Barclays Q1 2025 Earnings Report

Barclays EPS Results

• Actual EPS: $0.65
• Consensus EPS: $0.61
• Beat/Miss: Beat by +$0.04
• One Year Ago EPS: N/A

Barclays Revenue Results

• Actual Revenue: $10.32 billion
• Expected Revenue: $8.37 billion
• Beat/Miss: Beat by +$1.95 billion
• YoY Revenue Growth: N/A

Barclays Announcement Details

• Quarter: Q1 2025
• Date: 4/30/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, April 30, 2025
• Conference Call Time: 4:30AM ET

Barclays (NYSE:BCS) provides various financial services in the United Kingdom, Europe, the Americas, Africa, the Middle East, and Asia. The company operates through Barclays UK and Barclays International division segments. It offers financial services, such as retail banking, credit cards, wholesale banking, investment banking, wealth management, and investment management services. In addition, the company engages in securities dealing activities. The company was formerly known as Barclays Bank Limited and changed its name to Barclays PLC in January 1985. Barclays PLC was founded in 1690 and is headquartered in London, the United Kingdom.

Barclays Q1 2025 Earnings Call Transcript

Presentation

[Operator]

Welcome to Barclays Q1 twenty twenty five Results Analyst and Investor Conference Call. I will now hand over to C. S.

[Operator]

Venkatakrishnan, Group Chief Executive, before I hand over to Anna Cross, Group Finance Director.

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

Good morning, everyone. Thank you for joining Barclays' first quarter twenty twenty five results call. At our progress update eleven weeks ago, we outlined expectations for the second year of our three year plan. These were to deliver a better run, a more strongly performing and higher return in Barclays. I'm pleased with our performance and progress to date, including in this, the first quarter of twenty twenty five.

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

While the environment has certainly become more uncertain, we are firmly on track to achieve the full objectives of our plan, including approximately 11 return on tangible equity for 2025. Our confidence reflects the inherent diversification of our business, the careful and proactive approach which we adopt to managing risk, and our ongoing focus in delivery of operational efficiency. All of this is supported by a robust balance sheet, including a 13.9% CET1 ratio at the end of the first quarter. This is intentionally towards the top of our 13% to 14% target range. In addition, we are supported with very strong liquidity.

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

In the first quarter, Barclays generated a return on tangible equity of 14 percent. This was achieved even if tangible book value grew 11% year on year to $3.72 pence. Total income for the first quarter was £7,700,000,000 and importantly, the quality and stability of our income continues to improve. Looking ahead, we remain confident in our income growth profile. And today, we are upgrading 2025 NII guidance for Barclays UK and the group, reflecting favorable deposit volumes and mix.

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

And we will amplify our top line growth through positive operating leverage as we did again during the first quarter with 6% jaws delivering a 57% cost income ratio in the quarter. Moving on to our Q1 performance. We are improving operational performance across the businesses to drive sustainably higher financial returns. Last quarter, we released around $150,000,000 of the circa $500,000,000 gross cost efficiency savings, which we expect during the year. These savings structurally improve our cost base and the level of consistency of our returns, including beyond 2026.

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

We are generating higher returns in two ways. First, by allocating more capital to the highest returning UK businesses, And second, by improving returns in the lower returning businesses in the bank, namely the Investment Bank and the US Consumer Bank. Across the three UK businesses, we continue to grow our risk weighted assets in the quarter and delivered returns at or around the full year '26 target levels. Returns in the Investment Bank were supported by ongoing execution of management actions and strong activity in markets, in particular, in fixed income and credit where we monetized activity well and continued a disciplined approach to risk management. As you would expect in a period of uncertainty, weaker client confidence is delaying investment banking transactions.

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

But for us, this has been more than offset by the benefits of the impact of volatility on trading revenues and markets. While ROTE in the US consumer bank fell year on year to 4.5%, the operational performance of the business continues to progress as we expected. Finally, we are continuing to simplify our businesses. Two weeks ago, we announced a long term partnership with Brookfield to transform our payment acceptance business. We are looking forward to working closely with our partner to enhance the client experience, drive long term growth, and improve financial performance for this activity.

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

Earlier in the quarter, we completed the sale of our German consumer finance business. So while we remain focused executing our strategy and achieving our targets, we are obviously paying close attention to the recent market volatility and what it may imply for economic growth and business activity. And so before I hand over to Anna, let me offer some reflections on the current backdrop. I want to emphasize at the outset that our strategy has been designed to deliver in a range of economic and financial environments, and I reiterate our confidence in achieving the targets which we have set out financially and operationally for 2025 and 2026. Our role as ever is to help clients navigate the changes in the environment.

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

We must do so while prudently managing our own risk. We are well positioned to do this. We start with a business mix that is diversified geographically across wholesale and retail and by product. And in fact, all of this is well illustrated by the first quarter results which we are discussing. Last but not least, our customers start from a resilient position.

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

In The UK, household balance sheets are robust and spending trends have been stable. In our US consumer businesses, our balances are skewed to prime and super prime customers. And spending and payment rates across our US customer cohorts have remained stable, including among lower FICO customers. On the wholesale side, corporates are cautious about new borrowing and demonstrated desire to maintain liquidity. Having said all that, the current environment and market volatility undoubtedly require attention and management.

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

Looking ahead, we expect net interest income to grow further and for markets revenues to be roughly commensurate with volatility. However, transactional and lending income could slow as companies and individuals become more cautious. This income mix provides a good measure of structural protection and stability. On top of this, we have to protect ourselves as we always do with active risk management. We have long established programs to transfer and hedge risk, and we will continue to do so as warranted by this environment.

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

Finally, we continue to provision prudently across all our portfolios. In conclusion, while we recognize the risks that are inherent in the current environment, we remain confident in our income outlook and are positioning us ourselves carefully to navigate through this current circumstance. We remain committed to confident in delivering our 2025 guidance and 2026 targets, including an approximately 11% RoTE and a progressive capital distribution this year. I will now hand over to Anna to take us through the first quarter financials.

[Anna Cross, Group Finance Director at Barclays]

Thank you, Venkat, and good morning, everyone. Slide four summarizes the financial highlights for the first quarter. Before going into the detail, I would remind you that we are focused as ever on what we can control. The plan and targets we called out at the investor update are based on realistic assumptions about the external environment. These are unchanged from the full year results and are shown in the appendix.

[Anna Cross, Group Finance Director at Barclays]

The group's diversified business model by income and geography helps support returns in a range of environments, delivering a q one ROTE of 14%. This was against the previous year's 12.3 with much of the improvement reflecting income growth across all five divisions, particularly the Investment Bank and Barclays UK. Operating leverage is a key aspect of the plan to structurally improve group return. Income rose by 11%, while costs rose by 5%, delivering 6% positive jaws and driving a 19% increase in profit before tax to 2,700,000,000.0. This performance was further amplified by the effect of the share buybacks during the past year, leading to a 26% increase in earnings per share.

[Anna Cross, Group Finance Director at Barclays]

I remain focused on four aspects of performance, income stability with an increased emphasis on growth, cost discipline and progress on efficiency savings, credit performance, and a robust capital position. These underpin our aim to deliver high returns on a sustainable, predictable and consistent basis. I'll now cover these in more detail, starting with income on Slide six. Income in Q1 increased 700,000,000 to 7,700,000,000.0. This growth was broad based, including from stable income streams in retail, corporate and financing activities within markets.

[Anna Cross, Group Finance Director at Barclays]

In the Investment Bank, we captured the benefit of greater market volatility during the quarter, supported by our investment across the business. And in Barclays UK, stronger than expected deposit trends are supporting higher NII as shown on the next slide. Group net interest income increased 13% year on year to GBP 3,000,000,000. In Barclays UK, we now expect more than GBP £7,600,000,000 of NII during FY 2025, up from circa £7,400,000,000 previously. Two changes have led to this improvement in our outlook.

