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.

 

Condensed consolidated statement of changes in equity (unaudited)


Called up share capital and share premium1

Other equity instruments1

Other reserves1

Retained earnings

Total

Non-controlling interests2

Total equity

Half year ended 30.06.19

£m

£m

£m

£m

£m

£m

£m

Balance as at 1 January 2019

4,311

9,632

5,153

43,460

62,556

1,223

63,779

Profit after tax

-

363

-

2,072

2,435

34

2,469

Currency translation movements

-

-

177

-

177

-

177

Fair value through other comprehensive income reserve

-

-

505

-

505

-

505

Cash flow hedges

-

-

528

-

528

-

528

Retirement benefit remeasurements

-

-

-

(140)

(140)

-

(140)

Own credit

-

-

44

-

44

-

44

Total comprehensive income for the period

-

363

1,254

1,932

3,549

34

3,583

Issue of new ordinary shares

159

-

-

-

159

-

159

Issue of shares under employee share schemes

24

-

-

241

265

-

265

Issue and exchange of other equity instruments

-

2,504

-

-

2,504


2,504

Other equity instruments coupons paid

-

(363)

-

-

(363)

-

(363)

Vesting of shares under employee share schemes

-

-

(4)

(384)

(388)

-

(388)

Dividends paid

-

-

-

(684)

(684)

(34)

(718)

Other movements

-

(13)

-

(9)

(22)

(2)

(24)

Balance as at 30 June 2019

4,494

12,123

6,403

44,556

67,576

1,221

68,797









Half year ended 31.12.18








Balance as at 1 July 2018

22,144

8,938

4,532

25,441

61,055

2,113

63,168

Profit after tax3

-

406

-

1,036

1,442

118

1,560

Currency translation movements

-

-

496

-

496

-

496

Fair value through other comprehensive income reserve

-

-

(30)

-

(30)

-

(30)

Cash flow hedges

-

-

8

-

8

-

8

Retirement benefit remeasurements

-

-

-

367

367

-

367

Own credit

-

-

131

-

131

-

131

Other

-

-

-

20

20

(1)

19

Total comprehensive income for the period

-

406

605

1,423

2,434

117

2,551

Issue of new ordinary shares

21

-

-

-

21

-

21

Issue of shares under employee share schemes

19

-

-

212

231

-

231

Capital reorganisation

(17,873)

-

-

17,873

-

-

-

Issue and exchange of other equity instruments

-

692

-

(308)

384

-

384

Other equity instruments coupons paid3

-

(406)

-

-

(406)

-

(406)

Redemption of preference shares

-

-

-

(732)

(732)

(1,309)

(2,041)

Debt to equity reclassification

-

-

-

-

-

419

419

Vesting of shares under employee share schemes

-

-

16

(15)

1

-

1

Dividends paid

-

-

-

(427)

(427)

(120)

(547)

Other movements

-

2

-

(7)

(5)

3

(2)

Balance as at 31 December 2018

4,311

9,632

5,153

43,460

62,556

1,223

63,779

 

1

Details of share capital, other equity instruments and other reserves are shown on pages 72 to 74.

2

Details of non-controlling interests are shown on page 60.

3

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. This change does not impact earnings per share or return on average tangible shareholders' equity. Comparatives have been restated, reducing the tax charge for H218 by £110m. Further detail can be found in Note 1, Basis of preparation on pages 55 to 56.

 

Condensed consolidated statement of changes in equity (unaudited)


Called up share capital and share premium1

Other equity instruments1

Other reserves1

Retained earnings

Total

Non-controlling interests2

Total equity

Half year ended 30.06.18

£m

£m

£m

£m

£m

£m

£m

Balance as at 31 December 2017

22,045

8,941

5,383

27,536

63,905

2,111

66,016

Effects of changes in accounting policies

-

-

(136)

(2,014)

(2,150)

-

(2,150)

Balance as at 1 January 2018

22,045

8,941

5,247

25,522

61,755

2,111

63,866

Profit after tax3

-

346

-

561

907

108

1,015

Currency translation movements

-

-

338

-

338

-

338

Fair value through other comprehensive income reserve

-

-

(456)

-

(456)

-

(456)

Cash flow hedges

-

-

(509)

-

(509)

-

(509)

Retirement benefit remeasurements

-

-

-

(54)

(54)

-

(54)

Own credit

-

-

(73)

-

(73)

-

(73)

Other

-

-

-

10

10

1

11

Total comprehensive income for the period

-

346

(700)

517

163

109

272

Issue of new ordinary shares

67

-

-

-

67

-

67

Issue of shares under employee share schemes

32

-

-

237

269

-

269

Other equity instruments coupons paid3

-

(346)

-

-

(346)

-

(346)

Vesting of shares under employee share schemes

-

-

(15)

(484)

(499)

-

(499)

Dividends paid

-

-

-

(341)

(341)

(106)

(447)

Other movements

-

(3)

-

(10)

(13)

(1)

(14)

Balance as at 30 June 2018

22,144

8,938

4,532

25,441

61,055

2,113

63,168

 

1

Details of share capital, other equity instruments and other reserves are shown on pages 72 to 74.

2

Details of non-controlling interests are shown on page 60.

3

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 cash flow statement (unaudited)




Half year ended

Half year ended


30.06.19

30.06.18


£m

£m

Profit before tax

3,014

1,659

Adjustment for non-cash items

(297)

2,716

Changes in operating assets and liabilities

467

(2,799)

Corporate income tax paid

(260)

(172)

Net cash from operating activities

2,924

1,404

Net cash from investing activities

(17,075)

(7,332)

Net cash from financing activities

(610)

(4,300)

Effect of exchange rates on cash and cash equivalents

652

403

Net decrease in cash and cash equivalents

(14,109)

(9,825)

Cash and cash equivalents at beginning of the period

211,166

204,612

Cash and cash equivalents at end of the period

197,057

194,787

 

Financial Statement Notes

 

1.      Basis of preparation

 

These condensed consolidated interim financial statements for the six months ended 30 June 2019 have been prepared in accordance with the DTR of the UK FCA and with IAS 34, Interim Financial Reporting, as published by the International Accounting Standards Board (IASB) and adopted by the EU. The condensed consolidated interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2018, which have been prepared in accordance with IFRSs as published by the IASB and as adopted by the EU.

 

The accounting policies and methods of computation used in these condensed consolidated interim financial statements are the same as those used in the Barclays PLC Annual Report 2018, except as disclosed below.

 

1.   IFRS 16 - Leases

 

IFRS 16, Leases, which replaced IAS 17, Leases, was applied effective from 1 January 2019. IFRS 16 applies to all leases with the exception of licenses of intellectual property, rights held by licensing agreement within the scope of IAS 38, Intangible Assets, service concession arrangements, leases of biological assets within the scope of IAS 41, Agriculture, and leases of minerals, oil, natural gas and similar non-regenerative resources. IFRS 16 includes an accounting policy choice for a lessee to elect not to apply IFRS 16 to remaining assets within the scope of IAS 38, Intangible Assets, which the Barclays Group has decided to apply.

 

IFRS 16 does not result in a significant change to lessor accounting; however, for lessee accounting there is no longer a distinction between operating and finance leases. Lessees will be required to recognise both:

 


·

A lease liability, measured at the present value of remaining cash flows on the lease, and


·

A right of use (ROU) asset, measured at the amount of the initial measurement of the lease liability, plus any lease payments made prior to commencement date, initial direct costs, and estimated costs of restoring the underlying asset to the condition required by the lease, less any lease incentives received.

 

Subsequently the lease liability will increase for the accrual of interest, resulting in a constant rate of return throughout the life of the lease, and reduce when payments are made. The right of use asset will amortise to the income statement over the life of the lease.

 

There is a recognition exemption in IFRS 16 for leases with a term not exceeding 12 months, which allows the lessee to apply similar accounting as an operating lease under IAS 17.

 

The Barclays Group applied IFRS 16 on a modified retrospective basis and took advantage of the option not to restate comparative periods. The Barclays Group applied the following transition options available under the modified retrospective approach:

 


·

To calculate the right of use asset equal to the lease liability, adjusted for prepaid or accrued payments.


·

To rely on the previous assessment of whether leases are onerous in accordance with IAS 37 immediately before the date of initial application as an alternative to performing an impairment review. The Barclays Group adjusted the carrying amount of the ROU asset at the date of initial application by the previous carrying amount of its onerous lease provision.


·

To apply the recognition exception for leases with a term not exceeding 12 months.


·

To use hindsight in determining the lease term if the contract contains options to extend or terminate the lease.

 

The impact on adoption was an increase in property, plant and equipment of £1.6bn, and an increase in other liabilities of £1.6bn, with no material impact on retained earnings.

 

2.   IFRIC Interpretation 23 - Uncertainty over Income Tax Treatment

 

IFRIC 23 clarifies the application of IAS 12 to accounting for income tax treatments that have yet to be accepted by tax authorities, in scenarios where it may be unclear how tax law applies to a particular transaction or circumstance, or whether a taxation authority will accept an entity's tax treatment. IFRIC 23 has been applied from 1 January 2019. There was no significant effect from the adoption of IFRIC 23 in relation to accounting for uncertain tax positions.

 

3.   IAS 12 - Income Taxes - Amendments to IAS 12

 

The IASB amended IAS 12 in order to clarify the accounting treatment of the income tax consequences of dividends. As a result of the amendment, the tax consequences of all payments on financial instruments that are classified as equity for accounting purposes, where those payments are considered to be a distribution of profit, will be included in, and will reduce, the income statement tax charge. The amendments of IAS 12 were applied to the income tax consequences of dividends recognised on or after the beginning of the earliest comparative period. This resulted in reducing the tax charge and increasing profit after tax for H119 by £96m and H118 by £93m. This change does not impact retained earnings or earnings per share.

 

4.   IAS 19 - Employee Benefits - Amendments to IAS 19

 

The IASB issued amendments to the guidance in IAS 19, Employee Benefits, in connection with accounting for plan amendments, curtailments and settlements. The amendments have been applied to plan amendments, curtailments or settlements occurring on or after 1 January 2019. There was no significant effect from the adoption of the amendments of IAS 19.

 

5.   Going concern

 

Having reassessed the Principal Risks, the directors considered it appropriate to adopt the going concern basis of accounting in preparing the interim financial information.

 

6.   Other disclosures

 

The Credit risk disclosures on pages 24 to 31 form part of these interim financial statements.

 

2.      Segmental reporting

 

Analysis of results by business






Barclays

UK

Barclays

International

Head

Office

Barclays

Group

Half year ended 30.06.19

£m

£m

£m

£m

Total income

3,548

7,473

(231)

10,790

Credit impairment charges and other provisions

(421)

(492)

(15)

(928)

Net operating income/(expenses)

3,127

6,981

(246)

9,862

Total operating expenses

(2,065)

(4,671)

(136)

(6,872)

Other net income/(expenses)1

-

31

(7)

24

Profit/(loss) before tax

1,062

2,341

(389)

3,014






As at 30.06.19

£bn

£bn

£bn

£bn

Total assets

259.0

951.4

22.4

1,232.8






 


Barclays

UK

Barclays

International

Head

Office

Barclays

Group

Half year ended 30.06.18

£m

£m

£m

£m

Total income

3,624

7,515

(205)

10,934

Credit impairment (charges)/releases and other provisions

(415)

(161)

5

(571)

Net operating income/(expenses)

3,209

7,354

(200)

10,363

Total operating expenses

(2,387)

(4,668)

(1,661)

(8,716)

Other net income/(expenses)1

4

24

(16)

12

Profit/(loss) before tax

826

2,710

(1,877)

1,659






As at 31.12.18

£bn

£bn

£bn

£bn

Total assets

249.7

862.1

21.5

1,133.3

 

1

Other net income/(expenses) represents the share of post-tax results of associates and joint ventures, profit (or loss) on disposal of subsidiaries, associates and joint ventures and gains on acquisitions.

 


Half year ended

Half year ended

Split of income by geographic region1

30.06.19

30.06.18


£m

£m

UK

5,365

5,527

Europe

959

1,042

Americas

3,956

3,966

Africa and Middle East

144

103

Asia

366

296

Total 

10,790

10,934

 

1

The geographic region is based on counterparty location.

 

3.      Net fee and commission income

 

Fee and commission income is disaggregated below and includes a total for fees in scope of IFRS 15, Revenue from Contracts with Customers:

 


Barclays UK

Barclays  International

Head

Office

Total

Half year ended 30.06.19

£m

£m

£m

£m

Fee type





Transactional

523

1,353

-

1,876

Advisory

88

406

-

494

Brokerage and execution

101

536

-

637

Underwriting and syndication

-

1,240

-

1,240

Other

45

131

7

183

Total revenue from contracts with customers

757

3,666

7

4,430

Other non-contract fee income

-

54

-

54

Fee and commission income

757

3,720

7

4,484

Fee and commission expense

(187)

(957)

(6)

(1,150)

Net fee and commission income

570

2,763

1

3,334

 


Barclays UK

Barclays  International

Head

Office

Total

Half year ended 30.06.18

£m

£m

£m

£m

Fee type





Transactional

530

1,257

-

1,787

Advisory

99

377

-

476

Brokerage and execution

52

583

-

635

Underwriting and syndication

-

1,368

-

1,368

Other

61

125

16

202

Total revenue from contracts with customers

742

3,710

16

4,468

Other non-contract fee income

-

55

-

55

Fee and commission income

742

3,765

16

4,523

Fee and commission expense

(172)

(847)

(15)

(1,034)

Net fee and commission income

570

2,918

1

3,489

 

Transactional fees are service charges on deposit accounts, cash management services and transactional processing fees. This includes interchange and merchant fee income generated from credit and bank card usage.

