Free Writing Prospectus
Filed Pursuant to Rule 433
Reg. Statement No. 333-173886
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Barclays PLC
2013 Interim Results and Leverage Plan
30 July 2013
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Antony Jenkins
Chief Executive
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Original Transform financial commitments
2012 Restated Original 2015
Results Targets
Focus on CET1 ratio as limiting factor
Return on
Equity 9.0% > CoE
Operating Ł18.6bn Ł16.8bn
Expenses
Cost:Incom 63% mid-50s
e Ratio
Pro forma Ł468bn Ł440bn
B3 RWAs
Core Transitional
Capital 10.8% CET1 >10.5%
Ratio
Dividend
Payout 17% 30%
Ratio
Becoming the ‘Go-To’ bank
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| Barclays 2013 Interim Results | 30 July 2013 |
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PRA capital adequacy review
Capital adequacy review of major UK banks and building societies – results announced 20 Jun 2013
Barclays’ plan to meet 7% PRA stressed CET1 ratio by 31 Dec 2013 confirmed
The PRA introduced a minimum 3% leverage ratio target, calculated on a PRA-adjusted CET1 capital base and using a CRD IV leverage exposure measure
Barclays discussed a number of options with the PRA to meet the 3% PRA leverage ratio target
Barclays was asked to submit a plan to achieve the target by 30 Jun 2014
This is an accelerated timeline vs. expected international standards under CRD IV
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| Barclays 2013 Interim Results | 30 July 2013 |
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Leverage ratio movements to 30 Jun 2013
Leverage ratios (%)
2.8 (0.0) (0.3)
2.5 (0.0) 2.5 (0.3)
2.2
Asset Additional
valuation PVA
adjustment deduction
FY 12 Rebase to Revised FY 12 H1 13 H1 13 PRA H1 13
Fully loaded Fully loaded CRD IV & revised movements Fully loaded adjustments PRA leverage
CRD IV T1 CRD IV CET1 other estimate CRD IV CET1 ratio
leverage ratio capital 1 refinements leverage ratio
(Łbn)
T1/CET1
capital 40.0 (0.2) (2.5) 37.3 0.8 38.1 (4.1) 34.0
Leverage
exposure 1,413 - 85 1,498 61 1,559 - 1,559
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Relates to Absa MI excluded from CET1 CRD IV leverage ratio |
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| Barclays 2013 Interim Results | 30 July 2013 |
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Barclays Leverage Plan
Leverage Plan agreed with the PRA to meet 3% target by 30 Jun 2014 Capital or capital equivalent actions of Ł12.8bn:
Underwritten rights issue to raise Ł5.8bn (net of expenses)
Reduction of leverage exposure – Ł65-80bn (Ł2-2.5bn capital equivalent)
Already identified management actions with low execution risk
No material impact on revenue or profit before tax expected
Continue to support lending to customers and clients
Issue up to Ł2bn of CRD IV qualifying Additional Tier 1 securities
Retention of earnings (supported by conduct provisions announced today) and other forms of capital accretion
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| Barclays 2013 Interim Results | 30 July 2013 |
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Rights Issue details
Ł5.8bn raise net of expenses
Underwritten from today
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new share for every 4 existing shares |
Issue price 185 pence per Barclays share
Represents a 35% discount to theoretical ex-rights price on 29 Jul 2013
No shareholder approval required under existing annual resolution
Launch expected in September following and subject to approval of prospectus by UKLA
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| Barclays 2013 Interim Results | 30 July 2013 |
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Barclays Leverage Plan
Leverage ratios (%)
> 3.0
0.1
0.4 0.1
2.2
H1 13 Rights issue Deleveraging1 AT1 issuance Other capital Target H1 14
PRA net of expenses accretion & retained PRA
leverage ratio earnings leverage ratio
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Reflects already identified, low execution risk management actions; Ł2.0-2.5bn capital equivalent |
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| Barclays 2013 Interim Results | 30 July 2013 |
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Revised Transform financial commitments
Original 2015 Revised Dates
Targets Targets
Return on Equity > CoE > CoE in 2016 2016
Operating Expenses Ł16.8bn Ł16.8bn 2015
Cost:Income Ratio mid-50s mid-50s 2015
Pro forma B3 RWAs Ł440bn Ł440bn 2015
Core Capital Ratio Transitional Fully loaded Early
>10.5% >10.5% 2015
Dividend Payout From
30% 40-50%
Ratio 2014
9 | Barclays 2013 Interim Results | 30 July 2013
H1 13 financial progress
? Solid first half performance
? Additional Ł2bn conduct provisions for PPI and IRHP reducing uncertainty
around these conduct risks
? Costs to achieve Transform of Ł1.2bn planned in 2013: Ł640m in H1
? Adjusted RoE excluding costs to achieve Transform of 9.5%
? Legacy assets CRD IV RWA reductions of Ł25bn
10 | Barclays 2013 Interim Results | 30 July 2013
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Other Transform progress in H1 13
900,000 net new customers in Barclaycard
UK mortgage market share1 has improved to 9.9%
Ł42bn of FLS eligible lending to UK households and businesses
Embedding our Purpose and Values – 133,000 employees have participated in Values workshops
Launched Balanced Scorecard with senior leadership and rolling out to all employees during 2014
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Source: Internally calculated based on data from the Bank of England |
11 | Barclays 2013 Interim Results | 30 July 2013
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2013 Interim Results
Chris Lucas, Group Finance Director
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Adjusted financial highlights
2013 2012 Change
Six months ended – June (Łm) (Łm) (%)
Income 15,071 15,492 (3)
Impairment charges (1,631) (1,710) (5)
Net operating income 13,440 13,782 (2)
Operating expenses excluding costs to
achieve Transform (9,141) (9,520) (4)
