Barclays Plc · LSE:BARC
Barclays — Debt Investor Presentation (April 2023)
51 slides from Barclays's debt investor presentation, Apr 27, 2023
Slide 1: Barclays PLC Q1 2023 Fixed Income Investor Presentation
Barclays PLC Q1 2023 Fixed Income Investor Presentation 27 April 2023
Slide 2: Performance
Performance
Slide 3: Franchise strength driving strong returns and balance sheet stability
Franchise strength driving strong returns and balance sheet stability Income statement £7.2bn Income £2.6bn Profit before tax Strong Q1 performance: record quarter of profitability2 15.0% RoTE 11.3p Earnings per share Prudent risk management: underpinning performance Balance sheet, capital Dis
Slide 4: Supporting customers and clients in pursuit of our strategic priorities
Supporting customers and clients in pursuit of our strategic priorities Deliver next-generation Deliver sustainable Capture opportunities as digitised consumer growth in the Corporate we transition to a low- financial services & Investment Bank carbon economy 4 | Barclays Q1 2023 Results | 27 April
Slide 5: Group RoTE of 15.0% with profit before tax up 16%
Group RoTE of 15.0% with profit before tax up 16% Performance Profit before tax (£bn) £7.2bn £4.1bn Income Costs Q122: £6.5bn Q122: £4.1bn (0.4) (0.5) 0.5 0.7 57% £3.1bn Cost: income Profit before ratio impairment Q122: 63% Q122: £2.4bn £0.5bn 52bps Impairment Loan loss rate Q122: £0.1bn Q122: 15bps
Slide 6: Income +11% YoY, with growth across all operating businesses
Income +11% YoY, with growth across all operating businesses Group income (£bn) +11% 7.2 Group 6.5 2.0 +19% Barclays UK1 1.6 Consumer, Cards 1.3 +47% 0.9 & Payments2 Corporate & 3.9 4.0 +1% Investment Bank3 Q122 Q123 c.40-45% of Group income in USD since 20204 1 Barclays UK (BUK) | 2 Consumer, Cards
Slide 7: High quality and diverse sources of income growth across the Group
High quality and diverse sources of income growth across the Group Income growth YoY +£741m / +11% +£312m | +19% Barclays UK Mostly NII (+£279m) reflecting rates and structural hedge, partially offset by product margin impacts 312 +£420m | +47% Consumer, Cards & Payments1 +£338m: NII mainly US c
Slide 8: Structural hedge continues to drive higher NII across the Group
Structural hedge continues to drive higher NII across the Group Structural hedge Q123 gross hedge income up 104% YoY Spot: 4.18% 3.96%2 Expect continued momentum in structural hedge income 3.05% 3.75% o Two-thirds of gross hedge income within Barclays UK 2.26% 1.52% £3bn reduction in hedge notio
Slide 9: Cost: income ratio of 57%
Cost: income ratio of 57% Group costs (£bn) and cost: income ratio (CIR) CIR CIR 2023 Group cost: income ratio % in low 60s 63% 57% Guidance Q123 high point for Group operating costs1,2 4.1 4.1 0.5 (0.5) 0.4 Barclays UK +£94m 0.1 0.0 1.1 Transformation: digital optimisation and service simplificat
Slide 10: Barclays UK higher income driven by margin growth
Barclays UK higher income driven by margin growth Performance Income (£bn) Net interest margin £2.0bn £1.1bn Income Costs +19% Q122: £1.6bn Q122: £1.0bn 2.0 2.0 0.16% (0.21%) 56% YoY 0.13% £0.1bn 1.6 Cost: income 0.5 0.5 +31% Impairment ratio Q122: £48m Pr oduct margin -21bps Q122: 61% 0.4 T r easur
Slide 11: Consumer, Cards & Payments strong income growth of 47% YoY