[Anna Cross, Group Finance Director at Barclays]

First, Q1 seasonal deposit volumes were higher than we expected, particularly in current accounts consistent with more normalized behavior. Second, the mix of savings has stabilized faster than we expected. This improvement in deposit mix supports our confidence in lowering KefcoBank's post acquisition funding costs. These developments and a strong start to the year across other businesses mean we now expect group NII, excluding the IBN head office, to be more than 12,500,000,000 for FY '25, up from circa 12,200,000,000.0 previously. The continued strength of deposits also supports greater longer term income stability via the structural hedge.

[Anna Cross, Group Finance Director at Barclays]

We have now locked in 10,200,000,000.0 of gross structural hedge income over the next two years, up from 9,100,000,000.0 last quarter, and this income will build further as we reinvest maturing hedges. We said in February that we expect to reinvest three quarters of maturing hedges at a 3.5% yield. In q one, we were able to lock in hedges at a higher rate than our assumption with a stable hedge notional. Continued deposit strength means we now expect to reinvest around 90% of maturing hedges during 2025 and 2026 versus 75% previously. Given this reinvestment profile and our planning assumptions for 3.5 swap rates, we expect the contribution from the structural hedge to continue well beyond 2026.

[Anna Cross, Group Finance Director at Barclays]

Moving on to costs. The group cost to income ratio was 57% in Q1. This provides a strong foundation to deliver guidance of circa 61% in 2025 and the high fifties target in 2026 with scope to improve further thereafter. Total costs increased by a hundred and 89,000,000 year on year with around half of this increase related to run rate costs for Tesco Bank. Q one costs also included circa 50,000,000 for the employee share grant announced at the full year results.

[Anna Cross, Group Finance Director at Barclays]

These and other investments in business growth and inflation were partially offset by around a hundred and 50,000,000 of gross efficiency savings as part of the 500,000,000 we expect in 2025. Expenses associated with structural cost actions were modest in q one and are likely to be weighted towards the second half of twenty twenty five and within the 200 to 300,000,000 normal annual range. Turning now to impairment. I know that developments in The US, in particular, are a big focus, so we have included some additional color on the positioning of our US card business in the appendix. Customer behavior does not reflect risks to the economic outlook, and we start from a resilient position, including an IFRS nine coverage ratio of 10.4% or 8.3% on a CECL basis.

[Anna Cross, Group Finance Director at Barclays]

Both thirty and ninety day delinquencies were stable in the quarter as you can see from the two lines on this page. The USCB loan loss rate of five sixty two basis points increased versus Q4, reflecting reserves build for higher seasonal balances and the post model adjustment. I'll discuss this more on the next slide in the context of the group. The Q1 group impairment charge of $600,000,000 equated to a loan loss rate of 61 basis points modestly above our 50 to 60 basis points through the cycle guidance. As a reminder, our impairment charge is based on consensus economic forecast prevailing towards the end of the quarter.

[Anna Cross, Group Finance Director at Barclays]

These forecasts were largely unchanged from FY '20 '4 and so do not reflect elevated US economic uncertainty. To address this and consistent with our approach to uncertainty in the past, we increased the probability weighting of downside scenarios in our IFRS nine calculations for US portfolios. This led to a net post model adjustment of 74,000,000, included within the US consumer bank and the investment bank. The impact for US cards relate mainly to a change in the weighted average peak US unemployment rate from 4.7% to 5.2% resulting in a 38,000,000 adjustment. While in the investment bank, a reduction in the weighted average US GDP growth from 1.6% to point 8% led to a net 36,000,000 model adjustment.

[Anna Cross, Group Finance Director at Barclays]

Outside of The US, the increase in the Barclays UK loan loss charge was mainly driven by the addition of Tesco Bank. This included a circa 30,000,000 charge for the post acquisition stage migration of some Tesco Bank balances, which should diminish beyond q one. Aside from Tesco Bank, the loan loss rate for Barclays UK increased modestly but remains low. You can see financial highlights for Barclays UK on slide 12, but I will talk to slide 13. ROCE was 17.4% in the quarter and total income rose 14% year on year to 2,100,000,000.0.

[Anna Cross, Group Finance Director at Barclays]

The integration of Tesco Bank is progressing well with the improved deposit mix providing greater confidence on lower post acquisition funding costs. As a result, we now expect circa 500,000,000 of NII from this business in FY '25 included within the updated NII guidance versus circa £400,000,000 we expected previously. Stronger structural hedge income also supported greater NII versus Q4 and more than offset product margin headwinds. Non NII of GBP $252,000,000 was weaker due to seasonally lower customer spend, and we continue to expect a quarterly run rate above GBP $250,000,000. Overall, income growth of 14% exceeded cost growth of 9%, enabling the cost to income ratio to fall to 56% despite higher investments and run rate costs for Tesco Bank.

[Anna Cross, Group Finance Director at Barclays]

Moving on to the Barclays UK balance sheet. Deposits in the quarter were stronger than expected with balances down only GBP 1,100,000,000.0, consistent with a more normalized behavior. The mix of deposits continues to develop favorably with customers choosing to retain liquidity through current accounts and instant access savings accounts. Loan growth also continued in Q1 with GBP 1,900,000,000.0 of net lending driven by mortgages, partially offset by lower business banking lending as clients continue to repay COVID era loans. Indicators of future lending activity continue to improve as we pursue our strategy to deploy capital into The UK.

[Anna Cross, Group Finance Director at Barclays]

The momentum and breadth of UK growth that we saw in the second half of twenty twenty four continued in the first quarter. Gross mortgage lending remained strong, including among home movers and first time buyers, supporting net lending of 2,200,000,000.0. We acquired 386 new credit card customers as part of our strategy to regain market share in unsecured lending. This should support future growth in balances as customers' appetite to borrow normalizes. And we saw continued deployment of risk weighted assets in the UK Corporate Bank supporting GBP 1,300,000,000.0 loan growth as clients continue to draw down lending facilities.

[Anna Cross, Group Finance Director at Barclays]

Moving on to Slide 17. UK Corporate Bank delivered a Q1 rate of 17.1%. Income growth of 12% exceeded cost growth of 3%, leading to an improved cost to income ratio of 53%. NII was up 23% year on year, reflecting higher average lending and deposit balances, while non NII fell 10%. While this line can be volatile, we expect investments in our digital and lending propositions to drive non NII growth over time.

[Anna Cross, Group Finance Director at Barclays]

Impairments remained low and stable, decreasing quarter on quarter with lower single name charges. Turning now to Private Bank and Wealth Management. Q1 RoTE was 34.5%. Client assets and liabilities grew versus q four, including net new assets under management of 1,000,000,000, and income growth of 12 exceeded cost growth of 9%, leading to a cost to income ratio reduction to 68%. As previously guided, you should expect an increase in investment costs in the quarters to come to support adviser growth, product development, and digital capabilities.

[Anna Cross, Group Finance Director at Barclays]

Turning now to the Investment Bank. Q1 RoTE of 16.2% was supported by income growth across most areas of the IB. Total income was up 16% year on year, while total costs rose 5%, resulting in positive jaws and a cost to income ratio of 54%. Capital productivity measured by income over average RWAs was 7.7% or a 20 basis points better year on year. More now on income by business on Slide 22.

[Anna Cross, Group Finance Director at Barclays]

Using the US dollar figures as usual to help comparisons to US peers, market income was up 16% year on year. FICC rose 21% with particular strength in macro products across rates and FX and in securitized products. Equities income was up 9% or by 27% excluding the prior period's one off gain on Visa B shares. Financing and equity derivatives were particularly strong. Investment banking fees rose 4%.

