Company Announcements

Annual Results Announcement

Source: RNS
RNS Number : 8369C
Barclays PLC
13 February 2020
 

 

Barclays PLC

 

Results Announcement

 

31 December 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

·

Remuneration

23-24

Risk Management


·

Risk Management and Principal Risks

25

·

Credit Risk

26-36

·

Market Risk

37

·

Treasury and Capital Risk

38-47

Statement of Directors' Responsibilities

48

Condensed Consolidated Financial Statements

49-53

Financial Statement Notes

54-61

Appendix: Non-IFRS Performance Measures

62-71

Shareholder Information

72

 

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

 

Notes

 

The terms Barclays or Group refer to Barclays PLC together with its subsidiaries. Unless otherwise stated, the income statement analysis compares the year ended 31 December 2019 to the corresponding 12 months of 2018 and balance sheet analysis as at 31 December 2019 with comparatives relating to 31 December 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 12 February 2020, does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2019, which contain 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) will be 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 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 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 62 to 71 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 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. Forward-looking statements can be made in writing but also may be made verbally by members of the management of the Group (including, without limitation, during management presentations to financial analysts) in connection with this document. Examples of forward-looking statements include, among others, statements or guidance regarding or relating to the 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. The forward-looking statements speak only as at the date on which they are made and such statements 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 entity within the 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 Group's control. As a result, the Group's actual financial position, future results, dividend payments, capital, leverage or other regulatory ratios or other financial and non-financial metrics or performance measures may differ materially from the statements or guidance set forth in the Group's forward-looking statements. Additional risks and factors which may impact the 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 2019), which are available on the SEC's website at www.sec.gov.

 

Subject to our obligations under the applicable laws and regulations of any relevant jurisdiction, (including, without limitation, 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

 

Barclays delivered improved returns and increased distributions to shareholders, with Group earnings per share of 24.4p and a return on tangible equity of 9.0% (both excluding litigation and conduct), and a total dividend of 9.0p

 

·

Group return on tangible equity (RoTE) improved year-on-year to 9.0%1 (2018: 8.5%), in line with the 2019 target. This represents the third consecutive year of improved year-on-year RoTE performance for the Group2

·

The Group continues to target >10% RoTE1. However, given global macroeconomic uncertainty and the current low interest rate environment, it has become more challenging to achieve this in 2020. Notwithstanding these headwinds, the Group believes it can achieve a meaningful improvement in returns in 2020

·

Group statutory profit before tax was £4.4bn (2018: £3.5bn) and, excluding litigation and conduct, was £6.2bn (2018: £5.7bn). Statutory earnings per share (EPS) were 14.3p (2018: 9.4p) and, excluding litigation and conduct were 24.4p (2018: 21.9p)

·

Common equity tier 1 (CET1) ratio was 13.8%, with the Group target remaining c.13.5%

·

Delivering attractive capital returns to shareholders remains a key priority, whilst also continuing to improve RoTE on a sustainable basis and investing in business growth

 

Returns1

 

Group RoTE target of >10% over time

·

Group profit before tax of £6.2bn (2018: £5.7bn) and EPS of 24.4p (2018: 21.9p)

-

Barclays UK RoTE of 17.5% (2018: 16.7%)

-

Barclays International RoTE of 9.3% (2018: 8.7%)


-

Corporate and Investment Bank (CIB) RoTE of 8.0% (2018: 7.1%)


-

Consumer, Cards and Payments (CC&P) RoTE of 15.9% (2018: 17.3%)

Cost efficiency1

 

Cost: income ratio of <60% over time

·

Group operating expenses were in line with the 2019 guidance of less than £13.6bn1. All operating businesses generated positive cost: income jaws and the Group delivered positive jaws for the third consecutive year1

·

The 2019 cost: income ratio was 63%1 (2018: 66%), reflecting disciplined cost management as cost efficiencies were partially offset by continued investment

·

Cost control remains a priority and management continues to target a cost: income ratio of <60% over time

Capital and dividends

 

CET1 ratio target of c.13.5%3

·

Group CET1 ratio of 13.8% (December 2018: 13.2%)

·

Total dividend for 2019 of 9.0p, up from 6.5p in 2018

·

The Group capital returns policy remains unchanged, incorporating progressive ordinary dividends, supplemented with share buybacks as and when appropriate

 

·

Group profit before tax was £4.4bn (2018: £3.5bn), including an additional provision for Payment Protection Insurance (PPI) of £1,400m (2018: £400m). Profit before tax, excluding litigation and conduct, was £6.2bn (2018: £5.7bn). Income increased 2%, while operating expenses decreased 2%, resulting in an improved cost: income ratio of 63% (2018: 66%), with both Barclays UK and Barclays International delivering positive cost: income jaws1. Credit impairment charges increased to £1.9bn (2018: £1.5bn). The 2019 charge includes the impact of macroeconomic scenario updates and an overall reduction in unsecured gross exposures. Prior year comparatives included the impact of favourable macroeconomic scenario updates and a £150m charge regarding the anticipated economic uncertainty in the UK

·

Barclays UK profit before tax was £1.0bn (2018: £2.0bn) and, excluding litigation and conduct, was £2.6bn (2018: £2.4bn). Income was stable, as ongoing margin pressure was offset by continued growth in mortgages and deposits. Operating expenses decreased 2% as cost efficiencies were partially offset by planned investment and inflation, driving an improved cost: income ratio of 55% (2018: 56%). Credit metrics improved marginally in UK cards

·

Barclays International profit before tax was £4.1bn (2018: £3.8bn) and, excluding litigation and conduct, was £4.2bn (2018: £3.9bn), driven by income growth of 5% in CIB and 4% in CC&P. Operating expenses decreased 2% due to cost efficiencies partially offset by continued investment. Credit metrics were stable in US cards

·

Tangible net asset value (TNAV) per share was 262p (December 2018: 262p) as 14.3p of statutory EPS was offset by dividend payments totalling 7p per share and net negative reserve movements. Excluding litigation and conduct of 10p per share, EPS was 24.4p

 

1

Excluding litigation and conduct.

2

Excluding litigation and conduct and material items in 2017.

3

Group RoTE target based on an assumed CET1 ratio at the target of c.13.5%.

 

Barclays Group results


for the year ended

31.12.19

31.12.18



£m

£m

% Change

Total income

21,632

21,136

2

Credit impairment charges

(1,912)

(1,468)

(30)

Net operating income

19,720

19,668

-

Operating costs

(13,359)

(13,627)

2

UK bank levy

(226)

(269)

16

Operating expenses

(13,585)

(13,896)

2

Guaranteed Minimum Pensions (GMP) charge

-

(140)


Litigation and conduct

(1,849)

(2,207)

16

Total operating expenses

(15,434)

(16,243)

5

Other net income

71

69

3

Profit before tax

4,357

3,494

25

Tax charge1

(1,003)

(911)

(10)

Profit after tax

3,354

2,583

30

Non-controlling interests

(80)

(234)

66

Other equity instrument holders

(813)

(752)

(8)

Attributable profit

2,461

1,597

54





Performance measures




Return on average tangible shareholders' equity

5.3%

3.6%


Average tangible shareholders' equity (£bn)

 46.6

 44.1


Cost: income ratio

71%

77%


Loan loss rate (bps)

55

44


Basic earnings per share

14.3p

9.4p


Dividend per share

9.0p

6.5p


  




Performance measures excluding litigation and conduct2




Profit before tax

6,206

5,701

9

Attributable profit

4,194

3,733

12

Return on average tangible shareholders' equity

9.0%

8.5%


Cost: income ratio

63%

66%


Basic earnings per share

24.4p

21.9p






Balance sheet and capital management3

£bn

£bn


Tangible net asset value per share

262p

262p


Common equity tier 1 ratio

13.8%

13.2%


Common equity tier 1 capital

40.8

41.1


Risk weighted assets

295.1

311.9


Average UK leverage ratio

4.5%

4.5%


UK leverage ratio

5.1%

5.1%






Funding and liquidity




Group liquidity pool (£bn)

211

227


Liquidity coverage ratio

160%

169%


Loan: deposit ratio

82%

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 FY18 by £211m. This change does not impact EPS or return on average tangible shareholders' equity.

2

Refer to pages 62 to 71 for further information and calculations of performance measures excluding litigation and conduct.

3

Refer to pages 41 to 46 for further information on how capital, Risk Weighted Assets (RWAs) and leverage are calculated.

 

Group Chief Executive Officer's Review

 

"2019 was another year of progress for Barclays, continuing the positive momentum across our business and allowing us to increase returns to shareholders.

 

Excluding litigation and conduct, profit before tax was up 9% to £6.2bn, and Group return on tangible equity improved to 9.0% for the year, in line with our target for 2019.

 

Disciplined cost management and income growth resulted in a cost: income ratio of 63%, excluding litigation and conduct, and we saw positive jaws across all operating businesses, allowing us to continue investment in our service to customers and clients, including future growth opportunities, as well as improving profitability.

 

Barclays is a British universal bank, with a well-balanced mix of consumer and wholesale businesses, across geographies and currencies: this helps us deliver year-on-year improvements in profitability during a period of macroeconomic uncertainty.

 

We continue to believe that it is appropriate to target a return greater than 10%, and we are managing our business to achieve that. However, given the low interest rate environment, it has become more challenging to achieve that target in 2020. Nonetheless, Barclays is confident of further improving returns meaningfully this year.

 

Looking ahead, we will extend our customer reach by using our current strengths - our brand, our existing digital proposition, our universal banking model, and leading market positions. We will accelerate our digital journey, and continue to play a leading role in capturing innovation and bringing it to life, at scale, for millions of customers and clients. In this way, we will invest for growth in areas that are less capital intensive, further diversifying the Group without limiting our commitment to the businesses we already have.

 

Through continued cost discipline, we will also create the capacity to make targeted investments across our business.

 

With continued strong capital generation and a CET1 ratio of 13.8%, we are pleased to be able to deliver improved returns to shareholders, and have declared a total dividend of 9 pence per share - up from 6.5p in 2018, and three times that of 2017.

 

We expect future earnings to drive increased returns to shareholders, as we anticipate a significant reduction in charges related to litigation and conduct from this year onwards. We intend to pay a progressive ordinary dividend supplemented with additional cash returns to shareholders, including share buybacks, as and when appropriate.

 

I look forward to delivering for all of our stakeholders in 2020 and beyond."

 

James E Staley, Group Chief Executive Officer

 

Group Finance Director's Review

 

Group performance

 

·

RoTE, excluding litigation and conduct, increased to 9.0% (2018: 8.5%), in line with the 2019 target. EPS, excluding litigation and conduct, increased to 24.4p (2018: 21.9p). Statutory EPS was 14.3p (2018: 9.4p)

·

Profit before tax was £4,357m (2018: £3,494m), including an additional provision for PPI of £1,400m (2018: £400m). Excluding litigation and conduct, profit before tax was £6,206m (2018: £5,701m), with higher income and lower operating expenses partially offset by increased year-on-year credit impairment charges. The 4% appreciation of average USD against GBP positively impacted income and profits and adversely impacted credit impairment charges and operating expenses

·

Total income increased 2% to £21,632m. Barclays UK income was stable, as ongoing margin pressure and continued reduced risk appetite in UK cards were offset by mortgage and deposit balance growth. Barclays International income increased 5%, with CIB income up 5% and CC&P income up 4%. Within CIB, Markets income increased due to continued market share gains1, while Banking fees income was stable and a reduction in Corporate lending income was partially offset by an increase in Transaction banking income. Higher CC&P income reflected growth in US co-branded cards and payments partnerships

·

Credit impairment charges increased to £1,912m (2018: £1,468m). The 2019 charge includes the impact of macroeconomic scenario updates and an overall reduction in unsecured gross exposures. Prior year comparatives included the impact of favourable macroeconomic scenario updates and a £150m charge regarding the anticipated economic uncertainty in the UK

·

Operating expenses decreased to £13,585m (2018: £13,896m) in line with 2019 guidance, as cost efficiencies were partially offset by continued investment. Barclays UK and Barclays International each generated positive cost: income jaws, resulting in the Group cost: income ratio, excluding litigation and conduct, reducing to 63% (2018: 66%)

·

Total operating expenses of £15,434m (2018: £16,243m) included litigation and conduct charges of £1,849m (2018: £2,207m)

·

The effective tax rate was 23.0% (2018: 26.1%). Excluding litigation and conduct, the effective tax rate was 18.0% (2018: 17.2%). The Group's effective tax rate for future periods is expected to remain around 20%, excluding litigation and conduct

·

Attributable profit was £2,461m (2018: £1,597m). Excluding litigation and conduct, attributable profit was £4,194m (2018: £3,733m), generating an RoTE of 9.0% (2018: 8.5%) and EPS of 24.4p (2018: 21.9p)

 

Group capital and leverage

 

·

The CET1 ratio increased to 13.8% (December 2018: 13.2%)


-

CET1 capital decreased by £0.3bn to £40.8bn. This was driven by underlying profit generation of £5.0bn offset by dividends paid and foreseen of £2.4bn, the additional provision for PPI of £1.4bn, pension deficit reduction contribution payments of £0.5bn, a decrease in the currency translation reserve of £0.5bn, mainly driven by the depreciation of period end USD against GBP, and a loss on the redemption of Additional Tier 1 (AT1) securities of £0.4bn


-

Risk Weighted Assets (RWAs) decreased by £16.8bn to £295.1bn primarily driven by the reduction in the Group's operational risk RWAs, as well as the depreciation of period end USD against GBP

·

The average UK leverage ratio remained stable at 4.5% (December 2018: 4.5%) primarily driven by a net increase in AT1 capital, offset by a modest increase in leverage exposure to £1,143bn (December 2018: £1,110bn). The UK leverage ratio also remained stable at 5.1% (December 2018: 5.1%)

 

1

Data Source: Coalition, FY19 Preliminary Competitor Analysis. Market share represents Barclays share of the total industry Revenue Pool. Analysis is based on Barclays internal business structure and internal revenues.

