Barclays Q4 2024 Earnings Report

Barclays EPS Results

• Actual EPS: $0.34
• Consensus EPS: $0.19
• Beat/Miss: Beat by +$0.15
• One Year Ago EPS: N/A

Barclays Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $7.27 billion
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Barclays Announcement Details

• Quarter: Q4 2024
• Date: 2/18/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, February 13, 2025
• Conference Call Time: 4:30AM ET

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

Barclays Q4 2024 Earnings Call Transcript

Presentation

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

Good morning. It's good to see you all this year. Thank you for coming. And welcome to the our first, our full year 2024 results and progress update presentation. You can see the agenda for the morning on this slide.

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

We'll go straight into results before turning to review progress in the first year of our three year plan. And as usual, there will be an opportunity for those in the room to ask questions at the end. Note, we also include an update on key operational developments for each of our five divisions as an annex to today's presentation. We won't talk to these slides, but have included them in the spirit of transparency and to help you understand how we are delivering our plan. So let me start with some performance highlights before handing over to Anna to take you through the financials.

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

At our investor update last February, we set out a three year plan to deliver a better run, more strongly performing and higher returning Barclays. I'm encouraged by the progress which we have made during the first year. We are executing the plan in a disciplined way and have achieved all of our financial targets for 2024. And we are on track to achieve our 2026 targets. Last year, we delivered a return on tangible equity of 10.5%, in line with our target greater than 10%.

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

We also announced billion of capital distributions, an important step towards our target to distribute at least billion to shareholders by 2026. This includes billion of dividends, enabling a 5% increase in our dividends per share to 8.4p. And also billion in buybacks, billion of which was announced today and which we expect to initiate in the coming days. We have made progress on deploying billion of additional RWAs in our highest returning UK businesses, while keeping investment banking RWAs broadly stable. This has resulted in the Investment Bank falling from 58% to 56% of the group's RWAs on its way to our 2026 target of circa 50%.

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

And we remain well capitalized, ending the year with a CET1 ratio of 13.6% within our range of 13% to 14%. We are improving the quality of our income and the stability and durability of our returns. And we are making progress towards our approximately billion income target in 2026. Our top line grew by billion or 6% year on year during 2024, and we achieved our NII targets for the group and for Barclays U. K.

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

Our structural hedge provides a predictable and highly visible source of net interest income growth over several years. And our cost to income ratio for the full year, 24%, was 62%, better than our guidance of circa 63%. Our credit performance was also strong, particularly in The UK, with a group loan loss rate of 46 basis points for the year, below our through the cycle 50 to 60 basis points target range. Across Barclays, we are focused on execution. We delivered million of gross efficiency, cost efficiency savings in the fourth quarter, enabling us to achieve our billion target for all of 2024.

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

We remain focused on improving our operational and financial performance across each of our five divisions. Anna will review our financial performance by division shortly, but let me first cover a few highlights. Barclays U. K. Delivered a return on tangible equity of 23% for the year.

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

And on the November 1, we completed the acquisition of Tesco Bank. Through this acquisition, we have gained a strategic relationship with The U. K. Largest retailer, supporting growth in our home market. We plan to leverage our expertise in partnership credit cards developed over years and decades in The U.

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

S. To drive further growth and customer engagement. Across the rest of Barclays UK, deposit balances have continued to stabilize and lending trends are encouraging, resulting in organic balance sheet growth in the fourth quarter. UK corporate and the private bank and wealth management divisions also group's balance sheet expansion. In the investment bank, our objective is to improve returns by regaining market share and improving our RWA productivity and cost efficiency.

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

I'm broadly satisfied with how we have fared against these metrics. And of course, I expect further significant progress in each of the next two years in order to deliver our targets. The 8.5% ROTE for the investment bank in 2024 is up 1.5% year on year, and it's a good step on our journey to deliver returns in line with the group by 2026. And we expect the investment bank to deliver further progress on ROTE in the year ahead. Returns in The U.

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

S. Consumer Bank improved to 9% from 4% as impairment charges normalized as expected and as we proactively improved our operational performance. We've also made good progress to simplify the bank by divesting the non strategic businesses that we outlined at our investor update. This included the Italian mortgage portfolios in 2024 and the German consumer finance business completed last month. Before I hand over to Anna, I would like to make two broad points.

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

The first is about the composition and quality of our businesses and of our results. As I hope you see in our 2024 outcomes and in our 2025 outlook, we are aiming to construct a bank with a good mix of businesses, which perform well individually and collectively. We aim to achieve a healthy balance between consumer and wholesale activities, a sound revenue weighting among fees, interest and transactions and a geographical mix, which takes advantage of the full scope of our presence in The UK, the depth and breadth of our business in The U. S. And from both those locations, bridges to the important financial centers of the world.

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

Through this, we aim to deliver robust and reliable performance across interest rate and credit cycles. That is the objective of the business strategy which we presented last year and which we continue to prosecute. My second broad point is that while Anna and I have the honor to present our results, this performance has been generated by over 90,000 colleagues at Barclays. They have helped implement this strategy so far, and they are core to our achieving success over the next two years. And to further align their efforts with our shareholders' interests, our colleagues should be able to participate in the ultimate outcome of their work, which is the change in our share price.

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

Therefore, we are announcing today a share grant of approximately million each for the vast majority of our colleagues. Essentially all employees across all locations outside of managing directors and what we call material risk takers. I have long felt that this kind of alignment between shareholders and employees through broad based equity participation strengthens business outcomes. In The UK, sadly, broad based equity ownership has been declining. This represents our effort towards arresting and correcting this trend.

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

So with that, I'll hand over to Anna.

[Anna Cross, Group Finance Director at Barclays]

Thank you, Venkat, and good morning, everyone. Slide six summarizes our financial highlights for the fourth quarter and full year. Profit before tax was 8,100,000,000.0 and was up 24%. This included a Q4 profit before tax of 1,700,000,000.0, up from 100,000,000.0. Before going into the detail, as always, I would note that our results are affected by FX rates.

[Anna Cross, Group Finance Director at Barclays]

The year on year performance in Q4 was impacted by a weaker U. S. Dollars, which decreased our reported income, costs and impairments. Conversely, the dollar strengthened from Q3 to Q4. And I'll call out these effects where appropriate.

[Anna Cross, Group Finance Director at Barclays]

Group statutory ROTE was 10.5% for 2024 versus our target of greater than 10%. This was against the previous year's ROTE of 9%, which was impacted by $900,000,000 of structural cost actions in Q4. Much of the improvement in ROTI reflected higher income, particularly in the investment bank, Barclays UK and private bank and wealth management. This improvement occurred even as we grew tangible book value per share by 26p during the year to $3.57 pence. Throughout the year, as you know, I've been looking for four things in in our performance: income stability, cost discipline and progress on efficiency savings, credit performance and a robust capital position.

[Anna Cross, Group Finance Director at Barclays]

We delivered on all four. I'll now cover these in more detail starting with income on Slide eight. Our income growth continues to be supported by the structural hedge and is now complemented by balance sheet growth. Income in the investment bank, while seasonally lower in Q4, benefited from the execution of our initiatives to improve productivity and an increase in the industry wallet. Together, this resulted in a 6% increase in total group income for the year to €26,800,000,000 Excluding FX, income was up 7% year on year.

[Anna Cross, Group Finance Director at Barclays]

More stable income streams from retail, corporate and financing grew 3% year on year and together contributed 74% of group income. Turning to NII. Our group net interest income increased for the third consecutive year by 3% in FY 2024 to 11,300,000,000.0. Excluding Tesco, group NII increased 2% to 11,200,000,000.0, and within this, Barclays U. K.

[Anna Cross, Group Finance Director at Barclays]

Rose 1% to CHF 6,500,000,000.0. Both were in line with our guidance at Q3 and more favorable than our February guidance. This reflected the benefit of higher than expected interest rates and faster deposit stabilization on our NII, including as a result of higher reinvestment income from the structural hedge. The structural hedge is designed to reduce income volatility and manage interest rate risk. The high proportion of balances hedged reduces our sensitivity to the short term effect of rate cuts.

[Anna Cross, Group Finance Director at Barclays]

NII from the hedge increased 1,100,000,000 during the year to 4,700,000,000.0. Income provided by the hedge is significant and predictable. We've now locked in 9,100,000,000.0 of gross income over the next two years, up from 7,800,000,000.0 at Q3 and 4,800,000,000.0 a year ago. This income will continue to build as we reinvest maturing assets at higher yields. As consumer deposit behavior has stabilized, the average duration of the hedge has increased modestly to around three years.

[Anna Cross, Group Finance Director at Barclays]

Moving on to costs. We achieved a cost income ratio of 62% for the year, below our circa 63% target. This included a $90,000,000 motor finance provision in Q4. In line with our plan, we delivered $1,000,000,000 of gross efficiency savings during the year, including $300,000,000 during Q4. These savings created capacity for investments and business growth.

[Anna Cross, Group Finance Director at Barclays]

We also took proactive steps to accelerate structural cost actions in a number of our divisions given the strong performance in the year, whilst importantly still delivering on our cost income ratio target. The costs of these measures, which will support our future returns and efficiency, came to 110,000,000 in the quarter or million in total for 2024, well within our normal annual range. Turning now to impairment. The Q4 sorry, the FY twenty twenty four impairment charge of 2,000,000,000 equated to a loan loss rate of 46 basis points. This included a day one charge for Tesco Bank of $2.00 9,000,000, where accounting rules require balances to be brought onto our books at stage one.

[Anna Cross, Group Finance Director at Barclays]

The UK credit picture remains benign with low and stable delinquencies in our consumer books and wholesale loan loss rates below our through the cycle expectations. Specifically, the Barclays U. K. Charge was $365,000,000, including day one effects from Tesco, resulting in a loan loss rate of 16 basis points for 2024. The U.

