Barclays Plc · LSE:BARC
Barclays — H1 2010 Earnings Presentation
74 slides from Barclays's earnings presentation, Aug 5, 2010
Slide 1: Barclays PLC 2010 Interim Results
Barclays PLC 2010 Interim Results 5 August 2010 1
Slide 2: Chris Lucas, Group Finance Director
Chris Lucas Group Finance Director 2
Slide 3: Highlights
Highlights • Income resilience • Higher returns and higher profits • Impairment charges in line with guidance • Strong capital management • Stable leverage and strengthened liquidity • Gross new UK lending of £18bn 3
Slide 4: Group performance
Group performance 2010 2009 Change Half year ended – June (£m) (£m) % Profit before tax 3,947 2,745 44 Less: Own credit (gain) / charge (851) 893 Gains on acquisitions and disposals (133) (21) Gains on debt buy-backs – (1,192) Adjusted profit before tax 2,963 2,425 22 4
Slide 5: Financial summary
Financial summary 2010 2009 Change Half year ended – June (£m) (£m) % Income 16,581 15,318 8 Impairment charges (3,080) (4,556) (32) Net income 13,501 10,762 25 5
Slide 6: Impairment improvement
Impairment improvement (£m) BarCorp Spain 4,556 BarCap 120 Other* 1,874 3,080 553 309 2,562 2,218 H1 09 H1 10 * Includes GRB, BarCorp (ex Spain), Barclays Wealth, Investment Management, Absa and HOF 6
Slide 7: Financial summary
Financial summary 2010 2009 Change Half year ended – June (£m) (£m) % Income 16,581 15,318 8 Impairment charges (3,080) (4,556) (32) Net income 13,501 10,762 25 Operating expenses (9,720) (8,051) 21 Profit before tax 3,947 2,745 44 Cost : income ratio 59% 53% nm Cost : net income ratio 72% 75% nm 7
Slide 8: Financial summary cont'd
Financial summary cont’d Half year ended – June 2010 2009 Return on equity 9.8% 9.4% Return on tangible equity 12.0% 13.0% Return on risk weighted assets 1.5% 1.0% Earnings per share 20.9p 16.4p Dividend per share 2.0p 0.0p 8
Slide 9: Global Retail Banking
Global Retail Banking 2010 2009 Change Half year ended – June (£m) (£m) % UK Retail Banking 504 313 61 Barclaycard 317 375 (15) Western Europe Retail Banking 10 92 (89) Barclays Africa 70 65 8 GRB profit before tax 901 845 7 9
Slide 10: UK Retail Banking
UK Retail Banking 2010 2009 Change Half year ended – June (£m) (£m) % Total income 2,171 2,151 1 Impairment charges (447) (521) (14) Net income 1,724 1,630 6 Operating expenses (1,322) (1,319) – Profit before tax 504 313 61 Return on tangible equity 22% 16% Return on risk weighted assets 2.1% 1.4% 1
Slide 11: Barclaycard
Barclaycard 2010 2009 Change Half year ended – June (£m) (£m) % Total income 1,958 2,009 (3) Impairment charges (890) (915) (3) Net income 1,068 1,094 (2) Operating expenses (764) (724) 6 Profit before tax 317 375 (15) Return on tangible equity 14% 22% Return on risk weighted assets 1.4% 1.9% 11
Slide 12: Western Europe Retail Banking
Western Europe Retail Banking 2010 2009 Change Half year ended – June (£m) (£m) % Total income 602 682 (12) Impairment charges (133) (148) (10) Net income 469 534 (12) Operating expenses (495) (442) 12 Profit before tax 10 92 (89) Return on tangible equity 15% 7% Return on risk weighted assets 1.5%
Slide 13: Barclays Africa