 

Group funding and liquidity

 

·

The liquidity pool, at £211bn (December 2018: £227bn), reflects the Group's prudent approach to liquidity management. The liquidity coverage ratio (LCR) remained well above the 100% regulatory requirement at 160% (December 2018: 169%), equivalent to a surplus of £78bn (December 2018: £90bn). The liquidity pool, LCR and surplus have been managed down through the course of the year, supporting increased business funding requirements while maintaining a prudent liquidity position

·

Wholesale funding outstanding, excluding repurchase agreements, was £147.1bn (December 2018: £154.0bn). The Group issued £8.6bn equivalent of minimum requirement for own funds and eligible liabilities (MREL) instruments from Barclays PLC (the Parent company). The Group is well advanced in its MREL issuance plans, with a Barclays PLC MREL ratio of 31.2% as at 31 December 2019 relative to an estimated requirement (including requisite buffers) of 31.3% by 1 January 2022. This requirement increased from 29.9% as at 30 June 2019, due to the revision of the Group's Pillar 2A requirement, following the removal of the Group's operational risk RWAs floor

 

Other matters

 

·

As at 31 December 2019, the Group held a provision of £1.2bn against the cost of PPI redress and associated processing costs. Q319 saw an exceptional level of claims and information requests received in advance of the complaint deadline of 29 August 2019. Of the greater than 2 million items outstanding at Q319, materially all have now been processed into Barclays' systems and 52% of the items processed have been resolved. Based on resolution of complaints during Q419, the observed outcomes support the level of provision. Further information can be found on pages 57 to 58

·

The latest triennial actuarial valuation of the UK Retirement Fund (UKRF), with an effective date of 30 September 2019, has been completed and showed a funding deficit of £2.3bn compared to a £7.9bn funding deficit in the previous triennial valuation (effective date 30 September 2016). Barclays and the UKRF Trustee have agreed a revised recovery plan including lower deficit reduction contributions. Further information can be found on page 59

 

Dividends / capital returns

 

·

A half year dividend of 3.0p was paid on 23 September 2019. Barclays declares a full year dividend of 6.0p per share, resulting in a total dividend of 9.0p per share for 2019 (up from 6.5p in 2018)

·

The Group's existing capital returns policy as set out in the FY18 results announcement 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"

 

Outlook and guidance

 

·

The Group continues to target >10% RoTE1. However, given global macroeconomic uncertainty and the current low interest rate environment, it has become more challenging to achieve this in 2020. Notwithstanding these headwinds, the Group believes it can achieve a meaningful improvement in returns in 2020

 

Tushar Morzaria, Group Finance Director

 

1

Excluding litigation and conduct.

 

Results by Business

 

Barclays UK

Year ended

Year ended


31.12.19

31.12.18


Income statement information

£m

£m

% Change

Net interest income

5,888

6,028

(2)

Net fee, commission and other income

1,465

1,355

8

Total income

7,353

7,383

-

Credit impairment charges

(712)

(826)

14

Net operating income

6,641

6,557

1

Operating costs

(3,996)

(4,075)

2

UK bank levy

(41)

(46)

11

Operating expenses

(4,037)

(4,121)

2

Litigation and conduct

(1,582)

(483)


Total operating expenses

(5,619)

(4,604)

(22)

Other net income

-

3


Profit before tax

1,022

1,956

(48)

Attributable profit1

281

1,198

(77)




Balance sheet information

£bn

£bn


Loans and advances to customers at amortised cost

193.7

187.6


Total assets

257.8

249.7


Customer deposits at amortised cost

205.5

197.3


Loan: deposit ratio

96%

96%


Risk weighted assets

74.9

75.2


Period end allocated tangible equity

10.3

10.2






Key facts




Average loan to value of mortgage portfolio2

51%

49%


Average loan to value of new mortgage lending2

68%

65%


Number of branches

963

1,058


Mobile banking active customers

8.4m

7.3m


30 day arrears rate - Barclaycard Consumer UK

1.7%

1.8%






Performance measures




Return on average allocated tangible equity

2.7%

11.9%


Average allocated tangible equity (£bn)

10.3

10.0


Cost: income ratio

76%

62%


Loan loss rate (bps)

36

43


Net interest margin

3.09%

3.23%






Performance measures excluding litigation and conduct3

£m

£m


Profit before tax

2,604

2,439

7

Attributable profit

1,813

1,670

9

Return on average allocated tangible equity

17.5%

16.7%


Cost: income ratio

55%

56%


 

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 EPS or return on average tangible shareholders' equity.

2

Average loan to value of mortgages is balance weighted and reflects both residential and buy-to-let (BTL) mortgage portfolios within the Home Loans portfolio. The prior period has been updated to align to this basis of preparation.

3

Refer to pages 62 to 71 for further information and calculations of performance measures excluding litigation and conduct.

 

Analysis of Barclays UK

Year ended

Year ended


31.12.19

31.12.18


Analysis of total income

£m

£m

% Change

Personal Banking

4,009

4,006

-

Barclaycard Consumer UK

1,992

2,104

(5)

Business Banking

1,352

1,273

6

Total income

7,353

7,383

-





Analysis of credit impairment charges




Personal Banking

(195)

(173)

(13)

Barclaycard Consumer UK

(472)

(590)

20

Business Banking

(45)

(63)

29

Total credit impairment charges

(712)

(826)

14




Analysis of loans and advances to customers at amortised cost

£bn

£bn


Personal Banking

151.9

146.0


Barclaycard Consumer UK

14.7

15.3


Business Banking

27.1

26.3


Total loans and advances to customers at amortised cost

193.7

187.6






Analysis of customer deposits at amortised cost




Personal Banking

159.2

154.0


Barclaycard Consumer UK

-

-


Business Banking

46.3

43.3


Total customer deposits at amortised cost

205.5

197.3


 

The income environment in 2019 was challenging for Barclays UK and the additional PPI provision of £1.4bn (2018: £0.4bn) impacted full year profit before tax. Nevertheless, the business continued to deliver strong growth in balances, increasing mortgage lending by £6.4bn and growing deposits by £8.2bn. Barclays UK also delivered positive cost: income jaws, leading to an improvement in the cost: income ratio (excluding litigation and conduct) as cost efficiencies outweighed continued investment.

 

2019 compared to 2018

 

Income statement

 

·

Profit before tax, excluding litigation and conduct, increased 7% to £2,604m and RoTE increased to 17.5% (2018: 16.7%) reflecting the resilience of the business in a challenging income environment. Including litigation and conduct charges of £1,582m (2018: £483m), profit before tax was £1,022m (2018: £1,956m)

·

Total income was stable at £7,353m (2018: £7,383m). A 2% reduction in net interest income to £5,888m (resulting in a lower net interest margin (NIM) of 3.09% (2018: 3.23%)) reflected higher refinancing activity by mortgage customers, lower interest earning lending (IEL) balances in UK cards and the mix effect from growth in secured lending. Net fee, commission and other income increased 8% to £1,465m, due to increased debt sales and the impact of treasury operations


-

Personal Banking income was stable at £4,009m (2018: £4,006m), reflecting ongoing mortgage margin pressure, offset by mortgage and deposit balance growth, improved deposit margins and treasury operations


-

Barclaycard Consumer UK income decreased 5% to £1,992m reflecting a continued reduced risk appetite and reduced borrowing by customers, which resulted in a lower level of IEL balances, partially offset by increased debt sales


-

Business Banking income increased 6% to £1,352m driven by deposit growth, with improved deposit margins, and the non-recurrence of client remediation in 2018

·

Credit impairment charges decreased 14% to £712m reflecting the non-recurrence of a £100m specific charge in Q418 relating to the impact of anticipated economic uncertainty in the UK. Unsecured gross exposures were lower as a result of increased debt sales and an improved risk profile, both principally in UK cards. The 30 and 90 day arrears rates in UK cards decreased to 1.7% (Q418: 1.8%) and 0.8% (Q418: 0.9%) respectively

·

Operating expenses decreased 2% to £4,037m as cost efficiencies were partially offset by planned investment and inflation. The cost: income ratio, excluding litigation and conduct, was 55% (2018: 56%)

 

Balance sheet

 

·

Loans and advances to customers at amortised cost increased 3% to £193.7bn reflecting £6.4bn of mortgage growth

·

Customer deposits at amortised cost increased 4% to £205.5bn demonstrating franchise strength across both Personal and Business Banking

·

RWAs were stable at £74.9bn (2018: £75.2bn) as a reduction in UK cards (reflecting increased debt sales, lower IEL balances and an improved risk profile) was offset by growth in mortgages

 

Barclays International

Year ended

Year ended


31.12.19

31.12.18


Income statement information

£m

£m

% Change

Net interest income

3,941

3,815

3

Net trading income

4,199

4,450

(6)

Net fee, commission and other income

6,535

5,761

13

Total income

14,675

14,026

5

Credit impairment charges

(1,173)

(658)

(78)

Net operating income

13,502

13,368

1

Operating costs

(9,163)

(9,324)

2

UK bank levy

(174)

(210)

17

Operating expenses

(9,337)

(9,534)

2

Litigation and conduct

(116)

(127)

9

Total operating expenses

(9,453)

(9,661)

2

Other net income

69

68

1

Profit before tax

4,118

3,775

9

Attributable profit1

2,816

2,599

8





Balance sheet information

£bn

£bn


Loans and advances at amortised cost

132.8

127.2


Trading portfolio assets

113.3

104.0


Derivative financial instrument assets

228.9

222.1


Financial assets at fair value through the income statement

128.4

144.7


Cash collateral and settlement balances

79.4

74.3


Other assets

178.6

189.8


Total assets

861.4

862.1


Deposits at amortised cost

210.0

197.2


Derivative financial instrument liabilities

228.9

219.6


Loan: deposit ratio

63%

65%


Risk weighted assets

209.2

210.7


Period end allocated tangible equity

29.6

29.9






Performance measures




Return on average allocated tangible equity

9.0%

8.4%


Average allocated tangible equity (£bn)

31.2

31.0


Cost: income ratio

64%

69%


Loan loss rate (bps)

86

50


Net interest margin

4.07%

4.11%






Performance measures excluding litigation and conduct2

£m

£m


Profit before tax

4,234

3,902

9

Attributable profit

2,906

2,705

7

Return on average allocated tangible equity

9.3%

8.7%

Cost: income ratio

64%

68%


 

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 EPS or return on average tangible shareholders' equity.

2

Refer to pages 62 to 71 for further information and calculations of performance measures excluding litigation and conduct.

 

Analysis of Barclays International




Corporate and Investment Bank

Year ended

Year ended


31.12.19

31.12.18


Income statement information

£m

£m

% Change

FICC

3,364

2,863

17

Equities

1,887

2,037

(7)

Markets

5,251

4,900

7

Advisory

776

708

10

Equity capital markets

329

300

10

Debt capital markets

1,430

1,523

(6)

Banking fees

2,535

2,531

-

Corporate lending

765

878

(13)

Transaction banking

1,680

1,627

3

Corporate

2,445

2,505

(2)

Other1

-

(171)


Total income

10,231

9,765

5

Credit impairment (charges)/releases

(157)

150


Net operating income

10,074

9,915

2

Operating costs

(6,882)

(7,093)

3

UK bank levy

(156)

(188)

17

Operating expenses

(7,038)

(7,281)

3

Litigation and conduct

(109)

(68)

(60)

Total operating expenses

(7,147)

(7,349)

3

Other net income

28

27

4

Profit before tax

2,955

2,593

14

Attributable profit2

1,980

1,781

11




Balance sheet information

£bn

£bn


Loans and advances at amortised cost

92.0

86.4


Trading portfolio assets

113.3

104.0


Derivative financial instrument assets

228.8

222.1


Financial assets at fair value through the income statement

127.7

144.2


Cash collateral and settlement balances

78.5

73.4


Other assets

155.3

160.4


Total assets

795.6

790.5


Deposits at amortised cost

146.2

136.3


Derivative financial instrument liabilities

228.9

219.6


Risk weighted assets

171.5

170.9






Performance measures




Return on average allocated tangible equity

7.6%

6.9%


Average allocated tangible equity (£bn)

25.9

26.0


Cost: income ratio

70%

75%






Performance measures excluding litigation and conduct3

£m

£m


Profit before tax

3,064

2,661

15

Attributable profit

2,064

1,843

12

Return on average allocated tangible equity

8.0%

7.1%

Cost: income ratio

69%

75%

 

1

From 2019, treasury items previously included in Other have been allocated to businesses.