[Anna Cross, Group Finance Director at Barclays]

S. Consumer Bank impairment charge was down 10% year on year at billion. Delinquencies in USCB are developing in line with our expectations with thirty and ninety day delinquencies stable. As guided, impairment charges in this business were lower in 2024 versus the prior year, and H2 was also lower than H1. Coverage ratios remain strong.

[Anna Cross, Group Finance Director at Barclays]

Looking ahead, we expect the loan loss rate in FY 2025 to be similar to 2024. This includes the lagged effect of higher delinquencies in the past twelve to eighteen months and the anticipated day one effect of bringing the General Motors partnership on board in Q3 'twenty five. I would also note that loan loss rates tend to be seasonally higher in Q1 given holiday spend in Q4. Turning now to our U. K.

[Anna Cross, Group Finance Director at Barclays]

Growth. This slide summarizes key aspects of our organic growth. Gross mortgage lending strengthened throughout the year, supported by a more active property market and higher loan to value lending. 15% of our mortgage lending was to higher LTV borrowers, up from 9% in 2023. We acquired 1,000,000 new Barclaycard customers, up 58% year on year as part of our strategy to regain market share in unsecured lending.

[Anna Cross, Group Finance Director at Barclays]

And in the corporate bank, we deployed around 3,000,000,000 of RWAs by extending client lending facilities to support future lending growth. Clients have now started to draw down on these facilities, reflected in around SEK1 billion of net U. K. Corporate loan growth in Q4. Turning now to Barclays U.

[Anna Cross, Group Finance Director at Barclays]

K. You can see financial highlights on Slide 15, but I will talk to Slide 16. The acquisition of Tesco Bank in November complicates comparisons for Q4, so let me start by unpacking the moving parts. First, there was a gain on acquisition of 600,000,000.0 and a day one impairment charge of 200,000,000.0. Together, these created a one off benefit to Barclays U.

[Anna Cross, Group Finance Director at Barclays]

K. Statutory ROTE, which was 28% in the quarter. Excluding these day one effects, Barclays U. K. ROTE was 19.1%.

[Anna Cross, Group Finance Director at Barclays]

Second, comparisons are affected by the inclusion of Tesco Bank's underlying earnings for two months since November. This included 101,000,000 of NII and around 60,000,000 of costs, in line with our guidance for 30,000,000 run rate costs per month. We continue to expect circa 400,000,000 of NII from Tesco in twenty twenty four twenty twenty five. Whilst the Q4 run rate exceeded this level, we expect this to normalize in future quarters. The inclusion of higher NIM balances from Tesco also explains around 11 of the 19 basis points increase in BUK NIM versus Q3.

[Anna Cross, Group Finance Director at Barclays]

Excluding Tesco Bank, Barclays NII increased 48,000,000 Q on Q. This reflected continued structural hedge momentum and a tailwind from balance sheet growth, partially offset by product repricing lags. Non NII was $244,000,000 in Q4. The decline versus Q3 reflects the one off effect of the Q4 securitization that we previously highlighted. Going forward, we continue to expect a run rate above $250,000,000 per quarter.

[Anna Cross, Group Finance Director at Barclays]

Q4 costs total costs increased by $2.00 9,000,000 versus Q3 to 1,200,000,000.0. This included around 60,000,000 for Tesco Bank and a 36,000,000 bank levy. The remaining increase reflected investment to support growth and structural cost actions. Moving on to the Barclays U. K.

[Anna Cross, Group Finance Director at Barclays]

Balance sheet. In Q4, both loans and deposits grew organically. The acquisition of Tesco Bank added a further 8,000,000,000 of loans and 7,000,000,000 of deposits. On an organic basis, deposit balances grew by circa 1,000,000,000. Flows into savings accounts and current accounts were particularly strong ahead of The UK budget in October, and customers have so far retained this liquidity.

[Anna Cross, Group Finance Director at Barclays]

Looking ahead, tax payments during Q1 typically lead to a seasonal reduction in customer deposit balances. And as I discussed earlier, stronger activity in mortgages and Barclaycard led to a 1,000,000,000 increase in Q4 lending before the effect of our securitization in the quarter. Moving on to the UK Corporate Bank. UK Corporate Bank delivered a Q4 royalty of 12.3%. NII was up 31% year on year, reflecting deposit income growth and the non repeat of adverse liquidity pool income in the prior year.

[Anna Cross, Group Finance Director at Barclays]

Non NII was down 9% year on year and broadly flat to Q3. Whilst this line can be volatile, we expect investments in our digital and lending propositions to drive non NII growth over time. Investments to support this growth and to drive greater efficiency led to a 10% year on year increase in costs, excluding the structural cost actions we took in Q4 'twenty three. And our full year loan loss rate of 29 basis points was within our through the cycle guidance of circa 35 basis points. Turning now to Private Bank and Wealth Management.

[Anna Cross, Group Finance Director at Barclays]

Q4 ROTEY was 23.9%. Client assets and liabilities grew billion versus Q3 and billion versus the prior year. We also attracted net new assets under management of billion in Q4 and billion billion for the year. This is a new metric that we will disclose going forward. This growth in volumes as well as higher transactional activity led to a 12% year on year increase in income.

[Anna Cross, Group Finance Director at Barclays]

Excluding Q4 twenty twenty three structural cost actions, costs were up 15% year on year as we took further actions this quarter to optimize headcount and drive business growth. As you heard at our deep dive in December, we will continue to prioritize investment in this business. Turning now to the investment bank. The Q4 ROTI was seasonally low at 3.4% with a full year ROTE of 8.5%, both ahead of the prior year. Q4 total income was up 28% year on year, while total costs rose 11%, excluding the Q4 structural cost actions.

[Anna Cross, Group Finance Director at Barclays]

This was the third consecutive quarter of positive jaws. Adjusted for FX, total income was up 31% year on year and costs were up 12% year on year, excluding structural cost actions in the prior year. Part of the increase in our Q4 costs reflected actions we took to improve future efficiency. Period end RWAs of 199,000,000,000 were 5,000,000,000 higher versus Q3 with FX accounting for 6,000,000,000 of the increase. Now looking at the Q4 income in more detail.

[Anna Cross, Group Finance Director at Barclays]

Using the U. S. Dollar figures as usual to help comparison to U. S. Peers, markets income was up 36% year on year.

[Anna Cross, Group Finance Director at Barclays]

Macroeconomic conditions supported a 32% increase in FICC income, driven by financing, credit, rates and FX. Equities income was up 44% aided by strong performance across cash, prime and derivatives. Investment banking fees rose 22%. For FY 2024 as a whole, our share of banking fees increased by 30 basis points to 3.3%, but we have more work to do to build on this improvement. Within Q4, our ECM performance was strong with income up 160% year on year.

[Anna Cross, Group Finance Director at Barclays]

Advisory fees were also up 12% with good momentum and a robust pipeline headed into 2025. Whilst DCM was up 10% year on year, our performance was mixed. In leveraged finance, we increased market share by 70 basis points to 4.7% in a strong market. This was offset by softer performance in investment grade, particularly in Q4 with a strong Asian wallet, which we did not participate in given our limited presence in the region. In addition, we were less active in event financing in the quarter, and this represents an opportunity as we further improve our advisory capabilities.

[Anna Cross, Group Finance Director at Barclays]

Importantly, we saw progress in areas of the investment bank that inherently have more stable revenues. Financing income was up 34%, reflecting a strong increase in client balances, and international corporate bank income was up 22%. U. S. Deposit balances grew by circa 90% year on year, which we see as a lead indicator of income growth.

[Anna Cross, Group Finance Director at Barclays]

U. S. Consumer bank ROTE was 11.2% in the quarter. The improvement versus the prior year reflected lower impairment charges following the reserve build in H2 twenty three. Income was down 1% year on year or up 1% excluding FX.

[Anna Cross, Group Finance Director at Barclays]

This reflected a $900,000,000 increase in card balances to $33,100,000,000 on a reported basis. From Q3 to Q4, NII increased 5%, supported by seasonally stronger balances, which also grew 5%. NIM rose 28 basis points, partly reflecting the lagged benefit of our repricing actions earlier in the year. The successful launch of our new tier retail savings product in Q3 led to a 17% year on year growth in retail deposit funding with a $2,000,000,000 increase in Q4. The proportion of core deposits rose 1% year on year to 64%, reflecting wholesale funding raised during Q4 to meet seasonal asset growth.

[Anna Cross, Group Finance Director at Barclays]

As seasonal spending eases, we should see a further increase in our share of funding from core deposits towards our target of 75 in 2026. Excluding Q4 twenty twenty three structural cost actions, total costs were up 8% as we continue to invest in the growth of the business, driving a cost to income ratio of 51%. Moving to capital. We ended the year with a CET1 ratio of 13.6%. This included around 140 basis points of capital generation from profits, excluding the day one P and L benefit of the Tesco Bank acquisition.

[Anna Cross, Group Finance Director at Barclays]

We previously highlighted two inorganic transactions that would impact capital in the near term, both of which have now completed. The first was the circa 20 basis points of capital consumption from the acquisition of Tesco Bank in Q4. The second is the circa 10 basis points accretion from the sale of the German consumer finance business, which was completed last month and will benefit the CET1 ratio in Q1 twenty twenty five. The billion share buyback we announced today will also lower the ratio by around 30 basis points in Q1. Looking ahead, we maintain our guidance for between billion and billion of regulatory driven RWA inflation.

[Anna Cross, Group Finance Director at Barclays]

The UK Regulators' decision to postpone the implementation of Basel 3.1 to January 2027 may, however, alter the mix and phasing of this change. Adopting IRB in the U. S. Consumer Bank is still expected to increase RWAs by circa 16,000,000,000. Whilst uncertainty around the size and the mix of the portfolio at the time of implementation has increased, this remains our best estimate for now.

