BARCLAYS PLC 30 June 2015
Performance Highlights
2-4
Executive Chairman's Review
Group Finance Director's Review
5
6-8
Personal and Corporate Banking
Barclaycard
Africa Banking
10-11
12-13
14-15
Investment Bank
Head Office
16-17
18
Barclays Non-Core
Quarterly Results Summary
19-20
21-23
Quarterly Core Results by Business
24-28
Returns and equity by business
29-30
Margins and balances 31
Risk Management Overview
Funding Risk - Liquidity
32
33-36
Funding Risk - Capital
Credit Risk
37-40
41-47
Market Risk 48
Statement of Directors' Responsibilities 49
Independent Auditors' Review Report to Barclays PLC
Condensed Consolidated Financial Statements
50
51-55
Financial Statement Notes
Shareholder Information
BARCLAYS PLC, 1 CHURCHILL PLACE, LONDON, E14 5HP, UNITED KINGDOM. TELEPHONE: +44 (0) 20 7116 1000. COMPANY NO. 48839
56-89
90-91
Barclays PLC - 2015 Interim Results
NotesThe term Barclays or Group refers to Barclays PLC together with its subsidiaries. Unless otherwise stated, the income statement analysis compares the six months to 30 June 2015 to the corresponding six months of 2014 and balance sheet analysis as at 30 June with comparatives relating to 31
December 2014. The abbreviations '£m' and '£bn' represent millions and thousands of millions of Pounds Sterling respectively; the abbreviations
'$m' and '$bn' represent millions and thousands of millions of US Dollars respectively; and '€m' and '€bn' represent millions and thousands of millions of Euros respectively.
Comparatives pre Q214 have been restated to reflect the implementation of the Group structure changes and the reallocation of elements of the Head Office results under the revised business structure. These restatements were detailed in our announcement on 10 July 2014, accessible at http://www.barclays.com/barclays-investor-relations/results-and-reports.
References throughout this document to 'provisions for ongoing investigations and litigation primarily relating to Foreign Exchange' means
'provisions held for certain aspects of ongoing investigations involving certain authorities and litigation primarily relating to Foreign Exchange.' Adjusted profit before tax, adjusted attributable profit and adjusted performance metrics have been presented to provide a more consistent basis for
comparing business performance between periods. Adjusting items are considered to be significant but not representative of the underlying
business performance. Items excluded from the adjusted measures are: the impact of own credit; goodwill impairment; provisions for UK customer redress; gain on US Lehman acquisition assets; provisions for ongoing investigations and litigation primarily relating to Foreign Exchange; loss on sale of the Spanish business; Education, Social Housing, and Local Authority (ESHLA) valuation revision; and gain on valuation of a component of the defined retirement benefit liability. As management reviews adjusting items at a Group level, results by business are presented excluding these items. The reconciliation of adjusted to statutory performance is done at a Group level only.
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 www.Barclays.com/results.
The information in this announcement, which was approved by the Board of Directors on 28 July 2015 does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2014, which included certain information required for the Joint Annual Report on Form 20-F of Barclays PLC and Barclays Bank PLC to the US Securities and Exchange Commission (SEC) and which contained an unqualified 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.
These results will be furnished as a Form 6-K to the SEC as soon as practicable following their publication. Once furnished with the SEC, copies of the Form 6-K will also be available from the Barclays Investor Relations website www.barclays.com/investorrelations and from the SEC's website at http://www.sec.gov.
Barclays is a frequent issuer in the debt capital markets and regularly meets with investors via formal road-shows and other ad hoc meetings. Consistent with its usual practice, Barclays expects that from time to time over the coming quarter it will meet with investors globally to discuss these results and other matters relating to the Group.