 

Advisory fees are generated from asset management services and advisory services related to mergers, acquisitions and financial restructuring.

 

Brokerage and execution fees are earned for executing client transactions with exchanges and over-the-counter markets and assisting clients in clearing transactions.

 

Underwriting and syndication fees are earned for the distribution of client equity or debt securities and the arrangement and administration of a loan syndication. This includes commitment fees to provide loan financing.

 

4.      Staff costs

 


Half year ended

Half year ended


30.06.19

30.06.18

Compensation costs

£m

£m

Current year bonus charges

456

593

Deferred bonus charge

226

256

Commissions and other incentives

34

21

Performance costs

716

870

Salaries

2,195

2,069

Social security costs

315

303

Post-retirement benefits

251

243

Other compensation costs

232

199

Total compensation costs

3,709

3,684




Other resourcing costs



Outsourcing

257

277

Redundancy and restructuring

49

60

Temporary staff costs

173

193

Other

76

63

Total other resourcing costs

555

593




Total staff costs

4,264

4,277




Barclays Group compensation costs as a % of total income

34.4

33.7

 

No material awards have yet been granted in relation to the 2019 bonus pool as decisions regarding incentive awards are not taken by the Remuneration Committee until the performance for the full year can be assessed. The current year bonus charge for the first six months represents an accrual for estimated costs in accordance with accounting requirements.

 

5.      Infrastructure, administration and general expenses

 


Half year ended

Half year ended


30.06.19

30.06.18

Infrastructure costs

£m

£m

Property and equipment

691

685

Depreciation of property, plant and equipment1

310

202

Lease rentals1

21

128

Amortisation of intangible assets

419

412

Impairment of property, equipment and intangible assets

29

1

Total infrastructure costs

1,470

1,428




Administration and general expenses



Consultancy, legal and professional fees

284

353

Subscriptions, publications, stationery and communications

329

319

Marketing, advertising and sponsorship

212

195

Travel and accommodation

81

74

Other administration and general expenses

118

28

Total administration and general expenses

1,024

969




Total infrastructure, administration and general expenses

2,494

2,397

 

1

Barclays adopted the accounting standard IFRS 16 on 1 January 2019. The impact has been to increase the depreciation charge by £113m as a result of recognising a right of use asset and to reduce the operating lease expense in H119. The prior period comparatives have not been restated. See Note 1 for further details.

 

6.      Tax

 

The tax charge for H119 was £545m (H118: £644m), representing an effective tax rate of 18.1% (H118: 38.8%). The effective tax rate for H119 was substantially lower than H118, primarily due to charges for litigation and conduct in H118 which were non-deductible for tax purposes. From 2019, a change in accounting standards has required tax relief on payments made under AT1 instruments, which in prior periods was recognised in retained earnings, to be recognised in the income statement. Excluding this accounting change, the Group's effective tax rate would have been 21.3%.

 


Assets


Liabilities


As at

As at


As at

As at


30.06.19

31.12.18


30.06.19

31.12.18

Current and deferred tax assets and liabilities

£m

£m


£m

£m

Current tax

884

798


(616)

(628)

Deferred tax

3,142

3,828


(5)

(51)

Total

4,026

4,626


(621)

(679)

 


As at

As at


30.06.19

31.12.18

Deferred tax assets and liabilities

£m

£m

USA

2,293

2,541

UK

438

861

Other

411

426

Deferred tax assets

3,142

3,828

Deferred tax liabilities

(5)

(51)




Analysis of deferred tax assets



Temporary differences

2,754

3,299

Tax losses

388

529

Deferred tax assets

3,142

3,828







 

7.      Non-controlling interests

 


Profit attributable to

non-controlling interests


Equity attributable to

non-controlling interests


Half year ended

Half year ended


As at

As at


30.06.19

30.06.18


30.06.19

31.12.18


£m

£m


£m

£m

Barclays Bank PLC issued:






- Preference shares

27

106


529

529

- Upper T2 instruments

7

3


691

691

Other non-controlling interests

-

(1)


1

3

Total

34

108


1,221

1,223

 

8.      Earnings per share

 


Half year ended

Half year ended


30.06.19

30.06.18


£m

£m

Profit attributable to ordinary equity holders of the parent1

2,072

561





m

m

Basic weighted average number of shares in issue

17,178

17,067

Number of potential ordinary shares

200

258

Diluted weighted average number of shares

17,378

17,325





p

p

Basic earnings per ordinary share1

12.1

3.3

Diluted earnings per ordinary share1

11.9

3.2

 

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, increasing the profit after tax 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.

 

9.      Dividends on ordinary shares

 

It is Barclays' policy to declare and pay dividends on a semi-annual basis. A half year dividend for 2019 of 3.0p (H118: 2.5p) per ordinary share will be paid on 23 September 2019 to shareholders on the share register on 9 August 2019.

 


Half year ended 30.06.19

Half year ended 30.06.18


Per share

Total

Per share

Total

Dividends paid during the period

p

£m

p

£m

Full year dividend paid during period

4.0

684

2.0

341

 

For qualifying US and Canadian resident ADR holders, the half year dividend of 3.0p per ordinary share becomes 12.0p per ADS (representing four shares). The ADR depositary will post the half year dividend on 23 September 2019 to ADR holders on the record at close of business on 9 August 2019.

 

10.   Derivative financial instruments






Contract notional amount


Fair value



Assets

Liabilities

As at 30.06.19

£m


£m

£m

Foreign exchange derivatives

5,325,619


56,446

(58,302)

Interest rate derivatives

43,634,276


154,780

(147,878)

Credit derivatives

799,556


13,013

(11,995)

Equity and stock index and commodity derivatives

1,172,578


19,801

(24,761)

Derivative assets/(liabilities) held for trading

50,932,029


244,040

(242,936)






Derivatives in hedge accounting relationships





Derivatives designated as cash flow hedges

74,976


8

(2)

Derivatives designated as fair value hedges

116,000


138

(103)

Derivatives designated as hedges of net investments

935


-

(62)

Derivative assets/(liabilities) designated in hedge accounting relationships

191,911


146

(167)






Total recognised derivative assets/(liabilities)

51,123,940


244,186

(243,103)






As at 31.12.18





Foreign exchange derivatives

5,289,872


64,188

(64,127)

Interest rate derivatives

37,140,892


125,118

(120,628)

Credit derivatives

759,075


10,755

(9,519)

Equity and stock index and commodity derivatives

1,003,914


22,323

(25,304)

Derivative assets/(liabilities) held for trading

44,193,753


222,384

(219,578)






Derivatives in hedge accounting relationships





Derivatives designated as cash flow hedges

75,389


11

(6)

Derivatives designated as fair value hedges

101,845


143

(49)

Derivatives designated as hedges of net investments

2,968


-

(10)

Derivative assets/(liabilities) designated in hedge accounting relationships

180,202


154

(65)






Total recognised derivative assets/(liabilities)

44,373,955


222,538

(219,643)

 

Derivative financial instrument assets and liabilities increased £22bn to £244bn and £23bn to £243bn respectively, mainly due to an increase in interest rate derivatives.

 

The IFRS netting posted against derivative assets was £40bn including £5bn of cash collateral netted (December 2018: £21bn including £2bn cash collateral netted) and £40bn for liabilities including £6bn of cash collateral netted (December 2018: £21bn including £3bn of cash collateral netted). Derivative asset exposures would be £223bn (December 2018: £203bn) lower than reported under IFRS if netting were permitted for assets and liabilities with the same counterparty or for which the Barclays Group holds cash collateral of £37bn (December 2018: £31bn). Similarly, derivative liabilities would be £223bn (December 2018: £202bn) lower reflecting counterparty netting and cash collateral placed of £37bn (December 2018: £30bn). In addition, non-cash collateral of £5bn (December 2018: £6bn) was held in respect of derivative assets and £4bn (December 2018: £3bn) was placed in respect of derivative liabilities. Collateral amounts are limited to net on balance sheet exposure so as to not include over-collateralisation.

 

11.    Fair value of financial instruments

 

This section should be read in conjunction with Note 17, Fair value of financial instruments of the Barclays PLC Annual Report 2018 and Note 1, Basis of preparation on pages 55 to 56, which provides more detail about accounting policies adopted, valuation methodologies used in calculating fair value and the valuation control framework which governs oversight of valuations. There have been no changes in the accounting policies adopted or the valuation methodologies used.

 

Valuation

 

The following table shows the Barclays Group's assets and liabilities that are held at fair value disaggregated by valuation technique (fair value hierarchy) and balance sheet classification:

 


Valuation technique using




Quoted market prices

Observable inputs

Significant unobservable inputs




(Level 1)

(Level 2)

(Level 3)


Total

As at 30.06.19

£m

£m

£m


£m

Trading portfolio assets

58,456

58,377

3,548


120,381

Financial assets at fair value through the income statement

10,853

140,578

8,274


159,705

Derivative financial instruments

6,004

232,481

5,701


244,186

Financial assets at fair value through other comprehensive income

27,063

44,936

170


72,169

Investment property

-

-

8


8

Total assets

102,376

476,372

17,701


596,449







Trading portfolio liabilities

(25,714)

(17,004)

(6)


(42,724)

Financial liabilities designated at fair value

(98)

(229,451)

(304)


(229,853)

Derivative financial instruments

(5,728)

(232,576)

(4,799)


(243,103)

Total liabilities

(31,540)

(479,031)

(5,109)


(515,680)







As at 31.12.18






Trading portfolio assets

51,029

49,545

3,613


104,187

Financial assets at fair value through the income statement

8,918

131,348

9,382


149,648

Derivative financial instruments

6,813

210,510

5,215


222,538

Financial assets at fair value through other comprehensive income

19,764

32,697

355


52,816

Investment property

-

-

9


9

Total assets

86,524

424,100

18,574


529,198







Trading portfolio liabilities

(20,654)

(17,225)

(3)


(37,882)

Financial liabilities designated at fair value

(76)

(216,478)

(280)


(216,834)

Derivative financial liabilities

(6,152)

(208,748)

(4,743)


(219,643)

Total liabilities

(26,882)

(442,451)

(5,026)


(474,359)

 

The following table shows the Barclays Group's assets and liabilities that are held at fair value disaggregated by valuation technique (fair value hierarchy) and product type:

 


Assets

Liabilities


Valuation technique using

Valuation technique using


Quoted

market prices

(Level 1)

Observable

inputs

(Level 2)

Significant

unobservable

inputs

(Level 3)

Quoted

market prices

(Level 1)

Observable

inputs

(Level 2)

Significant

unobservable

inputs

(Level 3)

As at 30.06.19

£m

£m

£m

£m

£m

£m

Interest rate derivatives

-

152,606

2,320

-

(145,912)

(2,071)

Foreign exchange derivatives

-

56,237

209

-

(58,075)

(289)

Credit derivatives

-

11,565

1,448

-

(11,626)

(369)

Equity derivatives

6,004

10,871

1,711

(5,728)

(15,801)

(2,057)

Commodity derivatives

-

1,202

13

-

(1,162)

(13)

Government and government sponsored debt

53,418

63,687

2

(12,596)

(11,868)

-

Corporate debt

-

20,662

616

-

(5,671)

(6)

Certificates of deposit, commercial paper and other money market instruments

-

554

-

-

(7,939)

(21)

Margin lending

-

15,306

-

-

(23,860)

-

Reverse repurchase and repurchase agreements

-

122,021

13

-

(148,829)

-

Non-asset backed loans

-

7,383

7,930

-

-

-

Asset backed securities

-

3,193

669

-

(28)

-

Issued debt

-

-

-

-

(47,402)

(263)

Equity cash products

42,852

10,190

357

(13,118)

(804)

-

Private equity investments

4

-

913

-

-

(20)

Other1

98

895

1,500

(98)

(54)

-

Total

102,376

476,372

17,701

(31,540)

(479,031)

(5,109)








As at 31.12.18







Interest rate derivatives

-

122,794

2,478

-

(118,227)

(2,456)

Foreign exchange derivatives

-

63,996

192

-

(63,952)

(185)

Credit derivatives

-

9,373

1,381

-

(9,188)

(331)

Equity derivatives

6,813

12,934

1,136

(6,152)

(16,001)

(1,743)

Commodity derivatives

-

1,413

28

-

(1,380)

(28)

Government and government sponsored debt

41,812

51,644

14

(9,396)

(11,171)

-

Corporate debt

-

14,664

456

-

(5,061)

-

Certificates of deposit, commercial paper and other money market instruments

-

1,135

-

-

(8,556)

(10)

Margin lending

-

10,388

-

-

(26,875)

-

Reverse repurchase and repurchase agreements

-

118,273

768

-

(138,460)

-

Non-asset backed loans

-

7,406

8,304

-

-

-

Asset backed securities

-

2,314

688

-

(245)

-

Issued debt

-

-

-

-

(42,101)

(251)

Equity cash products

37,816

7,195

698

(11,258)

(1,181)

(3)

Private equity investments

7

-

1,071

-

-

(19)

Other1

76

571

1,360

(76)

(53)

-

Total

86,524

424,100

18,574

(26,882)

(442,451)

(5,026)

 

1

Other includes commercial real estate loans, funds and fund-linked products, asset backed loans, physical commodities and investment property.

