Barclays PLC

Good morning, everyone. Barclays generated 1.2 billion pounds of attributable profit in the third quarter of 2019, excluding the litigation and conduct charges, which largely related to our PPI provision. We dealt well with some headwinds in our UK consumer business, while she produced a good performance in our corporate and investment bank, particularly compared to the same period in 2018. The bank generated earnings per share of 19.7 pence for the first nine months of 2019. Profit before tax was 1.8 billion pounds in the quarter and 4.9 billion pounds year-to-date. Our group return on tangible equity of 10.2% for the quarter is a further positive step towards our 2019 target of 9%, which we still feel good about. Turning to capital, our CET1 ratio stands at 13.4%, as we now account for our operational risk more consistently with our UK peers. To reflect the positive impact of that change, we have consequently updated our CET1 target ratio to be around 13.5%. Our cost-to-income ratio for the quarter was 59%, and stands at 62% for the last nine months. Management focus on cost control remains a priority, and we continue to expect to see positive jaws across the group over the remainder of the year and for the full year. Markets UK produced good performance in the quarter, resulting in an ROTE of 21.2%, despite a challenging environment. We grew mortgage balances, though we still see margin compression in what is a competitive market. Therefore, we were pleased to land our net interest margin at 310 basis points, which was slightly up on Q2 despite this pressure. We continued to invest in our digital capability, and we're pleased that in the latest CMA service quality metrics, we were voted by UK consumers as the number one provider of active mobile banking services. In September, we also started the migration of 1.6 million customers from the Barclaycard legacy app through our award-winning Barclays app. Eight and a half million BarclayCard and Barclays customers on one platform means sharing a richer experience with all of them and provides our customers with access to a larger set of products and services. The corporate and investment banks produce a 9.2% return on tangible equity in the quarter and 9.3% year-to-date. Markets income was up 13% compared to Q3 of 2018, which was in line with our U.S. peers. Within that performance, equities income was up a touch on the comparable period last year, while in fixed income, currencies, and credit, we saw a 19% improvement in income year on year. Banking fees were up 33% versus the same period in 2018, reflecting strong performances in advisory and debt capital markets. This actually represents the best third quarter income performance for our banking business on record. Our corporate banking franchise had another decent quarter with income up on Q3 2018. We are maintaining a strong focus on improving returns in the corporate bank with client-by-client plans to grow profitability, especially through increasing higher returning transaction banking revenue. In our consumer cards and payment business, we are targeting growth in U.S. cards. with a particular focus on capturing new partnership opportunities, a core strength of the Barclays franchise in the States. We are confident in our ability to expand the portfolio further, both from finding new partners over time and through organic growth of our existing partnerships. Indeed, we expect to announce a new major partnership shortly. In payments, we are also positioned for growth and are investing in our digital capabilities to drive that. For example, In September, we went live with our new Transact solution for e-commerce merchants. This delivers a smooth and secure customer authentication process compliant with PSD2, which optimizes the transaction experience and helps to prevent fraud for the merchant. This is an excellent demonstration of where we've used our leading position as both an issuer and acquirer to create a hugely welcome solution. And we've already signed a number of agreements with clients paying a monthly fee for this state-of-the-art service. In summary, the numbers we've reported this morning represent another consistent and resilient performance from Barclays. And they show the benefits of our diversified model, one which allows us to weather today's macro headwinds and grow our businesses and profitability over time. They also show that we remain on track to achieve our target of a group return of 9% this year. We continue to target an ROTE of 10% in 2020, though we acknowledge that the outlook for next year is unquestionably more challenging now than it appeared a year ago, and particularly given the uncertainty around the U.K. economy and the interest rate environment. We'll see what transpires, but we are fortunate to have a strong franchise to deal with the challenges when they come. Finally, as I said before, we want to continue to return a greater proportion of the excess capital that we generate to our investors. And so, despite the impact of profitability of the 1.4 billion PPI provision, it remains our intention, in normal circumstances, to pay a total dividend for 2019 of around three times the half-year payment of three pence. Now, I'll hand you over to Tushar to walk you through the numbers in detail.

