Barclays : Bank UK PLC Interim 2022 Results Announcement (PDF 351KB

Barclays Bank UK PLC

Interim Results Announcement

30 June 2022

Table of Contents

Results Announcement	Page
Notes	1
Financial Review	2
Risk Management
• Risk Management and Principal Risks	4
• Credit Risk	5
• Treasury and Capital Risk	15
Statement of Directors' Responsibilities	18
Independent Review Report to Barclays Bank UK PLC	19
Condensed Consolidated Financial Statements	21
Financial Statement Notes	26
Other Information	39

BARCLAYS BANK UK PLC, 1 CHURCHILL PLACE, LONDON, E14 5HP, UNITED KINGDOM. TELEPHONE: [phone]. COMPANY NO. 9740322

Barclays Bank UK PLC

Notes

Barclays Bank UK PLC is a wholly-owned subsidiary of Barclays PLC. The consolidation of Barclays Bank UK PLC and its subsidiaries is referred to as the Barclays Bank UK Group. The terms Barclays or Barclays Group refer to Barclays PLC together with its subsidiaries. Unless otherwise stated, the income statement analysis compares the six months ended 30 June 2022 to the corresponding six months of 2021 and balance sheet analysis as at 30 June 2022 with comparatives relating to 31 December 2021. The abbreviations '£m' and '£bn' represent millions and thousands of millions of Pounds Sterling respectively.

There are a number of key judgement areas, for example impairment calculations, which are based on models and which are subject to ongoing adjustment and modifications. Reported numbers reflect best estimates and judgements at the given point in time.

Relevant terms that are used in this document but are not defined under applicable regulatory guidance or International Financial Reporting Standards (IFRS) are explained in the results glossary that can be accessed at home.barclays/investor-relations/reports-and-events/latest-financial- results.

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

The Barclays Bank UK Group is an issuer in the debt capital markets and meets with investors via formal road-shows and other ad hoc meetings. The Barclays Bank UK Group expects that from time to time over the coming half year it will meet with investors to discuss these results and other matters relating to the Barclays Bank UK Group.

Forward-looking statements

This document contains certain forward-looking statements with respect to the Barclays Bank UK Group. Barclays cautions readers that no forward- looking statement is a guarantee of future performance and that actual results or other financial condition or performance measures could differ materially from those contained in the forward-looking statements. Forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements sometimes use words such as 'may', 'will', 'seek', 'continue', 'aim', 'anticipate', 'target', 'projected', 'expect', 'estimate', 'intend', 'plan', 'goal', 'believe', 'achieve' or other words of similar meaning. Forward-looking statements can be made in writing but also may be made verbally by members of the management of the Barclays Bank UK 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 Barclays Bank UK Group's future financial position, income levels, assets and liabilities, impairment charges, provisions, capital, leverage and other regulatory ratios, capital distributions (including dividend pay-out ratios and expected payment strategies), projected levels of growth in banking and financial markets, projected expenditures, costs or savings, any commitments and targets (including, without limitation, environmental, social and governance (ESG) commitments and targets), business strategy, plans and objectives for future operations, group structure, International Financial Reporting Standards (IFRS) impacts and other statements that are not historical or current facts. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements speak only as at the date on which they are made. Forward-looking statements may be affected by a number of factors, including, without limitation: changes in legislation, regulation and the interpretation thereof, the development of IFRS and other accounting standards, including evolving practices with regard to the interpretation and application of accounting standards, emerging and developing ESG reporting standards, the outcome of current and future legal proceedings and regulatory investigations and any related impact on provisions, the policies and actions of governmental and regulatory authorities, the Barclays Bank UK Group's ability along with governments and other stakeholders to measure, manage and mitigate the impacts of climate change effectively, environmental, social and geopolitical risks and incidents or similar events beyond the Barclays Bank UK Group's control, and the impact of competition. In addition, factors including (but not limited to) the following may have an effect: capital, leverage and other regulatory rules applicable to past, current and future periods; macroeconomic and business conditions in the UK and in any systemically important economy which impacts the UK; volatility in credit and capital markets; market related risks such as changes in interest rates and foreign exchange rates; changes in valuation of credit market exposures; changes in valuation of issued securities; changes in credit ratings of any entity within the Barclays Bank UK Group or any securities issued by such entities; changes in counterparty risk; changes in consumer behaviour; the direct and indirect consequences of the Russia-Ukraine War on European and global macroeconomic conditions, political stability and financial markets; direct and indirect impacts of the coronavirus (COVID-19) pandemic; instability as a result of the UK's exit from the European Union (EU), the effects of the EU-UK Trade and Cooperation Agreement and the disruption that may subsequently result in the UK; the risk of cyber-attacks, information or security breaches or technology failures on the Barclays Bank UK Group's reputation, business or operations; the Barclays Bank UK Group's ability to access funding; and the success of acquisitions, disposals and other strategic transactions. A number of these influences and factors are beyond the Barclays Bank UK Group's control. As a result, the Barclays Bank UK 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 Barclays Bank UK Group's forward-looking statements. Additional risks and factors which may impact the Barclays Bank UK Group's future financial condition and performance are identified in the Barclays Bank UK PLC's 2021 Annual Report, which is available on home.barclays.

