TIDM12ZB
RNS Number : 4613H
Barclays Bank UK PLC
01 August 2019
Barclays Bank UK PLC
Interim Results Announcement
30 June 2019
Table of Contents
Results Announcement Page
Notes 1
Financial Review 2-3
Risk Management
-- Risk Management and Principal Risks 4
-- Credit Risk 5-7
-- Treasury and Capital Risk 8-9
Statement of Directors' Responsibilities 10
Independent Review Report to Barclays Bank UK PLC 11
Condensed Consolidated Financial Statements 12-16
Financial Statement Notes 17-29
Other Information 30
BARCLAYS BANK UK PLC, 1 CHURCHILL PLACE, LONDON, E14 5HP, UNITED
KINGDOM.
TELEPHONE: +44 (0) 20 7116 1000. COMPANY NO. 9740322
Notes
The term Barclays Bank UK Group refers to Barclays Bank UK PLC
together with its subsidiaries. Unless otherwise stated, the income
statement analysis compares the six months ended 30 June 2019 to
the corresponding six months of 2018 and balance sheet analysis as
at 30 June 2019 with comparatives relating to 31 December 2018. The
abbreviations 'GBPm' and 'GBPbn' represent millions and thousands
of millions of Pounds Sterling respectively.
There are a number of key judgement areas, for example
impairment calculations, which are based on models and which are
subject to ongoing adjustment and modifications. Reported numbers
reflect best estimates and judgements at the given point in
time.
Relevant terms that are used in this document but are not
defined under applicable regulatory guidance or International
Financial Reporting Standards (IFRS) are explained in the results
glossary that can be accessed at
home.barclays/investor-relations/reports-and-events/latest-financial-results.
The information in this announcement, which was approved by the
Board of Directors on 31 July 2019, does not comprise statutory
accounts within the meaning of Section 434 of the Companies Act
2006. Statutory accounts for the year ended 31 December 2018 which
contained an unmodified audit report under Section 495 of the
Companies Act 2006 (which did not make any statements under Section
498 of the Companies Act 2006) have been delivered to the Registrar
of Companies in accordance with Section 441 of the Companies Act
2006.
Barclays Bank UK Group is an issuer in the debt capital markets
and meets with investors via formal road-shows and other ad hoc
meetings. Barclays Bank UK Group expects that from time to time
over the coming half year it will meet with investors to discuss
these results and other matters relating to the Barclays Bank UK
Group.
Forward-looking statements
Barclays Bank UK Group cautions readers that no forward-looking
statement is a guarantee of future performance and that actual
results or other financial condition or performance measures could
differ materially from those contained in the forward-looking
statements. These forward-looking statements can be identified by
the fact that they do not relate only to historical or current
facts. Forward-looking statements sometimes use words such as
'may', 'will', 'seek', 'continue', 'aim', 'anticipate', 'target',
'projected', 'expect', 'estimate', 'intend', 'plan', 'goal',
'believe', 'achieve' or other words of similar meaning. Examples of
forward-looking statements include, among others, statements or
guidance regarding or relating to the Barclays Bank UK Group's
future financial position, income growth, assets, impairment
charges, provisions, business strategy, capital, leverage and other
regulatory ratios, payment of dividends (including dividend payout
ratios and expected payment strategies), projected levels of growth
in the banking and financial markets, projected costs or savings,
any commitments and targets, estimates of capital expenditures,
plans and objectives for future operations, projected employee
numbers, IFRS impacts and other statements that are not historical
fact. By their nature, forward-looking statements involve risk and
uncertainty because they relate to future events and circumstances.
These may be affected by changes in legislation, the development of
standards and interpretations under IFRS including evolving
practices with regard to the interpretation and application of
accounting and regulatory standards, the outcome of current and
future legal proceedings and regulatory investigations, future
levels of conduct provisions, the policies and actions of
governmental and regulatory authorities, geopolitical risks and the
impact of competition. In addition, factors including (but not
limited to) the following may have an effect: capital, leverage and
other regulatory rules applicable to past, current and future
periods; macroeconomic and business conditions in the UK and in any
systemically important economy which impacts the UK; the effects of
any volatility in credit markets; market related risks such as
changes in interest rates and foreign exchange rates; effects of
changes in valuation of credit market exposures; changes in
valuation of issued securities; volatility in capital markets;
changes in credit ratings of any entities within the Barclays Bank
UK Group or any securities issued by such entities; the potential
for one or more countries exiting the Eurozone; instability as a
result of the exit by the UK from the European Union and the
disruption that may subsequently result in the UK and globally; and
the success of future acquisitions, disposals and other strategic
transactions. A number of these influences and factors are beyond
the Barclays Bank UK Group's control. As a result, the Barclays
Bank UK Group's actual future results, dividend payments, and
capital and leverage ratios may differ materially from the plans,
goals, expectations and guidance set forth in the Barclays Bank UK
Group's forward-looking statements.
Subject to our obligations under any applicable laws and
regulations in relation to disclosure and ongoing information, we
undertake no obligation to update publicly or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
Financial Review
Barclays Bank UK Group results
for the half year ended 30.06.19 30.06.18(1)
GBPm GBPm % Change
=============================================== ======== =========== ========
Total income 3,571 1,843 94
Credit impairment charges and other provisions (418) (213) 96
=============================================== ======== =========== ========
Net operating income 3,153 1,630 93
Operating expenses (2,186) (1,058)
Litigation and conduct (45) (3)
=============================================== ======== =========== ========
Total operating expenses (2,231) (1,061)
Profit before tax 922 569 62
Tax charge(2) (213) (126) 69
=============================================== ========
Profit after tax 709 443 60
Other equity instrument holders (70) (35)
=============================================== -------- =========== ========
Attributable profit 639 408 57
30.06.19 31.12.18
Balance sheet information GBPm GBPm
=============================================== ======== =========== ==========
Loans and advances at amortised cost 194,414 188,565 3
Deposits at amortised cost 201,130 197,485 2
Capital metrics 30.06.19
=============================================== ======== =========== ==========
Common equity tier 1 (CET1) ratio(3) 14.4%
1 Barclays Bank UK PLC acquired the UK banking business from Barclays
Bank PLC on 1 April 2018, therefore the prior period represents
only three months of full business activity
2 From 2019, due to an IAS 12 update, the tax relief on payments
in relation to Additional Tier 1 (AT1) instruments has been recognised
in the tax charge of the income statement, whereas it was previously
recorded within retained earnings. Comparatives have been restated,
reducing the tax charge for H118 by GBP9m. Further detail can be
found in Note 1, Basis of preparation on pages 17 to 18
3 CET1 capital ratio is calculated applying the IFRS 9 transitional
arrangements of the Capital Requirements Regulation (CRR) as amended
by the Capital Requirements Regulation II (CRR II) applicable as
at the reporting date. Due to a change in scope of consolidation,
comparatives are not disclosed. For more information, see page
9.
Barclays Bank UK Group overview
Barclays Bank UK PLC is the UK ring-fenced bank which forms part
of the Barclays Group and consists of Personal Banking, Barclaycard
Consumer UK, Business Banking and Head Office. The UK banking
business was acquired from Barclays Bank PLC on 1 April 2018,
resulting in the prior period containing three months of full
business operations, compared to six months in the current period.
As such, period on period analysis of the income statement has not
been provided and the commentary below therefore encapsulates
themes and factors impacting the current period performance
only.
Barclays Bank UK PLC continued to deliver balance growth during
H119, increasing mortgage lending by GBP1.8bn and growing deposits
at amortised cost by GBP3.6bn. Increased refinancing activity by
mortgage customers and lower interest earning lending (IEL) in UK
cards contributed to ongoing margin pressure. Digital investment
continues to transform customer interactions.
Group performance
-- Profit before tax was GBP922m reflecting the continuing strength
of the business in a challenging income environment
-- Total income was GBP3,571m reflecting strong mortgage and deposit
balance growth, offset by mortgage margin compression, lower IEL
in UK cards, and lower Head Office income from structural hedges
- Personal Banking income of GBP1,992m reflected ongoing mortgage
margin compression, partially offset by mortgage and deposit
balance growth and improved liability margins
- Barclaycard Consumer UK income of GBP987m reflected the maintenance
of a reduced risk appetite, which resulted in a lower level of
interest-earning balances
- Business Banking income of GBP657m was driven by strong deposit
growth and improved liability margins
-- Credit impairment charges were GBP418m, consisting of Personal
Banking charges of GBP88m, Barclaycard Consumer UK charges of GBP315m,
and Business Banking charges of GBP18m. Charges in H119 include
releases on single name exposures in Business Banking
-- Total operating expenses were GBP2,231m, consisting of GBP1,547m
in Personal Banking, GBP328m in Barclaycard Consumer UK and GBP353m
in Business Banking. Operating expenses in H119 reflect planned
digital investment in the business and inflation partially offset
by cost efficiencies
-- The effective tax rate was 23.1%. This reflects a change in accounting
standards requiring tax relief on payments made under Additional
Tier 1 (AT1) instruments to be recognised in the income statement
Balance sheet and capital
-- Loans and advances at amortised cost increased 3% to GBP194.4bn
reflecting increased investment in debt securities, held as part
of the liquidity buffer and mortgage lending
-- Deposits at amortised cost increased 2% to GBP201.1bn demonstrating
franchise strength across both Personal and Business Banking
-- The remaining Payment Protection Insurance (PPI) provision as at
30 June 2019 was GBP0.4bn (December 2018: GBP0.9bn). This represents
Barclays Bank UK Group's best estimate of expected PPI related
costs. However, the uncertainty associated with future claims levels
has increased ahead of the Financial Conduct Authority (FCA) complaints
deadline on 29 August 2019
-- The Barclays Bank UK Group CET1 ratio as at 30 June 2019 was 14.4%,
which is above regulatory capital minimum requirements
Risk Management
Risk management and principal risks
The roles and responsibilities of the business groups, Risk and
Compliance, in the management of risk in Barclays Bank UK Group are
defined in the Barclays Group Enterprise Risk Management Framework.
