Half-year Results

RNS Number : 9985T
Barclays PLC
28 July 2022
 

 

 

 

Barclays PLC

Interim Results Announcement

30 June 2022

 

 

Table of Contents

 

Results Announcement

Page



Notes

1



Performance Highlights

3



Group Finance Director's Review

7



Results by Business




  Barclays UK

10



  Barclays International

14



  Head Office

19



Quarterly Results Summary

21



Quarterly Results by Business

22



Performance Management




  Margins and Balances

29



Risk Management




  Risk Management and Principal Risks

31



  Credit Risk

33



  Market Risk

57



  Treasury and Capital Risk

58



Statement of Directors' Responsibilities

74



Independent Review Report to Barclays PLC

75



Condensed Consolidated Financial Statements

77



Financial Statement Notes

87



Appendix: Non-IFRS Performance Measures

115



Shareholder Information

125

 

 

 

 

 

BARCLAYS PLC, 1 CHURCHILL PLACE, LONDON, E14 5HP, UNITED KINGDOM. TELEPHONE: +44 (0) 20 7116 1000. COMPANY NO. 48839.

 

 

Notes

 

This document contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014 (as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018, as amended).

The terms Barclays or Group refer to Barclays PLC together with its subsidiaries. Unless otherwise stated, the income statement analysis compares the six months ended 30 June 2022 to the corresponding six months of 2021 and balance sheet analysis as at 30 June 2022 with comparatives relating to 31 December 2021 and 30 June 2021. The historical financial information used for the purposes of such analysis has been restated. Please refer to Note 1 to the condensed consolidated interim financial statements contained herein for further information. The abbreviations '£m' and '£bn' represent millions and thousands of millions of Pounds Sterling respectively; the abbreviations '$m' and '$bn' represent millions and thousands of millions of US Dollars respectively; and the abbreviations '€m' and '€bn' represent millions and thousands of millions of Euros respectively.

There are a number of key judgement areas, for example impairment calculations, which are based on models and which are subject to ongoing adjustment and modifications. Reported numbers reflect best estimates and judgements at the given point in time.

Relevant terms that are used in this document but are not defined under applicable regulatory guidance or International Financial Reporting Standards (IFRS) are explained in the results glossary.

The information in this announcement, which was approved by the Board of Directors on 27 July 2022, does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2021, which contained an unmodified audit report under Section 495 of the Companies Act 2006 (which did not make any statements under Section 498 of the Companies Act 2006) have been delivered to the Registrar of Companies in accordance with Section 441 of the Companies Act 2006.

These results will be furnished on Form 6-K with the US Securities and Exchange Commission (SEC) as soon as practicable following their publication. Once furnished with the SEC, a copy of the Form 6-K will be available from the SEC's website at www.sec.gov.

Barclays is a frequent issuer in the debt capital markets and regularly meets with investors via formal road-shows and other ad hoc meetings. Consistent with its usual practice, Barclays expects that from time to time over the coming quarter it will meet with investors globally to discuss these results and other matters relating to the Group .

Non-IFRS performance measures

Barclays' management believes that the non-IFRS performance measures included in this document provide valuable information to the readers of the financial statements as they enable the reader to identify a more consistent basis for comparing the businesses' performance between financial periods and provide more detail concerning the elements of performance which the managers of these businesses are most directly able to influence or are relevant for an assessment of the Group. They also reflect an important aspect of the way in which operating targets are defined and performance is monitored by Barclays' management. However, any non-IFRS performance measures in this document are not a substitute for IFRS measures and readers should consider the IFRS measures as well. Refer to the appendix on pages 115 to 123 for further information and calculations of non-IFRS performance measures included throughout this document, and the most directly comparable IFRS measures.

 

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. 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', 'anticipate', 'target', 'projected', 'expect', 'estimate', 'intend', 'plan', 'goal', 'believe', 'achieve' or other words of 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 levels, assets and liabilities, impairment charges, provisions, capital, leverage and other regulatory ratios, capital distributions (including dividend pay-out ratios and expected payment strategies), projected levels of growth in banking and financial markets, projected expenditures, costs or savings, any commitments and targets (including, without limitation, environmental, social and governance (ESG) commitments and targets), business strategy, plans and objectives for future operations, group structure, IFRS impacts and other statements that are not historical or current facts. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements speak only as at the date on which they are made. Forward-looking statements may be affected by a number of factors, including, without limitation: changes in legislation, regulation and the interpretation thereof, the development of IFRS and other accounting standards, evolving practices with regard to the interpretation and application of accounting standards, emerging and developing ESG reporting standards, the outcome of current and future legal proceedings and regulatory investigations and any related impact on provisions, the policies and actions of governmental and regulatory authorities, the Group's ability along with governments and other stakeholders to measure, manage and mitigate the impacts of climate change effectively, environmental, social and geopolitical risks and incidents or similar events beyond the Group's control, and the impact of competition. In addition, factors including (but not limited to) the following may have an effect: capital, leverage and other regulatory rules applicable to past, current and future periods; UK, US, Eurozone and global macroeconomic and business conditions; volatility in credit and capital markets; market related risks such as changes in interest rates and foreign exchange rates; changes in valuation of credit market exposures; changes in valuation of issued securities; changes in credit ratings of any entity within the Group or any securities issued by such entities; changes in counterparty risk; changes in consumer behaviour; the direct and indirect consequences of the Russia-Ukraine War on European and global macroeconomic conditions, political stability and financial markets; direct and indirect impacts of the coronavirus (COVID-19) pandemic; instability as a result of the UK's exit from the European Union (EU), the effects of the EU-UK Trade and Cooperation Agreement and the disruption that may subsequently result in the UK and globally; the risk of cyber-attacks, information or security breaches or technology failures on the Group's reputation, business or operations; the Group's ability to access funding; and the success of acquisitions, disposals and other strategic transactions. A number of these influences and factors are beyond the Group's control. As a result, the Group's actual financial position, future results, capital distributions, capital, leverage or other regulatory ratios or other financial and non-financial metrics or performance measures or ability to meet commitments and targets may differ materially from the statements or guidance set forth in the Group's forward-looking statements. Additional risks and factors which may impact the Group's future financial condition and performance are identified in Barclays PLC's filings with the SEC (including, without limitation, Barclays PLC's Annual Report on Form 20-F, as amended, for the financial year ended 31 December 2021), which are available on the SEC's website at www.sec.gov.

Subject to Barclays' obligations under the applicable laws and regulations of any relevant jurisdiction (including, without limitation, the UK and the US), in relation to disclosure and ongoing information, we undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

Performance Highlights

 

Barclays delivered profit before tax of £3.7bn and return on tangible equity (RoTE) of 10.1%, with a half year dividend of 2.25p per share and intends to initiate a further share buyback of up to £500m

C. S. Venkatakrishnan, Group Chief Executive, commented

"This has been a strong first half with Group income up 17%1 to £13.2bn and a RoTE of 10.1%.

The broad-based income growth that we achieved in the first quarter continued across all three operating businesses into the second quarter.

Our performance in the first half shows the resilience and advantage that diversification at all levels brings, both across the bank and within our businesses. It also underlines the value of investment into our three strategic priorities in next generation consumer finance, sustainable growth across the Corporate and Investment Bank (CIB), and the transition to a low-carbon economy.

Profit before tax was £3.7bn, and attributable profit was £2.5bn, after absorbing charges net of tax of £0.6bn relating to the Over-issuance of Securities.

We are alert to the pressure that the rising cost of living will have on our customers and colleagues. We have a range of measures in place to help and are looking to do more. With our resilient income growth and balance sheet strength, we can provide that support while distributing excess capital, having announced a half year dividend of 2.25p per share and an intention to initiate a further share buyback of £500m."

 

 

Key financial metrics:


Income

Cost: income ratio

Profit before tax

Attributable profit

RoTE

EPS

CET1  ratio

TNAV per share

Total capital return

H122

£13.2bn

69%

£3.7bn

£2.5bn

10.1%

14.8p

13.6%

297p

c.5.25p equivalent

Q222

£6.7bn

75%

£1.5bn

£1.1bn

8.7%

6.4p


H122 performance2:

· Attributable profit was £2.5bn (H121: £3.8bn) and RoTE was 10.1% (H121: 16.1%) having reflected a £0.6bn net of tax impact for the Over-issuance of Securities in the US (Over-issuance of Securities3). Excluding this impact, RoTE was 12.5%

· £0.6bn impact of Over-issuance of Securities is comprised of:

· £0.4bn post tax expected net impact of the rescission offer losses, driven by £1.3bn of costs as a result of market movements and interest, substantially offset by £0.8bn of income from hedging arrangements

· £0.2bn of costs relating to an estimated monetary penalty from the SEC

· Excluding the impact of Over-issuance of Securities:

· Group income was £12.4bn, up 10% year-on-year , driven by strong client activity in Markets, recovery in both Consumer, Cards and Payments (CC&P) and Barclays UK more than offsetting the impact of a weak fee pool in Investment Banking

· Group costs were £7.7bn (H121: £7.2bn) including other litigation and conduct charges of £0.4bn (H121: £0.1bn), with operating costs (excluding litigation and conduct) up 2% year-on-year

· On a statutory basis, including the impacts of Over-issuance of Securities:

· Group income was £13.2bn, up 17% year-on-year, including the £0.8bn of income from hedging arrangements related to the Over-issuance of Securities

· Credit impairment charges were £0.3bn (H121: £0.7bn net release) with provision levels broadly retained in light of an uncertain macroeconomic backdrop

· Group costs were £9.1bn (H121: £7.3bn), including litigation and conduct charges of £1.9bn (H121: £0.2bn) , including £1.5bn estimated impact of rescission offer losses in relation to the Over-Issuance of Securities and associated estimated monetary penalty from the SEC  

· Capital: Common Equity Tier 1 (CET1) ratio of 13.6% (December 2021: 15.1% and March 2022: 13.8%) and tangible net asset value (TNAV) per share of 297p (December 2021: 291p and March 2022: 294p)

· Increased capital distributions: total capital return equivalent of c.5.25p per share, including a half year dividend of 2.25p per share. Intend to initiate a further share buyback of up to £0.5bn, which is expected to have a c.15bps CET1 ratio impact

1  Excluding the Q222 income benefit of £0.8bn from hedging arrangements related to the Over-issuance of Securities, Group income was up 10% to £12.4bn.

2  2021 financial and capital metrics have been restated to reflect the impact of the Over-issuance of Securities. See Basis of preparation on page 65 and Restatement of financial statements (Note 1) on page 87 for more information.

3  Denotes the Over-issuance of Securities under Barclays Bank PLC's US shelf registration statements on Form F-3 filed with the SEC in 2018 and 2019.

 

Outlook:

· Returns: Barclays continues to target a RoTE of greater than 10% in 2022

· Income: Barclays' diversified income streams position the Group well for the current economic and market environment and rising interest rates

· Costs: given £1.3bn of litigation and conduct charges in Q222 and the appreciation of average USD against GBP, Barclays now expects FY22 total operating expenses to be around £16.7bn1 versus previous outlook of £15.0bn2

· Impairment: while acknowledging macroeconomic uncertainty, the impairment charge is expected to remain below pre-pandemic levels in coming quarters given reduced unsecured lending balances and existing coverage ratios

· Capital: Barclays continues to target a CET1 ratio within the range of 13-14%

· Capital returns: Barclays' capital distribution policy incorporates a progressive ordinary dividend, supplemented with buybacks as appropriate. Dividends will continue to be paid semi-annually, with the half year dividend expected to represent, under normal circumstances, around one-third of the total dividend for the year

 

 

1  Group cost outlook is based on an average USD/GBP FX rate of 1.23 across H222 and subject to foreign currency movements.

2  Previous FY22 Group cost outlook was based on an average USD/GBP FX rate of 1.31 throughout 2022.

Barclays Group results

for the half year ended




30.06.22

Restated1

30.06.21



£m

£m

% Change

Net interest income

4,763

3,903

22

Net fee, commission and other income

8,441

7,412

14

Total income

13,204

11,315

17

Credit impairment (charges)/releases

(341)

742


Net operating income

12,863

12,057

7

Operating costs

(7,270)

(7,132)

(2)

Litigation and conduct

(1,857)

(176)


Total operating expenses

(9,127)

(7,308)

(25)

Other net (expenses)/ income

(3)

153


Profit before tax

3,733

4,902

(24)

Tax charge

(823)

(742)

(11)

Profit after tax

2,910

4,160

(30)

Non-controlling interests

(21)

(19)

(11)

Other equity instrument holders

(414)

(389)

(6)

Attributable profit

2,475

3,752

(34)





Performance measures




Return on average tangible shareholders' equity

10.1%

16.1%


Average tangible shareholders' equity (£bn)

48.9

46.5


Cost: income ratio

69%

65%


Loan loss rate (bps)

17

-


Basic earnings per share

14.8p

21.9p


Dividend per share

2.25p

2.0p


Share buyback announced (£m)

500

500


Total payout equivalent per share

c.5.25p

4.9p


Basic weighted average number of shares (m)

16,684

17,140

(3)

Period end number of shares (m)

16,531

16,998

(3)






As at 30.06.22

Restated1  As at 31.12.21

Restated1  As at 30.06.21

Balance sheet and capital management2

£bn

£bn

£bn

Loans and advances at amortised cost

395.8

361.5

348.5

Loans and advances at amortised cost impairment coverage ratio

1.4%

1.6%

1.8%

Total assets

1,589.2

1,384.3

1,376.3

Deposits at amortised cost

568.7

519.4

500.9

Tangible net asset value per share

297p

291p

280p

Common equity tier 1 ratio

13.6%

15.1%

15.0%

Common equity tier 1 capital

46.7

47.3

46.2

Risk weighted assets

344.5

314.1

307.4

UK leverage ratio

5.1%

5.2%

5.0%

UK leverage exposure

1,151.2

1,137.9

1,154.9

Average UK leverage ratio

4.7%

4.9%

4.8%

Average UK leverage exposure

1,233.5

1,229.0

1,192.7





Funding and liquidity




Group liquidity pool (£bn)

343

291

291

Liquidity coverage ratio

156%

168%

162%

Loan: deposit ratio

70%

70%

70%

 

1  2021 financial and capital metrics have been restated to reflect the impact of the Over-issuance of Securities. See Basis of preparation on page 65 and Restatement of financial statements (Note 1) on page 87 for more information.

2  Refer to pages 55 to 62 for further information on how capital, Risk Weighted Assets (RWAs) and leverage are calculated.

 

Group Finance Director's Review

 

Group performance1, 2

 

· Barclays' diversified model delivered a profit before tax of £3,733m (H121: £4,902m) , RoTE of 10.1% (H121: 16.1%), and earnings per share (EPS) of 14.8p (H121: 21.9p)

· Total income increased to £13,204m (H121: £11,315m). Barclays UK income increased 5%. Barclays International income increased 21%, with CIB income up 21% and CC&P income up 20%. Excluding the income benefit of £758m from hedging arrangements related to the Over-issuance of Securities, total Group income was £12,446m, up 10% year-on-year, Barclays International income was £9,182m, up 12% year-on-year and CIB income was £7,213m, up 10% year-on-year

· Credit impairment charges were £341m (H121: £742m net release) reflecting low flows to delinquency and an improved UK employment outlook, partially offset by a day one charge relating to the acquisition of the GAP Inc. US credit card portfolio (the GAP portfolio). Expert judgement post-model adjustments have been maintained to incorporate customer affordability and inflationary headwinds

· Total operating expenses increased to £9,127m (H121: £7,308m). Operating costs increased 2% to £7,270m, reflecting continued investment and business growth, the impact of inflation and the appreciation of average USD against GBP, partially offset by efficiency savings and the non-recurrence of structural cost actions, primarily relating to the real estate review in June 2021. Litigation and conduct charges were £1,857m (H121: £176m) including £1,304m estimated impact of rescission offer losses in relation to the Over-Issuance of Securities and £165m associated estimated monetary penalty from the SEC, £181m of customer remediation costs relating to a legacy loan portfolio in CC&P and £165m related to settlements in principle in respect of industry-wide devices investigations by the SEC and the Commodity Futures Trading Commission (CFTC)3. This resulted in a cost: income ratio of 69% (H121: 65%)

· The effective tax rate (ETR) was 22.0% (H121: 15.1%). The tax charge included a £346m charge recognised for the re-measurement of the Group's UK deferred tax assets (DTAs) due to the enactment of legislation in Q122 which will result in the UK banking surcharge rate being reduced from 8% to 3% effective from 1 April 2023. The ETR excluding the impact of this downward re-measurement of UK DTAs was 12.8% which included a 5.8% benefit relating to adjustments in respect of prior years

· Attributable profit was £2,475m (H121: £3,752m) including the net impact of the Over-issuance of Securities net of tax, of £581m, of which £341m was in Q222

· Total assets increased to £1,589bn (December 2021: £1,384bn) primarily due to an increase in client and trading activity, and growth in the liquidity pool

· TNAV per share increased to 297p (December 2021: 291p) primarily reflecting 14.8p of EPS, partially offset by net negative reserve movements driven by higher interest rates

Group capital and leverage1

· The CET1 ratio decreased by c.150bps to 13.6% (December 2021: 15.1%) as capital decreased by £0.6bn to £46.7bn and RWAs increased by £30.4bn to £344.5bn

-  c.80bps reduction to the CET1 ratio due to the expected impact of regulatory change on 1 January 2022 as CET1 capital decreased £1.7bn and RWAs increased £6.6bn

-  c.30bps reduction due to the £1bn buyback announced with FY21 results, which is well progressed

-  c.40bps reduction due to the impact of the Over-issuance of Securities. c.20bps due to the £0.6bn net of tax impact reducing CET1 capital and c.20bps due to a £4.5bn temporary increase in RWAs reflecting the hedging arrangements designed to manage the risk of the rescission offer. The hedging related RWAs are expected to reverse after the rescission offer is completed in Q322

-  Excluding the impacts above, an increase in CET1 capital of £2.7bn was offset by a £19.3bn increase in RWAs:

-  The £2.7bn increase in CET1 capital reflects profits and an increase in the currency translation reserve, offset by an accrual toward a FY22 dividend, equity coupons paid, and a decrease in the fair value through other comprehensive income reserve

-  The £19.3bn increase in RWAs was primarily due to the appreciation of USD against GBP, increased client activity within CIB and higher CC&P balances mainly driven by the GAP portfolio acquisition. This was marginally offset by the partial disposal of Barclays' equity stake in Absa Group Limited (Absa) in April 2022 

· The UK leverage ratio decreased to 5.1% (December 2021: 5.2%) primarily due to an increase in the leverage exposure of £13.3bn to £1,151.2bn

 

1  2021 financial and capital metrics have been restated to reflect the impact of the Over-issuance of Securities. See Basis of preparation on page 65 and Restatement of financial statements (Note 1) on page 87 for more information.

2  The 6% appreciation of average USD against GBP positively impacted income and profits and adversely impacted credit impairment charges and total operating expenses.

3  See 'Other matters' on page 6 for further details.

 

Group funding and liquidity

· The liquidity pool was £343bn (December 2021: £291bn) and the liquidity coverage ratio (LCR) remained significantly above the 100% regulatory requirement at 156% (December 2021: 168%), equivalent to a surplus of £119bn (December 2021: £116bn). The increase in the liquidity pool was driven by deposit growth and an increase in wholesale funding, which were partly offset by an increase in business funding consumption

· Wholesale funding outstanding, excluding repurchase agreements, was £181.5bn (December 2021: £167.5bn). The Group issued £3.5bn equivalent of minimum requirement for own funds and eligible liabilities (MREL) instruments from Barclays PLC (the Parent company) in the year to date. The Group has a strong MREL position with a ratio of 30.9% of RWAs which is in excess of its regulatory requirement of 28.5%, excluding the confidential institution specific PRA buffer. The Group remains above its MREL regulatory requirement including the PRA buffer

 

Other matters

· Over-issuance of Securities: since 31 March 2022, the following developments should be noted with respect to the Over-issuance of Securities:

· On 23 May 2022, Barclays PLC and Barclays Bank PLC filed amendments to their respective Annual Reports on Form 20-F to, among other matters, restate the financial statements for the financial year ended 31 December 2021 to reflect certain impacts of the Over-issuance of Securities

· On 23 May 2022, Barclays Bank PLC filed a shelf registration statement on Form F-3 with the SEC, which was automatically effective and under which an unlimited amount of securities may be registered, on the basis that Barclays Bank PLC is a "well-known seasoned issuer" (the "2022 F-3"). Barclays PLC also has an automatic shelf registration statement on Form F-3 filed with the SEC on 1 March 2021

· On 1 August 2022, Barclays Bank PLC intends to launch an offer to rescind the purchase of securities that were issued in excess of Barclays Bank PLC's shelf registration statement on Form F-3 declared effective by the SEC in 2019 (2019 F-3) and the predecessor US shelf registration statement filed in 2018 (Predecessor Shelf) by certain purchasers who purchased such securities in a distribution from Barclays Bank PLC during certain relevant periods (the rescission offer)

· Following the launch of the rescission offer, Barclays Bank PLC is expected to resume issuances and sales of series of iPath ETNs that were not affected by the rescission offer. Barclays Bank PLC further expects to resume issuances and sales of the remaining series of iPath ETNs when the rescission offer has been completed and settlement of the rescission offer with respect to the relevant series has occurred

· Barclays has recognised a H122 attributable profit impact of £581m relating to this matter net of tax, including a £1,304m charge recognised in costs, substantially offset by hedging arrangements which generated income of £758m, as well as an estimated monetary penalty from the SEC of £165m

· The total balance sheet provision as at 30 June 2022 was £1,757m, of which: £1,592m relates to the estimated rescission offer losses and £165m relates to an estimated SEC monetary penalty. Barclays also expects temporary RWAs of £4.5bn, which translates to a c.20bps reduction in the CET1 ratio, from the hedging arrangements to reverse after the rescission offer has been completed in Q322

· Barclays also expects the Review (see pages 25-26 for more detail), assisted by external counsel, of the facts and circumstances related to this matter to conclude shortly and will continue to engage with regulators

· SEC and CFTC devices investigation: in July 2022, Barclays Bank PLC and Barclays Capital Inc. (BCI) reached an agreement in principle with the staff of the SEC's Division of Enforcement and the staff of CFTC in connection with investigations by the SEC and the CFTC of Barclays Bank PLC, BCI and other financial institutions as part of a financial industry sweep regarding compliance with record-keeping obligations in connection with business-related communications sent over unapproved electronic messaging platforms (the Devices Settlements In Principle). The SEC and the CFTC found that Barclays Bank PLC and BCI failed to comply with their respective record keeping and supervisory obligations, where such communications were sent or received by employees over electronic messaging channels that had not been approved by the bank for business use by employees. The proposed resolution with the SEC and the CFTC will include Barclays Bank PLC and BCI paying a combined $125m civil monetary penalty to the SEC and a $75m civil monetary penalty to the CFTC. Subject to final agreement of the terms of the settlements and related documentation, as well as the SEC's and CFTC's approval, the civil monetary penalties are expected to be paid during the third quarter of 2022

· GAP portfolio acquisition: on 21 June 2022, Barclays completed the acquisition of a US credit card portfolio of $3.3bn of receivables, in partnership with GAP Inc. The acquisition reduced the Group CET1 ratio by approximately 15bps. The partnership broadens Barclays product offering in the retail sector and store cards, advancing our strategy and growth ambitions in the United States

· Kensington Mortgage Company acquisition: on 24 June 2022 Barclays PLC announced that Barclays Bank UK PLC has agreed to acquire UK specialist mortgage lender Kensington Mortgage Company Limited, thereby broadening Barclays' capabilities and product offering in the UK mortgage market. The transaction is subject to regulatory approval and is expected to complete in late Q422 or early Q123

· Legacy Loan Portfolio: a customer remediation provision of £181m was recognised in Q122 in relation to a legacy timeshare loan portfolio brokered by Azure Services Limited (ASL). The provision represents the best estimate as at 30 June 2022. Barclays continues to review complaints regarding legacy partner finance loans, however it is not currently possible to predict the outcome of this review

· Absa sale: on 21 April 2022, Barclays sold 63m ordinary shares in Absa (7.4% of Absa's issued share capital) at a price of ZAR 164.0 per share, raising aggregate gross sale proceeds of ZAR 10.3bn (£516m1)

· Pensions: during 2019 and 2020, the UK Retirement Fund (UKRF), the Group's main pension scheme, subscribed for non-transferable listed senior fixed rate notes for £1.25bn. Following the PRA's statement on 13 April 2022, Barclays is planning to unwind these transactions, which would result in a c.30bps reduction to the CET1 ratio, being accelerated to Q422 from 2023, 2024 and 2025. For more details, see note 16 on page 103

 

Capital distributions

· Barclays is committed to maintaining an appropriate balance between delivering attractive total cash returns to shareholders, investment in the business and maintaining a strong capital position. Barclays pays a progressive ordinary dividend, taking into account these objectives and the earnings outlook of the Group. The Board will also continue to supplement the ordinary dividends as appropriate, including with share buybacks

· Announced a half year dividend of 2.25p per share and intention to initiate a further share buyback of up to £500m

· Dividends will continue to be paid semi-annually, with the half year dividend expected to represent, under normal circumstances, around one-third of the total dividend for the year

· The £1.0bn buyback programme announced in FY21 results is expected to complete before the end of September 2022

 

Group targets

Barclays continues to target the following over the medium term:

· Returns: RoTE of greater than 10%

· Cost efficiency: cost: income ratio below 60%

· Capital adequacy: CET1 ratio in the range of 13-14%

Anna Cross, Group Finance Director

 

 

1  Exchange rate GBP/ZAR 20.04 as of 21 April 2022.

 

Results by Business

 

 

Barclays UK

Half year ended

Half year ended



30.06.22

30.06.21


Income statement information

£m

£m

% Change

Net interest income

2,732

2,586

6

Net fee, commission and other income

641

613

5

Total income

3,373

3,199

5

Credit impairment (charges)/releases

(48)

443


Net operating income

3,325

3,642

(9)

Operating costs

(2,083)

(2,114)

1

Litigation and conduct

(25)

(22)

(14)

Total operating expenses

(2,108)

(2,136)

1

Other net income

-

-


Profit before tax

1,217

1,506

(19)

Attributable profit

854

1,019

(16)






As at 30.06.22

As at 31.12.21

As at 30.06.21

Balance sheet information

£bn

£bn

£bn

Loans and advances to customers at amortised cost

205.9

208.8

207.8

Total assets

318.8

321.2

311.2

Customer deposits at amortised cost

261.5

260.6

255.5

Loan: deposit ratio

85%

85%

87%

Risk weighted assets

72.2

72.3

72.2

Period end allocated tangible equity

9.9

10.0

9.9






Half year ended

Half year ended


Key facts

30.06.22

30.06.21


Average loan to value of mortgage portfolio1

51%

51%


Average loan to value of new mortgage lending1

69%

69%


Number of branches

593

755


Mobile banking active customers

10.1m

9.4m


30 day arrears rate - Barclaycard Consumer UK

1.0%

1.4%






Performance measures




Return on average allocated tangible equity

17.0%

20.6%


Average allocated tangible equity (£bn)

10.0

9.9


Cost: income ratio

62%

67%


Loan loss rate (bps)

4

-


Net interest margin

2.67%

2.54%


 

1  Average loan to value of mortgages is balance weighted and reflects both residential and buy-to-let mortgage portfolios within the Home Loans portfolio.

 

Analysis of Barclays UK

Half year ended

Half year ended


30.06.22

30.06.21


Analysis of total income

£m

£m

% Change

Personal Banking

2,099

1,910

10

Barclaycard Consumer UK

541

605

(11)

Business Banking

733

684

7

Total income

3,373

3,199

5





Analysis of credit impairment (charges)/releases




Personal Banking

(21)

50


Barclaycard Consumer UK

40

398

(90)

Business Banking

(67)

(5)


Total credit impairment (charges)/releases

(48)

443







As at 30.06.22

As at 31.12.21

As at 30.06.21

Analysis of loans and advances to customers at amortised cost

£bn

£bn

£bn

Personal Banking

167.1

165.4

162.4

Barclaycard Consumer UK

8.8

8.7

8.8

Business Banking

30.0

34.7

36.6

Total loans and advances to customers at amortised cost

205.9

208.8

207.8





Analysis of customer deposits at amortised cost




Personal Banking

197.0

196.4

191.0

Barclaycard Consumer UK

-

-

0.1

Business Banking

64.5

64.2

64.4

Total customer deposits at amortised cost

261.5

260.6

255.5

 

Barclays UK delivered a RoTE of 17.0% (H121: 20.6%), and a lower cost: income ratio of 62% (H121: 67%), reflecting improved income performance across Personal Banking and Business Banking, alongside reduced total operating expenses, while impairment returned to a charge following a net release in H121. Barclays UK remains well positioned, with a strong focus on supporting customers in an increasingly difficult and uncertain environment.

Income statement - H122 compared to H121

· Profit before tax decreased to £1,217m (H121: £1,506m). RoTE was 17.0% (H121: 20.6%) reflecting the non-recurrence of a prior year credit impairment release, partially offset by the rising rate environment in the UK

· Total income increased 5% to £3,373m. Net interest income increased 6% to £2,732m with a net interest margin (NIM) of 2.67% (H121: 2.54%) primarily driven by the rising interest rate environment in the UK. Net fee, commission and other income increased 5% to £641m

· Personal Banking income increased 10% to £2,099m, driven by rising interest rates and the benefit of strong mortgage origination in 2021, partially offset by mortgage margin compression

· Barclaycard Consumer UK income decreased 11% to £541m as higher transaction based revenues from improved customer spend volumes were more than offset by lower interest earning lending (IEL) balances. Lower IEL balances were impacted by higher customer repayments and reduced borrowing

· Business Banking income increased 7% to £733m driven by rising interest rates alongside improved transaction based revenues, partially offset by lower government scheme lending income as repayments continue

· Credit impairment charge of £48m (H121: £443m net release) driven by low flows to delinquency, improved UK employment data and reduced uncertainty around the possible effects of COVID-19, offset by increased concerns around customers' vulnerability to high inflation. As at 30 June 2022, 30 and 90 day arrears rates in UK cards were 1.0% (H121: 1.4%) and 0.2% (H121: 0.6%) respectively. The credit card and consumer loan businesses maintain appropriate provision levels in light of affordability headwinds, as reflected in a total coverage ratio of 9.2% (December 2021: 10.9%)

· Total operating expenses decreased 1% to £2,108m driven by lower operational costs and efficiency savings, partially offset by increased investment spend and the impact of inflation

 

Balance sheet - 30 June 2022 compared to 31 December 2021

· Loans and advances to customers at amortised cost decreased 1% to £205.9bn as £1.5bn of mortgage growth was more than offset by a £4.7bn decrease in Business Banking balances due to the repayment of government scheme lending and the yield curve impact from rising interest rates on the Education, Social Housing and Local Authority portfolio carrying value

· Customer deposits at amortised cost remained broadly stable at £261.5bn, maintaining a strong loan: deposit ratio of 85% (December 2021: 85%)

· RWAs remained stable at £72.2bn (December 2021: £72.3bn)

 

 

 

 

Barclays International

Half year ended

Restated1

Half year ended



30.06.22

30.06.21


Income statement information

£m

£m

% Change

Net interest income

1,965

1,559

26

Net trading income

5,212

3,389

54

Net fee, commission and other income

2,763

3,270

(16)

Total income

9,940

8,218

21

Credit impairment (charges)/releases

(310)

293


Net operating income

9,630

8,511

13

Operating costs

(5,042)

(4,606)

(9)

Litigation and conduct

(1,832)

(161)


Total operating expenses

(6,874)

(4,767)

(44)

Other net income

13

22

(41)

Profit before tax

2,769

3,766

(26)

Attributable profit

2,083

2,638

(21)






As at 30.06.22

As at 31.12.21

As at 30.06.21

Balance sheet information

£bn

£bn

£bn

Loans and advances at amortised cost

167.3

133.8

121.9

Trading portfolio assets

126.9

146.9

147.1

Derivative financial instrument assets

343.5

261.5

255.4

Financial assets at fair value through the income statement

209.3

188.2

190.4

Cash collateral and settlement balances

128.5

88.1

108.5

Other assets

275.1

225.6

223.5

Total assets

1,250.6

1,044.1

1,046.8

Deposits at amortised cost

307.4

258.8

245.4

Derivative financial instrument liabilities

321.2

256.4

246.9

Loan: deposit ratio

54%

52%

50%

Risk weighted assets

263.8

230.9

223.2

Period end allocated tangible equity

38.0

33.2

31.8






Half year ended

Restated1

Half year ended


Performance measures

30.06.22

30.06.21


Return on average allocated tangible equity

11.5%

16.3%


Average allocated tangible equity (£bn)

36.2

32.3


Cost: income ratio

69%

58%


Loan loss rate (bps)

37

-


Net interest margin

4.34%

3.95%


 

 

1  2021 financial and capital metrics have been restated to reflect the impact of the Over-issuance of Securities. See Basis of preparation on page 65 and Restatement of financial statements (Note 1) on page 87 for more information.

 

Analysis of Barclays International




Corporate and Investment Bank

Half year ended

Restated1

Half year ended



30.06.22

30.06.21


Income statement information

£m

£m

% Change

Net interest income

795

640

24

Net trading income

5,188

3,411

52

Net fee, commission and other income

1,988

2,522

(21)

Total income

7,971

6,573

21

Credit impairment (charges)/releases

(32)

272


Net operating income

7,939

6,845

16

Operating costs

(3,791)

(3,509)

(8)

Litigation and conduct

(1,632)

(79)


Total operating expenses

(5,423)

(3,588)

(51)

Other net income

-

1


Profit before tax

2,516

3,258

(23)

Attributable profit

1,895

2,252

(16)






As at 30.06.22

As at 31.12.21

As at 30.06.21

Balance sheet information

£bn

£bn

£bn

Loans and advances at amortised cost

125.8

100.0

91.0

Trading portfolio assets

126.7

146.7

147.0

Derivative financial instrument assets

343.4

261.5

255.3

Financial assets at fair value through the income statement

209.2

188.1

190.3

Cash collateral and settlement balances

127.7

87.2

107.7

Other assets

237.2

195.8

192.5

Total assets

1,170.0

979.3

983.8

Deposits at amortised cost

229.5

189.4

178.2

Derivative financial instrument liabilities

321.2

256.4

246.8

Risk weighted assets

227.6

200.7

194.3






Half year ended

Restated1

Half year ended


Performance measures

30.06.22

30.06.21


Return on average allocated tangible equity

11.9%

15.9%


Average allocated tangible equity (£bn)

31.8

28.3


Cost: income ratio

68%

55%










Analysis of total income

£m

£m

% Change

FICC

3,173

2,099

51

Equities

2,463

1,709

44

Global Markets

5,636

3,808

48

Advisory

421

381

10

Equity capital markets

84

469

(82)

Debt capital markets

697

882

(21)

Investment Banking fees

1,202

1,732

(31)

Corporate lending

78

244

(68)

Transaction banking

1,055

789

34

Corporate

1,133

1,033

10

Total income

7,971

6,573

21

 

 

 

1  2021 financial and capital metrics have been restated to reflect the impact of the Over-issuance of Securities. See Basis of preparation on page 65 and Restatement of financial statements (Note 1) on page 87 for more information.

