Barclays Regulatory News (BARC)

Results Announcement

Page

Performance Highlights

2-4

Group Chief Executive Officer's Review

5

Group Finance Director's Review

6-9

Results by Business

- Barclays UK

10-12

- Barclays Corporate & International

13-16

- Head Office

17

- Barclays Non-Core

18-19

- Africa Banking - Discontinued Operation

20

Quarterly Results Summary

21-23

Quarterly Core Results by Business

24-27

Quarterly Africa Banking - Discontinued Operation Results

28

Performance Management

- Margins and balances

29

Risk Management

- Overview

30

- Funding Risk - Liquidity

31-35

- Funding Risk - Capital

36-40

- Credit Risk

41-49

- Market Risk

50-52

Statement of Directors' Responsibilities

53

Independent Auditors' Review Report to Barclays PLC

54

Condensed Consolidated Financial Statements

55-60

Financial Statement Notes

61-97

Shareholder Information

98

·

Group profit before tax of £2,063m (H115: £2,602m) reflected an increased Core profit before tax of £3,967m (H115: £3,347m) and Non-Core losses before tax of £1,904m (H115: £745m). Excluding notable items and an impairment of £372m in respect of the French retail, and wealth and investment management businesses, Group profit before tax was £2,037m (H115: £3,128m)

·

Group return on average tangible equity (RoTE) of 4.8% (H115: 6.9%) reflected attributable profit in Core of £2,444m (H115: £2,000m) and the attributable loss in Non-Core of £1,490m (H115: £582m)

·

Core profit before tax increased 19% to £3,967m including a gain of £615m on the disposal of Barclays' share of Visa Europe Limited and an additional provision of £400m relating to UK customer redress. Core RoTE was 12.5% (H115: 11.3%) on an increased average tangible equity base of £40bn (H115: £36bn). Core basic earnings per share contribution was 14.8p (H115: 12.1p)

·

Non-Core loss before tax was £1,904m (H115: £745m) reflecting the continued execution of our strategy. The loss included the impairment of £372m in respect of the assets of the French retail, and wealth and investment management businesses that are held for sale

·

Barclays UK delivered a strong underlying RoTE of 19.4% (H115: 21.9%). Underlying profit before tax decreased 4% to £1,329m driven by lower interchange fee income in Barclaycard Consumer UK and an increase in impairment. Net interest margin increased 2bps to 3.59%

·

Barclays Corporate & International delivered an underlying RoTE of 10.7% (H115: 12.4%). Underlying income remained in line with strong growth in Consumer, Cards and Payments and whilst income decreased in Corporate & Investment Bank (CIB), it was resilient in challenging market conditions

·

Momentum in the execution of the Non-Core strategy continued with good progress on business sales and the rundown of the derivative portfolio during the period. Period end allocated tangible equity in Non-Core reduced to £8bn (December 2015: £9bn), with risk weighted assets (RWAs) decreasing by a further £8bn to £46.7bn in H116, despite adverse market movements

·

Common equity tier 1 (CET1) ratio increased to 11.6% (December 2015: 11.4%). CET1 capital increased £1.6bn to £42.4bn primarily through profits generated in the period of £1.3bn. Group RWAs continue to be actively managed with the increase of £8bn to £366bn being principally due to the appreciation of USD and EUR against GBP

·

The leverage ratio decreased to 4.2% (December 2015: 4.5%), with leverage exposure increasing by £127bn to £1,155bn primarily due to higher cash and settlement balances, following increased client activity, and the appreciation of USD and EUR against GBP

·

Tangible net asset value per share increased to 289p (December 2015: 275p) driven by profit generated in the period and net favourable reserve movements

Progress on strategy execution in Q216

·

Sale of 12.2% of Barclays Africa Group Limited (BAGL) issued share capital. Barclays now holds 50.1% of BAGL's issued share capital

·

Completion of the sale of the retail banking, wealth, and investment management, and parts of the Corporate Banking business in Portugal

·

Announcement of exclusive discussions with AnaCap Financial Partners for the potential sale of the French retail, and wealth and investment management businesses

·

Restructuring of the terms of the Education, Social Housing and Local Authority (ESHLA) loans with Lender Option Borrower Option (LOBO) features. These loans are now classified as loans held at amortised cost, reducing the ESHLA loans held at fair value by £8bn and the fair value volatility on the ESHLA portfolio going forward

·

Redemption of $1.15bn 7.75% Series 4 Non-Cumulative Callable Dollar Preference Shares

Barclays Group results  

for the half year ended

30.06.16

30.06.15

YoY

£m

£m

% Change

Total income net of insurance claims

11,013 

12,111 

(9)

Credit impairment charges and other provisions

(931)

(779)

(20)

Net operating income  

10,082 

11,332 

(11)

Operating expenses

(7,172)

(6,624)

(8)

Litigation and conduct

(525)

(1,966)

73

Total operating expenses

(7,697)

(8,590)

10 

Other net expenses

(322)

(140)

Profit before tax  

2,063 

2,602 

(21)

Tax charge

(715)

(852)

16

Profit after tax in respect of continuing operations

1,348 

1,750 

(23)

Profit after tax in respect of discontinued operation1 

311 

358 

(13)

Non-controlling interests in respect of continuing operations

(186)

(173)

(8)

Non-controlling interests in respect of discontinued operation1 

(155)

(165)

6

Other equity holders2 

(208)

(159)

(31)

Attributable profit  

1,110 

1,611 

(31)

Performance measures

Return on average tangible shareholders' equity2 

4.8%

6.9%

Average tangible shareholders' equity (£bn)

48 

48 

Cost: income ratio

70%

71%

Loan loss rate (bps)

39 

35 

Basic earnings per share2 

6.9p

9.9p

Dividend per share

1.0p

2.0p

Balance sheet and capital management

As at

30.06.16

As at

31.12.15

Tangible net asset value per share

289p

275p

Common equity tier 1 ratio

11.6%

11.4%

Common equity tier 1 capital

£42.4bn

£40.7bn

Risk weighted assets

£366bn

£358bn

Leverage ratio

4.2%

4.5%

Fully loaded tier 1 capital

£47.9bn

£46.2bn

Leverage exposure

£1,155bn

£1,028bn

Funding and liquidity

Group liquidity pool

£149bn

£145bn

Estimated CRD IV liquidity coverage ratio

124%

133%

Estimated net stable funding ratio

106%

106%

Loan: deposit ratio3 

85%

86%

1

Refer to page 20 for further information on the Africa Banking discontinued operation.

