Company Announcements

Half-year Report

Source: RNS
RNS Number : 4636H
Barclays PLC
01 August 2019
 

 

Barclays PLC

Interim Results Announcement

 

30 June 2019

 

Table of Contents

 

Results Announcement

Page

Notes

1

Performance Highlights

2-3

Group Chief Executive Officer's Review

4

Group Finance Director's Review

5-6

Results by Business


·    Barclays UK

7-9

·    Barclays International

10-13

·    Head Office

14

Quarterly Results Summary

15

Quarterly Results by Business

16-21

Performance Management


·    Margins and Balances

22

Risk Management


·    Risk Management and Principal Risks

23

·    Credit Risk

24-33

·    Market Risk

34

·    Treasury and Capital Risk

35-46

Statement of Directors' Responsibilities

47

Independent Review Report to Barclays PLC

48

Condensed Consolidated Financial Statements

49-54

Financial Statement Notes

55-83

Appendix: Non-IFRS Performance Measures

84-93

Shareholder Information

94

 

 

BARCLAYS PLC, 1 CHURCHILL PLACE, LONDON, E14 5HP, UNITED KINGDOM. TELEPHONE: +44 (0) 20 7116 1000. COMPANY NO. 48839.

 

Notes

 

The terms Barclays or Barclays Group refer to Barclays PLC together with its subsidiaries. Unless otherwise stated, the income statement analysis compares the six months ended 30 June 2019 to the corresponding six months of 2018 and balance sheet analysis as at 30 June 2019 with comparatives relating to 31 December 2018 and 30 June 2018. The abbreviations '£m' and '£bn' represent millions and thousands of millions of Pounds Sterling respectively; the abbreviations '$m' and '$bn' represent millions and thousands of millions of US Dollars respectively; and the abbreviations '€m' and '€bn' represent millions and thousands of millions of Euros respectively.

 

There are a number of key judgement areas, for example impairment calculations, which are based on models and which are subject to ongoing adjustment and modifications. Reported numbers reflect best estimates and judgements at the given point in time.

 

Relevant terms that are used in this document but are not defined under applicable regulatory guidance or International Financial Reporting Standards (IFRS) are explained in the results glossary that can be accessed at home.barclays/investor-relations/reports-and-events/latest-financial-results.

 

The information in this announcement, which was approved by the Board of Directors on 31 July 2019, does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2018, which contained an unmodified audit report under Section 495 of the Companies Act 2006 (which did not make any statements under Section 498 of the Companies Act 2006) have been delivered to the Registrar of Companies in accordance with Section 441 of the Companies Act 2006.

 

These results will be furnished as a Form 6-K to the US Securities and Exchange Commission (SEC) as soon as practicable following their publication. Once furnished with the SEC, a copy of the Form 6-K will be available from the SEC's website at www.sec.gov.

 

Barclays is a frequent issuer in the debt capital markets and regularly meets with investors via formal road-shows and other ad hoc meetings. Consistent with its usual practice, Barclays expects that from time to time over the coming quarter it will meet with investors globally to discuss these results and other matters relating to the Barclays Group.

 

Non-IFRS performance measures

 

Barclays management believes that the non-IFRS performance measures included in this document provide valuable information to the readers of the financial statements as they enable the reader to identify a more consistent basis for comparing the businesses' 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 Barclays 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 performance measures in this document are not a substitute for IFRS measures and readers should consider the IFRS measures as well. Refer to the appendix on pages 84 to 93 for further information and calculations of non-IFRS performance measures included throughout this document, and the most directly comparable IFRS measures.

 

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 the Barclays Group. Barclays cautions readers that no forward-looking statement is a guarantee of future performance and that actual results or other financial condition or performance measures 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', 'projected', 'expect', 'estimate', 'intend', 'plan', 'goal', 'believe', 'achieve' or other words of similar meaning. Examples of forward-looking statements include, among others, statements or guidance regarding or relating to the Barclays Group's future financial position, income growth, assets, impairment charges, provisions, business strategy, capital, leverage and other regulatory ratios, payment of dividends (including dividend payout ratios and expected payment strategies), projected levels of growth in the banking and financial markets, projected costs or savings, any commitments and targets, estimates of capital expenditures, plans and objectives for future operations, projected employee numbers, IFRS impacts 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. These may be affected by changes in legislation, the development of standards and interpretations under IFRS including evolving practices with regard to the interpretation and application of accounting and regulatory standards, the outcome of current and future legal proceedings and regulatory investigations, future levels of conduct provisions, the policies and actions of governmental and regulatory authorities, geopolitical risks and the impact of competition. In addition, factors including (but not limited to) the following may have an effect: capital, leverage and other regulatory rules applicable to past, current and future periods; UK, US, Eurozone and global macroeconomic and business conditions; the effects of any 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; changes in credit ratings of any entities within the Barclays Group or any securities issued by such entities; the potential for one or more countries exiting the Eurozone; instability as a result of the exit by the UK from the European Union and the disruption that may subsequently result in the UK and globally; and the success of future acquisitions, disposals and other strategic transactions. A number of these influences and factors are beyond the Barclays Group's control. As a result, the Barclays Group's actual future results, dividend payments, and capital and leverage ratios may differ materially from the plans, goals, expectations and guidance set forth in the Barclays Group's forward-looking statements. Additional risks and factors which may impact the Barclays Group's future financial condition and performance are identified in our filings with the SEC (including, without limitation, our Annual Report on Form 20-F for the fiscal year ended 31 December 2018), which are available on the SEC's website at www.sec.gov.

 

Subject to our obligations under the applicable laws and regulations of the UK and the US in relation to disclosure and ongoing information, we undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

Performance Highlights

 

Resilient performance with Group return on tangible equity of 9.4%1 and an increased half year dividend of 3.0p per share

 

·

Barclays reported a Group return on tangible equity (RoTE) of 9.4% for the first half of 2019 and continues to target RoTE of >9% and >10% for 2019 and 2020 respectively1

·

The income environment in the first half was challenging and as a result Barclays is focused on net cost reductions in the second half and expects to reduce costs for 2019 to below the £13.6bn1 low end of the Group's previous cost guidance

·

Barclays will pay a half year dividend of 3.0p (H118: 2.5p) and is reiterating its capital returns policy

 

Returns1

 

Group RoTE targets of >9% in 2019 and >10% in 2020

·

Profit before tax of £3.1bn (H118: £3.7bn) and earnings per share (EPS) of 12.6p (H118: 14.9p)

·

Group RoTE of 9.4% (H118: 11.6%)

-

Barclays UK RoTE of 15.1% (H118: 17.3%)

-

Barclays International RoTE of 10.7% (H118: 12.9%), with the Corporate and Investment Bank (CIB) RoTE of 9.4% (H118: 11.1%) and Consumer, Cards and Payments of 16.7% (H118: 22.7%)

Cost efficiency

 

Group cost guidance of below £13.6bn1 in 2019

Cost: income ratio of <60% over time

·

Group operating expenses1 increased 1% to £6.8bn, resulting in a cost: income ratio of 63% (H118: 61%), reflecting continued investment in the business offset by lower compensation accruals and cost efficiencies

·

Cost control is a priority and, given the challenging income environment experienced in the first half, management expects to reduce 2019 costs below £13.6bn1

Capital and dividends

 

CET1 ratio target of c.13%

·

Common equity tier 1 (CET1) ratio of 13.4% (December 2018: 13.2%) was above the Group's target ratio of c.13%. The reported CET1 ratio increased 40bps in the second quarter

·

Reiterating capital returns policy, incorporating a progressive ordinary dividend, supplemented by share buybacks as and when appropriate. Dividends will continue to be paid semi-annually, with the half year dividend expected to represent, under normal circumstances, around one-third of the total dividend for the year

·

Half year dividend of 3.0p per share to be paid on 23 September 2019 (H118: 2.5p)

 

·

Barclays Group profit before tax was £3.0bn (H118: £1.7bn) and excluding litigation and conduct, was £3.1bn (H118: £3.7bn). The cost: income ratio was 63% (H118: 61%), with income down 1%, driven mainly by margin pressure in Barclays UK and lower income in Barclays International, while costs increased 1%, reflecting continued investment in the business. Credit impairment charges increased to £0.9bn (H118: £0.6bn) reflecting the non-recurrence of favourable US macroeconomic forecast updates and single name recoveries in H118, while delinquencies in unsecured lending remained stable

·

Barclays UK profit before tax was £1.1bn (H118: £0.8bn). Excluding litigation and conduct, profit before tax was £1.1bn (H118: £1.2bn). Income declined 2%, as continuing margin pressure was partially offset by continued growth in mortgages and deposits. Operating expenses increased 2% as digital investment was partially offset by cost efficiency savings

·

Barclays International profit before tax was £2.3bn (H118: £2.7bn). Income was down 1% driven by a reduction in CIB, reflecting reduced client activity, lower volatility and a smaller Banking fee pool across the industry2, offset by growth in Consumer, Cards and Payments. Operating expenses increased 1% as continued investment in the business was partially offset by reduced variable compensation accruals, reflecting performance in the CIB. Credit impairment charges increased from £0.2bn to £0.5bn, due to the non-recurrence of favourable US macroeconomic forecast updates and single name recoveries in H118

·

Attributable profit was £2.1bn (H118: £0.6bn). This reflected the non-recurrence of Q118 litigation and conduct charges of £2.0bn, principally relating to the Residential Mortgage Backed Securities settlement (RMBS) and Payment Protection Insurance (PPI). Excluding litigation and conduct, attributable profit was £2.2bn (H118: £2.6bn), generating basic earnings per share of 12.6p (H118: 14.9p)

·

Tangible net asset value (TNAV) per share was 275p (December 2018: 262p) as 12.6p of EPS, excluding litigation and conduct, and positive net reserve movements, were partially offset by payment of the remaining full year 2018 dividend of 4p in the second quarter

 

 

1

Excluding litigation and conduct, with returns targets based on a Barclays Group CET1 ratio of c.13%. Group cost guidance is based on a rate of 1.27 (USD/GBP) and subject to foreign currency movements.

2

Data Source: Dealogic for the period covering 1 January to 30 June 2019

 

Barclays Group results


for the half year ended

30.06.19

30.06.18



£m

£m

% Change

Total income

10,790

10,934

(1)

Credit impairment charges and other provisions

(928)

(571)

(63)

Net operating income

9,862

10,363

(5)

Operating expenses

(6,758)

(6,674)

(1)

Litigation and conduct

(114)

(2,042)

94

Total operating expenses

(6,872)

(8,716)

21

Other net income

24

12


Profit before tax

3,014

1,659

82

Tax charge1

(545)

(644)

15

Profit after tax

2,469

1,015


Non-controlling interests

(34)

(108)

69

Other equity instrument holders

(363)

(346)

(5)

Attributable profit

2,072

561






Performance measures




Return on average tangible shareholders' equity

9.1%

2.6%


Average tangible shareholders' equity (£bn)

 45.7

 43.8


Cost: income ratio

64%

80%


Loan loss rate (bps)

54

35


Basic earnings per share

12.1p

3.3p


Dividend per share

3.0p

2.5p


  




Performance measures excluding litigation and conduct2




Profit before tax

3,128

3,701

(15)

Attributable profit

2,158

2,550

(15)

Return on average tangible shareholders' equity

9.4%

11.6%


Cost: income ratio

63%

61%


Basic earnings per share

12.6p

14.9p







As at 30.06.19

As at 31.12.18

As at 30.06.18

Balance sheet and capital management3

£bn

£bn

£bn

Tangible net asset value per share

275p

262p

259p

Common equity tier 1 ratio

13.4%

13.2%

13.0%

Common equity tier 1 capital

42.9

41.1

41.4

Risk weighted assets

319.1

311.9

319.3

Average UK leverage ratio

4.7%

4.5%

4.6%

UK leverage ratio

5.1%

5.1%

4.9%





Funding and liquidity




Group liquidity pool (£bn)

238

227

214

Liquidity coverage ratio

156%

169%

154%

Loan: deposit ratio

82%

83%

83%

 

1

From 2019, due to an IAS 12 update, the tax relief on payments in relation to Additional Tier 1 (AT1) instruments has been recognised in the tax charge of the income statement, whereas it was previously recorded in retained earnings. Comparatives have been restated, reducing the tax charge for H118 by £93m. This change does not impact earnings per share or return on average tangible shareholders' equity. Further detail can be found in Note 1, Basis of preparation on pages 55 to 56.

2

Refer to pages 84 to 93 for further information and calculations of performance measures excluding litigation and conduct

3

Capital, Risk Weighted Assets (RWAs) and leverage measures are calculated applying the transitional arrangements of the Capital Requirements Regulation (CRR) as amended by the Capital Requirements Regulation II (CRR II) applicable as at the reporting date. This includes IFRS 9 transitional arrangements. For more information on the implementation of CRR II see page 40.

4

The fully loaded CET1 ratio was 13.1%, with £41.7bn of CET1 capital and £319.0bn of RWAs, calculated without applying the transitional arrangements of the CRR as amended by CRR II applicable as at the reporting date.

 

Group Chief Executive Officer's Review

 

"This was another resilient quarter of performance.

 

For the second quarter in succession Barclays generated an attributable profit of over £1 billion, and delivered EPS of 12.6p for the first half of 2019.

 

Our Group Return on Tangible Equity of 9.3% for the quarter is a further step towards meeting our 2019 RoTE target of greater than 9%.

 

Our reported CET1 ratio increased by 40 basis points in Q2 to 13.4%, demonstrating the strong capital generation capacity of the business.

 

Barclays UK continued to build its mortgage and deposit balances, with stable credit metrics. This has partially offset the reduction in net interest margin from increased levels of customer refinancing, and lower interest earnings from UK cards balances. Digital engagement with our UK customers is at an all time high, with just under 8 million customers now digitally active on the Barclays App.

 

The Corporate & Investment Bank produced a 9.3% return in the quarter, and we saw market outperformance in Banking fees and in Fixed income, Currencies and Credit.

 

Consumer, Cards & Payments continues to progress, producing an RoTE of 18% in the quarter and 16.7%for the half year.

 

Management focus on cost control remains a priority, and we expect to reduce expenses to below £13.6 billion for 2019.

 

This all puts us in a position to continue to increase the return of capital to shareholders by declaring a half year dividend of 3 pence. The half year dividend is around a third of what we expect to pay in total in a given year under normal circumstances. This increase in ordinary dividend reflects the confidence that the Board and management have in the sustainable earnings generation of our business.

 

Barclays' progressive capital returns policy, and intention to supplement the ordinary dividend with additional cash returns, including share buybacks when appropriate, remains unchanged."

 

James E Staley, Group Chief Executive Officer

 

Group Finance Director's Review

 

The Group return on tangible equity, excluding litigation and conduct, was 9.4% with earnings per share of 12.6p. Barclays continues to target RoTE of >9% and >10% for 2019 and 2020 respectively1. Given the challenging income environment experienced in the first half of the year, achieving net cost reductions in the second half is a key priority.