Costs to achieve Transform (640) -
Adjusted profit before tax1 3,591 4,339 (17)
Statutory profit before tax 1,677 871 93
1 Adjusted profit before tax in this and subsequent slides includes: share of post-tax results of associates and joint ventures; profit or loss on disposal of subsidiaries, associates and joint ventures; and gains on acquisitions
13 | Barclays 2013 Interim Results | 30 July 2013
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Adjusting items to profit before tax
2013 2012 Change
Six months ended – June (Łm) (Łm) (%)
Statutory profit before tax 1,6771 871
Own credit (gain)/charge (86) 2,945
Gain on disposal of BlackRock investment - (227)
Provision for PPI redress 1,350 300
Provision for interest rate hedging products 650 450
redress
Adjusted profit before tax 3,5911 4,339 (17)
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Includes costs to achieve Transform of Ł640m |
14 | Barclays 2013 Interim Results | 30 July 2013
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Adjusted performance measures
Six months ended – June 2013 2012
Return on average shareholders’ equity 7.8% 10.6%
Return on average tangible shareholders’ equity 9.1% 12.5%
Return on average risk weighted assets 1.3% 1.6%
Cost:Income ratio1 65% 61%
Basic earnings per share 16.2p 22.4p
Dividend per share 2.0p 2.0p
Core Tier 1 ratio 11.1% 10.8%2
1 For the six months ended Jun 2013, Cost:Income ratio would have been 61% excluding costs to achieve Transform of Ł640m 2 As at 31 Dec 2012
15 | Barclays 2013 Interim Results | 30 July 2013
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Adjusted profit before tax by cluster
2013 2012 Change
Six months ended – June(Łm)(Łm)(%)
UK RBB 632 592 7
Europe RBB(709)(148)
Africa RBB 212 183 16
Barclaycard 775 751 3
Investment Bank 2,389 2,242 7
Corporate Banking 402 311 29
Wealth and Investment Management 47 99(53)
Head Office and Other Operations(157) 309
Group 3,591 4,339(17)
16 | Barclays 2013 Interim Results | 30 July 2013
Investment Bank
2013
2012
Change
Six months ended – June
(Łm)
(Łm)
(%)
Income
6,473
6,460
-
Impairment charges
(181)
(202)
(10)
Net operating income
6,292
6,258
1
Operating expenses (excluding costs to
(3,751)
(4,044)
(7)
achieve Transform)
Costs to achieve Transform
(169)
-
Profit before tax
2,389
2,242
7
Return on average equity
15.4%
13.4%
Cost:Income ratio
61%
63%
Compensation:Income ratio
39%
40%
17 | Barclays 2013 Interim Results | 30 July 2013
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Investment Bank quarterly income
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Total Income |
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Total income
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Q2 2013 vs. Q2 2012 flat |
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Q2 2013 vs. Q1 2013 down 13% |
3,436 3,463
3,024 3,010
2,721 2,594
18 | Barclays 2013 Interim Results | 30 July 2013
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Investment Bank quarterly income
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Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
2,319
2,190
1,761 1,675
1,494
1,378
706 825
591 615 523 454 515 509 493 620 558 528
FICC Equities and Prime Services Investment Banking
Q2 13
vs. Q2 (22%) 34% 4%
12
Q2 13
vs. Q1 (37%) 17% (5%)
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19 | Barclays 2013 Interim Results | 30 July 2013
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Adjusted income by cluster
2013 2012 Change
Six months ended – June (Łm) (Łm) (%)
UK RBB 2,202 2,184 1
Europe RBB 352 379 (7)
Africa RBB 1,352 1,493 (9)
Barclaycard 2,343 2,112 11
Investment Bank 6,473 6,460 -
Corporate Banking 1,552 1,583 (2)
Wealth and Investment Management 931 894 4
Head Office and Other Operations1 (134) 387
Group1 15,071 15,492 (3)
1 Excludes the impact of Ł86m own credit gain (H1 2012: (Ł2,945m)) and Łnil gain on disposal of strategic investment in BlackRock, Inc. (H1 2012: Ł227m)
20 | Barclays 2013 Interim Results | 30 July 2013
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Net interest margin
Basis points
Customer margin
Non-customer margin
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H1 20121 H1 20131 |
Customer income 4,891 5,105
Non-customer income 617 523
Total 5,508 5,628
Average customer assets 317,673 327,129
Average customer 277,467 314,695
liabilities
186 177
20 17
166 160
H1 2012 H1 2013
1 Numbers refer to retail businesses; Barclaycard; Corporate Banking and Wealth and Investment Management. Total contribution from structural hedges was Ł582m (H1 2012: Ł641m)
21 | Barclays 2013 Interim Results | 30 July 2013
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Impairment down 5% to Ł1,631m
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H1 2013
H1 2012
122 1,710
616 1,631
492
431
314
258
208 202
178 181
125 142
49
19
UK RBB Europe Africa RBB Barclaycard Investment Corporate Wealth and Group
RBB Bank Banking IM
Loan Loss Rate
22 | Barclays 2013 Interim Results | 30 July 2013
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Cost analysis
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Non-performance costs
Performance costs
Costs to achieve Transform
9,520 (4%) 9,781
640
1,422 (10%) 1,276
8,098 (3%) 7,865
H1 2012 H1 2013
Costs
H1 2013
Costs to achieve Transform
23 | Barclays 2013 Interim Results | 30 July 2013
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Capital, liquidity and funding
As at 30 Jun 2013 31 Dec 2012
Core Tier 1 ratio 11.1% 10.8%
Risk weighted assets Ł 387bn Ł 387bn
Group liquidity pool Ł 138bn Ł 150bn
Loan:Deposit ratio 102% 110%
24 | Barclays 2013 Interim Results | 30 July 2013
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Core capital ratios
(%)
Reported ratio
Transitional CRD IV ratio
Fully loaded CRD IV ratio
10.8 11.1
10.0 2
8.1
31 Dec 121 30 Jun 13 30 Jun 131
CT1 CT1 Estimated CET1
(Basel 2.5) (Basel 2.5) (Basel 3)
1 For details and basis of calculation, see slides 32-34. 2 Reflects change in transitional methodology since Q1 13 – assumes 2013 is year 1 of transition
