Barclays(BCS) - 2023 Q1 - Quarterly Report

Introduction and General Information This section outlines the document's purpose, defines key financial terms and reporting periods, and provides a cautionary note on forward-looking statements Document Purpose and Scope This document amends a previously published Results Announcement to comply with US SEC regulations, providing additional disclosure and reconciliation of non-IFRS figures to IFRS - Purpose: Comply with US SEC regulations (Regulation G and Item 10(e) of Regulation S-K) by providing additional disclosure and reconciliation of non-IFRS figures to IFRS[3] - Status: This document does not update or otherwise supplement the information contained in the previously published Results Announcement[3] Notes and Definitions This section defines key terms, clarifies reporting periods for financial analysis, and explains the use and reconciliation of non-IFRS performance measures - Income statement analysis compares the three months ended 31 March 2023 to the corresponding three months of 2022[6] - Balance sheet analysis as at 31 March 2023 is compared with comparatives relating to 31 December 2022 and 31 March 2022[6] - Non-IFRS performance measures provide valuable information for comparing business performance and monitoring operating targets, but are not a substitute for IFRS measures[10] Forward-Looking Statements This section cautions that forward-looking statements are not guarantees of future performance and actual results may differ due to various risks - Forward-looking statements are not a guarantee of future performance, and actual results could differ materially due to inherent risks and uncertainties[12] - Factors that may affect results include changes in legislation, regulation, IFRS, legal proceedings, governmental policies, macroeconomic conditions (e.g., inflation), market volatility, and geopolitical risks[12] - Barclays PLC undertakes no obligation to publicly update or revise any forward-looking statements[13] Performance Highlights This section presents Barclays' key financial metrics for Q1 2023, summarizes overall performance with double-digit returns, and outlines the Group's targets and outlook for 2023 Key Financial Metrics (Q1 2023) This section provides a concise overview of Barclays' key financial metrics for Q1 2023, including income, profitability ratios, earnings per share, and capital and liquidity indicators Key Financial Metrics (Q1 2023) | Metric | Value | | :--- | :--- | | Income | £7.2 billion | | Cost: income ratio | 57% | | LLR | 52 basis points | | Profit before tax | £2.6 billion | | Attributable profit | £1.8 billion | | RoE | 12.8% | | RoTE | 15.0% | | EPS | 11.3 pence | | LCR | 163% | | Loan: deposit ratio | 73% | | NAV per share | 356 pence | | TNAV per share | 301 pence | | CET1 ratio | 13.6% | Q1 2023 Performance Summary Barclays delivered strong Q1 2023 results with double-digit returns across all operating divisions, driven by increased income and robust capital ratios - Group attributable profit was £1.8 billion, with RoE of 12.8% and RoTE of 15.0%, and all operating divisions achieving double-digit returns[17] - Group income increased 11% year-on-year to £7.2 billion, driven by a 19% increase in Barclays UK income (higher rates, structural hedge), a 1% increase in Corporate and Investment Bank (CIB) income (record Q1 performance), and a 47% increase in Consumer, Cards and Payments (CC&P) income (US cards growth, higher rates)[17] - Group operating expenses were stable at £4.1 billion, but excluding litigation and conduct charges, they increased to £4.1 billion (Q1 2022: £3.6 billion) due to business growth, inflation, and USD appreciation[17] - Credit impairment charges were £0.5 billion (LLR of 52 basis points), within the guided range, reflecting higher US cards balances and anticipated normalization of delinquencies[17] - The CET1 ratio was 13.6% (December 2022: 13.9%), reflecting expected capital impacts and seasonally higher Risk Weighted Assets (RWAs)[17] - Liquidity coverage ratio (LCR) was 163% and Net Stable Funding Ratio (NSFR) was 139%, both well above regulatory minimum requirements[17] Group Targets and Outlook Barclays is on track to meet its 2023 targets, aiming for a Return on Tangible Equity (RoTE) greater than 10% and a Barclays UK Net Interest Margin (NIM) exceeding 3.20% - Targeting RoTE of greater than 10% in 2023, consistent with the medium-term target[20] - Barclays UK Net Interest Margin (NIM) is expected to be greater than 3.20% in 2023, assuming the UK bank rate peaks at 4.25%[20] - Targeting a cost: income ratio percentage in the low 60s in 2023, with a medium-term target of below 60%[20] - Expect an LLR of 50-60 basis points in 2023, based on the current macroeconomic outlook[20] - Expect to operate within the CET1 ratio medium-term target range of 13-14%[20] - Capital distribution policy incorporates a progressive ordinary dividend, supplemented with share buybacks as appropriate[20] Barclays Group Results Overview This section provides a consolidated overview of Barclays Group's Q1 2023 income statement, balance sheet, and capital management, highlighting key financial performance and stability metrics Consolidated Income Statement Summary Barclays Group reported a 16% increase in profit before tax to £2,598 million and a 27% increase in attributable profit to £1,783 million for Q1 2023 Barclays Group Income Statement Highlights (Q1 2023 vs Q1 2022) | Metric | Q1 2023 (£ million) | Q1 2022 (£ million) | % Change | | :--- | :--- | :--- | :--- | | Total income | 7,237 | 6,496 | 11 | | Operating costs | (4,111) | (3,588) | (15) | | Litigation and conduct | 1 | (523) | | | Total operating expenses | (4,110) | (4,111) | — | | Profit before tax | 2,598 | 2,234 | 16 | | Attributable profit | 1,783 | 1,404 | 27 | | Return on average tangible shareholders' equity | 15.0% | 11.5% | | | Cost: income ratio | 57% | 63% | | | Loan loss rate (basis points) | 52 | 15 | | | Basic earnings per share | 11.3 pence | 8.4 pence | | Consolidated Balance Sheet and Capital Management Summary As of 31 March 2023, Barclays' total assets increased to £1,539.1 billion, with strong CET1, liquidity, and tangible net asset value per share Barclays Group Balance Sheet and Capital Management (As at 31 March 2023 vs 31 December 2022 vs 31 March 2022) | Metric | As at 31.03.23 (£ billion) | As at 31.12.22 (£ billion) | As at 31.03.22 (£ billion) | | :--- | :--- | :--- | :--- | | Loans and advances at amortised cost | 403.5 | 398.8 | 371.7 | | Total assets | 1,539.1 | 1,513.7 | 1,496.1 | | Deposits at amortised cost | 555.7 | 545.8 | 546.5 | | Net asset value per share | 356 pence | 347 pence | 342 pence | | Tangible net asset value per share | 301 pence | 295 pence | 294 pence | | Common equity tier 1 ratio | 13.6% | 13.9% | 13.8% | | Risk weighted assets | 338.4 | 336.5 | 328.8 | | UK leverage ratio | 5.1% | 5.3% | 5.0% | | Group liquidity pool | 333.0 | 318.0 | 319.8 | | Liquidity coverage ratio | 163% | 165% | 159% | | Net stable funding ratio | 139% | 137% | | | Loan: deposit ratio | 73% | 73% | 68% | Group Finance Director's Review This section details Barclays' Q1 2023 financial performance across the Group, Barclays UK, Barclays International, and Head Office, along with updates on capital, leverage, funding, liquidity, and the KMC acquisition Overall Group Performance Barclays achieved a profit before tax of £2,598 million and attributable profit of £1,783 million in Q1 2023, with RoE of 12.8% and RoTE of 15.0% - Profit before tax increased to £2,598 million (Q1 2022: £2,234 million), with RoE of 12.8% (Q1 2022: 9.9%) and RoTE of 15.0% (Q1 2022: 11.5%)[27] - Group income increased 11% to £7,237 million, primarily driven by higher interest rates, structural hedge income momentum, and growth in US cards balances[27] - Group operating expenses were stable at £4,110 million (Q1 2022: £4,111 million), with the prior year including £523 million in litigation and conduct charges[27] - Credit impairment charges increased to £524 million (Q1 2022: £141 million), reflecting higher US cards balances and anticipated normalization of delinquencies[27] - Total assets increased to £1,539.1 billion (December 2022: £1,513.7 billion), driven by increased trading and client activity in Global Markets and the acquisition of Kensington Mortgage Company (KMC)[27] Barclays UK Performance Barclays UK delivered a 27% increase in profit before tax to £754 million, achieving a RoE of 14.8% and RoTE of 20.0%, driven by strong net interest income growth - Profit before tax increased 27% to £754 million, with RoE of 14.8% and RoTE of 20.0%[27] - Total income increased 19% to £1,961 million, driven by a 21% increase in Net Interest Income (NII) to £1,618 million, resulting in a Net Interest Margin (NIM) of 3.18%[27] - Operating expenses increased 9% to £1,094 million due to inflation, with ongoing efficiency savings reinvested in digitisation[27] - Credit impairment charges were £113 million (Q1 2022: £48 million), reflecting limited observed deterioration, and UK cards 30 and 90 day arrears remained below pre-pandemic levels[27] - Loans and advances to customers increased 2% to £208.2 billion, primarily reflecting the acquisition of Kensington Mortgage Company (KMC)[27] - Customer deposits decreased 1% to £254.3 billion, with the loan: deposit ratio increasing to 90% (December 2022: 87%)[27] Barclays International Performance Barclays International's profit before tax increased 13% to £1,928 million, with RoE of 14.2% and RoTE of 14.5%, driven by 9% total income growth - Profit before tax increased 13% to £1,928 million, with RoE of 14.2% and RoTE of 14.5%[30] - Total income increased to £5,282 million (Q1 2022: £4,824 million), positively impacted by the appreciation of average USD against GBP[30] - Total operating expenses decreased 2% to £2,953 million. Excluding litigation and conduct, expenses increased 18% to £2,956 million, reflecting continued investment, USD appreciation, and inflation[30] - Credit impairment charges were £404 million (Q1 2022: £101 million), reflecting higher balances and the continuing normalization anticipated in US cards delinquencies[30] Corporate and Investment Bank (CIB) Performance CIB income increased 1% to £3,976 million, representing a record Q1 performance, driven by strong transaction banking and advisory, despite declines in Global Markets and Investment Banking fees - CIB income increased 1% to £3,976 million, representing a record Q1 income performance on a comparable basis[30] - Global Markets income decreased 8% to £2,492 million against a record prior year comparative, with FICC income up 9% and Equities income down 33%[30] - Investment Banking fees decreased 7% to £603 million due to a reduced industry fee pool, partially offset by a strong performance in advisory[30] - Transaction banking income increased 68% to £786 million, representing the best Q1 performance, driven by improved margins in deposits[30] - CIB operating expenses excluding litigation and conduct charges increased 15% to £2,202 million due to investment in talent and technology, USD appreciation, and inflation[30] Consumer, Cards and Payments (CC&P) Performance