Barclays : Investor Presentation (20240618 UKCB deepdive management speech)

Barclays UK Corporate Bank Deep Dive

Analyst and Investor Presentation

C.S. Venkatakrishnan, Barclays Group Chief Executive

Matt Hammerstein, Barclays UK Corporate Bank Chief Executive

Barclays UK Corporate Bank

Business Deep Dive: 18th June 2024

C. S. Venkatakrishnan, Chief Executive

Thanks for coming and welcome to our UK Corporate Bank Deep Dive.

When we had our investor day in February, we promised you that we would do a series of updates covering businesses which we had not covered in depth on the day, and this is the first of them on the UK Corporate Bank.

As you know, the UK Corporate Bank is one of the very high returning businesses which we have in the UK, in our UK home market, and we are very excited about a) what we've accomplished, what we've achieved with the momentum of the business and it's prospects.

So, it's my pleasure to introduce Matt Hammerstein to cover this business in detail.

Some of you will remember him from his previous role as head of Barclays UK.

Barclays Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority

(Financial Services Register No. 122702).

Registered in England. Registered No. 1026167. Registered office: 1 Churchill Place, London E14 5HP

I asked Matt to head the UK Corporate Bank earlier this year.

He brings to it a broad range of skills in the UK and has great experience in Barclays and the industry.

You will see how well positioned he is to lead the business and for the business to continue to provide the best corporate banking for our clients in the UK.

So without further ado, Mr. Hammerstein.

Matt Hammerstein, Barclays UK Corporate Bank Chief Executive

Thank you Venkat and good afternoon everyone. For those of you who don't know me I am Matt Hammerstein, Chief Executive of our UK Corporate Bank.

As Venkat mentioned I may have met some of you in my prior role as Chief Executive of Barclays UK, a role I held for 5 years.

This and the experience I have gained in my over 20 years of experience here in the UK, across the retail and corporate bank landscape, sets me up well to lead this business through its next phase.

I will do that with a talented team. I want to take a minute to introduce you to three of them in the room today: David Farrow, who leads our client coverage teams, Karen Braithwaite, who leads our global transaction banking capabilities, and Florence Akande, our recently appointed CFO.

We are excited about the opportunity ahead of us, let me now turn to why we believe you should be excited too.

Barclays Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority

(Financial Services Register No. 122702).

Registered in England. Registered No. 1026167. Registered office: 1 Churchill Place, London E14 5HP

Introduction to Barclays UK Corporate
Corporate and Investment Bank
	£12.6bn1
Barclays Investment Bank
Global Markets	Investment Banking
	Includes International
	Corporate Bank (£1.9bn1)

Bank	Barclays UK Corporate Bank	2
Business deep dive
	Consumer, Cards & Payments
	£5.3bn1
	Barclays UK Corporate Bank
	£1.8bn1

• Corporate Lending
• Transaction Banking including Card Issuing

1 All figures 2023 income | Note: £0.2bn of the £5.3bn income of Consumer, Cards & Payments sits within the UK Corporate Bank. The rest of the Consumer Cards & Payments business now sits in Private, Bank and Wealth Management, US Consumer Bank and Head Office |

As many of you will be aware the UK Corporate Bank previously sat within the Corporate and Investment Bank.

As we continue to differentiate our coverage model for UK Corporate Bank clients focused on their lending and transaction banking needs, we decided to split out the UK Corporate Bank.

We have also integrated our payments and card issuing activities, which previously sat in Consumer, Cards and Payments, into this division.

Although the UK Corporate Bank and International Corporate Bank are now reported through different divisions, our Global Transaction Banking capabilities span those divisions, which we view as a core strength, enabling us to enhance our client proposition and create operational efficiencies for the two divisions.

Overall, the newly combined UK Corporate Bank generated around £1.8bn of income in 2023 and a Return on Tangible Equity of 20%, making it one of the Group's highest returning businesses.

That's a strong foundation from which to grow balances and income, particularly with a positive outlook for the UK economy.