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. This change does not impact EPS or return on average tangible shareholders' equity.

3

Refer to pages 62 to 71 for more information and calculations of performance measures excluding litigation and conduct.

 

Analysis of Barclays International




Consumer, Cards and Payments

Year ended

Year ended


31.12.19

31.12.18


Income statement information

£m

£m

% Change

Net interest income

2,822

2,731

3

Net fee, commission, trading and other income

1,622

1,530

6

Total income

4,444

4,261

4

Credit impairment charges

(1,016)

(808)

(26)

Net operating income

3,428

3,453

(1)

Operating costs

(2,281)

(2,231)

(2)

UK bank levy

(18)

(22)

18

Operating expenses

(2,299)

(2,253)

(2)

Litigation and conduct

(7)

(59)

88

Total operating expenses

(2,306)

(2,312)

-

Other net income

41

41

-

Profit before tax

1,163

1,182

(2)

Attributable profit1

836

818

2





Balance sheet information

£bn

£bn


Loans and advances at amortised cost

40.8

40.8


Total assets

65.8

71.6


Deposits at amortised cost

63.8

60.9


Risk weighted assets

37.7

39.8






Key facts




30 day arrears rate - Barclaycard US

2.7%

2.7%


US cards customer FICO score distribution




<660

14%

14%


>660

86%

86%


Total number of Barclaycard payments clients

c.376,000

c.374,000


Value of payments processed (£bn)2

354

344






Performance measures




Return on average allocated tangible equity

15.8%

16.5%


Average allocated tangible equity (£bn)

5.3

5.0


Cost: income ratio

52%

54%


Loan loss rate (bps)

234

185






Performance measures excluding litigation and conduct3

£m

£m


Profit before tax

1,170

1,241

(6)

Attributable profit

842

862

(2)

Return on average allocated tangible equity

15.9%

17.3%


Cost: income ratio

52%

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 EPS or return on average tangible shareholders' equity.

2

Includes £272bn of merchant acquiring payments.

3

Refer to pages 62 to 71 for more information and calculations of performance measures excluding litigation and conduct.

 

Barclays International continued to make good progress on its strategy in 2019, with an improved performance in CIB and in CC&P. CIB delivered an RoTE of 8.0%, up 0.9%, with both Markets and Banking improving their market share1,2 and demonstrating a disciplined approach to costs. CC&P delivered an RoTE of 15.9% reflecting continued growth in US co-branded cards and payments partnerships.

 

2019 compared to 2018

 

Income statement

 

·

Profit before tax, excluding litigation and conduct, increased 9% to £4,234m with an RoTE of 9.3% (2018: 8.7%), reflecting returns in the CIB of 8.0% (2018: 7.1%) and CC&P of 15.9% (2018: 17.3%)

·

The 4% appreciation of average USD against GBP positively impacted income and profits, and adversely impacted credit impairment charges and operating expenses

·

Total income increased to £14,675m (2018: £14,026m)


-

CIB income increased 5% to £10,231m



-

Markets income increased 7% to £5,251m reflecting further gains in market share in a declining revenue pool1. FICC income increased 17% to £3,364m reflecting a strong performance in rates and growth in securitised products. Equities income decreased 7% to £1,887m driven by equity derivatives, which were impacted by reduced client activity. Included in Markets was a £180m gain related to the Tradeweb position and a net loss of £77m due to the impact of treasury operations and hedging counterparty risk



-

Banking fees income was stable at £2,535m. The business continued to gain market share in a declining fee pool2



-

Within Corporate, Transaction banking income increased 3% to £1,680m reflecting growth in deposits. This was offset by a decrease in Corporate lending income to £765m (2018: £878m). Excluding mark-to-market movements on loan hedges, Corporate lending income was broadly stable


-

CC&P income increased 4% to £4,444m reflecting growth in US co-branded cards and payments partnerships

·

Credit impairment charges increased to £1,173m (2018: £658m)


-

CIB credit impairment charges increased to £157m (2018: release of £150m) due to the non-recurrence of favourable macroeconomic scenario updates and single name recoveries in 2018


-

CC&P credit impairment charges increased to £1,016m (2018: £808m), reflecting the non-recurrence of favourable US macroeconomic scenario updates in 2018, as well as higher unsecured gross exposures due to balance growth in cards. Credit metrics remained stable, with 30 and 90 day arrears rates in US cards of 2.7% (Q418: 2.7%) and 1.4% (Q418: 1.4%) respectively

·

Operating expenses decreased 2% to £9,337m


-

CIB operating expenses decreased 3% to £7,038m as cost efficiencies were partially offset by continued investment


-

CC&P operating expenses increased 2% to £2,299m reflecting continued investment

 

Balance sheet

 

·

Loans and advances increased £5.6bn to £132.8bn mainly due to an increase in debt securities

·

Trading portfolio assets increased £9.3bn to £113.3bn due to increased trading activity, principally relating to the Equities business

·

Derivative financial instrument assets and liabilities increased £6.8bn to £228.9bn and £9.3bn to £228.9bn respectively driven by a decrease in major interest rate curves, partially offset by a decrease in foreign exchange volumes

·

Financial assets at fair value through the income statement decreased £16.3bn to £128.4bn driven by a focus on capital-efficient secured financing

·

Other assets decreased £11.2bn to £178.6bn predominantly due to a reduction in cash at central banks held as part of the liquidity pool

·

Deposits at amortised cost increased £12.8bn to £210.0bn due to increased deposits within CIB including the broadening of the business across Europe

·

RWAs decreased to £209.2bn (December 2018: £210.7bn) driven predominantly by depreciation of USD against GBP

 

1

Data Source: Coalition, FY19 Preliminary Competitor Analysis. Market share represents Barclays share of the total industry Revenue Pool. Analysis is based on Barclays internal business structure and internal revenues.

2

Data Source: Dealogic, for the period covering 1 January to 31 December 2019.

 

Head Office

Year ended

Year ended


31.12.19

31.12.18


Income statement information

£m

£m

% Change

Net interest income

(422)

(781)

46

Net fee, commission and other income

26

508

(95)

Total income

(396)

(273)

(45)

Credit impairment (charges)/releases

(27)

16


Net operating income

(423)

(257)

(65)

Operating costs

(200)

(228)

12

UK bank levy

(11)

(13)

15

Operating expenses

(211)

(241)

12

GMP charge

-

(140)


Litigation and conduct

(151)

(1,597)

91

Total operating expenses

(362)

(1,978)

82

Other net income/(expenses)

2

(2)


Loss before tax

(783)

(2,237)

65

Attributable loss1

(636)

(2,200)

71




Balance sheet information

£bn

£bn


Total assets

21.0

21.5


Risk weighted assets

11.0

26.0


Period end allocated tangible equity

5.6

4.9





Performance measures



Average allocated tangible equity (£bn)

5.1

3.1




Performance measures excluding litigation and conduct2

£m

£m


Loss before tax

(632)

(640)

1

Attributable loss

(525)

(642)

18

 

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 EPS or return on average tangible shareholders' equity.

2

Refer to pages 62 to 71 for further information and calculations of performance measures excluding litigation and conduct.

 

2019 compared to 2018

 

Income statement

 

·

Loss before tax, excluding litigation and conduct was £632m (2018: £640m). Including litigation and conduct charges of £151m (2018: £1,597m), loss before tax was £783m (2018: £2,237m), which reflected the non-recurrence of the £1,420m Residential Mortgage Backed Securities settlement in 2018

·

Total income was an expense of £396m (2018: £273m), which included the funding costs of legacy capital instruments, treasury items and hedge accounting expenses, partially offset by the recognition of dividends on Barclays' stake in Absa Group Limited. The increase in income expense was mainly due to the non-recurrence of a £155m one-off gain in 2018 from the settlement of receivables relating to the Lehman Brothers acquisition

 

Balance sheet

 

·

Average allocated tangible equity increased to £5.1bn (2018: £3.1bn) mainly due to excess capital held in Head Office as a result of the Group's average CET1 ratio for 2019 being above the 13.0% used in the allocation of equity to the businesses

·

RWAs decreased to £11.0bn (December 2018: £26.0bn) mainly driven by the removal of the Group's operational risk RWAs floor

 

Quarterly Results Summary

 

Barclays Group











Q419

Q319

Q219

Q119


Q418

Q318

Q218

Q118

Income statement information

£m

£m

£m

£m


£m

£m

£m

£m

Net interest income

2,344

2,445

2,360

2,258


2,296

2,388

2,190

2,188

Net fee, commission and other income

2,957

3,096

3,178

2,994


2,777

2,741

3,386

3,170

Total income

5,301

5,541

5,538

5,252


5,073

5,129

5,576

5,358

Credit impairment charges

(523)

(461)

(480)

(448)


(643)

(254)

(283)

(288)

Net operating income

4,778

5,080

5,058

4,804


4,430

4,875

5,293

5,070

Operating costs

(3,308)

(3,293)

(3,501)

(3,257)


(3,624)

(3,329)

(3,310)

(3,364)

UK bank levy

(226)

-

-

-


(269)

-

-

-

Operating expenses

(3,534)

(3,293)

(3,501)

(3,257)


(3,893)

(3,329)

(3,310)

(3,364)

GMP charge

-

-

-

-


(140)

-

-

-

Litigation and conduct

(167)

(1,568)

(53)

(61)


(60)

(105)

(81)

(1,961)

Total operating expenses

(3,701)

(4,861)

(3,554)

(3,318)


(4,093)

(3,434)

(3,391)

(5,325)

Other net income/(expenses)

20

27

27

(3)


37

20

(7)

19

Profit/(loss) before tax

1,097

246

1,531

1,483


374

1,461

1,895

(236)

Tax charge1

(189)

(269)

(297)

(248)


(75)

(192)

(386)

(258)

Profit/(loss) after tax

908

(23)

1,234

1,235


299

1,269

1,509

(494)

Non-controlling interests

(42)

(4)

(17)

(17)


(83)

(43)

(55)

(53)

Other equity instrument holders

(185)

(265)

(183)

(180)


(230)

(176)

(175)

(171)

Attributable profit/(loss)1

681

(292)

1,034

1,038


(14)

1,050

1,279

(718)











Performance measures










Return on average tangible shareholders' equity

5.9%

(2.4%)

9.0%

9.2%


(0.1%)

9.4%

11.8%

(6.5%)

Average tangible shareholders' equity (£bn)

46.4

48.4

46.2

45.2


44.3

44.6

43.5

44.2

Cost: income ratio

70%

88%

64%

63%


81%

67%

61%

99%

Loan loss rate (bps)

60

52

56

54


77

30

35

36

Basic earnings/(loss) per share

3.9p

(1.7p)

6.0p

6.1p


(0.1p)

6.1p

7.5p

(4.2p)











Performance measures excluding litigation and conduct2

£m

£m

£m

£m


£m

£m

£m

£m

Profit before tax

1,264

1,814

1,584

1,544


434

1,566

1,976

1,725

Attributable profit

803

1,233

1,074

1,084


48

1,135

1,338

1,212

Return on average tangible shareholders' equity

6.9%

10.2%

9.3%

9.6%


0.4%

10.2%

12.3%

11.0%

Cost: income ratio

67%

59%

63%

62%


79%

65%

59%

63%

Basic earnings per share

4.7p

7.2p

6.3p

6.3p


0.3p

6.6p

7.8p

7.1p











Balance sheet and capital management3

£bn

£bn

£bn

£bn


£bn

£bn

£bn

£bn

Total assets

1,140.2

1,290.4

1,232.8

1,193.5


1,133.3

1,170.8

1,149.6

1,142.2

Tangible net asset value per share

262p

274p

275p

266p


262p

260p

259p

251p

Common equity tier 1 ratio

13.8%

13.4%

13.4%

13.0%


13.2%

13.2%

13.0%

12.7%

Common equity tier 1 capital

40.8

41.9

42.9

41.4


41.1

41.7

41.4

40.2

Risk weighted assets

295.1

313.3

319.1

319.7


311.9

316.2

319.3

317.9

Average UK leverage ratio

4.5%

4.6%

4.7%

4.6%


4.5%

4.6%

4.6%

4.6%

Average UK leverage exposure

1,142.8

1,171.2

1,134.6

1,105.5


1,110.0

1,119.0

1,081.8

1,089.9

UK leverage ratio

5.1%

4.8%

5.1%

4.9%


5.1%

4.9%

4.9%

4.8%

UK leverage exposure

1,007.7

1,099.8

1,079.4

1,065.0


998.6

1,063.5

1,030.1

1,030.8











Funding and liquidity










Group liquidity pool (£bn)

211

226

238

232


227

213

214

207

Liquidity coverage ratio

160%

151%

156%

160%


169%

161%

154%

147%

Loan: deposit ratio

82%

82%

82%

80%


83%

83%

83%

84%

 

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 EPS or return on average tangible shareholders' equity.

2

Refer to pages 62 to 71 for further information and calculations of performance measures excluding litigation and conduct.

3

Refer to pages 41 to 46 for further information on how capital, RWAs and leverage are calculated.