Analysis of Barclays International




Consumer, Cards and Payments

Half year ended

Half year ended



30.06.22

30.06.21


Income statement information

£m

£m

% Change

Net interest income

1,170

919

27

Net fee, commission, trading and other income

799

726

10

Total income

1,969

1,645

20

Credit impairment (charges)/releases

(278)

21


Net operating income

1,691

1,666

2

Operating costs

(1,251)

(1,097)

(14)

Litigation and conduct

(200)

(82)


Total operating expenses

(1,451)

(1,179)

(23)

Other net income

13

21

(38)

Profit before tax

253

508

(50)

Attributable profit

188

386

(51)






As at 30.06.22

As at 31.12.21

As at 30.06.21

Balance sheet information

£bn

£bn

£bn

Loans and advances at amortised cost

41.5

33.8

30.9

Total assets

80.6

64.8

63.0

Deposits at amortised cost

77.9

69.4

67.2

Risk weighted assets

36.2

30.2

29.0






Half year ended

Half year ended


Key facts

30.06.22

30.06.21


30 day arrears rate - Barclaycard US 

1.4%

1.6%


US cards customer FICO score distribution




<660

10%

10%


>660

90%

90%


Total number of Barclaycard payments clients 

c.391,000

c.372,000


Value of payments processed (£bn)1

190

160






Performance measures




Return on average allocated tangible equity

8.5%

19.1%


Average allocated tangible equity (£bn)

4.4

4.0


Cost: income ratio

74%

72%


Loan loss rate (bps)

128

-






Analysis of total income

£m

£m

% Change

International Cards and Consumer Bank

1,229

1,050

17

Private Bank

459

393

17

Payments

281

202

39

Total income

1,969

1,645

20









 

1  Includes £145bn (H121: £129bn) of merchant acquiring payments.

 

Barclays International delivered a RoTE of 11.5% reflecting the benefits of being a diversified business. CIB delivered a RoTE of 11.9% reflecting a strong performance in FICC, partially offset by a decrease in Investment Banking fees, against a strong prior year comparative, and provisions for litigation and conduct. CC&P RoTE decreased to 8.5% as an increase in income was offset by a provision for higher customer remediation costs relating to a legacy loan portfolio and continued investment in the business.

 

Income statement - H122 compared to H1211

· Profit before tax decreased 26% to £2,769m with a RoTE of 11.5% (H121: 16.3%), reflecting a RoTE of 11.9% (H121: 15.9%) in CIB and 8.5% (H121: 19.1%) in CC&P

· The 6% appreciation of average USD against GBP positively impacted income and profits and adversely impacted impairment charges and total operating expenses

· Total income increased to £9,940m (H121: £8,218m)

· CIB income increased 21% to £7,971m reflecting the benefit of a diversified business model and impact of hedging arrangements

· Global Markets income increased 48% to £5,636m. FICC income increased 51% to £3,173m, mainly in macro, reflecting higher levels of activity as we supported our clients through a period of market volatility. Equities income increased £754m to £2,463m including £758m of income related to hedging arrangements in relation to managing the risks from the rescission offer to be launched by Barclays Bank PLC in relation to the Over-issuance of Securities

· Investment Banking fees income decreased 31% to £1,202m due to the reduced fee pool, particularly in Equity capital markets2, and a strong prior year comparative

· Within Corporate, Transaction banking income increased 34% to £1,055m driven by deposit balance growth, improved margins and higher payments volumes. Corporate lending income decreased 68% to £78m due to losses on certain fair value lending positions and higher costs of hedging and credit protection, partially offset by the non-recurrence of a prior year fair value loan write-off on a single name

· CC&P income increased 20% to £1,969m

· International Cards and Consumer Bank income increased 17% to £1,229m as higher average cards balances were partially offset by higher customer acquisition costs

· Private Bank income increased 17% to £459m, reflecting client balance growth and improved margins partially offset by the non-recurrence of a gain on a property sale in the prior year

· Payments income increased 39% to £281m driven by turnover growth following the easing of lockdown restrictions in the past year

· Credit impairment charges were £310m (H121: £293m net release)

· CIB credit impairment charge of £32m (H121: £272m net release) was driven by a net increase in modelled impairment whilst there continue to be limited material single name wholesale loan charges, with the prior year including a net release resulting from an improved macroeconomic outlook scenario refresh

· CC&P credit impairment charges increased to £278m (H121: £21m net release) driven by higher balances in US cards, including the day one impact of acquiring the GAP portfolio, partially offset by lower provisions held for uncertainty. As at 30 June 2022, 30 and 90 day arrears in US cards were 1.4% (H121: 1.6%) and 0.7% (H121: 0.9%) respectively. The US cards business continues to maintain appropriate provision levels in light of affordability headwinds

· Total operating expenses increased 44% to £6,874m

· CIB total operating expenses increased 51% to £5,423m. Operating costs increased 8% to £3,791m driven by investment in talent, systems and technology, and the impact of inflation. Litigation and conduct charges were £1,632m (H121: £79m) including £1,304m estimated impact of rescission offer losses in relation to the Over-Issuance of Securities and £165m associated estimated monetary penalty from the SEC, and £165m provision relating to the Devices Settlements in Principle

· CC&P total operating expenses increased 23% to £1,451m primarily driven by £200m of litigation and conduct costs, including a provision for higher customer remediation costs relating to a legacy loan portfolio. Operating costs increased 14% driven by higher investment spend reflecting an increase in marketing and costs for existing and new partnerships

 

1  2021 financial metrics have been restated to reflect the impact of the Over-issuance of Securities. See Restatement of financial statements (Note 1) on page 87 for more information.

2  Data source: Dealogic for the period covering 1 January to 30 June 2022.

 

Balance sheet - 30 June 2022 compared to 31 December 2021

· Loans and advances at amortised cost increased £33.5bn to £167.3bn due to increased lending across CIB and CC&P, inclusive of the £2.7bn GAP portfolio acquisition and appreciation of USD against GBP, and increased investment in debt securities

· Trading portfolio assets decreased £20.0bn to £126.9bn due to a reduction in equity securities driven by facilitation of client activity, partially offset by increased trading activity in debt securities

· Derivative assets and liabilities increased £82.0bn and £64.8bn respectively to £343.5bn and £321.2bn driven by market volatility and increased activity in FICC and Equities

· Financial assets at fair value through the income statement increased £21.1bn to £209.3bn driven by increased secured lending

· Deposits at amortised cost increased £48.6bn to £307.4bn primarily due to an increase in short-term money market deposits and growth in Corporate deposits

· RWAs increased to £263.8bn (December 2021: £230.9bn) resulting from the impact of the appreciation of USD against GBP, regulatory changes that took effect from 1 January 2022, increased client activity within CIB, an increase in respect of hedging arrangements designed to manage the risks of the rescission offer relating to the Over-issuance of Securities and higher CC&P balances driven mainly by the GAP portfolio acquisition

 

 

Head Office

Half year ended

Half year ended



30.06.22

30.06.21


Income statement information

£m

£m

% Change

Net interest income

66

(242)


Net fee, commission and other income

(175)

140


Total income

(109)

(102)

(7)

Credit impairment releases

17

6


Net operating income

(92)

(96)

4

Operating costs

(145)

(412)

65

Litigation and conduct

-

7


Total operating expenses

(145)

(405)

64

Other net (expenses)/income

(16)

131


Loss before tax

(253)

(370)

32

Attributable (loss)/profit

(462)

95







As at 30.06.22

Restated1

As at 31.12.21

Restated1

As at 30.06.21

Balance sheet information

£bn

£bn

£bn

Total assets

19.8

19.0

18.3

Risk weighted assets

8.6

11.0

12.0

Period end allocated tangible equity

1.1

5.5

5.9






Half year ended

Half year ended


Performance measures

30.06.22

30.06.21


Average allocated tangible equity (£bn)

2.7

4.3


 

Income statement - H122 compared to H121

· Loss before tax was £253m (H121: £370m)

· Total income was an expense of £109m (H121: £102m expense) which primarily reflected hedge accounting, funding costs on legacy capital instruments, treasury items as well as a £42m loss on sale from the partial disposal of Barclays' equity stake in Absa in April 2022. This was partially offset by a one-off gain of £86m from the sale and leaseback of UK data centres and the recognition of dividends on Barclays' equity stake in Absa

· Total operating expenses reduced to £145m (H121: £405m) reflecting the non-recurrence of the £266m charge related to structural cost actions taken as part of the real estate review in June 2021

· Other net income was an expense of £16m (H121: £131m income) driven by a fair value loss in Barclays associate investment holding in the Business Growth Fund

 

Balance sheet - 30 June 2022 compared to 31 December 2021

· RWAs reduced to £8.6bn (December 2021: £11.0bn) reflecting the partial sale of Barclays' equity stake in Absa in April 2022. The sale resulted in an increase to Barclays' CET1 ratio of c.10bps

 

 

1  2021 financial and capital metrics have been restated to reflect the impact of the Over-issuance of Securities. See Basis of preparation on page 65 and Restatement of financial statements (Note 1) on page 87 for more information.

 

 

Quarterly Results Summary

 

Barclays Group












Q222

Q122


Q4211

Q3211

Q2211

Q121


Q420

Q320

Income statement information

£m

£m


£m

£m

£m

£m


£m

£m

Net interest income

2,422

2,341


2,230

1,940

2,052

1,851


1,845

2,055

Net fee, commission and other income

4,286

4,155


2,930

3,525

3,363

4,049


3,096

3,149

Total income

6,708

6,496


5,160

5,465

5,415

5,900


4,941

5,204

Credit impairment (charges)/releases

(200)

(141)


31

(120)

797

(55)


(492)

(608)

Net operating income

6,508

6,355


5,191

5,345

6,212

5,845


4,449

4,596

Operating costs

(3,682)

(3,588)


(3,514)

(3,446)

(3,587)

(3,545)


(3,480)

(3,391)

UK bank levy

-

-


(170)

-

-

-


(299)

-

Litigation and conduct

(1,334)

(523)


(92)

(129)

(143)

(33)


(47)

(76)

Total operating expenses

(5,016)

(4,111)


(3,776)

(3,575)

(3,730)

(3,578)


(3,826)

(3,467)

Other net income/(expenses)

7

(10)


13

94

21

132


23

18

Profit before tax

1,499

2,234


1,428

1,864

2,503

2,399


646

1,147

Tax charge

(209)

(614)


(104)

(292)

(246)

(496)


(163)

(328)

Profit after tax

1,290

1,620


1,324

1,572

2,257

1,903


483

819

Non-controlling interests

(20)

(1)


(27)

(1)

(15)

(4)


(37)

(4)

Other equity instrument holders

(199)

(215)


(218)

(197)

(194)

(195)


(226)

(204)

Attributable profit

1,071

1,404


1,079

1,374

2,048

1,704


220

611












Performance measures











Return on average tangible shareholders' equity

8.7%

11.5%


9.0%

11.4%

17.6%

14.7%


1.8%

5.1%

Average tangible shareholders' equity (£bn)

49.0

48.8


48.0

48.3

46.5

46.5


47.6

48.3

Cost: income ratio

75%

63%


73%

65%

69%

61%


77%

67%

Loan loss rate (bps)

20

15


-

13

-

6


56

69

Basic earnings per share

6.4p

8.4p


6.4p

8.0p

11.9p

9.9p


1.3p

3.5p

Basic weighted average number of shares (m)

16,684

16,682


16,985

17,062

17,140

17,293


17,300

17,298

Period end number of shares (m)

16,531

16,762


16,752

16,851

16,998

17,223


17,359

17,353












Balance sheet and capital management2

£bn

£bn


£bn

£bn

£bn

£bn


£bn

£bn

Loans and advances at amortised cost

395.8

371.7


361.5

353.0

348.5

345.8


342.6

344.4

Loans and advances at amortised cost impairment coverage ratio

1.4%

1.5%


1.6%

1.7%

1.8%

2.2%


2.4%

2.5%

Total assets

1,589.2

1,496.1


1,384.3

1,406.5

1,376.3

1,379.7


1,349.5

1,421.7

Deposits at amortised cost

568.7

546.5


519.4

510.2

500.9

498.8


481.0

494.6

Tangible net asset value per share

297p

294p


291p

286p

280p

267p


269p

275p

Common equity tier 1 ratio

13.6%

13.8%


15.1%

15.3%

15.0%

14.6%


15.1%

14.6%

Common equity tier 1 capital

46.7

45.3


47.3

47.2

46.2

45.9


46.3

45.5

Risk weighted assets

344.5

328.8


314.1

307.7

307.4

313.4


306.2

310.7

UK leverage ratio

5.1%

5.0%


5.2%

5.1%

5.0%

5.0%


5.3%

5.2%

UK leverage exposure

1,151.2

1,123.5


1,137.9

1,162.7

1,154.9

1,145.4


1,090.9

1,095.1

Average UK leverage ratio

4.7%

4.8%


4.9%

4.9%

4.8%

4.9%


5.0%

5.1%

Average UK leverage exposure

1,233.5

1,179.4


1,229.0

1,201.1

1,192.7

1,174.9


1,146.9

1,111.1












Funding and liquidity











Group liquidity pool (£bn)

343

320


291

293

291

290


266

327

Liquidity coverage ratio

156%

159%


168%

161%

162%

161%


162%

181%

Loan: deposit ratio

70%

68%


70%

69%

70%

69%


71%

70%

 

 

 

 

 

 

 

1  The comparative capital and financial metrics relating to Q221 - Q421 have been restated to reflect the impact of the Over-issuance of Securities. See Basis of preparation on page 65 and Restatement of financial statements (Note 1) on page 87 for more information.

2  Refer to pages 55 to 62 for further information on how capital, RWAs and leverage are calculated.

 

Quarterly Results by Business

 

 

Barclays UK












Q222

Q122


Q421

Q321

Q221

Q121


Q420

Q320

Income statement information

£m

£m


£m

£m

£m

£m


£m

£m

Net interest income

1,393

1,339


1,313

1,303

1,305

1,281


1,317

1,280

Net fee, commission and other income

331

310


386

335

318

295


309

270

Total income

1,724

1,649


1,699

1,638

1,623

1,576


1,626

1,550

Credit impairment (charges)/releases

-

(48)


59

(137)

520

(77)


(170)

(233)

Net operating income

1,724

1,601


1,758

1,501

2,143

1,499


1,456

1,317

Operating costs

(1,085)

(998)


(1,202)

(1,041)

(1,078)

(1,036)


(1,134)

(1,095)

UK bank levy

-

-


(36)

-

-

-


(50)

-

Litigation and conduct

(16)

(9)


(5)

(10)

(19)

(3)


4

(25)

Total operating expenses

(1,101)

(1,007)


(1,243)

(1,051)

(1,097)

(1,039)


(1,180)

(1,120)

Other net (expenses)/income

-

-


(1)

1

-

-


6

(1)

Profit before tax 

623

594


514

451

1,046

460


282

196

Attributable profit

458

396


420

317

721

298


160

113












Balance sheet information

£bn

£bn


£bn

£bn

£bn

£bn


£bn

£bn

Loans and advances to customers at amortised cost

205.9

207.3


208.8

208.6

207.8

205.7


205.4

203.9

Total assets

318.8

317.2


321.2

312.1

311.2

309.1


289.1

294.5

Customer deposits at amortised cost

261.5

260.3


260.6

256.8

255.5

247.5


240.5

232.0

Loan: deposit ratio

85%

85%


85%

86%

87%

88%


89%

91%

Risk weighted assets

72.2

72.7


72.3

73.2

72.2

72.7


73.7

76.2

Period end allocated tangible equity

9.9

10.1


10.0

10.0

9.9

10.0


9.7

10.0












Performance measures











Return on average allocated tangible equity

18.4%

15.6%


16.8%

12.7%

29.1%

12.0%


6.5%

4.5%

Average allocated tangible equity (£bn)

10.0

10.1


10.0

10.0

9.9

9.9


9.8

10.1

Cost: income ratio

64%

61%


73%

64%

68%

66%


73%

72%

Loan loss rate (bps)

-

9


-

24

-

14


31

43

Net interest margin

2.71%

2.62%


2.49%

2.49%

2.55%

2.54%


2.56%

2.51%

 

 

 

Analysis of Barclays UK

Q222

Q122


Q421

Q321

Q221

Q121


Q420

Q320

Analysis of total income

£m

£m


£m

£m

£m

£m


£m

£m

Personal Banking

1,077

1,022


983

990

987

923


895

833

Barclaycard Consumer UK

265

276


352

293

290

315


354

362

Business Banking

382

351


364

355

346

338


377

355

Total income

1,724

1,649


1,699

1,638

1,623

1,576


1,626

1,550












Analysis of credit impairment (charges)/releases











Personal Banking

(42)

21


8

(30)

72

(22)


(68)

(48)

Barclaycard Consumer UK

84

(44)


114

(108)

434

(36)


(78)

(106)

Business Banking

(42)

(25)


(63)

1

14

(19)


(24)

(79)

Total credit impairment (charges)/releases

-

(48)


59

(137)

520

(77)


(170)

(233)












Analysis of loans and advances to customers at amortised cost

£bn

£bn


£bn

£bn

£bn

£bn


£bn

£bn

Personal Banking

167.1

166.5


165.4

164.6

162.4

160.4


157.3

155.7

Barclaycard Consumer UK

8.8

8.4


8.7

8.6

8.8

8.7


9.9

10.7

Business Banking

30.0

32.4


34.7

35.4

36.6

36.6


38.2

37.5

Total loans and advances to customers at amortised cost

205.9

207.3


208.8

208.6

207.8

205.7


205.4

203.9












Analysis of customer deposits at amortised cost











Personal Banking

197.0

196.6


196.4

193.3

191.0

186.0


179.7

173.2

Barclaycard Consumer UK

-

-


-

-

0.1

0.1


0.1

0.1

Business Banking

64.5

63.7


64.2

63.5

64.4

61.4


60.7

58.7

Total customer deposits at amortised cost

261.5

260.3


260.6

256.8

255.5

247.5


240.5

232.0

 

Barclays International












Q222

Q122


Q4211

Q3211

Q2211

Q121


Q420

Q320

Income statement information

£m

£m


£m

£m

£m

£m


£m

£m

Net interest income

1,029

936


955

749

811

748


614

823

Net trading income

2,766

2,446


789

1,515

1,455

1,934


1,372

1,528

Net fee, commission and other income

1,321

1,442


1,766

1,673

1,553

1,717


1,500

1,430

Total income

5,116

4,824


3,510

3,937

3,819

4,399


3,486

3,781

Credit impairment (charges)/releases

(209)

(101)


(23)

18

271

22


(291)

(370)

Net operating income

4,907

4,723


3,487

3,955

4,090

4,421


3,195

3,411

Operating costs

(2,537)

(2,505)


(2,160)

(2,310)

(2,168)

(2,438)


(2,133)

(2,227)

UK bank levy

-

-


(134)

-

-

-


(240)

-

Litigation and conduct

(1,319)

(513)


(84)

(100)

(140)

(21)


(9)

(28)

Total operating expenses

(3,856)

(3,018)


(2,378)

(2,410)

(2,308)

(2,459)


(2,382)

(2,255)

Other net income

5

8


3

15

13

9


9

9

Profit before tax

1,056

1,713


1,112

1,560

1,795

1,971


822

1,165

Attributable profit

783

1,300


818

1,191

1,207

1,431


441

782












Balance sheet information

£bn

£bn


£bn

£bn

£bn

£bn


£bn

£bn

Loans and advances at amortised cost

167.3

144.8


133.8

125.9

121.9

123.5


122.7

128.0

Trading portfolio assets

126.9

134.1


146.9

144.8

147.1

131.1


127.7

122.3

Derivative financial instrument assets

343.5

288.8


261.5

257.0

255.4

269.4


301.8

295.9

Financial assets at fair value through the income statement

209.3

203.8


188.2

200.5

190.4

197.5


170.7

178.2

Cash collateral and settlement balances

128.5

132.0


88.1

115.9

108.5

109.7


97.5

121.8

Other assets

275.1

255.5


225.6

231.8

223.5

221.7


221.4

261.7

Total assets

1,250.6

1,159.0


1,044.1

1,075.9

1,046.8

1,052.9


1,041.8

1,107.9

Deposits at amortised cost

307.4

286.1


258.8

253.3

245.4

251.2


240.5

262.4

Derivative financial instrument liabilities

321.2

277.2


256.4

252.3

246.9

260.2


300.4

293.3

Loan: deposit ratio

54%

51%


52%

50%

50%

49%


51%

49%

Risk weighted assets

263.8

245.1


230.9

222.7

223.2

230.0


222.3

224.7

Period end allocated tangible equity

38.0

35.6


33.2

31.8

31.8

32.7


30.2

30.5












Performance measures











Return on average allocated tangible equity

8.4%

14.8%


9.9%

14.9%

14.9%

17.7%


5.8%

10.2%

Average allocated tangible equity (£bn)

37.3

35.1


32.9

31.8

32.4

32.3


30.5

30.6

Cost: income ratio

75%

63%


68%

61%

60%

56%


68%

60%

Loan loss rate (bps)

49

28


7

-

-

(7)


90

112

Net interest margin

4.52%

4.15%


4.14%

4.02%

3.96%

3.92%


3.41%

3.79%

 

 

1  The comparative capital and financial metrics relating to Q221 - Q421 have been restated to reflect the impact of the Over-issuance of Securities. See Basis of preparation on page 65 and Restatement of financial statements (Note 1) on page 87 for more information.

Analysis of Barclays International






















Corporate and Investment Bank

Q222

Q122


Q4211

Q3211

Q2211

Q121


Q420

Q320

Income statement information

£m

£m


£m

£m

£m

£m


£m

£m

Net interest income

410

385


432

279

370

270


110

305

Net trading income

2,738

2,450


774

1,467

1,494

1,917


1,397

1,535

Net fee, commission and other income

885

1,103


1,426

1,383

1,115

1,407


1,131

1,065

Total income

4,033

3,938


2,632

3,129

2,979

3,594


2,638

2,905

Credit impairment (charges)/releases

(65)

33


73

128

229

43


(52)

(187)

Net operating income

3,968

3,971


2,705

3,257

3,208

3,637


2,586

2,718

Operating costs

(1,870)

(1,921)


(1,562)

(1,747)

(1,623)

(1,886)


(1,603)

(1,716)

UK bank levy

-

-


(128)

-

-

-


(226)

-

Litigation and conduct

(1,314)

(318)


(59)

(99)

(78)

(1)


2

(3)

Total operating expenses

(3,184)

(2,239)


(1,749)

(1,846)

(1,701)

(1,887)


(1,827)

(1,719)

Other net income

-

-


1

-

-

1


2

1

Profit before tax

784

1,732


957

1,411

1,507

1,751


761

1,000

Attributable profit

579

1,316


695

1,085

989

1,263


413

627












Balance sheet information

£bn

£bn


£bn

£bn

£bn

£bn


£bn

£bn

Loans and advances at amortised cost

125.8

109.6


100.0

93.8

91.0

94.3


92.4

96.8

Trading portfolio assets

126.7

134.0


146.7

144.7

147.0

130.9


127.5

122.2

Derivative financial instruments assets

343.4

288.7


261.5

256.9

255.3

269.4


301.7

295.9

Financial assets at fair value through the income statement

209.2

203.8


188.1

200.4

190.3

197.3


170.4

177.9

Cash collateral and settlement balances

127.7

131.2


87.2

115.1

107.7

108.8


96.7

121.0

Other assets

237.2

222.5


195.8

200.4

192.5

190.8


194.9

228.9

Total assets

1,170.0

1,089.8


979.3

1,011.3

983.8

991.5


983.6

1,042.7

Deposits at amortised cost

229.5

214.7


189.4

185.8

178.2

185.2


175.2

195.6

Derivative financial instrument liabilities

321.2

277.1


256.4

252.2

246.8

260.2


300.3

293.2

Risk weighted assets

227.6

213.5


200.7

192.5

194.3

201.3


192.2

193.3












Performance measures











Return on average allocated tangible equity

7.1%

17.1%


9.7%

15.6%

14.0%

17.9%


6.3%

9.5%

Average allocated tangible equity (£bn)

32.7

30.8


28.7

27.8

28.4

28.2


26.3

26.4

Cost: income ratio

79%

57%


66%

59%

57%

53%


69%

59%























Analysis of total income

£m

£m


£m

£m

£m

£m


£m

£m

FICC

1,529

1,644


546

803

895

1,204


812

1,000

Equities

1,411

1,052


501

757

777

932


542

691

Global Markets

2,940

2,696


1,047

1,560

1,672

2,136


1,354

1,691

Advisory

236

185


287

253

218

163


232

90

Equity capital markets

37

47


158

186

226

243


104

122

Debt capital markets

281

416


511

532

429

453


418

398

Investment Banking fees

554

648


956

971

873

859


754

610

Corporate lending

(47)

125


176

168

38

206


186

232

Transaction banking

586

469


453

430

396

393


344

372

Corporate

539

594


629

598

434

599


530

604

Total income

4,033

3,938


2,632

3,129

2,979

3,594


2,638

2,905

 

 

1  The comparative capital and financial metrics relating to Q221 - Q421 have been restated to reflect the impact of the Over-issuance of Securities. See Basis of preparation on page 65 and Restatement of financial statements (Note 1) on page 87 for more information.

 

Analysis of Barclays International



















Consumer, Cards and Payments

Q222

Q122


Q421

Q321

Q221

Q121


Q420

Q320

Income statement information

£m

£m


£m

£m

£m

£m


£m

£m

Net interest income

619

551


522

471

441

478


504

518

Net fee, commission, trading and other income

464

335


356

337

399

327


344

358

Total income

1,083

886


878

808

840

805


848

876

Credit impairment (charges)/releases

(144)

(134)


(96)

(110)

42

(21)


(239)

(183)

Net operating income

939

752


782

698

882

784


609

693

Operating costs

(667)

(584)


(598)

(563)

(545)

(552)


(530)

(511)

UK bank levy

-

-


(6)

-

-

-


(14)

-

Litigation and conduct

(5)

(195)


(25)

(1)

(62)

(20)


(11)

(25)

Total operating expenses

(672)

(779)


(629)

(564)

(607)

(572)


(555)

(536)

Other net income

5

8


2

15

13

8


7

8

Profit/(loss) before tax

272

(19)


155

149

288

220


61

165

Attributable profit/(loss)

204

(16)


123

106

218

168


28

155












Balance sheet information

£bn

£bn


£bn

£bn

£bn

£bn


£bn

£bn

Loans and advances at amortised cost

41.5

35.2


33.8

32.1

30.9

29.2


30.3

31.2

Total assets

80.6

69.2


64.8

64.6

63.0

61.4


58.2

65.2

Deposits at amortised cost

77.9

71.4


69.4

67.5

67.2

66.0


65.3

66.8

Risk weighted assets

36.2

31.6


30.2

30.2

29.0

28.8


30.1

31.4












Performance measures











Return on average allocated tangible equity

17.8%

(1.5)%


11.7%

10.5%

21.8%

16.5%


2.7%

14.7%

Average allocated tangible equity (£bn)

4.6

4.3


4.2

4.0

4.0

4.1


4.2

4.2

Cost: income ratio

62%

88%


72%

70%

72%

71%


65%

61%

Loan loss rate (bps)

132

145


105

127

-

27


286

211























Analysis of total income

£m

£m


£m

£m

£m

£m


£m

£m

International Cards and Consumer Bank

691

538


552

490

517

533


576

600

Private Bank

245

214


200

188

214

179


174

171

Payments

147

134


126

130

109

93


98

105

Total income

1,083

886


878

808

840

805


848

876

 

 

Head Office












Q222

Q122


Q421

Q321

Q221

Q121


Q420

Q320

Income statement information

£m

£m


£m

£m

£m

£m


£m

£m

Net interest income

-

66


(38)

(112)

(64)

(178)


(86)

(48)

Net fee, commission and other income

(132)

(43)


(11)

2

37

103


(85)

(79)

Total income

(132)

23


(49)

(110)

(27)

(75)


(171)

(127)

Credit impairment releases/(charges)

9

8


(5)

(1)

6

-


(31)

(5)

Net operating expenses

(123)

31


(54)

(111)

(21)

(75)


(202)

(132)

Operating costs

(60)

(85)


(152)

(95)

(341)

(71)


(213)

(69)

UK bank levy

-

-


-

-

-

-


(9)

-

Litigation and conduct

1

(1)


(3)

(19)

16

(9)


(42)

(23)

Total operating expenses

(59)

(86)


(155)

(114)

(325)

(80)


(264)

(92)

Other net income/(expenses)

2

(18)


11

78

8

123


8

10

Loss before tax

(180)

(73)


(198)

(147)

(338)

(32)


(458)

(214)

Attributable (loss)/profit

(170)

(292)


(159)

(134)

120

(25)


(381)

(284)












Balance sheet information

£bn

£bn


£bn

£bn

£bn

£bn


£bn

£bn

Total assets

19.8

19.9


19.0

18.5

18.3

17.7


18.6

19.3

Risk weighted assets1

8.6

11.0


11.0

11.8

12.0

10.7


10.2

9.8

Period end allocated tangible equity1

1.1

3.6


5.5

6.3

5.9

3.3


6.8

7.1












Performance measures1











Average allocated tangible equity (£bn)

1.7

3.6


5.1

6.5

4.2

4.3


7.3

7.6

 

 

1  The comparative capital and financial metrics relating to Q221 - Q421 have been restated to reflect the impact of the Over-issuance of Securities. See Basis of preparation on page 65 and Restatement of financial statements (Note 1) on page 87 for more information.

 

 

 

Performance Management

 

Margins and balances


Half year ended 30.06.22

Half year ended 30.06.21


Net interest income

Average customer assets

Net interest margin

Net interest income

Average customer assets

Net interest margin


£m

£m

%

£m

£m

%

Barclays UK

2,732

206,524

2.67

2,586

204,930

2.54

Barclays International1

1,883

88,607

4.29

1,518

77,413

3.95

Total Barclays UK and Barclays International

4,615

295,131

3.15

4,104

282,343

2.93

Other2

148



(201)



Total Barclays Group

4,763



3,903



1  Barclays International margins include the lending related investment bank business.

2  Other includes Head Office and the non-lending related investment bank businesses not included in Barclays International margins.

 

The Group's combined product and equity structural hedge notional as at 30 June 2022 was £256bn (30 June 2021: £198bn), with an average duration of close to 3 years (2021: average duration close to 3 years). Gross structural hedge contributions of £879m (H121: £689m) and net structural hedge contributions of £83m (H121: £592m) are included in Group net interest income. Gross structural hedge contributions represent the absolute level of interest earned from the fixed receipts on swaps in the structural hedge, while the net structural hedge contributions represent the net interest earned on the difference between the structural hedge rate and prevailing floating rates.

 

Quarterly analysis for Barclays UK and Barclays International

Net interest income

Average customer assets

Net interest margin

Three months ended 30.06.22

£m

£m

%

Barclays UK

1,393

205,834

2.71

Barclays International1

1,016

92,371

4.41

Total Barclays UK and Barclays International

2,409

298,205

3.24





Three months ended 31.03.22




Barclays UK

1,339

207,607

2.62

Barclays International1

867

84,838

4.15

Total Barclays UK and Barclays International

2,206

292,445

3.06





Three months ended 31.12.21




Barclays UK

1,313

209,064

2.49

Barclays International1

848

81,244

4.14

Total Barclays UK and Barclays International

2,161

290,308

2.95





Three months ended 30.09.21




Barclays UK

1,303

207,692

2.49

Barclays International1

783

77,364

4.02

Total Barclays UK and Barclays International

2,086

285,056

2.90





Three months ended 30.06.21




Barclays UK

1,305

205,168

2.55

Barclays International1

763

77,330

3.96

Total Barclays UK and Barclays International

2,068

282,498

2.94

 

 

1  Barclays International margins include the lending related investment bank business.

 

 

Risk Management

 

Risk management and principal risks

The roles and responsibilities of the business groups, Risk and Compliance in the management of risk in the Group are defined in the Enterprise Risk Management Framework. The purpose of the framework is to identify the principal risks of the Group, the process by which the Group sets its appetite for these risks in its business activities, and the consequent limits which it places on related risk taking. The framework identifies nine principal risks: credit risk, market risk, treasury and capital risk, climate risk, operational risk, model risk, conduct risk, reputation risk and legal risk. Further detail on the Group's principal risks and previously identified material existing and emerging risks and how such risks are managed is available in the Barclays PLC Annual Report 2021 (pages 202 to 223), or online at home.barclays/annualreport. There have been no significant changes to these principal risks or previously identified material existing and emerging risks in the period other than as set out below.

Material existing and emerging risks

Set out below are details of two additional material risks identified in H122 which potentially impact one or more principal risks.

Internal control over financial reporting and disclosure controls and procedures

The Group is subject to requirements under the Sarbanes-Oxley Act of 2002, as amended, to perform system and process evaluation and testing of its internal control over financial reporting to allow management to assess the effectiveness of its internal controls. In connection with the offer and sale of securities by Barclays Bank PLC in excess of the amounts registered under the 2019 F-3 and Predecessor Shelf (see "Over-issuance of US securities under Barclays Bank PLC's US shelf registration statements" below), management has concluded that the Group had a material weakness in relation to certain aspects of its internal control environment and that, as a consequence, its internal control over financial reporting as at 31 December 2021 was not effective under the applicable Committee of Sponsoring Organizations Framework and its disclosure controls and procedures were not effective as at such date. The material weakness that has been identified relates to a weakness in controls over the identification of external regulatory limits related to securities issuance and monitoring against these limits. As a result of this weakness, Barclays Bank PLC issued securities in excess of the amounts under the US shelf registration statements referred to above.

Remediation efforts have begun and the Group is taking steps to strengthen internal controls relating to securities issuance to address the material weakness. However, internal control systems (no matter how well designed) have inherent limitations and may not prevent or detect further misstatements or errors (whether of a similar or different character to the foregoing). If the Group fails to maintain an effective internal control environment or its disclosure controls and procedures are not effective, the Group could suffer material misstatements in its financial statements and fail to meet its reporting obligations, which could cause investors to lose confidence in the Group's reported financial information. This could in turn limit the Group's access to capital markets, negatively impact its results of operations, and lead to a negative impact on the trading price of its securities. Additionally, ineffective internal control over financial reporting could expose the Group to increased risk of fraud or misuse of corporate assets and subject it to potential regulatory investigations and civil or criminal sanctions. Any of the foregoing could have a material adverse effect on Barclays Bank PLC's and the Group's business, financial condition, results of operations and reputation as a frequent issuer in the securities markets.

Over-issuance of US securities under Barclays Bank PLC's US shelf registration statements

The Group may be subject to claims for rescission or damages and regulatory enforcement actions in connection with certain sales of securities issued by Barclays Bank PLC materially in excess of the amounts set forth in prior registration statements as set out under "Internal control over financial reporting and disclosure controls and procedures" above.

The securities that were issued in excess of these amounts comprise structured notes and exchange traded notes (ETNs). As such, certain offers and sales were not made in compliance with the US Securities Act of 1933, as amended (Securities Act), giving rise to rights of rescission for certain purchasers of the securities. As a result, Barclays Bank PLC has elected to make a rescission offer (Rescission Offer) to eligible purchasers of the relevant affected securities, which it intends to launch on 1 August 2022.

As previously disclosed, the Group is conducting a review (the Review), assisted by external counsel, of the facts and circumstances relating to the sale of the relevant affected securities in excess of amounts registered under such US shelf registration statements and, among other things, the control environment related to such sales. The Review is at an advanced stage and reports on its progress have been made to the Group's management team, the Group Board, and regulators, including the SEC Divisions of Enforcement and Corporation Finance. Such reports have included, among other things: (i) an assessment that the issuance of securities in excess of the maximum aggregate offering price for BBPLC's 2019 US Shelf resulted from a failure to monitor issuances during the period in which Barclays Bank PLC's status changed from a "well-known seasoned issuer" to an "ineligible issuer" for US securities law purposes, which required Barclays Bank PLC to pre-register a set amount of securities to be issued under its US Shelf with the SEC; (ii) confirmation that the Review has not identified any evidence of intentional misconduct; and (iii) the discovery that, while the vast majority of the over-issuance occurred under the 2019 US Shelf, a small portion of the over-issuance also occurred under the Predecessor Shelf.

