Barclays PLC

Welcome to Barclays Half Year 2026 Results Analyst and Investor Conference Call. This call will be recorded for replay and transcription purposes. These will be published on Barclays Investor Relations website in line with Barclays Privacy Policy at home.barclays. During the call, our Barclays representatives may make forward-looking statements within the meaning of U.S. security laws. These statements can be identified by the fact they relate to future events and circumstances and sometimes use words such as may, will, Seek, Continue, Aim, Anticipate, Target, Projected, Expect, Estimate, Intend, Plan, Goal, Believe, Achieve or other similar words. Forward-looking statements are based on the current beliefs and expectations of Barclays directors, officers and employees and are subject to significant risks and uncertainties. No forward-looking statement is a guarantee of future performance and the Barclays Group actual results, financial condition or performance could differ materially from those contained in such statements. Subject to applicable laws and regulations, Barclays undertakes no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For more information on forward-looking statements and other important information, Please refer to the disclaimer notice in the presentation slides which accompany this call. At the end of the presentation there will be a question and answer session. If you want to ask a question, please press star-fold by 1 on the telephone keypad at the start of the question and answer session. If you change your mind and wish to remove your question, please press star-fold by 2. Please stand by and you will be placed through to the call shortly.

Here, having achieved 16.1% in the second quarter, and 14.8% for the first half. We are balancing progressive returns and distributions with investment to secure sustainably higher ROTE. We are increasing shareholder returns, announcing a £1 billion share buyback and an £800 million interim dividend. This brings the first half distributions to £2.3 billion, up 61% versus the first half of 2025. In our investor update in February this year, I spoke of an accelerating ambition for Barclays, forging segment-leading, operationally efficient businesses, primed to support growth. We said we would build the foundations for an all-weather ROTE from 2026 to 2028, with the aim of sustainably higher returns beyond 2028. As we discussed, our businesses are now revolving around technology, and our aim is to build standardized foundation, use modernized approaches and based on harmonized systems and processes. All of this is powered by our talented and inventive colleagues. And we are using additional capacity from our strong first half profitability to structurally improve Bowkley's returns. This program is showing encouraging results. Therefore, After our increase in distributions, we will use some of the capacity from our stronger first half profitability to take further cost action later in 2026. We anticipate that this will create greater cost flexibility from 2027 onwards. These plans increase our confidence in delivering a 2028 ROTE greater than 14%, accelerating our progress towards an all-weather ROTE. Anna will expand on this shortly. All three UK businesses delivered ROPE above 20% this quarter with consistent volume and revenue growth. Investments which we have made have allowed us again to monetize strong markets and banking volumes in the investment bank. The ROPE increased nearly 4% versus last year to 16% in this quarter. While the U.S. consumer banks delivered 10.5% ROTE, excluding the American Airlines gain on sale. Operational improvements across the group are delivering stronger structural returns and a better customer experience. We have achieved around £350 million of growth efficiency savings so far this year. As I have mentioned, we want our businesses to be segment-leading, driving growth through new capabilities and deeper client relationships. Our US consumer bank is entirely digital, with over 25 million customers and not a single branch. In this quarter, we completed the acquisition of Bestech, adding advanced consumer loan capabilities for our customers and partners. We have also announced a partnership to provide card products in the Samsung wallet in the US. Our segment feeding offering in the UK is Premier Banking. In this quarter, We have commenced a refresh of our banking app and launched Premier Wealth Management to provide planning and advice to Premier customers with no upfront fee. We have also announced the acquisition of GoHenry, which we expect to complete later this year, and this will help attract the next generation of customers to Bowkley's UK. Lastly, we are expanding and enhancing our branch network Thank you for joining us today. are self-directed investment platforms. This is now the most competitively priced such alternatives for those who seek full-service investment with the security of the bank provider. I'm highly confident in achieving the group ROTE greater than 12% in 2026, progressing to more than 14% in 2028. We have increased the group ROTE from 9% in 2023 to 12.2% in the past 12 months. and we have driven this improvement through consistent execution of our plan. We are on track to deliver around 31.5 billion pounds of income this year, which is the original 30 billion target. This reflects Broadway's franchise growth and progress to drive greater productivity in the investment bank. The benefits for strong performance go to you, our shareholders. We have announced 9 billion pounds of distribution since 2024, Well on track for more than 10 billion pounds by the end of this year. And by growing our highest returning UK businesses, we are building the foundations for sustainably stronger returns in 2028 and beyond. I have told you before that the UK is a great place in which to do business and from which to do business. Global and domestic events have not changed us. The UK economy has been growing in nominal and real terms and at a faster rate than the eurozone. And this has supported real wage growth, rising house prices, and stable employment. And as you can see from our results for several quarters, Bowkley is helping foster UK growth, not just benefiting from it. Anna will outline how we are doing so shortly. Declining investments since the late 2000s meant that UK corporate debt to GDP has fallen to a multi-decade low. Corporates have had the capacity to invest, but not the confidence. This seems to be changing. The majority of corporate C-surveys tell us that they are gaining confidence in their prospects. Firms plan to increase investment in the next 12 months, including in technology. This is broad-based across sectors and regions, with overall UK corporate lending up 9% in the past year. Bowkley is backing the future of customers and clients across the UK. We are driving UK growth and prosperity. and all the wires bringing stronger and more consistent returns for shareholders. Anna, over to you to take us through the second quarter financials in more detail.

