UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
July 29, 2020
Barclays PLC
(Name of Registrant)
1 Churchill Place
London E14 5HP
England
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No x
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b):
This Report on Form 6-K is filed by Barclays PLC.
This Report comprises:
Information given to The London Stock Exchange and furnished pursuant to
General Instruction B to the General Instructions to Form 6-K.
EXHIBIT INDEX
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BARCLAYS PLC | |
(Registrant) |
Date: July 29, 2020
By: /s/ Garth Wright -------------------------------- | |
Garth Wright | |
Assistant Secretary |
Barclays PLC
Interim Results Announcement
30 June 2020
Table of Contents
Results Announcement | Page | |
Notes | 1 | |
Performance Highlights | 2 | |
Group Chief Executive Officer’s Review | 4 | |
Group Finance Director’s Review | 5 | |
Results by Business | ||
● Barclays UK | 7 | |
● Barclays International | 10 | |
● Head Office | 14 | |
Quarterly Results Summary | 15 | |
Quarterly Results by Business | 16 | |
Performance Management | ||
● Margins and Balances | 22 | |
Risk Management | ||
● Risk Management and Principal Risks | 23 | |
● Credit Risk | 25 | |
● Market Risk | 42 | |
● Treasury and Capital Risk | 43 | |
Statement of Directors’ Responsibilities | 55 | |
Independent Review Report to Barclays PLC | 56 | |
Condensed Consolidated Financial Statements | 57 | |
Financial Statement Notes | 63 | |
Appendix: Non-IFRS Performance Measures | 88 | |
Shareholder Information | 98 |
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 six months ended 30 June 2020 to the corresponding six months of 2019 and balance sheet analysis as at 30 June 2020 with comparatives relating to 31 December 2019 and 30 June 2019. 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 28 July 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 contained an unmodified audit report under Section 495 of the Companies Act 2006 (which did not make any statements under Section 498 of the Companies Act 2006) have been delivered to the Registrar of Companies in accordance with Section 441 of the Companies Act 2006.
These results will be furnished as a Form 6-K to the US Securities and Exchange Commission (SEC) as soon as practicable following their publication. Once furnished with the SEC, a copy of the Form 6-K will be available from the SEC’s website at www.sec.gov.
Barclays is a frequent issuer in the debt capital markets and regularly meets with investors via formal road-shows and other ad hoc meetings. Consistent with its usual practice, Barclays expects that from time to time over the coming quarter it will meet with investors globally to discuss these results and other matters relating to the 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 88 to 97 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; direct and indirect impacts of the coronavirus (COVID-19) pandemic; 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 and our 2020 Interim Results Announcement for the six months ended 30 June 2020 filed on Form 6-K), 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
Open for business during the COVID-19 pandemic, helping support the economy
COVID-19 support Supporting customers, business, the community, and our colleagues | ● c.600k payment holidays1 provided to customers, including c.121k in UK mortgages, c.157k in UK credit cards, c.106k in UK personal loans and point of sale finance, and c.216k in US credit cards | |
● Provided c.£22bn of COVID-19 support for UK businesses, including enabling c.£7.7bn of government backed Bounce Back Loans1, lending c.£2.5bn under the CBILS programmes1,2 and facilitating c.£11.7bn of commercial paper issuance1 | ||
● Helped businesses and institutions to access the global capital markets, including raising c.£620bn of new issuance in the second quarter | ||
● £45m of the £100m Community Aid Package distributed to charities and 817 branches remained open throughout the COVID-19 pandemic, over three-quarters of the branch network | ||
● 70k of 88k colleagues working from home |
Diversified business model delivered a resilient operating performance in H120
Despite the impacts of the COVID-19 pandemic, Barclays delivered a H120 Group profit before tax of £1.3bn (H119: £3.0bn), resulting in a return on tangible equity (RoTE) of 2.9% (H119: 9.1%) and earnings per share (EPS) of 4.0p (H119: 12.1p). Pre-provision profits (profit before tax excluding credit impairment charges) increased 27% to £5.0bn, while credit impairment charges increased to £3.7bn (H119: £0.9bn)
Income Strong CIB income offsetting challenges in Barclays UK and CC&P | Group income of £11.6bn up 8% versus prior year | |
● Corporate and Investment Bank (CIB) income of £6.9bn up 31% versus prior year driven by a standout performance in Markets | ||
● Consumer, Cards and Payments (CC&P) income of £1.7bn down 21% versus prior year primarily due to lower balances and consumer spending volumes | ||
● Barclays UK income of £3.2bn down 11% versus prior year reflecting lower interest rates and UK cards balances, COVID-19 customer support actions and the removal of certain fees | ||
Costs Improved cost: income ratio | Group total operating expenses of £6.6bn down 4% versus prior year | |
● Cost efficiencies and cost discipline contributed to positive cost: income jaws of 12% resulting in an improved cost: income ratio of 57% (H119: 64%) | ||
Credit impairment charges Increased impairment provisioning driving higher coverage ratios across portfolios | Credit impairment charges increased to £3.7bn (H119: £0.9bn), including £1.6bn in Q220 | |
● The charge reflects £0.6bn in respect of single name wholesale loan charges in the period and £2.4bn impact from revised IFRS 9 scenarios | ||
● Impairment coverage ratio for the unsecured consumer lending portfolio increased to 12.0% (FY19: 8.1%). Coverage for exposures to selected industry sectors regarded as particularly vulnerable to the COVID-19 pandemic increased to 4.0% (FY19: 2.3%) | ||
Capital, liquidity and TNAV Strong capital and liquidity position | Common equity tier 1 (CET1) ratio of 14.2% (December 2019: 13.8%) | |
● The increase over the first half of the year reflects profits, regulatory measures and cancellation of the full year 2019 dividend payment, partially offset by higher Risk Weighted Assets (RWAs) | ||
● Headroom of 3.0% above revised Maximum Distributable Amount (MDA) hurdle, which has reduced to 11.2%3 | ||
● Tangible net asset value (TNAV) per share increased to 284p (December 2019: 262p) |
Group outlook
Group outlook Given the uncertain economic outlook and low interest rate environment, the second half of the year is expected to continue to be challenging | ● Income in Barclays UK and CC&P is expected to gradually recover from Q220 levels, but certain headwinds, including from the low interest rate environment, are likely to persist into 2021 | |
● After a strong performance in H120 the CIB franchise is well positioned for the future | ||
● Impairment in H220 is expected to remain above the level experienced in recent years, but to be below the H120 impairment charge assuming no change in macroeconomic forecasts | ||
● Continued focus on cost discipline, but short-term headwinds remain from spend on COVID-19 initiatives | ||
● In H220 there may be headwinds to the CET1 ratio from procyclical effects on RWAs, and reduced benefit from transitional relief on IFRS 9 impairment | ||
● The Board will decide on future dividends and its capital returns policy at FY20 |
1 | Payment holiday data as at 22 July 2020. Business lending and commercial paper issuance data as at 27 July 2020. |
2 | The Coronavirus Business Interruption Loan Scheme (CBILS) and the Coronavirus Large Business Interruption Loan Scheme programmes (together the CBILS programmes). |
3 | Barclays’ MDA hurdle reduced to 11.2% in July 2020, and will fluctuate through the cycle given recent regulatory changes. |
Barclays Group results | |||
for the half year ended | 30.06.20 | 30.06.19 | |
£m | £m | % Change | |
Total income | 11,621 | 10,790 | 8 |
Credit impairment charges | (3,738) | (928) | |
Net operating income | 7,883 | 9,862 | (20) |
Operating expenses | (6,563) | (6,758) | 3 |
Litigation and conduct | (30) | (114) | 74 |
Total operating expenses | (6,593) | (6,872) | 4 |
Other net (expenses)/income | (18) | 24 | |
Profit before tax | 1,272 | 3,014 | (58) |
Tax charge | (113) | (545) | 79 |
Profit after tax | 1,159 | 2,469 | (53) |
Non-controlling interests | (37) | (34) | (9) |
Other equity instrument holders | (427) | (363) | (18) |
Attributable profit | 695 | 2,072 | (66) |
Performance measures | |||
Return on average tangible shareholders' equity | 2.9% | 9.1% | |
Average tangible shareholders' equity (£bn) | 48.6 | 45.7 | |
Cost: income ratio | 57% | 64% | |
Loan loss rate (bps) | 207 | 54 | |
Basic earnings per share | 4.0p | 12.1p | |
Dividend per share | - | 3.0p | |
Performance measures excluding litigation and conduct1 | |||
Profit before tax | 1,302 | 3,128 | (58) |
Attributable profit | 710 | 2,158 | (67) |
Return on average tangible shareholders' equity | 2.9% | 9.4% | |
Cost: income ratio | 56% | 63% | |
Basic earnings per share | 4.1p | 12.6p | |
As at 30.06.20 | As at 31.12.19 | As at 30.06.19 | |
Balance sheet and capital management2 | £bn | £bn | £bn |
Tangible net asset value per share | 284p | 262p | 275p |
Common equity tier 1 ratio | 14.2% | 13.8% | 13.4% |
Common equity tier 1 capital | 45.4 | 40.8 | 42.9 |
Risk weighted assets | 319.0 | 295.1 | 319.1 |
Average UK leverage ratio | 4.7% | 4.5% | 4.7% |
UK leverage ratio | 5.2% | 5.1% | 5.1% |
Funding and liquidity | |||
Group liquidity pool (£bn) | 298 | 211 | 238 |
Liquidity coverage ratio | 186% | 160% | 156% |
Loan: deposit ratio | 76% | 82% | 82% |
1 | Refer to pages 88 to 97 for further information and calculations of performance measures excluding litigation and conduct. |
2 | Refer to pages 48 to 53 for further information on how capital, RWAs and leverage are calculated. |
Group Chief Executive Officer’s Review
“This has been a period focussed on supporting our customers, clients and the UK economy through the COVID-19 pandemic – providing the people and businesses that we serve with a bridge to recovery in every way we can.
Since late March, we have helped to deliver around £22bn of vitally important COVID-19 government support measures to UK businesses to help fund them, including 250k government backed Bounce Back Loans totalling c.£7.7bn, c.£2.5bn under the CBILS programmes and c.£11.7bn of commercial paper issuance.1
To help consumers with their short-term household finances more than 600k payment holidays1 have been provided along with other fee waivers and support measures. We have also already distributed £45m of our £100m Community Aid Package to COVID-19 related charities in the UK, US and India to help rebuild communities.
Our CIB is taking a leading role helping clients to access capital markets to raise equity and debt, underwriting c.£620bn of new issuance in the quarter. In the equity capital markets, where we are a UK leader and broker to 40 of the FTSE 100 and FTSE 250 companies, we supported UK companies to raise £4.0bn as they navigate this crisis.
I remain very proud of the dedication and diligence of our 88k colleagues who have been working extremely hard to help our clients and customers through these tough times, playing our full part in the recovery efforts and delivering support at scale.
The reason that we have been able to support the economy as extensively as we have and remain financially resilient is because of our diversified universal banking model. Our strength in diversification has delivered pre-provision profits of £5.0bn and, even after impairment, we remain profitable. Income increased 8% to £11.6bn for the half, with total costs down 4% to £6.6bn resulting in positive jaws of 12%, and an improved cost to income ratio of 57% versus prior year.
In our CIB, income increased 31% to £6.9bn driven by strong performance in our Markets business, particularly in FICC (up 83%) and Equities (up 26%), and an 8% increase in Banking fees income through continued momentum in both debt and equity capital markets.
Our consumer business income decreased by 11% in Barclays UK and 21% in CC&P as a result of the lower interest rate environment, fewer interest earning balances, reduced payments activity and action to provide support for customers.
Credit impairment charges increased to £3.7bn in the first half due to the forecast impact of COVID-19. However, our improved pre-impairment performance ensured that we still delivered £1.3bn profit before tax for the first half of 2020, post impairment.
In the quarter Group total income decreased 4% year-on-year to £5.3bn, with total costs down 6% to £3.3bn. Following our £1.6bn quarterly credit impairment charge, profit before tax was £359m, and Group RoTE was 0.7%, with EPS of 0.5p.
Our CET1 ratio stands at 14.2% which underscores the strength of our balance sheet. Although we will remain well capitalised and ahead of our minimum requirements, we may experience stronger capital headwinds in the second half of the year. The Board will decide on future dividends and capital returns at the year-end 2020.
While the remainder of 2020 will be challenging, our diversified model means we can remain financially resilient and continue to support our customers and clients.”
James E Staley, Group Chief Executive Officer
1 | Payment holiday data as at 22 July 2020. Business lending and commercial paper issuance data as at 27 July 2020. |
Group Finance Director’s Review
Group performance
● | Statutory RoTE was 2.9% (H119: 9.1%) and statutory EPS was 4.0p (H119: 12.1p) |
● | Profit before tax was £1,272m (H119: £3,014m). Excluding litigation and conduct, profit before tax was £1,302m (H119: £3,128m), as positive operating leverage from an 8% increase in income and 3% reduction in operating expenses was offset by materially higher credit impairment charges |
● | Pre-provision profits increased 27% to £5,010m, benefitting from the Group’s diversified business model, as strong performance in CIB more than offset income headwinds in Barclays UK and CC&P |
● | Total income increased 8% to £11,621m. Barclays UK income decreased 11% due to ongoing margin pressure, including COVID-19 customer support actions, base rate reductions, lower UK cards interest earning lending (IEL) and overdraft balances, as well as lower income due to the removal of certain fees in overdrafts and UK cards. Barclays International income increased 16%, with CIB income up 31% and CC&P income down 21%. Within CIB, Markets income increased due to a strong performance across FICC and Equities. Banking fees income increased reflecting a strong performance in debt and equity capital markets, while there was a reduction in Corporate income driven by fair value losses, margin compression and carry costs on hedges. CC&P income decreased primarily as a result of lower balances on co-branded cards and a c.£100m valuation loss on Barclays’ preference shares in Visa Inc. |
● | Credit impairment charges increased to £3,738m (H119: £928m). This increase primarily reflects £591m in respect of single name wholesale loan charges and £2.4bn impact from revised IFRS 9 scenarios (the “COVID-19 scenarios”) reflecting forecast deterioration in macroeconomic variables (including a prolonged period of heightened UK and US unemployment), partially offset by the estimated impact of central bank, government and other support measures |
● | Operating expenses decreased 3% to £6,563m reflecting cost efficiencies and continued cost discipline in the current environment. The Group delivered positive cost: income jaws of 11% which resulted in the Group cost: income ratio, excluding litigation and conduct, reducing to 56% (H119: 63%). The Group accrued compensation costs reflective of business performance, resulting in a compensation: income ratio of 32.2% (H119: 34.4%) |
● | The effective tax rate was 8.9% (H119: 18.1%). This reflects the tax benefit recognised for a re-measurement of UK deferred tax assets as a result of the UK corporation tax rate being maintained at 19%. The Group’s effective tax rate for the full year is expected to be around 20%, excluding litigation and conduct |
● | Attributable profit was £695m (H119: £2,072m). Excluding litigation and conduct, attributable profit was £710m (H119: £2,158m), generating a RoTE of 2.9% (H119: 9.4%) and EPS of 4.1p (H119: 12.6p) |
● | Total assets increased to £1,385bn (December 2019: £1,140bn), primarily due to a £78bn increase in derivative assets (with a corresponding increase in derivative liabilities), £52bn increase in cash collateral and settlement balances, and £26bn increase in financial assets at fair value through the income statement. The low interest rate environment has resulted in significant decreases in forward interest rate curves which coupled with increased client activity and the appreciation of period end USD against GBP has resulted in rising asset values. Loans and advances have also increased by £16bn, which reflects the £7.1bn of lending under the government backed Bounce Back Loan Scheme (BBLS) and the CBILS which Barclays UK has provided to support businesses through the COVID-19 pandemic |
● | TNAV per share increased to 284p (December 2019: 262p) reflecting 4.0p of statutory EPS and positive reserve movements, including retirement benefit re-measurements and currency translation reserves |
Group capital and leverage
● | The CET1 ratio increased to 14.2% (December 2019: 13.8%) | |
– | CET1 capital increased by £4.6bn to £45.4bn reflecting resilient capital generation through £4.9bn of profits after tax, excluding credit impairment charges and a £1.0bn increase due to the cancellation of the full year 2019 dividend | |
– | Impairment charges of £3.7bn before tax were partially offset by a £1.3bn increase in IFRS 9 transitional relief after tax, which was driven by £1.2bn in Q220 due to both the new impairment charges and the implementation of new regulatory measures which allow for 100% relief on increases in stage 1 and stage 2 impairment throughout 2020 and 2021 | |
– | RWAs increased by £23.9bn to £319.0bn primarily due to higher market volatility and client activity within CIB as well as a reduction in credit quality, partially offset by lower CC&P balances | |
● | The average UK leverage ratio increased to 4.7% (December 2019: 4.5%) primarily driven by the increase in CET1 capital. The average leverage exposure increased to £1,149bn (December 2019: £1,143bn) | |
● | The UK leverage ratio increased to 5.2% (December 2019: 5.1%) primarily driven by the increase in CET1 capital, partially offset by an increase in leverage exposure. The leverage exposure increased by £63bn to £1,071bn, primarily driven by an increase in IFRS total assets, partially offset by the Prudential Regulation Authority’s (PRA) early adoption of CRR II settlement netting |
Group funding and liquidity
● | The liquidity pool was £298bn (December 2019: £211bn) and the liquidity coverage ratio (LCR) remained significantly above the 100% regulatory requirement at 186% (December 2019: 160%), equivalent to a surplus of £135bn (December 2019: £78bn). The increase in the liquidity pool, LCR and surplus is driven by a 12% growth in customer deposits and actions to maintain a prudent funding and liquidity position in the current environment |
● | Wholesale funding outstanding, excluding repurchase agreements, was £181.9bn (December 2019: £147.1bn). The Group issued £4.8bn equivalent of minimum requirement for own funds and eligible liabilities (MREL) instruments from Barclays PLC (the Parent company) during the year. The Group is well advanced in its MREL issuance plans, with a Barclays PLC MREL ratio of 32.4% as at 30 June 2020 (December 2019: 31.2%) relative to an estimated requirement (including requisite buffers) of c.29.7% by 1 January 2022 |
Other matters
● | As at 30 June 2020, the Group held a provision of £774m relating to Payment Protection Insurance (PPI). Since the provision increase in 2019, 70% of the items outstanding as at 30 September 2019 have been resolved (including invalid items) and observations from these resolved complaints continue to support the provision level |
Dividends and capital returns
● | In response to a request from the PRA, and to preserve additional capital for use in serving Barclays customers and clients through the extraordinary challenges presented by the COVID-19 pandemic, the Board agreed to cancel the 6.0p per ordinary share full year 2019 dividend. The Board also decided that for 2020 Barclays would suspend its current capital returns policy and accordingly will not undertake any interim ordinary share dividend payments, regulatory accruals of ordinary share dividends, or share buybacks. The Board will decide on future dividends and its capital returns policy at year-end 2020 |
Outlook and guidance
● | Given the uncertain economic outlook and low interest rate environment, the second half of the year is expected to continue to be challenging | |
– | Income in Barclays UK and CC&P is expected to gradually recover from Q220 levels, but certain headwinds including from the low interest rate environment, are likely to persist into 2021 | |
– | The CIB performance in the first half benefitted from increased issuance activity and trading volumes, with the franchise well positioned for the future | |
– | Impairment in H220 is expected to remain above the level experienced in recent years, but to be below the H120 credit impairment charge assuming no change in macroeconomic forecasts | |
● | Continued focus on cost discipline, but short-term headwinds remain from spend on COVID-19 initiatives | |
● | In H220 there may be headwinds to the Group’s CET1 ratio from procyclical effects on RWAs, and reduced benefit from transitional relief on IFRS 9 impairment. However, the Group’s CET1 ratio will continue to be managed to maintain an appropriate headroom above the MDA hurdle | |
● | The Group continues to target a RoTE1 of >10% and cost: income ratio of <60% over time, but targets remain subject to change depending on the evolution of the COVID-19 pandemic |
Tushar Morzaria, Group Finance Director
1 | Excluding litigation and conduct. |
Results by Business
Barclays UK | Half year ended | Half year ended | |
30.06.20 | 30.06.19 | ||
Income statement information | £m | £m | % Change |
Net interest income | 2,637 | 2,907 | (9) |
Net fee, commission and other income | 534 | 641 | (17) |
Total income | 3,171 | 3,548 | (11) |
Credit impairment charges | (1,064) | (421) | |
Net operating income | 2,107 | 3,127 | (33) |
Operating expenses | (2,041) | (2,021) | (1) |
Litigation and conduct | (11) | (44) | 75 |
Total operating expenses | (2,052) | (2,065) | 1 |
Other net income | 13 | - | |
Profit before tax | 68 | 1,062 | (94) |
Attributable profit | 52 | 750 | (93) |
As at 30.06.20 | As at 31.12.19 | As at 30.06.19 | |
Balance sheet information | £bn | £bn | £bn |
Loans and advances to customers at amortised cost | 202.0 | 193.7 | 189.1 |
Total assets | 287.6 | 257.8 | 259.0 |
Customer deposits at amortised cost | 225.7 | 205.5 | 200.9 |
Loan: deposit ratio | 92% | 96% | 97% |
Risk weighted assets | 77.9 | 74.9 | 76.2 |
Period end allocated tangible equity | 10.3 | 10.3 | 10.3 |
Half year ended | Half year ended | ||
Key facts | 30.06.20 | 30.06.19 | |
Average loan to value of mortgage portfolio1 | 52% | 50% | |
Average loan to value of new mortgage lending1 | 68% | 67% | |
Number of branches | 904 | 972 | |
Mobile banking active customers | 8.7m | 7.9m | |
30 day arrears rate - Barclaycard Consumer UK | 2.0% | 1.8% | |
Performance measures | |||
Return on average allocated tangible equity | 1.0% | 14.5% | |
Average allocated tangible equity (£bn) | 10.2 | 10.3 | |
Cost: income ratio | 65% | 58% | |
Loan loss rate (bps) | 101 | 43 | |
Net interest margin | 2.69% | 3.11% | |
Performance measures excluding litigation and conduct2 | £m | £m | % Change |
Profit before tax | 79 | 1,106 | (93) |
Attributable profit | 60 | 782 | (92) |
Return on average allocated tangible equity | 1.2% | 15.1% | |
Cost: income ratio | 64% | 57% |
1 | 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. |
2 | Refer to pages 88 to 97 for further information and calculations of performance measures excluding litigation and conduct. |
Analysis of Barclays UK | Half year ended | Half year ended | |
30.06.20 | 30.06.19 | ||
Analysis of total income | £m | £m | % Change |
Personal Banking | 1,794 | 1,910 | (6) |
Barclaycard Consumer UK | 803 | 987 | (19) |
Business Banking | 574 | 651 | (12) |
Total income | 3,171 | 3,548 | (11) |
Analysis of credit impairment charges | |||
Personal Banking | (264) | (88) | |
Barclaycard Consumer UK | (697) | (315) | |
Business Banking | (103) | (18) | |
Total credit impairment charges | (1,064) | (421) | |
As at 30.06.20 | As at 31.12.19 | As at 30.06.19 | |
Analysis of loans and advances to customers at amortised cost | £bn | £bn | £bn |
Personal Banking | 154.9 | 151.9 | 147.3 |
Barclaycard Consumer UK | 11.5 | 14.7 | 15.1 |
Business Banking | 35.6 | 27.1 | 26.7 |
Total loans and advances to customers at amortised cost | 202.0 | 193.7 | 189.1 |
Analysis of customer deposits at amortised cost | |||
Personal Banking | 169.6 | 159.2 | 156.3 |
Barclaycard Consumer UK | 0.1 | - | - |
Business Banking | 56.0 | 46.3 | 44.6 |
Total customer deposits at amortised cost | 225.7 | 205.5 | 200.9 |
Barclays UK continued to support customers during H120, increasing lending by £8.3bn, predominantly through £7.1bn of BBLS and CBILS. Customer deposits grew by £20.2bn, reflecting the impact from payment holidays, lower customer spending levels and the deposit of BBLS and CBILS loan proceeds, demonstrating franchise strength. Digital investment continues to transform customer interactions, providing continuity of service and resilience through the lockdown. During H120 Barclays UK provided c.350k payment holidays to customers across material portfolios. These comprised £0.7bn UK cards balances (5% of the portfolio), £0.6bn UK personal loan balances (11% of the portfolio), and £14.9bn mortgage balances (10% of the portfolio).
Income statement – H120 compared to H119
● | Profit before tax, excluding litigation and conduct, was £79m (H119: £1,106m). RoTE was 1.2% (H119: 15.1%) reflecting a challenging operating environment | |
● | Total income decreased 11% to £3,171m. Net interest income reduced 9% to £2,637m (resulting in a lower net interest margin (NIM) of 2.69% (H119: 3.11%)) reflecting COVID-19 customer support actions, the interval between Q120 base rate reductions and deposit re-pricing, as well as ongoing lower UK cards IEL and overdraft balances. Net fee, commission and other income decreased 17% to £534m, due to the removal of certain fees in overdrafts and UK cards, and planned lower debt sales | |
– | Personal Banking income decreased 6% to £1,794m, reflecting deposit margin compression, COVID-19 customer support actions, and lower overdraft balances and fees | |
– | Barclaycard Consumer UK income decreased 19% to £803m as reduced borrowing and spend levels by customers resulted in a lower level of IEL balances, as well as planned lower debt sales | |
– | Business Banking income decreased 12% to £574m due to deposit margin compression, lower transactional fee volumes as a result of COVID-19 and related customer support actions, partially offset by lending and deposit balance growth | |
● | Credit impairment charges increased to £1,064m (H119: £421m) reflecting forecast deterioration in macroeconomic variables in the COVID-19 scenarios, partially offset by the estimated impact of central bank, government and other support measures | |
● | Operating expenses increased 1% to £2,041m as efficiency savings were more than offset by COVID-19 pandemic related costs |
Balance sheet – 30 June 2020 compared to 31 December 2019
● | Loans and advances to customers at amortised cost increased 4% to £202.0bn predominantly through £7.1bn of BBLS and CBILS lending, £1.9bn of mortgage growth and the £2.2bn transfer of the Barclays Partner Finance portfolio from Barclays International1 with effect from 1 April 2020, partially offset by lower UK cards balances |
● | Customer deposits at amortised cost increased 10% to £225.7bn due to lower spending levels, the impact of payment holidays, as well as the deposit of BBLS and CBILS loan proceeds |
● | RWAs increased to £77.9bn (December 2019: £74.9bn) principally driven by the transfer of the Barclays Partner Finance portfolio1 and growth in mortgages |
1 | Refer to Segmental reporting note page 64 for further information. The 2019 comparative figures have not been restated. |
Barclays International | Half year ended | Half year ended | |
30.06.20 | 30.06.19 | ||
Income statement information | £m | £m | % Change |
Net interest income | 1,845 | 1,917 | (4) |
Net trading income | 4,020 | 2,160 | 86 |
Net fee, commission and other income | 2,789 | 3,396 | (18) |
Total income | 8,654 | 7,473 | 16 |
Credit impairment charges | (2,619) | (492) | |
Net operating income | 6,035 | 6,981 | (14) |
Operating expenses | (4,405) | (4,641) | 5 |
Litigation and conduct | (11) | (30) | 63 |
Total operating expenses | (4,416) | (4,671) | 5 |
Other net income | 10 | 31 | (68) |
Profit before tax | 1,629 | 2,341 | (30) |
Attributable profit | 997 | 1,620 | (38) |
As at 30.06.20 | As at 31.12.19 | As at 30.06.19 | |
Balance sheet information | £bn | £bn | £bn |
Loans and advances at amortised cost | 138.1 | 132.8 | 134.8 |
Trading portfolio assets | 109.5 | 113.3 | 120.0 |
Derivative financial instrument assets | 306.8 | 228.9 | 243.8 |
Financial assets at fair value through the income statement | 154.3 | 128.4 | 154.7 |
Cash collateral and settlement balances | 130.8 | 79.4 | 101.3 |
Other assets | 236.3 | 178.6 | 196.8 |
Total assets | 1,075.8 | 861.4 | 951.4 |
Deposits at amortised cost | 241.2 | 210.0 | 212.0 |
Derivative financial instrument liabilities | 307.6 | 228.9 | 243.0 |
Loan: deposit ratio | 57% | 63% | 64% |
Risk weighted assets | 231.2 | 209.2 | 214.8 |
Period end allocated tangible equity | 31.6 | 29.6 | 30.2 |
Half year ended | Half year ended | ||
Performance measures | 30.06.20 | 30.06.19 | |
Return on average allocated tangible equity | 6.2% | 10.5% | |
Average allocated tangible equity (£bn) | 32.4 | 30.8 | |
Cost: income ratio | 51% | 63% | |
Loan loss rate (bps) | 368 | 72 | |
Net interest margin | 3.67% | 3.95% | |
Performance measures excluding litigation and conduct1 | £m | £m | % Change |
Profit before tax | 1,640 | 2,371 | (31) |
Attributable profit | 1,005 | 1,644 | (39) |
Return on average allocated tangible equity | 6.2% | 10.7% | |
Cost: income ratio | 51% | 62% |
1 | Refer to pages 88 to 97 for further information and calculations of performance measures excluding litigation and conduct. |
Analysis of Barclays International | |||
Corporate and Investment Bank | Half year ended | Half year ended | |
30.06.20 | 30.06.19 | ||
Income statement information | £m | £m | % Change |
FICC | 3,326 | 1,822 | 83 |
Equities | 1,238 | 984 | 26 |
Markets | 4,564 | 2,806 | 63 |
Advisory | 239 | 353 | (32) |
Equity capital markets | 247 | 187 | 32 |
Debt capital markets | 881 | 727 | 21 |
Banking fees | 1,367 | 1,267 | 8 |
Corporate lending | 172 | 368 | (53) |
Transaction banking | 830 | 859 | (3) |
Corporate | 1,002 | 1,227 | (18) |
Total income | 6,933 | 5,300 | 31 |
Credit impairment charges | (1,320) | (96) | |
Net operating income | 5,613 | 5,204 | 8 |
Operating expenses | (3,370) | (3,479) | 3 |
Litigation and conduct | (3) | (26) | 88 |
Total operating expenses | (3,373) | (3,505) | 4 |
Other net income | 3 | 15 | (80) |
Profit before tax | 2,243 | 1,714 | 31 |
Attributable profit | 1,514 | 1,178 | 29 |
As at 30.06.20 | As at 31.12.19 | As at 30.06.19 | |
Balance sheet information | £bn | £bn | £bn |
Loans and advances at amortised cost | 104.9 | 92.0 | 92.1 |
Trading portfolio assets | 109.3 | 113.3 | 119.9 |
Derivative financial instrument assets | 306.7 | 228.8 | 243.7 |
Financial assets at fair value through the income statement | 153.7 | 127.7 | 154.1 |
Cash collateral and settlement balances | 129.7 | 78.5 | 100.4 |
Other assets | 205.5 | 155.3 | 168.1 |
Total assets | 1,009.8 | 795.6 | 878.3 |
Deposits at amortised cost | 173.9 | 146.2 | 145.4 |
Derivative financial instrument liabilities | 307.6 | 228.9 | 242.9 |
Risk weighted assets | 198.3 | 171.5 | 175.9 |
Half year ended | Half year ended | ||
Performance measures | 30.06.20 | 30.06.19 | |
Return on average allocated tangible equity | 11.0% | 9.3% | |
Average allocated tangible equity (£bn) | 27.7 | 25.5 | |
Cost: income ratio | 49% | 66% | |
Performance measures excluding litigation and conduct1 | £m | £m | % Change |
Profit before tax | 2,246 | 1,740 | 29 |
Attributable profit | 1,516 | 1,199 | 26 |
Return on average allocated tangible equity | 11.0% | 9.4% | |
Cost: income ratio | 49% | 66% |
1 | Refer to pages 88 to 97 for further information and calculations of performance measures excluding litigation and conduct. |
Analysis of Barclays International | |||
Consumer, Cards and Payments | Half year ended | Half year ended | |
30.06.20 | 30.06.19 | ||
Income statement information | £m | £m | % Change |
Net interest income | 1,176 | 1,385 | (15) |
Net fee, commission, trading and other income | 545 | 788 | (31) |
Total income | 1,721 | 2,173 | (21) |
Credit impairment charges | (1,299) | (396) | |
Net operating income | 422 | 1,777 | (76) |
Operating expenses | (1,035) | (1,162) | 11 |
Litigation and conduct | (8) | (4) | |
Total operating expenses | (1,043) | (1,166) | 11 |
Other net income | 7 | 16 | (56) |
(Loss)/profit before tax | (614) | 627 | |
Attributable (loss)/profit | (517) | 442 | |
As at 30.06.20 | As at 31.12.19 | As at 30.06.19 | |
Balance sheet information | £bn | £bn | £bn |
Loans and advances at amortised cost | 33.2 | 40.8 | 42.7 |
Total assets | 66.0 | 65.8 | 73.1 |
Deposits at amortised cost | 67.3 | 63.8 | 66.6 |
Risk weighted assets | 32.9 | 37.7 | 38.9 |
Half year ended | Half year ended | ||
Key facts | 30.06.20 | 30.06.19 | |
30 day arrears rate – Barclaycard US | 2.4% | 2.4% | |
US cards customer FICO score distribution | |||
<660 | 14% | 14% | |
>660 | 86% | 86% | |
Total number of Barclaycard payments clients | c.368,000 | 383,382 | |
Value of payments processed (£bn)1 | 156 | 174 | |
Performance measures | |||
Return on average allocated tangible equity | (21.9%) | 16.6% | |
Average allocated tangible equity (£bn) | 4.7 | 5.3 | |
Cost: income ratio | 61% | 54% | |
Loan loss rate (bps) | 714 | 176 | |
Performance measures excluding litigation and conduct2 | £m | £m | % Change |
(Loss)/profit before tax | (606) | 631 | |
Attributable (loss)/profit | (511) | 445 | |
Return on average allocated tangible equity | (21.7%) | 16.7% | |
Cost: income ratio | 60% | 53% |
1 | Includes £124bn (H119: £135bn) of merchant acquiring payments. |
2 | Refer to pages 88 to 97 for further information and calculations of performance measures excluding litigation and conduct. |
Barclays International continued to support its customers and clients through the COVID-19 pandemic by providing or facilitating lending, through the range of support programmes which have been introduced, as well as enabling the raising of debt and equity financing in the capital markets. Support actions, including over 200k payment holidays, have also been introduced to help customers and clients through the difficulties they may be experiencing. Despite the challenging operating environment, Barclays International delivered a RoTE of 6.2%, excluding litigation and conduct, reflecting the benefits of a diversified business model.
