REG - Barclays PLC - Q1 2022 Results Announcement
28/04/2022 07:00
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RNS Number : 6128J Barclays PLC 28 April 2022
Barclays PLC
Q1 2022 Results Announcement
31 March 2022
Notes
This document contains inside information for the purposes of Article 7 of the
Market Abuse Regulation (EU) No. 596/2014 (as it forms part of domestic law by
virtue of the European Union (Withdrawal) Act 2018, as amended).
The terms Barclays or Group refer to Barclays PLC together with its
subsidiaries. Unless otherwise stated, the income statement analysis compares
the three months ended 31 March 2022 to the corresponding three months of 2021
and balance sheet analysis as at 31 March 2022 with comparatives relating to
31 December 2021 and 31 March 2021. The abbreviations '£m' and '£bn'
represent millions and thousands of millions of Pounds Sterling respectively;
the abbreviations '$m' and '$bn' represent millions and thousands of millions
of US Dollars respectively; and the abbreviations '€m' and '€bn' represent
millions and thousands of millions of Euros respectively.
There are a number of key judgement areas, for example impairment
calculations, which are based on models and which are subject to ongoing
adjustment and modifications. Reported numbers reflect best estimates and
judgements at the given point in time.
Relevant terms that are used in this document but are not defined under
applicable regulatory guidance or International Financial Reporting Standards
(IFRS) are explained in the results glossary.
The information in this announcement, which was approved by the Board of
Directors on 27 April 2022, does not comprise statutory accounts within the
meaning of Section 434 of the Companies Act 2006. Statutory accounts for the
year ended 31 December 2021, which contained an unmodified audit report under
Section 495 of the Companies Act 2006 (which did not make any statements under
Section 498 of the Companies Act 2006) have been delivered to the Registrar of
Companies in accordance with Section 441 of the Companies Act 2006.
These results will be furnished on Form 6-K with the US Securities and
Exchange Commission (SEC) as soon as practicable following their publication.
Once furnished with the SEC, a copy of the Form 6-K will be available from the
SEC's website at www.sec.gov (http://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 32 to 36 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,
capital distributions (including dividend pay-out ratios and expected payment
strategies), projected levels of growth in the banking and financial markets,
projected costs or savings, any commitments and targets (including, without
limitation, environmental, social and governance (ESG) 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. Forward-looking statements may be affected by a number of factors,
including, without limitation: 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, emerging and developing ESG reporting 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, the Group's ability along with governments and other
stakeholders to measure, manage and mitigate the impacts of climate change
effectively, environmental, social and geopolitical risks, and the impact of
competition. In addition, factors including (but not limited to) the following
may have an effect: capital, leverage and other regulatory rules applicable to
past, current and future periods; UK, US, Eurozone and global macroeconomic
and business conditions; the effects of any volatility in credit markets;
market related risks such as changes in interest rates and foreign exchange
rates; effects of changes in valuation of credit market exposures; changes in
valuation of issued securities; volatility in capital markets; changes in
credit ratings of any entity within the Group or any securities issued by such
entities; the direct and indirect consequences of the Russia-Ukraine War on
European and global macroeconomic conditions, political stability and
financial markets; direct and indirect impacts of the coronavirus (COVID-19)
pandemic; instability as a result of the UK's exit from the European Union
(EU), the effects of the EU-UK Trade and Cooperation Agreement and the
disruption that may subsequently result in the UK and globally; the risk of
cyber-attacks, information or security breaches or technology failures on the
Group's reputation, business or operations; 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, capital distributions,
capital, leverage or other regulatory ratios or other financial and
non-financial metrics or performance measures or ability to meet commitments
and targets may differ materially from the statements or guidance set forth in
the Group's forward-looking statements. Additional risks and factors which may
impact the Group's future financial condition and performance are identified
in Barclays PLC's filings with the SEC (including, without limitation,
Barclays PLC's Annual Report on Form 20-F for the fiscal year ended 31
December 2021), which are available on the SEC's website at www.sec.gov
(http://www.sec.gov) .
Subject to Barclays' obligations under the applicable laws and regulations of
any relevant jurisdiction (including, without limitation, the UK and the US),
in relation to disclosure and ongoing information, we undertake no obligation
to update publicly or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
Performance Highlights
Barclays delivered a profit before tax of £2.2bn including £0.5bn of
litigation and conduct charges, and a return on tangible equity (RoTE) of
11.5%
C. S. Venkatakrishnan, Group Chief Executive, commented
"A strong Q1 performance demonstrated Barclays' ability to deliver broad-based
income growth across all operating businesses. Group income was up 10% to
£6.5bn, alongside profit before tax of £2.2bn and a RoTE of 11.5%. Our
performance includes the relevant costs(1) relating to the over-issuance of
securities in the US and customer remediation of a legacy loan portfolio. Our
income growth was driven partly by Global Markets, which has been helping
clients navigate ongoing market volatility caused by geopolitical and economic
challenges including the devastating war in Ukraine, and by the impact of
higher interest rates in the US and UK.
We remain focused on the impact higher prices are having on our customers and
our small business and corporate clients, all of whom are facing far harder
conditions this year as a result of inflation, supply chain issues and higher
energy costs. We will support them through this difficult period wherever we
can, and support the wider economy just as we did through the COVID-19
pandemic.
Our diversified income streams, focus on costs and a Common Equity Tier 1
(CET1) ratio of 13.8% provide a strong platform to deliver our target of a
greater than 10% RoTE for 2022. We remain focused on our three strategic
priorities as the year progresses: delivering next-generation, digitised
consumer financial services, producing sustainable growth in the Corporate and
Investment Bank (CIB), and capturing opportunities as we transition to a
low-carbon economy."
Key financial metrics:
Income Cost: income ratio Profit before tax RoTE EPS CET1 TNAV per share
ratio
Q122 £6.5bn 63% £2.2bn 11.5% 8.4p 13.8% 294p
Q122 performance(1):
· Attributable profit was £1.4bn (Q121: £1.7bn) including litigation and
conduct charges net of tax of £0.4bn
· Group income was £6.5bn (Q121: £5.9bn) up 10% year-on-year
- Strong CIB income: strong FICC and Equities performance with higher levels of
activity as we supported our clients through a period of market volatility,
more than offsetting weaker Investment Banking fees driven by a reduced fee
pool(2)
- Consumer and payments businesses recovering: robust UK mortgage lending,
positive trends in UK and US consumer spending and payments volumes, and
tailwind from rising rates
· Costs impacted by litigation and conduct charges: total operating expenses of
£4.1bn (Q121: £3.6bn) included litigation and conduct charges of £0.5bn
relating to the over-issuance of securities by Barclays Bank PLC in the US and
customer remediation costs relating to a legacy loan portfolio
- Group costs excluding litigation and conduct were £3.6bn, up 1% year-on-year
· Credit impairment charges: £0.1bn charge (Q121: £0.1bn) driven by low
delinquencies and a benign credit environment, with unsecured lending
provision levels remaining appropriate in light of inflationary headwinds
· Capital: CET1 ratio of 13.8% (December 2021: 15.1%) and tangible net asset
value (TNAV) per share of 294p (December 2021: 291p)
Outlook:
· Returns: Barclays continues to target a RoTE of greater than 10% in 2022
· Income: Barclays' diversified income streams position the Group well for the
current economic and market environment and rising interest rates
· Costs: given £0.5bn of litigation and conduct charges in Q122 and current
expectations for inflation and performance costs, Barclays now expects FY22
total operating expenses to be around £15.0bn(3)
· Impairment: acknowledging geopolitical uncertainty and cost of living
pressures, the impairment charge is expected to remain below pre-pandemic
levels in coming quarters given reduced unsecured lending balances and
appropriate coverage ratios
· Capital: Barclays continues to target a CET1 ratio within the range of 13-14%
· Capital returns: Barclays' capital distribution policy incorporates a
progressive ordinary dividend, supplemented as appropriate, including with
share buybacks. Barclays remains committed to the share buyback programme and
the intention would be to launch it as soon as practicable following
resolution of filing requirements being reached with the SEC and the
appropriate 20-F filings having been made. See Supplementary Information on
pages 30 to 31 for further details
1 To reflect the over-issuance of US securities under the Barclays Bank PLC US
Shelf, 2021 comparatives have been restated. See Basis of preparation on page
31 for further details.
2 Data source: Dealogic for the period covering 1 January to 31 March 2022.
3 Group cost outlook is based on an average USD/GBP FX rate of 1.31 during 2022
and subject to foreign currency movements.
Barclays Group results
for the three months ended
31.03.22 31.03.21(1)
£m £m % Change
Net interest income 2,341 1,851 26
Net fee, commission and other income 4,155 4,049 3
Total income 6,496 5,900 10
Credit impairment charges (141) (55)
Net operating income 6,355 5,845 9
Operating costs (3,588) (3,545) (1)
Litigation and conduct (523) (33)
Total operating expenses (4,111) (3,578) (15)
Other net (expenses)/income (10) 132
Profit before tax] 2,234 2,399 (7)
Tax charge (614) (496) (24)
Profit after tax 1,620 1,903 (15)
Non-controlling interests (1) (4) 75
Other equity instrument holders (215) (195) (10)
Attributable profit 1,404 1,704 (18)
Performance measures
Return on average tangible shareholders' equity 11.5% 14.7%
Average tangible shareholders' equity (£bn) 48.8 46.5
Cost: income ratio 63% 61%
Loan loss rate (bps) 15 6
Basic earnings per share 8.4p 9.9p
Basic weighted average number of shares (m) 16,682 17,293 (4)
Period end number of shares (m) 16,762 17,223 (3)
As at 31.03.22 Restated(2) As at 31.03.21
As at 31.12.21
Balance sheet and capital management £bn £bn £bn
Loans and advances at amortised cost 371.7 361.5 345.8
Loans and advances at amortised cost impairment coverage ratio 1.5% 1.6% 2.2%
Total assets 1,496.1 1,384.3 1,379.7
Deposits at amortised cost 546.5 519.4 498.8
Tangible net asset value per share 294p 291p 267p
Common equity tier 1 ratio 13.8% 15.1% 14.6%
Common equity tier 1 capital 45.3 47.3 45.9
Risk weighted assets 328.8 314.1 313.4
UK leverage ratio 5.0% 5.2% 5.0%
UK leverage exposure 1,123.5 1,137.9 1,145.4
Average UK leverage ratio 4.8% 4.9% 4.9%
Average UK leverage exposure 1,179.4 1,229.0 1,174.9
Funding and liquidity
Group liquidity pool (£bn) 320 291 290
Liquidity coverage ratio 159% 168% 161%
Loan: deposit ratio 68% 70% 69%
1 The income statement comparatives for Q121 are not impacted by the
over-issuance of US securities under the Barclays Bank PLC US Shelf. See Basis
of preparation on page 31 for further details.
