TIDM12ZB
RNS Number : 3929U
Barclays Bank UK PLC
29 July 2020
Barclays Bank UK PLC
Interim Results Announcement
30 June 2020
Table of Contents
Results Announcement Page
Notes 1
Financial Review 2
Risk Management
-- Risk Management and Principal Risks 4
-- Credit Risk 6
-- Treasury and Capital Risk 12
Statement of Directors' Responsibilities 13
Independent Review Report to Barclays Bank UK PLC 14
Condensed Consolidated Financial Statements 15
Financial Statement Notes 20
Other Information 31
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 2020 to
the corresponding six months of 2019 and balance sheet analysis as
at 30 June 2020 with comparatives relating to 31 December 2019. 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 28 July 2020, does not comprise statutory
accounts within the meaning of Section 434 of the Companies Act
2006. Statutory accounts for the year ended 31 December 2019 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
This document contains certain 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.
Forward-looking statements can be made in writing but also may be
made verbally by members of the management of the Barclays Bank UK
Group (including, without limitation, during management
presentations to financial analysts) in connection with this
document. 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. The forward-looking
statements speak only as at the date on which they are made and
such statements 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 entity within the Barclays Bank UK
Group or any securities issued by such entities; direct and
indirect impacts of the coronavirus (COVID-19) pandemic;
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 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 financial position, future results,
dividend payments, capital, leverage or other regulatory ratios or
other financial and non-financial metrics or performance measures
may differ materially from the statements or guidance set forth in
the Barclays Bank UK Group's forward-looking statements.
Subject to our obligations under the applicable laws and
regulations of any relevant jurisdiction, (including, without
limitation, the UK), 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 30.06.20 30.06.19
GBPm GBPm % Change
=============================================== ======== ======== ========
Total income 3,240 3,571 (9)
Credit impairment charges (1,055) (418)
=============================================== ======== ======== ========
Net operating income 2,185 3,153 (31)
Operating expenses (2,188) (2,186)
Litigation and conduct (11) (45) 76
=============================================== ======== ======== ========
Total operating expenses (2,199) (2,231) 1
Profit on disposal of subsidiaries, associates
and joint ventures 12 -
(Loss)/profit before tax (2) 922
Tax credit/(charge) 91 (213)
=============================================== ========
Profit after tax 89 709 (87)
Attributable to:
================================= === ===
Equity holders of the parent (5) 639
Other equity instrument holders 94 70 34
================================= === ===
Profit after tax 89 709
As at As at
30.06.20 31.12.19
Balance sheet information GBPm GBPm % Change
======================================= ========= ========== ========
Assets
Loans and advances at amortised cost 205,919 197,569 4
Cash and balances at central banks 38,651 24,305 59
Financial assets at fair value through
other comprehensive income 24,096 19,322 25
Liabilities
Deposits at amortised cost 225,745 205,696 10
======================================= ========= ========== ========
As at As at
30.06.20 31.12.19
Capital and liquidity metrics GBPbn GBPbn
===================================== ========= =========
Common equity tier 1 (CET1) ratio(1) 14.2% 13.5%
Liquidity pool 64 42
Liquidity coverage ratio 171% 144%
1 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. For more information on the implementation
of CRR II see page 12.
Barclays Bank UK Group overview
Barclays Bank UK PLC is the wholly-owned ring-fenced bank of
Barclays PLC and consists of Personal Banking, Business Banking and
Barclaycard Consumer UK businesses.
Group performance
Loss before tax was GBP2m (H119 Profit before tax: GBP922m)
reflecting a challenging operating environment. Barclays Bank UK
PLC continued to support customers during H120, increasing lending
by GBP8.4bn predominantly through GBP7.1bn of Bounce Back Loan
(BBLS) and the Coronavirus Business Interruption Loan Scheme
(CBILS). Customer deposits grew by GBP20.0bn, reflecting the impact
from payment holidays, lower customer spending levels and the
deposit of BBLS and CBILS loan proceeds, demonstrating franchise
strength. Digital investment continues to transform customer
interactions, providing continuity of service and resilience
through the lockdown. During H120 Barclays Bank UK PLC provided
c.350k payment holidays to customers. These comprised GBP0.7bn UK
cards balances (5% of the portfolio), GBP0.6bn UK personal loans
balances (11% of the portfolio), and GBP14.9bn mortgages balances
(10% of the portfolio).
Total income decreased 9% to GBP3,240m, consisting of:
-- Personal Banking income decreased 6% to GBP1,863m reflecting deposit
margin compression, COVID-19 customer support actions, and lower
overdraft balances and fees
-- Barclaycard Consumer UK income decreased 18% to GBP810m as reduced
borrowing and spend levels by customers resulted in a lower level
of Interest earning lending (IEL) balances, as well as planned
lower debt sales
-- Business Banking income decreased 13% to GBP575m due to deposit
margin compression, lower transactional fee volumes as a result
of COVID-19 and related customer support actions, partially offset
by lending and deposit balance growth
-- This was partially offset by an expense of GBP8m in Head Office
due to the impacts of hedge accounting
Credit impairment charges increased to GBP1,055m reflecting
forecast deterioration in macroeconomic variables in the COVID-19
scenarios(1) , partially offset by the estimated impact of central
bank, government and other support measures
Operating expenses were stable at GBP2,188m as efficiency
savings were offset by COVID-19 pandemic related costs
The tax credit for H120 was GBP91m (H119: GBP213m charge), which
includes the impact of the tax benefit recognised for the
re-measurement of UK deferred tax assets as a result of the UK
corporation tax rate being maintained at 19%.
Balance sheet, capital and liquidity
Loans and advances at amortised cost increased 4% to GBP205.9bn
predominantly through GBP7.1bn of BBLS and CBILS lending, as well
as GBP1.9bn of mortgage growth, partially offset by lower UK cards
balances
Deposits at amortised cost increased 10% to GBP225.7bn due to
lower spending levels, the impact of payment holidays, as well as
the deposit of BBLS and CBILS loan proceeds
Cash and balances at central banks increased 59% to GBP38.7bn
and Financial assets at fair value through other comprehensive
income increased 25% to GBP24.1bn, as a result of a larger
liquidity pool, predominantly due to increased customer
deposits
The Barclays Bank UK Group CET1 ratio as at 30 June 2020 was
14.2%, which is above regulatory capital minimum requirements.
1 See Measurement uncertainty, page 9, for a description of the COVID-19
Scenarios.
Risk Management
Risk m anagement and p rincipal r isks
The roles and responsibilities of the business groups, Risk and
Compliance, in the management of risk in the firm are defined in
the Enterprise Risk Management Framework. The purpose of the
framework is to identify the principal risks of Barclays Bank UK
Group, the process by which Barclays Bank UK Group sets its
appetite for these risks in its business activities, and the
consequent limits which it places on related risk taking.
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 2019 pages 31 to 41 or online 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, save that details of an
additional material risk identified in H120 which potentially
impacts more than one principal risk are set out below.
The following section also gives an overview of credit risk and
treasury and capital risk for the period.
Risks relating to the impact of COVID-19
The COVID-19 pandemic has had, and continues to have, a material
impact on businesses around the world and the economic environments
in which they operate. There are a number of factors associated
with the pandemic and its impact on global economies that could
have a material adverse effect on (among other things) the
profitability, capital and liquidity of financial institutions such
as Barclays Bank UK Group.
The COVID-19 pandemic has caused disruption to the Barclays Bank
UK Group's customers, suppliers and staff. In the UK severe
restrictions on the movement of people have been implemented by the
UK, Scottish and Welsh governments, with a resultant significant
impact on economic activity. It remains unclear how this will
evolve through 2020 (including whether there will be subsequent
waves of the COVID-19 pandemic and whether and in what manner
previously lifted restrictions will be re-imposed) and the Barclays
Bank UK Group continues to monitor the situation closely. However,
despite the COVID-19 contingency plans established by the Barclays
Bank UK Group, its ability to conduct business may be adversely
affected by disruptions to its infrastructure, business processes
and technology services, resulting from the unavailability of staff
due to illness or the failure of third parties to supply services.
This may cause significant customer detriment, costs to reimburse
losses incurred by the Barclays Bank UK Group's customers,
potential litigation costs (including regulatory fines, penalties
and other sanctions), and reputational damage.