 

Quarterly Results by Business

 

Barclays UK











Q419

Q319

Q219

Q119


Q418

Q318

Q218

Q118

Income statement information

£m

£m

£m

£m


£m

£m

£m

£m

Net interest income

1,478

1,503

1,438

1,469


1,513

1,529

1,493

1,493

Net fee, commission and other income

481

343

333

308


350

367

343

295

Total income

1,959

1,846

1,771

1,777


1,863

1,896

1,836

1,788

Credit impairment charges

(190)

(101)

(230)

(191)


(296)

(115)

(214)

(201)

Net operating income

1,769

1,745

1,541

1,586


1,567

1,781

1,622

1,587

Operating costs

(1,023)

(952)

(1,022)

(999)


(1,114)

(988)

(968)

(1,005)

UK bank levy

(41)

-

-

-


(46)

-

-

-

Operating expenses

(1,064)

(952)

(1,022)

(999)


(1,160)

(988)

(968)

(1,005)

Litigation and conduct

(58)

(1,480)

(41)

(3)


(15)

(54)

(3)

(411)

Total operating expenses

(1,122)

(2,432)

(1,063)

(1,002)


(1,175)

(1,042)

(971)

(1,416)

Other net (expenses)/income

-

-

(1)

1


(2)

1

5

(1)

Profit/(loss) before tax 

647

(687)

477

585


390

740

656

170

Attributable profit/(loss)1

438

(907)

328

422


241

510

473

(26)











Balance sheet information

£bn

£bn

£bn

£bn


£bn

£bn

£bn

£bn

Loans and advances to customers at amortised cost

193.7

193.2

189.1

187.5


187.6

186.7

185.3

184.3

Total assets

257.8

257.9

259.0

253.1


249.7

252.0

245.9

235.2

Customer deposits at amortised cost

205.5

203.3

200.9

197.3


197.3

195.8

194.3

192.0

Loan: deposit ratio

96%

97%

97%

96%


96%

96%

96%

96%

Risk weighted assets

74.9

76.8

76.2

76.6


75.2

74.8

75.0

72.5

Period end allocated tangible equity

10.3

10.4

10.3

10.5


10.2

10.1

10.2

9.8











Performance measures










Return on average allocated tangible equity

17.0%

(34.9%)

12.7%

16.3%


9.6%

20.1%

18.8%

(1.1%)

Average allocated tangible equity (£bn)

10.3

10.4

10.3

10.4


10.1

10.1

10.1

9.8

Cost: income ratio

57%

132%

60%

56%


63%

55%

53%

79%

Loan loss rate (bps)

38

20

47

40


61

24

45

43

Net interest margin

3.03%

3.10%

3.05%

3.18%


3.20%

3.22%

3.22%

3.27%











Performance measures excluding litigation and conduct2

£m

£m

£m

£m


£m

£m

£m

£m

Profit before tax

705

793

518

588


405

794

659

581

Attributable profit

481

550

358

424


253

558

474

385

Return on average allocated tangible equity

18.7%

21.2%

13.9%

16.4%


10.1%

22.0%

18.8%

15.7%

Cost: income ratio

54%

52%

58%

56%


62%

52%

53%

56%

 

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 EPS or return on average tangible shareholders' equity.

2

Refer to pages 62 to 71 for further information and calculations of performance measures excluding litigation and conduct.

 

Analysis of Barclays UK

Q419

Q319

Q219

Q119


Q418

Q318

Q218

Q118

Analysis of total income

£m

£m

£m

£m


£m

£m

£m

£m

Personal Banking

1,064

1,035

946

964


998

1,021

1,015

972

Barclaycard Consumer UK

533

472

497

490


522

551

504

527

Business Banking

362

339

328

323


343

324

317

289

Total income

1,959

1,846

1,771

1,777


1,863

1,896

1,836

1,788











Analysis of credit impairment (charges)/releases










Personal Banking

(71)

(36)

(36)

(52)


(44)

(8)

(49)

(72)

Barclaycard Consumer UK

(108)

(49)

(175)

(140)


(250)

(88)

(139)

(113)

Business Banking

(11)

(16)

(19)

1


(2)

(19)

(26)

(16)

Total credit impairment charges

(190)

(101)

(230)

(191)


(296)

(115)

(214)

(201)











Analysis of loans and advances to customers at amortised cost

£bn

£bn

£bn

£bn


£bn

£bn

£bn

£bn

Personal Banking

151.9

150.1

147.3

145.9


146.0

145.4

143.6

142.1

Barclaycard Consumer UK

14.7

14.9

15.1

15.0


15.3

15.3

15.2

15.2

Business Banking

27.1

28.2

26.7

26.6


26.3

26.0

26.5

27.0

Total loans and advances to customers at amortised cost

193.7

193.2

189.1

187.5


187.6

186.7

185.3

184.3











Analysis of customer deposits at amortised cost










Personal Banking

159.2

157.9

156.3

154.1


154.0

153.4

152.9

151.9

Barclaycard Consumer UK

-

-

-

-


-

-

-

-

Business Banking

46.3

45.4

44.6

43.2


43.3

42.4

41.4

40.1

Total customer deposits at amortised cost

205.5

203.3

200.9

197.3


197.3

195.8

194.3

192.0

 

Barclays International











Q419

Q319

Q219

Q119


Q418

Q318

Q218

Q118

Income statement information

£m

£m

£m

£m


£m

£m

£m

£m

Net interest income

965

1,059

1,017

900


984

965

853

1,013

Net trading income

929

1,110

1,016

1,144


837

1,103

1,094

1,416

Net fee, commission and other income

1,558

1,581

1,870

1,526


1,400

1,222

1,760

1,379

Total income

3,452

3,750

3,903

3,570


3,221

3,290

3,707

3,808

Credit impairment charges

(329)

(352)

(247)

(245)


(354)

(143)

(68)

(93)

Net operating income

3,123

3,398

3,656

3,325


2,867

3,147

3,639

3,715

Operating costs

(2,240)

(2,282)

(2,435)

(2,206)


(2,441)

(2,277)

(2,306)

(2,300)

UK bank levy

(174)

-

-

-


(210)

-

-

-

Operating expenses

(2,414)

(2,282)

(2,435)

(2,206)


(2,651)

(2,277)

(2,306)

(2,300)

Litigation and conduct

(86)

-

(11)

(19)


(33)

(32)

(47)

(15)

Total operating expenses

(2,500)

(2,282)

(2,446)

(2,225)


(2,684)

(2,309)

(2,353)

(2,315)

Other net income

17

21

13

18


32

12

11

13

Profit before tax

640

1,137

1,223

1,118


215

850

1,297

1,413

Attributable profit/(loss)1

397

799

832

788


(21)

687

926

1,007











Balance sheet information

£bn

£bn

£bn

£bn


£bn

£bn

£bn

£bn

Loans and advances at amortised cost

132.8

138.1

134.8

130.9


127.2

132.4

125.5

117.5

Trading portfolio assets

113.3

119.4

120.0

117.2


104.0

124.6

116.5

114.9

Derivative financial instrument assets

228.9

286.0

243.8

217.3


222.1

214.8

228.2

214.1

Financial assets at fair value through the income statement

128.4

158.0

154.7

153.5


144.7

147.8

141.2

150.6

Cash collateral and settlement balances

79.4

112.5

101.3

97.8


74.3

94.3

91.5

82.6

Other assets

178.6

195.6

196.8

202.3


189.8

186.3

183.6

186.9

Total assets

861.4

1,009.6

951.4

919.0


862.1

900.2

886.5

866.6

Deposits at amortised cost

210.0

217.6

212.0

215.5


197.2

200.3

191.0

167.2

Derivative financial instrument liabilities

228.9

283.3

243.0

213.5


219.6

213.7

224.9

210.8

Loan: deposit ratio

63%

63%

64%

61%


65%

66%

66%

70%

Risk weighted assets

209.2

223.1

214.8

216.1


210.7

214.6

218.0

214.2

Period end allocated tangible equity

29.6

31.4

30.2

30.6


29.9

30.2

30.5

30.0











Performance measures










Return on average allocated tangible equity

5.1%

9.9%

10.7%

10.4%


(0.3%)

8.8%

11.8%

13.4%

Average allocated tangible equity (£bn)

30.9

32.2

31.1

30.5


31.3

31.1

31.4

30.1

Cost: income ratio

72%

61%

63%

62%


83%

70%

63%

61%

Loan loss rate (bps)

96

99

72

73


107

41

22

31

Net interest margin

4.29%

4.10%

3.91%

3.99%


3.98%

3.87%

4.03%

4.57%











Performance measures excluding litigation and conduct2

£m

£m

£m

£m


£m

£m

£m

£m

Profit before tax

726

1,137

1,234

1,137


248

882

1,344

1,428

Attributable profit

461

801

840

804


13

713

960

1,019

Return on average allocated tangible equity

6.0%

10.0%

10.8%

10.6%


0.2%

9.2%

12.2%

13.6%

Cost: income ratio

70%

61%

62%

62%


82%

69%

62%

60%

 

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 EPS or return on average tangible shareholders' equity.

2

Refer to pages 62 to 71 for further information and calculations of performance measures excluding litigation and conduct.

 

Analysis of Barclays International
















Corporate and Investment Bank

Q419

Q319

Q219

Q119


Q418

Q318

Q218

Q118

Income statement information

£m

£m

£m

£m


£m

£m

£m

£m

FICC

726

816

920

902


570

688

736

869

Equities

409

494

517

467


375

471

601

590

Markets

1,135

1,310

1,437

1,369


945

1,159

1,337

1,459

Advisory

202

221

221

132


242

151

168

147

Equity capital markets

56

86

104

83


53

55

90

102

Debt capital markets

322

381

373

354


330

313

446

434

Banking fees

580

688

698

569


625

519

704

683

Corporate lending

202

195

216

152


243

197

198

240

Transaction banking

397

424

444

415


412

416

385

414

Corporate

599

619

660

567


655

613

583

654

Other

-

-

-

-


(74)

(56)

(44)

3

Total income

2,314

2,617

2,795

2,505


2,151

2,235

2,580

2,799

Credit impairment (charges)/releases

(30)

(31)

(44)

(52)


(35)

3

23

159

Net operating income

2,284

2,586

2,751

2,453


2,116

2,238

2,603

2,958

Operating costs

(1,691)

(1,712)

(1,860)

(1,619)


(1,835)

(1,712)

(1,773)

(1,773)

UK bank levy

(156)

-

-

-


(188)

-

-

-

Operating expenses

(1,847)

(1,712)

(1,860)

(1,619)


(2,023)

(1,712)

(1,773)

(1,773)

Litigation and conduct

(79)

(4)

(7)

(19)


(23)

(32)

-

(13)

Total operating expenses

(1,926)

(1,716)

(1,867)

(1,638)


(2,046)

(1,744)

(1,773)

(1,786)

Other net income

1

12

3

12


15

4

5

3

Profit before tax

359

882

887

827


85

498

835

1,175

Attributable profit/(loss)1

193

609

596

582


(84)

431

600

834











Balance sheet information

£bn

£bn

£bn

£bn


£bn

£bn

£bn

£bn

Loans and advances at amortised cost

92.0

95.8

92.1

90.6


86.4

93.3

87.8

81.3

Trading portfolio assets

113.3

119.3

119.9

117.2


104.0

124.5

116.5

114.9

Derivative financial instruments assets

228.8

286.0

243.7

217.3


222.1

214.8

228.1

214.2

Financial assets at fair value through the income statement

127.7

157.3

154.1

152.9


144.2

147.3

140.7

150.2

Cash collateral and settlement balances

78.5

111.6

100.4

96.9


73.4

93.3

90.6

81.1

Other assets

155.3

171.5

168.1

163.2


160.4

153.8

151.6

159.8

Total assets

795.6

941.5

878.3

838.1


790.5

827.0

815.3

801.5

Deposits at amortised cost

146.2

152.1

145.4

151.4


136.3

137.6

130.3

107.6

Derivative financial instrument liabilities

228.9

283.2

242.9

213.5


219.6

213.7

224.9

210.9

Risk weighted assets

171.5

184.9

175.9

176.6


170.9

175.9

180.4

181.3











Performance measures










Return on average allocated tangible equity

3.0%

9.1%

9.2%

9.3%


(1.3%)

6.6%

9.1%

13.0%

Average allocated tangible equity (£bn)

25.8

26.9

25.8

25.1


26.0

25.9

26.4

25.6

Cost: income ratio

83%

66%

67%

65%


95%

78%

69%

64%











Performance measures excluding litigation and conduct2

£m

£m

£m

£m


£m

£m

£m

£m

Profit before tax

438

886

894

846


108

530

835

1,188

Attributable profit/(loss)

251

614

601

598


(57)

456

600

844

Return on average allocated tangible equity

3.9%

9.2%

9.3%

9.5%


(0.9%)

7.0%

9.1%

13.2%

Cost: income ratio

80%

65%

67%

65%


94%

77%

69%

63%

 

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 EPS or return on average tangible shareholders' equity.

2

Refer to pages 62 to 71 for further information and calculations of performance measures excluding litigation and conduct.