2 31 December 2021 financial and capital metrics have been restated to reflect
the over-issuance of US securities under the Barclays Bank PLC US Shelf. See
Basis of preparation on page 31 for further details.
Group Finance Director's Review
Over-issuance of US securities under the Barclays Bank PLC US Shelf: Barclays
has a provision of £540m at Q122 relating to this matter, £320m (post-tax
impact of £240m) of which was recognised in Q122 and £220m (post-tax impact
of £170m) recognised in 2021, see Basis of preparation on page 31 for further
details.
Group performance
· Barclays' diversified model delivered a profit before tax of £2,234m (Q121:
£2,399m), RoTE of 11.5% (Q121: 14.7%), and earnings per share (EPS) of 8.4p
(Q121: 9.9p)
· Total income increased to £6,496m (Q121: £5,900m). Barclays UK income
increased 5%. Barclays International income increased 10%, with CIB income up
10% and Consumer, Cards and Payments (CC&P) income up 10%
· Credit impairment charges of £141m (Q121: £55m) were driven by ongoing flows
to delinquency in unsecured lending. Coverage levels remained materially in
line with Q421 and were considered appropriate having been assessed against
rising inflation and affordability headwinds
· Total operating expenses increased to £4,111m (Q121: £3,578m) due to
litigation and conduct charges of £523m including a provision in CIB of
£320m (post-tax impact of £240m) relating to the over-issuance of securities
by Barclays Bank PLC in the US and higher customer remediation costs relating
to a legacy loan portfolio in CC&P. This resulted in a cost: income ratio
of 63% (Q121: 61%). Costs excluding litigation and conduct increased 1% to
£3,588m, reflecting continued investment and business growth, partially
offset by lower performance costs and efficiency savings
· The effective tax rate (ETR) was 27.5% (Q121: 20.7%). The tax charge included
a £346m charge recognised for the re-measurement of the Group's UK deferred
tax assets (DTAs) due to the enactment of legislation in Q122 which will
result in the UK banking surcharge rate being reduced from 8% to 3% effective
from 1 April 2023 (the ETR excluding the impact of this downward
re-measurement of UK DTAs was 12.0%). Tax credits relating to adjustments in
respect of prior years partially offset the impact of the downward UK DTA
re-measurement
· Attributable profit was £1,404m (Q121: £1,704m) including litigation and
conduct charges net of tax of £405m
· Total assets increased to £1,496bn (December 2021: £1,384bn) primarily due
to an increase in client and trading activity, and growth in the liquidity
pool
· TNAV per share increased to 294p (December 2021: 291p(1)) primarily reflecting
8.4p of EPS, partially offset by net negative reserve movements driven by
higher interest rates
Barclays UK
· Profit before tax increased to £594m (Q121: £460m). RoTE was 15.6% (Q121:
12.0%) reflecting the resilience of the business which is well positioned
within the current UK operating environment
· Total income increased 5% to £1,649m. Net interest income increased 5% to
£1,339m with a net interest margin of 2.62% (Q121: 2.54%) primarily driven by
the rising interest rate environment in the UK. Net fee, commission and other
income increased 5% to £310m
- Personal Banking income increased 11% to £1,022m, driven by rising interest
rates and supported by the benefit of strong 2021 mortgage origination
- Barclaycard Consumer UK income decreased 12% to £276m as higher transaction
based revenues from improved customer spend volumes were more than offset by
lower interest earning lending (IEL) balances. Lower IEL balances were
impacted by higher customer repayments and reduced borrowing
- Business Banking income increased 4% to £351m driven by rising interest rates
alongside improved transaction based revenues, partially offset by lower
government scheme lending income as repayments continue
· Credit impairment charges decreased 38% to £48m reflecting lower unsecured
lending balances and lower delinquency rates. As at 31 March 2022, 30 and 90
day arrears rates in UK cards were 1.0% (Q121: 1.6%) and 0.3% (Q121: 0.8%)
respectively. The credit card and consumer loan businesses maintain
appropriate provision levels in light of emerging affordability headwinds, as
reflected in a total coverage ratio of 10.6% (December 2021: 10.9%)
· Total operating expenses decreased 3% to £1,007m driven by lower operational
costs and efficiency savings, partially offset by increased investment spend
· Loans and advances to customers at amortised cost decreased 1% in the quarter
to £207.3bn as £1.0bn of mortgage growth was more than offset by a £2.3bn
decrease in Business Banking balances due to the repayment of government
scheme lending and the yield curve impact from rising interest rates on the
Education, Social Housing and Local Authority portfolio carrying value
· Customer deposits at amortised cost remained broadly stable at £260.3bn,
maintaining a strong loan: deposit ratio of 85% (December 2021: 85%)
· RWAs remained stable at £72.7bn (December 2021: £72.3bn)
1 31 December 2021 financial and capital metrics have been restated to reflect
the over-issuance of US securities under the Barclays Bank PLC US Shelf. See
Basis of preparation on page 31 for further details.
Barclays International
· Profit before tax decreased 13% to £1,713m with a RoTE of 14.8% (Q121:
17.7%), reflecting a RoTE of 17.1% (Q121: 17.9%) in CIB and (1.5)% (Q121:
16.5%) in CC&P
· Total income increased to £4,824m (Q121: £4,399m)
- CIB income increased 10% to £3,938m reflecting the benefit of a diversified
business model
- Global Markets income increased 26% to £2,696m driven by strong performances
in FICC and Equities, reflecting higher levels of activity as we supported our
clients through a period of market volatility. FICC income increased 37% to
£1,644m, mainly in macro, and Equities income increased 13% to £1,052m
driven by derivatives
- Investment Banking fees income decreased 25% to £648m due to the reduced fee
pool, particularly in Equity capital markets(1), and a strong prior year
comparative
- Within Corporate, Transaction banking income increased 19% to £469m driven by
deposit balance growth, improved margins and higher payments volumes.
Corporate lending income decreased 39% to £125m due to higher costs of
hedging and credit protection
- CC&P income increased 10% to £886m
- International Cards and Consumer Bank income was stable at £538m as higher
average cards balances were offset by higher customer acquisition costs
- Private Bank income increased 20% to £214m, reflecting client balance growth
and improved margins
- Unified Payments income increased 44% to £134m driven by turnover growth
following the easing of lockdown restrictions in the past year
· Credit impairment charges were £101m (Q121: £22m net release) reflecting a
continued benign credit environment
- CIB credit impairment net release of £33m (Q121: £43m net release) was
driven by improvements in the portfolio and limited material single name
wholesale loan charges
- CC&P credit impairment charges increased to £134m (Q121: £21m charge)
driven by higher unsecured lending balances in US cards. As at 31 March 2022,
30 and 90 day arrears in US cards were 1.6% (Q121: 2.1%) and 0.8% (Q121: 1.2%)
respectively. The US cards business continues to maintain appropriate
provision levels in light of potential emerging affordability headwinds, as
reflected in a total coverage ratio of 10.4% (December 2021: 10.6%)
· Total operating expenses increased 23% to £3,018m
- CIB total operating expenses increased 19% to £2,239m primarily driven by a
£320m provision relating to the expected losses resulting from a rescission
offer to repurchase certain securities issuances identified as being in excess
of the registered amount. Operating costs increased 2% to £1,921m as
investment in talent, systems and technology were partially offset by lower
performance costs
- CC&P total operating expenses increased 36% to £779m driven by £195m of
litigation and conduct costs, including a provision for higher customer
remediation costs relating to a legacy loan portfolio, and higher investment
spend reflecting an increase in marketing and costs for existing and new
partnerships
· RWAs increased to £245.1bn (December 2021: £230.9bn) resulting from
regulatory changes that took effect from 1 January 2022, increased client and
trading activity within CIB and an increase in respect of short-term hedging
arrangements designed to manage the risks of the rescission offer
Head Office
· Loss before tax was £73m (Q121: £32m)
· Total income was £23m (Q121: £75m expense) which included a one-off gain of
£86m from the sale and leaseback of UK data centres, partially offset by
hedge accounting, funding costs on legacy capital instruments and treasury
items
· Total operating expenses were £86m (Q121: £80m)
· Other net income was an expense of £18m (Q121: £123m income) driven by a
fair value loss in Barclays associate investment holding in the Business
Growth Fund
· RWAs were £11.0bn (December 2021: £11.0bn)
1 Data source: Dealogic for the period covering 1 January to 31 March 2022.
Group capital and leverage(1)
· The CET1 ratio decreased by 130bps to 13.8% (December 2021: 15.1%) as capital
decreased by £2.1bn to £45.3bn and RWAs increased by £14.7bn to £328.8bn
- The expected impact of regulatory change on 1 January 2022 reduced the CET1
ratio by c80bps as CET1 capital decreased £1.7bn and RWAs increased £6.6bn
with a further c30bps reduction due to the £1bn buyback announced with FY21
results
- The impact of the over-issuance of securities in the US reduced the CET1 ratio
by c20bps due to a £0.2bn (post-tax) increase to the provision reducing CET1
capital and a £2.8bn increase in RWAs reflecting the short-term hedging
arrangements designed to manage the risk of the rescission offer
- Excluding the above impacts there was an increase to the CET1 ratio as CET1
capital increased by £0.9bn reflecting profits (excluding the increase in
provision for the over-issuance of securities in the US), an accrual toward a
FY22 dividend, equity coupons paid, and an increased deduction for prudent
valuation adjustments (PVA). This was largely offset by an RWA increase of
£5.3bn primarily due to increased client and trading activity within the CIB
· The UK leverage ratio decreased to 5.0% (December 2021: 5.2%) primarily due to
the decrease in CET1 capital and the £1bn redemption of Additional Tier 1
(AT1) instruments partially offset by a decrease in the leverage exposure of
£14.4bn to £1,123.5bn (December 2021: £1,137.9bn)
Group funding and liquidity
· The liquidity pool was £320bn (December 2021: £291bn) and the liquidity
coverage ratio remained significantly above the 100% regulatory requirement at
159% (December 2021: 168%), equivalent to a surplus of £115bn (December 2021:
£116bn). The increase in the pool was driven by deposit growth and an
increase in wholesale funding, which were partly offset by an increase in
business funding consumption
· Wholesale funding outstanding, excluding repurchase agreements, was £178.1bn
(December 2021: £167.5bn). The Group issued £1.4bn equivalent of minimum
requirement for own funds and eligible liabilities (MREL) instruments from
Barclays PLC (the Parent company) during the year. The Group has a strong MREL
position with a ratio of 31.2% of RWAs which is in excess of its regulatory
requirement of 28.9%
Other matters
· Over-issuance of US securities under the Barclays Bank PLC US Shelf: as per
Barclays' RNS announcement on 28 March 2022, Barclays has commissioned a
review by external counsel of the facts and circumstances relating to the
matter and is assisting regulators with their inquiries and requests for
information. Barclays Bank PLC has elected to make a rescission offer to
certain purchasers of the affected securities issued in excess of the
registered amount, which is expected to commence during the second quarter of
2022. Barclays remains committed to its structured products business in the US
and expects Barclays Bank PLC to file a new shelf registration statement with
the SEC, and resume issuance of structured notes, during the second quarter of
2022. The final cost of any rescission offer will be impacted by prevailing
market conditions at the date of that offer. Hedges have been put in place to
minimise this volatility, but the final impact may differ from the provision
reflected at Q122. For further details, please refer to Supplementary
Information on pages 30 to 31
· Legacy loan portfolio: a customer remediation provision of £181m has been
recognised in relation to a legacy timeshare loan portfolio brokered by Azure
Services Limited (ASL). The provision represents the best estimate as at Q122.
