Barclays PLC

Good morning everybody. This is my first earnings call as Chief Executive of Barclays. It's a great honor to follow a three century long line of stewards of this company. While I'm new in this job, I have been at Barclays for a number of years. I was part of the management team that developed the strategy we set out in 2016, and I'm delighted now that we are seeing the benefits of that strategy in the results which we are about to discuss. So moving to slide three, it has been a strong full year performance for the group. In 2016, we set out to build a bank capable of delivering double digit returns through the cycle. Last year in 2021, we delivered a group return of tangible, return on tangible equity of 13.4%. This included double digit returns in all three of our major lines of business, Barclays UK, the consumer cards and payments business, and the corporate and investment bank. The group also delivered a record profit before tax in 2021 of 8.4 billion pounds. This profit included record levels of profitability in the CID in our corporate and investment bank, strong cost discipline, a net credit impairment release of around 650 million pounds. And we acknowledge that the economic outlook remains uncertain, but this is reflected in the robust coverage ratios which we retain. We also remain well capitalized with a CET ratio of .1% per year rent. And this performance has enabled us to announce the return of over 2.5 billion pounds of excess capital to shareholders in respect of 2021. This is the equivalent of a total payout of 15 cents per share. The group has demonstrated significant progress since 2015. We delivered a greater than 10% ROTE in 2021. And the objective now is to sustain this performance, delivering double digit returns on a consistent basis. Prashar will say more about this shortly on the factors that give us confidence in achieving this. We continue to focus on managing costs. Our cost income ratio is 66% down from over 80% in 2015. In part, this improvement was driven by lower litigation and conduct charges. And a substantial portion of our material financial crisis related legacy matters are behind us. It's also a result of strong cost control, evidenced by base costs remaining flat year on year at 12 billion pounds. We will continue to emphasize cost discipline, creating efficiency savings, which we will use to invest for growth and to drive higher returns. We have also managed our capital resources prudently, steadily improving our CET one ratio since the end of 2015. Our strong organic capital generation, including over 200 basis points from earnings have enabled us to increase capital distribution to shareholders in 2021. Barclays remains in a strong capital position and distributions to shareholders remain a key priority for management and the board. To that end, we were pleased to be able to announce a further buyback of up to 1 billion pounds with our results today. This is in addition to the 500 million pound buyback, which we announced with our interim results and supplements the sixth sense total dividend for 2021. We recognize that the economic environment remains uncertain. However, Barclays is relatively well positioned against this backdrop. We are materially geared to rising interest rates at both the short end and the long end of the yield curve. This means that we benefit from rises in the base rate as well as the steepening of the yield curve by our structural interest rate hedge. We estimate that each 25 basis point upward parallel shifts the yield curve would add about 500 million pounds to annual net interest income by year three. In addition, consumer spending levels in the UK and US have been improving. And this is a good lead indicator of interest earning unsecured balance growth to come. Our latest spend trends data in the UK shows that debit and credit card spent for January 2022 was up .4% versus January 2020, pre pandemic. In the US, January 2022 purchases were broadly flat as January 2020 compared to January 2020 as the economy has continued to recover. Although inflation is a tailwind to normal GDP, it is a headwind to cost. We have a number of active cost efficiency programs to maintain the impact of inflation to mitigate the impact of inflation, I should say, while continuing to invest for the medium term. At the same time, unemployment in the UK and US remains at low levels. Unsecured lending balances are reducing and the macroeconomic outlook appears to be improving. We expect this to mean that the quarterly run rates of impairment is likely to be below pre pandemic levels. These are positive signs, though we of course recognize that a robust recovery is not assured. Our universal banking model is key to our strategy. We are a large consumer bank managing an excellent credit card franchise as well as the leading corporate bank and one of the largest global investment banks. Each is a successful business in its own right, but together they comprise a resilient and balanced group. For instance, in 2020 and 2021, we had strong profitability in the corporate and investment bank, helping us with standard downturn in our consumer businesses. Now, as the broader economy continues to recover, we expect to see an improved performance in our consumer businesses, while sustaining the robust performance of the corporate and investment bank. In order to grow the group and to sustain returns above our target, we emphasize three priorities. I will outline these in the next few slides. Our priorities should enable us to take advantage of some of the long-term changes taking place in financial services. Digitization is one of the most important of these trends. Digitization continues to liberate finance. It provides our customers and clients with cheaper and better products and services, a better user experience, and a more seamless and efficient way of interaction. This is typified as a strategy by the awkward trends in the number of customers who want to engage with us digitally. In the UK, our mobile banking customers continue to grow year on year. We now have over 10 million people registered on our app, with around 11,000 more added each week. At the same time, branch visits continue to fall. The pandemic has accelerated this transition. Within wholesale banking, we continue to observe growth in both the public and private global capital markets. And combining the total market capitalization of issued securities around the world, the value of equities and bonds outstanding has grown by over 50% in the last three years. But as these public markets have grown, so too have the private ones. Since 2018, the total assets and the management in the private markets have grown more than 60%, from $6 trillion to $9.8 trillion. The largest private equity and private credit funds dominate these markets, and they are among our biggest clients. Finally, as our third priority, we recognize the scale of opportunity in climate-related financing. It is difficult to be precise about the magnitude of this opportunity, much as it would have been difficult to predict the value of the internet revolution in the mid-1990s. Estimates of the additional investment required to finance the transition are at least $3 to $5 trillion every year for the next 30 years. This could be a new industrial revolution. So let me take each of our strategic priorities in turn. First is the delivery of the next generation digitized consumer financial services. We see the dominant business challenge for this next decade as continuing to transform Barclays to deliver products digitally. Across Barclays UK and our consumer cards and savings businesses, we will continue to invest in our digital capabilities. This is a means of delivering better products and services more efficiently and with higher profitability. Within Barclays UK, we will continue to enable customers to transact and interact globally, digitally. Our aim is to increase digitally enabled customer journeys, products and services that can be completed online from 70% to 80% by the end of this year. We're also observing a steady increase in the use of more flexible and accessible ways to transact outside a branch. For example, the number of smart ATMs we operate in the UK will go from 25 at the end of 2021 to 376 by the end of 2022. However, as we observe these trends, it remains central to our strategy that we adjust our footprint without neglecting the needs of society. We are one of the driving forces behind the current initiatives to share banking infrastructure in order to continue access to cash and access to banking. We will continue to build out more cost effective infrastructure, significantly increasing our utilization of cloud computing. This would have meaningful benefits for our cost base. We will utilize consumer data more effectively. And by doing so, we can better understand customers' needs, build a more competitive offering and simplify our products and services. And we will look to reduce the number of products we offer by around a third over the next four years, targeting gains in service quality, simplicity and efficiency. We also aim to continue to realize value in our payments platform, including the synergies with the banking franchises across our group. We have a significant opportunity to grow our payments business. We have around 360,000 payment service relationships with UK SMEs, but over 1 million business banking customers. So we have the ability to grow this cohort. As Barclays owns its own merchant acquiring operation, we have a much more integrated relationship with corporates in the UK and Europe. This gives us the ability to scale up our e-commerce offering, which is a very fast growing part of the payment complex. Having had a relatively conservative posture during the pandemic, we think now is a good time to build unsecured consumer lending in both the UK and the US. We intend to drive this growth through corporate partnerships, particularly in the US, which is the biggest global credit card market. The prime example of this is our relationship with Gap, which will commence in Q2 of this year. This partnership will not only enable us to diversify our US card offerings into retail from airlines, but will also broaden our product suite with the introduction of white-label store cards. We also have a significant portion of sales finance partnerships in regulated installment lending. This includes our partnerships with recognizable brands like Apple in the UK and Amazon in the UK and Germany, both of which we intend to grow. In the CID, we want to deliver sustainable growth and returns, improving our ability to serve clients across our markets as the capital markets themselves expand. This growth in the private and public capital market is at the core of our strategy. We are the sixth ranked global investment bank and the top ranked non-US player. This provides us with a strong foundation on which to continue to capitalize on the structural trend and to build a more diverse business. Over the past three years, we have improved our ranking, benefiting from the investments which we have made in our people and technology. At the same time, some of our European peers have been exiting capital markets businesses. We have benefited from the high levels of clients and market activity during the pandemic and while we recognize that the capital market business is cyclical, the franchise is well-positioned to benefit during periods of heightened volatility. We see opportunities therefore to sustain and grow our share of industry peoples, helping to protect earnings during weaker periods in cycle and delivering stronger returns. To that end, we have taken steps to diversify our income across the corporate and investment bank. For example, you have heard us talk previously about investing in talent to grow our equity capital markets business and expanding our banking coverage in sectors like technology. As a result, our global ECM fee share has grown 70 basis points since 2018. Similarly, our global technology fee share has grown 50 basis points since 2018. In global markets, you've heard us talk about the growth in our prime business. In three years, our client balances have grown by some 50%. This is a testament to our focus on strengthening and broadening our client offering and the strategic investments which we have made in our platforms. Reflecting the growth we have seen in key areas of our franchise, I was delighted to see Barclays win two awards last week. First, Risk Magazine named us Prime Broker of the Year and second, IFR named us as the Equity Drivers House of the Year. Overall, financing income at Barclays has grown by approximately 40% since 2018 and this provides more stable annuity tax income, smoothing our income mix across the board. We have also seen a growth across the global market businesses. In the corporate bank, we have been working to improve our returns for several years, focusing on deepening our client relationships and broadening our product capabilities. Here too, we have invested to diversify our income streams. We've had success growing the number of clients we have in Europe and growing key based income in transaction banking. Total 7% year on year to around 600 million pounds. Our third strategic priority is to capture opportunities and help our clients as the world transitions to a low carbon economy. As this fundamental reorganization of the global economy takes place, affecting every business in every sector, Barclays is positioned to benefit from playing a constructive role. This means being the trusted partner for our customers and clients as they transition, advising and supporting them to adapt their business model and in fact their individual lifestyles. It requires us to support our clients from governments and global corporations to SMEs as they adapt to make their businesses more sustainable. We are already using our balance sheet, investment banking and capital markets expertise to help deliver this advice and finance. For example, we have facilitated 62 billion pounds of green finance since 2018 through landmark deals. This includes serving as the joint lead on seven out of eight inaugural green bonds issued by European sovereigns since 2017. However, there is much more we can do to take advantage of the market opportunity. We are continuing to expand our sustainable finance offerings for our specialist teams and we are integrating sustainability across our service offerings. We will continue to innovate to develop banking products that help consumers and small businesses make greener choices. For example, in 2018, Barclays was one of the first major UK banks to launch a green mortgage product. To date, we have completed over one billion pounds in green home mortgages and we have recently launched a green -to-let mortgage product. We also keep investing, we will keep investing our own equity capital in the young companies that are inventing the low-emissions, -carbon-emissions technology of tomorrow. Our focus on climate is an example and a clear demonstration of our purpose and values. These were enshrined over 300 years ago by our Quaker founders and they include integrity, community and stewardship. We've made significant progress against our environmental, social and governance agenda in 2021, underpinned by this purpose. This agenda will continue to be a major focus for Barclays in 2022, including offering shareholders a say on climate at this year's annual general meeting. Finally, let me talk briefly about our philosophy towards capital management. As 2021 has proven, the group is able to generate meaningful organic capital from earnings. Achieving a greater than 10% return on tangible equity consistently would translate to about 150 basis points of annual capital ratio accretion. This capital can then be used to do three things. First, to return an effective amount to shareholders, which I've stressed remains a key priority for me, for our management team and our board. Second, to invest for growth, targeting demand-led and capital-like opportunities to drive higher returns. And finally, maintaining a strong capital position, which is the foundation of our 13 to 14% CET1 ratio target range. I will shortly hand over to the co-chair to take you through our numbers. But let me close by saying how pleased I am with our performance this year. Our strategy is delivering, we have set out clear priorities strategically, and I'm excited about the sustainable past approach for Barclays. I'm confident that this positions us to be able to deliver greater than 10% ROTE on a consistent basis. And before I end, I want to express my gratitude on behalf of all my colleagues at the bank, to Tishaar Mourzaria for eight plus years of outstanding service to Barclays as our group finance director. In his first year in the job in 2013, we had reported a PBT of 2.9 billion pounds, an ROTE of 1.2%, and a CET1 ratio of .1% after a six billion pound rights issue. Look how different we are now. This cleaner, leaner, profitable Barclays of today owes much to Tishaar's broad vision and deep execution capabilities. I have personally known Tishaar for over a decade and a half, and have always valued his counsel and friendship. I'm reconciling myself to his wanting a change, but I'm delighted he will stay on at Barclays as chairman of our financial institutions group in the investment bank, and be of value to our clients and to us. It is testament to Tishaar's vision and leadership that he identified and prepared Anna Cross to be his successor. I've worked closely with Anna for six years, and I'm delighted that she is our new group finance director. She's intimately familiar with the strategy of the bank and all aspects of our financials, having been controller of the bank as well as PFO of our retail operations. Anna is molded from the distinguished Scottish tradition in global banking, and she will steward our finances and strategy with prudence, diligence, discipline, and rigor. So thank you, Tishaar, for everything. Welcome, Anna, and congratulations. And over to you, Tishaar, for your valedictory address.