In the UK, schemes have been implemented by the Bank of England,
the UK Government and the Financial Conduct Authority to provide
financial support to parts of the economy most impacted by the
COVID-19 pandemic. These schemes have been designed and implemented
at pace, meaning lenders (including Barclays) continue to address
operational issues which have arisen in connection with the
implementation of the schemes, including resolving the interaction
between the schemes and existing law and regulation. In addition,
the details of how these schemes will impact the Barclays Bank UK
Group's customers and therefore the impact on the Barclays Bank UK
Group remains uncertain at this stage. However, certain actions
(such as the introduction of payment holidays for certain consumer
lending products or the cancellation or waiver of fees associated
with certain products) may negatively impact the effective interest
rate earned on certain of the Barclays Bank UK Group portfolios and
lower fee income being earned on certain products. Lower interest
rates in the UK will negatively impact net interest income earned
by the Barclays Bank UK Group. Both of these factors may in turn
negatively impact the Barclays Bank UK Group's profitability.
Furthermore, the introduction of, and participation in,
central-bank supported loan and other financing schemes introduced
as a result of the COVID-19 pandemic may negatively impact the
Barclays Bank UK Group's risk weighted assets (RWAs), level of
impairment and, in turn, capital position (particularly when any
transitional relief applied to the calculation of RWAs and
impairment expires). This may be exacerbated if the Barclays Bank
UK Group is required by the UK Government or the Financial Conduct
Authority to offer forbearance or additional financial relief to
borrowers.
As these schemes and other financial support schemes provided by
the UK Government (such as job retention and furlough schemes)
expire, are withdrawn or are no longer supported, the Barclays Bank
UK Group may experience a higher volume of defaults and
delinquencies in certain portfolios and may initiate collection and
enforcement actions to recover defaulted debts. Where defaulting
borrowers are harmed by the Barclays Bank UK Group's conduct, this
may give rise to civil legal proceedings, including class actions,
regulatory censure, potentially significant fines and other
sanctions, and reputational damage. Other legal disputes may also
arise between the Barclays Bank UK Group and defaulting borrowers
relating to matters such as breaches or enforcement of legal rights
or obligations arising under loan and other credit agreements.
Adverse findings in any such matters may result in the Barclays
Bank UK Group's rights not being enforced as intended. For further
details on legal risk and legal, competition and regulatory
matters, refer to Note 14 on pages 28 to 29.
The actions taken by the UK Government and the Bank of England,
may indicate a view on the potential severity of any economic
downturn and post recovery environment, which from a commercial,
regulatory and risk perspective could be significantly different to
past crises and persist for a prolonged period. The COVID-19
pandemic has led to a weakening in gross domestic product (GDP) and
an expectation of higher unemployment and lower house prices in the
UK. These factors all have a significant impact on the modelling of
expected credit losses (ECL) by Barclays Bank UK Group. As a
result, the Barclays Bank UK Group has experienced higher ECLs
during the first half of 2020 compared to prior periods and this
trend may continue in the second half of 2020. The economic
environment remains uncertain and future impairment charges may be
subject to further volatility (including from changes to
macroeconomic variable forecasts) depending on the longevity of the
COVID-19 pandemic and related containment measures, as well as the
longer term effectiveness of the Bank of England's, UK Government's
and other
support measures. For further details on macroeconomic variables
used in the calculation of ECLs, refer to page 9. In addition, ECLs
may be adversely impacted by increased levels of default for single
name exposures in certain sectors directly impacted by the COVID-19
pandemic (such as the retail and hospitality and leisure
sectors).
Furthermore, the Barclays Bank UK Group relies on models to
support a broad range of business and risk management activities,
including informing business decisions and strategies, measuring
and limiting risk, valuing exposures (including the calculation of
impairment), conducting stress testing and assessing capital
adequacy. Models are, by their nature, imperfect and incomplete
representations of reality because they rely on assumptions and
inputs, and so they may be subject to errors affecting the accuracy
of their outputs and/or misused. This may be exacerbated when
dealing with unprecedented scenarios, such as the COVID-19
pandemic, due to the lack of reliable historical reference points
and data. For further details on model risk, refer to page 34 of
the Barclays Bank UK PLC Annual Report 2019.
The disruption to economic activity caused by the COVID-19
pandemic could adversely impact the Barclays Bank UK Group's other
assets such as goodwill and intangibles, and the value of Barclays
Bank UK PLC's investments in subsidiaries. It could also impact the
Barclays Bank UK Group's income due to lower lending and
transaction volumes due to volatility or weakness in the capital
markets. Other potential risks include credit rating migration
which could negatively impact the Barclays Bank UK Group's RWAs and
capital position, and potential liquidity stress due to (among
other things) increased customer drawdowns, notwithstanding the
significant initiatives that the UK Government and the Bank of
England have put in place to support funding and liquidity.
Furthermore, a significant increase in the utilisation of credit
cards by customers could have a negative impact on the Barclays
Bank UK Group's RWAs and capital position.
The Bank of England and UK Government actions and other support
measures taken in response to the COVID-19 pandemic may also create
restrictions in relation to capital. Restrictions imposed by the UK
Government and/or the Prudential Regulation Authority (PRA) may
further limit management's flexibility in managing the business and
taking action in relation to capital distributions and capital
allocation.
Any and all such events mentioned above could have a material
adverse effect on the Barclays Bank UK Group's business, financial
condition, results of operations, prospects, liquidity, capital
position and credit ratings (including potential credit rating
agency changes of outlooks or ratings), as well as on the Barclays
Bank UK Group's customers, employees and suppliers.
Credit Risk
Loans and advances at amortised cost by product
The table below p resents a breakdown of loans and advances at
amortised cost and the impairment allowance with stage allocation
by asset classification.
Impairment allowance under IFRS 9 considers both the drawn and
the undrawn counterparty exposure. For retail portfolios, the total
impairment allowance is allocated to the drawn exposure to the
extent that the allowance does not exceed the exposure, as ECL is
not reported separately. Any excess is reported on the liability
side of the balance sheet as a provision. For wholesale portfolios,
the impairment allowance on the undrawn exposure is reported on the
liability side of the balance sheet as a provision.
Stage 2
------------------------------ =================================
Stage Not past <=30 >30 days Total Stage Total(1)
1 due days past 3
past due
As at 30.06.20 due
Gross exposure GBPm GBPm GBPm GBPm GBPm GBPm GBPm
============================== ======= ======== ===== ======== ====== ===== ========
Home loans 124,942 16,826 1,703 863 19,392 1,116 145,450
Credit cards, unsecured loans
and other retail lending 13,065 5,639 143 198 5,980 1,378 20,423
Wholesale loans 36,048 5,841 198 41 6,080 1,205 43,333
============================== ======= ======== ===== ======== ====== ===== ========
Total 174,055 28,306 2,044 1,102 31,452 3,699 209,206
Impairment allowance
============================== ======= ======== ===== ======== ====== ===== ========
Home loans 10 194 6 29 47 86
Credit cards, unsecured loans
and other retail lending 294 1,404 54 122 1,580 983 2,857
Wholesale loans 29 1192 3 124 191 344
============================== ======= ======== ==== ======= ====== ===== ========
Total 333 1,542 60 131 1,733 1,221 3,287
Net exposure
============================== ======= ======== ===== ======== ====== ===== ========
Home loans 124,932 16,807 1,699 857 19,363 1,069 145,364
Credit cards, unsecured loans
and other retail lending 12,771 4,235 89 76 4,400 395 17,566
Wholesale loans 36,019 5,722 196 38 5,956 1,014 42,989
============================== ======= ======== ===== ======== ====== ===== ========
Total 173,722 26,764 1,984 971 29,719 2,478 205,919
Coverage ratio %% %% %% %
============================== ======= ======= ==== ======= ===== ==== =======
Home loans - 0.1 0.2 0.7 0.1 4.2 0.1
Credit cards, unsecured loans
and other retail lending 2.3 24.9 37.8 61.6 26.4 71.3 14.0
Wholesale loans 0.1 2.0 1.0 7.3 2.0 15.9 0.8
============================== ======= ======== ===== ======== ====== ===== ========
Total 0.2 5.4 2.9 11.9 5.5 33.0 1.6
As at 31.12.19
Gross exposure
============================== ======= ======== ===== ======== ====== ===== ========
Home loans 126,109 14,189 1,537 643 16,369 1,099 143,577
Credit cards, unsecured loans
and other retail lending 16,471 5,953 192 164 6,309 1,280 24,060
Wholesale loans 28,430 2,885 20 12 2,917 1,196 32,543
============================== ======= ======== ===== ======== ====== ===== ========
Total 171,010 23,027 1,749 819 25,595 3,575 200,180
Impairment allowance
============================== ======= ======== ===== ======== ====== ===== ========
Home loans 6 135 6 24 55 85
Credit cards, unsecured loans
and other retail lending 180 1,074 60 89 1,223 864 2,267
Wholesale loans 27 651 2 68 164 259
============================== ======= ======== ==== ======= ====== ===== ========
Total 213 1,152 66 97 1,315 1,083 2,611
Net exposure
============================== ======= ======== ===== ======== ====== ===== ========
Home loans 126,103 14,176 1,532 637 16,345 1,044 143,492
Credit cards, unsecured loans
and other retail lending 16,291 4,879 132 75 5,086 416 21,793
Wholesale loans 28,403 2,820 19 10 2,849 1,032 32,284
============================== ======= ======== ===== ======== ====== ===== ========
Total 170,797 21,875 1,683 722 24,280 2,492 197,569
Coverage ratio %% %% %% %
============================== ======= ======= ==== ======= ===== ==== =======
Home loans - 0.1 0.3 0.9 0.1 5.0 0.1
Credit cards, unsecured loans
and other retail lending 1.1 18.0 31.3 54.3 19.4 67.5 9.4
Wholesale loans 0.1 2.3 5.0 16.7 2.3 13.7 0.8
============================== ======= ======== ===== ======== ====== ===== ========
Total 0.1 5.0 3.8 11.8 5.1 30.3 1.3
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 GBP29.2bn (December 2019: GBP24.5bn) and an impairment allowance
of GBP9m (December 2019: GBP3m). This comprises GBP4m (December
2019: GBP3m) on GBP28.2bn Stage 1 assets (December 2019: GBP24.5bn).