Barclays continues to review complaints regarding legacy partner finance
loans, however it is not currently possible to predict the outcome of this
review
· Absa sale: on 21 April 2022, Barclays sold 63m ordinary shares in Absa Group
Limited (7.4% of Absa's issued share capital) at a price of ZAR 164.0 per
share, raising aggregate gross sale proceeds of ZAR 10.3bn (£516m(2)). The
sale is expected to result in an increase of approximately 10 basis points to
Barclays' CET1 ratio in the second quarter of 2022 primarily due to reduced
capital deductions and RWAs, partially offset by a loss on sale of £42m
through the income statement
· Pensions: during 2019 and 2020, the UK Retirement Fund (UKRF), the Group's
main pension scheme, subscribed for non-transferable listed senior fixed rate
notes for £1.25bn. As a result of these transactions, the CET1 impact of the
UKRF was deferred until 2023, 2024 and 2025 upon maturity of the notes.
Following the PRA's statement on 13 April 2022, Barclays is planning to unwind
these transactions and to agree the terms and timing of this unwind with the
UKRF Trustee as part of the next triennial actuarial valuation as at 30
September 2022. Upon unwind, this would result in a c30bps reduction to the
CET1 ratio potentially being accelerated to Q422 from 2023, 2024 and 2025. As
at 31 March 2022, the UKRF was in an accounting surplus of £4.4bn on an IAS
19 basis and as at 30 September 2021 was in a funding surplus of £0.6bn.
There may also be a pension related reduction in Pillar 2A requirements in
2022 which could partially mitigate the impact of the unwind on the Group
surplus capital position
1 31 December 2021 financial and capital metrics have been restated to reflect
the over-issuance of US securities under the Barclays Bank PLC US Shelf. See
Basis of preparation on page 31 for further details.
2 Exchange rate GBP/ZAR 20.04 as of 21 April 2022.
Capital distributions
· Barclays is committed to maintaining an appropriate balance between delivering
attractive total cash returns to shareholders, investment in the business and
maintaining a strong capital position. Barclays pays a progressive ordinary
dividend, taking into account these objectives and the earnings outlook of the
Group. The Board will also continue to supplement the ordinary dividends as
appropriate, including with share buybacks
· In its 28 March 2022 announcement, Barclays indicated that its previously
announced £1bn share buyback programme was expected to commence in Q222
following the publication of Q1 results. Barclays' Q1 performance, including a
profit before tax of £2.2bn, a RoTE of 11.5% and a CET1 ratio of 13.8%
continues to provide a strong platform for returning capital through the
previously announced buyback programme. Due to the ongoing discussions with
the SEC regarding the potential restatement of the 2021 financial statements
included in Barclays PLC's Form 20-F filed with the SEC, Barclays believes
that it is prudent to delay the commencement of the buyback programme until
those discussions have been concluded. Barclays remains committed to the share
buyback programme and the intention would be to launch it as soon as
practicable following resolution of filing requirements being reached with the
SEC and the appropriate 20-F filings having been made. For further details
regarding discussions with the SEC, see Supplementary Information on pages 30
to 31
Group targets
Barclays continues to target the following over the medium term:
· Returns: RoTE of greater than 10%
· Cost efficiency: cost: income ratio below 60%
· Capital adequacy: CET1 ratio in the range of 13-14%
Anna Cross, Group Finance Director
Results by Business
Barclays UK Three months ended Three months ended
31.03.22 31.03.21
Income statement information £m £m % Change
Net interest income 1,339 1,281 5
Net fee, commission and other income 310 295 5
Total income 1,649 1,576 5
Credit impairment charges (48) (77) 38
Net operating income 1,601 1,499 7
Operating costs (998) (1,036) 4
Litigation and conduct (9) (3)
Total operating expenses (1,007) (1,039) 3
Other net income - -
Profit before tax 594 460 29
Attributable profit 396 298 33
As at 31.03.22 As at 31.12.21 As at 31.03.21
Balance sheet information £bn £bn £bn
Loans and advances to customers at amortised cost 207.3 208.8 205.7
Total assets 317.2 321.2 309.1
Customer deposits at amortised cost 260.3 260.6 247.5
Loan: deposit ratio 85% 85% 88%
Risk weighted assets 72.7 72.3 72.7
Period end allocated tangible equity 10.1 10.0 10.0
Three months ended Three months ended
Performance measures 31.03.22 31.03.21
Return on average allocated tangible equity 15.6% 12.0%
Average allocated tangible equity (£bn) 10.1 9.9
Cost: income ratio 61% 66%
Loan loss rate (bps) 9 14
Net interest margin 2.62% 2.54%
Analysis of Barclays UK Three months ended Three months ended
31.03.22 31.03.21
Analysis of total income £m £m % Change
Personal Banking 1,022 923 11
Barclaycard Consumer UK 276 315 (12)
Business Banking 351 338 4
Total income 1,649 1,576 5
Analysis of credit impairment charges
Personal Banking 21 (22)
Barclaycard Consumer UK (44) (36) (22)
Business Banking (25) (19) (32)
Total credit impairment charges (48) (77) 38
As at 31.03.22 As at 31.12.21 As at 31.03.21
Analysis of loans and advances to customers at amortised cost £bn £bn £bn
Personal Banking 166.5 165.4 160.4
Barclaycard Consumer UK 8.4 8.7 8.7
Business Banking 32.4 34.7 36.6
Total loans and advances to customers at amortised cost 207.3 208.8 205.7
Analysis of customer deposits at amortised cost
Personal Banking 196.6 196.4 186.0
Barclaycard Consumer UK - - 0.1
Business Banking 63.7 64.2 61.4
Total customer deposits at amortised cost 260.3 260.6 247.5
Barclays International Three months ended Three months ended(1)
31.03.22 31.03.21
Income statement information £m £m % Change
Net interest income 936 748 25
Net trading income 2,446 1,934 26
Net fee, commission and other income 1,442 1,717 (16)
Total income 4,824 4,399 10
Credit impairment (charges)/releases (101) 22
Net operating income 4,723 4,421 7
Operating costs (2,505) (2,438) (3)
Litigation and conduct (513) (21)
Total operating expenses (3,018) (2,459) (23)
Other net income 8 9 (11)
Profit before tax 1,713 1,971 (13)
Attributable profit 1,300 1,431 (9)
As at 31.03.22 As at 31.12.21 As at 31.03.21
Balance sheet information £bn £bn £bn
Loans and advances at amortised cost 144.8 133.8 123.5
Trading portfolio assets 134.1 146.9 131.1
Derivative financial instrument assets 288.8 261.5 269.4
Financial assets at fair value through the income statement 203.8 188.2 197.5
Cash collateral and settlement balances 132.0 88.1 109.7
Other assets 255.5 225.6 221.7
Total assets 1,159.0 1,044.1 1,052.9
Deposits at amortised cost 286.1 258.8 251.2
Derivative financial instrument liabilities 277.2 256.4 260.2
Loan: deposit ratio 51% 52% 49%
Risk weighted assets 245.1 230.9 230.0
Period end allocated tangible equity 35.6 33.2 32.7
Three months ended Three months ended
Performance measures 31.03.22 31.03.21
Return on average allocated tangible equity 14.8% 17.7%
Average allocated tangible equity (£bn) 35.1 32.3
Cost: income ratio 63% 56%
Loan loss rate (bps) 28 (7)
Net interest margin 4.15% 3.92%
1 The income statement comparatives for Q121 are not impacted by the
over-issuance of US securities under the Barclays Bank PLC US Shelf. See Basis
of preparation on page 31 for further details.
Analysis of Barclays International
Corporate and Investment Bank Three months ended Three months ended(1)
31.03.22 31.03.21
Income statement information £m £m % Change
Net interest income 385 270 43
Net trading income 2,450 1,917 28
Net fee, commission and other income 1,103 1,407 (22)
Total income 3,938 3,594 10
Credit impairment releases 33 43 (23)
Net operating income 3,971 3,637 9
Operating costs (1,921) (1,886) (2)
Litigation and conduct (318) (1)
Total operating expenses (2,239) (1,887) (19)
Other net income - 1
Profit before tax 1,732 1,751 (1)
Attributable profit 1,316 1,263 4
As at 31.03.22 As at 31.12.21 As at 31.03.21
Balance sheet information £bn £bn £bn
Loans and advances at amortised cost 109.6 100.0 94.3
Trading portfolio assets 134.0 146.7 130.9
Derivative financial instrument assets 288.7 261.5 269.4
Financial assets at fair value through the income statement 203.8 188.1 197.3
Cash collateral and settlement balances 131.2 87.2 108.8
Other assets 222.5 195.8 190.8
Total assets 1,089.8 979.3 991.5
Deposits at amortised cost 214.7 189.4 185.2
Derivative financial instrument liabilities 277.1 256.4 260.2
Risk weighted assets 213.5 200.7 201.3
Three months ended Three months ended
Performance measures 31.03.22 31.03.21
Return on average allocated tangible equity 17.1% 17.9%
Average allocated tangible equity (£bn) 30.8 28.2
Cost: income ratio 57% 53%
Analysis of total income £m £m % Change
FICC 1,644 1,204 37
Equities 1,052 932 13
Global Markets 2,696 2,136 26
Advisory 185 163 13
Equity capital markets 47 243 (81)
Debt capital markets 416 453 (8)
Investment Banking fees 648 859 (25)
Corporate lending 125 206 (39)
Transaction banking 469 393 19
Corporate 594 599 (1)
Total income 3,938 3,594 10
1 The income statement comparatives for Q121 are not impacted by the
over-issuance of US securities under the Barclays Bank PLC US Shelf. See Basis
of preparation on page 31 for further details.