Barclays Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority

(Financial Services Register No. 122702).

Registered in England. Registered No. 1026167. Registered office: 1 Churchill Place, London E14 5HP

Barclays UK Corporate Bank today

Long-established scale player delivering high returns

18-year average client relationship >50 offices across the UK >10% growth in clients vs. 2021

Barclays UK Corporate Bank	3
Business deep dive

Barclays UK	Barclays	Barclays Investment Bank
UK Corporate Bank	International Corporate
Business Banking
(c.13k clients)	Bank
<£6.5m	£6.5m annual turnover-	FTSE350, multinationals
annual turnover	FTSE350	and financial institutions
Barclays UK Corporate Bank: Card Issuing
(serves >250k clients across all businesses)

Core strengths

1. Deep and enduring franchise delivered across the UK
2. Award winning expertise
3. Strong and resilient deposit base

1 Source: Bank of England, BCG Banking Pools. Estimated that c.60% of the total corporate

Strong deposit	With room to
foundations	grow in lending

c.22%	c.9%
FY23 share	1	FY23 share	1
sterling deposit market and c.55% of the total corporate loan market fell into Barclays' definition of the market |

In February, Venkat described the UK Corporate Bank as the 'beating heart' of Barclays given its role in our 330 year history.

You see that in the depth and breadth of client relationships across the UK mid and large corporate market, with an average relationship length of 18 years.

We maintain these relationships through teams based locally, in over 50 offices across the UK.

We also support the full range of corporate client needs across three areas:

1. First, Business Banking, within Barclays UK, supports micro and small business clients whose product and service needs are closely aligned to the UK retail

customer base;

1. Second, the UK Corporate Bank, our focus today, serves mid to large sized corporates. These are clients with over £6.5m of annual turnover through to FTSE

350 companies, representing around thirteen thousand clients;

1. And third, the International Corporate Bank has relationships with FTSE 350 clients, multinationals and financial institutions.

I should note that our card issuing activities, while part of the UK Corporate Bank, serve the needs of more than 250,000 clients across this client continuum.

Using Bank of England data, we estimate that our UK Corporate Bank has 22% of the like-for-like UK share of deposits.

At the same time we estimate that we hold around 9% of the lending share.

That difference reflects our previous focus and strategy.

We see a real opportunity to begin to redress this imbalance, and this is the foundation for our lending growth aspirations. I'll come back to that a little later.

Barclays Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority

(Financial Services Register No. 122702).

Registered in England. Registered No. 1026167. Registered office: 1 Churchill Place, London E14 5HP

Today's financials					Business deep dive	4
					Barclays UK Corporate Bank
Financials	2021	2022	2023	Q124
RoTE	14%	19%	20%	15%1
Income (£bn)	1.3	1.7	1.8	0.4
Cost: income ratio	59%	49%	52%	58%	1
Credit impairment				23bps LLR
137	0	27
(charges) /releases (£m)	(15)
Loans (£bn)	27	27	26	26
Deposits (£bn)	85	84	85	82
1 Includes £30m Q124 BoE levy charge. RoTE and cost: income ratio excluding BoE levy were c.18% and c.51% respectively |

As you've already seen, the business has had an improving financial profile over the last three years.

Although the rising rate environment helped, we have also had balanced growth across diversified income streams, alongside prudently managed credit risk.

We believe we have strong foundations on which to build further over the life of our 3 year plan.

Barclays Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority

(Financial Services Register No. 122702).

