EX-99.1 2 d810869dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

Barclays PLC

This document includes portions from the previously published Results Announcement of Barclays PLC relating to the nine month period ended 30 September 2014, as amended to comply with the requirements of Regulation G and Item 10(e) of Regulation S-K promulgated by the US Securities and Exchange Commission (SEC), including the reconciliation of certain financial information to comparable measures prepared in accordance with International Financial Reporting Standards (IFRS). The purpose of this document is to provide such additional disclosure as required by Regulation G and Regulation S-K item 10(e), to delete certain information not in compliance with SEC regulations and to include reconciliations of certain non IFRS figures to the most directly equivalent IFRS figures for the periods presented. This document does not update or otherwise supplement the information contained in the previously published Results Announcement. Any reference to a website in this document is made for informational purposes only, and information found at such websites is not incorporated by reference into this document.

An audit opinion has not been rendered in respect of this document.


Table of Contents

 

 

 

Interim Management Statement    Page  

 

Performance Highlights

     4-5   

 

Group Performance Review

     6-8   

 

Results by Business

  

 

     Personal and Corporate Banking

     9   

 

     Barclaycard

     10   

 

     Africa Banking

     11   

 

     Investment Bank

     12-13   

 

     Head Office

     14   

 

     Barclays Non-Core

     15-16   

 

Appendix I – Quarterly Results Summary

     17-19   

 

Appendix II – Performance Management

  

 

     Returns and Equity by Business

     20-21   

 

     Margins and Balances

     22   

 

Appendix III - Consolidated Summary Income Statement, Balance Sheet and Statement of Changes in Equity

     23-25   

 

Appendix IV - Capital

     26-27   

 

Appendix V - Leverage

     28   

 

Appendix VI - Credit Risk

     29   

 

Appendix VII - Other Information

     30   

 

Appendix VIII - Glossary

     31   

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

 

 

 

   Barclays PLC     LOGO     


  

 

 

Notes

The term Barclays or Group refers to Barclays PLC together with its subsidiaries. Unless otherwise stated, the income statement analysis compares the nine months to 30 September 2014 to the corresponding nine months of 2013 and balance sheet analysis as at 30 September with comparatives relating to 30 June 2014. The abbreviations ‘£m’ and ‘£bn’ represent millions and thousands of millions of Pounds Sterling respectively; and the abbreviations ‘$m’ and ‘$bn’ represent millions and thousands of millions of US Dollars respectively.

The comparatives have been restated to reflect the implementation of the Group structure changes and the reallocation of elements of the Head Office results under the revised business structure. These restatements were detailed in our Form 6-K filed with the SEC dated 14 July 2014.

The information in this document, does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2013, which included certain information required for the Joint Annual Report on Form 20-F of Barclays PLC and Barclays Bank PLC to SEC and which contained an unqualified 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.

Certain non-IFRS measures

Barclays management believes that the non-International Financial Reporting Standards (non-IFRS) measures included in this document provide valuable information to readers of its financial statements because they enable the reader to identify a more consistent basis for comparing the business’ 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 measures in this document are not a substitute for IFRS measures and readers should consider the IFRS measures as well. As management reviews the adjusting items described below at a Group level, segmental results are presented excluding these items in accordance with IFRS 8; “Operating Segments”. Statutory and adjusted performance is reconciled at a Group level only.

Key non-IFRS measures included in this document, and the most directly comparable IFRS measures, are:

– Adjusted profit before tax is the non-IFRS equivalent of profit before tax as it excludes the impact of own credit; provisions for Payment Protection Insurance and claims management costs (PPI) and interest rate hedging redress; gain on US Lehman acquisition assets; provision for ongoing regulatory investigations into Foreign Exchange; loss on announced sale of the Spanish business; and goodwill impairment. A reconciliation to IFRS is presented on page 4 for the Group;

– Adjusted profit after tax represents profit after tax excluding the post-tax impact of own credit; provisions for PPI and interest rate hedging redress; the gain on US Lehman acquisition assets; provision for ongoing regulatory investigations into Foreign Exchange; loss on announced sale of the Spanish business; and goodwill impairment. A reconciliation to IFRS is presented on page 4 for the Group;

– Adjusted attributable profit represents adjusted profit after tax less profit attributable to non-controlling interests. The comparable IFRS measure is attributable profit;

– Adjusted income and adjusted total income net of insurance claims represents total income net of insurance claims excluding the impact of own credit; and the gain on US Lehman acquisition assets. A reconciliation to IFRS is presented on page 17 for the Group;

– Adjusted net operating income represents net operating income excluding the impact of own credit; and gain on US Lehman acquisition assets. A reconciliation to IFRS is presented on page 17 for the Group;

– Adjusted total operating expenses represents operating expenses excluding the provisions for PPI and interest rate hedging redress; provision for ongoing regulatory investigations into Foreign Exchange; and goodwill impairment. A reconciliation to IFRS is presented on page 17 for the Group;

– Adjusted litigation and conduct represents litigation and conduct excluding the provisions for PPI and interest rate hedging redress; and the provision for ongoing regulatory investigations into Foreign Exchange. A reconciliation to IFRS is presented on page 17 for the Group;

– Adjusted cost: income ratio represents cost: income ratio excluding the impact of own credit; the provisions for PPI and interest rate hedging redress; gain on US Lehman acquisition assets; and provision for ongoing regulatory investigations into Foreign Exchange. The comparable IFRS measure is cost: income ratio, which represents operating expenses to income net of insurance claims. A reconciliation to IFRS is presented on page 17 for the Group;

– Adjusted basic earnings per share represents adjusted attributable profit (page 21) divided by the basic weighted average number of shares in issue. The comparable IFRS measure is basic earnings per share, which represents profit after tax and non-controlling interests, divided by the basic weighted average number of shares in issue;

– Adjusted return on average shareholders’ equity represents adjusted attributable profit (page 21) divided by adjusted average equity, excluding non-controlling interests. The comparable IFRS measure is return on average shareholder’s equity, which represents profit attributable to equity holders of the parent divided by average equity, excluding non-controlling interests;

– Adjusted return on average tangible shareholders’ equity represents adjusted attributable profit (page 21) divided by average adjusted tangible equity, excluding non-controlling interests. The comparable IFRS measure is return on average tangible shareholders’ equity, which represents profit after tax and non-controlling interests, divided by average tangible equity (page 21);

 

 

 

   Barclays PLC    2    LOGO     


  

 

 

– Barclays Core results are non-IFRS measures because they represent the sum of five Operating Segments, each of which is prepared in accordance with IFRS 8; “Operating Segments”: Personal and Corporate Banking, Barclaycard, Africa Banking, Investment Bank and Head Office. A reconciliation to is provided on pages 18 & 19;

– ‘Constant Currency Basis’ excludes the impact of foreign currency conversion to GBP when comparing financial results in two different financial periods. ZAR has been translated into GBP at prior-year average exchange rates to eliminate the impact of movement in exchange rates between the comparable periods;

– The USD variance on total income for the Investment Bank is a non-IFRS measure and is presented in order to aid comparison to US peer banks. This is calculated as the monthly spot rate conversion of GBP results;

– Liquidity Coverage Ratio (LCR) is calculated according to the Commission Delegated Regulation of October 2014 that supplements Regulation (EU) 575/2013 (CRDIV) published by the European Commission in June 2013. The metric is a ratio that is not yet fully implemented in local regulations and, as such, represents a non-IFRS measure;

– Transitional CET1 ratio according to FSA October 2012. This measure is calculated by taking into account the statement of the Financial Services Authority, the predecessor of the Prudential Regulation Authority, on CRD IV transitional provisions in October 2012, assuming such provisions were applied as at 1 January 2014. This ratio is used as the relevant measure starting 1 January 2014 for purposes of determining whether the automatic write-down trigger (specified as a Transitional CET1 ratio according to FSA October 2012 of less than 7.00%) has occurred under the terms of the Contingent Capital Notes issued by Barclays Bank PLC on November 21, 2012 (CUSIP: 06740L8C2) and April 10, 2013 (CUSIP: 06739FHK0). Please refer to page 26 for a reconciliation of this measure to CRD IV CET1 ratio;

– Estimated BCBS 270 leverage exposure makes certain adjustments to Total assets under IFRS in accordance with Barclays’ understanding of the latest requirements that are expected to be included in the revised CRD IV text and guidance from regulators. The “Estimated Leverage” table on page 28 shows a reconciliation of BCBS 270 leverage exposure to total assets under IFRS;

– Estimated BCBS 270 leverage ratio represents CRD IV Tier 1 capital divided by BCBS 270 leverage exposure. See the “Estimated Leverage” table on page 28 for a reconciliation of BCBS 270 leverage exposure to Total assets under IFRS;

– The CRD IV fully loaded CET1 and estimated BCBS 270 leverage ratios excluding the impact of the announced sale of the Spanish business are non-IFRS measures as these metrics exclude the impact of the risk weighted assets associated with the Spanish business.