GBP5m (December 2019: GBPnil) on GBP988m Stage 2 assets (December
2019: GBPnil). Loan commitments and financial guarantee contracts
have total ECL of GBP148m (December 2019: GBP70m).
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 2019 on page 121. Barclays Bank UK Group does not hold any
material purchased or originated credit-impaired assets as at
period end. Transfers between stages in the tables have been
reflected as if they had taken place at the beginning of the year.
The movements are measured over a 6-month period.
Gross exposure for loans and advances at amortised cost
Stage 1 Stage 2 Stage 3 Total
---------------- ---------------- ---------------- ----------------
Gross Gross Gross Gross
exposure ECL exposure ECL exposure ECL exposure ECL
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
=============================== ========= ===== ========= ===== ========= ===== ========= =====
Home loans
=============================== ========= ===== ========= ===== ========= ===== ========= =====
As at 1 January 2020 126,109 6 16,369 24 1,099 55 143,577 85
-----
Transfers from Stage
1 to Stage 2 (6,767) (1) 6,767 1 - - - -
Transfers from Stage
2 to Stage 1 2,871 4 (2,871) (4) - - - -
Transfers to Stage 3 (35) - (221) (2) 256 2 - -
Transfers from Stage
3 7 1 80 - (87) (1) - -
Business activity in
the year 9,517 1 277 1 - - 9,794 2
Net drawdowns, repayments,
net re-measurement and
movement due to exposure
and risk parameter changes (3,085) (1) (383) 10 (42) 1 (3,510) 10
Final repayments (3,675) - (626) (1) (108) (8) (4,409) (9)
-----
Disposals - - - - - - - -
Write-offs(1) - - - - (2) (2) (2) (2)
=============================== ========= ===== ========= ===== ========= ===== ========= =====
As at 30 June 2020(2) 124,942 10 19,392 29 1,116 47 145,450 86
Credit cards, unsecured loans and other retail lending
=======================================================================================================
As at 1 January 2020 16,471 180 6,309 1,223 1,280 864 24,060 2,267
-----
Transfers from Stage
1 to Stage 2 (2,660) (45) 2,660 45 - - - -
Transfers from Stage
2 to Stage 1(3) 2,023 331 (2,023) (331) - - - -
Transfers to Stage 3 (101) (3) (396) (153) 497 156 - -
Transfers from Stage
3 15 6 12 4 (27) (10) - -
Business activity in
the year 980 20 134 28 10 4 1,124 52
Net drawdowns, repayments,
net re-measurement and
movement due to exposure
and risk parameter changes(3) (3,122) (184) (655) 774 (23) 296 (3,800) 886
Final repayments (541) (11) (61) (10) (61) (32) (663) (53)
-----
Disposals - - - - (15) (12) (15) (12)
Write-offs(1) - - - - (283) (283) (283) (283)
=============================== ========= ===== ========= ===== ========= ===== ========= =====
As at 30 June 2020(2) 13,065 294 5,980 1,580 1,378 983 20,423 2,857
1 In H1 2020, gross write-offs amounted to GBP304m (H1 2019: GBP324m)
and post write-off recoveries amounted to GBP14m (H1 2019: GBP26m).
Net write-offs represent gross write-offs less post write-off recoveries
and amounted to GBP290m (H1 2019: GBP298m).
2 Other financial assets subject to impairment excluded from the
tables above include cash collateral and settlement balances, financial
assets at fair value through other comprehensive income and other
assets. These have a total gross exposure of GBP29.2bn (December
2019: GBP24.5bn) and an impairment allowance of GBP9m (December
2019: GBP3m). This comprises GBP4m (December 2019: GBP3m) on GBP28.2bn
Stage 1 assets (December 2019: GBP24.5bn). GBP5m (December 2019:
GBPnil) on GBP988m Stage 2 assets (December 2019: GBPnil).
3 Transfers and risk parameter changes include a GBP253m net release
in ECL arising from a reclassification of GBP2.4bn gross loans
and advances from Stage 2 to Stage 1 in Credit cards, unsecured
loans and other retail lending resulting from a review of probability
of default models in the period. Barclays continually reviews the
output of models to determine appropriateness of the ECL calculation,
including reviews of model monitoring, external benchmarking and
experience of model operation over an extended period of time.
Stage 1 Stage 2 Stage 3 Total
-------------------- -------------------- -------------------- ---------------------
Gross exposure ECL Gross exposure ECL Gross exposure ECL Gross exposure ECL
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
============================= ============== ==== ============== ==== ============== ==== ============== =====
Wholesale loans
============================= ============== ==== ============== ==== ============== ==== ============== =====
As at 1 January 2020 28,430 27 2,917 68 1,196 164 32,543 259
-----
Transfers from Stage 1 to
Stage 2 (3,069) (6) 3,069 6 - - - -
Transfers from Stage 2 to
Stage 1 486 9 (486) (9) - - - -
Transfers to Stage 3 (142) - (146) (5) 288 5 - -
Transfers from Stage 3 112 9 141 7 (253) (16) - -
Business activity in the year 5,652 3 186 2 - - 5,838 5
Net drawdowns, repayments,
net re-measurement and
movement due to exposure and
risk parameter
changes 7,857 (13) 435 55 (7) 57 8,285 99
Final repayments (3,278) - (36) - - - (3,314) -
-----
Disposals - - - - - - - -
Write-offs(1) - - - - (19) (19) (19) (19)
============================= ============== ==== ============== ==== ============== ==== ============== =====
As at 30 June 2020(2) 36,048 29 6,080 124 1,205 191 43,333 344
Reconciliation of ECL movement to impairment charge/(release) for the period GBPm
=============================================================================================================== -----
Home loans 3
Credit cards, unsecured loans and other retail lending 885
Wholesale loans 104
-----
ECL movement excluding assets derecognised due to disposals and write-offs 992
Post write-off recoveries (14)
Other adjustments(3) (10)
Impairment charge on loan commitments and other financial guarantees 78
Impairment charge on other financial assets(2) 9
----------------------------------------------------------------------------------------------- ============== =====
As at 30 June 2020 1,055
1 In H1 2020, gross write-offs amounted to GBP304m (H1 2019: GBP324m)
and post write-off recoveries amounted to GBP14m (H1 2019: GBP26m).
Net write-offs represent gross write-offs less post write-off recoveries
and amounted to GBP290m (H1 2019: GBP298m).
2 Other financial assets subject to impairment excluded from the
tables above include cash collateral and settlement balances, financial
assets at fair value through other comprehensive income and other
assets. These have a total gross exposure of GBP29.2bn (December
2019: GBP24.5bn) and an impairment allowance of GBP9m (December
2019: GBP3m). This comprises GBP4m (December 2019: GBP3m) on GBP28.2bn
Stage 1 assets (December 2019: GBP24.5bn). GBP5m (December 2019:
GBPnil) on GBP988m Stage 2 assets (December 2019: GBPnil).