Thanks, Benkatt. While it may be the right time for me to be moving on, I can't think of a better team, in both you and Anna, to be stewarding and driving Barclays forward for many years to come. Moving on to the numbers. As usual, I'll start with a summary of our full year performance, and then go into more detail on Q4. Through the years, the strength of the CID has continued to offset the effects of the pandemic on our consumer businesses, which we are now seeing initial signs of recovery. Overall income was up 1% year on year, despite an 8% weakening from the average US dollar exchange rate. Cost increased by 0.6 billion to 14.4 billion, and I'll say more on the cost of that increase shortly. Following an impairment charge of 4.8 billion in 2020, we had a net release of 0.7 billion for the year. However, we maintained strong coverage ratios in line with or higher than pre-pandemic levels in key portfolios. This resulted in a PDT of 8.4 billion, a significant increase on the 2020 profit of 3.1 billion. The EPS was 37.5 pence, and we generated an ROCE of 13.4%. P now increased by 23 pence over the year to reach 292 pence. Our capital generation has put us in a position to pay a full year dividend of 4 pence per share, making 6 pence in total for the year, and launched a further share buyback of up to 1 billion, following on from the 500 million buyback executed in the second half of 2021. That takes total capital return to 15 pence per share equivalent in relation to 2021. And of course, we also completed a 700 million buyback in April in relation to 2020. We ended the year at a .1% CC1 ratio, or .8% adjusted for the announced buyback. Well above our target range of 13 to 14%. Few words on income, cost, and impairment trends before I look at Q4. We mentioned the benefit of diversification throughout the pandemic, and we again delivered resilient income, group income performance in 2021, up 1% on 2020 despite the US dollar headwind. We reported a 3% increase in B-UK income with growth in mortgages, and non-recurrence of COVID related customer support actions partially offset by lower unsecured lending balances. CCP income was down 3% year on year, reflecting lower average US car balances, increased customer acquisition costs, and the weaker US dollar. But income from payments and the private bank increased year on year. CID income was down just 1% on the very strong 2020 print despite the dollar headwind, with a strength in the fee businesses and equities offsetting weaker fixed performance. We summarized here some of the trends that are driving income across the lending businesses which underpin our confidence in income growth going forward. We have a continuing tailwind in secured lending volumes in the UK, adding almost 10 billion in mortgage balances year on year. On unsecured lending, we have been consistently cautious throughout 2020 and 21, but we are now seeing the first signs of recovery, and are optimistic about the prospects of a return to balance growth. The rising rate environment is a significant positive for us through the effect of higher longer rates on the role of the structural hedge, in addition to the effect on the public margins of recent base rate rises and potential further increases. The table on the right of the slide shows an illustrative example for a 25 basis point parallel shift upwards in the current yield curve. And the movement in the yield curve means that we now expect the role of the structural hedge to be a tailwind in 2022. Just to remind you that the income benefit from a 25 basis point increase in rates is spread across the group, with around two thirds now expected to benefit parties UK. Looking at costs, rate costs, which excludes structural cost actions and performance costs, are flat at 12 billion for 2021 in line with our previous guidance. Overall, costs increased by 0.6 billion to 14.4 billion as a result of the increase of 0.3 billion in structural cost actions and 0.2 billion in performance costs. Looking first at structural costs, the four year total of 0.6 billion included the real estate charge we took in Q2 and 0.3 billion in Q4, largely related to the transformation spend in the UK, which we flag at Q3, and which will start to bring savings from 2023. We will evaluate further structural cost actions for the current year, but I wouldn't expect a charge as large as 2021. We do place some inflation on costs, but we expect only a modest increase in base costs from the level of 12 billion, while continuing to make investments funded from cost efficiencies. To give overall cost guidance, but I'm broadly comfortable with where the cost consensus currently is in the 14.3 to 14.4 billion range. Moving on to impairment, we reported a net release for the group of 0.7 billion for the year, with a charge in CCP more than offset by net releases in VUK and CIV. This compares to the charge of 4.8 billion taken in 2020. On the right, you can see that the 2020 charge comprised roughly half stage three impairment on loans in default, and half stage one and stage two impairment. In 2021, we had a charge of 0.7 billion in stage three impairment, but a release of 1.3 billion on stage one and stage two balances, as macroeconomic forecasts have proved less severe than when the 2020 provision was taken. And there has been a sizable pay down in unsecured balances. We've included in the appendix, an updated slide on the macroeconomic variables and post-model adjustments. And you'll note that we're still holding a 1.5 billion in management adjustments. But I think the best way to think about our current impairment provisioning is by looking at coverage ratios, which is shown on the next slide. Despite the release in 2021, we still have strong coverage ratios. The area I want to focus on is the coverage of the unsecured ones. Here, the overall coverage ratio is still .8% above the pre-candidate level, and coverage on stage two balances, most of which are not past due, is still 30%, compared to the end 2019 level of 18.7%. Within this, coverage ratios for credit cards are still higher than the unsecured average, with 30 and 90 day areas, because are well down year on year. With these levels of coverage and the expected modest organic growth in unsecured balances, we expect the quarterly impairment chart to remain below historical pre-candidate levels in the coming quarters. Turning now to Q4 performance. Income was up 4% year on year to 5.2 billion, with growth in B-UK and -C-B and -I-B income stable. Costs were down 3% year on year, delivering positive sales. We had a small impairment release, compared to a chart of 0.5 billion for Q4 2020. As a result, profit before tax was 1.5 billion for Q4, up from 0.6 billion the previous year. The attributable profit for the quarter was 1.1 billion, generating an EPS of 6.6 pence and an ROTE of 9.3%. I would remind you again that these are all statutory numbers and take into account a litigation and conduct charge of 46 million. TNAP per share increased by 5 pence to 292 pence in the quarter, reflecting the 6.6 pence of EPS. Looking now at the business results for Q4 in more detail, starting with B-UK. Income increased 4% year on year, while the continuing strong, with the continuing strong performance in mortgages. Balances again grew with a net increase of 0.7 billion in Q4, making total mortgage foot growth of almost 10 billion year on year. Mortgage market is always very competitive, although there are some signs of pricing firming up. As we showed on the earlier slide, credit card balances were broadly flat at Q3, at 9.5 billion, still down 15% on the end of 2020 and 40% on 2019. Although only cron-related restrictions down from spending in December and January, we now expect the spend recovery to generate some growth in unsecured lending balances through the rest of the year. NIM for the quarter was 249 basis points, flat on Q3, but we expect improvement in NIM during the current year on the back of rate rises. The extent of this improvement will depend on the timing and number of rate rises and the long end of the curve, as well as product mix and pricing. There are a lot of variables, but at this stage, we're guiding to a NIM for 2022 in the range of 260 to 270 basis points. That's using an assumption that the UK base rate reaches 1% by the end of the year, although you'll note the futures market is currently pricing in higher rates. Increasing non-interest income compared to Q3, of 50 million, reflected higher debt sales. Cost increase twice the cent, reflecting 196 million of structural cost actions designed to deliver efficiency savings over time, a significant increase on Q4 2020. We expect the main savings from these measures to start coming in from 2023. Was an impairment release for the quarter of 59 million compared to the chart of 0.2 billion for Q4 2020. The coverage ratios, particularly in cards, look strong, as I mentioned earlier. Customer deposits increased by further 4 billion in the quarter, and the ROPE was 16.8%. Turning now to Barclays International, the IE income increased 1% year on year to 3.5 billion, while costs were marginally down. Impairment charge was 23 million, resulting in an ROPE of 10.4%. I'll go into more detail on the next two slides, beginning with the CIV. Income was broadly flat, demonstrating the benefit of diversification within the CIV, with a weaker performance in markets, largely offset by growth in investment banking fees. Q4 costs decreased by 7%, delivering positive draws, and a cost-income ratio of 65%. As I mentioned in previous quarters, the increase in the variable compensation accrual was skewed towards Q1 in 2021, in line with performance. There was a 73 million net impairment release compared to