Analysis of Barclays International
Consumer, Cards and Payments Three months ended Three months ended
31.03.22 31.03.21
Income statement information £m £m % Change
Net interest income 551 478 15
Net fee, commission, trading and other income 335 327 2
Total income 886 805 10
Credit impairment charges (134) (21)
Net operating income 752 784 (4)
Operating costs (584) (552) (6)
Litigation and conduct (195) (20)
Total operating expenses (779) (572) (36)
Other net income 8 8 -
(Loss)/profit before tax (19) 220
Attributable (loss)/profit (16) 168
As at 31.03.22 As at 31.12.21 As at 31.03.21
Balance sheet information £bn £bn £bn
Loans and advances at amortised cost 35.2 33.8 29.2
Total assets 69.2 64.8 61.4
Deposits at amortised cost 71.4 69.4 66.0
Risk weighted assets 31.6 30.2 28.8
Three months ended Three months ended
Performance measures 31.03.22 31.03.21
Return on average allocated tangible equity (1.5)% 16.5%
Average allocated tangible equity (£bn) 4.3 4.1
Cost: income ratio 88% 71%
Loan loss rate (bps) 145 27
Analysis of total income £m £m % Change
International Cards and Consumer Bank 538 533 1
Private Bank 214 179 20
Unified Payments 134 93 44
Total income 886 805 10
Head Office Three months ended Three months ended
31.03.22 31.03.21
Income statement information £m £m % Change
Net interest income 66 (178)
Net fee, commission and other income (43) 103
Total income 23 (75)
Credit impairment releases 8 -
Net operating income 31 (75)
Operating costs (85) (71) (20)
Litigation and conduct (1) (9) 89
Total operating expenses (86) (80) (8)
Other net (expenses)/income (18) 123
Loss before tax (73) (32)
Attributable loss (292) (25)
As at 31.03.22 As at 31.12.21 As at 31.03.21
Balance sheet information £bn £bn £bn
Total assets 19.9 19.0 17.7
Risk weighted assets 11.0 11.0 10.7
Period end allocated tangible equity 3.6 5.7 3.3
Three months ended Three months ended
Performance measures 31.03.22 31.03.21
Average allocated tangible equity (£bn) 3.6 4.3
Performance Management
Margins and balances
Three months ended 31.03.22 Three months ended 31.03.21
Net interest income Average customer assets Net interest margin Net interest income Average customer assets Net interest margin
£m £m % £m £m %
Barclays UK 1,339 207,607 2.62 1,281 204,663 2.54
Barclays International(1) 867 84,838 4.15 755 78,230 3.92
Total Barclays UK and Barclays International 2,206 292,445 3.06 2,036 282,893 2.92
Other(2) 135 (185)
Total Barclays Group 2,341 1,851
1 Barclays International margins include the lending related investment bank
business.
2 Other includes Head Office and the non-lending related investment bank
businesses not included in Barclays International margins.
The Group's combined product and equity structural hedge notional as at
31 March 2022 was £238bn (31 March 2021: £192bn), with an average duration
of close to 3 years (2021: average duration 2.5 to 3 years). Group net
interest income includes gross structural hedge contributions of £378m (Q121:
£350m) and net structural hedge contributions of £141m (Q121: £301m). Gross
structural hedge contributions represent the absolute level of interest earned
from the fixed receipts on the basket of swaps in the structural hedge, while
the net structural hedge contributions represent the net interest earned on
the difference between the structural hedge rate and prevailing floating
rates.
Quarterly analysis for Barclays UK and Barclays International Net interest income Average customer assets Net interest margin
Three months ended 31.12.21 £m £m %
Barclays UK 1,313 209,064 2.49
Barclays International(1) 848 81,244 4.14
Total Barclays UK and Barclays International 2,161 290,308 2.95
Three months ended 30.09.21
Barclays UK 1,303 207,692 2.49
Barclays International(1) 783 77,364 4.02
Total Barclays UK and Barclays International 2,086 285,056 2.90
Three months ended 30.06.21
Barclays UK 1,305 205,168 2.55
Barclays International(1) 763 77,330 3.96
Total Barclays UK and Barclays International 2,068 282,498 2.94
Three months ended 31.03.21
Barclays UK 1,281 204,663 2.54
Barclays International(1) 755 78,230 3.92
Total Barclays UK and Barclays International 2,036 282,893 2.92
1 Barclays International margins include the lending related investment bank
business.
Credit Risk
Loans and advances at amortised cost by stage
The table below presents an analysis of loans and advances at amortised cost
by gross exposure, impairment allowance, impairment charge and coverage ratio
by stage allocation and business segment as at 31 March 2022. Also included
are off-balance sheet loan commitments and financial guarantee contracts by
gross exposure, impairment allowance and coverage ratio by stage allocation as
at 31 March 2022.
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 expected credit loss (ECL) is not reported separately.
Any excess is reported on the liability side of the balance sheet as a
provision. For wholesale portfolios, the impairment allowance on the undrawn
exposure is reported on the liability side of the balance sheet as a
provision.
Gross exposure Impairment allowance Net exposure
Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
As at 31.03.22 £m £m £m £m £m £m £m £m £m
Barclays UK 158,707 25,003 3,049 186,759 221 943 704 1,868 184,891
Barclays International 26,627 2,792 1,574 30,993 575 873 795 2,243 28,750
Head Office 3,688 380 691 4,759 1 27 347 375 4,384
Total Barclays Group retail 189,022 28,175 5,314 222,511 797 1,843 1,846 4,486 218,025
Barclays UK 35,052 1,848 914 37,814 142 48 103 293 37,521
Barclays International 102,476 13,271 1,014 116,761 195 177 364 736 116,025
Head Office 124 1 22 147 - - 20 20 127
Total Barclays Group wholesale(1) 137,652 15,120 1,950 154,722 337 225 487 1,049 153,673
Total loans and advances at amortised cost 326,674 43,295 7,264 377,233 1,134 2,068 2,333 5,535 371,698
Off-balance sheet loan commitments and financial guarantee contracts(2) 330,717 27,886 1,724 360,327 207 275 21 503 359,824
Total(3) 657,391 71,181 8,988 737,560 1,341 2,343 2,354 6,038 731,522
As at 31.03.22 Three months ended 31.03.22
Coverage ratio Loan impairment charge/(release) and loan loss rate
Stage 1 Stage 2 Stage 3 Total Loan impairment charge/(release) Loan loss rate
% % % % £m bps
Barclays UK 0.1 3.8 23.1 1.0 43 9
Barclays International 2.2 31.3 50.5 7.2 128 167
Head Office - 7.1 50.2 7.9 (7) -
Total Barclays Group retail 0.4 6.5 34.7 2.0 164 30
Barclays UK 0.4 2.6 11.3 0.8 8 9
Barclays International 0.2 1.3 35.9 0.6 (7) -
Head Office - - 90.9 13.6 (1) -
Total Barclays Group wholesale(1) 0.2 1.5 25.0 0.7 - -
Total loans and advances at amortised cost 0.3 4.8 32.1 1.5 164 18
Off-balance sheet loan commitments and financial guarantee contracts(2) 0.1 1.0 1.2 0.1 (42)
Other financial assets subject to impairment(3) 19
Total(4) 0.2 3.3 26.2 0.8 141
1 Includes Wealth and Private Banking exposures measured on an individual basis,
and excludes Business Banking exposures, including lending under the
government backed Bounce Back Loan Scheme (BBLs) of £9.0bn that are managed
on a collective basis and reported within Barclays UK Retail. The net impact
is a difference in total exposure of £5,199m of balances reported as
wholesale loans on page 17 in the Loans and advances at amortised cost by
product disclosure.
2 Excludes loan commitments and financial guarantees of £14bn 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 £198.8bn and impairment allowance of £135m. This comprises
£7m ECL on £198.5bn Stage 1 assets, £0m on £130m Stage 2 fair value
through other comprehensive income assets, cash collateral and settlement
balances and £128m on £135m Stage 3 other assets.
4 The loan loss rate is 15bps after applying the total impairment charge of
£141m.
Gross exposure Impairment allowance Net exposure
Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
As at 31.12.21 £m £m £m £m £m £m £m £m £m
Barclays UK 160,695 22,779 2,915 186,389 261 949 728 1,938 184,451
Barclays International 25,981 2,691 1,566 30,238 603 795 858 2,256 27,982
Head Office 3,735 429 705 4,869 2 36 347 385 4,484
Total Barclays Group retail 190,411 25,899 5,186 221,496 866 1,780 1,933 4,579 216,917
Barclays UK 35,571 1,917 969 38,457 153 43 111 307 38,150
Barclays International 92,341 13,275 1,059 106,675 187 192 458 837 105,838
Head Office 542 2 21 565 - - 19 19 546
Total Barclays Group wholesale(1) 128,454 15,194 2,049 145,697 340 235 588 1,163 144,534
Total loans and advances at amortised cost 318,865 41,093 7,235 367,193 1,206 2,015 2,521 5,742 361,451
Off-balance sheet loan commitments and financial guarantee contracts(2) 312,142 34,815 1,298 348,255 217 302 23 542 347,713
Total(3) 631,007 75,908 8,533 715,448 1,423 2,317 2,544 6,284 709,164
As at 31.12.21 Year ended 31.12.21
Coverage ratio Loan impairment charge/(release) and loan loss rate
Stage 1 Stage 2 Stage 3 Total Loan impairment charge/(release) Loan loss rate
% % % % £m bps
Barclays UK 0.2 4.2 25.0 1.0 (227) -
Barclays International 2.3 29.5 54.8 7.5 181 60
Head Office 0.1 8.4 49.2 7.9 - -
Total Barclays Group retail 0.5 6.9 37.3 2.1 (46) -
Barclays UK 0.4 2.2 11.5 0.8 122 32
Barclays International 0.2 1.4 43.2 0.8 (197) -
Head Office - - 90.5 3.4 - -
Total Barclays Group wholesale(1) 0.3 1.5 28.7 0.8 (75) -
Total loans and advances at amortised cost 0.4 4.9 34.8 1.6 (121) -
Off-balance sheet loan commitments and financial guarantee contracts(2) 0.1 0.9 1.8 0.2 (514)
Other financial assets subject to impairment(3) (18)
Total 0.2 3.1 29.8 0.9 (653)
1 Includes Wealth and Private Banking exposures measured on an individual basis,
and excludes Business Banking exposures, including BBLs of £9.4bn that are
managed on a collective basis and reported within Barclays UK Retail. The net
impact is a difference in total exposure of £5,994m of balances reported as
wholesale loans on page 17 in the Loans and advances at amortised cost by
product disclosure.
2 Excludes loan commitments and financial guarantees of £18.8bn 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 £155.2bn and impairment allowance of £114m. This comprises
£6m ECL on £154.9bn Stage 1 assets, £1m on £157.0bn Stage 2 fair value
through other comprehensive income assets, other assets and cash collateral
and settlement balances and £107m on £110m Stage 3 other assets.