3 Includes interest and fees in suspense.
Loan commitments and financial guarantees
Stage 1 Stage 2 Stage 3 Total
-------------------- -------------------- -------------------- --------------------
Gross exposure ECL Gross exposure ECL Gross exposure ECL Gross exposure ECL
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
============================== ============== ==== ============== ==== ============== ==== ============== ====
Home loans
============================== ============== ==== ============== ==== ============== ==== ============== ====
As at 1 January 2020 9,508 - 499 - 3 - 10,010 -
Net transfers between stages (93) - 93 - - - - -
Business activity in the year - - - - - - - -
Net drawdowns, repayments, net
re-measurement and movement
due to exposure and risk
parameter
changes (886) - (6) - (2) - (894) -
Limit management (98) - (16) - - - (114) -
------------------------------ -------------- ---- -------------- ---- -------------- ---- -------------- ----
As at 30 June 2020 8,431 - 570 - 1 - 9,002 -
Credit cards, unsecured loans and other retail lending
----------------------------------------------------------------------------------------------------------------------
As at 1 January 2020 47,505 11 4,183 59 181 - 51,869 70
Net transfers between stages (2,281) 36 2,219 (36) 62 - - -
Business activity in the year 349 1 37 1 - - 386 2
Net drawdowns, repayments, net
re-measurement and movement
due to exposure and risk
parameter
changes 1,779 (20) 321 97 (38) - 2,062 77
Limit management (228) (1) (16) (1) (30) - (274) (2)
------------------------------ -------------- ---- -------------- ---- -------------- ---- -------------- ----
As at 30 June 2020 47,124 27 6,744 120 175 - 54,043 147
Wholesale loans
============================== ============== ==== ============== ==== ============== ==== ============== ====
As at 1 January 2020 2,738 - 395 - 47 - 3,180 -
Net transfers between stages (456) - 456 - - - - -
Business activity in the year 4 - - - - - 4 -
Net drawdowns, repayments, net
re-measurement and movement
due to exposure and risk
parameter
changes 709 - 194 1 12 - 915 1
Limit management (23) - (94) - - - (117) -
------------------------------ -------------- ---- -------------- ---- -------------- ---- -------------- ----
As at 30 June 2020 2,972 - 951 1 59 - 3,982 1
Measurement uncertainty
The Barclays Bank UK Group uses a five-scenario model to
calculate ECL. Absent the conditions surrounding the COVID-19
pandemic, a Baseline scenario is typically generated based on an
external consensus forecast assembled from key sources, including
HM Treasury (short and medium-term forecasts) and Bloomberg (based
on median of economic forecasts). In addition, two adverse
scenarios (Downside 1 and Downside 2) and two favourable scenarios
(Upside 1 and Upside 2) are derived, with associated probability
weightings. The adverse scenarios are typically calibrated to a
similar severity to internal stress tests, whilst also considering
IFRS 9 specific sensitivities and non-linearity. Downside 2 is
typically benchmarked to the Bank of England's annual cyclical
scenarios and to the most severe scenario from Moody's inventory,
but is not designed to be the same. The favourable scenarios are
generally calibrated to be symmetric to the adverse scenarios,
subject to a ceiling calibrated to relevant recent favourable
benchmark scenarios. The scenarios include four economic variables
(GDP, unemployment, House Price Index (HPI) and base rate), and
expanded variables using statistical models based on historical
correlations. The upside and downside shocks are designed to evolve
over a five-year stress horizon, with all five scenarios converging
to a steady state after approximately eight years. To calculate ECL
a probability weight is assigned to each scenario.
Following the onset of the COVID-19 pandemic, the Barclays Bank
UK Group generated a Baseline scenario in March 2020 that reflected
the most recent economic forecasts available in the market
(combined with internal assumptions) and estimated impacts from
significant support measures taken by Barclays, central banks and
governments across the Barclays Bank Group's key markets. This
scenario assumed a strong contraction in GDP and a sharp rise in
unemployment in 2020, and required a recalibration of probability
weights. This scenario was superseded by a further revised Baseline
scenario generated in June 2020, based broadly on the latest
economic forecasts which recognise some impacts from the various
support measures still in place across the Barclays Bank UK Group's
key markets. Upside and downside scenarios were also regenerated in
June 2020 (together with the revised Baseline scenario, the
"COVID-19 Scenarios"). The downside scenarios reflect slower
economic growth than the Baseline with social distancing measures
continuing to drag GDP. Economic growth begins to recover later in
2020 in Downside 1 but only in 2021 in the Downside 2 scenario. The
upside scenarios reflect a faster rebound in economic growth than
the Baseline with a sharp decrease in infection rates and an almost
fully reopened economy. Scenario weights were also revised in June
2020 with greater weight being applied to the tail scenarios
(Upside 2 and Downside 2). This reflects the significant range of
uncertainty in the economic environment compared to previous
quarters given the conditions surrounding the COVID-19
pandemic.
The economic environment remains uncertain and future impairment
charges may be subject to further volatility (including from
changes to macroeconomic variable forecasts) depending on the
longevity of the COVID-19 pandemic and related containment
measures, as well as the longer term effectiveness of central bank,
government and other support measures.
The tables below show the key macroeconomic variables used in
the COVID-19 Baseline scenario and the probability weights applied
to each respective scenario.
Baseline average macroeconomic variables used in the calculation of ECL
2020 2021 2022 Expected Worst Point
As at 30.06.20 % % % %
--------------------------- ------- ------ ----- ---------------------------
UK GDP(1) (8.7) 6.1 2.9 (51.4)
UK unemployment(2) 6.6 6.5 4.4 8.0
UK HPI(3) 0.6 2.0 - (1.5)
UK bank rate 0.2 0.1 0.1 0.1
1 Average Real GDP seasonally adjusted change in year; expected worst
point using Seasonally Adjusted Annual Rate, SAAR.
2 Average UK unemployment rate 16-year+.
3 Change in average yearly UK HPI = Halifax All Houses, All Buyers
index, relative to prior year end; worst point is based on cumulative
drawdown in year relative to prior year end.
Scenario probability weighting
Upside 2 Upside 1 Baseline Downside 1 Downside 2
% % % % %
=============================== ======== ======== ======== ========== ==========
As at 30.06.20
Scenario probability weighting 20.3 22.4 25.4 17.5 14.4
=============================== ======== ======== ======== ========== ==========
As at 31.12.19
Scenario probability weighting 10.1 23.1 40.8 22.7 3.3
Macroeconomic variables (specific bases) (1)
Upside 2 Upside 1 Baseline Downside 1 Downside 2
As at 30.06.20 % % % % %
--------------------------------------------- -------- -------- -------- ---------- ----------
UK GDP(2) 32.7 26.4 5.4 1.6 1.2
UK unemployment(3) 3.5 3.6 4.9 9.6 10.9
UK HPI(4) 45.3 27.2 2.3 (15.0) (33.4)
UK bank rate(3) 0.1 0.1 0.2 0.3 0.2
As at 31.12.19
--------------------------------------------- -------- -------- -------- ---------- ----------
UK GDP(2) 4.2 2.9 1.6 0.2 (4.7)
UK unemployment(3) 3.4 3.8 4.2 5.7 8.7
UK HPI(4) 46.0 32.0 3.1 (8.2) (32.4)
UK bank rate(3) 0.5 0.5 0.7 2.8 4.0
As at 30.06.19
--------------------------------------------- -------- -------- -------- ---------- ----------
UK GDP(2) 4.5 3.1 1.7 0.3 (4.1)
UK unemployment(3) 3.4 3.9 4.3 5.7 8.8
UK HPI(4) 46.4 32.6 3.2 (0.5) (32.1)
UK bank rate(3) 0.8 0.8 1.0 2.5 4.0
1 UK GDP = Real GDP growth seasonally adjusted; UK unemployment
= UK unemployment rate 16-year+; UK HPI = Halifax All Houses. Forecast
period based on 20 quarters from Q3 2020.
2 Upside scenario is the highest annual average growth rate based
on seasonally adjusted quarterly annualised rate; 5-year average
in Baseline; downside is the lowest annual average growth rate
based on seasonally adjusted quarterly annualised rate.