Registered in England. Registered No. 1026167. Registered office: 1 Churchill Place, London E14 5HP

Comprehensive client proposition, which Diverse income streams across products

delivers diverse income	Barclays UK Corporate Bank	5
Business deep dive
Corporate lending	•	Term debt / RCFs1

£m

Corporate Lending

Transactional products2

Deposits

Transaction Banking

	+32%
	1,657	1,770
	247	262
1,341
316		532
578
441
	832	976
584
2021	2022	2023

(Predominantly NII)	•	Overdrafts

• Risk protection

Transaction Banking
		•	Trade and Working Capital
Transactional	•	Payments and receipts
products	2	•	Card Issuing
(Predominantly Non-NII)	•	Foreign exchange
Transaction Banking
Deposits		•	Interest bearing, non-interest
		bearing and foreign-currency
(Predominantly NII)
	accounts

• Barclays UK: Business Banking

Group	•	Payments ecosystem
synergies	•	Private Bank & Wealth Management

• Investment Bank: ECM and DCM

1 Revolving credit facilities | 2 Treasury operations income which includes liquidity pool income is included within Transactional Products | Note: Charts may not sum due to rounding |

As I mentioned earlier, the UK Corporate Bank has a comprehensive suite of products to address typical client needs.

It also delivers broad sources of income. Income grew by 1/3 over the last three years to £1.8bn.

Within that, deposit income grew by 2/3 to just under £1bn across a full suite of deposit products: interest-bearing,non-interest bearing, and foreign currency accounts.

Encouragingly, over the same period, income from transactional products, which have a large non-interest income component, grew by 21%, with growth across each of the product areas: trade finance, payments and receipts, card issuing, and foreign exchange.

Client-driven transaction products are intrinsic to the day-to-day operations of our clients, so provide a recurring income stream.

This income increased year-over-year, and we expect to grow these capital-light income streams out to 2026 through even deeper client relationships, which I will cover shortly.

Corporate lending represents an important income growth driver. We believe it is the right time to lean into corporate lending growth in the UK, contributing to the Group's objective to increase risk weighted assets by £30bn across our higher returning UK businesses.

Venkat also noted in February that the UK economy has remained resilient and the legal and regulatory environment is strong and trusted.

Barclays Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority

(Financial Services Register No. 122702).

Registered in England. Registered No. 1026167. Registered office: 1 Churchill Place, London E14 5HP

While they don't appear on this slide as products. I'd like to take a moment to emphasise the complementary relationship between the UK Corporate Bank and the other businesses in the Group.

Payments is an important service to the UK economy and the opportunity spans businesses and consumers.

For instance, Business Banking within Barclays UK benefits from payment trends data from mid-sized UK businesses, served within the UK Corporate Bank.

In turn, our service of UK corporate clients benefits from consumer spend data from Barclays UK.

Client referrals from the UK Corporate Bank also benefit other divisions, including the Private Bank and Wealth Management for their personal investment needs, and the Investment Bank when they need access to the capital markets.

UK Corporate Bank clients also benefit from wider Group capabilities. For example, our Climate Tech Escalator which supports the next wave of climate tech solutions from idea to IPO.

This allows start-up and climate-tech ventures to collaborate, innovate and scale all within the Barclays ecosystem.

Through these synergies and the broader combination of businesses that we have, we believe our corporate bank offering is advantaged compared to our peers.

Barclays Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority

(Financial Services Register No. 122702).

Registered in England. Registered No. 1026167. Registered office: 1 Churchill Place, London E14 5HP

High-qualityincome growth across broad sources Income by type (£m)

Barclays UK Corporate Bank	6
Business deep dive

		+32%
		1,657	1,770	v. 2021
					Non-interest income
£m	1,341	525	610	+51%	•	Capital light and less rate dependent
Non-interest	405
income
				Net interest income
					•	Strong deposit franchise
Net interest			1,160	+24%	•	Higher rate environment
936	1,132	•	Structural hedge drives predictable tailwind to future NII
income					•	c.£20bn of the product structural hedge notional is within
							the UK Corporate Bank
	2021	2022	2023

We grew income over the last 3 years driven by both net interest income and non- interest income growth.

While the strong deposit base has enabled the business to capture the tailwind from higher rates to date, the structural hedge provides predictable support for future net interest income growth as rates decline.

Of the Group product structural hedge notional of £194bn as of the end of the first quarter of 2024, c.£20bn resides within the UK Corporate Bank today.