Barclays Africa 2010 2009 Change Half year ended – June (£m) (£m) % Total income 403 365 10 Impairment charges (48) (63) (24) Net income 355 302 18 Operating expenses (285) (254) 12 Profit before tax 70 65 8 Return on tangible equity 14% 2% Return on risk weighted assets 1.5% 0.4% 13
Slide 14: Barclays Capital
Barclays Capital 2010 2009 Change PBT – Half year ended June (£m) (£m) % Barclays Capital 3,400 1,047 225 Own credit (851) 893 Barclays Capital excluding own credit 2,549 1,940 31 14
Slide 15: Barclays Capital income summary
Barclays Capital income summary H1 10 H2 09 H1 09 Change Half year ended – June (£m) (£m) (£m) (%) Top – line income 7,126 7,373 10,489 (32) Income credit market losses (65) (910) (3,507) Own credit 851 (927) (893) Total income 7,912 5,536 6,089 30 Credit market impairment (311) (499) (1,170) Impair
Slide 16: Barclays Capital income summary cont'd
Barclays Capital income summary cont’d (£m) 5,000 Top – line income Total income Net income 4,000 3,000 2,000 1,000 0 Q3 09 Q4 09 Q1 10 Q2 10 16
Slide 17: Barclays Capital analysis of top-line income
Barclays Capital analysis of top-line income (£m) 2,714 2,711 2,695 Q3 09 Q4 09 Q1 10 Q2 10 2,253 643 556 545 563 459 461 493 334 101 13 (46) 4 Fixed income, currency Investment Banking Equities and prime Principal investments and commodities services 17
Slide 18: Barclays Capital momentum
Barclays Capital momentum League tables* H1 10 H1 09 Change Rank Share Rank Share Rank Global Debt 1 8.2 2 8.6 US Debt 2 12.1 4 11.9 All International Bonds 1 8.7 1 9.4 Global Foreign Exchange 3 11.1 3 10.5 Americas M&A completed 2 21.7 9 10.6 Global M&A completed 4 14.5 19 4.2 US IPOs 5 8.7 6 7.1 •
Slide 19: Barclays Capital income and cost analysis
Barclays Capital income and cost analysis 2010 2009 Change Half year ended – June (£m) (£m) % Net income 7,603 4,215 80 Operating expenses (4,213) (3,176) 33 Profit before tax 3,400 1,047 225 Return on tangible equity 21% 7% Return on risk weighted assets 2.2% 0.6% H1 10 FY 09 Cost : income 53% 57%
Slide 20: Barclays Corporate
Barclays Corporate UK & Cont. New Half year ended – June Ireland Europe Markets 2010 2009 Change (£m) (£m) (£m) (£m) (£m) % Income 1,122 147 132 1,401 1,638 (14) Impairment (280) (586) (83) (949) (718) 32 Operating expenses (463) (85) (281) (829) (768) 8 Profit before tax 379 (524) (232) (377) 152 n
Slide 21: Barclays Corporate cont'd
Barclays Corporate cont’d UK & Cont. New Change Half year ended – June 2010 2009 Ireland Europe Markets % Loans and advances (£bn) 52.8 10.4 3.6 66.8 74.8 (11) Loans and advances 14.4 12.0 20 at fair value (£bn) Customer accounts (£bn) 61.6 4.4 2.4 68.4 57.8 18 Loan to deposit ratio 119% 150% nm Ret
Slide 22: Barclays Wealth
Barclays Wealth 2010 2009 Change Half year ended – June (£m) (£m) % Total income 757 623 22 Impairment charges (27) (21) 29 Net income 730 602 21 Operating expenses (635) (528) 20 Profit before tax 95 75 27 Return on tangible equity 16% 7% nm Return on risk weighted assets 1.4% 1.1% nm 22
Slide 23: Absa
Absa 2010 2009 Change Half year ended – June (£m) (£m) % Total income 1,379 1,210 14 Impairment charges (282) (295) (4) Net income 1,097 915 20 Operating expenses (784) (657) 19 Profit before tax 318 259 23 Return on risk weighted assets 1.9% 1.9% nm 23
Slide 24: Operating expenses
