Barclays Plc · LSE:BARC
Barclays — Debt Investor Presentation (July 2023)
44 slides from Barclays's debt investor presentation, Jul 27, 2023
Slide 1: Barclays PLC Q2 2023 Fixed Income Investor Presentation
Barclays PLC Q2 2023 Fixed Income Investor Presentation 27 July 2023
Slide 2: Performance
Performance
Slide 3: Built on solid foundations
Built on solid foundations Well positioned for high inflation and interest rate environment, and to deliver consistent results through the cycle Prudent long-term credit risk management and balance sheet positioning Providing incremental and tailored support for customers and clients Continuin
Slide 4: Performance highlights
Performance highlights Targets and guidance Q223 H123 RoTE >10% in 2023 11.4% 13.2% Cost: income ratio Low 60s % in 2023 63% 60% Loan loss rate 50-60bps in 2023 37bps 44bps CET1 ratio 13-14% 13.8% Average Liquidity Coverage >100% regulatory minimum2 157% Ratio1 Total distributions in respect of H123
Slide 5: H123: Group RoTE of 13.2% with statutory profit before tax of £4.6bn
H123: Group RoTE of 13.2% with statutory profit before tax of £4.6bn Performance Profit before tax excluding the impact of the Over-issuance of Securities1 £13.5bn £8.1bn Income Costs H122: £12.4bn1 H122: £7.7bn1 (0.8) 1.1 0.4 60% £5.5bn (0.6) Cost: income Profit before ratio impairment H122: 62%1 H
Slide 6: Q223: Group RoTE of 11.4% with profit before tax of £2.0bn
Q223: Group RoTE of 11.4% with profit before tax of £2.0bn Performance Profit before tax excluding the impact of the Over-issuance of Securities in Q2221,2 £6.3bn £4.0bn Income Costs Q222: £6.0bn2 Q222: £3.9bn2 0.3 (0.2) 0.2 (0.2) 63% £2.3bn Cost: income Profit before ratio impairment Q222: 65%2 Q22
Slide 7: Income +6% YoY reflecting diverse sources of income
Income +6%1 YoY reflecting diverse sources of income Group income (£bn) excluding the impact of the Over-issuance of Securities in Q2221 +6%1 +£335m | +6% Group NIM: 4.06%2 6.3 6.0 5.5 5.4 NIM: 3.22% 5.3 1.7 2.0 +£237m | +14% Barclays UK3 1.8 1.5 Rates and structural hedge, partially offset by pro
Slide 8: Delivered Q223 costs below Q123; FY23 guidance unchanged
Delivered Q223 costs below Q123; FY23 guidance unchanged CIR 65%1 CIR 57% CIR 63% 2023 Group cost: income ratio % in low 60s Guidance Q123 high point for Group and CIB operating costs2,3 Group (£bn) Excludes Q222 £1.1bn Over- Delivered lower QoQ operating costs, in line with guidance issuance L&C
Slide 9: Barclays UK higher income driven by margin growth
Barclays UK higher income driven by margin growth Performance Income (£bn) Q223: Net interest margin 3.22% +4bps QoQ £2.0bn £1.1bn Income Costs +14% Q222: £1.7bn Q222: £1.1bn 0.08% (0.14%) 2.0 2.0 0.13% (0.10%) 0.07% 55% 1.7 £0.1bn YoY 0.5 0.5 Cost: income +26% Impairment ratio Q222: £0m 0.4 Include
Slide 10: FY23 NIM expected to be <3.20%, with a current view around 3.15%
FY23 NIM expected to be <3.20%, with a current view around 3.15% Recent macroeconomic developments are driving changes in customer behaviour o More persistent inflation o Higher base rate expectations o Increased swap rates Revised guidance Customers are managing their finances rationally by: Pr
Slide 11: Structural hedge income continuing to grow
Structural hedge income continuing to grow Tailwinds from higher yields expected to outweigh headwinds from any hedge notional declines H123 4.06% 5.03% GBP 5yr swap 0.67% 1.05% rate1 -0.01% H123 Average 1.26% Average yield continuing to grow as maturing hedges roll hedge yield 1.08% 0.94% 0.87% 0
Slide 12: Consumer, Cards & Payments strong income growth of 18% YoY