CC&P income increased 47% to £1,306 million, driven by growth in US cards balances and Private Bank client assets, though operating expenses and credit impairment also rose significantly - CC&P income increased 47% to £1,306 million, driven by growth in US cards balances (including the Gap portfolio acquisition) and growth in client assets and liabilities in the Private Bank[30] - International Cards and Consumer Bank income increased 67% to £900 million[30] - Private Bank income increased 21% to £258 million[30] - CC&P operating expenses excluding litigation and conduct charges increased 29% to £754 million, driven by higher investment spend in marketing and partnership costs (including Gap portfolio acquisition), USD appreciation, and inflation[30] - CC&P credit impairment charges increased to £371 million (Q1 2022: £134 million), reflecting higher US cards balances and normalization of delinquencies[30] Head Office Performance Head Office reported an increased loss before tax of £84 million in Q1 2023, with total income as an expense of £6 million, impacted by the absence of a prior year one-off gain - Loss before tax was £84 million (Q1 2022: £73 million loss)[30] - Total income was an expense of £6 million (Q1 2022: £23 million income), with the prior year including a one-off gain of £86 million from the sale and leaseback of UK data centres[30] - Total operating expenses were £63 million (Q1 2022: £86 million)[30] Capital Distributions Barclays paid the 2022 full-year dividend of 5.0 pence and completed a £0.5 billion share buyback programme in Q1 2023, maintaining a progressive ordinary dividend policy - Barclays paid the 2022 full year dividend of 5.0 pence on 31 March 2023[34] - The £0.5 billion share buyback programme announced at FY22 results was completed on 14 April 2023[34] - The capital distribution policy includes a progressive ordinary dividend, supplemented with share buybacks as appropriate, balancing capital strength, shareholder returns, and business investment[34] Group Capital and Leverage The CET1 ratio decreased by approximately 30 basis points to 13.6% in Q1 2023, primarily due to a £0.9 billion decrease in CET1 capital and a £1.9 billion increase in Risk Weighted Assets (RWAs) - The CET1 ratio decreased by c.30 basis points to 13.6% (December 2022: 13.9%)[34] - CET1 capital decreased by £0.9 billion to £46.0 billion, and RWAs increased by £1.9 billion to £338.4 billion[34] - Key capital impacts included a c.50 basis points increase from attributable profit, offset by a c.40 basis points aggregate decrease from the £0.5 billion share buyback, IFRS 9 transitional relief, and the KMC acquisition[34] - The UK leverage ratio decreased to 5.1% (December 2022: 5.3%) due to a £38.9 billion increase in leverage exposure and a £0.4 billion decrease in Tier 1 capital[34] - UK leverage exposure increased to £1,168.9 billion (December 2022: £1,130.0 billion), largely due to an increase in securities financing transactions (SFT) client and trading activity within Global Markets[34] Group Funding and Liquidity Barclays' funding and liquidity position remained robust in Q1 2023, with the liquidity pool increasing to £333.0 billion and LCR and NSFR significantly exceeding regulatory minimums - The liquidity pool increased to £333.0 billion (December 2022: £318.0 billion), driven by growth in deposits and increased wholesale funding[34] - The composition of the liquidity pool is conservative, with 82% held in cash and deposits with central banks[34] - Total deposits increased to £555.7 billion (December 2022: £545.8 billion)[34] - The Liquidity Coverage Ratio (LCR) was 163% (December 2022: 165%), equivalent to a surplus of £122.0 billion above the 100% regulatory requirement[34] - The Net Stable Funding Ratio (NSFR) was 139% (December 2022: 137%), representing a £166.7 billion surplus above the 100% regulatory requirement[34] - The Group has a strong MREL position with a ratio of 32.7%, exceeding the regulatory requirement of 29% plus a confidential PRA buffer[34] Other Matters (KMC Acquisition) Barclays completed the acquisition of UK specialist mortgage lender Kensington Mortgage Company (KMC) on 1 March 2023, adding a £2.2 billion mortgage portfolio and enhancing product capabilities - Barclays completed the acquisition of UK specialist mortgage lender Kensington Mortgage Company (KMC) on 1 March 2023[33] - The acquisition included a portfolio of mortgages totalling £2.2 billion with an RWA impact of £0.8 billion[33] - The transaction broadens Barclays' existing mortgage product range and enhances its product capabilities consistent with its strategic priority to deliver next-generation, digitised consumer financial services[33] Detailed Business Segment Results (Quarterly) This section provides a detailed quarterly breakdown of financial results for Barclays UK, Barclays International (including CIB and CC&P), and Head Office, covering income statements and balance sheets Barclays UK Quarterly Results Barclays UK reported strong Q1 2023 results with total income of £1,961 million, driven by a 21% increase in net interest income and a Net Interest Margin (NIM) of 3.18% Barclays UK Income Statement Highlights (Q1 2023 vs Q1 2022) | Income statement information | 31.03.23 (£ million) | 31.03.22 (£ million) | % Change | | :--- | :--- | :--- | :--- | | Net interest income | 1,618 | 1,339 | 21 | | Net fee, commission and other income | 343 | 310 | 11 | | Total income | 1,961 | 1,649 | 19 | | Total operating expenses | (1,094) | (1,007) | (9) | | Credit impairment charges | (113) | (48) | | | Profit before tax | 754 | 594 | 27 | | Attributable profit | 515 | 396 | 30 | Barclays UK Balance Sheet Highlights (As at 31 March 2023 vs 31 December 2022) | Balance sheet information | As at 31.03.23 (£ billion) | As at 31.12.22 (£ billion) | | :--- | :--- | :--- | | Loans and advances to customers at amortised cost | 208.2 | 205.1 | | Customer deposits at amortised cost | 254.3 | 258.0 | | Loan: deposit ratio | 90% | 87% | | Risk weighted assets | 74.6 | 73.1 | - Net interest margin (NIM) for Barclays UK increased to 3.18% in Q1 2023 from 2.62% in Q1 2022, showing a consistent upward trend over recent quarters[35][50] Barclays International Quarterly Results Barclays International reported total income of £5,282 million in Q1 2023, a 9% increase year-on-year, with net interest income surging 45% to £1,354 million and profit before tax of £1,928 million Barclays International Income Statement Highlights (Q1 2023 vs Q1 2022) | Income statement information | 31.03.23 (£ million) | 31.03.22 (£ million) | % Change | | :--- | :--- | :--- | :--- | | Net interest income | 1,354 | 936 | 45 | | Net trading income | 2,419 | 2,446 | (1) | | Net fee, commission and other income | 1,509 | 1,442 | 5 | | Total income | 5,282 | 4,824 | 9 | | Total operating expenses | (2,953) | (3,018) | 2 | | Credit impairment charges | (404) | (101) | | | Profit before tax | 1,928 | 1,713 | 13 | | Attributable profit | 1,348 | 1,300 | 4 | Barclays International Balance Sheet Highlights (As at 31 March 2023 vs 31 December 2022) | Balance sheet information | As at 31.03.23 (£ billion) | As at 31.12.22 (£ billion) | | :--- | :--- | :--- | | Loans and advances to customers at amortised cost | 131.0 | 133.7 | | Deposits at amortised cost | 301.6 | 287.6 | | Loan: deposit ratio | 57% | 59% | | Risk weighted assets | 255.1 | 254.8 | - Net interest margin (NIM) for Barclays International increased to 5.87% in Q1 2023 from 4.15% in Q1 2022, demonstrating a strong upward trend[40][52] Corporate and Investment Bank (CIB) Quarterly Results CIB reported a 1% increase in total income to £3,976 million and profit before tax of £1,744 million in Q1 2023, with strong transaction banking growth offsetting declines in Global Markets and Investment Banking fees CIB Income Statement Highlights (Q1 2023 vs Q1 2022) | Income statement information | 31.03.23 (£ million) | 31.03.22 (£ million) | % Change | | :--- | :--- | :--- | :--- | | Net interest income | 465 | 385 | 21 | | Net trading income | 2,437 | 2,450 | (1) | | Net fee, commission and other income | 1,074 | 1,103 | (3) | | Total income | 3,976 | 3,938 | 1 | | Total operating expenses | (2,199) | (2,239) | 2 | | Credit impairment (charges)/releases | (33) | 33 | | | Profit before tax | 1,744 | 1,732 | 1 | | Attributable profit | 1,209 | 1,316 | (8) | CIB Balance Sheet Highlights (As at 31 March 2023 vs 31 December 2022) | Balance sheet information | As at 31.03.23 (£ billion) | As at 31.12.22 (£ billion) | | :--- | :--- | :--- | | Loans and advances to customers at amortised cost | 89.2 | 90.5 | | Deposits at amortised cost | 221.0 | 205.8 | | Risk weighted assets | 216.8 | 215.9 | - Global Markets income was £2,492 million (Q1 2022: £2,696 million), with FICC up 9% to £1,788 million and Equities down 33% to £704 million[42] - Investment Banking fees were £603 million (Q1 2022: £648 million), with Advisory income increasing 15% to £212 million[42] - Transaction banking income increased 68% to £786 million[42] Consumer, Cards and Payments (CC&P) Quarterly Results CC&P reported a 47% increase in total income to £1,306 million in Q1 2023, driven by strong growth in net interest income and a return to profit before tax CC&P Income Statement Highlights (Q1 2023 vs Q1 2022) | Income statement information | 31.03.23 (£ million) | 31.03.22 (£ million) | % Change | | :--- | :--- | :--- | :--- | | Net interest income | 889 | 551 | 61 | | Net fee, commission, trading and other income | 417 | 335 | 24 | | Total income | 1,306 | 886 | 47 | | Total operating expenses | (754) | (779) | 3 | | Credit impairment charges | (371) | (134) | | | Profit/(loss) before tax | 184 | (19) | | | Attributable profit/(loss) | 139 | (16) | | CC&P Balance Sheet Highlights (As at 31 March 2023 vs 31 December 2022) | Balance sheet information | As at 31.03.23 (£ billion) | As at 31.12.22 (£ billion) | | :--- | :--- | :--- | | Loans and advances to customers at amortised cost | 41.8 | 43.2 | | Total assets | 88.3 | 80.2 | | Deposits at amortised cost | 80.6 | 81.8 | | Risk weighted assets | 38.2 | 38.9 | - International Cards and Consumer Bank income increased 67% to £900 million[43] - Private Bank income increased 21% to £258 million[43] - Payments income increased 10% to £148 million[43] Head Office Quarterly Results Head Office reported a total income expense of £6 million in Q1 2023, leading to a loss before tax of £84 million and an attributable loss of £80 million Head Office Income Statement Highlights (Q1 2023 vs Q1 2022) | Income statement information | 31.03.23 (£ million) | 31.03.22 (£ million) | % Change | | :--- | :--- | :--- | :--- | | Net interest income | 81 | 66 | 23 | | Net fee, commission and other income | (87) | (43) | | | Total income | (6) | 23 | | | Total operating expenses | (63) | (86) | 27 | | Loss before tax | (84) | (73) | (15) | | Attributable loss | (80) | (292) | 73 | Head Office Balance Sheet Highlights (As at 31 March 2023 vs 31 December 2022) | Balance sheet information | As at 31.03.23 (£ billion) | As at 31.12.22 (£ billion) | | :--- | :--- | :--- | | Total assets | 19.1 | 19.2 | | Risk weighted assets | 8.8 | 8.6 | Performance Management: Margins