Barclays PLC H1/Q2 2017 Financial Results 28 July 2017
Jes Staley Barclays Group Chief Executive Officer
Completed Barclays’ restructuring Sold down to target shareholding of c.15% and achieved Africa selldown complete proportional regulatory consolidation CET1 ratio of 13.1%, reflecting strong capital generation CET1 ratio within end-state range from profits and 47bps from Africa selldown Closure on 1 July 2017 Non-Core closed with residual RWAs of £23bn, ahead of guidance 3 | Barclays H1/Q2 2017 Financial Results | 28 July 2017
Transatlantic Consumer, Corporate and Investment bank Barclays UK Barclays International Stronger and simpler Barclays, benefitting RoTE of 20.4% 1 RoTE of 12.4% from diversification UK consumer and business bank Diversified transatlantic wholesale and stability Differentiated by scale and digital innovation and consumer bank Group Service Company Enabling world-class services for our customers and clients while driving efficiency Strong capital position Simpler organisation Focused on improving returns CET1 ratio of 13.1% Group RoTE of 8.1% 2 Reduced headcount by c.60k 13.4% pro-forma for BAGL 3 Core RoTE of 10.4% 1 1 H117 RoTE excluding £700m of charges for PPI | 2 H117 RoTE excluding Africa selldown effects (£1,435m loss on sale of 33.7% of BAGL’s issued share capital and £1,090m impairm ent of Barclays’ holding in BAGL) and £700m of charges for PPI | 3 Assuming full regulatory deconsolidation, at 30 June 2017 | 4 | Barclays H1/Q2 2017 Financial Results | 28 July 2017
Targeting Group RoTE of >10% Eliminate structural reform Drive cost efficiency 1 2 3 Improve CIB returns and restructuring costs through the Service Company Group-wide processes • Redeployment of capital in Non- 1 Standardised ops & tech • the CIB loan book and improved Core c.£1.2bn Simplified architecture funding assumptions • costs of costs c.£0.5bn Automation and digital • Structural in 2017 Innovative technologies reform/ • compensation Right-sized footprint • 2 Cost efficiencies and charge/other 1 strategic investments Generating capacity to reinvest • c.£0.7bn in the business Of which c.£1bn Restructured and World-class eliminated by 2019 repositioned CIB central shared services Creating capacity to Driving CIB Targeting Group CIR self-fund investment returns higher <60% over time 1 Includes Structural Reform Programme implementation costs, the change in compensation awards introduced in Q416 and other restructuring costs | 5 | Barclays H1/Q2 2017 Financial Results | 28 July 2017
CIB has a well balanced, low volatility business model H117 Income by Product Fee share gains across Banking Stable Income £5,346m H116 H117 Markets Banking Fees Corporate Lending & Transactional Banking Average of previous four quarters 3 2014 2015 2016 2017 Advisory 3.5% 4.0% Banking 26% 2.6 2.6 2.8 2.7 2.8 2.5 2.7 2.6 Fees 2.6 2.7 2.4 2.1 2.2 2.2 Debt 5.2% 5.9% Underwriting Macro 18% Equity 2.4% 3.0% Underwriting Equities 17% Banking Highlights 1 #1 Highest ranked European bank globally and in the US 2 Credit 13% #2 In Leveraged Finance globally with 7.4% share Trans. 15% Banking #4 In Debt Underwriting globally with 5.9% share Corporate 10% #1 Lending In the UK with10.3% share across all products Other 1% 1 Source: Dealogic, H117 ranking | 2 Ranked 6 th overall globally and in the US | 3 Q114 to Q314 are calculated using the average of these three quarters as there is no pre-2014 comparison | 6 | Barclays H1/Q2 2017 Financial Results | 28 July 2017
Restructured and repositioned CIB to deliver higher returns Corporate and Investment Bank RoTE Combined the Corporate Bank and Investment Bank in • RoTE Prospective impact of Non-Core reabsorption and Q4 UK bank levy March 2016 Successfully repositioned and restructured the business over • last 3 years, with improving RoTE year over year 9.7% Focused on two primary levers to deliver higher RoTE CIB capital allocation and funding 1 6.1% Redeployment of capital in the CIB loan book and 5.4% improvement in funding assumptions Cost efficiencies and strategic investments 2 1.9% Sustainable cost efficiency measures which are creating capacity for investment FY14 FY15 FY16 H117 7 | Barclays H1/Q2 2017 Financial Results | 28 July 2017