The purpose of the framework is to identify the Principal Risks of
Barclays Group, the process by which Barclays Group sets its
appetite for these risks in its business activities, and the
consequent limits which it places on related risk taking. It is
approved by the Barclays PLC Board Risk Committee on recommendation
of the Barclays Group Chief Risk Officer; it is then adopted by the
Barclays Bank UK Group with minor modifications where required to
meet regulatory expectations.
The framework identifies eight principal risks: credit risk;
market risk; treasury and capital risk; operational risk; model
risk; conduct risk; reputation risk; and legal risk. Further detail
on these risks and how they are managed is available in the
Barclays Bank UK PLC Annual Report 2018 available at
home.barclays/annualreport. There have been no significant changes
to these principal risks or previously identified material existing
and emerging risks in the period, including the risks associated
with the process of the UK withdrawal from the European Union which
continue to be closely monitored by Barclays Group. Impairment as
at 30 June 2019 continues to include an adjustment of GBP100m
representing the estimated impact of anticipated economic
uncertainty in the UK (for further detail please see page 7). No
significant changes to the principal risks or previously identified
material existing and emerging risks are currently expected for the
remaining six months of the year.
The following section gives an overview of credit risk and
treasury and capital risk for the period.
Credit Risk
Loans and advances at amortised cost by product
The table below presents a breakdown of loans and advances at
amortised cost and the impairment allowance with stage allocation
by asset classification.
Stage 2
------------------------------ ================================
Stage Not <=30 >30 Total Stage Total(1)
1 past days days 3
due past past
As at 30.06.19 due due
Gross exposure GBPm GBPm GBPm GBPm GBPm GBPm GBPm
============================== ======== ======= ====== ====== ======= ====== ========
Home loans 119,290 16,025 1,577 701 18,303 1,210 138,803
Credit cards, unsecured loans
and other retail lending 15,839 6,978 225 170 7,373 1,515 24,727
Corporate loans 27,949 4,339 24 60 4,423 1,310 33,682
============================== ======== ======= ====== ====== ======= ====== ========
Total 163,078 27,342 1,826 931 30,099 4,035 197,212
Impairment allowance
============================== ======== ======= ====== ====== ======= ====== ========
Home loans 6 28 4 4 36 42 84
Credit cards, unsecured loans
and other retail lending 166 1,205 53 75 1,333 957 2,456
Corporate loans 22 71 1 2 74 162 258
============================== ======== ======= ====== ====== ======= ====== ========
Total 194 1,304 58 81 1,443 1,161 2,798
Net exposure
============================== ======== ======= ====== ====== ======= ====== ========
Home loans 119,284 15,997 1,573 697 18,267 1,168 138,719
Credit cards, unsecured loans
and other retail lending 15,673 5,773 172 95 6,040 558 22,271
Corporate loans 27,927 4,268 23 58 4,349 1,148 33,424
============================== ======== ======= ====== ====== ======= ====== ========
Total 162,884 26,038 1,768 850 28,656 2,874 194,414
Coverage ratio %% %% %% %
============================== ======== ====== ===== ===== ====== ===== =======
Home loans - 0.2 0.3 0.6 0.2 3.5 0.1
Credit cards, unsecured loans
and other retail lending 1.0 17.3 23.6 44.1 18.1 63.2 9.9
Corporate loans 0.1 1.6 4.2 3.3 1.7 12.4 0.8
============================== ======== ======= ====== ====== ======= ====== ========
Total 0.1 4.8 3.2 8.7 4.8 28.8 1.4
As at 31.12.2018
Gross exposure GBPm GBPm GBPm GBPm GBPm GBPm GBPm
============================== ======== ======= ====== ====== ======= ====== ========
Home loans 118,580 15,009 1,622 715 17,346 1,282 137,208
Credit cards, unsecured loans
and other retail lending 16,223 6,881 225 197 7,303 1,682 25,208
Corporate loans 22,950 4,697 45 32 4,774 1,352 29,076
============================== ======== ======= ====== ====== ======= ====== ========
Total 157,753 26,587 1,892 944 29,423 4,316 191,492
Impairment allowance
============================== ======== ======= ====== ====== ======= ====== ========
Home loans 5 27 4 4 35 44 84
Credit cards, unsecured loans
and other retail lending 172 1,201 51 80 1,332 1,078 2,582
Corporate loans 22 85 5 2 92 147 261
============================== ======== ======= ====== ====== ======= ====== ========
Total 199 1,313 60 86 1,459 1,269 2,927
Net exposure
============================== ======== ======= ====== ====== ======= ====== ========
Home loans 118,575 14,982 1,618 711 17,311 1,238 137,124
Credit cards, unsecured loans
and other retail lending 16,051 5,680 174 117 5,971 604 22,626
Corporate loans 22,928 4,612 40 30 4,682 1,205 28,815
============================== ======== ======= ====== ====== ======= ====== ========
Total 157,554 25,274 1,832 858 27,964 3,047 188,565
Coverage ratio %% %% %% %
============================== ======== ====== ===== ===== ====== ===== =======
Home loans - 0.2 0.2 0.6 0.2 3.4 0.1
Credit cards, unsecured loans
and other retail lending 1.1 17.5 22.7 40.6 18.2 64.1 10.2
Corporate loans 0.1 1.8 11.1 6.3 1.9 10.9 0.9
============================== ======== ======= ====== ====== ======= ====== ========
Total 0.1 4.9 3.2 9.1 5.0 29.4 1.5
1 Other financial assets subject to impairment not included in the
table above include cash collateral and settlement balances and
financial assets at fair value through other comprehensive income,
accrued income and sundry debtors. These have a total gross exposure
of GBP19.0bn (2018: GBP10.4bn) in Stage 1 and an impairment allowance
of GBP1m (2018: GBP1m).
Movement in gross exposure and impairment allowance including
provisions for loan commitments and financial guarantees
The following tables present a reconciliation of the opening to
the closing balance of the exposure and impairment allowance. An
explanation of the terms 12-month ECL, lifetime ECL and
credit-impaired is included in the Barclays Bank UK PLC Annual
Report 2018 on page 125. Barclays Bank UK Group does not hold any
material purchased or originated credit-impaired assets as at
period end.
Stage 1 Stage Stage 3 Total
2
Gross exposure for loans and advances GBPm GBPm GBPm GBPm
at amortised cost
=========================================== ======= ======= ======= ========
As at 1 January 2019 157,753 29,423 4,316 191,492
Transfers from Stage 1 (9,099) 8,908 191 -
Transfers from Stage 2 6,402 (7,213) 811 -
Transfers from Stage 3 235 169 (404) -
Business activity in the year 19,386 559 144 20,089
Net drawdowns and repayments (5,454) (614) (245) (6,313)
Final repayments (6,145) (1,133) (190) (7,468)
Disposals - - (264) (264)
Write-offs(1) - - (324) (324)
=========================================== ======= ======= ======= ========
As at 30 June 2019 163,078 30,099 4,035 197,212
Stage 1 Stage Stage 3 Total(2)
2
Impairment allowance on loans and GBPm GBPm GBPm GBPm
advances at amortised cost
=========================================== ======= ======= ======= ========
As at 1 January 2019 199 1,459 1,269 2,927
Transfers from Stage 1 (33) 31 2 -
Transfers from Stage 2 261 (378) 117 -
Transfers from Stage 3 22 11 (33) -
Business activity in the year 27 38 22 87
Net re-measurement and movement due
to exposure and risk parameter changes (275) 310 328 363
Final repayments (7) (28) (21) (56)
Disposals - - (199) (199)
Write-offs(1) - - (324) (324)
=========================================== ======= ======= ======= ========
As at 30 June 2019(2) 194 1,443 1,161 2,798
Reconciliation of ECL movement to GBPm
impairment charge/(release) for the
period
=========================================== ======= ======= ======= ========
ECL movement excluding assets derecognised
due to disposals and write-offs 394
Post write-off recoveries(1) (26)
Exchange and other adjustments 42
Impairment charge on loan commitments
and financial guarantees 8
=========================================== ======= ======= ======= ========
Income statement charge/(release)
for the period 418
1 In H119, gross write-offs amounted to GBP324m (H118: GBP161m) and
post write-off recoveries of GBP26m (H118: GBP11m). Net write-offs
represent gross write-offs less post write-off recoveries and amounted
to GBP298m (H118: GBP150m).