Forward-looking statementsThis document contains certain forward-looking statements within the meaning of Section 21E of the US Securities Exchange Act of 1934, as amended, and Section 27A of the US Securities Act of 1933, as amended, with respect to the Group. Barclays cautions readers that no forward- looking statement is a guarantee of future performance and that actual results or other financial condition or performance measures could differ materially from those contained in the forward-looking statements. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements sometimes use words such as 'may', 'will', 'seek', 'continue', 'aim', 'anticipate',
'target', 'projected', 'expect', 'estimate', 'intend', 'plan', 'goal', 'believe', 'achieve' or other words of similar meaning. Examples of forward-looking statements include, among others, statements regarding the Group's future financial position, income growth, assets, impairment charges and provisions, business strategy, capital, leverage and other regulatory ratios, payment of dividends (including dividend pay-out ratios), projected levels of growth in the banking and financial markets, projected costs or savings, original and revised commitments and targets in connection with the strategic cost programme and the Group Strategy Update, run-down of assets and businesses within Barclays Non-Core, estimates of capital expenditures and plans and objectives for future operations, projected employee numbers and other statements that are not historical fact. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. These may be affected by changes in legislation, the development of standards and interpretations under International Financial Reporting Standards, 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 (including with regard to the future structure of the Group) applicable to past, current and future periods; UK, US, Africa, Eurozone and global macroeconomic and business conditions; the effects of continued volatility in credit markets; market related risks such as changes in interest rates and foreign exchange rates; effects of changes in valuation of credit market exposures; changes in valuation of issued securities; volatility in capital markets; changes in credit ratings of any entities within the Group or any securities issued by such entities; the potential for one or more countries exiting the Eurozone; the implementation of the strategic cost programme; and the success of future acquisitions, disposals and other strategic transactions. A number of these influences and factors are beyond the Group's control. As a result, the Group's actual future results, dividend payments, and capital and leverage ratios may differ materially from the plans, goals, and expectations set forth in the Group's forward- looking statements. Additional risks and factors which may impact the Group's future financial condition and performance are identified in our filings with the SEC (including, without limitation, our Annual Report on Form 20-F for the fiscal year ended 31 December 2014), which are available on the SEC's website at http://www.sec.gov.
Subject to our obligations under the applicable
laws and regulations of the United Kingdom and the United States 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.
Barclays PLC - 2015 Interim Results
Performance Highlights 11% growth in Group adjusted profit before tax to
£3,729m reflecting improvements in all Core operating businesses. Group adjusted return on average shareholders' equity increased to 7.7% (H114: 6.5%) Solid return on average equity performance across the businesses resulted in an increase in Core return on average equity to 11.1% (H114: 11.0%), driven by a 10% increase in profit before tax to £4,241m through positive cost to income jaws, with an increase in average allocated equity of £6bn to £47bn
Further run down of the Non-Core business, with risk weighted assets (RWAs) decreasing to £57bn
(December 2014: £75bn). Non-Core dilution of the Group's return on average equity was 3.4% (2014: 4.5%), having reduced average allocated equity by £4bn to £10bn Strong progress on capital and leverage, with the fully loaded common equity tier 1 (CET1) ratio increasing to 11.1% (December 2014: 10.3%) and the leverage ratio increasing to 4.1% (December
2014: 3.7%), achieving our 2016 targets A 7% reduction in total adjusted operating expenses to £8,262m and a 5% reduction in operating expenses excluding costs to achieve to £7,946m, driven by savings from strategic cost programmes
Progress on legacy litigation and conduct matters, with settlements of £1,608m reached with a number of authorities in Q215 in relation to industry-wide investigations into certain sales and trading practices in the Foreign Exchange market and an industry-wide investigation into the setting of the US Dollar ISDAFIX benchmark
Net tangible asset value per share decreased to 279p (December 2014: 285p) as profit generated for the period was more than offset by dividend distributions and the impact of changes in major forward interest rates and currency movements on reserves
Statutory profit before tax increased 25% to £3,114m, which included a net loss in adjusting items of
£615m (H114: £848m) Material adjusting items: Additional provisions of £800m (H114: £nil) were made in H115 for ongoing investigations and litigation primarily relating to Foreign Exchange, taking the total provisions to £2,050m
Additional UK customer redress provisions of £1,032m (H114: £900m) were taken based on an updated estimate of future redress and associated costs. This included an additional provision of £850m recognised in Q215
A £496m (H114: £nil) gain on US Lehman acquisition assets was recognised in Q215 reflecting a settlement to resolve outstanding litigation with the Trustee of Lehman Brothers Inc.
