Barclays PLC (BCS) H1 2016 Fixed Income Call

posted in: Earnings Call, Notes | 0

Tushar Morzaria – Group Finance Director

Solid returns on core business as they continue divesting from non-core

“First, our core business continues to perform strongly, generating an underlying return on tangible equity of 11% in the quarter. Secondly, progress on the rundown of non-core continued steadily as we exited businesses and achieved reductions in derivatives and securities and loans. ”

A good quarter that rode on a stong payments business

“ Consumer Cards and Payments had another outstanding quarter, achieving an underlying ROTE of 26.3%, driven by US and German COGS growth and the benefits of a stronger US dollar and euro. While such outstanding performance may not prove typical, we remain excited about the opportunities to continue growing the payments business, and building on our innovative digital offering to corporates. ”

They have a lot in store ahead

“We have a strong pipeline of announced deals, announced disposals, and remain confident in our trajectory and are focused on reducing costs and preserving capital as we proceed.”

Their business track record serves them well in crisis periods

“We’ve demonstrated a track record of prudent risk management and appetite since well before the 2008 financial crisis. This conservatism served us well during that period, notably through our limited exposure to UK commercial real estate and low LTVs on mortgage lending. We believe that the quality of our assets positions us well should economic stresses materialize.”

Dan Hodge -Group Treasurer

On the Impact of the Brexit on operations

“Our day-to-day Treasury operations continued uninterrupted as clients and customers undertook their usual business across retail, mortgage, credit card, lending, and wholesale activities. Whilst the medium-term impact of Brexit are less clear, immediate impacts have so far been very modest for Barclays…Immediate funding and liquidity impacts were also negligible, with no observable change in behavior in our short-term wholesale market investors, or our retail and corporate depositor base.”