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 certain of the Group’s plans and its current goals and expectations relating to its future financial condition and performance. Barclays cautions readers that no forward-looking statement is a guarantee of future performance and that actual results 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. Examples of forward-looking statements include, among others, statements regarding the Group’s future financial position, income growth, assets, impairment charges and provisions, business strategy, capital, leverage and other regulatory ratios, payment of dividends (including dividend pay-out ratios), projected levels of growth in the banking and financial markets, projected costs or savings, original and revised commitments and targets in connection with the Transform Programme and Group Strategy Update, run-down of assets and businesses within Barclays Non-Core, estimates of capital expenditures and plans and objectives for future operations, projected employee numbers 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. These may be affected by changes in legislation, the development of standards and interpretations under International Financial Reporting Standards (IFRS), evolving practices with regard to the interpretation and application of accounting and regulatory standards, the outcome of current and future legal proceedings and regulatory investigations, future levels of conduct provisions, the policies and actions of governmental and regulatory authorities, geopolitical risks and the impact of competition. In addition, factors including (but not limited to) the following may have an effect: capital, leverage and other regulatory rules (including with regard to the future structure of the Group) applicable to past, current and future periods; UK, US, Africa, Eurozone and global macroeconomic and business conditions; the effects of continued 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 the Group; the potential for one or more countries exiting the Eurozone; the impact of EU and US sanctions on Russia; the implementation of the Transform Programme; 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 future results, dividend payments, and capital and leverage ratios may differ materially from the plans, goals, and expectations set forth in the Group’s forward-looking statements. Additional risks and factors are identified in our filings with the SEC including our Annual Report on Form 20-F for the fiscal year ended 31 December 2013, which are available on the SEC’s website at http://www.sec.gov.

Any forward-looking statements made herein speak only as of the date they are made and it should not be assumed that they have been revised or updated in the light of new information or future events. Except as required by the Prudential Regulation Authority, the Financial Conduct Authority, the London Stock Exchange plc (the LSE) or applicable law, Barclays expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Barclays’ expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. The reader should, however, consult any additional disclosures that Barclays has made or may make in documents it has published or may publish via the Regulatory News Service of the LSE and/or has filed or may file with the SEC.

 

 

 

   Barclays PLC    3    LOGO     


Performance Highlights

 

 

 

Barclays Unaudited Results

for the Nine Months Ended

   Adjusted           Statutory  
     30.09.14      30.09.13                  30.09.14      30.09.13         
       £m         £m         % Change            £m         £m         % Change   

Total income net of insurance claims

     19,710          21,257         (7)            20,267          21,391         (5)   

Credit impairment charges and other provisions

     (1,595)         (2,353)         32            (1,595)         (2,353)         32   

Net operating income

     18,115          18,904         (4)            18,672          19,038         (2)   
Operating expenses      (12,051)         (13,239)                   (12,051)         (13,239)          

Litigation and conduct

     (309)         (164)         (88)            (1,719)         (2,164)         21   

Operating expenses excluding costs to achieve Transform

     (12,360)         (13,403)                   (13,770)         (15,403)         11   

Costs to achieve Transform

     (826)         (741)         (11)            (826)         (741)         (11)   

Total operating expenses

     (13,186)         (14,144)                   (14,596)         (16,144)         10   

Loss on announced sale of the Spanish business

                           (364)              

Other net income/(expenses)

     10          (43)                     10          (43)            

Profit before tax

     4,939          4,717                   3,722          2,851         31   

Tax charge

     (1,630)         (1,505)         (8)            (1,496)         (1,040)         (44)   

Profit after tax

     3,309          3,212                   2,226          1,811         23   

Non-controlling interests

     (551)         (629)         12            (551)         (629)         12   

Other equity interests

     (170)                             (170)                    

Attributable profit

     2,588          2,583                    1,505          1,182         27   

Performance Measures

                                                        

Return on average tangible shareholders’ equity

     7.4%         7.7%               4.4%         3.6%      

Return on average shareholders’ equity

     6.3%         6.6%               3.8%         3.1%      

Cost: income ratio

     67%         67%               72%         75%      

Loan loss rate (bps)

     43          64               43          64      
                                                          

Basic earnings per share

     16.1p         19.0p               9.4p         8.7p      

Dividend per share

     3.0p         3.0p               3.0p         3.0p      

Balance Sheet and Leverage

                                     30.09.14         30.06.14            

Net tangible asset value per share

                 287p         279p      

Net asset value per share

                 336p         327p      

Estimated BCBS 270 leverage exposure

                 £1,324bn         £1,353bn      

Capital Management

                                     30.09.14         30.06.14            

CRD IV fully loaded

                    
Common equity tier 1 ratio                  10.2%         9.9%      
Common equity tier 1 capital                  £42.0bn         £40.8bn      
Tier 1 capital                  £46.6bn         £45.4bn      
Risk weighted assets                  £413bn         £411bn      

Estimated BCBS 270 leverage ratio

                 3.5%         3.4%      

Funding and Liquidity

                                     30.09.14         30.06.14            
Group liquidity pool                  £146bn         £134bn      
Estimated CRD IV liquidity coverage ratio                  115%         107%      

Loan: deposit ratio4

                 90%         92%      

Adjusted Profit Reconciliation

Nine Months Ended

                                     30.09.14         30.09.13            

Adjusted profit before tax

                 4,939          4,717      

Own credit

                 96          (125)      

Provisions for PPI and interest rate hedging redress

                 (910)         (2,000)      

Gain on US Lehman acquisition assets1

                 461          259      

Provision for ongoing investigations into Foreign Exchange

                 (500)              

Loss on announced sale of the Spanish business

                                     (364)                    

Statutory profit before tax

                 3,722          2,851      

 

1

2013 adjusted income and profit before tax has been restated to exclude the Q213 £259m gain relating to assets not yet received from the US Lehman acquisition to aid comparability given its material nature in the current year.

 
2

The loss on the announced sale of the Spanish business of £364m represents a £680m impairment of assets in the Spanish businesses agreed for sale subject to completion at or shortly after the end of the year, partially offset by a £316m gain on related hedging instruments. There are also accumulated currency translation reserve losses of approximately £100m, subject to movements in the EUR exchange rate, which will be recognised on completion.

 
3

The profit after tax attributable to other equity holders of £170m (2013: £nil) is offset by a tax credit recorded in reserves of £36m (2013: £nil). The net amount of £134m, along with non-controlling interests (NCI) is deducted from profit after tax in order to calculate earnings per share, return on average tangible shareholders’ equity and return on average shareholders’ equity.

 
4

Loan: deposit ratio for PCB, Barclaycard, Africa Banking and Non-Core retail.