2 Other financial assets subject to impairment not included in the
table above include cash collateral and settlement balances, financial
assets at fair value through other comprehensive income, accrued
income and sundry debtors. These have a total gross exposure of
GBP19.0bn (31 December 2018: GBP10.4bn) in Stage 1 and an impairment
allowance of GBP1m (31 December 2018: GBP1m).
Stage 1 Stage 2 Stage 3 Total
Gross exposure for loan commitments GBPm GBPm GBPm GBPm
and financial guarantees
========================================= ======= ======= ======= =======
As at 1 January 2019 61,397 5,686 262 67,345
Net transfers between stages (901) 829 72 -
Business activity in the year 865 41 2 908
Net drawdowns and repayments (1,186) (773) (58) (2,017)
Final repayments (1,744) (150) (53) (1,947)
========================================= ======= ======= =======
As at 30 June 2019 58,431 5,633 225 64,289
Stage 1 Stage 2 Stage 3 Total
Impairment allowance on loan commitments GBPm GBPm GBPm GBPm
and financial guarantees
========================================= ======= ======= ======= =======
As at 1 January 2019 10 44 - 54
Net re-measurement and movement due
to exposure and risk parameter changes 1 6 - 7
========================================= ======= ======= =======
As at 30 June 2019 11 50 - 61
IFRS 9 models must assess ECL across a range of future economic
conditions. These economic scenarios are generated via an
independent model and ultimately set by the Barclays Group Senior
Scenario Review Committee (SSRC). Economic scenarios are
regenerated at a minimum annually (to align with Barclays Group's
medium-term planning exercise) but also if external consensus
regarding the UK economy materially changes. The SSRC monitors
consensus and within the period there have been no sufficiently
material changes to external consensus regarding the UK, and as
such there have been no changes to the macroeconomic variable paths
within each modelled scenario during 2019. There is however
continued anticipated economic uncertainty in the UK and as a
result the impairment adjustment of GBP100m, based broadly on the
output of the sensitivity analysis at 31 December 2018, continues
to be included in the impairment balance at 30 June 2019. The
output of the sensitivity analysis at 31 December 2018 remains
valid given the scenarios are unchanged and the portfolios are
comparable. Please refer to pages 58 to 60 of the Barclays Bank UK
PLC Annual Report 2018 for details.
Treasury and Capital Risk
Funding and liquidity
Overview
The liquidity pool increased to GBP47bn (31 December 2018:
GBP45bn) driven largely by franchise-led net deposit growth during
the period. This positions Barclays Bank UK Group prudently in the
face of prevailing macroeconomic uncertainty.
Liquidity risk stress testing
The liquidity risk stress assessment measures the potential
contractual and contingent stress outflows under a range of
scenarios, which are then used to determine the size of the
liquidity pool that is immediately available to meet anticipated
outflows if a stress occurs. The scenarios include a 30 day
Barclays-specific stress event, a 90 day market-wide stress event
and a 30 day combined scenario consisting of both a Barclays
specific and market-wide stress event.
The CRR (as amended by CRR II) Liquidity Coverage ratio (LCR)
requirement takes into account the relative stability of different
sources of funding and potential incremental funding requirements
in a stress. The LCR is designed to promote short-term resilience
of a bank's liquidity risk profile by holding sufficient high
quality liquid assets to survive an acute stress scenario lasting
for 30 days.
As at 30 June 2019, Barclays Bank UK Group held eligible liquid
assets in excess of 100% of the net stress outflows to its internal
and regulatory requirements. A significant portion of the liquidity
pool was held in cash and deposits with central banks. The
liquidity pool was held entirely within Barclays Bank UK PLC.
As at As at
30.06.19 31.12.18
GBPbn GBPbn
================================================ ========= =========
Barclays Bank UK Group liquidity pool 47 45
%%
================================================ ========= ========
Barclays Bank UK Group liquidity coverage ratio 160 164
Capital and leverage
Throughout 2018, Barclays Bank UK PLC was regulated by the
Prudential Regulation Authority (PRA) only on an individual basis.
As part of structural reform, Barclays Bank UK Group became
regulated by the PRA as a ring-fenced bank from 1 January 2019.
This results in additional entities being captured to reflect the
new regulatory scope of consolidation. Due to the change in scope,
comparatives are not disclosed.
The disclosures below provide key capital metrics for Barclays
Bank UK Group with further information on its risk profile to be
included in the Barclays Bank UK Group Pillar 3 Report H1 2019, due
to be published on 23 August 2019, and which will be available at
home.barclays/investor-relations/reports-and-events/latest-financial-results.
On 27 June 2019, as part of the EU Risk Reduction Measure
package, the CRR II entered into force amending CRR. As an amending
regulation, the existing provisions of CRR apply unless they are
amended by CRR II. The amendments largely take effect and are
phased in from 28 June 2021 with a number of exceptions which are
implemented with immediate effect.
These exceptions primarily relate to the minimum requirement for
own funds and eligible liabilities (MREL). Amendments within this
section include changes to qualifying criteria for CET1, AT1 and
Tier 2 instruments, the inclusion of additional holdings eligible
for deduction, an amendment to the treatment of deferred tax assets
and the introduction of requirements for MREL. Grandfathering and
transitional provisions relating to MREL have also been
introduced.
Certain aspects of CRR II are dependent on final technical
standards to be issued by the European Banking Authority (EBA) and
adopted by the European Commission as well as UK implementation of
the rules. The disclosures in the following section reflect
Barclays' interpretation of the current rules and guidance.
As at
Capital ratios(1,2) 30.06.19
========================= =========
CET1 14.4%
Tier 1 (T1) 18.1%
Total regulatory capital 22.8%
Capital resources GBPbn
================================== =====
CET1 capital 11.0
T1 capital 13.8
Total regulatory capital 17.3
Total risk weighted assets (RWAs) 76.2
Barclays Bank UK Group is required to disclose an average UK
leverage ratio which is based on capital on the last day of each
month in the quarter and an exposure measure for each day in the
quarter. Barclays Bank UK Group is also required to disclose a UK
leverage ratio based on capital and exposure on the last day of the
quarter. Both approaches exclude qualifying claims on central banks
from the leverage exposures.
As at 30 June 2019, Barclays Bank UK Group average UK leverage
ratio was 5.7% which is above the leverage ratio requirement.
As at
30.06.19
Leverage ratios(1) GBPbn
============================= =========
Average UK leverage ratio(3) 5.7%
Average T1 capital 13.3
Average UK leverage exposure 234
UK leverage ratio 6.0%
T1 capital 13.8
UK leverage exposure 229
1 Capital, RWAs and leverage are calculated applying the IFRS 9 transitional
arrangements of the CRR as amended by CRR II applicable as at the
reporting date
2 The fully loaded CET1 ratio was 14.1%, with GBP10.8bn of CET1 capital
and GBP76.3bn of RWAs, calculated without applying the transitional
arrangements of the CRR as amended by CRR II applicable as at the
reporting date.
3 The CET1 capital held against the 0.30% countercyclical leverage
buffer was GBP0.7bn.
Statement of Directors' Responsibilities
Each of the Directors (the names of whom are set out below) confirm
that to the best of their knowledge, the condensed consolidated
interim financial statements set out on pages 12 to 16 have been
prepared in accordance with International Accounting Standard
34, Interim Financial Reporting, as adopted by the European Union
(EU), and that the interim management report herein includes a
fair review of the information required by Disclosure Guidance
and Transparency Rules 4.2.7R and 4.2.8R namely:
-- an indication of important events that have occurred during the
six months ended 30 June 2019 and their impact on the condensed
consolidated interim financial statements, and a description of
the principal risks and uncertainties for the remaining six months
of the financial year
-- any related party transactions in the six months ended 30 June
2019 that have materially affected the financial position or performance
of Barclays Bank UK Group during that period and any changes in
the related party transactions described in the last Annual Report
that could have a material effect on the financial position or
performance of Barclays Bank UK Group in the six months ended 30
June 2019.
Signed on 31 July 2019 on behalf of the Board by
Matt Hammerstein Rupert Fowden
Barclays Bank UK Group Chief Executive Barclays Bank UK Group Chief Financial
Officer
Barclays Bank UK PLC Board of Directors:
Chairman Executive Directors Non-executive Directors
Sir Ian Cheshire Matt Hammerstein Avid Larizadeh Duggan
Rupert Fowden Michael Jary
Kathryn Matthews
Chris Pilling
Andrew Ratcliffe
David Thorburn
Sir John Timpson
Independent Review Report to Barclays Bank UK PLC
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the Interim Results Announcement for the
six months ended 30 June 2019 which comprises:
-- the condensed consolidated income statement and condensed consolidated
statement of comprehensive income for the period then ended;
-- the condensed consolidated balance sheet as at 30 June 2019;
-- the condensed consolidated statement of changes in equity for the
period then ended;
-- the condensed consolidated cash flow statement for the period then
ended; and
-- the related explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the Interim Results Announcement for the six months ended 30
June 2019 is not prepared, in all material respects, in accordance
with IAS 34 Interim Financial Reporting as adopted by the EU and
the Disclosure Guidance and Transparency Rules ("the DTR") of the
UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. We read the other information contained in the Interim
Results Announcement and consider whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
The impact of uncertainties due to the UK exiting the European
Union on our review
Uncertainties related to the effects of Brexit are relevant to
understanding our review of the condensed financial statements.