The Group is also conducting an internal review involving a five-year look-back at limits in other issuance programmes. Management has assessed as remote the risk of material financial impact associated with issuance limits other than where pre-registration of securities is required; therefore the focus of the review has been on programmes with external regulatory limits related to securities issuance. This review has not identified any other breach of an external regulatory limit in any issuance programme used by a member of the Group. Management has identified an instance where a limit imposed solely for internal governance reasons was exceeded when taking into account a large security held on the Group's own balance sheet issued under a non-SEC registered debt issuance programme which did not have an external limit, although the breach of the internal limit did not give rise to any rights on the part of investors and did not constitute a material weakness. Nevertheless, there can be no assurance that the ongoing internal or external counsel reviews will not identify additional facts and information that could be material to an evaluation of this aspect of the Group's control environment.

Under Section 12(a)(1) of the Securities Act, certain purchasers of unregistered securities have a right to recover, upon the tender of such security, the consideration paid for such security with interest, less the amount of any income received, or damages if the purchaser no longer owns the security (Rescission Price). Pursuant to the Rescission Offer, Barclays Bank PLC will offer to repurchase the relevant affected securities at the Rescission Price. Although the Rescission Offer is expected to reduce liability with respect to potential private civil claims, it will not necessarily prevent such claims from being asserted against Barclays Bank PLC and/or its affiliates, including claims under applicable US federal securities laws.

Further, the Rescission Offer does not bar the SEC or other authorities from pursuing enforcement actions against Barclays Bank PLC and its affiliates, which are expected to result in fines, penalties and/or other sanctions. The Group is engaged with, and responding to inquiries and requests for information from, various regulators, including the SEC. The SEC's investigation into this matter is at an advanced stage and the Group has had preliminary discussions with the staff of the SEC's Division of Enforcement about resolving this matter.

As at 30 June 2022, Barclays PLC has recognised a balance sheet provision of £1,757m (December 2021: £220m) in relation to this matter, out of which £1,592m (December 2021: £220m) relates to the over-issuance of structured notes and £165m (December 2021: nil) relates to liabilities that could be incurred arising out of ongoing discussions in respect of a potential SEC resolution. A contingent liability exists in relation to the over-issuance of ETNs due to evidentiary challenges and the high level of trading in the securities. A contingent liability also exists in relation to any potential civil claims or enforcement actions taken against Barclays Bank PLC and its affiliates but Barclays Bank PLC is unable to assess the likelihood of liabilities that may arise out of such claims or actions, there is currently no indication of the exact timing for resolution and it is not practicable to provide an estimate of the financial effects.

The final cost of the Rescission Offer will be impacted by a number of factors, including prevailing market conditions. Prior to the completion of the Rescission Offer, the amount of the provision in relation to the over-issuance of structured notes will fluctuate, perhaps materially, due, in part, to the volatility of the market prices for the structured notes subject to the Rescission Offer. While Barclays Bank PLC and/or its affiliates have entered into hedging arrangements designed to minimise the volatility, such arrangements cannot by their very nature completely hedge the exposures, which may mean the final impact of the Rescission Offer may materially differ from the £1,592m provision reflected as at 30 June 2022. In addition, the hedging arrangements may be modified, may not prove effective (in existing or modified form), may expire prior to the end of the Rescission Offer and do not cover any other losses arising out of potential private civil claims or enforcement actions. The provision of £165m in relation to the potential SEC resolution may also be impacted by the ultimate outcome of the ongoing discussions. Any of the foregoing could result in material additional losses for the Group.

Any liabilities, claims or actions in connection with the over-issuance of securities under the 2019 F-3 and the Predecessor Shelf could have a material adverse effect on Barclays Bank PLC's and the Group's business, financial condition, results of operations and reputation as a frequent issuer in the securities markets.

Management has concluded that, by virtue of the fact that there was a weakness in controls over the identification of external regulatory limits related to securities issuance and monitoring against these limits, the Group had a material weakness in relation to certain aspects of its internal control environment and, as a consequence, its internal control over financial reporting and disclosure controls and procedures as at 31 December 2021 were not effective. Further details on such material weakness are set out under "Internal control over financial reporting and disclosure controls and procedures" above.

 

Credit Risk

 

Loans and advances at amortised cost by stage

The table below presents an analysis of loans and advances at amortised cost by gross exposure, impairment allowance, impairment charge and coverage ratio by stage allocation and business segment as at 30 June 2022. Also included are off-balance sheet loan commitments and financial guarantee contracts by gross exposure, impairment allowance and coverage ratio by stage allocation as at 30 June 2022.

Impairment allowance under IFRS 9 considers both the drawn and the undrawn counterparty exposure. For retail portfolios, the total impairment allowance is allocated to the drawn exposure to the extent that the allowance does not exceed the exposure, as expected credit loss (ECL) is not reported separately. Any excess is reported on the liability side of the balance sheet as a provision. For wholesale portfolios, the impairment allowance on the undrawn exposure is reported on the liability side of the balance sheet as a provision.


Gross exposure


Impairment allowance

Net exposure


Stage 1

Stage 2

Stage 3

Total


Stage 1

Stage 2

Stage 3

Total

As at 30.06.22

£m

£m

£m

£m


£m

£m

£m

£m

£m

Barclays UK

160,110

23,805

3,012

186,927


218

780

753

1,751

185,176

Barclays International

32,053

3,251

1,674

36,978


679

821

826

2,326

34,652

Head Office

3,852

215

688

4,755


2

16

346

364

4,391

Total Barclays Group retail

196,015

27,271

5,374

228,660


899

1,617

1,925

4,441

224,219

Barclays UK

35,915

2,267

862

39,044


131

49

117

297

38,747

Barclays International

120,470

11,916

1,022

133,408


254

198

287

739

132,669

Head Office

186

1

23

210


-

-

21

21

189

Total Barclays Group wholesale1

156,571

14,184

1,907

172,662


385

247

425

1,057

171,605

Total loans and advances at amortised cost

352,586

41,455

7,281

401,322


1,284

1,864

2,350

5,498

395,824

Off-balance sheet loan commitments and financial guarantee contracts2

373,544

24,429

1,146

399,119


275

233

17

525

398,594

Total3

726,130

65,884

8,427

800,441


1,559

2,097

2,367

6,023

794,418













As at 30.06.22


Half year ended 30.06.22



Coverage ratio


Loan impairment charge/(release) and loan loss rate



Stage 1

Stage 2

Stage 3

Total


Loan impairment charge/(release)

Loan loss rate



%

%

%

%


£m

bps


Barclays UK

0.1

3.3

25.0

0.9



14


2


Barclays International

2.1

25.3

49.3

6.3



253


138


Head Office

0.1

7.4

50.3

7.7



(18)


-


Total Barclays Group retail

0.5

5.9

35.8

1.9



249


22


Barclays UK

0.4

2.2

13.6

0.8



36


19


Barclays International

0.2

1.7

28.1

0.6



75


11


Head Office

-

-

91.3

10.0



-


-


Total Barclays Group wholesale1

0.2

1.7

22.3

0.6



111


13


Total loans and advances at amortised cost

0.4

4.5

32.3

1.4



360


18


Off-balance sheet loan commitments and financial guarantee contracts2

0.1

1.0

1.5

0.1



(42)




Other financial assets subject to impairment3







23




Total4

0.2

3.2

28.1

0.8



341




 

1  Includes Wealth UK and Private Banking exposures measured on an individual customer exposure basis, and excludes Business Banking exposures, including lending under the government backed Bounce Back Loan Scheme (BBLS) of £8.1bn that are managed on a collective basis and reported within BUK Retail. The net impact is a difference in total exposure of £4.3bn of balances reported as wholesale loans on page 35 in the Loans and advances at amortised cost by product disclosure.

2  Excludes loan commitments and financial guarantees of £21.1bn carried at fair value.

3  Other financial assets subject to impairment not included in the table above include cash collateral and settlement balances, financial assets at fair value through other comprehensive income and other assets. These have a total gross exposure of £197.3bn and impairment allowance of £149m. This comprises £11m ECL on £195.0bn Stage 1 assets, £2m on £2.1bn Stage 2 fair value through other comprehensive income assets, cash collateral and settlement balances and £136m on £143m Stage 3 other assets.

4  The loan loss rate is 17bps after applying the total impairment charge of £341m.


Gross exposure


Impairment allowance

Net exposure


Stage 1

Stage 2

Stage 3

Total


Stage 1

Stage 2

Stage 3

Total

As at 31.12.21

£m

£m

£m

£m


£m

£m

£m

£m

£m

Barclays UK

160,695

22,779

2,915

186,389


261

949

728

1,938

184,451

Barclays International

25,981

2,691

1,566

30,238


603

795

858

2,256

27,982

Head Office

3,735

429

705

4,869


2

36

347

385

4,484

Total Barclays Group retail

190,411

25,899

5,186

221,496


866

1,780

1,933

4,579

216,917

Barclays UK

35,571

1,917

969

38,457


153

43

111

307

38,150

Barclays International

92,341

13,275

1,059

106,675


187

192

458

837

105,838

Head Office

542

2

21

565


-

-

19

19

546

Total Barclays Group wholesale1

128,454

15,194

2,049

145,697


340

235

588

1,163

144,534

Total loans and advances at amortised cost

318,865

41,093

7,235

367,193


1,206

2,015

2,521

5,742

361,451

Off-balance sheet loan commitments and financial guarantee contracts2

312,142

34,815

1,298

348,255


217

302

23

542

347,713

Total3

631,007

75,908

8,533

715,448


1,423

2,317

2,544

6,284

709,164













As at 31.12.21


Half year ended 31.12.21



Coverage ratio


Loan impairment charge/(release) and loan loss rate



Stage 1

Stage 2

Stage 3

Total


Loan impairment charge/(release)

Loan loss rate



%

%

%

%


£m

bps


Barclays UK

0.2

4.2

25.0

1.0



(227)


-


Barclays International

2.3

29.5

54.8

7.5



181


60


Head Office

0.1

8.4

49.2

7.9



-


-


Total Barclays Group retail

0.5

6.9

37.3

2.1



(46)


-


Barclays UK

0.4

2.2

11.5

0.8



122


32


Barclays International

0.2

1.4

43.2

0.8



(197)


-


Head Office

-

-

90.5

3.4



-


-


Total Barclays Group wholesale1

0.3

1.5

28.7

0.8



(75)


-


Total loans and advances at amortised cost

0.4

4.9

34.8

1.6



(121)


-


Off-balance sheet loan commitments and financial guarantee contracts2

0.1

0.9

1.8

0.2



(514)




Other financial assets subject to impairment3







(18)




Total

0.2

3.1

29.8

0.9



(653)




 

1  Includes Wealth and Private Banking exposures measured on an individual basis, and excludes Business Banking exposures, including BBLS of £9.4bn that are managed on a collective basis and reported within Barclays UK Retail. The net impact is a difference in total exposure of £6.0bn of balances reported as wholesale loans on page 35 in the Loans and advances at amortised cost by product disclosure.

2  Excludes loan commitments and financial guarantees of £18.8bn carried at fair value.

3  Other financial assets subject to impairment not included in the table above include cash collateral and settlement balances, financial assets at fair value through other comprehensive income and other assets. These have a total gross exposure of £155.2bn and impairment allowance of £114m. This comprises £6m ECL on £154.9bn Stage 1 assets, £1m on £157.0bn Stage 2 fair value through other comprehensive income assets, other assets and cash collateral and settlement balances and £107m on £110m Stage 3 other assets.

 

 

Loans and advances at amortised cost by product

The table below presents a breakdown of loans and advances at amortised cost and the impairment allowance with stage allocation by asset classification.



Stage 2



As at 30.06.22

Stage 1

Not past due

<=30 days past due

>30 days past due

Total

Stage 3

Total

Gross exposure

£m

£m

£m

£m

£m

£m

£m

Home loans

150,883

16,269

1,700

765

18,734

2,110

171,727

Credit cards, unsecured loans and other retail lending

43,628

5,918

303

273

6,494

2,510

52,632

Wholesale loans

158,075

15,814

84

329

16,227

2,661

176,963

Total

352,586

38,001

2,087

1,367

41,455

7,281

401,322









Impairment allowance








Home loans

19

29

6

6

41

398

458

Credit cards, unsecured loans and other retail lending

860

1,329

100

126

1,555

1,448

3,863

Wholesale loans

405

264

2

2

268

504

1,177

Total

1,284

1,622

108

134

1,864

2,350

5,498









Net exposure








Home loans

150,864

16,240

1,694

759

18,693

1,712

171,269

Credit cards, unsecured loans and other retail lending

42,768

4,589

203

147

4,939

1,062

48,769

Wholesale loans

157,670

15,550

82

327

15,959

2,157

175,786

Total

351,302

36,379

1,979

1,233

39,591

4,931

395,824









Coverage ratio

%

%

%

%

%

%

%

Home loans

-

0.2

0.4

0.8

0.2

18.9

0.3

Credit cards, unsecured loans and other retail lending

2.0

22.5

33.0

46.2

23.9

57.7

7.3

Wholesale loans

0.3

1.7

2.4

0.6

1.7

18.9

0.7

Total

0.4

4.3

5.2

9.8

4.5

32.3

1.4









As at 31.12.21








Gross exposure

£m

£m

£m

£m

£m

£m

£m

Home loans

148,058

17,133

1,660

707

19,500

2,122

169,680

Credit cards, unsecured loans and other retail lending

37,840

5,102

300

248

5,650

2,332

45,822

Wholesale loans

132,967

15,246

306

391

15,943

2,781

151,691

Total

318,865

37,481

2,266

1,346

41,093

7,235

367,193









Impairment allowance








Home loans

19

46

6

7

59

397

475

Credit cards, unsecured loans and other retail lending

824

1,493

85

123

1,701

1,504

4,029

Wholesale loans

363

248

4

3

255

620

1,238

Total

1,206

1,787

95

133

2,015

2,521

5,742









Net exposure








Home loans

148,039

17,087

1,654

700

19,441

1,725

169,205

Credit cards, unsecured loans and other retail lending

37,016

3,609

215

125

3,949

828

41,793

Wholesale loans

132,604

14,998

302

388

15,688

2,161

150,453

Total

317,659

35,694

2,171

1,213

39,078

4,714

361,451









Coverage ratio

%

%

%

%

%

%

%

Home loans

-

0.3

0.4

1.0

0.3

18.7

0.3

Credit cards, unsecured loans and other retail lending

2.2

29.3

28.3

49.6

30.1

64.5

8.8

Wholesale loans

0.3

1.6

1.3

0.8

1.6

22.3

0.8

Total

0.4

4.8

4.2

9.9

4.9

34.8

1.6

 

 

 

Loans and advances at amortised cost by selected sectors

The table below presents a breakdown of drawn exposure and impairment allowance for loans and advances at amortised cost with stage allocation for selected industry sectors within the wholesale loans portfolio. As the nature of macroeconomic uncertainty has evolved from the COVID-19 pandemic towards high inflation, supply chain constraints and consumer demand headwinds, so has the selected population under management focus.

The gross loans and advances to selected sectors have remained stable over the year. The small increase in provisions is informed by the improved macroeconomic outlook used in the Q222 scenario refresh, offset by management judgments to reflect the risk of uncertainty still prevailing within these sectors. The wholesale portfolio also benefits from a hedge protection programme that enables effective risk management against credit losses. An additional £0.1bn (December 2021: £0.1bn) impairment allowance has been applied to the undrawn exposures not included in the table below.


Gross exposure


Impairment allowance


Stage 1

Stage 2

Stage 3

Total


Stage 1

Stage 2

Stage 3

Total

As at 30.06.22

£m

£m

£m

£m


£m

£m

£m

£m

Autos

914

370

2

1,286


10

5

-

15

Consumer manufacture

3,498

1,587

215

5,300


45

27

47

119

Discretionary retail and wholesale

5,811

1,311

240

7,362


34

21

45

100

Hospitality and leisure

3,817

1,755

352

5,924


33

35

41

109

Passenger travel

807

318

107

1,232


11

5

12

28

Real estate

14,001

2,509

550

17,060


89

45

107

241

Steel and aluminium manufacturers

610

75

7

692


6

1

1

8

Total

29,458

7,925

1,473

38,856


228

139

253

620

Total of wholesale exposures (%)

19%

49%

55%

22%


56%

52%

50%

53%












Gross exposure


Impairment allowance


Stage 1

Stage 2

Stage 3

Total


Stage 1

Stage 2

Stage 3

Total

As at 31.12.21

£m

£m

£m

£m


£m

£m

£m

£m

Autos

656

295

2

953


3

3

-

6

Consumer manufacture

3,904

1,304

211

5,419


18

22

43

83

Discretionary retail and wholesale

5,413

1,197

230

6,840


47

20

54

121

Hospitality and leisure

4,348

1,613

384

6,345


28

33

44

105

Passenger travel

856

285

143

1,284


30

8

40

78

Real estate

13,620

3,314

518

17,452


65

53

93

211

Steel and aluminium manufacturers

415

75

6

496


2

3

1

6

Total

29,212

8,083

1,494

38,789


193

142

275

610

Total of wholesale exposures (%)

22%

51%

54%

26%


53%

56%

44%

49%

UK Commercial real estate exposure continues to remain well collateralised, however it has been included within the latest selected sector scoping as the broader real estate sector remains under pressure due to pricing and affordability concerns, as well as construction input costs and supply chain issues adding to the uncertainty, in particular across non-investment grade exposures.

The coverage ratio for selected sectors has broadly remained consistent at 1.6% as at 30 June 2022. Non-default coverage has marginally increased from 0.9% as at 31 December 2021 to 1.0% as at 30 June 2022.

 

 

Movement in gross exposures and impairment allowance including provisions for loan commitments and financial guarantees

The following tables present a reconciliation of the opening to the closing balance of the exposure and impairment allowance. An explanation of the methodology used to determine credit impairment provisions is included in the Barclays PLC Annual Report 2021 (Page 348). Transfers between stages in the table have been reflected as if they had taken place at the beginning of the year. The movements are measured over a 6-month period.

Loans and advances at amortised cost


Stage 1

Stage 2

Stage 3

Total


Gross exposure

ECL

Gross exposure

ECL

Gross exposure

ECL

Gross exposure

ECL

Home loans

£m

£m

£m

£m

£m

£m

£m

£m

As at 1 January 2022

148,058

19

19,500

59

2,122

397

169,680

475

Transfers from Stage 1 to Stage 2

(5,725)

(1)

5,725

1

-

-

-

-

Transfers from Stage 2 to Stage 1

5,131

18

(5,131)

(18)

-

-

-

-

Transfers to Stage 3

(197)

-

(234)

(5)

431

5

-

-

Transfers from Stage 3

19

1

133

3

(152)

(4)

-

-

Business activity in the period1

14,723

4

339

1

1

-

15,063

5

Refinements to models used for calculation

-

-

-

-

-

-

-

-

Net drawdowns, repayments, net re-measurement and movement due to exposure and risk parameter changes

(4,151)

(22)

(506)

2

(69)

16

(4,726)

(4)

Final repayments

(6,975)

-

(1,092)

(2)

(210)

(3)

(8,277)

(5)

Disposals

-

-

-

-

-

-

-

-

Write-offs2

-

-

-

-

(13)

(13)

(13)

(13)

As at 30 June 20223

150,883

19

18,734

41

2,110

398

171,727

458










Credit cards, unsecured loans and other retail lending

As at 1 January 2022

37,840

824

5,650

1,701

2,332

1,504

45,822

4,029

Transfers from Stage 1 to Stage 2

(2,572)

(67)

2,572

67

-

-

-

-

Transfers from Stage 2 to Stage 1

1,689

422

(1,689)

(422)

-

-

-

-

Transfers to Stage 3

(444)

(11)

(516)

(222)

960

233

-

-

Transfers from Stage 3

30

13

49

9

(79)

(22)

-

-

Business activity in the period1

8,231

354

294

32

20

5

8,545

391

Refinements to models used for calculation4

-

43

-

187

-

96

-

326

Net drawdowns, repayments, net re-measurement and movement due to exposure and risk parameter changes5

1,678

(691)

413

240

94

285

2,185

(166)

Final repayments

(2,673)

(23)

(251)

(27)

(140)

(29)

(3,064)

(79)

Disposals6

(151)

(4)

(28)

(10)

(122)

(69)

(301)

(83)

Write-offs2

-

-

-

-

(555)

(555)

(555)

(555)

As at 30 June 20223

43,628

860

6,494

1,555

2,510

1,448

52,632

3,863

 

 

1  Business activity in the period does not include additional drawdowns on the existing facility which are reported under 'Net drawdowns, repayments, net re-measurement and movements due to exposure and risk parameter changes'. Business activity reported within Credit cards, unsecured loans and other retail lending portfolio includes GAP portfolio acquisition in US cards of £2.7bn.

2  In H122, gross write-offs amounted to £768m (H121: £1,001m) and post write-off recoveries amounted to £36m (H121: £31m). Net write-offs represent gross write-offs less post write-off recoveries and amounted to £732m (H121: £970m).

3  Other financial assets subject to impairment not included in the table above include cash collateral and settlement balances, financial assets at fair value through other comprehensive income and other assets. These have a total gross exposure of £197.3bn (December 21: £155.2bn) and an impairment allowance of £149m (December 21: £114m). This comprises £11m ECL (December 21: £6m) on £195.0bn stage 1 assets (December 21: £154.9bn), £2m (December 21: £1m) on £2.1bn stage 2 fair value through other comprehensive income assets, other assets and cash collateral and settlement balances (December 21: £0.2bn) and £136m (FY21: £107m) on £143m stage 3 other assets (December 21: £110m).

4  Refinements to models used for calculation reported within Credit cards, unsecured loans and other retail lending portfolio include a £0.3bn movement in US cards. These reflect methodology changes made during the year. Barclays continually review the output of models to determine accuracy of the ECL calculation including review of model monitoring, external benchmarking and experience of model operation over an extended period of time. This ensures that the models used continue to reflect the risks inherent across the businesses.

5  Transfers and risk parameter changes include a £0.2bn (December 21: £0.3bn) net release in ECL arising from a reclassification of £1.4bn (December 21: £1.9bn) gross loans and advances from Stage 2 to Stage 1 in Credit cards, unsecured loans and other retail lending portfolio. The reclassification followed a review of back-testing of results which indicated that accuracy of origination probability of default characteristics required management adjustments to correct. The re-classification was first established in Q220.

6  The £0.3bn disposals reported within Credit cards, unsecured loans and other retail lending portfolio includes £0.2bn sale of NFL portfolio within US cards and £0.1bn of debt sales undertaken during the year.

Loans and advances at amortised cost








Stage 1

Stage 2

Stage 3

Total


Gross exposure

ECL

Gross exposure

ECL

Gross exposure

ECL

Gross exposure

ECL

Wholesale loans

£m

£m

£m

£m

£m

£m

£m

£m

As at 1 January 2022

132,967

363

15,943

255

2,781

620

151,691

1,238

Transfers from Stage 1 to Stage 2

(5,129)

(29)

5,129

29

-

-

-

-

Transfers from Stage 2 to Stage 1

5,544

41

(5,544)

(41)

-

-

-

-

Transfers to Stage 3

(676)

(3)

(405)

(6)

1,081

9

-

-

Transfers from Stage 3

114

9

200

17

(314)

(26)

-

-

Business activity in the period1

28,927

40

1,670

14

108

14

30,705

68

Refinements to models used for calculation2

-

(66)

-

(42)

-

(374)

-

(482)

Net drawdowns, repayments, net re-measurement and movement due to exposure and risk parameter changes3

12,529

79

1,048

70

(634)

555

12,943

704

Final repayments

(16,201)

(29)

(1,783)

(28)

(115)

(48)

(18,099)

(105)

Disposals4

-

-

(31)

-

(46)

(46)

(77)

(46)

Write-offs5

-

-

-

-

(200)

(200)

(200)

(200)

As at 30 June 20226

158,075

405

16,227

268

2,661

504

176,963

1,177










Reconciliation of ECL movement to impairment charge/(release) for the period

£m

Home loans








(4)

Credit cards, unsecured loans and other retail lending


472

Wholesale loans


185

ECL movement excluding assets derecognised due to disposals and write-offs


653

Recoveries and reimbursements7


(47)

Exchange and other adjustments8


(246)

Impairment release on loan commitments and other financial guarantees


(42)

Impairment charge on other financial assets6


23

Income statement charge for the period


341

 

1  Business activity in the period does not include additional drawdowns on the existing facility which are reported under 'Net drawdowns, repayments, net re-measurement and movements due to exposure and risk parameter changes'.

2  Refinements to models used for calculation reported within Wholesale loans relates to a £0.5bn movement in Business Banking. This relates to an update in the underlying ECL model that now fully recognises the 100% government guarantee against Barclays Bounce Back Loans exposure.

3  "Net drawdowns, repayments, net re-measurement and movements due to exposure and risk parameter changes" reported within Wholesale loans also include assets of £0.5bn de-recognised due to payment received on defaulted loans from government guarantees issued under government's Bounce Back Loans Scheme.

4  The £0.1bn disposals reported within Wholesale loans relates to debt sales undertaken during the year.

5  In H122, gross write-offs amounted to £768m (H121: £1,001m) and post write-off recoveries amounted to £36m (H121: £31m). Net write-offs represent gross write-offs less post write-off recoveries and amounted to £732m (H121: £970m).

6  Other financial assets subject to impairment not included in the table above include cash collateral and settlement balances, financial assets at fair value through other comprehensive income and other assets. These have a total gross exposure of £197.3bn (December 21: £155.2bn) and impairment allowance of £149m (December 21: £114m). This comprises £11m ECL (December 21: £6m) on £195.0bn stage 1 assets (December 21: £154.9bn), £2m (December 21: £1m) on £2.1bn stage 2 fair value through other comprehensive income assets, other assets and cash collateral and settlement balances (December 21: £157.0bn) and £136m (December 21: £107m) on £143m stage 3 other assets (December 21: £110m).

7  Recoveries and reimbursements includes a net gain in relation to reimbursements from financial guarantee contracts held with third parties of £11m (H121 loss: £216m) and post write off recoveries of £36m (H121: £31m).

8  Exchange and other adjustments includes foreign exchange and interest and fees in suspense.

Loan commitments and financial guarantees


Stage 1

Stage 2

Stage 3

Total


Gross

exposure

ECL

Gross

exposure

ECL

Gross

exposure

ECL

Gross

exposure

ECL

Home loans

£m

£m

£m

£m

£m

£m

£m

£m

As at 1 January 2022

10,833

-

532

-

3

-

11,368

-

Net transfers between stages

39

-

(39)

-

-

-

-

-

Business activity in the period

8,146

-

-

-

-

-

8,146

-

Net drawdowns, repayments, net re-measurement and movement due to exposure and risk parameter changes

(6,354)

-

(12)

-

-

-

(6,366)

-

Limit management and final repayments

(172)

-

(22)

-

-

-

(194)

-

As at 30 June 2022

12,492

-

459

-

3

-

12,954

-










Credit cards, unsecured loans and other retail lending

As at 1 January 2022

122,819

50

5,718

61

218

20

128,755

131

Net transfers between stages

(1,277)

23

935

(18)

342

(5)

-

-

Business activity in the period

26,892

1

212

-

-

-

27,104

1

Net drawdowns, repayments, net re-measurement and movement due to exposure and risk parameter changes

9,385

3

(1,267)

20

(288)

2

7,830

25

Limit management and final repayments

(3,740)

(1)

(209)

(3)

(36)

-

(3,985)

(4)

As at 30 June 2022

154,079

76

5,389

60

236

17

159,704

153










Wholesale loans









As at 1 January 2022

178,490

167

28,565

241

1,077

3

208,132

411

Net transfers between stages

9,775

36

(9,709)

(37)

(66)

1

-

-

Business activity in the period

37,358

19

2,864

24

1

-

40,223

43

Net drawdowns, repayments, net re-measurement and movement due to exposure and risk parameter changes

17,712

(9)

1,510

(22)

140

(5)

19,362

(36)

Limit management and final repayments

(36,362)

(14)

(4,649)

(33)

(245)

1

(41,256)

(46)

As at 30 June 2022

206,973

199

18,581

173

907

-

226,461

372

 

 

Management adjustments to models for impairment

Management adjustments to impairment models are applied in order to factor in certain conditions or changes in policy that are not fully incorporated into the impairment models, or to reflect additional facts and circumstances at the period end. Management adjustments are reviewed and incorporated into future model development where applicable.

Total management adjustments to impairment allowance are presented by product below:

Overview of management adjustments to models for impairment allowance1


As at 30.06.22

As at 31.12.21


Management adjustments to impairment allowances

Proportion of total impairment allowances

Management adjustments to impairment allowances

Proportion of total impairment allowances


£m

%

£m

%

Home loans

76

16.6

103

21.7

Credit cards, unsecured loans and other retail lending

785

19.6

1,362

32.7

Wholesale loans2

426

  27.5

21

1.3

Total

1,287

21.4

1,486

23.6

Management adjustments to models for impairment allowance1


Impairment allowance pre management adjustments3

Economic uncertainty adjustments

Other adjustments

Total Adjustments

Total impairment allowance4



(a)

(b)

(a+b)


As at 30.06.22

£m

£m

£m

£m

£m

Home loans

382

43

33

76

458

Credit cards, unsecured loans and other retail lending

3,229

578

207

785

4,014

Wholesale loans

1,125

417

9

426

1,551

Total

4,736

1,038

249

1,287

6,023







As at 31.12.21






Home loans

372

72

31

103

475

Credit cards, unsecured loans and other retail lending

2,798

1,217

145

1,362

4,160

Wholesale loans

1,628

403

(382)

21

1,649

Total

4,798

1,692

(206)

1,486

6,284

1  Positive values reflect an increase in impairment allowance and negative values reflect a reduction in the impairment allowance.

2  Proportion of management adjustments to impairment allowances has increased in wholesale loans primarily driven by release of offsetting PMA to recognise BBLS government guarantees of £0.4bn; now captured through the model. Excluding this, proportion of management adjustments to impairment allowances remain materially stable compare to previous year.

3  Includes £4.1bn (December 2021: £4.1bn) of modelled ECL, £0.4bn (December 2021: £0.5bn) of individually assessed impairments and £0.2bn (December 2021: £0.2bn) ECL from non-modelled exposures.

4  Total impairment allowance consists of ECL stock on drawn and undrawn exposure.

 

Economic uncertainty adjustments

Throughout the COVID-19 pandemic in 2020 and 2021, macroeconomic forecasts anticipated lasting impacts to unemployment levels and customer and client stress. However, the most recent macroeconomic outlook suggests the concerns over the spread of COVID-19 in major economies has receded and normalisation of customer behaviour has been observed, but uncertainty persists: Russia's invasion of Ukraine is affecting global energy markets and food prices; China's 'zero-COVID' policy is putting pressure on stretched supply chains; and labour markets continue to generate inflationary pressures. Credit deterioration could still occur as emerging supply chain disruption and inflationary pressures challenge economic stability; and economic consensus may not capture the range of arising economic uncertainty.

Given this backdrop, COVID-19 related expert judgements have been materially replaced by provisions for customers and clients considered most vulnerable to rising costs and supply chain disruption.  This uncertainty continues to be captured in two distinct ways. Firstly, customer uncertainty: the identification of customers and clients who may be more vulnerable to the emerging economic instability; and secondly, model uncertainty: to capture the impact from model limitations and sensitivities to specific macroeconomic parameters which are applied at a portfolio level.

The economic uncertainty adjustments of £1.0bn (FY21: £1.7bn) include customer and client uncertainty provisions of £0.8bn (FY21: £1.5bn) and model uncertainty provisions of £0.2bn (FY21: £0.2bn).

Customer and client uncertainty provisions include an adjustment of £0.8bn (FY21: £1.5bn) which has been applied to customers and clients considered potentially vulnerable to the emerging economic instability in light of inflationary and supply chain concerns. This adjustment is split between credit cards, unsecured loans and other retail lending £0.5bn (FY21: £0.8bn) and wholesale loans £0.3bn (FY21: £0.3bn). The reduction in the credit cards, unsecured loans and other retail lending-related adjustment is due to unwinding of COVID-19 related expert judgements partially offset by provisions booked for customers and clients considered more vulnerable to rising costs and slowing consumer demand.

Furthermore, a previously held 2021 adjustment of £0.4bn to amend probabilities of default (PDs), informed by pre COVID-19 levels, is no longer required as the normalisation of customer behaviour is now captured within the modelled output.

Model uncertainty provisions £0.2bn (2021: £0.2bn) informed by modelled provisions following the updated Q222 scenario.

Other adjustments

Other adjustments are operational in nature and are expected to remain in place until they can be corrected in the underlying models. These adjustments result from data limitations and model performance related issues identified through established governance processes. The quantum of adjustments has reduced in response to the macroeconomic variable refresh in Q222 as well as model enhancements made during H122. Material adjustments comprise the following:

Home loans: The low average loan to value (LTV) nature of the UK Home Loans portfolio means that modelled ECL estimates are low. An adjustment is made to maintain an appropriate level of ECL informed by model monitoring.

Credit cards, unsecured loans and other retail lending: Includes the estimated ECL impact from adoption of the new definition of default under the Capital Requirements Regulation, the Day 1 provision for the GAP portfolio acquisition in US cards, an annual update to the qualitative measures used in high risk account management (HRAM) and adjustments for model inaccuracies informed by model monitoring; partially offset by a reclassification of loans and advances from Stage 2 to Stage 1 in credit cards. The reclassification followed a review of back-testing results which indicated that accuracy of origination probability of default characteristics requires management adjustments to correct and was first established in Q220. This adjustment has been reduced, driven by the improved macroeconomic scenarios in Q222.

Wholesale loans: Management adjustments of £(0.4)bn within wholesale loans in 2021 principally comprised an adjustment applied on bounce back loans of £(0.4)bn to reverse out the modelled charge which did not consider the government guarantee when calculating the ECL. This adjustment is no longer needed due to model enhancements.

 

 

Measurement uncertainty

Management has applied economic uncertainty and other adjustments to modelled ECL outputs. Economic uncertainty adjustments have been applied to customers and clients considered most vulnerable to rising costs and supply chain disruption. As a result, ECL is higher than would be the case if it were based on forecast economic scenarios alone.

The measurement of modelled ECL involves complexity and judgement, including estimation of probabilities of default (PD), loss given default (LGD), a range of unbiased future economic scenarios, estimation of expected lives, estimation of exposures at default (EAD) and assessing significant increases in credit risk. The Group uses a five-scenario model to calculate ECL. An external consensus forecast is assembled from key sources, including HM Treasury (short and medium term forecasts), Bloomberg (based on median of economic forecasts) and the Urban Land Institute (for US House Prices), which forms the Baseline scenario. In addition, two adverse scenarios (Downside 1 and Downside 2) and two favourable scenarios (Upside 1 and Upside 2) are derived, with associated probability weightings. The adverse scenarios are calibrated to a broadly similar severity to Barclays' internal stress tests and stress scenarios provided by regulators whilst also considering IFRS 9 specific sensitivities and non-linearity. The favourable scenarios are designed to reflect plausible upside risks to the Baseline scenario which are broadly consistent with the economic narrative approved by the Senior Scenario Review Committee. All scenarios are regenerated at a minimum semi-annually. The scenarios include key economic variables, (including GDP, unemployment, House Price Index (HPI) and base rates in both the UK and US markets), and expanded variables using statistical models based on historical correlations. The upside and downside shocks are designed to evolve over a five-year stress horizon, with all five scenarios converging to a steady state after approximately seven years.

Scenarios used to calculate the Group's ECL charge were refreshed in Q222. The current Baseline scenario reflects the latest consensus economic forecasts. Unemployment rates remain low, close to current levels. As inflation expectations drift higher, central banks tighten monetary policy sharply. In 2023, the UK Bank Rate reaches 2.75%, while the US Federal Funds Rate peaks at 3.25%. Rising borrowing charges and falling real wages subtract from growth through lower investment and household consumption. In the Downside 2 scenario, with inflation expectations rising, the central banks have to raise interest rates very sharply. The UK Bank Rate and the US Federal Funds Rate both reach 5.0% in Q223. Higher borrowing costs derail the economy and unemployment peaks in Q124 at 9.2% in the UK and 9.5% in the US. Given already stretched valuations, the sharp increase in mortgage servicing costs sees house prices decrease very sharply. In the Upside 2 scenario, supply disruptions get resolved, while the aggregate demand is supported by a release of household savings. GDP growth accelerates. Recovering labour force participation limits domestic inflationary pressures, while lower energy prices add some downward pressure on prices globally.