Income statement – H120 compared to H119
● | Profit before tax, excluding litigation and conduct, decreased 31% to £1,640m with a RoTE of 6.2% (H119: 10.7%), reflecting a RoTE of 11.0% (H119: 9.4%) in CIB and (21.7)% (H119: 16.7%) in CC&P | ||
● | Total income increased to £8,654m (H119: £7,473m) | ||
– | CIB income increased 31% to £6,933m | ||
– | Markets income of £4,564m (H119: £2,806m) was the best ever first half of the year on a comparable basis1. FICC income increased 83% to £3,326m driven by strong performances in macro and credit, reflecting increased client activity and spread widening. Equities income increased 26% to £1,238m driven by cash and derivatives due to higher levels of client activity and volatility. This Markets performance reflected an increase in market share in Q1202 | ||
– | Banking fees income increased 8% to £1,367m due to a strong performance in debt and equity capital markets, representing the best ever first half of the year on a comparable basis for these businesses1, partially offset by lower fee income in advisory which was impacted by a reduced fee pool3 | ||
– | Within Corporate, Transaction banking income decreased 3% to £830m as deposit balance growth was more than offset by margin compression. Corporate lending income decreased by 53% to £172m reflecting the impact of c.£180m of losses on fair value lending positions and c.£50m of losses on mark-to-market and carry costs on related hedges in H120 | ||
– | CC&P income decreased 21% to £1,721m as the impacts of the COVID-19 pandemic resulted in lower balances on co-branded cards, margin compression and reduced payments activity. Q220 included a c.£100m valuation loss on Barclays’ preference shares in Visa Inc. resulting from the Q220 Supreme Court ruling concerning charges paid by merchants | ||
● | Credit impairment charges increased to £2,619m (H119: £492m) | ||
– | CIB credit impairment charges increased to £1,320m (H119: £96m), reflecting £591m in respect of single name wholesale loan charges and impacts from the COVID-19 scenarios, partially offset by the estimated impact of central bank, government and other support measures | ||
– | CC&P credit impairment charges increased to £1,299m (H119: £396m) reflecting forecast deterioration in macroeconomic variables in the COVID-19 scenarios, partially offset by the estimated impact of central bank, government and other support measures | ||
● | Operating expenses decreased 5% to £4,405m | ||
– | CIB operating expenses decreased 3% to £3,370m due to cost efficiencies and discipline in the current environment | ||
– | CC&P operating expenses decreased 11% to £1,035m reflecting cost efficiencies and lower marketing spend due to the impacts of the COVID-19 pandemic |
Balance sheet – 30 June 2020 compared to 31 December 2019
● | Loans and advances increased £5.3bn to £138.1bn due to increased lending within CIB, partially offset by lower card balances in CC&P |
● | Derivative financial instrument assets and liabilities increased £77.9bn to £306.8bn and £78.7bn to £307.6bn respectively driven by a decrease in major interest rate curves and increased trading volumes |
● | Cash collateral and settlements increased £51.4bn to £130.8bn predominantly due to increased activity |
● | Financial assets at fair value through the income statement increased £25.9bn to £154.3bn driven by increased secured lending |
● | Other assets increased £57.7bn to £236.3bn predominantly due to an increase in cash at central banks and securities within the liquidity pool |
● | Deposits at amortised cost increased £31.2bn to £241.2bn due to CIB clients increasing liquidity |
● | RWAs increased to £231.2bn (December 2019: £209.2bn) primarily due to increased market volatility, client activity and a reduction in credit quality within CIB, partially offset by lower CC&P balances |
1 | Period covering Q114 – Q220. Pre 2014 financials were not restated following re-segmentation in Q116. |
2 | Data Source: Coalition, Q120 Competitor Analysis. Market share represents Barclays share of the total industry Revenue Pool. Analysis is based on Barclays internal business structure and internal revenues. |
3 | Data source: Dealogic for the period covering 1 January to 30 June 2020. |
Head Office | Half year ended | Half year ended | |
30.06.20 | 30.06.19 | ||
Income statement information | £m | £m | % Change |
Net interest income | (259) | (206) | (26) |
Net fee, commission and other income | 55 | (25) | |
Total income | (204) | (231) | 12 |
Credit impairment charges | (55) | (15) | |
Net operating income | (259) | (246) | (5) |
Operating expenses | (117) | (96) | (22) |
Litigation and conduct | (8) | (40) | 80 |
Total operating expenses | (125) | (136) | 8 |
Other net expenses | (41) | (7) | |
Loss before tax | (425) | (389) | (9) |
Attributable loss | (354) | (298) | (19) |
As at 30.06.20 | As at 31.12.19 | As at 30.06.19 | |
Balance sheet information | £bn | £bn | £bn |
Total assets | 21.7 | 21.0 | 22.4 |
Risk weighted assets | 9.9 | 11.0 | 28.1 |
Period end allocated tangible equity | 7.4 | 5.6 | 7.0 |
Half year ended | Half year ended | ||
Performance measures | 30.06.20 | 30.06.19 | |
Average allocated tangible equity (£bn) | 6.0 | 4.6 | |
Performance measures excluding litigation and conduct1 | £m | £m | % Change |
Loss before tax | (417) | (349) | (19) |
Attributable loss | (355) | (268) | (32) |
Income statement – H120 compared to H119
● | Loss before tax, excluding litigation and conduct, was £417m (H119: £349m). Including litigation and conduct charges of £8m (H119: £40m), loss before tax was £425m (H119: £389m) |
● | Total income was an expense of £204m (H119: £231m), which included mark-to-market losses on legacy investments, treasury items and funding costs of legacy capital instruments, partially offset by hedge accounting gains and recognition of dividends on Barclays’ stake in Absa Group Limited |
● | Credit impairment charges increased to £55m (H119: £15m) due to impacts from the COVID-19 scenarios on the Italian home loan portfolio, partially offset by the estimated impact of central bank, government and other support measures |
● | Operating expenses were £117m (H119: £96m), which included £45m of charitable donations from Barclays’ COVID-19 Community Aid Package |
● | Other net expenses were £41m (H119: £7m), which included a fair value loss on an investment in an associate |
Balance sheet – 30 June 2020 compared to 31 December 2019
● | RWAs decreased to £9.9bn (December 2019: £11.0bn) driven by the reduction in value of Barclays’ stake in Absa Group Limited |
1 | Refer to pages 88 to 97 for further information and calculations of performance measures excluding litigation and conduct. |
Quarterly Results Summary
Barclays Group | ||||||||||
Q220 | Q120 | Q419 | Q319 | Q219 | Q119 | Q418 | Q318 | |||
Income statement information | £m | £m | £m | £m | £m | £m | £m | £m | ||
Net interest income | 1,892 | 2,331 | 2,344 | 2,445 | 2,360 | 2,258 | 2,296 | 2,388 | ||
Net fee, commission and other income | 3,446 | 3,952 | 2,957 | 3,096 | 3,178 | 2,994 | 2,777 | 2,741 | ||
Total income | 5,338 | 6,283 | 5,301 | 5,541 | 5,538 | 5,252 | 5,073 | 5,129 | ||
Credit impairment charges | (1,623) | (2,115) | (523) | (461) | (480) | (448) | (643) | (254) | ||
Net operating income | 3,715 | 4,168 | 4,778 | 5,080 | 5,058 | 4,804 | 4,430 | 4,875 | ||
Operating costs | (3,310) | (3,253) | (3,308) | (3,293) | (3,501) | (3,257) | (3,624) | (3,329) | ||
UK bank levy | - | - | (226) | - | - | - | (269) | - | ||
Operating expenses | (3,310) | (3,253) | (3,534) | (3,293) | (3,501) | (3,257) | (3,893) | (3,329) | ||
Guaranteed Minimum Pensions (GMP) charge | - | - | - | - | - | - | (140) | - | ||
Litigation and conduct | (20) | (10) | (167) | (1,568) | (53) | (61) | (60) | (105) | ||
Total operating expenses | (3,330) | (3,263) | (3,701) | (4,861) | (3,554) | (3,318) | (4,093) | (3,434) | ||
Other net (expenses)/income | (26) | 8 | 20 | 27 | 27 | (3) | 37 | 20 | ||
Profit before tax | 359 | 913 | 1,097 | 246 | 1,531 | 1,483 | 374 | 1,461 | ||
Tax charge | (42) | (71) | (189) | (269) | (297) | (248) | (75) | (192) | ||
Profit/(loss) after tax | 317 | 842 | 908 | (23) | 1,234 | 1,235 | 299 | 1,269 | ||
Non-controlling interests | (21) | (16) | (42) | (4) | (17) | (17) | (83) | (43) | ||
Other equity instrument holders | (206) | (221) | (185) | (265) | (183) | (180) | (230) | (176) | ||
Attributable profit/(loss) | 90 | 605 | 681 | (292) | 1,034 | 1,038 | (14) | 1,050 | ||
Performance measures | ||||||||||
Return on average tangible shareholders' equity | 0.7% | 5.1% | 5.9% | (2.4%) | 9.0% | 9.2% | (0.1%) | 9.4% | ||
Average tangible shareholders' equity (£bn) | 50.2 | 47.0 | 46.4 | 48.4 | 46.2 | 45.2 | 44.3 | 44.6 | ||
Cost: income ratio | 62% | 52% | 70% | 88% | 64% | 63% | 81% | 67% | ||
Loan loss rate (bps) | 179 | 223 | 60 | 52 | 56 | 54 | 77 | 30 | ||
Basic earnings/(loss) per share | 0.5p | 3.5p | 3.9p | (1.7p) | 6.0p | 6.1p | (0.1p) | 6.1p | ||
Performance measures excluding litigation and conduct1 | £m | £m | £m | £m | £m | £m | £m | £m | ||
Profit before tax | 379 | 923 | 1,264 | 1,814 | 1,584 | 1,544 | 434 | 1,566 | ||
Attributable profit | 106 | 604 | 803 | 1,233 | 1,074 | 1,084 | 48 | 1,135 | ||
Return on average tangible shareholders' equity | 0.8% | 5.1% | 6.9% | 10.2% | 9.3% | 9.6% | 0.4% | 10.2% | ||
Cost: income ratio | 62% | 52% | 67% | 59% | 63% | 62% | 79% | 65% | ||
Basic earnings per share | 0.6p | 3.5p | 4.7p | 7.2p | 6.3p | 6.3p | 0.3p | 6.6p | ||
Balance sheet and capital management2 | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | ||
Total assets | 1,385.1 | 1,444.3 | 1,140.2 | 1,290.4 | 1,232.8 | 1,193.5 | 1,133.3 | 1,170.8 | ||
Tangible net asset value per share | 284p | 284p | 262p | 274p | 275p | 266p | 262p | 260p | ||
Common equity tier 1 ratio | 14.2% | 13.1% | 13.8% | 13.4% | 13.4% | 13.0% | 13.2% | 13.2% | ||
Common equity tier 1 capital | 45.4 | 42.5 | 40.8 | 41.9 | 42.9 | 41.4 | 41.1 | 41.7 | ||
Risk weighted assets | 319.0 | 325.6 | 295.1 | 313.3 | 319.1 | 319.7 | 311.9 | 316.2 | ||
Average UK leverage ratio | 4.7% | 4.5% | 4.5% | 4.6% | 4.7% | 4.6% | 4.5% | 4.6% | ||
Average UK leverage exposure | 1,148.7 | 1,176.2 | 1,142.8 | 1,171.2 | 1,134.6 | 1,105.5 | 1,110.0 | 1,119.0 | ||
UK leverage ratio | 5.2% | 4.5% | 5.1% | 4.8% | 5.1% | 4.9% | 5.1% | 4.9% | ||
UK leverage exposure | 1,071.1 | 1,178.7 | 1,007.7 | 1,099.8 | 1,079.4 | 1,065.0 | 998.6 | 1,063.5 | ||
Funding and liquidity | ||||||||||
Group liquidity (£bn) | 298 | 237 | 211 | 226 | 238 | 232 | 227 | 213 | ||
Liquidity coverage ratio | 186% | 155% | 160% | 151% | 156% | 160% | 169% | 161% | ||
Loan: deposit ratio | 76% | 79% | 82% | 82% | 82% | 80% | 83% | 83% |
1 | Refer to pages 88 to 97 for further information and calculations of performance measures excluding litigation and conduct. |
2 | Refer to pages 48 to 53 for further information on how capital, RWAs and leverage are calculated. |
Quarterly Results by Business
Barclays UK | ||||||||||
Q220 | Q120 | Q419 | Q319 | Q219 | Q119 | Q418 | Q318 | |||
Income statement information | £m | £m | £m | £m | £m | £m | £m | £m | ||
Net interest income | 1,225 | 1,412 | 1,478 | 1,503 | 1,438 | 1,469 | 1,513 | 1,529 | ||
Net fee, commission and other income | 242 | 292 | 481 | 343 | 333 | 308 | 350 | 367 | ||
Total income | 1,467 | 1,704 | 1,959 | 1,846 | 1,771 | 1,777 | 1,863 | 1,896 | ||
Credit impairment charges | (583) | (481) | (190) | (101) | (230) | (191) | (296) | (115) | ||
Net operating income | 884 | 1,223 | 1,769 | 1,745 | 1,541 | 1,586 | 1,567 | 1,781 | ||
Operating costs | (1,018) | (1,023) | (1,023) | (952) | (1,022) | (999) | (1,114) | (988) | ||
UK bank levy | - | - | (41) | - | - | - | (46) | - | ||
Operating expenses | (1,018) | (1,023) | (1,064) | (952) | (1,022) | (999) | (1,160) | (988) | ||
Litigation and conduct | (6) | (5) | (58) | (1,480) | (41) | (3) | (15) | (54) | ||
Total operating expenses | (1,024) | (1,028) | (1,122) | (2,432) | (1,063) | (1,002) | (1,175) | (1,042) | ||
Other net income/(expenses) | 13 | - | - | - | (1) | 1 | (2) | 1 | ||
(Loss)/profit before tax | (127) | 195 | 647 | (687) | 477 | 585 | 390 | 740 | ||
Attributable (loss)/profit | (123) | 175 | 438 | (907) | 328 | 422 | 241 | 510 | ||
Balance sheet information | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | ||
Loans and advances to customers at amortised cost | 202.0 | 195.7 | 193.7 | 193.2 | 189.1 | 187.5 | 187.6 | 186.7 | ||
Total assets | 287.6 | 267.5 | 257.8 | 257.9 | 259.0 | 253.1 | 249.7 | 252.0 | ||
Customer deposits at amortised cost | 225.7 | 207.5 | 205.5 | 203.3 | 200.9 | 197.3 | 197.3 | 195.8 | ||
Loan: deposit ratio | 92% | 96% | 96% | 97% | 97% | 96% | 96% | 96% | ||
Risk weighted assets | 77.9 | 77.7 | 74.9 | 76.8 | 76.2 | 76.6 | 75.2 | 74.8 | ||
Period end allocated tangible equity1 | 10.3 | 10.3 | 10.3 | 10.4 | 10.3 | 10.5 | 10.2 | 10.1 | ||
Performance measures | ||||||||||
Return on average allocated tangible equity1 | (4.8%) | 6.9% | 17.0% | (34.9%) | 12.7% | 16.3% | 9.6% | 20.1% | ||
Average allocated tangible equity (£bn)1 | 10.3 | 10.1 | 10.3 | 10.4 | 10.3 | 10.4 | 10.1 | 10.1 | ||
Cost: income ratio | 70% | 60% | 57% | 132% | 60% | 56% | 63% | 55% | ||
Loan loss rate (bps) | 111 | 96 | 38 | 20 | 47 | 40 | 61 | 24 | ||
Net interest margin | 2.48% | 2.91% | 3.03% | 3.10% | 3.05% | 3.18% | 3.20% | 3.22% | ||
Performance measures excluding litigation and conduct2 | £m | £m | £m | £m | £m | £m | £m | £m | ||
(Loss)/profit before tax | (121) | 200 | 705 | 793 | 518 | 588 | 405 | 794 | ||
Attributable (loss)/profit | (118) | 178 | 481 | 550 | 358 | 424 | 253 | 558 | ||
Return on average allocated tangible equity1 | (4.6%) | 7.0% | 18.7% | 21.2% | 13.9% | 16.4% | 10.1% | 22.0% | ||
Cost: income ratio | 69% | 60% | 54% | 52% | 58% | 56% | 62% | 52% |
1 | Q120 has been restated to reflect allocated tangible equity being calculated as 13.0% of RWAs for each business, adjusted for capital deductions, excluding goodwill and intangible assets. |
2 | Refer to pages 88 to 97 for further information and calculations of performance measures excluding litigation and conduct. |
Analysis of Barclays UK | Q220 | Q120 | Q419 | Q319 | Q219 | Q119 | Q418 | Q318 | ||
Analysis of total income | £m | £m | £m | £m | £m | £m | £m | £m | ||
Personal Banking | 826 | 968 | 1,064 | 1,035 | 946 | 964 | 998 | 1,021 | ||
Barclaycard Consumer UK | 367 | 436 | 533 | 472 | 497 | 490 | 522 | 551 | ||
Business Banking | 274 | 300 | 362 | 339 | 328 | 323 | 343 | 324 | ||
Total income | 1,467 | 1,704 | 1,959 | 1,846 | 1,771 | 1,777 | 1,863 | 1,896 | ||
Analysis of credit impairment (charges)/releases | ||||||||||
Personal Banking | (130) | (134) | (71) | (36) | (36) | (52) | (44) | (8) | ||
Barclaycard Consumer UK | (396) | (301) | (108) | (49) | (175) | (140) | (250) | (88) | ||
Business Banking | (57) | (46) | (11) | (16) | (19) | 1 | (2) | (19) | ||
Total credit impairment charges | (583) | (481) | (190) | (101) | (230) | (191) | (296) | (115) | ||
Analysis of loans and advances to customers at amortised cost | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | ||
Personal Banking | 154.9 | 153.4 | 151.9 | 150.1 | 147.3 | 145.9 | 146.0 | 145.4 | ||
Barclaycard Consumer UK | 11.5 | 13.6 | 14.7 | 14.9 | 15.1 | 15.0 | 15.3 | 15.3 | ||
Business Banking | 35.6 | 28.7 | 27.1 | 28.2 | 26.7 | 26.6 | 26.3 | 26.0 | ||
Total loans and advances to customers at amortised cost | 202.0 | 195.7 | 193.7 | 193.2 | 189.1 | 187.5 | 187.6 | 186.7 | ||
Analysis of customer deposits at amortised cost | ||||||||||
Personal Banking | 169.6 | 161.4 | 159.2 | 157.9 | 156.3 | 154.1 | 154.0 | 153.4 | ||
Barclaycard Consumer UK | 0.1 | - | - | - | - | - | - | - | ||
Business Banking | 56.0 | 46.1 | 46.3 | 45.4 | 44.6 | 43.2 | 43.3 | 42.4 | ||
Total customer deposits at amortised cost | 225.7 | 207.5 | 205.5 | 203.3 | 200.9 | 197.3 | 197.3 | 195.8 |
Barclays International | ||||||||||
Q220 | Q120 | Q419 | Q319 | Q219 | Q119 | Q418 | Q318 | |||
Income statement information | £m | £m | £m | £m | £m | £m | £m | £m | ||
Net interest income | 847 | 998 | 965 | 1,059 | 1,017 | 900 | 984 | 965 | ||
Net trading income | 1,660 | 2,360 | 929 | 1,110 | 1,016 | 1,144 | 837 | 1,103 | ||
Net fee, commission and other income | 1,503 | 1,286 | 1,558 | 1,581 | 1,870 | 1,526 | 1,400 | 1,222 | ||
Total income | 4,010 | 4,644 | 3,452 | 3,750 | 3,903 | 3,570 | 3,221 | 3,290 | ||
Credit impairment charges | (1,010) | (1,609) | (329) | (352) | (247) | (245) | (354) | (143) | ||
Net operating income | 3,000 | 3,035 | 3,123 | 3,398 | 3,656 | 3,325 | 2,867 | 3,147 | ||
Operating costs | (2,186) | (2,219) | (2,240) | (2,282) | (2,435) | (2,206) | (2,441) | (2,277) | ||
UK bank levy | - | - | (174) | - | - | - | (210) | - | ||
Operating expenses | (2,186) | (2,219) | (2,414) | (2,282) | (2,435) | (2,206) | (2,651) | (2,277) | ||
Litigation and conduct | (11) | - | (86) | - | (11) | (19) | (33) | (32) | ||
Total operating expenses | (2,197) | (2,219) | (2,500) | (2,282) | (2,446) | (2,225) | (2,684) | (2,309) | ||
Other net income | 4 | 6 | 17 | 21 | 13 | 18 | 32 | 12 | ||
Profit before tax | 807 | 822 | 640 | 1,137 | 1,223 | 1,118 | 215 | 850 | ||
Attributable profit/(loss) | 468 | 529 | 397 | 799 | 832 | 788 | (21) | 687 | ||
Balance sheet information | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | ||
Loans and advances at amortised cost | 138.1 | 167.0 | 132.8 | 138.1 | 134.8 | 130.9 | 127.2 | 132.4 | ||
Trading portfolio assets | 109.5 | 101.6 | 113.3 | 119.4 | 120.0 | 117.2 | 104.0 | 124.6 | ||
Derivative financial instrument assets | 306.8 | 341.5 | 228.9 | 286.0 | 243.8 | 217.3 | 222.1 | 214.8 | ||
Financial assets at fair value through the income statement | 154.3 | 188.4 | 128.4 | 158.0 | 154.7 | 153.5 | 144.7 | 147.8 | ||
Cash collateral and settlement balances | 130.8 | 153.2 | 79.4 | 112.5 | 101.3 | 97.8 | 74.3 | 94.3 | ||
Other assets | 236.3 | 201.5 | 178.6 | 195.6 | 196.8 | 202.3 | 189.8 | 186.3 | ||
Total assets | 1,075.8 | 1,153.2 | 861.4 | 1,009.6 | 951.4 | 919.0 | 862.1 | 900.2 | ||
Deposits at amortised cost | 241.2 | 263.3 | 210.0 | 217.6 | 212.0 | 215.5 | 197.2 | 200.3 | ||
Derivative financial instrument liabilities | 307.6 | 338.8 | 228.9 | 283.3 | 243.0 | 213.5 | 219.6 | 213.7 | ||
Loan: deposit ratio | 57% | 63% | 63% | 63% | 64% | 61% | 65% | 66% | ||
Risk weighted assets | 231.2 | 237.9 | 209.2 | 223.1 | 214.8 | 216.1 | 210.7 | 214.6 | ||
Period end allocated tangible equity1 | 31.6 | 33.1 | 29.6 | 31.4 | 30.2 | 30.6 | 29.9 | 30.2 | ||
Performance measures | ||||||||||
Return on average allocated tangible equity1 | 5.6% | 6.8% | 5.1% | 9.9% | 10.7% | 10.4% | (0.3%) | 8.8% | ||
Average allocated tangible equity (£bn)1 | 33.5 | 31.2 | 30.9 | 32.2 | 31.1 | 30.5 | 31.3 | 31.1 | ||
Cost: income ratio | 55% | 48% | 72% | 61% | 63% | 62% | 83% | 70% | ||
Loan loss rate (bps) | 284 | 377 | 96 | 99 | 72 | 73 | 107 | 41 | ||
Net interest margin | 3.43% | 3.93% | 4.29% | 4.10% | 3.91% | 3.99% | 3.98% | 3.87% | ||
Performance measures excluding litigation and conduct2 | £m | £m | £m | £m | £m | £m | £m | £m | ||
Profit before tax | 818 | 822 | 726 | 1,137 | 1,234 | 1,137 | 248 | 882 | ||
Attributable profit | 476 | 529 | 461 | 801 | 840 | 804 | 13 | 713 | ||
Return on average allocated tangible equity1 | 5.7% | 6.8% | 6.0% | 10.0% | 10.8% | 10.6% | 0.2% | 9.2% | ||
Cost: income ratio | 55% | 48% | 70% | 61% | 62% | 62% | 82% | 69% |
1 | Q120 has been restated to reflect allocated tangible equity being calculated as 13.0% of RWAs for each business, adjusted for capital deductions, excluding goodwill and intangible assets. |
2 | Refer to pages 88 to 97 for further information and calculations of performance measures excluding litigation and conduct. |
Analysis of Barclays International | ||||||||||
Corporate and Investment Bank | Q220 | Q120 | Q419 | Q319 | Q219 | Q119 | Q418 | Q318 | ||
Income statement information | £m | £m | £m | £m | £m | £m | £m | £m | ||
FICC | 1,468 | 1,858 | 726 | 816 | 920 | 902 | 570 | 688 | ||
Equities | 674 | 564 | 409 | 494 | 517 | 467 | 375 | 471 | ||
Markets | 2,142 | 2,422 | 1,135 | 1,310 | 1,437 | 1,369 | 945 | 1,159 | ||
Advisory | 84 | 155 | 202 | 221 | 221 | 132 | 242 | 151 | ||
Equity capital markets | 185 | 62 | 56 | 86 | 104 | 83 | 53 | 55 | ||
Debt capital markets | 463 | 418 | 322 | 381 | 373 | 354 | 330 | 313 | ||
Banking fees | 732 | 635 | 580 | 688 | 698 | 569 | 625 | 519 | ||
Corporate lending | 61 | 111 | 202 | 195 | 216 | 152 | 243 | 197 | ||
Transaction banking | 381 | 449 | 397 | 424 | 444 | 415 | 412 | 416 | ||
Corporate | 442 | 560 | 599 | 619 | 660 | 567 | 655 | 613 | ||
Other | - | - | - | - | - | - | (74) | (56) | ||
Total income | 3,316 | 3,617 | 2,314 | 2,617 | 2,795 | 2,505 | 2,151 | 2,235 | ||
Credit impairment (charges)/releases | (596) | (724) | (30) | (31) | (44) | (52) | (35) | 3 | ||
Net operating income | 2,720 | 2,893 | 2,284 | 2,586 | 2,751 | 2,453 | 2,116 | 2,238 | ||
Operating costs | (1,680) | (1,690) | (1,691) | (1,712) | (1,860) | (1,619) | (1,835) | (1,712) | ||
UK bank levy | - | - | (156) | - | - | - | (188) | - | ||
Operating expenses | (1,680) | (1,690) | (1,847) | (1,712) | (1,860) | (1,619) | (2,023) | (1,712) | ||
Litigation and conduct | (3) | - | (79) | (4) | (7) | (19) | (23) | (32) | ||
Total operating expenses | (1,683) | (1,690) | (1,926) | (1,716) | (1,867) | (1,638) | (2,046) | (1,744) | ||
Other net income | 3 | - | 1 | 12 | 3 | 12 | 15 | 4 | ||
Profit before tax | 1,040 | 1,203 | 359 | 882 | 887 | 827 | 85 | 498 | ||
Attributable profit/(loss) | 694 | 820 | 193 | 609 | 596 | 582 | (84) | 431 | ||
Balance sheet information | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | ||
Loans and advances at amortised cost | 104.9 | 128.2 | 92.0 | 95.8 | 92.1 | 90.6 | 86.4 | 93.3 | ||
Trading portfolio assets | 109.3 | 101.5 | 113.3 | 119.3 | 119.9 | 117.2 | 104.0 | 124.5 | ||
Derivative financial instruments assets | 306.7 | 341.4 | 228.8 | 286.0 | 243.7 | 217.3 | 222.1 | 214.8 | ||
Financial assets at fair value through the income statement | 153.7 | 187.8 | 127.7 | 157.3 | 154.1 | 152.9 | 144.2 | 147.3 | ||
Cash collateral and settlement balances | 129.7 | 152.2 | 78.5 | 111.6 | 100.4 | 96.9 | 73.4 | 93.3 | ||
Other assets | 205.5 | 171.4 | 155.3 | 171.5 | 168.1 | 163.2 | 160.4 | 153.8 | ||
Total assets | 1,009.8 | 1,082.5 | 795.6 | 941.5 | 878.3 | 838.1 | 790.5 | 827.0 | ||
Deposits at amortised cost | 173.9 | 198.4 | 146.2 | 152.1 | 145.4 | 151.4 | 136.3 | 137.6 | ||
Derivative financial instrument liabilities | 307.6 | 338.7 | 228.9 | 283.2 | 242.9 | 213.5 | 219.6 | 213.7 | ||
Risk weighted assets | 198.3 | 201.7 | 171.5 | 184.9 | 175.9 | 176.6 | 170.9 | 175.9 | ||
Performance measures | ||||||||||
Return on average allocated tangible equity1 | 9.6% | 12.5% | 3.0% | 9.1% | 9.2% | 9.3% | (1.3%) | 6.6% | ||
Average allocated tangible equity (£bn)1 | 29.0 | 26.2 | 25.8 | 26.9 | 25.8 | 25.1 | 26.0 | 25.9 | ||
Cost: income ratio | 51% | 47% | 83% | 66% | 67% | 65% | 95% | 78% | ||
Performance measures excluding litigation and conduct2 | £m | £m | £m | £m | £m | £m | £m | £m | ||
Profit before tax | 1,043 | 1,203 | 438 | 886 | 894 | 846 | 108 | 530 | ||
Attributable profit/(loss) | 696 | 820 | 251 | 614 | 601 | 598 | (57) | 456 | ||
Return on average allocated tangible equity1 | 9.6% | 12.5% | 3.9% | 9.2% | 9.3% | 9.5% | (0.9%) | 7.0% | ||
Cost: income ratio | 51% | 47% | 80% | 65% | 67% | 65% | 94% | 77% |
1 | Q120 has been restated to reflect allocated tangible equity being calculated as 13.0% of RWAs for each business, adjusted for capital deductions, excluding goodwill and intangible assets. |
2 | Refer to pages 88 to 97 for further information and calculations of performance measures excluding litigation and conduct. |
Analysis of Barclays International | ||||||||||
Consumer, Cards and Payments | Q220 | Q120 | Q419 | Q319 | Q219 | Q119 | Q418 | Q318 | ||
Income statement information | £m | £m | £m | £m | £m | £m | £m | £m | ||
Net interest income | 513 | 663 | 717 | 720 | 720 | 665 | 664 | 691 | ||
Net fee, commission, trading and other income | 181 | 364 | 421 | 413 | 388 | 400 | 406 | 364 | ||
Total income | 694 | 1,027 | 1,138 | 1,133 | 1,108 | 1,065 | 1,070 | 1,055 | ||
Credit impairment charges | (414) | (885) | (299) | (321) | (203) | (193) | (319) | (146) | ||
Net operating income | 280 | 142 | 839 | 812 | 905 | 872 | 751 | 909 | ||
Operating costs | (506) | (529) | (549) | (570) | (575) | (587) | (606) | (565) | ||
UK bank levy | - | - | (18) | - | - | - | (22) | - | ||
Operating expenses | (506) | (529) | (567) | (570) | (575) | (587) | (628) | (565) | ||
Litigation and conduct | (8) | - | (7) | 4 | (4) | - | (10) | - | ||
Total operating expenses | (514) | (529) | (574) | (566) | (579) | (587) | (638) | (565) | ||
Other net income | 1 | 6 | 16 | 9 | 10 | 6 | 17 | 8 | ||
(Loss)/profit before tax | (233) | (381) | 281 | 255 | 336 | 291 | 130 | 352 | ||
Attributable (loss)/profit | (226) | (291) | 204 | 190 | 236 | 206 | 63 | 256 | ||
Balance sheet information | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | ||
Loans and advances at amortised cost | 33.2 | 38.8 | 40.8 | 42.3 | 42.7 | 40.3 | 40.8 | 39.1 | ||
Total assets | 66.0 | 70.7 | 65.8 | 68.1 | 73.1 | 80.9 | 71.6 | 73.2 | ||
Deposits at amortised cost | 67.3 | 64.9 | 63.8 | 65.5 | 66.6 | 64.1 | 60.9 | 62.7 | ||
Risk weighted assets | 32.9 | 36.2 | 37.7 | 38.2 | 38.9 | 39.5 | 39.8 | 38.7 | ||
Performance measures | ||||||||||
Return on average allocated tangible equity1 | (20.2%) | (23.5%) | 15.9% | 14.2% | 17.8% | 15.4% | 4.8% | 19.8% | ||
Average allocated tangible equity (£bn)1 | 4.5 | 5.0 | 5.1 | 5.3 | 5.3 | 5.4 | 5.3 | 5.2 | ||
Cost: income ratio | 74% | 52% | 50% | 50% | 52% | 55% | 60% | 54% | ||
Loan loss rate (bps) | 455 | 846 | 273 | 283 | 180 | 182 | 290 | 138 | ||
Performance measures excluding litigation and conduct2 | £m | £m | £m | £m | £m | £m | £m | £m | ||
(Loss)/profit before tax | (225) | (381) | 288 | 251 | 340 | 291 | 140 | 352 | ||
Attributable (loss)/profit | (220) | (291) | 210 | 187 | 239 | 206 | 70 | 257 | ||
Return on average allocated tangible equity1 | (19.6%) | (23.5%) | 16.3% | 14.0% | 18.0% | 15.4% | 5.4% | 19.9% | ||
Cost: income ratio | 73% | 52% | 50% | 50% | 52% | 55% | 59% | 54% |
1 | Q120 has been restated to reflect allocated tangible equity being calculated as 13.0% of RWAs for each business, adjusted for capital deductions, excluding goodwill and intangible assets. |
2 | Refer to pages 88 to 97 for further information and calculations of performance measures excluding litigation and conduct. |
Head Office | ||||||||||
Q220 | Q120 | Q419 | Q319 | Q219 | Q119 | Q418 | Q318 | |||
Income statement information | £m | £m | £m | £m | £m | £m | £m | £m | ||
Net interest income | (180) | (79) | (99) | (117) | (95) | (111) | (201) | (106) | ||
Net fee, commission and other income | 41 | 14 | (11) | 62 | (41) | 16 | 190 | 49 | ||
Total income | (139) | (65) | (110) | (55) | (136) | (95) | (11) | (57) | ||
Credit impairment (charges)/releases | (30) | (25) | (4) | (8) | (3) | (12) | 7 | 4 | ||
Net operating expenses | (169) | (90) | (114) | (63) | (139) | (107) | (4) | (53) | ||
Operating costs | (106) | (11) | (45) | (59) | (44) | (52) | (69) | (64) | ||
UK bank levy | - | - | (11) | - | - | - | (13) | - | ||
Operating expenses | (106) | (11) | (56) | (59) | (44) | (52) | (82) | (64) | ||
GMP charge | - | - | - | - | - | - | (140) | - | ||
Litigation and conduct | (3) | (5) | (23) | (88) | (1) | (39) | (12) | (19) | ||
Total operating expenses | (109) | (16) | (79) | (147) | (45) | (91) | (234) | (83) | ||
Other net (expenses)/income | (43) | 2 | 3 | 6 | 15 | (22) | 7 | 7 | ||
Loss before tax | (321) | (104) | (190) | (204) | (169) | (220) | (231) | (129) | ||
Attributable loss | (255) | (99) | (154) | (184) | (126) | (172) | (234) | (147) | ||
Balance sheet information | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | ||
Total assets | 21.7 | 23.6 | 21.0 | 22.9 | 22.4 | 21.4 | 21.5 | 18.6 | ||
Risk weighted assets | 9.9 | 10.0 | 11.0 | 13.4 | 28.1 | 27.0 | 26.0 | 26.8 | ||
Period end allocated tangible equity1 | 7.4 | 6.0 | 5.6 | 5.5 | 7.0 | 4.5 | 4.9 | 4.2 | ||
Performance measures | ||||||||||
Average allocated tangible equity (£bn)1 | 6.4 | 5.6 | 5.2 | 5.8 | 4.8 | 4.3 | 2.9 | 3.4 | ||
Performance measures excluding litigation and conduct2 | £m | £m | £m | £m | £m | £m | £m | £m | ||
Loss before tax | (318) | (99) | (167) | (116) | (168) | (181) | (219) | (110) | ||
Attributable loss | (252) | (103) | (139) | (118) | (124) | (144) | (218) | (136) |
1 | Q120 has been restated to reflect allocated tangible equity being calculated as 13.0% of RWAs for each business, adjusted for capital deductions, excluding goodwill and intangible assets. |
2 | Refer to pages 88 to 97 for further information and calculations of performance measures excluding litigation and conduct. |
Performance Management
Margins and balances | ||||||
Half year ended 30.06.20 | Half year ended 30.06.19 | |||||
Net interest income | Average customer assets | Net interest margin | Net interest income | Average customer assets | Net interest margin | |
£m | £m | % | £m | £m | % | |
Barclays UK | 2,637 | 197,023 | 2.69 | 2,907 | 188,377 | 3.11 |
Barclays International1 | 1,848 | 101,286 | 3.67 | 1,947 | 99,478 | 3.95 |
Total Barclays UK and Barclays International | 4,485 | 298,309 | 3.02 | 4,854 | 287,855 | 3.40 |
Other2 | (262) | (236) | ||||
Total Barclays Group | 4,223 | 4,618 |
1 | Barclays International margins include interest earning lending balances within the investment banking business. |
2 | Other includes Head Office and non-lending related investment banking businesses not included in Barclays International margins. |
Quarterly analysis for Barclays UK and Barclays International | Net interest income | Average customer assets | Net interest margin |
Three months ended 30.06.20 | £m | £m | % |
Barclays UK | 1,225 | 199,039 | 2.48 |
Barclays International1 | 868 | 101,706 | 3.43 |
Total Barclays UK and Barclays International | 2,093 | 300,745 | 2.80 |
Three months ended 31.03.20 | |||
Barclays UK | 1,412 | 195,204 | 2.91 |
Barclays International1 | 980 | 100,171 | 3.93 |
Total Barclays UK and Barclays International | 2,392 | 295,375 | 3.26 |
Three months ended 31.12.19 | |||
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 |
1 | Barclays International margins include interest earning lending balances within the investment banking business. |
Risk Management
Risk management and principal risks
The roles and responsibilities of the business groups, Risk and Compliance, in the management of risk in the firm are defined in the Enterprise Risk Management Framework. The purpose of the framework is to identify the principal risks of 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; model risk; conduct risk; reputation risk; and legal risk. Further detail on these risks and how they are managed is available in the Barclays PLC Annual Report 2019 (pages 127 to 146) or online at home.barclays/annualreport. There have been no significant changes to these principal risks or previously identified material existing and emerging risks in the period, save that details of an additional material risk identified in H120 which potentially impacts more than one principal risk are set out below.