and Balances This section analyzes the Group's Net Interest Margin (NIM) performance, highlighting drivers of change, and details contributions from the structural hedge Net Interest Margin (NIM) Analysis The Group's combined Net Interest Margin (NIM) for Barclays UK and Barclays International significantly increased by 100 basis points from 3.06% in Q1 2022 to 4.06% in Q1 2023 - The combined Net Interest Margin (NIM) for Barclays UK and Barclays International increased by 100 basis points from 3.06% in Q1 2022 to 4.06% in Q1 2023[62] - This increase was driven by the higher interest rate environment, continued structural hedge income momentum, and higher balances in CC&P (including the Gap portfolio acquisition)[62] - The positive drivers were partially offset by Mortgage margin compression and lower interest-earning lending in UK Cards[62] Net Interest Income and Margin by Segment (Q1 2023 vs Q1 2022) | Segment | Q1 2023 Net Interest Income (£ million) | Q1 2023 Net Interest Margin (%) | Q1 2022 Net Interest Income (£ million) | Q1 2022 Net Interest Margin (%) | | :--- | :--- | :--- | :--- | :--- | | Barclays UK | 1,618 | 3.18 | 1,339 | 2.62 | | Corporate and Investment Bank | 551 | 3.95 | 316 | 2.52 | | Consumer, Cards and Payments | 889 | 8.42 | 551 | 6.56 | | Barclays International | 1,440 | 5.87 | 867 | 4.15 | | Total Barclays UK and Barclays International | 3,058 | 4.06 | 2,206 | 3.06 | Structural Hedge Contributions As at 31 March 2023, the Group's combined product and equity structural hedge notional amount was £260 billion, with gross contributions significantly increasing to £773 million - The Group's combined product and equity structural hedge notional amount as at 31 March 2023 was £260 billion (31 March 2022: £238 billion)[63] - Gross structural hedge contributions were £773 million in Q1 2023 (Q1 2022: £378 million)[63] - Net structural hedge contributions were £(1,709) million in Q1 2023 (Q1 2022: £141 million)[63] Credit Risk Analysis This section provides a detailed analysis of Barclays' credit risk, including loans and advances by stage and product, measurement uncertainty, macroeconomic variables, and scenario probability weighting for Expected Credit Loss (ECL) calculations Loans and Advances at Amortised Cost by Stage As at 31 March 2023, Barclays' total loans and advances at amortised cost amounted to £409,284 million, with an impairment allowance of £5,736 million, resulting in a total coverage ratio of 1.4% Loans and Advances at Amortised Cost by Stage (As at 31 March 2023) | Segment | Gross Exposure (£ million) | Impairment Allowance (£ million) | Coverage Ratio (%) | | :--- | :--- | :--- | :--- | | Barclays UK Retail | 191,038 | 1,490 | 0.8 | | Barclays International Retail | 38,829 | 2,681 | 6.9 | | Head Office Retail | 4,293 | 353 | 8.2 | | Total Barclays Group Retail | 234,160 | 4,524 | 1.9 | | Barclays UK Wholesale | 38,479 | 275 | 0.7 | | Barclays International Wholesale | 136,401 | 920 | 0.7 | | Head Office Wholesale | 244 | 17 | 7.0 | | Total Barclays Group Wholesale | 175,124 | 1,212 | 0.7 | | Total loans and advances at amortised cost | 409,284 | 5,736 | 1.4 | - The total loan impairment charge for Q1 2023 was £542 million, resulting in an annualised loan loss rate of 54 basis points[68][70] Loans and Advances at Amortised Cost by Product As at 31 March 2023, home loans represented the largest product category with £178,017 million gross exposure, while credit cards and unsecured loans had a 7.2% coverage ratio Loans and Advances at Amortised Cost by Product (As at 31 March 2023) | Product | Gross Exposure (£ million) | Impairment Allowance (£ million) | Coverage Ratio (%) | | :--- | :--- | :--- | :--- | | Home loans | 178,017 | 520 | 0.3 | | Credit cards, unsecured loans and other retail lending | 52,710 | 3,789 | 7.2 | | Wholesale loans | 178,557 | 1,427 | 0.8 | | Total | 409,284 | 5,736 | 1.4 | Measurement Uncertainty and Macroeconomic Variables The Q1 2023 Expected Credit Loss (ECL) provision is based on Q4 2022 macroeconomic indicators, with post-model adjustments of £0.3 billion for elevated inflation's impact on customer affordability - The Q1 2023 ECL provision is based on macroeconomic indicators used in the Q4 2022 ECL scenario, rolled forward and updated to reflect changes in balances, risk parameters, and individually assessed impaired names[77] - Latest macroeconomic updates show slight improvements in certain key variables but remain materially in line with the Q4 2022 scenario, hence not reflected in the Q1 2023 ECL modelled provision level[78] - Post-model adjustments of £0.3 billion (31 December 2022: £0.3 billion) were included to address the potential impact of elevated inflation on customer affordability[79] Baseline Average Macroeconomic Variables (2023-2027, as at 31 March 2023) | Variable | 2023 (%) | 2024 (%) | 2025 (%) | 2026 (%) | 2027 (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | UK GDP | (0.6) | 0.5 | 1.6 | 1.9 | 1.8 | | UK unemployment | 4.3 | 4.6 | 4.2 | 4.2 | 4.2 | | UK HPI | (4.2) | (2.5) | 1.7 | 2.2 | 2.2 | | UK bank rate | 4.2 | 4.3 | 3.8 | 3.6 | 3.3 | | US GDP | 0.4 | 0.9 | 1.5 | 1.5 | 1.5 | | US unemployment | 4.1 | 4.7 | 4.7 | 4.7 | 4.7 | | US HPI | 1.5 | 1.5 | 2.1 | 2.4 | 2.4 | | US federal funds rate | 4.7 | 3.9 | 3.2 | 3.0 | 3.0 | Scenario Probability Weighting Barclays utilizes five macroeconomic scenarios for Expected Credit Loss (ECL) calculations, with the Baseline scenario maintaining the highest probability weighting at 39.4% as at 31 March 2023 Scenario Probability Weighting (As at 31 March 2023 vs 31 December 2022) | Scenario | As