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Barclays PLC (NYSE:BCS) Q4 2023 Earnings Call Transcript

Barclays PLC (NYSE:BCS) Q4 2023 Earnings Call Transcript February 20, 2024

Barclays PLC misses on earnings expectations. Reported EPS is $0.21 EPS, expectations were $0.36. Barclays PLC isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

C.S. Venkatakrishnan: Good morning. Thank you everybody for coming here and welcome to our Full Year 2023 Results Presentation as well as our Investor Update. You could see the agenda for the day on this slide. And so what we will do, we'll just go into the results for 2023 before turning to the broader investor update. So, as you saw this morning, I'll start with the results announcement with the performance highlights and then I'll hand over to Anna to take us all through the financials. So, we are delivering against our guidance. So, we achieved -- delivered on all our targets in 2023. And together with our consistently strong capital position throughout this year, what this enabled us to do was to give shareholders a material increase in distributions.

Excluding the Q4 structural cost actions, return on tangible equity was 10.6% for 2023, in line with our target of above 10%. And on the same basis, our cost-to-income ratio who was 63%, in line with our guidance for the low 60s for the full year as well. As being accretive to future returns, the structural cost actions did not limit our ability to deliver a 37% year-on-year increase in total distributions, which now amounted to £3 billion. This £3 billion number for 2023 included a total dividend of £0.08 per share with the full year amount of the dividend of £0.053 being announced today and as well as a full year buyback of £1 billion, which we expect to start in the coming days, and that's on top of the £750 million at the half year.

An investor looking at a stock chart, representing the bank's securities dealing.
An investor looking at a stock chart, representing the bank's securities dealing.

Tangible book value per share has increased by £0.36 year-on-year to £0.331. And our CET1 ratio was 13.8%, which is at the top end of our target range, which you will recall is 13% to 14%. Overall, we view this performance as a strong foundation on which to build towards our revised financial targets over the next three years and which we announced this morning and we'll talk about in greater detail in a few minutes. But before that, the financial report of these results. Anna, over to you.

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Anna Cross: Thank you, Venkat and good morning everyone. Turning now to Slide 5. I think I'm going to need the script. Thank you very much. On a statutory basis, RoTE was 9% for full year 2023. This included the £0.9 billion of structural cost actions taken in Q4. And given the materiality of those Q4 charge over and above normal annual cost actions, I'm going to exclude it from the financial performance metrics today. On this basis, 2023 return on tangible equity was 10.6%. I would note that there was no impact from the over-issuance of securities this year, but given the material impacts to income and costs in 2022, I will also use adjusted numbers as comparators. Group profit before tax was £7.5 billion, down 3% year-on-year, and income increased by £0.7 billion, while costs were £0.2 billion higher, excluding the Q4 cost actions.

Within costs, litigation and conduct charges were small this year at £37 million compared to around £0.6 billion in 2022. And operating costs, which include L&C, were up by £0.8 billion. Impairment charges were £0.7 billion to £1.9 billion, representing a loan loss ratio of 46 basis points, better than our through-the-cycle guidance of 50 to 60. As usual, I'll now cover the three drivers of our returns: income, costs and credit risk management. We saw a continuation of year-to-date income trends through the fourth quarter, resulting in total income up 3% at £25.4 billion for the year. Barclays UK income was up 5%, with growth in net interest income from rate increases outlaying lower card income and the transfer of UK Wealth in Q2. Consumer cards and payments income grew strongly, up 18%, driven by higher margins and balanced growth in both US cards and the Private Bank.

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