[Anna Cross, Group Finance Director at Barclays]

Our fee share was 3.5%, including an improvement in ECM and advisory. While clients are waiting for a more stable market environment before transacting, pipelines remain strong. In transaction banking, income increased 8% as we continue to implement our treasury coverage model. This also contributed to US deposit balance growth of around 50% year on year, which we see as a lead indicator of transaction banking income growth. And corporate lending income increased strongly year on year, reflecting gains on leveraged finance positions.

[Anna Cross, Group Finance Director at Barclays]

The investment bank is on a multiyear journey to generate higher and more consistent returns. Volatility creates opportunities in markets where we generate around two thirds of investment bank income. Investments we have made into this business allowed us to monetize these opportunities well during q one. We did this while prudently managing risk with stable VaR and no loss days in our trading book. And in banking, we entered into the most recent period of volatility with limited exposure to risk, including in Lev Fin.

[Anna Cross, Group Finance Director at Barclays]

We are also making good progress in our management actions, including in our three focused businesses, equity derivatives, European rates, and securitized products, all while growing the more stable income streams within the investment bank, including financing. Turning now to the US consumer bank. US consumer bank rate was 4.5% in the quarter, including the 38,000,000 post model adjustment I mentioned earlier. Total income was up 1% year on year as lower NII was offset by higher non NII. NII was down 1% with NIM of 10.5% driven by a full quarter impact of rate cuts in Q4 twenty twenty four, which drove spread compression with deposits taking longer to reprice than assets.

[Anna Cross, Group Finance Director at Barclays]

This interest rate risk is hedged with the offsetting benefit reflected in non NII, which increased 9% year on year. We remain confident in achieving NIM of greater than 12% by 2026 and expect meaningful progression during 2025 as the impact of our repricing actions take hold in the portfolio. Total costs were up 5% due to an increase in partner related expense, which is mostly offset in higher noninterest income. We continue to make good progress in increasing digital adoption and driving efficiency. End net receivables increased four percent year on year to $33,000,000,000 on a managed basis, all from organic growth.

[Anna Cross, Group Finance Director at Barclays]

We continue to see strong retail deposit growth, including $2,000,000,000 quarter on quarter and $4,000,000,000 year on year, driven by the tiered savings product that we launched in Q3 twenty twenty four. The percentage of total funding coming from core deposits now stands at 68%, and we expect this to increase going forward in line with our target of greater than 75% in 2026. Moving to the main developments impacting head office. Earlier this month, we announced a long term partnership with Brookfield for our payment acceptance business previously referred to as merchant acquiring. This business is strategically important but had become less able to compete in recent years given technology changes in the sector and absent investment, financial performance was expected to deteriorate.

[Anna Cross, Group Finance Director at Barclays]

Through the partnership, Barclays will invest circa 400,000,000, mostly in the next three years to enhance the range of services, improve efficiency, and support growth. This will begin in Q2 and has no material impact on our current financial targets or guidance. Over time, we expect the partnership to improve the financial performance of the business as part of Barclays Group. If Brookfield choose to increase their ownership interest after three years, our investment will be fully recovered, and we will retain an interest of around 20%. Moving to capital.

[Anna Cross, Group Finance Director at Barclays]

We ended the quarter at the top end of our 13% to 14% target range with a CET1 capital ratio of 13.9%. This included 53 bps of capital generation from profits and a 12 bps benefit from the sale of German consumer finance, partially offset by the 28 bps impact of the GBP 1,000,000,000 share buyback announced at FY twenty twenty four results. RWAs decreased around GBP 7,000,000,000 from Q4 to GBP $351,000,000,000 with FX accounting for circa 3,000,000,000 of the move. The sale of the German consumer finance business reduced head office RWAs by 3,300,000,000.0, while Barclays UK and the UK Corporate Bank saw a combined RWA increase of 800,000,000.0. Investment bank RWAs were 56% of the overall group and broadly flat from Q4 excluding FX despite the higher income and usual Q1 seasonality.

[Anna Cross, Group Finance Director at Barclays]

As usual, a word on our overall liquidity and funding on Slide 29. We have strong and diverse funding, including a 73% LVR and an NSFR of a 36%, and we are highly liquid across currencies with an LCR of a 75. These measures reflect purposeful and prudent management of our balance sheet and risk, delivering resilience and capacity to support customers in a range of economic environments. TNAV per share increased 15p in the quarter and 37p year on year to 372p. Attributable profit added 12p per share during Q1 and the unwind of the cash flow hedge reserve added 4p.

[Anna Cross, Group Finance Director at Barclays]

We expect the majority of the remaining cash flow hedge reserve to unwind by the end of twenty twenty six. This unwind, combined with earnings growth and buybacks, give us confidence that TNAV will continue to grow consistently as it has done for the last seven quarters and to a greater degree than current consensus expectations. So to summarize, we are pleased with the strong performance of the bank in q one, which sets us up well to deliver on all our 2025 guidance as we build towards our 2026 target. Over to you, Venka, for concluding remarks.

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

Thank you, Anna. Five quarters into the three year plan, we remain on track to deliver our goals. We're working hard to deliver sustainable operational and financial improvement across our businesses. This, in turn, we expect will drive higher group returns and shareholder distributions. I'll now open the q and a.

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

As ever, please limit yourself to two questions per person so we can get around as many of you as possible. And as always, please introduce yourself as you ask the questions. Thank you.

[Operator]

Our first question comes from Guy Stebbings from BNP Paribas.

[Guy Stebbings, Executive Director at Exane]

Taking the questions and a good set of results today. I do want to focus on the area which, as you rightly said, gets quite a lot of attention, which is The U. S. Consumer. And thanks for the extra disclosure.

[Guy Stebbings, Executive Director at Exane]

I was hoping you could help us think about book and the strategy as we look forward. So firstly, on the impairment charge, I guess, the quarter, $399,000,000, the actual write offs themselves were flattish and sort of in line with the last four quarters. You've taken the PMA and increased the coverage. So could you talk to the drivers of the increase in the reserve build that goes above and beyond the PMA this quarter perhaps? And in terms of the growth, as we look forward, the strategy is predicated on very much growth in the business, but I think a lot of people would understand you being a little bit more circumspect if delinquency trends look like they were deteriorating.

[Guy Stebbings, Executive Director at Exane]

So my question really is

[Guy Stebbings, Executive Director at Exane]

sort of how wedded are you to growing the book meaningfully as planned and and into higher margin but but slightly higher risk segments? And how easy would it be to pause that growth if you like? Presuming you sort of still feel good in the long term outlook and don't want to exit partnerships, so trying to understand how you weigh up balancing that strategic outlook with the current uncertainty. Thank you.

[Anna Cross, Group Finance Director at Barclays]

Thank you, guys. Thank you for the questions. So I will take the first one, and then I'll then I'll pass the second one to to Venkat. So, you know, as we look at our US consumer business right now, we we have given you additional disclosure. I'm glad that's helpful.

[Anna Cross, Group Finance Director at Barclays]

That's on page 38, and it's a bit more of a holistic view of what's going on, in The US market generally, but also in our book. But really what's happened in q one is as a BAU matter, you've got a slight seasonal elevation in the impairment charge. We normally see that in q one, and it's just reflective of the high levels of consumer spend that we see in q four through the holiday season. Typically, what then happens is you start to see that reverse in q two and beyond. So so far, you know, very straightforward.

[Anna Cross, Group Finance Director at Barclays]

In terms of the PMA, it's worth stepping back and thinking about what we consider when we book impairment, and we're looking at two things. The first is, consumer behavior, and the second is what we expect to happen in the macroeconomic environment. On the first, in consumer behavior, we see no change, You can see that clearly on the charts, delinquencies are relatively low and stable. Actually, we see no change on the second. So US economic consensus forecasts are actually relatively static, and that they're very similar to where they were at the full year.