 

Group performance

 

·

Profit before tax was £3,014m (H118: £1,659m). Excluding litigation and conduct, profit before tax was £3,128m (H118: £3,701m), reflecting the challenging income environment and an increase in impairment due to the non-recurrence of favourable US macroeconomic forecast updates and single name recoveries in H118. The 7% appreciation of average USD against GBP positively impacted income and profits and adversely impacted credit impairment charges and operating expenses

·

Total income decreased 1% to £10,790m. Barclays UK income decreased 2% as continued mortgage and deposit balance growth was offset by margin compression and maintaining a reduced risk appetite in UK cards. Barclays International income was down 1%, as the challenging income environment resulted in a 1% reduction in CIB, offset by a 2% increase in Consumer, Cards and Payments

·

Credit impairment charges increased to £928m (H118: £571m) primarily due to the non-recurrence of favourable US macroeconomic forecast updates and single name recoveries in H118. The economic environment continued to be benign and there were no changes in the macroeconomic variables used in impairment modelling in the first half. Delinquencies in unsecured lending remained stable, reflecting the continued prudent management of credit risk. The Barclays Group loan loss rate was 54bps (H118: 35bps)

·

Operating expenses increased 1% to £6,758m reflecting continued investment in the business including planned digitisation of Barclays UK, partially offset by lower variable compensation accruals in CIB and cost efficiencies. The cost: income ratio, excluding litigation and conduct, increased to 63% (H118: 61%)

·

The effective tax rate was 18.1%. This reflects a change in accounting standards requiring tax relief on payments made under Additional Tier 1 (AT1) instruments, which in prior periods was recognised in retained earnings, to be recognised in the income statement

·

Attributable profit was £2,072m (H118: £561m). Excluding litigation and conduct, attributable profit was £2,158m (H118: £2,550m), generating a RoTE of 9.4% (H118: 11.6%) and EPS of 12.6p (H118: 14.9p)

·

TNAV per share was 275p (December 2018: 262p) as 12.6p of EPS, excluding litigation and conduct, and positive net reserve movements, were partially offset by payment of the remaining full year 2018 dividend of 4p in the second quarter

 

Group capital and leverage

 

·

The CET1 ratio increased to 13.4% (December 2018: 13.2%) primarily driven by a £1.8bn increase in CET1 capital partially offset by an increase of £7.2bn in Risk Weighted Assets (RWAs) compared to year-end 2018

-

CET1 capital increased by £1.8bn to £42.9bn driven by underlying profit generation of £2.4bn and an increase of £0.5bn in the fair value through other comprehensive income reserve, primarily due to decreasing bond yields. These increases were partially offset by £1.2bn dividends paid and foreseen and £0.3bn from pension deficit reduction contributions

-

The increase in RWAs was primarily driven by increased CIB activity compared to year-end 2018

·

The average UK leverage ratio increased to 4.7% (December 2018: 4.5%) primarily driven by an increase in Tier 1 (T1) capital, which included the accretion of CET1 capital and the issuance of AT1 securities, partially offset by a modest increase in exposure to £1,135bn (December 2018: £1,110bn). The UK leverage ratio remained stable at 5.1% (December 2018: 5.1%)

 

Group funding and liquidity

 

·

The liquidity pool increased to £238bn (December 2018: £227bn) reflecting the Group's prudent liquidity management approach. The liquidity coverage ratio (LCR) remained well above the 100% regulatory requirement at 156% (December 2018: 169%), equivalent to a surplus of £83bn (December 2018: £90bn). The decrease in the LCR and surplus reflects support for seasonal activity, while maintaining a conservative liquidity position

·

Wholesale funding outstanding, excluding repurchase agreements, was £166bn (December 2018: £154bn). The Group issued £7.1bn equivalent of minimum requirement for own funds and eligible liabilities (MREL) instruments year-to-date from Barclays PLC (the Parent company). The Group is well advanced in its MREL issuance plans, with a Barclays PLC MREL ratio of 30.2% as at 30 June 2019 relative to an estimated requirement including requisite buffers of 29.9% by 1 January 2022

 

1

Excluding litigation and conduct, with returns targets based on a Barclays Group CET1 ratio of c.13%. Group cost guidance is based on a rate of 1.27 (USD/GBP) and subject to foreign currency movements.

 

Other matters

 

·

The remaining PPI provision as at 30 June 2019 was £0.4bn (December 2018: £0.9bn). This represents Barclays best estimate of expected PPI related costs. However, the uncertainty associated with future claims levels has increased ahead of the Financial Conduct Authority (FCA) complaints deadline on 29 August 2019

·

Following regulatory approval, Barclays intends to call the three AT1 instruments eligible for call on 15 September 2019. The redemptions will result in a pro-forma decrease of c.13bps to the 30 June 2019 CET1 ratio due to two of these instruments being held on the balance sheet at historical FX rates

 

Outlook and guidance

 

·

The Group continues to target 2019 and 2020 RoTE of >9% and >10% respectively1

·

Given the challenging income environment experienced in the first half, management expects to reduce 2019 costs below £13.6bn1

 

Dividends

 

·

Barclays existing capital returns policy as set out in our Full Year 2018 results remains unchanged:



"Barclays understands the importance of delivering attractive cash returns to shareholders. Barclays is therefore committed to maintaining an appropriate balance between total cash returns to shareholders, investment in the business and maintaining a strong capital position. Going forward, Barclays intends to pay a progressive ordinary dividend, taking into account these objectives and the earnings outlook of the Group.  It is also the Board's intention to supplement the ordinary dividends with additional cash returns, including share buybacks, to shareholders as and when appropriate."

·

Reflecting this, Barclays will pay a half year dividend per share of 3.0p on 23 September 2019 (H118: 2.5p)

·

Dividends will continue to be paid semi-annually, with the half year dividend expected to represent, under normal circumstances, around one-third of the total dividend for the year

 

Tushar Morzaria, Group Finance Director

 

1

Excluding litigation and conduct, with returns targets based on a Barclays Group CET1 ratio of c.13%. Group cost guidance is based on a rate of 1.27 (USD/GBP) and subject to foreign currency movements.

 

Results by Business

 

Barclays UK

Half year ended

Half year ended


30.06.19

30.06.18


Income statement information

£m

£m

% Change

Net interest income

2,907

2,986

(3)

Net fee, commission and other income

641

638

-

Total income

3,548

3,624

(2)

Credit impairment charges and other provisions

(421)

(415)

(1)

Net operating income

3,127

3,209

(3)

Operating expenses

(2,021)

(1,973)

(2)

Litigation and conduct

(44)

(414)

89

Total operating expenses

(2,065)

(2,387)

13

Other net income

-

4


Profit before tax

1,062

826

29

Attributable profit1

750

447

68





As at 30.06.19

As at 31.12.18

As at 30.06.18

Balance sheet information

£bn

£bn

£bn

Loans and advances to customers at amortised cost

189.1

187.6

185.3

Total assets

259.0

249.7

245.9

Customer deposits at amortised cost

200.9

197.3

194.3

Loan: deposit ratio

97%

96%

96%

Risk weighted assets

76.2

75.2

75.0

Period end allocated tangible equity

10.3

10.2

10.2






Half year ended

Half year ended


Key facts

30.06.19

30.06.18


Average loan to value of mortgage portfolio2

50%

50%


Average loan to value of new mortgage lending2

67%

64%


Number of branches

972

1,155


Mobile banking active customers

7.9m

6.7m


30 day arrears rate - Barclaycard Consumer UK

1.8%

1.9%






Performance measures




Return on average allocated tangible equity

14.5%

9.0%


Average allocated tangible equity (£bn)

10.3

10.0


Cost: income ratio

58%

66%


Loan loss rate (bps)

43

44


Net interest margin

3.11%

3.24%










Performance measures excluding litigation and conduct3

£m

£m

% Change

Profit before tax

1,106

1,240

(11)

Attributable profit

782

859

(9)

Return on average allocated tangible equity

15.1%

17.3%


Cost: income ratio

57%

54%


 

1

From 2019, due to an IAS 12 update, the tax relief on payments in relation to AT1 instruments has been recognised in the tax charge of the income statement, whereas it was previously recorded in retained earnings. Comparatives have been restated. This change does not impact earnings per share or return on average tangible shareholders' equity. Further detail can be found in Note 1, Basis of preparation on pages 55 to 56.

2

Average loan to value of mortgages is balance weighted and reflects both residential and buy-to-let mortgage portfolios.

3

Refer to pages 84 to 93 for further information and calculations of performance measures excluding litigation and conduct.

 

Analysis of Barclays UK

Half year ended

Half year ended


30.06.19

30.06.18


Analysis of total income

£m

£m

% Change

Personal Banking

1,910

1,987

(4)

Barclaycard Consumer UK

987

1,031

(4)

Business Banking

651

606

7

Total income

3,548

3,624

(2)





Analysis of credit impairment charges and other provisions




Personal Banking

(88)

(121)

27

Barclaycard Consumer UK

(315)

(252)

(25)

Business Banking

(18)

(42)

57

Total credit impairment charges and other provisions

(421)

(415)

(1)





As at 30.06.19

As at 31.12.18

As at 30.06.18

Analysis of loans and advances to customers at amortised cost

£bn

£bn

£bn

Personal Banking

147.3

146.0

143.6

Barclaycard Consumer UK

15.1

15.3

15.2

Business Banking

26.7

26.3

26.5

Total loans and advances to customers at amortised cost

189.1

187.6

185.3





Analysis of customer deposits at amortised cost




Personal Banking

156.3

154.0

152.9

Barclaycard Consumer UK

-

-

-

Business Banking

44.6

43.3

41.4

Total customer deposits at amortised cost

200.9

197.3

194.3

 

Barclays UK continued to deliver growth in balances during H119, increasing mortgage lending by £1.8bn and growing customer deposits by £3.6bn. Ongoing margin pressure from increased refinancing activity in mortgages and lower interest earning lending (IEL) in UK cards, resulted in a lower net interest margin (NIM). Digital investment continues to transform customer interactions.

 

Income statement - H119 compared to H118

 

·

Profit before tax, excluding litigation and conduct, decreased 11% to £1,106m. RoTE was robust at 15.1% (H118: 17.3%) reflecting the continuing strength of the Barclays UK business in a challenging income environment. Including litigation and conduct charges of £44m (H118: £414m) that decreased primarily due to the non-recurrence of a PPI charge, profit before tax increased 29% to £1,062m

·

Total income decreased 2% to £3,548m due to a 3% decrease in net interest income (NII) to £2,907m

-

Personal Banking income decreased 4% to £1,910m, reflecting ongoing mortgage margin pressure, partially offset by mortgage and deposit balance growth and improved liability margins

-

Barclaycard Consumer UK income decreased 4% to £987m reflecting the maintenance of a reduced risk appetite, which resulted in a lower level of IEL balances

-

Business Banking income increased 7% to £651m driven by continued deposit growth, improved liability margins and the non-recurrence of client remediation in H118

-

NIM decreased 13bps to 3.11% reflecting increased refinancing activity by mortgage customers, lower IEL in UK cards and the mix effect from growth in secured lending

·

Credit impairment charges were broadly flat at £421m (H118: £415m), with releases on single name exposures in Business Banking offsetting higher charges in UK cards due to the embedment of IFRS 9 in H118. The 30 and 90 day arrears rates in UK cards remained stable at 1.8% (H118: 1.9%) and 0.9% (H118: 0.9%) respectively

·

Operating expenses increased 2% to £2,021m as planned digital investment in the business and inflation outweighed cost efficiencies. The cost: income ratio, excluding litigation and conduct, was 57% (H118: 54%)

 

Balance sheet - 30 June 2019 compared to 31 December 2018

 

·

Loans and advances to customers at amortised cost increased 1% to £189.1bn reflecting £1.8bn of mortgage growth

·

Total assets increased 4% to £259.0bn reflecting increases in the liquidity pool and loans and advances to customers

·

Customer deposits at amortised cost increased 2% to £200.9bn demonstrating franchise strength across both Personal and Business Banking

·

RWAs increased to £76.2bn (December 2018: £75.2bn) including the recognition of property leases following IFRS 16 implementation, growth in Mortgages and Business Banking and change in mix of the liquidity pool

 

Barclays International

Half year ended

Half year ended


30.06.19

30.06.18


Income statement information

£m

£m

% Change

Net interest income

1,917

1,866

3

Net trading income

2,160

2,510

(14)

Net fee, commission and other income

3,396

3,139

8

Total income

7,473

7,515

(1)

Credit impairment charges and other provisions

(492)

(161)


Net operating income

6,981

7,354

(5)

Operating expenses

(4,641)

(4,606)

(1)

Litigation and conduct

(30)

(62)

52

Total operating expenses

(4,671)

(4,668)

-

Other net income

31

24

29

Profit before tax

2,341

2,710

(14)

Attributable profit1

1,620

1,933

(16)






As at 30.06.19

As at 31.12.18

As at 30.06.18

Balance sheet information

£bn

£bn

£bn

Loans and advances at amortised cost

134.8

127.2

125.5

Trading portfolio assets

120.0

104.0

116.5

Derivative financial instrument assets

243.8

222.1

228.2

Financial assets at fair value through the income statement

154.7

144.7

141.2

Cash collateral and settlement balances

101.3

74.3

91.5

Other assets

196.8

189.8

183.6

Total assets

951.4

862.1

886.5

Deposits at amortised cost

212.0

197.2

191.0

Derivative financial instrument liabilities

243.0

219.6

224.9

Loan: deposit ratio

64%

65%

66%

Risk weighted assets

214.8

210.7

218.0

Period end allocated tangible equity

30.2

29.9

30.5






Half year ended

Half year ended


Performance measures

30.06.19

30.06.18


Return on average allocated tangible equity

10.5%

12.6%


Average allocated tangible equity (£bn)

30.8

30.7


Cost: income ratio

63%

62%


Loan loss rate (bps)

72

25


Net interest margin

3.95%

4.30%






Performance measures excluding litigation and conduct2

£m

£m

% Change

Profit before tax

2,371

2,772

(14)

Attributable profit

1,644

1,979

(17)

Return on average allocated tangible equity

10.7%

12.9%

Cost: income ratio

62%

61%


 

1

From 2019, due to an IAS 12 update, the tax relief on payments in relation to AT1 instruments has been recognised in the tax charge of the income statement, whereas it was previously recorded in retained earnings. Comparatives have been restated. This change does not impact earnings per share or return on average tangible shareholders' equity. Further detail can be found in Note 1, Basis of preparation on pages 55 to 56.

2

Refer to pages 84 to 93 for further information and calculations of performance measures excluding litigation and conduct.

 

Analysis of Barclays International




Corporate and Investment Bank

Half year ended

Half year ended


30.06.19

30.06.18


Income statement information

£m

£m

% Change

FICC

1,822

1,605

14

Equities

984

1,191

(17)

Markets

2,806

2,796

-

Banking fees

1,267

1,387

(9)

Corporate lending

368

438

(16)

Transaction banking

859

799

8

Corporate

1,227

1,237

(1)

Other

-

(41)


Total income

5,300

5,379

(1)

Credit impairment (charges)/releases and other provisions

(96)

182


Net operating income

5,204

5,561

(6)

Operating expenses

(3,479)

(3,546)

2

Litigation and conduct

(26)

(13)


Total operating expenses

(3,505)

(3,559)

2

Other net income

15

8

88

Profit before tax

1,714

2,010

(15)

Attributable profit1

1,178

1,434

(18)





As at 30.06.19

As at 31.12.18

As at 30.06.18

Balance sheet information

£bn

£bn

£bn

Loans and advances at amortised cost

92.1

86.4

87.8

Trading portfolio assets

119.9

104.0

116.5

Derivative financial instrument assets

243.7

222.1

228.1

Financial assets at fair value through the income statement

154.1

144.2

140.7

Cash collateral and settlement balances

100.4

73.4

90.6

Other assets

168.1

160.4

151.6

Total assets

878.3

790.5

815.3

Deposits at amortised cost

145.4

136.3

130.3

Derivative financial instrument liabilities

242.9

219.6

224.9

Risk weighted assets

175.9

170.9

180.4






Half year ended

Half year ended


Performance measures

30.06.19

30.06.18


Return on average allocated tangible equity

9.3%

11.0%


Average allocated tangible equity (£bn)

25.5

26.0


Cost: income ratio

66%

66%






Performance measures excluding litigation and conduct2

£m

£m

% Change

Profit before tax

1,740

2,023

(14)

Attributable profit

1,199

1,444

(17)

Return on average allocated tangible equity

9.4%

11.1%

Cost: income ratio

66%

66%

 

1

From 2019, due to an IAS 12 update, the tax relief on payments in relation to AT1 instruments has been recognised in the tax charge of the income statement, whereas it was previously recorded in retained earnings. Comparatives have been restated. This change does not impact earnings per share or return on average tangible shareholders' equity. Further detail can be found in Note 1, Basis of preparation on pages 55 to 56.

2

Refer to pages 84 to 93 for more information and calculations of performance measures excluding litigation and conduct.

 

Analysis of Barclays International




Consumer, Cards and Payments

Half year ended

Half year ended


30.06.19

30.06.18


Income statement information

£m

£m

% Change

Total income

2,173

2,136

2

Credit impairment charges and other provisions

(396)

(343)

(15)

Net operating income

1,777

1,793

(1)

Operating expenses

(1,162)

(1,060)

(10)

Litigation and conduct

(4)

(49)

92

Total operating expenses

(1,166)

(1,109)

(5)

Other net income

16

16

-

Profit before tax

627

700

(10)

Attributable profit1

442

499

(11)






As at 30.06.19

As at 31.12.18

As at 30.06.18

Balance sheet information

£bn

£bn

£bn

Loans and advances at amortised cost

42.7

40.8

37.7

Total assets

73.1

71.6

71.2

Deposits at amortised cost

66.6

60.9

60.7

Risk weighted assets

38.9

39.8

37.6






Half year ended

Half year ended


Key facts

30.06.19

30.06.18


30 day arrears rate - Barclaycard US 

2.4%

2.5%


Total number of Barclaycard business clients 

383,382

 370,000


Value of payments processed (£bn)

174

169






Performance measures




Return on average allocated tangible equity

16.6%

21.2%


Average allocated tangible equity (£bn)

5.3

4.7


Cost: income ratio

54%

52%


Loan loss rate (bps)

176

171






Performance measures excluding litigation and conduct2

£m

£m

% Change

Profit before tax

631

749

(16)

Attributable profit

445

535

(17)

Return on average allocated tangible equity

16.7%

22.7%


Cost: income ratio

53%

50%


 

1

From 2019, due to an IAS 12 update, the tax relief on payments in relation to AT1 instruments has been recognised in the tax charge of the income statement, whereas it was previously recorded in retained earnings. Comparatives have been restated. This change does not impact earnings per share or return on average tangible shareholders' equity. Further detail can be found in Note 1, Basis of preparation on pages 55 to 56.

