Barclays PLC Interim Results Summary (H1 2024)
Business Context and Reporting Period
This Form 6-K filing reports the Interim Results for Barclays PLC for the six months ended 30 June 2024. The results were approved by the Board on 31 July 2024. The Group operates across Barclays UK, Barclays UK Corporate, Barclays Private Bank and Wealth Management (PBWM), Barclays Investment Bank (IB), and Barclays US Consumer Bank (USCB).
Key Financial Metrics
| Metric | H1 2024 | H1 2023 | Change |
|---|---|---|---|
| Total Income | £13.3bn | £13.5bn | -2% |
| Profit Before Tax | £4.2bn | £4.6bn | -8% |
| Attributable Profit | £2.8bn | £3.1bn | -10% |
| Return on Tangible Equity (RoTE) | 11.1% | 13.2% | -210bps |
| Cost: Income Ratio | 62% | 60% | +200bps |
| Loan Loss Rate (LLR) | 45bps | 44bps | +1bp |
| CET1 Ratio | 13.6% | 13.8% | -20bps |
| Tangible Net Asset Value (TNAV) per Share | 340p | 291p | +17% |
Capital Distributions: The Group announced total capital distributions of £1.2bn for H1 2024, comprising a half-year dividend of 2.9p per share and a share buyback of up to £750m. The Group completed a £1bn share buyback announced with FY23 results.
Material Changes vs. Prior Period
- Income: Group income decreased 2% year-on-year. Excluding inorganic activity (losses on disposals), income was broadly stable. Barclays UK income fell 4% due to mortgage margin pressure and adverse deposit dynamics, partially offset by structural hedge income. Investment Bank income rose 10% driven by higher fee income in Debt and Equity capital markets and a 24% increase in Equities income.
- Expenses: Total operating expenses increased 1% to £8.2bn, including a £120m estimated impact from the new Bank of England (BoE) levy scheme in Q1. Operating costs were broadly stable at £8.0bn, with £0.4bn of efficiency savings offsetting inflation.
- Impairment: Credit impairment charges were £0.9bn, flat year-on-year. The LLR increased slightly to 45bps. US cards impairment charges increased due to anticipated higher delinquencies.
- Capital: The CET1 ratio decreased to 13.6% (from 13.8% at year-end) due to an £8.7bn increase in Risk Weighted Assets (RWAs) driven by seasonal increases and regulatory model changes, partially offset by capital generation from profit.
Guidance, Outlook, and Risks
- 2024 Guidance:
- RoTE: Target remains >10% (c.10.5% excluding inorganic activity).
- Net Interest Income (NII): Guidance for Group NII (excl. IB and Head Office) increased to c.£11.0bn (from c.£10.7bn), driven by higher interest rates and improving deposit dynamics.
- Costs: Target cost: income ratio remains c.63%, including c.£1bn of gross efficiency savings.
- Impairment: Expect an LLR of 50-60bps through the cycle.
- Capital: Target CET1 ratio range of 13-14%.
- 2026 Targets: Target RoTE >12%, total income c.£30bn, and cost: income ratio in the high 50s. Plan to return at least £10bn of capital to shareholders between 2024 and 2026.
- Strategic Transactions:
- Tesco Bank: Acquisition expected to complete in November 2024, adding c.£8bn RWAs and c.£400m annualised NII.
- Disposals: Completed sale of Italian performing mortgage book (£220m loss); announced sale of German consumer finance business (expected completion Q4 2024/Q1 2025).
- Risks and Contingencies:
- Regulatory: FCA skilled person review of motor finance commission arrangements (outcome unknown, next steps expected May 2025). New BoE levy scheme impact estimated at £120m for 2024/25.
- Legal: Ongoing proceedings related to LIBOR, FX manipulation, and US residential mortgage-backed securities. No material adverse effect expected on financial position at this time.
- Macroeconomic: Risks include geopolitical conflicts (Ukraine, Middle East), inflation, interest rate volatility, and potential impacts of 2024 elections in UK, EU, and US.
Investor Verification Checklist
- Inorganic Activity Impact: Verify the £240m pre-tax loss impact from the Italian mortgage and German consumer finance disposals on H1 2024 results.
- Tesco Bank Acquisition: Confirm regulatory approval status and expected completion date (November 2024) for the Tesco Bank retail banking business.
- US Cards Delinquency: Monitor the trend in US cards 30-day and 90-day arrears rates (2.9% and 1.6% respectively) and associated impairment charges.
- BoE Levy Scheme: Track the final charge confirmation for the 2024/25 financial year, currently estimated at £120m.
- Capital Returns: Verify execution of the announced £750m share buyback and the 2.9p dividend payment in Q3 2024.