Consumer, Cards & Payments strong income growth of 47% YoY Performance Income (£bn) £1.3bn £0.8bn +47% Income Costs US cards End Net $28.5bn2 Q122: £0.9bn Q122: £0.8bn 1.3 1.3 Receivables +30%2 (incl. Gap) vs Q122 -2% vs Q422 58% £0.4bn Cost: income Impairment ratio Q122: £0.1bn Q122: 88% 0.9 YoY £1
Slide 12: Corporate & Investment Bank delivered second best quarter on record
Corporate & Investment Bank delivered second best quarter on record1 Performance Income (£bn) Income by business (£m) £4.0bn £2.2bn +1% YoY % USD YoY %: Income Costs Q122: £3.9bn Q122: £2.2bn 3.9 4.0 Markets FICC, 1,788 +9% +1% Global YoY 55% £33m 0.6 4 Equities, 704 -33% -38% 0.8 +25% 4 Cost: incom
Slide 13: Delivering against our targets and guidance
Delivering against our targets and guidance Targets and guidance Q123 RoTE >10% in 2023 15.0% Cost: income ratio Low 60s % in 2023 57% Loan loss rate 50-60bps in 2023 52bps CET1 ratio 13-14% 13.6% Liquidity coverage ratio >100% regulatory minimum1 163% 1 Liquidity coverage ratio >100% is a regulator
Slide 14: Outlook – unchanged from FY22 results
Outlook – unchanged from FY22 results Returns Targeting RoTE of greater than 10% in 2023 Diversified income streams continue to position the Group well for the current Income economic and market environment including higher interest rates. In 2023, Barclays UK NIM is expected to be greater than 3.20
Slide 15: Asset Quality
Asset Quality
Slide 16: Balance sheet remains well provisioned
Balance sheet remains well provisioned Balance sheet provisions for ECL1 (£bn) Commentary Impairment provision increased £0.1bn to £6.3bn 6.3 Retain economic uncertainty adjustments of £0.3bn 6.2 0.1 Other ECL 1.1 1.2 Economic uncertainty 0.3 0.3 adjustments Macroeconomic variables rolled forwar
Slide 17: Robust consumer coverage ratios and normalisation in credit
Robust consumer coverage ratios and normalisation in credit UK cards US cards Gross loans (£bn) Coverage ratio Gross loans (£bn) Coverage ratio Dec-19 Dec-22 Mar-23 Dec-19 Dec-22 Mar-23 Dec-19 Dec-22 Mar-23 Dec-19 Dec-22 Mar-23 Total 16.5 9.9 9.8 10.5% 7.6% 7.7% Total 22.5 25.8 24.8 9.1% 8.1% 8.9% S
Slide 18: Impairment charge normalising, in line with guidance
Impairment charge normalising, in line with guidance Loan loss rate (bps) Credit impairment charge (£m) 138 524 Group 113 BUK 53 57 55 49 52 44 30 CC&P US cards balance growth +30%1 141 371 Normalisation in credit (18) Stage migration including 48 acquired Gap portfolio 2016 2017 2018 2019 202
Slide 19: Macroeconomic variables
Macroeconomic variables Q123 Upside 2 Upside 1 B aseline Downside 1 Downside 2 2023 2024 2025 2023 2024 2025 2023 2024 2025 2023 2024 2025 2023 2024 2025 UK GDP 1 1.7% 4.1% 3.1% 0.5% 2.2% 2.3% (0.6)% 0.5% 1.6% (1.3)% (2.2)% 1.3% (2.0)% (4.8)% 1.0% UK unemployment2 3.6% 3.4% 3.4% 3.9% 4.0% 3.8% 4.3%
Slide 20: Macroeconomic variables
Macroeconomic variables Q422 Upside 2 Upside 1 B aseline Downside 1 Downside 2 2023 2024 2025 2023 2024 2025 2023 2024 2025 2023 2024 2025 2023 2024 2025 UK GDP 1 2.8% 3.7% 2.9% 1.0% 2.3% 2.4% (0.8)% 0.9% 1.8% (2.1)% (1.5)% 1.9% (3.4)% (3.8)% 2.0% UK unemployment2 3.5% 3.4% 3.4% 4.0% 3.9% 3.8% 4.5%
Slide 21: Impairment: March 2023 coverage ratios
Impairment: March 2023 coverage ratios Credit cards, unsecured loans and other retail lending Wholesale loans Impairment allowance Impairment allowance Gross loans (£bn) Coverage ratio Gross loans (£bn) Coverage ratio ( £bn) ( £bn) Dec-19 Dec-22 Mar-23 Dec-19 Dec-22 Mar-23 Dec-19 Dec-22 Mar-23 Dec-1
Slide 22: Impairment: March 2023 coverage ratios