2

The profit after tax attributable to other equity holders of £208m (H115: £159m) is offset by a tax credit recorded in reserves of £58m (H115: £32m). The net amount of £150m (H115: £127m), along with non-controlling interests (NCI) is deducted from profit after tax in order to calculate earnings per share and return on average tangible shareholders' equity.

3

Loan: deposit ratio for Barclays UK, Consumer, Cards and Payments, Corporate, and Non-Core retail.

Barclays Core and Non-Core results  

Barclays Core

Barclays Non-Core

for the half year ended

30.06.16

30.06.15

YoY

30.06.16

30.06.15

YoY

£m

£m

% Change

£m

£m

% Change

Total income net of insurance claims

11,599 

11,646 

- 

(586)

465 

Credit impairment charges and other provisions

(876)

(718)

(22)

(55)

(61)

10

Net operating income/(expenses)  

10,723 

10,928 

(2)

(641)

404 

Operating expenses

(6,315)

(5,679)

(11)

(857)

(945)

9

Litigation and conduct

(432)

(1,834)

76

(93)

(132)

30

Total operating expenses

(6,747)

(7,513)

10 

(950)

(1,077)

12 

Other net expenses

(9)

(68)

87

(313)

(72)

Profit/(loss) before tax  

3,967 

3,347 

19 

(1,904)

(745)

Tax (charge)/credit

(1,181)

(1,088)

(9)

466 

236 

97

Profit/(loss) after tax

2,786 

2,259 

23 

(1,438)

(509)

Non-controlling interests

(164)

(132)

(24)

(22)

(41)

46

Other equity holders

(178)

(127)

(40)

(30)

(32)

6

Attributable profit/(loss)1 

2,444 

2,000 

22

(1,490)

(582)

Performance measures

Return on average tangible equity

12.5%

11.3%

Average allocated tangible equity (£bn)1 

40 

36 

8 

12 

Period end allocated tangible equity (£bn)1 

41 

37 

8 

10 

Cost: income ratio

58%

65%

n/m

n/m

Loan loss rate (bps)

43 

38 

15 

17 

Basic earnings/(loss) per share contribution

14.8p

12.1p

(8.8p)

(3.5p)

As at

As at

As at

As at

Capital management

30.06.16

31.12.15

30.06.16

31.12.15

Risk weighted assets1 

£320bn

£304bn

£47bn

£54bn

Leverage exposure1 

£1,021bn

£879bn

£134bn

£149bn

Notable items for the half year ended

30.06.16

30.06.15

30.06.16

30.06.15

£m

£m

£m

£m

Own credit

183 

410 

- 

- 

Gain on disposal of Barclays' share of Visa Europe Limited

615 

- 

- 

- 

Gains on US Lehman acquisition assets

- 

496 

- 

- 

Provisions for ongoing investigations and litigation including Foreign Exchange

- 

(800)

- 

- 

Gains on valuation of a component of the defined retirement benefit liability

- 

429 

- 

- 

Provisions for UK customer redress

(400)

(967)

- 

(65)

Losses on sale relating to the Spanish business

- 

(97)

- 

(21)

1

Attributable profit in respect of the Africa Banking discontinued operation is reported at the Group level only. Allocated tangible equity, RWAs and leverage exposure are reported in Head Office within Core.

Half year ended

Half year ended

30.06.16

30.06.15

YoY

Income by business

£m

£m

% Change

Barclays UK

3,746 

3,635 

3

Barclays Corporate & International

7,552 

7,556 

- 

Head Office

301 

455 

(34)

Barclays Core

11,599 

11,646 

- 

Barclays Non-Core

(586)

465 

Barclays Group

11,013 

12,111 

(9)

Profit/(loss) before tax by business

Barclays UK

1,080 

712 

52

Barclays Corporate & International

2,753 

2,380 

16

Head Office

134 

255 

(47)

Barclays Core

3,967 

3,347 

19 

Barclays Non-Core

(1,904)

(745)

Barclays Group

2,063 

2,602 

(21)

·

Profit before tax decreased 21% to £2,063m primarily driven by the loss before tax in Non-Core of £1,904m (H115: £745m) and a 19% increase in Core profit before tax of £3,967m

·

Return on average tangible shareholders' equity was 4.8% (H115: 6.9%) and basic earnings per share was 6.9p (H115: 9.9p)

·

Total income net of insurance claims decreased 9% to £11,013m as Non-Core income reduced to a net expense of £586m (H115: income of £465m). Core income was in line at £11,599m (H115: £11,646m)

·

Credit impairment charges increased £152m to £931m primarily driven by the impairment of a number of single name exposures, largely in respect of counterparties in the oil and gas sector, and an increase in Barclaycard Consumer UK impairment due to refinement of impairment modelling. The loan loss rate increased 4bps to 39bps whilst underlying delinquency rates remained stable

·

Total operating expenses reduced 10% to £7,697m reflecting reduced litigation and conduct charges, and savings from strategic cost programmes, partially offset by restructuring and structural reform programme implementation costs, and continued investment in Consumer, Cards and Payments. Total operating expenses included a £400m (H115: £1,032m) increase in provisions for UK customer redress

·

The effective tax rate on profit before tax increased to 34.7% (H115: 32.7%)

·

Profit after tax in respect of continuing operations decreased 23% to £1,348m. Profit after tax in relation to the Africa Banking discontinued operation decreased 13% to £311m driven by the depreciation of average ZAR against GBP