2

Refer to pages 84 to 93 for more information and calculations of performance measures excluding litigation and conduct.

 

In H119, Barclays International delivered double-digit returns despite a challenging income environment. CIB income reflected a positive performance in FICC and Transaction Banking, offset by a decrease in Equities and lower Banking fees, which was impacted by a decline in the Banking fee pool across the industry1, compared to a strong H118. Credit impairment charges normalised in the CIB. Barclays International operating expenses increased, driven by Consumer, Cards and Payments, including investment in US cards, merchant acquiring and wealth. This was offset by lower compensation accruals within CIB.

 

Income statement - H119 compared to H118

 

·

Profit before tax, excluding litigation and conduct, decreased 14% to £2,371m resulting in a RoTE of 10.7% (H118: 12.9%), reflecting returns in the CIB of 9.4% (H118: 11.1%) and Consumer, Cards and Payments of 16.7% (H118: 22.7%)

·

The 7% appreciation of average USD against GBP positively impacted profits and income, and adversely impacted credit impairment charges and operating expenses

·

Total income decreased to £7,473m (H118: £7,515m)


-

CIB income of £5,300m decreased 1% as positive performance in FICC and Transaction Banking was offset by the impact of a lower Banking fee pool across the industry1 and reduced client activity in Equities. Markets income was in line at £2,806m, Banking fees income decreased 9% to £1,267m and Corporate income decreased 1% to £1,227m



-

Within Markets, FICC income increased 14% to £1,822m. Excluding the £166m strategic investment gain on the initial public offering of Tradeweb, FICC income increased 3% reflecting a strong performance in rates and growth in securitised products. Equities income decreased 17% to £984m driven by equity derivatives, which was impacted by reduced client activity



-

Banking fees income decreased 9% to £1,267m driven by lower debt underwriting fees reflecting a reduced Banking fee pool1, offset by an increase in advisory fees. However, Barclays share of the global Banking fee pool has increased since FY181



-

Within Corporate, Transaction banking income increased 8% to £859m reflecting growth in deposits. This was offset by a decrease in Corporate lending income to £368m (H118: £438m). Excluding mark-to-market movements on loan hedges, Corporate lending income was stable at c.£400m


-

Consumer, Cards and Payments income increased 2% to £2,173m reflecting balance growth in the US cards business, partnership growth in merchant acquiring and appreciation of USD against GBP, offset by the non-recurrence of a £53m gain on the sale of a US cards portfolio in H118

·

Credit impairment charges increased to £492m (H118: £161m)


-

CIB credit impairment charges increased to £96m (H118: release of £182m) due to the non-recurrence of favourable macroeconomic forecast updates and single name recoveries in H118


-

Consumer, Cards and Payments credit impairment charges increased to £396m (H118: £343m) due to the non-recurrence of favourable US macroeconomic forecast updates in H118. Credit metrics were stable, with US cards 30 and 90 day arrears of 2.4% (H118: 2.5%) and 1.3% (H118: 1.3%) respectively

·

Operating expenses increased 1% to £4,641m as continued investment in the business was offset by variable compensation accruals which were reduced in response to performance in Q119


-

CIB operating expenses decreased 2% to £3,479m as variable compensation accruals were reduced in response to performance in Q119 partially offset by continued investment in the business


-

Consumer, Cards and Payments operating expenses increased 10% to £1,162m driven by continued investment in US cards, merchant acquiring and wealth

 

Balance sheet - 30 June 2019 compared to 31 December 2018

 

·

Total assets of £951.4bn increased by £89.3bn compared to year-end 2018

·

Trading portfolio assets increased £16.0bn to £120.0bn and cash collateral and settlement balances increased £27.0bn to £101.3bn, both due to increased trading activity compared to year-end 2018

·

Derivative financial instrument assets and liabilities increased £21.7bn to £243.8bn and £23.4bn to £243.0bn respectively driven by a decrease in major interest rate curves, principally in the second quarter

·

Financial assets at fair value through the income statement increased £10.0bn to £154.7bn due to increased secured lending compared to year-end 2018

·

Deposits at amortised cost increased £14.8bn to £212.0bn due to increased customer deposits

·

RWAs increased to £214.8bn (December 2018: £210.7bn), driven by increased CIB activity compared to year-end 2018

 

1

Data Source: Dealogic for the period covering 1 January to 30 June 2019

 

Head Office

Half year ended

Half year ended


30.06.19

30.06.18


Income statement information

£m

£m

% Change

Net interest income

(206)

(474)

57

Net fee, commission and other income

(25)

269


Total income

(231)

(205)

(13)

Credit impairment (charges)/releases and other provisions

(15)

5


Net operating income

(246)

(200)

(23)

Operating expenses

(96)

(95)

(1)

Litigation and conduct

(40)

(1,566)

97

Total operating expenses

(136)

(1,661)

92

Other net expenses

(7)

(16)

56

Loss before tax

(389)

(1,877)

79

Attributable loss1

(298)

(1,819)

84





As at 30.06.19

As at 31.12.18

As at 30.06.18

Balance sheet information

£bn

£bn

£bn

Total assets

22.4

21.5

17.2

Risk weighted assets

28.1

26.0

26.3

Period end allocated tangible equity

7.0

4.9

3.6





Half year ended

Half year ended

Performance measures

30.06.19

30.06.18

Average allocated tangible equity (£bn)

4.6

3.1




Performance measures excluding litigation and conduct2

£m

£m

% Change

Loss before tax

(349)

(311)

(12)

Attributable loss

(268)

(288)

7

 

1

From 2019, due to an IAS 12 update, the tax relief on payments in relation to AT1 instruments has been recognised in the tax charge of the income statement, whereas it was previously recorded in retained earnings. Comparatives have been restated. This change does not impact earnings per share or return on average tangible shareholders' equity. Further detail can be found in Note 1, Basis of preparation on pages 55 to 56.

2

Refer to pages 84 to 93 for further information and calculations of performance measures excluding litigation and conduct.

 

Income statement - H119 compared to H118

 

·

Loss before tax, excluding litigation and conduct, was £349m (H118: £311m). Including litigation and conduct charges of £40m (H118: £1,566m) that decreased primarily due to the non-recurrence of the RMBS settlement, loss before tax was £389m (H118: £1,877m)

·

Total income was an expense of £231m (H118: £205m) which included legacy capital instrument funding costs, and hedge accounting expenses partially offset by the recognition of dividends on Barclays stake in Absa Group Limited. Income expense increased on prior year reflecting the non-recurrence of a £155m one-off gain from the settlement of receivables relating to the Lehman Brothers acquisition, partially offset by lower net expenses from treasury operations

·

Operating expenses, excluding litigation and conduct, were £96m (H118: £95m)

 

Balance sheet - 30 June 2019 compared to 31 December 2018

 

·

Total assets increased to £22.4bn (December 2018: £21.5bn) and RWAs increased to £28.1bn (December 2018: £26.0bn) driven by recognition of property leases following IFRS 16 implementation

·

Period end allocated tangible equity increased to £7.0bn (December 2018: £4.9bn) mainly due to the Group's CET1 ratio being above the 13.0% target which is used in the allocation of equity to the businesses

 

Quarterly Results Summary

 

Barclays Group












Q219

Q119


Q418

Q318

Q218

Q118


Q417

Q317

Income statement information

£m

£m


£m

£m

£m

£m


£m

£m

Net interest income

2,360

2,258


2,296

2,388

2,190

2,188


2,272

2,475

Net fee, commission and other income

3,178

2,994


2,777

2,741

3,386

3,170


2,750

2,698

Total income

5,538

5,252


5,073

5,129

5,576

5,358


5,022

5,173

Credit impairment charges and other provisions

(480)

(448)


(643)

(254)

(283)

(288)


(573)

(709)

Net operating income

5,058

4,804


4,430

4,875

5,293

5,070


4,449

4,464

Operating costs

(3,501)

(3,257)


(3,624)

(3,329)

(3,310)

(3,364)


(3,621)

(3,274)

UK bank levy

-

-


(269)

-

-

-


(365)

-

Operating expenses

(3,501)

(3,257)


(3,893)

(3,329)

(3,310)

(3,364)


(3,986)

(3,274)

Guaranteed Minimum Pensions (GMP) charge

-

-


(140)

-

-

-


-

-

Litigation and conduct

(53)

(61)


(60)

(105)

(81)

(1,961)


(383)

(81)

Total operating expenses

(3,554)

(3,318)


(4,093)

(3,434)

(3,391)

(5,325)


(4,369)

(3,355)

Other net income/(expenses)

27

(3)


37

20

(7)

19


13

(2)

Profit/(loss) before tax

1,531

1,483


374

1,461

1,895

(236)


93

1,107

Tax charge1

(297)

(248)


(83)

(192)

(386)

(258)


(1,089)

(281)

Profit/(loss) after tax

1,234

1,235


291

1,269

1,509

(494)


(996)

826

Non-controlling interests

(17)

(17)


(75)

(43)

(55)

(53)


(68)

(43)

Other equity instrument holders

(183)

(180)


(230)

(176)

(175)

(171)


(181)

(157)

Attributable profit/(loss)1

1,034

1,038


(14)

1,050

1,279

(718)


(1,245)

626












Performance measures











Return on average tangible shareholders' equity

9.0%

9.2%


(0.1%)

9.4%

11.8%

(6.5%)


(10.3%)

5.1%

Average tangible shareholders' equity (£bn)

46.2

45.2


44.3

44.6

43.5

44.2


48.1

48.9

Cost: income ratio

64%

63%


81%

67%

61%

99%


87%

65%

Loan loss rate (bps)2

56

54


77

30

35

36


56

66

Basic earnings/(loss) per share 

6.0p

6.1p


(0.1p)

6.1p

7.5p

(4.2p)


(7.3p)

3.7p












Performance measures excluding litigation and conduct3

£m

£m


£m

£m

£m

£m


£m

£m

Profit before tax

1,584

1,544


434

1,566

1,976

1,725


476

1,188

Attributable profit/(loss)

1,074

1,084


48

1,135

1,338

1,212


(894)

703

Return on average tangible shareholders' equity

9.3%

9.6%


0.4%

10.2%

12.3%

11.0%


(7.4%)

5.7%

Cost: income ratio

63%

62%


79%

65%

59%

63%


79%

63%

Basic earnings/(loss) per share

6.3p

6.3p


0.3p

6.6p

7.8p

7.1p


(5.3p)

4.1p












Balance sheet and capital management4

£bn

£bn


£bn

£bn

£bn

£bn


£bn

£bn

Total assets

1,232.8

1,193.5


1,133.3

1,170.8

1,149.6

1,142.2


1,133.2

1,149.3

Tangible net asset value per share

275p

266p


262p

260p

259p

251p


276p

281p

Common equity tier 1 ratio

13.4%

13.0%


13.2%

13.2%

13.0%

12.7%


13.3%

13.1%

Common equity tier 1 capital

42.9

41.4


41.1

41.7

41.4

40.2


41.6

42.3

Risk weighted assets

319.1

319.7


311.9

316.2

319.3

317.9


313.0

324.3

Average UK leverage ratio

4.7%

4.6%


4.5%

4.6%

4.6%

4.6%


4.9%

4.9%

Average UK leverage exposure

1,134.6

1,105.5


1,110.0

1,119.0

1,081.8

1,089.9


1,044.6

1,035.1

UK leverage ratio

5.1%

4.9%


5.1%

4.9%

4.9%

4.8%


5.1%

5.1%

UK leverage exposure

1,079.4

1,065.0


998.6

1,063.5

1,030.1

1,030.8


984.7

1,002.1












Funding and liquidity











Group liquidity (£bn)

238

232


227

213

214

207


220

216

Liquidity coverage ratio

156%

160%


169%

161%

154%

147%


154%

157%

Loan : deposit ratio

82%

80%


83%

83%

83%

84%


81%

80%












 

1

From 2019, due to an IAS 12 update, the tax relief on payments in relation to AT1 instruments has been recognised in the tax charge of the income statement, whereas it was previously recorded in retained earnings. Comparatives have been restated. This change does not impact earnings per share or return on average tangible shareholders' equity. Further detail can be found in Note 1, Basis of preparation on pages 55 to 56.

2

Prior to Q118 comparatives calculated based on gross loans and advances at amortised cost before the balance sheet presentation change and IAS 39 impairment charge.

3

Refer to pages 84 to 93 for further information and calculations of performance measures excluding litigation and conduct.

4

Capital, RWAs and leverage measures are calculated applying the transitional arrangements of the CRR as amended by CRR II applicable as at the reporting date. This includes IFRS 9 transitional arrangements. For more information on the implementation of CRR II see page 40.

 

Quarterly Results by Business

 

Barclays UK












Q219

Q119


Q418

Q318

Q218

Q118


Q417

Q317

Income statement information

£m

£m


£m

£m

£m

£m


£m

£m

Net interest income

1,438

1,469


1,513

1,529

1,493

1,493


1,540

1,501

Net fee, commission and other income

333

308


350

367

343

295


330

351

Total income

1,771

1,777


1,863

1,896

1,836

1,788


1,870

1,852

Credit impairment charges and other provisions

(230)

(191)


(296)

(115)

(214)

(201)


(184)

(201)

Net operating income

1,541

1,586


1,567

1,781

1,622

1,587


1,686

1,651

Operating costs

(1,022)

(999)


(1,114)

(988)

(968)

(1,005)


(1,117)

(980)

UK bank levy

-

-


(46)

-

-

-


(59)

-

Litigation and conduct

(41)

(3)


(15)

(54)

(3)

(411)


(53)

(11)

Total operating expenses

(1,063)

(1,002)


(1,175)

(1,042)

(971)

(1,416)


(1,229)

(991)

Other net (expenses)/income

(1)

1


(2)

1

5

(1)


(5)

1

Profit before tax 

477

585


390

740

656

170


452

661

Attributable profit/(loss)1

328

422


241

510

473

(26)


258

432












Balance sheet information

£bn

£bn


£bn

£bn

£bn

£bn


£bn

£bn

Loans and advances to customers at amortised cost

189.1

187.5


187.6

186.7

185.3

184.3


183.8

182.2

Total assets

259.0

253.1


249.7

252.0

245.9

235.2


237.4

230.4

Customer deposits at amortised cost

200.9

197.3


197.3

195.8

194.3

192.0


193.4

189.3

Loan: deposit ratio

97%

96%


96%

96%

96%

96%


95%

97%

Risk weighted assets

76.2

76.6


75.2

74.8

75.0

72.5


70.9

70.0

Period end allocated tangible equity

10.3

10.5


10.2

10.1

10.2

9.8


9.6

9.5












Performance measures











Return on average allocated tangible equity

12.7%

16.3%


9.6%

20.1%

18.8%

(1.1%)


10.7%

18.4%

Average allocated tangible equity (£bn)

10.3

10.4


10.1

10.1

10.1

9.8


9.6

9.4

Cost: income ratio

60%

56%


63%

55%

53%

79%


66%

54%

Loan loss rate (bps)2

47

40


61

24

45

43


39

43

Net interest margin

3.05%

3.18%


3.20%

3.22%

3.22%

3.27%


3.32%

3.28%












Performance measures excluding litigation and conduct3

£m

£m


£m

£m

£m

£m


£m

£m

Profit before tax

518

588


405

794

659

581


505

672

Attributable profit

358

424


253

558

474

385


295

440

Return on average allocated tangible equity

13.9%

16.4%


10.1%

22.0%

18.8%

15.7%


12.3%

18.7%

Cost: income ratio

58%

56%


62%

52%

53%

56%


63%

53%

 

1

From 2019, due to an IAS 12 update, the tax relief on payments in relation to AT1 instruments has been recognised in the tax charge of the income statement, whereas it was previously recorded in retained earnings. Comparatives have been restated. This change does not impact earnings per share or return on average tangible shareholders' equity. Further detail can be found in Note 1, Basis of preparation on pages 55 to 56.

2

Prior to Q118 comparatives calculated based on gross loans and advances at amortised cost before the balance sheet presentation change and IAS 39 impairment charge.

3

Refer to pages 84 to 93 for further information and calculations of performance measures excluding litigation and conduct.