 

 

 

 

   Barclays PLC   4   LOGO     


Performance Highlights

 

 

 

Barclays Core and Non-Core Results

for the Nine Months Ended

   Barclays Core           Barclays Non-Core  
     30.09.14         30.09.131               30.09.14         30.09.13      
       £m         £m         % Change            £m         £m         % Change   

Total income net of insurance claims

     18,682          19,414         (4)            1,028          1,843         (44)   

Credit impairment charges and other provisions

     (1,429)         (1,629)         12            (166)         (724)         77   

Net operating income

     17,253          17,785         (3)            862          1,119         (23)   
Operating expenses      (10,870)         (11,764)                   (1,181)         (1,475)         20   

Litigation and conduct

     (194)         (104)         (87)            (115)         (60)         (92)   

Costs to achieve Transform

     (655)         (306)                     (171)         (435)         61   

Total operating expenses

     (11,719)         (12,174)                   (1,467)         (1,970)         26   

Other net income/(expenses)

     53          71         (25)            (43)         (114)         62   

Profit/(loss) before tax

     5,587          5,682         (2)            (648)         (965)         33   

Tax charge

     (1,774)         (1,666)         (6)            144          161         (11)   

Profit/(loss) after tax

     3,813          4,016         (5)            (504)         (804)         37   

Non-controlling interests

     (458)         (537)         15            (93)         (92)         (1)   

Other equity interests

     (129)                             (41)                    

Attributable profit/(loss)

     3,226          3,479         (7)            (638)         (896)         29   

Performance Measures

                                                        

Return on average tangible shareholders’ equity

     12.8%         16.9%               (5.4%)         (9.2%)      

Average allocated tangible equity (£bn)

     £34bn         £27bn               £14bn         £17bn      

Return on average shareholders’ equity

     10.5%         13.3%               (4.2%)         (6.7%)      

Average allocated equity (£bn)

     £41bn         £35bn               £14bn         £17bn      

Cost: income ratio

     63%         63%               143%         107%      

Basic earnings per share contribution

     20.0p         25.6p               (3.9p)         (6.6p)      
Capital Management    30.09.14      30.06.14                    30.09.14      30.06.14          

CRD IV fully loaded

                    
Risk weighted assets      £332bn         £324bn               £81bn         £87bn      

 

Income by Business      30.09.14         30.09.131      
       £m         £m         % Change   

Personal and Corporate Banking (PCB)

     6,597          6,557          

Barclaycard

     3,247          3,069          

Africa Banking

     2,701          3,059         (12)   

Investment Bank

     5,922          6,814         (13)   

Head Office

     215          (85)            

Barclays Core

     18,682          19,414         (4)   

Barclays Non-Core

     1,028          1,843         (44)   

Barclays Group adjusted income

     19,710          21,257         (7)   

Barclays Group statutory income

     20,267          21,391          (5)   
Profit/(Loss) Before Tax by Business      30.09.14         30.09.131      
       £m         £m         % Change   

Personal and Corporate Banking (PCB)

     2,257          1,907         18   

Barclaycard

     1,126          927         21   

Africa Banking

     756          846         (11)   

Investment Bank

     1,342          2,156         (38)   

Head Office

     106          (154)            

Barclays Core

     5,587          5,682         (2)   

Barclays Non-Core

     (648)         (965)         33   

Barclays Group adjusted profit before tax

     4,939          4,717          

Barclays Group statutory profit before tax

     3,722          2,851          31    

 

1

2013 adjusted income and profit before tax has been restated to exclude the Q213 £259m gain relating to assets not yet received from the US Lehman acquisition to aid comparability given its material nature in the current year.

 
2

Return on average equity and average tangible equity for Barclays Non-Core represents its impact on the Group, being the difference between Barclays Group returns and Barclays Core returns. This does not represent the return on average equity and average tangible equity of the Non-Core business.

 
3

Africa Banking income increased 8% and profit before tax increased 11% on a constant currency basis.

 

 

 

 

   Barclays PLC   5   LOGO     


Group Performance Review

 

 

Income Statement

Group performance

 

 

Adjusted profit before tax increased 5% to £4,939m as improvements in Personal and Corporate Banking (PCB) and Barclaycard were partly offset by a reduction in the Investment Bank and adverse currency movements in Africa Banking

 

 

Statutory profit before tax was £3,722m (2013: £2,851m), also reflecting a gain on own credit of £96m (2013: loss of £125m), an additional £910m (2013: £2,000m) net provision for PPI and interest rate hedging redress, a gain on US Lehman acquisition assets of £461m (2013: £259m), a £500m provision for ongoing investigations into Foreign Exchange with certain regulatory authorities and a £364m loss on the announced sale of the Spanish business. We anticipate a modest increase in the impairment run rate in Q414, but our expectations are for 2014 full year impairment to be slightly below guidance provided at the 2014 Interim Results

 

 

Adjusted income decreased 7% to £19,710m whilst impairment reduced by 32% to £1,595m, resulting in a 4% decrease in adjusted net operating income to £18,115m. Statutory income decreased 5% to £20,267m resulting in a 2% decrease in statutory net operating income to £18,672m

 

 

Adjusted total operating expenses were down 7% to £13,186m, with a reduction in headcount of 7,800 since September 2013, as a result of restructuring savings associated with Transform initiatives, and currency movements. This included costs to achieve Transform of £826m (2013: £741m) and adjusted litigation and conduct charges of £309m (2013: £164m). Costs to achieve Transform are expected to be £1.3bn for 2014 full year, £700m in 2015 and £200m in 2016

 

 

Statutory operating expenses decreased by 10% to £14,596m reflecting a lower provision for PPI and interest rate hedging redress of £910m (2013: £2,000m)

 

 

The effective tax rate on adjusted profit before tax increased to 33.0% (2013: 31.9%) and the effective tax rate on statutory profit before tax increased to 40.2% (2013: 36.5%)

 

 

Adjusted Group attributable profit was £2,588m (2013: £2,583m), resulting in an adjusted Group return on average shareholders’ equity of 6.3% (2013: 6.6%). Statutory Group attributable profit was £1,505m (2013: £1,182m) resulting in a statutory Group return on average shareholders’ equity of 3.8% (2013: 3.1%)

Core performance

 

 

Profit before tax remained broadly in line at £5,587m (2013: £5,682m), as a 38% reduction in the Investment Bank was largely offset by improved performance across the majority of the Core business

 

 

Income decreased 4% to £18,682m, reflecting a reduction in the Investment Bank and a reduction in Africa Banking, due to currency movements, partially offset by growth in Barclaycard and PCB. Investment Bank income was down 13% year to date to £5,922m and down 10% to £1,665m in Q314 relative to Q313 due to lower Investment Banking fees and lower client volumes in Credit and Equities

 

   

Net interest income of PCB, Barclaycard and Africa Banking increased 4% to £8,513m driven by strong savings income growth in PCB and volume growth in Barclaycard, partially offset by a reduction in Africa Banking due to currency movements

 

 

Credit impairment charges improved 12% to £1,429m, reflecting lower impairments across most of the businesses, particularly PCB, due to the improving UK economic environment

 

 

Total operating expenses decreased 4% to £11,719m, reflecting improvements across most of the businesses as a result of savings associated with Transform initiatives partially offset by higher costs to achieve Transform charges of £655m (2013: £306m) and higher litigation and conduct charges of £194m (2013: £104m)

 

 

Attributable profit decreased to £3,226m (2013: £3,479m) and the Core return on equity decreased to 10.5% (2013: 13.3%), principally as a result of the increased shareholders’ equity

Non-Core performance

 

 

Loss before tax reduced 33% to £648m, reflecting:

 

   

Lower income of £1,028m (2013: £1,843m) following assets and securities run down, and business disposals, partially offset by a £119m gain on sale of the UAE retail banking portfolio

 

   

An improvement in impairment of £558m to £166m

 

   

A 26% reduction in total operating expenses to £1,467m due to benefits from Transform cost programmes, including lower non-retail headcount and the effects of the previously announced European retail restructuring, in addition to reduced costs to achieve Transform

 

 

Non-Core return on equity dilution improved to 4.2% (2013: 6.7%)

 

 

 

   Barclays PLC   6   LOGO     


Group Performance Review

 

 

 

Balance Sheet and Leverage

Balance sheet

 

 

Total assets as at 30 September 2014 increased 4% from 30 June 2014 to £1,365bn

 

   

Derivative assets increased £49bn to £383bn, consistent with the movement in derivative liabilities, which increased £53bn to £379bn, due to an increase in foreign exchange derivatives of £36bn, following volatility in the USD market, and an increase in interest rate derivatives of £14bn due to a reduction in the major interest rate forward curves

 

   

Reverse repurchase agreements and other similar secured lending decreased £14bn to £158bn primarily driven by lower matched book trading due to balance sheet deleveraging

 

 

Total loans and advances remained broadly stable at £483bn (June 2014: £486bn) primarily due to a £14bn reclassification of loans to other assets relating to the Spanish business which are now held for sale, partially offset by a £13bn increase in settlement and cash collateral balances, and £2bn growth in Barclaycard

 

 

Customer accounts decreased to £442bn (June 2014: £444bn) as a result of the reclassification of £8bn in relation to the Spanish business to other liabilities, partially offset by £5bn higher settlement balances

 

 