Consumer, Cards & Payments strong income growth of 18% YoY Performance Income (£bn) £1.3bn £0.8bn Income Costs +18% $29.5bn2 Q222: £1.1bn Q222: £0.7bn US cards: 1.3 1.3 End Net Receivables +12%2,3 (incl. Gap) vs Q222 62% £0.3bn 1.1 Cost: income Impairment ratio Q222: £0.1bn Q222: 62% YoY 0.9 0.8 +21
Slide 13: Combination of the Private Bank and Barclays UK Wealth business
Combination of the Private Bank and Barclays UK Wealth business Creating a Top 5 largest UK Private Bank and Wealth Management business and largest bank owned1 Barclays UK Wealth CC&P Combined entity transferred Private Bank Income per annum2 c.£0.2bn c.£1.0bn c.£1.2bn Client Assets & c.£28bn c.£146
Slide 14: Corporate & Investment Bank delivered resilient performance
Corporate & Investment Bank delivered resilient performance Performance Income (£bn)1 Income by business (£m)1 £3.2bn £2.0bn -3%1 YoY % USD YoY %: Income Costs Q222: £3.3bn1 Q222: £2.0bn1 4.0 -22% -22% Markets FICC, 1,186 Global YoY £(13)m -14% -13% 63% 3.3 0.8 4 Equities, 563 Cost: income net relea
Slide 15: Outlook
Outlook Returns Targeting RoTE of greater than 10% in 2023 Diversified income streams continue to position the Group well for the current economic and market environment including higher interest rates. In 2023, Barclays UK Net Interest Margin is now expected to be less than 3.20%, with a current vi
Slide 16: Asset Quality
Asset Quality
Slide 17: Well provisioned balance sheet
Well provisioned balance sheet Balance sheet provisions for ECL1 (£bn) UK GDP2 UK unemployment3 Q123 6.3 Q223 4.6% 6.1 3.3% 4.3% 4.2% (0.1) (0.1) 3.7% Other ECL 1.2 4.4% 1.1 4.1% 4.2% Economic 1.6% uncertainty 0.3 0.3 0.9% adjustments 0.3% 1.6% 0.5% (0.6)% 2022 2023 2024 2025 2022 2023 2024 2025 Mod
Slide 18: Reiterating FY23 loan loss rate guidance of 50-60bps
Reiterating FY23 loan loss rate guidance of 50-60bps Loan loss rate (bps) Credit impairment charge (£m) 138 524 113 Group 372 BUK 53 57 55 52 No impairment charge in Q222 44 95 37 Cards repayment rates remain high 30 and delinquencies stable 200 371 CC&P US cards average balance growth (18) 14
Slide 19: Long-term prudent risk positioning on our credit card portfolios
Long-term prudent risk positioning on our credit card portfolios UK cards US cards Balances c.40% lower vs. FY19 with strong and stable credit quality Controlled portfolio growth with improved risk mix Repayment rates remain elevated across the risk spectrum Improved >660 FICO1 score of 89%
Slide 20: Resilient mortgage book with customers proactively locking in rates
Resilient mortgage book with customers proactively locking in rates Mortgage portfolio Maturity profile 52.8% average balance weighted LTV of mortgage stock <20% of c.£84bn 5+ years fixed balances maturing before FY241 o 39.2% average valuation weighted LTV Only 1.5% of FY23 and 2.2% of FY24 m
Slide 21: Commercial Real Estate exposure is modest and well managed
Commercial Real Estate exposure is modest and well managed 4.7%1 of customer loans and advances (L&A), with a weighted average LTV of 49%2 Well diversified portfolio across sectors and underlying counterparties Prudent lending policy for over three decades Customer L&A3 £349bn Further to the l
Slide 22: Macroeconomic variables
Macroeconomic variables Q223 Upside 2 Upside 1 Baseline Downside 1 Downside 2 2023 2024 2025 2023 2024 2025 2023 2024 2025 2023 2024 2025 2023 2024 2025 UK GDP1 1.2% 4.1% 3.2% 0.8% 2.5% 2.4% 0.3% 0.9% 1.6% (0.1)% (2.1)% 0.6% (0.5)% (5.0)% (0.4)% UK unemployment2 3.9% 3.6% 3.5% 4.0% 4.0% 3.9% 4.1% 4.