25 | Barclays 2013 Interim Results | 30 July 2013
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2013 Interim results and Leverage Plan
Becoming the ‘Go-To’ bank
Solid H1 results,
with underlying Progress in our Decisive action
businesses in Transform in implementing
good health programme Leverage Plan
26 | Barclays 2013 Interim Results | 30 July 2013
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Appendices
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Appendix 1
Leverage, Capital and Balance Sheet
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Movements in CRD IV and PRA leverage ratios
Revised CRD FY 12
FY 12 H1 13 H1 13
(Łbn) IV & other revised
Pillar 3 movements RA
refinements estimate1
Derivative financial assets 469 - 469 (66) 403
Reverse repurchase agreements and other similar secured
177 - 177 46 223
lending
Loans & advances and other assets 844 (2) 842 65 907
Total assets (IFRS balance sheet) 1,490 (2) 1,488 45 1,533
Derivatives netting adjustment (390) - (390) 66 (324)
Potential future exposure (PFE) add-on 161 126 287 21 308
SFT adjustments (5) (53) (58) (72) (130)
Undrawn commitments 179 8 187 3 190
Regulatory deductions and other adjustments (22) 6 (16) (2) (18)
CRD IV exposure measure adjustments (77) 87 10 16 26
Fully loaded CRD IV leverage exposure measure 1,413 85 1,498 61 1,559
CRD IV fully loaded Tier 1 capital 40.0 (2.5) 37.5 0.8 38.3
CRD IV fully loaded leverage 2.8% 2.5% 2.5%
CRD IV fully loaded CET1 capital 39.8 (2.5) 37.3 0.8 38.1
Additional Prudential Value Adjustment (2.1)
Other valuation adjustments (2.0)
PRA CET1 adjustments (4.1)
PRA adjusted fully loaded CET 1 capital 34.0
PRA leverage ratio 2.2%
CET1 capital gap to 3% PRA leverage target 12.8
1 Represents revised estimate of leverage incorporating changes following the issuance of the final CRD IV text in June 2013, including updates to methodology arising from changes in the text and other refinements to the calculations, applied as at 31 Dec 2012
29 | Barclays 2013 Interim Results | 30 July 2013
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Notes on exposure measure adjustments
??Derivatives netting adjustment: Regulatory netting applied across asset and liability mark-to-market derivative positions,
pursuant to legally enforceable bi-lateral netting agreements and otherwise meeting the requirements set out in CRD IV
??Potential Future Exposure (PFE) add-on: Regulatory add on for potential future credit exposure on both exchange traded
and OTC derivative contracts, calculated by assigning a standardised percentage (based on underlying risk category and
residual trade maturity) to the gross notional value of each contract. PFE measure recognises some netting benefits where
legally enforceable bi-lateral netting agreements are in place, but these are floored at 40% of gross PFE by netting set,
regardless of whether a positive or negative mark-to market exists at the individual trade level. Identified low risk
management actions to reduce PFE add-ons are expected through improved application of existing legal netting agreements
and further data quality enhancements
??Securities Financing Transactions (SFT) adjustments: under CRD IV the IFRS exposure measure for SFTs (eg.
repo/reverse repo) is replaced with the Financial Collateral Comprehensive Method (FCCM) measure. FCCM is calculated
as exposure less collateral, taking into account legally enforceable master netting agreements, with standardised
adjustments to both sides of the trade for volatility and currency mismatches. Identified low risk management actions to
reduce SFT leverage exposure under CRD IV are expected through improvements in the application of collateral and
enhanced trade and counterparty data
??Undrawn Commitments: Regulatory add on relating to off balance sheet undrawn commitments based on a credit
conversion factor of 10% for unconditionally cancellable commitments and 100% for other commitments. The rules specify
additional relief to be applied to trade finance related undrawn commitments which are medium/low risk (20%) and medium
risk (50%). For Barclays, this relief is not estimated to be material
30 | Barclays 2013 Interim Results | 30 July 2013
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Estimated CRD IV Capital and RWAs
(Łbn) 30 Jun 2013
CT1 Capital (FSA 2009 definition) 42.9
RWAs (Basel 2.5) 387.2
CT1 Ratio (Basel 2.5) 11.1%
CET1 Transitional CET1 Fully-loaded
CRD IV impact on CT1 Capital:
Adjustments not impacted by transitional provisions
Conversion from securitisation deductions to RWA 0.8 0.8
Prudential Value Adjustments (PVA) (2.1) (2.1)
Other (0.2) (0.2)
Adjustments impacted by transitional provisions
Goodwill and intangibles 6.1 -
EL > impairment 0.4 (1.0)
Deferred tax assets (losses) (0.4) (1.9)
Excess minority interest (0.2) (0.6)
Debit Valuation Adjustment (DVA) (0.1) (0.3)
Gains on AFS equity and debt - 0.5
Non-significant holdings in Financial Institutions (0.5) (2.5)
Mitigation of non-significant holdings in Financial Institutions 0.5 2.5
CET1 Capital 47.2 38.1
CRD IV impact on RWA:
Credit Valuation Adjustment (CVA) 32.2
Securitisation 19.0
Central counterparty clearing 21.7
Other 11.4
Gross impact 84.3
RWAs (CRD IV) 471.5
CET1 Ratio 10.0% 8.1%
31 | Barclays 2013 Interim Results | 30 July 2013
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Estimated CRD IV Capital and RWAs – notes
Estimated Capital Ratios are based on/subject to the following:
CRD IV, models and waivers
??We have estimated our CRD IV CET1 ratio, capital resources, RWAs and leverage based on the final CRD IV text assuming the rules applied as at
30 June 2013 on both a transitional and fully loaded basis. The final impact of CRD IV is dependent on technical standards to be finalised by the
European Banking Authority (EBA) and on the final UK implementation of the rules
??The impacts assume that all material items in the Internal Model Method application to the PRA are approved and existing waivers, where such
discretion is available under CRD IV, will continue
Capital Resources