The methodology for estimating probability weights used in calculating ECL involves simulating a range of future paths for UK and US GDP using historical data. The five scenarios are mapped against the distribution of these future paths, with the median centred around the Baseline such that scenarios further from the Baseline attract a lower weighting. A single set of five scenarios is used across all portfolios and all five weights are normalised to equate to 100%. The same scenarios and weights that are used in the ECL estimation are also used for Barclays' internal planning purposes. The impacts across the portfolios are different because of the sensitivities of each of the portfolios to specific macroeconomic variables. For example, mortgages are highly sensitive to house prices; credit cards and unsecured consumer loans are highly sensitive to unemployment.

The decrease in the Upside scenario weightings and increase in the Baseline weighting were driven by: (i) continued growth in UK/US GDP which resulted in a narrower fan of future GDP paths; and (ii) generally less favourable GDP projections across scenarios, increasing the distance between Upside 2 and Baseline scenario paths. For further details see page 48.

COVID-19 related expert judgements have been materially replaced by provisions for customers and clients considered most vulnerable to rising costs and supply chain disruption. The economic uncertainty adjustments of £1.0bn (FY21: £1.7bn) have been applied as overlays to the modelled ECL output. These adjustments consist of a customer and client uncertainty provision of £0.8bn (FY21: £1.5bn) and a model uncertainty provision of £0.2bn (FY21: £0.2bn). For further details, see pages 41 to 35.

The tables below show the key consensus macroeconomic variables used in the scenarios (5-year annual paths), the probability weights applied to each scenario and the macroeconomic variables by scenario using 'specific bases' i.e. the most extreme position of each variable in the context of the scenario, for example, the highest unemployment for downside scenarios and the lowest unemployment for upside scenarios. The 5-year average table provides additional transparency.

Baseline average macroeconomic variables used in the calculation of ECL


2022

2023

2024

2025

2026

As at 30.06.22

%

%

%

%

%

UK GDP1

3.9

1.7

1.6

1.6

1.6

UK unemployment2

4.0

4.1

3.9

3.9

3.9

UK HPI3

4.3

1.0

2.2

2.5

2.8

UK bank rate

1.5

2.7

2.4

2.1

2.0

US GDP1

3.3

2.2

2.1

2.1

2.1

US unemployment4

3.6

3.5

3.5

3.5

3.5

US HPI5

4.1

3.4

3.4

3.4

3.4

US federal funds rate

1.5

3.2

2.9

2.7

2.5


2021

2022

2023

2024

2025

As at 31.12.21

%

%

%

%

%

UK GDP1

6.2

4.9

2.3

1.9

1.7

UK unemployment2

4.8

4.7

4.5

4.3

4.2

UK HPI3

4.7

1.0

1.9

1.9

2.3

UK bank rate

0.1

0.8

1.0

1.0

0.8

US GDP1

5.5

3.9

2.6

2.4

2.4

US unemployment4

5.5

4.2

3.6

3.6

3.6

US HPI5

11.8

4.5

5.2

4.9

5.0

US federal funds rate

0.2

0.3

0.9

1.2

1.3

 

1  Average Real GDP seasonally adjusted change in year.

2  Average UK unemployment rate 16-year+.

3  Change in year end UK HPI = Halifax All Houses, All Buyers index, relative to prior year end.

4  Average US civilian unemployment rate 16-year+.

5  Change in year end US HPI = FHFA House Price Index, relative to prior year end.

Downside 2 average economic variables used in the calculation of ECL


2022

2023

2024

2025

2026

As at 30.06.22

%

%

%

%

%

UK GDP1

3.1

(4.8)

(0.4)

4.3

3.6

UK unemployment2

5.2

8.4

8.6

6.8

5.9

UK HPI3

0.2

(26.2)

(3.6)

17.9

10.2

UK bank rate

1.8

4.7

4.3

2.6

2.3

US GDP1

2.4

(4.1)

(0.2)

3.4

2.7

US unemployment4

4.6

8.0

9.0

7.1

5.8

US HPI5

(0.2)

(11.7)

(0.2)

5.5

3.5

US federal funds rate

1.8

4.8

4.6

3.6

3.0


2021

2022

2023

2024

2025

As at 31.12.21

%

%

%

%

%

UK GDP1

6.2

0.2

(4.0)

2.8

4.3

UK unemployment2

4.8

7.2

9.0

7.6

6.3

UK HPI3

4.7

(14.3)

(21.8)

11.9

15.2

UK bank rate

0.1

2.2

3.9

3.1

2.2

US GDP1

5.5

(0.8)

(3.5)

2.5

3.2

US unemployment4

5.5

6.4

9.1

8.1

6.4

US HPI5

11.8

(6.6)

(9.0)

5.9

6.7

US federal funds rate

0.2

2.1

3.4

2.6

2.0

1  Average Real GDP seasonally adjusted change in year.

2  Average UK unemployment rate 16-year+.

3  Change in year end UK HPI = Halifax All Houses, All Buyers index, relative to prior year end.

4  Average US civilian unemployment rate 16-year+.

5  Change in year end US HPI = FHFA House Price Index, relative to prior year end.

 

 

Downside 1 average economic variables used in the calculation of ECL


2022

2023

2024

2025

2026

As at 30.06.22

%

%

%

%

%

UK GDP1

3.5

(1.6)

0.6

3.0

2.6

UK unemployment2

4.6

6.2

6.2

5.3

4.9

UK HPI3

2.3

(13.2)

(0.8)

10.0

6.5

UK bank rate

1.6

3.8

3.4

2.4

2.0

US GDP1

2.7

(1.0)

1.1

2.9

2.5

US unemployment4

4.1

5.7

6.2

5.3

4.6

US HPI5

1.9

(4.4)

1.6

4.4

3.4

US federal funds rate

1.7

3.9

3.8

3.2

2.8


2021

2022

2023

2024

2025

As at 31.12.21

%

%

%

%

%

UK GDP1

6.2

2.8

(0.7)

2.3

2.9

UK unemployment2

4.8

6.2

6.8

6.0

5.3

UK HPI3

4.7

(6.8)

(10.5)

6.9

8.6

UK bank rate

0.1

1.6

2.7

2.3

1.6

US GDP1

5.5

1.6

(0.4)

2.4

2.7

US unemployment4

5.5

5.4

6.6

6.1

5.2

US HPI5

11.8

(1.2)

(2.1)

4.8

5.2

US federal funds rate

0.2

1.3

2.3

2.1

1.8

 

1  Average Real GDP seasonally adjusted change in year.

2  Average UK unemployment rate 16-year+.

3  Change in year end UK HPI = Halifax All Houses, All Buyers index, relative to prior year end.

4  Average US civilian unemployment rate 16-year+.

5  Change in year end US HPI = FHFA House Price Index, relative to prior year end.

Upside 2 average economic variables used in the calculation of ECL


2022

2023

2024

2025

2026

As at 30.06.22

%

%

%

%

%

UK GDP1

5.0

5.2

3.1

2.4

2.0

UK unemployment2

3.8

3.7

3.6

3.6

3.6

UK HPI3

6.5

11.2

6.2

4.7

3.7

UK bank rate

1.2

1.5

1.4

1.3

1.3

US GDP1

4.0

4.9

3.6

3.4

3.4

US unemployment4

3.4

3.0

3.1

3.1

3.1

US HPI5

5.4

5.5

4.6

4.5

4.5

US federal funds rate

1.1

2.2

1.9

1.7

1.5


2021

2022

2023

2024

2025

As at 31.12.21

%

%

%

%

%

UK GDP1

6.2

7.2

4.0

2.7

2.1

UK unemployment2

4.8

4.5

4.1

4.0

4.0

UK HPI3

4.7

8.5

9.0

5.2

4.2

UK bank rate

0.1

0.2

0.5

0.5

0.3

US GDP1

5.5

5.3

4.1

3.5

3.4

US unemployment4

5.5

3.9

3.4

3.3

3.3

US HPI5

11.8

10.6

8.5

7.2

6.6

US federal funds rate

0.2

0.3

0.4

0.7

1.0

1  Average Real GDP seasonally adjusted change in year.

2  Average UK unemployment rate 16-year+.

3  Change in year end UK HPI = Halifax All Houses, All Buyers index, relative to prior year end.

4  Average US civilian unemployment rate 16-year+.

5  Change in year end US HPI = FHFA House Price Index, relative to prior year end.

 

 

Upside 1 average economic variables used in the calculation of ECL


2022

2023

2024

2025

2026

As at 30.06.22

%

%

%

%

%

UK GDP1

4.5

3.5

2.4

2.0

1.8

UK unemployment2

3.9

3.8

3.8

3.8

3.8

UK HPI3

5.4

6.3

4.1

3.6

3.2

UK bank rate

1.3

2.0

1.6

1.5

1.5

US GDP1

3.7

3.7

3.0

2.9

2.9

US unemployment4

3.5

3.2

3.3

3.3

3.3

US HPI5

4.7

4.4

4.0

3.9

3.9

US federal funds rate

1.3

2.4

2.2

1.9

1.8


2021

2022

2023

2024

2025

As at 31.12.21

%

%

%

%

%

UK GDP1

6.2

6.0

3.1

2.3

1.9

UK unemployment2

4.8

4.6

4.3

4.2

4.1

UK HPI3

4.7

5.0

5.0

3.9

3.3

UK bank rate

0.1

0.6

0.8

0.8

0.5

US GDP1

5.5

4.6

3.4

2.9

2.9

US unemployment4

5.5

4.0

3.5

3.5

3.5

US HPI5

11.8

8.3

7.0

6.0

5.7

US federal funds rate

0.2

0.3

0.6

1.0

1.1

 

1  Average Real GDP seasonally adjusted change in year.

2  Average UK unemployment rate 16-year+.

3  Change in year end UK HPI = Halifax All Houses, All Buyers index, relative to prior year end.

4  Average US civilian unemployment rate 16-year+.

5  Change in year end US HPI = FHFA House Price Index, relative to prior year end.

 

Scenario probability weighting


Upside 2

Upside 1

Baseline

Downside 1

Downside 2


%

%

%

%

%

As at 30.06.22






Scenario probability weighting

14.0

25.6

37.8

15.2

7.4

As at 31.12.21






Scenario probability weighting

20.9

27.2

30.1

14.8

7.0

 

 

Specific bases show the most extreme position of each variable in the context of the scenario, for example, the highest unemployment for downside scenarios, average unemployment for baseline scenarios and lowest unemployment for upside scenarios. GDP and HPI downside and upside scenario data represents the lowest and highest points relative to the start point in the 20 quarter period.

 

 

Macroeconomic variables (specific bases)1


Upside 2

Upside 1

Baseline

Downside 1

Downside 2

As at 30.06.22

%

%

%

%

%

UK GDP2

16.8

12.8

2.1

(1.1)

(5.9)

UK unemployment3

3.6

3.8

4.0

6.6

9.2

UK HPI4

36.7

24.8

2.6

(13.6)

(30.8)

UK bank rate

0.8

0.8

2.1

4.0

5.0

US GDP2

20.2

16.1

2.4

(0.5)

(5.0)

US unemployment3

3.0

3.2

3.5

6.5

9.5

US HPI4

27.0

22.9

3.5

(2.6)

(13.4)

US federal funds rate

0.3

0.3

2.6

4.1

5.0







As at 31.12.21






UK GDP2

21.4

18.3

3.4

(1.6)

(1.6)

UK unemployment3

4.0

4.1

4.5

7.0

9.2

UK HPI4

35.7

23.8

2.4

(12.7)

(29.9)

UK bank rate

0.1

0.1

0.7

2.8

4.0

US GDP2

22.8

19.6

3.4

1.5

(1.3)

US unemployment3

3.3

3.5

4.1

6.8

9.5

US HPI4

53.3

45.2

6.2

2.2

(5.0)

US federal funds rate

0.1

0.1

0.8

2.3

3.5

 

1  UK GDP = Real GDP growth seasonally adjusted; UK unemployment = UK unemployment rate 16-year+; UK HI = Halifax All Houses, All Buyers Index; US GDP = Real GDP growth seasonally adjusted; US unemployment = US civilian unemployment rate 16-year+; US HPI = FHFA House Price Index. 20 quarter period starts from Q122 (2021: Q121).

2  Maximum growth relative to Q421 (2021: Q420), based on 20 quarter period in Upside scenarios; 5-year yearly average Compound Annual Growth Rate (CAGR) in Baseline; minimum growth relative to Q421 (2021: Q420), based on 20 quarter period in Downside scenarios.

3  Lowest quarter in 20 quarter period in Upside scenarios; 5-year average in Baseline; highest quarter 20 quarter period in Downside scenarios.

4  Maximum growth relative to Q421 (2021: Q420), based on 20 quarter period in Upside scenarios; 5-year quarter end CAGR in Baseline; minimum growth relative to Q421 (2021: Q420), based on 20 quarter period in Downside scenarios.

Average basis represents the average quarterly value of variables in the 20 quarter period with GDP and HPI based on yearly average and quarterly CAGRs respectively.

 

 

Macroeconomic variables (5-year averages)1


Upside 2

Upside 1

Baseline

Downside 1

Downside 2

As at 30.06.22

%

%

%

%

%

UK GDP2

3.5

2.8

2.1

1.6

1.1

UK unemployment3

3.7

3.8

4.0

5.5

7.0

UK HPI4

6.4

4.5

2.6

0.6

(1.5)

UK bank rate

1.3

1.6

2.1

2.7

3.1

US GDP2

3.9

3.2

2.4

1.6

0.8

US unemployment3

3.1

3.3

3.5

5.2

6.9

US HPI4

4.9

4.2

3.5

1.4

(0.8)

US federal funds rate

1.7

1.9

2.6

3.1

3.6







As at 31.12.21






UK GDP2

4.4

3.9

3.4

2.7

1.8

UK unemployment3

4.3

4.4

4.5

5.8

7.0

UK HPI4

6.3

4.4

2.4

0.3

(2.0)

UK bank rate

0.3

0.5

0.7

1.7

2.3

US GDP2

4.4

3.9

3.4

2.4

1.3

US unemployment3

3.9

4.0

4.1

5.7

7.1

US HPI4

8.9

7.7

6.2

3.6

1.4

US federal funds rate

0.5

0.6

0.8

1.5

2.1

 

1  UK GDP = Real GDP growth seasonally adjusted; UK unemployment = UK unemployment rate 16-year+; UK HPI = Halifax All Houses, All Buyers Index; US GDP = Real GDP growth seasonally adjusted; US unemployment = US civilian unemployment rate 16-year+; US HPI = FHFA House Price Index.

2  5-year yearly average CAGR, starting 2021 (2021: 2020).

3  5-year average. Period based on 20 quarters from Q122 (2021: Q121).

4  5-year quarter end CAGR, starting Q421 (2021: Q420).

 

ECL under 100% weighted scenarios for modelled portfolios

The table below shows the ECL assuming scenarios have been 100% weighted. Model exposures are allocated to a stage based on the individual scenario rather than through a probability-weighted approach as required for Barclays reported impairment allowances. As a result, it is not possible to back solve to the final reported weighted ECL from the individual scenarios as a balance may be assigned to a different stage dependent on the scenario. Model exposure uses exposure at default (EAD) values and is not directly comparable to gross exposure used in prior disclosures. For Credit cards, unsecured loans and other retail lending, an average EAD measure is used (12-month or lifetime, depending on stage allocation in each scenario). Therefore, the model exposure movement into Stage 2 is higher than the corresponding Stage 1 reduction.

All ECL using a model is included, with the exception of Treasury assets (£7.7m of ECL). Non-modelled exposures and management adjustments are excluded. Management adjustments can be found in the Management adjustments to models for impairment section.

Model exposures allocated to Stage 3 do not change in any of the scenarios as the transition criteria relies only on observable evidence of default as at 30 June 2022 and not on macroeconomic scenarios.

The Downside 2 scenario represents a severe global recession with substantial falls in both UK and US GDP. Unemployment in UK markets rises towards 9.2% and US markets rises towards 9.5% and there are substantial falls in asset prices including housing. Under the Downside 2 scenario, model exposure moves between stages as the economic environment weakens. This can be seen in the movement of £22.1bn of model exposure into Stage 2 between the Weighted and Downside 2 scenario. ECL increases in Stage 2 predominantly due to unsecured portfolios as economic conditions deteriorate.

 


Scenarios

As at 30 June 2022

Weighted

Upside 2

Upside 1

Baseline

Downside 1

Downside 2

Stage 1 Model Exposure (£m)







Home loans

142,668

144,569

143,881

142,882

141,536

139,553

Credit cards, unsecured loans and other retail lending

46,225

46,906

46,692

46,446

45,324

44,057

Wholesale loans

183,356

189,252

187,709

183,570

178,233

167,303

Stage 1 Model ECL (£m)







Home loans

3

2

2

2

4

10

Credit cards, unsecured loans and other retail lending

341

329

333

338

353

372

Wholesale loans

250

210

224

237

296

329

Stage 1 Coverage (%)







Home loans

-

-

-

-

-

-

Credit cards, unsecured loans and other retail lending

0.7

0.7

0.7

0.7

0.8

0.8

Wholesale loans

0.1

0.1

0.1

0.1

0.2

0.2

Stage 2 Model Exposure (£m)







Home loans

18,684

16,783

17,471

18,470

19,815

21,799

Credit cards, unsecured loans and other retail lending

8,699

7,741

8,048

8,448

9,932

11,658

Wholesale loans

23,702

17,806

19,349

23,489

28,825

39,755

Stage 2 Model ECL (£m)







Home loans

13

8

9

11

20

40

Credit cards, unsecured loans and other retail lending

1,531

1,306

1,378

1,468

1,840

2,318

Wholesale loans

463

348

382

438

604

1,091

Stage 2 Coverage (%)







Home loans

0.1

-

0.1

0.1

0.1

0.2

Credit cards, unsecured loans and other retail lending

17.6

16.9

17.1

17.4

18.5

19.9

Wholesale loans

2.0

2.0

2.0

1.9

2.1

2.7

Stage 3 Model Exposure (£m)







Home loans

1,631

1,631

1,631

1,631

1,631

1,631

Credit cards, unsecured loans and other retail lending

1,797

1,797

1,797

1,797

1,797

1,797

Wholesale loans1

2,431

2,431

2,431

2,431

2,431

2,431

Stage 3 Model ECL (£m)







Home loans

313

301

305

309

328

357

Credit cards, unsecured loans and other retail lending

1,207

1,183

1,191

1,222

1,218

1,212

Wholesale loans1

61

56

58

60

66

73

Stage 3 Coverage (%)







Home loans

19.2

18.5

18.7

18.9

20.1

21.9

Credit cards, unsecured loans and other retail lending

67.2

65.8

66.3

68.0

67.8

67.4

Wholesale loans1

2.5

2.3

2.4

2.5

2.7

3.0

Total Model ECL (£m)







Home loans

329

311

316

322

352

407

Credit cards, unsecured loans and other retail lending

3,079

2,818

2,902

3,028

3,411

3,902

Wholesale loans1

774

614

664

735

966

1,493

Total Model ECL

4,182

3,743

3,882

4,085

4,729

5,802

1  Material wholesale loan defaults are individually assessed across different recovery strategies. As a result, ECL of £376m is reported as individually assessed impairments in the table below. 

Reconciliation to total ECL

£m

Total model ECL

4,182

ECL from individually assessed impairments

376

ECL from non-modelled and other management adjustments1

1,465

Total ECL

6,023

 

 

1  Includes £1.3bn post-model adjustments of which £0.1bn is included as part of total model ECL and £0.2bn ECL from non-modelled exposures.

The dispersion of results around the Baseline is an indication of uncertainty around the future projections. The disclosure highlights the results of the alternative scenarios enabling the reader to understand the extent of the impact on exposure and ECL from the upside/downside scenarios. Consequently, the use of five scenarios with associated weightings results in a total weighted ECL uplift from the Baseline ECL of 2.4%, largely driven by credit card losses which have more linear loss profiles than UK home loans and wholesale loan positions.

Home loans: Total weighted ECL of £329m represents a 2.2% increase over the Baseline ECL (£322m), and coverage ratios remain steady across the Upside scenarios, Baseline and Downside 1 scenario. However, total ECL increases in the Downside 2 scenario to £407m, driven by a significant fall in UK HPI (30.8%) reflecting the non-linearity of the UK portfolio.

Credit cards, unsecured loans and other retail lending: Total weighted ECL of £3,079m represents a 1.7% increase over the Baseline ECL (£3,028m) reflecting the range of economic scenarios used, mainly impacted by unemployment and other key retail variables. Total ECL increases to £3,902m under Downside 2 scenario, mainly driven by Stage 2, where coverage rates increase to 19.9% from a weighted scenario approach of 17.6% and circa £3.0bn increase in model exposure that meets the Significant Increase in Credit Risk criteria and transitions from Stage 1 to Stage 2.

Wholesale loans: Total weighted ECL of £774m represents an 5.3% increase over the Baseline ECL (£735m) reflecting the range of economic scenarios used, with exposures in the Corporate and Investment Bank particularly sensitive to the Downside 2 scenario.

 

 


Scenarios

As at 31 December 2021

Weighted

Upside 2

Upside 1

Baseline

Downside 1

Downside 2

Stage 1 Model Exposure (£m)







Home loans

137,279

139,117

138,424

137,563

135,544

133,042

Credit cards, unsecured loans and other retail lending

45,503

46,170

45,963

45,751

43,131

38,820

Wholesale loans

174,249

177,453

176,774

175,451

169,814

161,998

Stage 1 Model ECL (£m)







Home loans

4

2

2

3

6

14

Credit cards, unsecured loans and other retail lending

324

266

272

279

350

418

Wholesale loans

290

240

262

286

327

350

Stage 1 Coverage (%)







Home loans

-

-

-

-

-

-

Credit cards, unsecured loans and other retail lending

0.7

0.6

0.6

0.6

0.8

1.1

Wholesale loans

0.2

0.1

0.1

0.2

0.2

0.2

Stage 2 Model Exposure (£m)







Home loans

22,915

21,076

21,769

22,631

24,649

27,151

Credit cards, unsecured loans and other retail lending

7,200

6,260

6,521

6,795

9,708

14,290

Wholesale loans

32,256

29,052

29,732

31,054

36,692

44,507

Stage 2 Model ECL (£m)







Home loans

15

10

11

12

22

47

Credit cards, unsecured loans and other retail lending

1,114

925

988

1,058

1,497

3,295

Wholesale loans

572

431

467

528

851

1,510

Stage 2 Coverage (%)







Home loans

0.1

-

0.1

0.1

0.1

0.2

Credit cards, unsecured loans and other retail lending

15.5

14.8

15.2

15.6

15.4

23.1

Wholesale loans

1.8

1.5

1.6

1.7

2.3

3.4

Stage 3 Model Exposure (£m)







Home loans

1,724

1,724

1,724

1,724

1,724

1,724

Credit cards, unsecured loans and other retail lending

1,922

1,922

1,922

1,922

1,922

1,922

Wholesale loans1

1,811

1,811

1,811

1,811

1,811

1,811

Stage 3 Model ECL (£m)







Home loans

303

292

295

299

320

346

Credit cards, unsecured loans and other retail lending

1,255

1,236

1,245

1,255

1,277

1,297

Wholesale loans1

323

321

322

323

326

332

Stage 3 Coverage (%)







Home loans

17.6

16.9

17.1

17.3

18.6

20.1

Credit cards, unsecured loans and other retail lending

65.3

64.3

64.8

65.3

66.4

67.5

Wholesale loans1

17.8

17.7

17.8

17.8

18.0

18.3

Total Model ECL (£m)







Home loans

322

304

308

314

348

407

Credit cards, unsecured loans and other retail lending

2,693

2,427

2,505

2,592

3,124

5,010

Wholesale loans1

1,185

992

1,051

1,137

1,504

2,192

Total Model ECL

4,200

3,723

3,864

4,043

4,976

7,609

 

1  Material wholesale loan defaults are individually assessed across different recovery strategies. As a result, ECL of £524m is reported as individually assessed impairments in the table below.

 

Reconciliation to total ECL1

£m

Total model ECL

4,200

ECL from individually assessed impairments

524

ECL from non-modelled and other management adjustments

1,560

Total ECL

6,284

 

1  Includes £1.5bn of post-model adjustments and £0.2bn ECL from non-modelled exposures.

 

Analysis of specific portfolios and asset types

Secured home loans

The UK home loan portfolio primarily comprises first lien mortgages and accounts for 93% (December 2021: 93%) of the Group's total home loans balance.


Barclays UK

Home loans principal portfolios

As at 30.06.22

As at 31.12.21

Gross loans and advances (£m)

159,676

158,192

90 day arrears rate, excluding recovery book (%)

0.1

0.1

Annualised gross charge-off rates - 180 days past due (%)

0.5

0.5

Recovery book proportion of outstanding balances (%)

0.6

0.6

Recovery book impairment coverage ratio (%)

4.6

4.2




Average marked to market LTV



Balance weighted %

50.8

50.7

Valuation weighted %

37.8

37.5




New lending

Half year ended 30.06.22

Half year ended 30.06.21

New home loan bookings (£m)

14,117

19,120

New home loan proportion > 90% LTV (%)

2.6

0.9

Average LTV on new home loans: balance weighted (%)

68.6

68.7

Average LTV on new home loans: valuation weighted (%)

60.4

61.3

Home loans principal portfolios - distribution of balances by LTV1


Distribution of balances

Distribution of impairment allowance

Coverage ratio


Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

Barclays UK

%

%

%

%

%

%

%

%

%

%

%

%

As at 30.06.22













<=75%

79.2

10.9

0.6

90.7

6.7

17.3

34.5

58.5

-

0.1

2.9

-

>75% and <=90%

8.2

0.5

-

8.7

4.2

10.8

12.2

27.2

-

1.2

29.1

0.2

>90% and <=100%

0.6

-

-

0.6

0.4

0.6

2.2

3.2

-

2.5

72.9

0.3

>100%

-

-

-

-

0.1

1.5

9.5

11.1

0.4

20.7

100.0

23.1

As at 31.12.21













<=75%

77.2

11.3

0.7

89.2

8.3

17.7

31.9

57.9

-

0.1

2.4

-

>75% and <=90%

9.3

0.6

-

9.9

4.8

10.7

11.7

27.2

-

1.0

22.6

0.1

>90% and <=100%

0.9

-

-

0.9

0.9

1.0

2.9

4.8

0.1

1.9

87.5

0.3

>100%

-

-

-

-

0.2

1.0

8.9

10.1

0.4

6.4

100.0

14.1

1  Portfolio mark to market based on the most updated valuation including recovery book balances. Updated valuations reflect the application of the latest HPI available as at 30 June 2022.

New lending reduced to £14.1bn, a level more consistent with pre-COVID-19 periods, from £19.1bn in H121 when market dynamics drove high levels of new business due to stamp duty relief and property ownership led demand. The proportion of new lending with LTV >85% was 18%, more consistent with levels seen pre-COVID-19, compared to 7% in H121 when high LTV products were gradually being reintroduced following COVID-19 restrictions.

Head Office: Italian home loans and advances at amortised cost reduced to £4.6bn (2021: £4.7bn). The portfolio is secured on residential property with an average balance weighted mark to market LTV of 59.0% (2021: 60.4%). 90 day arrears remained stable at 1.3% (2021: 1.3%), gross charge-off rates increased to 0.4% (2021: 0.3%).

Credit cards, unsecured loans and other retail lending

The principal portfolios listed below accounted for 83% (December 2021: 82%) of the Group's total credit cards, unsecured loans and other retail lending.

Principal portfolios

Gross exposure

30 day arrears rate, excluding recovery book

90 day arrears rate, excluding recovery book

Annualised gross write-off rate

Annualised net write-off rate

As at 30.06.22

£m

%

%

%

%

Barclays UK






UK cards

9,901

1.0

0.2

2.4

2.3

UK personal loans

4,188

1.3

0.6

2.0

1.6

Barclays Partner Finance

2,459

0.5

0.2

0.8

0.8

Barclays International






US cards

23,037

1.4

0.7

2.9

2.7

Germany consumer lending

3,993

1.5

0.7

0.7

0.7







As at 31.12.21






Barclays UK






UK cards

9,933

1.0

0.2

4.1

4.0

UK personal loans

4,011

1.5

0.7

3.5

3.2

Barclays Partner Finance

2,471

0.4

0.2

1.4

1.4

Barclays International






US cards

17,779

1.6

0.8

4.3

4.2

Germany consumer lending

3,559

1.5

0.7

0.9

0.8

UK cards: 30 and 90 day arrears rates remained stable at 1.0% and 0.2%, with balances flat at £9.9bn. Gross and net write-off rates returned to more stable levels of 2.4% and 2.3% following the higher rates in 2021 caused by the sharp reductions in overall balances through COVID-19 and heightened debt sale activity.

UK personal loans : 30 and 90 day arrears rates reduced by 0.2% and 0.1% to 1.3% and 0.6% respectively. This marginal reduction was driven by the portfolio growing through new lending post the COVID-19 reductions, and these newer vintages performing better than the historical stock. Gross and net write-off rates returned to more stable levels of 2.0% and 1.6% following the higher rates in 2021 caused by the sharp reductions in overall balances through COVID-19 and heightened debt sale activity.

Barclays Partner Finance : 30 and 90 day arrears rates remain stable and in line with December 2021.

 

US cards: Balances increased due to the acquisition of the GAP portfolio in June 2022, movement in the USD/GBP exchange rate and core portfolio growth. 30 and 90 day arrears rates improved due to the GAP portfolio acquisition.

 

Germany consumer lending: 30 and 90 day arrears rates were stable. 30 day arrears rates are below pre-COVID levels.

 

 

Government supported loans

Throughout the COVID-19 pandemic Barclays has supported its customers and clients by participating in the UK government's Bounce Back Loan Scheme (BBLS), Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS) and the Recovery Loan Scheme (RLS).


Gross exposure

Impairment allowance

Impairment coverage

Government guaranteed exposure


Stage 1

Stage 2

Stage 3

Total

Modelled impairment

Management adjustment

Impairment post- management adjustment

Pre- management adjustment

Post- management adjustment

Total

As at 30.06.22

£m

£m

£m

£m

£m

£m

£m

%

%

£m

Barclays UK











BBLS

5,231

1,982

893

8,106

22

-

22

0.3

0.3

8,083

CBILS

606

234

54

894

18

(4)

14

2.1

1.6

715

RLS

17

2

1

20

-

-

-

-

-

16

Barclays International











CBILS

458

145

7

610

3

-

3

0.5

0.5

488

CLBILS

96

79

6

181

1

-

1

0.6

0.6

145

RLS

16

4

1

21

-

-

-

0.5

0.5

16

Total

6,424

2,446

962

9,832

44

(4)

40

0.4

0.4

9,463












As at 31.12.21









Barclays UK











BBLS

7,881

797

704

9,382

396

(380)

16

4.2

0.2

9,366

CBILS

900

110

47

1,057

12

(7)

5

1.1

0.5

845

RLS

11

-

1

12

-

-

-

2.7

2.7

10

Barclays International











CBILS

619

146

6

771

5

-

5

0.6

0.6

617

CLBILS

163

56

2

221

1

-

1

0.4

0.4

177

RLS

1

-

-

1

-

-

-

4.7

4.7

1

Total

9,575

1,109

760

11,444

414

(387)

27

3.6

0.2

11,016

The BBLS and CBILS schemes were launched to provide financial support to smaller and medium-sized businesses and CLBILS for larger businesses in the UK who may experience financial difficulties as a result of the COVID-19 outbreak. The RLS aims to help UK businesses access finance as they recover and grow following the COVID-19 pandemic. These loans are guaranteed by the government at 100% for BBLS and 80% for CBILS, CLBILS and RLS (70% for RLS issued post January 1, 2022) as at the balance sheet date.

Management adjustment of £(380)m applied in December 2021 has been discontinued following an update in the underlying ECL model that now fully recognises the 100% government guarantee against BBLS exposure within BUK Business Banking. However, we continue to hold the £(4)m (December 2021: £7m) adjustment against CBILS as the 80% government guarantee is not fully recognised in the models. In instances where Barclays has assessed the BBLS exposure to have not met strict assessment criteria, no claim has been made against the government guarantee resulting in an impairment allowance against these loans of £22m (December 2021: £16m) as at the balance sheet date.

Additionally, while the government supported loans are covered by guarantees, many BBLS customers have other financing arrangements with Barclays which are not covered by the government guarantee. Noting the elevated levels of delinquency across the BBLS population, Barclays has applied an adjustment of £0.1bn to the £2.6bn gross exposure to BBLS customers outside the scheme.

 

Market Risk

 

Analysis of management value at risk (VaR)

The table below shows the total management VaR on a diversified basis by asset class. Total management VaR includes all trading positions in Barclays Bank Group and it is calculated with a one-day holding period. VaR limits are applied to total management VaR and by asset class. Additionally, the market risk management function applies VaR sub-limits to material businesses and trading desks.

Management VaR (95%) by asset class


Half year ended 30.06.22


Half year ended 31.12.21


Half year ended 30.06.21


Average

High

Low


Average

High

Low


Average

High

Low


£m

£m

£m


£m

£m

£m


£m

£m

£m

Credit risk

16

24

8


10

13

7


18

30

9

Interest rate risk

10

19

4


5

9

4


8

15

4

Equity risk

10

29

4


8

29

4


10

15

6

Basis risk

9

24

4


4

7

3


7

10

4

Spread risk

5

10

3


4

6

3


4

6

3

Foreign exchange risk

10

25

2


4

16

1


3

6

2

Commodity risk

-

1

-


-

1

-


-

1

-

Inflation risk

6

17

3


3

5

2


2

3

2

Diversification effect1

(39)

n/a

n/a


(23)

n/a

n/a


(30)

n/a

n/a

Total management VaR

27

43

13


15

34

6


22

36

13

1  Diversification effects recognise that forecast losses from different assets or businesses are unlikely to occur concurrently, hence the expected aggregate loss is lower than the sum of the expected losses from each area. Historical correlations between losses are taken into account in making these assessments. The high and low VaR figures reported for each category did not necessarily occur on the same day as the high and low VaR reported as a whole. Consequently, a diversification effect balance for the high and low VaR figures would not be meaningful and is therefore omitted from the above table.

Average management VaR increased 80% to £27m (H221: £15m) driven by elevated market volatility and defensive risk positioning. Risk taking during the period remained within risk appetite.

 

Treasury and Capital Risk

 

The Group has a comprehensive Key Risk Control Framework for managing its liquidity risk. The liquidity framework meets the PRA standards and is designed to maintain liquidity resources that are sufficient in amount and quality, and a funding profile that is appropriate to meet the Group's Liquidity Risk Appetite (LRA). The liquidity framework is delivered via a combination of policy formation, review and governance, analysis, stress testing, limit setting and monitoring.

Liquidity risk stress testing

The liquidity risk stress assessment measures the potential contractual and contingent stress outflows under a range of scenarios, which are then used to determine the size of the liquidity pool that is immediately available to meet anticipated outflows if a stress occurs. The short-term scenarios include a 30 day Barclays-specific stress event, a 90 day market-wide stress event and a 30 day combined scenario consisting of both a Barclays specific and market-wide stress event. The Group also runs a long-term liquidity stress test, which measures the anticipated outflows over a 12 month market-wide scenario.

The LCR requirement takes into account the relative stability of different sources of funding and potential incremental funding requirements in a stress. The LCR is designed to promote short-term resilience of a bank's liquidity risk profile by holding sufficient high quality liquid assets to survive an acute stress scenario lasting for 30 days.