3 Lowest yearly average in Upside scenarios; 5-year average in Baseline;
highest yearly average in Downside scenarios.
4 Cumulative growth (trough to peak) in Upside scenarios; 5-year
average in Baseline; cumulative fall (peak-to-trough) in Downside
scenarios.
Macroeconomic variables (5-year averages) (1)
Upside 2 Upside 1 Baseline Downside 1 Downside 2
As at 30.06.20 % % % % %
---------------------------------------------- -------- -------- -------- ---------- ----------
UK GDP 8.9 7.2 5.4 5.2 2.8
UK unemployment 4.0 4.3 4.9 6.2 7.2
UK HPI 7.8 5.0 2.3 (1.4) (5.5)
UK bank rate 0.4 0.3 0.2 0.1 0.1
As at 31.12.19
---------------------------------------------- -------- -------- -------- ---------- ----------
UK GDP 3.2 2.4 1.6 0.8 (0.7)
UK unemployment 3.5 3.9 4.2 5.4 7.7
UK HPI 7.9 5.7 3.1 (1.1) (6.5)
UK bank rate 0.5 0.5 0.7 2.5 3.7
As at 30.06.19
---------------------------------------------- -------- -------- -------- ---------- ----------
UK GDP 3.4 2.6 1.7 0.9 (0.6)
UK unemployment 3.7 4.0 4.3 5.1 7.9
UK HPI 7.9 5.8 3.2 0.9 (6.4)
UK bank rate 0.8 0.8 1.0 2.3 3.7
1 UK GDP = Real GDP growth seasonally adjusted; UK unemployment
= UK unemployment rate 16-year+; UK HPI = Halifax All Houses. For
GDP and HPI, numbers represent average of seasonally adjusted quarterly
annualised rates. Forecast period based on 20 quarters from Q3
2020.
Treasury and Capital Risk
Funding and liquidity
Overview
The liquidity pool increased to GBP64bn (December 2019: GBP42bn)
driven by customer deposit growth and actions to maintain a prudent
funding and liquidity position in the current environment.
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 2020, Barclays Bank UK Group held eligible liquid
assets well above 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
30.06.20 31.12.19
GBPbn GBPbn
================================================ ========= =========
Barclays Bank UK Group liquidity pool 64 42
%%
================================================ ========= ========
Barclays Bank UK Group liquidity coverage ratio 171 144
Capital and leverage
The disclosures below provide key capital metrics for Barclays
Bank UK Group with further information on its risk profile included
in the Barclays Bank UK PLC Pillar 3 Report H1 2020, expected to be
published on 14 August 2020, and which will be available at
home.barclays/investor-relations/reports-and-events/latest-financial-results.
On 27 June 2019, CRR II came into force amending CRR. As an
amending regulation, the existing provisions of CRR apply unless
they are amended by CRR II. 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.
On 27 June 2020, CRR was further amended to accelerate specific
CRR II measures and implement a new IFRS 9 transitional relief
calculation. Previously due to be implemented in June 2021, the
accelerated measures primarily relate to the CRR leverage
calculation to include additional settlement netting and limited
changes to the calculation of RWAs. For UK leverage calculations,
the PRA early adopted the CRR II settlement netting measure in
April 2020.
The IFRS 9 transitional arrangements have been extended by two
years and a new modified calculation has been introduced. 100%
relief will be applied to increases in stage 1 and stage 2
provisions from 1 January 2020 throughout 2020 and 2021; 75% in
2022; 50% in 2023; 25% in 2024 with no relief applied from 2025.
The phasing out of transitional relief on the "day 1" impact of
IFRS 9 as well as increases in stage 1 and stage 2 provisions
between 1 January 2018 and 31 December 2019 under the modified
calculation remain unchanged and continue to be subject to 70%
transitional relief throughout 2020; 50% for 2021; 25% for 2022 and
with no relief applied from 2023.
Also impacting own funds from 30 June 2020 until 31 December
2020 inclusive are amendments to the regulatory technical standards
on prudential valuation which include an increase to
diversification factors applied to certain additional valuation
adjustments.
The disclosures in the following section reflect Barclays'
interpretation of the current rules and guidance.
As at As at
Capital ratios (1,2) 30.06.20 31.12.19
========================= ========= =========
CET1 14.2% 13.5%
Tier 1 (T1) 17.6% 16.9%
Total regulatory capital 23.1% 21.3%
Capital resources GBPm GBPm
============================ ====== ======
CET1 capital 10,834 10,128
T1 capital 13,394 12,688
Total regulatory capital 17,537 16,012
Risk weighted assets (RWAs) 76,039 75,010
1 Capital and RWAs 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 13.4%, with GBP10,181m of CET1
capital and GBP76,054m of RWAs, calculated without applying the
transitional arrangements of the CRR as amended by CRR II applicable
as at the reporting date.
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 and include the PRA's early adoption of
CRR II settlement netting.
As at 30 June 2020, Barclays Bank UK Group average UK leverage
ratio was 5.3% which is above the leverage ratio requirement.
As at As at
30.06.20 31.12.19
Leverage ratios (1) GBPm GBPm
============================== ========= =========
Average UK leverage ratio (2) 5.3% 5.2%
Average T1 capital 13,176 12,598
Average UK leverage exposure 247,894 240,057
UK leverage ratio 5.5% 5.4%
T1 capital 13,394 12,688
UK leverage exposure 245,609 236,026
1 Capital and RWAs are calculated applying the IFRS 9 transitional
arrangements of the CRR as amended by CRR II applicable as at the
reporting date.
2 The CET1 capital held against the 0.35% SRB ALRB was GBP0.9bn and
against the 0.0% CCLB was GBP0.0bn.
Statement of Directors' Responsibilities
The Directors (the names of whom are set out below) are required
to prepare the financial statements on a going concern basis unless
it is not appropriate to do so. In making this assessment, the
directors have considered information relating to present and
future conditions. 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 15 to 19 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 2020 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
2020 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 2020.
Signed on 28 July 2020 on behalf of the Board by
Matt Hammerstein James Mack
Barclays Bank UK Group Chief Executive Barclays Bank UK Group Chief Financial
Officer
Barclays Bank UK PLC Board of Directors:
Chair Executive Directors Non-executive Directors
Sir Ian Cheshire Matt Hammerstein Avid Larizadeh Duggan
James Mack Michael Jary
Kathryn Matthews
Chris Pilling
Andrew Ratcliffe
David Thorburn
Sir John Timpson
Independent Review Report to Barclays Bank UK PL C
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 2020 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 2020;
-- 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 2020 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.
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.
Michael McGarry
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London, E14 5GL
28 July 2020
Condensed Consolidated Financial Statements
Condensed consolidated income statement (unaudited)
Half year Half year
ended ended
30.06.20 30.06.19
Notes(1) GBPm GBPm
=============================================== ======== ========= =========
Interest and similar income 3,149 3,470
Interest and similar expense (516) (594)
=============================================== ======== ========= =========
Net interest income 2,633 2,876
Fee and commission income 3 667 818
Fee and commission expense 3 (149) (188)
=============================================== ======== ========= =========
Net fee and commission income 3 518 630
Other income 89 65
=============================================== ======== ========= =========
Total income 3,240 3,571
Credit impairment charges (1,055) (418)
=============================================== ======== ========= =========
Net operating income 2,185 3,153
Staff costs (647) (638)
Infrastructure, administration and general
expenses (1,541) (1,548)
Litigation and conduct (11) (45)
=============================================== ======== ========= =========
Operating expenses (2,199) (2,231)
Profit on disposal of subsidiaries, associates
and joint ventures 12 -
=============================================== ======== ========= =========
(Loss)/profit before tax (2) 922
Tax credit/(charge) 5 91 (213)
=============================================== ======== ========= =========
Profit after tax 89 709
Attributable to:
=============================================== ======== ========= =========
Equity holders of the parent (5) 639
Other equity instrument holders 94 70
=============================================== ======== ========= =========
Profit after tax 89 709
1 For notes to the Financial Statements see pages 20 to 31.
Condensed consolidated statement of comprehensive income
(unaudited)
Half year Half year
ended ended
30.06.20 30.06.19
Notes(1) GBPm GBPm
================================================ ======== ========= =========
Profit after tax 89 709
Other comprehensive income that may be recycled
to profit or loss:(2)