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Transitional CET1 capital is based on application of the CRD IV transitional provisions and the PRA (formerly the FSA) guidance on their application. |
In line with this guidance, adjustments for own shares and interim losses are assumed to transition in at 100%. Other deductions (including goodwill
and intangibles, expected losses over impairment and DVA) transition in at 20% in year 1 (except for AFS debt and equity gains which are 0% in the
first year), 40% in year 2, 60% in year 3, 80% in year 4 with the full impact in subsequent years. For the purpose of 30 June 2013 disclosures, the
PRA have requested that banks assume 2013 is year 1 of transition. However, our disclosures of CRD IV impacts in previous announcements have
reflected 2014 as the first year of application in line with the actual CRD IV implementation date
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The PVA deduction is shown as fully deducted from CET1 upon adoption of CRD IV. PVA is subject to a technical standard being drafted by the EBA |
and therefore the impact is currently based on methodology agreed with the PRA. The PVA deduction as at 30 June 2013 is Ł2.1bn gross of tax
(December 2012: Ł1.5bn gross of tax, Ł1.2bn net of tax), with the increase principally reflecting methodology changes during 2013
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As at 30 June 2013, net long non-significant holdings in financial entities were Ł9.3bn. This exceeds 10% of CET1 capital resources, which would |
result in a deduction from CET1 of Ł2.5bn in the absence of identified management actions to eliminate this deduction. The EBA consultation on
Technical Standards for Own funds – Part III identifies potential changes to the calculation that are not reflected in the estimate, including the
treatment of tranche positions as indirect holdings, the use of notional values for synthetic exposures and the widening of the scope of eligible entities
to include Barclays defined pension benefit funds. Depending on the final implementation and further clarification on the application of the proposals,
these changes would potentially have a material impact on the calculation of the non-significant holdings deduction
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The impact of changes in the calculation of allowable minority interest may be different pending the finalisation of the EBA’s technical standards on |
own funds, particularly regarding the treatment of non-financial holding companies and the equivalence of overseas regulatory regimes. The
estimated CRD IV numbers calculate the full impact and transitional capital base on the assumption that the Group’s holding companies will be
deemed eligible and their surplus capital due to minority interests consolidated in accordance with CRD IV rules. Our estimated CRD IV fully loaded
CET1 capital base includes Ł1.7bn of minority interests relating to Absa
32 | Barclays 2013 Interim Results | 30 July 2013
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Estimated CRD IV Capital and RWAs – notes
Estimated Capital Ratios are based on/subject to the following:
RWAs
??It is assumed that corporates, pension funds and sovereigns that meet the eligibility conditions are exempt from CVA volatility charges
??It is assumed all Central Clearing Counterparties (CCPs) will be deemed to be ‘Qualifying’. The final determination of Qualifying status will be made
by the European Securities and Markets Authority (ESMA)
??The estimated RWA increase from CRD IV includes 1250% risk weighting of securitisation positions while estimated capital includes an add back of
50/50 securitisations deducted under the current rules
??Estimated RWAs for definition of default assume that national discretion over 180 days definition of default remains for UK retail mortgages
??‘Other’ CRD IV impacts to RWAs include adjustments for withdrawal of national discretion of definition of default relating to non UK mortgage retail
portfolios (Ł1.3bn), Deferred Tax Assets (Ł2.4bn), Significant Holdings in financial institutions (Ł2.4bn), other counterparty credit risk (Ł4.5bn) and
other items
??RWAs are sensitive to market conditions. The estimated impact on RWAs for all periods reflects market conditions as at 30 June 2013
33 | Barclays 2013 Interim Results | 30 July 2013
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Capital Resources
30 Jun 13 31 Dec 12
As at (Łm) (Łm)
Shareholders’ equity (excluding NCIs) 51,083 50,615
Qualifying NCIs 2,281 2,450
Regulatory adjustments and deductions:
Own credit cumulative loss/(gain)1 593 804
Unrealised (gains)/losses on available for sale debt securities1 (293) (417)
Unrealised gains on available for sale equity1 (137) (110)
Cash flow hedging reserve1 (1,019) (2,099)
Defined benefit pension adjustment1 12 49
Goodwill and intangible assets1 (7,583) (7,622)
50% excess of expected losses over impairment1 (812) (648)
50% of securitisation positions (759) (997)
Other regulatory adjustments (423) (303)
Core Tier 1 Capital 42,943 41,722
RWAs 387,230 387,373
Core Tier 1 ratio 11.1% 10.8%
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The capital impacts of these items are net of tax |
34 | Barclays 2013 Interim Results | 30 July 2013
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RWAs by Business
As at 30 Jun 13 31 Dec 12
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(Łm) |
UK RBB 43,609 39,088
Europe RBB 16,733 15,795
Africa RBB 25,492 24,532
Barclaycard 38,801 37,836
Investment Bank 168,842 177,884
Corporate Banking 73,120 70,858
Wealth and Investment Management 16,979 16,054
Head Office and Other Operations 3,654 5,326
Total RWAs 387,230 387,373
35 | Barclays 2013 Interim Results | 30 July 2013
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RWA Bridge
(Łbn)
4.2
(11.0)
7.1
(0.5)
387 387
31 Dec Foreign Methodology Business Change in risk 30 Jun
2012 exchange changes activity parameters 2013
36 | Barclays 2013 Interim Results | 30 July 2013