Operating expenses Cost bridge (£m) FX impact Other Regulatory 186 29 9,720 296 Performance 496 Investment 662 8,051 H1 09 H1 10 24
Slide 25: Operating expenses
Operating expenses Cost : income ratio (%) Other Head Office 0.4% 58.6% 3.0% Barclays Corporate Barclays 1.1% Capital GRB 0.5% 1.0% 52.6% H1 09 H1 10 25
Slide 26: Margin in retail, corporate and wealth management
Margin in retail, corporate and wealth management Annualised NIM (bps) Liability margin compression Treasury income Asset margin 214 (19) and business mix increase (9) 12 198 H1 09 H1 10 26
Slide 27: Capital management
Capital management Core Tier 1 Bridge Attributable profit less BlackRock own credit impact Regulatory Exercise of 0.5% (0.5%) RWA Warrants movements Other net 0.3% (0.4%) movement 10.0% 0.1% 10.0% H1 09 H1 10 27
Slide 28: Adjusted gross leverage
Adjusted gross leverage £bn 30 Jun 10 31 Dec 09 Total assets 1,587 1,379 Derivative gross-up (461) (374) AUM on balance sheet (2) (2) Settlement balances and cash collateral (53) (26) Goodwill and intangible assets (9) (9) Adjusted tangible assets 1,063 968 Tier 1 capital 52.0 49.6 Adjusted gross le
Slide 29: Funding position
Funding position • Loan to deposit ratio improved from 130% to 124% • Strong name recognition evidenced in credit spreads versus peers • Wholesale term debt maturing in 2010 of £15bn, fully refinanced in the first half • Wholesale term contractual maturities of £22bn in 2011 and £18bn in 2012 29
Slide 30: Summary
Summary • Strong customer relationships • Higher returns and higher profits • Strong levels of capital and liquidity • Well positioned in current operating environment 30
Slide 31: Appendix
Appendix 2010 Interim Results 5 August 2010 31
Slide 32: Net income analysis
Net income analysis (£m) H1 09 25% H1 10 13,501 10,762 80% 7,603 2% 4,215 3,560 3,616 (51%) 1% 21% 20% 920 915 921 602 730 915 1,097 452 Group GRB BarCap BarCorp BarCorp Barclays Absa (ex Spain) Wealth 32
Slide 33: Barclays Capital diversification of income
Barclays Capital diversification of income (£m) H1 09 3,598 H2 09 H1 10 1,871 1,814 1,634 1,227 1,137 1,113 1,102 1,086 1,052 1,017 891 841 772 762 728 686 629 635 553 428 421 267 225 193 173 165 105 (33) (110) Credit Rates Investment Equities Mortgages Emerging Currency Commodities Prime Principal
Slide 34: Barclays Capital total income
Barclays Capital total income (£m) 11,625 7,912 7,119 6,267 5,231 FY 06 FY 07 FY 08 FY 09 H1 10 34
Slide 35: Barclays Capital quarterly income summary
Barclays Capital quarterly income summary Q2 10 Q1 10 Q4 09 Q3 09 Q2 09 Q1 09 (£m) (£m) (£m) (£m) (£m) (£m) Top – line income 3,281 3,845 3,642 3,731 5,275 5,214 Credit market losses (115) 50 (166) (744) (1,648) (1,859) Own credit 953 (102) (522) (405) (1,172) 279 Total income 4,119 3,793 2,954 2,58
Slide 36: Group summary
Group summary Profit before tax 2010 2009 Change Half year ended – June (£m) (£m) % UK Retail Banking 504 313 61 Barclaycard 317 375 (15) Western Europe Retail Banking 10 92 (89) Barclays Africa 70 65 8 Barclays Capital 3,400 1,047 225 Barclays Corporate (377) 152 nm Barclays Wealth 95 75 27 Investm
Slide 37: Group funding structure