A £429m (H114: £nil) gain was recognised in
Q115 as the valuation of a component of
the defined
retirement benefit liability was aligned to statutory provisions
A £118m (H114: £nil) loss was recognised in Q115 primarily relating to accumulated currency translation reserves recycled upon the completion of the Spanish business sale
Barclays PLC - 2015 Interim Results 2
Performance HighlightsAdjusted
30.06.15 30.06.14
Statutory
30.06.15 30.06.14
£m £m % Cha ge
£m £m % Change
13,888 13,384 4
(9 3) (1,086) 10
12,915 12,298 5
(7,3 3) (8,172) 10 (1,9 6) (1,111) (77)
(9,3 9) (9,283) (1)
(3 6) (494) 36
(9,6 5) (9,777) 1
(1 6) (20)
3,114 2,501 25
(1,0 6) (895) (12)
2,108 1,606 31
(3 8) (390) 13 (1 9) (90) (77)
1,611 1,126 43
Performan e measuresReturn on average tangible shareholders' equity2
Average tangi le shareholders' equity (£bn) Return on average shareholders' equity2
Average shareholders' equity (£bn) Cost: income ratio
Loan loss rate (bps)
9.1%
48
7.7%
56
64%
40
7.5%
47
6.5%
55
67%
45
6. % 4.9%
48 47
5. % 4.2%
56 54
7 % 73%
40 45
Basic earnings per share2
13.1p 10.9p
9.9p 7.0p
Dividend per share
2.0p
2.0p
2.0p 2.0p
Balance sh et and leverageNet tangible asset value per share
30.06.15 31.12.14
279p 285p
Net asset valu
per share
328p 335p
Leverage exposure
£1,139bn £1,233bn
Capital ma agement30.06.15 31.12.14
CRD IV fully loaded Common equity tier 1 ratio Common equity tier 1 capital Tier 1 capital
Risk weighted assets
Leverage ratio
Funding and liquidityGroup liquidity pool
Estimated CRD IV liquidity coverage ratio
Loan: deposit ratio3
11. % 10.3%
£42.0bn £41.5bn
£46.5bn £46.0bn
£377bn £402bn
4. % 3.7%
30.06.15 31.12.14
£145bn £149bn
12 % 124%
8 % 89%
Adjusted profit reconciliation for the six mo ths ended
Adjusted profit before tax
Own credit
Gain on US Le man acquisition assets
Gain on valuation of a compo ent of the defined retirement benefit liability
Provisions for ongoing investi ations and litigation primarily relating to Foreign Exchange
30.06.15 30.06.14
3,729 3,349
410 52
496 -
429 - (8 0) -
Provisions for UK customer redress
(1,0 2) (900)
Loss on sale of the Spanish business
(1 8) -
Statutory profit before tax
3,114 2,501
1 The effective tax rate for H115 is the expected full year rate adjusted for the impact of significant one-off items. The tax impacts of such items, which include adjusting items and the UK bank levy, are recognised in the period in which they occur.
2 The profit after tax attributable to other equity holders of £159m (H114: £90m) is offset by a tax credit recorded in reserves of £32m (H114: £19m). The net amount of £127m (H114: £71m), along with non-controlling interests (NCI) is deducted from profit after tax in order to calculate earnings per share, return on average tangible shareholders' equity and return on average shareholders' equity.