Slide 23: Macroeconomic variables
Macroeconomic variables Q123 Upside 2 Upside 1 Baseline Downside 1 Downside 2 2023 2024 2025 2023 2024 2025 2023 2024 2025 2023 2024 2025 2023 2024 2025 UK GDP1 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% 4.
Slide 24: Impairment: June 2023 coverage ratios
Impairment: June 2023 coverage ratios Retail credit cards Corporate loans Impairment allowance Impairment allowance Gross loans (£bn) Coverage ratio Gross loans (£bn) Coverage ratio (£bn) (£bn) Dec-22 Jun-23 Dec-22 Jun-23 Dec-22 Jun-23 Dec-22 Jun-23 Dec-22 Jun-23 Dec-22 Jun-23 Total 37.6 37.1 3.0 3.
Slide 25: Impairment: June 2023 coverage ratios
Impairment: June 2023 coverage ratios UK cards US cards Gross loans (£bn) Coverage ratio Gross loans (£bn) Coverage ratio Dec-22 Jun-23 Dec-22 Jun-23 Dec-22 Jun-23 Dec-22 Jun-23 Total 9.9 10.0 7.6% 7.1% Total 24.6 25.1 8.1% 9.0% Stage 1 7.1 7.5 1.8% 2.2% Stage 1 20.5 20.8 1.5% 1.4% Stage 2 2.6 2.3 1
Slide 26: Impairment: Q223 corporate loan exposure
Impairment: Q223 corporate loan exposure Corporate loans and selected sector exposure Commentary >30% of the Wholesale book is secured, Corporate loans (£bn) Gross loans and increasing to >60% for the selected sectors £407bn Financial Institutions 40.3 advances c.35% synthetic protection2 agains
Slide 27: Capital & Leverage
Capital & Leverage
Slide 28: Strong CET1 ratio with significant headroom to MDA
Strong CET1 ratio with significant headroom to MDA Q223 CET1 movement Key messages Target range of 13-14% (8bps) Target RoTE of >10%: translates to 39bps (13bps) 8bps (22bps) 13.8% 13.6% >c.150bps of annual CET1 ratio accretion 13.6% MDA hurdle o Generated 92bps in H123 11.4% UK countercyclica
Slide 29: Risk weighted assets
Risk weighted assets Q223 RWA movements (£bn) 3.0 (4.8) 0.3 338.4 336.9 1 Mar-23 Book size FX Other Jun-23 H123 RWA movements (£bn) 0.7 6.2 (8.8) 2.4 336.5 336.9 1 Dec-22 Book size Acquisitions and disposals FX Other Jun-23 1 Foreign exchange movements does not include the impact of foreign exchange
Slide 30: CET1 ratio within 13-14% target range
CET1 ratio within 13-14% target range CET1 minimum requirements UK leverage minimum requirements MDA1 11.8% 11.4% CCyB 0.5% 1.0% CCB 2.5% 2.5% Reg Min 3.975% CCLB 0.2% G-SII 1.5% 1.5% G-SII 0.525% 13.8% Pillar 2A 2.4% 2.4% 5.1% 4.8% BoE minimum leverage 3.25% requirement Pillar 1 4.5% 4.5% Jun-23 Ju
Slide 31: Operate with a prudent buffer to each tier of capital requirements
Operate with a prudent buffer to each tier of capital requirements AT1 and T2 needs managed on a total capital basis Balanced total capital structure Operate with prudent buffers at each part of the capital stack to 20.5% total manage FX and RWA movements capital ratio Announced the call of the
Slide 32: Balance Sheet Management
Balance Sheet Management
Slide 33: MREL position well established
