Barclays PLC

2019 was another year of progress for Barton. We continued the positive momentum across our businesses, and this allowed us to increase returns to shareholders. We have delivered a 9% return on tangible equity, and we will pay a dividend of nine pence per share, three times the dividend level in 2017. Our common equity tier one ratio stands at 13.8%. above our target at around 13.5%. Income was up 2% on the year. We've maintained our cost discipline, reducing operating expenses to below 13.6 billion pounds. This combination meant we improved our cost-income ratio for the third consecutive year to 63%, with positive jobs across all operating businesses. Profits before tax including litigation and conduct, with 6.2 billion pounds for the year, with a profit of 1.3 billion pounds in the fourth quarter. Earnings per share was 24.4 pence. This sustainable performance is grounded in our diversified model. Our income is generated across a mix of customers and clients, products, geographies, and currencies. As a result of the counter-technical benefits of our consumer and wholesale mix, our business is resilient through an economic cycle. 45% of our income comes from outside the United Kingdom and 47% of our income comes from our consumer banking and payments business. We have delivered on our target ROTE for 2019 and our focus on continuing to improve returns to the group. Barclays UK and our consumer cards and payment businesses are consistently high-returning at 17.5% and 15.9% respectively for the year. We continue to make good progress with our digital strategy in Barclays UK. More people than ever are now using our top-ranked banking app, with over a million more customers active on mobile than we had last year. We also fully integrated Barclays card accounts into our banking app during the year, so that our customers can now access even more of our products in one place. Investment in our capabilities is enabling us to improve the client experience and increase efficiency across our cards and payments business, strengthening existing relationships and helping us to build new ones. We just partnered with Emirates Airlines, the world's largest international carrier, to provide a new co-branded credit card to U.S. consumers this spring. This is a great growth opportunity for partners and adds to the strong and profitable partnerships we have with top brands in the U.S. like American Airlines and Uber. We've also recently signed a new European agreement with Visa, which will help us expand into new markets and invest in developing faster and smoother payments for merchants and consumers while maintaining the protection and security that our customers and clients expect. In the UK, we've joined up with British Airways in an exclusive deal to reward our premier banking customers with obvious points earned if they do more business with Barclays. We believe there are good opportunities to unlock further growth across the consumer banking and payments landscape, building and deepening relationships in the UK growing our partnerships and new propositions in the U.S., and strategically expanding in Europe. Looking at our corporate investment bank, we are pleased with our progress. Despite a 6% decline in the industry wallet across markets and banking since 2017, we have grown revenues in those businesses by 9% over the same period. That has underpinned a 230 basis points improvement in returns across the corporate and investment bank as a whole. Our top tier market business has gained 90 basis points of share since 2017, over nine times that of our closest European peer, and comparable to the highest gain in U.S. banks. And our banking franchise saw 10 basis points of share gain just last year, with many of our European peers seeing their share decline giving us a ranking of sixth globally for the first time, and more importantly, we are fifth in the U.S. We added some significant marquee deals in 2019. Barclays is acting as an exclusive financial advisor and lead financer for Danaher in its $21.4 billion acquisition of the biopharma division of GE Life Sciences, the largest ever acquisition in the life science tools market. We were also acting as corporate broker, financial advisor, and sponsor to the London Stock Exchange and its 27 billion in pending acquisitions for benefits. As part of that deal, we were the underwriter, book runner, and facility agent on branch facilities totaling $13.5 billion. In corporate banking, we have been driving returns through a careful focus on the return profile of each client. Balancing the capital committed in lending with the amount of transactional banking business a client does with us. As a result, we have seen a 90 basis points increase in 2016 in return on risk-adapted assets. We continue to manage our capital holistically across the corporate and investment banks, dynamically adapting our capital allocation to match our opportunities. The 8% return for 2019 is not yet where we believe it should be, but represents real progress. The profitability and cost efficiency of our model means that we are also sustainably creating the capacity to grow. We are focused on growing fee-based, technology-led annuity businesses with lower capital intensity. There are three areas where we have a significant customer base and believe we can differentiate Barclays over the next three to five years. Firstly, payments, we