Thank you, Venkat, and good morning, everyone. Slide 6 summarizes the financial highlights for the second quarter and first half, but I will begin with slide 7. Q2 ROTI increased 3.8% year-on-year to 16.1%. including a 1.2% benefit from the AA portfolio sale. Profit before impairment increased by 29% reflecting income growth and positive operating draws of 9%. We continue to drive EPS growth which increased 43% year-on-year to 16.7 pence. This is disproportionately driven by operational progress with attributable profit up 36% year-on-year as you can see in the bottom right. Lower share count from 3.2 billion of buybacks executed in the last 12 months further amplified this. We grew income by 16% to 8.3 billion and expect 2026 to be the ninth consecutive year of income growth. As you can see on slide 8, more stable income streams from financing in market, retail and corporate grew from 4.6 billion two years ago to 5.9 billion in Q2. Given year-to-date momentum, we now expect income to be around 31.5 billion, up half a billion from prior guidance. Group NII excluding IB and head office increased by 10% year on year. Lending momentum continued across all divisions while deposit growth supported full reinvestment of the structural hedge. We now expect Group NII of more than $13.7 billion in 2026. Structural hedge income growth is predictable and benefits all divisions, accounting for circa 45% of Q2 group NII. It will drive around half of the planned group income growth from 25 to 28 and remain a meaningful tailwind beyond. As a planning method, these expectations are based on a 3.5% reinvestment yield. Swap rates were above this level again in Q2 at 4.3%, further supporting NII in future years. Moving to cost. The Greek cost-to-income ratio improved to 54% from 59% a year earlier. Year-to-date, we have delivered $350 million of gross efficiency savings, including $200 million in Q2. Total costs increased by circa 300 million year-on-year, reflecting business growth actions. These include around 200 million of additional compensation accruals in Q2 in the investment bank to better align income and costs. And a decision to shift the compensation mix of material risk-takers are highest-paid employees, reflecting regulatory changes. Awards to be granted from 27 will move towards higher variable and lower fixed pay with a shorter vesting period. This will increase costs in H2 by 100 to 150 million weighted to the IB and provide greater cost flexibility from 2027. As referenced by Venkat, we anticipate taking additional structural cost actions in H2-26 funded by Stronger Half One Profitability. Our recent run rate is around 300 million in each of full year 24 and 25. Having recognised around 100 million so far this year, we anticipate up to 500 million in H2. Given an expected ROI of around 100% within 12 months, These actions should drive a commensurate improvement in 27 gross efficiency. The group's distribution plans and financial targets will not be impacted, including the high 50s cost income target. Turning to impairment. The Q2 group impairment charge of $571 million equated to a loan loss rate of 51 basis points. Consumer and corporate balance sheets remain robust and borrowers are behaving rationally. As an accounting matter, consensus on employment expectations increased as we anticipated, consuming the post-model adjustments that we recognised last quarter in Barclays UK and US Consumer Bank. We retained the 68 million PMA in the investment bank, recognising downside buys due to global macro uncertainty. For 26, we continue to expect a group loan loss rate around the top of the 50 to 60 basis point range. US consumer behaviour remains resilient, as we show on slide 45 in the appendix. We had expected the American Airlines portfolio exit to increase 30-day and 90-day delinquency rates by circa 30-bit and 20-bit, respectively. Instead, both rates fell in the quarter. This reflected repayments due to seasonal tax refunds, which were larger than usual following US tax changes. Delinquencies in the General Motors portfolios Also normalised, as expected. Turning to UK lending. Consistent execution of the strategy means that we have deployed 25 billion of UK business growth RWAs since 24, on track for circa 30 billion by the end of 26. UK lending grew 5% year on year, consistent with our guidance and recent track record. Our mortgage application share increased versus Q1, having exceeded the stock share for the past nine quarters, and our retention experience remains strong. The multi-brand strategy is also working in cards, demonstrated