 

Assets and liabilities reclassified between Level 1 and Level 2

 

During the period, there were no material transfers between Level 1 and Level 2 (period ended December 2018: no material transfers between Level 1 and Level 2).

 

Level 3 movement analysis

 

The following table summarises the movements in the balances of Level 3 assets and liabilities during the period. The table shows gains and losses and includes amounts for all financial assets and liabilities that are held at fair value transferred to and from Level 3 during the period. Transfers have been reflected as if they had taken place at the beginning of the year.

 

Asset and liability moves between Level 2 and Level 3 are primarily due to i) an increase or decrease in observable market activity related to an input or ii) a change in the significance of the unobservable input, with assets and liabilities classified as Level 3 if an unobservable input is deemed significant.

 

Level 3 movement analysis


As at 01.01.19

Purchases

Sales

Issues

Settle-

ments

Total gains and losses in the period recognised in the income statement

Transfers

As at 30.06.19

Trading income

Other income

In

Out


£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

Government and government sponsored debt

14

2

 -  

 -  

 -  

 -  

 -  

 -  

(14)

2

Corporate debt

388

70

(24)

 -  

(31)

14

 -  

32

(74)

375

Non-asset backed loans

2,263

1,235

(1,260)

 -  

(19)

12

 -  

19

(90)

2,160

Asset backed securities

664

81

(127)

 -  

 -  

5

 -  

16

(29)

610

Equity cash products

136

48

(13)

 -  

 -  

(2)

 -  

116

(20)

265

Other

148

 -  

 -  

 -  

(1)

(10)

 -  

 -  

(1)

136

Trading portfolio assets

3,613

1,436

(1,424)

 -  

(51)

19

 -  

183

(228)

3,548












Non-asset backed loans

5,688

2

 -  

 -  

(295)

248

 -  

 -  

(9)

5,634

Equity cash products

559

9

 -  

 -  

(10)

4

178

 -  

 -  

740

Private equity investments

1,071

21

(73)

 -  

(1)

 -  

43

 -  

(148)

913

Other

2,064

2,334

(2,619)

 -  

(2)

17

9

24

(840)

987

Financial assets at fair value through the income statement

9,382

2,366

(2,692)

 -  

(308)

269

230

24

(997)

8,274












Non-asset backed loans

353

48

 -  

 -  

(55)

 -  

 -  

 -  

(218)

128

Asset backed securities

 -  

40

 -  

 -  

 -  

 -  

 -  

 -  

 -  

40

Equity cash products

2

 -  

 -  

 -  

 -  

 -  

 -  

 -  

 -  

2

Financial assets at fair value through other comprehensive income

355

88

 -  

 -  

(55)

 -  

 -  

 -  

(218)

170












Investment property

9

 -  

 -  

 -  

 -  

 -  

(1)

 -  

 -  

8












Trading portfolio liabilities

(3)

 -  

 -  

 -  

 -  

2

 -  

(5)

 -  

(6)












Certificates of deposit, commercial paper and other money market instruments

(10)

 -  

 -  

 -  

1

 -  

(1)

(11)

 -  

(21)

Issued debt

(251)

 -  

 -  

(16)

1

5

 -  

(3)

1

(263)

Other

(19)

 -  

 -  

 -  

 -  

 -  

(1)

 -  

 -  

(20)

Financial liabilities designated at fair value

(280)

 -  

 -  

(16)

2

5

(2)

(14)

1

(304)












Interest rate derivatives

22

(3)

 -  

 -  

76

116

 -  

(107)

145

249

Foreign exchange derivatives

7

 -  

 -  

 -  

(12)

(41)

 -  

(51)

17

(80)

Credit derivatives

1,050

(63)

4

 -  

(3)

86

 -  

2

3

1,079

Equity derivatives

(607)

(122)

(5)

 -  

23

89

 -  

(16)

292

(346)

Net derivative financial instruments1

472

(188)

(1)

 -  

84

250

 -  

(172)

457

902












Total

13,548

3,702

(4,117)

(16)

(328)

545

227

16

(985)

12,592

 

1

Derivative financial instruments are represented on a net basis. On a gross basis, derivative financial assets were £5,701m and derivative financial liabilities were £4,799m.

 

Level 3 movement analysis


As at 01.01.18

Purchases

Sales

Issues

Settle-

ments

Total gains and losses in the period recognised in the income statement

Transfers

As at 30.06.18

Trading income

Other income

In

Out


£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

Government and government sponsored debt

49

11

 -  

 -  

 -  

 -  

 -  

 -  

(35)

25

Corporate debt

871

35

(17)

 -  

(23)

6

 -  

15

(6)

881

Non-asset backed loans

166

2,239

(239)

 -  

 -  

2

 -  

11

(6)

2,173

Asset backed securities

627

100

(99)

 -  

 -  

(11)

 -  

5

(30)

592

Equity cash products

68

 -  

(7)

 -  

 -  

35

 -  

75

(52)

119

Other

196

4

(4)

 -  

(10)

(21)

 -  

24

(138)

51

Trading portfolio assets

1,977

2,389

(366)

 -  

(33)

11

 -  

130

(267)

3,841












Non-asset backed loans

6,073

16

 -  

 -  

(510)

(8)

 -  

 -  

(4)

5,567

Equity cash products

8

11

 -  

 -  

 -  

 -  

 -  

 -  

 -  

19

Private equity investments

688

295

(37)

 -  

 -  

 -  

53

 -  

(14)

985

Other

750

2,359

(1,967)

 -  

 -  

4

110

 -  

 -  

1,256

Financial assets at fair value through the income statement

7,519

2,681

(2,004)

 -  

(510)

(4)

163

 -  

(18)

7,827












Equity cash products

36

 -  

(17)

 -  

 -  

 -  

 -  

 -  

(18)

1

Private equity investments

129

 -  

(12)

 -  

 -  

 -  

 -  

 -  

(14)

103

Other

40

 -  

(39)

 -  

 -  

 -  

 -  

 -  

 -  

1

Financial assets at fair value through other comprehensive income

205

 -  

(68)

 -  

 -  

 -  

 -  

 -  

(32)

105












Investment property

116

 -  

(104)

 -  

(5)

 -  

4

 -  

 -  

11












Trading portfolio liabilities

(4)

 -  

2

 -  

 -  

 -  

 -  

2

 -  

 -  












Certificates of deposit, commercial paper and other money market instruments

(250)

 -  

202

 -  

 -  

 -  

 -  

 -  

 -  

(48)

Issued debt

(214)

 -  

 -  

(4)

4

19

 -  

(219)

125

(289)

Other

(16)

 -  

16

 -  

2

 -  

(2)

 -  

 -  

 -  

Financial liabilities designated at fair value

(480)

 -  

218

(4)

6

19

(2)

(219)

125

(337)












Interest rate derivatives

(150)

 -  

 -  

 -  

96

(46)

 -  

(343)

58

(385)

Foreign exchange derivatives

37

 -  

 -  

 -  

(17)

(30)

 -  

8

(18)

(20)

Credit derivatives

1,146

2

3

 -  

(15)

(210)

 -  

1

(2)

925

Equity derivatives

(896)

22

(431)

 -  

221

129

 -  

33

175

(747)

Net derivative financial instruments1

137

24

(428)

 -  

285

(157)

 -  

(301)

213

(227)












Total

9,470

5,094

(2,750)

(4)

(257)

(131)

165

(388)

21

11,220

 

1

Derivative financial instruments are represented on a net basis. On a gross basis, derivative financial assets were £5,066m and derivative financial liabilities were £5,293m.

 

Unrealised gains and losses on Level 3 financial assets and liabilities

 

The following table discloses the unrealised gains and losses recognised in the period arising on Level 3 financial assets and liabilities held at the period end.

 


Half year ended 30.06.19

Half year ended 30.06.18


Income statement

Total

Income statement

Total


Trading income

Other income

Trading income

Other income


£m

£m

£m

£m

£m

£m

Trading portfolio assets

21

-

21

(3)

-

(3)

Financial assets at fair value through the income statement

253

205

458

(5)

116

111

Investment properties

-

(1)

(1)

-

-

-

Trading portfolio liabilities

2

-

2

-

-

-

Financial liabilities designated at fair value

6

-

6

18

-

18

Net derivative financial instruments

212

-

212

(155)

-

(155)

Total

494

204

698

(145)

116

(29)

 

Valuation techniques and sensitivity analysis

 

Sensitivity analysis is performed on products with significant unobservable inputs (Level 3) to generate a range of reasonably possible alternative valuations. The sensitivity methodologies applied take account of the nature of valuation techniques used, as well as the availability and reliability of observable proxy and historical data and the impact of using alternative models.

 

Current year valuation and sensitivity methodologies are consistent with those described within Note 17, Fair value of financial instruments in the Barclays PLC Annual Report 2018.

 

Sensitivity analysis of valuations using unobservable inputs


As at 30.06.19

As at 31.12.18


Favourable changes

Unfavourable changes

Favourable changes

Unfavourable changes


£m

£m

£m

£m

Interest rate derivatives

52

(118)

80

(162)

Foreign exchange derivatives

11

(14)

7

(10)

Credit derivatives

125

(79)

126

(73)

Equity derivatives

107

(108)

110

(112)

Commodity derivatives

1

(1)

1

(1)

Corporate debt

12

(10)

10

(2)

Non-asset backed loans

253

(529)

274

(458)

Equity cash products

130

(173)

121

(155)

Private equity investments

236

(247)

230

(241)

Other1

2

(2)

2

(2)

Total

929

(1,281)

961

(1,216)

 

1

Other includes commercial real estate loans, funds and fund-linked products, asset backed loans, physical commodities and investment property.

 

The effect of stressing unobservable inputs to a range of reasonably possible alternatives, alongside considering the impact of using alternative models, would be to increase fair values by up to £929m (December 2018: £961m) or to decrease fair values by up to £1,281m (December 2018: £1,216m) with all the potential effect impacting profit and loss.

 

Significant unobservable inputs

 

The valuation techniques and significant unobservable inputs for assets and liabilities recognised at fair value and classified as Level 3 are consistent with Note 17, Fair value of financial instruments in the Barclays PLC Annual Report 2018. The description of the significant unobservable inputs and the sensitivity of fair value measurement of the instruments categorised as Level 3 assets or liabilities to increases in significant unobservable inputs is also found in Note 17, Fair value of financial instruments of the Barclays PLC Annual Report 2018.

 

Fair value adjustments

 

Key balance sheet valuation adjustments are quantified below:

 


As at

As at


30.06.19

31.12.18


£m

£m

Exit price adjustments derived from market bid-offer spreads

(455)

(457)

Uncollateralised derivative funding

(60)

(47)

Derivative credit valuation adjustments

(149)

(125)

Derivative debit valuation adjustments

192

237

 

·

Uncollateralised derivative funding increased by £13m to £60m as a result of changes in underlying derivative exposures

·

Derivative credit valuation adjustments increased by £24m to £149m as a result of changes in underlying derivative exposures

·

Derivative debit valuation adjustments decreased by £45m to £192m as a result of tightening in Barclays' credit spreads

 

Portfolio exemption

 

The Barclays Group uses the portfolio exemption in IFRS 13, Fair Value Measurement to measure the fair value of groups of financial assets and liabilities. Instruments are measured using the price that would be received to sell a net long position (i.e. an asset) for a particular risk exposure or to transfer a net short position (i.e. a liability) for a particular risk exposure in an orderly transaction between market participants at the balance sheet date under current market conditions. Accordingly, the Barclays Group measures the fair value of the group of financial assets and liabilities consistently with how market participants would price the net risk exposure at the measurement date.

 

Unrecognised gains as a result of the use of valuation models using unobservable inputs

 

The amount that has yet to be recognised in income that relates to the difference between the transaction price (the fair value at initial recognition) and the amount that would have arisen had valuation models using unobservable inputs been used on initial recognition, less amounts subsequently recognised, is £120m (December 2018: £141m) for financial instruments measured at fair value and £257m (December 2018: £262m) for financial instruments carried at amortised cost. There are additions of £24m (December 2018: £65m) and amortisation and releases of £45m (December 2018: £33m) for financial instruments measured at fair value and additions of £1m (December 2018: £29m) and amortisation and releases of £6m (December 2018: £20m) for financial instruments carried at amortised cost.

 

Third party credit enhancements

 

Structured and brokered certificates of deposit issued by Barclays Group are insured up to $250,000 per depositor by the Federal Deposit Insurance Corporation (FDIC) in the United States. The FDIC is funded by premiums that Barclays and other banks pay for deposit insurance coverage. The carrying value of these issued certificates of deposit that are designated under the IFRS 9 fair value option includes this third party credit enhancement. The on balance sheet value of these brokered certificates of deposit amounted to £4,452m (December 2018: £4,797m).

 

Comparison of carrying amounts and fair values for assets and liabilities not held at fair value

 

Valuation methodologies employed in calculating the fair value of financial assets and liabilities measured at amortised cost are consistent with the Barclays PLC Annual Report 2018 disclosure.

 

The following table summarises the fair value of financial assets and liabilities measured at amortised cost on the Barclays Group's balance sheet.

