TIDMBARC
RNS Number : 6371X
Barclays PLC
05 May 2021
5 May 2021
Barclays PLC
AGM Statements
Chairman's 2021 AGM statement
Good morning. This is my second Annual General Meeting and I can
tell you that I am as disappointed as you are that we are not able
to meet in person. Whereas last year we had less time to re-plan,
this year we have been able to set things up so that we have a
so-called hybrid annual general meeting, with all of the Board in
attendance - some here in person - and shareholders able to join
remotely, submit live questions as well as questions in advance and
vote in real time using the online platform.
We hope that the successful medical fightback against Covid
continues and that we are able to meet in person next year.
You will hear shortly from Jes, who is going to cover in some
detail the Barclays response to the pandemic. He will talk about
how we have sought to help customers and clients respond to the
economic situation into which we were all thrown early last year.
He will also describe the resilience of the bank, financially and
operationally, and the way in which we have navigated the crisis so
as to be able to post reasonable results for 2020. We are also
starting to look beyond the crisis and Jes will talk about the four
or five priority investment areas for the future.
We are very pleased to have ended the year with a core capital
ratio of over 15% as well as being able to start paying dividends
again. We have completed our GBP700m buyback and, as you will have
seen from last Friday's announcement, 2021 has started well with
every division reporting a return on tangible equity in double
digits. There is still much uncertainty but it is heartening to see
both good results and the benefits of the group's diversified
strategy paying off.
I will not duplicate anymore with Jes' comments, but I would
like to cover one topic which is certainly on Jes' mind, and that
is to thank the 85,000 colleagues at Barclays who have stood
together and performed so resiliently over the last year. This has
been a tough time for many, often personally, and we take off our
hats to all of them, whether they have been coming into a branch or
office or working from home. A big thank you.
Before handing over to Jes, can I touch on some of the bigger
societal matters which concern the bank and its people, perhaps
more profoundly than is sometimes understood.
The bank has reset its purpose this year to "We deploy finance
responsibly to support people and businesses, acting with empathy
and integrity, championing innovation and sustainability, for the
common good and the long term." Purpose statements are cheap. What
is harder to deliver is to make sure that one really thinks about
purpose before taking decisions, large or small. We are now on a
very open journey internally to bring purpose to life. We will be
helped by the fact that the fantastic group of people we work with
naturally get our purpose. The job of the management and the Board
is to make sure that the organisation facilitates and accelerates
this journey and that shareholders understand what we are doing,
including the relevant short term challenges and costs. Over time,
we are totally convinced that there is no clash between purpose and
taking into account the interests of stakeholders, on the one hand,
and the generation of long-term value, on the other.
Let me take the environment. A year ago we recognised that the
bank was not in a very good place here and we committed to aligning
our financing portfolio to the goals of the Paris Agreement, with
an ambition to becoming net zero by 2050, with which I'm sure most
of you are familiar. You provided overwhelming support for this
when voting in favour of the resolution we proposed at last year's
AGM. We know that we have to do more and go further, in two
respects. First we have to deliver - extend our approach to other
sectors, collect more data and report the outcomes as we reduce the
impact of our financing activity on the planet, whether in total
carbon emissions or carbon efficiency. Secondly, we need to lift
the bar higher with some regularity. With that in mind, I can tell
you now that we plan to come back to shareholders next year with a
so-called Say on Climate advisory vote on our approach and progress
including additional targets and sectors, and updated policies for
important parts of the fossil fuel landscape. We are aware that
there are a range of views on the approach to Say on Climate
advisory votes, so we will develop our approach on the back of
proactive consultation with shareholders and other stakeholders
later on this year. We know that not everybody believes we are
committed to delivering on this, so we need to make sure that our
commitments, policies, and our reporting data are sufficiently
robust to refute that doubt.
We will also, as I said in my letter to shareholders in the
Annual Report, be paying more attention to the S in ESG. Like many
businesses we have to do, and will do, more to embrace diversity
and eliminate discrimination. Our retail customer work is, I can
assure you, conducted by people who feel passionately about the
well-being of those customers, the more so if they are in distress,
financial or otherwise. We don't always get things right, but we
seek to do ever better. At the heart of our response is a project
which we call Mindset. The organisation revealed a capacity for
speed, efficiency, and I hope empathy, in response to the crisis,
that was remarkable. We proved that this capacity is already a part
of our DNA, and that we can make it a part of how we serve
customers, every day.