================================================ ======== ========= =========
Fair value through other comprehensive income
reserve 12 1 19
Cash flow hedging reserve 12 258 134
Other comprehensive income that may be recycled
to profit or loss 259 153
Total comprehensive income for the period 348 862
1 For notes to the Financial Statements see pages 20 to 31.
2 Reported net of tax.
Condensed consolidated balance sheet (unaudited)
(+)
As at As at
30.06.20 31.12.19
Assets Notes(1) GBPm GBPm
================================================== ======== ========= =========
Cash and balances at central banks 38,651 24,305
Cash collateral and settlement balances 4,688 4,331
Loans and advances at amortised cost 205,919 197,569
Reverse repurchase agreements and other similar
secured lending 3,323 1,761
Trading portfolio assets 603 860
Financial assets at fair value through the income
statement 3,548 3,571
Derivative financial instruments 309 192
Financial assets at fair value through other
comprehensive income 24,096 19,322
Goodwill and intangible assets 3,528 3,530
Property, plant and equipment 816 893
Deferred tax assets 5 803 810
Other assets 764 1,254
================================================== ======== ========= =========
Total assets 287,048 258,398
Liabilities
================================================== ======== ========= =========
Deposits at amortised cost 225,745 205,696
Cash collateral and settlement balances 181 214
Repurchase agreements and other similar secured
borrowing 16,099 13,420
Debt securities in issue 12,028 8,271
Subordinated liabilities 10,598 7,688
Trading portfolio liabilities 1,227 1,704
Derivative financial instruments 849 740
Current tax liabilities 436 458
Other liabilities 1,752 2,034
Provisions 8 1,347 1,660
================================================== ======== ========= =========
Total liabilities 270,262 241,885
Equity
================================================== ======== ========= =========
Called up share capital and share premium 10 5 5
Other reserves 12 442 183
Retained earnings 13,779 13,765
================================================== ======== ========= =========
Shareholders' equity attributable to ordinary
shareholders of the parent 14,226 13,953
Other equity instruments 11 2,560 2,560
================================================== ======== ========= =========
Total equity 16,786 16,513
Total liabilities and equity 287,048 258,398
1 For notes to the Financial Statements see pages 20 to 31.
Condensed consolidated statement of changes in equity
(unaudited)
Called up share
capital and share Other equity
premium(1) instruments(1) Other reserves(1) Retained earnings Total equity
Half year ended
30.06.20 GBPm GBPm GBPm GBPm GBPm
===================== ==================== ===================== ================= ================= ============
Balance as at 1
January 2020 5 2,560 183 13,765 16,513
Profit after tax - 94 - (5) 89
Fair value through
other comprehensive
income reserve - - 1 - 1
Cash flow hedges - - 258 - 258
Total comprehensive
income for the
period - 94 259 (5) 348
Issue of shares under
employee share
schemes - - - 29 29
Coupons paid on other
equity instruments - (94) - - (94)
Vesting of employee
share schemes - - - (11) (11)
Dividends paid - - - (220) (220)
Capital Contribution
from Barclays PLC - - - 220 220
Other movements - - - 1 1
===================== ==================== ===================== ================= ================= ============
Balance as at 30 June
2020 5 2,560 442 13,779 16,786
Half year ended
31.12.19
===================== ==================== ===================== ================= ================= ============
Balance as at 1 July
2019 5 2,763 229 14,734 17,731
Profit after tax - 83 - (636) (553)
Fair value through
other comprehensive
income reserve - - (15) - (15)
Cash flow hedges - - (31) - (31)
===================== ==================== ===================== ================= ================= ============
Total comprehensive
income for the
period -(-) 83 (46) (636) (599)
Issue of shares under
employee share
schemes - - - 16 16
Issue and exchange of
equity instruments - (203) - - (203)
Coupons paid on other
equity instruments - (83) - - (83)
Dividends paid - - - (350) (350)
Other movements - - - 1 1
===================== ==================== ===================== ================= ================= ============
Balance as at 31
December 2019 5 2,560 183 13,765 16,513
Half year ended
30.06.19
===================== ==================== ===================== ================= ================= ============
Balance as at 1
January 2019 5 2,070 76 14,792 16,943
Profit after tax - 70 - 639 709
Fair value through
other comprehensive
income reserve - - 19 - 19
Cash flow hedges - - 134 - 134
===================== ==================== ===================== ================= ================= ============
Total comprehensive
income for the
period - 70 153 639 862
Issue of shares under
employee share
schemes - - - 16 16
Issue and exchange of
equity instruments - 693 - - 693
Coupons paid on other
equity instruments - (70) - - (70)
Vesting of employee
share schemes - - - (12) (12)
Dividends paid - - - (700) (700)
Other movements - - - (1) (1)
===================== ==================== ===================== ================= ================= ============
Balance as at 30 June
2019 5 2,763 229 14,734 17,731
1 Details of share capital, other equity instruments and other reserves
are shown on pages 27 to 28.
Condensed consolidated cash flow statement (unaudited)
Half year ended Half year ended
30.06.20 30.06.19
GBPm GBPm
======================================================= =============== ===============
Profit before tax (2) 922
Adjustment for non-cash items (160) (54)
Net increase in loans and advances at amortised cost (9,311) (5,455)
Net increase in deposits at amortised cost 20,049 3,645
Net increase in debt securities in issue 3,757 865
Changes in other operating assets and liabilities 201 1,856
Corporate income tax paid (23) -
======================================================= =============== ===============
Net cash from operating activities 14,511 1,779
Net cash from investing activities (2,342) (7,565)
Net cash from financing activities 1,902 68
Effect of exchange rates on cash and cash equivalents 294 326
======================================================= =============== ===============
Net increase / (decrease) in cash and cash equivalents 14,365 (5,392)
Cash and cash equivalents at beginning of the period 28,042 44,334
======================================================= =============== ===============
Cash and cash equivalents at end of the period 42,407 38,942
1 From 2019, the effect of exchange rates on cash and cash equivalents
has been disclosed. Comparatives have been restated, reducing other
non-cash movements by GBP326m.
Financial Statement Notes
1. Basis of preparation
These condensed consolidated interim financial statements for
the six months ended 30 June 2020 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 2019,
which have been prepared in accordance with IFRSs as published by
the IASB and as adopted by the EU.
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 2019.
1.Going concern
The financial statements are prepared on a going concern basis,
as the Directors are satisfied that the Group and parent company
have the resources to continue in business for the foreseeable
future. In making this assessment, the Directors have considered a
wide range of information relating to present and future
conditions, including future projections of profitability, capital
requirements and capital resources.
2. Other disclosures
The Credit risk disclosures on pages 6 to 10 form part of these
interim financial statements.
2. Segmental reporting
Analysis of results by business
Barclaycard Barclays
Personal Consumer Business Head Bank UK
Banking UK Banking Office Group
Half year ended 30.06.20 GBPm GBPm GBPm GBPm GBPm
===================================== ======== =========== ======== ======= ========
Total income 1,863 810 575 (8) 3,240
Credit impairment (charges) (255) (697) (103) - (1,055)
===================================== ======== =========== ======== ======= ========
Net operating income/(expenses) 1,608 113 472 (8) 2,185
Operating costs (1,544) (260) (359) (25) (2,188)
Litigation and conduct (4) (3) (4) - (11)
===================================== ======== =========== ======== ======= ========
Total operating expenses (1,548) (263) (363) (25) (2,199)
Other net income 12 - - - 12
===================================== ======== =========== ======== ======= ========
Profit/(loss) before tax 72 (150) 109 (33) (2)
As at 30.06.2020 GBPbn GBPbn GBPbn GBPbn GBPbn
===================================== ======== =========== ======== ======= ========
Total assets 199.8 12.3 74.9 - 287.0
Barclaycard Barclays
Personal Consumer Business Head Bank UK
Half year ended 30.06.19 Banking UK Banking Office Group
(1) GBPm GBPm GBPm GBPm GBPm
===================================== ======== =========== ======== ======= ========
Total income 1,992 987 657 (65) 3,571
Credit impairment (charges)/releases (88) (315) (18) 3 (418)
===================================== ======== =========== ======== ======= ========
Net operating income/(expenses) 1,904 672 639 (62) 3,153
Operating costs (1,548) (284) (352) (1) (2,186)
Litigation and conduct 1 (44) (1) (2) (45)
===================================== ======== =========== ======== ======= ========
Total operating expenses (1,547) (328) (353) (3) (2,231)
===================================== ======== =========== ======== ======= ========
Profit/(loss) before tax 357 344 286 (65) 922
As at 31.12.2019 GBPbn GBPbn GBPbn GBPbn GBPbn
===================================== ======== =========== ======== ======= ========
Total assets 187.3 16.1 55.0 - 258.4
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:
Business Head Barclays Bank
Personal Banking Barclaycard Consumer UK Banking Office UK Group
Half year ended 30.06.20 GBPm GBPm GBPm GBPm GBPm
========================================= ================ ======================= ======== ======= =============
Fee type
Transactional 283 47 56 - 386
Advisory 79 - - - 79
Other 150 7 45 - 202
========================================= ================ ======================= ======== ======= =============
Total revenue from contracts with
customers 512 54 101 - 667
Other non-contract fee income - - - - -
========================================= ================ ======================= ======== ======= =============
Fee and commission income 512 54 101 - 667
Fee and commission expense (133) (9) (7) - (149)
========================================= ================ ======================= ======== ======= =============
Net fee and commission income 379 45 94 - 518
Half year ended 30.06.19
========================================= ================ ======================= ======== ======= =============
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
Other non-contract fee income - - - - -
========================================= ================ ======================= ======== ======= =============
Fee and commission income 585 103 130 - 818
Fee and commission expense (168) (15) (5) - (188)
========================================= ================ ======================= ======== ======= =============
Net fee and commission income 417 88 125 - 630
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 30.06.20 Half year ended
30.06.19
Dividends paid during the period GBPm GBPm
====================================== ======================== ===============
Full year dividend paid during period 220 700
A dividend of GBP220m was paid on 25 March 2020 by Barclays Bank
UK PLC to its parent Barclays PLC. This was prior to the
announcement made by the PRA on 31 March 2020 that capital be
preserved for use in serving Barclays customers and clients through
the extraordinary challenges presented by the Covid-19 pandemic. As
part of a response to this announcement, Barclays PLC took steps to
provide additional capital to Barclays Bank UK PLC in the form of a
capital contribution.
