Barclays Plc · LSE:BARC
Barclays — Debt Investor Presentation (July 2014)
51 slides from Barclays's debt investor presentation, Jul 30, 2014
Slide 1: Barclays PLC Fixed Income Investor Presentation 2014 Interim Results
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Barclays PLC Fixed Income Investor Presentation 2014 Interim Results 30 July 2014 |
Slide 2: Performance Overview
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Performance Overview 2 | Fixed Income Investor Presentation – 2014 Interim Results
Slide 3: Summary Group financials
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Summary Group financials Six months ended – June (£m) 2013 2014 Financial Performance Income 15,071 13,332 • Adjusted profit fell by 7% to £3.3bn, driven largely by a 12% reduc
Slide 4: Strong credit fundamentals provide a platform for long-term sustainable returns
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Strong credit fundamentals provide a platform for long-term sustainable returns (£bn) Dec-13 Jun-14 Highlights Total assets 1,344 1,315 • Key balance sheet and capital measures
Slide 5: Core business performing well and as expected
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Core business performing well and as expected Highlights Six months ended – June (£m) 2013 2014 Financial performance Income 13,597 12,674 • Good performance in Core business,
Slide 6: Barclays Non-Core – good start to RWA reduction
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Barclays Non-Core – good start to RWA reduction Six months ended – June (£m) 2013 2014 Highlights Income 1,474 658 • Attributable loss before tax reduced by 25% following signi
Slide 7: Capital & Leverage
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Capital & Leverage 7 | Fixed Income Investor Presentation – 2014 Interim Results
Slide 8: Progressive strengthening of capital and leverage ratios
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Progressive strengthening of capital and leverage ratios reflect focused capital and balance sheet management Fully loaded CRD IV CET1 ratio (%)1 Highlights • Continue to show
Slide 9: Continued progress on the transition towards our target end-state capital structure
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Continued progress on the transition towards our „target‟ end-state capital structure Evolution of capital structure Fully loaded CRD IV capital position • Fully loaded CRD IV
Slide 10: Our plan incorporates the progressive implementation of CET1 requirements
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Our plan incorporates the progressive implementation of CET1 requirements Regulatory targets, excluding internal buffer Key assumptions in this illustration CRD IV minimum CET1
Slide 11: We intend to manage our CET1 capital ratio to mitigate distribution restrictions
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW We intend to manage our CET1 capital ratio to mitigate against the risk of mandatory distribution restrictions CET1 requirements1 (as at 1 January except H1 2014) • Mandatory r
Slide 12: Continue to strengthen our leverage ratio and reduce leverage exposure
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Continue to strengthen our leverage ratio and reduce leverage exposure PRA leverage exposure1 (£bn) Highlights L&A and other assets2 Derivatives • Estimated PRA leverage ratio
Slide 13: Liquidity & Funding
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Liquidity & Funding 13 | Fixed Income Investor Presentation – 2014 Interim Results
Slide 14: Balance sheet totals £1.3tn; wholesale funding requirements limited to £179bn
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW While the balance sheet totals £1.3tn (excl. BAGL), wholesale funding requirements are limited to £179bn Total balance sheet as at 30 June 2014 of £1.3tn (excl. BAGL) Highlight
Slide 15: Robust liquidity position, with pool well in excess of minimum requirements
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Maintaining a robust liquidity position, with pool well in excess of internal and external minimum requirements High quality liquidity pool (£bn) Key messages Cash & Deposits a
Slide 16: Stable and diverse sources of funding across deposits and wholesale debt
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW We maintain access to stable and diverse sources of funding, across customer deposits and wholesale debt Significant increase in deposit funding (£bn) Key messages • Group Loan
Slide 17: Diverse wholesale funding sources across products, currencies and maturities