[Anna Cross, Group Finance Director at Barclays]

In the meantime, there are a few changes in the regulatory landscape. Prior to implementing IRB for U. S. Cards, our Pillar 2A requirement will increase by 0.1% from Q1 twenty twenty five. We expect this Pillar 2A capital to be removed when the IRB model is implemented in 2026 or 2027 when the 16,000,000,000 RWA increase is reflected in Pillar one.

[Anna Cross, Group Finance Director at Barclays]

Consequently, our maximum distributable amount ratio, or MDA, is expected to rise to 12.2% from Q1 twenty twenty five. We previously expected that this would reduce following the implementation of Basel III in January 2026, but this will now be delayed to January 2027. Reflecting this, you should continue to expect us to operate towards the upper half of our 13% to 14% target CET1 range as we have been doing. Naturally, our distribution expectations remain unchanged. Turning now to recent RWA developments.

[Anna Cross, Group Finance Director at Barclays]

RWAs increased GBP 18,000,000,000 from Q3 to GBP $358,000,000,000. Tesco Bank added GBP 7,000,000,000 and a further GBP 7,000,000,000 was driven by FX in the investment bank and the U. S. Consumer Bank. As usual, a brief word on our overall capital and liquidity on Slide 30.

[Anna Cross, Group Finance Director at Barclays]

We maintain a well capitalized and liquid balance sheet with diverse sources of funding and a significant excess of deposits over loans. TNAV per share increased by 6p in the quarter and by 26p during 2024 to $3.57 pence. Attributable profit added 6p per share during Q4 whilst our share buyback and other movements added 1p and 3p respectively. These were partially offset by a more negative cash flow hedge reserve, which reduced TNAV by 4p per share. This is the fourth quarter in the twelve quarter plan we laid out in February.

[Anna Cross, Group Finance Director at Barclays]

Today, we are reiterating our group targets for 2026 and providing additional guidance for 2025, including a further improvement in group ROTI to around 11%. I'll come back to discuss the building blocks of this guidance in more detail with you. But first, I would like to hand back to Venkat to take you through some reflections on progress during the first year of our plan.

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

Thank you, Anna. So almost a year ago today, we set three key priorities for Barclays by 2026: to improve our returns, to distribute more to shareholders and to rebalance our RWAs. We also set twenty twenty interim milestones for 2024, which we have delivered. Our plan was set on realistic assumptions, which together with our diversified business model, allowed us effectively to navigate market, macro and regulatory conditions throughout the year. So what were these?

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

UK deposits have stabilized faster and the investment banking wallet has been stronger than we expected. Fixed income, FIC, which is traditionally an area of strength for us, performed slightly weaker than we had expected in 2024. But our strong performance in equities, where we have taken market share, partially compensated for this, rebalancing our overall markets business. And the economic environment has been more supportive, with interest rates remaining higher alongside more benign unemployment and inflation in our main U. K.

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

And U. S. Markets. Last year, I described the important reset of our financial performance and shareholder returns since 2021. I also told you that this improvement was not sufficient and that our shareholder experience needed to be better.

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

We are making progress on our plan and we are generating growth. Notably, we have achieved our fifth consecutive year of TNAV per share growth of 8% during 2024 and seven percent annually since 2019. This positive outcome reflects improvements in our returns and growth of our earnings per share, including by 30% year on year during 2024 to the highest level in a decade. This enabled a 5% increase in total distributions, including progressive growth in our dividend per share. For the group as a whole, we look to generate higher returns in two ways.

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

First, by allocating more capital to our higher returning UK businesses, which I'll come on to discuss and second, by improving returns in the lower returning businesses, namely the investment bank and the U. S. Consumer Bank. That was true last year when we set out our strategy, and it remains true today. We are making progress, including in target growth areas of the Investment Bank, but further improvements are needed to achieve our ROTE target of greater than 12%.

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

And in the U. S. Consumer Bank, too, we remain focused on rebuilding returns towards the mid teens ROTE beyond 2026. A reduction of impairments in line with our expectations as well as other operational improvements enabled a 9% RoTE in 2024 versus 4% in 2023. Let me now discuss the allocation of capital to higher returning divisions in more detail.

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

At our investor update, we outlined a plan to create a more balanced group. To do this, we plan to allocate £30,000,000,000 of additional RWAs to our three highest returning businesses, Barclays UK, the UK Corporate Bank and Private Banking and Wealth Management. As we expected, actions that we took during the year began to generate organic balance sheet growth towards the end of the year. And including the acquisition of Tesco Bank, RWAs and our highest returning UK businesses increased by billion due to business growth and by billion overall in 2024. And as Anna has discussed earlier, lead indicators of growth across our UK businesses are encouraging.

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

Given this, we expect to step up in our organic RWA deployment during the year with further momentum in 2026. We are committed to keeping investment bank RWAs relatively stable at 2023 levels, and this is the third consecutive year in which this division has operated with this level of capital. We continue to expect Investment Banking RWAs to fall proportionately to about 50% of the group by 2026 from 56% today as we grow the three U. K. Businesses.

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

Taking a closer look at the Tesco Bank acquisition, which we are thinking about in three stages: acquire, integrate and improve. The first stage was completed on the 11/01/2024. The acquisition has added GBP 8,000,000,000 to our unsecured balances, moving our waiting and credit cards and personal loans towards our twenty nineteen position. And the profile of Tesco Bank's customers is attractive. As we show in our operational data pack on Slide 57, Tesco Bank's customers have a higher spend per card than the market average.

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

Tesco's position as The U. K. Largest retailer with strong customer satisfaction and more than 20,000,000 Tesco Club cardholders provides a significant customer growth opportunity. We've also gained an additional brand to operate with and an open market lending capability. The second stage is to integrate Tesco Bank, which we intend to do during 2025 and 2026.

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

And this involves onboarding Tesco customers to Barclays' platform in 2026 to reduce duplication of systems and processes, while maintaining a strong customer experience. The integration will require some upfront investment, but the realization of synergies will reduce the run rate costs. These actions are factored into our plan, and we continue to target a circa 50% cost income ratio for Barclays UK in 2026, following an increase in 25% given the costs associated with the Tesco Bank. The third stage is to improve the business, which we expect to gain momentum after 2027. This will involve further growing customer balances supported by better access to funding and to capital.

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

This increased scale will enable greater efficiency as fixed costs are spread over a larger customer base. Turning now to the U. S. Consumer Bank. We've made meaningful progress in 2024, improving ROTE to 9% from 4% and achieving a cost income ratio of 49%.

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

We also announced that our American Airlines partnership will not be renewed beyond 2026. American Airlines has been a card partner in our business for seven years as part of a dual issuer model, and we valued our long relationship with them. We knew that the partnership could transition to a single issuer model. That happened last year, and we chose not to participate on that basis. The ending of our partnership provides a short term gain on sale in 2026 and releases capital that we intend to use to diversify the business.

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

We expect the overall credit mix of the portfolio to change, still prime, but with less weighting to super prime balances. And all things being equal, this will lead to a higher net interest margin and loan loss rate and a higher risk adjusted margin for the portfolio. Our 2026 targets are unchanged, including an ROTE of greater than 12% in line with the group as the gain on sale offsets lower profitability due to the loss of the receivables. We are confident in our ability to grow card balances to achieve necessary scale in the U. S.

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

Consumer Bank. In line with our broader group strategy, the plan is organic, and organic growth has driven around 85% of our increase of the increase in our net card receivables since 2011. And looking ahead, we'll drive two thirds of our planned growth. We have a strong foundation for such growth given that over 80% of our card receivables are under contract at least until 2029. Our success in accelerating balance growth for partners also translates into significant loyalty with a historical partnership renewal rate of around 90%.

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

In 2024, notable renewals included Hawaiian and RCI. And at the start of 2025, we have also renewed our partnership with Wyndham. In addition to being a long standing top five partner for us, Wyndham is also a long term investment banking client. This provides a good demonstration of how collaboration across The Barclays Group can drive successful outcomes. While organic growth is at the heart of the plan, opportunities for inorganic growth in the market are also significant.

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

For instance, 15 relevant deals $150,000,000 of balances were tendered annually on average in the market during the past five years. We remain confident in our ability to win new partners given the strength of our offering and our ability to increase customer engagement and balances. And this was evidenced by recent wins, including Breeze in 2023 and General Motors in 2024. The General Motors card portfolio, which we will onboard in the third quarter of twenty twenty five, will offset about a quarter of the balances we expect to lose from American Airlines. Overall, we remain focused on achieving scale beyond 2026 and driving improved efficiency to deliver mid teens RoTE for this business.

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

Turning now to the investment bank. Last year, we shared our plan to increase returns in the investment bank to greater than 12% by 2026, in line with our group target. While competitive and industry dynamics are creating opportunities and challenges for individual businesses, our overall progress is as expected, and we continue to run our own race. Our objective is to generate higher and more stable income and returns by improving RWA productivity and rebalancing resources in the business while only modestly increasing costs. We delivered 7% year on year income growth in 2024, broadly on track with our high single digit annualized growth target from 23% to 26%.

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

And as a reminder, more than half of our planned growth in the investment bank comes from initiatives which we control, with the remainder coming from growth in the industry wallet. So we expect these initiatives to add billion to our income by 2026. And in the first year of our plan, we achieved around a third of this planned improvement. In Investment Banking, we have increased share across most products. This included strong performance in ECM, where we increased fee share by about 100 basis points and in Leveraged Finance, where we increased share by 70 basis points.

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

And across the three focus businesses and markets, we've made progress within equity derivatives and securitized products. And while progress in European rates has been slower, we saw recovery in the fourth quarter. Across our markets business, we now rank top five with 56 of our top 100 clients, up seven from a year ago and versus our target of 70 by the end of twenty twenty six. Our capital productivity has also improved with income to RWAs increasing by 30 basis points year on year to 5.8%. And we achieved positive jaws with income up 7% from 23% versus a 4% increase in costs.