Thanks, Jeff. I'll begin with the results for the first nine months and then focus my comments on Q3 performance and the 30th of September balance sheet. Reported aid profits before tax were $4.9 billion for the first nine months, generating 19.7 pence of earnings per share, excluding litigation and conduct. I'll continue to exclude litigation and conduct charges in my commentary as usual. The gas strategy profitability was principally the additional Q3 PPI provision of $1.4 billion, which was within the range we announced in early September, and resulted in a statutory EPS of 10.4 pence. Group ROTE for the first nine months was 9.7%, with double-digit returns for both VUK and VI. As Jeff mentioned, we continue to target an ROTE for the full year of over 9% and over 10% for next year. The nine-month return represents a good base for reaching the 9%, despite Q4 seasonality. But the macro headwinds, including the low interest rate environment, are making our targets more challenging, particularly with respect to 2020. Nevertheless, we grew income 2% year-to-date, with the increase in Barclays International more than offsetting the decline in Barclays UK. Costs were broadly flat year-on-year, but with positive jewels in Q3, and expected for Q4 and for the year as a whole. With the income environment, cost control remains a major focus, and we've reiterated our cost guidance of below $13.6 billion. Impairment was $1.4 billion up on last year, which benefited from improved macroeconomic variables, but credit metrics remain broadly stable across both secured and unsecured portfolios. On capital, we've just concluded discussions with the regulators to remove the regulatory flaw on operational risk RWA. This resulted in a reduction in RWAs of $14 billion with an associated increase in the Pillar 2A requirement. Focusing now on the third quarter, income increased 8% despite the challenging environment, particularly in the UK, reflecting a strong performance in CIV, where income grew 17%. The cost sprint of $3.3 billion was down 1% and reflects cost efficiency measures across the group. This resulted in positive jewels of 9%. Impairment was $461 million, up $207 million on the low level we reported last year, and it principally is a non-recurrence of the significant favorable U.S. macroeconomic updates last year. In contrast, the Q3 impairment this year included a $16 million net charge from macro updates covering both the U.S. and U.K. The effective tax rate excluding litigation and conduct was 17% and attributable profits was $1.2 billion. This delivered an ROTE of 10.2% excluding litigation and conduct. PNAV of 274 pence was down 1 pence in the quarter, as earnings per share of 7.2 pence and reserve movements were more than offset by the PPI provision, and payment of the half-year dividend of 3 pence. Looking at the businesses in more detail, starting with BUK. BUK reported an ROT of 21.2% for Q3, despite the challenging income environment, with income down 3%. In personal banking, we saw further strong volume growth in mortgage balances, up 2.9 billion net in the quarter, and healthy application volumes, but also continuing-type margins. Vastly-cast balances were down from 15.1 billion to 14.9 in the quarter, reflecting both our risk appetite and customer behaviour, and I would expect this trend to continue. Despite margin pressure and a continuing growth in secured lending, the NIM of 310 basis points was a slight increase on Q2. We expect NIM for the full year to be close to this level, as the Q4 NIM will be lower, reflecting both the continuing mixed effects of growing secured lending and lower interest-earning lending in cars. Costs decreased 4% year-on-year, as efficiency savings more than offset continuing investment. This includes on-grain upgrades to our bus use app and our digital offering more broadly. Q3 income was up on Q1 and Q2, and I would note that this was achieved without any debt sales, which are part of our no still expect positive jewels for Q4. Loans were up $4 billion overall in the quarter to reach $193 billion, and deposit balances continue to grow to reach $203 billion. Repairment for the quarter was just over $100 million, while down on the run rate of around $200 million we've referenced in the past. This was despite a charge of around $30 million resulting from macroeconomic variable updates. UK car delinquencies were down slightly, and other credit metrics are benign. The lower charge reflects some recalibration of our models to reflect experience of customer behaviour over the last few quarters, as well as lower Stage 2 balances. As a result, although I would expect a higher charge in subsequent quarters, the 200 million run rate we referenced previously is looking like the high end of the expected range, absent significant deterioration in economic conditions. Paying out to Barclays International. In BI, income and impairment were both up while costs were flat, delivering an ROT of 10% for the quarter, up from 9.2% for Q3 last year. You can see the key financial metrics on this slide, and now I'll go into more detail on the BI businesses, starting with CIV. CIV reported an ROT of 9.2% for the quarter, up from 7% last year. Overall, the income was up 17% or close to $400 million at $2.6 billion. This included, within markets, a loss of $40 million from the market-to-market on our residual staking tradeways, and a net benefit of $90 million from Treasury activities, including positives from Treasury sales and negatives from CBA hedging. Stakes had a good quarter of 19%, reflecting strong performance, particularly in rates and securitized products. Equity has increased 5%, despite a lower contribution from derivatives, resulting in overall market income of 13%, ahead of U.S. peers, with good contributions across M&A, GCM, and ECM. The corporate income line was up 1%, reflecting growth in transaction banking, while the corporate lending line remained close to the underlying run rate of $200 million that we've referenced in the past. Costs were flat, despite the stronger dollar, as we continued to implement cost efficiencies. This resulted in positive jewels of 17%. There was an impairment charge of $31 million, which included single-name provisions, compared to a net release of $3 million last year. The most significant movement in CIV assets in the quarter and in Q2 was the result of further