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Balance sheet summary
30 Jun 13 31 Dec 12
As at (Łbn) (Łbn)
Total assets 1,533 1,488
Including
Derivative financial instruments 403 469
Loans and advances to customers 470 424
Total liabilities 1,473 1,428
Including
Derivative financial instruments 396 463
Customer accounts 460 385
Shareholders’ equity 60 60
Including
Shareholders’ equity excluding NCI 51 51
37 | Barclays 2013 Interim Results | 30 July 2013
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Barclays Exit Quadrant
With a good track record in reducing legacy assets, we now focus on reducing our expanded Exit Quadrant portfolios
Łbn 94
15 12
14 68
34 14
11 25 Targeted
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34 24 reduction 36
in IB positions
Dec 12 Legacy Derivatives Jun 13 Target Dec 15
CRD IV RWAs reduction 1 efficiencies CRD IV RWAs CRD IV RWAs
Portfolio assets excluding derivatives 2 Corporate monoline derivatives Pre CRD-IV rates Corporate Europe & ERBB legacy assets
As a result of the strategic review, the scope of assets targeted for active run-down was expanded to Ł94bn on an estimated CRD IV basis to include businesses that have become uneconomic and erode current returns:
Ł79bn of FICC positions of similar profile as the remaining credit markets exposure portfolio (CMEs) which will be heavily penalised as CRD IV is implemented
Ł15bn Legacy Corporate Europe and Europe RBB portfolios
We target a reduction of the legacy positions in the Investment Bank to Ł36bn of estimated CRD IV RWAs by Dec 2015
Between 2008 and 2012, Barclays successfully managed down legacy assets, reducing the CME portfolio by c.80% based on total assets
In H1 13, Exit Quadrant businesses CRD IV RWAs in the IB declined by Ł24bn driven by Ł10bn of legacy asset reductions and Ł14bn of derivatives optimisation
Ł10bn of the legacy reduction relates to the Investment Bank 2 Portfolio assets include credit market exposures and additional legacy assets
38 | Barclays 2013 Interim Results | 30 July 2013
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Appendix 2
Business Results
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Adjusted Return on Equity (RoE)
(%)
H1 2012 RoE H1 2013 RoE1
10.6% Group 7.8%
12.2% UK RBB 12.2%
(10.9%) Europe RBB (49.1%)
2.5% Africa RBB 3.0%
20.1% Barclaycard 19.3%
13.4% Investment Bank 15.4%
3.8% Corporate Banking 7.1%
7.3% Wealth and Investment Mgmt 2.5%
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Includes effect of costs to achieve – for RoE excluding costs to achieve, see next slide |
40 | Barclays 2013 Interim Results | 30 July 2013
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Impact of costs to achieve Transform
Six months ended – June
Return on
Costs to Profit before Cost:Income
Adjusted performance measures by business, achieve tax average ratio
excluding costs to achieve Transform Transform equity
| (m) |
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(Łm) (%) |
(%)
UK RBB (27) 659 12.7 63
Europe RBB (356) (353) (25.6) 120
Africa RBB (9) 221 3.6 68
Barclaycard (5) 780 19.5 41
Investment Bank (169) 2,558 16.5 58
Corporate Banking (41) 443 7.8 55
Wealth and Investment Management (33) 80 4.5 87
Head Office and Other Operations - (157) (2.2) (18)
Group excluding costs to achieve Transform (640) 4,231 9.5 61
41 | Barclays 2013 Interim Results | 30 July 2013
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Transform – costs update
(Łbn) Adjusted operating expenses
Cost to achieve
Operating expenses
19.7
1.2
18.5
5% 1.0
17.3
4% 0.5
18.5 18.5
17.5
16.8
2012 2013 2014 2015
Estimate Estimate Target
42 | Barclays 2013 Interim Results | 30 July 2013
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UK Retail and Business Banking
2013 2012 Change
Six months ended – June (Łm) (Łm) (%)
Income 2,202 2,184 1
Impairment charges (178) (122) 46
Net operating income 2,024 2,062 (2)
Operating expenses (excluding costs to achieve (1,393) (1,470) (5)
Transform and provision for PPI redress)
Costs to achieve Transform (27) -
Adjusted profit before tax1 632 592 7
Adjusted return on average equity 12.2% 12.2%
Adjusted Cost:Income ratio 64% 67%
1 Adjusted profit before tax and adjusted performance measures excludes the impact of the provision for PPI redress of Ł660m (H1 2012: Ł300m)
43 | Barclays 2013 Interim Results | 30 July 2013
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Europe Retail and Business Banking
2013 2012 Change
Six months ended – June (Łm) (Łm) (%)
Income 352 379 (7)
Impairment charges (142) (125) 14
Net operating income 210 254 (17)
Operating expenses (422) (409) 3
(excluding costs to achieve Transform)
Costs to achieve Transform (356) -
Other net expense (141) 7
Loss before tax (709) (148)
Return on average equity (49.1%) (10.9%)
Cost:Income ratio 221% 108%
44 | Barclays 2013 Interim Results | 30 July 2013
|
|
Africa Retail and Business Banking
2013 2012 Change
Six months ended – June (Łm) (Łm) (%)
Income 1,352 1,493 (9)
Impairment charges (208) (314) (34)
Net operating income 1,144 1,179 (3)
Operating expenses (926) (999) (7)
(excluding costs to achieve Transform)
Costs to achieve Transform (9) -
Profit before tax 212 183 16
Return on average equity 3.0% 2.5%
Cost:Income ratio 69% 67%
NOTE The average ZAR/GBP exchange rate for the six months ended 30 Jun 2013 was 14.20 an increase of 13% versus the rate for the six months ended 30 Jun 2012, which was 12.52
45 | Barclays 2013 Interim Results | 30 July 2013
|
|
Barclaycard
2013 2012 Change
Six months ended – June (Łm) (Łm) (%)
Income 2,343 2,112 11
Impairment charges (616) (492) 25
Net operating income 1,727 1,620 7
Operating expenses (excluding costs to achieve (963) (886) 9
Transform and provision for PPI)
Costs to achieve Transform (5) -
Adjusted profit before tax1 775 751 3
Adjusted return on average equity 19.3% 20.1%
Adjusted Cost:Income ratio 41% 42%
1 Adjusted profit before tax and adjusted performance measures exclude the impact of the provision for PPI redress of Ł690m (H1 2012: Łnil)
46 | Barclays 2013 Interim Results | 30 July 2013
|
|
Investment Bank
2013 2012 Change