Focused on two primary levers to improve CIB returns 1 CIB capital allocation and funding 2 Cost efficiencies and strategic investments CIB loan book RWAs (£bn) Return < cost of capital Performance • Alignment of in-year P&L with performance awards 25% introduced in Q416 costs £90bn • Rationalisation of real estate footprint Real estate • Reduction in data centres Redeployment of capital in the CIB loan book Evaluate CIB returns on an overall client relationship basis • • Investment in infrastructure for regulatory programmes Reallocate RWAs to higher returning CIB clients and products • (e.g. CCAR), cloud technology and cyber security Technology − Higher hurdle rates • Investment in eTrading platforms to increase scalability − Natural run-down/maturing of facilities − Sale of whole loans − Careful management of credit risk • Ongoing review of suppliers to drive sustainable 3 rd party Still committed to offering balance sheet to corporate clients • reduction in 3 rd party spend and increased cost spend efficiency Improvements in term wholesale funding costs 1 RWA reduction from BAGL deconsolidation and Non-Core rundown has • led to reduced MREL issuance requirement Repurchase of c.£8bn of OpCo capital and debt since the start of 2016, • Structural • Headwinds of set-up costs of IHC and UK ring-fenced including three USD retail preference shares, with further expensive bank incurred in 2016-2018 reform legacy instruments that either mature or are redeemable 2 over the next few years Material spread compression seen throughout 2017 • 1 Based on current spreads | 2 Subject to regulatory approval | 8 | Barclays H1/Q2 2017 Financial Results | 28 July 2017
Targeting Group RoTE of >10% Eliminate structural reform Drive cost efficiency 1 2 3 Improve CIB returns through the Service Company and restructuring costs Group-wide processes • Redeployment of capital in Non- 1 Standardised ops & tech • the CIB loan book and improved Core c.£1.2bn Simplified architecture funding assumptions • costs of costs c.£0.5bn Automation and digital • Structural in 2017 Innovative technologies reform/ • compensation Right-sized footprint • 2 Cost efficiencies and charge/other 1 strategic investments Generating capacity to reinvest • c.£0.7bn in the business Of which c.£1bn World-class Restructured and repositioned CIB central shared services eliminated by 2019 Creating capacity to self- Driving CIB Targeting Group CIR fund investment returns higher <60% over time 1 Includes Structural Reform Programme, the change in compensation awards introduced in Q416 and other restructuring costs | 9 | Barclays H1/Q2 2017 Financial Results | 28 July 2017
Service Company: Standardising and improving processes to further enhance customer experience and cost efficiency PRIMARY FOCUS AREAS EFFICIENCY DRIVERS Group-wide set of processes 10 1 World-class Standardised ops & tech and 1 Central Shared functional services Fraud handling Services Improved resilience, controls departments and security Aligning IT and data analytics New acquiring Automation and digital Modernised 2 payments technology Architecture Innovative technologies platform Cloud hosting Rightsizing for standardised Full review of suppliers Efficient 3 and simplified architecture Fewer strategic partnerships Workforce Reduced 3 rd party spend Reduced outsourcing Exited one site New campus Real estate rationalisation Right-sized 4 in Canary Wharf, in Whippany, Footprint Fewer data centres London (Q316) New Jersey 10 | Barclays H1/Q2 2017 Financial Results | 28 July 2017
Creating capacity for investment Co-brand #9 New co-brand model US Cards credit card Issuer partnership with Uber in the US 1 #2 Payments Unique payments 1 in every 3 processed in footprint across the Merchant Payments UK card Q217 full consumer to Acquirer transactions £61bn corporate spectrum in Europe 1 24m Data analytics to drive Mobile active #1 Mobile meaningful Customers Barclays UK customers 9.6m customer relationships Banking App 2 +19% and growth Digitally active 1 Nilson report #1104 for US Cards and #1110 for Payments | 2 Great British Mobile Banking Review 2017 – The Memo | 11 | Barclays H1/Q2 2017 Financial Results | 28 July 2017
Group financial targets Returns >10% Group Return on Tangible Equity (RoTE) Capital 150-200 bps above Group regulatory minimum level CET1 ratio ⇒ c.13% Costs <60% Group Cost: income ratio Intend to achieve these targets within a reasonable timeframe 12 | Barclays H1/Q2 2017 Financial Results | 28 July 2017
Tushar Morzaria Barclays Group Finance Director
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