a small charge for 2020. Overall, the CIV generated an ROPE with a quarter of 10.2%. Look at the income in a bit more detail, global markets decreased at 23% overall in sterling. Both FIC and equities were down, but equities by just 8% and prime balances continue to grow. Overall, given the performance through the year and the investments made in various areas, we remain positive about the development of our markets franchises. Investment banking fees reached a record level for the fourth quarter at 956 million, up 27% -on-year. We saw strong increases across all three fee lines with equity capital markets, one of the areas we invested in, the standout performer. I'm not going to make any specific comment on January trading, but I would observe that while volatile markets may affect the timing of primary deal flows, they may be favorable for secondary markets businesses. Corporate lending income was down slightly at 176 million, with loan demand remaining muted. Transaction banking, on the other hand, was up 32% at 453 million. Tending now to consumer cards and payments. Income in CTP increased 4% to 0.9 billion, reflecting growth in payments and the private bank, possibly offset by lower income from US cards. US cards saw a continuing recovery in balances, adding $1.1 billion in the quarter to reach $22.2 billion. That's 6% growth -on-year and 5% growth on Q3. However, the income effect is dampened by the J-curve investment in that balance growth, particularly on customer acquisition and in the, particularly on customer acquisition in the growing portfolios like American Airlines and JetBlue. We're still expecting high payment rates in line with the market, but we are confident that we're doing balance and revenue growth in 2022, both organically and with the acquisition of the Gap portfolio, which comes towards the end of Q2, but the bank was currently expected to be around $3.5 billion. Payment income was up 29% -on-year and close to the Q3 level, despite only current related restrictions in December. Private banking has increased 15% -on-year, as client balances continue to grow. Investment and higher marketing spent was reflected in an increase of 13% in CTP costs. The impairment charge was 96 million, well down -on-year, and the ROT was 11.7%. Telling now to head office, the negative income of 49 million was a bit better than the 75 million underlying run rate I've mentioned before. Costs of 155 million were higher than our usual run rate and including some further costs related to discontinued software assets. These are included in our base costs rather than called out as structural cost actions. Lost before tax for the quarter was 198 million. Before I move on to capital, a quick summary of our liquidity and funding on the next slide. Remain highly liquid and well funded with a liquidity coverage ratio of 168% and along with a deposit ratio of 70%. Moving on to capital. The -C-1 ratio ended the year at 15.1%, well above our target range of 13 to 14%. During the quarter, the ratio declined slightly from 15.4%, with profits broadly offset by the expected RWA growth, which we flagged at the Q3 results. However, across the year, the ratio was flat, despite 1 billion of dividends paid in accrued and 1.2 billion for the share buybacks executed during the year. A total of 72 basis points return on capital. Going forward, the organic capital generation from profits in 2021 is a good illustration of our ability to return capital to shareholders and we've announced a further buyback of up to 1 billion to follow these results. We're showing the effects of this proposed buyback and the Q1 regulatory headwinds on the next slide. The announced buyback would reduce the year-end ratio of .1% by about 30 basis points. We've previously identified various regulatory changes coming in this quarter, most notably the reversal of the software amortization benefit of 35 basis points. In total, these are expected to have an effect of 80 basis points, similar to what we showed at Q3. That will take the ratio to around the top end of our target range. With these changes behind us, I wouldn't expect to be calling out further material regulatory headwinds over the next couple of years. Looking further out, we are mindful of the eventual introduction of Basel 3.1. We await more detail on implementation, including timing, but our best estimate currently is that this could add five to 10% to group RWAs at the point of implementation based on the 2021 level. We'll be monitoring closely to what extent the effects will be partially mitigated by changes in Pelletier-Way requirements as flagged by the Bank of England. We will factor Basel changes into our usage of capital as we get closer to the implementation, but think this is very manageable. I'm not gonna forecast a precise plot path of the capital ratio from quarter to quarter, but going forward, we are confident that the balance between profitability and investment and growth will leave us with net capital generation to support attractive distributions to shareholders over time and be comfortably within our CT1 target range. As I said before, the Board considers capital distributions regularly through the year. It isn't just a matter for an annual discussion, as you saw in 2021. That target range gives us appropriate headroom above our MBA hurdle, which is currently 11.1%. The chart shows how the MBA hurdle is expected to evolve for the count of cyclical buffer increases indicated by the Bank of England to reach .6% by year end and potentially .1% in Q2 2023. As we've obviously taken this into account, we have obviously taken this into account in setting our target range. Finally on leverage, our year end spot leverage ratio was 5.3%, similar to the end of 2020, and the average UK leverage was 4.9%. Before concluding, I just wanna say a few words about the flight path for our ROTE. We're delighted to have hit our ROTE target of over 10% in 2021, but we are conscious that the .4% benefits from a net impairment release. So it's understandable that the market wants to assess how sustainable a double digit ROTE is. I'm not gonna give an ROTE forecast for 2022, but I wanted to talk through some of the factors that give us confidence this is achievable as we pursue the strategic priorities of NCAT reference. On the left-hand side, we've adjusted the reported return to eliminate some of the effect of low impairment. You can do this in a number of ways, but this illustration reverses out the macroeconomic release on modeled impairment. Together with removing the effect of the 2021 deferred tax data remeasurement in the UK, this would move the ROTE to around 10%. Looking forward over the next couple of years, we have some identifiable tailwinds and headwinds. On the income front, we expect a significant tailwind from rate rises plus some recovery and unsecured balances and growth in payments income, including transaction banking. Among headwinds, I've called out some further increase in impairment as balances recover. As I mentioned, we expect the charge to remain below pre-pandemic levels for some time. On the tax front, there will be a negative from the UK DTA remeasurement in Q1, reflecting the reduction in the bank tax surcharge from 2023. Longer term, there's a slight increase in the UK tax rates for banks from 2023, but the position on potential increases in US tax rates is now less clear. Other factors to consider are the cost trajectory and the direction of CID income and performance costs. We can influence the cost trajectory according to the environment and our priorities, particularly the extent to which cost efficiencies are invested in growth initiatives and the level of any further structural cost spend. Investment bank performance is hard to forecast. The market consensus is for some reduction in income wallet this year. However, there are positive structural trends from the size of capital markets, and we have made progress in strengthening our franchise in a number of areas, such as equity prime and secure price products. So overall, we feel we are well positioned to achieve double digit returns on a sustainable basis. To recap, we reported statutory earnings per share of 37.5 pence for 2021 and generated a .4% ROTE. And we're focused on delivering our target of double digit ROTE on a sustainable basis going forward. We're seeing some recovery in lead indicators for consumer income and believe our diversified income streams position us well to benefit from the economic recovery and rising interest rates. Reported an impairment release of 0.7 billion that maintains strong coverage ratios, and we expect the run rate for impairment to be below the pre pandemic levels over the coming quarters. We've delivered costs in line with guidance for 2021, although base costs for 2022 are expected to be modestly higher as a result of inflationary pressure. Plus remain a critical focus, and we will be disciplined on performance costs and on the extent of further structural cost actions. We executed two buybacks, totaling 1.2 billion during 2021, have announced a further buyback of up to 1 billion with these results. In addition to the total dividend of six pence per share. Our capital ratio is strong and remain confident of delivering attractive capital returns to shareholders while also investing for future growth. Thank you. And we'll now take your questions. And as usual, I'll ask that you link yourself to the 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 question, please ensure that your phone is unmuted locally. To confirm that star followed by one to ask a question. Your first telephone question today is from Omar Keenan from Credit Suisse. Omar, please go ahead, your line is now open.