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

And this enabled a year on year improvement in our cost income ratio to 67%. And we are focused on making further progress on this cost income ratio in 2025 towards delivery of our high 50s target for 2026 full year. I'd like to highlight two areas of progress during the past year that helped to position the investment bank to perform in a range of scenarios. First, as Anna said, we continue to prioritize growth in stable income during 2024, particularly within financing. Growing financing income enhances the durability of our returns, and we now have financing relationships with 98 of our top 100 clients.

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

Second, our banking fee share has increased by 30 basis points year on year to 3.3% with the wallet also higher. And we remain particularly positioned well positioned to benefit from stronger activity in The U. S, where we generate 68% of our total banking fees. At the same time, our market share in Global Markets declined 20 basis points in the year, reflecting lower share in fixed income, the larger of our Markets businesses. And so while we are pleased with our direction of travel, we recognize that there's further work to do to deliver the full extent of our ambition.

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

Let me now hand over to Anna for the final installment of today's update.

[Anna Cross, Group Finance Director at Barclays]

Thank you, Venkat. At our investor update last February, we outlined a plan to deliver ambitious financial targets and meaningfully higher shareholder distributions. We are confident that we can deliver consistent returns in a range of scenarios underpinning our ambition. I'll now go through what supports these targets. The diversification of our business model by income, by geography helps support return in a range of economic environments.

[Anna Cross, Group Finance Director at Barclays]

This has contributed to more stable returns in the last four years. As Venkat mentioned, the external environment in 2024 was generally more supportive than we expected. But in executing our plan, we remain focused on what we can control. Our plan continues to be based on realistic assumptions. These include four U.

[Anna Cross, Group Finance Director at Barclays]

K. Base rate cuts during 2025 and a bank rate of 3.5 by the end of twenty twenty six. We also assume a five year swap rate of around 3.5% for the purpose of our structural hedge reinvestment, although I acknowledge that current market rates are higher. And we are not relying on a recovery in the investment banking wallet to deliver our plan, with our assumptions unchanged from those we outlined last year. The next few slides describe how our drive towards higher and more predictable returns come together for our shareholders.

[Anna Cross, Group Finance Director at Barclays]

Our 2026 targets are unchanged, including our North Star of a rating above 12%. Our foundation is strong, having delivered 10.5% last year, and we expect further improvement in 2025 to around 11%. Crucially, we expect income growth to provide a rowdy tailwind in 2025, with NII accounting for more than half of this. We will maintain cost discipline as we grow. We expect our costincome ratio to fall in 2025, and we expect further cost efficiency savings and income momentum into 2026.

[Anna Cross, Group Finance Director at Barclays]

This combination will support a ROTE of more than 12%. I'll now explain the drivers of our income and costs in turn. We continue to target around 30,000,000,000 of income in 2026. This means a further 3,000,000,000 of income growth over the next two years having delivered billion in 2024. The drivers of our growth are within our control.

[Anna Cross, Group Finance Director at Barclays]

First, the strong NII tailwind. For 2025, we expect a $900,000,000 increase in group NII, of which $800,000,000 is from Barclays U. K. Our confidence in delivering this reflects the predictable tailwind from the structural hedge underpinned by realistic assumptions about rates and reinvestment yields. And this tailwind lasts beyond '25, with the structural hedge driving around half of our expected increase in total group income over the next two years.

[Anna Cross, Group Finance Director at Barclays]

In addition, we expect balance sheet and earnings momentum from the deployment of RWAs in our three high returning UK businesses. This momentum was apparent in Q4, and we expect it to continue and to be visible in our 2025 performance. Second, non NII mainly coming from the investment bank. We expect to deliver a high single digit CAGR income growth over the life of our three year plan and are broadly on track, having delivered 7% in 2024. Overall year on year growth of 800,000,000.0 in the IB included 200,000,000.0 from wallet growth.

[Anna Cross, Group Finance Director at Barclays]

Importantly, the biggest increase the biggest share of this increase of 0.6 came from the execution of our management initiatives or a third of the 1,800,000,000.0 total we expect by 2026. This leaves a further 1,200,000,000.0 of growth from management actions over the next two years. As was the case last year, we are not relying on wallet growth to meet our target. In fact, our assumptions are unchanged from a year ago with a lower banking wallet in both 2025 and 2026 versus 2024. And should the recovery continue, our business is strongly positioned to participate in a rebound in deal activity, particularly in The U.

[Anna Cross, Group Finance Director at Barclays]

S, where we generate around two thirds of our banking fees. Moving on to costs. Managing costs is at the heart of what we can control. We showed this in 2024, achieving a 62% cost to income ratio. This improvement versus 2023 was supported by the delivery of $1,000,000,000 of gross efficiency savings in the year.

[Anna Cross, Group Finance Director at Barclays]

These savings reflected targeted actions in respect to people, property and infrastructure. For example, in the past year, we decommissioned around 200 legacy applications as part of our plan to exit between four fifty and five hundred by 2026. We increased our digitally active customers in Barclays U. K. By 700,000 and rationalized our branch network by more than 25%.

[Anna Cross, Group Finance Director at Barclays]

And in markets, our actions during the last two years have driven a 20% reduction in the number of trade capture and risk pricing systems supporting our efficiency and operational resilience. Looking forward, there are three drivers of cost change in 2025 and twenty twenty twenty six. First, efficiency savings. We expect a further 1,000,000,000 in gross efficiency savings split broadly, evenly across the next two years. Around one third of these savings come from plans to simplify customer journeys, with the rest driven by actions to streamline businesses, including the optimization of people and technology.

[Anna Cross, Group Finance Director at Barclays]

Second, inflation, which we expect to be more meaningful in 2025 versus 2026. This is because inflation impacts us on a lagged basis. So '25 reflects some of the headline inflation pressure we've observed recently. It also includes a $50,000,000 increase in National Insurance contributions following The UK budget. And third, greater investment in our highest returning businesses in 2025.

[Anna Cross, Group Finance Director at Barclays]

Specifically, I would call out the annualization of investment costs, which have increased during 2024 and additional Tesco bank costs, including integration. In 2025, incremental investment and inflation are expected to exceed efficiency savings, resulting in an increase in our costs. In 2026, we expect costs to be broadly stable, if not down a little year on year, as incremental investment and inflation moderate and are offset by efficiency savings. Given this cost profile and planned income growth, we expect our cost to income ratio to fall by 1% in 2025 to circa 61% and to fall more significantly to a high 50s percent in 2026. Given our 2026 income target of $30,000,000,000 our high 50s cost to income target would be consistent with around $17,000,000,000 of costs.

[Anna Cross, Group Finance Director at Barclays]

We will drive further efficiency beyond that in each of our businesses and for the group as a whole. Barclays UK and investment bank represent some 70% of our planned cost efficiency savings. Work to reduce duplicate systems and processes for Tesco Bank should reduce the cost run rate from circa £30,000,000 per month currently as synergies are realized. And across Barclays U. K, we remain focused on streamlining and digitizing the business to improve our efficiency.

[Anna Cross, Group Finance Director at Barclays]

And in the investment bank, we invested significantly between 2021 and 2023 to sustain and grow future income. In markets, that investment centered around technology, whilst the focus in investment banking was more on people. We expect these actions to result in greater productivity and a high 50s cost income ratio in the investment bank by 2026, with further efficiencies expected beyond. Put differently, 2026 does not represent the full extent of our ambition. Turning now to capital and capital generation.

[Anna Cross, Group Finance Director at Barclays]

As we grow returns in line with our plan, we expect to generate around 170 basis points of capital during 2025, rising to more than 200 basis points in 2026. We have a clear hierarchy for capital allocation in order of priority. First, to hold a prudent level of capital with an expectation that we will continue to operate towards the upper half of our 13% to 14% CET1 target range, taking into account regulatory requirements. By doing this, we deliver for our investors, customers, clients and colleagues regardless of the environment. Second, to distribute capital to our shareholders and third, to invest selectively in our highest returning divisions resulting in a more profitable RWA mix and a better bank for all our stakeholders.

[Anna Cross, Group Finance Director at Barclays]

We set a high bar for investment returns given the importance we place on shareholder distributions overall. We announced $3,000,000,000 of capital distributions in respect of FY 2024. These distributions represent an important step in our target to return at least $10,000,000,000 to shareholders during the life of our plan. We expect a progressive increase in our total payout during 2025. And as a reminder, we plan to keep the total dividend broadly stable at 1,200,000,000.0 per year, growing our dividend per share progressively through lower share count.

[Anna Cross, Group Finance Director at Barclays]

Bringing this together, we are reiterating our group targets for 2026 and are providing additional guidance for 2025. This includes 2025 ROTE guidance of circa 11% and a progressive increase in our total payout versus 3,000,000,000 per year in the past two years. The expected increase in ROTE will be supported by group NII growth to around 12,200,000,000.0, including an increase in Barclays U. K. To around 7,400,000,000.0.

[Anna Cross, Group Finance Director at Barclays]

We expect to improve the cost group cost income ratio to circa 61%. Our progress during 2024 provides a solid foundation for these milestones. We continue to deliver against our plan to achieve a ROTI greater than 12% by focusing on structural actions that are within our control to improve income and efficiency. Over to Venkat for final remarks.

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

Thanks again, Anna. So one year into the three year plan, we are pleased with our progress, but we recognize that there's still work to be done to deliver our 2026 targets. And we're working hard to deliver sustainable operational and financial improvement across our businesses. And this, in turn, we expect will drive higher group returns and shareholder distributions. I'll now open to question and answers.

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

I will begin Alvaro with you.

[Alvaro Serrano, Managing Director at Morgan Stanley]

Thank you. Alvaro Serrano from Morgan Stanley. Two questions, please. One on your income assumptions. I've noted that you expect wallet share wallet the size of wallet to come down, but I'll focus on on BUK because I guess we'll have a view on that.

