Barclays(US:BCS)2024-08-01 12:42Financial Data and Key Metrics Changes - Return on tangible equity (RoTE) was 9.9% in Q2 and 11.1% for the first half, on track for the target of above 10% in 2024 [5][13] - Total income for Q2 was GBP6.3 billion, and GBP13.3 billion for the first half, with a 1% year-on-year increase [5][14] - Net interest income (NII) guidance for 2024 increased from GBP10.7 billion to approximately GBP11 billion [5][16] - Cost-to-income ratio was 63% in Q2 and 62% for the first half, with a target of around 63% for 2024 [5][18] Business Line Data and Key Metrics Changes - Barclays UK reported a RoTE of 22.3% for Q2, with total income of GBP1.9 billion [8][21] - UK Corporate Bank delivered a RoTE of 18% in Q2, with income down 6% year-on-year at GBP443 million [9][25] - Private Banking & Wealth Management achieved a RoTE of 30.8%, with client assets and liabilities growing by 14% year-on-year [9][26] - Investment Bank RoTE was 9.6%, with total income of GBP3 billion, up 10% year-on-year [10][27] - U.S. Consumer Bank RoTE improved to 9.2%, with income growth of 7% [11][31] Market Data and Key Metrics Changes - Barclays UK's deposits stabilized faster than anticipated, with savings broadly flat quarter-on-quarter [8][23] - The U.S. Consumer Bank's card balances increased by $1.7 billion year-on-year to $31.2 billion [31] - Investment Banking fee income was up 45% year-on-year, indicating a strong performance across products [10][30] Company Strategy and Development Direction - The company aims to grow returns with a target RoTE of above 12% by 2026 and plans to return at least GBP10 billion to shareholders between 2024 and 2026 [4][6] - A focus on improving operational and financial performance across all divisions, with a commitment to reducing risk-weighted assets (RWAs) in the investment bank from 58% to around 50% by 2026 [4][6] - The acquisition of Tesco's retail banking business is progressing well, expected to complete in November, contributing to the RWA target [8][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of income and credit performance, particularly in the UK [5][19] - The company anticipates continued growth in the U.S. Consumer Bank, with expectations for lower impairment charges in the second half of 2024 compared to 2023 [11][20] - Management remains focused on disciplined execution against the targets set in February, reiterating their commitment to capital distribution plans [35] Other Important Information - The CET1 ratio was 13.6%, comfortably within the target range of 13% to 14% [6][34] - A total payout of GBP1.2 billion for the first half of 2024 was announced, including a GBP0.029 dividend per share and a GBP750 million buyback [6][34] Q&A Session Summary Question: Cost structure and revenue performance in U.S. cards - Management indicated that structural costs were not significant and reiterated a cost guidance of around 63% for the year, with a focus on efficiency savings [39] - In the U.S. Consumer Bank, NII has fallen slightly due to seasonal factors and customer repayments, but management remains confident in achieving a NIM of greater than 12% by 2026 [40][41] Question: Follow-through on upgraded UK NII and RWA management - Management confirmed that the upgraded NII is based on stabilized deposits, but they are not adjusting 2026 targets at this time, focusing instead on disciplined execution [44][46] - The increase in RWAs was described as temporary, with expectations for a more meaningful change in RWA allocation from Q4 onwards [60] Question: U.S. consumer cards credit quality and UK performance - Management acknowledged an increase in non-performing loans but emphasized proactive reserve building and expected lower impairments in the second half of 2024 [66] - The company anticipates asset growth in Barclays UK, which will moderate returns but is seen as a positive shift towards growing the asset book [70]