Total shareholders’ equity including non-controlling interests was £67bn (June 2014: £65bn). Excluding non-controlling interests, shareholders’ equity increased to £60bn (June 2014: £58bn), reflecting a £0.8bn increase in the translation reserve as GBP weakened against USD and an increase in retained earnings of £0.5bn

 

 

Net asset value per share increased to 336p (June 2014: 327p) and net tangible asset value per share was 287p (June 2014: 279p)

Leverage exposure

 

 

The estimated Basel Committee on Banking Supervision (BCBS) 270 leverage exposure decreased to £1,324bn (June 2014: £1,353bn) primarily driven by a reduction in reverse repurchase agreements and derivative exposures

Capital Management

 

 

The fully loaded CRD IV CET1 ratio increased to 10.2% (June 2014: 9.9%) primarily due to an increase in the fully loaded CRD IV CET1 capital of £1.3bn to £42.0bn. Excluding the loss on the announced sale of the Spanish business, profits in the period generated £0.8bn of CET1 capital. RWAs remained broadly stable at £413bn (June 2014: £411bn), with growth across Core businesses, partially offset by a decrease in Non-Core. Subject to completion, the announced Spanish business sale would result in an increase in the CRD IV fully loaded CET1 ratio to 10.4% as at 30 September 20141

 

 

The estimated BCBS 270 leverage ratio increased to 3.5% (June 2014: 3.4%), reflecting the reduction in the estimated BCBS 270 leverage exposure of £29bn to £1,324bn and an increase in Tier 1 capital of £1.2bn to £46.6bn. Subject to completion, the announced sale of the Spanish businesses is expected to increase the estimated BCBS 270 leverage ratio by 2bps1

 

 

 1 The CET1 ratio of 10.4% and the increase of 2bps to the estimated BCBS 270 leverage ratio are reflective of a reduction in RWAs of £8bn. This is an estimate as announced on 1 Sept 2014, subject to valuation upon completion of the sale.

 

 

 

   Barclays PLC   7   LOGO     


Group Performance Review

 

 

 

Funding and Liquidity

 

 

The Group strengthened its liquidity position further during the quarter, building a larger surplus to its Liquidity Risk Appetite. This resulted in an increase in the Group liquidity pool to £146bn (June 2014: £134bn). The estimated CRD IV Liquidity Coverage Ratio (LCR) increased to 115% (June 2014: 107%), equivalent to a surplus of £20bn (June 2014: £9bn)

 

 

The Group funding profile remained stable and well diversified. Wholesale funding outstanding (excluding repurchase agreements) was £178bn (June 2014: £179bn). The Group issued £4bn of term funding net of early redemptions during the quarter taking total net issuance in 2014 to £14bn, excluding the £6bn participation in the Bank of England’s Funding for Lending Scheme. Barclays has £4bn of term funding maturing in the remainder of 2014 and £23bn in 2015

Other Matters

 

 

A £500m provision has been recognised relating to ongoing investigations into Foreign Exchange with certain regulatory authorities disclosed in the Legal, Competition and Regulatory Matters note in the Form 6-K filed with the SEC dated 30 July 2014

 

 

A gain of £461m has been recognised reflecting greater certainty around the recoverability of assets not yet received from the 2008 US Lehman acquisition. This gain follows a favourable ruling during the quarter from the US Court of Appeals for the Second Circuit

 

 

As at 30 September 2014 the provision for PPI redress was £1.2bn (June 2014: £1.3bn) following Q314 utilisation of £291m and the recognition of an additional amount of £170m based on an updated estimate of future redress and associated costs. The remaining provision reflects Barclays’ best current estimate of future costs

 

 

As at 30 September 2014 the provision for interest rate hedging product redress was £295m (June 2014: £648m) after Q314 utilisation of £193m and a provision release of £160m. The release has been recognised as the review is now substantially complete with redress outcomes communicated to 99% of customers covered by the redress exercise

Dividends

 

 

A third interim dividend of 1.0p will be paid on 12 December 2014

Outlook

 

 

2014 continues to be a transition year as we invest in the business and focus on balance sheet optimisation and cost reduction, while addressing ongoing regulatory and litigation issues

 

 

 

   Barclays PLC   8   LOGO     


Results by Business

 

 

Personal and Corporate Banking

 

Income Statement Information    Nine Months Ended      Nine Months Ended         
     

30.09.14

£m

     30.09.13
£m
     % Change  

Total income

     6,597         6,557          

Credit impairment charges and other provisions

     (359)         (451)         21   

Net operating income

     6,238         6,106          
        

Operating expenses

     (3,786)         (4,072)          

Costs to achieve Transform

     (205)         (165)         (24)   

Total operating expenses

     (3,991)         (4,237)          
        

Other net income

     10          38         (74)   

Profit before tax

     2,257         1,907         18   

Attributable profit

     1,617         1,399         16   
        
Balance Sheet Information   

As at 30.09.14

£bn

     As at 30.06.14
£bn
         

Loans and advances to customers at amortised cost

     215.7         216.7     

Total assets

     275.7         268.1     

Customer deposits

     295.9         298.3     

Risk weighted assets

     120.0         117.9     
        
Performance Measures    30.09.14      30.09.13          

Return on average tangible equity

     16.7%         14.1%      

Average allocated tangible equity (£bn)

     13.0         13.2      

Return on average equity

     12.5%         10.8%      

Average allocated equity (£bn)

     17.3         17.3      

Cost: income ratio

     60%         65%      

Loan loss rate (bps)

     22         28      

2014 compared to 2013

 

 

Total income increased 1% to £6,597m driven by improved savings margins and mortgage income growth, partially offset by lower fee income

 

   

Net interest margin improved by 8bps to 2.99% driven primarily by savings in personal banking partially offset by lower corporate banking lending margins

 

 

Credit impairment charges improved 21% to £359m due to the improving economic environment in the UK. Corporate banking benefitted from higher levels of provision releases and recoveries in the UK

 

 

Total operating expenses reduced 6% to £3,991m reflecting benefits from Transform programmes, including headcount reductions, partially offset by increased costs to achieve Transform of £205m (2013: £165m)

 

 

Profit before tax increased 18% to £2,257m

Q314 compared to Q214

 

 

Profit before tax remained stable at £789m (Q214: £780m) with higher income in personal banking and reduced operating expenses, due to benefits from Transform programmes, offset by higher costs to achieve Transform of £90m (Q214: £58m)

 

 

Loans and advances to customers reduced £1.0bn to £215.7bn due to lower working capital requirements from corporate banking customers, partially offset by mortgage growth

 

 

Total assets increased 3% to £275.7bn due to an increase in liquidity pool assets, partially offset by the net decrease in loans and advances to customers

 

 

Customer deposits reduced £2.4bn to £295.9bn due to reduced corporate banking client deposit balances in the UK, partially offset by inflows in current accounts

 

 

RWAs increased £2.1bn to £120.0bn primarily driven by increases in mortgage balances and corporate banking undrawn commitments

 

 

 

   Barclays PLC   9   LOGO     


Results by Business

 

 

 

Barclaycard

 

     Nine Months Ended      Nine Months Ended         
Income Statement Information   

30.09.14

£m

    

30.09.13

£m

     % Change  

Total income

     3,247         3,069          

Credit impairment charges and other provisions

     (821)         (830)          

Net operating income

     2,426         2,239          
        

Operating expenses

     (1,271)         (1,329)          

Costs to achieve Transform

     (68)         (11)            

Total operating expenses

     (1,339)         (1,340)           
        
        

Other net income

     39         28         39   

Profit before tax

     1,126         927         21   

Attributable profit

     801         653         23   
        
Balance Sheet Information   

As at 30.09.14

£bn

    

As at 30.06.14

£bn

         

Loans and advances to customers at amortised cost

     34.8         33.2     

Total assets

     38.9         36.2     

Customer deposits

     6.5         5.9     

Risk weighted assets

     38.6         37.7     
        
Performance Measures    30.09.14      30.09.13          

Return on average tangible equity

     23.0%         21.2%      

Average allocated tangible equity (£bn)

     4.7         4.1      

Return on average equity

     18.5%         16.5%      

Average allocated equity (£bn)

     5.8         5.3      

Cost: income ratio

     41%         44%      

Loan loss rate (bps)

     301         347      

2014 compared to 2013

 

 

Total income increased 6% to £3,247m reflecting continued net lending growth across all geographies and lower funding costs, partially offset by depreciation of USD against GBP