5.T ax
The tax credit for H120 was GBP91m (H119: GBP213m charge), which
includes the impact of the tax benefit recognised for the
re-measurement of UK deferred tax assets as a result of the UK
corporation tax rate being maintained at 19%.
The deferred tax asset of GBP803m (2019: GBP810m) includes
GBP43m (2019: nil) relating to tax losses.
6.Fair value of financial instruments
This section should be read in conjunction with Note 15, Fair
value of financial instruments of the Barclays Bank UK PLC Annual
Report 2019 and Note 1, Basis of preparation on page 20 , 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 Significant
market Observable unobservable
prices inputs inputs
(Level (Level (Level
1) 2) 3) Total
As at 30.06.20 GBPm GBPm GBPm GBPm
==================================== ======= ========== ============= =======
Trading portfolio assets 354 249 - 603
Financial assets designated at fair
value through income statement - 100 3,448 3,548
Derivative financial instruments - 309 - 309
Financial assets designated at fair
value through other comprehensive
income 6,983 17,113 - 24,096
==================================== ======= ========== ============= =======
Total assets 7,337 17,771 3,448 28,556
Trading portfolio liabilities (1,077) (150) - (1,227)
Derivative financial instruments - (849) - (849)
==================================== ======= ========== ============= =======
Total liabilities (1,077) (999) - (2,076)
As at 31.12.19 GBPm GBPm GBPm GBPm
==================================== ======= ========== ============= =======
Trading portfolio assets 384 476 - 860
Financial assets designated at fair
value through income statement - 38 3,533 3,571
Derivative financial instruments - 192 - 192
Financial assets designated at fair
value through other comprehensive
income 6,162 13,160 - 19,322
==================================== ======= ========== ============= =======
Total assets 6,546 13,866 3,533 23,945
Trading portfolio liabilities (1,331) (373) - (1,704)
Derivative financial instruments - (740) - (740)
==================================== ======= ========== ============= =======
Total liabilities (1,331) (1,113) - (2,444)
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
01.01.20 Purchases Sales Issues Settlements income(1) income In Out 30.06.20
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
============ =========== ========= ===== ====== =========== =========== =========== ===== ===== ============
Non-asset
backed
loans 3,530 - - - (298) 271 - - (59) 3,444
Other 3 6 - - (5) - - - - 4
============ =========== ========= ===== ====== =========== =========== =========== ===== ===== ============
Financial
assets at
fair value
through the
income
statement 3,533 6 - - (303) 271 - - (59) 3,448
As at As at
01.01.19 30.06.19
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
1 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:
As at 30.06.20 As at 30.06.19
============================== ==============================
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 271 - 271 178 - 178
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 30.06.20 As at 31.12.19
======================== ========================
Favourable Unfavourable Favourable Unfavourable
changes changes changes changes
========== ============ ========== ============
GBPm GBPm GBPm GBPm
======================= ========== ============ ========== ============
Non-asset backed loans 95 (236) 89 (264)
The effect of stressing unobservable inputs to a 90th percentile
confidence interval of a potential range of values, alongside
considering the impact of using alternative models, would be to
increase fair values by up to GBP95m (December 2019: GBP89m) or to
decrease fair values by up to GBP236m (December 2019: GBP264m). All
the potential effect would impact profit and loss. The asymmetry in
the favourable and unfavourable changes in the sensitivity analysis
is attributable to Investing and Funding costs with the prudential
valuation framework contributing to the unfavourable side only.
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 GBP12m
(December 2019: GBP13m) for financial instruments measured at fair
value and GBP223m (December 2019: GBP224m) for financial
instruments carried at amortised cost. The decrease of GBP1m in
financial instruments measured at fair value is driven by
amortisation and releases of GBP1m (December 2019: GBP1m). The
decrease of GBP1m in financial instruments carried at amortised
cost is driven by amortisation and releases of GBP6m (December
2019: GBP12m) offset by additions of GBP5m (December 2019:
GBP5m).
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.
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 30.06.20 As at 31.12.19
===================== =====================
Carrying Carrying
amount Fair value amount Fair value
Financial assets GBPm GBPm GBPm GBPm
======================================== ========= ========== ========= ==========
Loans and advances at amortised cost 205,919 205,113 197,569 196,342
Reverse repurchase agreements and
other similar secured lending 3,323 3,323 1,761 1,761
Financial liabilities
======================================== ========= ========== ========= ==========
Deposits at amortised cost (225,745) (225,773) (205,696) (205,701)
Repurchase agreements and other similar
secured borrowing (16,099) (16,099) (13,420) (13,420)
Debt securities in issue (12,028) (12,399) (8,271) (8,644)
Subordinated liabilities (10,598) (10,637) (7,688) (8,022)
7.Subordinated liabilities
Half year ended Year ended
30.06.20 31.12.19
GBPm GBPm
================================ =============== ==========
Opening balance as at 1 January 7,688 7,548
Issuances 2,007 157
Other 903 (17)
================================ =============== ==========
Closing balance 10,598 7,688
Issuances of GBP2,007m comprises GBP1,507m intra-group loans
from Barclays PLC and GBP500m 3.75% Fixed Rate Resetting
Subordinated Callable Notes issued intra-group to Barclays PLC.
Other movements predominantly include foreign exchange movements
and fair value hedge adjustments.
8.Provisions
As at As at
30.06.20 31.12.19
GBPm GBPm
========================================================== ======== ========
Payment Protection Insurance redress 774 1,155
Other customer redress 325 350
Legal, competition and regulatory matters 5 1
Redundancy and restructuring 20 12
Undrawn contractually committed facilities and guarantees 148 70
Onerous contracts 10 21
Sundry provisions 65 51
========================================================== ======== ========
Total 1,347 1,660
========================================================== ======== ========
PPI redress
As at 30 June 2020, the Barclays Bank UK Group held a provision
totalling GBP0.8bn against the cost of PPI redress and associated
processing costs.
The Barclays Group has recognised cumulative provisions
totalling GBP11bn (December 2019: GBP11bn), against the cost of
Payment Protection Insurance (PPI) redress and associated
processing costs. Utilisation of the cumulative provisions to date
is GBP10.2bn (December 2019: GBP9.8bn).
The current provision reflects the estimated cost of PPI redress
attributable to claims and information requests from customers,
Claims Management Companies and the Official Receiver in relation
to bankrupt individuals, prior to the Financial Conduct Authority
(FCA) complaint deadline of 29th August 2019.
Q3 2019 saw an exceptional level of claims and information
requests received in advance of the complaint deadline of 29 August
2019. All the items outstanding at Q3 2019, greater than two
million in total, have now been processed into Barclays' systems.