at 31.03.23 (%) | As at 31.12.22 (%) | | :--- | :--- | :--- | | Upside 2 | 10.9 | 10.9 | | Upside 1 | 23.1 | 23.1 | | Baseline | 39.4 | 39.4 | | Downside 1 | 17.6 | 17.6 | | Downside 2 | 9.0 | 9.0 | Treasury and Capital Risk This section details Barclays' regulatory minimum requirements for capital, leverage, and MREL, along with an overview of capital ratios, resources, movements in CET1 capital, Risk Weighted Assets (RWAs), and MREL position Regulatory Minimum Requirements (Capital, Leverage, MREL) Barclays' Overall Capital Requirement for CET1 is 11.4%, with a UK leverage ratio requirement of 4.0% and MREL set at the higher of 24.5% of RWAs or 6.75% of leverage exposures - The Group's Overall Capital Requirement for CET1 is 11.4%, composed of a 4.5% Pillar 1 minimum, 2.5% Capital Conservation Buffer (CCB), 1.5% Global Systemically Important Institution (G-SII) buffer, 2.4% Pillar 2A requirement, and 0.5% Countercyclical Capital Buffer (CCyB)[94] - The UK CCyB rate will be increased from 1% to 2% with effect from 5 July 2023[95] - The Group's CET1 target ratio of 13-14% includes headroom above requirements, such as a confidential institution-specific PRA buffer[97] - The Group is subject to a UK leverage ratio requirement of 4.0%, comprising a 3.25% minimum, a 0.53% G-SII additional leverage ratio buffer (G-SII ALRB), and a 0.2% countercyclical leverage ratio buffer (CCLB)[98] - The Group is required to meet MREL, which is the higher of (i) 24.5% of RWAs or (ii) 6.75% of leverage exposures, with regulatory capital and leverage buffers applied above MREL requirements[100] Capital Ratios and Resources As at 31 March 2023, Barclays' CET1 ratio was 13.6%, Tier 1 ratio was 17.6%, and Total regulatory capital ratio was 20.2%, with CET1 capital at £45,985 million Capital Ratios (As at 31 March 2023 vs 31 December 2022) | Capital ratios | As at 31.03.23 | As at 31.12.22 | | :--- | :--- | :--- | | CET1 | 13.6% | 13.9 % | | T1 | 17.6% | 17.9 % | | Total regulatory capital | 20.2% | 20.8 % | Capital Resources (As at 31 March 2023 vs 31 December 2022) | Capital resources | 31.03.23 (£ million) | 31.12.22 (£ million) | | :--- | :--- | :--- | | CET1 capital | 45,985 | 46,878 | | AT1 capital | 13,724 | 13,224 | | T1 capital | 59,709 | 60,102 | | Total regulatory capital | 68,214 | 70,072 | | Total RWAs | 338,448 | 336,518 | - The fully loaded CET1 ratio, relevant for assessing against the conversion trigger in Barclays PLC AT1 securities, was 13.5% as at 31 March 2023[104] Movement in CET1 Capital CET1 capital decreased by £0.9 billion to £46.0 billion in Q1 2023, with profit generation offset by distributions, currency translation, goodwill deductions, and reduced IFRS 9 transitional relief - CET1 capital decreased £0.9 billion to £46.0 billion (December 2022: £46.9 billion)[105] - £2.0 billion of capital was generated from profit, partially offset by £1.1 billion in distributions (equity coupons, buybacks, FY23 dividend accrual)[106][107] - Other significant movements included a £0.5 billion decrease in the currency translation reserve (due to USD depreciation against GBP)[107] - A £0.4 billion increase in the goodwill and intangibles deduction, primarily as a result of the acquisition of KMC[107] - A £0.5 billion decrease in IFRS 9 transitional relief, due to the reduction of relief percentages applied to impairment charges[107] Risk Weighted Assets (RWAs) by Risk Type and Business Overall Risk Weighted Assets (RWAs) increased by £1.9 billion to £338.4 billion in Q1 2023, primarily driven by a £2.8 billion increase in market risk RWAs from increased client and trading activity - Overall RWAs increased £1.9 billion to £338.4 billion (December 2022: £336.5 billion)[109] - Credit risk RWAs decreased £1.3 billion, primarily due to a £2.6 billion decrease from foreign exchange movements and a £1.1 billion decrease in book size from CIB business activities[109] - Counterparty Credit risk RWAs increased £0.4 billion, driven by a £1.2 billion increase in book size due to SFT client and trading activity within Global Markets, partially offset by FX movements[109] - Market risk RWAs increased £2.8 billion, mainly due to a £3.1 billion increase in book size from increased client and trading activity within Global Markets[109] RWAs by Risk Type (As at 31 March 2023 vs 31 December 2022) | Risk Type | 31.03.23 (£ million) | 31.12.22 (£ million) | | :--- | :--- | :--- | | Credit risk | 212,567 | 213,873 | | Counterparty credit risk | 42,425 | 41,996 | | Market risk | 39,591 | 36,834 | | Operational risk | 43,865 | 43,815 | | Total RWAs | 338,448 | 336,518 | Leverage Ratios The UK leverage ratio decreased to 5.1% in Q1 2023, primarily due to a £38.9 billion increase in leverage exposure from Global Markets activity and a £0.4 billion decrease in Tier 1 capital - The UK leverage ratio decreased to 5.1% (December 2022: 5.3%)[112] - This decrease was primarily due to a £38.9 billion increase in leverage exposure and a £0.4 billion decrease in Tier 1 capital[112] - The UK leverage exposure increased to £1,168.9 billion (December 2022: £1,130.0 billion), largely due to an increase in SFT client and trading activity within Global Markets[112] - The average UK leverage ratio remained at 4.8% (December 2022: 4.8%)[113] Leverage Ratios (As at 31 March 2023 vs 31 December 2022) | Metric | As at 31.03.23 | As at 31.12.22 | | :--- | :--- | :--- | | Average UK leverage ratio | 4.8% | 4.8% | | UK leverage ratio | 5.1% | 5.3% | | UK leverage exposure (£ million) | 1,168,899 | 1,129,973 | | T1 capital (£ million) | 59,709 | 60,102 | MREL (Minimum Requirement for Own