 

   

Net interest margin remained broadly stable at 8.98% (2013: 9.04%) as the impact of promotional offers and a change in product mix was offset by lower funding costs

 

 

Credit impairment charges remained in line at £821m (2013: £830m) despite volume growth. Favourable performance, as reflected by falling 30 day delinquency rates in the UK and US consumer cards businesses, resulted in loan loss rates reducing by 46bps to 301bps

 

 

Total operating expenses remained flat at £1,339m (2013: £1,340m). The impact of volume growth and higher costs to achieve Transform was offset by depreciation of USD against GBP and VAT refunds

 

 

Profit before tax increased 21% to £1,126m

Q314 compared to Q214

 

 

Profit before tax reduced 9% to £362m driven by higher operating expenses due to the non-recurrence of a VAT refund in the prior quarter and higher costs to achieve Transform

 

 

Total loans and advances to customers increased 5% to £34.8bn reflecting growth across all geographies

 

 

Total assets increased 7% to £38.9bn due to the increase in loans and advances to customers and an increase in liquidity pool assets

 

 

Customer deposits increased 10% to £6.5bn driven by funding initiatives in the US

 

 

RWAs increased £0.9bn to £38.6bn primarily driven by growth in loans and advances to customers

 

 

 

   Barclays PLC   10   LOGO     


Results by Business

 

 

 

Africa Banking

 

                               Constant Currency  
     Nine Months
Ended
     Nine Months
Ended
                 Nine Months
Ended
     Nine Months
Ended
        
Income Statement Information    30.09.14      30.09.13                  30.09.14      30.09.13         
      £m      £m      % Change            £m      £m      % Change  
Total income net of insurance claims      2,701         3,059         (12)            3,297         3,059          
Credit impairment charges and other provisions      (270)         (375)         28              (332)         (375)         11   
Net operating income      2,431         2,684         (9)            2,965         2,684         10   
                    
Operating expenses      (1,655)         (1,835)         10            (2,004)         (1,835)         (9)   
Costs to achieve Transform      (28)         (11)                       (34)         (11)            
Total operating expenses      (1,683)         (1,846)                   (2,038)         (1,846)         (10)   
                    
Other net income                                               13   
Profit before tax      756         846         (11)            936         846         11   
Attributable profit      272         325         (16)            368         325         13   
                    
                    
Balance Sheet Information   

As at 30.09.14

£bn

     As at 30.06.14
£bn
                

As at 30.09.14

£bn

    

As at 30.06.14

£bn

        
Loans and advances to customers at amortised cost      34.5         33.8              34.8         33.8     
Total assets      54.6         52.4              55.2         52.4     
Customer deposits      33.4         33.2              33.6         33.2     
Risk weighted assets      37.9         36.5                 
                    
Performance Measures    30.09.14      30.09.13                                   
Return on average tangible equity      13.2%         13.3%                  
Average tangible equity (£bn)       2.7         3.3                  
Return on average equity      9.6%         9.6%                  
Average equity (£bn)       3.8         4.5                  
Cost: income ratio      62%         60%                  
Loan loss rate (bps)      97         130                  

2014 compared to 2013

 

 

Based on average rates, the ZAR depreciated against GBP by 22% in 2014. The deterioration was a significant contributor to the movement in the reported results of Africa Banking

 

 

Total income declined 12% to £2,701m. On a constant currency basis, total income increased 8% reflecting higher net interest income, with continued strong Corporate and Investment Banking (CIB) asset growth and the net interest margin increasing to 5.96% (2013: 5.78%). Non-interest income increased reflecting growth in Retail and Business Banking (RBB)

 

 

Credit impairment charges decreased 28% to £270m. On a constant currency basis, credit impairment charges reduced 11% driven by improvements in the South Africa mortgages portfolio, partially offset by increased provisions in the Card portfolio. The loan loss rate improved from 130bps to 97bps

 

 

Total operating expenses decreased 9% to £1,683m. On a constant currency basis, operating expenses increased 10% largely reflecting inflationary increases, higher staff and marketing costs, increased investment spend on key initiatives and higher costs to achieve Transform

 

 

Profit before tax decreased 11% to £756m. On a constant currency basis, profit before tax increased 11%

Q314 compared to Q214

 

 

The closing and average ZAR rates against GBP remained broadly stable to Q214

 

 

Profit before tax increased to £272m (Q214: £244m) primarily reflecting improved income and lower impairment in RBB

 

 

Loans and advances to customers increased 2% to £34.5bn primarily reflecting growth in CIB

 

 

Total assets increased 4% to £54.6bn due to the increase in loans and advances to customers and an increase in CIB trading assets

 

 

Customer deposits increased 1% to £33.4bn mainly reflecting continued growth in deposits in RBB

 

 

RWAs increased £1.4bn to £37.9bn primarily reflecting loans and advances growth

 

1 Constant currency results are calculated by converting ZAR results into GBP using the average exchange rate for the nine months ended 30 September 2013 for the income statement and the 30 June 2014 exchange rate for the balance sheet to eliminate the impact of movement in exchange rates between the two periods.

 

 

 

   Barclays PLC    11    LOGO     


Results by Business

 

 

 

Investment Bank

     Nine Months Ended      Nine Months Ended         
Income Statement Information    30.09.14      30.09.13         
       £m         £m         % Change   

Investment Banking fees

     1,584         1,589           

Lending 

     306         257         19   

Banking

     1,890         1,846          

Credit

     871         1,026         (15)   

Equities

     1,615         1,876         (14)   

Macro

     1,526         2,086         (27)   

Markets

     4,012         4,988         (20)   

Banking & Markets

     5,902         6,834         (14)   

Other

     20         (20)            

Total income

     5,922         6,814         (13)   

Credit impairment releases and other provisions

     21         28         (25)  

Net operating income

     5,943         6,842         (13)   
        

Operating expenses

     (4,249)         (4,566)          

Costs to achieve Transform

     (352)         (120)            

Total operating expenses

     (4,601)         (4,686)          
        

Profit before tax

     1,342         2,156         (38)   

Attributable profit

     547         1,381         (60)   
Balance Sheet Information   

As at 30.09.14

£bn

    

As at 30.06.14

£bn

         

Loans and advances to banks and customers at amortised cost

     123.1         117.2     

Trading portfolio assets

     98.8         101.2     

Derivative financial instrument assets

     131.4         104.2     

Reverse repurchase agreements and other similar secured lending

     82.8         83.0     

Total assets

     488.4         446.2     

Risk weighted assets

     127.9         123.9     
Performance Measures    30.09.14      30.09.13          

Return on average tangible equity

     5.1%         11.8%      

Average allocated tangible equity (£bn)

     14.6         15.6      

Return on average equity

     4.9%         11.4%      

Average allocated equity (£bn)

     15.3         16.2      

Cost: income ratio

     78%         69%      

2014 compared to 2013

 

 

Total income decreased 13% to £5,922m or 6% if reported in USD3

 

   

Banking income increased 2% to £1,890m. Within Banking, Investment Banking fee income is in line with prior year at £1,584m (2013: £1,589m) driven by increased financial advisory and equity underwriting fees, offset by lower debt underwriting fee income. Lending income increased 19% to £306m driven by lower risk management losses and higher net interest and fee income

 

   

Markets income decreased 20% to £4,012m

 

   

Credit decreased 15% to £871m driven by lower income in high yield and high grade products, predominantly in the US

 

   

Equities decreased 14% to £1,615m due to declines in US cash equities and global equity derivatives, reflecting lower client volumes partially offset by higher income in equity financing

 

   

Macro decreased 27% to £1,526m reflecting subdued client activity in rates and lower volatility in H114 currency markets

 

 

Net credit impairment release of £21m (2013: £28m) arose from a number of single name exposures

 

 

Total operating expenses decreased 2% to £4,601m including a reduction due to foreign currency movements, partially offset by increased costs to achieve Transform of £352m (2013: £120m) and litigation and conduct charges. Excluding these items, operating expenses decreased 3%, reflecting lower compensation costs and benefits from Transform programmes, including business restructuring and operational streamlining

 

 

Profit before tax decreased 38% to £1,342m

 

2013 adjusted income and profit before tax has been restated to exclude the Q213 £259m gain relating to assets not yet received from the US Lehman acquisition to aid comparability given its material nature in the current year. In addition, June 2014 US Lehman acquisition assets and RWAs of £1.6bn have been restated for the reclassification of these assets from the Investment Bank to Head Office to more accurately reflect responsibility for the resolution of this matter.
Macro represents Rates, Currencies and Commodities income. Credit represents Credit, Securitised Products and Municipals income.
USD variance representing monthly spot rate conversion of GBP results has been included to aid comparison to US peer banks.