 


As at 30.06.19

As at 31.12.18


Carrying amount

Fair value

Carrying amount

Fair value

Financial assets

£m

£m

£m

£m

Loans and advances at amortised cost





- Home loans

151,543

150,549

150,284

148,897

- Credit cards, unsecured loans and other retail lending

56,304

57,822

54,560

56,462

- Finance lease receivables

2,035

2,178

1,886

2,057

- Corporate loans

129,437

127,374

119,676

117,848

Reverse repurchase agreements and other similar secured lending

8,990

8,990

2,308

2,308






Financial liabilities





Deposits at amortised cost





- Banks

(16,975)

(16,975)

(14,166)

(14,166)

- Current and demand accounts

(152,586)

(152,586)

(148,714)

(148,714)

- Savings accounts

(138,830)

(138,830)

(137,589)

(137,589)

- Other time deposits

(105,205)

(105,213)

(94,369)

(94,388)

Repurchase agreements and other similar secured borrowing

(18,322)

(18,322)

(18,578)

(18,578)

Debt securities in issue

(90,815)

(92,044)

(82,286)

(81,687)

Subordinated liabilities

(18,803)

(18,965)

(20,559)

(21,049)

 

12.    Subordinated liabilities


Half year ended

Year ended


30.06.19

31.12.18


£m

£m

Opening balance as at 1 January

20,559

23,826

Issuances

1,271

221

Redemptions

(3,091)

(3,246)

Other

64

(242)

Closing balance

18,803

20,559

 

Issuances of £1,271m include $1,500m 5.088% Fixed-to-Floating Rate Subordinated Notes (£1,194m) and £77m USD Floating Rate Notes.

 

Redemption totalling £3,091m include £3,000m 14% Step-up Callable Perpetual Reserve Capital Instruments and £77m USD Floating Rate Notes. Barclays Securities Japan Limited redeemed two JPY 1,000m dated loans during the year, totalling £14m.

 

Other movements predominantly include fair value hedge adjustments, accrued interest and foreign exchange movements.

 

13.    Provisions




As at

As at


30.06.19

31.12.18


£m

£m

PPI redress

360

888

Other customer redress

385

444

Legal, competition and regulatory matters

227

414

Redundancy and restructuring

145

169

Undrawn contractually committed facilities and guarantees

297

271

Onerous contracts

46

139

Sundry provisions

320

327

Total

1,780

2,652

 

PPI redress

 

As at 30 June 2019, Barclays had recognised cumulative provisions of £9.6bn (December 2018: £9.6bn). Utilisation of the cumulative provisions to date is £9.2bn (December 2018: £8.7bn), leaving a residual provision of £360m (December 2018: £888m).

 

Through to 30 June 2019, 2.6m (December 2018: 2.4m) customer initiated claims1 had been received and processed.

 

The current provision reflects the estimated cost of PPI redress primarily relating to customer initiated complaints and on-going remediation programmes, based on information available at June 2019. This also includes liabilities managed by third parties arising from portfolios previously sold where Barclays remains liable.

 

As at 30 June 2019, the provision of £360m represents Barclays' best estimate of expected PPI related costs in light of the complaints deadline implemented by the FCA of 29 August 2019. However, it is possible the eventual cumulative provision outcome may differ from the current estimate. Barclays will continue to review the adequacy of the provision in respect of the future impacts, including after the complaints deadline as not all costs will be settled at that point.

 

The PPI provision is calculated using a number of assumptions, which continue to involve significant modelling and management judgement:

 


·

Customer initiated claim volumes - claims received but not yet processed plus an estimate of future claims initiated by customers, where the increase in volume is anticipated to cease after the PPI deadline.


·

Average claim redress - the expected average payment to customers for upheld claims based on the type and age of the policy/policies.


·

Processing cost per claim - the cost of assessing and processing each valid claim.

 

These assumptions remain subjective, mainly due to the uncertainty associated with the remaining future claims levels, which include complaints driven by Claims Management Company (CMC) activity and the FCA advertising campaign.

 

In addition, these assumptions are subject to recent investigations and queries by the Official Receiver in respect of bankruptcy estates, the impact of which cannot be reliably estimated at this time.

 

The following table outlines key forecast assumptions used in the provision calculation as at 30 June 2019, and a sensitivity analysis illustrating the impact on the provision, if the future expected assumptions prove too high or too low.

 

Assumption

Cumulative actual to 30.06.19

Future expected policy claims

Sensitivity analysis increase/decrease in provision

Customer initiated claims received and processed (thousands)1

2,600

134

50k = £120m

Average uphold rate per claim (%)2

89

87

1% = £3m

Average redress per valid claim (£)3

2,143

2,286

£100 = £12m

 

1

Total mis-selling claims received by Barclays, including those received via CMCs but excluding those for which no PPI policy exists and excluding recent investigations and queries by the Official Receiver in respect of bankruptcy estates (the impact of which cannot be reliably estimated at this time) and responses to proactive mailing. The sensitivity analysis has been calculated to show the impact of a 50,000 increase or decrease in the number of customer initiated mis-selling policy claims would have on the provision level inclusive of operational processing costs.

2

Average uphold rate per customer initiated mis-selling claims received by Barclays and proactive mailings, excluding those for which no PPI policy exists. The sensitivity analysis has been calculated to show the impact a 1% change in the average uphold rate per claim would have on the provision level.  

3

Average redress stated on a per policy basis for future customer initiated mis-selling complaints received by Barclays. The sensitivity analysis has been calculated to show the impact a £100 increase or decrease in the average redress per claim would have on the provision level.

 

14.    Retirement benefits

 

As at 30 June 2019, the Barclays Group's IAS 19 pension surplus across all schemes was £1.6bn (December 2018: £1.5bn). The UK Retirement Fund (UKRF), which is the Barclays Group's main scheme, had an IAS 19 pension surplus of £1.8bn (December 2018: £1.7bn). The movement for the UKRF was driven by higher than assumed asset returns and payment of a deficit reduction contribution, offset by a decrease in the discount rate.

 

UKRF funding valuations

 

The Scheme Actuary prepares an annual update of the UKRF funding position in addition to the full triennial actuarial valuation. The latest annual update was carried out as at 30 September 2018 and showed a deficit of £4.0bn and a funding level of 88.4%.

 

The last triennial actuarial valuation of the UKRF had an effective date of 30 September 2016 and was completed in July 2017. This valuation showed a funding deficit of £7.9bn and a funding level of 81.5%.

 

The improvement in funding position between 30 September 2016 and 30 September 2018 was largely due to payment of deficit reduction contributions, higher than assumed asset returns, higher government bond yields and transfers out of the scheme.

 

The recovery plan agreed as part of the 2016 triennial actuarial valuation requires Barclays Bank PLC to pay deficit reduction contributions of £0.5bn per annum between 2018 and 2020, followed by £1.0bn per annum between 2021 and 2026. The deficit reduction contributions are in addition to the regular contributions to meet the Barclays Group's share of the cost of benefits accruing over each year. The agreement with the UKRF Trustee also takes into account the changes to the Barclays Group structure that were implemented as a result of ring-fencing. Barclays Bank PLC remains as the principal employer of the UKRF. Additional support measures agreed include a collateral arrangement, joint participation of Barclays Bank UK PLC until 2025, and support from Barclays PLC should Barclays Bank PLC not pay the deficit reduction contributions to the UKRF.

 

The next triennial actuarial valuation of the UKRF is due to be completed in 2020 with an effective date of 30 September 2019.

 

15.    Called up share capital

 

Called up share capital comprised 17,245m (December 2018: 17,133m) ordinary shares of 25p each. The increase was due to the issuance of shares under employee share schemes and the Barclays PLC Scrip Dividend Programme. 

 

Half year ended 30.06.19

Ordinary share capital

£m

Share premium

£m

Total share capital and share premium

£m

Opening balance as at 1 January

4,283

28

4,311

Movement

28

155

183

Closing balance

4,311

183

4,494

 

16.    Other equity instruments


Half year ended

Year ended


30.06.19

31.12.18


£m

£m

Opening balance as at 1 January

9,632

8,941

Issuances

2,504

1,925

Redemptions

-

(1,233)

Other

(13)

(1)

Closing balance

12,123

9,632

 

Other equity instruments of £12,123m (December 2018: £9,632m) include AT1 securities issued by Barclays PLC. During the period, Barclays PLC issued $2.0bn 8% Fixed Rate Resetting Perpetual Subordinated Contingent Convertible Securities and £1.0bn 7.125% Fixed Rate Resetting Perpetual Subordinated Contingent Convertible Securities.

 

The AT1 securities are perpetual securities with no fixed maturity and are structured to qualify as AT1 instruments under CRR. AT1 securities are undated and are repayable, at the option of Barclays PLC, in whole at the initial call date, or on any fifth anniversary after the initial call date. In addition, the AT1 securities are repayable, at the option of Barclays PLC, in whole in the event of certain changes in the tax or regulatory treatment of the securities. Any repayments require the prior consent of the PRA.

 

All Barclays PLC AT1 securities will be converted into ordinary shares of Barclays PLC, at a pre-determined price, should the fully loaded CET1 ratio of the Barclays Group fall below 7%.

 

17.    Other reserves




As at

As at


30.06.19

31.12.18


£m

£m

Currency translation reserve

4,065

3,888

Fair value through other comprehensive income reserve

247

(258)

Cash flow hedging reserve

1,188

660

Own credit reserve

(77)

(121)

Other reserves and treasury shares

980

984

Total

6,403

5,153

 

Currency translation reserve

 

The currency translation reserve represents the cumulative gains and losses on the retranslation of the Barclays Group's net investment in foreign operations, net of the effects of hedging.

 

As at 30 June 2019, there was a credit balance of £4,065m (December 2018: £3,888m credit) in the currency translation reserve. The £177m credit movement principally reflected the strengthening of period end USD against GBP.

 

Fair value through other comprehensive income reserve

 

The fair value through other comprehensive income reserve represents the unrealised change in the fair value through other comprehensive income investments since initial recognition.

 

As at 30 June 2019, there was a credit balance of £247m (December 2018: £258m debit) in the fair value through other comprehensive income reserve. The gain of £505m is principally reflected by a £721m gain from the increase in fair value of bonds due to decreasing bond yields and a gain of £125m due to an increase in the Absa Group Limited share price. This was partially offset by £216m of net gains transferred to net profit and a tax charge of £126m.

 

Cash flow hedging reserve

 

The cash flow hedging reserve represents the cumulative gains and losses on effective cash flow hedging instruments that will be recycled to the income statement when the hedged transactions affect profit or loss.

 

As at 30 June 2019, there was a credit balance of £1,188m (December 2018: £660m credit) in the cash flow hedging reserve. The increase of £528m principally reflected a £806m increase in the fair value of interest rate swaps held for hedging purposes as major interest rate curves decreased, partially offset by £114m of gains transferred to net profit and a tax charge of £167m.

 

Own credit reserve

 

The own credit reserve reflects the cumulative own credit gains and losses on financial liabilities at fair value. Amounts in the own credit reserve are not recycled to profit or loss in future periods.

 

As at 30 June 2019, there was a debit balance of £77m (December 2018: £121m debit) in the own credit reserve. The movement of £44m is principally reflected by the widening of Barclays' funding spreads of £68m, partially offset by tax of £24m.

 

Other reserves and treasury shares

 

Other reserves relate to redeemed ordinary and preference shares issued by the Barclays Group. Treasury shares relate to Barclays PLC shares held principally in relation to the Barclays Group's various share schemes.

 

As at 30 June 2019, there was a credit balance of £980m (December 2018: £984m credit) in other reserves. This included a debit balance of £31m (December 2018: £27m debit) relating to treasury shares. During the period, £207m (December 2018: £267m) net purchases of treasury shares were made, mainly reflecting the increase in shares held for the purposes of employee share schemes, and £203m (December 2018: £268m) was transferred to retained earnings reflecting the vesting of deferred share-based payments.

 

18.    Contingent liabilities and commitments




As at

As at


30.06.19

31.12.18

Contingent liabilities

£m

£m

Guarantees and letters of credit pledged as collateral security

16,836

15,805

Performance guarantees, acceptances and endorsements

5,921

4,498

Total

22,757

20,303




Commitments



Documentary credits and other short-term trade related transactions

1,273

1,741

Standby facilities, credit lines and other commitments

333,621

322,482

Total

334,894

324,223

 

In addition to the above, Note 19, Legal, competition and regulatory matters details out further contingent liabilities where it is not practicable to disclose an estimate of the potential financial effect on Barclays.

 

19.    Legal, competition and regulatory matters

 

Members of the Barclays Group face legal, competition and regulatory challenges, many of which are beyond our control. The extent of the impact on Barclays of these matters cannot always be predicted but may materially impact our operations, financial results, condition and prospects. Matters arising from a set of similar circumstances can give rise to either a contingent liability or a provision, or both, depending on the relevant facts and circumstances. The recognition of provisions in relation to such matters involves critical accounting estimates and judgments in accordance with the relevant accounting policies as described in Note 13, Provisions. We have not disclosed an estimate of the potential financial effect on Barclays of contingent liabilities where it is not currently practicable to do so.

 

Matters are ordered under headings corresponding to the financial statements in which they are disclosed.