Funds and Eligible Liabilities) As at 31 March 2023, Barclays PLC held £110.6 billion of own funds and eligible liabilities, equating to 32.7% of Risk Weighted Assets (RWAs), significantly exceeding the MREL requirement - As at 31 March 2023, Barclays PLC held £110.6 billion of own funds and eligible liabilities, equating to 32.7% of RWAs[114] - This was in excess of the Group's MREL requirement, excluding the PRA buffer, to hold £98.2 billion of own funds and eligible liabilities equating to 29% of RWAs[114] Own Funds and Eligible Liabilities (As at 31 March 2023 vs 31 December 2022) | Metric | As at 31.03.23 (£ million) | As at 31.12.22 (£ million) | | :--- | :--- | :--- | | CET1 capital | 45,985 | 46,878 | | AT1 capital instruments and related share premium accounts | 13,724 | 13,224 | | T2 capital instruments and related share premium accounts | 7,444 | 8,875 | | Eligible liabilities | 43,489 | 43,851 | | Total Barclays PLC own funds and eligible liabilities | 110,642 | 112,828 | | Total RWAs | 338,448 | 336,518 | | Total UK leverage exposure | 1,168,899 | 1,129,973 | | Own funds and eligible liabilities ratios as a percentage of: | | | | Total RWAs | 32.7% | 33.5% | | Total UK leverage exposure | 9.5% | 10.0% | Condensed Consolidated Financial Statements This section presents Barclays' condensed consolidated income statement, balance sheet, and statement of changes in equity for Q1 2023, providing a statutory overview of financial performance and position Condensed Consolidated Income Statement For Q1 2023, Barclays reported total income of £7,237 million, with profit before tax of £2,598 million and attributable profit of £1,783 million, resulting in basic earnings per share of 11.3 pence Condensed Consolidated Income Statement (Three months ended 31 March 2023 vs 31 March 2022) | Metric | 31.03.23 (£ million) | 31.03.22 (£ million) | | :--- | :--- | :--- | | Total income | 7,237 | 6,496 | | Operating expenses excluding litigation and conduct | (4,111) | (3,588) | | Litigation and conduct | 1 | (523) | | Operating expenses | (4,110) | (4,111) | | Profit before impairment | 3,122 | 2,375 | | Credit impairment charges | (524) | (141) | | Profit before tax | 2,598 | 2,234 | | Tax charge | (561) | (614) | | Profit after tax | 2,037 | 1,620 | | Attributable to equity holders of the parent | 1,783 | 1,404 | | Basic earnings per ordinary share | 11.3 pence | 8.4 pence | Condensed Consolidated Balance Sheet As at 31 March 2023, Barclays reported total assets of £1,539,050 million, with loans and advances at amortised cost amounting to £403,548 million, and total equity of £70,655 million Condensed Consolidated Balance Sheet (As at 31 March 2023 vs 31 December 2022) | Metric | 31.03.23 (£ million) | 31.12.22 (£ million) | | :--- | :--- | :--- | | Assets: | | | | Cash and balances at central banks | 265,874 | 256,351 | | Loans and advances at amortised cost | 403,548 | 398,779 | | Total assets | 1,539,050 | 1,513,699 | | Liabilities: | | | | Deposits at amortised cost | 555,724 | 545,782 | | Debt securities in issue | 116,647 | 112,881 | | Total liabilities | 1,468,395 | 1,444,439 | | Equity: | | | | Shareholders' equity attributable to ordinary shareholders of the parent | 55,915 | 55,008 | | Total equity | 70,655 | 69,260 | Condensed Consolidated Statement of Changes in Equity Total equity increased from £69,260 million at 1 January 2023 to £70,655 million at 31 March 2023, driven by profit after tax and equity instrument issues, partially offset by dividends and share repurchases - Total equity increased from £69,260 million at 1 January 2023 to £70,655 million at 31 March 2023[122] - Key drivers of the change included £2,037 million profit after tax and £495 million from the issue and redemption of other equity instruments[122] - Offsetting factors included £801 million in dividends paid (to ordinary shareholders and non-controlling interests) and £276 million from the repurchase of shares[122] Appendix: Non-IFRS Performance Measures This appendix provides detailed reconciliations and definitions for key non-IFRS performance measures, including Return on Tangible Equity (RoTE), Tangible Net Asset Value (TNAV) per share, Return on Average Equity (RoE), and the impact of notable items Returns (RoTE) The Group's Return on Average Tangible Equity (RoTE) for Q1 2023 was 15.0%, an increase from 11.5% in Q1 2022, with all business segments delivering positive RoTE - Return on average tangible equity (RoTE) for Barclays Group was 15.0% in Q1 2023, up from 11.5% in Q1 2022[126] - All business segments delivered positive RoTE, with Barclays UK at 20.0% and Corporate and Investment Bank (CIB) at 15.2%[126] - RoTE is calculated as profit after tax attributable to ordinary equity holders of the parent as a proportion of average tangible equity, excluding non-controlling and other equity interests for businesses[125] Return on Average Tangible Equity by Segment (Q1 2023 vs Q1 2022) | Segment | Q1 2023 RoTE (%) | Q1 2022 RoTE (%) | | :--- | :--- | :--- | | Barclays UK | 20.0 | 15.6 | | Corporate and Investment Bank | 15.2 | 17.1 | | Consumer, Cards and Payments | 10.5 | (1.5) | | Barclays International | 14.5 | 14.8 | | Head Office | not meaningful | not meaningful | | Barclays Group | 15.0 | 11.5 | Tangible Net Asset Value per Share Tangible Net Asset Value (TNAV) per share increased to 301 pence as at 31 March 2023, up from 295 pence at 31 December 2022, with Net Asset Value (NAV) per share also increasing to 356 pence - Tangible Net Asset Value (TNAV) per share increased to 301 pence as at 31 March 2023, up from 295 pence at 31 December 