[Anna Cross, Group Finance Director at Barclays]

But we think that's likely a timing issue, and therefore, it's reasonable for us to assume that they will change in the coming weeks and months, and therefore we're trying to get ahead of that. So we're being thoughtful and methodical. So what we've done is essentially skew the downside bias in the impairment charge to accelerate a bit of coverage here. But just as we step back, the performance of the book itself is extremely robust. Venkat?

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

Yeah. So I think I've said in the past when I look at the book overall, there's about 20 corporate clients, 20,000,000 underlying customers. And I look at the risk, or we look at the risk of this portfolio in four dimensions. The first dimension is who is the partner and what business they are in and so on. The second is related to that, what's the industry?

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

You know, we've had a bias towards travel, and we are looking to been looking to diversify out of travel. We added Gap. We added General Motors, and we chose not to renew American or our share of American. The third is the size and renewal rates. So we like to have a mix that is relatively smaller to our overall portfolio and not a lot of renewals coming in at the same time.

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

And the last one is the actual underlying credit card credit worthiness of the borrower. And through this combination, we like to create a business with a stable risk and high risk adjusted return. So when you take all of this together, we are continuing to want to grow this business. We do think the opportunities are great. Obviously, we will factor in the consumer environment when we do the actual risk selection of customers and look to get good risk adjusted returns.

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

And that risk selection is who do you open an account for and how do you manage credit lines. But we will continue to seek good partners that diversify our book and bring us opportunity.

[Anna Cross, Group Finance Director at Barclays]

Thank you, Guy. Can we go to the next question, please? Operator, could we go to the next question, please?

[Operator]

Of course. The next question comes from Benjamin Tombs from RBC. Please go ahead. Your line is now open.

[Benjamin Toms, Director - Equities at RBC Capital Markets]

Good morning, both. Thank you for taking my questions. Both are really around regulations. Barclays has been a market leader on SRT transactions. And in April, the regulator wrote to all UK banks highlighting concerns in this area.

[Benjamin Toms, Director - Equities at RBC Capital Markets]

Is there any headwinds to capital that we should be considering as a result of implementing any relevant changes that are identified in that letter? And secondly, some of your peers have written to the government asking for a softening in the ring fencing regime. How material could a change in regulation be here for you? From the outside, it feels like you'd be one of the large beneficiaries of any change here. Thank you.

[Anna Cross, Group Finance Director at Barclays]

Thank you, Ben, and good morning. Again, I'll take the first and and then hand, to Venkat for the second. So on SRT, the that we and others received recently, did deal with SRT, but it was actually more focused on the financing of SRT. And to be really clear, we do not finance our own SRT programs, so we're not we're not extending financing to investors who are then ongoing investors in our SRT. So we think that's the focus.

[Anna Cross, Group Finance Director at Barclays]

From our perspective, we've run our colonnade program since 2016. We share the details of each tranche of that with the regulator in order to get capital relief, and we manage the reinvestment risk around that very, very carefully as we've, you know, outlined before. So we're comfortable with our position and wouldn't envisage any capital consequences. Venkat?

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

Yep. So on ring fencing, I think you know that of the major UK banks, we have been opposed to any change and relaxation in the ring fencing regime. So while I agree with what others say that there are restriction in the system, there was obviously a high cost to set up the ring fence. Let's call it a sunk cost now. And there's a little bit of trapped capital and liquidity.

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

And if you release that in the short term, it would be good for banks, and let's argue for some customers. But I think in the long term, it weakens the system because it weakens the post of protection. I think the ring fence is an extremely strong and secure form of depositor protection in The UK. And while it might be short term attractive, I think in the long term, it weakens the system. It weakens the participants in the system, and that includes Barclays.

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

That's why on balance, I do not think we should change the rinse and rinse regime, and I'm a strong supporter of it in its current form.

[Benjamin Toms, Director - Equities at RBC Capital Markets]

Thank you.

[Anna Cross, Group Finance Director at Barclays]

Thank you very much. Perhaps we can go to the next question, please.

[Operator]

The next question comes from Chris Can't from Autonomous.

[Christopher Cant, Head of Banks Strategy at Autonomous Research]

I

[Christopher Cant, Head of Banks Strategy at Autonomous Research]

had two, please. First, on RWAs. How should we think about RWA developments into 2Q, specifically thinking about market risk here given the volatility? Obviously, 1Q was a somewhat unusual quarter where IB RWAs were down on a constant FX basis, didn't seem to demonstrate the usual seasonality. So any color you could give us on how to think about Q on Q RWA developments into 2Q for the IB would be helpful, please.

[Christopher Cant, Head of Banks Strategy at Autonomous Research]

And as I think out to your sort of targets, the 2026 targets that you've given us previously and the circa $50,000,000,000 of RWA growth you expected by the end of twenty twenty six, Obviously, Basel III is being delayed. Card IRB transition, I guess, is probably going to be a '27 event. I know you said it it's sort of ambiguous, but that's not necessarily going to hit you. With the weaker dollar, I guess that's also going to reduce, the sort of RWA growth. How should we be thinking now about where you expect to land in 2026 for for group RWAs relative to that previous $50,000,000,000 growth expectation?

[Christopher Cant, Head of Banks Strategy at Autonomous Research]

And I also just wanted to ask one on The U. S. So thank you again for reconfirming the FX splits for group and IB incoming costs. I think that's helpful for us in thinking about the weaker dollar. But in the event that the US administration applied some section eight ninety nine taxes to UK companies, for instance, due to digital service tax proposals, how would we be best thinking about the possible impact of that for Barclays?

[Christopher Cant, Head of Banks Strategy at Autonomous Research]

Would it simply be a case of taking the, country by country disclosures you give us and multiplying that percentage of PBT by the relevant incremental tax top up? Or is there something more nuanced we need to do in terms of subsidiary financials and that sort of thing? Thank you.

[Anna Cross, Group Finance Director at Barclays]

Thank you, Chris. I think there were at least three questions there, so I will attempt to deal with them in order. So, on the IB RWAs, you know, we we remain fairly clear that the business should operate within the third circa, February of RWAs that that we've allocated to it. And you can see us doing that very, very consistently, actually, since '23. So we were doing it for some time before we even did the investor update.

[Anna Cross, Group Finance Director at Barclays]

This period is is is no different, really. And you can see that nimbleness in RWA deployment in the first quarter. So if you look in the disclosures, you'll see that credit risk RWAs are down, market risk RWAs are up, and counterparty credit risk RWAs are up. So our intention is to manage it nimbly within the framework that we have given them. Sort of to your second part of the question, which is which is really around, the RWA shape from here, I mean, I think the way we think about it, Chris, is that there there is some uncertainty around the, you know, the timing and and the quantum of the regulatory impact, and we've given you our best view.

[Anna Cross, Group Finance Director at Barclays]

That may happen at the beginning of twenty seven as opposed to the end of twenty six, but we don't feel that it undermines the fundamental objective of the plan. And the fundamental objective of the plan is to hold our RWAs and the IB broadly flat, as I've said, and to deploy RWA growth into our highest returning UK businesses. And that part of the plan, which is, if you like, the most strategic part, remains intact. I think as the regulatory environment becomes clearer and those timings become clearer, we can give you sort of exact splits and impacts of that. And then on the final part of your question, so what the what would a US tax change mean for Barclays?

[Anna Cross, Group Finance Director at Barclays]

Well, there are obviously short term and long term differences. So in the short term, what we would see for a rise in US tax rates, for example, would be an increase in deferred tax assets. So you'd see a short term boost to capital, and then, obviously, you'd have a longer term drag from any higher rate. It's a bit too early to give you precise guidance. We're expecting, an initial US tax bill in q two.

[Anna Cross, Group Finance Director at Barclays]

Some of the discussion that's happened around higher rates for non US firms, I mean, clearly hasn't been confirmed or or firmed up into any kind of regulation yet. And I'd just remind you that the IHC is actually a US firm. BBPLC branch isn't, so there is some nuances. You're exactly right within this that we'd have to guide to nearer the time. So I think it's not quite as simple as looking at the country by country reporting, unfortunately.