 

 

 

   Barclays PLC   12   LOGO     


Results by Business

 

 

 

Q314 compared to Q313

 

 

Total income decreased 10% to £1,665m or 5% if reported in USD

 

   

Banking income decreased 4% to £547m. Within Banking, Investment Banking fee income decreased 22% to £410m driven by decreased financial advisory and debt underwriting fee income. Equity underwriting fee income remained broadly in line. Lending income increased to £137m (Q313: £42m) driven by lower risk management losses in the prior year

 

   

Markets income decreased 13% to £1,120m

 

   

Credit decreased 17% to £255m driven by declines in high yield and high grade products in the US

 

   

Equities decreased 25% to £395m due to declines in US cash equities and global equity derivatives, partially offset by higher income in equity financing

 

   

Macro increased 3% to £470m reflecting stronger performance in currencies due to higher volatility, partially offset by decreased client activity in rates

 

 

Total operating expenses remained in line at £1,376m (Q313: £1,376m) due to savings from Transform programmes and favourable currency movements, offset by higher costs to achieve Transform

 

 

Profit before tax decreased to £284m (Q313: £465m)

Q314 compared to Q214

 

 

Total income decreased 23% to £1,665m

 

   

Banking income decreased 25% to £547m. Within Banking, Investment Banking fee income decreased 38% to £410m driven by decreased equity and debt underwriting, and financial advisory fee income. Lending income increased to £137m (Q214: £66m) driven by lower risk management losses in the prior quarter

 

   

Markets income decreased 20% to £1,120m

 

   

Credit decreased 6% to £255m driven by declines across high yield and high grade products in the US

 

   

Equities decreased 37% to £395m due to declines in cash equities and equity derivatives

 

   

Macro decreased 7% to £470m as decreased client activity in rates was partially offset by stronger performance in currencies due to higher volatility

 

 

Total operating expenses decreased 14% to £1,376m due to lower litigation and conduct charges, savings from Transform programmes and lower costs to achieve Transform

 

 

Profit before tax decreased to £284m (Q214: £567m)

 

 

Loans and advances to banks and customers increased 5% to £123.1bn due to increased settlement balances

 

 

Derivative financial instrument assets increased 26% to £131.4bn driven by decreases in major interest rate forward curves and strengthening of USD against GBP

 

 

Reverse repurchase agreements and other similar secured lending were in line at £82.8bn (June 2014: £83.0bn)

 

 

Total assets increased 9% to £488.4bn due to movements in derivatives financial instrument assets, loans and advances to banks and customers and an increase in allocation of the Group liquidity pool assets

 

 

RWAs increased £4.0bn to £127.9bn primarily driven by an increase in loans and advances to customers and the downgrade of Russian counterparties

 

 

 

   Barclays PLC   13   LOGO     


Results by Business

 

 

 

Head Office

 

     Nine Months Ended      Nine Months Ended  
Income Statement Information    30.09.14      30.09.13  
       £m         £m   

Net operating income/(expense)

     215         (85)   
     

Operating expenses

     (104)         (65)   

Costs to achieve Transform

     (2)           

Total operating expenses

     (106)         (65)   
     

Other net expense

     (3)         (4)   

Profit/(loss) before tax

     106         (154)   

Attributable loss

     (11)         (279)   
     
Balance Sheet Information   

As at 30.09.14

£bn

    

As at 30.06.14

£bn

 

Total assets

     41.5         43.3  

Risk weighted assets

     7.5         7.6  

2014 compared to 2013

 

 

Net operating income increased to £215m (2013: expense of £85m) predominately due to the residual income from treasury operations and a net gain of £69m from foreign exchange recycling arising from the restructure of group subsidiaries

 

 

Total operating expenses increased £41m to £106m, mainly due to litigation and conduct charges, partially offset by the non-recurrence of costs associated with the Salz Review and establishment of the Transform programme in the prior year

 

 

Profit before tax of £107m moved from a loss of £154m in 2013

Q314 compared to Q214

 

 

Profit before tax increased to £40m (Q214: £6m) driven by lower operating expenses, mainly due to litigation and conduct charges in the prior quarter

 

 

Total assets remained broadly stable at £41.5bn (June 2014: £43.3bn)

 

 

RWAs remained in line at £7.5bn (June 2014: £7.6bn), with an increase relating to the US Lehman acquisition assets offset by a reduction due to a greater proportion of high quality sovereign assets

 

 

 

 

June 2014 US Lehman acquisition assets and RWAs of £1.6bn have been restated for the reclassification of these assets from the Investment Bank to Head Office to more accurately reflect responsibility for the resolution of this matter.

 

 

 

   Barclays PLC    14    LOGO     


Results by Business

 

 

 

Barclays Non-Core

     Nine Months Ended      Nine Months Ended         
Income Statement Information    30.09.14      30.09.13         
       £m         £m         % Change   

Businesses

     876         1,175         (25)   

Securities and Loans

     251         604         (58)   

Derivatives

     (99)         64            

Total income

     1,028         1,843         (44)   

Credit impairment charges and other provisions

     (166)         (724)         77   

Net operating income

     862         1,119         (23)   
        

Operating expenses

     (1,296)         (1,535)         16   

Costs to achieve Transform

     (171)         (435)         61   

Total operating expenses

     (1,467)         (1,970)         26   
        

Other net expense

     (43)         (114)         62   

Loss before tax

     (648)         (965)         33   

Attributable loss

     (638)         (896)         29   
Balance Sheet Information   

As at 30.09.14

£bn

    

As at 30.06.14

£bn

         

Loans and advances to banks and customers at amortised cost

     64.5         75.5     

Loans and advances to customers at fair value

     18.1         17.0     

Trading portfolio assets

     19.2         22.9     

Derivative financial instrument assets

     249.6         227.0     

Reverse repurchase agreements and other similar secured lending

     73.9         86.8     

Total assets

     466.5         468.6     

Customer deposits

     22.2         28.6     

Risk weighted assets

     81.0         87.5     
        
Performance Measures    30.09.14      30.09.13          

Return on average tangible equity impact

     (5.4%)         (9.2%)      

Average allocated tangible equity (£bn)

     13.6         17.1      

Return on average equity impact

     (4.2%)         (6.7%)      

Average allocated equity (£bn)

     13.8         17.4      

Cost: income ratio

     143%         107%      

2014 compared to 2013

 

 

Total income reduced 44% to £1,028m

 

   

Businesses income reduced 25% to £876m primarily driven by reduced investment banking activity, as assets are run down, adverse foreign currency movements and rationalisation of product offerings within the European retail business

 

   

Securities and Loans income decreased 58% to £251m primarily driven by the active rundown of securities, fair value adjustments on wholesale loan portfolios and non-recurrence of prior year favourable market movements on certain securitised products, partially offset by a £119m gain on the sale of the UAE retail banking portfolio

 

   

Derivative income reduced £163m to an expense of £99m reflecting the funding costs of the pre-CRD IV rates portfolio, hedging activities and the non-recurrence of fair value gains in the prior year

 

   

As run down activity progresses, 2015 income is expected to reduce significantly from current levels

 

 

Credit impairment charges improved 77% to £166m driven by the non-recurrence of a single name exposure, lower charges on the wholesale portfolio, including actions to reduce exposure to the Spanish property and construction sectors, and improved underlying performance in Europe

 

 

Total operating expenses improved 26% to £1,467m reflecting a 16% reduction in operating expenses due to benefits from Transform programmes, including non-retail headcount reductions and results of the previously announced European retail restructuring. In addition, costs to achieve Transform were 61% lower

 

 

Loss before tax reduced 33% to £648m

 

 1 Return on average equity and average tangible equity for Barclays Non-Core represents its impact on the Group. This does not represent the return on average equity and average tangible equity of the Non-Core business.