Six months ended – June (Łm) (Łm) (%)
Income 6,473 6,460 -
Impairment charges (181) (202) (10)
Net operating income 6,292 6,258 1
Operating expenses (3,751) (4,044) (7)
(excluding costs to achieve Transform)
Costs to achieve Transform (169) -
Profit before tax 2,389 2,242 7
Return on average equity 15.4% 13.4%
Cost:Income ratio 61% 63%
Compensation:Income ratio 39% 40%
47 | | Barclays s 2013 H1 Interim Interim Results Results | 30| July 30 July 2013 2013
|
|
Corporate Banking
2013 2012 Change
Six months ended – June (Łm) (Łm) (%)
Income 1,552 1,583 (2)
Impairment charges (258) (431) (40)
Net operating income 1,294 1,152 12
Operating expenses (excluding provision for interest rate (852) (839) 2
hedging products redress and costs to achieve Transform)
Costs to achieve Transform (41) -
Adjusted profit before tax1 402 311 29
Adjusted profit/(loss) before tax by geographic segment
UK 503 451 12
Europe (178) (186) (4)
Rest of the World2 77 46 67
1 Adjusted profit before tax and adjusted performance measures exclude the provision for interest rate hedging products redress of Ł650m (H1 2012: Ł450m)
| 2 |
|
Post restatement – now includes additional African corporate business |
48 | Barclays 2013 Interim Results | 30 July 2013
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|
Wealth and Investment Management
2013 2012 Change
Six months ended – June (Łm) (Łm) (%)
Income 931 894 4
Impairment charges (49) (19)
Net operating income 882 875 1
Operating expenses (810) (775) 5
(excluding costs to achieve Transform)
Costs to achieve Transform (33) -
Profit before tax 47 99 (53)
Return on average equity 2.5% 7.3%
Cost:Income ratio 91% 87%
49 | | Barclays s 2013 H1 Interim Interim Results Results | 30| July 30 July 2013 2013
|
|
Head Office and Other Operations
Six months ended – June 2013 2012
| (m) |
|
(Łm) |
Total adjusted (expense)/income (134) 387
Impairment (charges)/release 1 (5)
Adjusted net operating (expense)/income (133) 382
Operating expenses (24) (98)
Adjusted (loss)/profit before tax1 (157) 309
1 Adjusted (loss)/profit before tax excludes the impact of Ł86m own credit gain (H1 2012: (Ł2,945m)) and Łnil gain on disposal of strategic investment in BlackRock, Inc. (H1 2012: Ł227m)
50 | | Barclays s 2013 H1 Interim Interim Results Results | 30| July 30 July 2013 2013
|
|
Net interest income
2013 2012
Six months ended – June (Łm) (Łm)
Customer assets 3,506 3,320
Customer liabilities 1,599 1,571
Total customer income1 5,105 4,891
Product structural hedge 433 487
Equity structural hedge 149 154
Other (59) (24)
Total non-customer income1 523 617
Total RBB, Barclaycard, Corporate Banking and 5,628 5,508
Wealth and Investment Management
Investment Bank 86 364
Head Office and Other Operations (137) 257
Group net interest income 5,577 6,129
| 1 |
|
Includes RBB, Barclaycard, Corporate Banking and Wealth and Investment Management |
51 | Barclays 2013 Interim Results | 30 July 2013
|
|
Net interest margins and volumes
Total
UK Europe Africa Barclay- Corporate Wealth interest
Six months ended – June 2013 Total1
RBB RBB RBB card Banking and IM income1
| (m) |
|
Net interest margin (%): 1.27 0.81 3.11 8.36 1.23 1.08 1.77 5,628
Of which customer margin (%) 1.03 0.45 2.94 8.61 1.14 0.94 1.60 5,105
Average customer assets (Łm) 132,778 40,129 28,925 35,984 67,168 22,145 327,129
Average customer liabilities
| (m) |
|
124,312 14,124 18,722 3,226 95,875 58,436 314,695 |
Six months ended – June 2012
Net interest margin (%): 1.38 0.78 3.23 8.99 1.27 1.25 1.86 5,508
Of which customer margin (%) 1.03 0.46 3.01 9.71 1.15 0.98 1.66 4,891
Average customer assets (Łm) 122,343 41,207 32,386 32,832 69,768 19,137 317,673
Average customer liabilities 110,540 15,523 19,783 n/m 83,357 48,264 277,467
| (m) |
|
| 1 |
|
Includes RBB, Barclaycard, Corporate Banking and Wealth and Investment Management |
52 | Barclays 2013 Interim Results | 30 July 2013
|
|
Stable exposure to the Eurozone periphery
As at 30 Jun 2013 Spain Italy Portugal Ireland
| (m) |
|
(Łm) (Łm) (Łm) |
Sovereign 292 1,967 388 26
Corporate 4,976 1,489 1,357 1,144
Residential mortgages 13,546 16,034 3,595 108
Financial institutions 1,028 390 30 4,194
Other retail lending 2,436 2,072 1,720 114
Total1 22,278 21,952 7,090 5,586
Total as at 31 Dec 2012 23,463 22,725 7,900 4,928
| 1 |
|
Total net on-balance sheet exposure as at 30 Jun 2013 for Cyprus and Greece was Ł207m and Ł69m respectively |
53 | | Barclays s 2013 H1 Interim Interim Results Results | 30| July 30 July 2013 2013
|
|
Legal disclaimers
Important notice
The information, statements and opinions contained in this document do not constitute a public offer under any applicable legislation or an offer to sell or solicitation of any offer to buy any securities or financial instruments or any advice or recommendation with respect to such securities or other financial instruments.
Information in this document in relation to the rights issue is not for publication, release or distribution, directly or indirectly, in whole or in part, in or into any jurisdiction in which it would be unlawful to do so. The distribution or release, directly or indirectly, of this document or information referred to herein other than in the United Kingdom may be restricted by law and therefore persons into whose possession this document and/or any related documents comes should inform themselves about and observe any such restrictions. Any failure to comply with any such restrictions may constitute a violation of the securities laws of any such jurisdictions.
This document is an advertisement and does not constitute a prospectus or a prospectus equivalent document and is for information purposes only and does not constitute or form part of any offer or invitation to sell, or an invitation to induce an offer or issue, or any solicitation of any offer to acquire any securities of Barclays, in any jurisdiction in which such an offer or solicitation is unlawful. You should not subscribe or purchase any securities except on the basis of the information in the prospectus, which is to be published in due course.