We expect the notional to reduce at a similar rate to the Group, given the expected level of roll of maturing hedges.

Over time, we expect this to be more than offset by improved margins as we roll the hedge onto higher rates.

Non-interest income has grown over fifty percent since 2021 driven by higher client activity. We expect to grow this further in the coming years.

This is attractive, recurring income. The related transactional products are not big consumers of capital and the business is less dependent on rates.

Barclays Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority

(Financial Services Register No. 122702).

Registered in England. Registered No. 1026167. Registered office: 1 Churchill Place, London E14 5HP

Strong deposit foundation underpinned by deep relationships Franchise deposit base (£bn)

Barclays UK Corporate Bank	7
Business deep dive

Market share	1	22%	21%	22%	22%
Total	85	84	85	82
Interest-bearing					•	Market position underpinned by strong
and currency
accounts		64	66			client relationships
			73	70
					•	Non-interest-bearing current accounts balances
						expected to be more stable in 2024
						o	Expect migration to continue but at a slower pace
Non-interest-	21					than 2023
bearing current	18	12	11
accounts
		FY21	FY22	FY23	Q124
		Aim to grow total deposits in-line with UK corporate deposit market2 to 2026
1 Source: Bank of England, BCG Banking Pools. Estimated that c.60% of the total corporate sterling deposit market and c.55% of the total corporate loan market fell into Barclays' definition of the market | 2 Aim to grow deposits in line with the UK Corporate deposit market.
Measured using Bank of England data: Money Supply data | Note: Charts may not sum due to rounding |

So how are we going to drive this income growth? The foundation for this is the depth of our client relationships, evidenced by our strong, stable deposit franchise.

As you can see here on slide 7, while we have seen migration of deposits from non- interest bearing to interest bearing accounts in recent years, our experience was consistent with the industry and predicated on rational client behaviour. Our overall total balances have stayed broadly stable over this period.

As outlined in February, our ambition going forward is to grow deposits in-line with the UK corporate deposit market.

In addition to the structural hedge tailwind, we have two additional levers to grow income which I will cover on the next two slides.

Barclays Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority

(Financial Services Register No. 122702).

Registered in England. Registered No. 1026167. Registered office: 1 Churchill Place, London E14 5HP

Opportunity to deliver more to clients and shareholders Deepen relationships by enhancing client experience

Barclays UK Corporate Bank	8
Business deep dive

Service quality

Clients who rate overall satisfaction as very good or excellent (%)1
53	57	57	69

Peer #1

Barclays UKCB

Peer #2

Peer #3

	4	c.30%	5
Digital	th
lowest ranked peer in	of client service	separate client access
	online satisfaction1	interactions are digital	channels
Relationships		28%	4
of clients have two or	average products per
		fewer products
		client
1 Source: Savanta Market Vue Survey based on 1,139 interviews (247 Barclays £6.5m+) with companies turning over between £6.5m and £1bn carried out in YE Q1 2024. Survey data is weighted by turnover and region to be representative of the total market in Great Britain.
% Top Two Box Responses - Excellent and Very Good | Note: all other stats as at FY23	|

The first additional lever of income growth is the opportunity to help clients with a broader range of their needs, leading to an even higher take up of products and services.

However, we acknowledge that first we must improve the quality of their experience with us.

57% of clients rate our overall service as very good to excellent.

We plan to improve that and move towards the top of the peer set which would imply a level of at least 69% as of today.

As you can see on the slide here, our digital proposition ranks the lowest versus our peer group when it comes to online satisfaction.

We also see this clearly in our data, as only 30% of our client servicing interactions are undertaken digitally and we make it too complicated for clients to access our products and services because of multiple digital touchpoints.

This has contributed to just over a quarter of our clients holding 2 or fewer products with us currently.

As we make it simpler to access our services, we believe clients will use more of our products, improving our products per client metrics.

Barclays Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority

(Financial Services Register No. 122702).

Registered in England. Registered No. 1026167. Registered office: 1 Churchill Place, London E14 5HP