 

 

 

   Barclays PLC    15    LOGO     


Results by Business

 

 

 

Q314 compared to Q214

 

 

Total income increased 30% to £370m

 

   

Businesses income increased 34% to £328m primarily driven by fair value gains and sale proceeds as part of the exit strategy

 

   

Securities and Loans income increased to £103m (Q214: £48m), driven by income from commodities and foreign exchange trading, and a £119m gain on the sale of the UAE retail banking portfolio, partially offset by fair value adjustments on wholesale loan portfolios

 

   

Derivative income reduced £53m to an expense of £61m due to a decline in trading income leaving a residual funding cost

 

 

Credit impairment charges improved 79% to £17m driven by debt sales and provision releases within non-retail businesses

 

 

Total operating expenses increased 14% to £533m due to increased costs to achieve Transform of £130m (Q214: £17m), partially offset by 11% lower operating expenses due to benefits from the run down of non-retail businesses and from Transform programmes

 

 

Loss before tax reduced 53% to £157m

 

 

Loans and advances to banks and customers decreased 15% to £64.5bn due to a £14.0bn reclassification of loans relating to the Spanish business which are now held for sale

 

 

Total assets remained broadly stable at £466.5bn (June 2014: £468.6bn) with reduced reverse repurchase agreements and trading portfolio assets offset by an increase in derivative financial instrument assets

 

 

RWAs reduced £6.5bn to £81.0bn mainly driven by securities disposals and disposals of businesses, including the UAE retail banking portfolio

 

 

 

   Barclays PLC    16    LOGO     


Appendix I – Quarterly Results Summary

 

 

 

Barclays Results by Quarter1    Q314      Q214      Q114           Q413      Q313      Q213      Q113           Q412  
      £m      £m      £m           £m      £m      £m      £m           £m  

Statutory basis

                             

Total income net of insurance claims

     6,883          6,615          6,769             6,544          6,234          7,674          7,483             6,307    

Credit impairment charges and other provisions

     (509)         (538)         (548)            (718)         (722)         (925)         (706)            (825)   

Net operating income

     6,374          6,077          6,221             5,826          5,512          6,749          6,777             5,482    

Operating expenses

     (4,487)         (5,088)         (4,195)            (4,856)         (4,262)         (6,359)         (4,782)            (5,345)   

Costs to achieve Transform

     (332)         (254)         (240)            (468)         (101)         (126)         (514)              

UK bank levy

                                (504)                                    (345)   

Total operating expenses

     (4,819)         (5,342)          (4,435)            (5,828)         (4,363)         (6,485)         (5,296)            (5,690)   

Other net (expense)/income

     (334)         (46)          26             19          25          (122)         54             43    

Statutory profit/(loss) before tax

     1,221         689          1,812            17         1,174         142          1,535            (165)   

Statutory profit/(loss) after tax

     620         391          1,215            (514)         728         39          1,044            (364)   
                             

Attributable to:

                                                                             

Ordinary equity holders of the parent

     379          161          965            (642)         511         (168)         839            (589)   

Other equity holders

     80          41          49                                                 

Non-controlling interests

     161          189          201            128         217         207          205            225   
                                                                               

Adjusted basis

                             

Total income net of insurance claims

     6,378          6,682          6,650            6,639         6,445         7,078          7,734            6,867   

Credit impairment charges and other provisions

     (509)         (538)         (548)            (718)         (722)         (925)         (706)            (825)   

Net operating income

     5,869          6,144          6,102            5,921         5,723         6,153          7,028            6,042   

Operating expenses

     (3,977)         (4,188)         (4,195)            (4,777)         (4,262)         (4,359)         (4,782)            (4,345)   

Costs to achieve Transform

     (332)         (254)         (240)            (468)         (101)         (126)         (514)              

UK bank levy

                                (504)                                    (345)   

Total operating expenses

     (4,309)         (4,442)         (4,435)            (5,749)         (4,363)         (4,485)         (5,296)            (4,690)   

Other net income/(expense)

     30          (46)         26            19         25         (122)         54            43   

Adjusted profit before tax

     1,590          1,656          1,693            191         1,385         1,546          1,786            1,395   
                             

Adjusting items

                                                                             

Own credit1

     (44)         67          (119)            95          211          (337)         251             560    

Provisions for PPI and interest rate hedging redress2

     10          900                                     2,000                     1,000    

Goodwill impairment2

                                79                                       

Gain on US Lehman acquisition assets1

     (461)                                            (259)                      

Provision for ongoing investigations into Foreign Exchange2

     500                                                                  

Loss on announced sale of the Spanish business3

     364                                                                  
                                                                               

Adjusted basic earnings/(loss) per share

     5.2p         5.4p         5.5p            (2.8p)         5.4p         7.7p         7.5p            6.7p   

Adjusted cost: income ratio

     68%         66%         67%            87%         68%         63%         68%            68%   

Basic earnings/(loss) per share

     2.4p         1.0p         6.0p            (4.5p)         3.8p         (1.2p)         6.3p            (4.5p)   

Cost: income ratio

     70%         82%         66%            89%         70%         85%         71%            90%   

 

 

Adjusting item recorded in total income net of insurance claims.
Adjusting item recorded in operating expenses.

Adjusting item recorded in other net (expense)/income.

 

 

 

   Barclays PLC    17    LOGO     


Appendix I – Quarterly Results Summary

 

 

 

Barclays Core1    Q314
£m
     Q214
£m
     Q114
£m
          Q413
£m
     Q313
£m
     Q213
£m
     Q113
£m
          Q412
£m
 

Total income net of insurance claims

     6,008          6,397         6,277            6,189         6,076         6,514         6,824            6,115   

Credit impairment charges and other provisions

     (492)         (456)         (481)            (542)         (554)         (558)         (517)            (600)   

Net operating income

     5,516          5,941         5,796            5,647         5,522         5,956         6,307            5,515   

Operating expenses

     (3,573)         (3,738)         (3,753)            (4,114)         (3,776)         (3,853)         (4,239)            (3,844)   

Costs to achieve Transform

     (202)         (237)         (216)            (365)         (84)         (64)         (158)              

UK bank levy

                                (395)                                    (263)   

Total operating expenses

     (3,775)         (3,975)         (3,969)            (4,874)         (3,860)         (3,917)         (4,397)            (4,107)   

Other net income

             27         20            15         15         13         43            21   

Profit before tax

     1,747          1,993         1,847            788         1,677         2,052         1,953            1,429   
Barclays Non-Core                                                                          

Total income net of insurance claims

     370          285         373            450         368         564         911            752   

Credit impairment charges and other provisions

     (17)         (82)         (67)            (176)         (168)         (367)         (189)            (226)   

Net operating income

     353          203         306            274         200         197         722            526   

Operating expenses

     (403)         (451)         (442)            (664)         (485)         (507)         (542)            (500)   

Costs to achieve Transform

     (130)         (17)         (24)            (103)         (17)         (62)         (356)              

UK bank levy

                                (109)                                    (82)   

Total operating expenses

     (533)         (468)         (466)            (876)         (502)         (569)         (898)            (582)   

Other net income/(expense)

     23          (72)                          10         (135)         11            21   

Loss before tax

     (157)         (337)         (154)            (598)         (292)         (507)         (165)            (35)   

 

 

1 2013 adjusted income and profit before tax has been restated to exclude the Q213 £259m gain relating to assets not yet received from the US Lehman acquisition to aid comparability given its material nature in the current year. Barclays Core represents the sum of five Operating Segments results outlined on page 19, each of which is prepared in accordance with IFRS 8; “Operating Segments”: Personal and Corporate Banking, Barclaycard, Africa Banking, Investment Bank and Head Office.