by consistent acquisitions since Q1 25, as you can see in the top right. Business and corporate investment appetite remains strong. Core business banking lending has grown consistently for six quarters. And UK corporate lending grew by 12% year on year, continuing the trend of growing faster than the UK market for the past 18 months. The next slide shows how we are doing this. As part of the corporate investment bank prior to resegmentation in 24, UKCB did not have the capital to lend nor the investment in technology that it needed. As you can see in the top left, this resulted in a loan-to-deposit ratio of 31% compared with 50% to 75% for peers and a lending market share of 9% versus 22% for deposits. Since then, we have been on a journey to rebuild UKCB. Whilst we have further to go, lending share has risen by 70 basis points and deposit share by 40 basis points. with a loan-to-deposit ratio increasing to 35%. Lending has grown by 19% in the past two and a half years. We have attracted around 1,400 new clients in this time with around 40% already borrowing from us driving circa 70% of loan growth. The risk characteristics of these clients is similar to the existing book. as you can see from the default grade statistics in the bottom left. Pleasingly, we have half the time taken for new clients to use four or more products. Investments in iPortal are delivering real benefits with 65% of client interactions now self-serve. There are further opportunities as we add functionality to the enhanced mobile app. and migrate all clients to iPortal during 26, reducing the number of access platforms from 5 to 1. Now turning to Barclays UK. We show the financial highlights on slide 16, but I will talk to slide 17. Roti increased to 20.4%. Thank you very much. The anticipated SBAs that I discussed earlier may lead to higher costs in H2 versus H1. These will drive gross efficiency savings in 27, supporting lower year-on-year costs in 27 and 28. NII increased to $2 billion, up 8% year-on-year and 1% quarter-on-quarter. Thank you very much. In Q3, we expect a neutral deposit of product margin despite competitive deposit pricing, reflecting card seasonality and day count. For the full year, we expect NII to be around the middle of the $8.1 to $8.3 billion guidance range. Deposit balances increase $1.7 billion in Q2 with stable currents and savings accounts. We prize time deposits selectively to deepen Premier customer relationships. The acquisition of GoHenry, which we expect to complete in Q4, provides further opportunities to drive our Premier strategy. Lending has grown consistently for two years, including 5% year-on-year growth in Q2, as the strong mortgage application volumes that I called out last quarter drove strong completion in June. Moving on to the UK Corporate Bank. Supported by the operational progress I outlined earlier, UK Corporate Bank delivered a Q2 ROTI of 21.3%. Income grew by 8%, driven by strong NII, up 15% year-on-year, reflecting volume growth and structural hedge momentum. Loans increased 12%, and we grew deposits by 4%. Private Bank and Wealth Management Rotary was 26.9% in Q2 in line with the greater than 25% target in 26 and 28. Client assets and liabilities grew 8% and favorable valuation effects contributed to a 15% year-on-year increase in AUM. Net new AUM of 1.8 billion for half one overall was broadly similar to the same period last year with Q2 inflows of $0.3 billion. Income grew 5% while costs increased 12%. We plan to continue investment including additional marketing and staff costs following the launch of planning and advice. While this investment will drive future growth, We now expect a mid-70s cost income ratio in 26, turning to the investment bank. We continue to drive stronger and more consistent returns by maintaining RWA discipline, improving income stability and delivering operating average for nine consecutive quarters. We increased RWAs mostly to support client demand, with around 40% of the year-on-year increase due to FX, while driving income to average RWAs up by 100 basis points to 7.7%. We did this in a disciplined way, with stable bar and no lost days, as we show on slide 41. More stable income from financing and international corporate banks continue to grow, as did our focus businesses, reflecting past investments. ROTI was 16% up 3.8% year-on-year. Operating jaws were again positive, despite additional performance costs in the quarter. And changes to compensation mix will support further cost flexibility from 2017. We remain confident in the circa 60% cost-income ratio and 12% RACI target