Good morning. Thanks very much for the presentation and taking the questions. And I also want to extend my thanks to Tushar for all the guidance and wish you the best of luck for the future. I've got two questions, please. Firstly on Barclays UK NIM. I guess some of the key sensitivities for the 260 to 270 basis point is around deposit beta assumptions and mortgage margins. And as you said, you're assuming a base rate of 1% the market is expecting something higher than that. Could you help us think about what assumptions you have on deposit pass through for these rate hikes and how it compares to the sensitivity figure that you've given us. And appreciate your comments, but mortgage pricing has firmed in the past couple of weeks. But could you also help us think about what sort of churn assumptions you're making in the 260 to 270. So just a bit of color around what the key assumptions are behind that. And then my second question is on the return on tangible equity target. Thank you very much for the ladder. I guess the piece that might be missing is, as you said, the further normalization of loan losses from here. And thinking around when the cost income target of 60% might be met. Obviously it's very revenue dependent, but could you help us think a little bit more about the path towards the 60% cost income ratio. Thank you.

Yeah, thanks Omar. And I appreciate your comments. I look forward to probably seeing some of you next week anyway. But why don't I take both of those questions and then they may want to add some comments as I go along. On .U.K. Nim, I think your questions were, how do we think about deposit beta and churn, mortgage churn? So deposit beta for us, obviously you've seen how we've repriced our deposits for the first two rate rises that we have seen and obviously being relatively muted repricing. So a very, very significant path for assumption. You know, we've given out sensitivity for a further two rate, or a further 50 basis points of increasing base rates. Our sense is that it's still be relatively high levels of, or low levels of deposit beta. In other words, sort of we capture a lot of that rate rise. I won't throw out specific numbers, but I would say that I think as you get higher rates, the chances are that you probably proportionately start capturing less and less of each subsequent rate rise that's come through. It's very hard to be very sort of precise on this because we haven't really got any empirical data or anything like this historically where we started from such a low base and rates sort of rising relatively quickly. And on top of which, obviously the U.K. banking system has an awful lot of cash on deposits. But I think for the local sort of movements in the first or the next sort of two base rate rises or 50 basis points, we should be able to capture a reasonable amount of the path through, but we'll see. On mortgage churn, the way I think about mortgage churn, just so we get our definitions right, is it's really on the flow. So in other words, every product that comes for refinancing that's on our back books, so let's say a two year fixed rate product that comes to refinancing, what rate are we refinancing that into? I do think at current pricing levels that probably will go negative for now. It's really, really hard to be that precise sort of further out because you've seen how frequently I think the large lenders have been repricing their mortgage rates and obviously with movements in the swap curves, it's been quite active. So although I say near term pressures on negative churn on the flow, on sort of cannibalizing front book production, if you like, beyond that it's a little bit hard to tell. But by and large, I think what we're really trying to say is that we're reasonably optimistic in what a, at least what the current assumptions that we have around rate rises and what that will do to our income trends and hopefully see that in our NIM guidance. In terms of return on tangible equity, normalization of loan loss is just to remind folks briefly, I'm sure you've sort of got this from our scripted comments, but although we're not giving out a loan loss rate, at the moment it's sufficient to say that we would expect impairment charges to be quite a bit below pre-pandemic levels really as a function of a very benign credit environment. You can see that in our delinquency data, you can see that in the macroeconomic environment as well, as well as a lower unsecured balance rate than we had pre-pandemic. Cost-income ratio, Omar, I mean, you're right, it's as much a function of revenues as it is costs. We've talked about cost being in line with where current consensus is for 2022. We're quite optimistic on consumer income, CIV income, a little bit harder to be sort of precise than the forecast, but again, we think we're well positioned, generally speaking, as that business develops. So, I'd also say that for us, 10% is our sort of guiding north start. We reached a 10% return on a statutory basis this year, and our objective is to try and do that every year. And I think as we sort of do that in subsequent years, you'll see the cost-income ratio just naturally glide down towards that 60% or better. So, thanks for your questions, Omar.

