Barclays : Q1 2021 Results Announcement (PDF 2MB)

Barclays PLC

Q1 2021 Results Announcement

31 March 2021

Performance Highlights

Barclays continues to benefit from its diversified business model, whilst supporting the economy through the COVID-19 pandemic

Barclays delivered a record quarterly Group profit before tax in Q121 of £2.4bn1 (Q120: £0.9bn), attributable profit of

£1.7bn (Q120: £0.6bn), a return on tangible equity (RoTE) of 14.7% (Q120: 5.1%) and earnings per share (EPS) of 9.9p

(Q120: 3.5p)

Income	Group income of £5.9bn down 6% versus prior year
Diversified income streams	 Barclays International income of £4.4bn, down 5% versus prior year
- Corporate and Investment Bank (CIB) income of £3.6bn, down 1% with Equities
with strong CIB income	and Banking up 65% and 35% respectively, whilst FICC was down 35% versus a
partially offsetting	very strong Q120 comparative
challenges in Barclays	- Consumer, Cards and Payments (CC&P) income of £0.8bn, down 22% due to
UK and CC&P	lower cards balances and reduced payments activity
	 Barclays UK income of £1.6bn, down 8% versus prior year reflecting deposit margin
	compression from lower interest rates and lower interest earning lending (IEL) balances,
	partially offset by strong mortgages performance with record quarterly organic net
	asset growth of £3.6bn to £151.9bn
Credit impairment charges	Group credit impairment charges decreased significantly to £0.1bn (Q120: £2.1bn)
Reduced impairment as	 The low credit impairment charge was driven by reduced unsecured lending balances,
no material single name wholesale loan charges and limited portfolio deterioration
underlying asset quality
 Total balance sheet impairment allowance of £8.8bn (FY20: £9.4bn), resulting in
metrics remained benign
broadly stable coverage ratios for unsecured consumer lending and wholesale portfolios
	of 12.2% (FY20: 12.3%) and 1.4% (FY20: 1.5%) respectively
Costs	Group total operating expenses of £3.6bn up 10% versus prior year
Cost: income ratio of 61%	 Total operating expenses include higher variable compensation accruals reflective of
improved returns and continued investment in businesses, partially offset by foreign
	exchange movements and efficiency savings, resulting in a cost: income ratio of 61%
	(Q120: 52%). COVID-19 related expenses continued in Q121
Capital / capital	Common equity tier 1 (CET1) ratio of 14.6% down 50bps versus FY20
distributions	 The decrease reflects profit before tax more than offset by reversal of certain regulatory
Strong capital position and	forbearance measures applied through 2020, the impact of the share buyback
announced with FY20 results, a dividend accrual, and an increase in Risk Weighted
completed share buyback	Assets (RWAs), principally in the CIB
	 In April, completed £0.7bn share buyback announced with FY20 results

1 Since Q308 which included material adjusting items.

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Performance Highlights

Group outlook and targets

	Returns
	 Barclays expects to deliver meaningful year-on-year RoTE improvement in 2021
	Income
	 Headwinds to income in Barclays UK are expected to persist in 2021, driven by the subdued
		demand for unsecured lending and the low interest rate environment, partially offset by the
		recent steepening of the yield curve
Outlook	 Within Barclays International, the CIB franchise remains well positioned for the future; CC&P
	income outlook remains uncertain, despite early signs of an anticipated spending recovery
Remains uncertain and
	in the US and UK, with US cards balances expected to start to recover later in the year
subject to change
depending on the	Impairment
evolution and
	Barclays expects that the full year 2021 impairment charge will be materially below that of
persistence of the
	2020 reflecting delinquency experience and an improved economic outlook during the
COVID-19 pandemic
	latter part of Q121. If these conditions persist, Barclays would expect to reduce the
		impairment provision level

Costs

• Barclays expects full year 2021 costs to be above 2020, reflecting investment in the Group's franchises for future returns including higher variable compensation and further structural cost actions, with a real estate review expected to be concluded in the coming months. COVID-19 related expenses are also expected to remain in 2021

Capital

• Barclays remains in a strong capital position, although certain headwinds are likely in 2021, including the expected reversal of software amortisation benefit applied in 2020 and scheduled pension deficit reduction contributions

	Barclays continues to target the following over the medium term:
Targets	 Returns: RoTE of greater than 10% over time
	Cost efficiency: Cost: income ratio below 60% over time
	 Capital adequacy: CET1 ratio in the range of 13-14%