Loans and advances at amortised cost by product
The table below presents a breakdown of loans and advances at amortised cost
and the impairment allowance with stage allocation by asset classification.
Stage 2
As at 31.03.22 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 147,839 18,815 1,370 805 20,990 2,148 170,977
Credit cards, unsecured loans and other retail lending 37,963 5,259 318 454 6,031 2,341 46,335
Wholesale loans 140,872 15,057 948 269 16,274 2,775 159,921
Total 326,674 39,131 2,636 1,528 43,295 7,264 377,233
Impairment allowance
Home loans 18 43 3 7 53 397 468
Credit cards, unsecured loans and other retail lending 759 1,526 116 133 1,775 1,393 3,927
Wholesale loans 357 235 3 2 240 543 1,140
Total 1,134 1,804 122 142 2,068 2,333 5,535
Net exposure
Home loans 147,821 18,772 1,367 798 20,937 1,751 170,509
Credit cards, unsecured loans and other retail lending 37,204 3,733 202 321 4,256 948 42,408
Wholesale loans 140,515 14,822 945 267 16,034 2,232 158,781
Total 325,540 37,327 2,514 1,386 41,227 4,931 371,698
Coverage ratio % % % % % % %
Home loans - 0.2 0.2 0.9 0.3 18.5 0.3
Credit cards, unsecured loans and other retail lending 2.0 29.0 36.5 29.3 29.4 59.5 8.5
Wholesale loans 0.3 1.6 0.3 0.7 1.5 19.6 0.7
Total 0.3 4.6 4.6 9.3 4.8 32.1 1.5
As at 31.12.21
Gross exposure £m £m £m £m £m £m £m
Home loans 148,058 17,133 1,660 707 19,500 2,122 169,680
Credit cards, unsecured loans and other retail lending 37,840 5,102 300 248 5,650 2,332 45,822
Wholesale loans 132,967 15,246 306 391 15,943 2,781 151,691
Total 318,865 37,481 2,266 1,346 41,093 7,235 367,193
Impairment allowance
Home Loans 19 46 6 7 59 397 475
Credit cards, unsecured loans and other retail lending 824 1,493 85 123 1,701 1,504 4,029
Wholesale Loans 363 248 4 3 255 620 1,238
Total 1,206 1,787 95 133 2,015 2,521 5,742
Net exposure
Home loans 148,039 17,087 1,654 700 19,441 1,725 169,205
Credit cards, unsecured loans and other retail lending 37,016 3,609 215 125 3,949 828 41,793
Wholesale loans 132,604 14,998 302 388 15,688 2,161 150,453
Total 317,659 35,694 2,171 1,213 39,078 4,714 361,451
Coverage ratio % % % % % % %
Home loans - 0.3 0.4 1.0 0.3 18.7 0.3
Credit cards, unsecured loans and other retail lending 2.2 29.3 28.3 49.6 30.1 64.5 8.8
Wholesale loans 0.3 1.6 1.3 0.8 1.6 22.3 0.8
Total 0.4 4.8 4.2 9.9 4.9 34.8 1.6
Measurement uncertainty
The Q122 ECL provision has been based on macroeconomic indicators used in the
Q421 ECL scenario, rolled forward by one quarter, and updated to reflect
changes in balances, risk parameters and individually assessed impaired names
during the quarter. Management has applied economic uncertainty and other
adjustments to modelled ECL outputs.
Uncertainty persists. The ongoing geopolitical situation could put further
pressure on already high levels of inflation which may weigh on corporate
profitability and consumer affordability levels. In addition, COVID-19
infection rates have started to increase across the globe which could result
in (among other things) labour shortages and supply chain constraints.
In response to the changing economic environment, key baseline macroeconomic
indicators have been tracked against consensus updates to March 2022. These
latest updates reflect improved UK unemployment expectations but also higher
inflationary expectations. However, because the macroeconomic outlook remains
uncertain and has only recently changed, these updates have not been reflected
in the Q122 ECL modelled provision level.
Furthermore, sensitivity analysis has been completed to estimate the impact of
applying the refreshed UK unemployment baseline improvement to the UK Credit
Cards portfolio. This high level analysis indicated that, all other things
being equal, this would result in an immaterial release to modelled ECL. In
addition, coverage levels have been assessed in light of the potential impact
of higher inflation on customer affordability and expert judgements updated
accordingly with the resulting adjustments included within total post model
adjustments of £1.3bn (31 December 2021: £1.5bn).
The tables below show the key consensus macroeconomic variables used in the
Baseline scenario and the probability weights applied to each scenario.
Baseline average macroeconomic variables used in the calculation of ECL
2022 2023 2024 2025 2026
As at 31.03.22 % % % % %
UK GDP(1) 5.7 2.5 2.0 1.8 1.7
UK unemployment(2) 4.8 4.5 4.4 4.2 4.2
UK HPI(3) 1.1 1.7 1.9 2.2 2.2
UK bank rate 0.6 1.0 1.0 0.8 0.8
US GDP(1) 4.3 2.9 2.4 2.4 2.4
US unemployment(4) 4.3 3.7 3.6 3.6 3.6
US HPI(5) 4.8 5.3 4.9 5.0 5.0
US federal funds rate 0.3 0.8 1.1 1.3 1.3
2021 2022 2023 2024 2025
As at 31.12.21 % % % % %
UK GDP(1) 6.2 4.9 2.3 1.9 1.7
UK unemployment(2) 4.8 4.7 4.5 4.3 4.2
UK HPI(3) 4.7 1.0 1.9 1.9 2.3
UK bank rate 0.1 0.8 1.0 1.0 0.8
US GDP(1) 5.5 3.9 2.6 2.4 2.4
US unemployment(4) 5.5 4.2 3.6 3.6 3.6
US HPI(5) 11.8 4.5 5.2 4.9 5.0
US federal funds rate 0.2 0.3 0.9 1.2 1.3
1 Average Real GDP seasonally adjusted change in year.
2 Average UK unemployment rate 16-year+.
3 Change in year end UK HPI = Halifax All Houses, All Buyers index, relative to
prior year end.
4 Average US civilian unemployment rate 16-year+.
5 Change in year end US HPI = FHFA House Price Index, relative to prior year
end.
Scenario probability weighting
Upside 2 Upside 1 Baseline Downside 1 Downside 2
% % % % %
As at 31.03.22
Scenario probability weighting 20.9 27.2 30.1 14.8 7.0
As at 31.12.21
Scenario probability weighting 20.9 27.2 30.1 14.8 7.0
Treasury and Capital Risk
Regulatory minimum requirements
Capital
The Group's Overall Capital Requirement for CET1 is 11.0% 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 2.5% Pillar 2A
requirement and a 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 (FPC) 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. On 13 December 2021, the FPC announced that a CCyB rate of 1% for
UK exposures has been re-introduced and will be applicable from 13 December
2022.
The Group's Pillar 2A requirement as per the PRA's Individual Capital
Requirement was set as a nominal amount. When expressed as a percentage of
RWAs this was 4.4% of which at least 56.25% needed to be met with CET1
capital, equating to approximately 2.5% of RWAs. The Pillar 2A requirement is
subject to at least annual review and is based on a point in time assessment.
Leverage
The Group is subject to a UK leverage ratio requirement of 3.8%. 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 of
0.0%. Although the leverage ratio is expressed in terms of Tier 1 (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 £5.9bn.
The Group is also 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.
MREL
The Group is required to meet the higher of: (i) two times the sum of 8%
Pillar 1 and 4.4% Pillar 2A; and (ii) 6.75% of leverage exposures. CET1
capital cannot be counted towards both MREL and the capital buffers, meaning
that the buffers will effectively be applied above MREL requirements.
Significant regulatory updates in the period
Capital and RWAs
On 1 January 2022 the PRA's implementation of Basel III standards took effect
including the re-introduction of the 100% CET1 capital deduction for
qualifying software intangible assets and the introduction of the Standardised
Approach for Counterparty Credit Risk (SA-CCR) which replaces the Current
Exposure Method (CEM) for Standardised derivative exposures as a more risk
sensitive approach. In addition, the PRA also implemented IRB roadmap changes
which includes revisions to the criteria for definition of default,
probability of default (PD) and loss given default (LGD) estimation to ensure
supervisory consistency and increase transparency of IRB models.
Leverage
From 1 January 2022, UK banks are subject to a single UK leverage ratio
requirement meaning that the CRR leverage ratio no longer applies. Central
bank claims can be excluded from the UK leverage ratio measure as long as they
are matched by qualifying liabilities (rather than deposits).
References to CRR, as amended by CRR II mean, unless otherwise specified, CRR
as amended by CRR II, as it forms part of UK law pursuant to the European
Union (Withdrawal) Act 2018. On 31 March 2022, the temporary transitional
powers (TTP) available to UK regulators to delay or phase in on-shoring of
European Union legislation into UK law ended with full compliance of the
on-shored regulations required from 1 April 2022.
Restated(1)
Capital ratios(2,3,4) As at 31.03.22 As at 31.12.21
CET1 13.8% 15.1%
T1 17.1% 19.1%
Total regulatory capital 20.1% 22.2%
Capital resources £m £m
Total equity excluding non-controlling interests per the balance sheet 68,465 69,052
Less: other equity instruments (recognised as AT1 capital) (11,119) (12,259)
Adjustment to retained earnings for foreseeable ordinary share dividends (968) (666)
Adjustment to retained earnings for foreseeable repurchase of shares (1,000) -
Adjustment to retained earnings for foreseeable other equity coupons (39) (32)
Other regulatory adjustments and deductions
Additional value adjustments (PVA) (1,864) (1,585)
Goodwill and intangible assets (8,035) (6,804)
Deferred tax assets that rely on future profitability excluding temporary (938) (1,028)
differences
Fair value reserves related to gains or losses on cash flow hedges 3,343 852
Gains or losses on liabilities at fair value resulting from own credit 4 892
Defined benefit pension fund assets (3,225) (2,619)
Direct and indirect holdings by an institution of own CET1 instruments (20) (50)
Adjustment under IFRS 9 transitional arrangements 601 1,229
Other regulatory adjustments 64 345
CET1 capital 45,269 47,327
AT1 capital
Capital instruments and related share premium accounts 11,119 12,259
Qualifying AT1 capital (including minority interests) issued by subsidiaries - 637
Other regulatory adjustments and deductions (60) (80)
AT1 capital 11,059 12,816
T1 capital 56,328 60,143
T2 capital
Capital instruments and related share premium accounts 8,334 8,713
Qualifying T2 capital (including minority interests) issued by subsidiaries 1,540 1,113
Credit risk adjustments (excess of impairment over expected losses) 98 73
Other regulatory adjustments and deductions (160) (160)
Total regulatory capital 66,140 69,882
Total RWAs 328,830 314,136
1 Capital metrics as at 31 December 2021 have been restated. See Basis of
preparation on page 31 for further details. The transitional CET1 ratio
remains unchanged at 15.1%.