 

Analysis of Barclays International




















Consumer, Cards and Payments

Q419

Q319

Q219

Q119


Q418

Q318

Q218

Q118

Income statement information

£m

£m

£m

£m


£m

£m

£m

£m

Net interest income

717

720

720

665


664

691

699

677

Net fee, commission, trading and other income

421

413

388

400


406

364

428

332

Total income

1,138

1,133

1,108

1,065


1,070

1,055

1,127

1,009

Credit impairment charges

(299)

(321)

(203)

(193)


(319)

(146)

(91)

(252)

Net operating income

839

812

905

872


751

909

1,036

757

Operating costs

(549)

(570)

(575)

(587)


(606)

(565)

(533)

(527)

UK bank levy

(18)

-

-

-


(22)

-

-

-

Operating expenses

(567)

(570)

(575)

(587)


(628)

(565)

(533)

(527)

Litigation and conduct

(7)

4

(4)

-


(10)

-

(47)

(2)

Total operating expenses

(574)

(566)

(579)

(587)


(638)

(565)

(580)

(529)

Other net income

16

9

10

6


17

8

6

10

Profit before tax

281

255

336

291


130

352

462

238

Attributable profit1

204

190

236

206


63

256

326

173











Balance sheet information

£bn

£bn

£bn

£bn


£bn

£bn

£bn

£bn

Loans and advances at amortised cost

40.8

42.3

42.7

40.3


40.8

39.1

37.7

36.2

Total assets

65.8

68.1

73.1

80.9


71.6

73.2

71.2

65.1

Deposits at amortised cost

63.8

65.5

66.6

64.1


60.9

62.7

60.7

59.6

Risk weighted assets

37.7

38.2

38.9

39.5


39.8

38.7

37.6

32.9











Performance measures










Return on average allocated tangible equity

15.9%

14.2%

17.8%

15.4%


4.8%

19.8%

26.2%

15.6%

Average allocated tangible equity (£bn)

5.1

5.3

5.3

5.4


5.3

5.2

5.0

4.5

Cost: income ratio

50%

50%

52%

55%


60%

54%

51%

52%

Loan loss rate (bps)

273

283

180

182


290

138

90

263











Performance measures excluding litigation and conduct2

£m

£m

£m

£m


£m

£m

£m

£m

Profit before tax

288

251

340

291


140

352

509

240

Attributable profit

210

187

239

206


70

257

360

175

Return on average allocated tangible equity

16.3%

14.0%

18.0%

15.4%


5.4%

19.9%

28.9%

15.7%

Cost: income ratio

50%

50%

52%

55%


59%

54%

47%

52%

 

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 EPS or return on average tangible shareholders' equity.

2

Refer to pages 62 to 71 for further information and calculations of performance measures excluding litigation and conduct.

 

Head Office











Q419

Q319

Q219

Q119


Q418

Q318

Q218

Q118

Income statement information

£m

£m

£m

£m


£m

£m

£m

£m

Net interest income

(99)

(117)

(95)

(111)


(201)

(106)

(156)

(318)

Net fee, commission and other income

(11)

62

(41)

16


190

49

189

80

Total income

(110)

(55)

(136)

(95)


(11)

(57)

33

(238)

Credit impairment (charges)/releases

(4)

(8)

(3)

(12)


7

4

(1)

6

Net operating (expenses)/income

(114)

(63)

(139)

(107)


(4)

(53)

32

(232)

Operating costs

(45)

(59)

(44)

(52)


(69)

(64)

(36)

(59)

UK bank levy

(11)

-

-

-


(13)

-

-

-

Operating expenses

(56)

(59)

(44)

(52)


(82)

(64)

(36)

(59)

GMP charge

-

-

-

-


(140)

-

-

-

Litigation and conduct

(23)

(88)

(1)

(39)


(12)

(19)

(31)

(1,535)

Total operating expenses

(79)

(147)

(45)

(91)


(234)

(83)

(67)

(1,594)

Other net income/(expenses)

3

6

15

(22)


7

7

(23)

7

Loss before tax

(190)

(204)

(169)

(220)


(231)

(129)

(58)

(1,819)

Attributable loss1

(154)

(184)

(126)

(172)


(234)

(147)

(120)

(1,699)











Balance sheet information

£bn

£bn

£bn

£bn


£bn

£bn

£bn

£bn

Total assets

21.0

22.9

22.4

21.4


21.5

18.6

17.2

40.4

Risk weighted assets

11.0

13.4

28.1

27.0


26.0

26.8

26.3

31.2

Period end allocated tangible equity

5.6

5.5

7.0

4.5


4.9

4.2

3.6

3.0











Performance measures










Average allocated tangible equity (£bn)

5.2

5.8

4.8

4.3


2.9

3.4

2.0

4.3











Performance measures excluding litigation and conduct2

£m

£m

£m

£m


£m

£m

£m

£m

Loss before tax

(167)

(116)

(168)

(181)


(219)

(110)

(27)

(284)

Attributable loss

(139)

(118)

(124)

(144)


(218)

(136)

(96)

(192)

 

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 EPS or return on average tangible shareholders' equity.

2

Refer to pages 62 to 71 for further information and calculations of performance measures excluding litigation and conduct.

 

Performance Management

 

Margins and balances








Year ended 31.12.19

Year ended 31.12.181


Net interest income

Average customer assets

Net interest margin

Net interest income

Average customer assets

Net interest margin


£m

£m

%

£m

£m

%

Barclays UK

5,888

190,849

 3.09

6,028

186,881

 3.23

Barclays International2

4,021

98,824

 4.07

3,966

96,434

 4.11

Total Barclays UK and Barclays International

9,909

289,673

 3.42

9,994

283,315

 3.53

Other3

(502)



(932)



Total Barclays Group

9,407



9,062



 

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.

 

The Group NIM decreased 11bps to 3.42% and Barclays UK NIM decreased 14bps to 3.09%, primarily reflecting increased refinancing activity by mortgage customers and competitive pressure, lower IEL in UK cards and the mix effect from growth in secured lending.

 

The Group combined product and equity structural hedge notional as at 31 December 2019 was £171bn, with an average duration of 2.5 to 3 years. Group net interest income includes gross structural hedge contributions of £1.8bn (2018: £1.7bn) and net structural hedge contributions of £0.5bn (2018: £0.8bn). 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.

 

Quarterly analysis for Barclays UK and Barclays International

Net interest income

Average customer assets

Net interest margin

Three months ended 31.12.19

£m

£m

%

Barclays UK

 1,478

 193,610

 3.03

Barclays International1

 1,036

 95,819

 4.29

Total Barclays UK and Barclays International

 2,514

 289,429

 3.45





Three months ended 30.09.19




Barclays UK

1,503

192,262

3.10

Barclays International1

1,038

100,589

4.10

Total Barclays UK and Barclays International

2,541

292,851

3.44





Three months ended 30.06.19




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

 

1

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

 

Remuneration

 

Deferred bonuses are payable only once an employee meets certain conditions, including a specified period of service. This creates a timing difference between the communication of the bonus pool and the charges that are recognised in the income statement which are reconciled in the table below to show the charge for performance costs. Refer to the Remuneration Report on pages 85-123 of the Barclays PLC Annual Report 2019 for further detail on remuneration. The table below includes the other elements of compensation and staff costs.

 


Year ended

Year ended



31.12.19

31.12.18



£m

£m

% Change

Incentive awards granted:




Current year bonus

1,008

1,067

6

Deferred bonus

429

515

17

Commissions and other incentives

53

67

21

Total incentive awards granted

1,490

1,649

10





Reconciliation of incentive awards granted to income statement charge:




Less: deferred bonuses granted but not charged in current year

(293)

(359)

18

Add: current year charges for deferred bonuses from previous years

308

299

(3)

Other differences between incentive awards granted and income statement charge

(48)

(33)

(45)

Income statement charge for performance costs

1,457

1,556

6





Other income statement charges:




Salaries

4,332

4,200

(3)

Social security costs

573

558

(3)

Post-retirement benefits1

501

619

19

Other compensation costs

480

413

(16)

Total compensation costs2

7,343

7,346

-





Other resourcing costs:




Outsourcing

433

594

27

Redundancy and restructuring

132

133

1

Temporary staff costs

256

386

34

Other

151

170

11

Total other resourcing costs

972

1,283

24





Total staff costs

8,315

8,629

4





Group compensation costs as a % of total income3

33.9

34.1


Group staff costs as a % of total income3

38.4

40.2


 

1

Post-retirement benefits charge includes £270m (2018: £236m) in respect of defined contribution schemes and £231m (2018: £383m) in respect of defined benefit schemes.

2

£439m (2018: £296m) of Group compensation was capitalised as internally generated software.

3

Comparative excludes a GMP charge of £140m.

 

Deferred bonuses have been awarded and are expected to be charged to the income statement in the years outlined in the table that follows:

 

Year in which income statement charge is expected to be taken for deferred bonuses awarded to date1


Actual


Expected1,2


Year ended

Year ended


Year ended

2021 and


31.12.18

31.12.19


31.12.20

beyond


£m

£m


£m

£m

Deferred bonuses from 2016 and earlier bonus pools

169

56


7

-

Deferred bonuses from 2017 bonus pool

130

83


39

6

Deferred bonuses from 2018 bonus pool

156

169


98

59

Deferred bonuses from 2019 bonus pool

-

136


129

121

Income statement charge for deferred bonuses

455

444


273

186

 

1

The actual amount charged depends upon whether conditions have been met and will vary compared with the above expectation.

2

Does not include the impact of grants which will be made in 2020 and beyond.

 

Charging of deferred bonus profile1

Grant date

Expected payment date(s)2

Year

Income statement charge profile of 2019 awards3,4

March 2020


2019

35%



2020

34%


March 2021 (33.3%)

2021

21%


March 2022 (33.3%)

2022

9%


March 2023 (33.3%)

2023

1%

 

1

Represents a typical vesting schedule for deferred awards. Certain awards may be subject to 5- or 7-year deferral in line with regulatory requirements.

2

Share awards may be subject to an additional holding period.

3

The income statement charge is based on the period over which conditions are met.

4

Income statement charge profile % disclosed as a percentage of the award including lapse.

 

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 Group are identified in the Enterprise Risk Management Framework. The purpose of the framework is to identify the principal risks of the Group, the process by which the 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; conduct risk; reputation risk; model risk; and legal risk. Further detail on these risks and how they are managed is available in the Barclays PLC Annual Report 2019 or online at home.barclays/annualreport. The risks associated with the process of the UK withdrawal from the European Union continue to be closely monitored. Impairment stock as at 31 December 2019 continues to include an adjustment of £150m representing the anticipated impact of the economic uncertainty in the UK.

 

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 31 December 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 31 December 2019.

 

Impairment allowance under IFRS 9 considers both the drawn and the undrawn counterparty exposure. For retail portfolios, the total impairment allowance is allocated to the drawn exposure to the extent that the allowance does not exceed the exposure as ECL is not reported separately. Any excess is reported on the liability side of the balance sheet as a provision. For wholesale portfolios, the impairment allowance on the undrawn exposure is reported on the liability side of the balance sheet as a provision.

 


Gross exposure


Impairment allowance

Net exposure


Stage 1

Stage 2

Stage 3

Total


Stage 1

Stage 2

Stage 3

Total

As at 31.12.19

£m

£m

£m

£m


£m

£m

£m

£m

£m

Barclays UK

143,097

23,198

2,446

168,741


198

1,277

974

2,449

166,292

Barclays International

27,886

4,026

1,875

33,787


352

774

1,359

2,485

31,302

Head Office

4,803

500

826

6,129


5

36

305

346

5,783

Total Barclays Group retail

175,786

27,724

5,147

208,657


555

2,087

2,638

5,280

203,377

Barclays UK

27,891

2,397

1,124

31,412


16

38

108

162

31,250

Barclays International1

92,615

8,113

1,615

102,343


136

248

447

831

101,512

Head Office

2,974

 -  

37

3,011


 -  

 -  

35

35

2,976

Total Barclays Group wholesale

123,480

10,510

2,776

136,766


152

286

590

1,028

135,738

Total loans and advances at amortised cost

299,266

38,234

7,923

345,423


707

2,373

3,228

6,308

339,115

Off-balance sheet loan commitments and financial guarantee contracts2

321,140

19,185

935

341,260


97

170

55

322

340,938

Total3

620,406

57,419

8,858

686,683


804

2,543

3,283

6,630

680,053













As at 31.12.19


Year ended 31.12.19



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

39.8

1.5



661


39


Barclays International

1.3

19.2

72.5

7.4



999


296


Head Office

0.1

7.2

36.9

5.6



27


44


Total Barclays Group retail

0.3

7.5

51.3

2.5



1,687


81


Barclays UK

0.1

1.6

9.6

0.5



33


11


Barclays International1

0.1

3.1

27.7

0.8



113


11


Head Office

 -  

 -  

94.6

1.2



 -  


 -  


Total Barclays Group wholesale

0.1

2.7

21.3

0.8



146


11


Total loans and advances at amortised cost

0.2

6.2

40.7

1.8



1,833


53


Off-balance sheet loan commitments and financial guarantee contracts2

-

0.9

5.9

0.1



71




Other financial assets subject to impairment3







8




Total4

0.1

4.4

37.1

1.0



1,912




 

1

Includes Wealth and Private Banking exposures measured on an individual customer exposure basis.