2022 and 294 pence at 31 March 2022[137] - Net Asset Value (NAV) per share increased to 356 pence as at 31 March 2023[137] - TNAV per share is calculated by dividing shareholders' equity, excluding non-controlling interests and other equity instruments, less goodwill and intangible assets, by the number of issued ordinary shares[11] Net Asset Value and Tangible Net Asset Value per Share (As at 31 March 2023 vs 31 December 2022 vs 31 March 2022) | Metric | 31.03.23 (pence) | 31.12.22 (pence) | 31.03.22 (pence) | | :--- | :--- | :--- | | Net asset value per share | 356 | 347 | 342 | | Tangible net asset value per share | 301 | 295 | 294 | Profit Attributable to Ordinary Equity Holders and Return on Average Equity Barclays Group's attributable profit was £1,783 million in Q1 2023, resulting in a Return on Average Equity (RoE) of 12.8%, an increase from 9.9% in Q1 2022 - Barclays Group's attributable profit was £1,783 million in Q1 2023, resulting in a Return on Average Equity (RoE) of 12.8%, an increase from 9.9% in Q1 2022[139] - All operating divisions contributed positively to attributable profit, with Barclays UK achieving 14.8% RoE and Barclays International 14.2% RoE[139] Profit Attributable to Ordinary Equity Holders and Return on Average Equity (Q1 2023 vs Q1 2022) | Segment | Q1 2023 Attributable Profit (£ million) | Q1 2023 RoE (%) | Q1 2022 Attributable Profit (£ million) | Q1 2022 RoE (%) | | :--- | :--- | :--- | :--- | :--- | | Barclays UK | 515 | 14.8 | 396 | 11.6 | | Corporate and Investment Bank | 1,209 | 15.2 | 1,316 | 17.1 | | Consumer, Cards and Payments | 139 | 8.9 | (16) | (1.2) | | Barclays International | 1,348 | 14.2 | 1,300 | 14.4 | | Head Office | not meaningful | not meaningful | (292) | not meaningful | | Barclays Group | 1,783 | 12.8 | 1,404 | 9.9 | Notable Items This section reconciles statutory profit to profit excluding notable items, which include the net impact from the Over-issuance of Securities, customer remediation costs, other litigation, and re-measurement of UK Deferred Tax Assets (DTAs) Notable Items Impact on Profit (Three months ended 31 March 2023 vs 31 March 2022) | Item | Q1 2023 Profit before tax (£ million) | Q1 2023 Attributable profit (£ million) | Q1 2022 Profit before tax (£ million) | Q1 2022 Attributable profit (£ million) | | :--- | :--- | :--- | :--- | :--- | | Statutory | 2,598 | 1,783 | 2,234 | 1,404 | | Net impact from the Over-issuance of Securities | — | — | (320) | (240) | | Customer remediation costs on legacy loan portfolio | — | — | (181) | (147) | | Other litigation and conduct | 1 | 2 | (22) | (15) | | Re-measurement of UK DTAs | — | — | — | (346) | | Excluding the impact of notable items | 2,597 | 1,781 | 2,757 | 2,152 | - Non-IFRS performance measures excluding notable items provide valuable information for assessing Group performance and enabling consistent comparison, but are not incorporated into Group Targets[141][142] Shareholder Information This section provides essential shareholder information, including the results timetable, exchange rates, share price data, and key contact details for investor and media relations Results Timetable The next scheduled financial announcement for Barclays is the 2023 Interim Results, provisionally set for 27 July 2023 - The 2023 Interim Results Announcement is provisionally scheduled for 27 July 2023[144][147] Exchange Rates and Share Price Data As at 31 March 2023, the USD/GBP exchange rate was 1.23 (period end) and 1.22 (3-month average), with Barclays PLC share price at 145.80 pence and 15,701 million shares in issue Exchange Rates (Period end and 3-month average, 31 March 2023 vs 31 March 2022) | Currency Pair | 31.03.23 (Period end) | 31.03.22 (Period end) | 31.03.23 (3-month average) | 31.03.22 (3-month average) | | :--- | :--- | :--- | :--- | :--- | | USD/GBP | 1.23 | 1.31 | 1.22 | 1.34 | | EUR/GBP | 1.14 | 1.19 | 1.13 | 1.20 | - Barclays PLC share price was 145.80 pence as at 31 March 2023[144] - The number of Barclays PLC shares was 15,701 million as at 31 March 2023[144] Contact Information This section provides essential contact details for investor relations and media relations, along with information for the registered office, registrar, and American Depositary Receipts (ADRs) services - Investor relations contacts: Adam Strachan (+1 212 526 8442) and James Johnson (+44 (0) 20 7116 7233)[145] - Media relations contact: Tom Hoskin (+44 (0) 20 7116 4755)[145] - Registered office: 1 Churchill Place, London, E14 5HP, United Kingdom[145] - Registrar services are provided by Equiniti, and American Depositary Receipts (ADRs) services by EQ Shareowner Services[146] Glossary of Terms This comprehensive glossary defines a wide array of financial, regulatory, and operational terms used throughout the report, ensuring clarity and understanding of specialized terminology Glossary of Terms This extensive glossary provides definitions for a wide range of financial, regulatory, and operational terms used throughout the report - The glossary defines key financial terms such as 'Additional Tier 1 (AT1) capital', 'Common Equity Tier 1 (CET1) ratio', 'Expected Credit Losses (ECL)', 'Liquidity Coverage Ratio (LCR)', and 'Return on average tangible shareholders' equity (RoTE)'[150][194][237][289][357] - It also includes definitions for regulatory terms like 'Minimum requirement for own funds and eligible liabilities (MREL)' and 'Risk weighted assets (RWAs)'[306][358] - Operational and business-specific terms such as 'Net Interest Margin (NIM)', 'Structural hedge', and various business segment names are also defined[312][392][167]