Subject to Barclays' obligations under the applicable laws and regulations of any relevant jurisdiction, (including, without limitation, the UK), in relation to disclosure and ongoing information, we undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Barclays Bank UK PLC

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Financial Review

Barclays Bank UK Group results for the half year ended

30.06.22 30.06.21

£m	£m % Change

Total income	3,397	3,167	7
Credit impairment (charge)/release	(51)	443
Net operating income	3,346	3,610	(7)
Operating expenses	(2,202)	(2,243)	2
Litigation and conduct	(24)	(28)
Total operating expenses	(2,226)	(2,271)	2
Profit before tax	1,120	1,339	(16)
Tax charge	(405)	(176)
Profit after tax	715	1,163	(39)
Attributable to:
Equity holders of the parent	629	1,077
Other equity instrument holders	86	86	-
Profit after tax	715	1,163

Balance sheet information

As at

As at

30.06.22 31.12.21

£m	£m % Change

Assets
Loans and advances at amortised cost	222,399	220,271	1
Cash and balances at central banks	61,438	69,488	(12)
Liabilities
Deposits at amortised cost	261,169	260,732	-

Capital and liquidity metrics

As at

As at

30.06.22 31.12.21

£bn£bn

Common equity tier 1 (CET1) ratio1	14.8%	15.2%
Liquidity pool	86	86
Liquidity coverage ratio	185%	204%
Total risk weighted assets (RWAs)	71.1	71.2
Average UK leverage ratio	5.3%	5.5%

• CET1 capital, RWAs and leverage are calculated applying the IFRS 9 transitional arrangements of the Capital Requirements Regulation (CRR) as amended by the Capital Requirements Regulation II (CRR II). For further detail on the application of CRR and CRR II in the UK, see page 16.

Barclays Bank UK PLC

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Financial Review

Barclays Bank UK Group overview

Barclays Bank UK PLC is the ring-fenced bank within the Barclays Group. The Barclays Bank UK Group contains the majority of the Barclays Group's Barclays UK division, including the Personal Banking, Business Banking and Barclaycard Consumer UK businesses other than the Barclays Partner Finance business.

Barclays Bank UK Group performance

• H122 profit before tax decreased to £1,120m (H121: £1,339m) reflecting the non-recurrence of prior year credit impairment release, partially offset by the rising rate environment in the UK
• Total income increased 7% to £3,397m, consisting of:
• • Personal Banking income increased 12% to £2,199m driven by rising interest rates and the benefit of strong mortgage origination in 2021, partially offset by mortgage margin compression
  • Barclaycard Consumer UK income decreased 10% to £542m 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 7% to £733m driven by rising interest rates alongside improved transaction based revenues, partially offset by lower government scheme lending income as repayments continue
  • Head office expense of £77m related primarily to hedge accounting
• Credit impairment charge of £51m (H121: £443m net release) driven by low flows to delinquency, improved UK employment data and reduced uncertainty around the possible effects of COVID-19, offset by increased concerns around customers' vulnerability to high inflation. As at 30 June 2022, 30 and 90 day arrears rates in UK cards were 1.0% (H121: 1.4%) and 0.2% (H121: 0.6%) respectively. The credit card and consumer loan businesses maintain appropriate provision levels in light of affordability headwinds, as reflected in a total coverage ratio of 9.2% (December 2021: 10.9%)
• Total operating expenses decreased 2% to £2,226m driven by lower operational costs and efficiency savings, partially offset by increased investment spend and the impact of inflation
• The effective tax rate (ETR) was 36.2% (H121: 13.1%). This includes a £163m charge recognised for the re- measurement of the Barclays Bank UK Group's 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 21.6%, which includes a 2.5% benefit relating to adjustments in respect of prior years.

Balance sheet, capital and liquidity

• Loans and advances at amortised cost remained broadly stable at £222.4bn as mortgage growth was offset by decreases 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
• Deposits at amortised cost remained broadly stable at £261.2bn, maintaining a strong liquidity position
• The Barclays Bank UK Group CET1 ratio as at 30 June 2022 was 14.8%, which is above regulatory capital minimum requirements
• The Barclays Bank UK Group liquidity pool remained stable at £86bn (December 2021: £86bn) and the liquidity
  coverage ratio (LCR) decreased to 185% (December 2021: 204%) reflecting higher net stress outflows versus the year- end position
• RWAs remained stable at £71.1bn (December 2021: £71.2bn)

Other matters

On 24 June 2022 Barclays PLC announced that Barclays Bank UK PLC has agreed to acquire UK specialist mortgage lender Kensington Mortgage Company Limited, thereby broadening the Barclays Bank UK Group's capabilities and product offering in the UK mortgage market. The transaction is subject to regulatory approval and is expected to complete in late Q422 or early Q123.

Barclays Bank UK PLC

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