Brexit is one of the most significant economic events for the UK,
and at the date of this report its effects are subject to
unprecedented levels of uncertainty of outcomes, with the full
range of possible effects unknown. An interim review cannot be
expected to predict the unknowable factors or all possible future
implications for a company and this is particularly the case in
relation to Brexit.
Directors' responsibilities
The Interim Results Announcement is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the Interim Results Announcement in accordance with
the DTR of the UK FCA.
As disclosed in Note 1 Basis of preparation, the annual
financial statements of the Barclays Bank UK Group are prepared in
accordance with International Financial Reporting Standards as
adopted by the EU. The directors are responsible for preparing the
condensed set of financial statements included in the Interim
Results Announcement in accordance with IAS 34 as adopted by the
EU.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the Interim Results
Announcement based on our review.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the company for our
review work, for this report, or for the conclusions we have
reached.
Jonathan Bingham
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London, E14 5GL
31 July 2019
Condensed Consolidated Financial Statements
Condensed consolidated income statement (unaudited)
Half year ended Half year ended
30.06.19 30.06.18(2)
Notes(1) GBPm GBPm
==================================================== ======== =============== ===============
Net interest income 2,876 1,446
Net fee and commission income 3 630 371
Other income 65 26
==================================================== ======== =============== ===============
Total income 3,571 1,843
Credit impairment charges and other provisions (418) (213)
==================================================== ======== =============== ===============
Net operating income 3,153 1,630
Staff costs (638) (322)
Infrastructure, administration and general expenses (1,548) (736)
Litigation and conduct (45) (3)
==================================================== ======== =============== ===============
Operating expenses (2,231) (1,061)
Profit before tax 922 569
Tax charge(3) (213) (126)
==================================================== ======== =============== ===============
Profit after tax 709 443
Attributable to:
==================================================== ======== =============== ===============
Equity holders of the parent(3) 639 408
Other equity instrument holders 70 35
==================================================== ======== =============== ===============
Profit after tax 709 443
1 For notes to the Financial Statements see pages 17 to 29.
2 Barclays Bank UK PLC acquired the UK banking business from Barclays
Bank PLC on 1 April 2018, therefore the prior period represents
only three months of full business activity.
3 From 2019, due to an IAS 12 update, the tax relief on payments
in relation to AT1 instruments has been recognised in the tax charge
of the income statement, whereas it was previously recorded in
retained earnings. Comparatives have been restated, reducing the
tax charge for H118 by GBP9m. Further detail can be found in Note
1, Basis of preparation on pages 17 to 18.
Condensed consolidated statement of comprehensive income
(unaudited)
Half year ended Half year ended
30.06.19 30.06.18(2)
Notes(1) GBPm GBPm
====================================================================== ======== =============== ===============
Profit after tax 709 443
Other comprehensive income that may be recycled to profit or loss:(3)
====================================================================== ======== =============== ===============
Fair value through other comprehensive income reserve 11 19 4
Cash flow hedging reserve 11 134 11
Other comprehensive income that may be recycled to profit or loss 153 15
Total comprehensive income for the period 862 458
1 For notes to the Financial Statements see pages 17 to 29.
2 Barclays Bank UK PLC acquired the UK banking business from Barclays
Bank PLC on 1 April 2018, therefore the prior period represents
only three months of full business activity.
3 Reported net of tax.
Condensed consolidated balance sheet (unaudited)
(+)
As at As at
30.06.19(2) 31.12.18
Assets Notes(1) GBPm GBPm
========================================================================= ======== ============ =========
Cash and balances at central banks 34,304 40,669
Cash collateral and settlement balances 3,887 3,349
Loans and advances at amortised cost 194,414 188,565
Reverse repurchase agreements and other similar secured lending 1,194 1,759
Trading portfolio assets 372 151
Financial assets at fair value through the income statement 3,893 3,880
Derivative financial instruments 179 241
Financial assets at fair value through other comprehensive income 15,077 6,710
Goodwill and intangible assets 3,532 3,534
Property, plant and equipment 933 498
Deferred tax assets 741 792
Other assets 1,110 1,157
========================================================================= ======== ============ =========
Total assets 259,636 251,305
Liabilities
========================================================================= ======== ============ =========
Deposits at amortised cost 201,130 197,485
Cash collateral and settlement balances 629 239
Repurchase agreements and other similar secured borrowing 13,841 11,978
Debt securities in issue 12,037 11,172
Subordinated liabilities 8,004 7,548
Trading portfolio liabilities 1,388 1,269
Derivative financial instruments 499 419
Current tax liabilities 1,197 984
Other liabilities 2,380 1,888
Provisions 7 800 1,380
========================================================================= ======== ============ =========
Total liabilities 241,905 234,362
Equity
========================================================================= ======== ============ =========
Called up share capital and share premium 9 5 5
Other reserves 11 229 76
Retained earnings 14,734 14,792
========================================================================= ======== ============ =========
Shareholders' equity attributable to ordinary shareholders of the parent 14,968 14,873
Other equity instruments 10 2,763 2,070
========================================================================= ======== ============ =========
Total equity 17,731 16,943
Total liabilities and equity 259,636 251,305
1 For notes to the Financial Statements see pages 17 to 29.
2 Barclays Bank UK PLC adopted the accounting standard IFRS 16 on
1 January 2019. The impact on adoption was an increase in property,
plant and equipment of GBP0.5bn, and an increase in other liabilities
of GBP0.5bn, with no material impact on retained earnings.
Condensed consolidated statement of changes in equity
(unaudited)
Called up
share capital
and share Other equity Other Retained Non-controlling
premium(1) instruments(1) reserves(1) earnings Total interests Total equity
Half year ended
30.06.19 GBPm GBPm GBPm GBPm GBPm GBPm GBPm
=============== ============== ============== ============== ============== ====== =============== ============
Balance as at 1
January 2019 5 2,070 76 14,792 16,943 - 16,943
Profit after
tax - 70 - 639 709 - 709
Fair value
through other
comprehensive
income reserve - - 19 - 19 - 19
Cash flow
hedges - - 134 - 134 - 134
Total
comprehensive
income for the
period - 70 153 639 862 - 862
Issue of shares
under employee
share schemes - - - 16 16 - 16
Issue and
exchange of
equity
instruments - 693 - - 693 - 693
Coupons paid on
other equity
instruments - (70) - - (70) - (70)
Vesting of
employee share
schemes - - - (12) (12) - (12)
Dividends paid - - - (700) (700) - (700)
Other movements - - - (1) (1) - (1)
=============== ============== ============== ============== ============== ====== =============== ============
Balance as at
30 June 2019 5 2,763 229 14,734 17,731 - 17,731
Half year ended
31.12.18
=============== ============== ============== ============== ============== ====== =============== ============
Balance as at 1
July 2018 13,049 2,070 87 1,524 16,730 1 16,731
Profit after
tax(2) - 70 - 630 700 - 700
Fair value
through other
comprehensive
income reserve - - (21) - (21) - (21)
Cash flow
hedges - - 9 - 9 - 9
============== ============== ============== ============== ====== =============== ============
Total
comprehensive
income for the
period - 70 (12) 630 688 - 688
Issue of shares
under employee
share schemes - - - 13 13 - 13
Capital
reorganisation (13,044) - - 13,044 - - -
Coupons paid on
other equity
instruments(2) - (70) - - (70) - (70)
Dividends paid - - - (350) (350) - (350)
Capital
contribution
from Barclays
Bank PLC(3) - - - (66) (66) - (66)
Other movements - - 1 (3) (2) (1) (3)
=============== ============== ============== ============== ============== ====== =============== ============
Balance as at
31 December
2018 5 2,070 76 14,792 16,943 - 16,943
Half year ended
30.06.18(4)
=============== ============== ============== ============== ============== ====== =============== ============
Balance as at 1
January 2018 5 - 20 21 46 - 46
Profit after
tax(2) - 35 - 408 443 - 443
Fair value
through other
comprehensive
income reserve - - 4 - 4 - 4
Cash flow
hedges - - 11 - 11 - 11
============== ============== ============== ============== ====== =============== ============
Total
comprehensive
income for the
period - 35 15 408 458 - 458
Issue of new
ordinary
shares 13,044 - - - 13,044 - 13,044
Issue of shares
under employee
share schemes - - - 6 6 - 6
Net equity
impact of the
UK banking
business
transfer - 2,070 52 46 2,168 - 2,168
Coupons paid on
other equity
instruments(2) - (35) - - (35) - (35)
Vesting of
employee share
schemes - - - (9) (9) - (9)
Capital
contribution
from Barclays
Bank PLC - - - 1,049 1,049 - 1,049
Other movements - - - 3 3 1 4
=============== ============== ============== ============== ============== ====== =============== ============
Balance as at
30 June 2018 13,049 2,070 87 1,524 16,730 1 16,731
1 Details of share capital, other equity instruments and other reserves
are shown on pages 26 to 27.