 

1.     Barclays PLC and Barclays Bank PLC

 

Investigations into certain advisory services agreements and other matters and civil action

 

The UK Serious Fraud Office (SFO), the Financial Conduct Authority (FCA), the US Department of Justice (DoJ) and the US Securities and Exchange Commission (SEC) have been conducting investigations into two advisory services agreements entered into by Barclays Bank PLC. These agreements were entered into with Qatar Holding LLC in June and October 2008 (the Agreements). The FCA commenced an investigation into whether the Agreements may have related to Barclays PLC's capital raisings in June and November 2008 (the Capital Raisings). The existence of the June 2008 advisory services agreement was disclosed, but the entry into the advisory services agreement in October 2008 and the fees payable under the Agreements, which amounted to a total of £322m payable over a period of five years, were not disclosed in the announcements or public documents relating to the Capital Raisings. The SFO also commenced an investigation into the Agreements and into a $3bn loan (the Loan) provided by Barclays Bank PLC in November 2008 to the State of Qatar. In May 2018, the Crown Court dismissed all charges against Barclays PLC and Barclays Bank PLC brought by the SFO, and in October 2018, the High Court denied the SFO's application to reinstate the charges, which were consequently dismissed.

 

FCA Proceedings and other investigations

 

In 2013, the FCA issued warning notices (the Notices) finding that, while Barclays PLC and Barclays Bank PLC believed at the time of the execution of the Agreements that there should be at least some unspecified and undetermined value to be derived from them, the primary purpose of the Agreements was not to obtain advisory services but to make additional payments, which would not be disclosed, for the Qatari participation in the Capital Raisings. The Notices concluded that Barclays PLC and Barclays Bank PLC were in breach of certain disclosure-related listing rules and Barclays PLC was also in breach of Listing Principle 3 (the requirement to act with integrity towards holders and potential holders of the Company's shares). In this regard, the FCA considers that Barclays PLC and Barclays Bank PLC acted recklessly. The financial penalty provided in the Notices against Barclays is £50m. Barclays PLC and Barclays Bank PLC continue to contest the findings. The FCA action has been stayed due to the SFO proceedings pending against certain former Barclays executives.

 

In addition, the DoJ and the SEC have been conducting investigations relating to the Agreements.

 

Civil Action

 

In 2016, PCP Capital Partners LLP and PCP International Finance Limited (PCP) served a claim on Barclays Bank PLC seeking damages for fraudulent misrepresentation and deceit, arising from alleged statements made by Barclays Bank PLC to PCP in relation to the terms on which securities were to be issued to potential investors, allegedly including PCP, in the November 2008 capital raising. PCP seeks damages of approximately £1.6bn (plus interest from November 2017) and costs. Barclays Bank PLC is defending the claim and trial is scheduled to commence in June 2020.

 

Claimed amounts/Financial impact

 

It is not currently practicable to provide an estimate of the financial impact of the actions described on Barclays or what effect they might have upon Barclays' operating results, cash flows or financial position in any particular period. The financial penalty provided in the FCA's Notices and the amount of PCP's claim do not necessarily reflect Barclays' potential financial exposure in respect of these matters.

 

Investigations into certain business relationships

 

In 2012, the DoJ and SEC commenced investigations in relation to whether certain relationships with third parties who assist Barclays PLC to win or retain business are compliant with the US Foreign Corrupt Practices Act. Various regulators in other jurisdictions are also being briefed on the investigations. Separately, Barclays has been cooperating with the DoJ and SEC in relation to an investigation into certain of its hiring practices in Asia and elsewhere and is keeping certain regulators in other jurisdictions informed. Barclays is in advanced discussions to resolve this matter.

 

Claimed amounts/Financial impact

 

Barclays does not expect the financial impact of the matters described above to be material to the Group's operating results, cash flows or financial position.

 

Investigations into LIBOR and other benchmarks

 

Regulators and law enforcement agencies, including certain competition authorities, from a number of governments have been conducting investigations relating to Barclays Bank PLC's involvement in manipulating certain financial benchmarks, such as LIBOR and EURIBOR. Barclays PLC, Barclays Bank PLC and Barclays Capital Inc. (BCI) have reached settlements with a number of regulators and law enforcement agencies. Barclays Bank PLC continues to respond to requests for information from the SFO in relation to its ongoing LIBOR investigation, including in respect of Barclays Bank PLC.

 

Claimed amounts/Financial impact

 

Aside from the settlements described above, it is not currently practicable to provide an estimate of any further financial impact of the actions described on Barclays or what effect they might have upon Barclays' operating results, cash flows or financial position in any particular period.

 

LIBOR and other benchmark civil actions

 

Various individuals and corporates in a range of jurisdictions have threatened or brought civil actions against Barclays and other banks in relation to LIBOR and/or other benchmarks. While certain cases have been dismissed, settled or settled subject to final approval from the relevant court (and in the case of class actions, the right of class members to opt out of the settlement and to seek to file their own claims), other actions remain pending and their ultimate impact is unclear.

 

USD LIBOR Cases in the Multidistrict Litigation Court

 

The majority of the USD LIBOR cases, which have been filed in various US jurisdictions, have been consolidated for pre-trial purposes before a single judge in the US District Court in the Southern District of New York (SDNY).

 

The complaints are substantially similar and allege, amongst other things, that Barclays PLC, Barclays Bank PLC, BCI and other financial institutions individually and collectively violated provisions of the US Sherman Antitrust Act (Antitrust Act), the US Commodity Exchange Act (CEA), the US Racketeer Influenced and Corrupt Organizations Act (RICO), the Securities Exchange Act of 1934 and various state laws by manipulating USD LIBOR rates.

 

Certain of the proposed class actions have been settled. Barclays has settled claims purportedly brought on behalf of plaintiffs that (i) engaged in USD LIBOR-linked over-the-counter transactions (OTC Class); (ii) purchased USD LIBOR-linked financial instruments on an exchange; (iii) purchased USD LIBOR-linked debt securities; or (iv) issued loans linked to USD LIBOR (Lender Class) and paid $120m, $20m, $7.1m and $4m respectively. The settlements with the OTC Class and the Lender Class have received final court approval. The other settlements remain subject to final court approval and/or the right of class members to opt out of the settlement and to seek to file their own claims.

 

The remaining putative class actions and individual actions seek unspecified damages with the exception of five lawsuits, in which the plaintiffs are seeking a combined total in excess of $1.25bn in actual damages against all defendants, including Barclays Bank PLC, plus punitive damages. Some of the lawsuits also seek trebling of damages under the Antitrust Act and RICO.

 

Additional USD LIBOR Cases in the SDNY

 

In 2015, an individual action against Barclays Bank PLC and other panel bank defendants was dismissed by the SDNY. The plaintiff alleged that the panel bank defendants conspired to increase USD LIBOR, which caused the value of bonds pledged as collateral for a loan to decrease, ultimately resulting in the sale of the bonds at a low point in the market. In March 2018, the court denied the plaintiff's motion for leave to amend its complaint and dismissed the case. The plaintiff's appeal of the court's order has been dismissed.

 

Beginning in January 2019, several putative class actions were filed in the SDNY against Barclays PLC, Barclays Bank PLC, BCI, other financial institution defendants and Intercontinental Exchange Inc. and certain of its affiliates (ICE), asserting antitrust and unjust enrichment claims on allegations that, beginning in 2014, defendants manipulated USD LIBOR through defendants' submissions to ICE, which took over rate-setting duties for LIBOR from the British Bankers' Association in 2014. These actions have been consolidated.

 

Sterling LIBOR Case in SDNY 

 

In 2015, a putative class action was filed in the SDNY against Barclays Bank PLC and other Sterling LIBOR panel banks by a plaintiff involved in exchange-traded and over-the-counter derivatives that were linked to Sterling LIBOR. The complaint alleges, among other things, that the defendants manipulated the Sterling LIBOR rate between 2005 and 2010 and, in so doing, committed CEA, Antitrust Act, and RICO violations. In 2016, this class action was consolidated with an additional putative class action making similar allegations against Barclays Bank PLC and BCI and other Sterling LIBOR panel banks. The defendants' motion to dismiss was granted in December 2018. The plaintiff has asked the court to reconsider this decision.

 

Japanese Yen LIBOR Cases in SDNY

 

In 2012, a putative class action was filed in the SDNY against Barclays Bank PLC and other Japanese Yen LIBOR panel banks by a plaintiff involved in exchange-traded derivatives. The complaint also names members of the Japanese Bankers Association's Euroyen Tokyo Interbank Offered Rate (Euroyen TIBOR) panel, of which Barclays Bank PLC is not a member. The complaint alleges, amongst other things, manipulation of the Euroyen TIBOR and Yen LIBOR rates and breaches of the CEA and Antitrust Act between 2006 and 2010. In 2014, the court dismissed the plaintiff's antitrust claims in full, but the plaintiff's CEA claims remain pending. Discovery is ongoing.

 

In 2017, a second putative class action concerning Yen LIBOR which was filed in the SDNY against Barclays PLC, Barclays Bank PLC and BCI was dismissed in full. The complaint makes similar allegations to the 2012 class action. The plaintiffs have appealed the dismissal.

 

SIBOR/SOR Case in the SDNY

 

In 2016, a putative class action was filed in the SDNY against Barclays PLC, Barclays Bank PLC, BCI and other defendants, alleging manipulation of the Singapore Interbank Offered Rate (SIBOR) and Singapore Swap Offer Rate (SOR). The plaintiffs amended their complaint in 2017 following dismissal by the court of the claims against Barclays for failure to state a claim. In October 2018, the court dismissed all claims against Barclays PLC, Barclays Bank PLC and BCI, a decision that the plaintiffs are challenging.

 

Non-US Benchmarks Cases

 

In addition to the US actions described above, legal proceedings have been brought or threatened against Barclays in connection with alleged manipulation of LIBOR and EURIBOR and other benchmarks in the UK, including the matter referred to below in 'Local authority civil actions concerning LIBOR' that is also related to Barclays Bank UK PLC, as well as in a number of other jurisdictions in Europe, Israel and Argentina. Additional proceedings in other jurisdictions may be brought in the future.

 

Claimed amounts/Financial impact

 

Aside from the settlements described above, it is not currently practicable to provide an estimate of any further financial impact of the actions described on Barclays or what effect they might have upon Barclays' operating results, cash flows or financial position in any particular period.

 

Foreign Exchange Investigations

 

Various regulatory and enforcement authorities across multiple jurisdictions have been investigating a range of issues associated with Foreign Exchange sales and trading, including electronic trading.

 

In 2015 Barclays reached settlements with the CFTC, the DoJ, the NYDFS, the Board of Governors of the Federal Reserve System (Federal Reserve) and the FCA (together, the 2015 Resolving Authorities) in relation to investigations into certain sales and trading practices in the Foreign Exchange market. In connection with these settlements, Barclays paid total penalties of approximately $2.38bn and agreed to undertake certain remedial actions. Under the plea agreement with the DoJ, which was approved by the US District Court for the District of Connecticut in January 2017, Barclays PLC agreed to a term of probation of three years. Barclays also continues to provide relevant information to certain of the 2015 Resolving Authorities.

 

The European Commission is one of a number of authorities still conducting an investigation into certain trading practices in Foreign Exchange markets. In May 2019, the European Commission announced two settlements and Barclays has paid total penalties of approximately €210m. In June 2019, the Swiss Competition Commission announced two settlements, which require Barclays to pay total penalties of approximately CHF 27m.

 

Claimed amounts/Financial impact

 

Aside from the settlements described above, Barclays does not expect the financial impact of the matters described above to be material to the Group's operating results, cash flows or financial position.

 

Civil actions in respect of Foreign Exchange

 

Following settlement of certain investigations referred to above in 'Foreign Exchange Investigations' a number of individuals and corporates in a range of jurisdictions have threatened or brought civil actions against Barclays and other banks in relation to Foreign Exchange or may do so in the future. Certain of these cases have been dismissed, settled or settled subject to final approval from the relevant court (and in the case of class actions, the right of class members to opt out of the settlement and to seek to file their own claims).

 

FX Opt Out Action

 

In 2014, a number of civil actions filed in the SDNY alleging manipulation of Foreign Exchange markets were combined into a single consolidated action (Consolidated FX Action). In 2015, Barclays Bank PLC and BCI settled the Consolidated FX Action and paid $384m. The settlement received final court approval in August 2018. In November 2018, a group of sixteen plaintiffs (and several of their affiliates) who opted out of the Consolidated FX Action settlement filed a complaint in the SDNY against the Consolidated FX Action defendants, including Barclays Bank PLC and BCI.

 

Retail Basis Action

 

A putative action was filed in the Northern District of California (and subsequently transferred to the SDNY) against several international banks, including Barclays PLC and BCI, on behalf of a putative class of individuals that exchanged currencies on a retail basis at bank branches (Retail Basis Claims). The Court has ruled that the Retail Basis Claims are not covered by the settlement agreement in the Consolidated FX Action. The Court subsequently dismissed all Retail Basis Claims against Barclays and all other defendants. The plaintiffs amended their complaint and sought to expand the action to include credit card, debit card and wire transactions, which expansion the Court denied.

 

State Law FX Action

 

In 2016, a putative class action was filed in the SDNY under federal, New York and California law on behalf of proposed classes of stockholders of Exchange Traded Funds and others who supposedly were indirect investors in FX Instruments. The plaintiffs' counsel subsequently amended the complaint to bring claims on behalf of a proposed class of investors under federal and various state laws who traded FX Instruments through FX dealers or brokers not alleged to have manipulated Foreign Exchange Rates. A different group of plaintiffs subsequently filed another action and asserted substantively similar claims. These two actions were consolidated and a consolidated complaint was filed in 2017. The consolidated action was dismissed, but the plaintiffs have filed an amended complaint, except as to their federal claims.