Please take these few words as a description of where we want to
get to. Perhaps you never completely get there - whether on climate
or diversity and inclusion - there is always more that can be done.
However, I'm convinced that with this leadership team and the great
colleagues around the world that Barclays will continue to do
better for the communities which it serves and that that will
underpin its success and value in the future.
I'll now hand over to Jes.
Chief Executive's 2021 AGM statement
Good morning everyone, and welcome to our Annual General
Meeting.
I am sorry we are once again prevented from meeting in person. I
know you will appreciate that the current circumstances mean a
physical AGM is impossible.
We have nevertheless worked hard to offer up our hybrid format
and, regardless of whether you are joining us in person or
digitally, you should feel confident you can put forward your views
and have them recorded and responded to appropriately.
When we met last year, the COVID-19 pandemic was only just
beginning.
The crisis has caused huge economic harm and uncertainty, and
brought a lot of hardship and stress for millions of people. It has
also brought tragedy to many families, including among friends and
colleagues at Barclays. In common with other companies, it has
tested our resilience as a business and our values as a corporate
citizen.
Hopefully, with vaccination programmes advancing globally, we
can now start to see the beginning of the end of this terrible
pandemic. During the course of this year, I am hopeful we can start
to return to a more normal way of life.
As I reflect on the last year, I remain incredibly proud of the
way Barclays stood tall during the crisis, delivering on the
priorities we set for ourselves at the start of the pandemic.
We have tried to support our customers, clients and communities,
particularly those that were most vulnerable to the impacts of the
virus.
We have supported our employees, recognising the challenges they
faced on both a personal and professional level.
And we have preserved our financial integrity as an institution,
staying profitable in every quarter of 2020 and carrying that
performance into a record first quarter of this year.
I want to take a moment to recognise the work of our colleagues
in particular.
From our branches, to our trading floors, to our call centres,
thousands of Barclays' staff continued to go into the office, while
many thousands more had to adapt quickly to remote working in order
to keep Barclays delivering for its stakeholders.
For those who were unable to work during the pandemic, I am
pleased we were able to pay people in full, as well as offer
financial support for things like childcare and
self-quarantine.
Our colleagues were the driving force that enabled us to play
our part in containing the damage that this terrible disease has
caused. Thanks to them, Barclays made a real difference in a lot of
lives at a time when it was sorely needed.
Over the course of the year, we provided over 680,000 payment
holidays to our customers, waived around GBP100 million in interest
and overdraft fees and committed a further GBP100 million to
charities supporting the most vulnerable through our Community Aid
Package.
That support continues where our help is needed, most recently
with a GBP1m donation to charity partners in India to buy medical
supplies for communities still facing real hardship there.
We also helped our clients raise GBP1.5 trillion in the global
capital markets in the last three quarters of last year, and we
have extended close to GBP30 billion to British companies through
the UK Government lending schemes. In many cases, that meant
businesses were able to keep working and employing people
throughout the crisis.
Through a difficult year, I am pleased at how resilient our
performance proved.
Our decisions to help vulnerable customers and clients, to
protect jobs for our employees and to build in exceptionally strong
impairment reserves, all meant that our overall profitability in
2020 was lower than we would like. Group profit before tax for the
Full Year was GBP3.1bn, with a Group Return on Tangible Equity of
3.2%, including 9.5% for our Corporate and Investment Bank.
We are now starting to see profitability improve
significantly.
We delivered well beyond our RoTE target of greater than 10% in
Q1, with a Group Return on Tangible Equity of close to 15%. Indeed,
all three of our major lines of business delivered a Return on
Tangible Equity that was greater than 10%, which is a level of
profitability the bank has not had in over a decade.
We also remain focused on costs, applying good discipline over
the course of the year, while still investing in growth. Our 2020
cost to income ratio was 64%, and was 61% in the first quarter of
this year. We continue to target a Group cost to income ratio of
below 60% over time.