·

Notable items were a net profit before tax of £398m (H115: loss of £615m). H116 notable items comprised provisions for UK customer redress of £400m (H115: £1,032m), a £615m (H115: £nil) gain on disposal of Barclays' share of Visa Europe Limited and an own credit gain of £183m (H115: £410m)

·

Group income statement performance was materially impacted by the appreciation of average USD and EUR against GBP, positively benefiting income and adversely affecting impairment and operating expenses

·

Underlying Core performance generated a RoTE of 10.8% (H115: 13.7%) reflecting an 8% reduction in profit before tax to £3,569m and a £4bn increase in average tangible equity to £40bn as capital was redeployed from Non-Core

·

Underlying total income was 1% up at £10,801m, as a 19% increase in Consumer, Cards and Payments to £1,881m was partially offset by the impact of challenging market conditions in CIB where total income reduced 5% to £5,207m. Barclays UK underlying total income was 1% down at £3,595m primarily reflecting the impact of the European Interchange Fee Regulation

·

Credit impairment charges increased £158m to £876m primarily driven by the impairment of a number of single name exposures, largely in respect of counterparties in the oil and gas sector, and an increase in Barclaycard Consumer UK due to refinement of impairment modelling

·

Underlying total operating expenses increased 3% to £6,347m reflecting the appreciation of average USD and EUR against GBP and increased structural reform programme implementation costs, partially offset by savings from strategic cost programmes

·

Underlying RoTE was 19.4% (H115: 21.9%)

·

Underlying profit before tax decreased 4% to £1,329m driven by a 1% decrease in total income, primarily due to the impact of the European Interchange Fee Regulation, and a 10% increase in credit impairment charges, partially offset by a 1% reduction in total operating expenses

·

Credit impairment charges increased 10% to £366m primarily due to the refinement of impairment modelling in Barclaycard Consumer UK, whilst the 30 day and 90 day arrears rates remained stable year-on-year

·

Underlying total operating expenses reduced 1% reflecting savings realised from strategic cost programmes, partially offset by structural reform programme implementation costs

·

Underlying RoTE was 10.7% (H115: 12.4%)

·

Underlying profit before tax decreased 10% to £2,289m driven by a 4% increase in operating expenses due to the appreciation of average USD and EUR against GBP, and increased structural reform programme implementation costs, in addition to a 33% increase in credit impairment charges largely in respect of counterparties in the oil and gas sector

·

Underlying total income was broadly in line at £7,088m (H115: £7,060m), including the appreciation of average USD and EUR against GBP, with Consumer, Cards and Payments income increasing 19%, driven by continued growth in Barclaycard US, Germany and Merchant Acquiring. CIB income decreased 5% as Markets income reduced 6%, within which Equities and Macro were 22% and 4% lower respectively, relative to a strong H115 performance, partially offset by a 35% increase in Credit. Banking income decreased 5%

·

Underlying loss before tax was £49m (H115: loss of £58m) reflecting the net result from treasury operations, including one-off gains from the buyback of subordinated debt in Q116

·

The Non-Core rundown remains on track. As part of this, on 27 April 2016, Barclays announced that it had entered into exclusive discussions with AnaCap Financial Partners for the potential sale of its French retail, and wealth and investment management businesses. Other net expenses included a £372m impairment associated with these assets

·

During Q216, the terms of the ESHLA portfolio loans with LOBO features were restructured. As a result of the restructuring, a one-off loss of £182m was recognised in Non-Core income in Q216. The restructuring resulted in the derecognition of £8bn of existing Level 3 fair valued loan assets with the new restructured assets now measured on an amortised cost basis. As a result, Barclays will benefit from reduced fair value volatility on the ESHLA portfolio going forward

·

Non-Core RWAs reduced to £46.7bn (December 2015: £54.3bn), despite the appreciation of USD and EUR against GBP, reflecting a £3bn reduction in Derivatives, a £3bn reduction in Securities and loans and a £1bn reduction in Businesses RWAs, including a £1.8bn reduction following the completion of the sale of the retail banking, wealth and investment management and part of the Corporate Banking business in Portugal

·

Underlying loss before tax increased to £1,904m (H115: £659m) driven by a £1,051m reduction in total income to a net expense of £586m including fair value losses of £424m (H115: £175m) on the ESHLA portfolio, a one-off loss of £182m due to the restructuring of the ESHLA portfolio LOBO loan terms as well as lower income following the completion of the sale of the Barclays Wealth Americas, UK Secured Lending, and Portuguese retail and insurance businesses. Derivatives income reduced £135m to an expense of £198m reflecting the active rundown of the portfolios and funding costs

·

Underlying operating expenses reduced 6% reflecting cost savings from ceasing certain investment banking activities in a number of countries, the completion of the sale of several businesses and the rundown of portfolios, partially offset by a £180m increase in restructuring charges

·

The leverage ratio decreased to 4.2% (December 2015: 4.5%) driven by the increase in leverage exposure primarily due to balance sheet movements

·

Leverage exposure increased 12% to £1,155bn, while total assets increased 21% to £1,351bn from 31 December 2015

-

Total loans and advances and other assets increased £93bn to £718bn. The increase was primarily driven by a £27bn increase in cash and balances at central banks due to an increase in the cash element of the Group liquidity pool in preparation for the EU referendum, a £26bn increase in settlement balances following increased client activity, lending growth of £14bn within Barclays Corporate & International and an £8bn increase in Africa Banking assets held for sale reflecting the appreciation of ZAR against GBP

-

Net derivative leverage exposure remained broadly flat as an increase in assets of £117bn to £445bn was offset by an increase in derivative liabilities resulting in regulatory derivative netting increasing £109bn to £402bn. The increase was mostly within interest rate derivatives and foreign exchange derivatives reflecting a decrease in the major forward interest rates and appreciation of all major currencies against GBP

·

The fully loaded CRD IV CET1 ratio increased to 11.6% (December 2015: 11.4%) reflecting an increase in CET1 capital of £1.6bn to £42.4bn, whilst RWAs increased by £8bn to £366bn