3 Loan: deposit ratio for PCB, Barclaycard, Africa Banking and Non-Core retail.
Barclays PLC - 2015 Interim Results 3
Performance HighlightsBarclays Core
Barclays Non- ore
results for the six months ended30.06.15
£m
30.06.14
£m
% Change
30.06.15
£
30.06.14
£m
% Change
Total income net of insurance claims Credit impairment charges and other provisions | 12,940 (936) | 12,674 2 (937) - |
Net operating income Operating expenses Litigation and conduct Costs to achie e | 12,004 (7,359) (89) (293) | 11,737 2 (7,314) (1) (177) 50 (453) 35 |
Total operating expenses Other net (expenses)/income | (7,741) (22) | (7,944) 3 47 |
Profit/(loss) before tax Tax (charge)/ redit | 4,241 (1,250) | 3,840 10 (1,233) (1) |
Profit/(loss) after tax Non-controlling interests Other equity interests | 2,991 (306) (128) | 2,607 15 (315) 3 (68) (88) |
Attributable profit/(loss) | 2,557 | 2,224 15 |
Return on average tangible equity1
13.4%
13.5%
(4.3%) (6.0%)
Average allocated tangible eq ity (£bn)
39 33
10 14
Return on average equity1
Average allocated equity (£bn) Period end allocated equity (£bn) Cost: income ratio
Loan loss rate (bps)
11.1%
47
47
60%
44
11.0%
41
42
63%
46
(3.4%) (4.5%)
10 14
8 13 n/ n/m
10 45
Basic earnings per share contribution
Income by business15.5p
13.8p
30.06.15
£m
(2.4p) (2.9p)
30.06.14
£m
% Change
13,332
(3)
30.06.15
£m
30.06.14
£m
3,349
% Change
11
1 Return on average equity and average tangible equity for Barclays Non-Core represents its impact on the Group, being the difference between Barclays
Group returns and Barclays Core returns. This does not represent the return on average equity and average tangible equity of the Non-Core business.
Barclays PLC - 2015 Interim Results 4
Executive Chairman's Review
'The results reported today represent continued good progress for the business.
Group profits are up on both an adjusted and statutory basis, and our core franchises have performed well. Non-Core
rundown continues, costs
emain under control, and we continue to seek to put conduct issues behind us. We announced
settlements with certain authorities in the first half in respect of Foreign Exchange and ISDAFIX, although there is more to resolve. I am pleased that our CET1 and leverage ratios are now above 11% and 4% respectively. These are satisfactory, although we will continue to build capital in the medium term, balancing the need to fund growth with the need to strengthen the ratios.
Barclays today has a good portfolio of businesses. However, we need to accelerate the execution of the strategy. There is more that can be done to deliver better returns for shareholders, faster, and that work has begun under three Group priorities which I have established since becoming Executive Chairman earlier this month.
Our first priority is to deliver on our strategy, with increased focus on our core franchises: what we are good at, where we are good at it and what is financially compelling to us.
That means aligning our effort and investment behind our key franchises of UK personal and commercial banking, investment banking in Europe and the US, our cards business, and on Africa. We will also act quickly to curtail activity which is marginal or which will not deliver the return on equity we require.
A sensibly planned faster run-down of Barclays Non-Core will be implemented, resulting in it having around £20bn of RWAs in 2017 when we expect to reintegrate it into the Core.
I am personally pleased with recent progress in the Investment Bank. It has generated a double-digit return in H1, and the challenge for the team is to convert this performance into sustainable economic returns through subsequent periods.
The second major priority of the group is to accelerate the delivery of shareholder value.
It was particularly pleasing this half to see a strong recovery in earnings, broadly flat costs on a statutory basis, a CET1 ratio that has risen above 11% for the first time and a leverage ratio above 4%, both achieving our 2016 targets.
However, the Group return on equity is 5.9% on a statutory basis, well short of our cost of equity, and our cost-income ratio is 70%, which is high for our business mix.
We need to accelerate growth in earnings, return on equity, and capital generation. To do this, we intend to grow revenues at least in line with the market, reduce our Group cost-income ratio into the mid 50s, accrete and deploy capital wisely, and thereby over time achieve a Group return on equity above our cost of equity.
The Board has concluded that it is appropriate to plan for a 6.5p dividend for 2015, the same level as 2014, as we focus on improving the returns of the business and accelerating the implementation of the strategy, while maintaining capital strength. Over time, rather than targeting a particular payout ratio range, we will aim to maintain a sustainable and progressive dividend policy, recognising the importance of dividend yield in delivering returns to shareholders.