2

Excludes loan commitments and financial guarantees of £17.7bn carried at fair value.

3

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 £149.3bn and impairment allowance of £24m. This comprises £12m Expected Credit Loss (ECL) on £148.5bn stage 1 assets, £2m on £0.8bn stage 2 fair value through other comprehensive income assets, cash collateral and settlement balances and £10m on £10m stage 3 other assets.

4

The loan loss rate is 55bps after applying the total impairment charge of £1,912m.

 


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 International1

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 contracts2

309,989

22,126

684

332,799


99

150

22

271

332,528

Total3

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 International1

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 contracts2

-

0.7

3.2

0.1



(125)




Other financial assets subject to impairment3







3




Total4

0.1

4.4

36.9

1.1



1,468




 

1

Includes Wealth and Private Banking exposures measured on an individual customer exposure basis.

2

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

3

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.

4

The loan loss rate is 44bps after applying the total impairment charge of £1,468m.

 

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 31.12.19

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

135,713

14,733

1,585

725

17,043

2,155

154,911

Credit cards, unsecured loans and other retail lending

46,012

9,759

496

504

10,759

3,409

60,180

Wholesale loans

117,541

9,374

374

684

10,432

2,359

130,332

Total

299,266

33,866

2,455

1,913

38,234

7,923

345,423









Impairment allowance








Home loans

22

37

14

13

64

346

432

Credit cards, unsecured loans and other retail lending

542

1,597

159

251

2,007

2,335

4,884

Wholesale loans

143

284

9

9

302

547

992

Total

707

1,918

182

273

2,373

3,228

6,308









Net exposure








Home loans

135,691

14,696

1,571

712

16,979

1,809

154,479

Credit cards, unsecured loans and other retail lending

45,470

8,162

337

253

8,752

1,074

55,296

Wholesale loans

117,398

9,090

365

675

10,130

1,812

129,340

Total

298,559

31,948

2,273

1,640

35,861

4,695

339,115









Coverage ratio

%

%

%

%

%

%

%

Home loans

-

0.3

0.9

1.8

0.4

16.1

0.3

Credit cards, unsecured loans and other retail lending

1.2

16.4

32.1

49.8

18.7

68.5

8.1

Wholesale loans

0.1

3.0

2.4

1.3

2.9

23.2

0.8

Total

0.2

5.7

7.4

14.3

6.2

40.7

1.8









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

Wholesale 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

Wholesale 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

Wholesale 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

Wholesale 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 2019 on page 259. This disclosure has been enhanced in 2019 to provide further granularity by product. Transfers between stages in the tables have been reflected as if they had taken place at the beginning of the year. The movements are measured over a 12-month period.

 

Loans and advances at amortised cost


Stage 1

Stage 2

Stage 3

Total


Gross exposure

ECL

Gross exposure

ECL

Gross exposure

ECL

Gross exposure

ECL


£m

£m

£m

£m

£m

£m

£m

£m

Home loans









As at 1 January 2019

130,066

31

18,206

82

2,476

351

150,748

464

Transfers from Stage 1 to Stage 2

(9,051)

(1)

9,051

1

-

-

-

-

Transfers from Stage 2 to Stage 1

8,000

28

(8,000)

(28)

-

-

-

-

Transfers to Stage 3

(199)

-

(510)

(15)

709

15

-

-

Transfers from Stage 3

43

2

294

3

(337)

(5)

-

-

Business activity in the year

24,935

3

734

2

3

-

25,672

5

Changes to models used for calculation1

-

-

-

-

-

-

-

-

Net drawdowns, repayments, net re-measurement and movements due to exposure and risk parameter changes

(6,931)

(38)

(843)

27

(214)

24

(7,988)

13

Final repayments

(10,427)

(2)

(1,827)

(4)

(454)

(13)

(12,708)

(19)

Disposals2

(723)

(1)

(62)

(4)

(2)

-

(787)

(5)

Write-offs3

-

-

-

-

(26)

(26)

(26)

(26)

As at 31 December 20194

135,713

22

17,043

64

2,155

346

154,911

432










Credit cards, unsecured loans and other retail lending

As at 1 January 2019

45,785

528

12,229

2,304

3,760

2,511

61,774

5,343

Transfers from Stage 1 to Stage 2

(3,604)

(72)

3,604

72

-

-

-

-

Transfers from Stage 2 to Stage 1

4,522

701

(4,522)

(701)

-

-

-

-

Transfers to Stage 3

(857)

(21)

(1,264)

(448)

2,121

469

-

-

Transfers from Stage 3

144

103

28

14

(172)

(117)

-

-

Business activity in the year

9,664

120

704

123

89

39

10,457

282

Changes to models used for calculation1

-

16

-

(110)

-

(7)

-

(101)

Net drawdowns, repayments, net re-measurement and movements due to exposure and risk parameter changes

(5,975)

(779)

351

806

373

1,836

(5,251)

1,863

Final repayments

(3,667)

(54)

(371)

(53)

(290)

(74)

(4,328)

(181)

Disposals2

-

-

-

-

(777)

(627)

(777)

(627)

Write-offs3

-

-

-

-

(1,695)

(1,695)

(1,695)

(1,695)

As at 31 December 20194

46,012

542

10,759

2,007

3,409

2,335

60,180

4,884

 

1

Changes to models used for calculation include a £101m movement in Credit cards, unsecured loans and other retail lending and a £28m movement in Wholesale loans. These reflect methodology changes made during the year. Barclays continually reviews the output of models to determine accuracy of the ECL calculation including reviews of model monitoring, external benchmarking and experience of model operation over an extended period of time. This ensures that the models used continue to reflect the risks inherent across the businesses.

2

The £787m movement of gross loans and advances disposed of across Home Loans relates to the sale of a portfolio of mortgages from the Italian loan book. The £777m disposal reported within Credit cards, unsecured loans and other retail lending portfolio relates to debt sales undertaken during the year. Finally, disposals of £2,285m within Wholesales loans relate to the sale of debt securities as part of the Group's Treasury operations.

3

In 2019, gross write-offs amounted to £1,883m (2018: £1,891m) and post write-off recoveries amounted to £124m (2018: £195m). Net write-offs represent gross write-offs less post write-off recoveries and amounted to £1,759m (2018: £1,696m).

4

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 £149.3bn (December 2018: £129.9bn) and impairment allowance of £24m (December 2018: £12m). This comprises £12m ECL (December 2018: £10m) on £148.5bn Stage 1 assets (December 2018: £129.3bn), £2m (December 2018: £2m) on £0.8bn Stage 2 fair value through other comprehensive income assets, cash collateral and settlement assets (December 2018: £0.6bn) and £10m (December 2018: £nil) on £10m Stage 3 other assets (December 2018: £nil).

 

Loans and advances at amortised cost


Stage 1

Stage 2

Stage 3

Total


Gross exposure

ECL

Gross exposure

ECL

Gross exposure

ECL

Gross exposure

ECL

Wholesale loans

£m

£m

£m

£m

£m

£m

£m

£m

As at 1 January 2019

105,375

129

13,012

329

2,267

505

120,654

963

Transfers from Stage 1 to Stage 2

(3,419)

(11)

3,419

11

-

-

-

-

Transfers from Stage 2 to Stage 1

5,213

84

(5,213)

(84)

-

-

-

-

Transfers to Stage 3

(501)

(2)

(650)

(19)

1,151

21

-

-

Transfers from Stage 3

473

35

205

25

(678)

(60)

-

-

Business activity in the year

40,837

51

1,757

27

31

-

42,625

78

Changes to models used for calculation1

-

(9)

-

(19)

-

-

-

(28)

Net drawdowns, repayments, net re-measurement and movements due to exposure and risk parameter changes

5,929

(104)

321

85

122

334

6,372

315

Final repayments

(34,081)

(30)

(2,419)

(53)

(372)

(91)

(36,872)

(174)

Disposals2

(2,285)

-

-

-

-

-

(2,285)

-

Write-offs3

-

-

-

-

(162)

(162)

(162)

(162)

As at 31 December 20194

117,541

143

10,432

302

2,359

547

130,332

992










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

£m

Home loans

(1)

Credit cards, unsecured loans and other retail lending

1,863

Wholesale loans

191

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

2,053

Post write-off recoveries

(124)

Exchange and other adjustments5

(96)

Impairment release on loan commitments and financial guarantees

71

Impairment charge on other financial assets4

8

As at 31 December 2019








1,912

 

1

Changes to models used for calculations include a £101m movement in Credit cards, unsecured loans and other retail lending and a £28m movement in Wholesale loans. These reflect methodology changes made during the year. Barclays continually reviews the output of models to determine accuracy of the ECL calculation including reviews of model monitoring, external benchmarking and experience of model operation over an extended period of time. This ensures that the models used continue to reflect the risks inherent across the businesses.

2

The £787m movement of gross loans and advances disposed of across Home Loans relates to the sale of a portfolio of mortgages from the Italian loan book. The £777m disposal reported within Credit cards, unsecured loans and other retail lending portfolio relates to debt sales undertaken during the year. Finally, disposals of £2,285m within Wholesales loans relate to the sale of debt securities as part of the Group's Treasury operations.

3

In 2019, gross write-offs amounted to £1,883m (2018: £1,891m) and post write-off recoveries amounted to £124m (2018: £195m). Net write-offs represent gross write-offs less post write-off recoveries and amounted to £1,759m (2018: £1,696m).

4

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 £149.3bn (December 2018: £129.9bn) and impairment allowance of £24m (December 2018: £12m). This comprises £12m ECL (December 2018: £10m) on £148.5bn Stage 1 assets (December 2018: £129.3bn), £2m (December 2018: £2m) on £0.8bn Stage 2 fair value through other comprehensive income assets, cash collateral and settlement assets (December 2018: £0.6bn) and £10m (December 2018: £nil) on £10m Stage 3 other assets (December 2018: £nil).

5

Includes foreign exchange and interest and fees in suspense.

 

Loan commitments and financial guarantees











Stage 1

Stage 2

Stage 3

Total

Gross exposure

ECL

Gross exposure

ECL

Gross exposure

ECL

Gross exposure

ECL

£m

£m

£m

£m

£m

£m

£m

£m

Home loans









As at 1 January 2019

6,948

-

546

-

13

-

7,507

-

Net transfers between stages

(39)

-

47

-

(8)

-

-

-

Business activity in the year

2,848

-

-

-

-

-

2,848

-

Net drawdowns, repayments, net re-measurement and movement due to exposure and risk parameter changes

1

-

(40)

-

-

-

(39)

-

Final repayments

(216)

-

(53)

-

(1)

-

(270)

-

As at 31 December 2019

9,542

-

500

-

4

-

10,046

-










Credit cards, unsecured loans and other retail lending





As at 1 January 2019

124,611

41

9,016

65

267

20

133,894

126

Net transfers between stages

117

44

(1,082)

(43)

965

(1)

-

-

Business activity in the year

14,619

2

218

1

6

6

14,843

9

Net drawdowns, repayments, net re-measurement and movement due to exposure and risk parameter changes

(1,151)

(48)

(1,172)

54

(874)

(9)

(3,197)

(3)

Final repayments

(12,437)

(4)

(742)

(6)

(114)

(2)

(13,293)

(12)

As at 31 December 2019

125,759

35

6,238

71

250

14

132,247

120










Wholesale loans









As at 1 January 2019

178,430

58

12,564

85

404

2

191,398

145

Net transfers between stages

(875)

7

580

(8)

295

1

-

-

Business activity in the year

53,685

22

2,779

22

16

-

56,480

44

Net drawdowns, repayments, net re-measurement and movement due to exposure and risk parameter changes

(487)

(1)

1,190

36

232

41

935

76

Final repayments

(44,914)

(24)

(4,666)

(36)

(266)

(3)

(49,846)

(63)

As at 31 December 2019

185,839

62

12,447

99

681

41

198,967

202

 

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.

 

The Group uses a five-scenario model to calculate ECL. An external consensus forecast is assembled from key sources, including HM Treasury (short and medium term forecasts), Bloomberg (based on median of economic forecasts) and the Urban Land Institute (for US House Prices), 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. All scenarios are regenerated at a minimum annually. 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. The upside and downside shocks are designed to evolve over a five-year stress horizon, with all five scenarios converging to a steady state after approximately 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. This is reflected in the table below where the probability weights of the scenarios as of 31 December 2019 are shown. 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 31.12.19

 %

 %

 %

 %

 %

Scenario probability weighting

10.1

23.1

40.8

22.7

3.3







As at 31.12.18






Scenario probability weighting

9.0

24.0

41.0

23.0

3.0

 

The weights of Upside 2 and Downside 2 have increased slightly reflecting the small decrease in dispersion in the scenarios. The impact on ECL is immaterial.