for 26, despite the near-term cost of these changes and anticipated SEAs. Our strategy to improve the diversification of income is driving a stronger stable income base and less seasonal variation, as we show on slide 41 in the appendix Thank you very much. We expect the international corporate banks to become a larger part of the IB, driven by transaction banking, where we grew US dollar deposits by 16% year-on-year. Using the US dollar figures, markets income increased 17% year-on-year. Equities income was up 44%, driven by equity derivatives and prime financing, both focus areas, whilst equity Thick was stable versus a strong comparator. Around a third of the growth in markets income came from financing, which grew 16% year-on-year and for the eighth consecutive quarter. This reflected growth in prime balances, particularly in Asia, with around 80% of growth coming from markets top 100 global clients. Investment banking fees increased by 30%. Thank you very much. We participated in nine of the top global deals in the quarter with income up 91% year-on-year and the IPO pipeline for H2 remains strong. Turning to the US Consumer Bank. Let me start by outlining how portfolio changes affect the operational metrics. In April, we exited the American Airlines partnership which reduced reported card receivables by circa $6.5 billion. The acquisition of Bestseller in May added around $11 billion of managed balances as expected. These are originated to distribute, so do not materially affect reported balances, NIM or funding notes shown here. On an organic basis, we grew net receivables by 2% quarter-on-quarter. The mixed effects from exiting AA drove a 40 basis point increase in NIN and the share of retail card balances increased to 24%. Given continued retail deposit growth and lower funding needs, the share of funding from core deposits increased to 82% and the cost to income ratio was 39% or 49% excluding the $225 million gain on sale. Q2 ROTI was 30.2% and we remain focused on delivering a circa 12% ROTI in 26, excluding the AA gain on sale. We delivered 10.5% ROTI in Q2 and 11% year-on-year income growth on this basis in Q2. Costs increased by 12%, reflecting best day costs of $45 million per month since the start of May. Volumes in the existing business and best egg were as we expected. NIM of 13.2% was broadly as expected despite deposit margin pressure and we still expect NIM greater than 13% for 26. Higher benchmark interest rates in the quarter compressed market-wide pricing of originate-to-sell loans. Creating pressure on the non-NII line. Depending on the persistence of this effect, quarterly income may not fully build back to the Q1 level during 26, despite volume momentum. Turning to capital. We ended the quarter with a CET1 ratio of 14.3%. Given capital generation of 62 basis points in Q2 and 115 basis points in Half 1, we have announced a $1 billion share buyback and an $800 million dividend, equivalent to 5.9 pence per share. Proforma for the buyback, the CET1 ratio is 14%. Thank you very much. Guidance for regulatory RWA inflation in 27 remains unchanged at 19 to 26 billion. This includes Basel 3.1 changes on 1 January and implementation of IRB in US Consumer Bank, which we now expect in half to 27. Group pillar 2A requirements are expected to reduce following each of these events, and we will provide further guidance as we get clarity. On the broader regulatory landscape, we note the recent financial stability report that believe more can be done to drive UK growth. Proposed leverage changes would reduce Barclays' Tier 1 leverage requirements modestly by eight basis points, supporting its position as a backstop measure. We continue to work closely with the Bank of England to promote international alignment and competitiveness of the UK financial services sector. As usual, a word on our overall liquidity and funding on slide 32. We have strong and diverse funding, including a 75% LDR and an NSFR of 136%. And we are highly liquid across currencies, with an LCR of 158%. These measures reflect purposeful and prudent management of our balance sheets delivering resilience, thus ensuring we have capacity to support customers in a range of environments. TNAB for share increased by 39 pence or 10% year-on-year to 423 pence. There's mainly reflected organic earnings which should drive the overwhelming majority of future TNAF growth. To summarise, operational progress at 23 continues to support strong returns and EPS growth and we remain well placed to deliver all group targets for 26 and 28. Over to you Venkat for concluding remarks.