are in the unique position of being a bank with merchant acquiring, card issuing, and supplier payment capabilities. That means that we issue debts and credit cards to consumers, provide businesses with the ability to accept payments in-store and online, and we help clients make payments to suppliers as they order goods and services. This ability to see the payments landscape from all sides Alongside the significant investment in technology we have already made, great opportunities to deliver real value to our corporate clients to consumers. We helped one of the largest UK insurance clients realize millions of pounds worth of additional online customer transactions simply as a result of the improvements we made to their payment routes. Those improvements were powered by the insights we get from machine learning, against the large data set that comes from seeing every stage of the payment process. We're also connecting to the procurement system of our clients, taking out time and cost by limiting paper and manual property, while giving access to working capital. We see good growth opportunities to build our leading payment position in the UK. Only around 25% of our 1 million UK small business customers use our payment services today. So there's a significant opportunity to grow here. One of the ways we're doing that is by moving to digital application and onboarding, which will reduce fictions for small businesses and make signing up much more efficient. And we're embedding our payment acceptance capabilities in the software of third-party partners, which is helping us to scale much faster. We're also looking to further expand our European payment system. We recently signed a major client to our new European-wide payment acceptance proposition, supporting their entire UK and Europe business with thousands of new payment terms. Secondly, we're growing our transaction banking proposition in corporate banking, everyday fee-based banking services. We're continuing to expand the proposition across Europe with our single platform now live across seven of our nine hearted European countries. We added 360 new European clients in 2019 without the expense of bricks and mortars, which has helped us to grow to over 10 billion euros in our European deposit base. Improved client coverage and increased integration with our payments business and FX team is also helping to grow and diversify our income, as well as deepening the relationships we have with our corporate customers across more products. We now have over $500 million in fee and commission income from transaction banking and are targeting 5% to 10% annual growth rates in that number over the next few years. Thirdly, we see a significant long-term opportunity to grow our UK wealth, advice, and investment platform. We want to bring an integrated digital first experience across banking, financial planning, and investments to over 1 million of our existing premier banking customers. We're just beginning a multi-year program to transform our smart investors and wealth management businesses, building fee-based income with low capital intensity. We already have some 24 billion pounds of assets under management with good growth potential as we deliver this integrated platform. These are all areas that can increase our profitability without significantly increasing capital deployment, enabling us to further diversify Barclays without limiting our commitment to the businesses we're already in, or our capacity to return more capital to shareholders. In summary, we were pleased with our continued delivery in 2019, which again demonstrated the strength of our strategy to be the British Universal Bank. We know that our success over the long term is tied not just to sustainable financial results, but to the progress of our communities and the preservation of our environment. We are committed to playing a leading role in the transition to a low-carbon economy and are actively engaged in conversations with all of our stakeholders to ensure we make the greatest difference. In 2019, we achieved our 9% return target and increased returns to shareholders, while remaining in line with our target CFE1 level. We have a good control of our costs, both in absolute terms and are still improving cost-to-income ratios. we continue to believe that it's appropriate to target a return of greater than 10%, and we are managing our business to achieve just that. Given the low interest rate environment, however, it has become more challenging to achieve a 10% return this year. Nonetheless, we are confident that Barclays is well-positioned and will further improve returns immediately in 2020. We expect future earnings to drive increased returns to shareholders, as we anticipate a significant reduction in charges related to litigation and conduct from this year onwards. We intend to pay a progressive ordinary dividend supplemented with additional cash returns to shareholders, including share buybacks, as and when appropriate. Through continued cost discipline, we will also increase the capacity to invest selectively across our business, including the opportunities I've just outlined. Barclays is in a strong position. well-placed to face the challenges and opportunities ahead, and we look forward to delivering for all of our stakeholders in 2020 and beyond. Now I'll hand you over to Tushar, who will take you through the numbers in more detail.