2 From 2019, due to an IAS 12 update, the tax relief on payments
in relation to AT1 instruments has been recognised in the tax charge
of the income statement, whereas it was previously recorded in
retained earnings. Comparatives have been restated, reducing the
tax charge for H118 by GBP9m. Further detail can be found in Note
1, Basis of preparation on pages 17 to 18.
3 The capital contribution recorded in H218 reflected subsequent
true-up adjustments relating to the transfer of the majority of
the UK banking business from Barclays Bank PLC on 1 April 2018.
The adjustments were not recorded at the time of the H118 results
as they had not been verified by that date. The window for adjustments
has now closed.
4 Barclays Bank UK PLC acquired the UK banking business from Barclays
Bank PLC on 1 April 2018.
Condensed consolidated cash flow statement (unaudited)
Half year Half year
ended ended
30.06.19 30.06.18(1,2)
GBPm GBPm
=============================================== ========= ==============
Profit before tax 922 569
Adjustment for non-cash items 272 100
Changes in operating assets and liabilities(2) 911 (3,896)
Net cash from operating activities 2,105 (3,227)
Net cash acquired from the acquisition of
the UK banking business(2) - 45,940
Other investing activities (7,565) (1,046)
=============================================== ========= ==============
Net cash from investing activities (7,565) 44,894
Net cash from financing activities 68 (9)
=============================================== ========= ==============
Net (decrease) / increase in cash and cash
equivalents (5,392) 41,658
Cash and cash equivalents at beginning of
the period 44,334 53
=============================================== ========= ==============
Cash and cash equivalents at end of the period 38,942 41,711
1 Barclays Bank UK PLC acquired the UK banking business from Barclays
Bank PLC on 1 April 2018.
2 As at 30 June 2018, GBP8.6bn of cash equivalents were reclassified
from changes in operating assets and liabilities to net cash acquired
from the acquisition of the UK banking business.
Financial Statement Notes
1. Basis of preparation
These condensed consolidated interim financial statements for
the six months ended 30 June 2019 have been prepared in accordance
with the DTR of the UK FCA and with IAS 34, Interim Financial
Reporting, as published by the International Accounting Standards
Board (IASB) and adopted by the EU. The condensed consolidated
interim financial statements should be read in conjunction with the
annual financial statements for the year ended 31 December 2018,
which have been prepared in accordance with IFRSs as published by
the IASB and as adopted by the EU.
In April 2018, Barclays Bank UK PLC acquired its UK banking
business from Barclays Bank PLC. The notes to these interim
financial statements do not include an Acquisition note, as there
is no related activity in the current period. Relevant prior period
comparative information is available in Note 2, Acquisition of
business on pages 119 to 121 in the Barclays Bank UK PLC Annual
Report 2018.
The accounting policies and methods of computation used in these
condensed consolidated interim financial statements are the same as
those used in the Barclays Bank UK PLC Annual Report 2018, except
as disclosed below.
1. IFRS 16 - Leases
IFRS 16, Leases, which replaced IAS 17, Leases, was applied
effective from 1 January 2019. IFRS 16 applies to all leases with
the exception of licenses of intellectual property, rights held by
licensing agreement within the scope of IAS 38, Intangible Assets,
service concession arrangements, leases of biological assets within
the scope of IAS 41, Agriculture, and leases of minerals, oil,
natural gas and similar non-regenerative resources. IFRS 16
includes an accounting policy choice for a lessee to elect not to
apply IFRS 16 to remaining assets within the scope of IAS 38,
Intangible Assets, which the Barclays Bank UK Group has decided to
apply.
IFRS 16 does not result in a significant change to lessor
accounting; however, for lessee accounting there is no longer a
distinction between operating and finance leases. Lessees will be
required to recognise both:
-- A lease liability, measured at the present value of remaining cash
flows on the lease, and
-- A right of use (ROU) asset, measured at the amount of the initial
measurement of the lease liability, plus any lease payments made
prior to commencement date, initial direct costs, and estimated
costs of restoring the underlying asset to the condition required
by the lease, less any lease incentives received.
Subsequently the lease liability will increase for the accrual
of interest, resulting in a constant rate of return throughout the
life of the lease, and reduce when payments are made. The right of
use asset will amortise to the income statement over the life of
the lease.
There is a recognition exemption in IFRS 16 for leases with a
term not exceeding 12 months, which allows the lessee to apply
similar accounting as an operating lease under IAS 17.
The Barclays Bank UK Group applied IFRS 16 on a modified
retrospective basis and took advantage of the option not to restate
comparative periods. The Barclays Bank UK Group applied the
following transition options available under the modified
retrospective approach:
-- To calculate the right of use asset equal to the lease liability,
adjusted for prepaid or accrued payments.
-- To rely on the previous assessment of whether leases are onerous
in accordance with IAS 37 immediately before the date of initial
application as an alternative to performing an impairment review.
The Barclays Bank UK Group adjusted the carrying amount of the
ROU asset at the date of initial application by the previous carrying
amount of its onerous lease provision.
-- To apply the recognition exception for leases with a term not exceeding
12 months.
-- To use hindsight in determining the lease term if the contract
contains options to extend or terminate the lease.
The impact on adoption was an increase in property, plant and
equipment of GBP0.5bn, and an increase in other liabilities of
GBP0.5bn, with no material impact on retained earnings.
2. IFRIC Interpretation 23 - Uncertainty over Income Tax Treatment
IFRIC 23 clarifies the application of IAS 12 to accounting for
income tax treatments that have yet to be accepted by tax
authorities, in scenarios where it may be unclear how tax law
applies to a particular transaction or circumstance, or whether a
taxation authority will accept an entity's tax treatment. IFRIC 23
has been applied from 1 January 2019. There was no significant
effect from the adoption of IFRIC 23 in relation to accounting for
uncertain tax positions.
3. IAS 12 - Income Taxes - Amendments to IAS 12
The IASB amended IAS 12 in order to clarify the accounting
treatment of the income tax consequences of dividends. As a result
of the amendment, the tax consequences of all payments on financial
instruments that are classified as equity for accounting purposes,
where those payments are considered to be a distribution of profit,
will be included in, and will reduce, the income statement tax
charge. The amendments of IAS 12 were applied to the income tax
consequences of dividends recognised on or after the beginning of
the earliest comparative period. This resulted in reducing the tax
charge and increasing profit after tax for H119 by GBP19m and H118
by GBP9m. This change does not impact retained earnings.
4. IAS 19 - Employee Benefits - Amendments to IAS 19
The IASB issued amendments to the guidance in IAS 19, Employee
Benefits, in connection with accounting for plan amendments,
curtailments and settlements. The amendments have been applied to
plan amendments, curtailments or settlements occurring on or after
1 January 2019. There was no significant effect from the adoption
of the amendments of IAS 19.
5. Going concern
Having reassessed the Principal Risks, the directors considered
it appropriate to adopt the going concern basis of accounting in
preparing the interim financial information.
6. Other disclosures
The Credit risk disclosures on pages 5 to 7 form part of these
interim financial statements.
2. Segmental reporting
Analysis of results by
business
Head
Personal Banking Barclaycard Consumer UK Business Banking Office Barclays Bank UK Group
Half year ended 30.06.19 GBPm GBPm GBPm GBPm GBPm
======================== ================ ======================= ================ ======= ======================
Total income 1,992 987 657 (65) 3,571
Credit impairment
charges and other
provisions (88) (315) (18) 3 (418)
======================== ================ ======================= ================ ======= ======================
Net operating
income/(expenses) 1,904 672 639 (62) 3,153
Total operating expenses (1,547) (328) (353) (3) (2,231)
Profit/(loss) before tax 357 344 286 (65) 922
As at 30.06.2019 GBPbn GBPbn GBPbn GBPbn GBPbn
======================== ================ ======================= ================ ======= ======================
Total assets 187.1 15.9 56.6 - 259.6
Head
Half year ended Personal Banking Barclaycard Consumer UK Business Banking Office Barclays Bank UK Group
30.06.18(1) GBPm GBPm GBPm GBPm GBPm
======================== ================ ======================= ================ ======= ======================
Total income 1,063 504 320 (44) 1,843
Credit impairment
charges and other
provisions (48) (139) (26) - (213)
======================== ================ ======================= ================ ======= ======================
Net operating
income/(expenses) 1,015 365 294 (44) 1,630
Total operating expenses (726) (153) (175) (7) (1,061)
======================== ================ ======================= ================ ======= ======================
Profit/(loss) before tax 289 212 119 (51) 569
As at 31.12.2018 GBPbn GBPbn GBPbn GBPbn GBPbn
======================== ================ ======================= ================ ======= ======================
Total assets 179.4 16.5 55.4 - 251.3
1 Barclays Bank UK PLC acquired the UK banking business from Barclays
Bank PLC on 1 April 2018, therefore the prior period represents
only three months of full business activity.
Income by geographic region
Income from Barclays Bank UK Group is earned from the UK
region.