The following section also gives an overview of credit risk, market risk, and treasury and capital risk for the period.
Risks relating to the impact of COVID-19
The COVID-19 pandemic has had, and continues to have, a material impact on businesses around the world and the economic environments in which they operate. There are a number of factors associated with the pandemic and its impact on global economies that could have a material adverse effect on (among other things) the profitability, capital and liquidity of financial institutions such as Barclays.
The COVID-19 pandemic has caused disruption to the Group’s customers, suppliers and staff globally. Most jurisdictions in which the Group operates have implemented severe restrictions on the movement of their respective populations, with a resultant significant impact on economic activity in those jurisdictions. These restrictions are being determined by the governments of individual jurisdictions (including through the implementation of emergency powers) and impacts (including the timing of implementation and any subsequent lifting of restrictions) may vary from jurisdiction to jurisdiction. It remains unclear how this will evolve through 2020 (including whether there will be subsequent waves of the COVID-19 pandemic and whether and in what manner previously lifted restrictions will be re-imposed) and the Group continues to monitor the situation closely. However, despite the COVID-19 contingency plans established by the Group, its ability to conduct business may be adversely affected by disruptions to its infrastructure, business processes and technology services, resulting from the unavailability of staff due to illness or the failure of third parties to supply services. This may cause significant customer detriment, costs to reimburse losses incurred by the Group’s customers, potential litigation costs (including regulatory fines, penalties and other sanctions), and reputational damage.
In many of the jurisdictions in which the Group operates, schemes have been initiated by central banks, national governments and regulators to provide financial support to parts of the economy most impacted by the COVID-19 pandemic. These schemes have been designed and implemented at pace, meaning lenders (including Barclays) continue to address operational issues which have arisen in connection with the implementation of the schemes, including resolving the interaction between the schemes and existing law and regulation. In addition, the details of how these schemes will impact the Group’s customers and therefore the impact on the Group remains uncertain at this stage. However, certain actions (such as the introduction of payment holidays for certain consumer lending products or the cancellation or waiver of fees associated with certain products) may negatively impact the effective interest rate earned on certain of the Group’s portfolios and lower fee income being earned on certain products. Lower interest rates globally will negatively impact net interest income earned on certain of the Group’s portfolios. Both of these factors may in turn negatively impact the Group’s profitability. Furthermore, the introduction of, and participation in, central-bank supported loan and other financing schemes introduced as a result of the COVID-19 pandemic may negatively impact the Group’s RWAs, level of impairment and, in turn, capital position (particularly when any transitional relief applied to the calculation of RWAs and impairment expires). This may be exacerbated if the Group is required by any government or regulator to offer forbearance or additional financial relief to borrowers.
As these schemes and other financial support schemes provided by national governments (such as job retention and furlough schemes) expire, are withdrawn or are no longer supported, the Group may experience a higher volume of defaults and delinquencies in certain portfolios and may initiate collection and enforcement actions to recover defaulted debts. Where defaulting borrowers are harmed by the Group’s conduct, this may give rise to civil legal proceedings, including class actions, regulatory censure, potentially significant fines and other sanctions, and reputational damage. Other legal disputes may also arise between the Group and defaulting borrowers relating to matters such as breaches or enforcement of legal rights or obligations arising under loan and other credit agreements. Adverse findings in any such matters may result in the Group’s rights not being enforced as intended. For further details on legal risk and legal, competition and regulatory matters, refer to Note 20 on page 81.
The actions taken by various governments and central banks, in particular in the United Kingdom and the United States, may indicate a view on the potential severity of any economic downturn and post recovery environment, which from a commercial, regulatory and risk perspective could be significantly different to past crises and persist for a prolonged period. The COVID-19 pandemic has led to a weakening in gross domestic product (GDP) in most jurisdictions in which the Group operates and an expectation of higher unemployment and lower house prices in those same jurisdictions. These factors all have a significant impact on the modelling of expected credit losses (ECL) by the Group. As a result, the Group has experienced higher ECLs during the first half of 2020 compared to prior periods and this trend may continue in the second half of 2020. The economic environment remains uncertain and future impairment charges may be subject to further volatility (including from changes to macroeconomic variable forecasts) depending on the longevity of the COVID-19 pandemic and related containment measures, as well as the longer term effectiveness of central bank, government and other support measures. For further details on macroeconomic variables used in the calculation of ECLs, refer to page 32. In addition, ECLs may be adversely impacted by increased levels of default for single name exposures in certain sectors directly impacted by the COVID-19 pandemic (such as the oil and gas, retail, airline, and hospitality and leisure sectors).
Furthermore, the Group relies on models to support a broad range of business and risk management activities, including informing business decisions and strategies, measuring and limiting risk, valuing exposures (including the calculation of impairment), conducting stress testing and assessing capital adequacy. Models are, by their nature, imperfect and incomplete representations of reality because they rely on assumptions and inputs, and so they may be subject to errors affecting the accuracy of their outputs and/or misused. This may be exacerbated when dealing with unprecedented scenarios, such as the COVID-19 pandemic, due to the lack of reliable historical reference points and data. For further details on model risk, refer to page 136 of the Barclays PLC Annual Report 2019.
The disruption to economic activity globally caused by the COVID-19 pandemic could adversely impact the Group’s other assets such as goodwill and intangibles, and the value of Barclays PLC’s investments in subsidiaries. It could also impact the Group’s income due to lower lending and transaction volumes due to volatility or weakness in the capital markets. Other potential risks include credit rating migration which could negatively impact the Group’s RWAs and capital position, and potential liquidity stress due to (among other things) increased customer drawdowns, notwithstanding the significant initiatives that governments and central banks have put in place to support funding and liquidity. Furthermore, a significant increase in the utilisation of credit cards by Barclaycard customers could have a negative impact on the Group’s RWAs and capital position.
Central bank and government actions and other support measures taken in response to the COVID-19 pandemic may also create restrictions in relation to capital. For example, on 31 March 2020 in response to a request from the PRA and to preserve additional capital for use in serving Barclays’ customers and clients, the Board agreed to cancel the 6.0p per ordinary share full year 2019 dividend that was due for payment on 3 April 2020. In addition, the Board decided that for 2020 Barclays PLC will not undertake any interim ordinary share dividend payments, accrual of ordinary share dividends, or share buybacks. Restrictions imposed by governments and/or regulators may further limit management’s flexibility in managing the business and taking action in relation to capital distributions and capital allocation.
Any and all such events mentioned above could have a material adverse effect on the Group’s business, financial condition, results of operations, prospects, liquidity, capital position and credit ratings (including potential credit rating agency changes of outlooks or ratings), as well as on the Group’s customers, employees and suppliers.
Loans and advances at amortised cost by stage
The table below presents an analysis of loans and advances at amortised cost by gross exposure, impairment allowance, impairment charge and coverage ratio by stage allocation and business segment as at 30 June 2020. Also included are off-balance sheet loan commitments and financial guarantee contracts by gross exposure, impairment allowance and coverage ratio by stage allocation as at 30 June 2020.
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 30.06.20 | £m | £m | £m | £m | £m | £m | £m | £m | £m | |
Barclays UK | 147,369 | 26,022 | 2,613 | 176,004 | 327 | 1,672 | 1,129 | 3,128 | 172,876 | |
Barclays International | 17,714 | 6,200 | 1,838 | 25,752 | 427 | 1,335 | 1,400 | 3,162 | 22,590 | |
Head Office | 4,649 | 660 | 916 | 6,225 | 8 | 54 | 354 | 416 | 5,809 | |
Total Barclays Group retail | 169,732 | 32,882 | 5,367 | 207,981 | 762 | 3,061 | 2,883 | 6,706 | 201,275 | |
Barclays UK | 28,658 | 5,562 | 1,131 | 35,351 | 24 | 88 | 133 | 245 | 35,106 | |
Barclays International | 76,750 | 38,205 | 2,571 | 117,526 | 237 | 802 | 934 | 1,973 | 115,553 | |
Head Office | 2,977 | - | 38 | 3,015 | - | - | 37 | 37 | 2,978 | |
Total Barclays Group wholesale1 | 108,385 | 43,767 | 3,740 | 155,892 | 261 | 890 | 1,104 | 2,255 | 153,637 | |
Total loans and advances at amortised cost | 278,117 | 76,649 | 9,107 | 363,873 | 1,023 | 3,951 | 3,987 | 8,961 | 354,912 | |
Off-balance sheet loan commitments and financial guarantee contracts2 | 284,807 | 63,327 | 1,569 | 349,703 | 122 | 571 | 48 | 741 | 348,962 | |
Total3 | 562,924 | 139,976 | 10,676 | 713,576 | 1,145 | 4,522 | 4,035 | 9,702 | 703,874 | |
As at 30.06.20 | Half year ended 30.06.20 | |||||||||
Coverage ratio | Loan impairment charge and loan loss rate4 | |||||||||
Stage 1 | Stage 2 | Stage 3 | Total | Loan impairment charge | Loan loss rate | |||||
% | % | % | % | £m | bps | |||||
Barclays UK | 0.2 | 6.4 | 43.2 | 1.8 | 875 | 100 | ||||
Barclays International | 2.4 | 21.5 | 76.2 | 12.3 | 1,230 | 961 | ||||
Head Office | 0.2 | 8.2 | 38.6 | 6.7 | 55 | 178 | ||||
Total Barclays Group retail | 0.4 | 9.3 | 53.7 | 3.2 | 2,160 | 209 | ||||
Barclays UK | 0.1 | 1.6 | 11.8 | 0.7 | 102 | 58 | ||||
Barclays International | 0.3 | 2.1 | 36.3 | 1.7 | 910 | 156 | ||||
Head Office | - | - | 97.4 | 1.2 | - | - | ||||
Total Barclays Group wholesale1 | 0.2 | 2.0 | 29.5 | 1.4 | 1,012 | 131 | ||||
Total loans and advances at amortised cost | 0.4 | 5.2 | 43.8 | 2.5 | 3,172 | 175 | ||||
Off-balance sheet loan commitments and financial guarantee contracts2 | - | 0.9 | 2.0 | 0.2 | 409 | |||||
Other financial assets subject to impairment3 | 157 | |||||||||
Total4 | 0.2 | 3.2 | 37.6 | 1.4 | 3,738 |
1 | Includes Wealth and Private Banking exposures measured on an individual basis, and excludes Business Banking exposures that are managed on a collective basis. The net impact is a difference in total exposure of £1,195m of balances reported as wholesale loans on page 27 in the Loans and advances at amortised cost by product disclosure. |
2 | Excludes loan commitments and financial guarantees of £7.4bn 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 £215.6bn and impairment allowance of £176m. This comprises £37m ECL on £209.2bn stage 1 assets, £24m on £6.3bn stage 2 fair value through other comprehensive income assets, cash collateral and settlement balances and £115m on £115m stage 3 other assets. |
4 | H120 loan impairment charge represents six months of impairment charge, annualised to calculate the loan loss rate. The loan loss rate for H120 is 207bps after applying the total impairment charge of £3,738m. |
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 International | 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 wholesale1 | 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 rate4 | |||||||||
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 International | 0.1 | 3.1 | 27.7 | 0.8 | 113 | 11 | ||||
Head Office | - | - | 94.6 | 1.2 | - | - | ||||
Total Barclays Group wholesale1 | 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 basis, and excludes Business Banking exposures that are managed on a collective basis. The net impact is a difference in total exposure of £6,434m of balances reported as wholesale loans on page 27 in the Loans and advances at amortised cost by product disclosure. |
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 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. |
Loans and advances at amortised cost by product
The table below presents a breakdown of loans and advances at amortised cost and the impairment allowance with stage allocation by asset classification.
Stage 2 | |||||||
As at 30.06.20 | 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 | 134,612 | 17,464 | 1,765 | 1,042 | 20,271 | 2,258 | 157,141 |
Credit cards, unsecured loans and other retail lending | 35,829 | 11,825 | 361 | 557 | 12,743 | 3,463 | 52,035 |
Wholesale loans | 107,676 | 39,631 | 3,291 | 713 | 43,635 | 3,386 | 154,697 |
Total | 278,117 | 68,920 | 5,417 | 2,312 | 76,649 | 9,107 | 363,873 |
Impairment allowance | |||||||
Home loans | 22 | 47 | 15 | 21 | 83 | 397 | 502 |
Credit cards, unsecured loans and other retail lending | 768 | 2,515 | 146 | 286 | 2,947 | 2,535 | 6,250 |
Wholesale loans | 233 | 812 | 80 | 29 | 921 | 1,055 | 2,209 |
Total | 1,023 | 3,374 | 241 | 336 | 3,951 | 3,987 | 8,961 |
Net exposure | |||||||
Home loans | 134,590 | 17,417 | 1,750 | 1,021 | 20,188 | 1,861 | 156,639 |
Credit cards, unsecured loans and other retail lending | 35,061 | 9,310 | 215 | 271 | 9,796 | 928 | 45,785 |
Wholesale loans | 107,443 | 38,837 | 3,193 | 684 | 42,714 | 2,331 | 152,488 |
Total | 277,094 | 65,564 | 5,158 | 1,976 | 72,698 | 5,120 | 354,912 |
Coverage ratio | % | % | % | % | % | % | % |
Home loans | - | 0.3 | 0.8 | 2.0 | 0.4 | 17.6 | 0.3 |
Credit cards, unsecured loans and other retail lending | 2.1 | 21.3 | 40.4 | 51.3 | 23.1 | 73.2 | 12.0 |
Wholesale loans | 0.2 | 2.0 | 3.0 | 4.1 | 2.1 | 31.2 | 1.4 |
Total | 0.4 | 4.9 | 4.8 | 14.5 | 5.2 | 43.8 | 2.5 |
As at 31.12.19 | |||||||
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 |
Total customers on payment holidays amounted to £21.9bn in balances, of which 69% are in Stage 1. If these customers moved from Stage 1 to Stage 2, it would result in an estimated ECL impact of £214m. Staging criteria are broadly consistent with the criteria outlined in the Barclays PLC Annual Report 2019.
Loans and advances at amortised cost by selected sectors
The table below presents a breakdown of loans and advances at amortised cost and the impairment allowance, with gross exposure and stage allocation for selected industry sectors within the wholesale loans portfolio. The industry sectors have been selected based upon the level of management focus they have received following the onset of the COVID-19 pandemic.
Gross exposure | Impairment allowance | ||||||||
Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | ||
As at 30.06.20 | £m | £m | £m | £m | £m | £m | £m | £m | |
Air travel | 1,018 | 462 | 69 | 1,549 | - | 14 | 25 | 39 | |
Hospitality and leisure | 3,567 | 3,600 | 236 | 7,403 | 18 | 121 | 75 | 214 | |
Oil and gas | 1,427 | 2,389 | 407 | 4,223 | 19 | 99 | 185 | 303 | |
Retail | 2,954 | 2,260 | 297 | 5,511 | 37 | 46 | 101 | 184 | |
Shipping | 355 | 369 | 6 | 730 | 1 | 8 | 3 | 12 | |
Transportation | 818 | 358 | 119 | 1,295 | 4 | 21 | 46 | 71 | |
Total | 10,139 | 9,438 | 1,134 | 20,711 | 79 | 309 | 435 | 823 | |
Total of Wholesale exposures | 9% | 22% | 33% | 13% | 34% | 34% | 41% | 37% | |
Gross exposure | Impairment allowance | ||||||||
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 | |
Air travel | 194 | 31 | 26 | 251 | - | - | 24 | 24 | |
Hospitality and leisure | 4,321 | 851 | 199 | 5,371 | 8 | 18 | 29 | 55 | |
Oil and gas | 2,539 | 612 | 136 | 3,287 | 8 | 24 | 47 | 79 | |
Retail | 3,395 | 777 | 207 | 4,379 | 11 | 24 | 85 | 120 | |
Shipping | 357 | 52 | 7 | 416 | 1 | - | 3 | 4 | |
Transportation | 873 | 82 | 89 | 1,044 | 5 | 5 | 54 | 64 | |
Total | 11,679 | 2,405 | 664 | 14,748 | 33 | 71 | 242 | 346 | |
Total of Wholesale exposures | 10% | 23% | 28% | 11% | 23% | 24% | 44% | 35% |
The coverage ratio for selected sectors has increased from 2.3% as at 31 December 2019 to 4.0% as at 30 June 2020. Exposure to UK commercial real estate of £9.0bn, excluding government backed schemes, was in line with 31 December 2019 (£9.1bn). Coverage increased from 0.56% to 0.85% in the period.
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 ECL, lifetime ECL and credit-impaired is included in the Barclays PLC Annual Report 2019 on page 259. Transfers between stages in the table have been reflected as if they had taken place at the beginning of the year. The movements are measured over a 6-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 | |
Home loans | £m | £m | £m | £m | £m | £m | £m | £m |
As at 1 January 2020 | 135,713 | 22 | 17,043 | 64 | 2,155 | 346 | 154,911 | 432 |
Transfers from Stage 1 to Stage 2 | (7,161) | (1) | 7,161 | 1 | - | - | - | - |
Transfers from Stage 2 to Stage 1 | 2,985 | 7 | (2,985) | (7) | - | - | - | - |
Transfers to Stage 3 | (99) | - | (288) | (8) | 387 | 8 | - | - |
Transfers from Stage 3 | 24 | - | 112 | 1 | (136) | (1) | - | - |
Business activity in the year | 9,928 | 1 | 277 | 1 | - | - | 10,205 | 2 |
Net drawdowns, repayments, net re-measurement and movement due to exposure and risk parameter changes | (2,752) | (6) | (355) | 32 | (2) | 62 | (3,109) | 88 |
Final repayments | (4,026) | (1) | (694) | (1) | (137) | (9) | (4,857) | (11) |
Disposals | - | - | - | - | - | - | - | - |
Write-offs1 | - | - | - | - | (9) | (9) | (9) | (9) |
As at 30 June 20202 | 134,612 | 22 | 20,271 | 83 | 2,258 | 397 | 157,141 | 502 |
Credit cards, unsecured loans and other retail lending | ||||||||
As at 1 January 2020 | 46,012 | 542 | 10,759 | 2,007 | 3,409 | 2,335 | 60,180 | 4,884 |
Transfers from Stage 1 to Stage 2 | (6,228) | (124) | 6,228 | 124 | - | - | - | - |
Transfers from Stage 2 to Stage 13 | 2,977 | 465 | (2,977) | (465) | - | - | - | - |
Transfers to Stage 3 | (261) | (12) | (796) | (325) | 1,057 | 337 | - | - |
Transfers from Stage 3 | 36 | 10 | 62 | 9 | (98) | (19) | - | - |
Business activity in the year | 3,645 | 45 | 215 | 44 | 15 | 6 | 3,875 | 95 |
Net drawdowns, repayments, net re-measurement and movement due to exposure and risk parameter changes3 | (6,800) | (128) | (410) | 1,595 | 136 | 814 | (7,074) | 2,281 |
Final repayments | (2,059) | (22) | (155) | (22) | (125) | (36) | (2,339) | (80) |
Disposals4 | (1,493) | (8) | (183) | (20) | (86) | (57) | (1,762) | (85) |
Write-offs1 | - | - | - | - | (845) | (845) | (845) | (845) |
As at 30 June 20202 | 35,829 | 768 | 12,743 | 2,947 | 3,463 | 2,535 | 52,035 | 6,250 |
1 | In H120, gross write-offs amounted to £953m (H119: £951m) and post write-off recoveries amounted to £15m (H119: £73m). Net write-offs represent gross write-offs less post write-off recoveries and amounted to £938m (H119: £878m). |
2 | Other financial assets subject to impairment excluded from the tables 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 £215.6bn (December 2019: £149.3bn) and impairment allowance of £176m (December 2019: £24m). This comprises £37m ECL (December 2019: £12m) on £209.2bn Stage 1 assets (December 2019: £148.5m), £24m (December 2019: £2m) on £6.3bn Stage 2 fair value through other comprehensive income assets, cash collateral and settlement assets (December 2019: £0.8bn) and £115m (December 2019: £10m) on £115m Stage 3 other assets (December 2019: £10m). |
3 | Transfers and risk parameter changes include a £253m net release in ECL arising from a reclassification of £2.4bn gross loans and advances from Stage 2 to Stage 1 in Credit cards, unsecured loans and other retail lending resulting from a review of probability of default models in the period. Barclays continually reviews the output of models to determine appropriateness of the ECL calculation, including reviews of model monitoring, external benchmarking and experience of model operation over an extended period of time. |
4 | Disposals reported within Credit cards, unsecured loans and other retail lending portfolio include sale of motor financing business within the Barclays Partner Finance business. |
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 2020 | 117,541 | 143 | 10,432 | 302 | 2,359 | 547 | 130,332 | 992 |
Transfers from Stage 1 to Stage 2 | (27,187) | (63) | 27,187 | 63 | - | - | - | - |
Transfers from Stage 2 to Stage 1 | 2,076 | 20 | (2,076) | (20) | - | - | - | - |
Transfers to Stage 3 | (832) | (3) | (653) | (44) | 1,485 | 47 | - | - |
Transfers from Stage 3 | 251 | 9 | 250 | 7 | (501) | (16) | - | - |
Business activity in the year | 23,797 | 22 | 4,316 | 213 | 42 | 12 | 28,155 | 247 |
Net drawdowns, repayments, net re-measurement and movement due to exposure and risk parameter changes | 15,311 | 124 | 5,831 | 415 | 360 | 601 | 21,502 | 1,140 |
Final repayments | (23,281) | (19) | (1,643) | (15) | (260) | (37) | (25,184) | (71) |
Disposals | - | - | (9) | - | - | - | (9) | - |
Write-offs1 | - | - | - | - | (99) | (99) | (99) | (99) |
As at 30 June 20202 | 107,676 | 233 | 43,635 | 921 | 3,386 | 1,055 | 154,697 | 2,209 |
Reconciliation of ECL movement to impairment charge/(release) for the period | £m | |||||||
Home loans | 79 | |||||||
Credit cards, unsecured loans and other retail lending | 2,296 | |||||||
Wholesale loans | 1,316 | |||||||
ECL movement excluding assets derecognised due to disposals and write-offs | 3,691 | |||||||
Recoveries and reimbursements3 | (294) | |||||||
Exchange and other adjustments4 | (225) | |||||||
Impairment charge on loan commitments and other financial guarantees | 409 | |||||||
Impairment charge on other financial assets2 | 157 | |||||||
As at 30 June 2020 | 3,738 |
1 | In H120, gross write-offs amounted to £953m (H119: £951m) and post write-off recoveries amounted to £15m (H119: £73m). Net write-offs represent gross write-offs less post write-off recoveries and amounted to £938m (H119: £878m). |
2 | Other financial assets subject to impairment excluded from the tables 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 £215.6bn (December 2019: £149.3bn) and impairment allowance of £176m (December 2019: £24m). This comprises £37m ECL (December 2019: £12m) on £209.2bn Stage 1 assets (December 2019: £148.5m), £24m (December 2019: £2m) on £6.3bn Stage 2 fair value through other comprehensive income assets, cash collateral and settlement assets (December 2019: £0.8bn) and £115m (December 2019: £10m) on £115m Stage 3 other assets (December 2019: £10m). |
3 | Recoveries and reimbursements includes a net gain in relation to reimbursements from financial guarantee contracts held with third parties of £279m and post write off recoveries of £15m. |
4 | 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 | |
Home loans | £m | £m | £m | £m | £m | £m | £m | £m |
As at 1 January 2020 | 9,542 | - | 500 | - | 4 | - | 10,046 | - |
Net transfers between stages | (93) | - | 93 | - | - | - | - | - |
Business activity in the year | 136 | - | - | - | - | - | 136 | - |
Net drawdowns, repayments, net re-measurement and movement due to exposure and risk parameter changes | (875) | - | (6) | - | (1) | - | (882) | - |
Limit management | (117) | - | (16) | - | - | - | (133) | - |
As at 30 June 2020 | 8,593 | - | 571 | - | 3 | - | 9,167 | - |
Credit cards, unsecured loans and other retail lending | ||||||||
As at 1 January 2020 | 125,759 | 35 | 6,238 | 71 | 250 | 14 | 132,247 | 120 |
Net transfers between stages | (4,914) | 39 | 4,613 | (38) | 301 | (1) | - | - |
Business activity in the year | 4,012 | 2 | 94 | 1 | 1 | 1 | 4,107 | 4 |
Net drawdowns, repayments, net re-measurement and movement due to exposure and risk parameter changes | 9,357 | (4) | 248 | 123 | (312) | 8 | 9,293 | 127 |
Limit management | (5,402) | (1) | (277) | (1) | (34) | (3) | (5,713) | (5) |
As at 30 June 2020 | 128,812 | 71 | 10,916 | 156 | 206 | 19 | 139,934 | 246 |
Wholesale loans | ||||||||
As at 1 January 2020 | 185,839 | 62 | 12,447 | 99 | 681 | 41 | 198,967 | 202 |
Net transfers between stages | (38,868) | (22) | 37,836 | 15 | 1,032 | 7 | - | - |
Business activity in the year | 24,882 | 7 | 3,389 | 30 | 107 | - | 28,378 | 37 |
Net drawdowns, repayments, net re-measurement and movement due to exposure and risk parameter changes | 11,805 | 11 | 1,026 | 289 | (221) | (19) | 12,610 | 281 |
Limit management | (36,256) | (7) | (2,858) | (18) | (239) | - | (39,353) | (25) |
As at 30 June 2020 | 147,402 | 51 | 51,840 | 415 | 1,360 | 29 | 200,602 | 495 |
Measurement uncertainty
The Group uses a five-scenario model to calculate ECL. Absent the conditions surrounding the COVID-19 pandemic, a Baseline scenario is typically generated based on an external consensus forecast 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). 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 typically calibrated to a similar severity to internal stress tests, whilst also considering IFRS 9 specific sensitivities and non-linearity Downside 2 is typically 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 generally calibrated to be symmetric to the adverse scenarios, subject to a ceiling calibrated to relevant recent favourable benchmark scenarios. The scenarios include eight economic variables (GDP, unemployment, House Price Index (HPI) and base rates in both the UK and US markets), and expanded variables using statistical models based on historical correlations. 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. To calculate ECL a probability weight is assigned to each scenario.
