Barclays (BARC) Morgan Stanley US Financials, Payments & CRE Conference 2024 summary

Strategic plan and targets

• Announced a three-year plan with targets: >12% ROTE by 2026, >£10bn in capital distributions, and rebalancing the investment bank to 50% of group capital by 2026.

• Plan includes deploying £30bn of RWAs in the UK, with a focus on organic growth and select acquisitions like Tesco Bank.

• Progress is on track, with Q1 2024 ROTE at 12.3%, though seasonality is noted.

• UK lending growth is underway, with a focus on business banking, credit cards, and corporate lending where underrepresented.

• Capital allocation prioritizes maintaining 13–14% CET1, then distributions, then investment in high-return UK businesses.

UK business and NII outlook

• NII expected to be around £6.1bn in 2024, excluding Tesco; Tesco adds ~£400m annualized post-acquisition.

• Deposit growth and stability observed, with a burnout effect in deposit migration to longer terms.

• Lending growth supported by product expansion and acquisitions like Kensington Mortgages.

• Structural hedge expected to contribute £2bn more in 2026 vs. 2023, smoothing rate impacts.

• Growth in UK RWAs is ambitious but supported by resilience in the UK economy and room to grow in underpenetrated segments.

Investment bank and global business focus

• Investment bank aims to improve revenue, RWA productivity, and cost management.

• Targeting top-5 market position with 70 of top 100 clients by 2026, up from 30 in 2021.

• Focus areas: European rates, equity derivatives, and securitized products; progress seen in the latter two.

• Banking business shifting from DCM-heavy to more equities and M&A, with focus on tech, healthcare, and green energy.

• Cost savings target of £1bn in 2024, with £200m achieved in Q1.