Thank you very much.

Could we have the next question, please, operator?

Our next question comes from Ed Fergh from KBW. Please proceed with your question.

Yeah, thanks very much. Good morning, everybody. I just had two... Morning. Yeah, the first one was around CIV revenue outlook. And I need to remember, there was a lot of speculation in the press in January time that you're taking a big one-off hit on a particular transaction. I'm not particularly worried about the details of the transaction, but I wondered, can you give us some sort of idea of the quantum of that in terms of the Q4 numbers? And I guess, more importantly, looking forward, other than that, is there anything particular about your business this year, which would mean that going forward, you would perform any different than what we're seeing from the market as a whole? I mean, all the US banks are giving us sort of reasonable guidance in terms of how the market is operating in Q1. I guess that would be my first question. Do you want the second question at the same time, or do you want to answer that? Yeah, if you

want to get us both of them, Ed, and we'll try and get both together.

And the second question was about credit quality. I hear what you say about credit, but if I look at your stage three balances, in Q3, Q4 versus Q3, they were quite markedly in Buk, and quite markedly in international, which sort of surprised me, if I'm reading those correctly. I guess the question there is, it's very easy as a bank analyst, each time we hear about another 25 basis points of interest rate rises to shove in another, you know, 200, 300 million of revenue. But I guess the reason for these rate rises is ultimately to slow the economy. And I wonder what sort of work you've done internally about, at what level do you start to feel that rates would be the sort of headwind where you start to see credit issues coming through in your book, if that's OK. Thanks.

Yeah, thanks, Ed. Why don't I ask maybe Venkat to talk a bit about the CIB revenue and the item that you referred to, and maybe I'll come back to credit quality. And Venkat, maybe you want to add some comments there as well? Sure. Thanks, Ed.

I think our CIB, both in our markets and banking businesses, has been making strong and steady progress over the last few years. We have a sixth-ranked markets business. We've got a fifth-ranked banking business. The markets business has gone from eight to six approximately in three years. And the markets business... That's the markets business, but banking has also improved six over the last year. And this is with steadily increasing market share. Now, in that context, you will see some strong quarters and some quarters which are slightly weaker. What I would say is, on that specific item, that part of the strength of our business is now the greater coordination and large transactions which we do between banking and markets. The vast majority of these transactions are very profitable to us and very helpful to the clients in managing their risk and getting the, you know, profile that they want, the return profile that they want. Occasionally, one of these things does not work out quite as planned. We don't like it when that happens, and we learn from it and we move on. But I wouldn't read anything particular into this. And I have great confidence in the continuing trend of strong performance in the CIV, both in banking and markets, and appreciation of market share.

Thanks, Antat. On your second question, Ed, in terms of at what point do we start getting concerned about credit quality as rates rise, I'll make a few points there. At the outset, before we make any lending decision, particularly on the consumer side, obviously we do this in much more detail on the corporate side, on a -by-name basis. But even on the consumer side, we do stress for affordability at the very outset. And, you know, to give you a sense, for mortgages, we would stress customers to 6% mortgage rates before we feel it's prudent to be extending the mortgage. So it gives you a sense of sort of how we think about where that should go. The other thing I'll say is just in the consumer book, obviously it is dominated at the moment by our mortgage business, which is predominantly fixed. It's just the nature of the UK market. So there is obviously rate sensitivity to customers from there, but it's at the point of refinancing rather than sort of instantaneous transmission. The final two things I'll say, Ed, is we are seeing relatively low levels of indebtedness generally. So, you know, we aren't seeing customers at this stage exhibiting real stress in any sort of meaningful way. The one thing I would say, though, in terms of your own work, when you're looking at at what point could this be more of an issue, it will be, I think, always unemployment is probably the best lead indicator. So as unemployment starts trending up, particularly above perhaps where, you know, most people would expect to be at a sort of regular level of sort of residual unemployment, at that point, you'll see, you know, product quality change, and that's the best lead indicator. At the moment, we feel some way away from that, unemployment at extremely low levels, both in the US and in the UK. So we're not concerned at the moment. That's probably the one area we watch closely.

Yeah. And I'll add to that that I think we're at the stage in the economic cycle and the credit cycle particularly where build-up of balance is more beneficial to us from an income point of view than hurtful to us from a credit point of view. So I don't see, you know, I see that that marginal trade-off of balance that's being beneficial to us.

Yeah. OK. And so just in terms of the stage three balances, is that just something to do with how you add them up at the year end or something, or why would that be? Yeah, I mean,

we should probably maybe have a, maybe after this call rather and sort of go through. I'm just looking at the quarter on quarter stage three and they're slightly down, but you may be referencing a different table. So perhaps we can give you a quick call after this one or just to make sure we're synced up.

OK.

We have the next question, please, operator.

Our next question comes from Jason Napier from UBS. Your line is now open. Please proceed with your question.

Good morning. Thank you for taking my questions. And congratulations to you, Tushar, as well as to Venkat and Anna. And just to echo what Emma was saying, thank you for the hard work and help over the years in trying to make sense of all things financial. Two questions. The first, please, I guess, plus Venkat and for Tushar. The 10% ROTI target is around 160 basis points of CET1. And so when we're thinking about how the 10% ROTI and 150 basis points of capital accretion fit together, I wonder whether you might talk a little bit about what sort of normal IWA growth or consumption the group might demand and Venkat, particularly, whether you saw any changes to the composition of the group in the coming years. So that'd be the first question. And then secondly, I hear what you're saying about customer acquisition costs in CCNP. That's something we're hearing from US players quite clearly. Some of the offers in the market are pretty attractive. But it is something you've warned on before. And so I just wondered whether you're signaling that consensus is not listening. At this stage, we're at 3.7 billion for 2022, so up 13%. I would have thought with balances growing 5% last quarter and the gap portfolio coming on stream, that would have been the number that you could achieve. But perhaps you could be more clear about what it is you're saying about CCNP and those headwinds as we go through this year. Thank you.