 

Analysis of Barclays UK

Q219

Q119


Q418

Q318

Q218

Q118


Q417

Q317

Analysis of total income

£m

£m


£m

£m

£m

£m


£m

£m

Personal Banking

946

964


998

1,021

1,015

972


1,116

1,022

Barclaycard Consumer UK

497

490


522

551

504

527


445

539

Business Banking

328

323


343

324

317

289


309

291

Total income

1,771

1,777


1,863

1,896

1,836

1,788


1,870

1,852












Analysis of credit impairment (charges)/releases and other provisions











Personal Banking

(36)

(52)


(44)

(8)

(49)

(72)


(56)

(57)

Barclaycard Consumer UK

(175)

(140)


(250)

(88)

(139)

(113)


(124)

(145)

Business Banking

(19)

1


(2)

(19)

(26)

(16)


(4)

1

Total credit impairment charges and other provisions

(230)

(191)


(296)

(115)

(214)

(201)


(184)

(201)












Analysis of loans and advances to customers at amortised cost

£bn

£bn


£bn

£bn

£bn

£bn


£bn

£bn

Personal Banking

147.3

145.9


146.0

145.4

143.6

142.1


141.3

140.4

Barclaycard Consumer UK

15.1

15.0


15.3

15.3

15.2

15.2


16.4

16.3

Business Banking

26.7

26.6


26.3

26.0

26.5

27.0


26.1

25.5

Total loans and advances to customers at amortised cost

189.1

187.5


187.6

186.7

185.3

184.3


183.8

182.2












Analysis of customer deposits at amortised cost











Personal Banking

156.3

154.1


154.0

153.4

152.9

151.9


153.1

152.1

Barclaycard Consumer UK

-

-


-

-

-

-


-

-

Business Banking

44.6

43.2


43.3

42.4

41.4

40.1


40.3

37.2

Total customer deposits at amortised cost

200.9

197.3


197.3

195.8

194.3

192.0


193.4

189.3

 

Barclays International









Q219

Q119


Q418

Q318

Q218

Q118


Q417

Q317

Income statement information

£m

£m


£m

£m

£m

£m


£m

£m

Net interest income

1,017

900


984

965

853

1,013


987

1,148

Net trading income

1,016

1,144


837

1,103

1,094

1,416


935

815

Net fee, commission and other income

1,870

1,526


1,400

1,222

1,760

1,379


1,397

1,352

Total income

3,903

3,570


3,221

3,290

3,707

3,808


3,319

3,315

Credit impairment charges and other provisions

(247)

(245)


(354)

(143)

(68)

(93)


(386)

(495)

Net operating income

3,656

3,325


2,867

3,147

3,639

3,715


2,933

2,820

Operating costs

(2,435)

(2,206)


(2,441)

(2,277)

(2,306)

(2,300)


(2,428)

(2,182)

UK bank levy

-

-


(210)

-

-

-


(265)

-

Litigation and conduct

(11)

(19)


(33)

(32)

(47)

(15)


(255)

(5)

Total operating expenses

(2,446)

(2,225)


(2,684)

(2,309)

(2,353)

(2,315)


(2,948)

(2,187)

Other net income

13

18


32

12

11

13


21

19

Profit before tax

1,223

1,118


215

850

1,297

1,413


6

652

Attributable profit/(loss)1

832

788


(21)

687

926

1,007


(1,134)

391












Balance sheet information

£bn

£bn


£bn

£bn

£bn

£bn


£bn

£bn

Loans and advances at amortised cost

134.8

130.9


127.2

132.4

125.5

117.5


126.8

134.4

Trading portfolio assets

120.0

117.2


104.0

124.6

116.5

114.9


113.0

91.2

Derivative financial instrument assets

243.8

217.3


222.1

214.8

228.2

214.1


236.2

242.8

Financial assets at fair value through the income statement

154.7

153.5


144.7

147.8

141.2

150.6


104.1

103.7

Cash collateral and settlement balances

101.3

97.8


74.3

94.3

91.5

82.6


71.9

86.3

Other assets

196.8

202.3


189.8

186.3

183.6

186.9


204.1

208.7

Total assets

951.4

919.0


862.1

900.2

886.5

866.6


856.1

867.1

Deposits at amortised cost

212.0

215.5


197.2

200.3

191.0

167.2


187.3

191.9

Derivative financial instrument liabilities

243.0

213.5


219.6

213.7

224.9

210.8


237.8

242.9

Loan: deposit ratio

64%

61%


65%

66%

66%

70%


68%

70%

Risk weighted assets

214.8

216.1


210.7

214.6

218.0

214.2


210.3

218.2

Period end allocated tangible equity

30.2

30.6


29.9

30.2

30.5

30.0


27.5

28.0












Performance measures











Return on average allocated tangible equity

10.7%

10.4%


(0.3%)

8.8%

11.8%

13.4%


(15.9%)

5.4%

Average allocated tangible equity (£bn)

31.1

30.5


31.3

31.1

31.4

30.1


28.5

28.9

Cost: income ratio

63%

62%


83%

70%

63%

61%


89%

66%

Loan loss rate (bps)2

72

73


107

41

22

31


76

88

Net interest margin

3.91%

3.99%


3.98%

3.87%

4.03%

4.57%


4.31%

4.21%












Performance measures excluding litigation and conduct3

£m

£m


£m

£m

£m

£m


£m

£m

Profit before tax

1,234

1,137


248

882

1,344

1,428


261

657

Attributable profit/(loss)

840

804


13

713

960

1,019


(884)

395

Return on average allocated tangible equity

10.8%

10.6%


0.2%

9.2%

12.2%

13.6%


(12.4%)

5.5%

Cost: income ratio

62%

62%


82%

69%

62%

60%


81%

66%

 

1

From 2019, due to an IAS 12 update, the tax relief on payments in relation to AT1 instruments has been recognised in the tax charge of the income statement, whereas it was previously recorded in retained earnings. Comparatives have been restated. This change does not impact earnings per share or return on average tangible shareholders' equity. Further detail can be found in Note 1, Basis of preparation on pages 55 to 56.

2

Prior to Q118 comparatives calculated based on gross loans and advances at amortised cost before the balance sheet presentation change and IAS 39 impairment charge.

3

Refer to pages 84 to 93 for further information and calculations of performance measures excluding litigation and conduct.

 

Analysis of Barclays International




















Corporate and Investment Bank

Q219

Q119


Q418

Q318

Q218

Q118


Q417

Q317

Income statement information

£m

£m


£m

£m

£m

£m


£m

£m

FICC

920

902


570

688

736

869


607

627

Equities

517

467


375

471

601

590


362

350

Markets

1,437

1,369


945

1,159

1,337

1,459


969

977

Banking fees

698

569


625

519

704

683


605

607

Corporate lending

216

152


243

197

198

240


269

277

Transaction banking

444

415


412

416

385

414


408

419

Corporate

660

567


655

613

583

654


677

696

Other

-

-


(74)

(56)

(44)

3


1

-

Total income

2,795

2,505


2,151

2,235

2,580

2,799


2,252

2,280

Credit impairment (charges)/releases and other  provisions

(44)

(52)


(35)

3

23

159


(127)

(36)

Net operating income

2,751

2,453


2,116

2,238

2,603

2,958


2,125

2,244

Operating costs

(1,860)

(1,619)


(1,835)

(1,712)

(1,773)

(1,773)


(1,885)

(1,656)

UK bank levy

-

-


(188)

-

-

-


(244)

-

Litigation and conduct

(7)

(19)


(23)

(32)

-

(13)


(255)

(5)

Total operating expenses

(1,867)

(1,638)


(2,046)

(1,744)

(1,773)

(1,786)


(2,384)

(1,661)

Other net income

3

12


15

4

5

3


7

10

Profit/(loss) before tax

887

827


85

498

835

1,175


(252)

593

Attributable profit/(loss)1

596

582


(84)

431

600

834


(1,227)

368












Balance sheet information

£bn

£bn


£bn

£bn

£bn

£bn


£bn

£bn

Loans and advances at amortised cost

92.1

90.6


86.4

93.3

87.8

81.3


88.2

95.4

Trading portfolio assets

119.9

117.2


104.0

124.5

116.5

114.9


112.9

91.1

Derivative financial instruments assets

243.7

217.3


222.1

214.8

228.1

214.2


236.1

242.7

Financial assets at fair value through the income statement

154.1

152.9


144.2

147.3

140.7

150.2


103.8

103.4

Cash collateral and settlement balances

100.4

96.9


73.4

93.3

90.6

81.1


71.9

86.3

Other assets

168.1

163.2


160.4

153.8

151.6

159.8


175.8

179.9

Total assets

878.3

838.1


790.5

827.0

815.3

801.5


788.7

798.8

Deposits at amortised cost

145.4

151.4


136.3

137.6

130.3

107.6


128.0

133.4

Derivative financial instrument liabilities

242.9

213.5


219.6

213.7

224.9

210.9


237.7

242.8

Risk weighted assets

175.9

176.6


170.9

175.9

180.4

181.3


176.2

185.2












Performance measures











Return on average allocated tangible equity

9.2%

9.3%


(1.3%)

6.6%

9.1%

13.0%


(20.2%)

5.9%

Average allocated tangible equity (£bn)

25.8

25.1


26.0

25.9

26.4

25.6


24.3

24.8

Cost: income ratio

67%

65%


95%

78%

69%

64%


106%

73%












Performance measures excluding litigation and conduct2

£m

£m


£m

£m

£m

£m


£m

£m

Profit before tax

894

846


108

530

835

1,188


3

598

Attributable profit/(loss)

601

598


(57)

456

600

844


(977)

372

Return on average allocated tangible equity

9.3%

9.5%


(0.9%)

7.0%

9.1%

13.2%


(16.1%)

6.0%

Cost: income ratio

67%

65%


94%

77%

69%

63%


95%

73%

 

1

From 2019, due to an IAS 12 update, the tax relief on payments in relation to AT1 instruments has been recognised in the tax charge of the income statement, whereas it was previously recorded in retained earnings. Comparatives have been restated. This change does not impact earnings per share or return on average tangible shareholders' equity. Further detail can be found in Note 1, Basis of preparation on pages 55 to 56.

2

Refer to pages 84 to 93 for further information and calculations of performance measures excluding litigation and conduct.

 

Analysis of Barclays International
















Consumer, Cards and Payments

Q219

Q119


Q418

Q318

Q218

Q118


Q417

Q317

Income statement information

£m

£m


£m

£m

£m

£m


£m

£m

Total income

1,108

1,065


1,070

1,055

1,127

1,009


1,067

1,035

Credit impairment charges and other provisions

(203)

(193)


(319)

(146)

(91)

(252)


(259)

(459)

Net operating income

905

872


751

909

1,036

757


808

576

Operating costs

(575)

(587)


(606)

(565)

(533)

(527)


(543)

(526)

UK bank levy

-

-


(22)

-

-

-


(21)

-

Litigation and conduct

(4)

-


(10)

-

(47)

(2)


-

-

Total operating expenses

(579)

(587)


(638)

(565)

(580)

(529)


(564)

(526)

Other net income

10

6


17

8

6

10


14

9

Profit before tax

336

291


130

352

462

238


258

59

Attributable profit1

236

206


63

256

326

173


93

23












Balance sheet information

£bn

£bn


£bn

£bn

£bn

£bn


£bn

£bn

Loans and advances at amortised cost

42.7

40.3


40.8

39.1

37.7

36.2


38.6

39.0

Total assets

73.1

80.9


71.6

73.2

71.2

65.1


67.4

68.3

Deposits at amortised cost

66.6

64.1


60.9

62.7

60.7

59.6


59.3

58.5

Risk weighted assets

38.9

39.5


39.8

38.7

37.6

32.9


34.1

33.0












Performance measures











Return on average allocated tangible equity

17.8%

15.4%


4.8%

19.8%

26.2%

15.6%


8.9%

2.2%

Average allocated tangible equity (£bn)

5.3

5.4


5.3

5.2

5.0

4.5


4.2

4.2

Cost: income ratio

52%

55%


60%

54%

51%

52%


53%

51%

Loan loss rate (bps)2

180

182


290

138

90

263


255

446












Performance measures excluding litigation and conduct3

£m

£m


£m

£m

£m

£m


£m

£m

Profit before tax

340

291


140

352

509

240


258

59

Attributable profit

239

206


70

257

360

175


93

23

Return on average allocated tangible equity

18.0%

15.4%


5.4%

19.9%

28.9%

15.7%


9.0%

2.2%

Cost:income ratio

52%

55%


59%

54%

47%

52%


53%

51%

 

1

From 2019, due to an IAS 12 update, the tax relief on payments in relation to AT1 instruments has been recognised in the tax charge of the income statement, whereas it was previously recorded in retained earnings. Comparatives have been restated. This change does not impact earnings per share or return on average tangible shareholders' equity. Further detail can be found in Note 1, Basis of preparation on pages 55 to 56.

2

Prior to Q118 comparatives calculated based on gross loans and advances at amortised cost before the balance sheet presentation change and IAS 39 impairment charge.

3

Refer to pages 84 to 93 for further information and calculations of performance measures excluding litigation and conduct.

 

Head Office












Q219

Q119


Q418

Q318

Q218

Q118


Q417

Q317

Income statement information

£m

£m


£m

£m

£m

£m


£m

£m

Net interest income

(95)

(111)


(201)

(106)

(156)

(318)


(254)

(174)

Net fee, commission and other income

(41)

16


190

49

189

80


87

180

Total income

(136)

(95)


(11)

(57)

33

(238)


(167)

6

Credit impairment (charges)/releases and other provisions 

(3)

(12)


7

4

(1)

6


(3)

(13)

Net operating (expenses)/income

(139)

(107)


(4)

(53)

32

(232)


(170)

(7)

Operating costs

(44)

(52)


(69)

(64)

(36)

(59)


(76)

(112)

UK bank levy

-

-


(13)

-

-

-


(41)

-

GMP charge

-

-


(140)

-

-

-


-

-

Litigation and conduct

(1)

(39)


(12)

(19)

(31)

(1,535)


(75)

(65)

Total operating expenses

(45)

(91)


(234)

(83)

(67)

(1,594)


(192)

(177)

Other net income/(expenses)

15

(22)


7

7

(23)

7


(3)

(22)

Loss before tax

(169)

(220)


(231)

(129)

(58)

(1,819)


(365)

(206)

Attributable loss1

(126)

(172)


(234)

(147)

(120)

(1,699)


(369)

(197)












Balance sheet information

£bn

£bn


£bn

£bn

£bn

£bn


£bn

£bn

Total assets

22.4

21.4


21.5

18.6

17.2

40.4


39.7

51.7

Risk weighted assets

28.1

27.0


26.0

26.8

26.3

31.2


31.8

36.1

Period end allocated tangible equity

7.0

4.5


4.9

4.2

3.6

3.0


10.0

10.4












Performance measures











Average allocated tangible equity (£bn)

4.8

4.3


2.9

3.4

2.0

4.3


10.0

10.5












Performance measures excluding litigation and conduct2

£m

£m


£m

£m

£m

£m


£m

£m

Loss before tax

(168)

(181)


(219)

(110)

(27)

(284)


(290)

(141)

Attributable loss

(124)

(144)


(218)

(136)

(96)

(192)


(305)

(132)

 

1

From 2019, due to an IAS 12 update, the tax relief on payments in relation to AT1 instruments has been recognised in the tax charge of the income statement, whereas it was previously recorded in retained earnings. Comparatives have been restated. This change does not impact earnings per share or return on average tangible shareholders' equity. Further detail can be found in Note 1, Basis of preparation on pages 55 to 56.

2

Refer to pages 84 to 93 for further information and calculations of performance measures excluding litigation and conduct.

 

Performance Management

 

Margins and balances








Half year ended 30.06.19

Half year ended 30.06.181


Net interest income

Average customer assets

Net interest margin

Net interest income

Average customer assets

Net interest margin


£m

£m

%

£m

£m

%

Barclays UK

2,907

188,377

 3.11

2,986

185,666

 3.24

Barclays International2

1,947

99,478

 3.95

2,027

95,170

 4.30

Total Barclays UK and Barclays International

4,854

287,855

 3.40

5,013

280,836

 3.60

Other3

(236)



(635)



Total Barclays Group4

4,618



4,378



 

1

The Group's treasury results are reported directly within Barclays UK and Barclays International from Q218 following ring-fencing, resulting in gains and losses made on certain activities being recognised as Other income, rather than in Net interest income.

2

Barclays International margins include interest earning lending balances within the investment banking business.

3

Other includes Head Office and non-lending related investment banking businesses not included in Barclays International margins.

4

The Group combined product and equity structural hedge notional as at 30 June 2019 was £172bn, with an average duration of 2.5 to 3 years. Group net interest income includes gross structural hedge contributions of £0.9bn (H118: £0.9bn) and net structural hedge contributions of £0.2bn (H118: £0.4bn). Gross structural hedge contributions represent the absolute level of interest earned from the fixed receipts on the basket of swaps in the structural hedge, while the net structural hedge contributions represent the net interest earned on the difference between the structural hedge rate and prevailing floating rates.

 

Net interest margin decreased 20bps to 3.40% primarily reflecting ongoing margin pressure and maintenance of a reduced risk appetite in UK cards, and the recategorisation of certain treasury income following ring-fencing.