Group funding structure Barclays Capital Surplus Long Term Funding Surplus £111bn Liquidity £160bn Retail, Corporate, Wealth and Group Centre Surplus Long Group Term Funding Liabilities £111bn £139bn Wholesale Funding Wholesale £772bn Assets £723bn Business Business Assets Liabilities £325bn £297bn
Slide 38: Robert Le Blanc, Chief Risk Officer
Robert Le Blanc Chief Risk Officer 38
Slide 39: Topics
Topics • Overall impairment trends • Wholesale credit • Retail credit • Select Eurozone exposure • Trends in market risk • Outlook 39
Slide 40: Outlook: Loan loss rate begins to normalise
Outlook: Loan loss rate begins to normalise (bps) ‘92 property 250 slump 200 Financial crisis period 150 118 Recovery Period including 100 period telecom restructurings 20 Year Average of 90bp 50 0 90 95 00 05 H1 10 40
Slide 41: Impairment trends: Different phasing over time
Impairment trends: Different phasing over time BarCap CME US Cards BarCap Loans UK (Larger Business) Spain Retail UK Loans Spain Corporate H2 07 H1 08 H2 08 H1 09 H2 09 H1 10 41
Slide 42: Total impairment: Reduced by 32% from H1 09
Total impairment: Reduced by 32% from H1 09 (£m) AFS / 4,556 Reverse repos 32% Impairment 653 on loans 23% 3,515 60 12% 3,080 99 3,903 3,455 2,981 H1 09 H2 09 H1 10 42
Slide 43: Impairment on total loans and advances
Impairment on total loans and advances: 12 month decline of 24% in loan impairment (£m) Other 3,903 24% BarCap UKRB 3,455 528 11% BarCorp 559 14% 2,981 Barclaycard 1,231 485 667 322 521 510 447 708 836 837 915 883 890 H1 09 H2 09 H1 10 Loan balances £474bn £472bn £506bn 43
Slide 44: Wholesale impairment: 37% reduction from H1 09
Wholesale impairment: 37% reduction from H1 09 (£m) Other LLR 141bp BarCorp Intl 1,920 BarCorp UK 123 BarCap CME 162 21% BarCap Loans 1,519 LLR 86bp 404 120 20% 1,208 272 124 709 461 484 495 278 522 309 171 13 H1 09 H2 09 H1 10 44
Slide 45: Retail delinquency rates: UK Portfolios
Retail delinquency rates: UK Portfolios UK loans 2.7% 2.7% 2.4% UK cards 2.1% 1.8% 1.6% UK mortgages 1.2% 1.0% 1.0% H1 09 H2 09 H1 10 >90 days in arrears to charge off; not to scale 45
Slide 46: Retail delinquency rates: International Portfolios
Retail delinquency rates: International Portfolios Spain cards 8.7% 6.3% 5.1% 4.3% Absa mortgages 4.0% 4.1% US cards 3.2% 3.3% 2.9% Spain mortgages 0.8% 0.6% 0.4% H1 09 H2 09 H1 10 >90 days in arrears to charge off; not to scale 46
Slide 47: Retail impairment: 11% reduction from H1 09
Retail impairment: 11% reduction from H1 09 (£m) Other LLR 198bp International UKRB LLR 157bp 1,983 1,936 Barclaycard 2% 1,773 9% 594 574 471 469 467 405 906 875 880 H1 09 H2 09 H1 10 47
Slide 48: Impaired asset coverage ratio: Consistent with position in cycle
Impaired asset coverage ratio: Consistent with position in cycle (£bn) £22.7bn 25 Wholesale CRLs Credit Risk Loans (CRL) Retail CRLs 20 11.0 11.1 15 9.9 £11.8bn 8.2 10 6.3 11.3 11.7 5 10.0 7.5 5.5 0 H1 08 H2 08 H1 09 H2 09 H1 10 48
Slide 49: Impaired asset coverage ratio: Consistent with position in cycle
Impaired asset coverage ratio: Consistent with position in cycle (£bn) £22.7bn 25 Credit Risk Loans (CRL) 20 Coverage Ratios 52% 48% 15 £11.8bn 44% 42% 10 £11.7bn 42% Impairment Allowances 5 £4.9bn 0 H1 08 H2 08 H1 09 H2 09 H1 10 49