Notice to US investors and ADS holders. In the United States, the rights issue will be made pursuant to a U.S. prospectus that Barclays expects to file with the US Securities and Exchange Commission (the “SEC”) in September 2013. The U.S. prospectus will describe, among other things, how ADS holders will be able to participate in the rights issue. Barclays has filed a registration statement on Form F-3 (including a base prospectus) (Registration No. 333-173886) with the SEC relating to its ordinary shares and for the offering to which this document relates. Before you invest, you should read the base prospectus in that registration statement, as it may be amended from time to time, the U.S. prospectus (when it is filed) and other documents Barclays has filed, and will file, with the SEC for more complete information about Barclays and the rights issue. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov or by accessing Barclays website at www.barclays.com. Alternatively, copies of the base prospectus and, when available, the U.S. prospectus may be obtained by contacting Barclays, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, telephone (888) 603-5847 or e-mail a request to barclaysprospectus@broadridge.com.
54 | Barclays 2013 Interim Results | 30 July 2013
|
|
Legal disclaimers
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 of the US Securities Act of 1933, as amended, with respect to certain of the Barclays Group’s (the “Group”) plans and its current goals and expectations relating to its future financial condition and performance.
Barclays cautions readers that no forward-looking statement is a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statements. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements sometimes use words such as “may,” “will,” “seek,” “continue,” “aim,” “anticipate,” “target,” “expect,” “estimate,” “projected,” “intend,” “plan,” “goal,” “believe,” “achieve” or other words of similar meaning. Examples of forward-looking statements include, among others, statements regarding the Group’s future financial position, income growth, assets, impairments, charges, business strategy, capital ratios, leverage, payment of dividends, including dividend pay-out ratios, projected levels of growth in the banking and financial markets, projected costs, original and revised commitments and targets in connection with the Transform programme, deleveraging actions (including the Leverage Plan), estimates of capital expenditures, and plans and objectives for future operations and other statements that are not historical fact. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, including, but not limited to, U.K. domestic, Eurozone and global macroeconomic and business conditions, the effects of continued volatility in credit markets, market related risks such as changes in interest rates and foreign exchange rates, effects of changes in valuation of credit market exposures, changes in valuation of issued securities, volatility in capital markets, particularly as it may affect the timing and cost of planned capital raisings, the policies and actions of governmental and regulatory authorities (including, among others, requirements regarding capital and Group structures, regulatory approval for any dividend it proposes, and the potential for one or more countries exiting the Eurozone), changes in legislation, the further development of standards and interpretations under International Financial Reporting Standards (“IFRS”) applicable to past, current and future periods, evolving practices with regard to the interpretation and application of standards under IFRS and prudential capital rules, the outcome of current and future legal proceedings, future levels of conduct provisions, the success of future acquisitions and other strategic transactions and the impact of competition, a number of which factors are beyond the Group’s control. As a result of these uncertain events and circumstances, the Group’s actual future results, dividend payments and capital and leverage ratios may differ materially from the plans, goals and expectations set forth in such forward-looking statements. The list above is not exhaustive and there are other factors that may cause the Group’s actual results to differ materially from the forward-looking statements contained in this document. Additional risks and factors are identified in Barclays filings with the SEC, including in the Barclays PLC and Barclays Bank PLC Annual Report on Form 20-F for the fiscal year ended 31 December 2012, which is available on the SEC’s website at http://www.sec.gov. You are also advised to read carefully the additional risks and other factors that will be identified in the applicable U.K. prospectus and the applicable U.S. prospectus before making any investment decision in the rights issue.
Any forward-looking statements made herein speak only as of the date they are made. Except as required by the Prudential Regulation of growth in the banking and financial markets, projected costs, commitments in connection with the Transform Programme, estimates of capital Authority, the Financial Conduct Authority, the London Stock Exchange plc (the “LSE”) or applicable law, Barclays expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Barclays’ expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. The reader should, however, consult any additional disclosures that Barclays has made or may make in documents it has published or may publish via the Regulatory News Service of the LSE and/or has filed or may file with the SEC.
Nothing in this document is intended, or is to be construed as a profit forecast or to be interpreted to mean that earnings per Barclays share for the current or future financial years will necessarily match or exceed the historical published earnings per Barclays share.
55 | Barclays 2013 Interim Results | 30 July 2013
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|
Legal disclaimers
Certain non-IFRS measures
This document includes certain non-IFRS measures. These non-IFRS measures are important to understanding the background of, and rationale for, the rights Issue as
well as the Group’s capital and leverage position in light of the implementation of CRD IV and requirements of the Prudential Regulation Authority (“PRA”). The CRD IV-
based measures have been calculated on the basis of the Group’s current interpretation of CRD IV. These regulatory measurements are not yet in force and are not yet
required to be disclosed by the Group and, as such, represent non-IFRS measures. Measures presented on a “transitional” basis are calculated by taking into account the
FSA’s statement on CRD IV transitional provisions in October 2012, assuming they were applied as at 30 June 2013. Measures presented on a “fully loaded” basis are
calculated without applying CRD IV transitional provisions and assume that the phase-in of the transitional provisions is complete and all of CRD IV applied in the form
that the Group currently expects it to apply. The final impact of CRD IV is dependent on technical standards to be finalised by the European Banking Authority and on the
final UK implementation of the rules. The Group’s interpretation of CRD IV and the basis of the Group’s calculation of CRD IV-based measures may be different from
those of other financial institutions. This document includes the following CRD IV-based metrics, which are described in more detail in this document and in the Group’s
announcement (Barclays PLC Announces Leverage Plan) dated 30 July 2013.
| • |
|
CRD IV CET1 capital on a transitional and fully loaded basis. See the “Estimated Impact of CRD IV – Capital and RWAs” table in this document for a reconciliation of |
CRD IV CET1 capital to Core Tier 1 capital, which is calculated on the basis that currently applies to the Group under applicable regulatory requirements.
| • |
|
CRD IV risk weighted assets (“RWAs”) on a transitional and fully loaded basis. See the “Estimated Impact of CRD IV – Capital and RWAs” table in this document for a |
reconciliation of CRD IV RWAs to RWAs as calculated on the basis that currently applies to the Group under applicable regulatory requirements.
