Barclays (BARC) Status Update summary

Business overview and strategic direction

• U.K. Corporate Bank is a standalone division serving 13,000 mid-to-large corporates, with a 22% share of U.K. corporate deposits and 9% of lending, highlighting growth potential.

• Achieved over 10% client growth since 2021, maintaining an 18-year average client relationship and over 50 offices nationwide.

• Income has grown by one-third over three years, reaching £1.8bn in 2023 with a 20% return on tangible equity, making it one of the group's highest-returning businesses.

• The business aims to grow lending and deposits, leveraging strong client relationships, a stable deposit franchise, and group synergies.

• The group-wide objective is to increase risk-weighted assets by £30bn in higher-returning U.K. businesses.

Financial performance and growth levers

• Non-interest income has grown over 50% since 2021, while net interest income increased 24%, driven by higher client activity and recurring transactional products.

• The structural hedge provides predictable support for net interest income as rates decline, with £20bn notional expected to roll onto higher rates.

• Plans to grow deposits in line with the market and improve client experience, aiming to increase the percentage of clients rating service as very good to excellent from 57% to at least 69%.

• Only 35% of clients borrow from the bank, with a loan-to-deposit ratio of 31%, indicating significant lending growth potential.

• 2026 targets include high-teens ROTE, cost:income ratio in the high 40s%, and a loan loss rate of c.35bps.

Digital transformation and client experience

• Underinvestment in digital has led to low online satisfaction; plans include consolidating five digital channels into one (iPortal) and targeting over 60% self-service interactions by 2026.

• Trade 360 and enhanced cash management platforms are being rolled out to improve client engagement and income.

• Efficiency savings from 2021-23 are funding increased investment in digital capabilities and growth opportunities for 2024-26.

• Deeper client relationships are expected to drive income, with clients using more products generating exponentially higher income.

• The number of clients using seven or more products has increased, representing the most profitable segment.