-

The increase in CET1 capital was largely driven by profits generated in the period and favourable movements in other qualifying reserves which included the currency translation reserves as a result of the appreciation of all major currencies against GBP

-

The increase in RWAs was principally due to the appreciation of USD, EUR and ZAR against GBP, which more than offset underlying RWA reductions in Non-Core

·

Tangible net asset value per share increased to 289p (December 2015: 275p) driven by profit generated in the period and net favourable reserve movements

·

The Group continued to maintain surpluses to its internal and regulatory requirements in H116 with a liquidity pool of £149bn (December 2015: £145bn). The Liquidity Coverage Ratio (LCR) decreased to 124% (December 2015: 133%), equivalent to a surplus of £29bn (December 2015: £37bn) driven primarily by the early repayment of the Bank of England's Funding for Lending Scheme of £12bn in Q116 as Barclays optimised its funding cost

·

Wholesale funding outstanding excluding repurchase agreements increased £12bn to £154bn, driven by the prudent management of the liquidity position in the immediate run-up to the 23 June 2016 referendum in the United Kingdom. The Group issued £5.7bn of senior unsecured debt and capital transactions from the holding company in H116, of which £4.2bn and £0.6bn in public and private senior unsecured debt respectively, and £0.9bn of subordinated debt. £6.1bn of Barclays Bank PLC senior debt and capital instruments have been bought back or called during H116. Proceeds raised by Barclays PLC have been used to invest in Barclays Bank PLC instruments in each case with a corresponding ranking

·

On 5 May 2016, Barclays sold 103.6m ordinary shares in the capital of BAGL, representing 12.2% of BAGL issued share capital at a price of ZAR 126 per share through an accelerated bookbuild placing. The placing resulted in a proforma 10bps increase to the CET1 ratio in Q216. Barclays now holds 424.7m ordinary shares in the capital of BAGL, representing 50.1% of BAGL's issued share capital. BAGL remains fully consolidated within the Group at 30 June 2016

·

On 10 May 2016, Barclays announced it would exercise its right to redeem its $1.15bn 7.75% Series 4 Non-Cumulative Callable Dollar Preference Shares on their optional redemption date of 15 June 2016. The redemption resulted in a proforma 6bps decrease to the CET1 ratio in Q216, but will result in an ongoing reduction in preference share dividends payable of $89m per annum from 15 June 2016 onwards

·

The acquisition of Visa Europe Limited by Visa Inc. completed on 21 June 2016 resulted in the recognition of a pre-tax gain on disposal of £615m in income in Q216. £396m of this amount had previously been recognised in Available for Sale Reserves in Q415

·

Additional UK customer redress provisions of £400m (H115: £1,032m) relating to Payment Protection Insurance (PPI) were recognised in Q216, reflecting an updated estimate of costs, primarily relating to ongoing remediation programmes

·

H116 included an own credit gain of £183m (H115: £410m)

·

 An interim dividend of 1.0p per share will be paid on 19 September 2016

·

2016 Core cost guidance of £12.8bn, excluding litigation and conduct charges, and subject to foreign currency movements1, remains unchanged

·

The existing Non-Core income and operating expenses guidance for 2016 remains unchanged. 2017 Non-Core operating expenses are expected to be within the range of £400m to £500m excluding notable items. The Non-Core RWA guidance of around £20bn in 2017 remains unchanged

1

2016 Core cost guidance of £12.8bn assumed an average USD/GBP exchange rate of 1.42.

Barclays UK  

Half year ended

Half year ended

30.06.16

30.06.15

YoY

Income statement information

£m

£m

% Change

Net interest income

2,977 

2,965 

-

Net fee, commission and other income

769 

670 

15 

Total income

3,746 

3,635 

3 

Credit impairment charges and other provisions

(366)

(333)

(10)

Net operating income

3,380 

3,302 

2 

Operating expenses

(1,899)

(1,619)

(17)

Litigation and conduct

(400)

(969)

59 

Total operating expenses

(2,299)

(2,588)

11 

Other net expenses

(1)

(2)

50 

Profit before tax

1,080 

712 

52 

Attributable profit

608 

490 

24 

As at 30.06.16

As at 31.12.15

As at 30.06.15

Balance sheet information

£bn

£bn

£bn

Loans and advances to customers at amortised cost

166.0 

166.1 

166.1 

Total assets

204.6 

202.5 

202.2 

Customer deposits

181.7 

176.8 

171.6 

Risk weighted assets

67.1 

69.5 

71.7 

Half year ended

Half year ended

Key facts  

30.06.16

30.06.15

Average LTV of mortgage portfolio1 

47%

51%

Average LTV of new mortgage lending1 

63%

62%

Number of branches

1,331

1,448

Barclays mobile banking customers

5.2m

4.2m

30 day arrears rate - Barclaycard Consumer UK

2.3%

2.4%

Performance measures

Return on average tangible equity

13.6%

10.6%

Average allocated tangible equity (£bn)

9.1 

9.4 

Cost: income ratio

61%

71%

Loan loss rate (bps)

43 

40 

Loan: deposit ratio

91%

97%

Net interest margin

3.59%

3.57%

Notable items  

£m

£m

Gain on disposal of Barclays' share of Visa Europe Limited  

151 

-

Provisions for UK customer redress

(400)

(967)

Gain on valuation of a component of the defined retirement benefit liability  

- 

296 

1

Average LTV of mortgage portfolio and new mortgage lending calculated on the balance weighted basis.