| • |
|
CRD IV CET1 ratio on a transitional and fully loaded basis, which represents CRD IV CET1 capital divided by CRD IV RWAs. See the “Estimated Impact of CRD IV– |
Capital and RWAs” table in this document for a reconciliation of the components of the CRD IV CET1 ratio to the respective components of Core Tier 1 ratio, as
calculated on the basis that currently applies to the Group under applicable regulatory requirements.
| • |
|
CRD IV leverage exposure on a fully loaded basis. CRD IV leverage exposure makes certain adjustments to Total assets under IFRS in accordance with the Group’s |
interpretation of CRD IV requirements. See the “Movements in CRD IV and PRA leverage ratios” table in this document for a reconciliation of CRD IV leverage
exposure to Total assets under IFRS.
| • |
|
CRD IV leverage ratio on a fully loaded basis, which represents CRD IV CET1 capital divided by CRD IV leverage exposure. See the “Estimated Impact of CRD IV – |
Capital and RWAs” table in this document for a reconciliation of CRD IV CET1 capital to Core Tier 1 capital, and see the “Movements in CRD IV and PRA leverage
ratios” table in this document for a reconciliation of CRD IV leverage exposure to Total assets.
With respect to the metrics reflecting the PRA adjustments – PRA-adjusted fully loaded CET1 capital and PRA leverage ratio – included in this document, these metrics
apply the PRA adjustments to the Group’s fully loaded CRD IV CET1 capital and CRD IV leverage ratio, respectively. Reconciliations of the PRA-adjusted fully loaded
CET1 capital to the Group’s CRD IV CET1 capital on a fully loaded basis and of the PRA leverage ratio to the Group’s CRD IV leverage ratio are shown in the table
entitled “Movements in CRD IV and PRA leverage ratios” in this document.
56 | Barclays 2013 Interim Results | 30 July 2013
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|
Legal disclaimers
Certain non-IFRS measures (continued)
This document includes certain non-IFRS measures in connection with the Group’s results for the half-year ended 30 June 2013. Barclays management believes that the
non-IFRS measures included in this document provide valuable information to readers of its financial statements because they enable the reader to identify a more
consistent basis for comparing the business’ performance between financial periods, and provide more detail concerning the elements of performance which the
managers of these businesses are most directly able to influence or are relevant for an assessment of the Group. They also reflect an important aspect of the way in
which operating targets are defined and performance is monitored by Barclays management. However, any non-IFRS measures in this document are not a substitute for
IFRS measures and readers should consider the IFRS measures as well. Key non-IFRS measures included in this document, and the most directly comparable IFRS
measures are described below. Quantitative reconciliations of these measures to the relevant IFRS measures are included in Exhibit 99.1 of the Group’s Form 6-K filed
with the SEC on 30 July 2013 with respect to the Group’s half-year results, and such quantitative reconciliations are incorporated by reference into this document.
| • |
|
Adjusted profit/(loss) before tax is the non-IFRS equivalent of profit/(loss) before tax as it excludes the impact of own credit; gains on debt buy-backs; impairment and |
disposal of the investment in BlackRock, Inc.; the provision for Payment Protection Insurance redress payments and claims management costs (“PPI redress”); the
provision for interest rate hedging products redress and claims management costs (interest rate hedging products redress); goodwill impairments; and gains and
losses on acquisitions and disposals. The regulatory penalties relating to the industry-wide investigation into the setting of interbank offered rates have not been
excluded from adjusted measures. A reconciliation of IFRS and Adjusted profit/(loss) before tax is presented on slide 14 of this document.
| • |
|
Adjusted attributable profit represents adjusted profit/(loss) after tax less profit attributable to non-controlling interests. The comparable IFRS measure is profit |
attributable to equity holders of the parent.
| • |
|
Adjusted income and total income/(expense) net of insurance claims on an adjusted basis represents total income/(expense) net of insurance claims excluding the |
impact of own credit and gains on debt buy-backs.
| • |
|
Adjusted operating expenses represents operating expenses excluding the provision for PPI redress, provision for interest rate hedging product redress and goodwill |
impairment.
| • |
|
Adjusted cost: income ratio represents Cost:Income ratio excluding the impact of own credit, gains on debt buy-backs, gain on disposal of strategic investment in |
BlackRock, Inc., the provision for PPI redress, provision for interest rate hedging product redress, and goodwill impairment. The comparable IFRS measure is cost:
income ratio, which represents operating expenses to income net of insurance claims.
| • |
|
Adjusted basic earnings per share represents adjusted profit attributable to equity holders of the parent divided by the basic weighted average number of shares in |
issue. The comparable IFRS measure is basic earnings per share, which represents profit after tax and non-controlling interests, divided by the basic weighted
average number of shares in issue.
| • |
|
Adjusted return on average shareholders equity represents adjusted profit attributable to equity holders of the parent divided by average equity. The comparable IFRS |
measure is return on average shareholders equity, which represents profit after tax and non-controlling interests, divided by average equity.
| • |
|
Adjusted return on average tangible shareholders equity represents adjusted profit attributable to equity holders of the parent divided by average tangible equity. The |
comparable IFRS measure is return on average tangible shareholders equity, which represents profit after tax and non-controlling interests, divided by average
tangible equity.
57 | Barclays 2013 Interim Results | 30 July 2013
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|
Legal disclaimers
Certain non-IFRS measures (continued)
Adjusted return on average risk weighted assets represents adjusted profit after tax, divided by average risk weighted assets. The comparable IFRS measure is return on average risk weighted assets, which represents profit after tax divided by average risk weighted assets.
Adjusted gross leverage is a non-IFRS measure representing the multiple of adjusted total tangible assets over total qualifying Tier 1 capital. Adjusted total tangible assets are total assets adjusted to allow for derivative counterparty netting where the Group has a legally enforceable master netting agreement, assets under management on the balance sheet, settlement balances and cash collateral on derivative liabilities, goodwill and intangible assets. This measure has been presented as it provides for a metric used by management in assessing balance sheet leverage. Barclays management believes that disclosing a measure of balance sheet leverage provides useful information to readers of Barclays financial statements as a key measure of stability, which is consistent with the views of investors. The comparable IFRS measure is the ratio of total assets to total shareholders equity.
58 | Barclays 2013 Interim Results | 30 July 2013