MREL position well established MREL position as at Jun-231 HoldCo issuance 32.9% c.£11bn 2023 MREL issuance plan across Senior, Tier 2 and AT1 (£111.0bn) 29.2% o c.£4bn of original funding plan remaining (£98.3bn) o Pre-funding may be explored subject to the completion of CCyB: 0.5% CCB: 2.5% Seni
Slide 34: Executed c.£7.1bn of c.£11bn 2023 issuance plan
Executed c.£7.1bn 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 c.4 6.1 remaining Mar-23: GBP 1.5bn AT1 9.3 10.2 4.0 8.3 5.9 4.1 2.9 1.1 1.0 1.7 3.5 1.6 1.2 Mar-23: SGD 400m AT1
Slide 35: Diverse and stable franchise deposit base; total deposits stable
Diverse and stable franchise deposit base; total deposits stable Deposit mix shift driven by client deleveraging, FX and other macro factors CIB: Corporate Bank £170bn3, flat BUK: Personal Banking £191bn, -2% >20% insured4 72% insured c.14% term (>30 day) >75% of relationships 5+ years c.6
Slide 36: Prudently managed LCR supported by a highly liquid balance sheet
Prudently managed LCR supported by a highly liquid balance sheet Average LCR1 80% of Liquidity Pool held in cash HTC £24bn FVOCI 7% £43bn 160% 159% 13% 157% 156% 156% 157% 157% Liquidity Pool £331bn Q421 Q122 Q222 Q322 Q422 Q123 Q223 Cash Spot LCR £264bn >98% of cash placed with BoE, US Fed, ECB,
Slide 37: Business strategy supported by comprehensive liquidity framework
Business strategy supported by comprehensive liquidity framework Stress tests are applied across multiple scenarios Rigorous liquidity risk stress testing framework 30 days combined market-wide and Barclays-specific stress event Bespoke Group and all 30 days Barclays-specific stress event material l
Slide 38: Wholesale funding composition as at 30 June 2023
Wholesale funding composition as at 30 June 20231 1-3 3-6 6-12 Total 1-2 2-3 3-4 4-5 As at 30 June 2023 (£bn) <1 month >5 years Total months months months <1 year years years years years Barclays PLC (the Parent company) Senior unsecured 0.2 0.6 0.9 1.5 3.2 7.2 6.8 5.7 3.3 17.7 43.9 (public benchmar
Slide 39: 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 40: Credit Ratings
Credit Ratings
Slide 41: Strong momentum with recent credit rating upgrades
Strong momentum with recent credit rating upgrades Recent upgrades Current Senior long and short term ratings Moody’s Standard & Poor’s Fitch Moody’s Two upgrades in just over three years Baa1 BBB+ A Stable Stable Stable Barclays PLC P-2 A-2 F1 Standard & Poor’s Upgraded in May 2023 A1 A+ A+ Stable
Slide 42: Barclays rating composition for senior debt
Barclays rating composition for senior debt Moody’s Standard & Poor’s Fitch BBUK BBUK BBUK BPLC BBPLC BPLC BBPLC BPLC BBPLC PLC PLC PLC Adjusted Baseline baa1 baa1 a3 Stand-Alone Credit Profile a- Viability Rating2 a a a Credit Assessment Macro profile Strong+ Strong+ Strong+ Anchor bbb+ Operating e
Slide 43: 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 43 | Barclays Q2 2023 Results | 27 July 2023
Slide 44: 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