As at 30 June 2022, the Group held eligible liquid assets in excess of 100% of net stress outflows to its internal and external regulatory requirements.

Liquidity coverage ratio




As at 30.06.22

As at 31.12.21


£bn

£bn

Eligible liquidity buffer

331

285

Net stress outflows

(212)

(169)

Surplus

119

116




Liquidity coverage ratio

156%

168%

The Group plans to maintain its surplus to the internal and regulatory stress requirements at an efficient level, while considering risks to market funding conditions and its liquidity position. The continuous reassessment of these risks may lead to execution of appropriate actions to resize the liquidity pool.

 

Composition of the Group liquidity pool





As at 30.06.22

As at 31.12.21


Liquidity pool

Liquidity pool of which LCR eligible1

Liquidity pool


Cash

Level 1

Level 2A


£bn

£bn

£bn

£bn

£bn

Cash and deposits with central banks2

288

284

-

-

245







Government bonds3






AAA to AA-

33

-

24

1

26

A+ to A-

5

-

-

5

2

BBB+ to BBB-

-

-

-

-

-

Total government bonds

38

-

24

6

28







Other






Government Guaranteed Issuers, PSEs and GSEs

8

-

6

1

6

International Organisations and MDBs

3

-

4

-

5

Covered bonds

4

-

2

2

6

Other

2

-

-

-

1

Total other

17

-

12

3

18







Total as at 30 June 2022

343

284

36

9

291

Total as at 31 December 2021

291

243

37

5


 

1  The LCR eligible liquidity pool is adjusted for trapped liquidity and other regulatory deductions. It also incorporates other CRR as amended by CRR II qualifying assets that are not eligible under Barclays' internal risk appetite.

2  Includes cash held at central banks and surplus cash at central banks related to payment schemes. 99% (December 2021: over 99%) was placed with the Bank of England, US Federal Reserve, European Central Bank, Bank of Japan and Swiss National Bank.

3  Of which over 81% (December 2021: over 82%) comprised UK, US, French, German, Japanese, Swiss and Dutch securities.

The Group liquidity pool increased to £343bn as at 30 June 2022 (December 2021: £291bn) driven by continued deposit growth and an increase in wholesale funding, which were partly offset by an increase in business funding consumption. During H122, the month-end liquidity pool ranged from £309bn to £343bn (H221: £290bn to £308bn), and the month-end average balance was £324bn (H221: £296bn). The liquidity pool is held unencumbered and is not used to support payment or clearing requirements. Such requirements are treated as part of our regular business funding. The liquidity pool is intended to offset stress outflows, and comprises the above cash and unencumbered assets.

As at 30 June 2022, 64% (December 2021: 58%) of the liquidity pool was located in Barclays Bank PLC, 25% (December 2021: 30%) in Barclays Bank UK PLC and 6% (December 2021: 7%) in Barclays Bank Ireland PLC. The residual portion of the liquidity pool is held outside of these entities, predominantly in US subsidiaries, to meet entity-specific stress outflows and local regulatory requirements. To the extent the use of this residual portion of the liquidity pool is restricted due to local regulatory requirements, it is assumed to be unavailable to the rest of the Group in calculating the LCR.

The composition of the pool is subject to limits and controls set by the respective entity Boards and independent liquidity risk, credit risk and market risk functions. In addition, the investment of the liquidity pool is monitored for concentration by issuer, currency and asset type. Given returns generated by these highly liquid assets, the risk and reward profile is continuously managed.

 

Deposit funding


As at 30.06.22


As at 31.12.21


Loans and advances at amortised cost

Deposits at amortised cost

Loan: deposit ratio1


Loan: deposit ratio1

Funding of loans and advances

£bn

£bn

%


%

Barclays UK

224

262

  85 


  85 

Barclays International

167

307

  54 


  52 

Head Office

5

-




Barclays Group

396

569

  70 


  70 

1  The loan: deposit ratio is calculated as loans and advances at amortised cost divided by deposits at amortised cost.

Funding structure and funding relationships

The basis for liquidity risk management is a funding structure that reduces the probability of a liquidity stress leading to an inability to meet funding obligations as they fall due. The Group's overall funding strategy is to develop a diversified funding base (geographically, by type and by counterparty) and maintain access to a variety of alternative funding sources, to provide protection against unexpected fluctuations, while minimising the cost of funding.

Within this, the Group aims to align the sources and uses of funding. As such, retail and corporate loans and advances are largely funded by deposits in the relevant entities, with the surplus primarily funding the liquidity pool. The majority of reverse repurchase agreements are matched by repurchase agreements. Derivative liabilities and assets are largely matched. A substantial proportion of balance sheet derivative positions qualify for counterparty netting and the remaining portions are largely offset when netted against cash collateral received and paid. Wholesale debt and equity is used to fund residual assets.

These funding relationships as at 30 June 2022 are summarised below:







Restated1


As at 30.06.22

As at 31.12.21



As at 30.06.22

As at 31.12.21

Assets

£bn

£bn


Liabilities and equity

£bn

£bn

Loans and advances at amortised cost2

381

358


Deposits at amortised cost

569

519

Group liquidity pool

343

291


<1 Year wholesale funding

84

67





>1 Year wholesale funding

97

101

Reverse repurchase agreements, trading portfolio assets, cash collateral and settlement balances

426

388


Repurchase agreements, trading portfolio liabilities, cash collateral and settlement balances

387

330

Derivative financial instruments

345

263


Derivative financial instruments

321

257

Other assets3

94

84


Other liabilities

60

40





Equity

71

70

Total assets

1,589

1,384


Total liabilities and equity

1,589

1,384

 

1  2021 financial metrics have been restated to reflect the impact of the Over-issuance of Securities. See Restatement of financial statements (Note 1) on page 87 for more information. The contractual maturity profile of Senior unsecured (privately placed) has been restated to reflect the impact of the Over-issuance of Securities.

2  Adjusted for liquidity pool debt securities reported at amortised cost of £15bn (December 2021: £3bn).

3  Other assets include fair value assets that are not part of reverse repurchase agreements or trading portfolio assets, and other asset categories.

Composition of wholesale funding

Wholesale funding outstanding (excluding repurchase agreements) was £181.5bn (December 2021: £167.5bn). In H122, the Group issued £3.5bn of MREL eligible instruments from Barclays PLC (the Parent company) in a range of tenors and currencies.

Our operating companies also access wholesale funding markets to maintain their stable and diversified funding bases. Barclays Bank PLC continued to issue in the shorter-term and medium-term notes markets. In addition, Barclays Bank UK PLC continued to issue in the shorter-term markets.

Wholesale funding of £84.2bn (December 2021: £66.7bn1) matures in less than one year, representing 46% (December 2021: 40%1) of total wholesale funding outstanding. This includes £19.4bn (December 2021: £24.9bn1) related to term funding2.

 

Maturity profile of wholesale funding2,3


<1

1-3

3-6

6-12

<1

1-2

2-3

3-4

4-5

>5



month

months

months

months

year

years

years

years

years

years

Total


£bn

£bn

£bn

£bn

£bn

£bn

£bn

£bn

£bn

£bn

£bn

Barclays PLC (the Parent company)












Senior unsecured (public benchmark)

-

-

-

0.2

0.2

6.9

7.7

5.5

3.5

14.0

37.8

Senior unsecured (privately placed)

-

-

-

-

-

0.2

-

-

-

1.2

1.4

Subordinated liabilities

-

-

-

-

-

-

1.0

1.7

-

7.4

10.1

Barclays Bank PLC (including subsidiaries)












Certificates of deposit and commercial paper

9.7

11.4

18.1

10.8

50.0

0.1

2.1

-

-

-

52.2

Asset backed commercial paper

3.7

4.5

0.2

0.2

8.6

-

-

-

-

-

8.6

Senior unsecured (public benchmark)

-

-

-

-

-

0.6

-

-

-

-

0.6

Senior unsecured (privately placed)4

7.6

1.8

1.9

3.9

15.2

6.3

7.5

2.1

3.2

20.3

54.6

Asset backed securities

0.6

-

-

0.1

0.7

0.4

2.3

0.4

0.2

1.4

5.4

Subordinated liabilities

-

0.1

1.2

0.2

1.5

0.1

0.1

-

0.1

-

1.8

Barclays Bank UK PLC (including subsidiaries)












Certificates of deposit and commercial paper

6.1

0.1

-

-

6.2

-

-

-

-

-

6.2

Senior unsecured (public benchmark)

-

-

-

-

-

-

-

-

-

0.1

0.1

Covered Bonds

-

-

-

1.8

1.8

-

-

-

-

0.9

2.7

Total as at 30 June 2022

27.7

17.9

21.4

17.2

84.2

14.6

20.7

9.7

7.0

45.3

181.5

Of which secured

4.3

4.5

0.2

2.1

11.1

0.4

2.3

0.4

0.2

2.3

16.7

Of which unsecured

23.4

13.4

21.2

15.1

73.1

14.2

18.4

9.3

6.8

43.0

164.8













Total as at 31 December 20211

14.1

21.7

15.5

15.4

66.7

15.4

15.1

9.9

11.4

49.0

167.5

Of which secured

2.4

6.4

0.6

0.5

9.9

1.9

2.0

0.1

0.3

2.4

16.6

Of which unsecured

11.7

15.3

14.9

14.9

56.8

13.5

13.1

9.8

11.1

46.6

150.9

 

1  2021 financial metrics have been restated to reflect the impact of the Over-issuance of Securities. See Restatement of financial statements (Note 1) on page 87 for more information. The contractual maturity profile of financial liabilities designated at fair value has been restated to reflect the impact of the Over-issuance of Securities. Securities issued by BBPLC in excess of the maximum aggregate offering price registered under Barclays Bank PLC's 2019 F-3 and Predecessor Shelf with a value of £6,997m have been classified as "on demand".

2  The composition of wholesale funds comprises the balance sheet reported financial liabilities at fair value, debt securities in issue and subordinated liabilities. It does not include participation in the central bank facilities reported within repurchase agreements and other similar secured borrowing.

3  Term funding comprises public benchmark and privately placed senior unsecured notes, covered bonds, asset-backed securities and subordinated debt where the original maturity of the instrument is more than 1 year.

4  Includes structured notes of £45.9bn, of which £8.5bn matures within one year.

 

Credit ratings

In addition to monitoring and managing key metrics related to the financial strength of the Group, Barclays also solicits independent credit ratings from Standard & Poor's Global (S&P), Moody's, Fitch, and Rating and Investment Information (R&I). These ratings assess the creditworthiness of the Group, its subsidiaries and its branches, and are based on reviews of a broad range of business and financial attributes including capital strength, profitability, funding, liquidity, asset quality, strategy and governance.

Barclays Bank PLC

Standard & Poor's

Moody's

Fitch

Long-term

A / Positive

A1 / Stable

A+ / Stable

Short-term

A-1

P-1

F1





Barclays Bank UK PLC




Long-term

A / Positive

A1 / Stable

A+ / Stable

Short-term

A-1

P-1

F1





Barclays PLC




Long-term

BBB / Positive

Baa2 /Positive

A / Stable

Short-term

A-2

P-2

F1

As at 30 June 2022, all solicited ratings and outlooks with all agencies remained unchanged since 31 December 2021.

In June 2021, S&P revised the outlooks of Barclays PLC, Barclays Bank PLC and Barclays Bank UK PLC to positive from stable, whilst affirming all ratings. The revisions reflect the view that Barclays is delivering a stronger, more consistent business profile and financial performance.

In November 2021, Moody's revised the outlook of Barclays PLC to positive from stable, whilst affirming all ratings. The revisions reflect Moody's view that the level and stability of the Group's earnings could further improve once global macroeconomic conditions normalise, recognising the balanced earnings streams and stable operating costs.

In July 2021, Fitch revised the outlooks of Barclays PLC, Barclays Bank PLC and Barclays Bank UK PLC to stable from negative, whilst affirming all ratings. The revisions reflected improved expectations for economic recovery in Barclays' key markets and the Group's resilient performance through the pandemic.

Barclays also solicits issuer ratings from R&I. In November 2021, R&I upgraded the issuer ratings of Barclays PLC and Barclays Bank PLC by one notch to A and A+ respectively.

A credit rating downgrade could result in outflows to meet collateral requirements on existing contracts. Outflows related to credit rating downgrades are included in the LRA stress scenarios and a portion of the liquidity pool is held against this risk. Credit ratings downgrades could also result in reduced funding capacity and increased funding costs.

The contractual collateral requirement following one- and two-notch long-term and associated short-term downgrades across all credit rating agencies, would result in outflows of £1bn and £3bn respectively, and are provided for in determining an appropriate liquidity pool size given the Group's liquidity risk appetite. These numbers do not assume any management or restructuring actions that could be taken to reduce posting requirements. These outflows do not include the potential liquidity impact from loss of unsecured funding, such as from money market funds, or loss of secured funding capacity. However, unsecured and secured funding stresses are included in the LRA stress scenarios and a portion of the liquidity pool is held against these risks.

 

Regulatory minimum requirements

Capital

The Group's Overall Capital Requirement for CET1 is 10.9% comprising a 4.5% Pillar 1 minimum, a 2.5% Capital Conservation Buffer (CCB), a 1.5% Global Systemically Important Institution (G-SII) buffer, a 2.4% Pillar 2A requirement and a 0% Countercyclical Capital Buffer (CCyB).

The Group's CCyB is based on the buffer rate applicable for each jurisdiction in which the Group has exposures. On 11 March 2020, the Financial Policy Committee (FPC) set the CCyB rate for UK exposures at 0% with immediate effect. The buffer rates set by other national authorities for non-UK exposures are not currently material. Overall, this results in a 0.0% CCyB for the Group. On 13 December 2021, the FPC announced that a CCyB rate of 1% for UK exposures has been re-introduced and will be applicable from 13 December 2022. On 5 July 2022, the FPC announced that the UK CCyB rate will be increased from 1% to 2% and will be applicable from 5 July 2023.

The Group's Pillar 2A requirement as per the PRA's Individual Capital Requirement was set as a nominal amount. When expressed as a percentage of RWAs this was 4.2% of which at least 56.25% needed to be met with CET1 capital, equating to approximately 2.4% of RWAs. The Pillar 2A requirement is subject to at least annual review and is based on a point in time assessment.

The Group's CET1 target ratio of 13-14% takes into account headroom above requirements which includes a confidential institution-specific PRA buffer.  The Group remains above its minimum capital regulatory requirements including the PRA buffer.

Leverage

The Group is subject to a UK leverage ratio requirement of 3.8%. This comprises the 3.25% minimum requirement, a G-SII additional leverage ratio buffer (G-SII ALRB) of 0.53% and a countercyclical leverage ratio buffer of 0.0%. Although the leverage ratio is expressed in terms of Tier 1 (T1) capital, 75% of the minimum requirement, equating to 2.4375%, needs to be met with CET1 capital. In addition, the G-SII ALRB must be covered solely with CET1 capital. The CET1 capital held against the 0.53% G-SII ALRB was £6.0bn.

The Group is also required to disclose an average UK leverage ratio which is based on capital on the last day of each month in the quarter and an exposure measure for each day in the quarter.

MREL

The Group is required to meet the higher of: (i) two times the sum of 8% Pillar 1 and 4.2% Pillar 2A; and (ii) 6.75% of leverage exposures plus capital buffers, including the above mentioned confidential institution-specific PRA buffer. CET1 capital cannot be counted towards both MREL and the capital buffers, meaning that the buffers will effectively be applied above MREL requirements. 

Significant regulatory updates in the period

Capital and RWAs

On 1 January 2022 the PRA's implementation of Basel III standards took effect including the re-introduction of the 100% CET1 capital deduction for qualifying software intangible assets and the introduction of the Standardised Approach for Counterparty Credit Risk (SA-CCR) which replaces the Current Exposure Method (CEM) for Standardised derivative exposures as a more risk sensitive approach. In addition, the PRA also implemented IRB roadmap changes which includes revisions to the criteria for definition of default, probability of default (PD) and loss given default (LGD) estimation to ensure supervisory consistency and increase transparency of IRB models.

Leverage

From 1 January 2022, UK banks became subject to a single UK leverage ratio requirement meaning that the CRR leverage ratio no longer applies. Central bank claims can be excluded from the UK leverage ratio measure as long as they are matched by qualifying liabilities (rather than deposits).

 

References to CRR, as amended by CRR II mean, unless otherwise specified, CRR as amended by CRR II, as it forms part of UK law pursuant to the European Union (Withdrawal) Act 2018. On 31 March 2022, the temporary transitional powers (TTP) available to UK regulators to delay or phase in on-shoring of European Union legislation into UK law ended with full compliance of the on-shored regulations required from 1 April 2022.

 

Impact of Over-issuance of Securities

Basis of preparation

In March 2022, the Group became aware that Barclays Bank PLC had issued securities in excess of the amount it had registered with the SEC under Barclays Bank PLC's 2019 F-3 and subsequently became aware that securities had also been issued in excess of the amount it had registered with the SEC under the Predecessor Shelf. The securities issued in excess of the registered amount comprised structured products and exchange traded notes. As these securities were not issued in compliance with the Securities Act, a right of rescission has arisen for certain purchasers of the securities. A proportion of these costs associated with the right of rescission are attributable to the financial statements for the year ended 31 December 2021, resulting in the restatement of the 2021 figures in the disclosures below.

Prior to the restatement, litigation and conduct charges in the income statement in relation to 2021 were under reported by £220m (pre-tax). This resulted in a CET1 capital decrease of £170m from £47,497m to £47,327m. Both the transitional and fully loaded CET1 ratios remained unchanged at 15.1% and 14.7% respectively. The T1 ratio moved from 19.2% to 19.1% and the total capital ratio moved from 22.3% to 22.2%.

The leverage exposure increased £1.9bn to recognise on a regulatory basis, the potential commitment relating to the rescission offer (see 'Other matters' on page 6). This resulted in the UK leverage ratio moving from 5.3% to 5.2% whilst the average UK leverage ratio remained unchanged at 4.9%.

Total own funds and eligible liabilities decreased £0.2bn to £108bn, which was in excess of a restated requirement to hold £94bn of own funds and eligible liabilities.

 




Restated1

Capital ratios2,3,4

As at 30.06.22

As at 31.03.22

As at 31.12.21

CET1

13.6%

13.8%

15.1%

T1

17.1%

17.1%

19.1%

Total regulatory capital

19.9%

20.1%

22.2%





Capital resources

£m

£m

£m

Total equity excluding non-controlling interests per the balance sheet

69,627

68,465

69,052

Less: other equity instruments (recognised as AT1 capital)

(12,357)

(11,119)

(12,259)

Adjustment to retained earnings for foreseeable ordinary share dividends

(595)

(968)

(666)

Adjustment to retained earnings for foreseeable repurchase of shares

(568)

(1,000)

-

Adjustment to retained earnings for foreseeable other equity coupons

(32)

(39)

(32)





Other regulatory adjustments and deductions




Additional value adjustments (PVA)

(1,810)

(1,864)

(1,585)

Goodwill and intangible assets

(8,232)

(8,035)

(6,804)

Deferred tax assets that rely on future profitability excluding temporary differences

(1,010)

(938)

(1,028)

Fair value reserves related to gains or losses on cash flow hedges

4,673

3,343

852

Gains or losses on liabilities at fair value resulting from own credit

(62)

4

892

Defined benefit pension fund assets

(3,785)

(3,225)

(2,619)

Direct and indirect holdings by an institution of own CET1 instruments

(20)

(20)

(50)

Adjustment under IFRS 9 transitional arrangements

642

601

1,229

Other regulatory adjustments

220

64

345

CET1 capital

46,691

45,269

47,327





AT1 capital




Capital instruments and related share premium accounts

12,357

11,119

12,259

Qualifying AT1 capital (including minority interests) issued by subsidiaries

-

-

637

Other regulatory adjustments and deductions

(60)

(60)

(80)

AT1 capital

12,297

11,059

12,816





T1 capital

58,988

56,328

60,143





T2 capital




Capital instruments and related share premium accounts

8,442

8,334

8,713

Qualifying T2 capital (including minority interests) issued by subsidiaries

1,277

1,540

1,113

Credit risk adjustments (excess of impairment over expected losses)

73

98

73

Other regulatory adjustments and deductions

(160)

(160)

(160)

Total regulatory capital

68,620

66,140

69,882





Total RWAs

344,516

328,830

314,136

 

1  Capital metrics as at 31 December 2021 have been restated to reflect the impact of the Over-issuance of Securities. See Basis of preparation on page 65 for more information. The transitional CET1 ratio remains unchanged at 15.1%.

2  CET1, T1 and T2 capital, and RWAs are calculated applying the transitional arrangements of the CRR as amended by CRR II. This includes IFRS 9 transitional arrangements and the grandfathering of CRR II non-compliant capital instruments. December 2021 comparatives include the grandfathering of CRR non-compliant capital instruments.

3  The fully loaded CET1 ratio, as is relevant for assessing against the conversion trigger in Barclays PLC AT1 securities, was 13.4%, with £46.0bn of CET1 capital and £344.3bn of RWAs calculated without applying the transitional arrangements of the CRR as amended by CRR II.

4  The Group's CET1 ratio, as is relevant for assessing against the conversion trigger in Barclays Bank PLC 7.625% Contingent Capital Notes, was 13.6%. For this calculation CET1 capital and RWAs are calculated applying the transitional arrangements under the CRR as amended by CRR II, including the IFRS 9 transitional arrangements. The benefit of the Financial Services Authority (FSA) October 2012 interpretation of the transitional provisions, relating to the implementation of CRD IV, expired in December 2017.

Movement in CET1 capital

Three months ended 30.06.22

Six months ended 30.06.22


£m

£m

Opening CET1 capital1

45,269

47,327




Profit for the period attributable to equity holders

1,270

2,889

Own credit relating to derivative liabilities

(76)

(97)

Ordinary share dividends paid and foreseen

(291)

(593)

Purchased and foreseeable share repurchase

-

(1,000)

Other equity coupons paid and foreseen

(192)

(414)

Increase in retained regulatory capital generated from earnings

711

785




Net impact of share schemes

132

(136)

Fair value through other comprehensive income reserve

(550)

(759)

Currency translation reserve

1,333

1,703

Other reserves

11

35

Increase in other qualifying reserves

926

843




Pension remeasurements within reserves

423

1,090

Defined benefit pension fund asset deduction

(560)

(1,166)

Net impact of pensions

(137)

(76)




Additional value adjustments (PVA)

54

(225)

Goodwill and intangible assets

(197)

(1,428)

Deferred tax assets that rely on future profitability excluding those arising from temporary differences

(72)

18

Direct and indirect holdings by an institution of own CET1 instruments

-

30

Adjustment under IFRS 9 transitional arrangements

41

(587)

Other regulatory adjustments

96

4

Decrease in regulatory capital due to adjustments and deductions

(78)

(2,188)




Closing CET1 capital

46,691

46,691

1  Opening balance as at 31 December 2021 has been restated to reflect the impact of the Over-issuance of Securities. See Basis of preparation on page 65 for further details.

CET1 capital decreased £0.6bn to £46.7bn (December 2021: £47.3bn).

CET1 capital decreased by £1.7bn as a result of regulatory changes that took effect from 1 January 2022 including the re-introduction of the 100% CET1 capital deduction for qualifying software intangible assets and a reduction in IFRS9 transitional relief due to the relief applied to the pre-2020 impairment charge reducing to 25% in 2022 from 50% in 2021 and the relief applied to the post-2020 impairment charge reducing to 75% in 2022 from 100% in 2021.

£2.9bn of capital generated from profits, after absorbing the £0.6bn net of tax impact of the Over-issuance of Securities, was partially offset by distributions of £2bn comprising:

· £1bn for share buybacks announced with FY21 results

· £0.6bn accrual towards a FY22 dividend

· £0.4bn of equity coupons paid

Other significant movements in the period were:

· £0.8bn decrease in the fair value through other comprehensive income reserve primarily due to losses on bonds as a result of an increase in yields

· £1.7bn increase in the currency translation reserves driven by the appreciation of period end USD against GBP

 

RWAs by risk type and business


Credit risk


Counterparty credit risk


Market Risk


Operational risk

Total RWAs


STD

IRB


STD

IRB

Settlement Risk

CVA


STD

IMA




As at 30.06.22

£m

£m


£m

£m

£m


£m

£m


£m

£m

Barclays UK

6,613

53,958


253

-

-

76


236

-


11,047

72,183

Corporate and Investment Bank

40,055

71,737


18,739

22,099

440

3,357


17,466

28,423


25,296

227,612

Consumer, Cards and Payments

25,516

3,643


256

34

-

64


28

195


6,424

36,160

Barclays International

65,571

75,380


18,995

22,133

440

3,421


17,494

28,618


31,720

263,772

Head Office

3,488

6,069


-

-

-

-


-

-


(996)

8,561

Barclays Group

75,672

135,407


19,248

22,133

440

3,497


17,730

28,618


41,771

344,516















As at 31.03.22














Barclays UK

6,989

54,241


229

-

-

57


155

-


11,047

72,718

Corporate and Investment Bank

35,325

70,831


16,422

21,047

268

3,675


17,068

23,551


25,296

213,483

Consumer, Cards and Payments

21,289

3,459


242

12

-

37


110

34


6,424

31,607

Barclays International

56,614

74,290


16,664

21,059

268

3,712


17,178

23,585


31,720

245,090

Head Office

5,532

6,486


-

-

-

-


-

-


(996)

11,022

Barclays Group

69,135

135,017


16,893

21,059

268

3,769


17,333

23,585


41,771

328,830















As at 31.12.21














Barclays UK

7,195

53,408


426

-

-

138


100

-


11,022

72,289

Corporate and Investment Bank

29,420

64,416


15,223

19,238

105

2,289


17,306

27,308


25,359

200,664

Consumer, Cards and Payments

20,770

2,749


215

18

-

21


-

57


6,391

30,221

Barclays International

50,190

67,165


15,438

19,256

105

2,310


17,306

27,365


31,750

230,885

Head Office

4,733

7,254


-

-

-

-


-

-


(1,025)

10,962

Barclays Group

62,118

127,827


15,864

19,256

105

2,448


17,406

27,365


41,747

314,136

 

Movement analysis of RWAs

Credit risk

Counterparty credit risk

Market risk

Operational risk

Total RWAs


£m

£m

£m

£m

£m

Opening RWAs (as at 31.12.21)

189,945

37,673

44,771

41,747

314,136

Book size

12,781

1,611

60

24

14,476

Acquisitions and disposals

(209)

-

-

-

(209)

Book quality

(3,101)

117

-

-

(2,984)

Model updates

-

-

-

-

-

Methodology and policy

3,458

3,352

-

-

6,810

Foreign exchange movements1

8,205

2,565

1,517

-

12,287

Total RWA movements

21,134

7,645

1,577

24

30,380

Closing RWAs (as at 30.06.22)

211,079

45,318

46,348

41,771

344,516

1  Foreign exchange movements does not include foreign exchange for modelled market risk or operational risk.

Overall RWAs increased £30.4bn to £344.5bn (December 2021: £314.1bn)

Credit risk RWAs increased £21.1bn:

· A £12.8bn increase in book size primarily driven by a £7.8bn increase in lending activities mainly within CIB and a £4.5bn temporary increase in RWAs reflecting the hedging arrangements designed to manage the risk of the rescission offer relating to the Over-issuance of Securities, which are expected to reverse after the rescission offer has been completed in Q322

· A £0.2bn decrease in acquisitions and disposals primarily driven by partial disposal of Barclays' equity stake in Absa in April 2022, offset by GAP portfolio acquisition

· A £3.1bn decrease in book quality primarily driven by the benefit in mortgages from an increase in the House Price Index (HPI)

· A £3.5bn increase in methodology and policy as a result of regulatory changes that took effect from 1 January 2022, relating to implementation of IRB roadmap changes partially offset by the reversal of the software intangibles benefit

· A £8.2bn increase in FX primarily due to appreciation of period end USD against GBP

Counterparty Credit risk RWAs increased £7.6bn:

· A £1.6bn increase in book size primarily due to an increase in trading activities within SFTs and derivatives

· A £3.4bn increase in methodology and policy as a result of regulatory changes that took effect from 1 January 2022, relating to the introduction of SA-CCR

· A £2.6bn increase in FX primarily due to appreciation of period end USD against GBP

Market risk RWAs increased £1.6bn:

· A £0.1bn increase in book size primarily driven by a £8.4bn increase due to client and trading activities, offset by a £6.9bn decrease in Stressed Value at Risk (SVaR) model adjustment as a result of changes in portfolio composition and a £1.4bn reduction in Structural FX

· A £1.5bn increase in FX primarily due to appreciation of period end USD against GBP

 




Restated1

Leverage ratios2,3

As at 30.06.22

As at 31.03.22

As at 31.12.21

£m

£m

£m

Average UK leverage ratio

4.7%

4.8%

4.9%

Average T1 capital

57,689

56,701

59,739

Average UK leverage exposure

1,233,537

1,179,381

1,229,041





UK leverage ratio

5.1%

5.0%

5.2%





CET1 capital

46,691

45,269

47,327

AT1 capital

12,297

11,059

12,179

T1 capital

58,988

56,328

59,506





UK leverage exposure

1,151,214

1,123,531

1,137,904





UK leverage exposure




Accounting assets




Derivative financial instruments

344,855

289,822

262,572

Derivative cash collateral

66,909

64,836

58,177

Securities financing transactions (SFTs)

193,682

186,417

170,853

Loans and advances and other assets

983,784

955,020

892,683

Total IFRS assets

1,589,230

1,496,095

1,384,285





Regulatory consolidation adjustments

(3,546)

(3,605)

(3,665)





Derivatives adjustments




Derivatives netting

(288,727)

(235,071)

(236,881)

Adjustments to collateral

(53,328)

(52,181)

(50,929)

Net written credit protection

28,102

19,729

15,509

Potential future exposure (PFE) on derivatives

85,469

85,619

137,291

Total derivatives adjustments

(228,484)

(181,904)

(135,010)





SFTs adjustments

29,784

29,095

24,544





Regulatory deductions and other adjustments

(22,758)

(22,332)

(20,219)





Weighted off-balance sheet commitments

127,400

119,933

115,047





Qualifying central bank claims

(294,477)

(260,196)

(210,134)





Settlement netting

(45,935)

(53,555)

(16,944)





UK leverage exposure

1,151,214

1,123,531

1,137,904

1  Capital and leverage metrics as at 31 December 2021 have been restated to reflect the impact of the Over-issuance of Securities. See Basis of preparation on page 65 for further details.

2  Capital and leverage measures are calculated applying the transitional arrangements of the CRR as amended by CRR II.

3  Fully loaded average UK leverage ratio was 4.6%, with £57.0bn of T1 capital and £1,232.9bn of leverage exposure. Fully loaded UK leverage ratio was 5.1%, with £58.3bn of T1 capital and £1,150.6bn of leverage exposure. Fully loaded UK leverage ratios are calculated without applying the transitional arrangements of the CRR as amended by CRR II.

 

The UK leverage ratio decreased to 5.1% (December 2021: 5.2%) primarily due to a £13.3bn increase in the leverage exposure. The UK leverage exposure increased to £1,151.2bn (December 2021: £1,137.9bn), due to the following significant movements:

 

· £36.8bn increase in derivative financial instruments post additional regulatory netting and adjustments for cash collateral primarily driven by client and trading activity in CIB and the application of a 1.4 multiplier introduced under SA-CCR

· £34.4bn increase in loans and advances at amortised cost primarily driven by increased lending

· £28.1bn increase in SFTs primarily driven by client activity in CIB

· £12.6bn increase in net written credit protection primarily driven by the inclusion of credit default swap options from 1 January 2022

· £51.8bn decrease in PFE on derivatives primarily driven by increased netting eligibility due to the introduction of SA-CCR

· £39.8bn decrease due to an £84.3bn increase in the qualifying central bank claims exemption primarily due to the matching of allowable liabilities rather than deposits introduced under the UK leverage framework review, partially offset by a £44.6bn increase in cash

· £20.0bn decrease in trading portfolio assets primarily due to decreases in Equities

The average UK Leverage Ratio decreased to 4.7% (December 2021: 4.9%) primarily due to a £2.1bn decrease in average T1 capital largely as a result of regulatory changes effective from 1 January 2022 and the redemption of AT1 instruments in Q122. 

 

MREL








MREL requirements including buffers1,2,3,4

Total requirement (£m) based on


Requirement as a percentage of:




Restated1




Restated1


As at 30.06.22

As at 31.03.22

As at 31.12.21


As at 30.06.22

As at 31.03.22

As at 31.12.21

Requirement based on RWAs (minimum requirement)

98,096

94,947

77,302


28.5%

28.9%

24.6%

Requirement based on UK leverage exposure3

91,532

89,025

93,975


8.0%

7.9%

6.9%
















Restated1

Own funds and eligible liabilities1,3





As at 30.06.22

As at 31.03.22

As at 31.12.21






£m

£m

£m

CET1 capital





46,691

45,269

47,327

AT1 capital instruments and related share premium accounts5





12,297

11,059

12,179

T2 capital instruments and related share premium accounts5





8,355

8,272

8,626

Eligible liabilities





39,137

37,886

39,889

Total Barclays PLC (the Parent company) own funds and eligible liabilities



106,480

102,486

108,021









Total RWAs





344,516

328,830

314,136

Total UK leverage exposure4





1,151,214

1,123,531

1,356,191
















Restated1

Own funds and eligible liabilities ratios as a percentage of:1





As at 30.06.22

As at 31.03.22

As at 31.12.21

Total RWAs





30.9%

31.2%

34.4%

Total UK leverage exposure4





9.2%

9.1%

8.0%

As at 30 June 2022, Barclays PLC (the Parent company) held £106.5bn of own funds and eligible liabilities equating to 30.9% of RWAs. This was in excess of the Group's MREL requirement, excluding the PRA buffer, to hold £98.1bn of own funds and eligible liabilities equating to 28.5% of RWAs. The Group remains above its MREL regulatory requirement including the PRA buffer.

1  Capital and leverage metrics as at 31 December 2021 have been restated to reflect the impact of the Over-issuance of Securities. See Basis of preparation on page 65 for further details.

2  Minimum requirement excludes the confidential institution-specific PRA buffer.

3  CET1, T1 and T2 capital, and RWAs are calculated applying IFRS 9 transitional arrangements.

4  As at 31 December 2021, MREL requirements were on a CRR leverage basis which, from 1 January 2022, was no longer applicable for UK banks.

5  Includes other AT1 capital regulatory adjustments and deductions of £60m (December 2021: £80m), and other T2 credit risk adjustments and deductions of £87m (December 2021: £87m).

 

Statement of Directors' Responsibilities

 

The Directors (the names of whom are set out below) are required to prepare the financial statements on a going concern basis unless it is not appropriate to do so. In making this assessment, the directors have considered information relating to present and future conditions. Each of the Directors confirm that to the best of their knowledge, the condensed consolidated interim financial statements set out on pages 77 to 86 have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the UK, and that the interim management report herein includes a fair review of the information required by Disclosure Guidance and Transparency Rules 4.2.7R and 4.2.8R namely:

· an indication of important events that have occurred during the six months ended 30 June 2022 and their impact on the condensed consolidated interim financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year

· any related party transactions in the six months ended 30 June 2022 that have materially affected the financial position or performance of Barclays during that period and any changes in the related party transactions described in the last Annual Report that could have a material effect on the financial position or performance of Barclays in the six months ended 30 June 2022

Signed on 27 July 2022 on behalf of the Board by

 

 

C.S. Venkatakrishnan

Anna Cross

Group Chief Executive

Group Finance Director

Barclays PLC Board of Directors

 

Chairman

Executive Directors

Non-Executive Directors

Nigel Higgins

C.S. Venkatakrishnan

Mike Ashley


Anna Cross

Robert Berry



Tim Breedon CBE



Mohamed A. El-Erian



Dawn Fitzpatrick



Mary Francis CBE



Crawford Gillies



Brian Gilvary



Diane Schueneman



Julia Wilson

 

 

 

Independent Review Report to Barclays PLC

 

Conclusion

We have been engaged by Barclays PLC ("the company" or "the group") to review the condensed set of financial statements in the Interim Results Announcement for the six months ended 30 June 2022 which comprises:

 

· the condensed consolidated income statement and condensed consolidated statement of comprehensive income for the period then ended;

· the condensed consolidated balance sheet as at 30 June 2022;

· the condensed consolidated statement of changes in equity for the period then ended;

· the condensed consolidated cash flow statement for the period then ended; and

· the related explanatory notes.