3. Net fee and commission income
Fee and commission income is disaggregated below and includes a
total for fees in scope of IFRS 15, Revenue from Contracts with
Customers:
Barclaycard Barclays
Personal Consumer Business Head Bank
Banking UK Banking Office UK Group
Half year ended 30.06.19 GBPm GBPm GBPm GBPm GBPm
============================== ======== =========== ======== ======= =========
Fee type
Transactional 344 102 76 - 522
Advisory 88 - - - 88
Other 153 1 54 - 208
============================== ======== =========== ======== ======= =========
Total revenue from contracts
with customers 585 103 130 - 818
Fee and commission expense (168) (15) (5) - (188)
============================== ======== =========== ======== ======= =========
Net fee and commission income 417 88 125 - 630
Half year ended 30.06.18
============================== ======== =========== ======== ======= =========
Fee type
Transactional 167 56 44 - 267
Advisory(1) 74 - - - 74
Other 51 4 12 - 67
============================== ======== =========== ======== ======= =========
Total revenue from contracts
with customers 292 60 56 - 408
Fee and commission expense (15) (8) (14) - (37)
============================== ======== =========== ======== ======= =========
Net fee and commission income 277 52 42 - 371
1 Advisory fees of GBP74m have been restated from Business Banking
to Personal Banking to reflect re-alignment of businesses.
Transactional fees are service charges on deposit accounts, cash
management services and transactional processing fees. This
includes interchange and merchant fee income generated from credit
and bank card usage.
Advisory fees are generated from wealth management services.
Wealth management advisory fees primarily consists of asset-based
fees for advisory accounts of wealth management clients and are
based on the market value of client assets. They are earned over
the period the services are provided and are generally recognised
quarterly when the market value of client assets is determined.
Other relates to various fee types which individually do not
amount to 10% or greater of the Barclays Bank UK Group total fee
and commission income.
4. Dividends on ordinary shares
Half year ended Half year ended
30.06.19 30.06.18
================= =================
Per share Total Per share Total
Dividends paid during the period p GBPm p GBPm
====================================== ========== ===== ========== =====
Full year dividend paid during period 139 700 - -
A half year dividend for 2019 of GBP350m will be paid on 16
September 2019.
5. Fair value of financial instruments
This section should be read in conjunction with Note 16, Fair
value of financial instruments of the Barclays Bank UK PLC Annual
Report 2018 and Note 1, Basis of preparation on pages 114 to 118,
which provides more detail about accounting policies adopted and
valuation methodologies used in calculating fair value.
Valuation
The following table shows assets and liabilities that are held
at fair value disaggregated by valuation technique (fair value
hierarchy) and balance sheet classification:
Valuation technique using
========================================================================
Quoted market prices Observable inputs Significant unobservable inputs
(Level 1) (Level 2) (Level 3) Total
As at 30.06.19 GBPm GBPm GBPm GBPm
=================================== ==================== ================= =============================== =======
Trading portfolio assets 87 285 - 372
Financial assets designated at fair
value through income statement - 34 3,859 3,893
Derivative financial assets - 179 - 179
Financial assets designated at fair
value through other comprehensive
income 6,713 8,364 - 15,077
=================================== ==================== ================= =============================== =======
Total assets 6,800 8,862 3,859 19,521
Trading portfolio liabilities (1,275) (113) - (1,388)
Derivative financial instruments - (499) - (499)
=================================== ==================== ================= =============================== =======
Total liabilities (1,275) (612) - (1,887)
As at 31.12.18
=================================== ==================== ================= =============================== =======
Trading portfolio assets - 151 - 151
Financial assets designated at fair
value through income statement - 28 3,852 3,880
Derivative financial assets - 241 - 241
Financial assets designated at fair
value through other comprehensive
income 2,901 3,809 - 6,710
=================================== ==================== ================= =============================== =======
Total assets 2,901 4,229 3,852 10,982
Trading portfolio liabilities (1,252) (17) - (1,269)
Derivative financial instruments - (419) - (419)
=================================== ==================== ================= =============================== =======
Total liabilities (1,252) (436) - (1,688)
The following table shows the Barclays Bank UK Group's assets
and liabilities that are held at fair value disaggregated by
valuation technique (fair value hierarchy) and product type:
Assets Liabilities
Valuation technique using Valuation technique using
================================================= =================================================
Significant Significant
Quoted market Observable unobservable Quoted market Observable unobservable
prices inputs inputs prices inputs inputs
(Level 1) (Level 2) (Level 3) (Level 1) (Level 2) (Level 3)
As at 30.06.19 GBPm GBPm GBPm GBPm GBPm GBPm
================ =============== =============== =============== =============== =============== ===============
Interest rate
derivatives - 95 - - (373) -
Foreign exchange
derivatives - 84 - - (126) -
Government and
government
sponsored debt 6,800 6,778 - (1,275) (113) -
Corporate debt - 1,835 - - - -
Non-asset backed
loans - 34 3,859 - - -
Asset backed
securities - 36 - - - -
================ =============== =============== =============== =============== =============== ===============
Total 6,800 8,862 3,859 (1,275) (612) -
As at 31.12.18
================ ====================================================================================================
Interest rate
derivatives - 170 - - (337) -
Foreign exchange
derivatives - 71 - - (82) -
Government and
government
sponsored debt 2,901 3,777 - (1,252) (17) -
Corporate debt - 134 - - - -
Non-asset backed
loans - 28 3,852 - - -
Asset backed
securities - 49 - - - -
================ =============== =============== =============== =============== =============== ===============
Total 2,901 4,229 3,852 (1,252) (436) -
Assets and liabilities reclassified between Level 1 and Level
2
During the period, there were no material transfers between
Level 1 and Level 2.
Level 3 movement analysis
The following table summarises the movements in the Level 3
balance during the period. The table shows gains and losses and
includes amounts for all financial assets and liabilities that are
held at fair value transferred to and from Level 3 during the
period.
Asset and liability moves between Level 2 and Level 3 are
primarily due to i) an increase or decrease in observable market
activity related to an input or ii) a change in the significance of
the unobservable input, with assets and liabilities classified as
Level 3 if an unobservable input is deemed significant.
Total gains and losses
in the period
recognised in the
income statement Transfers
======================= ============
As at Trading Other As at
01.01.19 Purchases(1) Sales Issues Settlements Income(2) income In Out 30.06.19
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
=========== =========== ============ ===== ====== =========== =========== ========== ===== ===== ===========
Non-asset
backed
loans 3,852 - - - (163) 178 - - (8) 3,859
=========== =========== ============ ===== ====== =========== =========== ========== ===== ===== ===========
Financial
assets at
fair value
through
the income
statement 3,852 - - - (163) 178 - - (8) 3,859
As at As at
01.01.18 30.06.18
GBPm GBPm
=========== =========== ============ ===== ====== =========== =========== ========== ===== ===== ===========
Non-asset
backed
loans - 4,432 - - (272) (12) - - - 4,148
=========== =========== ============ ===== ====== =========== =========== ========== ===== ===== ===========
Financial
assets at
fair value
through
the income
statement - 4,432 - - (272) (12) - - - 4,148
1 On 1 April 2018, GBP4.4bn of non-asset backed loans were transferred
as part of the acquisition of the UK banking business.
2 Trading income represents gains on Level 3 financial assets which
is offset by losses on derivative hedges disclosed within Level
2
Unrealised gains and losses on Level 3 financial assets and
liabilities
The following table discloses the unrealised gains and losses
recognised in the period arising on Level 3 financial assets and
liabilities held at the period end:
Half year ended 30.06.19 Half year ended 30.06.18
============================== ==============================
Income statement Income statement
======================= =======================
Other Other
Trading income income Total Trading income income Total
GBPm GBPm GBPm GBPm GBPm GBPm
====================================================== ============== ======= ===== ============== ======= =====
Financial assets at fair value through the income
statement 178 - 178 (12) - (12)
Valuation techniques and sensitivity analysis
Sensitivity analysis is performed on products with significant
unobservable inputs (Level 3) to generate a range of reasonably
possible alternative valuations. The sensitivity methodologies
applied take account of the nature of valuation techniques used, as
well as the availability and reliability of observable proxy and
historical data and the impact of using alternative models.
Sensitivity analysis of valuations using unobservable inputs
The following table discloses the sensitivity to changes in
credit spreads used in determining the fair value of Non-asset
backed loans:
As at 30.06.19 As at 31.12.18
======================================== ========================================
Favourable changes Unfavourable changes Favourable changes Unfavourable changes
----------------------- ================== ==================== ================== ====================
GBPm GBPm GBPm GBPm
======================= ================== ==================== ================== ====================
Non-asset backed loans 115 (288) 133 (248)
The underlying facilities consist predominantly of long-dated
fixed rate loans, extended to counterparties in Education, Social
Housing and Local Authorities. These facilities are generally
considered to be very low credit risk and attract an input loan
spread, which, although unobservable, reflects this. The effect of
stressing unobservable inputs to a 90(th) percentile confidence
interval of a potential range of values, alongside considering the
impact of using alternative valuation models, would be to increase
fair values by up to GBP115m (2018: GBP133m) or to decrease fair
values by up to GBP288m (2018: GBP248m). All the potential effect
would impact profit and loss, rather than reserves. The decrease in
fair values is commensurate to an average stress to the input loan
spread of 65bps on a portfolio level.