[Anna Cross, Group Finance Director at Barclays]

Okay. Thank you. Perhaps we can go to the next question, please.

[Operator]

The next question comes from Amit Goel from Mediobanca. Please go ahead. Your line is now open.

[Amit Goel, Managing Director at Mediobanca]

Hi, thank you, and thanks for that extra disclosure on U. S. CB. I just want to check, I mean, obviously, The UK NII has been guided up and the IB Q1 performance has been strong. So just thinking about the 11% RoTE guidance for this year, which has remained the same.

[Amit Goel, Managing Director at Mediobanca]

So just curious, is that to reflect perhaps a bit more uncertainty in the environment? Or is it just a case of just not changing at this point or a bit more risk on that U. CB part of the business? So number one, just curious why the 11% hasn't changed as well. And then secondly, in terms of the hedge benefit beyond 2026, I think you're commenting, obviously, that it remains quite a strong tailwind.

[Amit Goel, Managing Director at Mediobanca]

So just wanted to double check the kind of roll off yield that you're anticipating, say, in 27%. We have about 2.5%. Just wanted to check whether it's in the right kind of ballpark or whether you think actually the roll off yield is a bit lower or a bit higher than that.

[Anna Cross, Group Finance Director at Barclays]

Okay. Thanks, Amit. I'll both of those. So, we've obviously seen a strong Q1, and that's coming through not only in the income line, but all the way through the p and l. So we've got good operating leverage, we, you know, we're pleased with that performance.

[Anna Cross, Group Finance Director at Barclays]

But it's only the first quarter of the year. So all we've done is we've repeated our circa 11% guidance, and I'm not signaling anything by repeating that guidance, whether that be an income cost or impairment. So I'm I'm merely repeating it. On the second question around the hedge benefit, we have said today, that we expect, the hedge momentum to continue beyond 2026. Why have we said that?

[Anna Cross, Group Finance Director at Barclays]

Well, if I take you back to deposits and the stability of deposits, what that means now is that we expect the hedge notional to be broadly stable from here, and that actually takes one of the variables off the table. So all we're doing now is we are comparing, if you like, the prevailing swap with the yield on the hedge, whether that be the average yield or indeed the maturing yield. We haven't given any disclosure on maturing yield beyond '26, but I think if you do this simple math, which I know many of you have done, and just take our planning assumption of 3.5 and push that through, the maturing elements of, '25 and '26, you will find that the average hedge yield in 2027 is below 3.5%. So that's really what we are signaling here. And obviously, as we get closer, we'll we'll talk a bit more about maturing yields, but just a bit too far out for that.

[Anna Cross, Group Finance Director at Barclays]

Hopefully, that's helpful. Okay. Thank you. Can we go to the next question, please?

[Operator]

The next question comes from Alvaro Serrano from Morgan Stanley. Please go ahead. Your line is now open.

[Alvaro Serrano, Managing Director at Morgan Stanley]

Good morning, and apologies if you've already touched on this because I joined a bit late. I was multitasking. On U. S. Cards, I see you have the €40,000,000,000 receivables target you've maintained

[Alvaro Serrano, Managing Director at Morgan Stanley]

And I just wonder with the sort of broader discussions around The U. S. Cycle, you obviously need to sign on new clients, new JVs on to get to that. Is this the right time and the right do you feel there's enough visibility to take on significant portfolios to achieve that €40,000,000,000 Or would you need to wait just to think about sort of medium term target? And then another one on the IBN, on general activity.

[Alvaro Serrano, Managing Director at Morgan Stanley]

Could you maybe give us a bit of color on how the Investment Bank has done during the quarter or maybe even April or by region? What I'm trying to get to is obviously, Q1 is very good, but if volatility comes down, are we suddenly going to see a very quiet sort of performance? And how much of the activity you think how much visibility you have on for the rest of the year? It's a difficult question, but any handholding or color would be much appreciated. You.

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

Alvaro, hi. I'll start with cards. And we covered a little bit of this, but I'll I'll go over it again. And then Anna will talk about the Investment Bank. So on The US cards portfolio, look, the growth is going to come in net receivables from three things.

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

One is organic growth in our existing portfolio. The second is how we choose to flex the lever that we have used of risk transfers. We can do more or less. And if we do less, the receivables are there on our book. And then the third thing is portfolio changes, which is, you know, new accounts or accounts leaving.

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

So on the first one, which is organic growth, we're fairly comfortable that we continue to see organic growth. And, you know, we have a very high credit quality portfolio. We're looking to diversify it amongst certain sectors, but it's a high credit quality portfolio. On the second one, which is risk transfer, that's always a question at the time of what capital benefit we get, what's the price at which we sell it, and whether it suits our risk management. As you say, given that we've chosen not to bid for our portion for a renewal of our portion of American, all else equal, we would want to keep things on our balance sheet.

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

Third is acquisitions or the other disposals. We've renewed a bunch of our other accounts through 2024. I think we've mentioned that in our previous full year earnings. And then, you know, we continue to look in this environment, even in this environment, especially in this environment, at at good quality portfolios that we think rounds out our business. These things are very long term decisions.

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

A typical portfolio takes two to three years to decide to bid and to come to you, and then it's there with you for hopefully seven years. So these are long term decisions, and I wouldn't let the short term stuff in the market, affect that decision making. Anna?

[Anna Cross, Group Finance Director at Barclays]

Thanks, Venka. Alvaro, the only thing I'd add to that is that the, you know, achieving the plan and the returns that we want in USCB is not just only volume either. You know, we're working very hard on margins. We're working very hard on, costs and digitization of the business and and also the capital efficiency as Venkat said. So a a a plan of many parts.

[Anna Cross, Group Finance Director at Barclays]

And let me talk about the IB sort of generally in the quarter, and then I'll pass across to Venkat, who might wanna add at the end. You know, if you if you think about what should have happened to our IB in the quarter given the volatility that we've seen, we should see strong markets revenues in a more subdued banking environment. And that's exactly, you know, the shape of our results very much in line with the market more broadly. And as I look at q one in particular, we've been investing in this business for some time and investing to create a franchise that allows us in order you you know, allows us to perform in a range of environments, and and you see that. So the SIC result's very strong, and I think that reflects our investment in securitized products.

[Anna Cross, Group Finance Director at Barclays]

It reflects our investments in our rates businesses. And equities is strong. Actually, you'll recall there was a one off last year. But, you know, our equities position has been very much driven by the investments that we've made in equity derivatives. So we feel like we're facing the market with a much more complete franchise.

[Anna Cross, Group Finance Director at Barclays]

And of course, our financing business has stability and is probably less impacted by volatility, but you can see good growth in there that's obviously also underpinning FICC and equities. I said we would have expected the IB to be a bit softer and, of course, or investment banking to be a bit softer in q one. And, of course, it has been we feel that's in line with the Street. And in fact, we've seen share gains across, advisory, ECM, DCM, and for the complex overall, albeit in a smaller market. And I'll just remind you that that our planning assumption was for this market to be 10% down year on year, and that's broadly what we see in q one.

[Anna Cross, Group Finance Director at Barclays]

All of this has been underpinned by us being a bit more nimble in RWAs in the IB, as I've said. But we're really focused all the way through the P and L and the performance of the IB. You see good cost control, and you'll also see very, very good risk control. We've disclosed today for the first, time consistently, both our bar progression and indeed our loss days, and you can see we're not taking outsized risk. I should have actually mentioned also a very good performance within the ICB, the International Corporate Bank within within, banking.

[Anna Cross, Group Finance Director at Barclays]

So financing and the ICB are both less sort of impacted by volatility. Venkat, do you wanna comment?