Analysis of Barclays UK  

Half year ended

Half year ended

30.06.16

30.06.15

YoY

Analysis of total income  

£m

£m

% Change

Personal Banking

1,987 

1,832 

8 

Barclaycard Consumer UK

954 

1,008 

(5)

Wealth, Entrepreneurs & Business Banking

805 

795 

1 

Total income

3,746 

3,635 

3 

Analysis of credit impairment charges and other provisions

Personal Banking

(86)

(119)

28 

Barclaycard Consumer UK

(274)

(201)

(36)

Wealth, Entrepreneurs & Business Banking

(6)

(13)

54 

Total credit impairment charges and other provisions  

(366)

(333)

(10)

As at 30.06.16

As at 31.12.15

As at 30.06.15

Analysis of loans and advances to customers at amortised cost

£bn

£bn

£bn

Personal Banking

134.7 

134.0 

134.4 

Barclaycard Consumer UK

16.2 

16.2 

15.8 

Wealth, Entrepreneurs & Business Banking

15.1 

15.9 

15.9 

Total loans and advances to customers at amortised cost

166.0 

166.1 

166.1 

Analysis of customer deposits

Personal Banking

134.8 

131.0 

126.7 

Barclaycard Consumer UK

- 

- 

- 

Wealth, Entrepreneurs & Business Banking

46.9 

45.8 

44.9 

Total customer deposits  

181.7 

176.8 

171.6 

·

Profit before tax increased 52% to £1,080m. Underlying profit before tax, excluding the impact of notable items decreased 4% to £1,329m driven by reduced income and an increase in credit impairment charges, partially offset by a reduction in operating expenses

·

Total income, including a gain on disposal of Barclays' share of Visa Europe Limited recognised in Personal Banking and Business Banking increased 3% to £3,746m. Underlying total income reduced 1% to £3,595m, within which:

-

Personal Banking income increased 1% to £1,858m driven by improved deposit margins and balance growth, partially offset by a lower mortgage margin

-

Barclaycard Consumer UK income decreased 5% to £954m primarily driven by the impact of the European Interchange Fee Regulation, which began to come into full effect from December 2015, and is now fully implemented

-

Wealth, Entrepreneurs & Business Banking (WEBB) decreased 2% to £783m driven by reduced transactional appetite from clients in equity markets and a reduction in assets under management, partially offset by improved deposit margins and balance growth

-

Net interest income was broadly in line at £2,977m (H115: £2,965m) due to balance growth and deposit pricing initiatives, offset by a lower mortgage margin

-

Net interest margin increased 2bps to 3.59% reflecting higher margins on Personal Banking deposits, partially offset by lower lending margins

-

Net fee, commission and other income decreased 8% to £618m due to the impact of the European Interchange Fee Regulation, which began to come into full effect from December 2015, and is now fully implemented, and reduced fee and commission income in WEBB

·

Credit impairment charges increased 10% to £366m primarily due to refinement of impairment modelling in Barclaycard Consumer UK, whilst the 30 day and 90 day arrears rates remained stable year-on-year 

·

Total operating expenses reduced 11% to £2,299m, including provisions for UK customer redress. Underlying total operating expenses reduced 1% to £1,899m reflecting savings realised from strategic cost programmes, relating to restructuring of the branch network and technology improvements, partially offset by structural reform programme implementation costs and increased amortisation from investment in digital

·

Underlying cost: income ratio was 53% (H115: 53%) and underlying RoTE was 19.4% (H115: 21.9%)

·

Loans and advances to customers were stable at £166.0bn (December 2015: £166.1bn)

·

Total assets increased 1% to £204.6bn driven by an increase in WEBB

·

Customer deposits increased 3% to £181.7bn primarily driven by higher balances in Personal Banking

·

RWAs reduced £2.4bn to £67.1bn primarily driven by credit risk model changes following approval from the Prudential Regulation Authority (PRA)

Barclays Corporate & International  

Half year ended

Half year ended

30.06.16

30.06.15

YoY

Income statement information

£m

£m

% Change

Net interest income

2,111 

2,095 

1 

Net trading income

2,375 

2,372 

- 

Net fee, commission and other income

3,066 

3,089 

(1)

Total income

7,552 

7,556 

- 

Credit impairment charges and other provisions

(509)

(384)

(33)

Net operating income

7,043 

7,172 

(2)

Operating expenses

(4,295)

(3,963)

(8)

Litigation and conduct

(14)

(857)

98 

Total operating expenses

(4,309)

(4,820)

11 

Other net income

19 

28 

(32)

Profit before tax

2,753 

2,380 

16 

Attributable profit

1,746 

1,360 

28 

As at 30.06.16

As at 31.12.15

As at 30.06.15

Balance sheet information

£bn

£bn

£bn

Loans and advances to banks and customers at amortised cost1 

230.6 

184.1 

210.5 

Trading portfolio assets

68.1 

61.9 

75.3 

Derivative financial instrument assets

181.4 

111.5 

116.0 

Derivative financial instrument liabilities

187.5 

119.0 

124.8 

Reverse repurchase agreements and other similar secured lending

19.7 

24.7 

57.4 

Financial assets designated at fair value

68.3 

46.8 

5.6 

Total assets

679.9 

532.2 

566.1 

Customer deposits2 

226.5 

185.6 

197.7 

Risk weighted assets

209.3 

194.8 

195.4 

Half year ended

Half year ended

Performance measures

30.06.16

30.06.15

Return on average tangible equity

14.3%

11.0%

Average allocated tangible equity (£bn)

25.0 

25.0 

Cost: income ratio

57%

64%

Loan loss rate (bps)

44 

36 

Loan: deposit ratio

90%

92%

Net interest margin3 

4.76%

4.52%

Notable items  

£m

£m

Gain on disposal of Barclays' share of Visa Europe Limited

464 

- 

Gains on US Lehman acquisition assets

- 

496 

Provisions for ongoing investigations and litigation including Foreign Exchange

- 

(800)

Gain on valuation of a component of the defined retirement benefit liability  

- 

133 

1

As at 30 June 2016 loans and advances included £204.4bn (December 2015: £162.6bn) of loans and advances to customers (including settlement balances of £39.9bn (December 2015: £18.5bn) and cash collateral of £29.8bn (December 2015: £24.8bn)), and £26.2bn (December 2015: £21.5bn) of loans and advances to banks (including settlement balances of £6.2bn (December 2015: £1.6bn) and cash collateral of £5.3bn (December 2015: £5.7bn)). Loans and advances to banks and customers in respect of Consumer, Cards and Payments were £35.4bn (December 2015: £32.1bn).

