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Barclays Q3 Results 2020

Barclays has announced its latest financial results for Q3 2020

Financial performance highlights

Group Chief Executive Officer’s review

Jes Staley, Barclays CEO

In this historically challenging year for our customers and clients we have continued to provide huge support to help people through the social and economic impact of the COVID-19 pandemic. This remains a priority, alongside maintaining the financial integrity of the firm and keeping our colleagues safe.

Jes Staley

Group CEO

Webcast

Watch the webcast hosted by Jes Staley, Group Chief Executive and Tushar Morzaria, Group Finance Director.

Replay dial-in details:

All locations: +44 20 3936 3001
USA: 1 845 709 8569
Access Code: 504891

Q3 2020 results webcast

COVID-19 support highlights

COVID-19 support

Q3 updates from across Barclays

Barclays Group

Despite the pandemic, Barclays delivered a Q320 year to date (YTD) Group profit before tax of £2.4bn (Q319 YTD: £3.3bn, included a Payment Protection Insurance (PPI) provision of £1.4bn), a return on tangible equity (RoTE) of 3.6% (Q319 YTD: 5.1%), earnings per share (EPS) of 7.6p (Q319 YTD: 10.4p) and a common equity tier 1 (CET1) ratio of 14.6% (December 2019: 13.8%)

Pre-provision profits, excluding litigation and conduct, increased 9% to £6,871m, benefitting from the Group’s diversified business model, as strong performance in CIB more than offset income headwinds in Barclays UK and CC&P.

Barclays UK banking

Barclays UK

Barclays UK income of £4.7bn down 12% versus prior year reflecting lower interest rates and unsecured lending balances, COVID-19 customer support actions and the removal of certain fees.

Profit before tax, excluding litigation and conduct, was £300m (Q319 YTD: £1,899m). RoTE was 2.5% (Q319 YTD: 17.2%) reflecting a challenging operating environment and materially higher credit impairment charges.

RWAs increased to £76.2bn (December 2019: £74.9bn) driven by the transfer of BPF and growth in mortgages, partially offset by a reduction in consumer loans.

Barclays International

Barclays International income of £12.4bn, up 11% versus prior year

  • Corporate and Investment Bank (CIB) income of £9.8bn, up 24% driven by strong markets income reflecting wider spreads and market share gains1
  • Consumer, Cards and Payments (CC&P) income of £2.6bn, down 21% driven by lower balances, margin compression and reduced payments activity

Profit before tax, excluding litigation and conduct, decreased 19% to £2,833m with a RoTE of 7.6% (Q319 YTD: 10.4%), reflecting a RoTE of 10.5% (Q319 YTD: 9.3%) in CIB and (9.9)% (Q319 YTD: 15.8%) in CC&P

RWAs increased to £224.7bn (December 2019: £209.2bn) primarily due to increased market volatility, client activity and a reduction in credit quality within CIB, partially offset by lower CC&P balances.

1 Data source: Coalition, H120 Competitor Analysis. market share represents Barclays share of the total industry Revenue Pool. Analysis is based on Barclays internal business structure and internal revenues.


Jes Staley - Group Chief  Executive Officer Review

In this historically challenging year for our customers and clients we have continued to provide huge support to help people through the social and economic impact of the COVID-19 pandemic. This remains a priority, alongside maintaining the financial integrity of the firm and keeping our colleagues safe.

For customers, we have provided over 640,000 payment holidays globally1, and this is in addition to some £100m of income foregone in the form of waived overdraft interest and banking charges for our UK customers and business banking clients.

We have now delivered some £25bn through the government support measures to UK businesses.1 This includes 296,000 Bounce Back Loans totalling £9.2bn, around £3bn under the CBILS programmes2, and £12.4bn through the Covid Corporate Financing Facility.1 In addition, we have helped businesses and institutions to access global capital markets, including underwriting over £1tn of new issuance in Q220 and Q320.3

Our £100m Community Aid Package is making a positive difference for thousands of people via hundreds of charities we have supported which are mitigating the impact of COVID-19, including donations to NHS hospital charities, Age UK and Mind.

This support is made partly possible because we have a resilient and diversified business model which means we remain profitable as we weather this crisis, with strong income performance in our CIB more than offsetting headwinds in our consumer businesses.

In the first nine months Group income increased 3% to £16.8bn with pre-provision profits4 increasing 9% to £6.9bn.

Our impairment charges now total £4.3bn, with an additional £608m taken in Q320, a figure down 63% on the previous quarter. We expect the impairment charge in the second half of the year to be materially lower than the first half.

Group profit before tax for the first nine months was £2.4bn, with the Group remaining profitable in each quarter so far.

In Barclays International, CIB income increased 24% to £9.8bn with Markets income up 52% mainly reflecting wider spreads and market share gains.5 Profit before tax in the CIB increased 25% to £3.2bn.

Our CC&P business returned to profitability in the third quarter with profit before tax of £165m, reducing the year to date loss before tax to £449m, which included impairment charges of £1.5bn.

Barclays UK also returned to profitability in the third quarter, with profit before tax of £196m, as economic activity recovered from the spring low point and impairment charges reduced. For the first nine months Barclays UK delivered profit before tax of £264m. Income headwinds in Barclays UK are expected to persist into 2021 including the low interest rate environment.

Group costs excluding litigation and conduct are down 1% at £10.0bn, resulting in positive cost to income jaws of 4%, and an improved cost to income ratio of 59%.

Group RoTE was 3.6% including 10.5% for the CIB; and 2.2% for Barclays UK. The Group generated EPS of 7.6 pence.

In the third quarter Group income was £5.2bn and Group profit before tax increased to £1.1bn due to the non-recurrence of the 2019 PPI provision.

Our CET1 ratio increased 40bps in the quarter to 14.6%, more than 300 basis points above our regulatory minimum. The Board recognises the importance of capital returns to shareholders and will provide an update on its policy and dividends at full year results.

  1. Total payment holidays granted as at 30 September 2020, business lending and commercial paper issuance data as at 19 October 2020.
  2. The Coronavirus Business Interruption Loan Scheme (CBILS) and the Coronavirus Large Business Interruption Loan Scheme programmes (together the CBILS programmes).
  3. Across Equity and Debt Capital Markets.
  4. Excluding litigation and conduct.
  5. Data source: Coalition, H120 Competitor Analysis Market share represents Barclays share of the total industry Revenue Pool. Analysis is based on Barclays internal business structure and internal revenues.