 

Quarterly analysis for Barclays UK and Barclays International

Net interest income

Average customer assets

Net interest margin

Three months ended 30.06.19

£m

£m

%

Barclays UK

 1,438

 189,172

 3.05

Barclays International1

 980

 100,645

 3.91

Total Barclays UK and Barclays International

 2,418

 289,817

 3.35





Three months ended 31.03.19




Barclays UK

1,469

187,570

3.18

Barclays International1

967

98,313

3.99

Total Barclays UK and Barclays International

2,436

285,883

3.46





Three months ended 31.12.18




Barclays UK

1,513

187,813

3.20

Barclays International1

994

99,137

3.98

Total Barclays UK and Barclays International

2,507

286,950

3.47





Three months ended 30.09.18




Barclays UK

1,529

188,239

3.22

Barclays International1

945

96,785

3.87

Total Barclays UK and Barclays International

2,474

285,024

3.44





Three months ended 30.06.18




Barclays UK

1,493

186,053

3.22

Barclays International1

962

95,728

4.03

Total Barclays UK and Barclays International

2,455

281,781

3.49

 

1

Barclays International margins include interest earning lending balances within the investment banking business.

 

Risk Management

 

Risk management and principal risks

 

The roles and responsibilities of the business groups, Risk and Compliance, in the management of risk in the firm are defined in the Enterprise Risk Management Framework. The purpose of the framework is to identify the principal risks of Barclays Group, the process by which Barclays Group sets its appetite for these risks in its business activities, and the consequent limits which it places on related risk taking.

 

The framework identifies eight principal risks: credit risk; market risk; treasury and capital risk; operational risk; model risk; conduct risk; reputation risk; and legal risk. Further detail on these risks and how they are managed is available in the Barclays PLC Annual Report 2018 or online at home.barclays/annualreport. There have been no significant changes to these principal risks or previously identified material existing and emerging risks in the period, including the risks associated with the process of the UK withdrawal from the European Union which continue to be closely monitored by Barclays Group. Impairment as at 30 June 2019 continues to include an adjustment of £150m representing the estimated impact of anticipated economic uncertainty in the UK (for further detail please see page 31). No significant changes to the principal risks or previously identified material existing and emerging risks are currently expected for the remaining six months of the year.

 

The following section gives an overview of credit risk, market risk, and treasury and capital risk for the period.

 

Credit Risk

 

Loans and advances at amortised cost by stage

 

The table below presents an analysis of loans and advances at amortised cost by gross exposure, impairment allowance, impairment charge and coverage ratio by stage allocation and business segment as at 30 June 2019. Also included are off-balance sheet loan commitments and financial guarantee contracts by gross exposure, impairment allowance and coverage ratio by stage allocation as at 30 June 2019. Barclays does not hold any material purchased or originated credit impaired assets as at period-end.

 


Gross exposure


Impairment allowance

Net exposure


Stage 1

Stage 2

Stage 3

Total


Stage 1

Stage 2

Stage 3

Total

As at 30.06.19

£m

£m

£m

£m


£m

£m

£m

£m

£m

Barclays UK

135,413

26,319

2,816

164,548


180

1,395

1,043

2,618

161,930

Barclays International

28,498

4,444

1,855

34,797


344

803

1,312

2,459

32,338

Head Office

6,121

611

897

7,629


8

46

314

368

7,261

Total Barclays Group retail

170,032

31,374

5,568

206,974


532

2,244

2,669

5,445

201,529

Barclays UK

27,640

3,775

1,213

32,628


14

50

115

179

32,449

Barclays International

91,954

9,826

1,592

103,372


146

257

465

868

102,504

Head Office

2,834

                - 

40

2,874


               - 

               - 

37

37

2,837

Total Barclays Group wholesale

122,428

13,601

2,845

138,874


160

307

617

1,084

137,790

Total loans and advances at amortised cost

292,460

44,975

8,413

345,848


692

2,551

3,286

6,529

339,319

Off-balance sheet loan commitments and financial guarantee contracts1

321,028

20,661

503

342,192


104

161

32

297

341,895

Total2

613,488

65,636

8,916

688,040


796

2,712

3,318

6,826

681,214













As at 30.06.19


Half year ended 30.06.19



Coverage ratio


Loan impairment charge and loan loss rate3



Stage 1

Stage 2

Stage 3

Total


Loan impairment charge

Loan loss rate



%

%

%

%


£m

bps


Barclays UK

0.1

5.3

37.0

1.6



404


50


Barclays International

1.2

18.1

70.7

7.1



383


222


Head Office

0.1

7.5

35.0

4.8



15


40


Total Barclays Group retail

0.3

7.2

47.9

2.6



802


78


Barclays UK

0.1

1.3

9.5

0.5



8


5


Barclays International

0.2

2.6

29.2

0.8



82


16


Head Office

-

-

92.5

1.3



-


-


Total Barclays Group wholesale

0.1

2.3

21.7

0.8



90


13


Total loans and advances at amortised cost

0.2

5.7

39.1

1.9



892


52


Off-balance sheet loan commitments and financial guarantee contracts1

-

0.8

6.4

0.1



30




Other financial assets subject to impairment2







6




Total

0.1

4.1

37.2

1.0



928




 

1

Excludes loan commitments and financial guarantees of £15.5bn carried at fair value.

2

Other financial assets subject to impairment not included in the table above include cash collateral and settlement balances, financial assets at fair value through other comprehensive income and other assets. These have a total gross exposure of £178.7bn and impairment allowance of £22m. This comprises £14m Expected Credit Loss (ECL) on £178.2bn stage 1 assets, £3m on £0.5bn stage 2 fair value through other comprehensive income assets and £5m on £5m stage 3 other assets.

3

H119 loan impairment charge represents six months of impairment charge, annualised to calculate the loan loss rate. The loan loss rate for H119 is 54bps after applying the total impairment charge of £928m.

 


Gross exposure


Impairment allowance

Net exposure


Stage 1

Stage 2

Stage 3

Total


Stage 1

Stage 2

Stage 3

Total

As at 31.12.18

£m

£m

£m

£m


£m

£m

£m

£m

£m

Barclays UK

134,911

25,279

3,040

163,230


183

1,389

1,152

2,724

160,506

Barclays International

26,714

4,634

1,830

33,178


352

965

1,315

2,632

30,546

Head Office

6,510

636

938

8,084


9

47

306

362

7,722

Total Barclays Group retail

168,135

30,549

5,808

204,492


544

2,401

2,773

5,718

198,774

Barclays UK

22,824

4,144

1,272

28,240


16

70

117

203

28,037

Barclays International

87,344

8,754

1,382

97,480


128

244

439

811

96,669

Head Office

2,923

 -  

41

2,964


-

-

38

38

2,926

Total Barclays Group wholesale

113,091

12,898

2,695

128,684


144

314

594

1,052

127,632

Total loans and advances at amortised cost

281,226

43,447

8,503

333,176


688

2,715

3,367

6,770

326,406

Off-balance sheet loan commitments and financial guarantee contracts1

309,989

22,126

684

332,799


99

150

22

271

332,528

Total2

591,215

65,573

9,187

665,975


787

2,865

3,389

7,041

658,934













As at 31.12.18


Year ended 31.12.18



Coverage ratio


Loan impairment charge and loan loss rate



Stage 1

Stage 2

Stage 3

Total


Loan impairment charge

Loan loss rate



%

%

%

%


£m


bps


Barclays UK

0.1

5.5

37.9

1.7



830


51


Barclays International

1.3

20.8

71.9

7.9



844


254


Head Office

0.1

7.4

32.6

4.5



15


19


Total Barclays Group retail

0.3

7.9

47.7

2.8



1,689


83


Barclays UK

0.1

1.7

9.2

0.7



74


26


Barclays International

0.1

2.8

31.8

0.8



(142)


 -


Head Office

-

-

92.7

1.3



(31)


 -


Total Barclays Group wholesale

0.1

2.4

22.0

0.8



(99)


 -


Total loans and advances at amortised cost

0.2

6.2

39.6

2.0



1,590


48


Off-balance sheet loan commitments and financial guarantee contracts1

-

0.7

3.2

0.1



(125)




Other financial assets subject to impairment2







3




Total

0.1

4.4

36.9

1.1



1,468




 

1

Excludes loan commitments and financial guarantees of £11.7bn carried at fair value.

2

Other financial assets subject to impairment not included in the table above include cash collateral and settlement balances, financial assets at fair value through other comprehensive income and other assets. These have a total gross exposure of £129.9bn and impairment allowance of £12m. This comprises £10m ECL on £129.3bn stage 1 assets and £2m on £0.6bn stage 2 fair value through other comprehensive income assets.

 

Loans and advances at amortised cost by product

 

The table below presents a breakdown of loans and advances at amortised cost and the impairment allowance with stage allocation by asset classification.

 



Stage 2



As at 30.06.19

Stage 1

Not past due

<=30 days past due

>30 days past due

Total

Stage 3

Total

Gross exposure

£m

£m

£m

£m

£m

£m

£m

Home loans

130,559

16,640

1,636

792

19,068

2,393

152,020

Credit cards, unsecured loans and other retail lending

47,591

11,205

529

460

12,194

3,574

63,359

Corporate loans

114,310

12,033

619

1,061

13,713

2,446

130,469

Total

292,460

39,878

2,784

2,313

44,975

8,413

345,848









Impairment allowance








Home loans

34

54

15

14

83

360

477

Credit cards, unsecured loans and other retail lending

516

1,768

158

219

2,145

2,380

5,041

Corporate loans

142

296

19

8

323

546

1,011

Total

692

2,118

192

241

2,551

3,286

6,529









Net exposure








Home loans

130,525

16,586

1,621

778

18,985

2,033

151,543

Credit cards, unsecured loans and other retail lending

47,075

9,437

371

241

10,049

1,194

58,318

Corporate loans

114,168

11,737

600

1,053

13,390

1,900

129,458

Total

291,768

37,760

2,592

2,072

42,424

5,127

339,319









Coverage ratio

%

%

%

%

%

%

%

Home loans

-

0.3

0.9

1.8

0.4

15.0

0.3

Credit cards, unsecured loans and other retail lending

1.1

15.8

29.9

47.6

17.6

66.6

8.0

Corporate loans

0.1

2.5

3.1

0.8

2.4

22.3

0.8

Total

0.2

5.3

6.9

10.4

5.7

39.1

1.9









As at 31.12.18








Gross exposure

£m

£m

£m

£m

£m

£m

£m

Home loans

130,066

15,672

1,672

862

18,206

2,476

150,748

Credit cards, unsecured loans and other retail lending

45,785

11,262

530

437

12,229

3,760

61,774

Corporate loans

105,375

12,177

360

475

13,012

2,267

120,654

Total

281,226

39,111

2,562

1,774

43,447

8,503

333,176









Impairment allowance








Home loans

31

56

13

13

82

351

464

Credit cards, unsecured loans and other retail lending

528

1,895

169

240

2,304

2,511

5,343

Corporate loans

129

300

16

13

329

505

963

Total

688

2,251

198

266

2,715

3,367

6,770









Net exposure








Home loans

130,035

15,616

1,659

849

18,124

2,125

150,284

Credit cards, unsecured loans and other retail lending

45,257

9,367

361

197

9,925

1,249

56,431

Corporate loans

105,246

11,877

344

462

12,683

1,762

119,691

Total

280,538

36,860

2,364

1,508

40,732

5,136

326,406









Coverage ratio

%

%

%

%

%

%

%

Home loans

-

0.4

0.8

1.5

0.5

14.2

0.3

Credit cards, unsecured loans and other retail lending

1.2

16.8

31.9

54.9

18.8

66.8

8.6

Corporate loans

0.1

2.5

4.4

2.7

2.5

22.3

0.8

Total

0.2

5.8

7.7

15.0

6.2

39.6

2.0

 

Movement in gross exposures and impairment allowance including provisions for loan commitments and financial guarantees

 

The following tables present a reconciliation of the opening to the closing balance of the exposure and impairment allowance. An explanation of the terms 12-month Expected Credit Losses (ECL), lifetime ECL and credit-impaired is included in the Barclays PLC Annual Report 2018 on page 273.

 


Stage 1

Stage 2

Stage 3

Total

Gross exposure for loans and advances at amortised cost

£m

£m

£m

£m

As at 1 January 2019

281,226

43,447

8,503

333,176

Transfers from Stage 1

(13,760)

13,256

504

-

Transfers from Stage 2

9,943

(11,468)

1,525

-

Transfers from Stage 3

271

267

(538)

-

Business activity in the year

51,037

1,543

169

52,749

Net drawdowns and repayments

(8,564)

867

91

(7,606)

Final repayments

(27,693)

(2,937)

(605)

(31,235)

Disposals

-

-

(285)

(285)

Write-offs1

-

-

(951)

(951)

As at 30 June 2019

292,460

44,975

8,413

345,848







Stage 1

Stage 2

Stage 3

Total

Impairment allowance on loans and advances at amortised cost

£m

£m

£m

£m

As at 1 January 2019

688

2,715

3,367

6,770

Transfers from Stage 1

(91)

82

9

-

Transfers from Stage 2

507

(834)

327

-

Transfers from Stage 3

23

17

(40)

-

Business activity in the year

122

77

27

226

Net re-measurement and movement due to exposure and risk parameter changes

(520)

563

841

884

Final repayments

(37)

(69)

(74)

(180)

Disposals

-

-

(220)

(220)

Write-offs1

-

-

(951)

(951)

As at 30 June 20192

692

2,551

3,286

6,529






Reconciliation of ECL movement to impairment charge/(release) for the period




£m

ECL movement excluding assets derecognised due to disposals and write-offs




930

Post write-off recoveries1




(73)

Exchange and other adjustments




35

Impairment charge on loan commitments and financial guarantees




30

Impairment charge on other financial assets2




6

Income statement charge/(release) for the period




928

 

1

In H119, gross write-offs amounted to £951m (H118: £949m) and post write-off recoveries amounted to £73m (H118: £68m). Net write-offs represent gross write-offs less post write-off recoveries and amounted to £878m (H118: £881m).

2

Other financial assets subject to impairment not included in the table above include cash collateral and settlement balances, financial assets at fair value through other comprehensive income and other assets. These have a total gross exposure of £178.7bn (December 2018: £129.9bn) and impairment allowance of £22m (December 2018: £12m). This comprises £14m ECL (December 2018: £10m) on £178.2bn stage 1 assets (December 2018: £129.3bn), £3m (December 2018: £2m) on £0.5bn stage 2 fair value through other comprehensive income assets (December 2018: £0.6bn) and £5m (December 2018: £nil) on £5m stage 3 other assets (December 2018: £nil).

 


Stage 1

Stage 2

Stage 3

Total

Gross exposure for loan commitments and financial guarantees

£m

£m

£m

£m

As at 1 January 2019

309,989

22,126

684

332,799

Net transfers between stages

(1,406)

969

437

-

Business activity in the year

44,908

1,579

12

46,499

Net drawdowns and repayments

(3,536)

229

(342)

(3,649)

Final repayments

(28,927)

(4,242)

(288)

(33,457)

As at 30 June 2019

321,028

20,661

503

342,192






Impairment allowance on loan commitments and financial guarantees

Stage 1

Stage 2

Stage 3

Total

£m

£m

£m

£m

As at 1 January 2019

99

150

22

271

Net transfers between stages

8

(6)

(2)

-

Business activity in the year

26

25

7

58

Net re-measurement and movement due to exposure and risk parameter changes

(14)

18

6

10

Final repayments

(15)

(26)

(1)

(42)

As at 30 June 2019

104

161

32

297

 

Measurement uncertainty

 

The measurement of ECL involves complexity and judgement, including estimation of probabilities of default (PD), loss given default (LGD), a range of unbiased future economic scenarios, estimation of expected lives, estimation of exposures at default (EAD) and assessing significant increases in credit risk.

 

Barclays Group uses a five-scenario model to calculate ECL. An external consensus forecast is assembled from key sources, including HM Treasury, Bloomberg and the Urban Land Institute, which forms the baseline scenario. In addition, two adverse scenarios (Downside 1 and Downside 2) and two favourable scenarios (Upside 1 and Upside 2) are derived, with associated probability weightings. The adverse scenarios are calibrated to a similar severity to internal stress tests, whilst also considering IFRS 9 specific sensitivities and non-linearity. Downside 2 is benchmarked to the Bank of England's annual cyclical scenarios and to the most severe scenario from Moody's inventory, but is not designed to be the same. The favourable scenarios are calibrated to be symmetric to the adverse scenarios, subject to a ceiling calibrated to relevant recent favourable benchmark scenarios. The scenarios include eight economic variables, (GDP, unemployment, House Price Index (HPI) and base rates in both the UK and US markets), and expanded variables using statistical models based on historical correlations. All five scenarios converge to a steady state after eight years.

 

Scenario weights

 

The methodology for estimating probability weights for each of the scenarios involves a comparison of the distribution of key historic UK and US macroeconomic variables against the forecast paths of the five scenarios. The methodology works such that the baseline (reflecting current consensus outlook) has the highest weight and the weights of adverse and favourable scenarios depend on the deviation from the baseline; the further from the baseline, the smaller the weight. The probability weights of the scenarios as of 30 June 2019 are shown below. A single set of five scenarios is used across all portfolios and all five weights are normalised to equate to 100%. The same scenarios and weights that are used in the estimation of expected credit losses are also used for Barclays internal planning purposes. The impacts across the portfolios are different because of the sensitivities of each of the portfolios to specific macroeconomic variables, for example, mortgages are highly sensitive to house prices and base rates, credit cards and unsecured consumer loans are highly sensitive to unemployment.