Following the onset of the COVID-19 pandemic, the Group generated a Baseline scenario in March 2020 that reflected the most recent economic forecasts available in the market (combined with internal assumptions) and estimated impacts from significant support measures taken by Barclays, central banks and governments across the Group’s key markets. This scenario assumed a strong contraction in GDP and a sharp rise in unemployment in 2020 across both the UK and US, and required a recalibration of probability weights. This scenario was superseded by a further revised Baseline scenario generated in June 2020, based broadly on the latest economic forecasts which recognise some impacts from the various support measures still in place across the Group’s key markets. Upside and downside scenarios were also regenerated in June 2020 (together with the revised Baseline scenario, the “COVID-19 scenarios”). The downside scenarios reflect slower economic growth than the Baseline with social distancing measures continuing to drag GDP. Economic growth begins to recover later in 2020 in Downside 1 but only in 2021 in the Downside 2 scenario. The upside scenarios reflect a faster rebound in economic growth than the Baseline with a sharp decrease in infection rates and an almost fully reopened economy. Scenario weights were also revised in June 2020 with greater weight being applied to the tail scenarios (Upside 2 and Downside 2). This reflects the significant range of uncertainty in the economic environment compared to previous quarters given the conditions surrounding the COVID-19 pandemic.
The economic environment remains uncertain and future impairment charges may be subject to further volatility (including from changes to macroeconomic variable forecasts) depending on the longevity of the COVID-19 pandemic and related containment measures, as well as the longer term effectiveness of central bank, government and other support measures.
The tables below show the key macroeconomic variables used in the COVID-19 Baseline scenario and the probability weights applied to each respective scenario.
Baseline average macroeconomic variables used in the calculation of ECL | ||||
2020 | 2021 | 2022 | Expected Worst Point | |
As at 30.06.20 | % | % | % | % |
UK GDP1 | (8.7) | 6.1 | 2.9 | (51.4) |
UK unemployment2 | 6.6 | 6.5 | 4.4 | 8.0 |
UK HPI3 | 0.6 | 2.0 | - | (1.5) |
UK bank rate | 0.2 | 0.1 | 0.1 | 0.1 |
US GDP1 | (4.2) | 4.4 | (0.3) | (30.4) |
US unemployment4 | 9.3 | 7.6 | 5.5 | 13.4 |
US HPI5 | 1.1 | 1.8 | (0.8) | (1.9) |
US federal funds rate | 0.5 | 0.3 | 0.3 | 0.3 |
As at 31.03.20 | ||||
UK GDP1 | (8.0) | 6.3 | 1.3 | (51.5) |
UK unemployment2 | 6.7 | 4.5 | 3.7 | 8.0 |
UK HPI3 | (3.5) | 2.6 | 2.7 | (6.5) |
UK bank rate | 0.1 | 0.3 | 0.3 | 0.1 |
US GDP1 | (6.4) | 4.4 | 3.2 | (45.0) |
US unemployment4 | 12.9 | 7.5 | 3.8 | 17.0 |
US HPI5 | - | 0.7 | 0.8 | (0.3) |
US federal funds rate | 0.3 | 0.3 | 0.3 | 0.3 |
1 | Average Real GDP seasonally adjusted change in year (31.03.20 based on Barclays Global Economic Forecasts); expected worst point is the minimum seasonally adjusted quarterly annualised rate. |
2 | Average UK unemployment rate 16-year+. |
3 | Change in average yearly UK HPI = Halifax All Houses, All Buyers index, relative to prior year end; worst point is based on cumulative drawdown in year relative to prior year end. |
4 | Average US civilian unemployment rate 16-year+. |
5 | Change in average yearly US HPI = FHFA house price index, relative to prior year end; worst point is based on cumulative drawdown in year relative to prior year end. (31.03.20 based on QoQ average growth rates). |
Scenario probability weighting | |||||
Upside 2 | Upside 1 | Baseline | Downside 1 | Downside 2 | |
% | % | % | % | % | |
As at 30.06.20 | |||||
Scenario probability weighting | 20.3 | 22.4 | 25.4 | 17.5 | 14.4 |
As at 31.03.20 | |||||
Scenario probability weighting | 5.0 | 20.8 | 46.7 | 21.0 | 6.5 |
As at 31.12.19 | |||||
Scenario probability weighting | 10.1 | 23.1 | 40.8 | 22.7 | 3.3 |
Macroeconomic variables (specific bases)1 | |||||
Upside 2 | Upside 1 | Baseline | Downside 1 | Downside 2 | |
As at 30.06.20 | % | % | % | % | % |
UK GDP2 | 32.7 | 26.4 | 5.4 | 1.6 | 1.2 |
UK unemployment3 | 3.5 | 3.6 | 4.9 | 9.6 | 10.9 |
UK HPI4 | 45.3 | 27.2 | 2.3 | (15.0) | (33.4) |
UK bank rate3 | 0.1 | 0.1 | 0.2 | 0.3 | 0.2 |
US GDP2 | 19.1 | 13.5 | 3.3 | 2.0 | (3.1) |
US unemployment3 | 4.1 | 4.4 | 6.3 | 15.4 | 18.7 |
US HPI4 | 32.3 | 20.9 | 2.3 | (8.8) | (19.7) |
US federal funds rate3 | 0.3 | 0.3 | 0.3 | 0.4 | 0.4 |
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 30.06.19 | |||||
UK GDP2 | 4.5 | 3.1 | 1.7 | 0.3 | (4.1) |
UK unemployment3 | 3.4 | 3.9 | 4.3 | 5.7 | 8.8 |
UK HPI4 | 46.4 | 32.6 | 3.2 | (0.5) | (32.1) |
UK bank rate3 | 0.8 | 0.8 | 1.0 | 2.5 | 4.0 |
US GDP2 | 4.8 | 3.7 | 2.1 | 0.4 | (3.3) |
US unemployment3 | 3.0 | 3.4 | 3.7 | 5.2 | 8.4 |
US HPI4 | 36.9 | 30.2 | 4.1 | - | (17.4) |
US federal funds rate3 | 2.3 | 2.3 | 2.7 | 3.0 | 3.5 |
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. Forecast period based on 20 quarters from Q3 2020. |
2 | Upside scenario is the highest annual average growth rate based on seasonally adjusted quarterly annualised rate; 5-year average in Baseline; downside is the lowest annual average growth rate based on seasonally adjusted quarterly annualised rate. |
3 | Lowest yearly average in Upside scenarios; 5-year average in Baseline; highest yearly average in Downside scenarios. |
4 | Cumulative growth (trough to peak) in Upside scenarios; 5-year average in Baseline; cumulative fall (peak-to-trough) in Downside scenarios. |
Macroeconomic variables (5-year averages)1 | |||||
Upside 2 | Upside 1 | Baseline | Downside 1 | Downside 2 | |
As at 30.06.20 | % | % | % | % | % |
UK GDP | 8.9 | 7.2 | 5.4 | 5.2 | 2.8 |
UK unemployment | 4.0 | 4.3 | 4.9 | 6.2 | 7.2 |
UK HPI | 7.8 | 5.0 | 2.3 | (1.4) | (5.5) |
UK bank rate | 0.4 | 0.3 | 0.2 | 0.1 | 0.1 |
US GDP | 5.9 | 4.4 | 3.3 | 2.7 | 1.8 |
US unemployment | 4.4 | 5.1 | 6.3 | 8.4 | 10.9 |
US HPI | 5.8 | 3.9 | 2.3 | (0.5) | (3.1) |
US federal funds rate | 0.6 | 0.5 | 0.3 | 0.3 | 0.3 |
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 30.06.19 | |||||
UK GDP | 3.4 | 2.6 | 1.7 | 0.9 | (0.6) |
UK unemployment | 3.7 | 4.0 | 4.3 | 5.1 | 7.9 |
UK HPI | 7.9 | 5.8 | 3.2 | 0.9 | (6.4) |
UK bank rate | 0.8 | 0.8 | 1.0 | 2.3 | 3.7 |
US GDP | 3.7 | 3.0 | 2.1 | 1.1 | (0.5) |
US unemployment | 3.1 | 3.5 | 3.7 | 4.7 | 7.4 |
US HPI | 6.5 | 5.4 | 4.1 | 2.4 | (2.6) |
US federal funds rate | 2.3 | 2.3 | 2.7 | 3.0 | 3.4 |
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. For GDP and HPI, numbers represent average of seasonally adjusted quarterly annualised rates. Forecast period based on 20 quarters from Q3 2020. |
The following table provides a breakdown of the key drivers of the Group’s loan impairment charge.
Drivers of loan impairment charge | |||
Q120 | Q220 | Total | |
£m | £m | £m | |
Impairment charge generated using scenarios before COVID-19 | 370 | 424 | 794 |
Single name wholesale loan charges | 405 | 186 | 591 |
Loan impairment charge prior to impact of COVID-19 scenarios | 775 | 610 | 1,385 |
Impact of COVID-19 scenarios and weights | 1,190 | 1,163 | 2,353 |
Specific charge in respect of exposures to selected sectors | 300 | (150) | 150 |
Incorporation of provision for UK economic uncertainty | (150) | - | (150) |
Total loan impairment charge | 2,115 | 1,623 | 3,738 |
The impact of the COVID-19 scenarios and weighting adjustments has resulted in a £2,353m increase in ECL from the pre-COVID scenarios, primarily driven by forecasts for a prolonged period of UK and US unemployment.
Estimated effects from the significant support measures provided by Barclays, central banks and governments across the Group’s key markets as a result of the COVID-19 pandemic have been factored into the calculation of the Group’s loan impairment charge.
The £300m provision taken in Q120 in respect of oil price risk has been released given the Q2 rebound in oil prices and residual risk on the energy sector has been recognised in a Q2 charge of c.£150m under the COVID-19 scenarios and weights. A specific charge of £150m in respect of exposures to selected sectors represents additional provisions taken in Q220 in response to the current slowdown, in particular in the hospitality and retail sectors.
The £150m provision for UK economic uncertainty held at the year-end was incorporated within the updated scenarios in Q1.
ECL under 100% weighted scenarios for modelled portfolios
The table below shows the ECL assuming scenarios have been 100% weighted. Model exposures are allocated to a stage based on the individual scenario rather than through a probability-weighted approach as required for Barclays reported impairment allowances. As a result, it is not possible to back solve to the final reported weighted ECL from the individual scenarios as a balance may be assigned to a different stage dependent on the scenario. Model exposure uses exposure at default (EAD) values and is not directly comparable to gross exposure used in prior disclosures. For Credit cards, unsecured loans and other retail lending, an average EAD measure is used (12 month or lifetime, depending on stage allocation in each scenario). Therefore, the model exposure movement into Stage 2 is higher than the corresponding Stage 1 reduction.
All ECL using a model is included, with the exception of Treasury assets (£30m of ECL), non-modelled exposures and management adjustments.
Model exposures allocated to Stage 3 do not change in any of the scenarios as the transition criteria relies only on observable evidence of default as at 30 June 2020 and not on macroeconomic scenarios.
The Downside 2 scenario represents a global recession with substantial falls in both UK and US GDP. Unemployment in UK and US markets rises to 11% and 19% respectively and there are substantial falls in asset prices including housing.
Under the Downside 2 scenario, model exposure moves between stages as the economic environment weakens. This can be seen in the movement of £50bn of model exposure into Stage 2 between the Weighted and Downside 2 scenario. ECL increases in Stage 2 predominantly due to unsecured portfolios as economic conditions deteriorate.
Scenarios | ||||||
As at 30.06.20 | Weighted | Upside 2 | Upside 1 | Baseline | Downside 1 | Downside 2 |
Stage 1 Model Exposure (£m) | ||||||
Home loans | 125,380 | 128,154 | 127,314 | 126,404 | 122,433 | 112,937 |
Credit cards, unsecured loans and other retail lending | 58,303 | 63,114 | 62,525 | 61,361 | 58,654 | 55,410 |
Wholesale loans | 122,594 | 144,825 | 145,491 | 140,318 | 115,054 | 93,598 |
Stage 1 Model ECL (£m) | ||||||
Home loans | 15 | 7 | 8 | 10 | 25 | 273 |
Credit cards, unsecured loans and other retail lending | 592 | 558 | 612 | 636 | 665 | 649 |
Wholesale loans | 293 | 330 | 317 | 293 | 283 | 271 |
Stage 1 Coverage (%) | ||||||
Home loans | - | - | - | - | - | 0.2 |
Credit cards, unsecured loans and other retail lending | 1.0 | 0.9 | 1.0 | 1.0 | 1.1 | 1.2 |
Wholesale loans | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 | 0.3 |
Stage 2 Model Exposure (£m) | ||||||
Home loans | 20,058 | 17,284 | 18,124 | 19,034 | 23,005 | 32,501 |
Credit cards, unsecured loans and other retail lending | 23,620 | 14,746 | 17,298 | 21,270 | 26,748 | 32,457 |
Wholesale loans | 67,528 | 45,296 | 44,631 | 49,804 | 75,067 | 96,523 |
Stage 2 Model ECL (£m) | ||||||
Home loans | 75 | 48 | 48 | 55 | 70 | 194 |
Credit cards, unsecured loans and other retail lending | 3,715 | 2,124 | 2,643 | 3,527 | 4,950 | 6,562 |
Wholesale loans | 2,385 | 1,378 | 1,484 | 1,873 | 3,349 | 4,790 |
Stage 2 Coverage (%) | ||||||
Home loans | 0.4 | 0.3 | 0.3 | 0.3 | 0.3 | 0.6 |
Credit cards, unsecured loans and other retail lending | 15.7 | 14.4 | 15.3 | 16.6 | 18.5 | 20.2 |
Wholesale loans | 3.5 | 3.0 | 3.3 | 3.8 | 4.5 | 5.0 |
Stage 3 Model Exposure (£m) | ||||||
Home loans | 1,750 | 1,750 | 1,750 | 1,750 | 1,750 | 1,750 |
Credit cards, unsecured loans and other retail lending | 2,928 | 2,928 | 2,928 | 2,928 | 2,928 | 2,928 |
Wholesale loans1 | 1,864 | 1,864 | 1,864 | 1,864 | 1,864 | 1,864 |
Stage 3 Model ECL (£m) | ||||||
Home loans | 330 | 271 | 273 | 315 | 380 | 465 |
Credit cards, unsecured loans and other retail lending | 2,346 | 2,277 | 2,309 | 2,345 | 2,392 | 2,449 |
Wholesale loans1 | 91 | 80 | 83 | 93 | 96 | 109 |
Stage 3 Coverage (%) | ||||||
Home loans | 18.9 | 15.5 | 15.6 | 18.0 | 21.7 | 26.6 |
Credit cards, unsecured loans and other retail lending | 80.1 | 77.8 | 78.9 | 80.1 | 81.7 | 83.6 |
Wholesale loans1 | 4.9 | 4.3 | 4.5 | 5.0 | 5.2 | 5.8 |
Total Model ECL (£m) | ||||||
Home loans | 420 | 326 | 329 | 380 | 475 | 932 |
Credit cards, unsecured loans and other retail lending | 6,653 | 4,959 | 5,564 | 6,508 | 8,007 | 9,660 |
Wholesale loans1 | 2,769 | 1,788 | 1,884 | 2,259 | 3,728 | 5,170 |
Total Model ECL | 9,842 | 7,073 | 7,777 | 9,147 | 12,210 | 15,762 |
1 | Material wholesale loan defaults are individually assessed across different recovery strategies. |
Reconciliation to total ECL | £m | |||||
Total model ECL | 9,842 | |||||
ECL from individually assessed impairments on stage 3 loans | 1,026 | |||||
ECL from non-modelled and other management adjustments1 | (1,166) | |||||
Total ECL | 9,702 |
1 | Management adjustments of £1.2bn materially reflect estimated impacts from the significant support measures provided by Barclays, central banks and governments across the Group’s key markets as a result of the COVID-19 pandemic. Some impacts from these support measures are recognised in the COVID-19 scenarios used to calculate modelled ECL. However, given the uncertain economic environment and the unprecedented policy response to the pandemic, management have reviewed the output of the models across key portfolios to assess the appropriateness of the total ECL and to more fully estimate the impact given the longevity of support measures. Such assessments are inherently uncertain and actual credit losses may differ from the ECL depending on the evolution of the COVID-19 pandemic. |
The dispersion of results around the Baseline is an indication of uncertainty around future projections. The disclosure highlights the results of the alternative scenarios enabling the reader to understand the extent of the impact on exposure and ECL from the upside/downside scenarios. Consequently, the use of five scenarios with associated weightings results in a total weighted ECL uplift from the Baseline ECL of 8%.
Scenarios | ||||||
As at 31.12.19 | Weighted | Upside 2 | Upside 1 | Baseline | Downside 1 | Downside 2 |
Stage 1 Model Exposure (£m) | ||||||
Home loans | 137,929 | 139,574 | 138,992 | 138,249 | 136,454 | 132,505 |
Credit cards, unsecured loans and other retail lending | 68,619 | 69,190 | 69,012 | 68,388 | 68,309 | 67,015 |
Wholesale loans | 160,544 | 162,717 | 162,058 | 161,111 | 157,720 | 143,323 |
Stage 1 Model ECL (£m) | ||||||
Home loans | 6 | 4 | 5 | 5 | 7 | 19 |
Credit cards, unsecured loans and other retail lending | 505 | 490 | 495 | 495 | 511 | 528 |
Wholesale loans | 209 | 162 | 174 | 188 | 271 | 297 |
Stage 1 Coverage (%) | ||||||
Home loans | - | - | - | - | - | - |
Credit cards, unsecured loans and other retail lending | 0.7 | 0.7 | 0.7 | 0.7 | 0.7 | 0.8 |
Wholesale loans | 0.1 | 0.1 | 0.1 | 0.1 | 0.2 | 0.2 |
Stage 2 Model Exposure (£m) | ||||||
Home loans | 16,889 | 15,245 | 15,826 | 16,570 | 18,364 | 22,314 |
Credit cards, unsecured loans and other retail lending | 13,406 | 11,449 | 12,108 | 13,075 | 15,663 | 19,615 |
Wholesale loans | 15,947 | 13,773 | 14,433 | 15,380 | 18,770 | 33,168 |
Stage 2 Model ECL (£m) | ||||||
Home loans | 41 | 33 | 34 | 36 | 47 | 170 |
Credit cards, unsecured loans and other retail lending | 1,844 | 1,412 | 1,562 | 1,771 | 2,384 | 4,285 |
Wholesale loans | 414 | 285 | 323 | 374 | 579 | 1,427 |
Stage 2 Coverage (%) | ||||||
Home loans | 0.2 | 0.2 | 0.2 | 0.2 | 0.3 | 0.8 |
Credit cards, unsecured loans and other retail lending | 13.8 | 12.3 | 12.9 | 13.5 | 15.2 | 21.8 |
Wholesale loans | 2.6 | 2.1 | 2.2 | 2.4 | 3.1 | 4.3 |
Stage 3 Model Exposure (£m) | ||||||
Home loans | 1,670 | 1,670 | 1,670 | 1,670 | 1,670 | 1,670 |
Credit cards, unsecured loans and other retail lending | 3,008 | 3,008 | 3,008 | 3,008 | 3,008 | 3,008 |
Wholesale loans1 | 1,489 | 1,489 | 1,489 | 1,489 | 1,489 | 1,489 |
Stage 3 Model ECL (£m) | ||||||
Home loans | 268 | 262 | 264 | 266 | 272 | 316 |
Credit cards, unsecured loans and other retail lending | 2,198 | 2,154 | 2,174 | 2,195 | 2,235 | 2,292 |
Wholesale loans1 | 118 | 111 | 114 | 117 | 127 | 128 |
Stage 3 Coverage (%) | ||||||
Home loans | 16.0 | 15.7 | 15.8 | 15.9 | 16.3 | 18.9 |
Credit cards, unsecured loans and other retail lending | 73.1 | 71.6 | 72.3 | 73.0 | 74.3 | 76.2 |
Wholesale loans1 | 7.9 | 7.4 | 7.6 | 7.9 | 8.5 | 8.6 |
Total Model ECL (£m) | ||||||
Home loans | 315 | 299 | 303 | 307 | 326 | 505 |
Credit cards, unsecured loans and other retail lending | 4,547 | 4,056 | 4,231 | 4,461 | 5,130 | 7,105 |
Wholesale loans1 | 741 | 558 | 611 | 679 | 977 | 1,852 |
Total Model ECL | 5,603 | 4,913 | 5,145 | 5,447 | 6,433 | 9,462 |
1 | Material wholesale loan defaults are individually assessed across different recovery strategies. |
Reconciliation to total ECL1 | £m | |||||
Total model ECL | 5,603 | |||||
ECL from individually assessed impairments on stage 3 loans | 419 | |||||
ECL from non-modelled and other management adjustments | 608 | |||||
Total ECL | 6,630 |
1 | The table has been re-presented to separately show the impact of individually assessed impairments of £419m. This was included in the Barclays PLC Annual Report 2019 with non-modelled and other adjustments of £268m. Non-modelled and other adjustments are now disclosed within the other management adjustments category of £608m. |
Analysis of specific portfolios and asset types
Secured home loans
The UK home loan portfolio primarily comprises first lien mortgages and accounts for 92% (December 2019: 92%) of the Group’s total home loans balance.
Home loans principal portfolios | Barclays UK | |||
As at 30.06.20 | As at 31.12.19 | |||
Gross loans and advances (£m) | 145,205 | 143,259 | ||
90 day arrears rate, excluding recovery book (%) | 0.2 | 0.2 | ||
Annualised gross charge-off rate - 180 days past due (%) | 0.5 | 0.6 | ||
Recovery book proportion of outstanding balances (%) | 0.6 | 0.5 | ||
Recovery book impairment coverage ratio (%) | 3.5 | 5.3 | ||
Average marked to market LTV | ||||
Balance weighted (%) | 51.5 | 51.1 | ||
Valuation weighted (%) | 37.5 | 37.3 | ||
New lending | Half year ended 30.06.20 | Half year ended 30.06.19 | ||
New home loan completions (£m) | 9,977 | 11,097 | ||
New home loans proportion > 90% LTV (%) | 3.7 | 3.9 | ||
Average LTV on new home loans: balance weighted (%) | 68.4 | 67.1 | ||
Average LTV on new home loans: valuation weighted (%) | 60.0 | 58.9 |
Home loans principal portfolios – distribution of balances by LTV1,2 | ||||||||||||
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 30.06.20 | ||||||||||||
<=75% | 73.3 | 12.3 | 0.6 | 86.2 | 10.4 | 22.4 | 32.0 | 64.8 | - | 0.1 | 2.5 | - |
>75% and <=90% | 11.5 | 1.0 | - | 12.5 | 3.0 | 13.7 | 9.0 | 25.7 | - | 0.7 | 14.6 | 0.1 |
>90% and <=100% | 1.1 | 0.1 | - | 1.2 | 0.4 | 1.6 | 2.0 | 4.0 | - | 1.0 | 26.5 | 0.2 |
>100% | 0.1 | - | - | 0.1 | 0.1 | 1.3 | 4.1 | 5.5 | 0.1 | 2.8 | 39.6 | 3.0 |
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 |
1 | Portfolio mark to market based on the most updated valuation including recovery book balances. Updated valuations reflect the application of the latest HPI available as at 30 June 2020. |
2 | The average LTV of the customers taking payment holidays is 57%. Of the customers taking payment holidays, 35% of customers are in less than 60% LTV bucket, 40% in 60%-80% LTV bucket and 25% in greater than 80% LTV bucket. |
The change in impairment coverage by loan to value ratio in the period is due to the impact of the change in economic assumptions and scenario weights, reflecting the COVID-19 crisis. This has resulted in a redistribution of the impairment stock by loan to value segment for the UK Mortgage portfolio with no change in overall impairment coverage for this portfolio.
During H120, a total of 120k payment holidays were provided to customers. At 30 June 2020, the book value of the portfolio where payment holidays have been granted was £14.9bn, representing 10.3% of the portfolio.
Head Office: Italian home loans and advances at amortised cost remained broadly stable at £6.1bn (2019: £6.0bn). The portfolio is secured on residential property with an average balance weighted mark to market LTV of 63.1% (2019: 64.4%). 90-day arrears remained broadly stable at 1.9% (2019: 1.8%), gross charge-off rates increased slightly to 1.1% (2019: 0.8%).
Credit cards, unsecured loans and other retail lending
The principal portfolios listed below accounted for 86% (December 2019: 87%) 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 30.06.20 | £m | % | % | % | % |
Barclays UK | |||||
UK cards | 13,639 | 2.0 | 1.0 | 2.6 | 2.6 |
UK personal loans | 5,526 | 2.4 | 1.4 | 2.9 | 2.7 |
Barclays Partner Finance1 | 2,286 | 0.8 | 0.4 | 1.2 | 1.2 |
Barclays International | |||||
US cards | 19,505 | 2.4 | 1.4 | 5.1 | 5.1 |
Germany consumer lending | 3,570 | 1.6 | 0.8 | 1.0 | 0.9 |
As at 31.12.19 | |||||
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 Finance1 | 4,134 | 0.9 | 0.3 | 1.7 | 1.7 |
Germany consumer lending | 3,558 | 1.7 | 0.7 | 2.1 | 1.3 |
1 | On 1 April 2020, the Barclays Partner Finance business moved from Barclays International to Barclays UK. The 2019 comparative figures have not been restated. |
UK cards: 30 and 90 day arrears rates increased by 0.3% and 0.2% respectively. The majority of the increase was driven by a £2.8bn reduction in balances, and prior to payment holidays being initiated, lower collections capacity in the first few weeks of the COVID-19 related lockdown. During H120, a total of 151k payment holidays were provided to customers. At 30 June 2020, the book value of the portfolio where payment holidays have been granted was £664m, representing 4.9% of the portfolio.
UK personal loans: 30 and 90 day arrears rates increased by 0.3% and 0.4% respectively, driven by a 10% reduction in overall balances, coupled with lower collections capacity prior to payment holidays being initiated in the first few weeks of the COVID-19 related lockdown. During H120, a total of 74k payment holidays were provided to customers. At 30 June 2020, the book value of the portfolio where payment holidays have been granted was £609m, representing 11.0% of the portfolio.
Barclays Partner Finance: The marginal improvement in the 30 day arrears rate was primarily a result of the sale of the motor financing business, and since the introduction of payment holidays, lower flows into delinquency. 90 day arrears rate slightly worsened as prior to payment holidays being initiated, there was lower collections capacity in the first few weeks of the COVID-19 related lockdown. During H120, a total of 13k payment holidays were provided to customers. At 30 June 2020, the book value of the portfolio where payment holidays have been granted was £43m, representing 1.9% of the portfolio.
US cards: 30 day arrears rate decreased due to payment holidays granted to customers impacted by COVID-19 which reduced the delinquency entrance rate and overall flow through delinquency. During H120, a total of 213k payment holidays were provided to customers. At 30 June 2020, the book value of the portfolio where payment holidays have been granted was £567m, representing 2.9% of the portfolio.
Germany consumer lending: The improvement in the 30 day arrears rate was primarily driven by payment deferrals offered by Germany in Q220. During H120, a total of 8k payment holidays were provided to customers. At 30 June 2020, the book value of the portfolio where payment holidays have been granted was £98m, representing 2.7% of the portfolio.
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 class | |||||||||||
Half year ended 30.06.20 | Half year ended 31.12.19 | Half year ended 30.06.19 | |||||||||
Average | High1 | Low1 | Average | High1 | Low1 | Average | High1 | Low1 | |||
£m | £m | £m | £m | £m | £m | £m | £m | £m | |||
Credit risk | 22 | 38 | 10 | 13 | 17 | 11 | 11 | 14 | 8 | ||
Interest rate risk | 9 | 17 | 6 | 7 | 11 | 5 | 5 | 9 | 3 | ||
Equity risk | 15 | 35 | 6 | 11 | 22 | 5 | 9 | 16 | 5 | ||
Basis risk | 10 | 16 | 7 | 9 | 11 | 7 | 8 | 9 | 6 | ||
Spread risk | 5 | 9 | 3 | 4 | 5 | 3 | 4 | 5 | 3 | ||
Foreign exchange risk | 5 | 7 | 2 | 3 | 5 | 2 | 3 | 5 | 2 | ||
Commodity risk | 1 | 1 | - | 1 | 2 | - | 1 | 1 | - | ||
Inflation risk | 1 | 2 | 1 | 1 | 2 | 1 | 2 | 3 | 2 | ||
Diversification effect1 | (33) | n/a | n/a | (24) | n/a | n/a | (22) | n/a | n/a | ||
Total management VaR | 35 | 57 | 18 | 25 | 29 | 18 | 21 | 26 | 17 |
1 | 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. |
Average management VaR increased 40% to £35m in H120 (H219: £25m) as elevated market volatility resulted in an increase in credit and equity risk.
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
The liquidity risk stress assessment measures the potential contractual and contingent stress outflows under a range of scenarios, which are then used to determine the size of the liquidity pool that is immediately available to meet anticipated outflows if a stress occurs. The short-term scenarios include 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 event. The Group also runs a long-term liquidity stress test, which measures the anticipated outflows over a 12 month market-wide scenario.
The CRR (as amended by CRR II) Liquidity Coverage ratio (LCR) requirement takes into account the relative stability of different sources of funding and potential incremental funding requirements in a stress. The LCR is designed to promote short-term resilience of a bank’s liquidity risk profile by holding sufficient high quality liquid assets to survive an acute stress scenario lasting for 30 days.
As at 30 June 2020, the Group held eligible liquid assets in excess of 100% of net stress outflows to its internal and external regulatory requirements.
Liquidity coverage ratio | ||
As at 30.06.20 | As at 31.12.19 | |
£bn | £bn | |
Eligible liquidity buffer | 291 | 206 |
Net stress outflows | (156) | (128) |
Surplus | 135 | 78 |
Liquidity coverage ratio | 186% | 160% |
The Group plans to maintain its surplus to the internal and regulatory stress requirements at an efficient level, while considering risks to market funding conditions and its liquidity position. The continuous reassessment of these risks may lead to execution of appropriate actions to resize the liquidity pool. Given the heightened uncertainty in the current environment, the Group has taken actions to maintain its liquidity surplus at an elevated level. Over time, and as risks dissipate, it is likely the liquidity surplus will fall back from its current elevated level.
Composition of the Group liquidity pool | |||||
As at 30.06.20 | As at 31.12.19 | ||||
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 | 200 | 196 | - | - | 153 |
Government bonds2 | |||||
AAA to AA- | 41 | - | 39 | 1 | 31 |
A+ to A- | 23 | - | 17 | 6 | 2 |
BBB+ to BBB- | 5 | - | 5 | - | 3 |
Total government bonds | 69 | - | 61 | 7 | 36 |
Other | |||||
Government guaranteed issuers, PSEs and GSEs | 11 | - | 9 | 1 | 9 |
International organisations and MDBs | 9 | - | 9 | - | 7 |
Covered bonds | 8 | - | 6 | 2 | 6 |
Other | 1 | - | - | - | - |
Total other | 29 | - | 24 | 3 | 22 |
Total as at 30 June 2020 | 298 | 196 | 85 | 10 | 211 |
Total as at 31 December 2019 | 211 | 150 | 50 | 3 |
1 | Includes cash held at central banks and surplus cash at central banks related to payment schemes. Over 99% (December 2019: over 98%) was placed with the Bank of England, US Federal Reserve, European Central Bank, Bank of Japan and Swiss National Bank. |
2 | Of which over 80% (December 2019: over 67%) comprised UK, US, French, German, Japanese, 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 increased to £298bn as at 30 June 2020 (December 2019: £211bn) driven by a 12% growth in customer deposit and actions to maintain a prudent funding and liquidity position in the current environment. During H120, the month-end liquidity pool ranged from £218bn to £306bn (H219: £211bn to £256bn), and the month-end average balance was £257bn (H219: £235bn). The liquidity pool is held unencumbered and is not used to support payment or clearing requirements. Such requirements are treated as part of our regular business funding. The liquidity pool is intended to offset stress outflows, and comprises the above cash and unencumbered assets.
As at 30 June 2020, 65% (December 2019: 67%) of the liquidity pool was located in Barclays Bank PLC, 21% (December 2019: 20%) in Barclays Bank UK PLC and 6% (December 2019: 6%) 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.
The composition of the pool is subject to limits set by the Board and the independent liquidity risk, credit risk and market risk functions. In addition, the investment of the liquidity pool is monitored for concentration by issuer, currency and asset type. Given returns generated by these highly liquid assets, the risk and reward profile is continuously managed.