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Performance Highlights

Barclays Group results
for the three months ended	31.03.21	31.03.20
	£m	£m	% Change
Net interest income	1,851	2,331	(21)
Net fee, commission and other income	4,049	3,952	2

Total income	5,900	6,283	(6)
Credit impairment charges	(55)	(2,115)	97
Net operating income	5,845	4,168	40
Operating expenses	(3,545)	(3,253)	(9)
Litigation and conduct	(33)	(10)
Total operating expenses	(3,578)	(3,263)	(10)
Other net income	132	8
Profit before tax	2,399	913
Tax charge	(496)	(71)
Profit after tax	1,903	842
Non-controlling interests	(4)	(16)	75
Other equity instrument holders	(195)	(221)	12
Attributable profit	1,704	605

Performance measures

Return on average tangible shareholders' equity	14.7%	5.1%
Average tangible shareholders' equity (£bn)	46.5	47.0
Cost: income ratio	61%	52%
Loan loss rate (bps)	6	223
Basic earnings per share	9.9p	3.5p
	As at 31.03.21	As at 31.12.20	As at 31.03.20
Balance sheet and capital management1	£bn	£bn	£bn
Loans and advances at amortised cost	345.8	342.6	374.1
Loans and advances at amortised cost impairment coverage ratio	2.2%	2.4%	2.1%
Deposits at amortised cost	498.8	481.0	470.7
Tangible net asset value per share	267p	269p	284p
Common equity tier 1 ratio	14.6%	15.1%	13.1%
Common equity tier 1 capital	45.9	46.3	42.5
Risk weighted assets	313.4	306.2	325.6
Average UK leverage ratio	4.9%	5.0%	4.5%
UK leverage ratio	5.0%	5.3%	4.5%
Funding and liquidity
Group liquidity pool (£bn)	290	266	237
Liquidity coverage ratio	161%	162%	155%
Loan: deposit ratio	69%	71%	79%

1 Refer to pages 21 to 26 for further information on how capital, RWAs and leverage are calculated.

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Group Chief Executive Officer's Review

"Since the early days of the pandemic last year, our diversified business has demonstrated the resilience critical to ensuring Barclays' financial integrity. It gives us the capacity to step up for our customers, clients, colleagues and communities when they need our support the most, and deliver for our shareholders by staying profitable in every quarter.

Our diversification continued to drive a strong performance, delivering a Group RoTE of 14.7% in the first quarter of 2021. Group profit before tax increased to £2.4bn, contributing towards EPS of 9.9 pence.

As was the case throughout 2020, within Barclays International, performance in the CIB was strong this quarter, achieving a RoTE of 17.9% on income of £3.6bn, just 1% down from our Q1 income performance last year, which was a very strong comparative.

It also partially offset challenges in our consumer businesses that have been impacted by lower spend and activity levels as a result of the pandemic. Barclays UK generated income of £1.6bn in the quarter with lower impairment charges resulting in a RoTE of 12.0%. Strong demand in mortgages and record completions drove organic net asset growth of £3.6bn which was our best ever single quarter. Our CC&P business generated an income of £805m and delivered a RoTE of 16.5%.

As we enter the next phase of this pandemic, we remain resolute in our commitment to support the economic recovery. From our spend data, which captures UK economic activity across our cards and acquiring businesses, we are already seeing encouraging early signs of recovery in some sectors, including those hit hardest by the crisis.

While momentum in the consumer businesses, particularly card balances, will take time to build, Barclays secured significant new growth opportunities in Q1.

We negotiated a new, long-term agreement to issue Gap's co-branded and private label credit card programme in the US from May 2022.

Following the launch of our point-of-sale finance partnership with Amazon in Germany last year, we have agreed to extend our Amazon partnership to the UK, a significant expansion of our franchise in Europe's two largest consumer markets. Alongside existing partnerships including with Apple in the UK, it demonstrates the strength and potential of our consumer platform.

More broadly across payments, we expect to realise around £900m of income growth opportunity over the coming three years.

While evidence of recovery is encouraging, we have continued to take a cautious view of the impact of the pandemic on the business. We remain disciplined on costs, with a cost to income ratio of 61% this quarter. Our capital position remains well above target with a CET1 ratio of 14.6% and we completed our £700m buyback this month. We will give further guidance on distributions when appropriate.

With a strong balance sheet and diversified business, Barclays remains well-positioned to support the economy and deliver for our shareholders."

James E Staley, Group Chief Executive Officer

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