I am not issuing new targets for the Group, but can confirm that we will adhere to our remaining targets. Now that we have achieved an 11% CET1 ratio, we would like this to continue to improve over time so that we reach our end state.
The third priority is to instil a high performance ethic and process across the Group, underpinned by an enhanced values driven culture. We need to be much more customer and client orientated in our approach, to streamline and eliminate unnecessary and cumbersome bureaucracy, and to embed direct accountability for activities within our businesses. Crucially we must do this in a way which is consistent with our values, and with strong controls in place, so that we build this business in the right way.
There is a lot we can do to accelerate our progress and the work has already begun.'
John McFarlane, Executive Chairman
Barclays PLC - 2015 Interim Results 5
Group Finance Director's Review Income statement Group performance Adjusted profit before tax increased 11% to £3,729m reflecting improvements in all Core operating businesses
Adjusted income decreased 3% to £12,982m as Non-Core income reduced £616m to £42m. This was partially offset by
Core income increasing 2% to £12,940m
Impairment reduced 10% to £973m, with the Group loan loss rate improving 5bps to 40bps
Adjusted total operating expenses were down 7% to £8,262m as a result of savings from strategic cost programmes, particularly in Non-Core and the Investment Bank. Costs to achieve were £316m (H114: £494m) and litigation and conduct charges were £134m (H114: £211m)
Statutory profit before tax was £3,114m (H114: £2,501m) which also included an additional £1,032m (H114: £900m) of provisions for UK customer redress, a £496m gain (H114: £nil) on US Lehman acquisition assets, £800m (H114: £nil) of additional provisions for ongoing investigations and litigation primarily relating to Foreign Exchange, a £429m (H114:
£nil) gain on the valuation of a component of the defined retirement benefit liability, a £118m (H114: £nil) loss on the sale of the Spanish business and an own credit gain of £410m (H114: £52m)
The effective tax rate on adjusted profit before tax decreased to 28.9% (H114: 33.1%) and on statutory profit before tax decreased to 32.3% (H114: 35.8%). The reduction reflects the expected full year rate adjusted for the impact of significant one-off items, including adjusting items and the UK bank levy, which is recognised in the period in which they occur
Adjusted attributable profit was £2,155m (H114: £1,760m) resulting in an adjusted return on average shareholders'
equity of 7.7% (H114: 6.5%)
Core performance Profit before tax increased 10% to £4,241m with improvements of 36% to £1,440m in the Investment Bank, 12% to
£540m in Africa Banking, 4% to £1,528m in Personal and Corporate Banking (PCB) and 4% to £795m in Barclaycard
Income increased 2% to £12,940m
- Barclaycard income increased 11% to £2,357m reflecting growth in US cards and Business Solutions
- Africa Banking income increased 5% to £1,858m reflecting strong growth in Retail and Business Banking (RBB) due to the continued progress on the retail banking turnaround in South Africa
- PCB income increased 1% to £4,384m due to good growth in Corporate, partially offset by a reduction in Personal income due to mortgage margin pressure
- Net interest income in PCB, Barclaycard and Africa Banking increased 7% to £5,975m driven by lending and deposit growth and margin improvement in PCB, and volume growth in Barclaycard and Africa Banking. Net interest margin increased 11bps to 4.17%
- Investment Bank income increased 1% to £4,299m reflecting an improvement in Macro income due to higher income in rates and currency products, and an increase in Equities income, partially offset by lower Banking and Credit income
Credit impairment charges were in line at £936m (H114: £937m). This reflected lower impairments in PCB due to the improving UK economic environment resulting in lower default rates and charges in Corporate, offset by an increase of
5% in Barclaycard which was accompanied by loans and advances growth of 11% from June 2014. The loan loss rate reduced 2bps to 44bps
Total operating expenses decreased 3% to £7,741m, reflecting savings from strategic cost programmes, principally in the Investment Bank and lower costs to achieve of £293m (2014: £453m). Barclaycard total operating expenses increased 19% to £1,017m primarily due to continued investment in business growth and the impact of one-off items, including certain marketing costs and the non-recurrence of a H114 VAT refund