Impairment: March 2023 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-22 Mar-23 Dec-19 Dec-22 Mar-23 Dec-19 Dec-22 Mar-23 Dec-19 Dec-22 Mar-23 Dec-19 Dec-22 Mar-23 Dec-19 Dec-22 Ma
Slide 23: Impairment: Q123 wholesale exposures and UK/US cards arrears rates
Impairment: Q123 wholesale exposures and UK/US cards arrears rates Wholesale and selected sector exposure Se le cted sectors (£bn/coverage ratio %) c.30% of the Wholesale book is secured, increasing to W holesale lending excl. Gro ss loans (£bn) D ebt Securities (£bn) E x posure C o verage c.60% f
Slide 24: Capital & Leverage
Capital & Leverage
Slide 25: Strong CET1 ratio with significant headroom to MDA
Strong CET1 ratio with significant headroom to MDA Q123 CET1 ratio movements Future considerations Target RoTE of >10%: translates to (10bps) c.150bps of annual CET1 ratio accretion (13bps) (21bps) UK countercyclical buffer (CCyB):increase 53bps (13bps) (9bps) to 2%, adds c.40bps to MDA in Q323
Slide 26: Risk weighted assets
Risk weighted assets Q123 RWA movements (£bn) 0.7 3.2 ( 4.0 ) 2.1 338.4 336.5 1 Dec-22 Book size Acquisitions and FX Other Mar-23 disposals 1 FX on credit risk, counterparty credit risk and standardised market risk RWAs | Note: Charts may not sum due to rounding | 26 | Barclays Q1 2023 Results | 27
Slide 27: CET1 ratio within 13-14% target range
CET1 ratio within 13-14% target range CET1 minimum requirements UK leverage minimum requirements MDA 1 11.4% CCyB 0.5% CCB 2.5% Reg Min 3.975% CCLB 0.2% G-SII 1.5% 0.525% G-SII 13.6% Pillar 2A 2.4% 5.1% 4.8% BoE minimum leverage 3.25% requirement Pillar 1 4.5% 2 2 UK Leverage Mar-23 UK average Mar-2
Slide 28: Capital structure well managed
Capital structure well managed Capital requirements1 and structure Balanced total capital structure Surplus over CET1 MDA as we run a 13-14% target Surplus over T1 requirement to manage FX and RWA movements, 20.2% total capital ratio as well as deployment into high returning leverage balance she
Slide 29: Barclays PLC AT1: Additional background
Barclays PLC AT1: Additional background Consistent structure across outstanding Barclays PLC AT1s Recent creditor hierarchy statement by the Bank of England Ful ly compliant UK CRR features T2 Eq uity convertible. Convertible into ordinary shares upon a 7% “AT1 instruments rank ahead of CET1 Los
Slide 30: Balance Sheet Management
Balance Sheet Management
Slide 31: MREL position well established
MREL position well established MREL position as at Mar-231 HoldCo issuance 32.7% c.£11bn 2023 MREL issuance plan across Senior, Tier 2 and ( £110.6bn) 29.0% AT1 ( £98.2bn) o c.£2.7bn executed CCyB: 0.5% CCB: 2.5% Senior: 12.8% Successfully executed c.£15bn of MREL issuance in 2022 G-SII: 1.5% (£
Slide 32: Executed c.£2.7bn of c.£11bn 2023 issuance plan
Executed c.£2.7bn of c.£11bn 2023 issuance plan 2023 HoldCo issuance Annual HoldCo issuance volume (£bn) and currency1 15.0 Jan-23: GBP 1.0bn Senior 12.1 11.5 12.1 11.0 c.11 8.6 8.2 10.8 6.1 Mar-23: GBP 1.5bn AT1 9.3 10.2 8.3 c.8 4.0 remaining 5.9 2.9 1.1 1.0 1.7 3.5 1.2 1.6 1.0 2.5 3.2 1.1 1.9 1.1
Slide 33: Diverse and stable franchise deposit base; total deposits +c.£10bn
Diverse and stable franchise deposit base; total deposits +c.£10bn Customer deposits1 down c.£5bn, driven by expected seasonal effects and FX CIB: Corporate Bank £170bn4, flat BUK: Personal Banking £194bn, -1% >20% insured5 71% insured c.13% term (>30 day) >75% of relationships 5+ years c.