Yeah, thanks, Jason. And thanks for your comments at the beginning of your question. Why don't I just cover them both real brief. And I think Venkat will want to make a couple of comments as well. Yeah, the ROTI, I mean, we sort of just rounded it to 150 basis points of capital generation. We weren't trying to be super precise. In terms of the gist of your question, just how much of that gets absorbed by, I guess, growing our balance sheet or putting capital back into the businesses. I think what you'll see is that the consumer businesses recover. We would very much like to grow consumer assets, both in unsecured mortgages, in US cards as well as in the UK. Those aren't particularly capital consumptive assets, though. So I don't think you'll see much RWA, if you like, inflation as a consequence of growing the consumer side of the balance sheet. That then leaves the investment bank. And the investment bank would just be more nimble there. You'll see now RWA has gone up slightly over the course of this year. It's been a pretty decent environment with super active capital markets as well as sales and trading. So that may ebb and flow a bit. But I don't think you'll see material differences even in the CIP, certainly for the upside. But Ben-Kat may want to talk a bit more about how he sees business composition over the more medium term. Just a quick word on customer acquisition costs in CCP, and I'll hand over to Ben-Kat. Yeah, you're right to point out. I think this is a positive lead indicator. What's really important for us is there's three stages to us. First of all, the people wanting your card. So in other words, the people opening new accounts with you. When we look in the US, account openings are going real well, and I think pretty much back to pre-pandemic levels, and sometimes better in some portfolios. So that's good. People want our card. They're going out and getting our card for the first time. Second thing, are they using our card? I look at spend data and gross purchase volume. They're very much in line with most of our US peers when I look at the sort of industry averages. And again, that feels really good for us, because we are more of a partnership business, and we're competing with a lot of open market brands. So to see our purchase volume very consistent with them is great news. And the third thing is, at what point do balances grow and people revolve? And you've seen balance growth now, and I'm pretty confident that will result in revolving balances growing as well as we're getting to next year. So overall, I think we're pretty constructive in the US card business growth, and really the increase in sort of customer acquisition costs, which, by the way, does hit all three line items of our P&L. We'll see some in contra revenue as we sort of give the rewards out when people first start using our cards. You see it in the marketing line, in our expense line, and also you see in payment builders as balances, and new lines are allocated. So you'll see it sort of scattered through our P&L. That, to me, is a very positive lead indicator, and that all feels in the right place. But, Venkat, anything you want to add? Look, I'll obviously endorse what Tushar had said.

I think overall business mix, as Tushar has indicated, we would like to see more balance growth and the modest capital consumption that goes with it from the consumer side, especially in cards. On cards in particular, we like the onboarding of our accounts with GAAP and AARP. They diversify the portfolio, which has been a -heavy-ish portfolio, and so it brings in more retail and a different spending mix. And then on the investment banking side, we continue to have what we call sustainable organic growth. And I think, in many ways, on the market side, where capital flow is nimble, it's a function of where the trading volumes are, which we are pretty constructive on, as this quarter has begun. And we would tend to see, I think, growth continued in equities and in securitized products. And, of course, in macro, where there's been an active amount of volatility. And the biggest theory over the last couple of years that has grown, which has been rewarding to us, has been prime, where that business has increased balances tremendously. There's a little capital that goes through it, because there are very well-structured balances. But that's been a major area of increase. So the bottom line is that we believe we have the capacity to absorb what we think is the expected growth in our trading businesses and banking businesses overall.

Thanks for your question, Jason. We have the next question, please, operator.

Our next question comes from Jonathan Pierce from Newmish. Your line is now open. Please go ahead.

Hello. Good morning, both. A couple of questions. The first one is a numbness question around. Actually, tier one in the first quarter. And I was particularly looking for some guidance on whether there's going to be an impact with the big move in the swap rates that we've seen so far this year. Your report and account shows there's about a 500 million pound pre-tax hit on the fair value ACI for every 25 basis points move. And I guess that scales up to about a billion pound pre-tax based on what we've seen so far this year. But you don't split it between pensions, which obviously don't hit capital and other things which do. So it gives a bit of help, please, on any Q1 headwind that's coming from that. That would be really helpful. The second question is much broader and it's on the distribution profile. Dividends versus buybacks. Is it your intention to just move the ordinary dividend up over the next few years? Is it 40%, 50% of EPS? Or are you going to be a bit more dynamic than that? And if the shares continue to trade at spots six, five times booked, I'd note your L-tip pays out in full. And if the ROT hits 12% next year, so you clearly think the shares are pretty cheap. There will be a big bias towards buybacks versus ordinary dividends in the nearer term. Thanks very much.

Yeah, thanks, Jonathan. Why don't I take both of them. On your question about CT1 headwinds from AFS, I mean, of course there are some headwinds there. The best way though, I mean, there's so many things that go into the CT1 ratio with business activity, tailwinds, headwinds, et cetera. The best thing I would say is a typical profile for us would be we are users of capital, net users of capital in the first quarter. It tends to be a very active quarter for us. We'll see in our investment bank, a lot of deal activity, a lot of sales and trading opportunities. And then we tend to steadily net net and create capital over the remaining three quarters. So rather than getting into the wherewithal of individual components of the ratio, because although a move back up in rates may be detrimental to AFS, it may be better for income, it may be better actually for fixed income financing spreads in the IP, and there's all sorts of things that change. But generally, net users, a small amount of capital in Q1 and then generate capital from that point on, which is a typical year for us. Distribution profiles. We sort of, we've guided to a progressive dividend policy. So I think it's fair to say that the assumption is all things being equal. You would expect that dividend to grow at a reasonably healthy rate from where we are today. You rightly point out that given the share price where it is today, buybacks look incredibly attractive. We absolutely do feel, as we've said a number of times, we believe we're a 10% double digit earning bank and that's our objective to try and do that every year. That obviously isn't reflected. We believe in our share price, the buybacks look incredibly attractive at these levels. But the dividend is a progressive dividend. I'm not sure the board would look to reset the level of dividend until perhaps the shares are at a different price point. Hopefully that answers your question, Jonathan.

Yeah, brilliant. Thank you very much.

All right, we have the next question, please, operator.

The next question comes from Joseph Dickerson from Jeffries. Your line is now open. Please go ahead.

Hi, thank you for taking my questions. A couple of longer run type of questions, probably more for Venkat at this stage. But I guess when you look at the US CCMP business, how meaningful is the business extension into adjacent businesses and the resulting revenue augmentation from that? So driving, leveraging gap portfolio and whatever future store card deals you may do. I guess how meaningful do you see that opportunity in the context of the group? And then related to that, just coming back to the near term, you know, the costs were up 13% year on year in CCMP. I guess how much of that is competitive landscape and how much of that is more idiosyncratic to bar plays? And again, link back into those two points is Venkat. Do you feel that the group, as somebody used to wear the wrist cap, do you feel that the group has taken enough risk in some of the areas in unsecured finance?

So why don't I ask Venkat to add some comments on the longer term, particularly the sort of the mix of card portfolios in the US business and the risk profile as well. Let me just make an introductory comment first, Joe. I'd say moving into or diversifying away from if you like hospitality and travel is a very big deal for us. And the gap portfolio does two very important things for us. One, it takes us into a completely different space in terms of the partnership product. If you look really broadly speaking, the overall industry wallet for partnership programs, about half is in travel and hospitality and leisure and the other half is in retail. And we don't have anything in sort of traditional retail. So gap is a big deal for us. And in terms of customers, put that into context. In the US, gap will be approximately 11 million customers. It's kind of like the number of customers we have in the United Kingdom and we are a very significant player. So adding 11 million customers in one shot is a very big deal for us. The other thing it does actually takes us into a brand new product as well as a brand new segment of the market and that's into store carts. And store carts in the US, around about 40% of the market. So that's an area that we don't do anything at the moment as well. So this is a big deal for us and we're very, very excited about being able to do this. We hope at the beginning of a change in the credit cycle, so after the pandemic and now we're into a recovery cycle, we'll hopefully have a decent consumer recovery cycle and that's the right time to be sort of really pushing investment in this. I think in terms of the risk profile, I should probably not make any comments on that. I should let our ex-Chief Risk Officer and our Chief Executive Officer comment on both of them. So over to you then, Kev.

Yeah, so thanks, Joseph. I think I echo what Tushar has said. And I think the question you had about adjacencies, so there are clearly some technological adjacencies that happen with the card portfolio. I think the more meaningful adjacencies that we have capitalised on so far are actually the investment banking adjacencies. So our card business is a corporate-oriented business. So while we have millions and millions of customers, actually we're dealing with a few dozen corporates. And the card relationship is a way we have to cement a much broader investment banking relationship, which has been particularly lucrative for us and helpful to our clients. So that's a very important adjacency. I think more broadly, do we take enough risk? I would say, do we take the right type of risk? And I think the one type of risk we do not take, particularly, is our own branded cards. And that's important because we don't have a broad US retail presence, and we don't know the customers as well. When we take the portfolio risk in our corporate card program, we are working with a lot of data and a lot of familiarity. And as Tushar has said, diversifying away from travel into both private or white-label cards as well as the retail segment is actually, we think, risk-improving for us.

