Highlights Nine months ended (£m) Sep-22 Sep-21 % change Income excluding loss from hedging arrangements up 12% YoY reflecting growth across all Income 19,155 16,780 +14% Credit
Slide 57: Q322 YTD BUK and BI
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Q322 YTD BUK Q322 YTD BI Nine months ended (£m) Sep-22 Sep-21 % change Nine months ended (£m) Sep-22 Sep-21 % change - Personal Banking 3,311 2,900 +14% Income 14,005 12,155 +15% - Barclaycard Consumer
Slide 58: Q322 YTD CIB and CC&P
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Q322 YTD CIB Q322 YTD CC&P Nine months ended (£m) Sep-22 Sep-21 % change Nine months ended (£m) Sep-22 Sep-21 % change - FICC 4,719 2,902 +63% -International Cards & Consumer Bank 2,053 1,540 +33% - Equ
Slide 59: Q322 YTD Head Office; exchange rates and share count
CAPITAL BALANCE SHEET PERFORMANCE ASSET QUALITY CREDIT RATINGS ESG APPENDIX & LEVERAGE MANAGEMENT Q322 YTD Head Office Nine months ended (£m) Sep-22 Sep-21 % change Income (139) (212) -34% Credit impairment (charges)/releases 12 5 – Operating costs (239) (507) -53% – Litigation and conduct (54) (12)
Slide 60: Contacts – Debt Investor Relations Team
Contacts – Debt Investor Relations Team Dan Colvin Joanne Cash Christy Zakarias +44 (0)20 7116 6533 +44 (0)20 7116 4215 +44 (0)20 7116 4543 daniel.colvin@barclays.com joanne.cash@barclays.com christy.zakarias@barclays.com 60 | Barclays Q3 2022 Results | 26 October 2022
Slide 61: 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