Slide 50: Impaired asset coverage ratios: Consistent with business type
Impaired asset coverage ratios: Consistent with business type 78% Retail 71% unsecured 69% 52% 48% Group 44% 46% Wholesale 42% 40% Retail mortgages 18% 17% (UK + Intl) 13% H1 09 H2 09 H1 10 50
Slide 51: Select Eurozone countries: Loans and advances
Select Eurozone countries: Loans and advances 30 Jun 10 (£bn) Spain Italy Portugal Ireland Total Sovereign 6.4 8.6 1.2 0.3 16.5 fair value Retail 18.3 14.5 5.2 0.1 38.1 Wholesale 8.0 3.3 2.4 3.3 17.0 Total 26.3 17.8 7.6 3.4 55.1 • Retail primarily mortgages • Spain and Italy are largest lending port
Slide 52: Spain: Part of a diversified portfolio
Spain: Part of a diversified portfolio Gross loans and advances (£bn) Group Spain United Kingdom 227 Mortgages 14.6 Other EU 105 Governments 0.1 United States 81 BarCorp 6.9 Africa 53 Other Corp 1.0 ROW 40 Other retail 3.7 Total 506 Total 26.3 52
Slide 53: BarCorp Spain: Impairment driven by declining property values
BarCorp Spain: Impairment driven by declining property values • Prolonged recession Other Corp Property • Commercial property values lower 51% 38% • Weaker refinancing (£m) H1 10 H2 09 Impairment charge 553 149 Construction 11% CRLs 1,910 1,320 Gross Loans & Advances Coverage 41% 30% = £6.9bn 53
Slide 54: Impairment summary: 32% reduction from H1 09
Impairment summary: 32% reduction from H1 09 BarCap CME 4,556 (859) BarCorp BarCap Intl Loans 365 (706) BarCorp UK / Ireland (135) UKRB B’Card Other (74) (25) (42) 3,080 H1 09 H1 10 • Rapid wholesale improvement • Significant BarCap reduction • Retail improvement • BarCorp Spain increase 54
Slide 55: Barclays Capital market risk: Actively managed to lower risk levels
Barclays Capital market risk: Actively managed to lower risk levels BarCap DVaR (£m) DVaR 120 H1 09: H2 08: Very high client volumes Increasing volatility H1 10: Avg £57m 80 VaR 40 Lehman H2 09 / H1 10: bankruptcy Inventory levels lower in line with client flows 0 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10
Slide 56: Barclays Capital market risk: Positive distribution of daily trading revenue
Barclays Capital market risk: Positive distribution of daily trading revenue Business days 65 H2 09 H1 10 48 32 27 27 22 19 9 1 1 2 0 <-30 -30 to 0 0 to 30 30 to 60 60 to 90 >90 Daily revenue (£m) 56
Slide 57: Barclays Capital market risk: Strong risk-adjusted revenue performance
Barclays Capital market risk: Strong risk-adjusted revenue performance £m Ratio 100 125% 75% to 115% 80 100% 60 75% Average of Daily Revenue 40 Ratio = 50% Average Daily VaR 20 25% 0 0% Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 57
Slide 58: Review of conditions
Review of conditions • Economies: • Continued slow growth • Low interest rates, persistent unemployment • Spain economy remains weak • Other asset values broadly stable • Credit: • CRL balances are stabilising • Severity risk on recovery books • Late cycle default risk for corporates • Refinancing r
Slide 59: Impairment outlook: Different wholesale and retail trends
Impairment outlook: Different wholesale and retail trends Impairment (£bn) 2009 = £8.1bn Wholesale Retail 4.6 3.5 3.1 2.6 1.6 1.3 2.0 1.9 1.8 H1 09 H2 09 H1 10 59