Attributable profit increased 15% to £2,557m, while average allocated equity increased £6bn to £47bn as capital was redeployed from Non-Core, resulting in an increase in Core return on average equity to 11.1% (H114: 11.0%)
Non-Core performance Loss before tax increased to £512m (H114: £491m) reflecting:
- A reduction in income of £616m to £42m following assets and securities run-down, business disposals including the impact of the sale of the Spanish business, and fair value losses on the Education, Social Housing, and Local Authority (ESHLA) portfolio of £175m (H114: £29m)
- An improvement in impairment to £37m (H114: £149m) primarily reflecting the sale of the Spanish business and higher recoveries in Europe
- A 44% reduction in total operating expenses to £521m due to savings from strategic cost programmes, the sale of the Spanish business and reduced costs to achieve
Non-Core return on average equity dilution was 3.4% (H114: 4.5%) reflecting a reduction in average allocated equity to
£10bn (H114: £14bn). Period end allocated equity reduced to £8bn (December 2014: £11bn)
Barclays PLC - 2015 Interim Results 6
Group Finance Director's Review Balance sheet and capital Balance sheet Total assets decreased 12% to £1,197bn compared to 31 December 2014, primarily due to reductions in derivatives and reverse repurchase agreements
- Total loans and advances increased £5bn to £475bn as a net £8bn increase in settlement and cash collateral balances was partially offset by a £3bn decrease due to the run-down of European retail assets within Non-Core
Customer accounts increased £11bn to £438bn primarily due to a £12bn increase within the Investment Bank as a result of higher settlement balances, partially offset by a £2bn decrease in Non-Core due to the run-down of the business
Total shareholders' equity including non-controlling interests was £65.6bn (December 2014: £66.0bn). Excluding non- controlling interests, shareholders' equity was £59.3bn (December 2014: £59.6bn) reflecting a reduction in other reserves of £1.4bn including a £0.6bn decrease in the cash flow hedging reserve, due to the impact of forward interest rate movements, and a £0.5bn decrease in the currency translation reserve as GBP strengthened against ZAR, EUR and USD. This was partially offset by a £0.7bn increase in share capital and share premium, due to the issuance of shares under employee share schemes and scrip dividends, and an increase of £0.4bn in retained earnings due to generated profit of £1.8bn offset by £0.7bn of dividends paid and £0.7bn of shares vesting in relation to employee share schemes
Net asset value and net tangible asset value per share decreased to 328p (December 2014: 335p) and 279p (December
2014: 285p) respectively as profit generated for the period was more than offset by the overall decrease in shareholders'
equity as detailed above
Leverage exposure decreased £94bn to £1,139bn driven by:
- Securities Financing Transactions decreased by £40bn, primarily due to IFRS reverse repurchase agreements reducing £39bn to £93bn. This was driven by reductions in matched book trading as the balance sheet was deleveraged
- The Potential Future Exposure (PFE) on derivatives decreased £19bn to £160bn, mainly as a result of continued legacy portfolio run down and optimisation including trade compressions and tear-ups
- Derivative leverage exposure, excluding PFE, decreased £26bn partly due to a decrease in IFRS assets of £99bn to
£341bn, offset by a decrease in derivative netting of £87bn to £308bn. These decreases were primarily due to increases in major forward rate curves and continued legacy portfolio run down
Capital ratios The fully loaded CRD IV CET1 ratio increased to 11.1% (December 2014: 10.3%) due to a £25bn reduction in RWAs to
£377bn and an increase in the fully loaded CRD IV CET1 capital of £0.5bn to £42.0bn
- The increase in CET1 capital was driven by £1.8bn profits after absorbing adjusting items. After further adjusting for the impacts of own credit and regulatory dividends paid and foreseen, capital generated from earnings increased CET1 capital by £0.3bn
- The reduction in RWAs was primarily driven by the reduction in Non-Core of £19bn to £57bn including the sale of the Spanish business, run-down of legacy structured and credit products, and a £7bn reduction in the Investment Bank driven by risk reduction in the trading book
