Barclays PLC Q1 FY2026 earnings call

• Venkat discussed the vision for 2028 and beyond, first quarter results showing benefits of structural improvements, group ROTE of 13.5%, top-line growth, cost-income ratio improvement, and commitment to returning capital to shareholders.
• Mentioned no credit weakness in UK, US consumer, or corporate lending, but vigilant about inflationary impact. Disclosed exposure to private credit and non-bank financial institutions.
• Recognized £228 million single-name charge in securitized products business due to fraud, constraining lending to certain counterparties. Reducing exposure to highly leveraged, non-investment-grade corporates.
• Achieved approx. £150 million of gross efficiency savings towards £2 billion target. Enabled all corporate banking clients on iPortal and will launch Premier Wealth Management in Barclays UK app.

All divisions generated double-digit returns. UK businesses had around or above 20% ROTE. US Consumer Bank had 18.8% ROTE. Investment Bank had 15% ROTE. Group ROTE was 13.5%. Income grew 6% to 8.2 billion pounds. UK lending grew 5% year-on-year. US Consumer Bank receivables grew 9% year-on-year. Investment bank income surpassed £4 billion for the first time. Barclays UK NII increased 9% year-on-year. UK corporate bank income grew 10% and cost fell 2%. Private bank and wealth management had 25.5% ROTE and added 1.5 billion of net new AUM.

• Confident in delivering ROTE of greater than 12% in 2026 and more than 14% in 2028.
• Remain confident in delivering full-year guidance for Group NII of more than £13.5 billion, including £8.1 to £8.3 billion in Barclays UK.
• Expect UK lending to continue growing with a 25 exit rate and more than 5% CAGR from 2025 to 2028, aiming to deploy circa $30 billion of UK business growth RWA by end of 2026.
• Expect US Consumer Bank to have a mid-40s cost-to-income ratio in 2026, with certain portfolio changes in Q2 affecting NIN and loan loss rate.

• £228 million single-name charge in securitized products business due to a well-publicized sophisticated fraud, indicating importance of strong financial controls and difficulty in identifying fraud ex ante. Constraining lending to certain structured finance counterparties with vulnerable business models.
• Increased macroeconomic and business uncertainties leading to reducing exposure to more highly leveraged, non-investment-grade corporates vulnerable to weakening economy.
• IFRS 9 models are pro-cyclical and sensitive to changes in consensus economic expectations, with post-model adjustments made reflecting more prudent views of consensus economic forecasts.

Q: Alvaro Serrano asked about reduced risk in structured products and NII outlook.

A: Varun and Anna responded, noting impact not material, NII confidence increased with positive/neutral experience, and details on deposit performance and lending growth.

Q: Pearlie Mong asked about product margin and USCB net receivables.

A: Anna responded on product margin impacts, deposit competition, and USCB net receivables being seasonal.

Q: Amit Birwal asked about cost phasing and USCB net receivables.

A: Anna responded on BUK cost phasing and USCB net receivables being seasonal.

Q: Jonathan Pierce asked about 2028 income and hedge.

A: Jonathan and Venkat responded on income consensus, hedge yield, and USCB progress.

Q: Guy Sebbings asked about hedge notional and ECLs.

A: Guy and Venkat responded on hedge notional reflecting deposit observation, and ECL post-model adjustments.

Q: Andrew Coombs asked about leverage ratio and capital impact.

A: Andy and Venkat responded on leverage ratio not a constraint, and capital intensity of businesses.

Q: Jason Napier asked about SRTs and capital intensity.

A: Jason and Venkat responded on SRTs being well-managed, and capital intensity of businesses.

Q: Chris Kant asked about competition and corporate lending.

A: Chris and Venkat responded on competition in financing and corporate lending being consistent with strategy.

Q: Nicholas Payen asked about cost-office guidance and Middle East situation.

A: Nicholas and Anna responded on cost-office guidance and no significant impact from Middle East.

Q: Chris Hallam asked about lending dynamics and private credit.

A: Chris and Venkat responded on lending dynamics being strategic, and private credit growth outlook.

Q: Robert Noble asked about growth risk and book sensitivity.

A: Robert and Anna responded on growth risk and prudent positioning.

Q: Edward Firth asked about problem triggers and single-name exposure.

A: Edward and Venkat responded on problem triggers and single-name exposure being manageable with risk management.