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the Interim Results Announcement for the six months ended 30 June 2022 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted for use in the UK and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA"). 

Basis for conclusion

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity ("ISRE (UK) 2410") issued for use in the UK.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  We read the other information contained in the Interim Results Announcement and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. 

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion. 

Conclusions relating to going concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention that causes us to believe that the directors have inappropriately adopted the going concern basis of accounting, or that the directors have identified material uncertainties relating to going concern that have not been appropriately disclosed.

This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410. However, future events or conditions may cause the group to cease to continue as a going concern, and the above conclusions are not a guarantee that the group will continue in operation.

Directors' responsibilities

The Interim Results Announcement is the responsibility of, and has been approved by, the directors.  The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA. 

As disclosed in note 1, the Basis of preparation, the annual financial statements of the Barclays Group are prepared in accordance with UK-adopted international accounting standards.

The directors are responsible for preparing the condensed set of financial statements included in the Interim Results Announcement in accordance with IAS 34 as adopted for use in the UK.

In preparing the condensed set of financial statements, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or to cease operations, or have no realistic alternative but to do so.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the Interim Results Announcement based on our review. Our conclusion, including our conclusions relating to going concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion section of this report.

The purpose of our review work and to whom we owe our responsibilities

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the DTR of the UK FCA.  Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached. 

 

 

 

 

Stuart Crisp

for and on behalf of KPMG LLP 

Chartered Accountants  

15 Canada Square

London, E14 5GL

27 July 2022

 

 

Condensed Consolidated Financial Statements

 

Condensed consolidated income statement (unaudited)




Restated2


Notes1

Half year ended 30.06.22

Half year ended 30.06.21



£m

£m

Interest and similar income


7,134

5,279

Interest and similar expense


(2,371)

(1,376)

Net interest income


4,763

3,903

Fee and commission income

3

4,726

4,682

Fee and commission expense

3

(1,302)

(976)

Net fee and commission income

3

3,424

3,706

Net trading income


5,013

3,482

Net investment income


(116)

152

Other income


120

72

Total income


13,204

11,315

Credit impairment (charges)/releases


(341)

742

Net operating income


12,863

12,057





Staff costs

4

(4,583)

(4,334)

Infrastructure, administration and general expenses

5

(2,687)

(2,798)

Litigation and conduct

15

(1,857)

(176)

Operating expenses


(9,127)

(7,308)





Share of post-tax results of associates and joint ventures


(3)

154

Profit on disposal of subsidiaries, associates and joint ventures


-

(1)

Profit before tax


3,733

4,902

Tax charge

6

(823)

(742)

Profit after tax


2,910

4,160





Attributable to:




Equity holders of the parent


2,475

3,752

Other equity instrument holders


414

389

Total equity holders of the parent


2,889

4,141

Non-controlling interests

7

21

19

Profit after tax


2,910

4,160





Earnings per share


p

p

Basic earnings per ordinary share

8

14.8

21.9

Diluted earnings per ordinary share

8

14.5

21.3

 

1  For Notes to the Financial Statements see pages 87 to 114.

2  2021 financial metrics have been restated to reflect the impact of the Over-issuance of Securities. See Restatement of financial statements (Note 1) on page 87 for more information.

 

Condensed consolidated statement of comprehensive income (unaudited)




Restated2



Half year ended 30.06.22

Half year ended 30.06.21


Notes1

£m

£m

Profit after tax


2,910

4,160





Other comprehensive income/(loss) that may be recycled to profit or loss:3



Currency translation reserve

19

1,703

(495)

Fair value through other comprehensive income reserve

19

(913)

(365)

Cash flow hedging reserve

19

(3,818)

(911)

Other comprehensive loss that may be recycled to profit


(3,028)

(1,771)





Other comprehensive income/(loss) not recycled to profit or loss:3



Retirement benefit remeasurements

16

1,090

103

Fair value through other comprehensive income reserve

19

154

115

Own credit

19

855

(47)

Other comprehensive income not recycled to profit


2,099

171





Other comprehensive loss for the period


(929)

(1,600)





Total comprehensive income for the period


1,981

2,560





Attributable to:




Equity holders of the parent


1,960

2,541

Non-controlling interests


21

19

Total comprehensive income for the period


1,981

2,560

 

1  For Notes to the Financial Statements see pages 87 to 114.

2  2021 financial metrics have been restated to reflect the impact of the Over-issuance of Securities. See Restatement of financial statements (Note 1) on page 87 for more information.

3  Reported net of tax.

 

Condensed consolidated balance sheet (unaudited)




Restated2



As at 30.06.22

As at 31.12.21

Assets

Notes1

£m

£m

Cash and balances at central banks


283,136

238,574

Cash collateral and settlement balances


132,623

92,542

Loans and advances at amortised cost

12

395,824

361,451

Reverse repurchase agreements and other similar secured lending


1,639

3,227

Trading portfolio assets


127,004

147,035

Financial assets at fair value through the income statement


212,723

191,972

Derivative financial instruments

10

344,855

262,572

Financial assets at fair value through other comprehensive income


63,194

61,753

Investments in associates and joint ventures


911

999

Goodwill and intangible assets

13

8,245

8,061

Property, plant and equipment


3,582

3,555

Current tax assets


551

261

Deferred tax assets

6

5,044

4,619

Retirement benefit assets

16

5,233

3,879

Other assets


4,666

3,785

Total assets


1,589,230

1,384,285





Liabilities




Deposits at amortised cost

12

568,670

519,433

Cash collateral and settlement balances


124,724

79,371

Repurchase agreements and other similar secured borrowing


28,566

28,352

Debt securities in issue


115,906

98,867

Subordinated Liabilities

14

11,871

12,759

Trading portfolio liabilities


76,638

54,169

Financial liabilities designated at fair value


255,136

250,960

Derivative financial instruments

10

321,396

256,883

Current tax liabilities


449

689

Deferred tax liabilities

6

5

37

Retirement benefit liabilities

16

309

311

Other liabilities


11,538

10,505

Provisions

15

3,426

1,908

Total liabilities


1,518,634

1,314,244





Equity




Called up share capital and share premium

17

4,508

4,536

Other reserves

19

(218)

1,770

Retained earnings


52,980

50,487

Shareholders' equity attributable to ordinary shareholders of the parent


57,270

56,793

Other equity instruments

18

12,357

12,259

Total equity excluding non-controlling interests


69,627

69,052

Non-controlling interests

7

969

989

Total equity


70,596

70,041





Total liabilities and equity


1,589,230

1,384,285

 

1  For Notes to the Financial Statements see pages 87 to 114.

2  2021 financial metrics have been restated to reflect the impact of the Over-issuance of Securities. See Restatement of financial statements (Note 1) on page 87 for more information.

 

Condensed consolidated statement of changes in equity (unaudited)





Restated1

Restated1


Restated1


Called up share capital and share premium2

Other equity instruments2

Other reserves2

 

 

Retained earnings

Total

Non-controlling interests3

Total equity

Half year ended 30.06.22

£m

£m

£m

£m

£m

£m

£m

Balance as at 1 January 2022

4,536

12,259

1,770

50,487

69,052

989

70,041

Profit after tax

-

414

-

2,475

2,889

21

2,910

Currency translation movements

-

-

1,703

-

1,703

-

1,703

Fair value through other comprehensive income reserve

-

-

(759)

-

(759)

-

(759)

Cash flow hedges

-

-

(3,818)

-

(3,818)

-

(3,818)

Retirement benefit remeasurements

-

-

-

1,090

1,090

-

1,090

Own credit

-

-

855

-

855

-

855

Total comprehensive income for the period

-

414

(2,019)

3,565

1,960

21

1,981

Employee share schemes and hedging thereof

33

-

-

417

450

-

450

Issue and redemption of other equity instruments

-

115

-

25

140

(20)

120

Other equity instruments coupon paid

-

(414)

-

-

(414)

-

(414)

Partial disposal of ABSA holding

-

-

(39)

39

-

-

-

Vesting of employee share schemes

-

-

7

(464)

(457)

-

(457)

Dividends paid

-

-

-

(664)

(664)

(21)

(685)

Repurchase of shares

(61)

-

61

(432)

(432)

-

(432)

Other movements

-

(17)

2

7

(8)

-

(8)

Balance as at 30 June 2022

4,508

12,357

(218)

52,980

69,627

969

70,596



Half year ended 31.12.2021








Balance as at 1 July 2021

4,568

11,167

2,856

48,401

66,992

1,064

68,056

Profit after tax

-

415

-

2,453

2,868

28

2,896

Currency translation movements

-

-

364

-

364

-

364

Fair value through other comprehensive income reserve

-

-

(38)

-

(38)

-

(38)

Cash flow hedges

-

-

(1,517)

-

(1,517)

-

(1,517)

Retirement benefit remeasurements

-

-

-

540

540

-

540

Own credit

-

-

33

-

33

-

33

Total comprehensive income for the period

-

415

(1,158)

2,993

2,250

28

2,278

Employee share schemes and hedging thereof

35

-

-

(54)

(19)

-

(19)

Issue and redemption of other equity instruments

-

1,078

-

6

1,084

(75)

1,009

Other equity instruments coupon paid

-

(415)

-

-

(415)

-

(415)

Vesting of employee share schemes

-

-

(3)

(13)

(16)

-

(16)

Dividends paid

-

-

-

(339)

(339)

(28)

(367)

Repurchase of shares

(67)

-

67

(500)

(500)

-

(500)

Other movements

-

14

8

(7)

15

-

15

Balance as at 31 December 2021

4,536

12,259

1,770

50,487

69,052

989

70,041

1  2021 financial metrics have been restated to reflect the impact of the Over-issuance of Securities. See Restatement of financial statements (Note 1) on page 87 for more information.

2  Details of share capital, other equity instruments and other reserves are shown on pages 103 to 104.

3  Details of non-controlling interests are shown on page 92.

Condensed consolidated statement of changes in equity (unaudited)





Restated1

Restated1


Restated1


Called up share capital and share premium2

Other equity instruments2

Other reserves2

Retained earnings

Total

Non-controlling interests3

Total equity

Half year ended 30.06.2021

£m

£m

£m

£m

£m

£m

£m

Balance as at 1 January 2021

4,637

11,172

4,461

45,527

65,797

1,085

66,882

Profit after tax

-

389

-

3,752

4,141

19

4,160

Currency translation movements

-

-

(495)

-

(495)

-

(495)

Fair value through other comprehensive income reserve

-

-

(250)

-

(250)

-

(250)

Cash flow hedges

-

-

(911)

-

(911)

-

(911)

Retirement benefit remeasurements

-

-

-

103

103

-

103

Own credit

-

-

(47)

-

(47)

-

(47)

Total comprehensive income for the period

-

389

(1,703)

3,855

2,541

19

2,560

Employee share schemes and hedging thereof

25

-

-

289

314

-

314

Other equity instruments coupon paid

-

(389)

-

-

(389)

-

(389)

Vesting of employee share schemes

-

-

4

(397)

(393)

-

(393)

Dividends paid

-

-

-

(173)

(173)

(16)

(189)

Repurchase of shares

(94)

-

94

(700)

(700)

-

(700)

Other movements

-

(5)

-

-

(5)

(24)

(29)

Balance as at 30 June 2021

4,568

11,167

2,856

48,401

66,992

1,064

68,056









 

 

1.  2021 financial metrics have been restated to reflect the impact of the Over-issuance of Securities. See Restatement of financial statements (Note 1) on page 87 for more information.

2.  Details of share capital, other equity instruments and other reserves are shown on pages 103 to 104.

3.  Details of non-controlling interests are shown on page 92.

 

Condensed consolidated cash flow statement (unaudited)



Restated1


Half year ended 30.06.22

Half year ended 30.06.21


£m

£m

Profit before tax

3,733

4,902

Adjustment for non-cash items

(7,115)

6,977

Net (increase)/decrease in loans and advances at amortised cost

(17,667)

432

Net increase in deposits at amortised cost

49,237

19,859

Net increase in debt securities in issue

19,748

13,041

Changes in other operating assets and liabilities

14,719

(5,559)

Corporate income tax paid

(401)

(712)

Net cash from operating activities

62,254

38,940

Net cash from investing activities

(14,939)

(3,389)

Net cash from financing activities

(5,500)

(2,562)

Effect of exchange rates on cash and cash equivalents

7,047

(5,535)

Net increase in cash and cash equivalents

48,862

27,454

Cash and cash equivalents at beginning of the period

259,206

210,142

Cash and cash equivalents at end of the period

308,068

237,596

 

1  2021 financial metrics have been restated to reflect the impact of the Over-issuance of Securities. See Restatement of financial statements (Note 1) on page 87 for more information.

 

 

Financial Statement Notes

 

 

1.  Basis of preparation

These condensed consolidated interim financial statements ("the financial statements") for the six months ended 30 June 2022 have been prepared in accordance with the Disclosure Guidance and Transparency Rules (DTR) of the UK's Financial Conduct Authority (FCA) and IAS 34, Interim Financial Reporting, as published by the International Accounting Standards Board (IASB) and adopted by the UK.

The condensed consolidated interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2021. The annual financial statements for the year ended 31 December 2021 were prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and in accordance with International Financial Reporting Standards (IFRS) and interpretations (IFRICs) as issued by the IASB and adopted by the UK.

The accounting policies and methods of computation used in these condensed consolidated interim financial statements are the same as those used in the Barclays PLC Annual Report 2021.

 

1.  Going concern

The financial statements are prepared on a going concern basis, as the Directors are satisfied that the Group and parent company have the resources to continue in business for a period of at least 12 months from approval of the interim financial statements. In making this assessment, the Directors have considered a wide range of information relating to present and future conditions and includes a review of a working capital report (WCR). The WCR is used by the Directors to assess the future performance of the business and that it has the resources in place that are required to meet its ongoing regulatory requirements. The WCR also includes an assessment of the impact of internally generated stress testing scenarios on the liquidity and capital requirement forecasts. The stress tests used were based upon an assessment of reasonably possible downside economic scenarios that the Group could experience.

The WCR indicated that the Group had sufficient capital in place to support its future business requirements and remained above its regulatory minimum requirements in the internal stress scenarios.

2.  Other disclosures

The Credit risk disclosures on pages 33 to 56 form part of these interim financial statements.

Restatement of financial statements

The comparatives in these condensed consolidated interim financial statements for the six months ended 30 June 2022 (the financial statements) have been restated to reflect both a provision and contingent liability disclosure in respect of the impact of an over-issuance of securities (the Over-issuance of Securities) in excess of the maximum aggregate offering price registered under Barclays Bank PLC's shelf registration statement on Form F-3, as declared effective by the SEC in August 2019 (2019 F-3) and Barclays Bank PLC's predecessor shelf registration statement on Form F-3 filed in 2018 (Predecessor Shelf).

Due to a historic SEC settlement order, at the time the 2019 F-3 was filed and the Predecessor Shelf was amended, Barclays Bank PLC had ceased to be a "well-known seasoned issuer" (or WKSI) and had become an "ineligible issuer", as defined in Rule 405 under the Securities Act of 1933, as amended (Securities Act), thus being required to register upfront a certain amount of securities with the SEC.

In March 2022, Barclays Bank PLC became aware that it had issued securities in the US materially in excess of the amount it had registered with the SEC under the 2019 F-3 and subsequently became aware that securities had also been issued in excess of the amount it had registered with the SEC under the Predecessor Shelf. The securities that were issued in this period comprise structured notes and exchange traded notes (ETNs). As such, certain offers and sales of these securities were not made in compliance with the Securities Act, giving rise to rights of rescission for certain purchasers of the securities. Under Section 12(a)(1) of the Securities Act, certain purchasers of unregistered securities have a right to recover, upon the tender of such security, the consideration paid for such security with interest, less the amount of any income received, or damages if the purchaser no longer owns the security (the Rescission Price). As a result, Barclays Bank PLC has elected to make a rescission offer to eligible purchasers of the relevant affected securities at the Rescission Price (the Rescission Offer).

A proportion of the expected costs associated with the rights of rescission of certain investors are attributable to Barclays PLC's financial statements for the year ended 31 December 2021. Accordingly, the comparatives in these financial statements have been restated. The restatement impacts the consolidated income statement, the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated statement of changes in equity, and the consolidated cash flow statement for the year ended 31 December 2021, as well as quarterly and half yearly financial information that is presented within this document. There was no material effect on Barclays PLC's previously reported financial statements for the year ended 31 December 2020 and 2019.

The table below reflects each of the consolidated financial statement line items that were affected by the restatement:

Impact on the consolidated income statement

As reported


Restatement


As restated

Half year ended 30.06.21

£m


£m


£m

Litigation and conduct

(99)


(77)


(176)

Operating expenses

(7,231)


(77)


(7,308)

Profit before tax

4,979


(77)


4,902

Taxation

(759)


17


(742)

Profit after tax

4,220


(60)


4,160







Year ended 31.12.21

£m


£m


£m

Litigation and conduct

(177)


(220)


(397)

Operating expenses

(14,439)


(220)


(14,659)

Profit before tax

8,414


(220)


8,194

Taxation

(1,188)


50


(1,138)

Profit after tax

7,226


(170)


7,056







Impact on the consolidated statement of comprehensive income






Half year ended 30.06.21

£m


£m


£m

Profit after tax

4,220


(60)


4,160

Total comprehensive income for the period

2,620


(60)


2,560







Year ended 31.12.21

£m


£m


£m

Profit after tax

7,226


(170)


7,056

Total comprehensive income for the period

5,008


(170)


4,838







Impact on the cash flow statement






Half year ended 30.06.21

£m


£m


£m

Profit before tax

4,979


(77)


4,902

Adjustment for non-cash items

6,900


77


6,977







Impact on the consolidated balance sheet






As at 31.12.21

£m


£m


£m

Current tax liabilities

739


(50)


689

Provisions

1,688


220


1,908

Total liabilities

1,314,074


170


1,314,244







Retained earnings

50,657


(170)


50,487

Total equity

70,211


(170)


70,041



 

2.  Segmental reporting

Analysis of results by business






Barclays

UK

Barclays

International

Head

Office

Barclays

Group

Half year ended 30.06.22

£m

£m

£m

£m

Total income

3,373

9,940

(109)

13,204

Credit impairment (charges)/releases

(48)

(310)

17

(341)

Net operating income/(expenses)

3,325

9,630

(92)

12,863

Operating costs

(2,083)

(5,042)

(145)

(7,270)

Litigation and conduct

(25)

(1,832)

-

(1,857)

Total operating expenses

(2,108)

(6,874)

(145)

(9,127)

Other net income/(expenses)1

-

13

(16)

(3)

Profit/(loss) before tax

1,217

2,769

(253)

3,733






As at 30.06.22

£bn

£bn

£bn

£bn

Total assets

318.8

1,250.6

19.8

1,589.2

 



Restated2


Restated2


Barclays

UK

Barclays

International

Head

Office

Barclays

Group

Half year ended 30.06.21

£m

£m

£m

£m

Total income

3,199

8,218

(102)

11,315

Credit impairment releases

443

293

6

742

Net operating income/(expenses)

3,642

8,511

(96)

12,057

Operating costs

(2,114)

(4,606)

(412)

(7,132)

Litigation and conduct

(22)

(161)

7

(176)

Total operating expenses

(2,136)

(4,767)

(405)

(7,308)

Other net income1

-

22

131

153

Profit/(loss) before tax

1,506

3,766

(370)

4,902






As at 31.12.21

£bn

£bn

£bn

£bn

Total assets

321.2

1,044.1

19.0

1,384.3

 

1  Other net income/(expenses) represents the share of post-tax results of associates and joint ventures, profit (or loss) on disposal of subsidiaries, associates and joint ventures and gains on acquisitions.

2  2021 financial metrics have been restated to reflect the impact of the Over-issuance of Securities. See Restatement of financial statements (Note 1) on page 87 for more information.

Split of income by geographic region1




Half year ended 30.06.22

Half year ended 30.06.21


£m

£m

United Kingdom

7,972

5,895

Europe

1,311

1,222

Americas

3,200

3,608

Africa and Middle East

31

20

Asia

690

570

Total

13,204

11,315

1  The geographical analysis is based on the location of the office where the transactions are recorded.

3.  Net fee and commission income

Fee and commission income is disaggregated below and includes a total for fees in scope of IFRS 15, Revenue from Contracts with Customers:


Barclays UK

Barclays International

Head Office

Total

Half year ended 30.06.22

£m

£m

£m

£m

Fee type





Transactional1

515

1,448

-

1,963

Advisory

83

511

-

594

Brokerage and execution

125

762

-

887

Underwriting and syndication

-

1,102

-

1,102

Other

29

80

2

111

Total revenue from contracts with customers

752

3,903

2

4,657

Other non-contract fee income

-

69

-

69

Fee and commission income1

752

3,972

2

4,726

Fee and commission expense

(147)

(1,153)

(2)

(1,302)

Net fee and commission income

605

2,819

-

3,424

 


Barclays UK

Barclays  International

Head Office

Total

Half year ended 30.06.21

£m

£m

£m

£m

Fee type





Transactional

408

1,181

-

1,589

Advisory

83

459

1

543

Brokerage and execution

109

553

-

662

Underwriting and syndication

-

1,715

-

1,715

Other

35

73

3

111

Total revenue from contracts with customers

635

3,981

4

4,620

Other non-contract fee income

-

62

-

62

Fee and commission income

635

4,043

4

4,682

Fee and commission expense1

(108)

(861)

(7)

(976)

Net fee and commission income

527

3,182

(3)

3,706

1  Barclays has corrected the presentation of the scheme fees incurred when Barclays acts as an "acquirer" as part of the payment transaction cycle. From 2022 onwards, the scheme fees reported under "Barclays International" are presented within fees and commission income under "Transactional" fee type, which had previously been recognised in fees and commission expense. The reclassification into Fee and Commission income is a reduction of £103m for H122. The comparatives have not been restated as the effect is not considered material although the effect would have been a reduction of H121: £88m with no impact on Net fee and commission income. There is no impact on Net assets or Cash flows reported.

Transactional fees are service charges on deposit accounts, cash management services and transactional processing fees. These include interchange and merchant fee income generated from credit and bank card usage.

Advisory fees are generated from wealth management services and investment banking advisory services related to mergers, acquisitions and financial restructurings.

Brokerage and execution fees are earned for executing client transactions with various exchanges and over-the-counter markets and assisting clients in clearing transactions.

Underwriting and syndication fees are earned for the distribution of client equity or debt securities and the arrangement and administration of a loan syndication. These include commitment fees to provide loan financing.

 

4.  Staff costs


Half year ended 30.06.22

Half year ended 30.06.21

Compensation costs

£m

£m

Upfront bonus charge

705

824

Deferred bonus charge

280

262

Other incentives

44

6

Performance costs

1,029

1,092

Salaries

2,278

2,117

Social security costs

377

336

Post-retirement benefits

282

275

Other compensation costs

241

223

Total compensation costs

4,207

4,043




Other resourcing costs



Outsourcing

268

171

Redundancy and restructuring

(15)

23

Temporary staff costs

53

55

Other

70

42

Total other resourcing costs

376

291




Total staff costs

4,583

4,334




Barclays Group compensation costs as a % of total income

31.9%

35.7%

No material awards have yet been granted in relation to the 2022 bonus pool as decisions regarding incentive awards are not taken by the Remuneration Committee until the performance for the full year can be assessed. The current year bonus charge for the first six months represents an accrual for estimated costs in accordance with accounting requirements. One of the primary considerations when evaluating the accrual is Group and business level returns, aligning colleague and shareholder interests.

The Group has entered into physically settled forward contracts to hedge the settlement of certain share-based payment schemes. The present value of the fixed forward price to be paid under these outstanding contracts is £287m and has been recorded in retained earnings.

 

5.  Infrastructure, administration and general expenses


Half year ended 30.06.22

Half year ended 30.06.21

Infrastructure costs

£m

£m

Property and equipment

744

709

Depreciation and amortisation

863

832

Lease payments

14

20

Impairment of property, equipment and intangible assets

21

304

Total infrastructure costs

1,642

1,865




Administration and general expenses



Consultancy, legal and professional fees

288

262

Marketing and advertising

206

163

Other administration and general expenses

551

508

Total administration and general expenses

1,045

933




Total infrastructure, administration and general expenses

2,687

2,798

 

6.  Tax

The tax charge for H122 was £823m (restated1 H121: £742m), representing an effective tax rate (ETR) of 22.0% (restated1 H121: 15.1%). The ETR for H122 includes a charge recognised for the re-measurement of the Group's UK deferred tax assets (DTAs) due to the enactment of legislation in Q122 which will result in the UK banking surcharge rate being reduced from 8% to 3% effective from 1 April 2023. The ETR excluding the impact of this downward re-measurement of UK DTAs was 12.8%, which includes a 5.8% benefit relating to adjustments in respect of prior years. Included in the H122 tax charge is a credit of £110m (H121: £104m) in respect of payments made on AT1 instruments that are classified as equity for accounting purposes. The H121 ETR included a benefit recognised for the re-measurement of the Group's UK DTAs as a result of the enactment of legislation to increase the UK corporation tax rate to 25% effective from 1 April 2023.

The re-measurement of UK DTAs has resulted in the Group's DTAs decreasing by £318m with a tax charge in the income statement of £346m and a tax credit within other comprehensive income of £28m.

In October 2021, the OECD and G20 Inclusive Framework on Base Erosion and Profit Shifting announced plans to introduce a global minimum tax rate of 15%. The model rules were released by the OECD in December 2021 with further guidance published in March 2022. Draft legislation published by the UK government on 20 July 2022 to implement the global minimum tax regime is expected to apply for accounting periods beginning on or after 31 December 2023. The Group is reviewing the published OECD model rules and guidance and will review further guidance as well as new legislation to be released by governments implementing this new tax regime as it is published to assess the potential impact of new legislation.

In the USA, the proposed Build Back Better Act was passed by the House of Representatives in 2021 but it was not passed by the Senate and it is uncertain whether various proposals contained in the Act will progress further. The Act included proposals to implement material changes to international tax provisions, including amendments to the Base Erosion and Anti-Abuse Tax and the imposition of an alternative minimum tax based on accounting profits. It is unclear at this time whether any of these proposals could have a significant impact on the Group if enacted. The Group will continue to monitor developments and assess the potential impact of any future legislative changes ultimately enacted.

1  2021 financial metrics have been restated to reflect the impact of the Over-issuance of Securities. See Restatement of financial statements (Note 1) on page 87 for more information.


As at 30.06.22

As at 31.12.21

Deferred tax assets and liabilities

£m

£m

UK

3,046

2,183

USA

1,530

2,006

Other territories

468

430

Deferred tax assets

5,044

4,619

Deferred tax liabilities

(5)

(37)




Analysis of deferred tax assets



Temporary differences

3,871

3,399

Tax losses

1,173

1,220

Deferred tax assets

5,044

4,619

 

 

7.  Non-controlling interests


Profit attributable to

non-controlling interests


Equity attributable to

non-controlling interests


Half year ended 30.06.22

Half year ended 30.06.21


As at 30.06.22

As at 31.12.21


£m

£m


£m

£m

Barclays Bank PLC issued:






- Preference shares

15

13


529

529

- Upper T2 instruments

6

3


438

458

Other non-controlling interests

-

3


2

2

Total

21

19


969

989

 

 

8.  Earnings per share



Restated1


Half year ended 30.06.22

Half year ended 30.06.21


£m

£m

Profit attributable to ordinary equity holders of the parent

2,475

3,752





m

m

Basic weighted average number of shares in issue

16,684

17,140

Number of potential ordinary shares

428

467

Diluted weighted average number of shares

17,112

17,607





p

p

Basic earnings per ordinary share

14.8

21.9

Diluted earnings per ordinary share

14.5

21.3

1  2021 financial metrics have been restated to reflect the impact of the Over-issuance of Securities. See Restatement of financial statements (Note 1) on page 87 for more information.

9.  Dividends on ordinary shares

A half year dividend for 2022 of 2.25p (H121: 2p) per ordinary share will be paid on 16 September 2022 to shareholders on the register on 12 August 2022.


Half year ended 30.06.22

Half year ended 30.06.21


Per share

Total

Per share

Total

Dividends paid during the period

p

£m

p

£m

Full year dividend paid during period

4.0

664

1.0

173

For qualifying American Depositary Receipt (ADR) holders, the half year dividend of 2.25p per ordinary share becomes 9.0p per American Depositary Share (representing 4 shares). The depositary bank will post the half year dividend on 16 September 2022 to ADR holders on the record at close of business on 12 August 2022.

The Directors have confirmed their intention to initiate a share buyback of up to £500m after the balance sheet date. The share buyback is expected to commence in the third quarter of 2022. The financial statements for the six months ended 30 June 2022 do not reflect the impact of the proposed share buyback, which will be accounted for as and when shares are repurchased by the Company.

 

10. Derivative financial instruments


Contract notional amount


Fair value



Assets

Liabilities

As at 30.06.22

£m


£m

£m

Foreign exchange derivatives

6,732,093


135,207

(123,662)

Interest rate derivatives

44,275,712


130,628

(116,541)

Credit derivatives

1,640,043


8,128

(8,228)

Equity and stock index and commodity derivatives

2,510,981


70,066

(71,830)

Derivative assets/(liabilities) held for trading

55,158,829


344,029

(320,261)






Derivatives in hedge accounting relationships





Derivatives designated as cash flow hedges

139,040


701

(21)

Derivatives designated as fair value hedges

107,809


106

(1,054)

Derivatives designated as hedges of net investments

4,097


19

(60)

Derivative assets/(liabilities) designated in hedge accounting relationships

250,946


826

(1,135)






Total recognised derivative assets/(liabilities)

55,409,775


344,855

(321,396)






As at 31.12.21





Foreign exchange derivatives

5,824,856


76,140

(74,437)

Interest rate derivatives

38,816,432


125,846

(114,803)

Credit derivatives

1,272,104


5,682

(6,561)

Equity and stock index and commodity derivatives

1,899,382


54,010

(59,946)

Derivative assets/(liabilities) held for trading

47,812,774


261,678

(255,747)






Derivatives in hedge accounting relationships





Derivatives designated as cash flow hedges

114,313


798

(3)

Derivatives designated as fair value hedges

102,815


59

(1,129)

Derivatives designated as hedges of net investments

2,423


37

(4)

Derivative assets/(liabilities) designated in hedge accounting relationships

219,551


894

(1,136)






Total recognised derivative assets/(liabilities)

48,032,325


262,572

(256,883)

The IFRS netting posted against derivative assets was £55bn including £12bn of cash collateral netted (December 2021: £24bn including £4bn cash collateral netted) and £55bn for liabilities including £12bn of cash collateral netted (December 2021: £24bn including £4bn of cash collateral netted). Derivative asset exposures would be £306bn (December 2021: £237bn) lower than reported under IFRS if netting were permitted for assets and liabilities with the same counterparty or for which the Group holds cash collateral of £40bn (December 2021: £35bn). Similarly, derivative liabilities would be £293bn (December 2021: £235bn) lower reflecting counterparty netting and cash collateral placed of £26bn (December 2021: £32bn). In addition, non-cash collateral of £13bn (December 2021: £6bn) was held in respect of derivative assets and £3bn (December 2021: £2bn) was placed in respect of derivative liabilities. Collateral amounts are limited to net on balance sheet exposure so as to not include over-collateralisation.

 

 

11. Fair value of financial instruments

This section should be read in conjunction with Note 17, Fair value of financial instruments of the Barclays PLC Annual Report 2021 which provides more detail about accounting policies adopted, valuation methodologies used in calculating fair value and the valuation control framework which governs oversight of valuations. There have been no changes in the accounting policies adopted or the valuation methodologies used.

Valuation

The following table shows the Group's assets and liabilities that are held at fair value disaggregated by valuation technique (fair value hierarchy) and balance sheet classification:


Valuation technique using



Quoted market prices

Observable inputs

Significant unobservable inputs



(Level 1)

(Level 2)

(Level 3)

Total

As at 30.06.22

£m

£m

£m

£m

Trading portfolio assets

58,419

64,329

4,256

127,004

Financial assets at fair value through the income statement

1,115

202,026

9,582

212,723

Derivative financial instruments

11,653

329,329

3,873

344,855

Financial assets at fair value through other comprehensive income

22,455

40,696

43

63,194

Investment property

-

-

5

5

Total assets

93,642

636,380

17,759

747,781






Trading portfolio liabilities

(47,870)

(28,686)

(82)

(76,638)

Financial liabilities designated at fair value

(193)

(254,496)

(447)

(255,136)

Derivative financial instruments

(12,674)

(304,343)

(4,379)

(321,396)

Total liabilities

(60,737)

(587,525)

(4,908)

(653,170)






As at 31.12.21





Trading portfolio assets

80,926

63,828

2,281

147,035

Financial assets at fair value through the income statement

5,093

177,167

9,712

191,972

Derivative financial instruments

6,150

252,412

4,010

262,572

Financial assets at fair value through other comprehensive income

22,009

39,706

38

61,753

Investment property

-

-

7

7

Total assets

114,178

533,113

16,048

663,339






Trading portfolio liabilities

(27,529)

(26,613)

(27)

(54,169)

Financial liabilities designated at fair value

(174)

(250,376)

(410)

(250,960)

Derivative financial instruments

(6,571)

(244,253)

(6,059)

(256,883)

Total liabilities

(34,274)

(521,242)

(6,496)

(562,012)

The following table shows the Group's Level 3 assets and liabilities that are held at fair value disaggregated by product type:


As at 30.06.22

As at 31.12.21


Assets

Liabilities

Assets

Liabilities


£m

£m

£m

£m

Interest rate derivatives

1,573

(1,849)

1,091

(1,351)

Foreign exchange derivatives

786

(560)

376

(374)

Credit derivatives

234

(615)

323

(709)

Equity derivatives

1,280

(1,355)

2,220

(3,625)

Corporate debt

1,171

(13)

1,205

(21)

Reverse repurchase and repurchase agreements

178

(188)

13

(172)

Non-asset backed loans

8,660

-

6,405

-

Asset backed securities

291

-

558

-

Equity cash products

422

(3)

393

-

Private equity investments

1,297

(8)

1,095

(6)

Other1

1,867

(317)

2,369

(238)

Total

17,759

(4,908)

16,048

(6,496)

1  Other includes commercial real estate loans, funds and fund-linked products, asset backed loans, issued debt, commercial paper, government sponsored debt and investment property.

Assets and liabilities reclassified between Level 1 and Level 2

During the period, there were no material transfers between Level 1 and Level 2 (period ended 31 December 2021: no material transfers between Level 1 and Level 2).

Level 3 movement analysis

The following table summarises the movements in the balances of Level 3 assets and liabilities during the period. The table shows gains and losses and includes amounts for all financial assets and liabilities that are held at fair value transferred to and from Level 3 during the period. Transfers have been reflected as if they had taken place at the beginning of the period.

Asset and liability moves between Level 2 and Level 3 are primarily due to i) an increase or decrease in observable market activity related to an input or ii) a change in the significance of the unobservable input, with assets and liabilities classified as Level 3 if an unobservable input is deemed significant.