[Alvaro Serrano, Managing Director at Morgan Stanley]

On BUK, the guidance for 2025 looks on my numbers for an underlying 2% growth versus the run rate in Q4, which sounds quite conservative given the volume growth and given the hedge contribution should be increasing. Are you just being conservative? Or are we missing any moving parts at a more competition in asset product like mortgage? Is there anything we're missing there? It's just been out of conservatism.

[Alvaro Serrano, Managing Director at Morgan Stanley]

And the second question on capital. If we take out, obviously, the buyback and German cards, will come down and you want to operate at the higher end, the 13% to 14%. Do you have any sort of RWA efficiency measures that you can call out? And I'm thinking, obviously, there's been a Twitter sale, sounds like a couple of blocks there, and these are very high risk weighted sort of kind of positions over to 50%, from if memory is certainly right. Will that have a significant impact that will help you sort of reallocate the capital to growth areas?

[Alvaro Serrano, Managing Director at Morgan Stanley]

Thank you.

[Anna Cross, Group Finance Director at Barclays]

Thank you, Alvaro. I'll take both of those. So let me start with a question that you didn't ask, but you sort of asked, which was about the banking wallet. So I want to be really clear here. We're assuming or we have an assumption that the banking wallet remains as we had it last year.

[Anna Cross, Group Finance Director at Barclays]

You shouldn't take from that that if the opportunities are greater than the market that we would seek to monetize those as we have done in Q4 and indeed all the way through 2024. So I just call out that distinction. Relating to Barclays U. K, we're guiding to NII next year or in 2025 of billion. As I think about that number, I reflect back on 2024.

[Anna Cross, Group Finance Director at Barclays]

And actually, what we've seen in successive quarters is strong NII growth. And we expect that to continue in 2025 and into 2026. BUK NII is not near its peak. As I take the $7,400,000 I think of it in a number of building blocks. So the first is take the Q4 run rate ex Tesco, multiply that by four.

[Anna Cross, Group Finance Director at Barclays]

Then add on $400,000,000 for Tesco. Add on the impact of maturing structural hedge this year. Now we are assuming a reinvestment rate of 3.5% in that calculation and then take off the impact of four base rate reductions in the year. As I put those building blocks together, you will get to around 7,400,000,000.0. In addition to that, there's two further things for you to consider.

[Anna Cross, Group Finance Director at Barclays]

The first, as you note, we have got good momentum in the business, and you can see that in Q4. You can see that in cards and in mortgages. We expect that to continue. In our calculation, what we're assuming here is that there is some offset in margin. I wouldn't call anything out in particular.

[Anna Cross, Group Finance Director at Barclays]

I would just say, particularly in liability margins, we expect a continuation of migration. Nothing more than we've seen, so I'm not expecting it to accelerate, but I'm just assuming that those two things are somewhat offsetting within the year. You may have different expectations for those macro assumptions or indeed the swap realistic assumptions that underpin that number. But I'd just highlight, we're expecting continued income momentum in BUK into 2025 and beyond. In terms of your capital number, I mean, I'm not going to speak about any client positions as you would expect.

[Anna Cross, Group Finance Director at Barclays]

Our focus here is on executing the plan as it is elsewhere. We'd expect the investment bank to operate within the framework we've given it for RWAs, so you should expect those RWAs to be broadly flat. The thing that you didn't call out actually was organic capital generation. That's what we're confident in here. So throughout Q1, remember, Q1 is a seasonally strong quarter for us.

[Anna Cross, Group Finance Director at Barclays]

We deploy RWAs into the business, but seasonally, it is very strong for us in terms of investment banking and markets activity. And as we've called out in the presentation, our expectation is that organic capital generation will continue to develop both in 'twenty five and in 'twenty six. And the kind of capital range that we talked about today is no different from where you've seen us operate actually over the last two to three years.

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

So I'll come to you in a second, Pirli. But just if I may emphasize one thing, which is behind the spirit of what we did last year and what we're doing this year is given you our slides, we've given you an operational data pack. We've been very clear with our assumptions, right? And I think not just on NII, but other aspects, I think that's our approach, which is to tell you what we think structurally we're trying to achieve, our cyclical assumptions or our macro assumptions, and allow you, therefore, to impose your view if you'd like. All right.

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

Bernie?

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

Hello. Thank you, Venkat. Thank you, Anders, for taking my question. So I guess the first one is on 26 targets. I guess the share price reaction this morning maybe reflects the fact that people were expecting a little bit more.

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

And as you noted that, well, you know, the environment is probably better than what what you were sitting on a year ago when you put out the targets for the first time across every metric you could think of pretty much. So I guess why did you not upgrade 26 targets a bit more? I mean, I I know, you know, it's greater than 12%. So but would would you, for example, like, invite us to put more focus on the greater than, for example, and and any color you could give on on that would be really helpful. Just, you know, if you were to were to come up with a plan today, wouldn't you be more optimistic than you were a year ago?

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

I guess that's the first question. The second question is on US cards. Just the direction of the of the business as, the AA book phases out. So for do you still see us a growth business? Because a few years ago, that was an area of, of growth, that that we all looked at.

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

And then I guess more operationally, what does, the exit of AA mean? So, you know, what what I'm thinking is that, well, maybe maybe receivables growth will be a bit slower in the next couple of years as the book comes to an end. And then as you take on new books, well, there will be more JCAV impact and more day one impairments, etcetera. So how is that going to impact the the ROTI? Because I I know that you haven't changed the the guidance on that either.

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

I'll let Anna take the first part, and then I'll come in for the second part.

[Anna Cross, Group Finance Director at Barclays]

Yes, sure. So our focus is management, Pearlie. What you should expect us to do is to execute the operational plan and deliver the financials without surprises. That is our objective. And so our focus is on executing the plan that we've given you, and I would emphasize the greater than 12,000,000,000 and the at least 10,000,000,000.

[Anna Cross, Group Finance Director at Barclays]

But our primary focus really is on executing that plan. We're pleased with the progress that we've made in 2024. We've hit all of the targets and guidance that we gave you, and we feel we've set the business up really well for momentum in 'twenty five and 'twenty six. And I just call out that different that difference that I highlighted before. We are planning on realistic assumptions because we want as much of this plan within our control as is possible.

[Anna Cross, Group Finance Director at Barclays]

However, if the market environment allows, whether that be interest rates, swap rates or the banking wallet, you should expect us to monetize that opportunity. And Cat?

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

Yes. Look, I'll emphasize that as well, which is that it's a realistic plan. It's a confident plan, right? It's a confident plan, which is based on strong structural progress across the things which we can control and then taking advantage of cyclical opportunities as we did last year and we expect to as they come up. On The U.

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

S. Cards business, we remain confident for a couple of reasons. First of all, we gave you the statistic of the number of accounts and the volume of receivables that come up for bid. Second, which is $40,000,000,000 in this thing. Second is that we have, A, locked up around 90% of our 85% of our net receivables outside of American through to 2029.

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

And third, we have a retention rate of 90% renewal rate. We operate in a very specialized place with mid sized companies for whom we have a particular skill at managing their partnership portfolio and able to grow their balances and increase customer engagement. And so just like General Motors came in this year, we will continue to look for these opportunities. I'm fairly confident we'll land them because when we participate in these, we know what we provide very valuably into the market. And then on the operational side, we will continue to come back to your point on J curve.

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

First of all, if a lot of the book, 85% of the book is locked through 2029, yes, there will be a J curve for new things, right? But as a proportion of the business, it's smaller. Would you add anything?

[Anna Cross, Group Finance Director at Barclays]

Yes. I'll just reflect back on the plan that we set out last year. It's a plan of many parts. It's an executional plan that actually goes all the way through the P and L and the balance sheet. Clearly, revenue growth is important, but it's not the only thing that we're working on to improve the ROTI of the business.

[Anna Cross, Group Finance Director at Barclays]

So we're working very hard on mitigating the impacts of regulatory headwinds. So you saw that transaction in Q1 of this year. We're working very hard in terms of the cost efficiency of this business. The costincome ratio is now below 50% in this business. It's fallen for the last consecutive four years.

[Anna Cross, Group Finance Director at Barclays]

And remember, we're targeting to get it to mid-40s. So there's a big digitization push in this business. The third thing is we continue to work on the net interest margin of the business. We spoke again about that last year and that there are two parts. The first was repricing.

[Anna Cross, Group Finance Director at Barclays]

We completed that repricing in 2024, and you're going to see it start to accumulate in the NIM over time. And the second thing is really reducing our funding costs by driving up the proportion of retail deposits. Again, I spoke about that in my prepared remarks. So Venkal is absolutely right. There are opportunities here to grow volume, but our ROTA delivery is volume, capital efficiency, cost efficiency and NIM.

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

Okay. Go ahead, please.

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

And Thomas from

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

working?

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

Yes.

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

Yes.

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

Ben Thomas from RBC. Thanks for taking my questions. There's been a lot of discussion over the last month around the government going softer on regulation, for example, changes in LTV restrictions.

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

Do any of the changes

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

that have been put forward actually have the potential to be material tailwinds? And if how use would it be to Barclays if there was a leveling of the playing field on ring fencing so you could use the first thirty five billion euros of your deposits to fund other parts of the group? And I guess tied to this, does the messaging around risk attitude for M and A in The UK have the potential to cause you to rethink your low tolerance to material transactions? Thank

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

you.

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

Good question to both. So look, I think we are at the early stages of a regulatory debate in The U. K, which go both to what might happen on prudential regulation as well as consumer regulation. We do think that obviously regulation is very important and it's important to the City of London.

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

We also think it's important to have a balanced regulatory outlook and one that is commensurate across the globe. So in The U. S, you're seeing a rethinking on Basel, on the base of Basel as well as stress testing. And the PRA has postponed its own decisions till 2027. We would always want we've always advocated for consistency in total capital requirements.

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

That means base capital in Basel as well as stress testing. And that's what we'd like to see, but it's too soon for me to say one way or the other what the results are going to be. So you've seen the plan that we've given you with the assumptions we have. On the consumer side, obviously, there has been volatility that's come in because of impact of regulations, impact of court cases, worries about retrospective application of these things. And you've seen it in the charges that people have taken and we took a provision on more to finance.

