Barclays PLC Half-year Results

Barclays PLC

Interim Results Announcement

30 June 2022

Table of Contents
Results Announcement	Page
Notes	1
Performance Highlights	3
Group Finance Director's Review	7
Results by Business
•   Barclays UK	10
•   Barclays International	14
•   Head Office	19
Quarterly Results Summary	21
Quarterly Results by Business	22
Performance Management
•   Margins and Balances	29
Risk Management
•   Risk Management and Principal Risks	31
•   Credit Risk	33
•   Market Risk	57
•   Treasury and Capital Risk	58
Statement of Directors' Responsibilities	74
Independent Review Report to Barclays PLC	75
Condensed Consolidated Financial Statements	77
Financial Statement Notes	87
Appendix: Non-IFRS Performance Measures	115
Shareholder Information	125

 

 

 

 

 

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

 

 

 

This document contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014 (as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018, as amended).

The terms Barclays or Group refer to Barclays PLC together with its subsidiaries. Unless otherwise stated, the income statement analysis compares the six months ended 30 June 2022 to the corresponding six months of 2021 and balance sheet analysis as at 30 June 2022 with comparatives relating to 31 December 2021 and 30 June 2021. The historical financial information used for the purposes of such analysis has been restated. Please refer to Note 1 to the condensed consolidated interim financial statements contained herein for further information. 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.

The information in this announcement, which was approved by the Board of Directors on 27 July 2022, does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2021, which contained an unmodified audit report under Section 495 of the Companies Act 2006 (which did not make any statements under Section 498 of the Companies Act 2006) have been delivered to the Registrar of Companies in accordance with Section 441 of the Companies Act 2006.

These results will be furnished on Form 6-K with 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 115 to 123 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. 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 levels, assets and liabilities, impairment charges, provisions, capital, leverage and other regulatory ratios, capital distributions (including dividend pay-out ratios and expected payment strategies), projected levels of growth in banking and financial markets, projected expenditures, costs or savings, any commitments and targets (including, without limitation, environmental, social and governance (ESG) commitments and targets), business strategy, plans and objectives for future operations, group structure, IFRS impacts and other statements that are not historical or current facts. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements speak only as at the date on which they are made. Forward-looking statements may be affected by a number of factors, including, without limitation: changes in legislation, regulation and the interpretation thereof, the development of IFRS and other accounting standards, evolving practices with regard to the interpretation and application of accounting standards, emerging and developing ESG reporting standards, the outcome of current and future legal proceedings and regulatory investigations and any related impact on provisions, the policies and actions of governmental and regulatory authorities, the Group's ability along with governments and other stakeholders to measure, manage and mitigate the impacts of climate change effectively, environmental, social and geopolitical risks and incidents or similar events beyond the Group's control, 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; volatility in credit and capital markets; market related risks such as changes in interest rates and foreign exchange rates; changes in valuation of credit market exposures; changes in valuation of issued securities; changes in credit ratings of any entity within the Group or any securities issued by such entities; changes in counterparty risk; changes in consumer behaviour; the direct and indirect consequences of the Russia-Ukraine War on European and global macroeconomic conditions, political stability and financial markets; direct and indirect impacts of the coronavirus (COVID-19) pandemic; instability as a result of the UK's exit from the European Union (EU), the effects of the EU-UK Trade and Cooperation Agreement and the disruption that may subsequently result in the UK and globally; the risk of cyber-attacks, information or security breaches or technology failures on the Group's reputation, business or operations; the Group's ability to access funding; and the success of 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, capital distributions, capital, leverage or other regulatory ratios or other financial and non-financial metrics or performance measures or ability to meet commitments and targets 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 Barclays PLC's filings with the SEC (including, without limitation, Barclays PLC's Annual Report on Form 20-F, as amended, for the financial year ended 31 December 2021), which are available on the SEC's website at www.sec.gov.

Subject to Barclays' 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.

 

 

Barclays delivered profit before tax of £3.7bn and return on tangible equity (RoTE) of 10.1%, with a half year dividend of 2.25p per share and intends to initiate a further share buyback of up to £500m

C. S. Venkatakrishnan, Group Chief Executive, commented “This has been a strong first half with Group income up 17%1 to £13.2bn and a RoTE of 10.1%. The broad-based income growth that we achieved in the first quarter continued across all three operating businesses into the second quarter. Our performance in the first half shows the resilience and advantage that diversification at all levels brings, both across the bank and within our businesses. It also underlines the value of investment into our three strategic priorities in next generation consumer finance, sustainable growth across the Corporate and Investment Bank (CIB), and the transition to a low-carbon economy. Profit before tax was £3.7bn, and attributable profit was £2.5bn, after absorbing charges net of tax of £0.6bn relating to the Over-issuance of Securities. We are alert to the pressure that the rising cost of living will have on our customers and colleagues. We have a range of measures in place to help and are looking to do more. With our resilient income growth and balance sheet strength, we can provide that support while distributing excess capital, having announced a half year dividend of 2.25p per share and an intention to initiate a further share buyback of £500m.”