Deposit funding | |||||
As at 30.06.20 | As at 31.12.19 | ||||
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 | 208 | 226 | 92% | 96% | |
Barclays International | 138 | 241 | 57% | 63% | |
Head Office | 9 | - | |||
Barclays Group | 355 | 467 | 76% | 82% |
1 | The loan: deposit ratio is calculated as loans and advances at amortised cost divided by deposits at amortised cost. |
Funding structure and funding relationships
The basis for liquidity risk management is a funding structure that reduces the probability of a liquidity stress leading to an inability to meet funding obligations as they fall due. The Group’s overall funding strategy is to develop a diversified funding base (geographically, by type and by counterparty) and maintain access to a variety of alternative funding sources, to provide protection against unexpected fluctuations, while minimising the cost of funding.
Within this, the Group aims to align the sources and uses of funding. As such, retail and corporate loans and advances are largely funded by deposits in the relevant entities, with the surplus primarily funding the liquidity pool. The majority of reverse repurchase agreements are matched by repurchase agreements. Derivative liabilities and assets are largely matched. A substantial proportion of balance sheet derivative positions qualify for counterparty netting and the remaining portions are largely offset when netted against cash collateral received and paid. Wholesale debt and equity is used to fund residual assets.
These funding relationships as at 30 June 2020 are summarised below:
As at 30.06.20 | As at 31.12.19 | As at 30.06.20 | As at 31.12.19 | |||
Assets | £bn | £bn | Liabilities and equity | £bn | £bn | |
Loans and advances at amortised cost1 | 347 | 335 | Deposits at amortised cost | 467 | 416 | |
Group liquidity pool | 298 | 211 | <1 Year wholesale funding | 70 | 41 | |
>1 Year wholesale funding | 112 | 106 | ||||
Reverse repurchase agreements, trading portfolio assets, cash collateral and settlement balances | 383 | 298 | Repurchase agreements, trading portfolio liabilities, cash collateral and settlement balances | 306 | 247 | |
Derivative financial instruments | 307 | 229 | Derivative financial instruments | 308 | 229 | |
Other assets2 | 50 | 67 | Other liabilities | 52 | 35 | |
Equity | 70 | 66 | ||||
Total assets | 1,385 | 1,140 | Total liabilities and equity | 1,385 | 1,140 |
1 | Adjusted for liquidity pool debt securities reported at amortised cost of £8bn (December 2019: £4bn). |
2 | Other assets include fair value assets that are not part of reverse repurchase agreements or trading portfolio assets, and other asset categories. |
Composition of wholesale funding
Wholesale funding outstanding (excluding repurchase agreements) was £181.9bn (December 2019: £147.1bn). In H120, the Group issued £4.8bn of MREL eligible instruments from Barclays PLC (the Parent company) in a range of tenors and currencies.
Our operating companies also access wholesale funding markets to maintain their stable and diversified funding bases. Barclays Bank PLC continued to issue in the shorter-term and medium-term notes markets, and also issued a $1.75bn two-year senior bond in May. In addition, Barclays Bank UK PLC continued to issue in the shorter-term markets.
Wholesale funding of £69.6bn (December 2019: £40.6bn) matures in less than one year, representing 38% (December 2019: 28%) of total wholesale funding outstanding. This includes £25.0bn (December 2019: £16.3bn) related to term funding2. Although not a requirement, the liquidity pool exceeded wholesale funding maturing in less than one year by £228bn (December 2019: £170bn).
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) | - | 0.3 | - | 2.6 | 2.9 | 2.8 | 5.2 | 7.2 | 6.3 | 14.0 | 38.4 |
Senior unsecured (privately placed) | - | - | - | 0.1 | 0.1 | 0.2 | - | 0.3 | - | 0.5 | 1.1 |
Subordinated liabilities | - | - | - | - | - | - | - | - | 1.0 | 7.6 | 8.6 |
Barclays Bank PLC (including subsidiaries) | |||||||||||
Certificates of deposit and commercial paper | 3.9 | 9.8 | 10.4 | 6.2 | 30.3 | 0.9 | 0.4 | 0.1 | - | - | 31.7 |
Asset backed commercial paper | 3.2 | 3.9 | 1.6 | 0.3 | 9.0 | - | - | - | - | - | 9.0 |
Senior unsecured (public benchmark) | - | - | - | 3.1 | 3.1 | 1.6 | 0.1 | 1.2 | - | 1.7 | 7.7 |
Senior unsecured (privately placed)3 | 0.6 | 3.2 | 2.5 | 4.6 | 10.9 | 6.8 | 6.6 | 4.6 | 5.8 | 22.8 | 57.5 |
Asset backed securities | 0.5 | - | 0.1 | - | 0.6 | 0.6 | 1.1 | 0.4 | 0.3 | 1.6 | 4.6 |
Subordinated liabilities | - | 0.2 | 0.9 | 4.9 | 6.0 | 1.3 | 2.4 | - | 0.1 | 1.5 | 11.3 |
Barclays Bank UK PLC (including subsidiaries) | |||||||||||
Certificates of deposit and commercial paper | 3.7 | 1.3 | 0.2 | 0.1 | 5.3 | - | - | - | - | - | 5.3 |
Covered bonds | - | - | - | 0.9 | 0.9 | 2.3 | 1.7 | - | - | 1.3 | 6.2 |
Asset backed securities | 0.5 | - | - | - | 0.5 | - | - | - | - | - | 0.5 |
Total as at 30 June 2020 | 12.4 | 18.7 | 15.7 | 22.8 | 69.6 | 16.5 | 17.5 | 13.8 | 13.5 | 51.0 | 181.9 |
Of which secured | 4.2 | 3.9 | 1.7 | 1.2 | 11.0 | 2.9 | 2.8 | 0.4 | 0.3 | 2.9 | 20.3 |
Of which unsecured | 8.2 | 14.8 | 14.0 | 21.6 | 58.6 | 13.6 | 14.7 | 13.4 | 13.2 | 48.1 | 161.6 |
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 |
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 £48.5bn, of which £8.9bn matures within one year. |
Credit ratings
In addition to monitoring and managing key metrics related to the financial strength of the Group, Barclays also solicits independent credit ratings from Standard & Poor’s Global (S&P), Moody’s, Fitch, and Rating and Investment Information (R&I). These ratings assess the creditworthiness of the Group, its subsidiaries and its branches, and are based on reviews of a broad range of business and financial attributes including capital strength, profitability, funding, liquidity, asset quality, strategy and governance.
Barclays Bank PLC | Standard & Poor's | Moody's | Fitch |
Long-term | A / Negative | A1 / Stable | A+ / RWN1 |
Short-term | A-1 | P-1 | F1 |
Barclays Bank UK PLC | |||
Long-term | A / Negative | A1 / Negative | A+ / Negative |
Short-term | A-1 | P-1 | F1 |
Barclays PLC | |||
Long-term | BBB / Negative | Baa2 /Stable | A / RWN1 |
Short-term | A-2 | P-2 | F1 |
1 | Rating Watch Negative. |
In January 2020, Moody’s upgraded the long-term ratings of Barclays PLC and Barclays Bank PLC by one notch to Baa2 and A1 respectively, due to their view that the earnings profile of the entities has improved. This followed the positive outlooks that had been placed on these entities in May 2019 and the outlooks reverted to stable in the most recent action. In November 2019, Moody’s revised the outlook on Barclays Bank UK PLC to negative from stable, alongside other UK peers following a negative revision to the UK sovereign outlook.
In April 2020, Fitch revised the outlooks of Barclays PLC and Barclays Bank PLC to Rating Watch Negative (RWN) from stable, while the outlook for Barclays Bank UK PLC was revised to negative from stable, alongside UK peers, to reflect the downside risks to their credit profiles resulting from the economic and financial market implications of the COVID-19 outbreak. In May 2020, Fitch maintained the ratings of Barclays PLC and Barclays Bank PLC on RWNs whilst affirming the rating of Barclays Bank UK PLC.
In April 2020, S&P affirmed all ratings for Barclays PLC, Barclays Bank PLC and Barclays Bank UK PLC, whilst revising the outlooks for Barclays and its subsidiaries to negative from stable, alongside many European peers, to reflect economic and market stress triggered by the COVID-19 pandemic.
Barclays also solicits issuer ratings from R&I and the ratings of A- for Barclays PLC and A for Barclays Bank PLC were affirmed in November 2019 with stable outlooks.
A credit rating downgrade could result in outflows to meet collateral requirements on existing contracts. Outflows related to credit rating downgrades are included in the LRA stress scenarios and a portion of the liquidity pool is held against this risk. Credit ratings downgrades could also result in reduced funding capacity and increased funding costs.
The contractual collateral requirement following one- and two-notch long-term and associated short-term downgrades across all credit rating agencies, would result in outflows of £2bn and £5bn respectively, and are provided for in determining an appropriate liquidity pool size given the Group’s liquidity risk appetite. These numbers do not assume any management or restructuring actions that could be taken to reduce posting requirements. These outflows do not include the potential liquidity impact from loss of unsecured funding, such as from money market funds, or loss of secured funding capacity. However, unsecured and secured funding stresses are included in the LRA stress scenarios and a portion of the liquidity pool is held against these risks.
Capital
The Group’s Overall Capital Requirement for CET1 is 11.2% comprising a 4.5% Pillar 1 minimum, a 2.5% Capital Conservation Buffer (CCB), a 1.5% Global Systemically Important Institution (G-SII) buffer, a 2.7% Pillar 2A requirement and a 0.0% 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 11 March 2020, the Financial Policy Committee set the CCyB rate for UK exposures at 0% with immediate effect. The buffer rates set by other national authorities for non-UK exposures are not currently material. Overall, this results in a 0.0% CCyB for the Group.
The Group’s Pillar 2A requirement as per the PRA’s Individual Capital Requirement applicable from 23 July 2020 has been revised to 4.8% of which at least 56.25% needs to be met with CET1 capital, equating to approximately 2.7% of RWAs. The Pillar 2A requirement is subject to at least annual review and has been set as a nominal capital amount. This is based on a point in time assessment and the requirement (when expressed as a proportion of RWAs) will change depending on the total RWAs at each reporting period.
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 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.
On 27 June 2020, CRR was further amended to accelerate specific CRR II measures and implement a new IFRS 9 transitional relief calculation. Previously due to be implemented in June 2021, the accelerated measures primarily relate to the CRR leverage calculation to include additional settlement netting and limited changes to the calculation of RWAs. For UK leverage calculations, the PRA early adopted the CRR II settlement netting measure in April 2020.
The IFRS 9 transitional arrangements have been extended by two years and a new modified calculation has been introduced. 100% relief will be applied to increases in stage 1 and stage 2 provisions from 1 January 2020 throughout 2020 and 2021; 75% in 2022; 50% in 2023; 25% in 2024 with no relief applied from 2025. The phasing out of transitional relief on the “day 1” impact of IFRS 9 as well as increases in stage 1 and stage 2 provisions between 1 January 2018 and 31 December 2019 under the modified calculation remain unchanged and continue to be subject to 70% transitional relief throughout 2020; 50% for 2021; 25% for 2022 and with no relief applied from 2023.
Also impacting own funds from 30 June 2020 until 31 December 2020 inclusive are amendments to the regulatory technical standards on prudential valuation which include an increase to diversification factors applied to certain additional valuation adjustments.
The disclosures in the following section reflect Barclays’ interpretation of the current rules and guidance.
Capital ratios1,2,3 | As at | As at | As at |
30.06.20 | 31.03.20 | 31.12.19 | |
CET1 | 14.2% | 13.1% | 13.8% |
Tier 1 (T1) | 17.8% | 16.6% | 17.7% |
Total regulatory capital | 21.7% | 20.4% | 21.6% |
Capital resources | £m | £m | £m |
Total equity excluding non-controlling interests per the balance sheet | 68,304 | 68,369 | 64,429 |
Less: other equity instruments (recognised as AT1 capital) | (10,871) | (10,871) | (10,871) |
Adjustment to retained earnings for foreseeable dividends | (44) | (49) | (1,096) |
Other regulatory adjustments and deductions | |||
Additional value adjustments (PVA) | (1,517) | (1,847) | (1,746) |
Goodwill and intangible assets | (8,154) | (8,197) | (8,109) |
Deferred tax assets that rely on future profitability excluding temporary differences | (444) | (294) | (479) |
Fair value reserves related to gains or losses on cash flow hedges | (1,914) | (1,709) | (1,002) |
Gains or losses on liabilities at fair value resulting from own credit | (233) | (389) | 260 |
Defined benefit pension fund assets | (2,094) | (3,603) | (1,594) |
Direct and indirect holdings by an institution of own CET1 instruments | (50) | (50) | (50) |
Adjustment under IFRS 9 transitional arrangements | 2,459 | 1,215 | 1,126 |
Other regulatory adjustments | (62) | (57) | (55) |
CET1 capital | 45,380 | 42,518 | 40,813 |
AT1 capital | |||
Capital instruments and related share premium accounts | 10,871 | 10,871 | 10,871 |
Qualifying AT1 capital (including minority interests) issued by subsidiaries | 691 | 753 | 687 |
Other regulatory adjustments and deductions | (80) | (130) | (130) |
AT1 capital | 11,482 | 11,494 | 11,428 |
T1 capital | 56,862 | 54,012 | 52,241 |
T2 capital | |||
Capital instruments and related share premium accounts | 9,028 | 8,423 | 7,650 |
Qualifying T2 capital (including minority interests) issued by subsidiaries | 3,396 | 4,013 | 3,984 |
Credit risk adjustments (excess of impairment over expected losses) | 36 | 196 | 16 |
Other regulatory adjustments and deductions | (160) | (250) | (250) |
Total regulatory capital | 69,162 | 66,394 | 63,641 |
Total RWAs | 318,987 | 325,631 | 295,131 |
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 £42.9bn of CET1 capital and £318.0bn 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 14.2%. For this calculation CET1 capital and RWAs are calculated applying the transitional arrangements under the CRR, including the IFRS 9 transitional arrangements. The benefit of the Financial Services Authority (FSA) October 2012 interpretation of the transitional provisions, relating to the implementation of CRD IV, expired in December 2017. |
Movement in CET1 capital | Three months | Six months |
ended | ended | |
30.06.20 | 30.06.20 | |
£m | £m | |
Opening CET1 capital | 42,518 | 40,813 |
Profit for the period attributable to equity holders | 296 | 1,122 |
Own credit relating to derivative liabilities | 172 | 3 |
Dividends paid and foreseen | (201) | 625 |
Increase in retained regulatory capital generated from earnings | 267 | 1,750 |
Net impact of share schemes | 344 | 288 |
Fair value through other comprehensive income reserve | 399 | (378) |
Currency translation reserve | 223 | 1,220 |
Other reserves | 3 | (3) |
Increase in other qualifying reserves | 969 | 1,127 |
Pension remeasurements within reserves | (1,345) | 645 |
Defined benefit pension fund asset deduction | 1,509 | (500) |
Net impact of pensions | 164 | 145 |
Additional value adjustments (PVA) | 330 | 229 |
Goodwill and intangible assets | 43 | (45) |
Deferred tax assets that rely on future profitability excluding those arising from temporary differences | (150) | 35 |
Adjustment under IFRS 9 transitional arrangements | 1,244 | 1,333 |
Other regulatory adjustments | (5) | (7) |
Increase in regulatory capital due to adjustments and deductions | 1,462 | 1,545 |
Closing CET1 capital | 45,380 | 45,380 |
CET1 capital increased £4.6bn to £45.4bn (December 2019: £40.8bn).
£1.1bn of capital generated from profits, and a £1.0bn increase due to the cancellation of the full year 2019 dividend were partially offset by £0.4bn of AT1 coupons paid. Other movements in the period were:
● | A £0.4bn decrease in the fair value through other comprehensive income reserve driven by a decrease in the Absa Group Limited share price |
● | A £1.2bn increase in the currency translation reserve mainly driven by the appreciation of period end USD against GBP |
● | A £0.1bn increase as a result of movements in pensions, largely due to an additional £250m investment by the UKRF in non-transferrable listed senior fixed rate notes, backed by UK gilts |
● | A £0.2bn increase due to a reduction in PVA which includes the temporary increase to diversification factors applied to certain additional valuation adjustments |
● | A £1.3bn increase in the IFRS 9 transitional relief after tax which was driven by £1.2bn in Q220 following new impairment charges and the implementation of new regulatory measures which allow for 100% relief on increases in stage 1 and stage 2 impairment throughout 2020 and 2021 |
RWAs by risk type and business | |||||||||||||
Credit risk | Counterparty credit risk | Market risk | Operational risk | Total RWAs | |||||||||
Std | IRB | Std | IRB | Settlement risk | CVA | Std | IMA | ||||||
As at 30.06.20 | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | |||
Barclays UK | 7,428 | 58,048 | 359 | - | - | 48 | 122 | - | 11,851 | 77,856 | |||
Corporate and Investment Bank | 27,032 | 77,983 | 11,879 | 20,472 | 218 | 3,871 | 12,830 | 22,638 | 21,387 | 198,310 | |||
Consumer, Cards and Payments | 21,901 | 3,168 | 157 | 46 | - | 27 | - | 95 | 7,539 | 32,933 | |||
Barclays International | 48,933 | 81,151 | 12,036 | 20,518 | 218 | 3,898 | 12,830 | 22,733 | 28,926 | 231,243 | |||
Head Office | 3,578 | 6,183 | - | - | - | - | - | - | 127 | 9,888 | |||
Barclays Group | 59,939 | 145,382 | 12,395 | 20,518 | 218 | 3,946 | 12,952 | 22,733 | 40,904 | 318,987 | |||
As at 31.03.20 | |||||||||||||
Barclays UK | 5,835 | 59,451 | 311 | - | - | 28 | 202 | - | 11,851 | 77,678 | |||
Corporate and Investment Bank | 30,620 | 71,993 | 15,611 | 19,756 | 1,022 | 3,309 | 14,036 | 24,010 | 21,390 | 201,747 | |||
Consumer, Cards and Payments | 25,205 | 3,085 | 132 | 31 | - | 21 | - | 151 | 7,536 | 36,161 | |||
Barclays International | 55,825 | 75,078 | 15,743 | 19,787 | 1,022 | 3,330 | 14,036 | 24,161 | 28,926 | 237,908 | |||
Head Office | 3,706 | 6,212 | - | - | - | - | - | - | 127 | 10,045 | |||
Barclays Group | 65,366 | 140,741 | 16,054 | 19,787 | 1,022 | 3,358 | 14,238 | 24,161 | 40,904 | 325,631 | |||
As at 31.12.19 | |||||||||||||
Barclays UK | 5,189 | 57,455 | 235 | - | - | 23 | 178 | - | 11,821 | 74,901 | |||
Corporate and Investment Bank | 25,749 | 62,177 | 12,051 | 16,875 | 276 | 2,470 | 12,854 | 17,626 | 21,475 | 171,553 | |||
Consumer, Cards and Payments | 27,209 | 2,706 | 92 | 37 | - | 11 | - | 103 | 7,532 | 37,690 | |||
Barclays International | 52,958 | 64,883 | 12,143 | 16,912 | 276 | 2,481 | 12,854 | 17,729 | 29,007 | 209,243 | |||
Head Office | 5,104 | 5,754 | - | - | - | - | - | - | 129 | 10,987 | |||
Barclays Group | 63,251 | 128,092 | 12,378 | 16,912 | 276 | 2,504 | 13,032 | 17,729 | 40,957 | 295,131 |
Movement analysis of RWAs | |||||
Credit risk | Counterparty credit risk | Market risk | Operational risk | Total RWAs | |
£m | £m | £m | £m | £m | |
Opening RWAs (as at 31.12.19) | 191,343 | 32,070 | 30,761 | 40,957 | 295,131 |
Book size | (1,161) | 3,786 | 10,064 | (53) | 12,636 |
Acquisitions and disposals | (33) | - | - | - | (33) |
Book quality | 6,502 | 491 | - | - | 6,993 |
Model updates | 1,846 | 182 | - | - | 2,028 |
Methodology and policy | 1,881 | 548 | (5,140) | - | (2,711) |
Foreign exchange movements1 | 4,943 | - | - | - | 4,943 |
Closing RWAs (as at 30.06.20) | 205,321 | 37,077 | 35,685 | 40,904 | 318,987 |
1 | Foreign exchange movements does not include foreign exchange for counterparty credit risk or market risk. |
RWA increased £23.9bn to £319.0bn:
● | Book size increased RWAs £12.6bn primarily due to higher market volatility and an increase in client activity compared to year-end 2019 |
● | Book quality increased RWAs £7.0bn due to a reduction in credit quality primarily within CIB |
● | Model updates increased RWAs £2.0bn primarily due to modelled risk weights recalibrations |
● | Methodology and policy decreased RWAs £2.7bn primarily due to the removal of a Risk Not In VaR (RNIV) and the reduction in capital requirements related to VaR backtesting exceptions |
● | Foreign exchange movements increased RWAs £4.9bn due to the appreciation of period end USD against GBP |
Leverage ratio and exposures
The Group is subject to a leverage ratio requirement of 3.8% as at 30 June 2020. 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 0.0%. 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 must be covered solely with CET1 capital. The CET1 capital held against the 0.53% G-SII ALRB was £6.0bn.
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 and include the PRA’s early adoption of CRR II settlement netting.
Leverage ratios1,2 | As at 30.06.20 | As at 31.03.20 | As at 31.12.19 |
£m | £m | £m | |
Average UK leverage ratio | 4.7% | 4.5% | 4.5% |
Average T1 capital3 | 54,548 | 53,274 | 51,823 |
Average UK leverage exposure | 1,148,720 | 1,176,198 | 1,142,819 |
UK leverage ratio | 5.2% | 4.5% | 5.1% |
CET1 capital | 45,380 | 42,518 | 40,812 |
AT1 capital | 10,791 | 10,741 | 10,741 |
T1 capital3 | 56,171 | 53,259 | 51,553 |
UK leverage exposure | 1,071,138 | 1,178,708 | 1,007,721 |
UK leverage exposure | |||
Accounting assets | |||
Derivative financial instruments | 307,258 | 342,120 | 229,236 |
Derivative cash collateral | 77,063 | 85,321 | 56,589 |
Securities financing transactions (SFTs) | 160,015 | 185,725 | 111,307 |
Loans and advances and other assets | 840,781 | 831,130 | 743,097 |
Total IFRS assets | 1,385,117 | 1,444,296 | 1,140,229 |
Regulatory consolidation adjustments | (1,982) | (4,841) | (1,170) |
Derivatives adjustments | |||
Derivatives netting | (279,151) | (309,585) | (207,756) |
Adjustments to cash collateral | (67,718) | (70,758) | (48,464) |
Net written credit protection | 14,442 | 19,994 | 13,784 |
Potential future exposure (PFE) on derivatives | 123,468 | 126,503 | 119,118 |
Total derivatives adjustments | (208,959) | (233,846) | (123,318) |
SFTs adjustments | 21,226 | 34,271 | 18,339 |
Regulatory deductions and other adjustments | (18,297) | (14,615) | (11,984) |
Weighted off-balance sheet commitments | 108,436 | 102,499 | 105,289 |
Qualifying central bank claims | (173,033) | (149,056) | (119,664) |
Settlement netting | (41,370) | - | - |
UK leverage exposure2 | 1,071,138 | 1,178,708 | 1,007,721 |
1 | Fully loaded average UK leverage ratio was 4.6%, with £53.0bn of T1 capital and £1,147bn of leverage exposure. Fully loaded UK leverage ratio was 5.0%, with £53.7bn of T1 capital and £1,069bn 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. |
The average UK leverage ratio increased to 4.7% (December 2019: 4.5%), driven by an increase in T1 capital. The leverage exposure increased by £6bn to £1,149bn, primarily driven by SFTs and loans and advances and other assets, partially offset by the PRA’s early adoption of CRR II settlement netting.
The UK leverage ratio increased to 5.2% (December 2019: 5.1%), driven by an increase in T1 capital. The UK leverage exposure increased by £63bn to £1,071bn, primarily driven by SFTs and loans and advances and other assets, partially offset by the PRA’s early adoption of CRR II settlement netting.
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 H1 2020, expected to be published on 14 August 2020 and which will be available at home.barclays/investor-relations/reports-and-events/latest-financial-results).
1 | CRR leverage ratio as amended by CRR II applicable as at the reporting date. |
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 30.06.20 | As at 31.03.20 | As at 31.12.19 |
CET1 capital | 14.2% | 13.1% | 13.8% |
AT1 capital instruments and related share premium accounts2 | 3.4% | 3.3% | 3.6% |
T2 capital instruments and related share premium accounts2 | 2.8% | 2.6% | 2.5% |
Eligible liabilities | 12.0% | 10.3% | 11.2% |
Total Barclays PLC (the Parent company) own funds and eligible liabilities | 32.4% | 29.3% | 31.2% |
Qualifying AT1 capital (including minority interests) issued by subsidiaries | 0.2% | 0.2% | 0.2% |
Qualifying T2 capital (including minority interests) issued by subsidiaries | 1.1% | 1.2% | 1.3% |
Total own funds and eligible liabilities, including eligible Barclays Bank PLC instruments | 33.7% | 30.7% | 32.8% |
Own funds and eligible liabilities1 | £m | £m | £m |
CET1 capital | 45,380 | 42,518 | 40,813 |
AT1 capital instruments and related share premium accounts2 | 10,791 | 10,741 | 10,741 |
T2 capital instruments and related share premium accounts2 | 8,904 | 8,369 | 7,416 |
Eligible liabilities | 38,308 | 33,674 | 33,025 |
Total Barclays PLC (the Parent company) own funds and eligible liabilities | 103,383 | 95,302 | 91,995 |
Qualifying AT1 capital (including minority interests) issued by subsidiaries | 691 | 753 | 687 |
Qualifying T2 capital (including minority interests) issued by subsidiaries | 3,396 | 4,013 | 3,984 |
Total own funds and eligible liabilities, including eligible Barclays Bank PLC instruments | 107,470 | 100,068 | 96,666 |
Total RWAs1 | 318,987 | 325,631 | 295,131 |
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 £80m (December 2019: £130m), and other T2 credit risk adjustments and deductions of £124m (December 2019: £234m). |
Statement of Directors’ Responsibilities
The Directors (the names of whom are set out below) are required to prepare the financial statements on a going concern basis unless it is not appropriate to do so. In making this assessment, the directors have considered information relating to present and future conditions. Each of the Directors confirm that to the best of their knowledge, the condensed consolidated interim financial statements set out on pages 57 to 62 have been prepared in accordance with International Accounting Standard 34, ‘Interim Financial Reporting’, as adopted by the European Union (EU), and that the interim management report herein includes a fair review of the information required by Disclosure and Transparency Rules 4.2.7R and 4.2.8R namely:
● | an indication of important events that have occurred during the six months ended 30 June 2020 and their impact on the condensed consolidated interim financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year |
● | any related party transactions in the six months ended 30 June 2020 that have materially affected the financial position or performance of Barclays during that period and any changes in the related party transactions described in the last Annual Report that could have a material effect on the financial position or performance of Barclays in the six months ended 30 June 2020 |
Signed on 28 July 2020 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 |
Independent Review Report to Barclays PLC
Conclusion
We have been engaged by the company to review the condensed set of financial statements in the Interim Results Announcement for the six months ended 30 June 2020 which comprises:
● | the condensed consolidated income statement and condensed consolidated statement of comprehensive income for the period then ended; |
● | the condensed consolidated balance sheet as at 30 June 2020; |
● | the condensed consolidated statement of changes in equity for the period then ended; |
● | the condensed consolidated cash flow statement for the period then ended; and |
● | the related explanatory notes |
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the Interim Results Announcement for the six months ended 30 June 2020 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and the Disclosure Guidance and Transparency Rules (“the DTR”) of the UK’s Financial Conduct Authority (“the UK FCA”).
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the Interim Results Announcement and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Directors’ responsibilities
The Interim Results Announcement is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Interim Results Announcement in accordance with the DTR of the UK FCA.
As disclosed in Note 1, Basis of preparation, the annual financial statements of the Barclays Group are prepared in accordance with International Financial Reporting Standards as adopted by the EU. The directors are responsible for preparing the condensed set of financial statements included in the Interim Results Announcement in accordance with IAS 34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the Interim Results Announcement based on our review.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.