2

As at 30 June 2016 customer deposits included settlement balances of £38.9bn (December 2015: £16.3bn) and cash collateral of £18.7bn (December 2015: £15.9bn).

3

Excludes Investment Banking related balances.

Analysis of Barclays Corporate & International

Half year ended

Half year ended

Corporate and Investment Bank

30.06.16

30.06.15

YoY

Income statement information

£m

£m

% Change

Analysis of total income

Credit

591 

438 

35 

Equities

919 

1,177 

(22)

Macro

1,185 

1,239 

(4)

Markets

2,695 

2,854 

(6)

Banking fees

1,103 

1,128 

(2)

Corporate lending

608 

672 

(10)

Transactional banking

798 

829 

(4)

Banking

2,509 

2,629 

(5)

Other

3 

496 

(99)

Total income

5,207 

5,979 

(13)

Credit impairment charges and other provisions

(132)

(41)

Total operating expenses

(3,465)

(4,027)

14 

Profit before tax

1,610 

1,912 

(16)

As at 30.06.16

As at 31.12.15

As at 30.06.15

Balance sheet information

£bn

£bn

£bn

Risk weighted assets

178.4 

167.3 

170.0 

Half year ended

Half year ended

Performance measures

30.06.16

30.06.15

Return on average tangible equity

8.4%

9.8%

Average allocated tangible equity (£bn)

21.5 

22.0 

Half year ended

Half year ended

Consumer, Cards and Payments

30.06.16

30.06.15

YoY

Income statement information

£m

£m

% Change

Total income

2,345 

1,577 

49 

Credit impairment charges and other provisions

(377)

(344)

(10)

Total operating expenses

(844)

(793)

(6)

Profit before tax

1,143 

468 

As at 30.06.16

As at 31.12.15

As at 30.06.15

Balance sheet information

£bn

£bn

£bn

Loans and advances to banks and customers at amortised cost

35.4 

32.1 

29.6 

Customer deposits

46.9 

41.8 

38.4 

Risk weighted assets

30.9 

27.5 

25.4 

Half year ended

Half year ended

Key facts

30.06.16

30.06.15

30 day arrears rates - Barclaycard US

2.2%

1.9%

Total number of Barclaycard business clients

350,000 

 343,000 

Value of payments processed

£141bn

£135bn

Performance measures

Return on average tangible equity

50.9%

20.4%

Average allocated tangible equity (£bn)

3.5 

3.0 

·

Profit before tax increased 16% to £2,753m. Underlying profit before tax, which excludes the impact of notable items decreased 10% to £2,289m driven by a 4% increase in underlying total operating expenses to £4,309m due to the appreciation of average USD and EUR against GBP, structural reform programme implementation and restructuring costs, and a 33% increase in credit impairment charges to £509m

·

Underlying total income remained broadly in line at £7,088m (H115: £7,060m), including the appreciation of average USD and EUR against GBP, with Consumer, Cards and Payments income increasing 19% to £1,881m and CIB income decreasing 5% to £5,207m

·

Underlying cost: income ratio was 61% (H115: 59%) and underlying RoTE was 10.7% (H115: 12.4%)

·

Profit before tax decreased 16% to £1,610m. Underlying profit before tax, which excludes the impact of notable items decreased 25% to £1,610m primarily due to a reduction in income driven by challenging market conditions in Equities, increased credit impairment charges of £132m (H115: £41m), and increased underlying total operating expenses driven by restructuring and structural reform programme implementation costs. Total income and total operating expenses have also been impacted by the appreciation of average USD against GBP

·

Underlying total income decreased 5% to £5,207m:

-

Markets income decreased 6% to £2,695m, within which:

-

Credit income increased 35% to £591m driven by strong performance in fixed income credit flow businesses, which benefitted from increased market volatility

-

Equities income decreased 22% to £919m following simplification of the business model with minimal impact on returns as lower income in EMEA and Asia was partially offset by increases in the Americas in a challenging trading environment

-

Macro income decreased 4% to £1,185m due to lower client activity in Q116 partially offset by an improved Q216 performance, primarily in rates and currency products

-

Banking income decreased 5% to £2,509m, within which:

-

Banking fee income decreased 2% to £1,103m driven by lower equity underwriting fees, partially offset by higher advisory and debt underwriting fees

-

Corporate lending reduced 10% to £608m due to the non-recurrence of a one-off work-out gain recognised in H115, in addition to some margin reduction, partially offset by balance growth

-

Transactional banking income reduced 4% to £798m primarily due to margin and rate compression, partially offset by income from higher deposit balances and an increase in payment volumes

·

Credit impairment charges of £132m (H115: £41m) arose from impairment of a number of single name exposures primarily in Q116, largely in respect of counterparties in the oil and gas sector

·

Underlying total operating expenses increased 5% to £3,465m due to the appreciation of average USD against GBP, restructuring and structural reform programme implementation costs, partially offset by lower litigation and conduct costs

·

Loans and advances to banks and customers at amortised cost increased £43.2bn to £195.2bn primarily driven by increases in settlements, cash collateral and new client activity during the period

·

Derivative financial instrument assets and liabilities increased 63% to £181.2bn and 57% to £187.4bn respectively, due to decreases in major forward interest rates and appreciation of major currencies against GBP

·

Trading portfolio assets increased £6.2bn to £68.1bn due to an increase in client activity

·

Financial assets designated at fair value increased £21.4bn to £68.2bn primarily due to an increase in reverse repurchase agreements that have been designated at fair value, increased matched book trading and firm funding requirements

·

Total assets increased 29% to £625.9bn primarily due to an increase in derivative financial instrument assets, reverse repurchase agreements, loans and advances to banks and customers, and trading portfolio assets, partially offset by a decrease in other assets