 

Non-US FX Actions

 

In addition to the actions described above, legal proceedings have been brought or are threatened against Barclays in connection with manipulation of Foreign Exchange in the UK, a number of other jurisdictions in Europe, Israel and Australia and additional proceedings may be brought in the future.

 

Claimed amounts/Financial impact

 

Aside from the settlement described above, it is not currently practicable to provide an estimate of any further financial impact of the actions described on Barclays or what effect they might have upon Barclays' operating results, cash flows or financial position in any particular period.

 

Metals investigations

 

Barclays Bank PLC has provided information to the DoJ, the CFTC and other authorities in connection with investigations into metals and metals-based financial instruments.

 

Claimed amounts/Financial impact

 

It is not currently practicable to provide an estimate of the financial impact of the actions described on Barclays or what effect they might have upon Barclays' operating results, cash flows or financial position in any particular period.

 

Civil actions in respect of the gold and silver fix

 

A number of civil complaints, each on behalf of a proposed class of plaintiffs, have been consolidated and transferred to the SDNY. The complaints allege that Barclays Bank PLC and other members of The London Gold Market Fixing Ltd. manipulated the prices of gold and gold derivative contracts in violation of the CEA, the Antitrust Act, and state antitrust and consumer protection laws.

 

Also, in the US, a proposed class of plaintiffs filed a complaint against a number of banks, including Barclays Bank PLC, BCI and Barclays Capital Services Ltd., alleging manipulation of the price of silver in violation of the CEA and antitrust laws. The court has dismissed this action as against the Barclays entities.

 

Civil actions have also been filed in Canadian courts against Barclays PLC, Barclays Bank PLC, Barclays Capital Canada Inc. and BCI on behalf of proposed classes of plaintiffs alleging manipulation of gold and silver prices in violation of Canadian law.

 

Claimed amounts/Financial impact

 

It is not currently practicable to provide an estimate of the financial impact of the actions described on Barclays or what effect they might have upon Barclays' operating results, cash flows or financial position in any particular period.

 

US residential mortgage related litigation

 

There are various pending civil actions relating to US Residential Mortgage-Backed Securities (RMBS). Barclays was the sole provider of various loan-level representations and warranties (R&Ws) with respect to approximately $5bn of Barclays sponsored securitisations.  In addition, an entity that Barclays acquired in 2007 (Acquired Subsidiary) provided R&Ws on $19.4bn of loans it sold to third parties.  There are no stated expiration provisions applicable to most R&Ws made by Barclays or the Acquired Subsidiary.  Under certain circumstances, Barclays and/or the Acquired Subsidiary may be required to repurchase the related loans or make other payments related to such loans if the R&Ws are breached.

 

The unresolved repurchase requests received on or before 30 June 2019 associated with R&Ws made by Barclays or the Acquired Subsidiary had an original unpaid principal balance of approximately $2.1bn at the time of such sale.

 

The unresolved repurchase requests described above relate to civil actions that have been commenced by the trustees for certain RMBS securitisations in which the trustees allege that Barclays and/or the Acquired Subsidiary must repurchase loans that violated the operative R&Ws. Such trustees making repurchase requests have also alleged that the operative R&Ws may have been violated with respect to a greater (but unspecified) amount of loans than the amount of loans previously stated in specific repurchase requests made by such trustees. These civil actions are ongoing.  An intermediate appellate court has found that claims related to certain R&Ws are time-barred.  This decision is being appealed.

 

Claimed amounts/Financial impact

 

It is not currently practicable to provide an estimate of any further financial impact of the actions described on Barclays or what effect they might have upon Barclays' operating results, cash flows or financial position in any particular period.

 

Alternative trading systems

 

In 2014, the New York State Attorney General (NYAG) filed a complaint (NYAG Complaint) against Barclays PLC and BCI in the Supreme Court of the State of New York alleging, amongst other things, that Barclays PLC and BCI engaged in fraud and deceptive practices in connection with LX, Barclays' SEC-registered alternative trading system (ATS). In February 2016, Barclays reached settlement agreements with the SEC and NYAG, which required Barclays to pay $35m to each. Following the filing of the NYAG Complaint, Barclays PLC and BCI were also named in a putative shareholder securities class action. The parties have agreed to a settlement of this action for $27m, which has received final court approval.

 

Claimed amounts/Financial impact

 

Aside from the settlements described above, there is no financial impact on Barclays' operating results, cash flows or financial position.

 

Treasury auction securities civil actions and related matters

 

Various civil actions have been filed against Barclays Bank PLC, BCI and other financial institutions alleging violations of antitrust and other laws relating to the markets for US Treasury securities and Supranational, Sovereign and Agency securities. Certain governmental authorities are also conducting investigations relating to trading of certain government and agency securities in various markets.

 

Numerous putative class action complaints have been filed in US Federal Court against Barclays Bank PLC, BCI and other financial institutions that have served as primary dealers in US Treasury securities. Those actions have been consolidated and in 2017, plaintiffs in the putative class action filed a consolidated amended complaint in the US Federal Court in New York against the defendants as well as certain corporations that operate electronic trading platforms on which US Treasury securities are traded. The complaint purports to assert claims under US federal antitrust laws and state common law based on allegations that the defendants (i) conspired to manipulate the US Treasury securities market and/or (ii) conspired to prevent the creation of certain platforms by boycotting or threatening to boycott such trading platforms. The defendants have filed a motion to dismiss.

 

In addition, certain plaintiffs have filed a related, direct action against BCI and certain other financial institutions that have served as primary dealers in US Treasury securities. This complaint alleges that defendants conspired to fix and manipulate the US Treasury securities market in violation of US federal antitrust laws, the CEA and state common law.

 

Barclays PLC, Barclays Bank PLC, BCI, Barclays Execution Services Limited (formerly Barclays Services Limited), Barclays Capital Securities Limited and certain other financial institutions have been named as defendants in a civil antitrust complaint that alleges that the defendants engaged in a conspiracy to fix prices and restrain competition in the market for US dollar-denominated Supranational, Sovereign and Agency bonds (SSA Bonds) from 2009 through 2015. The defendants have moved to dismiss the action. In February 2019, indirect purchasers of SSA Bonds filed a separate but related complaint making similar allegations.

 

Certain governmental authorities are conducting investigations into activities relating to the trading of certain government and agency securities in various markets and Barclays has been providing information to various authorities on an ongoing basis.

 

Claimed amounts/Financial impact

 

It is not currently practicable to provide an estimate of the financial impact of the actions described on Barclays or what effect they might have upon Barclays' operating results, cash flows or financial position in any particular period.

 

US Government Sponsored Entities Bond Civil Class Action

 

In a putative consolidated class action filed in the SDNY in 2019, plaintiffs allege that BCI and certain other bond dealers conspired to fix the prices of government sponsored entity bonds in violation of US antitrust law from January 2009 through January 2016.

 

Claimed amounts/Financial impact

 

It is not currently practicable to provide an estimate of the financial impact of the matter described on Barclays or what effect it might have upon Barclays' operating results, cash flows or financial position in any particular period.

 

Mexican Government Bond civil action

 

In 2018, a putative consolidated class action against various financial institutions including Barclays PLC, Barclays Bank PLC, BCI, Barclays Capital Securities Limited, Barclays Bank Mexico, S.A., Grupo Financiero Barclays Mexico, S.A. de C.V. and Banco Barclays S.A. was consolidated in the US District Court in the SDNY. The plaintiffs assert antitrust and state law claims arising out of an alleged conspiracy to fix the prices of Mexican Government Bonds from 2006 through mid-2017. Defendants have moved to dismiss the consolidated action.

 

Claimed amounts/Financial impact

 

It is not currently practicable to provide an estimate of the financial impact of the actions described on Barclays or what effect they might have upon Barclays' operating results, cash flows or financial position in any particular period.

 

BDC Finance L.L.C.

 

In 2008, BDC Finance L.L.C. (BDC) filed a complaint in the NY Supreme Court alleging that Barclays Bank PLC had breached a contract in connection with a portfolio of total return swaps governed by an ISDA Master Agreement (collectively, the Agreement) when it failed to transfer approximately $40m of alleged excess collateral in response to BDC's 2008 demand (Demand).

 

BDC asserts that under the Agreement Barclays Bank PLC was not entitled to dispute the Demand before transferring the alleged excess collateral and that even if the Agreement entitled Barclays Bank PLC to dispute the Demand before making the transfer, Barclays Bank PLC failed to dispute the Demand. BDC demands damages totalling $298m plus attorneys' fees, expenses, and pre-judgement interest. Following a trial on certain liability issues, the court ruled in December 2018 that Barclays Bank PLC was not a defaulting party. BDC has appealed that decision.

 

In 2011, BDC's investment advisor, BDCM Fund Adviser, L.L.C. and its parent company, Black Diamond Capital Holdings, L.L.C. also sued Barclays Bank PLC and BCI in Connecticut State Court for unspecified damages allegedly resulting from Barclays Bank PLC's conduct relating to the Agreement, asserting claims for violation of the Connecticut Unfair Trade Practices Act and tortious interference with business and prospective business relations. The Connecticut case is currently stayed.

 

Claimed amounts/Financial impact

 

It is not currently practicable to provide an estimate of the financial impact of the actions described on Barclays or what effect they might have upon Barclays' operating results, cash flows or financial position in any particular period. BDC has made claims against Barclays totalling $298m plus attorneys' fees, expenses, and pre-judgement interest. This amount does not necessarily reflect Barclays' potential financial exposure if a ruling were to be made against it.

 

Civil actions in respect of the US Anti-Terrorism Act

 

Civil complaints against Barclays Bank PLC and other banks allege engagement in a conspiracy and violation of the US Anti-Terrorism Act (ATA). These include various civil complaints filed in the US Federal Courts in the EDNY and SDNY by separate groups of plaintiffs (aggregating over 4,000) alleging that Barclays Bank PLC and a number of other banks engaged in a conspiracy and violated the ATA by facilitating US dollar denominated transactions for the Government of Iran and various Iranian banks, which in turn funded acts of terrorism that injured or killed the plaintiffs' family members. The plaintiffs seek to recover for pain, suffering and mental anguish pursuant to the provisions of the ATA, which allows for the tripling of any proven damages and attorneys' fees. In respect of a motion by defendants to dismiss one of the complaints, in July 2018, a magistrate judge (to whom the court referred the motion) issued a recommendation that the motion be denied; the defendants objected to that recommendation; and the motion is pending before the court. In respect of another complaint, the defendants' motion to dismiss was granted in March 2019, but the plaintiffs have moved to file an amended complaint.

 

Claimed amounts/Financial impact

 

It is not currently practicable to provide an estimate of the financial impact of the actions described on Barclays or what effect they might have upon Barclays' operating results, cash flows or financial position in any particular period.

 

Interest rate swap and credit default swap US civil actions

 

Barclays PLC, Barclays Bank PLC, and BCI, together with other financial institutions that act as market makers for interest rate swaps (IRS) are named as defendants in several antitrust class actions which were consolidated in the SDNY in 2016. The complaints allege the defendants conspired to prevent the development of exchanges for IRS and demand unspecified money damages, treble damages and legal fees. Plaintiffs include certain swap execution facilities, as well as buy-side investors. The buy-side investors claim to represent a class that transacted in fixed-for-floating IRS with defendants in the US from 2008 to the present, including, for example, US retirement and pension funds, municipalities, university endowments, corporations, insurance companies and investment funds.

 

In 2017, a separate suit was filed in the US District Court in the SDNY against the same financial institution defendants in the IRS cases, including Barclays PLC, Barclays Bank PLC, and BCI, claiming that certain conduct alleged in the IRS cases also caused plaintiff to suffer harm with respect to the Credit Default Swaps market. The defendants have moved to dismiss this action. Separately, in June 2018, trueEX LLC filed an antitrust class action in the SDNY against eleven financial institutions that act as dealers in the IRS market, including Barclays Bank PLC and BCI, alleging that the defendants unlawfully conspired to block trueEX from successfully entering the market with its IRS trading platform. trueEX LLC also alleges that the defendants more generally boycotted other anonymous, all-to-all IRS trading platforms. In November 2018, the court dismissed certain claims for unjust enrichment and tortious interference, but denied a motion to dismiss the federal and state antitrust claims which remain pending.

 

Claimed amounts/Financial impact

 

It is not currently practicable to provide an estimate of the financial impact of the actions described on Barclays or what effect they might have upon Barclays' operating results, cash flows or financial position in any particular period.

 

Portuguese Competition Authority investigation

 

The Portuguese Competition Authority is investigating whether competition law was infringed by the exchange of information about retail credit products amongst 15 banks in Portugal, including Barclays, over a period of 11 years with particular reference to mortgages, consumer lending and lending to small and medium enterprises. Barclays is cooperating with the investigation.

 

Claimed amounts/Financial impact

 

It is not currently practicable to provide an estimate of the financial impact of the matter described on Barclays or what effect it might have upon Barclays' operating results, cash flows or financial position in any particular period.

 

2.     Barclays PLC, Barclays Bank PLC and Barclays Bank UK PLC

 

Investigation into collections and recoveries relating to unsecured lending

 

In February 2018, the FCA commenced an enforcement investigation in relation to whether or not Barclays implemented effective systems and controls with respect to collections and recoveries and whether or not it paid due consideration to the interests of customers in default and arrears.