Michelle Hinchliffe
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London, E14 5GL
28 July 2020
Condensed Consolidated Financial Statements
Condensed consolidated income statement (unaudited) | |||
Half year ended | Half year ended | ||
30.06.20 | 30.06.19 | ||
Notes1 | £m | £m | |
Interest and similar income | 6,437 | 7,496 | |
Interest and similar expense | (2,214) | (2,878) | |
Net interest income | 4,223 | 4,618 | |
Fee and commission income | 3 | 4,399 | 4,484 |
Fee and commission expense | 3 | (1,090) | (1,150) |
Net fee and commission income | 3 | 3,309 | 3,334 |
Net trading income | 4,198 | 2,124 | |
Net investment income | (136) | 662 | |
Other income | 27 | 52 | |
Total income | 11,621 | 10,790 | |
Credit impairment charges | (3,738) | (928) | |
Net operating income | 7,883 | 9,862 | |
Staff costs | 4 | (4,053) | (4,264) |
Infrastructure, administration and general expenses | 5 | (2,510) | (2,494) |
Litigation and conduct | (30) | (114) | |
Operating expenses | (6,593) | (6,872) | |
Share of post-tax results of associates and joint ventures | (31) | 14 | |
Profit on disposal of subsidiaries, associates and joint ventures | 13 | 10 | |
Profit before tax | 1,272 | 3,014 | |
Tax charge | 6 | (113) | (545) |
Profit after tax | 1,159 | 2,469 | |
Attributable to: | |||
Equity holders of the parent | 695 | 2,072 | |
Other equity instrument holders | 427 | 363 | |
Total equity holders of the parent | 1,122 | 2,435 | |
Non-controlling interests | 7 | 37 | 34 |
Profit after tax | 1,159 | 2,469 | |
Earnings per share | p | p | |
Basic earnings per ordinary share | 8 | 4.0 | 12.1 |
Diluted earnings per ordinary share | 8 | 3.9 | 11.9 |
1 | For notes to the Financial Statements see pages 63 to 87. |
Condensed consolidated statement of comprehensive income (unaudited) | |||
Half year ended | Half year ended | ||
30.06.20 | 30.06.19 | ||
Notes1 | £m | £m | |
Profit after tax | 1,159 | 2,469 | |
Other comprehensive income/(loss) that may be recycled to profit or loss:2 | |||
Currency translation reserve | 18 | 1,220 | 177 |
Fair value through other comprehensive income reserve | 18 | 137 | 380 |
Cash flow hedging reserve | 18 | 912 | 528 |
Other | 18 | (6) | - |
Other comprehensive income that may be recycled to profit | 2,263 | 1,085 | |
Other comprehensive income/(loss) not recycled to profit or loss:2 | |||
Retirement benefit remeasurements | 15 | 645 | (140) |
Fair value through other comprehensive income reserve | 18 | (515) | 125 |
Own credit | 18 | 496 | 44 |
Other comprehensive income not recycled to profit | 626 | 29 | |
Other comprehensive income for the period | 2,889 | 1,114 | |
Total comprehensive income for the period | 4,048 | 3,583 | |
Attributable to: | |||
Equity holders of the parent | 4,011 | 3,549 | |
Non-controlling interests | 37 | 34 | |
Total comprehensive income for the period | 4,048 | 3,583 |
1 | For notes to the Financial Statements see pages 63 to 87. |
2 | Reported net of tax. |
Condensed consolidated balance sheet (unaudited) | |||
As at | As at | ||
30.06.20 | 31.12.19 | ||
Assets | Notes1 | £m | £m |
Cash and balances at central banks | 194,452 | 150,258 | |
Cash collateral and settlement balances | 134,945 | 83,256 | |
Loans and advances at amortised cost | 12 | 354,912 | 339,115 |
Reverse repurchase agreements and other similar secured lending | 22,224 | 3,379 | |
Trading portfolio assets | 110,062 | 114,195 | |
Financial assets at fair value through the income statement | 158,975 | 133,086 | |
Derivative financial instruments | 10 | 307,258 | 229,236 |
Financial assets at fair value through other comprehensive income | 79,764 | 65,750 | |
Investments in associates and joint ventures | 720 | 721 | |
Goodwill and intangible assets | 8,163 | 8,119 | |
Property, plant and equipment | 4,239 | 4,215 | |
Current tax assets | 556 | 412 | |
Deferred tax assets | 6 | 2,671 | 3,290 |
Retirement benefit assets | 15 | 2,848 | 2,108 |
Other assets | 3,328 | 3,089 | |
Total assets | 1,385,117 | 1,140,229 | |
Liabilities | |||
Deposits at amortised cost | 12 | 466,913 | 415,787 |
Cash collateral and settlement balances | 112,907 | 67,341 | |
Repurchase agreements and other similar secured borrowing | 19,144 | 14,517 | |
Debt securities in issue | 103,970 | 76,369 | |
Subordinated liabilities | 13 | 19,886 | 18,156 |
Trading portfolio liabilities | 51,606 | 36,916 | |
Financial liabilities designated at fair value | 221,460 | 204,326 | |
Derivative financial instruments | 10 | 307,891 | 229,204 |
Current tax liabilities | 322 | 313 | |
Deferred tax liabilities | 6 | 23 | 23 |
Retirement benefit liabilities | 15 | 371 | 348 |
Other liabilities | 8,471 | 8,505 | |
Provisions | 14 | 2,612 | 2,764 |
Total liabilities | 1,315,576 | 1,074,569 | |
Equity | |||
Called up share capital and share premium | 16 | 4,620 | 4,594 |
Other reserves | 18 | 6,996 | 4,760 |
Retained earnings | 45,817 | 44,204 | |
Shareholders' equity attributable to ordinary shareholders of the parent | 57,433 | 53,558 | |
Other equity instruments | 17 | 10,871 | 10,871 |
Total equity excluding non-controlling interests | 68,304 | 64,429 | |
Non-controlling interests | 7 | 1,237 | 1,231 |
Total equity | 69,541 | 65,660 | |
Total liabilities and equity | 1,385,117 | 1,140,229 |
1 | For notes to the Financial Statements see pages 63 to 87. |
Condensed consolidated statement of changes in equity (unaudited) | |||||||
Called up share capital and share premium1 | Other equity instruments1 | Other reserves1 | Retained earnings | Total | Non-controlling interests2 | Total equity | |
Half year ended 30.06.20 | £m | £m | £m | £m | £m | £m | £m |
Balance as at 1 January 2020 | 4,594 | 10,871 | 4,760 | 44,204 | 64,429 | 1,231 | 65,660 |
Profit after tax | - | 427 | - | 695 | 1,122 | 37 | 1,159 |
Currency translation movements | - | - | 1,220 | - | 1,220 | - | 1,220 |
Fair value through other comprehensive income reserve | - | - | (378) | - | (378) | - | (378) |
Cash flow hedges | - | - | 912 | - | 912 | - | 912 |
Retirement benefit remeasurements | - | - | - | 645 | 645 | - | 645 |
Own credit | - | - | 496 | - | 496 | - | 496 |
Other | - | - | - | (6) | (6) | - | (6) |
Total comprehensive income for the period | - | 427 | 2,250 | 1,334 | 4,011 | 37 | 4,048 |
Equity settled share schemes | 26 | - | - | 603 | 629 | - | 629 |
Other equity instruments coupons paid | - | (427) | - | - | (427) | - | (427) |
Vesting of shares under employee share schemes | - | - | (14) | (327) | (341) | - | (341) |
Dividends paid | - | - | - | - | - | (37) | (37) |
Other movements | - | - | - | 3 | 3 | 6 | 9 |
Balance as at 30 June 2020 | 4,620 | 10,871 | 6,996 | 45,817 | 68,304 | 1,237 | 69,541 |
Half year ended 31.12.19 | |||||||
Balance as at 1 July 2019 | 4,494 | 12,123 | 6,403 | 44,556 | 67,576 | 1,221 | 68,797 |
Profit after tax | - | 450 | - | 389 | 839 | 46 | 885 |
Currency translation movements | - | - | (721) | - | (721) | - | (721) |
Fair value through other comprehensive income reserve | - | - | (434) | - | (434) | - | (434) |
Cash flow hedges | - | - | (186) | - | (186) | - | (186) |
Retirement benefit remeasurements | - | - | - | (54) | (54) | - | (54) |
Own credit | - | - | (296) | - | (296) | - | (296) |
Other | - | - | - | 16 | 16 | - | 16 |
Total comprehensive income for the period | - | 450 | (1,637) | 351 | (836) | 46 | (790) |
Issue of new ordinary shares | 23 | - | - | - | 23 | - | 23 |
Equity settled share schemes | 77 | - | - | 237 | 314 | - | 314 |
Issue and exchange of other equity instruments | - | (1,266) | - | (406) | (1,672) | - | (1,672) |
Other equity instruments coupons paid | - | (450) | - | - | (450) | - | (450) |
Vesting of shares under employee share schemes | - | - | (6) | (20) | (26) | - | (26) |
Dividends paid | - | - | - | (517) | (517) | (46) | (563) |
Other movements | - | 14 | - | 3 | 17 | 10 | 27 |
Balance as at 31 December 2019 | 4,594 | 10,871 | 4,760 | 44,204 | 64,429 | 1,231 | 65,660 |
1 | Details of share capital, other equity instruments and other reserves are shown on pages 78 to 80. |
2 | Details of non-controlling interests are shown on page 67. |
Condensed consolidated statement of changes in equity (unaudited) | |||||||
Called up share capital and share premium1 | Other equity instruments1 | Other reserves1 | Retained earnings | Total | Non-controlling interests2 | Total equity | |
Half year ended 30.06.19 | £m | £m | £m | £m | £m | £m | £m |
Balance as at 1 January 2019 | 4,311 | 9,632 | 5,153 | 43,460 | 62,556 | 1,223 | 63,779 |
Profit after tax | - | 363 | - | 2,072 | 2,435 | 34 | 2,469 |
Currency translation movements | - | - | 177 | - | 177 | - | 177 |
Fair value through other comprehensive income reserve | - | - | 505 | - | 505 | - | 505 |
Cash flow hedges | - | - | 528 | - | 528 | - | 528 |
Retirement benefit remeasurements | - | - | - | (140) | (140) | - | (140) |
Own credit | - | - | 44 | - | 44 | - | 44 |
Total comprehensive income for the period | - | 363 | 1,254 | 1,932 | 3,549 | 34 | 3,583 |
Issue of new ordinary shares | 159 | - | - | - | 159 | - | 159 |
Equity settled share schemes | 24 | - | - | 241 | 265 | - | 265 |
Issue and exchange of other equity instruments | - | 2,504 | - | - | 2,504 | - | 2,504 |
Other equity instruments coupons paid | - | (363) | - | - | (363) | - | (363) |
Vesting of shares under employee share schemes | - | - | (4) | (384) | (388) | - | (388) |
Dividends paid | - | - | - | (684) | (684) | (34) | (718) |
Other movements | - | (13) | - | (9) | (22) | (2) | (24) |
Balance as at 30 June 2019 | 4,494 | 12,123 | 6,403 | 44,556 | 67,576 | 1,221 | 68,797 |
1 | Details of share capital, other equity instruments and other reserves are shown on pages 78 to 80. |
2 | Details of non-controlling interests are shown on page 67. |
Condensed consolidated cash flow statement (unaudited) | ||
Half year ended | Half year ended | |
30.06.20 | 30.06.19 | |
£m | £m | |
Profit before tax | 1,272 | 3,014 |
Adjustment for non-cash items | (1,112) | (297) |
Net increase in loans and advances at amortised cost | (19,431) | (11,333) |
Net increase in deposits at amortised cost | 51,126 | 18,758 |
Net increase in debt securities in issue | 24,183 | 8,529 |
Changes in other operating assets and liabilities | 4,757 | (15,487) |
Corporate income tax paid | (351) | (260) |
Net cash from operating activities | 60,444 | 2,924 |
Net cash from investing activities | (11,599) | (17,075) |
Net cash from financing activities | 3,133 | (610) |
Effect of exchange rates on cash and cash equivalents | 7,814 | 652 |
Net increase/(decrease) in cash and cash equivalents | 59,792 | (14,109) |
Cash and cash equivalents at beginning of the period | 183,387 | 211,166 |
Cash and cash equivalents at end of the period | 243,179 | 197,057 |
Financial Statement Notes
1.
Basis of preparation
These condensed consolidated interim financial statements for the six months ended 30 June 2020 have been prepared in accordance with the DTR of the UK FCA and with IAS 34, Interim Financial Reporting, as published by the International Accounting Standards Board (IASB) and adopted by the EU. The condensed consolidated interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2019, which have been prepared in accordance with IFRSs as published by the IASB and as adopted by the EU.
The accounting policies and methods of computation used in these condensed consolidated interim financial statements are the same as those used in the Barclays PLC Annual Report 2019.
1.
Going concern
The financial statements are prepared on a going concern basis, as the Directors are satisfied that the Group and parent company have the resources to continue in business for the foreseeable future. In making this assessment, the Directors have considered a wide range of information relating to present and future conditions, including future projections of profitability, cash flows, capital requirements and capital resources. The future conditions considered included an assessment of internally generated stress scenarios assuming a prolonged economic stress and impact on the future operational and financial performance of the Group.
2.
Other disclosures
The Credit risk disclosures on pages 25 to 39 form part of these interim financial statements.
2.
Segmental reporting
Analysis of results by business | ||||
Barclays UK | Barclays International | Head Office | Barclays Group | |
Half year ended 30.06.20 | £m | £m | £m | £m |
Total income | 3,171 | 8,654 | (204) | 11,621 |
Credit impairment charges | (1,064) | (2,619) | (55) | (3,738) |
Net operating income/(expenses) | 2,107 | 6,035 | (259) | 7,883 |
Operating expenses | (2,041) | (4,405) | (117) | (6,563) |
Litigation and conduct | (11) | (11) | (8) | (30) |
Total operating expenses | (2,052) | (4,416) | (125) | (6,593) |
Other net income/(expenses)1 | 13 | 10 | (41) | (18) |
Profit/(loss) before tax | 68 | 1,629 | (425) | 1,272 |
As at 30.06.20 | £bn | £bn | £bn | £bn |
Total assets | 287.6 | 1,075.8 | 21.7 | 1,385.1 |
Barclays UK | Barclays International | Head Office | Barclays Group | |
Half year ended 30.06.19 | £m | £m | £m | £m |
Total income | 3,548 | 7,473 | (231) | 10,790 |
Credit impairment charges | (421) | (492) | (15) | (928) |
Net operating income/(expenses) | 3,127 | 6,981 | (246) | 9,862 |
Operating expenses | (2,021) | (4,641) | (96) | (6,758) |
Litigation and conduct | (44) | (30) | (40) | (114) |
Total operating expenses | (2,065) | (4,671) | (136) | (6,872) |
Other net income/(expenses)1 | - | 31 | (7) | 24 |
Profit/(loss) before tax | 1,062 | 2,341 | (389) | 3,014 |
As at 31.12.19 | £bn | £bn | £bn | £bn |
Total assets | 257.8 | 861.4 | 21.0 | 1,140.2 |
1 | Other net income/(expenses) represents the share of post-tax results of associates and joint ventures, profit (or loss) on disposal of subsidiaries, associates and joint ventures and gains on acquisitions. |
Split of income by geographic region1 | Half year ended | Half year ended |
30.06.20 | 30.06.19 | |
£m | £m | |
UK | 5,989 | 5,873 |
Europe | 1,199 | 788 |
Americas | 3,776 | 3,591 |
Africa and Middle East | 20 | 40 |
Asia | 637 | 498 |
Total | 11,621 | 10,790 |
1 | The geographical analysis is now based on the location of office where the transactions are recorded, whereas in the prior year it was based on counterparty location. The approach was changed at year-end 2019 and is better aligned to the geographical view of the business following the implementation of structural reform. Prior year comparatives have been restated. |
3.
Net fee and commission income
Fee and commission income is disaggregated below and includes a total for fees in scope of IFRS 15, Revenue from Contracts with Customers:
Barclays UK | Barclays International | Head Office | Total | |
Half year ended 30.06.20 | £m | £m | £m | £m |
Fee type | ||||
Transactional | 386 | 1,157 | - | 1,543 |
Advisory | 79 | 306 | 1 | 386 |
Brokerage and execution | 102 | 685 | - | 787 |
Underwriting and syndication | - | 1,468 | - | 1,468 |
Other | 38 | 115 | 2 | 155 |
Total revenue from contracts with customers | 605 | 3,731 | 3 | 4,339 |
Other non-contract fee income | - | 60 | - | 60 |
Fee and commission income | 605 | 3,791 | 3 | 4,399 |
Fee and commission expense | (148) | (940) | (2) | (1,090) |
Net fee and commission income | 457 | 2,851 | 1 | 3,309 |
Barclays UK | Barclays International | Head Office | Total | |
Half year ended 30.06.19 | £m | £m | £m | £m |
Fee type | ||||
Transactional | 523 | 1,353 | - | 1,876 |
Advisory | 88 | 406 | - | 494 |
Brokerage and execution | 101 | 536 | - | 637 |
Underwriting and syndication | - | 1,240 | - | 1,240 |
Other | 45 | 131 | 7 | 183 |
Total revenue from contracts with customers | 757 | 3,666 | 7 | 4,430 |
Other non-contract fee income | - | 54 | - | 54 |
Fee and commission income | 757 | 3,720 | 7 | 4,484 |
Fee and commission expense | (187) | (957) | (6) | (1,150) |
Net fee and commission income | 570 | 2,763 | 1 | 3,334 |
Transactional fees are service charges on deposit accounts, cash management services and transactional processing fees. This includes interchange and merchant fee income generated from credit and bank card usage.
Advisory fees are generated from asset management services and advisory services related to mergers, acquisitions and financial restructuring.
Brokerage and execution fees are earned for executing client transactions with exchanges and over-the-counter markets and assisting clients in clearing transactions.
Underwriting and syndication fees are earned for the distribution of client equity or debt securities and the arrangement and administration of a loan syndication. This includes commitment fees to provide loan financing.
4.
Staff costs
Half year ended | Half year ended | |
30.06.20 | 30.06.19 | |
Compensation costs | £m | £m |
Current year bonus charges | 476 | 456 |
Deferred bonus charge | 269 | 226 |
Commissions and other incentives | 4 | 34 |
Performance costs | 749 | 716 |
Salaries | 2,153 | 2,195 |
Social security costs | 317 | 315 |
Post-retirement benefits | 268 | 251 |
Other compensation costs | 254 | 232 |
Total compensation costs | 3,741 | 3,709 |
Other resourcing costs | ||
Outsourcing | 175 | 257 |
Redundancy and restructuring | 39 | 49 |
Temporary staff costs | 58 | 173 |
Other | 40 | 76 |
Total other resourcing costs | 312 | 555 |
Total staff costs | 4,053 | 4,264 |
Barclays Group compensation costs as a % of total income | 32.2 | 34.4 |
No material awards have yet been granted in relation to the 2020 bonus pool as decisions regarding incentive awards are not taken by the Remuneration Committee until the performance for the full year can be assessed. The current year bonus charge for the first six months represents an accrual for estimated costs in accordance with accounting requirements.
5.
Infrastructure, administration and general expenses
Half year ended | Half year ended | |
30.06.20 | 30.06.19 | |
Infrastructure costs | £m | £m |
Property and equipment | 757 | 691 |
Depreciation and amortisation | 751 | 729 |
Lease payments | 26 | 21 |
Impairment of property, equipment and intangible assets | 32 | 29 |
Total infrastructure costs | 1,566 | 1,470 |
Administration and general expenses | ||
Consultancy, legal and professional fees | 270 | 284 |
Marketing and advertising | 158 | 212 |
Other administration and general expenses | 516 | 528 |
Total administration and general expenses | 944 | 1,024 |
Total infrastructure, administration and general expenses | 2,510 | 2,494 |
6.
Tax
The tax charge for H120 was £113m (H119: £545m), representing an effective tax rate of 8.9% (H119: 18.1%). The effective tax rate for H120 was lower than H119, reflecting the tax benefit recognised for the re-measurement of UK deferred tax assets through the income statement as a result of the UK corporation tax rate being maintained at 19%.
Included in the tax charge is a credit of £112m (H119: £96m) in respect of payments made on AT1 instruments that are classified as equity for accounting purposes.
As at | As at | |
30.06.20 | 31.12.19 | |
Deferred tax assets and liabilities | £m | £m |
USA | 2,168 | 2,052 |
UK | - | 818 |
Other territories | 503 | 420 |
Deferred tax assets | 2,671 | 3,290 |
Deferred tax liabilities | (23) | (23) |
Analysis of deferred tax assets | ||
Temporary differences | 2,174 | 2,767 |
Tax losses | 497 | 523 |
Deferred tax assets | 2,671 | 3,290 |
7.
Non-controlling interests
Profit attributable to non-controlling interests | Equity attributable to non-controlling interests | ||||
Half year ended | Half year ended | As at | As at | ||
30.06.20 | 30.06.19 | 30.06.20 | 31.12.19 | ||
£m | £m | £m | £m | ||
Barclays Bank PLC issued: | |||||
- Preference shares | 28 | 27 | 529 | 529 | |
- Upper T2 instruments | 9 | 7 | 691 | 691 | |
Other non-controlling interests | - | - | 17 | 11 | |
Total | 37 | 34 | 1,237 | 1,231 |
8.
Earnings per share
Half year ended | Half year ended | |
30.06.20 | 30.06.19 | |
£m | £m | |
Profit attributable to ordinary equity holders of the parent | 695 | 2,072 |
m | m | |
Basic weighted average number of shares in issue | 17,294 | 17,178 |
Number of potential ordinary shares | 319 | 200 |
Diluted weighted average number of shares | 17,613 | 17,378 |
p | p | |
Basic earnings per ordinary share | 4.0 | 12.1 |
Diluted earnings per ordinary share | 3.9 | 11.9 |
9.
Dividends on ordinary shares
In response to a request from the PRA, and to preserve additional capital for use in serving Barclays customers and clients through the extraordinary challenges presented by the COVID-19 pandemic, the Board agreed to cancel the 6.0p per ordinary share full year 2019 dividend. The Board also decided that for 2020 Barclays would suspend its current capital returns policy and accordingly will not undertake any interim ordinary share dividend payments, regulatory accruals of ordinary share dividends, or share buybacks. The Board will decide on future dividends and its capital returns policy at year-end 2020.
Half year ended 30.06.20 | Half year ended 30.06.19 | |||
Per share | Total | Per share | Total | |
Dividends paid during the period | p | £m | p | £m |
Full year dividend paid during period | - | - | 4.0 | 684 |
10. Derivative financial instruments | ||||
Contract notional amount | Fair value | |||
Assets | Liabilities | |||
As at 30.06.20 | £m | £m | £m | |
Foreign exchange derivatives | 5,730,348 | 67,755 | (68,502) | |
Interest rate derivatives | 44,652,771 | 199,378 | (191,435) | |
Credit derivatives | 906,573 | 6,739 | (6,955) | |
Equity and stock index and commodity derivatives | 1,072,400 | 33,186 | (40,120) | |
Derivative assets/(liabilities) held for trading | 52,362,092 | 307,058 | (307,012) | |
Derivatives in hedge accounting relationships | ||||
Derivatives designated as cash flow hedges | 57,497 | 55 | (10) | |
Derivatives designated as fair value hedges | 126,692 | 145 | (822) | |
Derivatives designated as hedges of net investments | 709 | - | (47) | |
Derivative assets/(liabilities) designated in hedge accounting relationships | 184,898 | 200 | (879) | |
Total recognised derivative assets/(liabilities) | 52,546,990 | 307,258 | (307,891) | |
As at 31.12.19 | ||||
Foreign exchange derivatives | 4,999,865 | 56,576 | (57,021) | |
Interest rate derivatives | 35,098,216 | 142,325 | (135,759) | |
Credit derivatives | 825,516 | 8,215 | (8,086) | |
Equity and stock index and commodity derivatives | 1,187,513 | 21,947 | (27,751) | |
Derivative assets/(liabilities) held for trading | 42,111,110 | 229,063 | (228,617) | |
Derivatives in hedge accounting relationships | ||||
Derivatives designated as cash flow hedges | 67,773 | 7 | (1) | |
Derivatives designated as fair value hedges | 112,457 | 136 | (586) | |
Derivatives designated as hedges of net investments | 1,145 | 30 | - | |
Derivative assets/(liabilities) designated in hedge accounting relationships | 181,375 | 173 | (587) | |
Total recognised derivative assets/(liabilities) | 42,292,485 | 229,236 | (229,204) |
The IFRS netting posted against derivative assets was £67bn including £8bn of cash collateral netted (December 2019: £37bn including £4bn cash collateral netted) and £67bn for liabilities including £11bn of cash collateral netted (December 2019: £37bn including £5bn of cash collateral netted). Derivative asset exposures would be £283bn (December 2019: £209bn) lower than reported under IFRS if netting were permitted for assets and liabilities with the same counterparty or for which the Group holds cash collateral of £46bn (December 2019: £33bn). Similarly, derivative liabilities would be £286bn (December 2019: £212bn) lower reflecting counterparty netting and cash collateral placed of £49bn (December 2019: £36bn). In addition, non-cash collateral of £5bn (December 2019: £6bn) was held in respect of derivative assets and £4bn (December 2019: £3bn) was placed in respect of derivative liabilities. Collateral amounts are limited to net on balance sheet exposure so as to not include over-collateralisation.
11.
Fair value of financial instruments
This section should be read in conjunction with Note 17, Fair value of financial instruments of the Barclays PLC Annual Report 2019 and Note 1, Basis of preparation on page 63, which provides more detail about accounting policies adopted, valuation methodologies used in calculating fair value and the valuation control framework which governs oversight of valuations. There have been no changes in the accounting policies adopted or the valuation methodologies used.
Valuation
The following table shows the Group’s assets and liabilities that are held at fair value disaggregated by valuation technique (fair value hierarchy) and balance sheet classification:
Valuation technique using | |||||
Quoted market prices | Observable inputs | Significant unobservable inputs | |||
(Level 1) | (Level 2) | (Level 3) | Total | ||
As at 30.06.20 | £m | £m | £m | £m | |
Trading portfolio assets | 49,460 | 57,524 | 3,078 | 110,062 | |
Financial assets at fair value through the income statement | 1,877 | 148,046 | 9,052 | 158,975 | |
Derivative financial instruments | 8,761 | 290,749 | 7,748 | 307,258 | |
Financial assets at fair value through other comprehensive income | 20,657 | 58,760 | 347 | 79,764 | |
Investment property | - | - | 10 | 10 | |
Total assets | 80,755 | 555,079 | 20,235 | 656,069 | |
Trading portfolio liabilities | (32,411) | (19,195) | - | (51,606) | |
Financial liabilities designated at fair value | (123) | (220,968) | (369) | (221,460) | |
Derivative financial instruments | (8,445) | (290,514) | (8,932) | (307,891) | |
Total liabilities | (40,979) | (530,677) | (9,301) | (580,957) | |
As at 31.12.19 | |||||
Trading portfolio assets | 60,352 | 51,579 | 2,264 | 114,195 | |
Financial assets at fair value through the income statement | 10,445 | 114,141 | 8,500 | 133,086 | |
Derivative financial instruments | 5,439 | 220,642 | 3,155 | 229,236 | |
Financial assets at fair value through other comprehensive income | 18,755 | 46,566 | 429 | 65,750 | |
Investment property | - | - | 13 | 13 | |
Total assets | 94,991 | 432,928 | 14,361 | 542,280 | |
Trading portfolio liabilities | (20,977) | (15,939) | - | (36,916) | |
Financial liabilities designated at fair value | (82) | (203,882) | (362) | (204,326) | |
Derivative financial instruments | (5,305) | (219,910) | (3,989) | (229,204) | |
Total liabilities | (26,364) | (439,731) | (4,351) | (470,446) |
The following table shows the Group’s Level 3 assets and liabilities that are held at fair value disaggregated by product type:
As at 30.06.20 | As at 31.12.19 | |||
Assets | Liabilities | Assets | Liabilities | |
£m | £m | £m | £m | |
Interest rate derivatives | 4,153 | (3,772) | 605 | (812) |
Foreign exchange derivatives | 655 | (588) | 291 | (298) |
Credit derivatives | 193 | (456) | 539 | (342) |
Equity derivatives | 2,730 | (4,099) | 1,711 | (2,528) |
Commodity derivatives | 17 | (17) | 9 | (9) |
Corporate debt | 516 | - | 521 | - |
Reverse repurchase and repurchase agreements | - | (175) | - | (167) |
Non-asset backed loans | 8,271 | - | 6,811 | - |
Asset backed securities | 740 | - | 756 | - |
Equity cash products | 1,146 | - | 1,228 | - |
Private equity investments | 880 | (15) | 899 | (19) |
Other1 | 934 | (179) | 991 | (176) |
Total | 20,235 | (9,301) | 14,361 | (4,351) |
1 | Other includes commercial real estate loans, funds and fund-linked products, asset backed loans, issued debt, commercial paper, government sponsored debt and investment property. |
Assets and liabilities reclassified between Level 1 and Level 2
During the period, there were no material transfers between Level 1 and Level 2 (period ended December 2019: no material transfers between Level 1 and Level 2).
Level 3 movement analysis.
The following table summarises the movements in the balances of Level 3 assets and liabilities during the period. The table shows gains and losses and includes amounts for all financial assets and liabilities that are held at fair value transferred to and from Level 3 during the period. Transfers have been reflected as if they had taken place at the beginning of the
year
Asset and liability moves between Level 2 and Level 3 are primarily due to i) an increase or decrease in observable market activity related to an input or ii) a change in the significance of the unobservable input, with assets and liabilities classified as Level 3 if an unobservable input is deemed significant.
Level 3 movement analysis | |||||||||||
As at 01.01.20 | Purchases | Sales | Issues | Settle- ments | Total gains and losses in the period recognised in the income statement | Total gains or losses recognised in OCI | Transfers | As at 30.06.20 | |||
Trading income | Other income | In | Out | ||||||||
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | |
Corporate debt | 120 | 25 | - | - | - | (26) | - | - | 4 | (17) | 106 |
Non-asset backed loans | 974 | 1,926 | (740) | - | (4) | (111) | - | - | 97 | (320) | 1,822 |
Asset backed securities | 656 | 249 | (224) | - | (76) | (12) | - | - | 41 | (11) | 623 |
Equity cash products | 392 | 2 | (4) | - | - | (67) | - | - | 28 | (4) | 347 |
Other | 122 | 48 | - | - | - | 2 | - | - | 8 | - | 180 |
Trading portfolio assets | 2,264 | 2,250 | (968) | - | (80) | (214) | - | - | 178 | (352) | 3,078 |
Non-asset backed loans | 5,494 | 1,050 | (270) | - | (410) | 381 | - | - | - | (58) | 6,187 |
Equity cash products | 835 | 14 | - | - | - | (22) | (28) | - | - | - | 799 |
Private equity investments | 900 | 19 | (6) | - | (2) | 2 | (44) | - | 23 | (12) | 880 |
Other | 1,271 | 1,870 | (2,017) | - | (18) | (8) | 64 | - | 24 | - | 1,186 |
Financial assets at fair value through the income statement | 8,500 | 2,953 | (2,293) | - | (430) | 353 | (8) | - | 47 | (70) | 9,052 |
Non-asset backed loans | 343 | 79 | - | - | (157) | - | - | (3) | - | - | 262 |
Asset backed securities | 86 | - | (1) | - | - | 1 | - | (1) | - | - | 85 |
Assets at fair value through other comprehensive income | 429 | 79 | (1) | - | (157) | 1 | - | (4) | - | - | 347 |
Investment property | 13 | - | (1) | - | - | - | (2) | - | 2 | (2) | 10 |
Trading portfolio liabilities | - | - | - | - | - | - | - | - | - | - | - |
Issued debt | (146) | - | - | (3) | - | - | - | - | (22) | 14 | (157) |
Other | (216) | - | 1 | - | - | (10) | 2 | - | - | 11 | (212) |
Financial liabilities designated at fair value | (362) | - | 1 | (3) | - | (10) | 2 | - | (22) | 25 | (369) |
Interest rate derivatives | (206) | 18 | - | - | 10 | 268 | 1 | - | 300 | (10) | 381 |
Foreign exchange derivatives | (7) | - | - | - | (12) | 89 | - | - | 5 | (8) | 67 |
Credit derivatives | 198 | (258) | 11 | - | (376) | 151 | 1 | - | 2 | 8 | (263) |
Equity derivatives | (819) | (448) | (1) | - | 17 | (90) | - | - | (5) | (23) | (1,369) |
Commodity derivatives | - | - | - | - | - | - | - | - | - | - | - |
Net derivative financial instruments1 | (834) | (688) | 10 | - | (361) | 418 | 2 | - | 302 | (33) | (1,184) |
Total | 10,010 | 4,594 | (3,252) | (3) | (1,028) | 548 | (6) | (4) | 507 | (432) | 10,934 |
1 | Derivative financial instruments are represented on a net basis. On a gross basis, derivative financial assets were £7,748m and derivative financial liabilities were £8,932m. |
Level 3 movement analysis | ||||||||||
As at 01.01.19 | Purchases | Sales | Issues | Settle- ments | Total gains and losses in the period recognised in the income statement | Transfers | As at 30.06.19 | |||
Trading income | Other income | In | Out | |||||||
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m | |
Government and government sponsored debt | 14 | 2 | - | - | - | - | - | - | (14) | 2 |
Corporate debt | 388 | 70 | (24) | - | (31) | 14 | - | 32 | (74) | 375 |
Non-asset backed loans | 2,263 | 1,235 | (1,260) | - | (19) | 12 | - | 19 | (90) | 2,160 |
Asset backed securities | 664 | 81 | (127) | - | - | 5 | - | 16 | (29) | 610 |
Equity cash products | 136 | 48 | (13) | - | - | (2) | - | 116 | (20) | 265 |
Other | 148 | - | - | - | (1) | (10) | - | - | (1) | 136 |
Trading portfolio assets | 3,613 | 1,436 | (1,424) | - | (51) | 19 | - | 183 | (228) | 3,548 |
Non-asset backed loans | 5,688 | 2 | - | - | (295) | 248 | - | - | (9) | 5,634 |
Equity cash products | 559 | 9 | - | - | (10) | 4 | 178 | - | - | 740 |
Private equity investments | 1,071 | 21 | (73) | - | (1) | - | 43 | - | (148) | 913 |
Other | 2,064 | 2,334 | (2,619) | - | (2) | 17 | 9 | 24 | (840) | 987 |
Financial assets at fair value through the income statement | 9,382 | 2,366 | (2,692) | - | (308) | 269 | 230 | 24 | (997) | 8,274 |
Non-asset backed loans | 353 | 48 | - | - | (55) | - | - | - | (218) | 128 |
Asset backed securities | - | 40 | - | - | - | - | - | - | - | 40 |
Equity cash products | 2 | - | - | - | - | - | - | - | - | 2 |
Financial assets at fair value through other comprehensive income | 355 | 88 | - | - | (55) | - | - | - | (218) | 170 |
Investment property | 9 | - | - | - | - | - | (1) | - | - | 8 |
Trading portfolio liabilities | (3) | - | - | - | - | 2 | - | (5) | - | (6) |
Certificates of deposit, commercial paper and other money market instruments | (10) | - | - | - | 1 | - | (1) | (11) | - | (21) |
Issued debt | (251) | - | - | (16) | 1 | 5 | - | (3) | 1 | (263) |
Other | (19) | - | - | - | - | - | (1) | - | - | (20) |
Financial liabilities designated at fair value | (280) | - | - | (16) | 2 | 5 | (2) | (14) | 1 | (304) |
Interest rate derivatives | 22 | (3) | - | - | 76 | 116 | - | (107) | 145 | 249 |
Foreign exchange derivatives | 7 | - | - | - | (12) | (41) | - | (51) | 17 | (80) |
Credit derivatives | 1,050 | (63) | 4 | - | (3) | 86 | - | 2 | 3 | 1,079 |
Equity derivatives | (607) | (122) | (5) | - | 23 | 89 | - | (16) | 292 | (346) |
Net derivative financial instruments1 | 472 | (188) | (1) | - | 84 | 250 | - | (172) | 457 | 902 |
Total | 13,548 | 3,702 | (4,117) | (16) | (328) | 545 | 227 | 16 | (985) | 12,592 |
1 | Derivative financial instruments are represented on a net basis. On a gross basis, derivative financial assets were £5,701m and derivative financial liabilities were £4,799m. |
Unrealised gains and losses on Level 3 financial assets and liabilities
The following table discloses the unrealised gains and losses recognised in the period arising on Level 3 financial assets and liabilities held at the period end.
Half year ended 30.06.20 | Half year ended 30.06.19 | |||||||
Income statement | Other compre- hensive income | Total | Income statement | Other compre- hensive income | Total | |||
Trading income | Other income | Trading income | Other income | |||||
£m | £m | £m | £m | £m | £m | £m | £m | |
Trading portfolio assets | (177) | - | - | (177) | 21 | - | - | 21 |
Financial assets at fair value through the income statement | 397 | (53) | - | 344 | 253 | 205 | - | 458 |
Financial assets at fair value through other comprehensive income | - | - | (2) | (2) | - | - | - | - |
Investment properties | - | (2) | - | (2) | - | (1) | - | (1) |
Trading portfolio liabilities | - | - | - | - | 2 | - | - | 2 |
Financial liabilities designated at fair value | (16) | (1) | - | (17) | 6 | - | - | 6 |
Net derivative financial instruments | 248 | - | - | 248 | 212 | - | - | 212 |
Total | 452 | (56) | (2) | 394 | 494 | 204 | - | 698 |
Valuation techniques and sensitivity analysis
Sensitivity analysis is performed on products with significant unobservable inputs (Level 3) to generate a range of reasonably possible alternative valuations. The sensitivity methodologies applied take account of the nature of valuation techniques used, as well as the availability and reliability of observable proxy and historical data and the impact of using alternative models.
Current year valuation and sensitivity methodologies are consistent with those described within Note 17, Fair value of financial instruments in the Barclays PLC Annual Report 2019.