Level 3 movement analysis







Total gains and (losses) in the period recognised in the income statement

Total gains or (losses) recognised in OCI

Transfers



As at 01.01.22

Purchases

Sales

Issues

Settle-ments

Trading income

Other income

In

Out

As at 30.06.22


£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

Corporate debt

389

90

(144)

-

(17)

54

-

-

43

(11)

404

Non-asset backed loans

758

2,448

(459)

-

-

11

-

-

50

(113)

2,695

Asset backed securities

454

72

(80)

-

(297)

(20)

-

-

100

(66)

163

Equity cash products

303

21

(56)

-

-

24

-

-

52

(17)

327

Other

377

326

(42)

-

(5)

56

-

-

39

(84)

667

Trading portfolio assets

2,281

2,957

(781)

-

(319)

125

-

-

284

(291)

4,256













Non-asset backed loans

5,647

1,847

(757)

-

(484)

(334)

-

-

52

(9)

5,962

Equity cash products

90

-

-

-

-

3

2

-

-

-

95

Private equity investments

1,095

99

(16)

-

(1)

84

(26)

-

59

(4)

1,290

Other

2,880

4,817

(5,579)

-

(156)

11

182

-

99

(19)

2,235

Financial assets at fair value through the income statement

9,712

6,763

(6,352)

-

(641)

(236)

158

-

210

(32)

9,582













Private equity investments

-

-

-

-

-

-

-

1

6

-

7

Asset backed securities

38

-

-

-

-

-

-

(2)

-

-

36

Assets at fair value through other comprehensive income

38

-

-

-

-

-

-

(1)

6

-

43













Investment property

7

-

(1)

-

-

-

(1)

-

-

-

5













Trading portfolio liabilities

(27)

(35)

3

-

-

(29)

-

-

-

6

(82)













Financial liabilities designated at fair value

(410)

(5)

-

(13)

47

(22)

-

-

(81)

37

(447)













Interest rate derivatives

(260)

25

-

-

(4)

(305)

(9)

-

271

6

(276)

Foreign exchange derivatives

2

-

-

-

(9)

273

-

-

(65)

25

226

Credit derivatives

(386)

(36)

5

-

60

(99)

-

-

20

55

(381)

Equity derivatives

(1,405)

(83)

-

-

171

980

(1)

-

(9)

272

(75)

Net derivative financial instruments1

(2,049)

(94)

5

-

218

849

(10)

-

217

358

(506)













Total

9,552

9,586

(7,126)

(13)

(695)

687

147

(1)

636

78

12,851

1  Derivative financial instruments are represented on a net basis. On a gross basis, derivative financial assets were £3,873m and derivative financial liabilities were £4,379m.

Level 3 movement analysis


As at 01.01.21

Purchases

Sales

Issues

Settle-

ments

Total gains and (losses) in the period recognised in the income statement

Total gains or (losses) recognised in OCI

Transfers

As at 30.06.21


Trading income

Other income

In

Out


£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

Corporate debt

151

305

(87)

-

-

25

-

-

40

(11)

423

Non-asset backed loans

709

620

(131)

-

(84)

13

-

-

124

(106)

1,145

Asset backed securities

686

112

(294)

-

-

(10)

-

-

43

(48)

489

Equity cash products

214

13

(17)

-

-

32

-

-

29

(9)

262

Other

103

21

-

-

(51)

(1)

-

-

162

(1)

233

Trading portfolio assets

1,863

1,071

(529)

-

(135)

59

-

-

398

(175)

2,552













Non-asset backed loans

5,580

698

(299)

-

(687)

(119)

-

-

69

(48)

5,194

Equity cash products

326

160

(194)

-

-

(171)

18

-

1

-

140

Private equity investments

874

106

(9)

-

(8)

(5)

92

-

-

(71)

979

Other

1,726

2,291

(2,389)

-

(162)

(19)

1

-

16

-

1,464

Financial assets at fair value through the income statement

8,506

3,255

(2,891)

-

(857)

(314)

111

-

86

(119)

7,777













Non-asset backed loans

106

-

-

-

-

-

-

-

-

(106)

-

Asset backed securities

47

4

-

-

(5)

-

-

2

-

-

48

Assets at fair value through other comprehensive income

153

4

-

-

(5)

-

-

2

-

(106)

48













Investment property

10

-

(2)

-

-

-

-

-

-

-

8













Trading portfolio liabilities

(28)

(3)

14

-

-

(7)

-

-

-

7

(17)













Financial liabilities designated at fair value

(355)

-

-

-

98

7

(2)

-

(78)

18

(312)













Interest rate derivatives

(2)

9

-

-

33

(121)

4

-

21

(297)

(353)

Foreign exchange derivatives

1

-

-

-

58

(6)

-

-

3

(34)

22

Credit derivatives

(155)

(117)

2

-

(5)

12

(1)

-

1

(1)

(264)

Equity derivatives

(1,614)

(315)

(1)

-

(32)

(221)

(1)

-

28

808

(1,348)

(1,770)

(423)

1

-

54

(336)

2

-

53

476

(1,943)













Total

8,379

3,904

(3,407)

-

(845)

(591)

111

2

459

101

8,113

1  Derivative financial instruments are represented on a net basis. On a gross basis, derivative financial assets were £3,657m and derivative financial liabilities were £5,600m.

Unrealised gains and losses on Level 3 financial assets and liabilities

The following table discloses the unrealised gains and losses recognised in the period arising on Level 3 financial assets and liabilities held at the period end.


Half year ended 30.06.22

Half year ended 30.06.21


Income statement

Other compre hensive income

Total

Income statement

Other compre hensive income

Total


Trading income

Other income

Trading income

Other income


£m

£m

£m

£m

£m

£m

£m

£m

Trading portfolio assets

121

-

-

121

35

-

-

35

Financial assets at fair value through the income statement

(165)

(22)

-

(187)

(201)

114

-

(87)

Financial assets at fair value through other comprehensive income

-

-

(1)

(1)

-

-

-

-

Investment properties

-

(1)

-

(1)

-

-

-

-

Trading portfolio liabilities

(35)

-

-

(35)

(6)

-

-

(6)

Financial liabilities designated at fair value

(14)

-

-

(14)

7

-

-

7

Net derivative financial instruments

862

(1)

-

861

(367)

-

-

(367)

Total

769

(24)

(1)

744

(532)

114

-

(418)

Valuation techniques and sensitivity analysis

Sensitivity analysis is performed on products with significant unobservable inputs (Level 3) to generate a range of reasonably possible alternative valuations. The sensitivity methodologies applied take account of the nature of valuation techniques used, as well as the availability and reliability of observable proxy and historical data and the impact of using alternative models.

Current year valuation and sensitivity methodologies are consistent with those described within Note 17, Fair value of financial instruments in the Barclays PLC Annual Report 2021.

Sensitivity analysis of valuations using unobservable inputs











As at 30.06.22

As at 31.12.21


Favourable changes

Unfavourable changes

Favourable changes

Unfavourable changes


Income statement

Equity

Income statement

Equity

Income statement

Equity

Income statement

Equity


£m

£m

£m

£m

£m

£m

£m

£m

Interest rate derivatives

75

-

(108)

-

51

-

(79)

-

Foreign exchange derivatives

15

-

(22)

-

20

-

(28)

-

Credit derivatives

111

-

(115)

-

111

-

(103)

-

Equity derivatives

107

-

(112)

-

187

-

(195)

-

Corporate debt

36

-

(35)

-

38

-

(28)

-

Non-asset backed loans

298

-

(334)

-

165

-

(256)

-

Equity cash products

73

-

(129)

-

42

-

(61)

-

Private equity investments

272

1

(286)

(1)

246

-

(236)

-

Other1

27

-

(36)

-

20

-

(19)

-

Total

1,014

1

(1,177)

(1)

880

-

(1,005)

-

1  Other includes commercial real estate loans, funds and fund-linked products, asset backed loans, issued debt, commercial paper, government sponsored debt and investment property.

The effect of stressing unobservable inputs to a range of reasonably possible alternatives, alongside considering the impact of using alternative models, would be to increase fair values by up to £1,015m (December 2021: £880m) or to decrease fair values by up to £1,178m (December 2021: £1,005m) with substantially all the potential effect impacting profit and loss rather than reserves. 

Significant unobservable inputs

The valuation techniques and significant unobservable inputs for assets and liabilities recognised at fair value and classified as Level 3 are consistent with Note 17, Fair value of financial instruments in the Barclays PLC Annual Report 2021.

Fair value adjustments

Key balance sheet valuation adjustments are quantified below:


As at 30.06.22

As at 31.12.21


£m

£m

Exit price adjustments derived from market bid-offer spreads

(539)

(506)

Uncollateralised derivative funding

(82)

(127)

Derivative credit valuation adjustments

(388)

(212)

Derivative debit valuation adjustments

208

91

· Exit price adjustments derived from market bid-offer spreads increased by £33m to £539m as a result of movements in market bid offer spreads.

· Uncollateralised derivative funding decreased by £45m to £82m as a result of reduction in uncollateralised funding exposure due to increases in interest rates which offset impact of wider funding spreads.

· Derivative credit valuation adjustments increased by £176m to £388m as a result of widening input counterparty credit spreads

· Derivative debit valuation adjustments increased by £117m to £208m as a result of widening input own credit spreads

Portfolio exemption

The Group uses the portfolio exemption in IFRS 13, Fair Value Measurement to measure the fair value of groups of financial assets and liabilities. Instruments are measured using the price that would be received to sell a net long position (i.e. an asset) for a particular risk exposure or to transfer a net short position (i.e. a liability) for a particular risk exposure in an orderly transaction between market participants at the balance sheet date under current market conditions. Accordingly, the Group measures the fair value of the group of financial assets and liabilities consistently with how market participants would price the net risk exposure at the measurement date.

Unrecognised gains as a result of the use of valuation models using unobservable inputs

The amount that has yet to be recognised in income that relates to the difference between the transaction price (the fair value at initial recognition) and the amount that would have arisen had valuation models using unobservable inputs been used on initial recognition, less amounts subsequently recognised, is £117m (December 2021: £133m) for financial instruments measured at fair value and £221m (December 2021: £230m) for financial instruments carried at amortised cost. There are additions and FX gains of £19m (December 2021: £59m) and amortisation and releases of £35m (December 2021: £42m) for financial instruments measured at fair value and additions of £nil (December 2021: £nil) and amortisation and releases of £9m (December 2021: £17m) for financial instruments carried at amortised cost.

Third party credit enhancements

Structured and brokered certificates of deposit issued by the Group are insured up to $250,000 per depositor by the Federal Deposit Insurance Corporation (FDIC) in the United States. The FDIC is funded by premiums that Barclays and other banks pay for deposit insurance coverage. The carrying value of these issued certificates of deposit that are designated under the IFRS 9 fair value option includes this third party credit enhancement. The on balance sheet value of these brokered certificates of deposit amounted to £3,065m (December 2021: £790m).

 

Comparison of carrying amounts and fair values for assets and liabilities not held at fair value

Valuation methodologies employed in calculating the fair value of financial assets and liabilities measured at amortised cost are consistent with those described within Note 17, Fair value of financial instruments in the Barclays PLC Annual Report 2021.

The following table summarises the fair value of financial assets and liabilities measured at amortised cost on the Group's balance sheet.


As at 30.06.22

As at 31.12.21


Carrying amount

Fair value

Carrying amount

Fair value

Financial assets

£m

£m

£m

£m

Loans and advances at amortised cost

395,824

396,475

361,451

362,424

Reverse repurchase agreements and other similar secured lending

1,639

1,639

3,227

3,227






Financial liabilities





Deposits at amortised cost

(568,670)

(568,715)

(519,433)

(519,436)

Repurchase agreements and other similar secured borrowing

(28,566)

(28,569)

(28,352)

(28,358)

Debt securities in issue

(115,906)

(115,777)

(98,867)

(100,657)

Subordinated liabilities

(11,871)

(11,799)

(12,759)

(13,334)

 

 

12. Loans and advances and deposits at amortised cost


As at 30.06.22

As at 31.12.21


£m

£m

Loans and advances at amortised cost to banks

12,532

9,698

Loans and advances at amortised cost to customers

337,220

319,922

Debt securities at amortised cost

46,072

31,831

Total loans and advances at amortised cost

395,824

361,451




Deposits at amortised cost from banks

29,891

17,819

Deposits at amortised cost from customers

538,779

501,614

Total deposits at amortised cost

568,670

519,433

 

 

13. Goodwill and intangible assets

Goodwill and intangible assets are allocated to business operations according to business segments as follows:


As at 30.06.22

As at 31.12.21


Goodwill

Intangibles

Total

Goodwill

Intangibles

Total


£m

£m

£m

£m

£m

£m

Barclays UK

3,560

1,247

4,807

3,560

1,233

4,793

Barclays International

308

3,079

3,387

291

2,930

3,221

Head Office

44

7

51

42

5

47

Total

3,912

4,333

8,245

3,893

4,168

8,061

The Group performed an impairment review to assess the recoverability of its goodwill and intangible asset balances as at 31 December 2021. The outcome of this review is disclosed on pages 382-385 of the Barclays PLC Annual Report 2021. No impairment was recognised as a result of the review as value in use exceeded carrying amount. A review of the Group's goodwill and intangible assets as at 30 June 2022 did not identify the presence of impairment.

 

14. Subordinated liabilities


Half year ended 30.06.22

Year ended 31.12.21


£m

£m

Opening balance as at 1 January

12,759

16,341

Issuances

259

1,890

Redemptions

(1,180)

(4,807)

Other

33

(665)

Closing balance

11,871

12,759

Issuances of £259m comprise £128m USD Floating Rate Notes, £89m ZAR Floating Rate Notes and £42m EUR Floating Rate Notes issued externally by Barclays subsidiaries.

Redemptions of £1,180m comprise £1,039m notes issued externally by Barclays Bank PLC, £74m USD Floating Rate Notes issued externally by a Barclays subsidiary and £67m GBP Undated Subordinated Loan Notes (secured) issued externally by a Barclays securitisation special purpose vehicle (SPV). £1,039m notes issued externally by Barclays Bank PLC comprise £838m EUR 6.625% Fixed Rate Subordinated Notes, £147m USD 6.86% Callable Perpetual Core Tier One Notes, £42m EUR Subordinated Floating Rate Notes and £12m GBP 6% Callable Perpetual Core Tier One Notes.

Other movements predominantly comprise foreign exchange movements and fair value hedge adjustments.

 

15. Provisions



Restated1


As at 30.06.22

As at 31.12.21


£m

£m

Customer redress

1,985

530

Legal, competition and regulatory matters

418

226

Redundancy and restructuring

216

326

Undrawn contractually committed facilities and guarantees

526

542

Onerous contracts

-

5

Sundry provisions

281

279

Total

3,426

1,908

1  2021 financial metrics have been restated to reflect the impact of the Over-issuance of Securities. See Restatement of financial statements (Note 1) on page 87 for more information.

Over-issuance of securities

As at 30 June 2022, Barclays PLC has recognised a balance sheet provision of £1,757m (December 2021: £220m) in relation to the Over-issuance of Securities (see Basis of preparation on page 87 for more information), out of which £1,592m (December 2021: £220m) is due to the over-issuance of structured notes (within Customer redress) and £165m (December 2021: nil) relates to liabilities that could be incurred arising out of ongoing discussions in respect of a potential SEC resolution (within Legal, competition and regulatory matters).

The amount of the provision in relation to the rescission rights of investors in over-issued structured notes is determined by (among other things) the market value of the structured notes subject to the Rescission Offer, participation rates in such Rescission Offer, prevailing interest rates, and movements in foreign exchange rates. The majority of the structured notes subject to the Rescission Offer provide an equity linked return to investors. As such, the value of these notes is highly sensitive to movements in the price of individual securities and a range of indices.

The increase in the provision of £1,372m predominantly reflects a reduction in the market value of the structured notes and additional accrued interest that would be payable to investors on rescission. The US equity markets have been volatile during the first half of 2022, with significant reductions in the value of US equity indices such as the S&P 500 from the year end 2021 levels, which has led to a reduction in the market value of the structured notes, and increased the size of the provision. The provision does not include the impact of market hedges that have been entered into subsequent to the year-end and were initiated from the end of the first quarter of 2022 to reduce the net volatility to the income statement. When determining these market hedges, consideration was given to changes in the rescission costs which would arise from volatility in the market along with the positioning of the Markets business.

The structured notes also accrue interest on a monthly basis (at current prevailing interest rates and participation rate assumptions this is c£34m a month) until the Rescission Price has been paid. The provision also assumes that not all structured note investors whose securities are out of the money will accept the Rescission Offer. If all investors were to accept the Rescission Offer, the provision would increase by c£60m.

The remaining increase in the provision of £165m results from Barclays PLC's estimate of the potential SEC resolution.

 

16. Retirement benefits

As at 30 June 2022, the Group's IAS 19 net pension surplus across all schemes was £4.9bn (December 2021: £3.6bn). The UK Retirement Fund (UKRF), which is the Group's main scheme, had an IAS 19 net pension surplus of £5.2bn (December 2021: 3.8bn). The movement for the UKRF was driven by an overall increase in AA corporate bond yields (used for discounting future liabilities), a reduction in long-term expected price inflation assumption and the payment of deficit reduction contributions. These movements were partially offset by the fall in the value of UKRF's assets and the impact of high recent inflation on the liabilities.

UKRF funding valuations

The latest annual update as at 30 September 2021 showed the funding position had improved to a surplus of £0.6bn from a deficit of £0.9bn shown at 30 September 2020. The improvement was mainly due to £0.7bn of deficit reduction contributions and favourable asset returns, partially offset by higher expected long term price inflation. The deficit recovery plan agreed at the last triennial valuation requires deficit reduction contributions from Barclays Bank PLC of £294m in 2022 and £286m in 2023. The deficit reduction contributions are in addition to the regular contributions to meet the Group's share of the cost of benefits accruing over each year. £147m of the 2022 deficit reduction contributions were paid in April, with the remaining £147m due in September. The next triennial actuarial valuation of the UKRF is due to be completed in 2023 with an effective date of 30 September 2022.

During 2019 and 2020, the UKRF, the Group's main pension scheme, subscribed for non-transferable listed senior fixed rate notes for £1.25bn issued by entities consolidated within the Group under IFRS 10. As a result of these transactions, the CET1 impact of the 2019 and 2020 deficit contributions was deferred until 2023, 2024 and 2025 upon maturity of the notes. Following the PRA's statement on 13 April 2022, Barclays is planning to unwind these transactions and to agree the terms and timing of this unwind with the UKRF Trustee as part of the next triennial actuarial valuation as at 30 September 2022. Upon unwind, this would result in a c.30bps reduction to the CET1 ratio potentially being accelerated to Q4 2022 from 2023, 2024 and 2025.

 

17. Called up share capital


Ordinary share capital

Share premium

Total share capital and share premium

Half year ended 30.06.22

£m

£m

£m

Opening balance as at 1 January

4,188

348

4,536

Issue of shares under employee share schemes

6

27

33

Repurchase of shares

(61)

-

(61)

Closing balance

4,133

375

4,508

Called up share capital comprises 16,531m (December 2021: 16,752m) ordinary shares of 25p each. The decrease is mainly due to the repurchase of 244m shares as part of the £1.0bn share buyback announced in the FY21 results, partially offset by an increase due to the issuance of shares under employee share schemes.

 

18. Other equity instruments


Half year ended 30.06.22

Year ended 31.12.21


£m

£m

Opening balance as at 1 January

12,259

11,172

Issuances

1,247

1,078

Redemptions

(1,132)

-

Securities held by the Group

(17)

9

Closing balance

12,357

12,259

Other equity instruments of £12,357m (December 2021: £12,259m) comprise AT1 securities issued by Barclays PLC. There was one issuance and one redemption in the six months to 30 June 2022.

The AT1 securities are perpetual securities with no fixed maturity and are structured to qualify as AT1 instruments under prevailing capital rules applicable as at the relevant issue date. AT1 securities are undated and are redeemable, at the option of Barclays PLC, in whole on (i) the initial call date, or on any fifth anniversary after the initial call date or (ii) any day falling in a named period ending on the initial reset date, or on any fifth anniversary after the initial reset date. In addition, the AT1 securities are redeemable, at the option of Barclays PLC, in whole in the event of certain changes in the tax or regulatory treatment of the securities. Any redemptions require the prior consent of the PRA.

All Barclays PLC AT1 securities will be converted into ordinary shares of Barclays PLC, at a pre-determined price, should the fully loaded CET1 ratio of the Group fall below 7%.

 

19. Other reserves


As at 30.06.22

As at 31.12.21


£m

£m

Currency translation reserve

4,443

2,740

Fair value through other comprehensive income reserve

(1,081)

(283)

Cash flow hedging reserve

(4,671)

(853)

Own credit reserve

(103)

(960)

Other reserves and treasury shares

1,194

1,126

Total

(218)

1,770

Currency translation reserve

The currency translation reserve represents the cumulative gains and losses on the retranslation of the Group's net investment in foreign operations, net of the effects of hedging.

As at 30 June 2022, there was a credit balance of £4,443m (December 2021: £2,740m credit) in the currency translation reserve. The £1,703m credit movement principally reflects the weakening of GBP against USD during the period.

Fair value through other comprehensive income reserve

The fair value through other comprehensive income reserve represents the changes in the fair value of fair value through other comprehensive income investments since initial recognition.

As at 30 June 2022, there was a debit balance of £1,081m (December 2021: £283m debit) in the fair value through other comprehensive income reserve. The loss of £798m is principally driven by a loss of £1,237m from the decrease in fair value of bonds due to increasing bond yields, £5m of net gains transferred to the income statement and £39m of gains transferred to retained earnings on sale of 7.45% equity stake in Absa Group Limited. This is partially offset by a gain of £153m due to an increase in the Absa Group Limited share price and a tax credit of £326m.

Cash flow hedging reserve

The cash flow hedging reserve represents the cumulative gains and losses on effective cash flow hedging instruments that will be recycled to the income statement when the hedged transactions affect profit or loss.

As at 30 June 2022, there was a debit balance of £4,671m (December 2021: £853m debit) in the cash flow hedging reserve. The decrease of £3,818m principally reflects a £4,747m decrease in the fair value of interest rate swaps held for hedging purposes as major interest rate forward curves increased and £429m of gains transferred to the income statement. This is partially offset by a tax credit of £1,358m.

Own credit reserve

The own credit reserve reflects the cumulative own credit gains and losses on financial liabilities at fair value. Amounts in the own credit reserve are not recycled to profit or loss in future periods.

As at 30 June 2022, there was a debit balance of £103m (December 2021: £960m debit) in the own credit reserve. The movement of £857m principally reflects a £1,258m gain from the widening of Barclays' funding spreads partially offset by a tax charge of £403m.

Other reserves and treasury shares

Other reserves relate to redeemed ordinary and preference shares issued by the Group. Treasury shares relate to Barclays PLC shares held principally in relation to the Group's various share schemes.

As at 30 June 2022, there was a credit balance of £1,194m (December 2021: £1,126m credit) in other reserves and treasury shares. This is driven by an increase of £61m due to the repurchase of 244m shares as part of the £1.0bn share buyback and a £7m increase in the treasury shares balance held in relation to employee share schemes.

 

20. Contingent liabilities and commitments


As at 30.06.22

As at 31.12.21

Contingent liabilities and financial guarantees

£m

£m

Guarantees and letters of credit pledged as collateral security

16,463

15,549

Performance guarantees, acceptances and endorsements

5,877

5,797

Total

22,340

21,346




Commitments



Documentary credits and other short-term trade related transactions

1,888

1,584

Standby facilities, credit lines and other commitments

396,038

344,127

Total

397,926

345,711

Further details on contingent liabilities, where it is not practicable to disclose an estimate of the potential financial effect on Barclays relating to legal and competition and regulatory matters can be found in Note 21.

 

21. Legal, competition and regulatory matters

The Group faces legal, competition and regulatory challenges, many of which are beyond our control. The extent of the impact of these matters cannot always be predicted but may materially impact our operations, financial results, condition and prospects. Matters arising from a set of similar circumstances can give rise to either a contingent liability or a provision, or both, depending on the relevant facts and circumstances.

The recognition of provisions in relation to such matters involves critical accounting estimates and judgments in accordance with the relevant accounting policies applicable to Note 15, Provisions. We have not disclosed an estimate of the potential financial impact or effect on the Group of contingent liabilities where it is not currently practicable to do so. Various matters detailed in this note seek damages of an unspecified amount. While certain matters specify the damages claimed, such claimed amounts do not necessarily reflect the Group's potential financial exposure in respect of those matters.

Matters are ordered under headings corresponding to the financial statements in which they are disclosed.

1. Barclays PLC and Barclays Bank PLC

Investigations into certain advisory services agreements

FCA proceedings

In 2008, Barclays Bank PLC and Qatar Holdings LLC entered into two advisory service agreements (the Agreements). The Financial Conduct Authority (FCA) conducted an investigation into whether the Agreements may have related to Barclays PLC's capital raisings in June and November 2008 (the Capital Raisings) and therefore should have been disclosed in the announcements or public documents relating to the Capital Raisings. In 2013, the FCA issued warning notices (the Notices) finding that Barclays PLC and Barclays Bank PLC acted recklessly and in breach of certain disclosure-related listing rules, and that Barclays PLC was also in breach of Listing Principle 3. The financial penalty provided in the Notices is £50m. Barclays PLC and Barclays Bank PLC continue to contest the findings. Following the conclusion of the Serious Fraud Office (SFO) proceedings against certain former Barclays executives resulting in their acquittals, the FCA proceedings, which were stayed, have resumed. A hearing took place before the Regulatory Decisions Committee in the first quarter of 2022 and a decision is expected in the second half of 2022.

Investigations into LIBOR and other benchmarks and related civil actions

Regulators and law enforcement agencies, including certain competition authorities, from a number of governments have conducted investigations relating to Barclays Bank PLC's involvement in allegedly manipulating certain financial benchmarks, such as LIBOR. Various individuals and corporates in a range of jurisdictions have threatened or brought civil actions against the Group and other banks in relation to the alleged manipulation of LIBOR and/or other benchmarks.

USD LIBOR civil actions

The majority of the USD LIBOR cases, which have been filed in various US jurisdictions, have been consolidated for pre-trial purposes in the US District Court in the Southern District of New York (SDNY). The complaints are substantially similar and allege, among other things, that Barclays PLC, Barclays Bank PLC, Barclays Capital Inc. (BCI) and other financial institutions individually and collectively violated provisions of the US Sherman Antitrust Act (Antitrust Act), the US Commodity Exchange Act (CEA), the US Racketeer Influenced and Corrupt Organizations Act (RICO), the Securities Exchange Act of 1934 and various state laws by manipulating USD LIBOR rates.

Putative class actions and individual actions seek unspecified damages with the exception of one lawsuit, in which the plaintiffs are seeking no less than $100m in actual damages and additional punitive damages against all defendants, including Barclays Bank PLC. Some of the lawsuits also seek trebling of damages under the Antitrust Act and RICO. Barclays Bank PLC has previously settled certain claims. Two class action settlements, where Barclays Bank PLC has respectively paid $7.1m and $20m, have received final court approval. Barclays Bank PLC also settled two further matters for $7.5m, and $1.95m respectively.

Sterling LIBOR civil actions

In 2016, two putative class actions filed in the SDNY against Barclays Bank PLC, BCI and other Sterling LIBOR panel banks alleging, among other things, that the defendants manipulated the Sterling LIBOR rate in violation of the Antitrust Act, CEA and RICO, were consolidated. The defendants' motion to dismiss the claims was granted in 2018. The plaintiffs have appealed the dismissal.

Japanese Yen LIBOR civil actions

In 2012, a putative class action was filed in the SDNY against Barclays Bank PLC and other Japanese Yen LIBOR panel banks by a lead plaintiff involved in exchange-traded derivatives and members of the Japanese Bankers Association's Euroyen Tokyo Interbank Offered Rate (Euroyen TIBOR) panel. The complaint alleges, among other things, manipulation of the Euroyen TIBOR and Yen LIBOR rates and breaches of the CEA and the Antitrust Act. In 2014, the court dismissed the plaintiff's antitrust claims, and, in 2020, the court dismissed the plaintiff's remaining CEA claims. The plaintiff has appealed the lower court's dismissal of such claims.

In 2015, a second putative class action, making similar allegations to the above class action, was filed in the SDNY against Barclays PLC, Barclays Bank PLC and BCI. Barclays and the plaintiffs have reached a settlement of $17.75m for both actions, which is subject to court approval.

SIBOR/SOR civil action

In 2016, a putative class action was filed in the SDNY against Barclays PLC, Barclays Bank PLC, BCI and other defendants, alleging manipulation of the Singapore Interbank Offered Rate (SIBOR) and Singapore Swap Offer Rate (SOR). The plaintiffs and remaining defendants (which includes Barclays Bank PLC) have reached a joint settlement to resolve this matter for $91m, which has received preliminary court approval. A final court approval hearing has been scheduled for November 2022. The financial impact of Barclays' share of the joint settlement is not expected to be material to the Group's operating results, cash flows or financial position.

ICE LIBOR civil actions

In 2019, several putative class actions were filed in the SDNY against a panel of banks, including Barclays PLC, Barclays Bank PLC, BCI, other financial institution defendants and Intercontinental Exchange Inc. and certain of its affiliates (ICE), asserting antitrust claims that defendants manipulated USD LIBOR through defendants' submissions to ICE. These actions have been consolidated. The defendants' motion to dismiss was granted in 2020 and the plaintiffs appealed. In February 2022, the dismissal was affirmed on appeal. The plaintiffs have not sought U.S. Supreme Court review. This matter is now concluded.

In August 2020, an ICE LIBOR-related action was filed by a group of individual plaintiffs in the US District Court for the Northern District of California on behalf of individual borrowers and consumers of loans and credit cards with variable interest rates linked to USD ICE LIBOR. The plaintiffs' motion seeking, among other things, preliminary and permanent injunctions to enjoin the defendants from continuing to set LIBOR or enforce any financial instrument that relies in whole or in part on USD LIBOR was denied. The defendants have moved to dismiss the case.

Non-US benchmarks civil actions

There remains one claim, issued in 2017, against Barclays Bank PLC and other banks in the UK in connection with alleged manipulation of LIBOR. Proceedings have also been brought in a number of other jurisdictions in Europe, Argentina and Israel relating to alleged manipulation of LIBOR and EURIBOR. Additional proceedings in other jurisdictions may be brought in the future.

Credit Default Swap civil action

A putative antitrust class action is pending in New Mexico federal court against Barclays Bank PLC, BCI and various other financial institutions. The plaintiffs, the New Mexico State Investment Council and certain New Mexico pension funds, allege that the defendants conspired to manipulate the benchmark price used to value Credit Default Swap (CDS) contracts at settlement (i.e. the CDS final auction price). The plaintiffs allege violations of US antitrust laws and the CEA, and unjust enrichment under state law. The defendants have moved to dismiss the case.

Foreign Exchange investigations and related civil actions

In 2015, the Group reached settlements totalling approximately $2.38bn with various US federal and state authorities and the FCA in relation to investigations into certain sales and trading practices in the Foreign Exchange market.

The European Commission announced two settlements in May 2019 and the Group paid penalties totalling approximately €210m. In June 2019, the Swiss Competition Commission announced two settlements and the Group paid penalties totalling approximately CHF27m. In December 2021, the European Commission announced a final settlement which required the Group to pay penalties totalling approximately €54m, which amount has been provided for in previous periods. The financial impact of any ongoing investigations is not expected to be material to the Group's operating results, cash flows or financial position.

Various individuals and corporates in a range of jurisdictions have threatened or brought civil actions against the Group and other banks in relation to alleged manipulation of Foreign Exchange markets.

FX opt out civil action

In 2018, Barclays Bank PLC and BCI settled a consolidated action filed in the SDNY, alleging manipulation of Foreign Exchange markets (Consolidated FX Action), for a total amount of $384m. Also in 2018, a group of plaintiffs who opted out of the Consolidated FX Action filed a complaint in the SDNY against Barclays PLC, Barclays Bank PLC, BCI and other defendants. Some of the plaintiffs' claims were dismissed in 2020.

Retail basis civil action

In 2015, a putative class action was filed against several international banks, including Barclays PLC and BCI, on behalf of a proposed class of individuals who exchanged currencies on a retail basis at bank branches (Retail Basis Claims). The SDNY has ruled that the Retail Basis Claims are not covered by the settlement agreement in the Consolidated FX Action. The Court subsequently dismissed all Retail Basis Claims against the Group and all other defendants. The plaintiffs have filed an amended complaint.

Non-US FX civil actions

Legal proceedings have been brought or are threatened against Barclays PLC, Barclays Bank PLC, BCI and Barclays Execution Services Limited (BX) in connection with alleged manipulation of Foreign Exchange in the UK, a number of other jurisdictions in Europe, Israel, Brazil and Australia. Additional proceedings may be brought in the future.

The above-mentioned proceedings include two purported class actions filed against Barclays PLC, Barclays Bank PLC, BX, BCI and other financial institutions in the UK Competition Appeal Tribunal (CAT) in 2019 following the settlements with the European Commission described above. The CAT refused to certify these claims in the first quarter of 2022 although the claimants are seeking permission to appeal. Also in 2019, a separate claim was filed in the UK in the High Court of Justice (High Court), and subsequently transferred to the CAT, by various banks and asset management firms against Barclays Bank PLC and other financial institutions alleging breaches of European and UK competition laws related to FX trading.

Metals related civil actions

A number of US civil complaints, each on behalf of a proposed class of plaintiffs, have been consolidated and transferred to the SDNY. The complaints allege that Barclays Bank PLC and other members of The London Gold Market Fixing Ltd. manipulated the prices of gold and gold derivative contracts in violation of the Antitrust Act and other federal laws. The parties have reached a joint settlement to resolve this matter for $50m, which has received preliminary court approval, with the final court approval hearing scheduled for August 2022. The financial impact of Barclays' share of the joint settlement is not expected to be material to the Group's operating results, cash flows or financial position. A separate US civil complaint by a proposed class of plaintiffs against a number of banks, including Barclays Bank PLC, BCI and BX, alleging manipulation of the price of silver in violation of the CEA, the Antitrust Act and state antitrust and consumer protection laws, has been dismissed as against the Barclays entities. The plaintiffs have the option to seek the court's permission to appeal.

Civil actions have also been filed in Canadian courts against Barclays PLC, Barclays Bank PLC, Barclays Capital Canada Inc. and BCI on behalf of proposed classes of plaintiffs alleging manipulation of gold and silver prices.

US residential mortgage related civil actions

There are two pending US Residential Mortgage-Backed Securities (RMBS) related civil actions arising from unresolved repurchase requests submitted by Trustees for certain RMBS, alleging breaches of various loan-level representations and warranties (R&Ws) made by Barclays Bank PLC and/or a subsidiary acquired in 2007. In one action, the Barclays defendants' motion for summary judgment was granted in June 2022 and the plaintiffs' R&W breach claim was dismissed. The plaintiffs may appeal. The other repurchase action is pending.

Barclays Bank PLC has reached settlements to resolve two other repurchase actions, which have received final court approval. Payment of the settlement amount of one of those repurchase actions was completed in the first quarter of 2022, and the other will be completed in the third quarter of 2022. The financial impact of the settlements is not expected to be material to the Group's operating results, cash flows or financial position.

In 2020, a civil litigation claim was filed in the New Mexico First Judicial District Court by the State of New Mexico against six banks, including BCI, on behalf of two New Mexico state pension funds and the New Mexico State Investment Council relating to legacy RMBS purchases. As to BCI, the complaint alleges that the funds purchased approximately $22m in RMBS underwritten by BCI. The parties have reached a joint settlement to resolve this matter for $32.5m. The settlement was paid in April 2022. The financial impact of BCI's share of the joint settlement is not material to the Group's operating results, cash flows or financial position.