The leverage ratio increased to 4.1% (December 2014: 3.7%) driven by a decrease in the leverage exposure to £1,139bn
(December 2014: £1,233bn)
Barclays PLC - 2015 Interim Results 7
Group Finance Director's Review Funding and liquidity The Group continued to maintain surpluses to its internal and regulatory requirements in H115 with a liquidity pool of
£145bn (December 2014: £149bn). The Liquidity Coverage Ratio (LCR) decreased to 121% (December 2014: 124%), equivalent to a surplus of £26bn (December 2014: £30bn). The surpluses were built to position the Group for outflows associated with credit rating changes as a result of credit rating agencies' assessment of sovereign support. Whilst the ratings changes occurred during Q215, the expected funding impacts had not fully materialised by the end of H115
Wholesale funding outstanding excluding repurchase agreements was £157bn (December 2014: £171bn). The Group issued £6bn of term funding net of early redemptions during H115, of which £3bn was in senior unsecured debt issued by the holding company, Barclays PLC. These proceeds have been used to subscribe for senior unsecured debt at Barclays Bank PLC, the operating company. This demonstrates further progress on the transition towards a holding company capital and funding model
Other matters Provisions of £484m (December 2014: £1,690m) are held for Legal, Competition and Regulatory matters
- Additional provisions of £800m (H114: £nil) were made for ongoing investigations and litigation primarily relating to Foreign Exchange, taking the total provisions recognised to £2,050m. Settlements of £1,608m were reached in Q215 with a number of authorities in relation to industry-wide investigations into certain sales and trading practices in the Foreign Exchange market and an industry-wide investigation into the setting of the US Dollar ISDAFIX benchmark
Additional UK customer redress provisions of £1,032m (H114: £900m) were recognised including £850m in Q215. This includes additional charges for PPI redress based on an updated estimate of future redress costs of £750m (H114:
£900m), £600m of which was recognised in Q215. As at June 2015 the PPI redress provision held was £1,268m
(December 2014: £1,059m)
A £496m (H114: £nil) gain on US Lehman acquisition assets was recognised in Q215. Barclays has reached a settlement with the Securities Investor Protection Act Trustee for Lehman Brothers Inc. (LBI) to resolve outstanding litigation between the parties relating to the acquisition of most of the assets of LBI in September 2008
A £429m (H114: £nil) gain was recognised in Q115 as the valuation of a component of the defined retirement benefit liability was revised to use the long term Consumer Price Index rather than the Retail Price Index, consistent with statutory provisions
A £118m (H114: £nil) loss was recognised in Q115 primarily relating to accumulated currency translation reserves recycled upon the completion of the Spanish business sale
Dividends The Board recognises the importance of paying returns to shareholders by way of dividends and expects to deliver, over time, a dividend that is sustainable and progressive rather than targeting a particular payout ratio range
For 2015, the Board has concluded that it is appropriate to plan for a 6.5p distribution, the same level as 2014, while we focus on improving the returns of the business and accelerating the implementation of the strategy whilst maintaining capital strength
A second interim dividend of 1p will be paid on 14 September 2015
Barclays Non-Core Guidance We have made significant progress in running down Barclays Non-Core since it was established as a separate unit in
2014. Non-Core RWAs have been reduced from £110bn in December 2013 to £57bn, resulting in an equity allocation of £8.3bn as at June 2015, 15% of the Group total and down from £15.1bn as at December 2013
We now have greater visibility as to the options available to us in order to reduce Non-Core's influence on the Group's financial results through lower capital requirements and operating losses. We therefore plan to reduce Non-Core RWAs to around £20bn by the end of 2017, at which point we expect the Non-Core unit will be reintegrated into the Core business where it will continue to be managed down. This revised guidance replaces previous guidance of reducing Non-Core RWAs to £45bn at the end of 2016
Tushar Morzaria, Group Finance Director
Barclays PLC - 2015 Interim Results 8
Intentionally left blank
Barclays PLC - 2015 Interim Results 9
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