Barclays Plc · LSE:BARC
Barclays — Debt Investor Presentation (February 2021)
31 slides from Barclays's debt investor presentation, Feb 18, 2021
Slide 1: Barclays PLC Fixed Income Investor Call
Barclays PLC Fixed Income Investor Call FY 2020 Results Announcement 18 February 2021
Slide 2: Tushar Morzaria, Group Finance Director
Tushar Morzaria Barclays Group Finance Director
Slide 3: FY20 Group highlights
FY20 Group highlights Group PBT of £3.2bn (excl. litigation and conduct) despite the impact of the COVID-19 pandemic Financial performance1 • PBT down 48%, primarily driven by materially increased impairment charges due to the `` deterioration in economic outlook driven by the COVID-19 pandemic Inco
Slide 4: Impairment charge increased £2.9bn due to expected future customer and client stress
Impairment charge increased £2.9bn due to expected future customer and client stress caused by the pandemic Group loan 55bps 138bps All divisions experienced increased impairment in 2020, due to the loss rate (bps) £4,838m deterioration in economic outlook Impairment increased to £1.5bn reflecting h
Slide 5: Balance sheet impairment allowances significantly strengthened, including management adjustments
Balance sheet impairment allowances significantly strengthened, including management adjustments Baseline scenario macroeconomic variables (MEVs) Dec-19 MEVs Dec-20 MEVs Expected • Baseline UK and US macroeconomic variables worst have been revised 2021 2022 2021 2022 2023 point2 − The Dec-20 baselin
Slide 6: Kathryn McLeland, Group Treasurer
Kathryn McLeland Group Treasurer
Slide 7: FY20 highlights
FY20 highlights Strong balance sheet evidenced across key metrics, providing ability to support clients CET1 ratio 13.8% 14.2% 15.1% MDA Prudently managing the Group’s capital Capital hurdle 11.2% position; CET1 ratio of 15.1%, with 390bps headroom to MDA Dec-19 Jun-20 Dec-20 MREL ratio (RWA basis)
Slide 8: CET1 ratio increased 130bps YoY and 50bps QoQ
CET1 ratio increased 130bps YoY and 50bps QoQ CET1 ratio was 390bps above the MDA hurdle of 11.2% as at Dec-20 YoY CET1 ratio1 movements 35bps 6bps 29bps 122bps 40bps 91bps 203bps Includes: 14.6% • 45bps IFRS 9 15.1% 15.4% 15.1% 15.1% 13.8% 13.8% 14.2% 14.2% transitional relief • 30bps software amor
Slide 9: CET1 ratio flightpath to target range of 13-14%
CET1 ratio flightpath to target range of 13-14% 24bps 13-14% 23bps • PVA relief: 15bps 15.1% • 14.9% IFRS 9 relief 14.7% 14.7% 14.7% 15.1% amortisation: 9bps Dec-20 1 Reduction of Share buyback Rebased 1-Jan-21 Organic capital Additional Capital CET1 target range regulatory support announced 2 CET1
Slide 10: Material increase in headroom above MDA hurdle
Material increase in headroom above MDA hurdle CET1 ratio target in the range of 13-14% Illustrative evolution of minimum CET1 requirements and buffers • Barclays intends to manage its CET1 ratio in the Dec-191: Dec-201: range of 13-14%, to enable it to support Target: 13.8% +130bps 15.1% customers
Slide 11: Managing evolving future Group minimum leverage requirements
Managing evolving future Group minimum leverage requirements Minimum leverage requirements and buffers under the UK regime • Headroom to minimum leverage requirement of 150bps in Q4, while the RWA based CET1 ratio remains our primary regulatory constraint Dec-191: Dec-201: UK Spot: 5.1% UK Spot: 5.3
Slide 12: MREL position already compliant with all 2022 requirements
MREL position already compliant with all 2022 requirements Expect c.£8bn of MREL issuance in 2021 Fully loaded MREL position of £100bn as at Dec-20, Well advanced on 2022 HoldCo issuance plan fulfilling all expected requirements1 • Issued c.£8bn of MREL in 2020 across Senior, Tier 2 and AT1 £100.2bn
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 22.1% • BBPLC issued capital instruments are expected to be included as ≥16.9% MREL until 1 Januar
Slide 14: High quality liquidity position
High quality liquidity position YoY 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 Liquidity Coverage Ratio (LCR) 186% 181% 9% 160% 155% 162% Minimum requirement: 17
Slide 15: Conservative loan: deposit ratio