 

 

Key financial metrics:

	Income	Cost: income ratio	Profit before tax	Attributable profit	RoTE	EPS	CET1  ratio	TNAV per share	Total capital return
H122	£13.2bn	69%	£3.7bn	£2.5bn	10.1%	14.8p	13.6%	297p	c.5.25p equivalent
Q222	£6.7bn	75%	£1.5bn	£1.1bn	8.7%	6.4p

H122 performance²:

· Attributable profit was £2.5bn (H121: £3.8bn) and RoTE was 10.1% (H121: 16.1%) having reflected a £0.6bn net of tax impact for the Over-issuance of Securities in the US (Over-issuance of Securities³). Excluding this impact, RoTE was 12.5%

· £0.6bn impact of Over-issuance of Securities is comprised of:

· £0.4bn post tax expected net impact of the rescission offer losses, driven by £1.3bn of costs as a result of market movements and interest, substantially offset by £0.8bn of income from hedging arrangements

· £0.2bn of costs relating to an estimated monetary penalty from the SEC

· Excluding the impact of Over-issuance of Securities:

· Group income was £12.4bn, up 10% year-on-year , driven by strong client activity in Markets, recovery in both Consumer, Cards and Payments (CC&P) and Barclays UK more than offsetting the impact of a weak fee pool in Investment Banking

· Group costs were £7.7bn (H121: £7.2bn) including other litigation and conduct charges of £0.4bn (H121: £0.1bn), with operating costs (excluding litigation and conduct) up 2% year-on-year

· On a statutory basis, including the impacts of Over-issuance of Securities:

· Group income was £13.2bn, up 17% year-on-year, including the £0.8bn of income from hedging arrangements related to the Over-issuance of Securities

· Credit impairment charges were £0.3bn (H121: £0.7bn net release) with provision levels broadly retained in light of an uncertain macroeconomic backdrop

· Group costs were £9.1bn (H121: £7.3bn), including litigation and conduct charges of £1.9bn (H121: £0.2bn) , including £1.5bn estimated impact of rescission offer losses in relation to the Over-Issuance of Securities and associated estimated monetary penalty from the SEC  

· Capital: Common Equity Tier 1 (CET1) ratio of 13.6% (December 2021: 15.1% and March 2022: 13.8%) and tangible net asset value (TNAV) per share of 297p (December 2021: 291p and March 2022: 294p)

· Increased capital distributions: total capital return equivalent of c.5.25p per share, including a half year dividend of 2.25p per share. Intend to initiate a further share buyback of up to £0.5bn, which is expected to have a c.15bps CET1 ratio impact

1  Excluding the Q222 income benefit of £0.8bn from hedging arrangements related to the Over-issuance of Securities, Group income was up 10% to £12.4bn.

2  2021 financial and capital metrics have been restated to reflect the impact of the Over-issuance of Securities. See Basis of preparation on page 65 and Restatement of financial statements (Note 1) on page 87 for more information.

3  Denotes the Over-issuance of Securities under Barclays Bank PLC's US shelf registration statements on Form F-3 filed with the SEC in 2018 and 2019.

 

Outlook:

· Returns: Barclays continues to target a RoTE of greater than 10% in 2022

· Income: Barclays' diversified income streams position the Group well for the current economic and market environment and rising interest rates

· Costs: given £1.3bn of litigation and conduct charges in Q222 and the appreciation of average USD against GBP, Barclays now expects FY22 total operating expenses to be around £16.7bn¹ versus previous outlook of £15.0bn²

· Impairment: while acknowledging macroeconomic uncertainty, the impairment charge is expected to remain below pre-pandemic levels in coming quarters given reduced unsecured lending balances and existing coverage ratios

· Capital: Barclays continues to target a CET1 ratio within the range of 13-14%

· Capital returns: Barclays' capital distribution policy incorporates a progressive ordinary dividend, supplemented with buybacks as appropriate. Dividends will continue to be paid semi-annually, with the half year dividend expected to represent, under normal circumstances, around one-third of the total dividend for the year