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Continue to access diverse wholesale funding sources across multiple products, currencies and maturities Wholesale funding by product (as at 30 June 2014) Key Messages Deposits
Slide 18: Asset quality
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Asset quality 18 | Fixed Income Investor Presentation – 2014 Interim Results
Slide 19: Group impairment improved 33%, with positive trends across businesses
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Group impairment improved 33%, with positive trends across businesses Retail loan loss rate (bps)1 Key Messages H2 2013 332 • Declining Loan Loss Rate (LLR) trend across 311 al
Slide 20: Core impairment reduced across all businesses
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Core impairment reduced across all businesses Impairment charge (£m) • Continued improvement in asset quality, with Core impairment falling 13% to £937m, with reductions across
Slide 21: Reduced exposure to Eurozone periphery
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Reduced exposure to Eurozone periphery Exposures by geography (£bn) Key Messages Spain Italy Portugal Ireland • Active management of exposure to Eurozone periphery countries 59
Slide 22: Barclays Non-Core – encouraging progress on RWA reductions
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Barclays Non-Core – encouraging progress on RWA reductions RWA reduction (£bn) Highlights Businesses Securities and Loans • RWA reductions concentrated in Securities and Loans
Slide 23: Credit ratings
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Credit ratings 23 | Fixed Income Investor Presentation – 2014 Interim Results
Slide 24: Barclays' credit ratings remain strong and in line with peers'
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Barclays‟ credit ratings remain strong and in line with peers‟ As at 30 June 2014 Key Messages Barclays PLC Barclays Bank PLC • Barclays‟ ratings and outlooks have been adverse
Slide 25: Prudently manages and reserves for potential rating actions in the liquidity pool
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Barclays prudently manages and reserves for potential rating actions in the liquidity pool Contractual credit rating downgrade exposure • Potential outflows related to a multip
Slide 26: Summary
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Summary • A diversified international bank focused on delivering improved and more sustainable returns Business model • Concentrating on our high growth opportunities where we
Slide 27: Appendix - Strategy
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Appendix - Strategy 27 | Fixed Income Investor Presentation – 2014 Interim Results
Slide 28: Repositioning and simplifying Barclays
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Repositioning and simplifying Barclays Rightsizing and focusing the Investment Bank Establishing a dedicated Non-Core unit and a new Personal & Corporate Banking business Alloc
Slide 29: 2016 Transform financial commitments
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW 2016 Transform financial commitments 1 Capital CRD IV FL CET1 ratio >11.0% Group 2 Leverage Leverage ratio >4.0% 3 Dividend Payout ratio 40-50% 4 Returns Adjusted RoE >12% Barc
Slide 30: Reorganising to a simpler, focused and balanced structure
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Reorganising to a simpler, focused and balanced structure Barclays Group – H1 2014 Personal & Africa Investment Barclays Non-Core Barclaycard Corporate Banking Banking Bank (BN
Slide 31: Reducing and reallocating RWAs to drive growth and returns
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW <15% Reducing and reallocating RWAs to drive growth and returns 2013 pre-resegmentation (£bn) 2013 post-resegmentation estimate (£bn) 2016 guidance (£bn) Leverage exposure £1.4
Slide 32: Rebalanced Investment Bank as a proportion of the Group
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Rebalanced Investment Bank as a proportion of the Group Group RWA splits – June 2014 Group Income splits – June 2014 Investment Investment Bank Bank 31% 32% Macro 9% Rest of Gr
Slide 33: Non-Core will be tightly managed to reduce RWAs and leverage
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Non-Core will be tightly managed to reduce RWAs and leverage Anticipated RWA reduction of c.55% by 2016 (£bn) Anticipated reduction in leverage exposure of c.55% by 2016 (£bn)
Slide 34: Investment Bank assets are majority of Non-Core