 

The tables below show the macroeconomic variables for each scenario and the respective scenario weights. Note that in order to provide additional transparency, 5-year average data tables and UK/US base rate metrics have been included.

 

Scenario probability weighting







Upside 2

Upside 1

Baseline

Downside 1

Downside 2

As at 30.06.19 and 31.12.18

 %

 %

 %

 %

 %

Scenario probability weighting

9

24

41

23

3

 

Macroeconomic variables (specific bases)1







Upside 2

Upside 1

Baseline

Downside 1

Downside 2

As at 30.06.19

 %

 %

 %

 %

 %

UK GDP2

4.5

3.1

1.7

0.3

(4.1)

UK unemployment3

3.4

3.9

4.3

5.7

8.8

UK HPI4

46.4

32.6

3.2

(0.5)

(32.1)

UK bank rate3

0.8

0.8

1.0

2.5

4.0

US GDP2

4.8

3.7

2.1

0.4

(3.3)

US unemployment3

3.0

3.4

3.7

5.2

8.4

US HPI4

36.9

30.2

4.1

-

(17.4)

US federal funds rate3

2.3

2.3

2.7

3.0

3.5







As at 31.12.18






UK GDP2

4.5

3.1

1.7

0.3

(4.1)

UK unemployment3

3.4

3.9

4.3

5.7

8.8

UK HPI4

46.4

32.6

3.2

(0.5)

(32.1)

UK bank rate3

0.8

0.8

1.0

2.5

4.0

US GDP2

4.8

3.7

2.1

0.4

(3.3)

US unemployment3

3.0

3.4

3.7

5.2

8.4

US HPI4

36.9

30.2

4.1

-

(17.4)

US federal funds rate3

2.3

2.3

2.7

3.0

3.5







As at 30.06.18






UK GDP2

4.4

3.1

1.8

(0.3)

(4.8)

UK unemployment3

3.0

3.7

4.8

6.0

9.0

UK HPI4

45.3

28.3

2.8

(3.1)

(33.4)

UK bank rate3

0.5

0.5

0.9

2.5

4.0

US GDP2

4.6

3.4

2.0

(0.3)

(4.7)

US unemployment3

2.4

3.1

4.2

5.6

9.0

US HPI4

35.8

28.5

4.2

(1.8)

(19.5)

US federal funds rate3

1.5

1.5

1.8

2.9

3.5

 

1

UK GDP = Real GDP growth seasonally adjusted; UK unemployment = UK unemployment rate 16-year+; UK HPI = Halifax All Houses, All Buyers Index; US GDP = Real GDP growth seasonally adjusted; US unemployment = US civilian unemployment rate 16-year+; US HPI = FHFA house price index.

2

Highest annual growth in Upside scenarios; 5-year average in Baseline; lowest annual growth in Downside scenarios.

3

Lowest yearly average in Upside scenarios; 5-year average in Baseline; highest yearly average in Downside scenarios.

4

Cumulative growth (trough to peak) in Upside scenarios; 5-year average in Baseline; cumulative fall (peak-to-trough) in Downside scenarios.

 

Macroeconomic variables (5-year averages)1







Upside 2

Upside 1

Baseline

Downside 1

Downside 2

As at 30.06.19

 %

 %

 %

 %

 %

UK GDP

3.4

2.6

1.7

0.9

(0.6)

UK unemployment

3.7

4.0

4.3

5.1

7.9

UK HPI

7.9

5.8

3.2

0.9

(6.4)

UK bank rate

0.8

0.8

1.0

2.3

3.7

US GDP

3.7

3.0

2.1

1.1

(0.5)

US unemployment

3.1

3.5

3.7

4.7

7.4

US HPI

6.5

5.4

4.1

2.4

(2.6)

US federal funds rate

2.3

2.3

2.7

3.0

3.4







As at 31.12.18






UK GDP

3.4

2.6

1.7

0.9

(0.6)

UK unemployment

3.7

4.0

4.3

5.1

7.9

UK HPI

7.9

5.8

3.2

0.9

(6.4)

UK bank rate

0.8

0.8

1.0

2.3

3.7

US GDP

3.7

3.0

2.1

1.1

(0.5)

US unemployment

3.1

3.5

3.7

4.7

7.4

US HPI

6.5

5.4

4.1

2.4

(2.6)

US federal funds rate

2.3

2.3

2.7

3.0

3.4







As at 30.06.18






UK GDP

3.3

2.5

1.8

0.8

(0.8)

UK unemployment

3.5

4.0

4.8

5.5

8.2

UK HPI

7.8

5.1

2.8

0.2

(7.0)

UK bank rate

0.5

0.6

0.9

2.1

3.6

US GDP

3.5

2.7

2.0

0.9

(0.8)

US unemployment

2.9

3.4

4.2

5.1

7.8

US HPI

6.3

5.2

4.2

2.0

(3.1)

US federal funds rate

1.5

1.6

1.8

2.7

3.3

 

1

UK GDP = Real GDP growth seasonally adjusted; UK unemployment = UK unemployment rate 16-year+; UK HPI = Halifax All Houses, All Buyers Index; US GDP = Real GDP growth seasonally adjusted; US unemployment = US civilian unemployment rate 16-year+; US HPI = FHFA house price index.

 

IFRS 9 models must assess ECL across a range of future economic conditions. These economic scenarios are generated via an independent model and ultimately set by the Senior Scenario Review Committee (SSRC). Economic scenarios are regenerated at a minimum annually (to align with Barclays Group's medium-term planning exercise) but also if external consensus regarding the UK or US economy materially changes. The SSRC monitors consensus and within the period there have been no sufficiently material changes to external consensus regarding the UK or US economy, and as such there have been no changes to the macroeconomic variable paths within each modelled scenario during 2019. There is however continued anticipated economic uncertainty in the UK and as a result the impairment adjustment of £150m, based broadly on the output of the sensitivity analysis at 31 December 2018, continues to be included in the impairment balance at 30 June 2019. The output of the sensitivity analysis as at 31 December 2018 remains valid given the scenarios are unchanged and the portfolios are comparable. Please refer to pages 161 to 163 of the Barclays PLC Annual Report 2018 for details.

 

Analysis of specific portfolios and asset types

 

Secured home loans

 

The UK home loan portfolio primarily comprises first lien mortgages and accounts for 91% (December 2018: 91%) of the Barclays Group's total home loans balance.

 

Home loans principal portfolios



Barclays UK



As at

30.06.19

As at

31.12.18

Gross loans and advances (£m)



138,272

136,517

90 day arrears rate, excluding recovery book (%)



0.1

0.1

Annualised gross charge-off rate - 180 days past due (%)



0.2

0.3

Recovery book proportion of outstanding balances (%)



0.2

0.2

Recovery book impairment coverage ratio (%)



7.3

7.1






Average marked to market LTV





Balance weighted (%)



50.1

48.9

Valuation weighted (%)



36.6

35.8






New lending



Half year ended 30.06.19

Half year ended 30.06.18

New home loan completions (£m)



11,097

11,496

New home loans proportion > 85% LTV (%)



14.3

8.9

Average LTV on new home loans: balance weighted (%)



67.1

64.4

Average LTV on new home loans: valuation weighted (%)



58.9

56.3

 

Home loans principal portfolios - distribution of balances by LTV1









As at 30.06.19

As at 31.12.18


Distribution of balances

Distribution of impairment allowance

Coverage ratio

Distribution of balances

Distribution of impairment allowance

Coverage ratio

Barclays UK

%

%

%

%

%

%

<=75%

88.9

42.2

-

90.6

50.9

-

>75% and <=90%

9.7

25.1

0.1

8.6

22.1

0.1

>90% and <=100%

1.3

9.8

0.4

0.7

7.7

0.5

>100%

0.1

22.9

9.5

0.1

19.3

10.8

 

1

Portfolio mark to market based on the most updated valuation including recovery book balances. Updated valuations reflect the application of the latest HPI available as at 30 June 2019.

 

Total gross UK home loans balances increased by £1.8bn, mainly driven by Buy to Let (BTL) lending. BTL home loans accounted for 13% (December 2018: 12%) of total balances, and the BTL average balance weighted LTV increased to 55.6% (December 2018: 55.4%).

 

Residential interest-only home loans comprised 24% (December 2018: 26%) of total balances. The average balance weighted LTV on these loans increased to 38.9% (December 2018: 38.8%). The 90-day arrears rate excluding recovery book remained stable at 0.3% (December 2018: 0.3%).

 

The value of home loan completions was lower than H118, for both Residential and BTL. The reduction in Residential was driven by a significantly lower value of business written in January, with Q2 higher year on year. The proportion of new home loan completions associated with BTL remained stable year on year at 17%.

 

The average marked to market LTV measures and the proportion of balances at >75% LTV increased due to a higher average LTV for new business flow than for the total book. New lending LTVs remained within planned levels throughout H119.

 

Head Office: Italian home loans and advances at amortised cost reduced to £7.5bn (December 2018: £7.9bn) and continue to run-off since new completions ceased in 2016. The portfolio is secured on Residential property with an average balance weighted marked to market LTV of 63.7% (December 2018: 61.8%). 90-day arrears and gross charge-off rates remained stable at 1.5% (December 2018: 1.4%) and 0.8% (December 2018: 0.8%) respectively.

 

Credit cards, unsecured loans and other retail lending

 

The principal portfolios listed below accounted for 84% (December 2018: 87%) of the Barclays Group's total credit cards, unsecured loans and other retail lending.

 

Principal portfolios

Gross exposure

30 day arrears rate, excluding recovery book

90 day arrears rate, excluding recovery book

Annualised gross write-off rate

Annualised net write-off rate

As at 30.06.19

£m

%

%

%

%

Barclays UK






UK cards

16,925

1.8

0.9

2.0

1.9

UK personal loans

6,334

2.2

1.1

3.3

3.0

Barclays International






US cards

22,172

2.4

1.3

4.5

4.4

Barclays Partner Finance

4,277

0.9

0.3

1.5

1.5

Germany consumer lending

3,758

1.7

0.7

1.0

0.2







As at 31.12.18






Barclays UK






UK cards

17,285

1.8

0.9

1.9

1.5

UK personal loans

6,335

2.3

1.1

1.9

1.5

Barclays International






US cards

22,178

2.7

1.4

3.6

3.4

Barclays Partner Finance

4,216

1.1

0.4

1.7

1.7

Germany consumer lending

3,545

1.9

0.8

1.2

0.5

 

UK cards: 30 and 90 day arrears rates remained stable. The annualised gross write-off rate increased marginally, whilst the net write-off rate increased from 1.5% to 1.9% as a result of increased debt sale activity.

 

UK personal loans: 30 and 90 day arrears rates reduced slightly. The annualised gross and net write-off rates increased, reflecting the resolution of write-off processing issues observed in 2018. Underlying write off rates remained stable.

 

US cards: 30 and 90 day arrears rates reduced due to the impact of seasonality.  The increase in write-off rates reflected an increase in the rate of assets flowing into the recovery book in H218 which led to a higher level of assets being written off in the current period.

 

Barclays Partner Finance: The reduction in arrears rates reflected improved quality of new business and better arrears management. Write-off rates were broadly stable.

 

Germany consumer lending: Arrears rates improved due to better quality of new business and good collections performance. The reduced write-off rates were primarily driven by the cards portfolio due to the timing of debt sale write-offs.

 

Market Risk

 

Analysis of management value at risk (VaR)

 

The table below shows the total management VaR on a diversified basis by risk factor. Total management VaR includes all trading positions in CIB and Treasury and it is calculated with a one-day holding period.

 

Limits are applied against each risk factor VaR as well as total management VaR, which are then cascaded further by risk managers to each business.

 

Management VaR (95%) by asset class1






















Half year ended 30.06.19


Half year ended 31.12.18


Half year ended 30.06.18


Average

High2

Low2


Average

High2

Low2


Average

High2

Low2


£m

£m

£m


£m

£m

£m


£m

£m

£m

Credit risk

11

14

8


10

13

8


11

16

8

Interest rate risk

5

9

3


8

14

3


9

19

4

Equity risk

9

16

5


7

14

4


7

12

4

Basis risk

8

9

6


7

8

6


5

8

4

Spread risk

4

5

3


6

9

3


5

9

3

Foreign exchange risk

3

5

2


3

6

2


3

7

2

Commodity risk

1

1

-


1

1

-


1

2

-

Inflation risk

2

3

2


3

3

2


3

4

2

Diversification effect2

(22)

n/a

n/a


(24)

n/a

n/a


(24)

n/a

n/a

Total management VaR

21

26

17


21

27

18


20

26

15

 

1

Excludes Barclays Africa Group Limited from 23 July 2018.

2

Diversification effects recognise that forecast losses from different assets or businesses are unlikely to occur concurrently, hence the expected aggregate loss is lower than the sum of the expected losses from each area. Historical correlations between losses are taken into account in making these assessments. The high and low VaR figures reported for each category did not necessarily occur on the same day as the high and low VaR reported as a whole. Consequently, a diversification effect balance for the high and low VaR figures would not be meaningful and is therefore omitted from the above table.

 

Treasury and Capital Risk

 

The Barclays Group has a comprehensive Key Risk Control Framework for managing its liquidity risk. The Liquidity Framework meets the PRA standards and is designed to maintain liquidity resources that are sufficient in amount and quality, and a funding profile that is appropriate to meet the Barclays Group's liquidity risk appetite (LRA). The Liquidity Framework is delivered via a combination of policy formation, review and governance, analysis, stress testing, limit setting and monitoring.

 

Liquidity risk stress testing

 

As at 30 June 2019, the Barclays Group held eligible liquid assets in excess of 100% of net stress outflows to its internal and external regulatory requirements. The short-term stress scenarios comprise a 30-day Barclays specific stress event, a 90-day market-wide stress event and a 30-day combined scenario consisting of both a Barclays specific and market-wide stress.

 

Liquidity coverage ratio




As at 30.06.19

As at 31.12.18


£bn

£bn

Eligible liquidity buffer

232

219

Net stress outflows

(149)

(129)

Surplus

83

90




Liquidity coverage ratio

156%

169%

 

The Barclays Group plans to maintain its surplus to the internal and regulatory stress requirements at an efficient level, while considering risks to market funding conditions and its liquidity position. The continuous reassessment of these risks may lead to execution of appropriate actions to resize the liquidity pool.

 

Composition of the Group liquidity pool










As at 30.06.19

As at 31.12.18



Liquidity pool

Liquidity pool of which CRR LCR eligible3

Liquidity pool



Cash

Level 1

Level 2A



£bn

£bn

£bn

£bn

£bn

Cash and deposits with central banks1


160

156

-

-

181








Government bonds2







AAA to AA-


47

-

41

3

27

A+ to A-


5

-

5

-

1

BBB+ to BBB-


4

-

4

-

3

Other LCR ineligible government bonds


-

-

-

-

1

Total government bonds


56

-

50

3

32








Other







Government guaranteed issuers, PSEs and GSEs


8

-

8

-

6

International organisations and MDBs


7

-

7

-

5

Covered bonds


6

-

5

1

3

Other


1

-

1

-

-

Total other


22

-

21

1

14








Total as at 30 June 2019


238

156

71

4

227

Total as at 31 December 2018


227

176

40

1


 

1

Of which over 99% (December 2018: over 99%) was placed with the Bank of England, US Federal Reserve, European Central Bank, Bank of Japan and Swiss National Bank.

2

Of which over 77% (December 2018: over 71%) comprised UK, US, French, German, Swiss and Dutch securities.

3

The LCR eligible liquidity pool is adjusted for trapped liquidity and other regulatory deductions. It also incorporates other CRR (as amended by CRR II) qualifying assets that are not eligible under Barclays' internal risk appetite.

 

The Barclays Group liquidity pool was £238bn as at 30 June 2019 (December 2018: £227bn). During H119, the month-end liquidity pool ranged from £227bn to £251bn (H218: £207bn to £243bn), and the month-end average balance was £237bn (H218: £225bn). The liquidity pool is held unencumbered and is not used to support payment or clearing requirements. Such requirements are treated as part of our regular business funding. The liquidity pool is intended to offset stress outflows, and comprises the above cash and unencumbered assets.

 

As at 30 June 2019, 68% (December 2018: 70%) of the liquidity pool was located in Barclays Bank PLC, 20% (December 2018: 20%) in Barclays Bank UK PLC and 5% (December 2018: 2%) in Barclays Bank Ireland PLC. The residual portion of the liquidity pool is held outside of these entities, predominantly in US subsidiaries, to meet entity-specific stress outflows and local regulatory requirements. To the extent the use of this residual portion of the liquidity pool is restricted due to local regulatory requirements, it is assumed to be unavailable to the rest of the Barclays Group in calculating the LCR.