Thanks for your questions, Joe. Could we have the next question, please, operator?

Our next question comes from Alvaro Sereno from Morgan Stanley. Your line is now open. Please go ahead.

Hi, good morning. I have a couple of follow-up questions, really. First of all, on your NIM guidance in the UK, you point out that the business mix is still a headwind. I was wondering on the volume growth there, what kind of recovery, if you can be a bit more specific, maybe you're assuming on credit cards, you obviously said you expect some growth, but it sounds like it's not going to be a big rebound. And how do you think that's still compared to, obviously, mortgage balances? And then I had another follow-up on CID. I see the pipeline in ECM, M&A, it dried up quite a lot, and you alluded to that, particularly in technology. You've called out the volatility and, obviously, prime brokerage balances. But I wonder, you think, is that going to be enough to offset what looks like a pretty weak start to banking fees? I'm just thinking consensus has barely got revenues down just a bit for this year, and that might prove a bit optimistic. I don't know if you can maybe share some thoughts on that. Thank you.

Yeah, thanks, Alvaro. Why don't I cover them both, and I think everyone who has a couple of comments as well. On net interest margin and business mix, we are constructive on credit card growth. We have been cautious up till now, and I guess in this space, unfortunately, perhaps we were right, that balances didn't grow as quickly as perhaps, there was a bit more optimism out there from elsewhere. But we, unfortunately, were probably more right on this one. But we are quite optimistic into 2022, and the reason for that is we think that 2022 ought to be a year that is free from lockdowns and restraints on the economy. And the big difference that will make for this year is that the kind of spend that we would expect to see will be more geared towards credit card spend activity. So unfortunately, last year, for example, at least in the United Kingdom, there was much less holiday travel, for example, than we would typically expect, certainly overseas holiday travel. That's usually completely a credit card category that's very important for us. And that was muted last year. We would like to think that this year, those kind of more discretionary spend items would be unabated, and therefore, we should see good utilization of our credit card. Next question is how much of that then appears as revolving balances? So a little bit harder one to gauge, but we are optimistic that we should see some improvement there. I wouldn't overstate it, but it's a high margin product, so you don't need to see too much for it to be very creative to NIM and indeed, net interest income. The other thing is on the mortgage side, if anything this year might suit our business mix a bit more than last year, last year was characterized very much by sort of the first time buyers market that was fueling the mortgage market. For us, as you're probably all familiar, the remortgage business is an even bigger part of our business than first time buyers. And with rates rising, you tend to see much more active remortgage activity. People are just basically financing themselves before the anticipated rate rises, and that actually suits our business well. So constructive on both mortgage growth just as the nature of the market perhaps suiting us and on credit card, the nature of the spend activity we expect to see in the UK being quite attractive to us. In terms of CID, the only thing I'll say there, Alvaro, it's very, very hard to give sort of precise guidance on income, so I'll refrain from that, but we feel really good about the diversification in the CIV, so you're right, it's been somewhat slower ECM, M&A activities certainly in January, and that's in some ways not surprising, that's actually quite typical because they usually get a flurry of deal activity before the calendar year end, and then you go into company reporting season and blackout periods and stuff like that, so you don't typically see a lot of deal activity in the earlier part of the year, and that may change obviously, you'll have to look at asset markets and geopolitical risk and whatever, but away from that, if for example, there is price volatility and asset price moves and sort of geopolitical news flow, it typically suits sales and trading business real well, and certainly a rising rate environment ought to suit the financing business very well, and we're very pleased with the progress we've made in the prime business, and one business we don't talk a lot about but is fixed income financing, as alt is a large business for us, I refrain from giving precise income guidance, but we feel pretty good about the diversification that we should do, in our view, well, regardless of what's hot and what's less hot in any one particular quarter, but we should be able to see that through.

Sorry, Tushar, on the retail side, I mean, you're optimistic on credit cards and more widgets, but you think the mix is still a drag, so are you sort of, credit cards maybe not growing as much as mortgages yet? If I read your

guidance correctly. Alvaro, on a nominal basis, I'm sure, I mean, that's obvious, I know you know this, on a nominal basis, mortgages were massively our credit cards, cards is a very much more of a higher margin product, so I wouldn't rule anything out, it really depends on the pace and strength of the recovery, we're still okay with it now, but we'll monitor it quarter by quarter. Thank you. Thanks, we have the next question, please, operator.

Our next question comes from Rohit Chandra Rajan from Bank of America, the line is now open, please proceed with your question.

Hi, good morning, I had a couple, please. The first one on the CIB, so the commitment to maintain market position, you know, seems like a very clear statement of intent, as Tushar alluded to earlier, consensus expectations are for a smaller revenue pool this year, but also competition looks like it's intensifying, so I wondered if you could talk about how you balance near-term revenue prospects with the costs and capital resources that might be required to maintain that top six global IB ranking, so that's the first one, and then the second one, hopefully relatively quick, just on the structural costs for 2022, should we think about that as similar to 2021, not excluding the real estate charge that we had in 2021, and to what degree should we think about the structural costs being ongoing?

Yeah, thanks, why don't I quickly do the second one and I'll ask them to talk about the CIB. Yeah, I think that's a reasonable way of thinking about it, so just to repeat what you said, take sort of 2021 charges and strip out the real estate charge that we took in the second one, it's probably a decent sort of planning assumption. Prospectively from there, we have a lot of choice about this, I don't expect this to be at this stage a sort of a material item to be putting into or a projection sort of into 2023 and beyond, but we will, it's something that I think what we try to do is keep you posted on plans as we go through the courses. One thing I would say is that where we see opportunities to accelerate progress and make a difference, and we've got the earning capacity and the capital capacity to do that, we think it's probably in shareholders' interest, so we are minded to do that, but we will keep you guys posted, but certainly for 2022, I think your planning assumption is a reasonable one. Ben, do you want to ask your idea? Yeah, so Rohit, thanks for the

question. I look at the CIB as a place where we've obviously been gaining market share and increasing our rankings. It comes from three things. It comes from investment in people and capabilities. It comes from investment in technology, and it comes from a steady commitment to the business, which basically helps clients decide that they want to do with you, do more with you, and stay doing it with you. All three have been in place to an increasing level over the last number of years, so I think we have the momentum behind us to continue to do that, and we don't control the overall wallet, but to be meaningful to our clients, I think it requires, as I said, those types of investments, and I'm fairly confident that with the investments we've made, we can continue to make, and we will continue to make, that we will continue to get both mine share and market share.

I see your question, Rohit. Thank you. Do we have the next question, please, operator?

Our next question comes from Guy Stebbins from B&P Paribas. Your line is now open. Please go ahead.

Hi, morning. Thanks for having me, Tushar, and I echo comments on best of luck for the news as well, Tushar. The first question was on NIMT trajectory, and primarily BUK. Given the range of 260 to 270, it strikes me from simple math that we should be exiting at the top of that range, and if the curve holds, is there a reason why we shouldn't be thinking about a NIMT north of 270 as we enter 2023? I mean, potentially it's quite a bit more if we have the benefit or rate hikes implied from the market. I mean, within that too, I mean, if I look at your hedge, it looks like it should be up about 200 million in 2022 from the current run rate, and then another even larger step up in 2023. So is there anything that would just lead you to soften expectations versus those sort of comments? And then the second question on costs. Thanks for the guidance and comments about sort of being happy with consensus costs of 14.3 to 14.4. And if you just unpick that a little bit more, so firstly, modest growth in the base cost, I would assume modest is about 2%. If that's fair, taking your comments on structural cost actions down to 250 million in the year. If I then had flat CIB costs here, you'd be looking at about 14.4, so the sort of top end of that range, is there anything I'm missing around that? If I can just quickly add another one on costs, another year of CIB costs income ratio below 60%. Assuming revenues don't drop meaningfully in the CIB, is that something you think is achievable going forward from here?