Thanks, Jeff. I'll begin with a quick summary of the results for the full year and then focus my comments on Q4 performance, our cost trajectory, and our capital position. We reported a property for a tax of $6.2 billion, generating 24.4 pence of earnings per share, excluding litigation and conduct. up from 21.9% in 2018. This delivered in ROTE is 9%, the third consecutive year of underlying ROTE progression, and in line with our target for the year. As Jake mentioned, we still believe that about 10% is an appropriate target for Barclays over time, but achieving this in 2020 has become more difficult. We are nevertheless confident of reporting meaningful year-on-year progression in ROTE for 2020. I include litigation and conduct charges in my commentary as usual, but following the PPI provision of 1.4 billion at Q3, we hope that in future there will be less need to discuss the gap to statutory profitability. In 2019, this gap was largely due to the PPI provision, which resulted in a statutory EPS of 14.3 pence. The residual PPI provision is 1.2 billion, and we are well advanced with progressing the last volume of licence receiving Q3 in the run-up to the deadlines. We grew income 2% year-on-year with growth in CIP and PCP and income held up well in Barclays UK despite the challenging rate and margin environment. Costs are down 2% delivering positive tools both at the group level and in each of our operating businesses. At just below $13.6 billion, costs are in line with our guidance for the year. Cost control will remain at 1%. existing targets delivering a top 50% cost-income ratio over time. The reduction in the year from 66% to 63% represents good progress towards this. Impairment was $1.9 billion up on last year's charge, which benefited from improved macroeconomic variables, but credit metrics remain broadly stable across both secured and unsecured portfolios. We ended the year with a capital ratio of 13.8%, close to 60 basis points year-on-year, reflecting the change in treatment of operational risk at Q3. Our underlying capital generation more than offset the litigation and combat headwind of close to 60 basis points, allowing us to pay a significantly increased dividend of nine-tenths. We are comfortable with our capital target of around 13.5%. Although our capital ratio will go backwards in Q1, we are confident of generating capital in 2020 to fund increased return to shareholders. Looking now at the fourth quarter, income increased 4%, reflecting improvements across all the operating businesses. The cost rate of 3.5 billion was down 9% and reflects substantial cost-efficiency measures across the group, including the lower bank levy charge, which resulted in positive yields of 13%. Contentment was 523 million, down 120, reflecting non-recurrence of the 115 million for economic uncertainty in the UK, which we took in Q4 last year and remains in place. Credit metrics remain reassuring, with improvements in arrears in UK cars and flat arrears in US cars. Improved Q4 performance contributed to our delivery of the full-year ROTE of 9%. Looking at the businesses in more detail, starting with the UK. The UK reported an ROTE of 18.7% for Q4, with income up 5%, despite the challenging income environment. while COPS decreased 8%, delivering strong positive draws for both Q4 and for the fourth year. As in recent quarters, we had lower interest earning lending in UK cars, continuing to reflect reduced risk appetite and high customer repayments. This was more than offset by the benefits of Treasury operations and debt sales. As I mentioned at Q3, our debt sales this year were concentrated in Q4, but would more normally be spread across the year. In personal banking, we saw continued growth in mortgage balances, up a further $1.9 billion in the quarter, as our flow again exceeded our stock share. Although mortgage pricing remained competitive, we saw some margin improvement in the quarter. In market class, balances were down $0.2 billion, as in Q3, to $14.7 billion, reflecting both our risk appetite and balance paydown. As I indicated at Q3, NIM was just above 300 basis points at 303, resulting in a full-year NIM of 309. This reflected our growth in secured lending, and I would expect that to continue in 2020, resulting in a NIM below 300. The combination of these factors and a low-rate environment would suggest a 2020 income run rate below the Q4 level. The cost decrease reflects efficiency savings, which more than offset continued investment, particularly improved digital capabilities to serve our customers. Cost management will remain a priority in 2020, given the income environment, but we won't delay key investment spend, including branch optimisation, which will benefit the digital transformation of the UK bank, and this year I would expect that spend to be skewed towards the first half. Benefit for the quarter was down year-on-year because of the one-off in Q4 last year that I mentioned, but up on the low Q3 print at $190 million. UK carbon instances were down slightly and other credit metrics are benign. As we look forward, the 200 million run rate we've referenced in the past is looking too high, absent significant deterioration in the economic conditions. Turning now to Barclays International. The BI businesses delivered an ROV of 6% for the quarter