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

Yeah. I'll reemphasize what Anna said at the beginning, which is that if you see the first quarter results, you see the performance you would expect to see in the places you'd expect to see them. And, obviously, we can't talk about the second quarter. We don't. We're about a month into it.

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

But, again, reemphasize what Anna said on the market side. You know, when there's volatility, we aim to put our clients first and to do intermediation and risk management for our clients. That is what we strive to do, and it can be profitable as long as you manage your own risks well, which is what we've tried to do. And then I gave you the data on on the first quarter results of that. So that's what we strive to do every day.

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

And on banking activity, you know, people will wait for clarity until they resume. It could happen sooner than we think. But the overall business is pretty well diversified, whether you look at the investment bank and you look at deposit growth in the international corporate bank, you look at the business in the international corporate bank, you look at markets, or even the whole bank itself, Barclays as a whole.

[Alvaro Serrano, Managing Director at Morgan Stanley]

Thank you so much.

[Anna Cross, Group Finance Director at Barclays]

Thank you. Thank you, Alvaro. Perhaps we could go to the next question, please.

[Operator]

The next question comes from Chris Hallum from Goldman Sachs. Please go ahead. Your line is now open.

[Chris Hallam, Managing Director at Goldman Sachs]

Two quick ones. So given the conservative banking wallet already embedded in your planning assumptions, which, I guess, you just referenced, are there any initiatives either on the cost side or the investment side that you would need to either undertake or delay should 2025 sort of indeed play out as per those wallet assumptions? That's the first question. And then second, you mentioned the substantial increase in transaction banking deposits in The U. S.

[Chris Hallam, Managing Director at Goldman Sachs]

How has that trended post quarter end? So if companies are maybe building liquidity, delaying some investment spend, are you seeing that show up in your deposit volumes? Thank you.

[Anna Cross, Group Finance Director at Barclays]

Okay. Thanks. Thanks, Chris. Thanks for the questions. I'll take the first one, and then I'll hand across to Venkat.

[Anna Cross, Group Finance Director at Barclays]

As I said, that was our assumption for banking. And actually, what we're seeing here is diversification of income working really well across the bank, both in terms of, you know, more than offset by markets activity and also the strength, that we're seeing coming through in in The UK and The UK complex more generally across deposits that's underpinned our upgrade today. So, you know, the the the revenue line appears to be very robust, and we have confidence in it. That said, that does not undermine our focus on costs. You know, it's what we're doing every day.

[Anna Cross, Group Finance Director at Barclays]

It's a key part of of the strategy. You know, you can see that all the way through, the p and l today. Income up by 11%, profits up by 19%. The the plan is to create operating leverage not just at the group, but across every single business, within the group. Overall, I still expect what I expected at the year end, which is for incremental investment to underpin the longer term growth of the plan and investment I'm sorry, inflation to outweigh our, gross efficiencies for the year and for us to see an uptick in costs.

[Anna Cross, Group Finance Director at Barclays]

All of that is contained within the most important cost metric, which is cost income ratio at 61%. That is the number that we are most focused on. It's likely that we'll see some movement in absolute cost. I'm happy with consensus as it currently starts, but it is FX sensitive, and it is performance and volume sensitive. And therefore, I'd really urge you to focus on the cost income ratio target that we've that we've given.

[Anna Cross, Group Finance Director at Barclays]

We feel like 57% in q one is a good down payment against that and should show you how focused we are on operating leverage. Bank up transaction Yeah.

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

So on look. Transaction banking has been an area of great emphasis for us in the last few years. We spoke about it last year. We've spoken about it at our year end earnings. People choose us, and the quantity quantum of deposits is based on two factors.

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

One is the growth in our overall transaction banking business or relationships generally, people's choice of us as a counterparty, which is increasing, and then ultimately, their needs for cash and their use of cash. In this period, we continue to see happily people choosing us as a counterparty newly, and that's good. And that's improving again. And then I think on cash, what you're seeing is growth in deposits in part, what you would expect when people are, you know, being cautious on the deploying of cash for transactions. So you're seeing deposit growth whether it's individuals or it's institutions.

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

It's all what you would normally expect in this environment.

[Chris Hallam, Managing Director at Goldman Sachs]

Okay.

[Anna Cross, Group Finance Director at Barclays]

Thank you. Thanks, Chris. Can we go to the next question, please?

[Operator]

The next question today comes from Pearlie Mong from Bank of America. Please go ahead. Your line is now open.

[Perlie Mong, UK Banks Analyst at Bank of America Merrill Lynch]

Hello. Hi, Anna. So just a couple of questions. One, just quickly touching on, the U. S.

[Perlie Mong, UK Banks Analyst at Bank of America Merrill Lynch]

Cards margin. So obviously, that's been down, but you've talked about some of the drivers, some of the time lags between deposit pricing and asset pricing. I just and I I know you've mentioned that the interest rate risk is already hedged, but I guess the market is pricing in faster and more rate cuts and and on the on The US side for the rest of the year, maybe three or four rate cuts. So if that were to happen, I guess is it already in your planning assumption? And if that were to happen, would you still expect the meaningful progression during 2025 as as you've just talked about.

[Perlie Mong, UK Banks Analyst at Bank of America Merrill Lynch]

So I guess it's number one. Number two, I guess, broadly on the full year '26 greater than 12% returns target. So consensus has just got to about 12%, taking a year to get there. I guess the operating environment is arguably a little bit more challenging. Certainly, impairment looks like it it it is possible that it it will go up given, economic indicators coming down maybe a little bit.

[Perlie Mong, UK Banks Analyst at Bank of America Merrill Lynch]

And I suppose in general, US dollar weakening is probably not super helpful either. So where do you see a gap between your planning assumption and and where consensus is? Because you've re reiterated guidance, so presumably that you see you see maybe some positive to where consensus is currently, notwithstanding maybe a little bit of worsening in credit quality and maybe some some ethics impact as well. So just it would be helpful to understand where you think people might be too pessimistic.

[Anna Cross, Group Finance Director at Barclays]

Okay. Thank you, Perly. So let me deal with The U. S. Cards margin first.

[Anna Cross, Group Finance Director at Barclays]

We've given you our macroeconomic variable assumptions. I think they're on slide 35. So, you know, you you can have a look at those. Obviously, we are expecting further downward pressure on Fed rates. You can see that from there.

[Anna Cross, Group Finance Director at Barclays]

What I would just remind you though is that that matter is hedged. So we've got floating rate assets. We've got largely fixed rate deposits. So you can see that we would have a timing difference in a downward rate environment. We do hedge that interest rate risk, but the nature of those hedges is different from the ones that we have in The UK, and therefore the accounting geography is different.

[Anna Cross, Group Finance Director at Barclays]

So you do see an income offset, but it manifests itself on non interest income. So if you look year on year, you're gonna see non interest income. So I'm not concerned about the the the income overall, but you might see a bit of a split geography between the margin compression and the hedge benefit, which obviously you wouldn't see in The UK. And then if I step back and look at FY 2026, look, we've reiterated and reaffirmed our targets today. We feel like we've got momentum in the business, and we are delivering our plan.

[Anna Cross, Group Finance Director at Barclays]

What you should expect us to do is execute the operational plan and deliver the numbers with no surprises, and that's no different in the current environment than it is, last year or in or indeed the year before. So we're a % focused on that. We've clearly got good income growth. That comes from the diversification of the business. There's clearly a bit of a weak spot in investment banking, but markets, as Venkat's been through benefits from periods of volatility.

[Anna Cross, Group Finance Director at Barclays]

And very importantly, we are seeing a strong underpin here from the upgrade of NII that we've given you, not just for BUK, but for the group as a whole, and that's coming from the strength of deposits in The UK. Our costs are well controlled. Again, you can see we're focused on operating leverage. And whilst there's, you know, more uncertainty in the impairment line, Perleigh, I would not see that uncertainty taking us out with the 50 to 60 basis point range that we've given you for loan loss rate. So we are confident in the delivery of our circa 11 this year and also the targets that we've given you for next year.

