Barclays Plc · LSE:BARC
Barclays — Q1 2023 Earnings Presentation
40 slides from Barclays's earnings presentation, Apr 27, 2023
Slide 1: Barclays PLC Q1 2023 Results Presentation
Barclays PLC Q1 2023 Results Presentation 27 April 2023
Slide 2: Presenters and agenda
i ii iii C.S. Venkatakrishnan Anna Cross Appendix: Financials Group CEO Group Finance Director
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 Prudent risk management: underpinning performance 11.3p Earnings per share 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: Presenters and agenda
i ii iii C.S. Venkatakrishnan Anna Cross Appendix: Financials Group CEO Group Finance Director
Slide 6: 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 7: 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 8: 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 9: 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 10: 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 11: 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) 0.4 Barclays UK +£94m 0.5 0.1 0.0 1.1 Transformation: digital optimisation and service simplificat
Slide 12: 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 13: 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 14: 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 15: 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 Product margin -21bps Q122: 61% 0.4 0.2 Treasu
Slide 16: 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 17: 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 +9% +1% Markets FICC, 1,788 Global YoY 55% £33m 0.6 0.8 4 4 Equities, 704 -33% -38% +25% Cost: incom
Slide 18: Franchise strength driving consistent capital and liquidity over time
Franchise strength driving consistent capital and liquidity over time Historical performance (%) 11.4% MDA1 hurdle 13.8% 13.6% CET1 ratio 13-14% target 2019 2020 2021 2022 Q123 82% 73% Loan: deposit ratio 2019 2020 2021 2022 Q123 160% 163% Liquidity coverage >100% regulatory minimum ratio £122bn sur
Slide 19: 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 20: 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 21: 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 22: 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 23: Appendix: Financials
i ii iii C.S. Venkatakrishnan Anna Cross Appendix: Financials Group CEO Group Finance Director
Slide 24: 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 25: Macroeconomic variables
Macroeconomic variables Q422 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 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% 4.
Slide 26: 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-19
Slide 27: 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 Mar-
Slide 28: 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 Selected sectors (£bn/coverage ratio %) c.30% of the Wholesale book is secured, increasing to Wholesale lending excl. Gross loans (£bn) Debt Securities (£bn) Exposure Coverage c.60% for the se
Slide 29: 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 | 29 | Barclays Q1 2023 Results | 27
Slide 30: CET1 ratio within 13-14% target range
CET1 ratio within 13-14% target range CET1 minimum requirements UK leverage minimum requirements MDA1 11.4% CCyB 0.5% CCB 2.5% Reg Min 3.975% CCLB 0.2% G-SII 1.5% G-SII 0.525% 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-23
Slide 31: 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 20.2% total Surplus over T1 requirement to manage FX and RWA movements, capital ratio as well as deployment into high returning leverage balance she
Slide 32: TNAV per share
TNAV per share QoQ TNAV movements (pence per share) 2 1 (5) 7 (3) (3) (3) (1) 11 301 295 Dec-22 Attributable Cash flow hedge Share buyback Pension Dividends paid Currency Own credit Goodwill and Other Mar-23 profit reserve remeasurement translation reserve Intangibles1 reserve 1 Goodwill and Intangi
Slide 33: Q123 Group Financial Highlights
Q123 Group Financial Highlights Three months ended (£m) Mar-23 Mar-22 % change Income up 11% YoY with diverse sources of growth across the Group as well as the Income 7,237 6,496 +11% – Operating costs (4,111) (3,588) -15% benefit from USD appreciation – Litigation and conduct 1 (523) Costs of £4.1b
Slide 34: Q123 Barclays UK Financial Highlights
Q123 Barclays UK Financial Highlights Three months ended (£m) Mar-23 Mar-22 % change Income up 19% YoY capturing the benefit from rising interest rates – Personal Banking 1,253 1,022 +23% – Barclaycard Consumer UK 247 276 -11% − NIM increased +8bps QoQ to 3.18% – Business Banking 461 351 +31% Income
Slide 35: Q123 Barclays International Financial Highlights
Q123 Barclays International Financial Highlights Three months ended (£m) Mar-23 Mar-22 % change Income up 9% Income 5,282 4,824 +9% – Operating costs (2,956) (2,505) -18% − Diversified income profile across businesses and geographies – Litigation and conduct 3 (513) Total operating expenses (2,953)
Slide 36: Q123 Corporate & Investment Bank Financial Highlights
Q123 Corporate & Investment Bank Financial Highlights Three months ended (£m) Mar-23 Mar-22 % change CIB income of £3,976m represented the best Q1 on a comparable basis1 – FICC 1,788 1,644 +9% – Equities 704 1,052 -33% 9% appreciation of average USD against GBP was a tailwind to income and profits,
Slide 37: Q123 Consumer Cards & Payments Financial Highlights
Q123 Consumer Cards & Payments Financial Highlights Three months ended (£m) Mar-23 Mar-22 % change Income up 47% with growth across all businesses – International Cards & Consumer Bank 900 538 +67% – Private Bank 258 214 +21% − International Cards and Consumer Bank income up 67% reflecting higher –
Slide 38: Q123 Head Office Financial Highlights
Q123 Head Office Financial Highlights Three months ended (£m) Mar-23 Mar-22 % change Income of £(6)m Income (6) 23 – Operating costs (63) (85) +26% − Primarily reflecting hedge accounting and treasury items – Litigation and conduct — (1) Total operating expenses (63) (86) +27% − The prior year inclu
Slide 39: Interest rate sensitivity, exchange rates and USD exposure
Interest rate sensitivity llustrative sensitivity of Group NII to a parallel shift in interest rate curves (£m)1 Year 1 Year 2 Year 3 25bps upward c.150 c.300 c.450 – Structural hedge c.65 c.200 c.350 – Other c. 85 c. 100 c. 100 Exchange rates and share count information YoY % Exchange rates Mar-23
Slide 40: 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