We also remain in a strong capital position, with a CET1 ratio
of 14.6%. We anticipate some capital headwinds in 2021, but we
nevertheless remain significantly above our CET1 ratio target of
between 13 and 14% and well above our minimum regulatory
requirement, with GBP8.8bn of provisions set aside for
impairments.
I am pleased that the strength of our business has allowed us to
re-establish capital distributions, with the Board approving a
total payout equivalent to 5p per share in February 2021,
comprising a 1p per share 2020 full year dividend and a GBP700m
share buyback, which completed in April. We will be providing a
further update on capital distributions in due course.
Over the year, our performance has benefitted significantly from
our business model as a British universal bank. This gives us
balance between consumer banking and wholesale banking.
Our consumer businesses felt the impact of the pandemic most
acutely, with Barclays UK income down 14% last year and Consumer
Cards and Payments down 22% primarily caused by lower credit card
balances.
At the same time, in our wholesale business, Corporate and
Investment Banking income was up 22%, driven by Markets and Banking
delivering standout income performances, up 45% and 8% respectively
in 2020.
That left Barclays International up 8% overall, stabilising
Group income at a time of stress and helping us deliver resilient
performance through a difficult macroeconomic cycle.
We have carried the benefits of this diversification into the
first quarter of this year. The Corporate and Investment Bank had
another strong quarter, achieving a Return on Tangible Equity of
roughly 18%.
Geographically, almost half of our income now comes from outside
the UK, while well over half is non-interest income, continuing to
position us well in the current low rate environment.
This income composition continues to show our British universal
banking model working well.
We remain focused on the sustainable impact of our business, and
on meeting our ambition to be a net zero bank by 2050.
Last month, we were pleased to join other banks in forming the
Glasgow Financial Alliance for Net Zero, ahead of the COP 26
climate summit later this year.
As part of our commitment to aligning all of our financing to
the goals of the Paris Agreement, we announced in November 2020
that we have started to apply our BlueTrack methodology to the
Energy and Power sectors in our financing portfolio. In March, we
announced we are extending BlueTrack to include two further
sub-sectors, Cement and Metals, and we will continue to add sectors
in this way until our entire portfolio is covered.
We are also actively helping clients with the transition to a
low carbon economy. For example, we have recently advised National
Grid on a series of large transactions that will significantly
enhance their central role in the delivery of the UK's net zero
targets.
As the global economy begins to emerge from the pandemic, I am
optimistic about the trajectory for recovery.
We are seeing some positive signs in our Spend data, drawn from
our UK consumer cards, and from merchant acquiring, which together
tracks nearly 40% of all consumer transactions in the UK.
In addition to the improving Q1 trend, we saw a 72% uplift in
the number of payments processed by businesses in the first two
weeks of April, compared to the same time last year. Encouragingly,
spending in some of the hardest hit sectors, including hospitality
and travel, is starting to pick up.
As consumer spending increases, we expect there will be growth
in unsecured lending balances, though it will take time to rebuild
interest-earning balances.
Mortgage growth also remains robust, with applications
continuing to stay at elevated levels throughout Q1 and pricing at
attractive margins. We have grown the mortgage book by GBP3.6bn in
the first quarter, one of the strongest quarters ever.
Looking ahead, I am also optimistic about our prospects to grow
our company, strengthen our existing diversification and deliver
more to shareholders.
We have clear strategic growth priorities.
First, we will continue to invest in our role as a major
participant in the global capital markets that drive the world's
economic growth. These markets are themselves growing as businesses
and institutions increasingly turn to them for funding. Barclays is
now the only British global investment bank with a leading presence
in both the US and UK, competing at scale as many of our European
competitors pull away. We want to build from this position,
increasing our market share in debt and equity underwriting.
Second, we want to accelerate the geographic roll out of
Barclays' commercial banking expertise, adding to our historic
strength in the UK by targeting expansion in mainland Europe and
the US. In doing so, we will help companies around the world manage
their core financial needs, from liquidity management, to payments
processing, to trade finance.
Third, we will invest in the expansion of our wealth management
business in the UK. Central to this is the extension of access to
our investment platform and advice services to eligible banking
customers. We should be a major provider to hundreds of thousands
more UK consumers as they plan for the future and invest in more
attractive returning assets.