[Anna Cross, Group Finance Director at Barclays]

And that's the case for the financial targets and the distribution targets. Okay. Perhaps we can go to the next question, please.

[Operator]

The next question comes from Andrew Coombs from Citigroup.

[Andrew Coombs, Equity Research Analyst at Citi]

Perhaps I just have a couple of follow ons, especially on fixed income result, very strong relative to peers. So any reason why there might be episodic revenues in that or any additional seasonality compared to your peers? And if you could help us think about the breakdown between credit, securitized products, rates and FX. Any color you can share would be helpful. And then the second question, just on your mortgage balances in The U.

[Andrew Coombs, Equity Research Analyst at Citi]

K. Obviously, you've been struggling to grow that for a while, but you've actually

[Andrew Coombs, Equity Research Analyst at Citi]

seen a very good result this quarter,

[Andrew Coombs, Equity Research Analyst at Citi]

GBP 3,000,000,000 Q on Q. How sustainable do you think that is versus how much is that just a pull forward of activity, in light of stamp duty changes? Thank you.

[Anna Cross, Group Finance Director at Barclays]

Okay, Andy. I will start, then Kat may want to add on sick. I mean, nothing much more than I would call out from before. Just a strong performance across the board reflects our investment in the business both in intermediation and in financing. You know, I called out rates, I called out as securitized products.

[Anna Cross, Group Finance Director at Barclays]

There are no one offs in there. And so, you know, where we take, remarks on less than positions, they are not in fixed. They are on our corporate lending line, and we've called that out separately. So I wouldn't call out anyone else. It's a it's a good performance.

[Anna Cross, Group Finance Director at Barclays]

On mortgages, you know, the mortgage market was, robust in q one as a as a market matter. Approvals were up by 15%. Notably within that, house purchase is up by 20. And that's, not just, house purchase, but first time buyers as well. We think both of those two are really good lead indicators.

[Anna Cross, Group Finance Director at Barclays]

Sorry. My voice Let me take a drink of water. They're good indicators for the health of the mortgage market overall. You know, if you step back, you've got rates that are broadly on a downward trend.

[Anna Cross, Group Finance Director at Barclays]

You've got robust and stable house price inflation, and you've got real wage growth. So there may be a bit of pull forward in q one, but honestly, the the the market as a whole is performing well. Okay. Perhaps we can go to the next question, please.

[Operator]

The next question today comes from Edward Firth from KBW. Please go ahead. Your line is now open.

[Ed Firth, Managing Director at Keefe, Bruyette & Woods (KBW)]

Good morning, everybody. Thanks very much. Yeah. I just have two questions. Number one, UK fees look very weak.

[Ed Firth, Managing Director at Keefe, Bruyette & Woods (KBW)]

They're down about, I think, 9% year on year, and they're certainly annualizing at no more than about £1,000,000,000 I guess. That's in The UK business. So could you tell us a little

[Ed Firth, Managing Director at Keefe, Bruyette & Woods (KBW)]

bit about what's going on there and

[Ed Firth, Managing Director at Keefe, Bruyette & Woods (KBW)]

how we should expect that going forward? Is the is the sort of two fifty like the run rate we should be thinking about, or is there something that we that that was in there that means it might pick up as the rest of the year progresses? So I guess that's my first question. The second question is just coming back to risk weighted assets because you talked about how, you know, IB was broadly performing as you might expect in terms of trends in the first quarter. I I would agree with that completely except for risk weighted assets, which have always been up very strongly in the first quarter.

[Ed Firth, Managing Director at Keefe, Bruyette & Woods (KBW)]

With all the volatility, you would have expected them to be up even more, I guess, or I might have done. And yet they were down and down just down quite and I know there was FX in there, but even if strip all that out there, I think they were flat to down. So

[Ed Firth, Managing Director at Keefe, Bruyette & Woods (KBW)]

could you just tell us a little bit

[Ed Firth, Managing Director at Keefe, Bruyette & Woods (KBW)]

more about why why that was? And and is the potential to further reduce that going forward? And can I ask you? You might have told

[Ed Firth, Managing Director at Keefe, Bruyette & Woods (KBW)]

us this, I apologize if

[Ed Firth, Managing Director at Keefe, Bruyette & Woods (KBW)]

I missed it,

[Ed Firth, Managing Director at Keefe, Bruyette & Woods (KBW)]

you told us in one of the back slides, you say you've done $57,000,000,000 I think, of risk transfers at full year '24. Could you update us where we are on that? Is that where that number is now? Is some of this about increasing risk transfers, etcetera, and how that might progress? Thanks very much.

[Anna Cross, Group Finance Director at Barclays]

Ed, there was a lot in that. So let's try and answer it. I'll start and then I'll hand to Venkat. So on UK non NII, we've given you guidance previously for greater than $250,000,000 I'd just repeat that guidance. This number can be a bit lumpy.

[Anna Cross, Group Finance Director at Barclays]

There is no story within the Q1 beyond the fact that Q1 can sometimes be a bit light just because of lower transactional activity, and, honestly, there's nothing more in there to to read into. So, I'd stick to the guidance of greater than than $2.50. On RWAs, you're right. There's a bit of FX in there that's taking it downwards. We haven't elevated the SRT.

[Anna Cross, Group Finance Director at Barclays]

We've said before that the colonnade program, which is the one that impacts the IB, is mature, and we do not expect to extend it. Venkat, do you wanna comment beyond that?

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

I mean, look. I think, you know, we've targeted a level of stability in the investment bank out of you is you've got to expect quarter on quarter, and I've said this before, there'll be some volatility. Right? A couple of billion up does not mean that we're losing this figures. A couple of billion down does not mean we are tightening it up.

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

Right? There is natural client activity. There's volatility in that activity. There are positions that get taken off. There are positions that get added or don't get added.

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

As you might imagine in this environment, you know, the marginal benefit of the marginal allocation is more in markets than in banking based on activity, and that's what you saw in the first quarter.

[Ed Firth, Managing Director at Keefe, Bruyette & Woods (KBW)]

Right. Just just to Ed. Sorry. Just follow on from that then. So, I mean, your tier one is now 13.9.

[Ed Firth, Managing Director at Keefe, Bruyette & Woods (KBW)]

You've obviously right at the top end of your range, you're gonna generate more capital, I guess, in the next quarter. I mean, there's no reason why you shouldn't be doing buybacks bigger than you've done in the past, is there? Just just to clarify that.

[Anna Cross, Group Finance Director at Barclays]

So our capital is 13.9, so it's towards the top end of our range. We did indicate at at the full year that we did expect to operate towards the the the top half, and that was simply because we did expect an increase in the MDA, which is which is now come through. That said, why are we there? We're there because the strategy is working, and we're seeing very good capital generation from the business. That is the strategy.

[Anna Cross, Group Finance Director at Barclays]

And if we keep executing the strategy, as we keep executing strategy, it's not inconceivable that we might go through the top end of that range. But, you know, that's that's a good thing. We've we've given you guidance, that we would expect distributions to be progressive this year. And, you know, we haven't changed our guidance that distributions will be at least 10,000,000,000 over the period of the plan.

[Ed Firth, Managing Director at Keefe, Bruyette & Woods (KBW)]

Sure.

[Ed Firth, Managing Director at Keefe, Bruyette & Woods (KBW)]

Okay. Thanks so much. Okay.

[Anna Cross, Group Finance Director at Barclays]

Thank you. Perhaps we can go to the next question, please.

[Operator]

The next question today comes from Jonathan Price from Jefferies. Please go ahead. Your line is now open.