Government and agency securities civil actions

Treasury auction securities civil actions

Consolidated putative class action complaints filed in US federal court against Barclays Bank PLC, BCI and other financial institutions under the Antitrust Act and state common law allege that the defendants (i) conspired to manipulate the US Treasury securities market and/or (ii) conspired to prevent the creation of certain platforms by boycotting or threatening to boycott such trading platforms. The court dismissed the consolidated action in March 2021. The plaintiffs filed an amended complaint. The defendants' motion to dismiss the amended complaint was granted in March 2022. The plaintiffs are appealing this decision.

In addition, certain plaintiffs have filed a related, direct action against BCI and certain other financial institutions, alleging that defendants conspired to fix and manipulate the US Treasury securities market in violation of the Antitrust Act, the CEA and state common law.

Supranational, Sovereign and Agency bonds civil actions

Civil antitrust actions have been filed in the SDNY and Federal Court of Canada in Toronto against Barclays Bank PLC, BCI, BX, Barclays Capital Securities Limited and, with respect to the civil action filed in Canada only, Barclays Capital Canada, Inc. and other financial institutions alleging that the defendants conspired to fix prices and restrain competition in the market for US dollar-denominated Supranational, Sovereign and Agency bonds.

In one of the actions filed in the SDNY, the court granted the defendants' motion to dismiss the plaintiffs' complaint. The dismissal was affirmed on appeal; however, the district court subsequently informed the parties of a potential conflict. The motion to dismiss were assigned to a new district court judge and the plaintiffs have moved to vacate the dismissal order. The plaintiffs have voluntarily dismissed the other SDNY action. In the Federal Court of Canada action, the plaintiffs reached settlements with a small number of banks in 2020 (not including Barclays Capital Canada, Inc.). The plaintiffs have commenced the class certification process. There is no court scheduled deadline and the action remains at an early stage.

Variable Rate Demand Obligations civil actions

Civil actions have been filed against Barclays Bank PLC and BCI and other financial institutions alleging the defendants conspired or colluded to artificially inflate interest rates set for Variable Rate Demand Obligations (VRDOs). VRDOs are municipal bonds with interest rates that reset on a periodic basis, most commonly weekly. Two actions in state court have been filed by private plaintiffs on behalf of the states of Illinois and California. Three putative class action complaints have been consolidated in the SDNY. In the consolidated SDNY class action, certain of the plaintiffs' claims were dismissed in November 2020 and defendants' motion for partial dismissal of the amended consolidated complaint was granted in part and denied in part in June 2022. In the California action, the plaintiffs' claims were dismissed in June 2021. The plaintiffs have appealed the dismissal.

Odd-lot corporate bonds antitrust class action

In 2020, BCI, together with other financial institutions, were named as defendants in a putative class action. The complaint alleges a conspiracy to boycott developing electronic trading platforms for odd-lots and price fixing. The plaintiffs demand unspecified money damages. The defendants' motion to dismiss was granted in 2021 and the plaintiffs have appealed the dismissal. The district court subsequently informed the parties of a potential conflict and the case was reassigned to a new district court judge. The plaintiffs have filed a motion seeking a ruling that would vacate the dismissal and allow the plaintiffs to file an amended complaint if the appeals court remands the case for further proceedings.

Interest rate swap and credit default swap US civil actions

Barclays PLC, Barclays Bank PLC and BCI, together with other financial institutions that act as market makers for interest rate swaps (IRS) are named as defendants in several antitrust class actions which were consolidated in the SDNY in 2016. The complaints allege the defendants conspired to prevent the development of exchanges for IRS and demand unspecified money damages.

In 2018, trueEX LLC filed an antitrust class action in the SDNY against a number of financial institutions including Barclays PLC, Barclays Bank PLC and BCI based on similar allegations with respect to trueEX LLC's development of an IRS platform. In 2017, Tera Group Inc. filed a separate civil antitrust action in the SDNY claiming that certain conduct alleged in the IRS cases also caused the plaintiff to suffer harm with respect to the Credit Default Swaps market. In 2018 and 2019, respectively, the court dismissed certain claims in both cases for unjust enrichment and tortious interference but denied motions to dismiss the federal and state antitrust claims, which remain pending.

BDC Finance L.L.C.

In 2008, BDC Finance L.L.C. (BDC) filed a complaint in the Supreme Court of the State of New York (NY Supreme Court), demanding damages of $298m, alleging that Barclays Bank PLC had breached a contract in connection with a portfolio of total return swaps governed by an ISDA Master Agreement (the Master Agreement). Following a trial, the court ruled in 2018 that Barclays Bank PLC was not a defaulting party, which was affirmed on appeal. In April 2021, the trial court entered judgement in favour of Barclays Bank PLC for $3.3m and as yet to be determined legal fees and costs. BDC appealed. In January 2022, the appellate court reversed the trial court's summary judgment decision in favour of Barclays Bank PLC and remanded the case to the lower court for further proceedings, with the trial scheduled to commence in the fourth quarter of 2022.

In 2011, BDC's investment advisor, BDCM Fund Adviser, L.L.C. and its parent company, Black Diamond Capital Holdings, L.L.C. also sued Barclays Bank PLC and BCI in Connecticut State Court for unspecified damages allegedly resulting from Barclays Bank PLC's conduct relating to the Master Agreement, asserting claims for violation of the Connecticut Unfair Trade Practices Act and tortious interference with business and prospective business relations. This case is currently stayed.

Civil actions in respect of the US Anti-Terrorism Act

There are a number of civil actions, on behalf of more than 4,000 plaintiffs, filed in US federal courts in the US District Court in the Eastern District of New York (EDNY) and SDNY against Barclays Bank PLC and a number of other banks. The complaints generally allege that Barclays Bank PLC and those banks engaged in a conspiracy to facilitate US dollar-denominated transactions for the Iranian Government and various Iranian banks, which in turn funded acts of terrorism that injured or killed the plaintiffs or the plaintiffs' family members. The plaintiffs seek to recover damages for pain, suffering and mental anguish under the provisions of the US Anti-Terrorism Act, which allow for the trebling of any proven damages.

The court granted the defendants' motions to dismiss three out of the six actions in the EDNY. The plaintiffs have appealed in one action. The remaining actions are stayed pending a decision on the appeal. Out of the two actions in the SDNY, the court also granted the defendants' motion to dismiss the first action, which is stayed pending a decision on the EDNY appeal. The second SDNY action is stayed, pending any appeal on the dismissal of the first.

Shareholder derivative action

In November 2020, a purported Barclays shareholder filed a putative derivative action in New York state court against BCI and a number of current and former members of the Board of Directors of Barclays PLC and senior executives or employees of the Group. The shareholder filed the claim on behalf of nominal defendant Barclays PLC, alleging that the individual defendants harmed the company through breaches of their duties, including under the Companies Act 2006. The plaintiff seeks damages on behalf of Barclays PLC for the losses that Barclays PLC allegedly suffered as a result of these alleged breaches. An amended complaint was filed in April 2021, which BCI and certain other defendants moved to dismiss. The motion to dismiss was granted in April 2022. The plaintiffs are appealing the decision.

Derivative transactions civil action

In 2021, Vestia (a Dutch housing association) brought a claim against Barclays Bank PLC in the UK in the High Court in relation to a series of derivative transactions entered into with Barclays Bank PLC between 2008 and 2011, seeking damages of £329m. Barclays Bank PLC is defending the claim and has made a counterclaim.

Timeshare loans, skilled person review, and associated matters

In August 2020, the FCA granted an application by Clydesdale Financial Services Limited (CFS), which trades as Barclays Partner Finance and houses Barclays' point-of-sale finance business, for a validation order with respect to certain loans to customers brokered between April 2014 and April 2016 by Azure Services Limited (ASL), a timeshare operator, which did not, at the point of sale, hold the necessary broker licence.  As a condition to the validation order, the FCA required CFS to undertake a skilled person review of the assessment of affordability processes for the loans brokered by ASL (ASL Loans) as well as CFS' policies and procedures for assessing affordability and oversight of brokers more generally, and dictated a remediation methodology in the event that ASL Loans did not pass the affordability test. CFS voluntarily agreed to remediate the ASL Loans, in accordance with the FCA's methodology and the remediation exercise is substantively complete. The remaining scope of the skilled person review is also complete. The skilled person made a number of observations, some of which were adverse, about both current and historic affordability practices as well as current oversight practices. CFS is not required to conduct a full back book review but, following a review of certain cohorts of loans to determine historic affordability and/or broker oversight practices that may have caused customer harm, where harm is identified, CFS' intention is to remediate. To date CFS has identified a number of areas for remediation but the scoping exercise is ongoing. Separately, and notwithstanding this, CFS decided in March 2022 to extend the proactive remediation of ASL Loans beyond those brokered between April 2014 to April 2016 to include the full portfolio of ASL Loans brokered between 2006 and 2018. In the first quarter of 2022, a customer remediation provision of £181m has been recognised in relation to the remediation of the ASL Loans originated outside the April 2014 to April 2016 period. This provision represents the best estimate as at 30 June 2022. 

CFS continues to review complaints about other legacy partner finance loans, however, it is not currently possible to predict the outcome of this review or the financial impact on the Group.

Over-issuance of securities in the US

Barclays Bank PLC maintains a US shelf registration statement with the Securities and Exchange Commission (SEC) in order to issue securities to US investors. In May 2017, Barclays Bank PLC was the subject of an SEC settlement order as a result of which it lost its status as a "well-known seasoned issuer" (or WKSI) and was required to register a specified amount of securities to be issued under any US shelf registration statements filed with the SEC.

On 10 March 2022, executive management became aware that Barclays Bank PLC had issued securities materially in excess of the set amount under its 2019 US shelf registration statement (2019 F-3) and subsequently became aware that securities had also been issued in excess of the set amount under the predecessor US shelf registration statement (the Predecessor Shelf). The securities that have been over-issued comprise structured notes and exchange traded notes (ETNs). Securities issued in excess of the amount registered are considered to be "unregistered securities" for the purposes of US securities laws, with certain purchasers of those securities having a right to recover, upon the tender of such security to Barclays Bank PLC, the consideration paid for such security with interest, less the amount of any income received, or to recover damages from Barclays Bank PLC if the purchaser no longer owns the security and had sold the security at a loss (the Rescission Price). Barclays Bank PLC is expected to launch a rescission offer on 1 August 2022, by which Barclays Bank PLC will offer to repurchase the relevant affected securities for the rescission price (the Rescission Offer). Although the Rescission Offer is expected to reduce liability with respect to potential private civil claims, it will not necessarily prevent such claims from being asserted against Barclays Bank PLC and/or its affiliates, including claims under applicable US federal securities laws.

Further, the Rescission Offer does not bar the SEC and other regulators from pursuing enforcement actions against Barclays Bank PLC and its affiliates, which are expected to result in fines, penalties and/or other sanctions. The Group is engaged with, and responding to inquiries and requests for information from, various regulators, including the SEC. The SEC's investigation into this matter is at an advanced stage and the Group has had preliminary discussions with the staff of the SEC's Division of Enforcement about resolving this matter.

As at 30 June 2022, Barclays PLC has recognised a balance sheet provision of £1,757m (December 2021: £220m) in relation to this matter, out of which £1,592m (December 2021: £220m) relates to the over-issuance of structured notes and £165m (December 2021: nil) relates to liabilities that could be incurred arising out of ongoing discussions in respect of a potential SEC resolution.

A contingent liability exists in relation to the over-issuance of ETNs due to evidentiary challenges and the high level of trading in the securities. A contingent liability also exists in relation to any potential civil claims or enforcement actions taken against Barclays Bank PLC and/or its affiliates, but Barclays Bank PLC is unable to assess the likelihood of liabilities that may arise out of such claims or actions. Any liabilities, claims or actions in connection with the over-issuance of securities under its 2019 F-3 and the Predecessor Shelf could have an adverse effect on Barclays Bank PLC's and the Group's business, financial condition, results of operations and reputation as a frequent issuer in the securities markets.

Investigation into the use of unapproved communications platforms

In July 2022, Barclays Bank PLC and BCI reached an agreement in principle with the staff of the SEC's Division of Enforcement and the staff of the Commodity Futures Trading Commission (CFTC) in connection with investigations by the SEC and the CFTC of Barclays Bank PLC, BCI and other financial institutions as part of a financial industry sweep regarding compliance with record-keeping obligations in connection with business-related communications sent over unapproved electronic messaging platforms. The SEC and the CFTC found that Barclays Bank PLC and BCI failed to comply with their respective record keeping rules, where such communications were sent or received by employees over electronic messaging channels that had not been approved by the bank for business use by employees. The proposed resolution with the SEC and the CFTC, will include Barclays Bank PLC and BCI paying a combined $125m civil monetary penalty to the SEC and a $75m civil monetary penalty to the CFTC. There will also be non-financial components to the settlements which have yet to be finalised and agreed with the SEC and CFTC. Subject to final agreement of the terms of the settlements and related documentation, as well as the SEC's and CFTC's approval, the civil monetary penalties are expected to be paid during the third quarter of 2022.

2. Barclays PLC, Barclays Bank PLC and Barclays Bank UK PLC

HM Revenue & Customs (HMRC) assessments concerning UK Value Added Tax

In 2018, HMRC issued notices that have the effect of removing certain overseas subsidiaries that have operations in the UK from Barclays' UK VAT group, in which group supplies between members are generally free from VAT. The notices have retrospective effect and correspond to assessments of £181m (inclusive of interest), of which Barclays would expect to attribute an amount of approximately £128m to Barclays Bank UK PLC and £53m to Barclays Bank PLC. HMRC's decision has been appealed to the First Tier Tribunal (Tax Chamber).

Local authority civil actions concerning LIBOR

Following settlement by Barclays Bank PLC of various governmental investigations concerning certain benchmark interest rate submissions referred to above in 'Investigations into LIBOR and other benchmarks and related civil actions', in the UK, certain local authorities brought claims in 2018 against Barclays Bank PLC and Barclays Bank UK PLC asserting that they entered into loans between 2006 and 2008 in reliance on misrepresentations made by Barclays Bank PLC in respect of its conduct in relation to LIBOR. Barclays Bank PLC and Barclays Bank UK PLC were successful in their applications to strike out the claims. The claims have been settled on terms such that the parties have agreed not to pursue these claims further and to bear their own costs. The financial impact of the settlements is not material to the Group's operating results, cash flows or financial position.

3. Barclays PLC

Alternative trading systems

In 2020, a claim was brought against Barclays PLC in the UK in the High Court by various shareholders regarding Barclays PLC's share price based on the allegations contained within a complaint by the New York State Attorney General (NYAG) in 2014. Such claim was settled in 2016, as previously disclosed. The more recent claim seeks unquantified damages and Barclays is defending the claim. The NYAG complaint was filed against Barclays PLC and BCI in the NY Supreme Court alleging, among other things, that Barclays PLC and BCI engaged in fraud and deceptive practices in connection with LX, BCI's SEC-registered alternative trading system.

General

The Group is engaged in various other legal, competition and regulatory matters in the UK, the US and a number of other overseas jurisdictions. It is subject to legal proceedings brought by and against the Group which arise in the ordinary course of business from time to time, including (but not limited to) disputes in relation to contracts, securities, debt collection, consumer credit, fraud, trusts, client assets, competition, data management and protection, intellectual property, money laundering, financial crime, employment, environmental and other statutory and common law issues.

The Group is also subject to enquiries and examinations, requests for information, audits, investigations and legal and other proceedings by regulators, governmental and other public bodies in connection with (but not limited to) consumer protection measures, compliance with legislation and regulation, wholesale trading activity and other areas of banking and business activities in which the Group is or has been engaged. The Group is cooperating with the relevant authorities and keeping all relevant agencies briefed as appropriate in relation to these matters and others described in this note on an ongoing basis.

At the present time, Barclays PLC does not expect the ultimate resolution of any of these other matters to have a material adverse effect on the Group's financial position. However, in light of the uncertainties involved in such matters and the matters specifically described in this note, there can be no assurance that the outcome of a particular matter or matters (including formerly active matters or those matters arising after the date of this note) will not be material to Barclays PLC's results, operations or cash flow for a particular period, depending on, among other things, the amount of the loss resulting from the matter(s) and the amount of profit otherwise reported for the reporting period.

 

22. Related party transactions

Related party transactions in the half year ended 30 June 2022 were similar in nature to those disclosed in the Barclays PLC Annual Report 2021. No related party transactions that have taken place in the half year ended 30 June 2022 have materially affected the financial position or the performance of the Group during this period.

 

23. Interest rate benchmark reform

Following the financial crisis, the reform and replacement of benchmark interest rates such as LIBOR became a priority for global regulators. The FCA and other global regulators instructed market participants to prepare for the cessation of GBP, EUR, CHF, JPY LIBOR and the 1-week and 2-month USD settings of LIBOR after the end of 2021, The remaining USD LIBOR settings are scheduled to cease immediately after 30 June 2023.

How the Group is managing the transition to alternative benchmark rates

Barclays established a Group-wide LIBOR Transition Programme, further detail on the transition programme is available in the Barclays PLC Annual Report 2021 (Page 417). This Programme oversaw transition for GBP, EUR, CHF and JPY LIBOR exposures and continues to work to transition the remaining residual of unremediated exposures off of synthetic rates, in addition to overseeing USD LIBOR transition in preparation for the 30 June 2023 cessation.

The majority of GBP, EUR, CHF and JPY exposures have now transitioned off of LIBOR and good progress has been made with the unremediated exposures reported at year-end 2021. A small residual population of GBP, EUR and JPY contracts remain unremediated at the end of H1 2022. The majority of these have now reset onto GBP and JPY Synthetic LIBOR rates. We continue to work with clients to bilaterally transition these trades and have raised potential risks regarding note holder consent for securitised products and Local Authority consent for Public Finance Initiative (PFI) loan deals with our regulators.

The Barclays Group-wide LIBOR Transition Programme has also commenced focus on the transition of USD LIBOR exposures impacted by the 30 June 2023 cessation timeline. As with GBP, EUR, CHF and JPY LIBOR, USD LIBOR transition approaches will vary by product and nature of counterparty. H122 saw focused efforts to transition uncommitted lending exposure with further wide scale client engagement for other products due to commence in H222. Both active conversion of exposures and inclusion of fallback provisions will be leveraged for bilateral derivative and non-derivatives products. For cleared derivatives, Barclays is working with central clearing counterparties (CCPs) on transition which is expected to follow a market wide, standardised approach to reform similar to the CCP-led conversions in 2021.

The Group met the Q121 Federal Reserve Bank of New York milestone to cease new use of US dollar LIBOR, with limited exceptions. The Group has put in place controls so that any exceptions or exemptions are approved.

 

24. Barclays PLC parent company balance sheet


As at 30.06.22

As at 31.12.21

Assets

£m

£m

Investment in subsidiaries

63,633

62,528

Loans and advances to subsidiaries

20,369

22,072

Financial assets at fair value through the income statement

24,052

25,091

Derivative financial instruments

5

4

Other assets

235

68

Total assets

108,294

109,763




Liabilities



Deposits at amortised cost

545

488

Debt securities in issue

22,389

25,658

Subordinated liabilities

10,070

9,301

Financial liabilities designated at fair value

16,888

16,319

Derivative financial instruments

540

43

Other liabilities

104

117

Total liabilities

50,536

51,926




Equity



Called up share capital

4,133

4,188

Share premium account

375

348

Other equity instruments

12,347

12,241

Other reserves

616

555

Retained earnings

40,287

40,505

Total equity

57,758

57,837




Total liabilities and equity

108,294

109,763

Investment in subsidiaries 

The investment in subsidiaries of £63,633m (December 2021: £62,528m) predominantly relates to investments in the ordinary shares of Barclays Bank PLC of £36,340m (December 2021: £35,590m) and their AT1 securities of £9,849m (December 2021: £9,493m), as well as investments in the ordinary shares of Barclays Bank UK PLC of £14,245m (December 2021: £14,245m) and their AT1 securities of £2,570m (December 2021: £2,570m). Barclays PLC considers the carrying value of its investment in subsidiaries to be fully recoverable.

Loans and advances to subsidiaries

During the period, loans and advances to subsidiaries decreased by £1,703m to £20,369m (December 2021: £22,072m). The decrease was driven by the maturity of £2,296m intragroup loans to Barclays Bank PLC and the maturity of £836m intragroup loans to Barclays Bank UK PLC. There was also a £397m share buyback which took place in Q222. This was partially offset by a foreign exchange impact of £1,326m due to depreciation of GBP against major currencies (although the FX impact is offset across the balance sheet liabilities) and £1,010m dividend receipts from Barclays Bank UK PLC.

Financial assets and liabilities designated at fair value

Financial liabilities designated at fair value of £16,888m (December 2021: £16,319m) comprise material issuances during the period of €2,250m Fixed Rate Resetting Senior Callable Notes and $400m Zero Coupon Callable Notes. The proceeds raised through these transactions were used to invest in subsidiaries of Barclays PLC which are included within the financial assets designated at fair value through the income statement balance of £24,052m (December 2021: £25,091m).

Subordinated liabilities and debt securities in issue

During the period, subordinated liabilities have increased to £10,070m (December 2021: £9,301m) largely driven by foreign exchange impact of £819m due to depreciation of GBP against major currencies. Debt securities in issue of £22,389m (December 2021: £25,658m) have reduced in the year due to the maturity of senior issuances.

Called up share capital and share premium

Called up share capital and share premium of Barclays PLC is £4,508m (December 2021: £4,536m). The decrease in the year is primarily due to 244m shares repurchased with a total nominal value of £61m. This decrease was offset by £33m of shares issued under employee share schemes.

Other equity instruments

Other equity instruments comprises AT1 securities issued by Barclays PLC. The increase in the year of £106m is driven by one issuance (principal amount of £1,250m) and one redemption (principal amount of $1,500m).

Other reserves

As at 30 June 2022, there was a balance of £616m (December 2021: £555m) in other reserves. The increase is due to the repurchase of shares as part of the share buyback.

 

Management of internal investments, loans and advances

Barclays PLC retains the discretion to manage the nature of its internal investments in subsidiaries according to their regulatory and business needs. Barclays PLC may invest capital and funding into Barclays Bank PLC, Barclays Bank UK PLC and other Group subsidiaries such as Barclays Execution Services Limited and the US Intermediate Holding Company (IHC).

 

Appendix: Non-IFRS Performance Measures

 

The Group's management believes that the non-IFRS performance measures included in this document provide valuable information to the readers of the financial statements as they enable the reader to identify a more consistent basis for comparing the businesses' performance between financial periods, and provide more detail concerning the elements of performance which the managers of these businesses are most directly able to influence or are relevant for an assessment of the Group. They also reflect an important aspect of the way in which operating targets are defined and performance is monitored by management.

However, any non-IFRS performance measures in this document are not a substitute for IFRS measures and readers should consider the IFRS measures as well.

Non-IFRS performance measures glossary

Measure

Definition

Loan: deposit ratio

Loans and advances at amortised cost divided by deposits at amortised cost. The components of the calculation have been included on the page 52.

Period end allocated tangible equity

Allocated tangible equity is calculated as 13.5% (2021: 13.5%) of RWAs for each business, adjusted for capital deductions, excluding goodwill and intangible assets, reflecting the assumptions the Group uses for capital planning purposes. Head Office allocated tangible equity represents the difference between the Group's tangible shareholders' equity and the amounts allocated to businesses.

Average tangible shareholders' equity

Calculated as the average of the previous month's period end tangible equity and the current month's period end tangible equity. The average tangible shareholders' equity for the period is the average of the monthly averages within that period.

Average allocated tangible equity

Calculated as the average of the previous month's period end allocated tangible equity and the current month's period end allocated tangible equity. The average allocated tangible equity for the period is the average of the monthly averages within that period.

Return on average tangible shareholders' equity

Annualised profit after tax attributable to ordinary equity holders of the parent, as a proportion of average shareholders' equity excluding non-controlling interests and other equity instruments adjusted for the deduction of intangible assets and goodwill. The components of the calculation have been included on pages 116 to 120.

Return on average allocated tangible equity

Annualised profit after tax attributable to ordinary equity holders of the parent, as a proportion of average allocated tangible equity. The components of the calculation have been included on pages 116 to 122.

Cost: income ratio

Total operating expenses divided by total income.

Loan loss rate

Quoted in basis points and represents total annualised impairment charges divided by gross loans and advances held at amortised cost at the balance sheet date. The components of the calculation have been included on page 33. Quoted as zero when credit impairment is a net release.

Net interest margin

Annualised net interest income divided by the sum of average customer assets. The components of the calculation have been included on page 29.

Tangible net asset value per share

Calculated by dividing shareholders' equity, excluding non-controlling interests and other equity instruments, less goodwill and intangible assets, by the number of issued ordinary shares. The components of the calculation have been included on page 123.

 

 

Returns

Return on average tangible equity is calculated as profit after tax attributable to ordinary equity holders of the parent as a proportion of average tangible equity, excluding non-controlling and other equity interests for businesses. Allocated tangible equity has been calculated as 13.5% (2021: 13.5%) of RWAs for each business, adjusted for capital deductions, excluding goodwill and intangible assets, reflecting the assumptions the Group uses for capital planning purposes. Head Office average allocated tangible equity represents the difference between the Group's average tangible shareholders' equity and the amounts allocated to businesses.


Profit/(loss) attributable to ordinary equity holders of the parent


Average tangible equity


Return on average tangible equity

Half year ended 30.06.22

£m


£bn


%

Barclays UK

854


10.0


17.0

  Corporate and Investment Bank

1,895


31.8


11.9

  Consumer, Cards and Payments

188


4.4


8.5

Barclays International

2,083


36.2


11.5

Head Office

(462)


2.7


n/m

Barclays Group

2,475


48.9


10.1







Half year ended 30.06.211






Barclays UK

1,019


9.9


20.6

  Corporate and Investment Bank

2,252


28.3


15.9

  Consumer, Cards and Payments

386


4.0


19.1

Barclays International

2,638


32.3


16.3

Head Office

95


4.3


n/m

Barclays Group

3,752


46.5


16.1

 

1  2021 financial metrics have been restated to reflect the impact of the Over-issuance of Securities. See Restatement of financial statements (Note 1) on page 87 for more information.

 









Half year ended 30.06.22


Barclays UK

Corporate and Investment Bank

Consumer, Cards and Payments

Barclays International

Head Office

Barclays Group

Return on average tangible shareholders' equity

£m

£m

£m

£m

£m

£m

Attributable profit/(loss)

854

1,895

188

2,083

(462)

2,475









£bn

£bn

£bn

£bn

£bn

£bn

Average shareholders' equity

13.6

31.8

5.3

37.1

6.3

57.0

Average goodwill and intangibles

(3.6)

-

(0.9)

(0.9)

(3.6)

(8.1)

Average tangible shareholders' equity

10.0

31.8

4.4

36.2

2.7

48.9








Return on average tangible shareholders' equity

17.0%

11.9%

8.5%

11.5%

n/m

10.1%

 


Half year ended 30.06.211


Barclays UK

Corporate and Investment Bank

Consumer, Cards and Payments

Barclays International

Head Office

Barclays Group

Return on average tangible shareholders' equity

£m

£m

£m

£m

£m

£m

Attributable profit

1,019

2,252

386

2,638

95

3,752









£bn

£bn

£bn

£bn

£bn

£bn

Average shareholders' equity

13.5

28.3

4.6

32.9

8.0

54.4

Average goodwill and intangibles

(3.6)

-

(0.6)

(0.6)

(3.7)

(7.9)

Average tangible shareholders' equity

9.9

28.3

4.0

32.3

4.3

46.5








Return on average tangible shareholders' equity

20.6%

15.9%

19.1%

16.3%

n/m

16.1%

 

Performance measures excluding the Over-issuance of Securities

Profit attributable to ordinary equity holders of the parent






Half year ended 30.06.22   £m

Attributable profit






2,475

Post-tax impact of the Over-issuance of Securities






581

Profit attributable to ordinary equity holders of the parent excluding the Over-issuance of Securities






3,056








Return on average tangible shareholders' equity






£bn

Average tangible shareholders' equity






48.9








Return on average tangible shareholders' equity excluding the Over-issuance of Securities






  12.5 %

 

1.  2021 financial metrics have been restated to reflect the impact of the Over-issuance of Securities. See Restatement of financial statements (Note 1) on page 87 for more information.

 

Barclays Group











Return on average tangible shareholders' equity

Q222

Q122


Q4211

Q3211

Q2211

Q121


Q420

Q320

£m

£m


£m

£m

£m

£m


£m

£m

Attributable profit

1,071

1,404


1,079

1,374

2,048

1,704


220

611













£bn

£bn


£bn

£bn

£bn

£bn


£bn

£bn

Average shareholders' equity

57.1

56.9


56.1

56.5

54.4

54.4


55.7

56.4

Average goodwill and intangibles

(8.1)

(8.1)


(8.1)

(8.2)

(7.9)

(7.9)


(8.1)

(8.1)

Average tangible shareholders' equity

49.0

48.8


48.0

48.3

46.5

46.5


47.6

48.3












Return on average tangible shareholders' equity

8.7%

11.5%


9.0%

11.4%

17.6%

14.7%


1.8%

5.1%

 

 

Barclays UK











Return on average allocated tangible equity

Q222

Q122


Q421

Q321

Q221

Q121


Q420

Q320

£m

£m


£m

£m

£m

£m


£m

£m

Attributable profit

458

396


420

317

721

298


160

113













£bn

£bn


£bn

£bn

£bn

£bn


£bn

£bn

Average allocated equity

13.6

13.7


13.6

13.6

13.5

13.5


13.4

13.7

Average goodwill and intangibles

(3.6)

(3.6)


(3.6)

(3.6)

(3.6)

(3.6)


(3.6)

(3.6)

Average allocated tangible equity

10.0

10.1


10.0

10.0

9.9

9.9


9.8

10.1












Return on average allocated tangible equity

18.4%

15.6%


16.8%

12.7%

29.1%

12.0%


6.5%

4.5%

 

1.  2021 financial metrics have been restated to reflect the impact of the Over-issuance of Securities. See Restatement of financial statements (Note 1) on page 87 for more information.

 

Barclays International











Return on average allocated tangible equity

Q222

Q122


Q4211

Q3211

Q2211

Q121


Q420

Q320

£m

£m


£m

£m

£m

£m


£m

£m

Attributable profit

783

1,300


818

1,191

1,207

1,431


441

782













£bn

£bn


£bn

£bn

£bn

£bn


£bn

£bn

Average allocated equity

38.2

36.0


33.8

32.7

33.0

32.8


31.1

31.2

Average goodwill and intangibles

(0.9)

(0.9)


(0.9)

(0.9)

(0.6)

(0.5)


(0.6)

(0.6)

Average allocated tangible equity

37.3

35.1


32.9

31.8

32.4

32.3


30.5

30.6












Return on average allocated tangible equity

8.4%

14.8%


9.9%

14.9%

14.9%

17.7%


5.8%

10.2%












 

 

 

Corporate and Investment Bank










Return on average allocated tangible equity

Q222

Q122


Q4211

Q3211

Q2211

Q121


Q420

Q320

£m

£m


£m

£m

£m

£m


£m

£m

Attributable profit

579

1,316


695

1,085

989

1,263


413

627













£bn

£bn


£bn

£bn

£bn

£bn


£bn

£bn

Average allocated equity

32.7

30.8


28.7

27.8

28.4

28.2


26.3

26.4

Average goodwill and intangibles

-

-


-

-

-

-


-

-

Average allocated tangible equity

32.7

30.8


28.7

27.8

28.4

28.2


26.3

26.4












Return on average allocated tangible equity

7.1%

17.1%


9.7%

15.6%

14.0%

17.9%


6.3%

9.5%

 

Consumer, Cards and Payments










Return on average allocated tangible equity

Q222

Q122


Q421

Q321

Q221

Q121


Q420

Q320

£m

£m


£m

£m

£m

£m


£m

£m

Attributable profit/(loss)

204

(16)


123

106

218

168


28

155













£bn

£bn


£bn

£bn

£bn

£bn


£bn

£bn

Average allocated equity

5.5

5.2


5.1

4.9

4.6

4.6


4.8

4.8

Average goodwill and intangibles

(0.9)

(0.9)


(0.9)

(0.9)

(0.6)

(0.5)


(0.6)

(0.6)

Average allocated tangible equity

4.6

4.3


4.2

4.0

4.0

4.1


4.2

4.2












Return on average allocated tangible equity

17.8%

(1.5)%


11.7%

10.5%

21.8%

16.5%


2.7%

14.7%

 

1.  2021 financial metrics have been restated to reflect the impact of the Over-issuance of Securities. See Restatement of financial statements (Note 1) on page 87 for more information.

 

Tangible net asset value per share

As at 30.06.22

Restated1

As at 31.12.21

Restated1

As at 30.06.21


£m

£m

£m

Total equity excluding non-controlling interests

69,627

69,052

66,992

Other equity instruments

(12,357)

(12,259)

(11,167)

Goodwill and intangibles

(8,245)

(8,061)

(8,196)

Tangible shareholders' equity attributable to ordinary shareholders of the parent

49,025

48,732

47,629






m

m

m

Shares in issue

16,531

16,752

16,998






p

p

p

Tangible net asset value per share

297

291

280

 

1.  2021 financial metrics have been restated to reflect the impact of the Over-issuance of Securities. See Restatement of financial statements (Note 1) on page 87 for more information.

 

 

 

Shareholder Information

 








Results timetable1



Date




Ex-dividend date



11 August 2022

Dividend record date



12 August 2022

Cut off time of 5:00pm (UK time) for the receipt of Dividend Re-investment Programme (DRIP) Application Form Mandate


26 August 2022

Dividend payment date



16 September 2022

Q322 Results Announcement



26 October 2022








For qualifying US and Canadian resident ADR holders, the half year dividend of 2.25p per ordinary share becomes 9.0p per ADS (representing four shares). The ex-dividend, dividend record and dividend payment dates for ADR holders are as shown above











% Change3

Exchange rates2

30.06.22

31.12.21

30.06.21


31.12.21

30.06.21

Period end - USD/GBP

1.22

1.35

1.38


(10)%

(12)%

6 month average - USD/GBP

1.30

1.36

1.39


(4)%

(6)%

3 month average - USD/GBP

1.26

1.35

1.40


(7)%

(10)%

Period end - EUR/GBP

1.16

1.19

1.17


(3)%

(1)%

6 month average - EUR/GBP

1.19

1.17

1.15


2%

3%

3 month average - EUR/GBP

1.18

1.18

1.16


-

2%








Share price data







Barclays PLC (p)

153.12

187.00

171.12




Barclays PLC number of shares (m)4

16,531

16,752

16,998


















For further information please contact














Investor relations

Media relations

Chris Manners +44 (0) 20 7773 2136

Tom Hoskin +44 (0) 20 7116 4755















More information on Barclays can be found on our website: home.barclays












Registered office







1 Churchill Place, London, E14 5HP, United Kingdom. Tel: +44 (0) 20 7116 1000. Company number: 48839.









Registrar







Equiniti, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, United Kingdom.


Tel: 0371 384 20555 from the UK or +44 121 415 7004 from overseas.









American Depositary Receipts (ADRs)







EQ Shareowner Services

P.O. Box 64854

St. Paul, MN 55164-0854

United States of America

shareowneronline.com






Toll Free Number: +1 800-990-1135







Outside the US  +1 651-453-2128














Delivery of ADR certificates and overnight mail







EQ Shareowner Services, 1110 Centre Pointe Curve, Suite 101, Mendota Heights, MN 55120-4100, USA.

1  Note that this date is provisional and subject to change.

2  The average rates shown above are derived from daily spot rates during the year.

3  The change is the impact to GBP reported information.

4  The number of shares of 16,531m is different from the 16,509m quoted in the 1 July 2022 RNS because the share buyback transactions executed on the 29 and 30 June 2022 did not settle until 1 July 2022 and 4 July 2022. 

5  Lines open 8.30am to 5.30pm (UK time), Monday to Friday, excluding UK public holidays in England and Wales.

 

 

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