Slide 60: Risk Outlook
Risk Outlook • Market risk: • Risk levels to continue tracking client activity • Impairment: • Retail: continued reductions • Wholesale: slowing rate of reduction • Recovery risk against non performing assets • Maintain 2010 year end guidance 60
Slide 61: Appendix
Appendix 2010 Interim Results 5 August 2010 61
Slide 62: Wholesale Credit Risk Loans
Wholesale Credit Risk Loans: (£bn) Other 11.0 11.1 BarCorp Intl 1% 9.9 11% 1.4 1.6 BarCorp UK 1.0 Barclays Capital 1.6 1.1 2.3 1.5 1.6 1.4 6.3 6.4 5.8 H1 09 H2 09 H1 10 Loan balances £272bn £259bn £282bn 62
Slide 63: Retail Credit Risk Loans
Retail Credit Risk Loans: (£bn) Other 11.7 11.3 Absa 3% 0.8 10.0 13% 0.8 WERB 0.6 2.8 Barclaycard 2.6 UKRB 2.5 1.4 1.5 1.0 2.8 3.4 3.5 3.1 3.1 3.1 H1 09 H2 09 H1 10 Loan balances £201bn £213bn £224bn 63
Slide 64: John Varley, Group Chief Executive
John Varley Group Chief Executive 64
Slide 65: 2010 Scorecard
2010 Scorecard • Balance sheet size and leverage • RWAs and returns • Core Tier 1 capital • Return on equity • Funding and liquidity • Jaws • Dividends 65
Slide 66: Key objectives
Key objectives • Staying close to customers and clients • Managing our risks • Maintaining strategic momentum 66
Slide 67: Barclays Capital analysis of top-line income
Barclays Capital analysis of top-line income (£m) 2,714 2,711 2,695 Q3 09 Q4 09 Q1 10 Q2 10 2,253 643 556 545 563 459 461 493 334 101 13 (46) 4 Fixed income, currency Investment Banking Equities and prime Principal investments and commodities services 67
Slide 68: Key objectives
Key objectives • Staying close to customers and clients • Managing our risks • Maintaining strategic momentum 68
Slide 69: UK Lending: Trends in applications and approval rates
UK Lending: Trends in applications and approval rates Barclays term loans 20,000 100% Approval rate (RHS) 80% 15,000 60% 10,000 Applications (LHS) 40% 5,000 20% 0 0% Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 69
Slide 70: UK Lending: Trends in overdraft utilisation
UK Lending: Trends in overdraft utilisation Utilisation (overdraft) by Client Sales Turnover band 100% 80% 60% <£10m turnover 40% £10m – £100m turnover 20% £100m+ turnover 0% Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 3 month rolling average 70
Slide 71: UK Lending: Price of credit
UK Lending: Price of credit SME Commercial Mortgage* Residential Mortgage* (% of assets) (% of assets) 7.8% (4.8%) 6.0% (2.1%) 3.9% 3.0% FY 07 Reduction in H1 10 FY 07 Reduction in H1 10 client rate client rate * First Year 71
Slide 72: Key objectives
Key objectives • Staying close to customers and clients • Managing our risks • Maintaining strategic momentum 72
Slide 73: Barclays of today versus 2007
Barclays of today versus 2007 Core Tier One Capital Ratio Adjusted Gross Leverage Liquidity Buffer 33x £160bn 10.0% 0.6x 20x 2.1x 8.4x 4.7% £19bn FY 07 H1 10 FY 07 H1 10 FY 07 H1 10 73
Slide 74: Key objectives
Key objectives • Staying close to customers and clients • Managing our risks • Maintaining strategic momentum Forward-looking Statements This document contains certain forward-looking statements within the meaning of Section 21E of the US Securities Exchange Act of 1934, as amended, and Section 27A