Slide 34: Highly liquid balance sheet
Highly liquid balance sheet 82% of Liquidity Pool held in cash HTC £14bn 4% FVOCI £45bn >99% of cash placed with BoE, US Fed, ECB, BoJ, SNB 14% Remainder mostly held in high-quality government bonds (materially all AA or AAA) Liquidity Pool Majority of securities in the liquidity pool are hedg
Slide 35: Wholesale funding composition as at December 2022
Wholesale funding composition as at 31 December 20221 1- 3 3- 6 6- 12 T otal 1- 2 2- 3 3- 4 4- 5 As at 31 December 2022 (£bn) <1 month >5 years T otal mon ths mon ths mon ths <1 year ye ars ye ars ye ars ye ars Barclays PLC (the Parent company) Senior unsecured - - 0.2 1.7 1.9 5.8 5.6 8.3 4.5 18.0 4
Slide 36: 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 37: Credit Ratings
Credit Ratings
Slide 38: 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 Baa1 BBB A Stable Positive Stable Barclays PLC P-2 A-2 F1 A1 A A+ Stable Positive Stable Barclays Bank PLC (BBPLC) P-1 A-1 F1 Counterparty risk assessment Resolution counterparty
Slide 39: Barclays rating composition for senior debt
Barclays rating composition for senior debt Moody’s St andard & Poor’s Fitch BBUK BBUK BBUK BPLC BBPLC BPLC BBPLC BPLC BBPLC PLC PLC PLC Adjusted Baseline b aa1 b aa1 a3 Stan d-Alone Credit Profile bbb+ Viab ility Rating2 a a a Cr e dit Assessment Macro profile Strong+ Strong+ Strong+ Anchor bbb+ Op
Slide 40: ESG
ESG
Slide 41: We continued to advance our ESG agenda in 2022
We continued to advance our ESG agenda in 2022 Environmental Governance Social Created a pathway to address our Brought forward part of the 2023 pay increase, supply chain emissions awarding 35,000 UK-based junior colleagues a Fully integrated our TCFD1 report into Barclays £1,200 salary increase ef
Slide 42: Sustainable Impact Capital's upsized target to £500m
Sustainable Impact Capital’s upsized target to £500m Sustainable finance activities through Treasury Mission Portfolio as at FY22 Accelerate the transition to a net zero future by investing £500m by the end of 2027 (£175m by 2025 previously) in global climate tech start-ups, including a focus on: •
Slide 43: Fulfilling our Purpose
Fulfilling our Purpose creating positive influence our delivered through Our Purpose… and our Values… outcomes for our strategy… Group synergies… stakeholders Customers and clients Our diversification, We deploy finance Respect built to deliver responsibly to support double-digit Colleagues people a
Slide 44: ESG has been an ongoing focus for Barclays…
ESG has been an ongoing focus for Barclays… E Announced ambition to be a net zero bank by 2050 E Joined the Paris Pledge for Action Launched BlueTrackTM to measure/track our financed emissions E Pre- S Launched LifeSkills 2016 E Set 2025 targets for Energy and Power G Launched the Barclays Way – our
Slide 45: …and we continued to advance our ESG agenda in 2022
…and we continued to advance our ESG agenda in 2022 Sourced 100% renewable electricity for our operations1 and created a pathway to address our supply chain emissions Extended assessment of our financed emissions to six sectors, adding Automotive Manufacturing and Residential Real Estate, and an
Slide 46: We measure our progress against key metrics and targets (1/2)
We measure our progress against key metrics and targets (1/2) FY21 FY22 Category Metric Target(s) as at FY22 performance1 performance1 GHG emissions Scope 1 and 2 (market- -90% (2025) -86%2 -91%Δ, 3 b ased) reduction against 2018 baseline Operational footprint Source 100% renewable electricity for o
Slide 47: We measure our progress against key metrics and targets (2/2)
We measure our progress against key metrics and targets (2/2) Target(s) / benchmark FY21 FY22 Category Metric as at FY22 performance performance Females at Managing Director/Director level 33% (2025) 28% 29%Δ Colleagues ‘Maintain engagements at Colleague engagement 82% 84% healthy levels’1 Barclays
Slide 48: Our ESG ratings performance
Our ESG ratings performance Agency Rating type Scale 2019 2020 2021 2022 Year on year (b e st to worst) MSCI ESG rating AAA – CCC BBB A AA AA Stable CDP Climate Change A – D- A- B B A- Improved Questionnaire S&P Global Corporate 70 77 78 75 Declined slightly but relative Sustainability 100 – 0 (77th
Slide 49: Appendix
Appendix
Slide 50: Contacts – Debt Investor Relations Team
Contacts – Debt Investor Relations Team Version 2 Dan Colvin Joanne Cash Justin Lutterbuese +44 (0)20 7116 6533 +44 (0)20 7116 4215 +44 (0)20 7116 6021 daniel.colvin@barclays.com joanne.cash@barclays.com justin.lutterbuese@barclays.com 50 | Barclays Q1 2023 Results | 27 April 2023
Slide 51: Disclaimer
Disclaimer I m portant 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