 

Macroeconomic variables used in the calculation of ECL (specific bases)1


Upside 2

Upside 1

Baseline

Downside 1

Downside 2

As at 31.12.19

 %

 %

 %

 %

 %

UK GDP2

4.2

2.9

1.6

0.2

(4.7)

UK unemployment3

3.4

3.8

4.2

5.7

8.7

UK HPI4

46.0

32.0

3.1

(8.2)

(32.4)

UK bank rate3

0.5

0.5

0.7

2.8

4.0

US GDP2

4.2

3.3

1.9

0.4

(3.4)

US unemployment3

3.0

3.5

3.9

5.3

8.5

US HPI4

37.1

23.3

3.0

0.5

(19.8)

US federal funds rate3

1.5

1.5

1.7

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

 

Macroeconomic variables used in the calculation of ECL (5-year averages)1


Upside 2

Upside 1

Baseline

Downside 1

Downside 2

As at 31.12.19

 %

 %

 %

 %

 %

UK GDP

3.2

2.4

1.6

0.8

(0.7)

UK unemployment

3.5

3.9

4.2

5.4

7.7

UK HPI

7.9

5.7

3.1

(1.1)

(6.5)

UK bank rate

0.5

0.5

0.7

2.5

3.7

US GDP

3.5

2.8

1.9

1.0

(0.5)

US unemployment

3.1

3.6

3.9

5.0

7.5

US HPI

6.5

4.3

3.0

1.3

(3.7)

US federal funds rate

1.6

1.7

1.7

2.9

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

 

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.

 

Over the year, the macroeconomic baseline variables have worsened in the US, in part due to the trade dispute with China. Baseline expectations for the US federal funds rate have also moved lower from 2.7% to 1.7% averaged over the first five years. Macroeconomic baseline variables in the UK have remained fairly flat with a small decrease in bank rates driven by market expectations of lower interest rates in the next few years. The other scenarios are generally unchanged from 2018, with the exception of UK HPI in the Downside 1 scenario where the cumulative fall in house prices now represents a more severe fall of 8.2% versus 0.5% in 2018.

 

Analysis of specific portfolios and asset types

 

Secured home loans

 

The UK home loan portfolio (excluding Wealth) primarily comprises first lien home loans and accounts for 92% (December 2018: 91%) of the Group's total home loans balance.

 

Home loans principal portfolios1



Barclays UK



As at

31.12.19

As at

31.12.18

Gross loans and advances (£m)



143,259

136,517

90 day arrears rate, excluding recovery book (%)



0.2

0.2

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



0.6

0.7

Recovery book proportion of outstanding balances (%)



0.5

0.6

Recovery book impairment coverage ratio (%)



5.3

2.9






Average marked to market LTV1





Balance weighted (%)



51.1

48.8

Valuation weighted (%)



37.3

35.8






New lending



Year ended 31.12.19

Year ended 31.12.18

New bookings (£m)



25,530

23,473

New home loans proportion > 90% LTV (%)



4.2

1.8

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



67.9

65.4

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



60.0

57.4

 

1

2018 metrics have been restated to align with the current methodology for the classification of delinquent balances and the inclusion of past maturity balances.

 

Home loans principal portfolios - distribution of balances by LTV1


Distribution of balances

Distribution of impairment allowance

Coverage ratio


Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

Barclays UK

%

%

%

%

%

%

%

%

%

%

%

%

As at 31.12.19













<=75%

76.0

10.7

0.7

87.4

4.2

15.4

28.5

48.1

-

0.1

2.2

-

>75% and <=90%

10.4

0.7

-

11.1

2.7

11.5

12.6

26.8

-

0.9

19.7

0.1

>90% and <=100%

1.3

0.1

-

1.4

0.8

2.5

4.9

8.2

-

1.8

54.4

0.3

>100%

0.1

-

-

0.1

0.2

4.1

12.6

16.9

0.2

8.7

107.4

9.0

As at 31.12.18













<=75%

77.9

11.9

0.8

90.6

3.3

26.7

20.9

50.9

-

0.1

1.3

-

>75% and <=90%

8.0

0.6

-

8.6

1.6

11.8

8.7

22.1

-

1.0

12.7

0.1

>90% and <=100%

0.6

0.1

-

0.7

0.3

3.0

4.4

7.7

-

1.7

44.5

0.5

>100%

-

0.1

-

0.1

-

10.0

9.3

19.3

-

5.9

88.5

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 31 December 2019.

 

The UK home loans portfolio:

 


·

Gross loans and advances increased by £6.7bn (4.9%) following increases across both Residential (3.0%) and Buy to Let (BTL) (17.6%)


·

Owner-occupied interest-only home loans comprised 23.4% (2018: 26.3%) of total balances


·

The average balance weighted LTV on owner occupied loans increased to 50.2% (2018: 47.9%) with average completion LTVs remaining higher than for the existing portfolio


·

BTL home loans comprised 13.6% (2018: 12.1%) of total balances. The average balance weighted LTV increased to 56.5% (2018: 55.4%) driven by average completion LTVs remaining higher than for the existing book

 

The value of new bookings increased across both the owner-occupied and BTL portfolios, 9.2% and 6.5% respectively. High LTV lending booked in 2019 increased driven by market conditions.

 

Head Office: Italian home loans and advances at amortised cost reduced to £6.0bn (2018: £7.9bn) and continue to run-off since new bookings ceased in 2016. The portfolio is secured on residential property with an average balance weighted mark to market LTV of 64.4% (2018: 61.8%). 90-day arrears increased to 1.8% (2018: 1.4%), a function of the balance reduction associated with the sale of £787m assets in Q3 2019, gross charge-off rates remained stable at 0.8% (2018: 0.8%).

 

Credit cards, unsecured loans and other retail lending

 

The principal portfolios listed below accounted for 87% (December 2018: 86%) of the 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 31.12.19

£m

%

%

%

%

Barclays UK






UK cards

16,457

1.7

0.8

1.6

1.6

UK personal loans

6,139

2.1

1.0

3.2

2.9

Barclays International






US cards

22,041

2.7

1.4

4.5

4.4

Barclays Partner Finance

4,134

0.9

0.3

1.7

1.7

Germany consumer lending

3,558

1.7

0.7

2.1

1.3







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

3,400

1.9

0.8

2.7

2.0

 

UK cards: Following the introduction of payment reminders both 30 and 90 day arrears rates reduced by 0.1%. The annualised gross write-off rate reduced to 1.6% (2018: 1.9%), reflecting lower levels of delinquency and contractual charge-offs through 2019, albeit with increased debt sales from the recovery book.

 

UK personal loans: 30 and 90 day arrears rates reduced by 0.2% and 0.1% respectively, reflecting a continued improvement in lending quality over the past 2 years, coupled with improvements in collections effectiveness. Write-off rates increased significantly reflecting higher charge-offs in 2018.

 

US cards: 30 and 90-day arrears rates remained stable. The annualised gross and net write-off rates increased to 4.5% (2018: 3.6%) and 4.4% (2018: 3.4%) respectively, primarily driven by an increase in charge-offs in 2018. The percentage of write-offs to charge-offs was stable year on year.

 

Barclays Partner Finance: Improvement in 30 and 90 days arrears was driven by better arrears management and improved customer selection. Annualised write-off rates remained flat.

 

Germany consumer lending: Improvement in 30 and 90 days arrears was driven by better collections performance across all products.  The annualised write-off rates improved in line with expectations. 

 

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














Year ended 31.12.19


Year ended 31.12.18


Average

High2

Low2


Average

High2

Low2


£m

£m

£m


£m

£m

£m

Credit risk

12

17

8


11

16

8

Interest rate risk

6

11

3


8

19

3

Equity risk

10

22

5


7

14

4

Basis risk

8

11

6


6

8

4

Spread risk

4

5

3


6

9

3

Foreign exchange risk

3

5

2


3

7

2

Commodity risk

1

2

                          - 


1

2

-

Inflation risk

2

3

1


3

4

2

Diversification effect2

(23)

 n/a

 n/a


(24)

n/a

n/a

Total management VaR

23

29

17


21

27

15

 

Average management VaR increased by 10% to £23m in 2019 (2018: £21m) and remained relatively stable during the period. The increase in average management VaR in 2019 was driven by a small increase in equity risk and credit risk, partially offset by a slight decrease in interest rate risk compared to 2018.

 

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 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 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 31 December 2019, the 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 31.12.19

As at 31.12.18


£bn

£bn

Eligible liquidity buffer

206

219

Net stress outflows

(128)

(129)

Surplus

78

90




Liquidity coverage ratio

160%

169%

 

The Group plans to maintain its surplus to the internal and regulatory stress requirements at an efficient level, while continuously assessing risks to market funding conditions and its liquidity position, and taking actions to manage the size of the liquidity pool as appropriate.

 

Composition of the Group liquidity pool










As at 31.12.19

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


153

150

-

-

181








Government bonds2







AAA to AA-


31

-

26

-

27

BBB+ to BBB-


5

-

4

2

4

Other LCR ineligible government bonds


-

-

-

-

1

Total government bonds


36

-

30

2

32








Other







Government guaranteed issuers, PSEs and GSEs


9

-

8

1

6

International organisations and MDBs


7

-

7

-

5

Covered bonds


6

-

5

-

3

Total other


22

-

20

1

14








Total as at 31 December 2019


211

150

50

3

227

Total as at 31 December 2018


227

176

40

1


 

1

Includes cash held at central banks and surplus cash at central banks related to payment schemes. Over 98% (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 67% (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 Group liquidity pool was £211bn as at 31 December 2019 (December 2018: £227bn). During the year, the month-end liquidity pool ranged from £211bn to £256bn (December 2018: £207bn to £243bn), and the month-end average balance was £235bn (December 2018: £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 31 December 2019, 67% (December 2018: 70%) of the liquidity pool was located in Barclays Bank PLC, 20% (December 2018: 20%) in Barclays Bank UK PLC and 6% (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 Group in calculating the LCR.

 

Deposit funding







As at 31.12.19


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

198

206

96%


96%

Barclays International

133

210

63%


65%

Head Office

8

-



-

Barclays Group

339

416

82%


83%

 

1

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

 

Composition of wholesale funding

 

Wholesale funding outstanding (excluding repurchase agreements) was £147.1bn (December 2018: £154.0bn). In 2019, the Group issued £8.6bn of MREL eligible instruments from Barclays PLC (the Parent company) in a range of 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 £40.6bn (December 2018: £46.7bn) matures in less than one year, representing 28% (December 2018: 30%) of total wholesale funding outstanding. This includes £16.3bn (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 £170bn (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)

 - 

 - 

0.8

0.3

1.1

4.2

0.9

8.2

4.5

14.2

33.1

Senior unsecured (privately placed)

 - 

 - 

 - 

 - 

 - 

0.2

 - 

0.1

0.1

0.5

0.9

Subordinated liabilities

 - 

 - 

 - 

 - 

 - 

 - 

 - 

 - 

1.0

6.7

7.7

Barclays Bank PLC (including subsidiaries)












Certificates of deposit and commercial paper

1.1

4.2

3.6

7.3

16.2

0.9

0.5

0.1

 - 

 - 

17.7

Asset backed commercial paper

1.6

4.9

0.7

 - 

7.2

 - 

 - 

 - 

 - 

 - 

7.2

Senior unsecured (public benchmark)

0.6

 - 

 - 

 - 

0.6

2.9

0.1

 - 

1.1

0.3

5.0

Senior unsecured (privately placed)3

1.1

1.5

2.4

5.9

10.9

5.7

4.8

3.9

4.0

20.9

50.2

Asset backed securities

 - 

0.4

0.6

 - 

1.0

 - 

0.2

0.6

0.9

2.1

4.8

Subordinated liabilities

 - 

0.2

0.1

0.9

1.2

5.0

3.3

0.1

 - 

0.9

10.5

Other

0.1

 - 

 - 

 - 

0.1

 - 

 - 

0.3

 - 

1.2

1.6

Barclays Bank UK PLC (including subsidiaries)












Certificates of deposit and commercial paper

 - 

0.4

0.2

0.2

0.8

 - 

 - 

 - 

 - 

 - 

0.8

Covered bonds

 - 

 - 

1.0

 - 

1.0

0.9

2.3

1.8

 - 

1.1

7.1

Asset backed securities

 - 

 - 

 - 

0.5

0.5

 - 

 - 

 - 

 - 

 - 

0.5

Total as at 31 December 2019

4.5

11.6

9.4

15.1

40.6

19.8

12.1

15.1

11.6

47.9

147.1

Of which secured

1.6

5.3

2.3

0.5

9.7

0.9

2.5

2.4

0.9

3.2

19.6

Of which unsecured

2.9

6.3

7.1

14.6

30.9

18.9

9.6

12.7

10.7

44.7

127.5













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 £42.9bn, of which £8.3bn matures within one year.

 

Capital

 

The Group's Overall Capital Requirement for CET1 is 12.1% 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 3.0% Pillar 2A requirement and a 0.6% Countercyclical Capital Buffer (CCyB).

 

The Group's CCyB is based on the buffer rate applicable for each jurisdiction in which the Group has exposures. On 28 November 2018, the Financial Policy Committee (FPC) set the CCyB rate for UK exposures at 1%. The buffer rates set by other national authorities for non-UK exposures are not currently material. Overall, this results in a 0.6% CCyB for the Group for Q419. On 16 December 2019, the FPC announced its intention to increase the CCyB rate for UK exposures from 1% to 2%. This will take effect from December 2020 and based on current UK exposures, is expected to increase the Group's CCyB to approximately 1.1%.