 

Deposit funding







As at 30.06.19


As at 31.12.18


Loans and advances at amortised cost

Deposits at amortised cost

Loan: deposit ratio1


Loan: deposit ratio1

Funding of loans and advances

£bn

£bn

%


%

Barclays UK

194

201

97%


96%

Barclays International

135

212

64%


65%

Head Office

10

-

-


-

Barclays Group

339

414

82%


83%

 

1

The loan: deposit ratio is calculated as loans and advances at amortised cost divided by deposits at amortised cost.

 

Funding structure and funding relationships

 

The basis for liquidity risk management is a funding structure that reduces the probability of a liquidity stress leading to an inability to meet funding obligations as they fall due. The Barclays Group's overall funding strategy is to develop a diversified funding base (geographically, by type and by counterparty) and maintain access to a variety of alternative funding sources, to provide protection against unexpected fluctuations, while minimising the cost of funding.

 

Within this, the Barclays Group aims to align the sources and uses of funding. As such, loans and advances are largely funded by deposits, with the surplus used to fund liquidity requirements. The majority of reverse repurchase agreements are matched by repurchase agreements. Derivative liabilities and assets are largely matched. A substantial proportion of balance sheet derivative positions qualify for counterparty netting and the remaining portions are largely offset once netted against cash collateral received and paid. Wholesale debt and equity is used to fund residual assets.

 

These funding relationships as at 30 June 2019 are summarised below:

 


As at 30.06.19

As at 31.12.18



As at 30.06.19

As at 31.12.18

Assets

£bn

£bn


Liabilities and equity

£bn

£bn

Loans and advances at amortised cost

339

327


Deposits at amortised cost

414

395

Group liquidity pool

238

227


<1 Year wholesale funding

53

47





>1 Year wholesale funding

113

107

Reverse repurchase agreements, trading portfolio assets, cash collateral and settlement balances

356

303


Repurchase agreements, trading portfolio liabilities, cash collateral and settlement balances

304

262

Derivative financial instruments

244

223


Derivative financial instruments

243

220

Other assets1

56

53


Other liabilities

37

38





Equity

69

64

Total assets

1,233

1,133


Total liabilities and equity

1,233

1,133

 

1

Other assets include fair value assets that are not part of reverse repurchase agreements or trading portfolio assets, and other asset categories.

 

Composition of wholesale funding

 

Wholesale funding outstanding (excluding repurchase agreements) was £165.6bn (December 2018: £154bn). In 2019, Barclays Group issued £7.1bn of MREL eligible instruments from Barclays PLC (the Parent company) in a range of different tenors and currencies.

 

Barclays Bank PLC continued to issue in the shorter-term markets and Barclays Bank UK PLC issued in the shorter-term and secured markets, helping to maintain their stable and diversified funding bases.

 

Wholesale funding of £52.8bn (December 2018: £46.7bn) matures in less than one year, representing 32% (December 2018: 30%) of total wholesale funding outstanding. This includes £20.4bn (December 2018: £19.1bn) related to term funding2. Although not a requirement, the liquidity pool exceeded wholesale funding maturing in less than one year by £185bn (December 2018: £180bn).

 

Maturity profile of wholesale funding1,2









<1

1-3

3-6

6-12

<1

1-2

2-3

3-4

4-5

>5



month

months

months

months

year

years

years

years

years

years

Total


£bn

£bn

£bn

£bn

£bn

£bn

£bn

£bn

£bn

£bn

£bn

Barclays PLC (the Parent company)












Senior unsecured (public benchmark)

-

-

1.6

0.8

2.4

2.9

3.4

4.0

8.5

13.8

35.0

Senior unsecured (privately placed)

-

-

-

-

-

0.1

0.1

0.1

0.2

0.5

1.0

Subordinated liabilities

-

-

-

-

-

-

-

-

-

8.1

8.1

Barclays Bank PLC (including












subsidiaries)












Certificates of deposit and commercial paper

3.7

5.6

9.6

4.8

23.7

1.0

0.9

0.4

0.1

-

26.1

Asset backed commercial paper

2.8

3.2

1.0

-

7.0

-

-

-

-

-

7.0

Senior unsecured (public benchmark)

-

1.2

-

0.6

1.8

3.0

0.2

-

1.2

0.4

6.6

Senior unsecured (privately placed)3

0.8

2.8

1.5

5.1

10.2

8.5

4.7

4.1

3.8

21.0

52.3

Asset backed securities

0.4

0.6

-

1.0

2.0

0.1

0.5

0.7

0.9

1.7

5.9

Subordinated liabilities

0.2

-

0.1

0.1

0.4

5.6

1.3

2.4

-

1.0

10.7

Other

0.1

-

-

-

0.1

-

-

-

0.2

0.6

0.9

Barclays Bank UK PLC (including












subsidiaries)












Certificates of deposit and commercial paper

0.3

0.7

0.4

0.2

1.6

-

-

-

-

-

1.6

Covered bonds

-

-

1.8

1.0

2.8

1.0

2.3

1.8

-

1.2

9.1

Asset backed securities

0.8

-

-

-

0.8

0.5

-

-

-

-

1.3

Total as at 30 June 2019

9.1

14.1

16.0

13.6

52.8

22.7

13.4

13.5

14.9

48.3

165.6

Of which secured

4.0

3.8

2.8

2.0

12.6

1.6

2.8

2.5

0.9

2.9

23.3

Of which unsecured

5.1

10.3

13.2

11.6

40.2

21.1

10.6

11.0

14.0

45.4

142.3













Total as at 31 December 2018

2.5

15.9

8.2

20.1

46.7

16.7

16.8

10.4

13.2

50.2

154.0

Of which secured

2.0

3.7

1.1

3.6

10.4

2.7

1.2

2.6

1.9

3.7

22.5

Of which unsecured

0.5

12.2

7.1

16.5

36.3

14.0

15.6

7.8

11.3

46.5

131.5

 

1

The composition of wholesale funds comprises the balance sheet reported financial liabilities at fair value, debt securities in issue and subordinated liabilities. It does not include participation in the central bank facilities reported within repurchase agreements and other similar secured borrowing.

2

Term funding comprises public benchmark and privately placed senior unsecured notes, covered bonds, asset-backed securities and subordinated debt where the original maturity of the instrument is more than 1 year.

3

Includes structured notes of £43.9bn, of which £7.3bn matures within one year.

 

Credit ratings

 

In addition to monitoring and managing key metrics related to the financial strength of the Barclays Group, Barclays also solicits independent credit ratings from Standard & Poor's Global (S&P), Moody's, Fitch, and Rating and Investment Information (R&I). These ratings assess the creditworthiness of the Barclays Group, its subsidiaries and its branches, and are based on reviews of a broad range of business and financial attributes including capital strength, profitability, funding, liquidity, asset quality, strategy and governance.

 

Barclays Bank PLC

Standard & Poor's

Moody's

Fitch

Long-term

A / Stable

A2 / Positive

A+ / RWN1

Short-term

A-1

P-1

F1





Barclays Bank UK PLC




Long-term

A / Stable

A1 / Stable

A+ / RWN1

Short-term

A-1

P-1

F1





Barclays PLC




Long-term

BBB / Stable

Baa3 / Positive

A / RWN1

Short-term

A-2

P-3

F1

 

1

Rating Watch Negative.

 

In March 2019, Fitch placed the outlooks of all entities on rating watch negative alongside UK peers to reflect their expectation that they would revise the outlooks to negative under a disruptive no deal Brexit scenario. In June 2019, Fitch affirmed all ratings for Barclays PLC, Barclays Bank PLC and Barclays Bank UK PLC.

 

In May 2019, Moody's revised the outlooks of the senior unsecured debt ratings of Barclays PLC and Barclays Bank PLC from stable to positive, due to their expectation that operating performance and profitability prospects will improve. Barclays Bank UK PLC's ratings outlooks remained unchanged.

 

In June 2019, S&P affirmed all ratings for Barclays PLC, Barclays Bank PLC and Barclays Bank UK PLC.

 

Barclays also solicits issuer ratings from R&I and the ratings of A- for Barclays PLC and A for Barclays Bank PLC were affirmed in July 2018 with stable outlooks.

 

Capital

 

Barclays' CET1 regulatory requirement is 11.7% comprising a 4.5% Pillar 1 minimum, a 2.5% Capital Conservation Buffer (CCB), a 1.5% Global Systemically Important Institution (G-SII) buffer, a 2.6% Pillar 2A requirement and a 0.5% Countercyclical Capital Buffer (CCyB).

 

The Barclays CCyB is based on the buffer rate applicable for each jurisdiction in which Barclays have exposures. On 28 November 2018, the Financial Policy Committee set the CCyB rate for UK exposures at 1%. The buffer rates set by other national authorities for our non-UK exposures are not currently material. Overall, this results in a 0.5% CCyB for Barclays for H119.

 

Barclays' Pillar 2A requirement as per the PRA's Individual Capital Requirement for 2019 is 4.7%, of which at least 56.25% needs to be met in CET1 form, equating to approximately 2.6% of RWAs. Certain elements of the Pillar 2A requirement are a fixed quantum whilst others are a proportion of RWAs and are based on a point in time assessment. The Pillar 2A requirement is subject to at least annual review.

 

On 27 June 2019, as part of the EU Risk Reduction Measure package, the CRR II entered into force amending CRR.  As an amending regulation, the existing provisions of CRR apply unless they are amended by CRR II. The amendments largely take effect and are phased in from 28 June 2021 with a number of exceptions which are implemented with immediate effect.

 

These exceptions primarily relate to the minimum requirement for own funds and eligible liabilities (MREL). Amendments within this section include changes to qualifying criteria for CET1, AT1 and Tier 2 instruments, the inclusion of additional holdings eligible for deduction, an amendment to the treatment of deferred tax assets and the introduction of requirements for MREL. Grandfathering and transitional provisions relating to MREL have also been introduced. 

 

Certain aspects of CRR II are dependent on final technical standards to be issued by the European Banking Authority (EBA) and adopted by the European Commission as well as UK implementation of the rules. The disclosures in the following section reflect Barclays' interpretation of the current rules and guidance.

 

Capital ratios1,2,3

As at

As at

As at

30.06.19

31.03.19

31.12.18

CET1

13.4%

13.0%

13.2%

Tier 1 (T1)

17.4%

17.1%

17.0%

Total regulatory capital

21.4%

20.8%

20.7%

  




Capital resources

£bn

£bn

£bn

Total equity excluding non-controlling interests per the balance sheet

67.6

64.7

62.6

Less: other equity instruments (recognised as AT1 capital)

(12.1)

(11.1)

(9.6)

Adjustment to retained earnings for foreseeable dividends

(0.8)

(1.0)

(0.7)





Other regulatory adjustments and deductions




Additional value adjustments (PVA)

(1.8)

(1.7)

(1.7)

Goodwill and intangible assets

(8.0)

(7.9)

(8.0)

Deferred tax assets that rely on future profitability excluding temporary differences

(0.4)

(0.4)

(0.5)

Fair value reserves related to gains or losses on cash flow hedges

(1.2)

(1.0)

(0.7)

Gains or losses on liabilities at fair value resulting from own credit

(0.1)

(0.2)

(0.1)

Defined benefit pension fund assets

(1.4)

(0.9)

(1.3)

Direct and indirect holdings by an institution of own CET1 instruments

(0.1)

(0.1)

(0.1)

Adjustment under IFRS 9 transitional arrangements

1.2

1.2

1.3

CET1 capital

42.9

41.4

41.1

  




AT1 capital




Capital instruments and related share premium accounts

12.1

11.1

9.6

Qualifying AT1 capital (including minority interests) issued by subsidiaries

0.7

2.3

2.4

Other regulatory adjustments and deductions

(0.1)

(0.1)

(0.1)

AT1 capital

12.7

13.3

11.9





T1 capital

55.6

54.7

53.0

  




T2 capital




Capital instruments and related share premium accounts

8.0

6.5

6.6

Qualifying T2 capital (including minority interests) issued by subsidiaries

5.0

5.5

5.3

Credit risk adjustments (excess of impairment over expected losses)

-

0.1

-

Other regulatory adjustments and deductions

(0.3)

(0.3)

(0.3)

Total regulatory capital

68.3

66.6

64.6





Total RWAs

319.1

319.7

311.9

 

1

CET1, T1 and T2 capital, and RWAs are calculated applying the transitional arrangements of the CRR as amended by CRR II applicable as at the reporting date. This includes IFRS 9 transitional arrangements and the grandfathering of CRR and CRR II non-compliant capital instruments.

2

The fully loaded CET1 ratio, as is relevant for assessing against the conversion trigger in Barclays PLC AT1 securities, was 13.1%, with £41.7bn of CET1 capital and £319.0bn of RWAs calculated without applying the transitional arrangements of the CRR as amended by CRR II applicable as at the reporting date.

3

The Barclays PLC CET1 ratio, as is relevant for assessing against the conversion trigger in Barclays Bank PLC T2 Contingent Capital Notes, was 13.4%. For this calculation CET1 capital and RWAs are calculated applying the transitional arrangements under the CRR, including the IFRS 9 transitional arrangements. The benefit of the Financial Services Authority (FSA) October 2012 interpretation of the transitional provisions, relating to the implementation of CRD IV, expired in December 2017.

 

Movement in CET1 capital

Three months

Six months

ended

ended

30.06.19

30.06.19

£bn

£bn

Opening CET1 capital

41.4

41.1




Profit for the period attributable to equity holders

1.2

2.4

Dividends paid and foreseen

(0.7)

(1.2)

Increase in retained regulatory capital generated from earnings

0.5

1.3




Net impact of share schemes

0.3

-

Fair value through other comprehensive income reserve

0.4

0.5

Currency translation reserve

0.6

0.2

Increase in other qualifying reserves

1.2

0.7




Pension remeasurements within reserves

0.3

(0.1)

Defined benefit pension fund asset deduction

(0.5)

(0.1)

Net impact of pensions

(0.2)

(0.2)




Additional value adjustments (PVA)

(0.1)

-

Goodwill and intangible assets

(0.1)

-

Deferred tax assets that rely on future profitability excluding those arising from temporary differences

0.1

0.1

Adjustment under IFRS 9 transitional arrangements

-

(0.1)

Decrease in regulatory capital due to adjustments and deductions

(0.1)

-




Closing CET1 capital

42.9

42.9




 

CET1 capital increased £1.8bn to £42.9bn (December 2018: £41.1bn).

 

£2.4bn of organic capital generated from profits was partially offset by £1.2bn of regulatory dividends paid and foreseen including £0.4bn of AT1 coupons paid. Other movements in the period were:

 


·

A £0.5bn increase in the fair value through other comprehensive income reserve mainly driven by gains from an increase in fair value of bonds due to decreasing bond yields


·

A £0.2bn increase in the currency translation reserve mainly driven by the appreciation of period end USD against GBP


·

A £0.2bn decrease as a result of movements relating to pensions, largely due to deficit contribution payments of £0.25bn in April 2019


·

A £0.1bn decrease in the IFRS 9 transitional add back primarily due to the change in the phasing of transitional relief from 95% in 2018 to 85% in 2019

 

Risk weighted assets (RWAs) by risk type and business


Credit risk


Counterparty credit risk


Market risk


Operational risk

Total RWAs


Std

IRB


Std

IRB

Settlement risk

CVA


Std

IMA




As at 30.06.19

£bn

£bn


£bn

£bn

£bn

£bn


£bn

£bn


£bn

£bn

Barclays UK

3.8

60.2


0.3

 -  

 -  

 -  


0.1

 -  


11.8

76.2

Corporate and Investment Bank

24.6

68.2


12.4

16.4

0.2

3.4


15.4

13.7


21.6

175.9

Consumer, Cards and Payments

29.3

2.1


0.1

 -  

 -  

 -  


 -  

0.1


7.3

38.9

Barclays International

53.9

70.3


12.5

16.4

0.2

3.4


15.4

13.8


28.9

214.8

Head Office

5.7

6.4


 -  

 -  

 -  

 -  


 -  

 -  


16.0

28.1

Barclays Group

63.4

136.9


12.8

16.4

0.2

3.4


15.5

13.8


56.7

319.1















As at 31.03.19








Barclays UK

3.8

60.7


0.2

-

-

-


0.1

-


11.8

76.6

Corporate and Investment Bank

26.8

66.3


10.2

15.9

0.1

4.1


16.5

15.1


21.6

176.6

Consumer, Cards and Payments

29.4

2.2


0.1

 -

 -  

 -


 -  

0.5


7.3

39.5

Barclays International

56.2

68.5


10.3

15.9

0.1

4.1


16.5

15.6


28.9

216.1

Head Office

5.2

5.8


-

-

-

-


-

-


16.0

27.0

Barclays Group

65.2

135.0


10.5

15.9

0.1

4.1


16.6

15.6


56.7

319.7









As at 31.12.18








Barclays UK

3.3

59.7


0.2

-

-

0.1


0.1

-


11.8

75.2

Corporate and Investment Bank

26.1

64.8


9.8

14.9

0.2

3.3


13.9

16.2


21.7

170.9

Consumer, Cards and Payments

29.5

2.2


0.1

0.1

-

-


-

0.6


7.3

39.8

Barclays International

55.6

67.0


9.9

15.0

0.2

3.3


13.9

16.8


29.0

210.7

Head Office

4.3

5.8


-

-

-

-


-

-


15.9

26.0

Barclays Group

63.2

132.5


10.1

15.0

0.2

3.4


14.0

16.8


56.7

311.9

 

Movement analysis of RWAs


Credit risk

Counterparty credit risk

Market risk

Operational risk

Total RWAs

As at 30.06.19

£bn

£bn

£bn

£bn

£bn

Opening RWAs

195.6

28.8

30.8

56.7

311.9

Book size

4.3

4.0

(1.2)

-

7.1

Acquisitions and disposals

(0.2)

-

-

-

(0.2)

Book quality

(0.1)

-

-

-

(0.1)

Model updates

-

-

-

-

-

Methodology and policy

0.2

-

(0.3)

-

(0.1)

Foreign exchange movements1

0.5

-

-

-

0.5

Closing RWAs

200.3

32.8

29.3

56.7

319.1

 

1

Foreign exchange movements does not include foreign exchange for counterparty credit risk or market risk.