2 CET1, T1 and T2 capital, and RWAs are calculated applying the transitional
arrangements of the CRR as amended by CRR II. This includes IFRS 9
transitional arrangements and the grandfathering of CRR II non-compliant
capital instruments. Prior period comparatives include the grandfathering of
CRR non-compliant capital instruments.
3 The fully loaded CET1 ratio, as is relevant for assessing against the
conversion trigger in Barclays PLC AT1 securities, was 13.6%, with £44.7bn of
CET1 capital and £328.6bn of RWAs calculated without applying the
transitional arrangements of the CRR as amended by CRR II.
4 The Group's CET1 ratio, as is relevant for assessing against the conversion
trigger in Barclays Bank PLC 7.625% Contingent Capital Notes, was 13.8%. For
this calculation CET1 capital and RWAs are calculated applying the
transitional arrangements under the CRR as amended by CRR II, 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.
Restated(1)
Movement in CET1 capital Three months ended 31.03.22
£m
Opening CET1 capital 47,327
Profit for the period attributable to equity holders 1,619
Own credit relating to derivative liabilities (21)
Ordinary share dividends paid and foreseen (302)
Purchased and foreseeable share repurchase (1,000)
Other equity coupons paid and foreseen (222)
Increase in retained regulatory capital generated from earnings 74
Net impact of share schemes (268)
Fair value through other comprehensive income reserve (209)
Currency translation reserve 370
Other reserves 24
Decrease in other qualifying reserves (83)
Pension remeasurements within reserves 667
Defined benefit pension fund asset deduction (606)
Net impact of pensions 61
Additional value adjustments (PVA) (279)
Goodwill and intangible assets (1,231)
Deferred tax assets that rely on future profitability excluding those arising 90
from temporary differences
Direct and indirect holdings by an institution of own CET1 instruments 30
Adjustment under IFRS 9 transitional arrangements (628)
Other regulatory adjustments (92)
Decrease in regulatory capital due to adjustments and deductions (2,110)
Closing CET1 capital 45,269
1 Opening balance as at 31 December 2021 has been restated. See Basis of
preparation on page 31 for further details.
CET1 capital decreased £2.1bn to £45.3bn (December 2021: £47.3bn).
CET1 capital decreased by £1.7bn as a result of regulatory changes that took
effect from 1 January 2022 including the re-introduction of the 100% CET1
capital deduction for qualifying software intangible assets and a reduction in
IFRS9 transitional relief due to the relief applied to the pre-2020 impairment
charge reducing to 25% in 2022 from 50% in 2021 and the relief applied to the
post-2020 impairment charge reducing to 75% in 2022 from 100% in 2021.
£1.6bn of capital generated from profits, after absorbing the £0.2bn
(post-tax) additional impact of the over-issuance of securities in the US, was
more than offset by distributions of £1.5bn comprising:
· £1bn for share buybacks announced with FY21 results
· £0.3bn accrual towards a FY22 dividend
· £0.2bn of equity coupons paid
Other significant decreases in the period were:
· £0.3bn increase in the PVA deduction as a result of increased volatility and
uncertainty in the market
· £0.2bn decrease in the Fair value through other comprehensive income reserve
primarily due to losses on bonds as a result of an increase in yields,
partially offset by gains in value of the Absa investment
RWAs by risk type and business
Credit risk Counterparty credit risk Market Risk Operational risk Total RWAs
STD IRB STD IRB Settlement Risk CVA STD IMA
As at 31.03.22 £m £m £m £m £m £m £m £m £m £m
Barclays UK 6,989 54,241 229 - - 57 155 - 11,047 72,718
Corporate and Investment Bank 35,325 70,831 16,422 21,047 268 3,675 17,068 23,551 25,296 213,483
Consumer, Cards and Payments 21,289 3,459 242 12 - 37 110 34 6,424 31,607
Barclays International 56,614 74,290 16,664 21,059 268 3,712 17,178 23,585 31,720 245,090
Head Office 5,532 6,486 - - - - - - (996) 11,022
Barclays Group 69,135 135,017 16,893 21,059 268 3,769 17,333 23,585 41,771 328,830
As at 31.12.21
Barclays UK 7,195 53,408 426 - - 138 100 - 11,022 72,289
Corporate and Investment Bank 29,420 64,416 15,223 19,238 105 2,289 17,306 27,308 25,359 200,664
Consumer, Cards and Payments 20,770 2,749 215 18 - 21 - 57 6,391 30,221
Barclays International 50,190 67,165 15,438 19,256 105 2,310 17,306 27,365 31,750 230,885
Head Office 4,733 7,254 - - - - - - (1,025) 10,962
Barclays Group 62,118 127,827 15,864 19,256 105 2,448 17,406 27,365 41,747 314,136
Movement analysis of RWAs
Credit risk Counterparty credit risk Market risk Operational risk Total RWAs
£m £m £m £m £m
Opening RWAs (as at 31.12.21) 189,945 37,673 44,771 41,747 314,136
Book size 10,139 290 (4,236) 24 6,217
Acquisitions and disposals (70) - - - (70)
Book quality (1,239) (154) - - (1,393)
Model updates - - - - -
Methodology and policy 3,278 3,349 - - 6,627
Foreign exchange movements(1) 2,099 831 383 - 3,313
Total RWA movements 14,207 4,316 (3,853) 24 14,694
Closing RWAs (as at 31.03.22) 204,152 41,989 40,918 41,771 328,830
1 Foreign exchange movements does not include foreign exchange for modelled
market risk or operational risk.
Overall RWAs increased £14.7bn to £328.8bn (December 2021: £314.1bn)
Credit risk RWAs increased £14.2bn:
· A £10.1bn increase in book size primarily driven by lending activities within
CIB and an increase in short-term hedging arrangements designed to manage the
risks of the rescission offer, expected to unwind after completion of such
rescission offer
· A £1.2bn decrease in book quality primarily driven by the benefit in
mortgages from an increase in the House Price Index (HPI)
· A £3.3bn increase in methodology and policy as a result of regulatory changes
that took effect from 1 January 2022, relating to implementation of IRB
roadmap changes partially offset by the reversal of the software intangibles
benefit
· A £2.1bn increase in FX due to appreciation of period end USD and EUR against
GBP
Counterparty Credit risk RWAs increased £4.3bn:
· A £3.3bn increase in methodology and policy as a result of regulatory changes
that took effect from 1 January 2022, relating to the introduction of SA-CCR
Market risk RWAs decreased £3.9bn:
· A £4.2bn decrease in book size primarily due to a decrease in Stressed Value
at Risk (SVaR) model adjustment as a result of changes in portfolio
composition and a reduction in Structural FX. This was partially offset by
increased client and trading activities.
Restated(1)
Leverage ratios(2,3) As at 31.03.22 As at 31.12.21
£m £m
Average UK leverage ratio 4.8% 4.9%
Average T1 capital 56,701 59,739
Average UK leverage exposure 1,179,381 1,229,041
UK leverage ratio 5.0% 5.2%
CET1 capital 45,269 47,327
AT1 capital 11,059 12,179
T1 capital 56,328 59,506
UK leverage exposure 1,123,531 1,137,904
UK leverage exposure
Accounting assets
Derivative financial instruments 289,822 262,572
Derivative cash collateral 64,836 58,177
Securities financing transactions (SFTs) 186,417 170,853
Loans and advances and other assets 955,020 892,683
Total IFRS assets 1,496,095 1,384,285
Regulatory consolidation adjustments (3,605) (3,665)
Derivatives adjustments
Derivatives netting (235,071) (236,881)
Adjustments to collateral (52,181) (50,929)
Net written credit protection 19,729 15,509
Potential future exposure (PFE) on derivatives 85,619 137,291
Total derivatives adjustments (181,904) (135,010)
SFTs adjustments 29,095 24,544
Regulatory deductions and other adjustments (22,332) (20,219)
Weighted off-balance sheet commitments 119,933 115,047
Qualifying central bank claims (260,196) (210,134)
Settlement netting (53,555) (16,944)
UK leverage exposure 1,123,531 1,137,904
1 Capital and leverage metrics as at 31 December 2021 have been restated. See
Basis of preparation on page 31 for further details.
2 Capital and leverage measures are calculated applying the transitional
arrangements of the CRR as amended by CRR II.
3 Fully loaded average UK leverage ratio was 4.8%, with £56.1bn of T1 capital
and £1,178.8bn of leverage exposure. Fully loaded UK leverage ratio was 5.0%,
with £55.7bn of T1 capital and £1,122.9bn of leverage exposure. Fully loaded
UK leverage ratios are calculated without applying the transitional
arrangements of the CRR as amended by CRR II.
The UK leverage ratio decreased to 5.0% (December 2021: 5.2%) primarily due to
a £3.2bn decrease in T1 capital partially offset by a £14.4bn decrease in
the leverage exposure. The UK leverage exposure decreased to £1,123.5bn
(December 2021: £1,137.9bn), due to the following movements:
· £51.7bn decrease in PFE on derivatives primarily driven by increased netting
eligibility due to the introduction of SA-CCR
· £23.7bn decrease due to a £50.1bn increase in qualifying central bank claims
exemption due to the matching of allowable liabilities rather than deposits
introduced under the UK leverage framework review, partially offset by a
£26.3bn increase in cash
· £34.5bn increase in derivative financial instruments post additional
regulatory netting and adjustments for cash collateral primarily driven by
client and trading activity in CIB and the application of a 1.4 multiplier
introduced under SA-CCR
· £20.1bn increase in SFTs primarily driven by client activity in CIB
The average UK leverage ratio decreased to 4.8% (December 2021: 4.9%)
primarily due to a £3.0bn decrease in average T1 capital driven by the
redemption of AT1 capital instruments and the reduction of IFRS9 transitional
relief. This was partially offset by a £49.7bn decrease in the leverage
exposure to £1,179.4bn (December 2021: £1,229.0bn) due to movements broadly
in line with UK leverage as well as an increase in net written credit
derivatives due to the inclusion of credit default swap options from 1 January
2022.