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

What I'm very happy about on that is that we were small in the business and we exited the business in 2019, right. And so you've got to risk manage the situation. You should always expect us to do that. And then as far as M and A, look, this is an organic plan, right? And what you're seeing us do is to present what we aim to do for this bank in an organic way.

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

And that is what we intend to be absolutely focused on.

[Anna Cross, Group Finance Director at Barclays]

I might just add on because I think you asked about mortgages also, Ben. There are three things, I think, being talked about. The first is some reduction in the restrictions around loan to income and also sort of affordability stress testing. I think our perception would be the second is probably more meaningful in the current environment just because of the interest rate environment. That affordability test is probably the one that restrains the market a little bit more.

[Anna Cross, Group Finance Director at Barclays]

And then the third thing is around potentially reducing RWA weightings in higher loan to value mortgages. We're an IRB bank, so any change to the standardization standardized rules wouldn't impact Barclays. They would impact Kensington, but not the Barclays lending, not the larger part of the group.

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

Yes. Andy?

[Andrew Coombs, Equity Research Analyst at Citi]

Good morning. If I could just start with costs. Thank you for Slide 47. I'm just going to rephrase the slide, I guess, essentially. 16,700,000,000.0 of costs in 2024, if we're thinking about this in absolute cost terms rather than cost income, given that you've got The U.

[Andrew Coombs, Equity Research Analyst at Citi]

K, Tesco double run, investment in corporate and PBWM, you've got FX translation. Presumably, what you're essentially saying is you're expecting the cost base to grow to in excess of $17,000,000,000 in 2025 before then fading back to around 17,000,000,000 in 2026, but just wanted to make sure that understanding was correct. And then the second question on the U. S. Consumer Bank, you've specifically drawn out on Slide 39 that there is going to be a gain on the sale of the AA portfolio, and that seems to be included within the target.

[Andrew Coombs, Equity Research Analyst at Citi]

So does that mean that come 2027, the RoTE fades again before it then recovers thereafter within that division?

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

Go ahead.

[Anna Cross, Group Finance Director at Barclays]

Yes. I'll go ahead. So let's just look at Slide 47, please. The answer is yes. So we're expecting our costs to go up in 2025 because of the annualization of Tesco, because of the integration costs of Tesco and because of those inflation headwinds that I talked about in my prepared remarks.

[Anna Cross, Group Finance Director at Barclays]

But underneath all of this, you've got a continued focus in gross efficiency. So that's going to be continuing. In 'twenty five, inflation and investment outweigh the efficiency. In 'twenty six, it's the other way around. So actually, I'm expecting costs to go above $17,000,000,000 Actually, I think consensus is not in a bad place and then drop back.

[Anna Cross, Group Finance Director at Barclays]

So that's my expectation. In terms of U. S. Consumer Bank, in 2026, you're going to have those two offsetting effects. As Venkat said, you're going to have a gain on sale and you're going to have a more immediate impact from loss of volume.

[Anna Cross, Group Finance Director at Barclays]

I'm not going to guide you to a 2027 ROTI at this point. I'll just make a few points. Firstly, we're confident in our ability to regain volume, both organically and inorganically. Secondly, I'd just remind you of what Venkat said in his remarks where he talked about American Airlines was an incredibly important partner for us, but in terms of risk adjusted returns, it's a lower part of our portfolio. And we will continue to really focus on the things that I talked about in terms of cost efficiency, in terms of capital efficiency, in terms of NIM.

[Anna Cross, Group Finance Director at Barclays]

So let me give you

[Anna Cross, Group Finance Director at Barclays]

an example on cost efficiency. So the digitization,

[Anna Cross, Group Finance Director at Barclays]

if you like, efficiency. So the digitization, if you like, of U. S. Cards. So as customers interact with us in a retail business, clearly, we want a large portion of that to be digital.

[Anna Cross, Group Finance Director at Barclays]

In U. S. Cards, that's low 90s. If I compare that to either BUK or indeed the German cards business that we've just sold, that was high 90s. So we do feel we've got good opportunities here to continue to streamline the business.

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

Yes. Sorry. Yes?

[Jason Napier, Head of European Banks Research at UBS Group]

Jason Napier from UBS. Two questions on firstly, on cards and then secondly, on the Tesco Bank acquisition. There's a lot of focus on cards and whether Barclays is the right owner for the asset given the differential in capital loading that you are going to be having at some point. So one of the benefits is that the IB carries less capital because of the stress losses that the card business helps protect the unit from. Can you give us some concrete sense as to how much of a saving that is?

[Jason Napier, Head of European Banks Research at UBS Group]

I think it's a really important part of the debate, helped not only by what it means for you, but also by the excitement about easier stress tests in The U. S. At some point. We'll see how that goes. Secondly, on Tesco Bank, it came in at about a 90% indicator cost income ratio.

[Jason Napier, Head of European Banks Research at UBS Group]

And it looks like from Slide 47, if I'm reading it correctly, it doesn't actually contribute to a lower costincome ratio to the end of twenty twenty six. Is that right? Or is that part of the efficiency gains? And maybe you could just talk about how much pre provision profit do you think it can make? There was a deployment of capital.

[Jason Napier, Head of European Banks Research at UBS Group]

It felt like a cost takeout story in the beginning. It's no longer that. If you could just talk about how much profit do you think it might generate once you're done?

[Jason Napier, Head of European Banks Research at UBS Group]

Thank you.

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

I'll take the first one, let Anna take the second one. So I think the easiest way for you to see it, obviously it's under current rules, is to look at the CCAR results of the top banks in The U. S. And look both at our initial level of capital, which we keep and look at the drawdown and compare it to banks who don't have that kind of a credit card or retail consumer portfolio in the mix.

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

Now scenarios vary from year to year and so on, so you have to look at it for a few years, but you will get a sense of the benefit. And I think it is an important regulatory benefit for us to have it in the stress test. It's under current rules. Right?

[Anna Cross, Group Finance Director at Barclays]

Thanks, Jason. I'll take the second one. So you're right. Tesco's got a high cost income ratio around 90%, and I think that reflects in and of itself its lack of scale as a stand alone business. So I think our view is as follows.

[Anna Cross, Group Finance Director at Barclays]

This is it actually still is a cost takeout story, but this is a complex integration. It's not like a portfolio in asset runoff. It's a growing business, an active business, and credit cards have a daily and digital interaction with the customers. So actually, it's quite a complex piece of work. But we are confident that we can do it, and we can we're confident that we can execute it well.

[Anna Cross, Group Finance Director at Barclays]

But it doesn't happen as quickly as if, for example, we bought a

[Anna Cross, Group Finance Director at Barclays]

mortgage portfolio, and that's really

[Anna Cross, Group Finance Director at Barclays]

what you're seeing here. Our accretive to be U. K. And indeed, the group hasn't changed. Typically, I would expect the costincome ratio of an unsecured business to be relatively low, certainly lower than The U.

[Anna Cross, Group Finance Director at Barclays]

K. As a whole. And if you want a good indication, look at where we're trying to get the USCB business to. So hopefully, that gives you some indication. But you're going to see an increase in '25, both from the operational cost, if you like, the dual running, some investment in integration.

[Anna Cross, Group Finance Director at Barclays]

You'll start to see some efficiencies flow through in 2026, but as Venkat said, the real scaling and the real unlocking of that value will come somewhat beyond 'twenty six. But that's included in all of the targets that we have given you for BUK and for the group.

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

Thanks. Yes, Kiem?

[Kian Abouhossein, Analyst at JP Morgan]

Yes. Two questions. The first one is regarding the fixed income business. You discussed around the market share gains in equities. And I just want to understand a little bit, were you on the market share gains on fixed income?

[Kian Abouhossein, Analyst at JP Morgan]

If you can talk a little bit about what has to happen for that to come through? And then secondly, just getting back to Tesco Bank, I mean, for me, what's more interesting is actually the customers that you gain. So can you talk a little bit about the 3,000,000 roughly active customers in terms of overlap, but also the 20,000,000 Clubcard customers? What is really the opportunity in terms of data that you're getting in the long term?

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

Yeah. Let me take the first one and Anna can take the second one. So within fixed income, we've had three focus we've had two focus areas. One was securitized products and the other was European rates. And I think it's fair to say securitized products did well through the year.

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

Credit, which has been a historical great strength of ours, was a smaller part of the overall wallet last year as spreads remained both subdued and tight. And then the third thing is that European rates started picking up only later in the year, as did macro overall. So when we look and we give you the market share, there are two ways we look at it. One is the market share number which we give, which is we take us and the top nine other banks, 10 banks total and look at what our proportion was. And that's always a little bit of noise in it because we are not in commodities.

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

That's part of the number. There are certain regional exposures we don't have, especially in Asia. But the other number which we look at is our penetration of our top 100 clients. So we are a number six markets business and number six investment bank. So we ask off that top 100, how many of them are we number five with, right, so one step higher.

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

And in that, that number which we began at 49 20 three and want to be at 70 by '26, we've moved from 49 to 56. So I take comfort from looking at that data with those clients in the things we do. But of course, I want to see a broader improvement in fixed income. I'm confident, as I said earlier, because I think this is our strength. And we have strong structural presence and cyclicality, when it plays to our strengths, will help us.

[Anna Cross, Group Finance Director at Barclays]

On Tesco, I think we'd agree with you it's an exciting opportunity, and I think that comes in a number of parts. When we look at the customers, obviously, with 20,000,000 Clubcard customers, that's broadly the scale that we have in our U. K. Retail bank. It's inevitable, given the population of The U.

[Anna Cross, Group Finance Director at Barclays]

K, that there will be some overlap between them.