compared to break-even last year, with improvement in both CIV and CPT. I'll go into more detail on the businesses on the next few slides. Although Q4 is seasonally the weakest quarter for the CID, ROPE was 3.9% compared to a small loss last year, contributing to a full year ROPE of 8%, up from around 7% in 2018. Income was up 8% at 2.3 billion, while costs were down 9% at 1.8 billion, delivering strong positive draws. Market income included a gain of $55 million on TradeWeb, and a 37 million negative from CBA catching net of treasury activities. It had a good quarter of 27% reflecting strong performance, particularly in rates. Ex-keys increased 9% despite a lower contribution from derivatives, as cash equities and ex-keys financing reported year-on-year growth. Overall, market income was up 20% year-on-year. Banking was down 7% against our record key fall last year, as our stress before the timing of deal completion can make the banking line quite lumpy from quarter to quarter, but we're happy with the way the franchise is developing. The corporate income line is down 9%, reflecting market moves on loan hedges. We reduced GID costs by 9%, as cost efficiencies outweigh continued investment in the business. And going forward, we will clearly be aiming for positive tools, adapting the cost base to the income environment. RWA decreased by over $13 billion in the quarter to $172 billion, but was similar to the $2 expect an increase through Q1, which will include the new securitization rules introduced on the 1st of January, as well as these analyses. Sending out consumer cards and payments. We continue to generate attractive returns in CCP, with a Q4 ROV of 15.3%, up from 5.4% in the Q4 last year. Income increased year-on-year by 6%, reflecting improved Treasury contribution. You'll recall that we disclosed a 16 million negative last Q4. The costs were down 10% resulting in strong positive draws. The US card would continue to increase the focus on the co-brand portfolios of scaling back own brands. This resulted in overall growth in net receivables of just 1%, but within that the co-brand balances increased 3% year on year. At this stage in the US economic cycle, I think growth in the co-brand balances is likely to be in mid to high single digits per annum, but overall balance growth will be lower. We also felt some income growth in Germany and in private banking and payments. As Jeff mentioned, we are particularly encouraged by the outlook for payments growth following the major investment in systems we've made over the last few years. Reduction in costs also reflects the refocusing in the U.S. consumer business as we scaled back our own brand offering while continuing to invest in other areas. Payment was slightly down year-on-year at $299 million and down on Q3, which you will recall included a $30 million increase from macroeconomic updates. Credit metrics also remain well-controlled, with not much movement in the 30 and 90-day arrears. Turning now to head office. The head office loss before tax of $167 million was a little higher than the Q3 loss of $116 million. The delta is largely attributable to the after-dividend, which we receive in Q1 and Q3 each year. Costs continue to run in the $50 to $60 million range, while the negative income reflects the main elements I referenced before. and the residual negative Treasury items. There are also some negative income in Q4 from the sale of close to $1 billion of our Italian mortgage portfolio. Now I want to focus a little on costs. We delivered on our cost guidance in 2019, and although we aren't selling fixed cost guidance for 2020, we are very focused on delivering positive juros in order to drive the group's cost-income ratios to top 60% over time. Through cost efficiencies, we have delivered an absolute reduction of $1.4 billion over the last three years, while continuing to invest in key business initiatives. Together with income growth, we've generated a 9% point reduction in the cost-income ratio. Looking at a bit more detail at these cost-efficiency actions, I've shown here some examples of the productivity gains that our third code, BS, has been driving over the last two years, under four main categories. For example, in procurement, the Expo has delivered an 11% reduction in suppliers since the end of 2018. On the real estate front, we've cut over 1 million square feet of floor space, while creating new campuses in New Jersey, Pune, and Glasgow. Overall, these savings totaled around $550 million in 2019, and many of the actions are ongoing through 2020, so we expect to drive further significant costs for capacity creation. The result of this is that we are spending less on run-the-bank costs and more on change to banks. For example, between 2018 and 2020, we expect to reduce costs allocated to mandatory regulatory controls by a third. Key now decreased in the quarter by 12 pence to 262 pence, full slack on 2018 despite a currency headwind. Key 4 included a negative currency impact of 7 pence, another reserve headwind of 6 pence, reflecting revenues and credit spread tightening. These more than offset 4 pence of EPS. As you know, the sterling dollar rate has been volatile over the last couple of quarters, with a significant benefit in Q3, followed by the Q4 headwind. There have also been material growth