Thanks. Yeah, so why don't I take them, Guy? I think on net interest margin in the UK, I think it's reasonable what you said, just the fact that if we're guiding to a sort of range of 260, 270, we'll obviously be expecting to exit 2022, the very sort of upper end of that, and like you say, there's flow through from structural hedges and full year effects of any rate rises we may get from this point on. So that will be, that will improve into next year. So yeah, I think it's reasonable in the way you're thinking about it. Of course, there are, I just sort of bridge back to, there are so many variables, the number of rate rises, the product mix pricing. So, and I know you will know all this, but that's why we give a sort of a range rather than trying to get too precise. But I think you're thinking about it the right way. Costs, I think it's reasonable. Again, the sort of the building blocks that you use, I won't quote whether, you know, use 2% or 3% or whatever in your precise models, I'll let you sort of judge that. But I think the building blocks that you're using are pretty reasonable. In terms of CIV and cost-income ratio, we're pretty pleased with the operating leverage that the CIV has been able to demonstrate. So, you know, where we have very buoyant top line environment, a lot of that sort of drops straight through to the bottom line. You know, we feel we've, we're very competitive in terms of remuneration to the bankers that we have here. We've attracted really high quality folks to our platform and our retention rates have been very good as well. So we think we've got that balance right. And, you know, absolutely, in a good revenue environment, our intention is to demonstrate, you know, strong operating leverage in the CIV as we've done in the past. You know, we won't give, again, precise guidance on cost-income ratios, but operating leverage is always something that's important to us in our business. Okay, thank you. Thanks, Guy. Can we have the next question, please, operator?

Our next question comes from Chris Cant from Autonomous. Your line is now open. Please go ahead.

Good morning, Tushar and Venka. Tushar, if I could just echo what others have said, all the best for your future role. And thanks for all the questions over the years. Two for me, please, on the CIV. So if I look at your performance costs, I think if I think back to 2019, your total increase in group performance costs, 2021 on 2019, is up 290 million. And if I think about CIO revenues over that time, they're up by 2.3 billion, or so there or thereabouts. So how should we be thinking about this into 2022? I appreciate you don't want to guide on revenues. You don't want to comment on current trading. But in recent courses, you've indicated that if revenues do come down in 2022, you would pull down CIV costs to offset it. If I think about where SOMP had been historically, it hasn't moved up that much relative to the scale of the revenue improvement. What kind of cost-income ratio on a decline in revenue should we be thinking about there? Because it doesn't feel like there's a huge amount of wiggle room relative to kind of historical levels of performance costs if revenues do decline in the CIV. That would be the first question, please. And secondly, instead of asking another on the CIV, if I could ask about payments. So you gave this guidance at the first half stage that there was a 900 million revenue upside opportunity from the recovery and growth in the various payments businesses relative to 2020 levels. Could you just give us a sense of how much of that opportunity is already captured in your kind of 4Q run rate? So you were flagging in particular in CCMP quite a lot of growth year over year in payments there. But if we think about 4Q, how much of that 900 million is already in the run rate? How much of it is still to come of upside into 2022 and 2023? Thank you.

Yeah, thanks, Chris, and thanks to your comments at the beginning of your question. Much appreciated. Yeah, performance costs, and I guess really your real question is in a downside revenue environment, how much could we bring performance costs down? It's a tough one to answer. The one thing I'll say is on one level, we have to be responsive to the market that we're operating in. So it's obviously too simplistic to just be mechanical about your performance costs because there are just so many factors that go into it. You look at the competitive nature of the marketplace. Was our underperformance idiosyncratic? Was it part of the overall trends in the industry? What did that result in overall pay levels? The mix of the business, some businesses have a higher payout ratio than other businesses and vice versa. So it's hard to be precise. But what I would say is hopefully you've seen us demonstrate, at least in an upward market, good discipline, but at the same time, making sure that the franchise is in very good health and they've got the right quality of people on the platform to benefit from that upside. For us, I guess, in some ways, the guiding north star I've always felt in this business is that we need to make sure each of our divisions is earning at least 10% return on equity. So that's an interesting inflection point for us. And we would do what we can to maintain that. But we've got to be responsible if we need to pay to protect our franchise, we obviously will. But hopefully you've seen us discipline and not just paying for no reason. In terms of payments, the $900 million run rate, I think in our disclosure, you should be able to pick this up. And if not, I'll get someone to give you a buzz afterwards just so you're picking up from the right part of our disclosures. The payments is up about 17% year on year. And you should be able to back into there. Maybe I'll get someone after the call just to point you in the right direction as to how much of that $900 million. Therefore, that's consumed. And then you can sort of back into the rest if that's OK, Chris.

OK, sure. I can stay offline. Thanks.

I think just as we're getting closer to the top of the answer, should we take one more question? We have one more question, please, operator.

Thank you. The final question we have time for today comes from Martin Leitgeb from Goldman Sachs. Please go ahead. Your line is now open.

Good morning. Let me echo earlier comments that congratulate Banker Dillanmach on your new roles. And thank you, Dusha, for all your help over the years. Just one question, please. And just looking at the progression of deposits in the UK system as a whole compared to loans and the marked increase in access liquidity now fattened retail ring centers in the UK, I was just wondering if you could highlight your thinking on this excess liquidity. Do you think this is likely to stay? Or could we see a scenario this is going to gradually decrease? The question here being, could this new view lead to a phase where deposit bettas are markedly lower compared to where they were in history? Or is there any other incentive for banks like Barclays to potentially engage in higher deposit betta, maybe for current account market share purposes? Thank you.

Yeah, I think the way I'd answer that, Martin, is that we've never really paid up for balances. So we don't believe we've got much, if you like, hot money. If you look at our savings rates, you probably wouldn't be choosing Barclays as your deposit account if you were just looking for the best rates available. That's never really been a part of our business. They're much more franchise balances, as we call them, and they've grown quite nicely. So having said that, at some point, these balances will become rate sensitive. Our view is we haven't seen that yet. The last time base rates peaked, there were 75 basis points, and we didn't see rate sensitivity then. So it's probably reasonable to assume for the next 25 to 50 basis points, maybe not much rate sensitivity. Beyond that, I think it's just harder to, we don't have any empirical historical data to calibrate them off. But what gives us a little bit of comfort is that we've never paid up for the balances in the first place. So it's not that money. People have been parking money with us in the expectation that they'll move it when they can get a better deal elsewhere. So I hope that helps. But thanks for your question, Martin. So why don't we wrap up the call? Before I close, thank you for many of your comments as part of your questions. I'd just like to say it's been an absolute privilege and a pleasure being a CFO here since 2013. And although this will be the last call I do of this type, I hope to get to see many of you at a self-hide breakfast next week and at the buy-side meetings that we'll have as of the next coming days. And I'll still be at Barclays for some time, so we may bump into each other in a different capacity. But a big thank you to everyone for all of your debate, challenge, counsel, and the odd word of encouragement that I've had over the years. Whatever you said, it's been much appreciated. And I mean, that is to all of you. I'd also like to say how thrilled I am that Anna has agreed to step into the role. Anna and I have known each other for several years and worked very closely. And hopefully, many of you have met her in the recent quarters, as she's been a fantastic help to me. She will be a fantastic steward for Barclays. And with both her and Venkata, the helm, someone will be holding shares in Barclays for the foreseeable future. I couldn't think of two better people to be taking care of my shareholding in the right way. But with that, why don't I hand over to Anna, who's actually with me here today, to close out on the call. Anna.

Thank you, Sia. And at the risk of repeating everyone, I think a huge thank you to you from all of us. It's certainly a tough act to follow. Big shoes to fill, but I'm really looking forward to the opportunity. I'm also looking forward to the opportunity to meeting many of you over the next few weeks at the breakfast and beyond with Tushar and with Venkat. So with that, thanks everyone, and we'll close the call there.