Portfolio exemption
The Barclays Bank UK Group uses the portfolio exemption in IFRS
13, Fair Value Measurement to measure the fair value of groups of
financial assets and liabilities. Instruments are measured using
the price that would be received to sell a net long position (i.e.
an asset) for a particular risk exposure or to transfer a net short
position (i.e. a liability) for a particular risk exposure in an
orderly transaction between market participants at the balance
sheet date under current market conditions. Accordingly, the
Barclays Bank UK Group measures the fair value of the group of
financial assets and liabilities consistently with how market
participants would price the net risk exposure at the measurement
date.
Unrecognised gains as a result of the use of valuation models
using unobservable inputs
The amount that has yet to be recognised in income that relates
to the difference between the transaction price (the fair value at
initial recognition) and the amount that would have arisen had
valuation models using unobservable inputs been used on initial
recognition, less amounts subsequently recognised, is GBP14m (2018:
GBP14m) for financial instruments measured at fair value and
GBP225m (2018: GBP231m) for financial instruments carried at
amortised cost. The decrease of GBP6m in financial instruments
carried at amortised cost is driven by amortisation and releases of
GBP6m (2018: GBP18m).
Comparison of carrying amounts and fair values for assets and
liabilities not held at fair value
The following table summarises the fair value of financial
assets and liabilities measured at amortised cost on the Barclays
Bank UK Group balance sheet:
As at 30.06.19 As at 31.12.18
===================== =====================
Carrying Carrying
amount Fair value amount Fair value
Financial assets GBPm GBPm GBPm GBPm
======================================== ========= ========== ========= ==========
Loans and advances at amortised cost
-Home loans 138,719 138,299 137,124 136,304
-Credit cards, unsecured loans and
other retail lending 22,271 22,875 22,626 23,334
-Corporate loans 33,424 32,083 28,815 27,253
Reverse repurchase agreements and
other similar secured lending 1,194 1,194 1,759 1,759
Financial liabilities
======================================== ========= ========== ========= ==========
Deposits at amortised cost
- Banks (88) (88) (29) (29)
- Current and demand accounts (73,625) (73,625) (71,450) (71,450)
- Savings accounts (111,817) (111,817) (110,611) (110,611)
- Other time deposits (15,600) (15,616) (15,395) (15,414)
Repurchase agreements and other similar
secured borrowing (13,841) (13,841) (11,978) (11,978)
Debt securities in issue (12,037) (12,493) (11,172) (11,681)
Subordinated liabilities (8,004) (8,070) (7,548) (7,548)
6. Subordinated liabilities
Half year ended Year ended
30.06.19 31.12.18
GBPm GBPm
=================================== ==================== =====================
Opening balance as at 1 January 7,548 -
Issuances 157 -
Acquisition of UK banking business - 3,001
Other 299 4,547
=================================== ==================== =====================
Closing balance 8,004 7,548
Issuance of $200m of 5.088% Fixed-to-Floating Rate Subordinated
Notes (GBP157m), intra-group to Barclays PLC.
Other movements in the six months ended 30 June 2019
predominantly consists of fair value hedge adjustments.
7. Provisions
As at As at
30.06.19 31.12.18
GBPm GBPm
========================================================== ======== ========
PPI redress 360 888
Other customer redress 281 317
Legal, competition and regulatory matters 3 3
Redundancy and restructuring 36 47
Undrawn contractually committed facilities and guarantees 61 54
Onerous contracts 25 42
Sundry provisions 34 29
========================================================== ======== ========
Total 800 1,380
PPI redress
As at 30 June 2019, the Barclays Bank UK Group held a provision
of GBP360m (December 2018: GBP888m) against the cost of PPI redress
and associated processing costs.
The Barclays Group had recognised cumulative provisions
totalling GBP9.6bn (December 2018: GBP9.6bn) with utilisation of
GBP9.2bn (December 2018: GBP8.7bn), GBP0.5bn of which was utilised
in H119.
Through to 30 June 2019, 2.6m (December 2018: 2.4m) customer
initiated claims(1) had been received and processed by the Barclays
Group.
The current provision reflects the estimated cost of PPI redress
primarily relating to customer initiated complaints and on-going
remediation programmes, based on information available at June
2019. This also includes liabilities managed by third parties
arising from portfolios previously sold where Barclays Bank UK
Group remains liable.
As at 30 June 2019, the provision of GBP360m represents Barclays
Bank UK Groups' best estimate of expected PPI related costs in
light of the complaints deadline implemented by the FCA of 29
August 2019. However, it is possible the eventual cumulative
provision outcome may differ from the current estimate. Barclays
Bank UK Group will continue to review the adequacy of the provision
in respect of the future impacts, including after the complaints
deadline as not all costs will be settled at that point.
The PPI provision is calculated using a number of assumptions,
which continue to involve significant modelling and management
judgement:
-- Customer initiated claim volumes - claims received but not yet
processed plus an estimate of future claims initiated by customers,
where the increase in volume is anticipated to cease after the
PPI deadline.
-- Average claim redress - the expected average payment to customers
for upheld claims based on the type and age of the policy/policies.
-- Processing cost per claim - the cost of assessing and processing
each valid claim.
These assumptions remain subjective, mainly due to the
uncertainty associated with the remaining future claims levels,
which include complaints driven by Claims Management Company (CMC)
activity and the FCA advertising campaign.
In addition, these assumptions are subject to recent
investigations and queries by the Official Receiver in respect of
bankruptcy estates, the impact of which cannot be reliably
estimated at this time.
The following table outlines key forecast assumptions used in
the provision calculation as at 30 June 2019, and a sensitivity
analysis illustrating the impact on the provision, if the future
expected assumptions prove too high or too low.
Future Sensitivity analysis increase/
expected decrease
Assumption policy claims in provision
=============================================================== ============== ==============================
Customer initiated claims received and processed (thousands)(1) 134 50k = GBP120m
Average uphold rate per claim (%)(2) 87 1% = GBP3m
Average redress per valid claim (GBP)(3) 2,286 GBP100 = GBP12m
1 Total mis-selling claims received by Barclays, including those
received via CMCs but excluding those for which no PPI policy exists
and excluding recent investigations and queries by the Official
Receiver in respect of bankruptcy estates (the impact of which
cannot be reliably estimated at this time) and responses to proactive
mailing. The sensitivity analysis has been calculated to show the
impact of a 50,000 increase or decrease in the number of customer
initiated mis-selling policy claims would have on the provision
level inclusive of operational processing costs.
2 Average uphold rate per customer initiated mis-selling claims received
by Barclays and proactive mailings, excluding those for which no
PPI policy exists. The sensitivity analysis has been calculated
to show the impact a 1% change in the average uphold rate per claim
would have on the provision level.
3 Average redress stated on a per policy basis for future customer
initiated mis-selling complaints received by Barclays. The sensitivity
analysis has been calculated to show the impact a GBP100 increase
or decrease in the average redress per claim would have on the
provision level.
8. Retirement benefits
As permitted under the Financial Services and Markets Act 2000
(Banking Reform) (Pensions) Regulations 2015, from 1 September
2017, until the end of 2025, Barclays Bank UK PLC will participate
as an employer in the UK Retirement Fund (UKRF). Barclays Bank UK
PLC will make contributions for the future service of its employees
who are currently Afterwork members and, in the event of Barclays
Bank PLC's insolvency during this period, Barclays Bank UK PLC
would step in as principal employer of the UKRF. Barclays Bank PLC
remains the sponsoring employer of the UKRF.
Under IAS 19, the defined benefit obligation remains with
Barclays Bank PLC and Barclays Bank UK PLC recognises a cost equal
to its contributions to the scheme. In accordance with accounting
standards, Barclays Bank UK PLC does not account for any potential
additional liability to the scheme at the end of the transitional
phase.
There have been no changes to the plan arrangements in the six
months to 30 June 2019.
9. Called up share capital
As at 30 June 2019, the issued ordinary share capital of
Barclays Bank UK PLC comprised 505m (December 2018: 505m) ordinary
shares of GBP0.01 each.
There were no issuances or redemptions in the six months to 30
June 2019.
10. Other equity instruments
Other equity instruments of GBP2,763m (December 2018: GBP2,070m)
are AT1 securities issued to Barclays PLC by Barclays Bank UK PLC.
There has been one issuance during the period, GBP700m 7.125% Fixed
Rate Resetting Perpetual Subordinated Contingent Convertible
Securities.
The AT1 securities are perpetual securities with no fixed
maturity and are structured to qualify as AT1 instruments under
CRR. AT1 securities are undated and are repayable, at the option of
Barclays Bank UK PLC, in whole at the initial call date, or on any
fifth anniversary after the initial call date. In addition, the AT1
securities are repayable, at the opinion of Barclays Bank UK PLC,
in whole in the event of certain changes in the tax or regulatory
treatment of the securities. Any repayments require the prior
consent of the PRA.
11. Other reserves
As at As at
30.06.19 31.12.18
GBPm GBPm
====================================================== ========= =========
Fair value through other comprehensive income reserve (14) (33)
Cash flow hedging reserve 154 20
Other reserves and other shareholders' equity 89 89
====================================================== ========= =========
Total 229 76
Fair value through other comprehensive income reserve
The fair value through other comprehensive income reserve
represents the unrealised change in the fair value through other
comprehensive income investments since initial recognition.