[Anna Cross, Group Finance Director at Barclays]

That said, we see

[Anna Cross, Group Finance Director at Barclays]

the opportunity to build and grow this business. And what's interesting here is our ability to use more than one brand in these markets that we haven't previously done to target different demographics and launch different products. So we're very thoughtful of that. But I'd encourage you to think about Tesco a bit more holistically than just those customers and what we can do with them because it speaks to a much bigger part of the BUK strategy, which is one which is more multi brand, more partnership led. So we talked when we bought Tesco about leveraging the capability that we have from U.

[Anna Cross, Group Finance Director at Barclays]

S. Cards and bringing it to The U. K. You're now seeing that both in terms of Avios and Tesco and Amazon. So more of a partnership focus in The UK that really helps us grow and diversify that cards business.

[Anna Cross, Group Finance Director at Barclays]

But also, more broadly across the bank, you know, we've always operated as a single brand. Now we've got Kensington. Now we've got Tesco, etcetera, etcetera. So it's much more holistic. The other thing I would say is that in buying Tesco, we've actually acquired some very good capability that we can take back into the core BUK business.

[Anna Cross, Group Finance Director at Barclays]

And one of the things I'd really call out there is an open market loans capability that we didn't really have and actually Tesco does extremely well. So there are multiple points of leverage here.

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

Sorry, yes.

[Jonathan Pierce, Equity Analyst at Jefferies]

Yes, good morning, both. It's Jonathan Pierce from Jefferies. Can I ask two questions, maybe one for each of you? Anna, the base rate sensitivity table on Slide 71 is helpful. Thank you for splitting out the impact of base rate cuts or moves in the curve more generally, sorry, into swaps and managed margin.

[Jonathan Pierce, Equity Analyst at Jefferies]

The managed margin piece though is extremely small. I mean, I think we could work that out from the previous disclosure. Year one at million, I'm assuming that's million of gapping negative. But then we move to million as a sort of ongoing hit from a 25 basis point rate cut. Why is it so small?

[Jonathan Pierce, Equity Analyst at Jefferies]

And maybe you could tell us what the pass through assumption is behind that 10,000,000. That would be question one. Question two, a slightly longer term one for Venkat. Where do you see the return on tangible equity going in this business in the medium term? I note in the report and accounts today that the second year on the trough, we've got a 14% ROTE target to hit the top end of your LTIP awards.

[Jonathan Pierce, Equity Analyst at Jefferies]

That's now average across 26, 20 seven. Is that where you sort of see this business potentially going in the medium term? And sorry, a part two to question two. The dividend, your dividend's been sub-10p for nearly two decades now. The payout ratio on your target on your targets next year is going to be sub 20%.

[Jonathan Pierce, Equity Analyst at Jefferies]

Are we looking at a dramatic increase in the dividend payout ratio into 2027, please? Thank you.

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

You want to take the first and the third, and I'll come back in the middle.

[Anna Cross, Group Finance Director at Barclays]

Okay.

[Anna Cross, Group Finance Director at Barclays]

Why

[Anna Cross, Group Finance Director at Barclays]

not? Okay. Can we go to Slide 71, please? Okay. So just for those of you who haven't got that far on the pack, we've split out, and I hope it is helpful, the impact of a 25 basis point parallel shift in the curve between two impacts.

[Anna Cross, Group Finance Director at Barclays]

The top is the swap rates. For that, think the impact in structural hedge, that's why it builds over many years. And then the bottom is the base rates. And there, what you have is two impacts in year one, you have a timing impact. And then on a longer term basis, you have a pass through impact, which is what Jonathan's asking about.

[Anna Cross, Group Finance Director at Barclays]

The reason that the numbers on the bottom there are so small is because of the proportion that we hedge. And actually, if you compare this version to the version that we had earlier in the year, you'll see that our sensitivity has increased. And the reason it's increased is obviously because we've reduced the scale of the hedge as the year has progressed. So that is increasing our relative our absolute sensitivity, but we think that we are still relatively insensitive just because of the proportion that we hedge. Now what we don't call out is a pass through assumption, but I would guide you that by using this assumption and by using the split that we've given you on BUK deposits, you could probably come up with a reasonable approximation.

[Anna Cross, Group Finance Director at Barclays]

Venkat?

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

Dividend?

[Anna Cross, Group Finance Director at Barclays]

Yep. No, you go next and

[Anna Cross, Group Finance Director at Barclays]

we'll collect dividend.

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

Okay, good. Fine. All right. Okay.

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

So first of all, I think as we've said on 2026 is not an endpoint, it's a sort of a waypoint on the journey. So when you look at the business beyond 2026, what I would hope is that if we've got the businesses, the lower returning businesses such as the investment bank and The U. S. Cards business to add 12% And we maintain the higher return businesses at their roughly 20% -ish range for Barclays U. K.

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

And the corporate banks a little less, Private Banking Wealth is a little more. And we continue to grow then that proportionate mix would have a play into ultimately what the RoTE of the business should be, which I would hope is higher not just because it would allow me to get more of my compensation plan as you mentioned, but because I think that takes advantage of the full potential of the business. It's a calculation which we will have to come back to because right now we are focused on 2026, right? But I do think and I would hope that what we are building is a bank that's much more strongly performing well beyond 2026, that this is not a limit of our ambition, our ambition grows. And for what we achieve for ourselves, for our customers and for you, our shareholders.

[Anna Cross, Group Finance Director at Barclays]

So let me take the third point. I think I'll start by just reiterating what Venkat said at the beginning, which is how important we realize shareholder return is. And you should just reflect on our capital priorities, which are regulation first, distribution second, investment in our businesses third. The way we think about it and the conversations that we certainly had with our shareholders are really about total return, and that's our current focus. We're pleased to see that total return go up by 5% year on year.

[Anna Cross, Group Finance Director at Barclays]

As you can imagine, we do have conversations with our investors about this, and we're committed to the greater than 10%. But at this point in time, it feels like the

[Anna Cross, Group Finance Director at Barclays]

right formulation.

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

Yes, in the center.

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

Good morning. It's Chris Kent from Autonomous. Thanks for taking my questions. I had a couple on RWAs, please, and then one on head office. So on Slide 45, you present your RoTE bridge and you gave us the similar slide last year.

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

You've got a 1.3% headwind in there over the two year period from RWA growth, but obviously some of the regulatory impacts have been pushed back. Your American Airlines card book is coming out and essentially I think you're probably going to undershoot your RWA growth target for U. S. Cards. Why hasn't that RWA headwind come down relative to where you were last year?

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

So in the equivalent bridge 24% to 26% a year ago, you said greater than 1% headwind from RWAs. Now you're saying less than I think it's less than 1.3% if I add those together. So it seems to have gone up despite the fact the RWA growth outlook looks better. What's going on there? Are we missing something?

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

Because the reg headwinds are being pushed further into the future. So it's now a 1.3% reduction here from RWAs in the Roti Bridge. And it was greater than 1% a year ago. So it looks like it's got worse despite the fact the RWA growth should be less. So if you could speak to that and sort of related, on the deregulatory point, FRTB, I don't think you've ever given us a number.

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

A lot of your wholesale banking peers in Europe do give us a number now. Obviously, that's an area that may never happen. So if you could give us a sense of that, that would be helpful to understand the RWA trajectory. And then the general one is head office. It's been incredibly difficult to model because there's been so much going on.

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

It feels like it's a bit cleaner this year. I think it's a big driver of the range we see in your consensus. Could you give us an indication of what you think that looks like? And I completely appreciate it's always a mess because there's always odds and sods in there. But putting those to one side, what do you think sort of underlying head office income and costs are to help us corral consensus onto something more sensible?

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

Thank you.

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

Shall I do FRTB and you do the rest?

[Anna Cross, Group Finance Director at Barclays]

Okay.

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

But you can start.

[Anna Cross, Group Finance Director at Barclays]

Okay. So on your RWA points, our expectation is no different really around RWAs. There's a timing point clearly in terms of the timing of Basel. But this chart is based on our plans to deploy 30,000,000,000 of RWAs in The UK and hold the investment bank flat. So I think if there are more technical questions, we can come back to you on it, and I'll ask Marina to pick up after the event.

[Anna Cross, Group Finance Director at Barclays]

Venkat, FRTB?

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

Yes. Look, you're right that there are some people who have given it. We are looking at, either UK implementation, what we think we have already done in market risk capital calculations. And so we don't have the specific information right now to be able to make a judgment. But we think, as we've said, for 24% to 26%, the overall we're keeping Investment Banking RWAs flat.

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

In that, we said last year that there would be an absorption of about GBP 15,000,000,000 to GBP 16,000,000,000 of RWAs that came from a variety of things, including FRTB, right? We are not changing from that view.

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

I think it's gone off. How is it back? In terms of the SEK3 billion to SEK10 billion range on Basel Three Point One Billion, is that SEK7 billion FRTB? Is a big chunk of that variance FRTB? Or is that residual uncertainty?

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

Because I would have thought you've now got final rules in The UK. So what drives the range?

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

So you've got final rules in The UK. You don't have a date yet, of course. But it's also there's a little bit of modeling uncertainty and just and implementation on the portfolio. So I wouldn't say all of it is FRTB.

[Anna Cross, Group Finance Director at Barclays]

Yes. Don't assume that the $7,000,000,000 is FRTB in or out variance. As Venkat said, it's much more reflective of we continue to refine our modeling, Chris. So at this point in time, we're reacting to the rules that we have and expect to implement them in full, and the 3% to 10% reflects that. Just coming back to head office.

[Anna Cross, Group Finance Director at Barclays]

So I recognize the fact it's been very difficult to interpret and model as we've gone through twenty twenty five twenty twenty four. I mean, you've had German cards coming out, well, going in and then coming out, same with Italian mortgages. So it has been very complex. I appreciate that. I won't give you a number for going forward, but let me tell you how I think about it.