·

Customer deposits increased £36.0bn to £179.7bn primarily driven by increases in settlements, cash collateral and new client activity during the period

·

RWAs increased £11.1bn to £178.4bn primarily due to an increase in the fair value of derivative exposures and the appreciation of USD against GBP

·

Profit before tax increased £675m to £1,143m. Underlying profit before tax, which excludes the impact of notable items increased 65% to £679m as loans and advances to banks and customers increased 20% year-on-year

·

Total income, including a gain on disposal of Barclays' share of Visa Europe Limited increased 49% to £2,345m. Underlying total income increased 19% to £1,881m driven by continued growth in Barclaycard US, Germany and Merchant Acquiring, and the appreciation of average USD and EUR against GBP

·

Credit impairment charges increased 10% to £377m primarily driven by balance growth and the appreciation of average USD and EUR against GBP

·

Underlying total operating expenses were broadly in line at £844m (H115: £849m) including the appreciation of average USD and EUR against GBP

·

Loans and advances to banks and customers grew 10% to £35.4bn driven by growth in Barclaycard US, including the acquisition of the JetBlue credit card portfolio

·

Customer deposits increased £5.1bn to £46.9bn driven by strong balance growth in Wealth International and Offshore businesses

·

RWAs increased £3.4bn to £30.9bn primarily driven by the appreciation of USD and EUR against GBP, and the acquisition of card portfolios

Head Office  

Half year ended

Half year ended

30.06.16

30.06.15

YoY

Income statement information

£m

£m

% Change

Total income

301 

455 

(34)

Credit impairment charges and other provisions

(1)

(1)

- 

Net operating income

300 

454 

(34)

Operating expenses

(121)

(98)

(23)

Litigation and conduct

(18)

(7)

Total operating expenses

(139)

(105)

(32)

Other net expenses

(27)

(94)

71 

Profit before tax

134 

255 

(47)

Attributable profit

90 

152 

(41)

As at 30.06.16

As at 31.12.15

As at 30.06.15

Balance sheet information

£bn

£bn

£bn

Total assets1 

87.7 

59.4 

62.2 

Risk weighted assets1 

43.2 

39.7 

41.0 

Half year ended

Half year ended

30.06.16

30.06.15

Performance measures

£bn

£bn

Average allocated tangible equity (£bn)

5.8 

1.4 

Notable items  

£m

£m

Own credit

183 

410 

Losses on sale relating to the Spanish business

- 

(97)

1

Includes Africa Banking assets held for sale of £56.0bn (December 2015: £47.9bn) and risk weighted assets of £36.1bn (December 2015: £31.7bn).

·

Profit before tax reduced 47% to £134m. Underlying loss before tax, excluding the impact of notable items reduced £9m to £49m

·

Underlying total income increased to £118m (H115: £45m) primarily reflecting one-off gains from the buyback of subordinated debt in Q116

·

Underlying total operating expenses increased £34m to £139m primarily due to an increase in litigation settlements and professional fees

·

Total assets increased £28.3bn to £87.7bn driven by an increase in the liquidity buffer held due to uncertainty relating to the 23 June 2016 referendum in the United Kingdom

·

RWAs increased £3.5bn to £43.2bn primarily due to the appreciation of ZAR against GBP

Barclays Non-Core

Half year ended

Half year ended

30.06.16

30.06.15

YoY

Income statement information

£m

£m

% Change

Net interest income

136 

310 

(56)

Net trading income

(953)

(184)

Net fee, commission and other income

370 

506 

(27)

Total income

(447)

632 

Net claims and benefits incurred under insurance contracts

(139)

(167)

17 

Total income net of insurance claims  

(586)

465 

Credit impairment charges and other provisions

(55)

(61)

10 

Net operating income

(641)

404 

Operating expenses

(857)

(945)

9 

Litigation and conduct

(93)

(132)

30 

Total operating expenses

(950)

(1,077)

12 

Other net expenses

(313)

(72)

Loss before tax

(1,904)

(745)

Attributable loss

(1,490)

(582)

As at 30.06.16

As at 31.12.15

As at 30.06.15

Balance sheet information

£bn

£bn

£bn

Loans and advances to banks and customers at amortised cost1 

68.5 

51.8 

60.4 

Derivative financial instrument assets

262.8 

213.7 

223.9 

Derivative financial instrument liabilities

253.4 

202.1 

216.7 

Reverse repurchase agreements and other similar secured lending

0.1

3.1 

16.7 

Financial assets designated at fair value

15.4 

21.4 

22.1 

Total assets

379.1 

325.8 

366.2 

Customer deposits2 

17.4 

20.9 

27.9 

Risk weighted assets

46.7 

54.3 

68.6 

Half year ended

Half year ended

Performance measures

30.06.16

30.06.15

Average allocated tangible equity (£bn)

8.5 

11.8 

Period end allocated tangible equity (£bn)

7.8 

10.1 

Loan loss rate (bps)

15 

17 

Notable items  

£m

£m

Provisions for UK customer redress

- 

(65)

Losses on sale relating to the Spanish business  

- 

(21)

YoY

Analysis of income net of insurance claims  

% Change

Businesses

377 

596 

(37)

Securities and loans  

(765)

(68)

Derivatives  

(198)

(63)

Total income net of insurance claims  

(586)

465 

1

As at 30 June 2016 loans and advances included £52.4bn (December 2015: £40.4bn) of loans and advances to customers (including settlement balances of £0.1bn (December 2015: £0.3bn) and cash collateral of £28.8bn (December 2015: £19.0bn)), and £16.1bn (December 2015: £11.4bn) of loans and advances to banks (including settlement balances of £0.1bn (December 2015: £nil) and cash collateral of £15.0bn (December 2015: £10.1bn)).

2

As at 30 June 2016 customer deposits included settlement balances of £0.1bn (December 2015: £0.2bn) and cash collateral of £14.5bn (December 2015: £12.3bn).