[Jonathan Pierce, Equity Analyst at Jefferies]

Hello. Good morning, both. Got a couple of questions. The first is a follow-up on Ed's question on capital. You came into this year at 13.6% equity Tier one ratio, 13.3% adjusting for the buyback.

[Jonathan Pierce, Equity Analyst at Jefferies]

It does sound increasingly like you want to operate close to the 14% moving forward. Can I just confirm that that is how we should be thinking about it? I'm just wondering whether there's an element of this relating to the fact that UK RWA growth, your target for end of next year looks looks increasingly stretching and maybe, you know, you're thinking about some sort of inorganic bolt on, which obviously would would consume some some capital in a one off sense there. So that's the first question. The the second question is on sensitivity again, particularly in in The US card book.

[Jonathan Pierce, Equity Analyst at Jefferies]

If I look at your full year downside scenarios, even on downside two, which has got GDP falling over one percentage point this year and next year, unemployment moving to above 7%, the models are telling you that your required stage one and two ECL bills would only be about a hundred and £77,000,000, which feels very low given that, set of macroeconomic assumptions. I mean, I guess the models are, you know, telling us what the models are telling us. But how robust do you think the models are? I guess, into COVID, IFRS nine was quite new. It's bit wet behind years.

[Jonathan Pierce, Equity Analyst at Jefferies]

We're seven to eight years in now. And this obviously applies across the group as well because the sensitivity to downside one and two scenarios is is very limited given the severity of those. So comment on that would be useful. Thanks.

[Anna Cross, Group Finance Director at Barclays]

Okay. Thanks, Jonathan. Okay. So let me start with capital. Venkat may want to comment on this also.

[Anna Cross, Group Finance Director at Barclays]

You're right. We're generating a lot of capital. But as I said previously, that is an outcome of of the plan, and it is intentional. It is deliberate, and it and, you know, it's what you should expect, going forward. We did indicate, at the full year that you should expect us to operate towards the top half.

[Anna Cross, Group Finance Director at Barclays]

And and, you know, I'll just reiterate that as our as our formal guidance, but just reflecting on the fact that we are generating a lot of capital. Just on the the utilization of that capital, you know, we're very focused on deploying 30,000,000,000 in The UK. That plan is intact. As I look at where we are now, we've we've deployed 14,000,000,000 of that, recognizing, of course, that a large part of that has has come from Tesco. But you can see good loan growth in the quarter both from The UK and from the The UK corporate bank.

[Anna Cross, Group Finance Director at Barclays]

If I look at the specifics of lending, you know, the consumer preference at the moment is for secured versus unsecured lending. That's very that's very clear. That's okay. And then as I look at the lending as it's developing in the corporate bank and private banking and wealth management, actually, it's very high quality, and that's reflective of our portfolios. So q one, you know, if I look at that in isolation, the lending's happening.

[Anna Cross, Group Finance Director at Barclays]

Maybe the RWA waiting is a is is a little light. But over the period of the plan, that plan is intact. And I particularly point you to the momentum that we got both around mortgages and cards, on the leading indicators on slide 15. We're going through that j curve in cards. You're going to see interest earning lending and RWAs growing cards from the back end of twenty five with all of that maturing through.

[Anna Cross, Group Finance Director at Barclays]

Venkat, do you wanna comment more on RWAs?

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

No. Look. I think Anna's covered it all. I'd also remind you of the environment in which we are. You would expect us to be on the general side of prudent in in our capital.

[Anna Cross, Group Finance Director at Barclays]

Yeah. Absolutely. And then on the second point, you know, I would I would take the disclosures on IFRS nine as a sensitivity. They're not predictive. They essentially say, what happens if I take my current static balance sheet and I push through a different set of macroeconomic variables.

[Anna Cross, Group Finance Director at Barclays]

What it doesn't take into account is clearly the kind of stage migration that you would see into stage three. It doesn't take into account any, you know, increases of exposure at default. So the fact that customers may draw down as as they become for more financially pressed. But, also, the other thing that it doesn't take into account is credit actions that we might take in order to manage that position. So I wouldn't think of it as a scenario.

[Anna Cross, Group Finance Director at Barclays]

I I would think of it as a as a sensitivity, and and it's quite, know, it's quite a straightforward sensitivity. I don't think it's intended to be predictive. Predictive. The same is true of the PMA that we've taken. That's that's really just a downside bias at this stage.

[Anna Cross, Group Finance Director at Barclays]

Hopefully Okay.

[Jonathan Pierce, Equity Analyst at Jefferies]

Thanks a lot.

[Anna Cross, Group Finance Director at Barclays]

Helpful. Okay. Thank you.

[Anna Cross, Group Finance Director at Barclays]

Next question, please.

[Operator]

Our final question today comes from Robin Down from HSBC. Please go ahead. Your line is now open.

[Robin Down, Analyst at HSBC]

Good morning. Thanks for taking the questions. Just a couple of quickies for me. I think you kind of touched on this a little bit, Anna, in your last answer. But the Barclaycard Consumer UK revenue line doesn't really seem to have made a great deal of progress over the last kind of twelve months despite the kind of the big pickup in card acquisition numbers.

[Robin Down, Analyst at HSBC]

Is that just a kind of lead lag effect? Does it kind of take twelve months for revenues to come through? Or is there some other kind of trend in there when you might expect to see kind of proper revenue growth in that line? And then the second question is more of a clarification. I think Slide eight talks about a 90% reinvestment rate on the structural hedge.

[Robin Down, Analyst at HSBC]

But I think you mentioned earlier that you expected the structural hedge to be stable. Is that 90% unstable? Is that just kind of a very broad definition of stable? Or know, how how should we read that?

[Anna Cross, Group Finance Director at Barclays]

Okay. Thank thank you, Robin. Let let let me deal with those. So on on the Barclaycard line, I mean, we stepped back into the credit card market in 2023. So all you are seeing here really is a is a production line of, those cards acquisitions then, maturing into interest earning lending.

[Anna Cross, Group Finance Director at Barclays]

Actually, if you think about the structure of the market, it tends to be slightly longer dated than twelve months. So you're going to see some pickup in interest earning lending towards the back end of twenty twenty five, but the bulk of this is actually going to be in in 2026. So it is a lead lag effect as you suggest. And then on the on the the second question, you know, we've given you a planning assumption of circa 90%, but, you know, you can see given where deposits have been in the first quarter that the notional has been stable, and we would expect it to be broadly stable. But just, you know, for your planning math, that that's why we said circa '90.

[Anna Cross, Group Finance Director at Barclays]

Nothing

[Anna Cross, Group Finance Director at Barclays]

nothing more to read into it than that. Okay. So I think that brings us to the end of questions for today. And I'd like to thank you for those questions. Thank you for your continued interest in Barclays in what I know is a very busy day, and we will see you either on the road or at the analyst breakfast in a couple of weeks.

[C.S. Venkatakrishnan, Group Chief Executive at Barclays]

Thank you, everybody.

[Anna Cross, Group Finance Director at Barclays]

Thank you.

[Operator]

Thank you. That concludes today's conference call. You may now disconnect.

Participants

Executives

• C.S. Venkatakrishnan, Group Chief Executive
• Anna Cross, Group Finance Director

Analysts

• Guy Stebbings, Executive Director at Exane
• Benjamin Toms, Director - Equities at RBC Capital Markets
• Christopher Cant, Head of Banks Strategy at Autonomous Research
• Amit Goel, Managing Director at Mediobanca
• Alvaro Serrano, Managing Director at Morgan Stanley
• Chris Hallam, Managing Director at Goldman Sachs
• Perlie Mong, UK Banks Analyst at Bank of America Merrill Lynch
• Andrew Coombs, Equity Research Analyst at Citi
• Ed Firth, Managing Director at Keefe, Bruyette & Woods (KBW)
• Jonathan Pierce, Equity Analyst at Jefferies
• Robin Down, Analyst at HSBC