moves, with increases in the quarter, or reductions since year end. The capital progression, by contrast, was a positive story. On capital, the CP1 ratio increased in the quarter by 40 basis points to 13.8% Although Q4 is our seasonally weakest quarter for underlying profitability, we still generated 28 basis points, more than offsetting the 18 basis points applied to dividends and 81 coupons. The other contributor to the increase was the significant reduction in RWA. This is mainly due to depreciation of the dollar, capital friction action, and the seasonality at year-end in the CIB. I would remind you that the RWA reduction from the weakening of the dollar is broadly hedged by the move in the dollar to Q1 capital. Looking on the next slide at our capital requirements, a year-end CQ1 ratio of 13.8% is comfortable against our target level of around 13.5%. As you know, CQ1 tends to be our weakest quarter for ratio build, and I would expect a lower capital ratio at 31st of March, reflecting both the seasonal build in RWAs and the increase in securitisation RWAs that came in on the 1st of January. Nevertheless, we remain confident about capital generation from our businesses, despite the increase capital bills will be held over the next few years by the lower pension deficit contributions agreed with the trustee following the recent tri-year valuation. It showed a significant reduction in the funding deficit to $2.3 billion. These are the details in the next slide. As you know, our capital returns policy is to combine aggressive dividends with share buybacks as and when appropriate, but we won't be saying anything about the precise timing and quantum of buybacks until we are ready to announce one. We show on this slide our current capital requirements, and also an illustration of how this might change to reflect the expected counter-cyclical buffer increase indicated by the Bank of England. There is expected to be some reduction in the PIL-SUA requirement, but overall it would increase our MBA hurdle, all other things being equal. So for many times, we look at capital through a number of lenses, and our target level isn't only based on the buffer over MBA. We wouldn't see this change increasing our target capital level of around 13.5%, and we don't see it severely affecting our capital distribution plans. Our UK leverage ratio at the end of the year was 5.1% on the spot basis and 4.5% for Q4 on the daily average basis. These are prudent levels for us to hold above our UK leverage requirement, which is currently just below 4%. With the material portion of our exposures being short-term or liquid in nature, we have proven our ability to manage our leverage exposure dynamically. Our spot and average measures will generally be wider apart than most UK tiers, which have less flexibility and more static leverage positions. But also note that we expect the implementation of CRR2 to provide a meaningful benefit to our leverage position, given our level of settlement balances and the effect on derivative exposures. Our funding and liquidity position remains strong. We issued $8.6 billion equivalent of MREL debt in the year, broadly in line with our plan to issue around $8 billion. We plan roughly 7 to 8 million in the current year. Our MRL is currently at 31.2%, in line with our expected end requirement. We're also pleased with the recent rating upgrade from Moody, which has moved our tier 2 debt up to investment grade. Our liquidity coverage ratio was 160% at the end of the quarter, and our loan-to-deposit ratio was 82%. Before I conclude, a few words on ESG, which is rightly becoming an increased focus for both our investors and for other stakeholders. Our key principles on ESG are guided by a core objective of delivering sustainable returns for the long term. This slide shows a number of key 2019 highlights in this area. With the publication of our annual ESG report in March, we will be providing information on how we take in a leading position on climate change and the transition to a low-carbon economy. As well as enhanced climate-related disclosures to supplement our outwardly extensive environmental, social and governance reporting. Special recap. Reporting an ROPE of 9%, including litigation in conduct for the year, is possibly fewer than 4%. We still believe that about 10% is an appropriate target for parties over time, but we acknowledge that achievement of this in 2020 has become more difficult. We are nevertheless confident in reporting meaningful year-on-year progression in ROPE for 2020. This progression remains a key priority for the group, while also delivering attractive capital returns to shareholders and investing in key business growth opportunities. We've made a dividend of 9 pence a year, up from 6.5. With our fee-to-earn ratio at 13.8%, against our target of around 13.5, we are well-placed to generate capital to fund increased distribution to shareholders. Thank you. I will now take a question, and as usual, I'd ask if you 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 your question, please press star followed by two. When preparing to ask your questions, please ensure your phone is unmuted locally. So confirm that star followed by one to ask a question. Our first question today comes from Alvaro Serrano of Morgan Stanley. Please go ahead.