[Anna Cross, Group Finance Director at Barclays]

There's gonna be a few things which will be stable, enduring, evergreen, at least for the foreseeable future. So within there, you've got the costs that truly relate to the group, and you've got some costs that relate to some legacy treasury funding. For the moment, we also have our merchant acquiring business in there. Those three things are going to be relatively stable throughout the period. Then there are things in there which are inherently more volatile, and in part, that's why they're there.

[Anna Cross, Group Finance Director at Barclays]

So the first of those is hedge accounting. So that's essentially where we're offsetting the fair value of a hedged item with the fair value of the hedge itself. Sometimes they don't entirely offset. And where there's leakage, it goes to P and L. Actually, that was quite significant in Q4, and it probably explains the income swing between Q3 and Q4.

[Anna Cross, Group Finance Director at Barclays]

It's broadly neutral over time. It's just timing, but it can be volatile. The second thing that you do see in there is where we've got any marks on our principal investments. That tends to be a bit smaller. And then the third thing in there will be if we are carrying any litigation or conduct that relates to a business that we are no longer active in.

[Anna Cross, Group Finance Director at Barclays]

So that's why Motor Finance is in there. So as this settles down, Chris, we'll talk to you more about it. But at the moment, that's the sort of broad guidance I would give you.

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

Any more? Yes.

[Elise Yu Ge, Equity Research Analyst at Keefe, Bruyette & Woods (KBW)]

Hello. It's Elise from KW. Thank you for taking my questions. I've got two both on IB numbers, if if that's okay. So first is risk weighted assets, which decreased to 56% of the group from 58%, and that includes Tesco acquisition.

[Elise Yu Ge, Equity Research Analyst at Keefe, Bruyette & Woods (KBW)]

So in terms of the target, how should we think about the evolution to 50% by the end of 'twenty six? What exactly is the step down here? And then just in terms of modeling, is the 199,000,000,000 the new level of numbers we should be using going forward? Or are we expecting it back to, say, 23,000,000,000 level, which is 197,000,000,000? That's my first question, just with two parts.

[Elise Yu Ge, Equity Research Analyst at Keefe, Bruyette & Woods (KBW)]

And second is on Roti. So to hit the Roti expectation, which is in line with the group, more than 12%, it needs to improve earning by about 23% without more capital. I'm just wondering how exactly are you going to achieve that? I know you mentioned more stabilized revenue and disciplined costs, but are there any other areas that you're focused on that we should be aware of?

[Anna Cross, Group Finance Director at Barclays]

Thank you.

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

Do you

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

want to take the first one? I'll take the second one.

[Anna Cross, Group Finance Director at Barclays]

Yeah. And I can add to the second one if you wish.

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

Yeah. Go ahead.

[Anna Cross, Group Finance Director at Barclays]

So on the capital number, so getting to 50% is as we set out last year, Elyse.

[Anna Cross, Group Finance Director at Barclays]

So we expect the IB to be broadly stable. I would say FX is going to move that around as you've seen from Q2 to Q3 to Q4, but broadly stable around that 200,000,000,000 mark. Remember that about 50% to 60% of our IB revenues are in U. S. Dollars, So FX does make that number move around.

[Anna Cross, Group Finance Director at Barclays]

But just to remind you, you then got earnings and RWAs moving together. So even though those RWAs are going up and down with FX, I wouldn't expect that to have an impact on on capital generation. So that that would be the the first piece. In terms of the overall sort of trajectory to to 50%, it's holding that piece stable and continuing to grow in those three focus UK businesses. I mean, you've seen us come out of 2024 with some degree of acceleration.

[Anna Cross, Group Finance Director at Barclays]

You should expect that to accelerate over the period. So you might see slightly more in 'twenty six than you see in 'twenty five. But we will report to you, as we have done along the way, with the equivalent of Slide 14 so you can see that progression. Why don't I start with some maths and then I'll hand over to Venkat. Just in terms of the IB ROTI, I mean, simplistically, it's gone from seven to 8.5.

[Anna Cross, Group Finance Director at Barclays]

It's gone up by 1.5. We recognize the 3.5 at least to go. So we're very conscious of that. And that comes in a number of parts. The first is clearly revenue.

[Anna Cross, Group Finance Director at Barclays]

And Venkat talked about having delivered $600,000,000 of our $1,800,000,000 around our focus businesses. So revenue growth is important here, and we're very on the things that we can control, and those areas are focused not only within markets but the IB. The second is revenue stability. And the reason this is important is we want an IB here which can deliver in lots of different environments. So we think of financing and we think of the ICB as ballast within that investment banking revenue.

[Anna Cross, Group Finance Director at Barclays]

So that's also important. If you take those two together, the third thing that's important is capital discipline. So for the third year in a row, we've got broadly flat RWAs in the IB. So we're generating revenue consistently. We're holding that capital flat consistently, and that's why the revenue over RWAs has gone up.

[Anna Cross, Group Finance Director at Barclays]

And then the thing that is most in our control, and I'm talking about it last but it's not least, is costs and cost efficiency. So this the IBCIR is down by three percentage points year on year. It's delivered positive jaws in three quarters out of the last four. It needs to continue to do so. It's not going to do so every quarter, but you'd expect it to do it more often than not because we want to get this business to a high 50s cost income ratio.

[Anna Cross, Group Finance Director at Barclays]

But even then, even in 'twenty six, it's not going to be top quartile. So we'll have more opportunity in terms of efficiency from that point. Venkat?

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

I cannot improve on that answer. I'll just say one thing, which is that I said last year that this is the hardest part of our journey, what we do with the investment bank. Because as you said, what we are trying to do is increase revenue, reduce costs, improve capital efficiency while keeping capital roughly flat, right? That we have done it in 2024, we are very pleased about, and it gives us the confidence to continue to do it. And that confidence is what Anna stated in her numbers.

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

I think that was it.

[Anna Cross, Group Finance Director at Barclays]

Amit, right at the back.

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

Oh, sorry, I didn't see you. Amit.

[Amit Goel, Managing Director at Mediobanca]

Hi. Thank you. It's Amit Gohle here from Mediobanca. So two questions. One, again, just coming back to broader strategy.

[Amit Goel, Managing Director at Mediobanca]

But I guess just just just thinking about the world as it is today versus how it was maybe twelve months ago when you were putting the plan together, and the kind of opportunity set that you see. You know, it looks like there's perhaps a bit more opportunity in The US. You know, maybe regulation's a bit slower, you know, discussion about growth in The UK relative. So I appreciate your executing against the plan that you've laid out, you know, just around twelve months ago. But curious if you were to rethink about it or think about where you would position capital, you know, if you're looking at it today, if there are any changes or anything else you would consider or think about?

[Amit Goel, Managing Director at Mediobanca]

And then secondly, maybe a bit more kind of detail, but I think on the on the ROTE, the group delivered for the year, this year, the the 10.5. I think, you know, Q3, that was kind of guided to. So I think the environment was a bit better in Q4 from a from a FX and IB trading standpoint, maybe a slightly bigger gain on Tesco. So just curious if there are any other factors that worked slightly in the other way that you saw. Thank you.

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

So let me cover The U. S. First, and then Anna can cover the second part on ROTI. So you're right. There is a lot of opportunity potentially in The U.

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

S. We certainly have it in trading and we could have it in banking. We've had some through the last year and it may continue. So two things. First of all, as we've said, we have a fairly big U.

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

S. Presence. The firm itself makes about 40% of its revenue in U. S. Dollars.

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

The investment banking side makes about two thirds of its revenue, 68% in The U. S. So we've got a huge presence there. There is enough willingness availability and flexibility within the investment bank and for U. S.

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

Cards to be able to deploy it in those attractive opportunities. And in fact, if you take U. S. Cards to begin with, we've already said that what American the non renew side of American, what it does is that it gives us capital, which we look to deploy for higher risk returning businesses and to diversify our portfolio. The similar opportunity exists inside the investment bank, and you've seen it in the deals we've taken in The U.

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

S, as well as the strength of our equities franchise, which is very heavily U. S. Based as well. So we'll deploy it and we'll adjust.

[Anna Cross, Group Finance Director at Barclays]

On your second question in terms of ROTI, as you would expect, we manage a number of puts and takes in the delivery of our financials. So you're right. There are a number of these things that were certainly better. I'd call out rates, obviously, better than our assumptions. The investment banking wallet was better.

[Anna Cross, Group Finance Director at Barclays]

We performed well in equities. Deposits stabilized faster. So all of those things gave us a tailwind. But we talked about some of the headwinds here too, some of which were quite evident in the fourth quarter. Venkat talked about FICC.

[Anna Cross, Group Finance Director at Barclays]

We saw some improvement in Q4, but it's definitely been weaker in the year. And that's important because it's a big business for us. We also saw some unforeseen inflation, not just in the fourth quarter but throughout the year. I'd call out the Bank of England levy in Q1. I'd call out Motor Finance in Q4.

[Anna Cross, Group Finance Director at Barclays]

And of course, in the fourth quarter, as I said in my remarks, we efficiency plans to really secure those costs in the outer years. So from our perspective, we're encouraged by what we delivered. We're managing actively within the plan to deliver it with no surprises.

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

Okay. Well, thank you very much, everybody. We appreciate your time, your engagement, your questions, and we welcome this participation. So thank you again for joining us. I think there might still be coffee outside, and we'll come and see you outside.

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

Thank you.

Participants

Executives

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

Analysts

• Alvaro Serrano, Managing Director at Morgan Stanley
• Perlie Mong, UK Banks Analyst at Bank of America Merrill Lynch
• Benjamin Toms, Director - Equities at RBC Capital Markets
• Andrew Coombs, Equity Research Analyst at Citi
• Jason Napier, Head of European Banks Research at UBS Group
• Kian Abouhossein, Analyst at JP Morgan
• Jonathan Pierce, Equity Analyst at Jefferies
• Christopher Cant, Head of Banks Strategy at Autonomous Research
• Elise Yu Ge, Equity Research Analyst at Keefe, Bruyette & Woods (KBW)
• Amit Goel, Managing Director at Mediobanca