MREL
MREL requirements including buffers(1,2,3) Total requirement (£m) based on Requirement as a percentage of:
Restated(1) Restated(1)
As at 31.03.22 As at 31.12.21 As at 31.03.22 As at 31.12.21
Requirement based on RWAs (minimum requirement) 94,947 77,302 28.9% 24.6%
Requirement based on UK leverage exposure(3) 89,025 93,975 7.9% 6.9%
Restated(1)
Own funds and eligible liabilities(1,2) As at 31.03.22 As at 31.12.21
£m £m
CET1 capital 45,269 47,327
AT1 capital instruments and related share premium accounts(4) 11,059 12,179
T2 capital instruments and related share premium accounts(4) 8,272 8,626
Eligible liabilities 37,886 39,889
Total Barclays PLC (the Parent company) own funds and eligible liabilities 102,486 108,021
Total RWAs 328,830 314,136
Total UK leverage exposure(3) 1,123,531 1,356,191
Restated(1)
Own funds and eligible liabilities ratios as a percentage of:(1) As at 31.03.22 As at 31.12.21
Total RWAs 31.2% 34.4%
Total UK leverage exposure(3) 9.1% 8.0%
As at 31 March 2022, Barclays PLC (the Parent company) held £102.5bn of own
funds and eligible liabilities equating to 31.2% of RWAs. This was in excess
of the Group's MREL requirement to hold £94.9bn of own funds and eligible
liabilities equating to 28.9% of RWAs.
1 Capital and leverage metrics as at 31 December 2021 have been restated. See
Basis of preparation on page 31 for further details.
2 CET1, T1 and T2 capital, and RWAs are calculated applying IFRS 9 transitional
arrangements.
3 As at 31 December 2021, MREL requirements were on a CRR leverage basis which,
from 1 January 2022, was no longer applicable for UK banks.
4 Includes other AT1 capital regulatory adjustments and deductions of £60m
(December 2021: £80m), and other T2 credit risk adjustments and deductions of
£62m (December 2021: £81m).
Condensed Consolidated Financial Statements
Condensed consolidated income statement (unaudited)
Three months ended 31.03.22 Three months ended 31.03.21(1)
£m £m
Total income 6,496 5,900
Credit impairment charges (141) (55)
Net operating income 6,355 5,845
Operating expenses excluding litigation and conduct (3,588) (3,545)
Litigation and conduct (523) (33)
Operating expenses (4,111) (3,578)
Other net (expenses)/income (10) 132
Profit before tax 2,234 2,399
Tax charge (614) (496)
Profit after tax 1,620 1,903
Attributable to:
Equity holders of the parent 1,404 1,704
Other equity instrument holders 215 195
Total equity holders of the parent 1,619 1,899
Non-controlling interests 1 4
Profit after tax 1,620 1,903
Earnings per share p p
Basic earnings per ordinary share 8.4 9.9
1 The income statement comparatives for Q121 are not impacted by the
over-issuance of US securities under the Barclays Bank PLC US Shelf. See Basis
of preparation on page 31 for further details.
Condensed consolidated balance sheet (unaudited)
Restated(1)
As at 31.03.22 As at 31.12.21
Assets £m £m
Cash and balances at central banks 264,916 238,574
Cash collateral and settlement balances 136,289 92,542
Loans and advances at amortised cost 371,698 361,451
Reverse repurchase agreements and other similar secured lending 2,999 3,227
Trading portfolio assets 134,208 147,035
Financial assets at fair value through the income statement 207,392 191,972
Derivative financial instruments 289,822 262,572
Financial assets at fair value through other comprehensive income 61,858 61,753
Investments in associates and joint ventures 988 999
Goodwill and intangible assets 8,046 8,061
Current tax assets 342 261
Deferred tax assets 5,171 4,619
Other assets 12,366 11,219
Total assets 1,496,095 1,384,285
Liabilities
Deposits at amortised cost 546,482 519,433
Cash collateral and settlement balances 121,299 79,371
Repurchase agreements and other similar secured borrowing 29,013 28,352
Debt securities in issue 110,658 98,867
Subordinated Liabilities 11,630 12,759
Trading portfolio liabilities 78,092 54,169
Financial liabilities designated at fair value 238,913 250,960
Derivative financial instruments 277,466 256,883
Current tax liabilities 1,050 689
Deferred tax liabilities 37 37
Other liabilities 12,021 12,724
Total liabilities 1,426,661 1,314,244
Equity
Called up share capital and share premium 4,551 4,536
Other reserves 317 1,770
Retained earnings 52,478 50,487
Shareholders' equity attributable to ordinary shareholders of the parent 57,346 56,793
Other equity instruments 11,119 12,259
Total equity excluding non-controlling interests 68,465 69,052
Non-controlling interests 969 989
Total equity 69,434 70,041
Total equity and liabilities 1,496,095 1,384,285
1 See Basis of preparation on page 31 for further details on restatement of
prior period comparatives.
Condensed consolidated statement of changes in equity (unaudited)
Restated(1) Restated(1) Restated(1)
Called up share capital and share premium Other equity instruments Other reserves Retained earnings Total Non-controlling interests Total equity
Three months ended 31.03.22 £m £m £m £m £m £m £m
Balance as at 01 January 2022 4,536 12,259 1,770 50,487 69,052 989 70,041
Profit after tax - 215 - 1,404 1,619 1 1,620
Retirement benefit remeasurements - - - 667 667 - 667
Other - - (1,462) - (1,462) - (1,462)
Total comprehensive income for the period - 215 (1,462) 2,071 824 1 825
Employee share schemes and hedging thereof 15 - - 351 366 - 366
Issue and redemption of other equity instruments - (1,132) - 25 (1,107) (20) (1,127)
Other equity instruments coupon paid - (215) - - (215) - (215)
Vesting of employee share schemes - - 9 (454) (445) - (445)
Dividends paid - - - - - (1) (1)
Other movements - (8) - (2) (10) - (10)
Balance as at 31 March 2022 4,551 11,119 317 52,478 68,465 969 69,434
1 See Basis of preparation on page 31 for further details on restatement of
opening balances.
As at 31.03.2022 As at 31.12.2021
Other reserves £m £m
Currency translation reserve 3,110 2,740
Fair value through other comprehensive income reserve (492) (283)
Cash flow hedging reserve (3,343) (853)
Own credit reserve (93) (960)
Other reserves and treasury shares 1,135 1,126
Total 317 1,770
Financial Statement Notes
1. Contingent liabilities and commitments
Contingent liabilities are possible obligations whose existence will be
confirmed only by uncertain future events and present obligations where the
transfer of economic resources is uncertain or cannot be reliably measured.
Contingent liabilities are not recognised on the balance sheet but are
disclosed unless the likelihood of an outflow of economic resources is remote.
Over Issuance of Securities in the US
Barclays Bank PLC maintains a US Shelf registration statement with the SEC in
order to issue securities to US investors. The current shelf registration
statement was declared effective by the SEC and was valid for three years from
1 August 2019. At the time this shelf registration statement was filed,
Barclays Bank PLC was not eligible to be a "well-known seasoned issuer" (or
WKSI) due to an historic SEC settlement order and was required to pre-register
a set amount of securities to be issued under the US Shelf with the SEC.
On 10 March 2022, executive management became aware that Barclays Bank PLC had
issued securities in excess of the set amount. It has been estimated that the
BBPLC US shelf limit was exceeded on or around 18 February 2021, with
issuances through to 10 March 2022 exceeding the limit by c.US$15bn. The
securities that have been over issued in this period comprise structured notes
and exchange traded notes (ETNs). Securities issued in excess of the limit are
considered to be "unregistered securities" for the purposes of US securities
law with the certain purchasers of those securities having the right to
require Barclays Bank PLC to repurchase those securities at their original
purchase price with compensatory interest and the potential for the certain
purchasers to bring civil claims and the SEC and other regulators to take
enforcement actions against Barclays Bank PLC.
Barclays has a provision of £540m at Q122 relating to this matter, £320m
(post-tax impact of £240m) of which was recognised in Q122 and £220m
(post-tax of £170m) recognised in 2021 in relation to the c.US$13bn over
issuance of structured notes which represents the best estimate of the
rescission right investors have for these securities. A contingent liability
exists in relation to the c.US$2bn over issuance of ETNs due to evidentiary
challenges and the high level of trading in the securities. A contingent
liability also exists in relation to any potential claims or enforcement
actions taken against Barclays Bank PLC but there is currently no indication
of the timetable for resolution and it is not practicable to provide an
estimate of the financial effects. Barclays Bank PLC is unable to assess the
likelihood of liabilities that may arise out of any civil claims or
enforcement actions. Any such liabilities, claims or actions could have an
adverse effect on Barclays Bank PLC's and the Group's business, financial
condition, results of operations and reputation as a frequent issuer in the
securities markets.
Supplementary Information
Over-issuance of US securities under the Barclays Bank PLC US Shelf
In its announcement on 28 March 2022 relating to the impact of over-issuance
under the US shelf registration statement (US Shelf) of Barclays Bank PLC
(BBPLC), Barclays indicated that (i) it was assessing the impact of these
matters on prior period financial statements of BBPLC and (ii) it had
commissioned a review by external counsel (the Review) of the facts and
circumstances relating to these matters, including, among other things, the
control environment related to such over-issuance. In addition, it disclosed
that BBPLC would make a rescission offer to certain purchasers of the affected
securities issued in excess of the registered amount under the US Shelf. Since
the announcement, Barclays has continued to engage with, and respond to
inquiries and requests for information from, various regulators, including the
US Securities and Exchange Commission (SEC).
Developments since the announcement:
· Financial Statements in BPLC 2021 ARA: The directors do not believe it is
appropriate under UK company law and financial reporting standards to revise
the financial statements of Barclays PLC (BPLC) included in its 2021 Annual
Report and Accounts (BPLC 2021 ARA) to reflect the impact of the
over-issuance, but Barclays will instead record a pre-tax provision of £220m
(£170m post-tax) as at 31 December 2021 as a prior year adjustment in the
financial statements of BPLC for the year ended 31 December 2022 in relation
to these matters. This and subsequent results announcements will therefore
also reflect the impact of this adjustment in the appropriate prior year
quarters.
· Financial Statements in BPLC 2021 Form 20-F: Barclays is currently in
discussions with the SEC regarding whether the fact that the financial
statements of BPLC included in its Annual Report on Form 20-F for the year
ended 31 December 2021 (the BPLC 2021 Form 20-F) do not reflect the £220m
provision at 31 December 2021 for the over-issuance of structured notes and a
contingent liability disclosure in respect of the over-issuance of exchange
traded notes (ETNs) and related potential claims and enforcement actions
against BBPLC and its affiliates constitutes a material accounting error under
US securities laws. Depending on the outcome of those discussions, Barclays
may be required to withdraw and refile (Restate or Restatement) the financial
statements included in the BPLC 2021 Form 20-F to reflect these matters. In
any event, Barclays will be required to reflect the financial impact of these
matters by adjusting the comparative financial periods in its subsequent
financial filings until the error has been fully corrected.