Sensitivity analysis of valuations using unobservable inputs | ||||||||
As at 30.06.20 | As at 31.12.19 | |||||||
Favourable changes | Unfavourable changes | Favourable changes | Unfavourable changes | |||||
Income statement | Equity | Income statement | Equity | Income statement | Equity | Income statement | Equity | |
£m | £m | £m | £m | £m | £m | £m | £m | |
Interest rate derivatives | 138 | - | (255) | - | 44 | - | (127) | - |
Foreign exchange derivatives | 7 | - | (11) | - | 5 | - | (7) | - |
Credit derivatives | 127 | - | (109) | - | 73 | - | (47) | - |
Equity derivatives | 151 | - | (158) | - | 114 | - | (119) | - |
Commodity derivatives | - | - | - | - | - | - | - | - |
Corporate debt | 23 | - | (23) | - | 11 | - | (16) | - |
Non-asset backed loans | 253 | 4 | (558) | (4) | 214 | 8 | (492) | (8) |
Equity cash products | 164 | - | (206) | - | 123 | - | (175) | - |
Private equity investments | 236 | - | (269) | - | 205 | - | (235) | - |
Other1 | 2 | - | (2) | - | 1 | - | (1) | - |
Total | 1,101 | 4 | (1,591) | (4) | 790 | 8 | (1,219) | (8) |
1 | Derivative financial instruments are represented on a net basis. On a gross basis, derivative financial assets were £5,701m and derivative financial liabilities were £4,799m. |
1 | Other includes commercial real estate loans, funds and fund-linked products, asset backed loans, issued debt, commercial paper, government sponsored debt and investment property. |
The effect of stressing unobservable inputs to a range of reasonably possible alternatives, alongside considering the impact of using alternative models, would be to increase fair values by up to £1,105m (December 2019: £798m) or to decrease fair values by up to £1,595m (December 2019: £1,227m) with substantially all the potential effect impacting profit and loss rather than reserves.
Significant unobservable inputs
The valuation techniques and significant unobservable inputs for assets and liabilities recognised at fair value and classified as Level 3 are consistent with Note 17, Fair value of financial instruments in the Barclays PLC Annual Report 2019. The description of the significant unobservable inputs and the sensitivity of fair value measurement of the instruments categorised as Level 3 assets or liabilities to increases in significant unobservable inputs is also found in Note 17, Fair value of financial instruments of the Barclays PLC Annual Report 2019.
Fair value adjustments
Key balance sheet valuation adjustments are quantified below:
As at | As at | |
30.06.20 | 31.12.19 | |
£m | £m | |
Exit price adjustments derived from market bid-offer spreads | (575) | (429) |
Uncollateralised derivative funding | (181) | (57) |
Derivative credit valuation adjustments | (378) | (135) |
Derivative debit valuation adjustments | 149 | 155 |
● | Exit price adjustments derived from market bid-offer spreads increased by £146m to £575m as a result of movements in market bid offer spreads |
● | Uncollateralised derivative funding increased by £124m to £181m as a result of widening input funding spreads and an update to methodology |
● | Derivative credit valuation adjustments increased by £243m to £378m as a result of widening input counterparty credit spreads |
● | Derivative debit valuation adjustments decreased by £6m to £149m as a result of widening input Barclays Bank PLC credit spreads and an update to methodology |
Portfolio exemption
The Group uses the portfolio exemption in IFRS 13, Fair Value Measurement to measure the fair value of groups of financial assets and liabilities. Instruments are measured using the price that would be received to sell a net long position (i.e. an asset) for a particular risk exposure or to transfer a net short position (i.e. a liability) for a particular risk exposure in an orderly transaction between market participants at the balance sheet date under current market conditions. Accordingly, the Group measures the fair value of the group of financial assets and liabilities consistently with how market participants would price the net risk exposure at the measurement date.
Unrecognised gains as a result of the use of valuation models using unobservable inputs
The amount that has yet to be recognised in income that relates to the difference between the transaction price (the fair value at initial recognition) and the amount that would have arisen had valuation models using unobservable inputs been used on initial recognition, less amounts subsequently recognised, is £114m (December 2019: £113m) for financial instruments measured at fair value and £254m (December 2019: £255m) for financial instruments carried at amortised cost. There are additions of £12m (December 2019: £41m) and amortisation and releases of £11m (December 2019: £69m) for financial instruments measured at fair value and additions of £6m (December 2019: £7m) and amortisation and releases of £7m (December 2019: £14m) for financial instruments carried at amortised cost.
Third party credit enhancements
Structured and brokered certificates of deposit issued by the Group are insured up to $250,000 per depositor by the Federal Deposit Insurance Corporation (FDIC) in the United States. The FDIC is funded by premiums that Barclays and other banks pay for deposit insurance coverage. The carrying value of these issued certificates of deposit that are designated under the IFRS 9 fair value option includes this third party credit enhancement. The on balance sheet value of these brokered certificates of deposit amounted to £3,162m (December 2019: £3,218m).
Comparison of carrying amounts and fair values for assets and liabilities not held at fair value
Valuation methodologies employed in calculating the fair value of financial assets and liabilities measured at amortised cost are consistent with the Barclays PLC Annual Report 2019 disclosure.
The following table summarises the fair value of financial assets and liabilities measured at amortised cost on the Group’s balance sheet.
As at 30.06.20 | As at 31.12.19 | |||
Carrying amount | Fair value | Carrying amount | Fair value | |
Financial assets | £m | £m | £m | £m |
Loans and advances at amortised cost | 354,912 | 353,369 | 339,115 | 337,510 |
Reverse repurchase agreements and other similar secured lending | 22,224 | 22,224 | 3,379 | 3,379 |
Financial liabilities | ||||
Deposits at amortised cost | (466,913) | (466,986) | (415,787) | (415,807) |
Repurchase agreements and other similar secured borrowing | (19,144) | (19,144) | (14,517) | (14,517) |
Debt securities in issue | (103,970) | (104,576) | (76,369) | (78,512) |
Subordinated liabilities | (19,886) | (21,422) | (18,156) | (18,863) |
12. Loans and advances and deposits at amortised cost | ||
As at | As at | |
30.06.20 | 31.12.19 | |
£m | £m | |
Loans and advances at amortised cost to banks | 10,013 | 9,624 |
Loans and advances at amortised cost to customers | 320,582 | 311,739 |
Debt securities at amortised cost | 24,317 | 17,752 |
Total loans and advances at amortised cost | 354,912 | 339,115 |
Deposits at amortised cost from banks | 17,390 | 15,402 |
Deposits at amortised cost from customers | 449,523 | 400,385 |
Total deposits at amortised cost | 466,913 | 415,787 |
13. Subordinated liabilities | ||
Half year ended | Year ended | |
30.06.20 | 31.12.19 | |
£m | £m | |
Opening balance as at 1 January | 18,156 | 20,559 |
Issuances | 580 | 1,352 |
Redemptions | (296) | (3,248) |
Other | 1,446 | (507) |
Closing balance | 19,886 | 18,156 |
Issuances of £580m comprises £500m 3.75% Fixed Rate Resetting Subordinated Callable Notes issued externally by Barclays PLC and £80m USD Floating Rate Notes issued externally by a Barclays subsidiary.
Redemptions of £296m comprises £266m USD Floating Rate Notes and £30m USD Fixed Rate Notes issued externally by Barclays subsidiaries.
Other movements predominantly include foreign exchange movements and fair value hedge adjustments.
14. Provisions | ||
As at | As at | |
30.06.20 | 31.12.19 | |
£m | £m | |
PPI redress | 774 | 1,155 |
Other customer redress | 372 | 420 |
Legal, competition and regulatory matters | 269 | 376 |
Redundancy and restructuring | 104 | 143 |
Undrawn contractually committed facilities and guarantees | 741 | 322 |
Onerous contracts | 23 | 42 |
Sundry provisions | 329 | 306 |
Total | 2,612 | 2,764 |
PPI redress
As at 30 June 2020, Barclays had recognised cumulative provisions totalling £11bn (December 2019: £11bn). Utilisation of the cumulative provisions to date is £10.2bn (December 2019: £9.8bn), leaving a residual provision of £0.8bn (December 2019: £1.2bn). This represents Barclays best estimate as at 30 June 2020 based on the information available.
The current provision reflects the estimated cost of PPI redress attributable to claims and information requests from customers, Claims Management Companies and the Official Receiver in relation to bankrupt individuals.
Q3 2019 saw an exceptional level of claims and information requests received in advance of the complaint deadline of 29 August 2019. All the items outstanding at Q3 2019, greater than two million in total, have now been processed into Barclays’ systems. 70% of these have been resolved including invalid items.
It is possible that the eventual cumulative provision will differ from the current estimate. The table below shows the predicted level of valid claims and the impact of a 1% increase or decrease in the percentage of valid volumes on the outstanding claims at 30 June 2020:
Validity assumptions1 | Total volumes assumed valid2 | Sensitivity on the remaining volumes |
% | £m | |
Claims received | 21% | 1% = £3m |
Information requests received | 7% | 1% = £2m |
Final agreement has yet to be reached in relation to claims received from the Official Receiver, however we do not expect any further exposure from these claims to be material in the context of the total provision.
1 | Total valid claims and information requests received, excluding those for which no PPI policy exists, claims from the Official Receiver in relation to bankrupt individuals and responses to proactive mailing. The sensitivity has been calculated to show the impact a 1% increase or decrease in the volume of unresolved valid claims would have on the provision level. |
2 | Based on the observed data from September 2019 to June 2020. |
15.
Retirement benefits
As at 30 June 2020, the Group’s IAS 19 pension surplus across all schemes was £2.5bn (December 2019: £1.8bn). The UK Retirement Fund (UKRF), which is the Group’s main scheme, had an IAS 19 pension surplus of £2.8bn (December 2019: £2.1bn). The movement for the UKRF was driven by higher than assumed asset returns and lower than expected long-term price inflation, partially offset by a decrease in the discount rate.
UKRF funding valuations
The last triennial actuarial valuation of the UKRF had an effective date of 30 September 2019 and was completed in February 2020. This valuation showed a funding deficit of £2.3bn and a funding level of 94.0%. A revised deficit recovery plan was agreed with deficit reduction contributions required from Barclays Bank PLC of £500m in 2019, £500m in 2020, £700m in 2021, £294m in 2022 and £286m in 2023. The deficit reduction contributions are in addition to the regular contributions to meet the Group’s share of the cost of benefits accruing over each year.
On 12 June 2020, Barclays Bank PLC paid the £500m deficit reduction contribution agreed for 2020 and at the same time the UKRF subscribed for non-transferrable listed senior fixed rate notes for £750m, backed by UK gilts (the Senior Notes). These Senior Notes entitle the UKRF to semi-annual coupon payments for five years, and full repayment in cash in three equal tranches in 2023, 2024, and at final maturity in 2025. The Senior Notes were issued by Heron Issuer Number 2 Limited (Heron 2), an entity that is consolidated within the Group under IFRS 10. As a result of the investment in Senior Notes, the regulatory capital impact of the £500m deficit reduction contribution paid on 12 June 2020 takes effect in 2023, 2024 and 2025 on maturity of the notes. The £250m additional investment by the UKRF in the Senior Notes has a positive capital impact in 2020 which is reduced equally in 2023, 2024 and 2025 on the maturity of the notes. Heron 2 acquired a total of £750m of gilts from Barclays Bank PLC for cash to support payments on the Senior Notes.
The next triennial actuarial valuation of the UKRF is due to be completed in 2023 with an effective date of 30 September 2022.
16.
Called up share capital
Called up share capital comprised 17,345m (December 2019: 17,322m) ordinary shares of 25p each. The increase was due to the issuance of shares under employee share schemes.
Ordinary share capital | Share premium | Total share capital and share premium | |
Half year ended 30.06.20 | £m | £m | £m |
Opening balance as at 1 January | 4,331 | 263 | 4,594 |
Movement | 5 | 21 | 26 |
Closing balance | 4,336 | 284 | 4,620 |
17. Other equity instruments | ||
Half year ended | Year ended | |
30.06.20 | 31.12.19 | |
£m | £m | |
Opening balance as at 1 January | 10,871 | 9,632 |
Issuances | - | 3,500 |
Redemptions | - | (2,262) |
Other | - | 1 |
Closing balance | 10,871 | 10,871 |
Other equity instruments of £10,871m (December 2019: £10,871m) include AT1 securities issued by Barclays PLC. There have been no issuances or redemptions in the period.
The AT1 securities are perpetual securities with no fixed maturity and are structured to qualify as AT1 instruments under prevailing capital rules applicable as at the relevant issue date. AT1 securities are undated and are redeemable, at the option of Barclays PLC, in whole at the initial call date, or on any fifth anniversary after the initial call date. In addition, the AT1 securities are redeemable, at the option of Barclays PLC, in whole in the event of certain changes in the tax or regulatory treatment of the securities. Any redemptions require the prior consent of the PRA.
All Barclays PLC AT1 securities will be converted into ordinary shares of Barclays PLC, at a pre-determined price, should the fully loaded CET1 ratio of the Group fall below 7%.
18. Other reserves | ||
As at | As at | |
30.06.20 | 31.12.19 | |
£m | £m | |
Currency translation reserve | 4,564 | 3,344 |
Fair value through other comprehensive income reserve | (565) | (187) |
Cash flow hedging reserve | 1,914 | 1,002 |
Own credit reserve | 123 | (373) |
Other reserves and treasury shares | 960 | 974 |
Total | 6,996 | 4,760 |
Currency translation reserve
The currency translation reserve represents the cumulative gains and losses on the retranslation of the Group’s net investment in foreign operations, net of the effects of hedging.
As at 30 June 2020, there was a credit balance of £4,564m (December 2019: £3,344m credit) in the currency translation reserve. The £1,220m credit movement principally reflects the strengthening of period end USD exchange rate against GBP.
Fair value through other comprehensive income reserve
The fair value through other comprehensive income reserve represents the unrealised change in the fair value through other comprehensive income investments since initial recognition.
As at 30 June 2020, there was a debit balance of £565m (December 2019: £187m debit) in the fair value through other comprehensive income reserve. The loss of £378m is principally driven by a loss of £515m due to a decrease in the Absa Group Limited share price and £150m of net gains transferred to the income statement. This is partially offset by a gain of £307m from the increase in fair value of bonds due to decreasing bond yields.
Cash flow hedging reserve
The cash flow hedging reserve represents the cumulative gains and losses on effective cash flow hedging instruments that will be recycled to the income statement when the hedged transactions affect profit or loss.
As at 30 June 2020, there was a credit balance of £1,914m (December 2019: £1,002m credit) in the cash flow hedging reserve. The increase of £912m principally reflects a £1,458m increase in the fair value of interest rate swaps held for hedging purposes as major interest rate forward curves decreased. This is partially offset by £197m of gains transferred to the income statement and a tax charge of £358m.
Own credit reserve
The own credit reserve reflects the cumulative own credit gains and losses on financial liabilities at fair value. Amounts in the own credit reserve are not recycled to profit or loss in future periods.
As at 30 June 2020, there was a credit balance of £123m (December 2019: £373m debit) in the own credit reserve. The movement of £496m principally reflects a £845m gain from the widening of Barclays’ funding spreads. This is partially offset by other activity of £209m and a tax charge of £144m.
Other reserves and treasury shares
Other reserves relate to redeemed ordinary and preference shares issued by the Group. Treasury shares relate to Barclays PLC shares held principally in relation to the Group’s various share schemes.
As at 30 June 2020, there was a credit balance of £960m (December 2019: £974m credit) in other reserves and treasury shares. The decrease of £14m is due to an increase in treasury shares held in relation to employee share schemes.
19. Contingent liabilities and commitments | ||
As at | As at | |
30.06.20 | 31.12.19 | |
Contingent liabilities | £m | £m |
Guarantees and letters of credit pledged as collateral security | 16,225 | 17,606 |
Performance guarantees, acceptances and endorsements | 6,739 | 6,921 |
Total | 22,964 | 24,527 |
Commitments | ||
Documentary credits and other short-term trade related transactions | 1,162 | 1,291 |
Standby facilities, credit lines and other commitments | 332,969 | 333,164 |
Total | 334,131 | 334,455 |
In addition to the above, Note 20, Legal, competition and regulatory matters details out further contingent liabilities where it is not practicable to disclose an estimate of the potential financial effect on Barclays.
20.
Legal, competition and regulatory matters
Members of the Group face legal, competition and regulatory challenges, many of which are beyond our control. The extent of the impact of these matters cannot always be predicted but may materially impact our operations, financial results, condition and prospects. Matters arising from a set of similar circumstances can give rise to either a contingent liability or a provision, or both, depending on the relevant facts and circumstances.
The recognition of provisions in relation to such matters involves critical accounting estimates and judgments in accordance with the relevant accounting policies as described in Note 14, Provisions. We have not disclosed an estimate of the potential financial impact or effect on the Group of contingent liabilities where it is not currently practicable to do so. Various matters detailed in this note seek damages of an unspecified amount. While certain matters specify the damages claimed, such claimed amounts do not necessarily reflect the Group’s potential financial exposure in respect of those matters.
Matters are ordered under headings corresponding to the financial statements in which they are disclosed.
1.
Barclays PLC and Barclays Bank PLC
Investigations into certain advisory services agreements and other matters and civil action
FCA proceedings
In 2008, Barclays Bank PLC and Qatar Holdings LLC entered into two advisory service agreements (the Agreements). The Financial Conduct Authority (FCA) conducted an investigation into whether the Agreements may have related to Barclays PLC’s capital raisings in June and November 2008 (the Capital Raisings) and therefore should have been disclosed in the announcements or public documents relating to the Capital Raisings. In 2013, the FCA issued warning notices (the Notices) finding that Barclays PLC and Barclays Bank PLC acted recklessly and in breach of certain disclosure-related listing rules, and that Barclays PLC was also in breach of Listing Principle 3. The financial penalty provided in the Notices is £50m. Barclays PLC and Barclays Bank PLC continue to contest the findings. Following the conclusion of the Serious Fraud Office (SFO) proceedings against certain former Barclays executives resulting in their acquittals, the FCA proceedings, which were stayed, have resumed. All charges brought by the SFO against Barclays PLC and Barclays Bank PLC in relation to the Agreements were dismissed in 2018.
Civil action
PCP Capital Partners LLP and PCP International Finance Limited (PCP) are seeking damages of approximately £1.6bn from Barclays Bank PLC for fraudulent misrepresentation and deceit, arising from alleged statements made by Barclays Bank PLC to PCP in relation to the terms on which securities were to be issued to potential investors, allegedly including PCP, in the November 2008 capital raising. Barclays Bank PLC is defending the claim and trial commenced in June 2020.
Investigations into LIBOR and other benchmarks and related civil actions
Regulators and law enforcement agencies, including certain competition authorities, from a number of governments have conducted investigations relating to Barclays Bank PLC’s involvement in allegedly manipulating certain financial benchmarks, such as LIBOR. The SFO has closed its investigation with no action to be taken against the Group. Various individuals and corporates in a range of jurisdictions have threatened or brought civil actions against the Group and other banks in relation to the alleged manipulation of LIBOR and/or other benchmarks. Certain actions remain pending.
USD LIBOR civil actions
The majority of the USD LIBOR cases, which have been filed in various US jurisdictions, have been consolidated for pre-trial purposes in the US District Court in the Southern District of New York (SDNY). The complaints are substantially similar and allege, among other things, that Barclays PLC, Barclays Bank PLC, Barclays Capital Inc. (BCI) and other financial institutions individually and collectively violated provisions of the US Sherman Antitrust Act (Antitrust Act), the US Commodity Exchange Act (CEA), the US Racketeer Influenced and Corrupt Organizations Act (RICO), the Securities Exchange Act of 1934 and various state laws by manipulating USD LIBOR rates.
Putative class actions and individual actions seek unspecified damages with the exception of three lawsuits, in which the plaintiffs are seeking a combined total of approximately $900m in actual damages and additional punitive damages against all defendants, including Barclays Bank PLC. Some of the lawsuits also seek trebling of damages under the Antitrust Act and RICO. Barclays has previously settled certain claims. Two of the class action settlements where Barclays has paid $20m and $7.1m, respectively, remain subject to final court approval and/or the right of class members to opt out of the settlement to file their own claims.
Sterling LIBOR civil actions
In 2016, two putative class actions filed in the SDNY against Barclays Bank PLC, BCI and other Sterling LIBOR panel banks alleging, among other things, that the defendants manipulated the Sterling LIBOR rate in violation of the Antitrust Act, CEA and RICO, were consolidated. The defendants’ motion to dismiss the claims was granted in December 2018. The plaintiffs have appealed the dismissal.
Japanese Yen LIBOR civil actions
In 2012, a putative class action was filed in the SDNY against Barclays Bank PLC and other Japanese Yen LIBOR panel banks by a lead plaintiff involved in exchange-traded derivatives and members of the Japanese Bankers Association’s Euroyen Tokyo Interbank Offered Rate (Euroyen TIBOR) panel. The complaint alleges, among other things, manipulation of the Euroyen TIBOR and Yen LIBOR rates and breaches of the CEA and the Antitrust Act. In 2014, the court dismissed the plaintiff’s antitrust claims in full, but the plaintiff’s CEA claims remain pending.
In 2015, a second putative class action, making similar allegations to the above class action, was filed in the SDNY against Barclays PLC, Barclays Bank PLC and BCI. In 2017, this action was dismissed in full and the plaintiffs appealed the dismissal. The appellate court reversed the dismissal and the matter has been remanded to the lower court.
SIBOR/SOR civil action
In 2016, a putative class action was filed in the SDNY against Barclays PLC, Barclays Bank PLC, BCI and other defendants, alleging manipulation of the Singapore Interbank Offered Rate (SIBOR) and Singapore Swap Offer Rate (SOR). In October 2018, the court dismissed all claims against Barclays PLC, Barclays Bank PLC and BCI. The plaintiffs have appealed the dismissal.
ICE LIBOR civil actions
In 2019, several putative class actions have been filed in the SDNY against Barclays PLC, Barclays Bank PLC, BCI, other financial institution defendants and Intercontinental Exchange Inc. and certain of its affiliates (ICE), asserting antitrust claims that defendants manipulated USD LIBOR through defendants’ submissions to ICE. These actions have been consolidated. The defendants’ motion to dismiss was granted in March 2020. The plaintiffs have appealed the dismissal.
Non-US benchmarks civil actions
Legal proceedings (which include the claims referred to below in ‘Local authority civil actions concerning LIBOR’) have been brought or threatened against Barclays Bank PLC (and, in certain cases, Barclays Bank UK PLC) in the UK in connection with alleged manipulation of LIBOR, EURIBOR and other benchmarks. Proceedings have also been brought in a number of other jurisdictions in Europe and Israel. Additional proceedings in other jurisdictions may be brought in the future.
Foreign Exchange investigations and related civil actions
In 2015, the Group reached settlements totalling approximately $2.38bn with various US federal and state authorities and the FCA in relation to investigations into certain sales and trading practices in the Foreign Exchange market. Under the related plea agreement with the US Department of Justice (DoJ), which received final court approval in January 2017, the Group agreed to a term of probation of three years, which expired in January 2020. The Group also continues to provide relevant information to certain authorities.
The European Commission is one of a number of authorities still conducting an investigation into certain trading practices in Foreign Exchange markets. The European Commission announced two settlements in May 2019 and the Group paid penalties totalling approximately €210m. In June 2019, the Swiss Competition Commission announced two settlements and the Group paid penalties totalling approximately CHF 27m. The financial impact of the ongoing matters is not expected to be material to the Group’s operating results, cash flows or financial position.
A number of individuals and corporates in a range of jurisdictions have also threatened or brought civil actions against the Group and other banks in relation to alleged manipulation of Foreign Exchange markets, and may do so in the future. Certain actions remain pending.
FX opt out civil action
In 2018, Barclays Bank PLC and BCI settled a consolidated action filed in the SDNY, alleging manipulation of Foreign Exchange markets (Consolidated FX Action), for a total amount of $384m. Also in 2018, a group of plaintiffs who opted out of the Consolidated FX Action filed a complaint in the SDNY against Barclays PLC, Barclays Bank PLC, BCI and other defendants. Some of the plaintiff’s claims were dismissed in May 2020.
Retail basis civil action
In 2015, a putative class action was filed against several international banks, including Barclays PLC and BCI, on behalf of a proposed class of individuals who exchanged currencies on a retail basis at bank branches (Retail Basis Claims). The SDNY has ruled that the Retail Basis Claims are not covered by the settlement agreement in the Consolidated FX Action. The Court subsequently dismissed all Retail Basis Claims against the Group and all other defendants. The plaintiffs have filed an amended complaint.
State law FX civil action
In 2017, the SDNY dismissed consolidated putative class actions brought under federal and various state laws on behalf of proposed classes of (i) stockholders of Exchange Traded Funds and others who purportedly were indirect investors in FX instruments, and (ii) investors who traded FX instruments through FX dealers or brokers not alleged to have manipulated Foreign Exchange Rates. Barclays Bank PLC and BCI have settled the claim, which is subject to court approval.
Non-US FX civil actions
In addition to the actions described above, legal proceedings have been brought or are threatened against Barclays PLC, Barclays Bank PLC, BCI and Barclays Execution Services Limited (BX) in connection with alleged manipulation of Foreign Exchange in the UK, a number of other jurisdictions in Europe, Israel and Australia and additional proceedings may be brought in the future.
Metals investigations and related civil actions
Barclays Bank PLC previously provided information to the DoJ, the US Commodity Futures Trading Commission and other authorities in connection with investigations into metals and metals-based financial instruments.
A number of US civil complaints, each on behalf of a proposed class of plaintiffs, have been consolidated and transferred to the SDNY. The complaints allege that Barclays Bank PLC and other members of The London Gold Market Fixing Ltd. manipulated the prices of gold and gold derivative contracts in violation of US antitrust and other federal laws. This consolidated putative class action remains pending. A separate US civil complaint by a proposed class of plaintiffs against a number of banks, including Barclays Bank PLC, BCI and BX, alleging manipulation of the price of silver in violation of the CEA, the Antitrust Act and state antitrust and consumer protection laws, has been dismissed as against the Barclays entities. The plaintiffs have the option to seek the court’s permission to appeal.
Civil actions have also been filed in Canadian courts against Barclays PLC, Barclays Bank PLC, Barclays Capital Canada Inc. and BCI on behalf of proposed classes of plaintiffs alleging manipulation of gold and silver prices.
US residential mortgage related civil actions
There are various pending civil actions relating to US Residential Mortgage-Backed Securities (RMBS), including four actions arising from unresolved repurchase requests submitted by Trustees for certain RMBS, alleging breaches of various loan-level representations and warranties (R&Ws) made by Barclays Bank PLC and/or a subsidiary acquired in 2007 (the Acquired Subsidiary). The unresolved repurchase requests received as at 31 December 2019 had an original unpaid principal balance of approximately $2.1bn. The Trustees have also alleged that the relevant R&Ws may have been breached with respect to a greater (but unspecified) amount of loans than previously stated in the unresolved repurchase requests.
These repurchase actions are ongoing. In one repurchase action, the New York Court of Appeals held that claims related to certain R&Ws are time-barred. Barclays Bank PLC has reached a settlement to resolve two of the repurchase actions, which is subject to final court approval. The financial impact of the settlement is not expected to be material to the Group’s operating results, cash flows or financial position. The remaining two repurchase actions are pending.
Government and agency securities civil actions and related matters
Certain governmental authorities are conducting investigations into activities relating to the trading of certain government and agency securities in various markets. The Group provided information in cooperation with such investigations. Civil actions have also been filed on the basis of similar allegations, as described below.
Treasury auction securities civil actions
Consolidated putative class action complaints filed in US federal court against Barclays Bank PLC, BCI and other financial institutions under the Antitrust Act and state common law allege that the defendants (i) conspired to manipulate the US Treasury securities market and/or (ii) conspired to prevent the creation of certain platforms by boycotting or threatening to boycott such trading platforms. The defendants have filed a motion to dismiss.
In addition, certain plaintiffs have filed a related, direct action against BCI and certain other financial institutions, alleging that defendants conspired to fix and manipulate the US Treasury securities market in violation of the Antitrust Act, the CEA and state common law.
Supranational, Sovereign and Agency bonds civil actions
Civil antitrust actions have been filed in the SDNY and Federal Court of Canada in Toronto against Barclays Bank PLC, BCI, BX, Barclays Capital Securities Limited and, with respect to the civil action filed in Canada only, Barclays Capital Canada, Inc. and other financial institutions alleging that the defendants conspired to fix prices and restrain competition in the market for US dollar-denominated Supranational, Sovereign and Agency bonds.
In one of the actions filed in the SDNY, the court granted the defendants’ motion to dismiss the plaintiffs’ complaint, which the plaintiffs have appealed. The plaintiffs have voluntarily dismissed the other SDNY action.
Variable Rate Demand Obligations civil actions
Civil actions have been filed against Barclays Bank PLC and BCI and other financial institutions alleging the defendants conspired or colluded to artificially inflate interest rates set for Variable Rate Demand Obligations (VRDOs). VRDOs are municipal bonds with interest rates that reset on a periodic basis, most commonly weekly. Two actions in state court have been filed by private plaintiffs on behalf of the states of Illinois and California. Two putative class action complaints, which have been consolidated, have been filed in the SDNY.
Government bond civil actions
In a putative class action filed in the SDNY in 2019, plaintiffs alleged that BCI and certain other bond dealers conspired to fix the prices of US government sponsored entity bonds in violation of US antitrust law. BCI agreed to a settlement of $87m, which received final court approval in June 2020. Separately, various entities in Louisiana, including the Louisiana Attorney General and the City of Baton Rouge, have filed complaints against Barclays Bank PLC and other financial institutions making similar allegations as the class action plaintiffs.
In 2018, a separate putative class action against various financial institutions including Barclays PLC, Barclays Bank PLC, BCI, Barclays Bank Mexico, S.A., and certain other subsidiaries of the Group was consolidated in the SDNY. The plaintiffs asserted antitrust and state law claims arising out of an alleged conspiracy to fix the prices of Mexican Government bonds. Barclays PLC has settled the claim for $5.7m, which is subject to court approval.
BDC Finance L.L.C.
In 2008, BDC Finance L.L.C. (BDC) filed a complaint in the NY Supreme Court, demanding damages of $298m, alleging that Barclays Bank PLC had breached a contract in connection with a portfolio of total return swaps governed by an ISDA Master Agreement (collectively, the Agreement). Following a trial on certain liability issues, the court ruled in December 2018 that Barclays Bank PLC was not a defaulting party, which was affirmed on appeal. Barclays Bank PLC’s counterclaim against BDC remains pending.
In 2011, BDC’s investment advisor, BDCM Fund Adviser, L.L.C. and its parent company, Black Diamond Capital Holdings, L.L.C. also sued Barclays Bank PLC and BCI in Connecticut State Court for unspecified damages allegedly resulting from Barclays Bank PLC’s conduct relating to the Agreement, asserting claims for violation of the Connecticut Unfair Trade Practices Act and tortious interference with business and prospective business relations. This case is currently stayed.
Civil actions in respect of the US Anti-Terrorism Act
There are a number of civil actions, on behalf of more than 4,000 plaintiffs, filed in US federal courts in the US District Court in the Eastern District of New York (EDNY) and SDNY against Barclays Bank PLC and a number of other banks. The complaints generally allege that Barclays Bank PLC and those banks engaged in a conspiracy to facilitate US dollar-denominated transactions for the Government of Iran and various Iranian banks, which in turn funded acts of terrorism that injured or killed plaintiffs or plaintiffs’ family members. The plaintiffs seek to recover damages for pain, suffering and mental anguish under the provisions of the US Anti-Terrorism Act, which allow for the trebling of any proven damages.
The court granted the defendants’ motion to dismiss three actions in the EDNY. Plaintiffs have appealed in one action. The court also granted the defendants’ motion to dismiss another action in the SDNY. The remaining actions are stayed pending decisions in these cases.
Interest rate swap and credit default swap US civil actions
Barclays PLC, Barclays Bank PLC and BCI, together with other financial institutions that act as market makers for interest rate swaps (IRS) are named as defendants in several antitrust class actions which were consolidated in the SDNY in 2016. The complaints allege the defendants conspired to prevent the development of exchanges for IRS and demand unspecified money damages.
In 2018, trueEX LLC filed an antitrust class action in the SDNY against a number of financial institutions including Barclays PLC, Barclays Bank PLC and BCI based on similar allegations with respect to trueEX LLC’s development of an IRS platform. In 2017, Tera Group Inc. filed a separate civil antitrust action in the SDNY claiming that certain conduct alleged in the IRS cases also caused the plaintiff to suffer harm with respect to the Credit Default Swaps market. In November 2018 and July 2019, respectively, the court dismissed certain claims in both cases for unjust enrichment and tortious interference but denied motions to dismiss the federal and state antitrust claims, which remain pending.