And finally, we are investing in our consumer banking and
payments businesses. Looking at our business by activity rather
than division, Barclays' income now comes from one of three
sources: Lending; Transacting; and Payments. That third leg,
Payments, now accounts for some 8% of the Group's total income or
GBP1.7bn last year. Taken as a whole, we believe payments can
generate an additional GBP900m of income over the next three
years.
We also know there are parts of our business that face long-term
strategic challenges.
Beyond the immediate impacts of the pandemic, UK retail banking
continues to operate in a near-zero interest rate environment, with
lower charges for services and many core banking provisions
available for free. Barclays UK has a strong position in the market
and returning it to sustainable profitability is a priority.
Specifically, we need to deliver a better, more digital bank for
consumers and small businesses; we need to continue to focus on
running the business efficiently; and we need to increase our
commercial engagement with customers.
But we shouldn't forget that Barclays UK is a business that, in
the relatively benign circumstances of the decade prior to 2020,
regularly produced RoTEs averaging in the high teens. It remains a
very good business, with strong fundamentals, and I expect to see
performance improve markedly as the economy returns to normal.
So in summary, let me say again how pleased I am with our
performance over the past year.
With a strong balance sheet and competitive market positions
across the Group, as well as encouraging prospects to grow our
business and provide improved returns for shareholders, I believe
we are well-placed for the future.
At the same time, I am proud to be able to say that Barclays did
the right thing throughout the pandemic. This crisis is not over,
but it is my view that we did much to live up to our 330-year
heritage in the way we supported our communities throughout the
pandemic. Now, as the economic recovery takes hold, we have an
opportunity to play our full part in supporting the recovery.
Thank you.
-S -
For further information, please contact:
Investor Relations Media Relations
Chris Manners Tom Hoskin
+44 (0)20 7773 2136 +44 (0)20 7116 4755
About Barclays
Barclays is a British universal bank. We are diversified by
business, by different types of customer and client, and geography.
Our businesses include consumer banking and payments operations
around the world, as well as a top-tier, full service, global
corporate and investment bank, all of which are supported by our
service company which provides technology, operations and
functional services across the Group. For further information about
Barclays, please visit our website home.barclays
Forward-looking statements
This document contains certain forward-looking statements within
the meaning of Section 21E of the US Securities Exchange Act of
1934, as amended, and Section 27A of the US Securities Act of 1933,
as amended, with respect to the Group. Barclays cautions readers
that no forward-looking statement is a guarantee of future
performance and that actual results or other financial condition or
performance measures could differ materially from those contained
in the forward-looking statements. These forward-looking statements
can be identified by the fact that they do not relate only to
historical or current facts. Forward-looking statements sometimes
use words such as 'may', 'will', 'seek', 'continue', 'aim',
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similar meaning. Forward-looking statements can be made in writing
but also may be made verbally by members of the management of the
Group (including, without limitation, during management
presentations to financial analysts) in connection with this
document. Examples of forward-looking statements include, among
others, statements or guidance regarding or relating to the Group's
future financial position, income growth, assets, impairment
charges, provisions, business strategy, capital, leverage and
other
regulatory ratios, capital distributions (including dividend
pay-out ratios and expected payment strategies), projected levels
of growth in the banking and financial markets, projected costs or
savings, any commitments and targets, estimates of capital
expenditures, plans and objectives for future operations, projected
employee numbers, IFRS impacts and other statements that are not
historical fact. By their nature, forward-looking statements
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and circumstances. The forward-looking statements speak only as at
the date on which they are made. Forward-looking statements may be
affected by: changes in legislation; the development of standards
and interpretations under IFRS, including evolving practices with
regard to the interpretation and application of accounting and
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applicable to past, current and future periods; UK, US, Eurozone
and global macroeconomic and business conditions; the effects of
any volatility in credit markets; market related risks such as
changes in interest rates and foreign exchange rates; effects of
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results, capital distributions, capital, leverage or other
regulatory ratios or other financial and non-financial metrics or
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Additional risks and factors which may impact the Group's future
financial condition and performance are identified in our filings
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Form 20-F for the fiscal year ended 31 December 2020), which are
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