· BBPLC Financial Statements: Similarly, the directors of BBPLC do not believe
it is appropriate under UK company law and financial reporting standards, to
revise the financial statements of BBPLC included in its 2021 Annual Report
and Accounts (BBPLC 2021 ARA), but Barclays will instead record the pre-tax
provision of £220m as a prior year adjustment in the financial statements of
BBPLC for the year ended 31 December 2022. However, due to the lower
applicable materiality threshold for BBPLC, on 27 April 2022 the directors of
BBPLC determined that BBPLC would Restate the financial statements included in
its Annual Report on Form 20-F for the year ended 31 December 2021 (the BBPLC
2021 20-F) previously filed with the SEC. BBPLC intends to Restate such
financial statements to reflect both the provision and the contingent
liability referred to above. There will therefore be differences between the
2021 financial statements included in the BBPLC 2021 Form 20-F once amended
and the BBPLC 2021 ARA, and investors are therefore cautioned to exercise care
in using these financial statements during the course of 2022.
· Assessment of Control Environment: In light of the ongoing Review, management
has concluded that, by virtue of the fact that the over-issuance occurred and
was not immediately identified, both BPLC and BBPLC had a material weakness in
relation to certain aspects of their internal control environment and, as a
consequence, their internal control over financial reporting for the year
ended 31 December 2021 was not effective under the applicable Committee of
Sponsoring Organizations (COSO) Framework. The material weakness that has been
identified relates to a failure to monitor issuances of structured notes and
ETNs under BBPLC's US Shelf during the period in which BBPLC's status changed
from a "well-known seasoned issuer" to an "ineligible issuer" for US
securities law purposes, and BBPLC was required to pre-register a set amount
of securities to be issued under its US Shelf with the SEC. As a result of
this failure, BBPLC issued securities in excess of that set amount.
· Amendments to Forms 20-F: BPLC is preparing an amendment to the BPLC 2021 Form
20-F to reflect the change in management's assessment of BPLC's internal
control over financial reporting and KPMG's auditor attestation thereon as
well as its disclosure controls and procedures. BBPLC is preparing an
amendment to the BBPLC 2021 Form 20-F to include its Restated 2021 financial
statements and to reflect the change in management's assessment of internal
control over financial reporting and disclosure controls and procedures. These
amendments will be filed as soon as practicable. Until the BPLC 2021 Form 20-F
has been amended to disclose that its internal controls were not effective,
KPMG's audit report should not be relied upon by users of BPLC's financial
statements. Until BBPLC has Restated its financial statements for the year
ended 31 December 2021 and amended the BBPLC 2021 Form 20-F, investors and
other users of BBPLC's filings with the SEC are cautioned not to rely on the
financial statements included in the BBPLC 2021 Form 20-F.
· Remediation Plans: Following a review of other issuance programmes utilised by
members of the Group, management have determined that the Group is not in
excess of any limit applicable to such programmes. Barclays is nonetheless
enhancing the internal controls relating to its debt securities issuance
activity in all relevant jurisdictions.
Barclays remains committed to its structured products business in the US and
expects BBPLC to file a new shelf registration statement with the SEC as soon
as practicable following the amendment of the BBPLC 2021 Form 20-F. For
further details, please refer to the notes to the condensed consolidated
financial statements accompanying this Q122 results announcement.
Notwithstanding any Restatement of the financial statements included in the
BPLC 2021 Form 20-F that may ultimately be required in accordance with the
applicable SEC rules, as mentioned above, it is not intended that the
financial statements in the BPLC 2021 ARA for the financial year ended 31
December 2021 would be revised and the BPLC 2021 ARA, which has been
circulated to shareholders ahead of the BPLC AGM to be held on 4 May 2022,
will be laid before shareholders at that meeting in the usual way.
Basis of preparation
In March 2022, Barclays management became aware that Barclays Bank PLC, a
subsidiary undertaking had issued securities in the US in excess of the amount
it had registered with the SEC. The securities issued in excess of the
registered amount were structured and exchange traded notes. As the securities
were not issued in compliance with the Securities Act of 1933, as amended (the
"Securities Act"), this gives rise to a right of rescission for certain
purchasers of the securities. A proportion of these costs associated with the
right of rescission are attributable to the financial statements for the year
ended 31 December 2021. This omission in the financial statements has resulted
in the restatement of the prior period comparatives with the following impact:
- Litigation and conduct charges in the income statement in relation to 2021
were under reported by £220m increasing total operating expenses from a
reported £14,439m to £14,659m. Provisions on the balance sheet have
increased from a reported £1,688m to £1,908m.
- Taxation charge in the income statement has reduced by £50m from a reported
£1,188m to £1,138m with a corresponding decrease in current tax liabilities
on the balance sheet from £739m to £689m.
- CET1 capital decreased £0.2bn from £47.5bn to £47.3bn with the CET1 ratio
remaining unchanged at 15.1%. The T1 ratio moved from 19.2% to 19.1% and Total
capital ratio moved from 22.3% to 22.2%
- Leverage exposure increased £1.9bn with the UK leverage ratio decreasing from
5.3% to 5.2% and the average UK leverage ratio remaining unchanged at 4.9%
- Total own funds and eligible liabilities decreased £0.2bn to £108bn, which
was in excess of a restated requirement to hold £94bn of own funds and
eligible liabilities.
The overall impact of the restatement on the 2021 comparatives has been to
reduce the reported profit after tax from £7,226m to £7,056m for the full
financial year. This reduction in profit after tax was incurred after Q121 and
as such, no adjustments have been made to the Q121 reported income statement
figures.
Reflecting this adjustment in this Q122 results announcement results in a
pre-tax provision of £220m (£170m post-tax) being reflected as at 31
December 2021. This reduces the 2022 impact of the provision previously
communicated on 28 March 2022 and results in a pre-tax provision of £320m
(£240m post-tax) being recognised in Q122. Had such adjustment not been made
the impact on the key performance ratios for Q122 would have been to reduce
the return on average tangible shareholders equity to 10.1% and increase the
cost:income ratio to 67%.
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.
Period end allocated tangible equity Allocated tangible equity is calculated as 13.5% (2021: 13.5%) 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 pages 33 to 34.
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 pages 33 to 35.
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 15.
Quoted as zero when credit impairment is a net release.
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 14.
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 36.
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 13.5% (2021:
13.5%) 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
Three months ended 31.03.22 £m £bn %
Barclays UK 396 10.1 15.6
Corporate and Investment Bank 1,316 30.8 17.1
Consumer, Cards and Payments (16) 4.3 (1.5)
Barclays International 1,300 35.1 14.8
Head Office (292) 3.6 n/m
Barclays Group 1,404 48.8 11.5
Three months ended 31.03.21(1)
Barclays UK 298 9.9 12.0
Corporate and Investment Bank 1,263 28.2 17.9
Consumer, Cards and Payments 168 4.1 16.5
Barclays International 1,431 32.3 17.7
Head Office (25) 4.3 n/m
Barclays Group 1,704 46.5 14.7
1 The income statement comparatives for Q121 are not impacted by the
over-issuance of US securities under the Barclays Bank PLC US Shelf. See Basis
of preparation on page 31 for further details.
Barclays Group
Return on average tangible shareholders' equity Q122 Q121(1)
£m £m
Attributable profit 1,404 1,704
£bn £bn
Average shareholders' equity 56.9 54.4
Average goodwill and intangibles (8.1) (7.9)
Average tangible shareholders' equity 48.8 46.5
Return on average tangible shareholders' equity 11.5% 14.7%
Barclays UK
Q122 Q121
Return on average allocated tangible equity £m £m
Attributable profit 396 298
£bn £bn
Average allocated equity 13.7 13.5
Average goodwill and intangibles (3.6) (3.6)
Average allocated tangible equity 10.1 9.9
Return on average allocated tangible equity 15.6% 12.0%
1 The income statement comparatives for Q121 are not impacted by the
over-issuance of US securities under the Barclays Bank PLC US Shelf. See Basis
of preparation on page 31 for further details.
Barclays International
Q122 Q121(1)
Return on average allocated tangible equity £m £m
Attributable profit 1,300 1,431
£bn £bn
Average allocated equity 36.0 32.8
Average goodwill and intangibles (0.9) (0.5)
Average allocated tangible equity 35.1 32.3
Return on average allocated tangible equity 14.8% 17.7%
Corporate and Investment Bank
Q122 Q121(1)
Return on average allocated tangible equity £m £m
Attributable profit 1,316 1,263
£bn £bn
Average allocated equity 30.8 28.2
Average goodwill and intangibles - -
Average allocated tangible equity 30.8 28.2
Return on average allocated tangible equity 17.1% 17.9%
Consumer, Cards and Payments
Q122 Q121
Return on average allocated tangible equity £m £m
Attributable (loss)/profit (16) 168
£bn £bn
Average allocated equity 5.2 4.6
Average goodwill and intangibles (0.9) (0.5)
Average allocated tangible equity 4.3 4.1
Return on average allocated tangible equity (1.5)% 16.5%
1 The income statement comparatives for Q121 are not impacted by the
over-issuance of US securities under the Barclays Bank PLC US Shelf. See Basis
of preparation on page 31 for further details.
Tangible net asset value per share As at 31.03.22 Restated(1) As at 31.03.21
As at 31.12.21
£m £m £m
Total equity excluding non-controlling interests 68,465 69,052 65,105
Other equity instruments (11,119) (12,259) (11,179)
Goodwill and intangibles (8,046) (8,061) (7,867)
Tangible shareholders' equity attributable to ordinary shareholders of the 49,300 48,732 46,059
parent
m m m
Shares in issue 16,762 16,752 17,223
p p p
Tangible net asset value per share 294 291 267
1 To reflect the over-issuance of US securities under the Barclays Bank PLC US
Shelf, 2021 comparatives have been restated. See Basis of preparation on page
31 for further details.
Shareholder Information
Results timetable(1) Date
2022 Interim Results Announcement 28 July 2022
% Change(3)
Exchange rates(2) 31.03.22 31.12.21 31.03.21 31.12.21 31.03.21
Period end - USD/GBP 1.31 1.35 1.38 (3)% (5)%
3 month average - USD/GBP 1.34 1.35 1.38 (1)% (3)%
Period end - EUR/GBP 1.19 1.19 1.18 - 1%
3 month average - EUR/GBP 1.20 1.18 1.14 2% 5%
Share price data
Barclays PLC (p) 148.30 187.00 185.92
Barclays PLC number of shares (m) 16,762 16,752 17,223
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.
(https://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 2055(4) from the UK or +44 121 415 7004 from overseas.
American Depositary Receipts (ADRs)
EQ Shareowner Services
P.O. Box 64504
St. Paul, MN 55164-0504
United States of America
https://www.shareowneronline.com (https://www.shareowneronline.com/)
Toll Free Number: +1 800-233-5601
Outside the U.S. +1 651-453-2128
Delivery of ADR certificates and overnight mail
Shareowner Services, 1110 Centre Pointe Curve, Suite 101, Mendota Heights, MN
55120, USA.
1 Note that this date is 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.
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