 

 

 

   Barclays PLC    18    LOGO     


Appendix I – Quarterly Results Summary

 

 

 

Personal and Corporate Banking    Q314
£m
     Q214
£m
     Q114
£m
          Q413
£m
     Q313
£m
     Q213
£m
     Q113
£m
          Q412
£m
 

Total income

     2,236          2,188         2,173            2,166         2,252         2,192         2,113            2,153   

Credit impairment charges and other provisions

     (129)         (95)         (135)            (169)         (153)         (165)         (134)            (191)   

Net operating income

     2,107          2,093         2,038            1,997         2,099         2,027        1,979            1,962   

Operating expenses

     (1,232)         (1,256)         (1,298)            (1,388)         (1,318)         (1,378)         (1,376)            (1,337)   

Costs to achieve Transform

     (90)         (58)         (57)            (219)         (73)         (55)         (37)              

UK bank levy

                                (66)                                    (49)   

Total operating expenses

     (1,322)         (1,314)         (1,355)            (1,673)         (1,391)         (1,433)         (1,413)            (1,386)   

Other net income

                                                   30             

Profit before tax

     789          780         688            327         709         601         596            579   
Barclaycard                                                                          

Total income

     1,123          1,082         1,042            1,034         1,050         1,030         989            987   

Credit impairment charges and other provisions

     (284)         (268)         (269)            (266)         (290)         (272)         (268)            (265)   

Net operating income

     839          814         773            768         760         758        721            722   

Operating expenses

     (449)         (420)         (402)            (457)         (455)         (424)         (450)            (472)   

Costs to achieve Transform

     (32)         (23)         (13)            (38)         (6)         (5)                      

UK bank levy

                                (22)                                    (15)   

Total operating expenses

     (481)         (443)         (415)            (517)         (461)         (429)         (450)            (487)   

Other net income

             25         10                   12                           

Profit before tax

     362          396         368            256         311         336         280            240   
Africa Banking                                                                          

Total income net of insurance claims

     928          895         878            980         1,004         1,016         1,039            1,064   

Credit impairment charges and other provisions

     (74)         (100)         (96)            (104)         (101)         (131)         (143)            (164)   

Net operating income

     854          795         782            876         903         885         896            900   

Operating expenses

     (573)         (545)         (537)            (616)         (605)         (597)         (633)            (605)   

Costs to achieve Transform

     (11)         (8)         (9)            (15)         (2)         (9)                      

UK bank levy

                                (42)                                    (34)   

Total operating expenses

     (584)         (553)         (546)            (673)         (607)         (606)         (633)            (639)   

Other net income

                                                              12   

Profit before tax

     272          244         240            203         299         283         264            273   
Investment Bank1                                                                          

Investment Banking fees

     410          661         513            571         526         488         575            621   

Lending

     137          66         103            68         42         141         74            42   

Banking

     547          727         616            639         568         629         649            663   

Credit

     255          270         346            231         308         239         479            248   

Equities

     395          629         591            421         524         750         602            419   

Macro

     470          504         552            494         457         689         940            609   

Markets

     1,120          1,403         1,489            1,146         1,289         1,678         2,021            1,276   

Banking & Markets

     1,667          2,130         2,105            1,785         1,857         2,307         2,670            1,939   

Other

     (2)         24         (2)            (3)         (6)         (7)         (7)            (8)   

Total income

     1,665          2,154         2,103           1,782         1,851         2,300         2,663            1,931   

Credit impairment (charges)/releases and other provisions

     (5)                19            (6)         (10)         10         28            21   

Net operating income

     1,660          2,161         2,122            1,776         1,841        2,310         2,691            1,952   

Operating expenses

     (1,306)         (1,442)         (1,501)            (1,606)         (1,373)         (1,429)         (1,764)            (1,360)   

Costs to achieve Transform

     (70)         (152)         (130)            (71)         (3)                 (116)              

UK bank levy

                                (236)                                    (139)   

Total operating expenses

     (1,376)         (1,594)         (1,631)            (1,913)         (1,376)         (1,429)         (1,880)            (1,499)   

Profit/(loss) before tax

     284          567         491            (137)         465         881         811            453   
Head Office                                                                          

Total income/(expense)

     56          78         81            227         (81)         (24)         20            (20)   

Credit impairment releases/(charges) and other provisions

                                                                  (1)   

Net operating income/(expense)

     56        78         81            230         (81)         (24)         20           (21)   

Operating expenses

     (13)         (76)         (15)            (47)         (25)         (25)         (16)            (70)   

Costs to achieve Transform

                    (7)            (22)                        (5)              

UK bank levy

                                (29)                                    (26)   

Total operating expenses

     (13)         (71)         (22)            (98)         (25)         (20)         (21)            (96)   

Other net (expense)/income

     (3)         (1)                          (1)         (5)                    

Profit/(loss) before tax

     40                 60            139         (107)         (49)                   (116)   

 

1

2013 adjusted income and profit before tax has been restated to exclude the Q213 £259m gain relating to assets not yet received from the US Lehman acquisition to aid comparability given its material nature in the current year.

 

 

 

   Barclays PLC    19    LOGO     


Appendix II – Performance Management

 

 

 

Returns and Equity by Business

Returns on average equity and average tangible equity are calculated as annualised profit for the period attributable to ordinary equity holders of the parent (adjusted for the offset by the tax credit recorded in reserves in respect of coupons on other equity instruments) divided by average allocated equity or average allocated tangible equity for the period as appropriate, excluding non-controlling and other equity interests for businesses, apart from Africa Banking (see below). Average allocated equity has been calculated as 10.5% of average CRD IV fully loaded risk weighted assets for each business, adjusted for CRD IV fully loaded capital deductions, including goodwill and intangible assets, reflecting the assumptions the Group uses for capital planning purposes. The excess of allocated Group equity, reflecting CRD IV fully loaded Common Equity Tier 1 capital ratio of 10.2% as at 30 September 2014 being below 10.5%, is allocated as negative equity to Head Office and Other Operations. Average allocated tangible equity is calculated using the same method but excludes goodwill and intangible assets.

For Africa Banking the equity used for return on average equity is Barclays share of the statutory equity of the BAGL entity (together with that of the Barclays Egypt and Zimbabwe businesses which remain outside the BAGL corporate entity), as well as the Barclays’ goodwill on acquisition of these businesses. The tangible equity for return on tangible equity uses the same basis but excludes both the Barclays’ goodwill on acquisition and the goodwill and intangibles held within the BAGL statutory equity.

 

    

Nine Months Ended

 

30.09.14

    

Nine Months Ended

 

30.09.13

 
Return on Average Equity    %      %  

Personal and Corporate Banking

     12.5        10.8  

Barclaycard

     18.5        16.5  

Africa Banking

     9.6        9.6  

Investment Bank

     4.9        11.4  

Barclays Core excluding Head Office

     10.3        11.6  

Head Office impact

     0.2        1.7  

Barclays Core

     10.5        13.3  

Barclays Non-Core impact

     (4.2)         (6.7)   

Barclays Group adjusted total

     6.3        6.6  

Barclays Group statutory total

     3.8         3.1   
    

Nine Months Ended

 

30.09.14

    

Nine Months Ended

 

30.09.13

 
Return on Average Tangible Equity    %      %  

Personal and Corporate Banking

     16.7        14.1  

Barclaycard

     23.0        21.2  

Africa Banking

     13.2        13.3  

Investment Bank

     5.1        11.8  

Barclays Core excluding Head Office

     12.4        13.9  

Head Office impact

     0.4        3.0  

Barclays Core

     12.8        16.9  

Barclays Non-Core impact

     (5.4)         (9.2)   

Barclays Group adjusted total

     7.4        7.7  

Barclays Group statutory total

     4.4         3.6   

 

 

1

2013 adjusted income and profit before tax has been restated to exclude the Q213 £259m gain relating to assets not yet received from the US Lehman acquisition to aid comparability given its material nature in the current year.

2

Return on average equity and average tangible equity for Head Office and Barclays Non-Core represents their impact on Barclays Core and the Group  respectively. This does not represent the return on average equity and average tangible equity of Head Office or the Non-Core business.

 

 

 

   Barclays PLC    20    LOGO     


Appendix II – Performance Management

 

 

 

     Nine Months Ended      Nine Months Ended  
     30.09.14      30.09.13  
Profit/(Loss) Attributable to Ordinary Equity Holders of the Parent2      £m         £m   

Personal and Corporate Banking

     1,629          1,399   

Barclaycard

     805          653   

Africa Banking

     272          325   

Investment Bank

     559          1,381   

Head Office

     (11)         (279)   

Barclays Core

     3,254          3,479   

Barclays Non-Core

     (629)         (896)   

Barclays Group adjusted total4

     2,625          2,583  

Barclays Group statutory total

     1,542          1,182   
    

 

Average Allocated Equity

 
     Nine Months Ended      Nine Months Ended  
     30.09.14      30.09.13  
       £bn         £bn   

Personal and Corporate Banking

     17.3          17.3   

Barclaycard

     5.8          5.3   

Africa Banking

     3.8          4.5   

Investment Bank

     15.3  &n