70% of these have been resolved including invalid items.
It is possible that the eventual cumulative provision will
differ from the current estimate. The table below shows the
predicted level of valid claims and the impact of a 1% increase or
decrease in the percentage of valid volumes on the outstanding
claims at 30 June 2020:
Total Volumes Assumed Valid(2) Sensitivity on the remaining volumes
Validity assumptions(1) % GBPm
============================= ============================== ====================================
Claims received 21% 1% = GBP3m
Information requests received 7% 1% = GBP2m
Final agreement has yet to be reached in relation to claims
received from the Official Receiver, however we do not expect any
further exposure from these claims to be material in the context of
the total provision.
1 Total valid claims and information requests received, excluding
those for which no PPI policy exists, claims from the Official
Receiver in relation to bankrupt individuals and responses to proactive
mailing. The sensitivity has been calculated to show the impact
a 1% increase or decrease in the volume of unresolved valid claims
would have on the provision level.
2 Based on the observed data from September 2019 to June 2020.
9.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 2020.
10. Called up share capital
As at 30 June 2020, the issued ordinary share capital of
Barclays Bank UK PLC comprised 505m (December 2019: 505m) ordinary
shares of GBP0.01 each.
There were no issuances or redemptions in the six months to 30
June 2020.
11. Other equity instruments
Other equity instruments of GBP2,560m (December 2019: GBP2,560m)
are AT1 securities issued to Barclays PLC. Barclays PLC uses funds
from the market issuance to purchase AT1 securities from Barclays
Bank UK PLC. There have been no issuances or redemptions in the 6
months to 30 June 2020.
The AT1 securities are perpetual securities with no fixed
maturity and are structured to qualify as AT1 instruments under
prevailing capital rules applicable as at the relevant issue date.
AT1 securities are undated and are redeemable, 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 redeemable, at the option of Barclays Bank UK PLC,
in whole in the event of certain changes in the tax or regulatory
treatment of the securities. Any redemptions require the prior
consent of the PRA.
12.Other reserves
As at As at
30.06.20 31.12.19
GBPm GBPm
====================================================== ========= =========
Fair value through other comprehensive income reserve (28) (29)
Cash flow hedging reserve 381 123
Other reserves and other shareholders' equity 89 89
====================================================== ========= =========
Total 442 183
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 2020, there was a debit balance of GBP28m
(December 2019: GBP29m debit) in the fair value through other
comprehensive income reserve. The gain of GBP1m is principally
driven by a GBP29m gain from the increase in fair value of bonds
due to decreasing bond yields and an impairment charge of GBP6m.
This was offset by GBP35m of net gains transferred to the income
statement.
Cash f low h edg ing r eserve
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 2020, there was a credit balance of GBP381m
(December 2019: GBP123m credit) in the cash flow hedging reserve.
The increase of GBP258m principally reflects a GBP391m increase in
the fair value of interest rate swaps held for hedging purposes as
interest rate forward curves decreased. This is partially offset by
GBP33m of gains transferred to the income statement and a tax
charge of GBP100m.
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, which occurred on 1 April
2018.
As at 30 June 2020, there was a credit balance of GBP89m
(December 2019: GBP89m credit) in other reserves and shareholders'
equity. There has been no movement since December 2019.
13.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
30.06.20 31.12.19
Contingent liabilities GBPm GBPm
================================================================= ========== ==========
Guarantees and letters of credit pledged as collateral security 400 600
Performance guarantees, acceptances and endorsements 150 150
================================================================== ========== ==========
Total 550 750
Commitments
================================================================= ========== ==========
Standby facilities, credit lines and other commitments 66,477 64,309
In addition to the above, Note 14, 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.
14. 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 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.
The recognition of provisions in relation to such matters
involves critical accounting estimates and judgments in accordance
with the relevant accounting policies as described in Note 7,
Provisions. We have not disclosed an estimate of the potential
financial impact or effect on the Group of contingent liabilities
where it is not currently practicable to do so. Various matters
detailed in this note seek damages of an unspecified amount. While
certain matters specify the damages claimed, such claimed amounts
do not necessarily reflect the Group's potential financial exposure
in respect of those matters.
Investigation into collections and recoveries relating to
unsecured lending
Since February 2018, the FCA has been investigating whether the
Barclays Group implemented effective systems and controls with
respect to collections and recoveries and whether it paid due
consideration to the interests of customers in default and arrears.
The FCA investigation is at an advanced stage.
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.
HMRC's decision has been appealed to the First Tier Tribunal (Tax
Chamber).
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 Bank PLC (and, in certain cases, Barclays
Bank UK PLC) asserting that they entered into loans in reliance on
misrepresentations made by Barclays Bank PLC in respect of its
conduct in relation to LIBOR. The loans were originally entered
into with Barclays Bank PLC, but Barclays Bank UK PLC is now the
lender of record. Barclays has applied to strike out the
claims.
General
The Barclays Bank UK Group is engaged in various other legal,
competition and regulatory matters in the jurisdictions in which it
operates. The Barclays Bank UK Group is subject to legal
proceedings brought by and against members of the Barclays Bank UK
Group 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 it is or has been engaged. The Barclays Bank UK
Group 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,
among other things, the amount of the loss resulting from the
matter(s) and the amount of profit otherwise reported for the
reporting period.
15. Related party transactions
Related party transactions in the half year ended 30 June 2020
were similar in nature to those disclosed in the Barclays Bank UK
PLC Annual Report 2019.
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
30.06.20 30.06.19
===================== =====================
Fellow Fellow
Parent subsidiaries Parent subsidiaries
GBPm GBPm GBPm GBPm
=================== ====== ============= ====== =============
Total income (146) 57 (140) 52
Operating expenses (22) (1,100) (36) (1,142)
As at 30.06.20 As at 31.12.19
===================== =====================
Fellow Fellow
Parent subsidiaries Parent subsidiaries
GBPm GBPm GBPm GBPm
=================== ====== ============= ====== =============
Total assets 9 1,701 6 667
Total liabilities 10,137 1,722 7,594 1,679
Except for the above, no related party transactions that have
taken place in the half year ended 30 June 2020 have materially
affected the financial position or performance of the Barclays Bank
UK Group during this period.
16. Barclays Bank UK PLC parent condensed balance sheet
As at As at
30.06.20 31.12.19
Assets GBPm GBPm
================================================================== ========= =========
Cash and balances at central banks 38,651 24,305
Cash collateral and settlement balances 4,688 4,331
Loans and advances at amortised cost 206,891 197,960
Reverse repurchase agreements and other similar secured lending 3,323 1,761
Trading portfolio assets 603 860
Financial assets at fair value through the income statement 3,548 3,571
Derivative financial instruments 309 193
Financial assets at fair value through other comprehensive income 24,096 19,322
Investments in subsidiaries 454 454
Goodwill and intangible assets 3,380 3,382
Property, plant and equipment 816 893
Deferred tax assets 803 810
Other assets 570 1,079
================================================================== ========= =========
Total assets 288,132 258,921
Liabilities
================================================================== ========= =========
Deposits at amortised cost 227,409 206,764
Cash collateral and settlement balances 181 214
Repurchase agreements and other similar secured borrowing 16,099 13,420
Debt securities in issue 11,502 7,778
Subordinated liabilities 10,598 7,688
Trading portfolio liabilities 1,227 1,704
Derivative financial instruments 880 740
Current tax liabilities 426 451
Other liabilities 1,581 1,903
Provisions 1,311 1,613
================================================================== ========= =========
Total liabilities 271,214 242,275
Equity
================================================================== ========= =========
Called up share capital and share premium 5 5
Other equity instruments 2,560 2,560
Other reserves 544 285
Retained earnings 13,809 13,796
Total equity 16,918 16,646
Total liabilities and equity 288,132 258,921
Investment in subsidiar ies
The investment in subsidiaries of GBP454m (December 2019:
GBP454m) predominantly relates to investments in Barclays Insurance
Services Company Limited, Barclays Investment Solutions Limited and
Barclays Asset Management Limited. Barclays Bank UK PLC has
reviewed its investments in subsidiaries and has concluded that no
impairment is required.
Other Information
Results timetable (1) Date
============================================= ============== =========== =========
2020 Annual Report 11 February 2021
For further information please contact
Investor relations Media relations
============================================= ======================================
Chris Manners +44 (0) 20 7773 2136 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
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