Conservative loan: deposit ratio LDR decreased 11% YoY, reflecting strong deposit growth during the year in BUK and CIB Conservative loan: deposit ratio (LDR)1,2 BUK CIB CC&P Head Office LDR 82% 79% 76% 70% 71% 495 481 471 467 416 67 65 374 65 67 339 64 355 344 343 11 13 15 13 15 39 174 196 175 198
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 sub-group Barclays Bank PLC sub-group Barclays Bank UK PLC (solus) Ba
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 Negative Negative P-2 A-2 F1 A1 A A+ Barclays Bank PLC Stable Negative Negative (BBPLC) P-1 A-1 F1 Counterparty Resolution Derivative risk assessmen
Slide 18: Ambition to be a net zero bank by 2050
Ambition to be a net zero bank by 2050 Ambition to be a net zero bank by 2050 • Already at net zero emissions from our own operations (Scope 1 and 2) • Announced in March 2020 our commitment to align our financing in all sectors with the goals of the Paris Agreement – Emissions for the clients we fi
Slide 19: Kathryn McLeland, Group Treasurer
Kathryn McLeland Group Treasurer
Slide 20: Q&A
Q&A
Slide 21: Appendix
Appendix
Slide 22: Strong balance sheet underpinning returns potential
Strong balance sheet underpinning returns potential FY20 metrics1 Group targets Group RoTE Group RoTE/profitability Cost efficiency 3.2% >10% RoTE over time, with <60% cost: income ratio over Cost efficiency meaningful year on year time improvement in 2021 64% cost: income ratio2 CET1 ratio 15.1% CE
Slide 23: Increased coverage across all portfolios, with unsecured lending coverage ratio at 12.3%
Increased coverage across all portfolios, with unsecured lending coverage ratio at 12.3% Credit cards, unsecured loans and other retail lending Wholesale loans Gross exposure (£m) Impairment allowance (£m) Coverage ratio Gross exposure (£m) Impairment allowance (£m) Coverage ratio 60,180 52,035 46,5
Slide 24: Increased coverage across unsecured portfolios, with UK and US cards coverage ratios
Increased coverage across unsecured portfolios, with UK and US cards coverage ratios of 16.6% and 14.3% respectively UK cards US cards Gross exposure (£m) Impairment allowance (£m) Coverage ratio Gross exposure (£m) Impairment allowance (£m) Coverage ratio 16,457 13,639 11,911 1,736 2,179 1,980 10.5
Slide 25: RWAs increased by £11.1bn YoY and decreased by £4.5bn QoQ
RWAs increased by £11.1bn YoY and decreased by £4.5bn QoQ YoY RWAs movements (£bn) 1.7 2.6 4.9 9.1 6.6 3.6 0.9 303.6 306.2 300.4 295.1 295.1 297.6 296.8 296.8 1 Dec-19 Credit risk - Credit risk - Credit risk - reg. Counterparty credit Market risk FX Other Dec-20 book quality net lending tailwinds ri
Slide 26: IFRS 9 transitional relief as at Dec-20 at c.80bps
IFRS 9 transitional relief as at Dec-20 at c.80bps Impairment migration to stage 3 would lead to capital impact as it is not eligible for transitional relief Constructive regulatory action in Q220 gave greater relief Prudently positioned CET1 ratio for stage 1 and 2 impairments in the event of stage
Slide 27: Constructive regulatory actions in 2020
Constructive regulatory actions in 2020 Many regulatory actions in place for the medium term Expected timeline and beyond FY20 FY21 FY22 FY23 FY24 Q1 Q2 Q3 CET1 requirement • Modification of Pillar 2A requirement1 CET1 capital • IFRS 9 transitional relief on new COVID-19 related expected credit loss
Slide 28: Continued progress in HoldCo issuance
Continued progress in HoldCo issuance 2020 HoldCo issuance Annual HoldCo issuance volume materially lower compared to 2016-18 (£bn)1,2 by currency2 AT1 Tier 2 Senior unsecured March: 13.4 USD 300m Senior Formosa 12.1 12.2 11.5 April: 6.2 8.6 EUR 2bn Senior 8.3 Target: c.8 6.1 May: 9.3 10.2 1.8 4.0 U
Slide 29: Barclays is set up to continue serving clients based in the EU
Barclays is set up to continue serving clients based in the EU EU subsidiary operational with client on-boarding substantially complete • Barclays has been able to provide undisrupted services in the European footprint to service key markets European Union (EU) throughout the Brexit transition perio
Slide 30: 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 £0.4bn in Q420 and £1.7bn in FY20. The net structural hedge contribution was £0.3bn in Q420 and £1.2bn in FY20 • The combined structural he
Slide 31: 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
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