 

RWAs increased £7.2bn to £319.1bn; this was primarily driven by increased CIB activity compared to year-end.

 

Leverage ratio and exposures

 

Barclays is subject to a leverage ratio requirement of 4.0% as at 30 June 2019. This comprises the 3.25% minimum requirement, a G-SII additional leverage ratio buffer (G-SII ALRB) of 0.53% and a countercyclical leverage ratio buffer (CCLB) of 0.2%. Although the leverage ratio is expressed in terms of T1 capital, 75% of the minimum requirement, equating to 2.4375%, needs to be met with CET1 capital. In addition, the G-SII ALRB and CCLB must be covered solely with CET1 capital. The CET1 capital held against the 0.53% G-SII ALRB was £6.0bn and against the 0.2% CCLB was £2.3bn.

 

Barclays is required to disclose an average UK leverage ratio which is based on capital on the last day of each month in the quarter and an exposure measure for each day in the quarter. Barclays is also required to disclose a UK leverage ratio based on capital and exposure on the last day of the quarter. Both approaches exclude qualifying claims on central banks from the leverage exposures.

 

Leverage ratios1,2

As at

30.06.19

As at

31.03.19

As at

31.12.18

£bn

£bn

£bn

Average UK leverage ratio

4.7%

4.6%

4.5%

Average T1 capital3

53.8

 51.2

 50.5

Average UK leverage exposure

1,135

 1,106

 1,110





UK leverage ratio

5.1%

4.9%

5.1%





CET1 capital

42.9

 41.4

 41.1

AT1 capital

12.0

 11.0

 9.5

T1 capital3

54.9

 52.4

 50.6





UK leverage exposure

1,079

1,065

999





UK leverage exposure




Accounting assets




Derivative financial instruments

244

218

223

Derivative cash collateral

59

53

48

Securities financing transactions (SFTs)

131

135

121

Loans and advances and other assets

799

788

741

Total IFRS assets

1,233

1,194

1,133





Regulatory consolidation adjustments

(1)

(2)

(2)





Derivatives adjustments




Derivatives netting

(223)

(198)

(202)

Adjustments to cash collateral

(51)

(43)

(42)

Net written credit protection

15

16

19

Potential future exposure (PFE) on derivatives

127

125

123

Total derivatives adjustments

(132)

(100)

(102)





SFTs adjustments

17

17

17





Regulatory deductions and other adjustments

(12)

(11)

(11)





Weighted off-balance sheet commitments

110

108

108





Qualifying central bank claims

(136)

(141)

(144)





UK leverage exposure2

1,079

1,065

999

 

1

The fully loaded UK leverage ratio was 5.0%, with £53.7bn of T1 capital and £1,078bn of leverage exposure calculated without applying the transitional arrangements of the CRR as amended by CRR II applicable as at the reporting date.

2

Capital and leverage measures are calculated applying the transitional arrangements of the CRR as amended by CRR II applicable as at the reporting date.

3

T1 capital is calculated in line with the PRA Handbook.

 

The average UK leverage ratio increased to 4.7% (December 2018: 4.5%). T1 capital increased £3.3bn to £53.8bn, which included the accretion of CET1 capital and the issuance of AT1 securities, partially offset by an increase in exposure of £25bn to £1,135bn primarily driven by securities financing transactions (SFTs) trading activity.

 

The UK leverage ratio remained stable at 5.1% (December 2018: 5.1%). The T1 capital increased £4.3bn to £54.9bn, which included the accretion of CET1 capital and the issuance of AT1 securities. The UK leverage exposure increased £80bn to £1,079bn which included a seasonal increase in settlement balances and trading portfolio assets.

 

The average UK leverage ratio is 40bps less than the UK leverage ratio, which reflects the capacity that Barclays has to deploy highly liquid assets intra-quarter in addition to client activity reductions at quarter ends, including settlement balances.

 

Barclays also discloses a CRR leverage ratio1 within its additional regulatory disclosures prepared in accordance with EBA guidelines on disclosure under Part Eight of the CRR (see Barclays PLC Pillar 3 Report H1 2019, due to be published on 23 August 2019 and which will be available at home.barclays/investor-relations/reports-and-events/latest-financial-results).

 

1

CRR leverage ratio as amended by CRR II applicable as at the reporting date.

 

Minimum requirement for own funds and eligible liabilities (MREL)

 

The CRR II requirements relating to own funds and eligible liabilities came into effect from 27 June 2019. Barclays has calculated eligible liabilities reflecting our interpretation of the current rules and guidance. Certain aspects of CRR II are dependent on final technical standards to be issued by the EBA and adopted by the European Commission as well as UK implementation of the rules.

 

Barclays is required to meet the higher of: (i) the MREL set by the Bank of England; or (ii) the requirements in CRR II. MREL is subject to phased implementation and will be fully implemented by 1 January 2022, at which time Barclays indicative MREL is expected to be two times the sum of its Pillar 1 and Pillar 2A requirements, as set by the Bank of England. In addition, CET1 capital cannot be counted towards both MREL and the capital buffers, meaning that the buffers will effectively be applied above both the Pillar 1 and Pillar 2A requirements relating to own funds and eligible liabilities. The Bank of England will review the MREL calibration by the end of 2020, including assessing the proposal for Pillar 2A recapitalisation, which may drive a different 1 January 2022 MREL than currently proposed.

 

Barclays' indicative MREL is currently expected to be 29.9% of RWAs from 1 January 2022 comprising:

 


·

Loss absorption and recapitalisation amounts consisting of two times the 8% Pillar 1 and 4.7% Pillar 2A requirement


·

Capital buffers including a 1.5% G-SII buffer, 2.5% CCB and 0.5% CCyB

 

Own funds and eligible liabilities ratios1

As at

30.06.19

As at

31.03.193

As at

31.12.183

CET1 capital

13.4%

13.0%

13.2%

AT1 capital instruments and related share premium accounts2

3.8%

3.4%

3.1%

T2 capital instruments and related share premium accounts2

2.4%

2.0%

2.1%

Eligible liabilities

10.6%

9.4%

9.7%

Total Barclays PLC (the Parent company) own funds and eligible liabilities

30.2%

27.7%

28.1%

Qualifying AT1 capital (including minority interests) issued by subsidiaries

0.2%

0.7%

0.7%

Qualifying T2 capital (including minority interests) issued by subsidiaries

1.6%

1.7%

1.6%

Total own funds and eligible liabilities, including eligible Barclays Bank PLC instruments

32.0%

30.2%

30.5%





Own funds and eligible liabilities1

£bn

£bn3

£bn3

CET1 capital

42.9

41.4

41.1

AT1 capital instruments and related share premium accounts2

12.0

11.0

9.6

T2 capital instruments and related share premium accounts2

7.8

6.3

6.6

Eligible liabilities

33.7

29.9

30.4

Total Barclays PLC (the Parent company) own funds and eligible liabilities

96.4

88.7

87.7

Qualifying AT1 capital (including minority interests) issued by subsidiaries

0.7

2.3

2.3

Qualifying T2 capital (including minority interests) issued by subsidiaries

5.0

5.5

5.1

Total own funds and eligible liabilities, including eligible Barclays Bank PLC instruments

102.0

96.5

95.1





Total RWAs1

319.1

319.7

311.9

 

1

CET1, T1 and T2 capital, and RWAs are calculated applying the transitional arrangements of the CRR as amended by CRR II applicable as at the reporting date. This includes IFRS 9 transitional arrangements and the grandfathering of CRR and CRR II non-compliant capital instruments.

2

Includes other AT1 capital regulatory adjustments and deductions of £0.1bn (included in AT1 issued by subsidiaries in December 2018: £0.1bn), and other T2 credit risk adjustments and deductions of £0.2bn (included in T2 issued by subsidiaries in December 2018: £0.3bn).

3

The comparatives are based on the Bank of England's statement of policy on MREL.

 

Statement of Directors' Responsibilities

 

Each of the Directors (the names of whom are set out below) confirm that to the best of their knowledge, the condensed consolidated interim financial statements set out on pages 49 to 54 have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union (EU), and that the interim management report herein includes a fair review of the information required by Disclosure and Transparency Rules 4.2.7R and 4.2.8R namely:

 

·

an indication of important events that have occurred during the six months ended 30 June 2019 and their impact on the condensed consolidated interim financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year

·

any related party transactions in the six months ended 30 June 2019 that have materially affected the financial position or performance of Barclays during that period and any changes in the related party transactions described in the last Annual Report that could have a material effect on the financial position or performance of Barclays in the six months ended 30 June 2019.

 

Signed on 31 July 2019 on behalf of the Board by

 

James E Staley

Tushar Morzaria

Group Chief Executive

Group Finance Director

 

Barclays PLC Board of Directors:

 

Chairman

Nigel Higgins

Executive Directors

James E Staley

Tushar Morzaria

 

Non-executive Directors

Mike Ashley

Tim Breedon CBE

Sir Ian Cheshire

Mary Anne Citrino

Mary Francis CBE

Crawford Gillies

Matthew Lester

Diane Schueneman

 

 

Independent Review Report to Barclays PLC

 

Conclusion

 

We have been engaged by the company to review the condensed set of financial statements in the Interim Results Announcement for the six months ended 30 June 2019 which comprises:

 


·

The condensed consolidated income statement and condensed consolidated statement of comprehensive income for the period then ended;


·

the condensed consolidated balance sheet as at 30 June 2019;


·

the condensed consolidated statement of changes in equity for the period then ended;


·

the condensed consolidated cash flow statement for the period then ended; and


·

the related explanatory notes

 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the Interim Results Announcement for the six months ended 30 June 2019 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").

 

Scope of review

 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the Interim Results Announcement and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

 

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

The impact of uncertainties due to the UK exiting the European Union on our review

Uncertainties related to the effects of Brexit are relevant to understanding our review of the condensed financial statements. Brexit is one of the most significant economic events for the UK, and at the date of this report its effects are subject to unprecedented levels of uncertainty of outcomes, with the full range of possible effects unknown. An interim review cannot be expected to predict the unknowable factors or all possible future implications for a company and this is particularly the case in relation to Brexit.

 

Directors' responsibilities

 

The Interim Results Announcement is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Interim Results Announcement in accordance with the DTR of the UK FCA.

 

As disclosed in Note 1 Basis of preparation, the annual financial statements of the Barclays Group are prepared in accordance with International Financial Reporting Standards as adopted by the EU. The directors are responsible for preparing the condensed set of financial statements included in the Interim Results Announcement in accordance with IAS 34 as adopted by the EU.

 

Our responsibility

 

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the Interim Results Announcement based on our review.

 

The purpose of our review work and to whom we owe our responsibilities

 

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.

 

Michelle Hinchliffe

for and on behalf of KPMG LLP

Chartered Accountants

15 Canada Square

London, E14 5GL

31 July 2019

 

Condensed Consolidated Financial Statements

 

Condensed consolidated income statement (unaudited)



Half year ended

Half year ended



30.06.19

30.06.18


Notes1

£m

£m

Net interest income


4,618

4,378

Net fee and commission income

3

3,334

3,489

Net trading income


2,124

2,480

Net investment income


662

512

Other income


52

75

Total income


10,790

10,934

Credit impairment charges and other provisions


(928)

(571)

Net operating income


9,862

10,363





Staff costs

4

(4,264)

(4,277)

Infrastructure, administration and general expenses

5

(2,494)

(2,397)

Litigation and conduct


(114)

(2,042)

Operating expenses


(6,872)

(8,716)





Profit on disposal of undertakings and share of results of associates and joint ventures


24

12

Profit before tax


3,014

1,659

Tax charge2

6

(545)

(644)

Profit after tax


2,469

1,015





Attributable to:




Equity holders of the parent2


2,072

561

Other equity instrument holders


363

346

Total equity holders of the parent


2,435

907

Non-controlling interests

7

34

108

Profit after tax


2,469

1,015





Earnings per share


p

p

Basic earnings per ordinary share

8

12.1

3.3

Diluted earnings per ordinary share

8

11.9

3.2

 

1

For notes to the Financial Statements see pages 55 to 83.

2

From 2019, due to an IAS 12 update, the tax relief on payments in relation to AT1 instruments has been recognised in the tax charge of the income statement, whereas it was previously recorded in retained earnings. Comparatives have been restated, reducing the tax charge for H118 by £93m. This change does not impact earnings per share or return on average tangible shareholders' equity. Further detail can be found in Note 1, Basis of preparation on pages 55 to 56.

 

Condensed consolidated statement of comprehensive income (unaudited)







Half year ended

Half year ended



30.06.19

30.06.18


Notes1

£m

£m

Profit after tax


2,469

1,015





Other comprehensive income/(loss) that may be recycled to profit or loss:2



Currency translation reserve

17

177

338

Fair value through other comprehensive income reserve

17

380

(189)

Cash flow hedging reserve

17

528

(509)

Other

17

-

11

Other comprehensive income/(loss) that may be recycled to profit or loss


1,085

(349)





Other comprehensive (loss)/income not recycled to profit or loss:2



Retirement benefit remeasurements

14

(140)

(54)

Fair value through other comprehensive income reserve

17

125

(267)

Own credit

17

44

(73)

Other comprehensive income/(loss) not recycled to profit or loss


29

(394)





Other comprehensive income/(loss) for the period


1,114

(743)





Total comprehensive income for the period


3,583

272





Attributable to:




Equity holders of the parent


3,549

163

Non-controlling interests


34

109

Total comprehensive income for the period


3,583

272

 

1

For notes to the Financial Statements see pages 55 to 83.

2

Reported net of tax.

 

Condensed consolidated balance sheet (unaudited)



As at

As at



30.06.192

31.12.18

Assets

Notes1

£m

£m

Cash and balances at central banks


158,070

177,069

Cash collateral and settlement balances


104,625

77,222

Loans and advances at amortised cost


339,319

326,406

Reverse repurchase agreements and other similar secured lending


8,990

2,308

Trading portfolio assets


120,381

104,187

Financial assets at fair value through the income statement


159,705

149,648

Derivative financial instruments

10

244,186

222,538

Financial assets at fair value through other comprehensive income


72,169

52,816

Investments in associates and joint ventures


734

762

Goodwill and intangible assets


7,993

7,973

Property, plant and equipment


4,206

2,535

Current tax assets

6

884

798

Deferred tax assets

6

3,142

3,828

Retirement benefit assets

14

1,875

1,768

Other assets


6,543

3,425

Total assets


1,232,822

1,133,283





Liabilities




Deposits at amortised cost


413,596

394,838

Cash collateral and settlement balances


93,806

67,522

Repurchase agreements and other similar secured borrowing


18,322

18,578

Debt securities in issue


90,815

82,286

Subordinated liabilities

12

18,803

20,559

Trading portfolio liabilities


42,724

37,882

Financial liabilities designated at fair value


229,853

216,834

Derivative financial instruments

10

243,103

219,643

Current tax liabilities

6

616

628

Deferred tax liabilities

6

5

51

Retirement benefit liabilities

14

323

315

Other liabilities


10,279

7,716

Provisions

13

1,780

2,652

Total liabilities


1,164,025

1,069,504





Equity




Called up share capital and share premium

15

4,494

4,311

Other reserves

17

6,403

5,153

Retained earnings


44,556

43,460

Shareholders' equity attributable to ordinary shareholders of the parent


55,453

52,924

Other equity instruments

16

12,123

9,632

Total equity excluding non-controlling interests


67,576

62,556

Non-controlling interests

7

1,221

1,223

Total equity


68,797

63,779





Total liabilities and equity


1,232,822

1,133,283

 

1

For notes to the Financial Statements see pages 55 to 83.

2

Barclays adopted the accounting standard IFRS 16 on 1 January 2019. The impact on adoption was an increase in property, plant and equipment of £1.6bn, an increase in other liabilities of £1.6bn, with no material impact on retained earnings.