 

Claimed amounts/Financial impact

 

It is not currently practicable to provide an estimate of the financial impact of the investigation on Barclays or what effect that it might have upon Barclays' operating results, cash flows or financial position in any particular period.

 

HM Revenue & Customs (HMRC) assessments concerning UK Value Added Tax

 

In 2018, HMRC issued notices that have the effect of removing certain overseas subsidiaries that have operations in the UK from Barclays' UK VAT group, in which group supplies between members are generally free from VAT. The notices have retrospective effect and correspond to assessments of £181m (inclusive of interest), of which Barclays would expect to attribute an amount of approximately £128m to Barclays Bank UK PLC and £53m to Barclays Bank PLC. Barclays has appealed HMRC's decision to the First Tier Tribunal (Tax Chamber).

 

Claimed amounts/Financial impact

 

The total amount of the HMRC assessments is approximately £181m, inclusive of interest.

 

Local authority civil actions concerning LIBOR

 

Following settlement by Barclays Bank PLC of various governmental investigations concerning certain benchmark interest rate submissions referred to above in 'Investigations into LIBOR and other benchmarks', in the UK, certain local authorities have brought claims against Barclays asserting that they entered into loans in reliance on misrepresentations made by Barclays in respect of its conduct in relation to LIBOR.

 

Claimed amounts/Financial impact

 

It is not currently practicable to provide an estimate of any further financial impact of the actions described on Barclays or what effect they might have upon Barclays' operating results, cash flows or financial position in any particular period.

 

General

 

Barclays is engaged in various other legal, competition and regulatory matters in the UK, the US and a number of other overseas jurisdictions. It is subject to legal proceedings brought by and against Barclays which arise in the ordinary course of business from time to time, including (but not limited to) disputes in relation to contracts, securities, debt collection, consumer credit, fraud, trusts, client assets, competition, data management and protection, money laundering, financial crime, employment, environmental and other statutory and common law issues.

 

Barclays is also subject to enquiries and examinations, requests for information, audits, investigations and legal and other proceedings by regulators, governmental and other public bodies in connection with (but not limited to) consumer protection measures, compliance with legislation and regulation, wholesale trading activity and other areas of banking and business activities in which Barclays is or has been engaged. Barclays is cooperating with the relevant authorities and keeping all relevant agencies briefed as appropriate in relation to these matters and others described in this note on an ongoing basis.

 

At the present time, Barclays does not expect the ultimate resolution of any of these other matters to have a material adverse effect on its financial position. However, in light of the uncertainties involved in such matters and the matters specifically described in this note, there can be no assurance that the outcome of a particular matter or matters (including formerly active matters or those matters arising after the date of this note) will not be material to Barclays' results, operations or cash flow for a particular period, depending on, amongst other things, the amount of the loss resulting from the matter(s) and the amount of profit otherwise reported for the reporting period.

 

20.    Related party transactions

 

Related party transactions in the half year ended 30 June 2019 were similar in nature to those disclosed in the Barclays PLC Annual Report 2018. No related party transactions that have taken place in the half year ended 30 June 2019 have materially affected the financial position or the performance of the Barclays Group during this period.

 

21.    Barclays PLC parent company balance sheet

 


As at

As at


30.06.19

31.12.18

Assets

£m

£m

Investment in subsidiaries

60,902

57,374

Loans and advances to subsidiaries

29,800

29,374

Financial assets at fair value through the income statement

10,774

6,945

Derivative financial instruments

138

168

Other assets

109

115

Total assets

101,723

93,976




Liabilities



Deposits at amortised cost

519

576

Debt securities in issue

32,489

32,373

Subordinated liabilities

7,976

6,775

Financial liabilities designated at fair value

3,514

-

Other liabilities

99

72

Total liabilities

44,597

39,796




Equity



Called up share capital

4,311

4,283

Share premium account

183

28

Other equity instruments

12,137

9,633

Other reserves

394

394

Retained earnings

40,101

39,842

Total equity

57,126

54,180




Total liabilities and equity

101,723

93,976

 

Investment in subsidiaries

 

The investment in subsidiaries of £60,902m (December 2018: £57,374m) predominantly relates to investments in Barclays Bank PLC and Barclays Bank UK PLC, as well as holdings of their AT1 securities of £12,200m (December 2018: £9,666m). The increase of £3,528m during the period was predominantly driven by capital contributions into Barclays Bank PLC totalling £995m and additional AT1 holdings of $2,000m and £1,000m.

 

Financial assets and liabilities designated at fair value

 

Financial liabilities designated at fair value of £3,514m (December 2018: £nil) comprises issuances during the period totalling $2,750m Fixed-to-Floating Rate Senior Notes, £600m Fixed Rate Senior Notes, AUD940m Fixed and Floating Rate Senior Notes and ¥20,000m Fixed-to-Floating Rate Bonds. The proceeds raised through these transactions were used to invest in subsidiaries of Barclays PLC which are included within the financial assets designated at fair value through the income statement balance of £10,774m (December 2018: £6,945m).

 

Subordinated liabilities

 

During H119, Barclays PLC issued $1,500m of Fixed-to-Floating Rate Subordinated Notes, which are included within the subordinated liabilities balance of £7,976m (December 2018: £6,775m).

 

Other equity instruments

 

Other equity instruments comprises AT1 securities issued by Barclays PLC. There have been two issuances during the period, with principal amounts totalling $2,000m and £1,000m.

 

Management of internal investments, loans and advances 

 

Barclays PLC retains the discretion to manage the nature of its internal investments in subsidiaries according to their regulatory and business needs. Barclays PLC may invest capital and funding into Barclays Bank PLC, Barclays Bank UK PLC and other Barclays Group subsidiaries such as the Group Service Company and the US Intermediate Holding Company (IHC).

 

Appendix: 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.

 

Non-IFRS performance measures glossary

 

Measure

Definition

Loan: deposit ratio

Loans and advances at amortised cost divided by deposits at amortised cost.

Period end allocated tangible equity

Allocated tangible equity is calculated as 13.0% (2018: 13.0%) of RWAs for each business, adjusted for capital deductions, excluding goodwill and intangible assets, reflecting the assumptions the Barclays Group uses for capital planning purposes. Head Office allocated tangible equity represents the difference between the Barclays Group's tangible shareholders' equity and the amounts allocated to businesses.

Average tangible shareholders' equity

Calculated as the average of the previous month's period end tangible equity and the current month's period end tangible equity. The average tangible shareholders' equity for the period is the average of the monthly averages within that period.

Average allocated tangible equity

Calculated as the average of the previous month's period end allocated tangible equity and the current month's period end allocated tangible equity. The average allocated tangible equity for the period is the average of the monthly averages within that period.

Return on average tangible shareholders' equity

Annualised profit after tax attributable to ordinary equity holders of the parent, as a proportion of average shareholders' equity excluding non-controlling interests and other equity instruments adjusted for the deduction of intangible assets and goodwill. The components of the calculation have been included on page 85.

Return on average allocated tangible equity

Annualised profit after tax attributable to ordinary equity holders of the parent, as a proportion of average allocated tangible equity. The components of the calculation have been included on page 85.

Cost: income ratio

Total operating expenses divided by total income.

Loan loss rate

Quoted in basis points and represents total annualised impairment charges divided by gross loans and advances held at amortised cost at the balance sheet date. The components of the calculation have been included on page 24.

Net interest margin

Annualised net interest income divided by the sum of average customer assets. The components of the calculation have been included on page 22.

Tangible net asset value per share

Calculated by dividing shareholders' equity, excluding non-controlling interests and other equity instruments, less goodwill and intangible assets, by the number of issued ordinary shares. The components of the calculation have been included on page 93.

Performance measures excluding litigation and conduct

Calculated by excluding litigation and conduct charges from performance measures. The components of the calculations have been included on pages 86 to 93.

 

Returns

 

Return on average tangible equity is calculated as profit after tax attributable to ordinary equity holders of the parent as a proportion of average tangible equity, excluding non-controlling and other equity interests for businesses. Allocated tangible equity has been calculated as 13.0% (2018: 13.0%) of RWAs for each business, adjusted for capital deductions, excluding goodwill and intangible assets, reflecting the assumptions the Barclays Group uses for capital planning purposes. Head Office average allocated tangible equity represents the difference between the Barclays Group's average tangible shareholders' equity and the amounts allocated to businesses.

 


Profit/(loss) attributable to ordinary equity holders of the parent


Average tangible equity


Return on average tangible equity

Half year ended 30.06.19

£m


£bn


%

Barclays UK

750


10.3


14.5

    Corporate and Investment Bank

1,178


25.5


9.3

    Consumer, Cards and Payments

442


5.3


16.6

Barclays International

1,620


30.8


10.5

Head Office

(298)


4.6


n/m

Barclays Group

2,072


45.7


9.1







Half year ended 30.06.18






Barclays UK

447


10.0


9.0

    Corporate and Investment Bank

1,434


26.0


11.0

    Consumer, Cards and Payments

499


4.7


21.2

Barclays International

1,933


30.7


12.6

Head Office

(1,819)


3.1


n/m

Barclays Group

561


43.8


2.6

 

Performance measures excluding litigation and conduct








Half year ended 30.06.19


Barclays UK

Corporate and Investment Bank

Consumer, Cards and Payments

Barclays International

Head Office

Barclays Group

Cost: income ratio

£m

£m

£m

£m

£m

£m

Total operating expenses

(2,065)

(3,505)

(1,166)

(4,671)

(136)

(6,872)

Impact of litigation and conduct

44

26

4

30

40

114

Operating expenses

(2,021)

(3,479)

(1,162)

(4,641)

(96)

(6,758)








Total income

3,548

5,300

2,173

7,473

(231)

10,790








Cost: income ratio excluding litigation and conduct

57%

66%

53%

62%

n/m

63%







Profit before tax







Profit/(loss) before tax

1,062

1,714

627

2,341

(389)

3,014

Impact of litigation and conduct

44

26

4

30

40

114

Profit/(loss) before tax excluding litigation and conduct

1,106

1,740

631

2,371

(349)

3,128







Profit attributable to ordinary equity holders of the parent







Attributable profit/(loss)

750

1,178

442

1,620

(298)

2,072

Post-tax impact of litigation and conduct

32

21

3

24

30

86

Profit/(loss) attributable to ordinary equity holders of the parent excluding litigation and conduct

782

1,199

445

1,644

(268)

2,158







Return on average tangible shareholders' equity

£bn

£bn

£bn

£bn

£bn

£bn

Average shareholders' equity

13.9

25.5

6.4

31.9

7.9

53.7

Average goodwill and intangibles

(3.6)

-

(1.1)

(1.1)

(3.3)

(8.0)

Average tangible shareholders' equity

10.3

25.5

5.3

30.8

4.6

45.7








Return on average tangible shareholders' equity excluding litigation and conduct

15.1%

9.4%

16.7%

10.7%

n/m

9.4%







Basic earnings per ordinary share







Basic weighted average number of shares (m)






17,178








Basic earnings per ordinary share excluding litigation and conduct






12.6p







 








Half year 30.06.18


Barclays UK

Corporate and Investment Bank

Consumer, Cards and Payments

Barclays International

Head Office

Barclays Group

Cost: income ratio

£m

£m

£m

£m

£m

£m

Total operating expenses

(2,387)

(3,559)

(1,109)

(4,668)

(1,661)

(8,716)

Impact of litigation and conduct

414

13

49

62

1,566

2,042

Operating expenses

(1,973)

(3,546)

(1,060)

(4,606)

(95)

(6,674)








Total income

3,624

5,379

2,136

7,515

(205)

10,934








Cost: income ratio excluding litigation and conduct

54%

66%

50%

61%

n/m

61%







Profit before tax







Profit/(loss) before tax

826

2,010

700

2,710

(1,877)

1,659

Impact of litigation and conduct

414

13

49

62

1,566

2,042

Profit/(loss) before tax excluding litigation and conduct

1,240

2,023

749

2,772

(311)

3,701







Profit attributable to ordinary equity holders of the parent







Attributable profit/(loss)

447

1,434

499

1,933

(1,819)

561

Post-tax impact of litigation and conduct

412

10

36

46

1,531

1,989

Profit/(loss) attributable to ordinary equity holders of the parent excluding litigation and conduct

859

1,444

535

1,979

(288)

2,550







Return on average tangible shareholders' equity

£bn

£bn

£bn

£bn

£bn

£bn

Average shareholders' equity

13.5

26.3

5.8

32.1

6.1

51.7

Average goodwill and intangibles

(3.5)

(0.3)

(1.1)

(1.4)

(2.9)

(7.8)

Average tangible shareholders' equity

10.0

26.0

4.7

30.7

3.1

43.8








Return on average tangible shareholders' equity excluding litigation and conduct

17.3%

11.1%

22.7%

12.9%

n/m

11.6%







Basic earnings per ordinary share







Basic weighted average number of shares (m)






17,067








Basic earnings per ordinary share excluding litigation and conduct






14.9p







 












Barclays Group












Q219

Q119


Q418

Q318

Q218

Q118


Q417

Q317

Cost: income ratio

£m

£m


£m

£m

£m

£m


£m

£m

Total operating expenses

(3,554)

(3,318)


(4,093)

(3,434)

(3,391)

(5,325)


(4,369)

(3,355)

Impact of litigation and conduct

53

61


60

105

81

1,961


383

81

Operating expenses

(3,501)

(3,257)


(4,033)

(3,329)

(3,310)

(3,364)


(3,986)

(3,274)