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Investment Bank assets are majority of Non-Core Portfolios and businesses included Portfolios and businesses included: Preliminary 2013 Income RWAs Split of 2013 (£m) (£bn) Non
Slide 35: Selected corporate, retail and other assets constitute remainder of Non-Core
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Selected corporate, retail and other assets constitute remainder of Non-Core Portfolios and businesses included: Income RWAs Preliminary 2013 Split of 2013 (£m) (£bn) CRD IV RW
Slide 36: Core businesses expected to maintain average adjusted RoE >12%
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Core businesses expected to maintain average adjusted RoE >12% on a much higher equity base % Core >12 c.12 Non-Core c.3 drag <3% c.9-10 c.6 6.1 4.5 1.6 Group >9% 3.5 1.0 2013
Slide 37: Costs reduced across all businesses
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Costs reduced across all businesses Operating expenses progress (£m) H113 operating H114 operating CTA spend to Net decrease YoY Savings initiatives from CTA expenses¹ expenses
Slide 38: Group Cost targets
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Group Cost targets Group cost guidance1 (£bn) Core cost targets1 (£bn) Original Group cost target and interim guidance Revised Group cost guidance Core cost targets 19 18.7 c.(
Slide 39: Appendix - Data
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Appendix - Data 39 | Fixed Income Investor Presentation – 2014 Interim Results
Slide 40: Core customer assets and NIM growth driving NII
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Core customer assets and NIM growth driving NII Core income Six months ended – June (£m) 2013 2014 • Steady performance in PCB and Barclaycard Personal and Corporate Banking 4,
Slide 41: Capital Resources
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Capital Resources1 (£m) 31 December 2013 30 June 2014 Shareholders' equity (excluding non controlling interests) per the balance sheet 55,385 58,068 Less: Other equity instrume
Slide 42: Estimated leverage exposure
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Estimated leverage exposure1 PRA Leverage exposure BCBS 270 Leverage exposure (£bn) 31 December 2013 30 June 2014 30 June 2014 IFRS derivative financial instruments 355 333 333
Slide 43: Wholesale funding composition
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Wholesale funding composition1 >3 >6 >1 month >9 months >1 year >2 years months months Total As at 30 June 2014 (£bn) ≤1 month but ≤3 but ≤12 but ≤2 but ≤5 >5 years Total but ≤
Slide 44: Reduced exposure to the Eurozone
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Reduced exposure to the Eurozone As at 30 June 2014 (£m) Spain Italy Portugal Ireland Total Sovereign 134 1,898 165 30 2,227 Financial institutions 753 681 43 2,972 4,449 Corpo
Slide 45: UK Banking Act will include a statutory bail-in power
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW In line with the European Bank Recovery & Resolution Directive the UK Banking Act will include a statutory bail-in power Overview Considerations for Bondholders • Statutory bai
Slide 46: CRD IV - Regulatory timeline
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW CRD IV - Regulatory timeline Timeframe based on Capital Requirements Regulation (CRR) and Capital Requirements Directive (CRD) published in June H1 2010 1 Jan 2011 1 Jan 2012 1
Slide 47: Contact - Debt Investor Relations Team
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Contact - Debt Investor Relations Team Richard Caven Sofia Lonnqvist Julie Stanzl +44 (0)20 7116 2809 +44 (0)20 7116 5716 +44 (0)20 7116 7748 richard.caven@barclays.com sofia.l
Slide 48: Disclaimer
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Disclaimer 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
Slide 49: Disclaimer (continued)
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Disclaimer (continued) Barclays has filed a registration statement (including a prospectus) and has filed, or will file, a prospectus supplement with the U.S. Securities and Ex
Slide 50: Disclaimer (continued)
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Disclaimer (continued) • Adjusted total operating expenses represents operating expenses excluding the provision for PPI redress; the provision for interest rate hedging produc
Slide 51: Disclaimer (continued)
PERFORMANCE CAPITAL & LEVERAGE LIQUIDITY & FUNDING ASSET QUALITY CREDIT RATING APPENDIX - STRATEGY APPENDIX - DATA OVERVIEW Disclaimer (continued) • Estimated Net Stable Funding Ratio (NSFR) is calculated according to the definition and methodology detailed in the standard provided by the Basel Comm