 

The Group's Pillar 2A requirement as per the PRA's Individual Capital Requirement is 5.4% of which at least 56.25% needs to be met with CET1 capital, equating to approximately 3.0% of RWAs. Certain elements of the Pillar 2A requirement are a fixed quantum whilst others are a proportion of RWAs, based on a point in time assessment. The Pillar 2A requirement is subject to at least annual review.

 

On 27 June 2019, CRR II came into force amending CRR. As an amending regulation, the existing provisions of CRR apply unless they are amended by CRR II.

 

Certain provisions took immediate effect and these primarily relate to MREL. Amendments within the capital risk 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. Other CRR II amendments are expected to take effect from 28 June 2021.

 

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

 31.12.19

30.09.19

31.12.18

CET1

13.8%

13.4%

13.2%

Tier 1 (T1)

17.7%

17.0%

17.0%

Total regulatory capital

21.6%

21.1%

20.7%

  




Capital resources

£bn

£bn

£bn

Total equity excluding non-controlling interests per the balance sheet

64.4

66.2

62.6

Less: other equity instruments (recognised as AT1 capital)

(10.9)

(10.9)

(9.6)

Adjustment to retained earnings for foreseeable dividends

(1.1)

(0.7)

(0.7)





Other regulatory adjustments and deductions




Additional value adjustments (PVA)

(1.7)

(1.9)

(1.7)

Goodwill and intangible assets

(8.1)

(8.1)

(8.0)

Deferred tax assets that rely on future profitability excluding temporary differences

(0.5)

(0.3)

(0.5)

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

(1.0)

(1.5)

(0.7)

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

0.3

-

(0.1)

Defined benefit pension fund assets

(1.6)

(2.0)

(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

1.1

1.1

1.3

Other regulatory adjustments

(0.1)

(0.1)

-

CET1 capital

40.8

41.9

41.1

  




AT1 capital




Capital instruments and related share premium accounts

10.9

10.9

9.6

Qualifying AT1 capital (including minority interests) issued by subsidiaries

0.7

0.8

2.4

Other regulatory adjustments and deductions

(0.1)

(0.1)

(0.1)

AT1 capital

11.4

11.5

11.9





T1 capital

52.2

53.4

53.0

  




T2 capital




Capital instruments and related share premium accounts

7.7

8.3

6.6

Qualifying T2 capital (including minority interests) issued by subsidiaries

4.0

4.7

5.3

Other regulatory adjustments and deductions

(0.3)

(0.3)

(0.3)

Total regulatory capital

63.6

66.1

64.6





Total RWAs

295.1

313.3

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 13.5%, with £39.7bn of CET1 capital and £295.0bn 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 13.8%. 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

Year

ended

ended

31.12.19

31.12.19

£bn

£bn

Opening CET1 capital

41.9

41.1




Profit for the period attributable to equity holders

0.9

3.3

Own credit relating to derivative liabilities

-

0.1

Dividends paid and foreseen

(0.6)

(2.4)

Increase in retained regulatory capital generated from earnings

0.3

1.0




Net impact of share schemes

0.2

0.3

Fair value through other comprehensive income reserve

(0.2)

0.1

Currency translation reserve

(1.3)

(0.5)

Other reserves

-

(0.4)

Decrease in other qualifying reserves

(1.3)

(0.5)




Pension remeasurements within reserves

(0.5)

(0.2)

Defined benefit pension fund asset deduction

0.4

(0.3)

Net impact of pensions

-

(0.5)




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

(0.2)

-

Adjustment under IFRS 9 transitional arrangements

-

(0.2)

Decrease in regulatory capital due to adjustments and deductions

(0.1)

(0.3)




Closing CET1 capital

40.8

40.8




 

CET1 capital decreased £0.3bn to £40.8bn (December 2018: £41.1bn).

 

£3.3bn of capital generated from profits was partially offset by £2.4bn of regulatory dividends paid and foreseen including £0.8bn of AT1 coupons paid. Other movements in the period were:

 


·

A £0.5bn decrease in the currency translation reserve mainly driven by the depreciation of period end USD against GBP


·

A £0.5bn decrease as a result of movements relating to pensions, largely due to scheduled deficit reduction contribution payments of £0.25bn in April 2019 and September 2019


·

A £0.4bn loss on the redemption of AT1 securities


·

A £0.2bn 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

 

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 31.12.19

£bn

£bn


£bn

£bn

£bn

£bn


£bn

£bn


£bn

£bn

Barclays UK

5.2

57.5


0.2

-

-

-


0.2

-


11.8

74.9

Corporate and Investment Bank

25.7

62.1


12.1

16.9

0.3

2.5


12.8

17.6


21.5

171.5

Consumer, Cards and Payments

27.2

2.7


0.1

-

-

-


-

0.1


7.6

37.7

Barclays International

52.9

64.8


12.2

16.9

0.3

2.5


12.8

17.7


29.1

209.2

Head Office

5.1

5.8


-

-

-

-


-

-


0.1

11.0

Barclays Group

63.2

128.1


12.4

16.9

0.3

2.5


13.0

17.7


41.0

295.1















As at 30.09.19








Barclays UK

4.1

60.4


0.3

-

-

-


0.2

-


11.8

76.8

Corporate and Investment Bank

27.4

69.3


12.9

17.4

0.1

4.0


15.6

16.6


21.6

184.9

Consumer, Cards and Payments

28.3

2.4


0.1

 -

 -  

 -


 -  

0.1


7.3

38.2

Barclays International

55.7

71.7


13.0

17.4

0.1

4.0


15.6

16.7


28.9

223.1

Head Office

5.3

6.3


-

-

-

-


-

-


1.8

13.4

Barclays Group

65.1

138.4


13.3

17.4

0.1

4.0


15.8

16.7


42.5

313.3









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


£bn

£bn

£bn

£bn

£bn

Opening RWAs (as at 31.12.18)

195.6

28.8

30.8

56.7

311.9

Book size

-

3.9

(1.0)

(1.5)

1.4

Acquisitions and disposals

(0.8)

-

-

-

(0.8)

Book quality

(2.9)

0.3

-

-

(2.6)

Model updates

1.5

0.5

-

-

2.0

Methodology and policy

0.8

(1.4)

0.9

(14.2)

(13.9)

Foreign exchange movements1

(2.9)

-

-

-

(2.9)

Closing RWAs (as at 31.12.19)

191.3

32.1

30.7

41.0

295.1

 

1

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

 

RWAs decreased £16.8bn to £295.1bn:

 


·

Book size increased RWAs £1.4bn primarily due to an increase in trading activity, offset by a decrease in operational risk as per the standardised approach


·

Book quality decreased RWAs £2.6bn primarily due to changes in risk profile


·

Model updates increased RWAs £2.0bn primarily due to the recalibration of modelled wholesale RWAs


·

Methodology and Policy decreased RWAs £13.9bn primarily due to removal of the operational risk floor


·

Foreign exchange movements decreased RWAs by £2.9bn primarily due to the depreciation of period end USD against GBP

 

Leverage ratio and exposures

 

The Group is subject to a leverage ratio requirement of 4.0% as at 31 December 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.

 

The Group 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. The Group 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

31.12.19

As at

30.09.19

As at

 31.12.18

£bn

£bn

£bn

Average UK leverage ratio

4.5%

4.6%

4.5%

Average T1 capital3

51.8

 53.8

 50.5

Average UK leverage exposure

1,143

 1,171

 1,110





UK leverage ratio

5.1%

4.8%

5.1%





CET1 capital

40.8

 41.9

 41.1

AT1 capital

10.7

 10.7

 9.5

T1 capital3

51.6

 52.6

 50.6





UK leverage exposure

1,008

1,100

999





UK leverage exposure




Accounting assets




Derivative financial instruments

229

286

223

Derivative cash collateral

57

69

48

Securities financing transactions (SFTs)4

111

142

130

Loans and advances and other assets4

743

793

732

Total IFRS assets

1,140

1,290

1,133





Regulatory consolidation adjustments

(1)

1

(2)





Derivatives adjustments




Derivatives netting

(207)

(263)

(202)

Adjustments to cash collateral

(48)

(61)

(42)

Net written credit protection

14

16

19

Potential future exposure (PFE) on derivatives

119

134

123

Total derivatives adjustments

(122)

(174)

(102)





SFTs adjustments

18

18

17





Regulatory deductions and other adjustments

(12)

(13)

(11)





Weighted off-balance sheet commitments

105

114

108





Qualifying central bank claims

(120)

(136)

(144)





UK leverage exposure2

1,008

1,100

999

 

1

Fully loaded average UK leverage ratio was 4.4%, with £50.7bn of T1 capital and £1,142bn of leverage exposure. Fully loaded UK leverage ratio was 5.0%, with £50.4bn of T1 capital and £1,007bn of leverage exposure. Fully loaded UK leverage ratios are 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.

4

Comparative numbers have been revised to reflect the allocation of margin lending from loans and advances and other assets to SFTs.

 

The average UK leverage ratio remained stable at 4.5% (December 2018: 4.5%). T1 capital increased £1.4bn to £51.8bn, which included a net increase in AT1 capital, partially offset by a modest increase in exposure of £33bn to £1,143bn primarily driven by SFTs and Weighted off-balance sheet commitments.

 

The UK leverage ratio also remained stable at 5.1% (December 2018: 5.1%). T1 capital increased £1.0bn to £51.6bn, which included a net increase in AT1 capital. The UK leverage exposure increased £9bn to £1,008bn primarily driven by Loans and advances and other assets.

 

The difference between the average UK leverage ratio and the UK leverage ratio was primarily driven by lower trading portfolio assets, settlement exposures and SFT exposures at quarter end.

 

The Group 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 2019, due to be published on 13 February 2020 and which will be available at home.barclays/annualreport).

 

1

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

 

MREL

 

CRR II requirements relating to own funds and eligible liabilities came into effect from 27 June 2019. Eligible liabilities have been calculated reflecting the Group's 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.

 

The Group is required to meet the higher of: (i) the MREL set by the Bank of England; and (ii) the requirements in CRR II, both of which have RWA and leverage based requirements. MREL is subject to phased implementation and will be fully implemented by 1 January 2022, at which time the Group's 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.

 

Own funds and eligible liabilities ratios1

As at

31.12.19

As at

30.09.19

As at

31.12.183

CET1 capital

13.8%

13.4%

13.2%

AT1 capital instruments and related share premium accounts2

3.6%

3.4%

3.1%

T2 capital instruments and related share premium accounts2

2.5%

2.6%

2.1%

Eligible liabilities

11.2%

11.0%

9.7%

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

31.2%

30.4%

28.1%

Qualifying AT1 capital (including minority interests) issued by subsidiaries

0.2%

0.2%

0.7%

Qualifying T2 capital (including minority interests) issued by subsidiaries

1.3%

1.5%

1.6%

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

32.8%

32.1%

30.5%





Own funds and eligible liabilities1

£bn

£bn

£bn3

CET1 capital

40.8

41.9

41.1

AT1 capital instruments and related share premium accounts2

10.7

10.7

9.6

T2 capital instruments and related share premium accounts2

7.4

8.1

6.6

Eligible liabilities

33.0

34.5

30.4

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

92.0

95.2

87.7

Qualifying AT1 capital (including minority interests) issued by subsidiaries

0.7

0.8

2.3

Qualifying T2 capital (including minority interests) issued by subsidiaries

4.0

4.7

5.1

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

96.7

100.6

95.1





Total RWAs1

295.1

313.3

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 financial statements (set out on pages 49 to 53), which have been prepared in accordance with the IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole. The condensed consolidated financial statements should be read in conjunction with the annual financial statements as included in the Annual Report for the year ended 31 December 2019; and

 

·

to the best of their knowledge, the management information (set out on pages 1 to 47) includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face. This management information should be read in conjunction with the principal risks and uncertainties included in the Annual Report for the year ended 31 December 2019.

 

Signed 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

Mohamed A. El-Erian

Dawn Fitzpatrick

Mary Francis CBE

Crawford Gillies

Brian Gilvary

Diane Schueneman

 

Condensed Consolidated Financial Statements

 

Condensed consolidated income statement



Year ended

Year ended



31.12.19

31.12.18


Notes1

£m

£m

Net interest income


9,407

9,062

Net fee and commission income


6,760

6,809

Net trading income


4,235

4,566

Net investment income


1,131

585

Other income


99

114

Total income


21,632

21,136

Credit impairment charges


(1,912)

(1,468)

Net operating income


19,720

19,668





Staff costs


(8,315)

(8,629)

Infrastructure, administration and general expenses


(5,270)

(5,407)

Litigation and conduct


(1,849)

(2,207)

Operating expenses


(15,434)

(16,243)





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


71

69

Profit before tax


4,357

3,494

Tax charge2

1

(1,003)

(911)

Profit after tax


3,354

2,583





Attributable to:




Equity holders of the parent2


2,461

1,597

Other equity instrument holders


813

752

Total equity holders of the parent


3,274

2,349

Non-controlling interests

2

80

234

Profit after tax


3,354

2,583