As at 30 June 2019, there was a debit balance of GBP14m
(December 2018: GBP33m debit) in the fair value through other
comprehensive income reserve. The gain of GBP19m is principally
driven by a GBP42m gain from the increase in fair value of bonds
due to decreasing bond yields. This was partially offset by GBP17m
of net gains transferred to net profit and a tax charge of
GBP6m.
Cash flow hedging reserve
The cash flow hedging reserve represents the cumulative gains
and losses on effective cash flow hedging instruments that will be
recycled to the income statement when the hedged transactions
affect profit or loss.
As at 30 June 2019, there was a credit balance of GBP154m
(December 2018: GBP20m credit) in the cash flow hedging reserve.
The increase of GBP134m principally reflected a GBP179m increase in
the fair value of interest rate swaps held for hedging purposes as
interest rate curves decreased and offset by a tax charge of
GBP45m.
Other reserves and other shareholders' equity
Other reserves and other shareholders' equity relate to the
merger reserve for Barclays Bank UK Group and the Group
Reconstruction Relief for Barclays Bank UK PLC, in respect of the
transfer of the UK banking business.
As at 30 June 2019, there was a credit balance of GBP89m
(December 2018: GBP89m credit) in other reserves and shareholders'
equity. There has been no movement since December 2018.
12. Contingent liabilities and commitments
The following table summarises the nominal principal amount of
contingent liabilities and commitments which are not recorded on
the balance sheet:
As at As at
30.06.19 31.12.18
Contingent liabilities GBPm GBPm
======================================================== ========== ==========
Guarantees and letters of credit pledged as collateral
security 730 760
Performance guarantees, acceptances and endorsements 150 150
========================================================
Total 880 910
Commitments
======================================================== ========== ==========
Standby facilities, credit lines and other commitments 63,409 66,435
In addition to the above, Note 13, Legal, competition and
regulatory matters details out further contingent liabilities where
it is not practicable to disclose an estimate of the potential
financial effect on Barclays Bank UK Group.
13. Legal, competition and regulatory matters
Barclays Bank UK PLC and the Barclays Bank UK Group face legal,
competition and regulatory challenges, many of which are beyond our
control. The extent of the impact on Barclays of these matters
cannot always be predicted but may materially impact our
operations, financial results, condition and prospects. Matters
arising from a set of similar circumstances can give rise to either
a contingent liability or a provision, or both, depending on the
relevant facts and circumstances.
Investigation into collections and recoveries relating to
unsecured lending
In February 2018, the FCA commenced an enforcement investigation
in relation to whether or not Barclays implemented effective
systems and controls with respect to collections and recoveries and
whether or not it paid due consideration to the interests of
customers in default and arrears.
Claimed amounts/Financial impact
It is not currently practicable to provide an estimate of the
financial impact of the investigation on Barclays or what effect
that it might have upon Barclays' operating results, cash flows or
financial position in any particular period.
HM Revenue & Customs (HMRC) assessments concerning UK Value
Added Tax
In 2018, HMRC issued notices that have the effect of removing
certain overseas subsidiaries that have operations in the UK from
Barclays' UK VAT group, in which group supplies between members are
generally free from VAT. The notices have retrospective effect and
correspond to assessments of GBP181m (inclusive of interest), of
which Barclays would expect to attribute an amount of approximately
GBP128m to Barclays Bank UK PLC and GBP53m to Barclays Bank PLC.
Barclays has appealed HMRC's decision to the First Tier Tribunal
(Tax Chamber).
Claimed amounts/Financial impact
The total amount of the HMRC assessments is approximately
GBP181m, inclusive of interest.
Local authority civil actions concerning LIBOR
Following settlement by Barclays Bank PLC of various
governmental investigations concerning certain benchmark interest
rate submissions, in the UK, certain local authorities have brought
claims against Barclays asserting that they entered into loans in
reliance on misrepresentations made by Barclays in respect of its
conduct in relation to LIBOR.
Claimed amounts/Financial impact
It is not currently practicable to provide an estimate of any
further financial impact of the actions described on Barclays or
what effect they might have upon Barclays' operating results, cash
flows or financial position in any particular period.
General
Barclays Bank UK PLC and its subsidiaries are engaged in various
other legal, competition and regulatory matters in the
jurisdictions in which they operate. The Barclays Bank UK Group is
subject to legal proceedings brought by and against Barclays which
arise in the ordinary course of business from time to time,
including (but not limited to) disputes in relation to contracts,
securities, debt collection, consumer credit, fraud, trusts, client
assets, competition, data management and protection, money
laundering, financial crime, employment, environmental and other
statutory and common law issues.
The Barclays Bank UK Group is also subject to enquiries and
examinations, requests for information, audits, investigations and
legal and other proceedings by regulators, governmental and other
public bodies in connection with (but not limited to) consumer
protection measures, compliance with legislation and regulation,
wholesale trading activity and other areas of banking and business
activities in which Barclays is or has been engaged. Barclays is
cooperating with the relevant authorities and keeping all relevant
agencies briefed as appropriate in relation to these matters and
others described in this note on an ongoing basis.
At the present time, Barclays Bank UK PLC does not expect the
ultimate resolution of any of these other matters to have a
material adverse effect on its financial position. However, in
light of the uncertainties involved in such matters and the matters
specifically described in this note, there can be no assurance that
the outcome of a particular matter or matters (including formerly
active matters or those matters arising after the date of this
note) will not be material to Barclays Bank UK PLC's results,
operations or cash flow for a particular period, depending on,
amongst other things, the amount of the loss resulting from the
matter(s) and the amount of profit otherwise reported for the
reporting period.
14. Related party transactions
Parent company
The parent company, which is also the ultimate parent company,
is Barclays PLC, which holds 100% of the issued ordinary shares of
Barclays Bank UK PLC.
Fellow subsidiaries
Transactions between the Barclays Bank UK Group and other
subsidiaries of the parent company meet the definition of related
party transactions.
Amounts included in the Barclays Bank UK Group's financial
statements with other Barclays Group companies are as follows:
Half year ended Half year ended
30.06.19 30.06.18
===================== =====================
Fellow Fellow
Parent subsidiaries Parent subsidiaries
GBPm GBPm GBPm GBPm
=================== ====== ============= ====== =============
Total income (140) 52 (59) (45)
Operating expenses (36) (1,142) (22) (554)
As at 30.06.19 As at 31.12.18
===================== =====================
Fellow Fellow
Parent subsidiaries Parent subsidiaries
GBPm GBPm GBPm GBPm
=================== ====== ============= ====== =============
Total assets 2 678 5 1,612
Total liabilities 7,934 2,199 7,723 1,304
Except for the above, no related party transactions that have
taken place in the half year ended 30 June 2019 have materially
affected the financial position or performance of the Barclays Bank
UK Group during this period.
15. Barclays Bank UK PLC parent condensed balance sheet
As at As at
30.06.19 31.12.18
Assets GBPm GBPm
=========================================================== ========= =========
Cash and balances at central banks 34,304 40,664
Cash collateral and settlement balances 3,887 3,364
Loans and advances at amortised cost 194,540 188,606
Reverse repurchase agreements and other similar
secured lending 1,194 1,759
Trading portfolio assets 372 151
Financial assets at fair value through the income
statement 3,893 3,880
Derivative financial instruments 179 241
Financial assets at fair value through other comprehensive
income 15,077 6,710
Investments in subsidiaries 463 463
Goodwill and intangible assets 3,384 3,386
Property, plant and equipment 933 498
Deferred tax assets 741 790
Other assets 863 939
=========================================================== ========= =========
Total assets 259,830 251,451
Liabilities
=========================================================== ========= =========
Deposits at amortised cost 202,629 199,031
Cash collateral and settlement balances 697 239
Repurchase agreements and other similar secured
borrowing 13,841 11,978
Debt securities in issue 10,775 9,912
Subordinated liabilities 8,004 7,548
Trading portfolio liabilities 1,388 1,269
Derivative financial instruments 517 436
Current tax liabilities 1,211 990
Other liabilities 2,153 1,676
Provisions 782 1,348
=========================================================== ========= =========
Total liabilities 241,997 234,427
Equity
=========================================================== ========= =========
Called up share capital and share premium 5 5
Other equity instruments 2,763 2,070
Other reserves 331 178
Retained earnings 14,734 14,771
Total equity 17,833 17,024
Total liabilities and equity 259,830 251,451
Other Information
Results timetable(1) Date
============================================= ============== =========== =========
2019 Annual Report 13 February 2020
For further information please contact
Investor relations Media relations
============================================= ======================================
Lisa Bartrip +44 (0) 20 7773 0708 Thomas Hoskin +44 (0) 20
7116 4755
More information on Barclays Bank UK PLC can be found
on our website: home.barclays.
Registered office
1 Churchill Place, London, E14 5HP, United Kingdom. Tel: +44
(0) 20 7116 1000. Company number: 9740322.
1 Note that this date is provisional and subject to change.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR BRGDRXSXBGCB
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