·

Loss before tax increased to £1,904m (H115: £745m). Underlying loss before tax, excluding the impact of notable items increased to £1,904m (H115: £659m) driven by reduced income and increased losses resulting from continued progress on the rundown of Securities and loans, Businesses, and Derivative assets, a £372m impairment associated with the valuation of the French retail, and wealth and investment management businesses in other net expenses, and higher fair value losses on the ESHLA portfolio

·

Total income net of insurance claims reduced £1,051m to a net expense of £586m

-

Businesses income reduced 37% to £377m due to the impact of lower income following the completion of the sale of the Barclays Wealth Americas, UK Secured Lending and Portuguese retail and insurance businesses

-

Securities and loans income decreased £697m to a net expense of £765m primarily driven by fair value losses of £424m (H115: £175m) on the ESHLA portfolio, a one-off loss of £182m due to the restructure of the ESHLA portfolio loan terms and the non-recurrence of a £91m provision release relating to a litigation matter in Q115

-

Derivatives income reduced £135m to an expense of £198m reflecting the active rundown of the portfolios and funding costs

·

Credit impairment charges improved 10% to £55m due to higher recoveries in Europe

·

Underlying total operating expenses improved 6% to £950m reflecting cost savings from ceasing certain investment banking activities in a number of countries and the completion of the sale of several businesses, partially offset by a £180m increase in restructuring charges

·

Other net expenses of £313m (H115: £72m) included a £372m impairment associated with the valuation of the French retail, and wealth and investment management businesses

·

Loans and advances to banks and customers at amortised cost increased 32% to £68.5bn due to an increase in cash collateral assets and the reclassification of £8bn of ESHLA loans now recognised at amortised cost, following the restructure of LOBO loan terms, partially offset by the reclassification of assets on the announced sale of the Asia wealth and investment management business to assets held for sale, and the rundown and exit of historical investment bank assets

·

Derivative financial instrument assets and liabilities increased 23% to £262.8bn and 25% to £253.4bn respectively, due to a rates rally across the three major currencies (GBP, USD, EUR) from December 2015 to June 2016, partially offset by the continued rundown of the derivative back book

·

Customer deposits decreased £3.5bn to £17.4bn due to the increase in collateral received

·

Total assets increased £53.3bn to £379.1bn due to higher derivative financial instrument assets which increased £49.1bn to £262.8bn. Derivative financial instrument liabilities increased £51.3bn to £253.4bn

·

Leverage exposure decreased £15bn to £134bn due to reduced potential future exposure on derivatives and trading portfolio assets

·

RWAs reduced £7.6bn to £46.7bn including a £3bn reduction in Derivatives, a £3bn reduction in Securities and loans, and a £1bn reduction in Businesses RWAs, despite the appreciation of USD and EUR against GBP and other adverse market movements

Africa Banking

Half year ended  

Half year ended

30.06.16

30.06.15

YoY

Income statement information

£m

£m

% Change

Net interest income

982

1,011 

(3)

Net fee, commission and other income

802

848 

(5)

Total income

1,784

1,859 

(4)

Net claims and benefits incurred under insurance contracts

(87)

(81)

(7)

Total income net of insurance claims  

1,697

1,778 

(5)

Credit impairment charges and other provisions

(244)

(194)

(26)

Net operating income

1,453

1,584 

(8)

Total operating expenses

(1,020)

(1,075)

5 

Other net income

2

3 

(33)

Profit before tax

435

512 

(15)

Profit after tax

311

358 

(13)

Attributable profit

156

193 

(19)

As at 30.06.16

As at 31.12.15

As at 30.06.15

Balance sheet information

£bn

£bn

£bn

Total assets

56.0

47.9 

52.2 

Risk weighted assets

36.1

31.7 

34.4 

Half year ended  

Half year ended

Key facts

30.06.16

30.06.15

Period end - ZAR/£

19.63

19.12 

6 month average - ZAR/£1

22.17

18.16 

Barclays Africa Group Limited share price (ZAR)

144.08

182.98 

Barclays Africa Group Limited number of shares (m)

848

848 

1

The average rate is derived from daily spot rates during the year.

Barclays Group  

Q216

Q116

Q415

Q315

Q215

Q115

Q414

Q314

Income statement information

£m

£m

£m

£m

£m

£m

£m

£m

Total income net of insurance claims

5,972 

5,041 

4,448 

5,481 

6,461 

5,650 

4,097 

5,987 

Credit impairment charges and other provisions

(488)

(443)

(554)

(429)

(393)

(386)

(495)

(435)

Net operating income

5,484 

4,598 

3,894 

5,052 

6,068 

5,264 

3,602 

5,552 

Operating expenses

(3,425)

(3,747)

(3,547)

(3,552)

(3,557)

(3,067)

(3,696)

(3,653)

UK bank levy

- 

- 

(426)

- 

- 

- 

(418)

- 

Litigation and conduct

(447)

(78)

(1,722)

(699)

(927)

(1,039)

(1,089)

(607)

Total operating expenses

(3,872)

(3,825)

(5,695)

(4,251)

(4,484)

(4,106)

(5,203)

(4,260)

Other net (expenses)/income

(342)

20 

(274)

(182)

(39)

(101)

(82)

(336)

Profit/(loss) before tax

1,270 

793 

(2,075)

619 

1,545 

1,057 

(1,683)

956 

Tax (charge)/credit

(467)

(248)

(164)

(133)

(324)

(528)

134 

(507)

Profit/(loss) after tax in respect of continuing operations

803 

545 

(2,239)

486 

1,221 

529 

(1,549)

449 

Profit after tax in respect of discontinued operation

145 

166 

101 

167 

162 

196 

168 

171 

Attributable to:

Ordinary equity holders of the parent

677 

433 

(2,422)

417 

1,146 

465 

(1,679)

379 

Other equity holders

104 

104 

107 

79 

79 

80 

80 

80 

Non-controlling interests

167 

174 

177 

157 

158 

180 

218 

161 

Balance sheet information

£bn

£bn

£bn