flattening of interest rate curves, which led to increases in both derivative assets and liabilities. There were also further increases in prime balances as we continued to expand our financing businesses. RWA has increased by $9.25 billion to $185 billion, reflecting a stronger dollar and levels of trading activity. Turning now to consumer cards and payments. We continue to generate attractive returns in CPP while growing the business. ROP was 14%, down year-on-year, reflecting the unusually low impairment in Q3 last year. Income increased year-on-year by 7% or $78 million, partly due to the non-recurrence of the $41 million loss on Visa preference shares. We grew the U.S. card receivables by 4% in dollar terms, notably in the partnership portfolios. Costs increased 1% as we continued to invest in the growth of the international cards, the private banks, and payments. In payments, we continued to roll out our merchant acquiring proposition in a number of European countries, and this is an interesting growth opportunity going forward. As we flagged at Q2, impairment is significantly higher than the Q1 and Q2 levels at £321 million, which included £30 million from macroeconomic updates, and we expect Q4 to reflect further seasonal balance growth through Thanksgiving and Christmas. However, credit metrics remain well controlled, with not much movement in the 30- and 90-day areas. Turning now to head office. The improved results quarter on quarter was driven by the lower level of income expense, following the redemption of the 14% RCI at the end of Q2. Income was a net negative of £55 million, reflecting £30 million of residual legacy funding costs, hedge accounting expenses and the residual negative Treasury items. These negatives were partly offset by the out-of-the-dividend which is received in Q1 and Q3 each year. RWA decreased to £13.4 billion, reflecting the removal of the operational risk clause. I'm including a cost summary to emphasise our continuing focus on cost efficiencies, to fund the investment spend and to deliver absolute cost reductions when the income environment requires it. As I've mentioned, we remain on track to meet our cost guidance of below $13.6 billion. I would remind you that this was set based on a dollar rate of $1.27, although we had a Q3 cost headwind with an average run rate of 1.23, with the dollar back above the 1.27 level, we still plan to come in slightly under the 13.6 billion figure. Key now decreased in the quarter by one-tenth to 274 pence. Earnings per share of 7.2 pence were partially offset by the payment of the half-year dividend of three-tenths. Net reserves movements were also positive, including the strengthening of the dollar to 1.23 at 30 September. Of course, this may reverse in Q4 based on current rates. The net accretion of 8 pence from these elements was more than offset by the 9 pence hedge win from litigation and conduct. On capital, the CT1 ratio was flat across the quarter at 13.4%, which reflected a 57 basis point increase from the removal of the operational risk floor, largely offset by the 49 basis points from litigation and conduct. Our businesses remain capital generated, with 50 basis points from profits, out of which we accrued 21 basis points for dividends and 81 coupons. The 21 basis points reflect the final clip-on on AP1's recording Q3, and you would therefore expect a lower capital effect in Q4, and a 13 basis points from the FX impact of those redemptions is also not occurring in Q4. This slide shows the build-up of our capital requirement. The removal of the operational risk floor has had a positive effect on 57 basis points on our CP1 ratio. Our CP1 requirement has also increased, with PILA 2A up by 35 basis points and the annual updates. The result is our regulatory minimum capital level is now 12%. We have therefore updated our target CG1 ratio to around 13.5%. The operational risk charge doesn't affect our overall capital requirement, but does give us a little more flexibility in how we meet this. In summary, we are still around our target ratio, and our confidence in our ability to continue to generate further capital is reflected in our capital returns policy. combining a progressive dividend and buybacks as and when appropriate. Our funding and liquidity position remains strong. In Q3, we issued a further billion of AP1, and we called three outstanding AP1s, totaling 2.3 billion sterling equivalent. Our next potential AP1 calls aren't until December of next year. Looking at MREL overall, we have issued 8.2 billion equivalent in the year to date, in line with our plans to issue around 8 billion this year. As usual, we will keep an eye on market conditions for pre-funding opportunities. Our MREL is currently at 30.4%, closer to our expected end requirement of 31.2%, which reflects the Pillar 2A update. Liquidity coverage ratio was 151% at the end of the quarter, with a liquidity fall of $226 billion, with our loans deposit ratio was 82%, continuing to position us conservatively. So to recap, we remain on track in the execution of our strategy, and reported an ROPE of 10.2%, excluding litigation and conduct. the Q3, with positive tools of 9%. We continue to target an ROT of greater than 9% and 10% for 2019 and 2020, respectively. But the macro headwinds, including the low-rate environment, are making it more challenging to achieve these targets, particularly with respect to 2020. Continuing to improve our returns year on year remains a key priority for the group, while also delivering attractive capital returns to shareholders and investing in key business growth opportunities. We are at our updated CP1 target of around 13.5% despite the Q3 CPI provision. And with an ROT for the first nine months of 9.7%, we are well-placed to deliver on these priorities. Thank you. And we will now take your questions. And as usual, I would ask you to limit yourself to two per person so we get a chance to get around to everyone.

If you wish to ask a question, please press star followed by one on your telephone keypad. If you change your mind and wish to remove the question, please press star followed by two. When preparing to ask your question, please ensure that your phone is unmuted locally. To confirm, press star followed by one to ask your question. Your first question today, gentlemen, comes from Alvaro Serrano of Morgan Stanley. Alvaro, please go ahead.