Total income

5,538

5,252


5,073

5,129

5,576

5,358


5,022

5,173












Cost: income ratio excluding litigation and conduct

63%

62%


79%

65%

59%

63%


79%

63%












Profit before tax











Profit/(loss) before tax

1,531

1,483


374

1,461

1,895

(236)


93

1,107

Impact of litigation and conduct

53

61


60

105

81

1,961


383

81

Profit before tax excluding litigation and conduct

1,584

1,544


434

1,566

1,976

1,725


476

1,188












Profit attributable to ordinary equity holders of the parent











Attributable profit/(loss)

1,034

1,038


(14)

1,050

1,279

(718)


(1,245)

626

Post-tax impact of litigation and conduct

40

46


62

85

59

1,930


351

77

Profit/(loss) attributable to ordinary equity holders of the parent excluding litigation and conduct

1,074

1,084


48

1,135

1,338

1,212


(894)

703












Return on average tangible shareholders' equity

£bn

£bn


£bn

£bn

£bn

£bn


£bn

£bn

Average shareholders' equity

54.0

53.2


52.2

52.5

51.3

52.0


55.9

56.6

Average goodwill and intangibles

(7.8)

(8.0)


(7.9)

(7.9)

(7.8)

(7.8)


(7.8)

(7.8)

Average tangible shareholders' equity

46.2

45.2


44.3

44.6

43.5

44.2


48.1

48.9












Return on average tangible shareholders' equity excluding litigation and conduct

9.3%

9.6%


0.4%

10.2%

12.3%

11.0%


(7.4%)

5.7%












Basic earnings per ordinary share











Basic weighted average number of shares (m)

17,178

17,111


17,075

17,074

17,067

17,037


16,996

16,994












Basic earnings/(loss) per ordinary share excluding litigation and conduct

6.3p

6.3p


0.3p

6.6p

7.8p

7.1p


(5.3p)

4.1p












 

Barclays UK












Q219

Q119


Q418

Q318

Q218

Q118


Q417

Q317

Cost: income ratio

£m

£m


£m

£m

£m

£m


£m

£m

Total operating expenses

(1,063)

(1,002)


(1,175)

(1,042)

(971)

(1,416)


(1,229)

(991)

Impact of litigation and conduct

41

3


15

54

3

411


53

11

Operating expenses

(1,022)

(999)


(1,160)

(988)

(968)

(1,005)


(1,176)

(980)












Total income

1,771

1,777


1,863

1,896

1,836

1,788


1,870

1,852












Cost: income ratio excluding litigation and conduct

58%

56%


62%

52%

53%

56%


63%

53%












Profit before tax











Profit before tax

477

585


390

740

656

170


452

661

Impact of litigation and conduct

41

3


15

54

3

411


53

11

Profit before tax excluding litigation and conduct

518

588


405

794

659

581


505

672












Profit attributable to ordinary equity holders of the parent











Attributable profit/(loss)

328

422


241

510

473

(26)


258

432

Post-tax impact of litigation and conduct

30

2


12

48

1

411


37

8

Profit attributable to ordinary equity holders of the parent excluding litigation and conduct

358

424


253

558

474

385


295

440












Return on average allocated tangible equity

£bn

£bn


£bn

£bn

£bn

£bn


£bn

£bn

Average allocated equity

13.8

13.9


13.6

13.7

13.6

13.4


13.1

14.0

Average goodwill and intangibles

(3.5)

(3.5)


(3.5)

(3.6)

(3.5)

(3.5)


(3.5)

(4.6)

Average allocated tangible equity

10.3

10.4


10.1

10.1

10.1

9.8


9.6

9.4












Return on average allocated tangible equity excluding litigation and conduct

13.9%

16.4%


10.1%

22.0%

18.8%

15.7%


12.3%

18.7%

 

Barclays International












Q219

Q119


Q418

Q318

Q218

Q118


Q417

Q317

Cost: income ratio

£m

£m


£m

£m

£m

£m


£m

£m

Total operating expenses

(2,446)

(2,225)


(2,684)

(2,309)

(2,353)

(2,315)


(2,948)

(2,187)

Impact of litigation and conduct

11

19


33

32

47

15


255

5

Operating expenses

(2,435)

(2,206)


(2,651)

(2,277)

(2,306)

(2,300)


(2,693)

(2,182)












Total income

3,903

3,570


3,221

3,290

3,707

3,808


3,319

3,315












Cost: income ratio excluding litigation and conduct

62%

62%


82%

69%

62%

60%


81%

66%












Profit before tax











Profit before tax

1,223

1,118


215

850

1,297

1,413


6

652

Impact of litigation and conduct

11

19


33

32

47

15


255

5

Profit before tax excluding litigation and conduct

1,234

1,137


248

882

1,344

1,428


261

657












Profit attributable to ordinary equity holders of the parent











Attributable profit/(loss)

832

788


(21)

687

926

1,007


(1,134)

391

Post-tax impact of litigation and conduct

8

16


34

26

34

12


250

4

Profit/(loss) attributable to ordinary equity holders of the parent excluding litigation and conduct

840

804


13

713

960

1,019


(884)

395












Return on average allocated tangible equity

£bn

£bn


£bn

£bn

£bn

£bn


£bn

£bn

Average allocated equity

32.1

31.6


32.4

32.5

32.8

31.4


29.9

31.5

Average goodwill and intangibles

(1.0)

(1.1)


(1.1)

(1.3)

(1.4)

(1.4)


(1.4)

(2.6)

Average allocated tangible equity

31.1

30.5


31.3

31.1

31.4

30.1


28.5

28.9












Return on average allocated tangible equity excluding litigation and conduct

10.8%

10.6%


0.2%

9.2%

12.2%

13.6%


(12.4%)

5.5%

 

Corporate and Investment Bank









Q219

Q119


Q418

Q318

Q218

Q118


Q417

Q317

Cost: income ratio

£m

£m


£m

£m

£m

£m


£m

£m

Total operating expenses

(1,867)

(1,638)


(2,046)

(1,744)

(1,773)

(1,786)


(2,384)

(1,661)

Impact of litigation and conduct

7

19


23

32

-

13


255

5

Operating expenses

(1,860)

(1,619)


(2,023)

(1,712)

(1,773)

(1,773)


(2,129)

(1,656)












Total income

2,795

2,505


2,151

2,235

2,580

2,799


2,252

2,280












Cost: income ratio excluding litigation and conduct

67%

65%


94%

77%

69%

63%


95%

73%












Profit before tax











Profit/(loss) before tax

887

827


85

498

835

1,175


(252)

593

Impact of litigation and conduct

7

19


23

32

-

13


255

5

Profit before tax excluding litigation and conduct

894

846


108

530

835

1,188


3

598












Profit attributable to ordinary equity holders of the parent











Attributable profit/(loss)

596

582


(84)

431

600

834


(1,227)

368

Post-tax impact of litigation and conduct

5


27

25

-


4

Profit/(loss) attributable to ordinary equity holders of the parent excluding litigation and conduct

601

598


(57)

456

600

844


(977)

372












Return on average allocated tangible equity

£bn

£bn


£bn

£bn

£bn

£bn


£bn

£bn

Average allocated equity

25.8

25.2


26.0

26.2

26.7

25.9


24.7

25.8

Average goodwill and intangibles

-

(0.1)


-

(0.2)

(0.3)

(0.3)


(0.4)

(1.1)

Average allocated tangible equity

25.8

25.1


26.0

25.9

26.4

25.6


24.3

24.8












Return on average allocated tangible equity excluding litigation and conduct

9.3%

9.5%


(0.9%)

7.0%

9.1%

13.2%


(16.1%)

6.0%

 

Consumer, Cards and Payments











Q219

Q119


Q418

Q318

Q218

Q118


Q417

Q317

Cost: income ratio

£m

£m


£m

£m

£m

£m


£m

£m

Total operating expenses

(579)

(587)


(638)

(565)

(580)

(529)


(564)

(526)

Impact of litigation and conduct

4

-


10

-

47

2


-

-

Operating expenses

(575)

(587)


(628)

(565)

(533)

(527)


(564)

(526)












Total income

1,108

1,065


1,070

1,055

1,127

1,009


1,067

1,035












Cost: income ratio excluding litigation and conduct

52%

55%


59%

54%

47%

52%


53%

51%












Profit before tax











Profit before tax

336

291


130

352

462

238


258

59

Impact of litigation and conduct

4

-


10

-

47

2


-

-

Profit before tax excluding litigation and conduct

340

291


140

352

509

240


258

59












Profit attributable to ordinary equity holders of the parent











Attributable profit

236

206


63

256

326

173


93

23

Post-tax impact of litigation and conduct

3


7

1

34


-

Profit attributable to ordinary equity holders of the parent excluding litigation and conduct

239

206


70

257

360

175


93

23












Return on average allocated tangible equity

£bn

£bn


£bn

£bn

£bn

£bn


£bn

£bn

Average allocated equity

6.3

6.4


6.4

6.3

6.0

5.5


5.3

5.7

Average goodwill and intangibles

(1.0)

(1.0)


(1.1)

(1.1)

(1.1)

(1.0)


(1.1)

(1.5)

Average allocated tangible equity

5.3

5.4


5.3

5.2

5.0

4.5


4.2

4.2












Return on average allocated tangible equity excluding litigation and conduct

18.0%

15.4%


5.4%

19.9%

28.9%

15.7%


9.0%

2.2%

 

Head Office










Q219

Q119


Q418

Q318

Q218

Q118


Q417

Q317

Profit before tax

£m

£m


£m

£m

£m

£m


£m

£m

Loss before tax

(169)

(220)


(231)

(129)

(58)

(1,819)


(365)

(206)

Impact of litigation and conduct

1

39


12

19

31

1,535


75

65

Loss before tax excluding litigation and conduct

(168)

(181)


(219)

(110)

(27)

(284)


(290)

(141)












Profit attributable to ordinary equity holders of the parent











Attributable loss

(126)

(172)


(234)

(147)

(120)

(1,699)


(369)

(197)

Post-tax impact of litigation and conduct

2

28


16

11

24

1,507


64

65

Attributable loss excluding litigation and conduct

(124)

(144)


(218)

(136)

(96)

(192)


(305)

(132)

 

Tangible net asset value





As at 30.06.19

As at 31.12.18

As at 30.06.18


£m

£m

£m

Total equity excluding non-controlling interests

67,576

62,556

61,055

Other equity instruments

(12,123)

(9,632)

(8,938)

Goodwill and intangibles

(7,993)

(7,973)

(7,871)

Tangible shareholders' equity attributable to ordinary shareholders of the parent

47,460

44,951

44,246






m

m

m

Shares in issue

17,245

17,133

17,110






p

p

p

Tangible net asset value per share

275

262

259

 

Shareholder Information

 







Results timetable1



Date



Ex-dividend date



8 August 2019

Dividend record date



9 August 2019

Scrip reference share price set and made available to shareholders



15 August 2019

Cut off time of 4.30 pm (UK time) for the receipt of Mandate Forms or Revocation Forms (as applicable)



23 August 2019

Dividend payment date/first day of dealing in new shares



23 September 2019

Q3 2019 Results Announcement



25 October 2019







For qualifying US and Canadian resident ADR holders, the half year dividend of 3.0p per ordinary share becomes 12.0p per ADS (representing four shares). The ex-dividend, dividend record and dividend payment dates for ADR holders are as shown above.















% Change3

Exchange rates2

30.06.19

31.12.18

30.06.18

31.12.18

30.06.18

Period end - USD/GBP

1.27

1.28

1.32

(1%)

(4%)

6 month average - USD/GBP

1.29

1.29

1.38

-

(7%)

3 month average - USD/GBP

1.29

1.29

1.36

-

(5%)

Period end - EUR/GBP

1.12

1.12

1.13

-

(1%)

6 month average - EUR/GBP

1.15

1.12

1.14

3%

1%

3 month average - EUR/GBP

1.14

1.13

1.14

1%

-







Share price data






Barclays PLC (p)

149.80

150.52

189.00



Barclays PLC number of shares (m)

17,245

17,133

17,110















For further information please contact












Investor relations

Media relations

Lisa Bartrip +44 (0) 20 7773 0708

Thomas Hoskin +44 (0) 20 7116 4755







More information on Barclays can be found on our website: home.barclays.












Registered office






1 Churchill Place, London, E14 5HP, United Kingdom. Tel: +44 (0) 20 7116 1000. Company number: 48839.


 

 






Registrar






Equiniti, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, United Kingdom.


Tel: 0371 384 20554 from the UK or +44 121 415 7004 from overseas.

 


 American Depositary Receipts (ADRs)






 J.P.Morgan






 jpmorgan.adr@eq-us.com






 Tel: +1 800 990 1135 (toll free in US and Canada), +1 651 453 2128 (outside the US and Canada) or +1 651 453 2133 (for the hearing

 impaired).






 https://shareowneronline.equiniti.com/UserManagement/ContactUs.aspx






 J.P.Morgan Chase Bank N.A., Shareholder Services, PO Box 64504, St. Paul, MN 55164-0504, USA.



 

1

Note that these dates are provisional and subject to change. Any changes to the Scrip Dividend Programme dates will be made available at home.barclays/dividends.

2

The average rates shown above are derived from daily spot rates during the year.

3.

The change is the impact to GBP reported information

4

Lines open 8.30am to 5.30pm (UK time), Monday to Friday, excluding UK public holidays in England and Wales.

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
END
 
 
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