Odd-lot corporate bonds antitrust class action
In 2020, BCI, together with other financial institutions, were named as defendants in a putative class action. The complaint alleges a conspiracy to boycott developing electronic trading platforms for odd-lots and price fixing. Plaintiffs demand unspecified money damages.
2.
Barclays PLC, Barclays Bank PLC and Barclays Bank UK PLC
Investigation into collections and recoveries relating to unsecured lending
Since February 2018, the FCA has been investigating whether the Group implemented effective systems and controls with respect to collections and recoveries and whether it paid due consideration to the interests of customers in default and arrears. The FCA investigation is at an advanced stage.
HM Revenue & Customs (HMRC) assessments concerning UK Value Added Tax
In 2018, HMRC issued notices that have the effect of removing certain overseas subsidiaries that have operations in the UK from Barclays’ UK VAT group, in which group supplies between members are generally free from VAT. The notices have retrospective effect and correspond to assessments of £181m (inclusive of interest), of which Barclays would expect to attribute an amount of approximately £128m to Barclays Bank UK PLC and £53m to Barclays Bank PLC. HMRC’s decision has been appealed to the First Tier Tribunal (Tax Chamber).
Local authority civil actions concerning LIBOR
Following settlement by Barclays Bank PLC of various governmental investigations concerning certain benchmark interest rate submissions referred to above in ‘Investigations into LIBOR and other benchmarks and related civil actions’, in the UK, certain local authorities have brought claims against Barclays Bank PLC (and, in certain cases, Barclays Bank UK PLC) asserting that they entered into loans in reliance on misrepresentations made by Barclays Bank PLC in respect of its conduct in relation to LIBOR. Barclays has applied to strike out the claims.
General
The Group is engaged in various other legal, competition and regulatory matters in the UK, the US and a number of other overseas jurisdictions. It is subject to legal proceedings brought by and against the Group which arise in the ordinary course of business from time to time, including (but not limited to) disputes in relation to contracts, securities, debt collection, consumer credit, fraud, trusts, client assets, competition, data management and protection, money laundering, financial crime, employment, environmental and other statutory and common law issues.
The Group is also subject to enquiries and examinations, requests for information, audits, investigations and legal and other proceedings by regulators, governmental and other public bodies in connection with (but not limited to) consumer protection measures, compliance with legislation and regulation, wholesale trading activity and other areas of banking and business activities in which the Group is or has been engaged. The Group is cooperating with the relevant authorities and keeping all relevant agencies briefed as appropriate in relation to these matters and others described in this note on an ongoing basis.
At the present time, Barclays PLC does not expect the ultimate resolution of any of these other matters to have a material adverse effect on the Group’s financial position. However, in light of the uncertainties involved in such matters and the matters specifically described in this note, there can be no assurance that the outcome of a particular matter or matters (including formerly active matters or those matters arising after the date of this note) will not be material to Barclays PLC’s results, operations or cash flow for a particular period, depending on, among other things, the amount of the loss resulting from the matter(s) and the amount of profit otherwise reported for the reporting period.
21.
Related party transactions
Related party transactions in the half year ended 30 June 2020 were similar in nature to those disclosed in the Barclays PLC Annual Report 2019. No related party transactions that have taken place in the half year ended 30 June 2020 have materially affected the financial position or the performance of the Group during this period.
22.
Barclays PLC parent company balance sheet
As at | As at | |
30.06.20 | 31.12.19 | |
Assets | £m | £m |
Investment in subsidiaries | 61,488 | 59,546 |
Loans and advances to subsidiaries | 28,254 | 28,850 |
Financial assets at fair value through the income statement | 16,246 | 10,348 |
Derivative financial instruments | 116 | 58 |
Other assets | 37 | 2 |
Total assets | 106,141 | 98,804 |
Liabilities | ||
Deposits at amortised cost | 534 | 500 |
Debt securities in issue | 31,417 | 30,564 |
Subordinated liabilities | 8,669 | 7,656 |
Financial liabilities designated at fair value | 8,206 | 3,498 |
Other liabilities | 112 | 119 |
Total liabilities | 48,938 | 42,337 |
Equity | ||
Called up share capital | 4,336 | 4,331 |
Share premium account | 284 | 263 |
Other equity instruments | 10,865 | 10,865 |
Other reserves | 394 | 394 |
Retained earnings | 41,324 | 40,614 |
Total equity | 57,203 | 56,467 |
Total liabilities and equity | 106,141 | 98,804 |
Investment in subsidiaries
The investment in subsidiaries of £61,488m (December 2019: £59,546m) predominantly relates to investments in Barclays Bank PLC and Barclays Bank UK PLC, as well as holdings of their AT1 securities of £10,843m (December 2019: £10,843m). The increase of £1,942m during the period was predominantly driven by capital contributions into Barclays Bank PLC totalling £1,500m and Barclays Bank UK PLC totalling £220m. Barclays PLC considers the carrying value of its investment in subsidiaries to be fully recoverable.
Financial assets and liabilities designated at fair value
Financial liabilities designated at fair value of £8,206m (December 2019: £3,498m) comprises issuances during the period of $300m Zero Coupon Callable Notes, $1,750m Fixed-to-Floating Rate Senior Notes, $1,000m Fixed Rate Resetting Senior Callable Notes and €2,000m Reset Notes. The proceeds raised through these transactions were used to invest in subsidiaries of Barclays PLC which are included within the financial assets designated at fair value through the income statement balance of £16,246m (December 2019: £10,348m).
Subordinated liabilities
During H120, Barclays PLC issued £500m of Fixed Rate Resetting Subordinated Callable Notes, which is included within the subordinated liabilities balance of £8,669m (December 2019: £7,656m).
Other equity instruments
Other equity instruments comprises AT1 securities issued by Barclays PLC. There have been no new issuances or redemptions during the period.
Management of internal investments, loans and advances
Barclays PLC retains the discretion to manage the nature of its internal investments in subsidiaries according to their regulatory and business needs. Barclays PLC may invest capital and funding into Barclays Bank PLC, Barclays Bank UK PLC and other Group subsidiaries such as Barclays Execution Services Limited and the US Intermediate Holding Company (IHC).
Appendix: Non-IFRS Performance Measures
The Group’s 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 management.
However, any non-IFRS performance measures in this document are not a substitute for IFRS measures and readers should consider the IFRS measures as well.
Non-IFRS performance measures glossary
Measure | Definition |
Loan: deposit ratio | Loans and advances at amortised cost divided by deposits at amortised cost. The components of the calculation have been included on page 44. |
Period end allocated tangible equity | Allocated tangible equity is calculated as 13.0% (2019: 13.0%) of RWAs for each business, adjusted for capital deductions, excluding goodwill and intangible assets, reflecting the assumptions the Group uses for capital planning purposes. Head Office allocated tangible equity represents the difference between the Group’s tangible shareholders’ equity and the amounts allocated to businesses. |
Average tangible shareholders’ equity | Calculated as the average of the previous month’s period end tangible equity and the current month’s period end tangible equity. The average tangible shareholders’ equity for the period is the average of the monthly averages within that period. |
Average allocated tangible equity | Calculated as the average of the previous month’s period end allocated tangible equity and the current month’s period end allocated tangible equity. The average allocated tangible equity for the period is the average of the monthly averages within that period. |
Return on average tangible shareholders’ equity | Annualised profit after tax attributable to ordinary equity holders of the parent, as a proportion of average shareholders’ equity excluding non-controlling interests and other equity instruments adjusted for the deduction of intangible assets and goodwill. The components of the calculation have been included on page 89. |
Return on average allocated tangible equity | Annualised profit after tax attributable to ordinary equity holders of the parent, as a proportion of average allocated tangible equity. The components of the calculation have been included on page 89. |
Cost: income ratio | Total operating expenses divided by total income. |
Loan loss rate | Quoted in basis points and represents total annualised impairment charges divided by gross loans and advances held at amortised cost at the balance sheet date. The components of the calculation have been included on page 25. |
Net interest margin | Annualised net interest income divided by the sum of average customer assets. The components of the calculation have been included on page 22. |
Tangible net asset value per share | Calculated by dividing shareholders’ equity, excluding non-controlling interests and other equity instruments, less goodwill and intangible assets, by the number of issued ordinary shares. The components of the calculation have been included on page 97. |
Performance measures excluding litigation and conduct | Calculated by excluding litigation and conduct charges from performance measures. The components of the calculations have been included on pages 90 to 97. |
Pre-provision profits | Calculated by excluding credit impairment charges from profit before tax. The components of the calculation have been included on pages 90 to 92. |
Pre-provision profits excluding litigation and conduct | Calculated by excluding credit impairment charges, and litigation and conduct charges from profit before tax. The components of the calculation have been included on pages 90 to 92. |
Returns
Return on average tangible equity is calculated as profit after tax attributable to ordinary equity holders of the parent as a proportion of average tangible equity, excluding non-controlling and other equity interests for businesses. Allocated tangible equity has been calculated as 13.0% (2019: 13.0%) of RWAs for each business, adjusted for capital deductions, excluding goodwill and intangible assets, reflecting the assumptions the Group uses for capital planning purposes. Head Office average allocated tangible equity represents the difference between the Group’s average tangible shareholders’ equity and the amounts allocated to businesses.
Profit/(loss) attributable to ordinary equity holders of the parent | Average tangible equity | Return on average tangible equity | |||
Half year ended 30.06.20 | £m | £bn | % | ||
Barclays UK | 52 | 10.2 | 1.0 | ||
Corporate and Investment Bank | 1,514 | 27.7 | 11.0 | ||
Consumer, Cards and Payments | (517) | 4.7 | (21.9) | ||
Barclays International | 997 | 32.4 | 6.2 | ||
Head Office | (354) | 6.0 | n/m | ||
Barclays Group | 695 | 48.6 | 2.9 | ||
Half year ended 30.06.19 | |||||
Barclays UK | 750 | 10.3 | 14.5 | ||
Corporate and Investment Bank | 1,178 | 25.5 | 9.3 | ||
Consumer, Cards and Payments | 442 | 5.3 | 16.6 | ||
Barclays International | 1,620 | 30.8 | 10.5 | ||
Head Office | (298) | 4.6 | n/m | ||
Barclays Group | 2,072 | 45.7 | 9.1 |
Performance measures excluding litigation and conduct | ||||||
Half year ended 30.06.20 | ||||||
Barclays UK | Corporate and Investment Bank | Consumer, Cards and Payments | Barclays International | Head Office | Barclays Group | |
Cost: income ratio | £m | £m | £m | £m | £m | £m |
Total operating expenses | (2,052) | (3,373) | (1,043) | (4,416) | (125) | (6,593) |
Impact of litigation and conduct | 11 | 3 | 8 | 11 | 8 | 30 |
Operating expenses | (2,041) | (3,370) | (1,035) | (4,405) | (117) | (6,563) |
Total income | 3,171 | 6,933 | 1,721 | 8,654 | (204) | 11,621 |
Cost: income ratio excluding litigation and conduct | 64% | 49% | 60% | 51% | n/m | 56% |
Profit before tax | ||||||
Profit/(loss) before tax | 68 | 2,243 | (614) | 1,629 | (425) | 1,272 |
Impact of litigation and conduct | 11 | 3 | 8 | 11 | 8 | 30 |
Profit/(loss) before tax excluding litigation and conduct | 79 | 2,246 | (606) | 1,640 | (417) | 1,302 |
Profit attributable to ordinary equity holders of the parent | ||||||
Attributable profit/(loss) | 52 | 1,514 | (517) | 997 | (354) | 695 |
Post-tax impact of litigation and conduct | 8 | 2 | 6 | 8 | (1) | 15 |
Profit/(loss) attributable to ordinary equity holders of the parent excluding litigation and conduct | 60 | 1,516 | (511) | 1,005 | (355) | 710 |
Return on average tangible shareholders' equity | £bn | £bn | £bn | £bn | £bn | £bn |
Average shareholders' equity | 13.8 | 27.7 | 5.4 | 33.1 | 9.9 | 56.8 |
Average goodwill and intangibles | (3.6) | - | (0.7) | (0.7) | (3.9) | (8.2) |
Average tangible shareholders' equity | 10.2 | 27.7 | 4.7 | 32.4 | 6.0 | 48.6 |
Return on average tangible shareholders' equity excluding litigation and conduct | 1.2% | 11.0% | (21.7%) | 6.2% | n/m | 2.9% |
Basic earnings per ordinary share | ||||||
Basic weighted average number of shares (m) | 17,294 | |||||
Basic earnings per ordinary share excluding litigation and conduct | 4.1p | |||||
Pre-provision profits | ||||||
Profit before tax excluding credit impairment charges and litigation and conduct | £m | |||||
Profit before tax | 1,272 | |||||
Impact of credit impairment charges | 3,738 | |||||
Profit before tax excluding credit impairment charges | 5,010 | |||||
Impact of litigation and conduct | 30 | |||||
Profit before tax excluding credit impairment charges and litigation and conduct | 5,040 |
Half year 30.06.19 | ||||||
Barclays UK | Corporate and Investment Bank | Consumer, Cards and Payments | Barclays International | Head Office | Barclays Group | |
Cost: income ratio | £m | £m | £m | £m | £m | £m |
Total operating expenses | (2,065) | (3,505) | (1,166) | (4,671) | (136) | (6,872) |
Impact of litigation and conduct | 44 | 26 | 4 | 30 | 40 | 114 |
Operating expenses | (2,021) | (3,479) | (1,162) | (4,641) | (96) | (6,758) |
Total income | 3,548 | 5,300 | 2,173 | 7,473 | (231) | 10,790 |
Cost: income ratio excluding litigation and conduct | 57% | 66% | 53% | 62% | n/m | 63% |
Profit before tax | ||||||
Profit/(loss) before tax | 1,062 | 1,714 | 627 | 2,341 | (389) | 3,014 |
Impact of litigation and conduct | 44 | 26 | 4 | 30 | 40 | 114 |
Profit/(loss) before tax excluding litigation and conduct | 1,106 | 1,740 | 631 | 2,371 | (349) | 3,128 |
Profit attributable to ordinary equity holders of the parent | ||||||
Attributable profit/(loss) | 750 | 1,178 | 442 | 1,620 | (298) | 2,072 |
Post-tax impact of litigation and conduct | 32 | 21 | 3 | 24 | 30 | 86 |
Profit/(loss) attributable to ordinary equity holders of the parent excluding litigation and conduct | 782 | 1,199 | 445 | 1,644 | (268) | 2,158 |
Return on average tangible shareholders' equity | £bn | £bn | £bn | £bn | £bn | £bn |
Average shareholders' equity | 13.9 | 25.5 | 6.4 | 31.9 | 7.9 | 53.7 |
Average goodwill and intangibles | (3.6) | - | (1.1) | (1.1) | (3.3) | (8.0) |
Average tangible shareholders' equity | 10.3 | 25.5 | 5.3 | 30.8 | 4.6 | 45.7 |
Return on average tangible shareholders' equity excluding litigation and conduct | 15.1% | 9.4% | 16.7% | 10.7% | n/m | 9.4% |
Basic earnings per ordinary share | ||||||
Basic weighted average number of shares (m) | 17,178 | |||||
Basic earnings per ordinary share excluding litigation and conduct | 12.6p | |||||
Pre-provision profits | ||||||
Profit before tax excluding credit impairment charges and litigation and conduct | £m | |||||
Profit before tax | 3,014 | |||||
Impact of credit impairment charges | 928 | |||||
Profit before tax excluding credit impairment charges | 3,942 | |||||
Impact of litigation and conduct | 114 | |||||
Profit before tax excluding credit impairment charges and litigation and conduct | 4,056 |
Barclays Group | ||||||||||
Q220 | Q120 | Q419 | Q319 | Q219 | Q119 | Q418 | Q318 | |||
Cost: income ratio | £m | £m | £m | £m | £m | £m | £m | £m | ||
Total operating expenses | (3,330) | (3,263) | (3,701) | (4,861) | (3,554) | (3,318) | (4,093) | (3,434) | ||
Impact of litigation and conduct | 20 | 10 | 167 | 1,568 | 53 | 61 | 60 | 105 | ||
Operating expenses | (3,310) | (3,253) | (3,534) | (3,293) | (3,501) | (3,257) | (4,033) | (3,329) | ||
Total income | 5,338 | 6,283 | 5,301 | 5,541 | 5,538 | 5,252 | 5,073 | 5,129 | ||
Cost: income ratio excluding litigation and conduct | 62% | 52% | 67% | 59% | 63% | 62% | 79% | 65% | ||
Profit before tax | ||||||||||
Profit before tax | 359 | 913 | 1,097 | 246 | 1,531 | 1,483 | 374 | 1,461 | ||
Impact of litigation and conduct | 20 | 10 | 167 | 1,568 | 53 | 61 | 60 | 105 | ||
Profit before tax excluding litigation and conduct | 379 | 923 | 1,264 | 1,814 | 1,584 | 1,544 | 434 | 1,566 | ||
Profit attributable to ordinary equity holders of the parent | ||||||||||
Attributable profit/(loss) | 90 | 605 | 681 | (292) | 1,034 | 1,038 | (14) | 1,050 | ||
Post-tax impact of litigation and conduct | 16 | (1) | 122 | 1,525 | 40 | 46 | 62 | 85 | ||
Profit attributable to ordinary equity holders of the parent excluding litigation and conduct | 106 | 604 | 803 | 1,233 | 1,074 | 1,084 | 48 | 1,135 | ||
Return on average tangible shareholders' equity | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | ||
Average shareholders' equity | 58.4 | 55.2 | 54.5 | 56.4 | 54.0 | 53.2 | 52.2 | 52.5 | ||
Average goodwill and intangibles | (8.2) | (8.2) | (8.1) | (8.0) | (7.8) | (8.0) | (7.9) | (7.9) | ||
Average tangible shareholders' equity | 50.2 | 47.0 | 46.4 | 48.4 | 46.2 | 45.2 | 44.3 | 44.6 | ||
Return on average tangible shareholders' equity excluding litigation and conduct | 0.8% | 5.1% | 6.9% | 10.2% | 9.3% | 9.6% | 0.4% | 10.2% | ||
Basic earnings per ordinary share | ||||||||||
Basic weighted average number of shares (m) | 17,294 | 17,278 | 17,200 | 17,192 | 17,178 | 17,111 | 17,075 | 17,074 | ||
Basic earnings per ordinary share excluding litigation and conduct | 0.6p | 3.5p | 4.7p | 7.2p | 6.3p | 6.3p | 0.3p | 6.6p | ||
Pre-provision profits | ||||||||||
Profit before tax excluding credit impairment charges and litigation and conduct | Q220 | Q120 | Q419 | Q319 | Q219 | Q119 | Q418 | Q318 | ||
£m | £m | £m | £m | £m | £m | £m | £m | |||
Profit before tax | 359 | 913 | 1,097 | 246 | 1,531 | 1,483 | 374 | 1,461 | ||
Impact of credit impairment charges | 1,623 | 2,115 | 523 | 461 | 480 | 448 | 643 | 254 | ||
Profit before tax excluding credit impairment charges | 1,982 | 3,028 | 1,620 | 707 | 2,011 | 1,931 | 1,017 | 1,715 | ||
Impact of litigation and conduct | 20 | 10 | 167 | 1,568 | 53 | 61 | 60 | 105 | ||
Profit before tax excluding credit impairment charges and litigation and conduct | 2,002 | 3,038 | 1,787 | 2,275 | 2,064 | 1,992 | 1,077 | 1,820 |
Barclays UK | ||||||||||
Q220 | Q120 | Q419 | Q319 | Q219 | Q119 | Q418 | Q318 | |||
Cost: income ratio | £m | £m | £m | £m | £m | £m | £m | £m | ||
Total operating expenses | (1,024) | (1,028) | (1,122) | (2,432) | (1,063) | (1,002) | (1,175) | (1,042) | ||
Impact of litigation and conduct | 6 | 5 | 58 | 1,480 | 41 | 3 | 15 | 54 | ||
Operating expenses | (1,018) | (1,023) | (1,064) | (952) | (1,022) | (999) | (1,160) | (988) | ||
Total income | 1,467 | 1,704 | 1,959 | 1,846 | 1,771 | 1,777 | 1,863 | 1,896 | ||
Cost: income ratio excluding litigation and conduct | 69% | 60% | 54% | 52% | 58% | 56% | 62% | 52% | ||
Profit before tax | ||||||||||
(Loss)/profit before tax | (127) | 195 | 647 | (687) | 477 | 585 | 390 | 740 | ||
Impact of litigation and conduct | 6 | 5 | 58 | 1,480 | 41 | 3 | 15 | 54 | ||
(Loss)/profit before tax excluding litigation and conduct | (121) | 200 | 705 | 793 | 518 | 588 | 405 | 794 | ||
Profit attributable to ordinary equity holders of the parent | ||||||||||
Attributable (loss)/profit | (123) | 175 | 438 | (907) | 328 | 422 | 241 | 510 | ||
Post-tax impact of litigation and conduct | 5 | 3 | 43 | 1,457 | 30 | 2 | 12 | 48 | ||
(Loss)/profit attributable to ordinary equity holders of the parent excluding litigation and conduct | (118) | 178 | 481 | 550 | 358 | 424 | 253 | 558 | ||
Return on average allocated tangible equity | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | ||
Average allocated equity | 13.9 | 13.7 | 13.8 | 13.9 | 13.8 | 13.9 | 13.6 | 13.7 | ||
Average goodwill and intangibles | (3.6) | (3.6) | (3.5) | (3.5) | (3.5) | (3.5) | (3.5) | (3.6) | ||
Average allocated tangible equity | 10.3 | 10.1 | 10.3 | 10.4 | 10.3 | 10.4 | 10.1 | 10.1 | ||
Return on average allocated tangible equity excluding litigation and conduct | (4.6%) | 7.0% | 18.7% | 21.2% | 13.9% | 16.4% | 10.1% | 22.0% |
Barclays International | ||||||||||
Q220 | Q120 | Q419 | Q319 | Q219 | Q119 | Q418 | Q318 | |||
Cost: income ratio | £m | £m | £m | £m | £m | £m | £m | £m | ||
Total operating expenses | (2,197) | (2,219) | (2,500) | (2,282) | (2,446) | (2,225) | (2,684) | (2,309) | ||
Impact of litigation and conduct | 11 | - | 86 | - | 11 | 19 | 33 | 32 | ||
Operating expenses | (2,186) | (2,219) | (2,414) | (2,282) | (2,435) | (2,206) | (2,651) | (2,277) | ||
Total income | 4,010 | 4,644 | 3,452 | 3,750 | 3,903 | 3,570 | 3,221 | 3,290 | ||
Cost: income ratio excluding litigation and conduct | 55% | 48% | 70% | 61% | 62% | 62% | 82% | 69% | ||
Profit before tax | ||||||||||
Profit before tax | 807 | 822 | 640 | 1,137 | 1,223 | 1,118 | 215 | 850 | ||
Impact of litigation and conduct | 11 | - | 86 | - | 11 | 19 | 33 | 32 | ||
Profit before tax excluding litigation and conduct | 818 | 822 | 726 | 1,137 | 1,234 | 1,137 | 248 | 882 | ||
Profit attributable to ordinary equity holders of the parent | ||||||||||
Attributable profit/(loss) | 468 | 529 | 397 | 799 | 832 | 788 | (21) | 687 | ||
Post-tax impact of litigation and conduct | 8 | - | 64 | 2 | 8 | 16 | 34 | 26 | ||
Profit attributable to ordinary equity holders of the parent excluding litigation and conduct | 476 | 529 | 461 | 801 | 840 | 804 | 13 | 713 | ||
Return on average allocated tangible equity | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | ||
Average allocated equity | 34.2 | 31.9 | 31.9 | 33.3 | 32.1 | 31.6 | 32.4 | 32.5 | ||
Average goodwill and intangibles | (0.7) | (0.7) | (1.0) | (1.1) | (1.0) | (1.1) | (1.1) | (1.3) | ||
Average allocated tangible equity | 33.5 | 31.2 | 30.9 | 32.2 | 31.1 | 30.5 | 31.3 | 31.1 | ||
Return on average allocated tangible equity excluding litigation and conduct | 5.7% | 6.8% | 6.0% | 10.0% | 10.8% | 10.6% | 0.2% | 9.2% |
Corporate and Investment Bank | ||||||||||
Q220 | Q120 | Q419 | Q319 | Q219 | Q119 | Q418 | Q318 | |||
Cost: income ratio | £m | £m | £m | £m | £m | £m | £m | £m | ||
Total operating expenses | (1,683) | (1,690) | (1,926) | (1,716) | (1,867) | (1,638) | (2,046) | (1,744) | ||
Impact of litigation and conduct | 3 | - | 79 | 4 | 7 | 19 | 23 | 32 | ||
Operating expenses | (1,680) | (1,690) | (1,847) | (1,712) | (1,860) | (1,619) | (2,023) | (1,712) | ||
Total income | 3,316 | 3,617 | 2,314 | 2,617 | 2,795 | 2,505 | 2,151 | 2,235 | ||
Cost: income ratio excluding litigation and conduct | 51% | 47% | 80% | 65% | 67% | 65% | 94% | 77% | ||
Profit before tax | ||||||||||
Profit before tax | 1,040 | 1,203 | 359 | 882 | 887 | 827 | 85 | 498 | ||
Impact of litigation and conduct | 3 | - | 79 | 4 | 7 | 19 | 23 | 32 | ||
Profit before tax excluding litigation and conduct | 1,043 | 1,203 | 438 | 886 | 894 | 846 | 108 | 530 | ||
Profit attributable to ordinary equity holders of the parent | ||||||||||
Attributable profit/(loss) | 694 | 820 | 193 | 609 | 596 | 582 | (84) | 431 | ||
Post-tax impact of litigation and conduct | 2 | - | 58 | 5 | 5 | 16 | 27 | 25 | ||
Profit/(loss) attributable to ordinary equity holders of the parent excluding litigation and conduct | 696 | 820 | 251 | 614 | 601 | 598 | (57) | 456 | ||
Return on average allocated tangible equity | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | ||
Average allocated equity | 29.1 | 26.2 | 25.9 | 26.9 | 25.8 | 25.2 | 26.0 | 26.2 | ||
Average goodwill and intangibles | (0.1) | - | (0.1) | - | - | (0.1) | - | (0.2) | ||
Average allocated tangible equity | 29.0 | 26.2 | 25.8 | 26.9 | 25.8 | 25.1 | 26.0 | 25.9 | ||
Return on average allocated tangible equity excluding litigation and conduct | 9.6% | 12.5% | 3.9% | 9.2% | 9.3% | 9.5% | (0.9%) | 7.0% |
Consumer, Cards and Payments | ||||||||||
Q220 | Q120 | Q419 | Q319 | Q219 | Q119 | Q418 | Q318 | |||
Cost: income ratio | £m | £m | £m | £m | £m | £m | £m | £m | ||
Total operating expenses | (514) | (529) | (574) | (566) | (579) | (587) | (638) | (565) | ||
Impact of litigation and conduct | 8 | - | 7 | (4) | 4 | - | 10 | - | ||
Operating expenses | (506) | (529) | (567) | (570) | (575) | (587) | (628) | (565) | ||
Total income | 694 | 1,027 | 1,138 | 1,133 | 1,108 | 1,065 | 1,070 | 1,055 | ||
Cost: income ratio excluding litigation and conduct | 73% | 52% | 50% | 50% | 52% | 55% | 59% | 54% | ||
Profit before tax | ||||||||||
(Loss)/profit before tax | (233) | (381) | 281 | 255 | 336 | 291 | 130 | 352 | ||
Impact of litigation and conduct | 8 | - | 7 | (4) | 4 | - | 10 | - | ||
(Loss)/profit before tax excluding litigation and conduct | (225) | (381) | 288 | 251 | 340 | 291 | 140 | 352 | ||
Profit attributable to ordinary equity holders of the parent | ||||||||||
Attributable (loss)/profit | (226) | (291) | 204 | 190 | 236 | 206 | 63 | 256 | ||
Post-tax impact of litigation and conduct | 6 | - | 6 | (3) | 3 | - | 7 | 1 | ||
(Loss)/profit attributable to ordinary equity holders of the parent excluding litigation and conduct | (220) | (291) | 210 | 187 | 239 | 206 | 70 | 257 | ||
Return on average allocated tangible equity | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | ||
Average allocated equity | 5.1 | 5.7 | 6.0 | 6.4 | 6.3 | 6.4 | 6.4 | 6.3 | ||
Average goodwill and intangibles | (0.6) | (0.7) | (0.9) | (1.1) | (1.0) | (1.0) | (1.1) | (1.1) | ||
Average allocated tangible equity | 4.5 | 5.0 | 5.1 | 5.3 | 5.3 | 5.4 | 5.3 | 5.2 | ||
Return on average allocated tangible equity excluding litigation and conduct | (19.6%) | (23.5%) | 16.3% | 14.0% | 18.0% | 15.4% | 5.4% | 19.9% |
Head Office | ||||||||||
Q220 | Q120 | Q419 | Q319 | Q219 | Q119 | Q418 | Q318 | |||
Profit before tax | £m | £m | £m | £m | £m | £m | £m | £m | ||
Loss before tax | (321) | (104) | (190) | (204) | (169) | (220) | (231) | (129) | ||
Impact of litigation and conduct | 3 | 5 | 23 | 88 | 1 | 39 | 12 | 19 | ||
Loss before tax excluding litigation and conduct | (318) | (99) | (167) | (116) | (168) | (181) | (219) | (110) | ||
Profit attributable to ordinary equity holders of the parent | ||||||||||
Attributable loss | (255) | (99) | (154) | (184) | (126) | (172) | (234) | (147) | ||
Post-tax impact of litigation and conduct | 3 | (4) | 15 | 66 | 2 | 28 | 16 | 11 | ||
Attributable loss excluding litigation and conduct | (252) | (103) | (139) | (118) | (124) | (144) | (218) | (136) |
Tangible net asset value per share | As at | As at | As at |
30.06.20 | 31.12.19 | 31.06.19 | |
£m | £m | £m | |
Total equity excluding non-controlling interests | 68,304 | 64,429 | 67,576 |
Other equity instruments | (10,871) | (10,871) | (12,123) |
Goodwill and intangibles | (8,163) | (8,119) | (7,993) |
Tangible shareholders' equity attributable to ordinary shareholders of the parent | 49,270 | 45,439 | 47,460 |
m | m | m | |
Shares in issue | 17,345 | 17,322 | 17,245 |
p | p | p | |
Tangible net asset value per share | 284 | 262 | 275 |
Shareholder Information
Results timetable1 | Date | |||||
Q320 Results Announcement | 23 October 2020 | |||||
% Change3 | ||||||
Exchange rates2 | 30.06.20 | 31.12.19 | 30.06.19 | 31.12.19 | 30.06.19 | |
Period end - USD/GBP | 1.24 | 1.33 | 1.27 | (7%) | (2%) | |
6 month average - USD/GBP | 1.26 | 1.26 | 1.29 | - | (2%) | |
3 month average - USD/GBP | 1.24 | 1.29 | 1.29 | (4%) | (4%) | |
Period end - EUR/GBP | 1.10 | 1.18 | 1.12 | (7%) | (2%) | |
6 month average - USD/GBP | 1.14 | 1.14 | 1.15 | - | (1%) | |
3 month average - EUR/GBP | 1.13 | 1.16 | 1.14 | (3%) | (1%) | |
Share price data | ||||||
Barclays PLC (p) | 114.42 | 179.64 | 149.80 | |||
Barclays PLC number of shares (m) | 17,345 | 17,322 | 17,245 | |||
For further information please contact | ||||||
Investor relations | Media relations | |||||
Chris Manners +44 (0) 20 7773 2136 | Tom Hoskin +44 (0) 20 7116 4755 | |||||
More information on Barclays can be found on our website: home.barclays. | ||||||
Registered office | ||||||
1 Churchill Place, London, E14 5HP, United Kingdom. Tel: +44 (0) 20 7116 1000. Company number: 48839. | ||||||
Registrar | ||||||
Equiniti, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, United Kingdom. | ||||||
Tel: 0371 384 20554 from the UK or +44 121 415 7004 from overseas. | ||||||
American Depositary Receipts (ADRs) | ||||||
J.P.Morgan Chase Bank, N.A | ||||||
StockTransfer@equiniti.com | ||||||
Tel: +1 800 990 1135 (toll free in US and Canada), +1 651 453 2128 (outside the US and Canada) or +1 866 700 1652 (for the hearing | ||||||
impaired). | ||||||
J.P.Morgan Chase Bank N.A., Shareowner Services, PO Box 64504, St Paul, MN 55164-0504, USA. | ||||||
Delivery of ADR certificates and overnight mail | ||||||
J.P.Morgan Chase Bank N.A., Shareowner Services, 1110 Centre Pointe Curve, Suite 101, Mendota Heights, MN 55120, USA. |
1 | Note that these dates are provisional and subject to change. |
2 | The average rates shown above are derived from daily spot rates during the year. |
3 | The change is the impact to GBP reported information. |
4 | Lines open 8.30am to 5.30pm (UK time), Monday to Friday, excluding UK public holidays in England and Wales. |