Everyone, welcome as well from my side to the 29th Financial Conference here in London. I'm very pleased today to welcome Mr. C.S. Venkatakrishnan with us, CEO of Barclays. Really a pleasure and honor to have you with us, so let's start with the first question. In February, you provided a detailed target to support plans for revenue growth, cost control, and capital allocation to deliver above 12% return on tangible equity and more than 10 billion GBP capital return to shareholders. That was well received by the market. Well done, so it's still early in the three-year plan, but what progress have been made so far, and what's been easier or harder to execute? Thank you very much, Tariq. Thank you for having us here, and I'm very pleased to be speaking. As you said, we presented this plan in February of this year. The important thing is that we are executing according to our plan. You know, the plan had three important elements. The first is that we wanted to take our ROTE from around 10%, which is what it was in 2023, to greater than 12% by 2026. We printed an ROTE at the end of the second quarter, just above 11%, 11.2%, and we feel fully comfortable with the target for 2024, which is, you know, in the 10% range. Then the second thing, which we said was that we would have capital distributions of greater than GBP 10 billion over the period 2024 to 2026. We had done GBP 3 billion in 2023, and so this was a little higher. So far, through the first half of this year, we've done GBP 1.25 billion in capital distributions, of which GBP 500 million is dividends and GBP 750 million is share buybacks, which is underway. The third thing which we said is that we wanted to rebalance our business and to take the investment bank, which is about 60% of the RWAs of the bank, and make it about 50% of the RWAs of the bank. And that is not by shrinking the investment bank, but by keeping its RWAs relatively flat, but growing the businesses around it, which are primarily retail and corporate, and largely UK facing. And we're on track with that. And an important part of that was a GBP 30 billion RWA allocation into the UK-facing businesses, our retail and UK corporate bank and private banking and wealth. And we made a down payment initially of GBP 8 billion by acquiring the Tesco Bank portfolio. So the return metrics, the capital return metrics, and the business metrics are all tracking the plan which we laid out. Very good. Thank you. On your point on capital, so one of the key points on your plan was indeed capping capital allocation to investment bank while still delivering revenue growth, and that was core of this, for the strategy. Yeah. How do you expect to achieve that increase in RWA productivity? Where are you in that journey versus where you expected when you announced that plan in February? Maybe just to clarify more, in addition, you're still confident in your ability to hold the investment bank risk-weighted assets at the 2023 level? Yeah. So that's absolutely right. An important element of this plan is to keep the RWAs of the investment bank at roughly the 2023 levels. What that means is that the investment bank, in my, in my language, you know, does a little diet and exercise, so there's a little bit of RWA efficiency, and there's also the absorption of whatever we expect from Basel 3.1, which we can talk about later. The first and most important thing here is to note that our investment bank is at scale. The investment bank, at the current level of capital allocation, is able to operate well in the businesses in which we are, in both markets and in banking, and is able to operate competitively and effectively in those businesses. And we saw that through the second quarter. And then if you look at banking itself, and you see some of the statistics that are publicly published in the last couple of months, you continue to see that. So the first thing is the investment bank is at scale. The second is the way you're going to—we are getting capital efficiency is a reallocation of capital within the investment bank, primarily from, from banking into markets, and an increase, as you mentioned, in efficiency within the investment bank of return per unit RWA. That efficiency measure by the second quarter had gone up about 40 basis points compared to the end of last year. So we're, we're producing on that. And then, you know, I've also said that our markets business is a little further along in the journey because they started a little earlier on that capital efficiency, and the banking side is catching up. So that's the way we aim to do it. And the important thing is we are doing it from a position of scale, a position of strength, and a position of great client penetration and client interaction. And on the market side, the way we measure that is the number of our top 100 clients with whom we are top five. So, you know, we are a number 6 investment bank, totally, and in markets and in banking. So if you set your sights a little bit higher and you say, "Well, I want to be five with some people," that number of the top 100 used to be about 30 of the top 100 a few years ago. It's gone to above 50, and we're looking for that to be 70 by 2026. So greater client penetration, more efficient RWA use-... Allocation within the investment bank, we are already seeing the results, and we start from a position of scale, strength, and competitiveness. Very good. I mean, follow up on this, in terms of, this other way, velocity, I mean, do you have any instruments you use to, better be more efficient about your capital, or it's just a point you mentioned? I mean, you see what I'm alluding to, I mean, look- Yeah, yeah, yeah. -securitization, uh. Yeah. The first thing I should say is that we have been in the so-called SRT or the risk transfer business for many, many years, and we've used this as a form of both capital management, meaning you enter into engagements where you pay off the interest coming from loans as well as any principal change because people default, right? So you transfer the default risk, and you pay the income. We've been doing that in our investment bank for many years as a form of capital management, as I said, and risk management, right? Which is when we anticipate things are going to get worse, we dial up the amount, and we dialed it up, you know, around the COVID period. Not only do we do this in the investment bank, we do it outside the investment bank. We did a transaction early this year in our U.S. credit card portfolio of around $2 billion with Blackstone, one of the first trades of its kind, I think the first trade of its kind since the financial crisis. We've done it in our U.K. portfolio as well. We did it on a motor loan portfolio a few years ago, so we are very practiced at this, and it's really important when you think of banks, to see how long they've done it, because the market, like any program, the buyers need to know what you do, how you do it, what's the quality of your credit, and have experience with your underwriting. That's why it's important to have done it, and it gives us a real advantage to have been doing it, and we will continue to exercise that muscle in every which way. Perfect. Thank you very much. Very clear. Maybe you can move to your business in the UK. So you recently upgraded your group net interest income guidance for this year. So but how do you expect Barclays UK NII to evolve in a rate cut environment, which is actually well engaged now? Yeah. So we upgraded our NII guidance, as you said, from 16.1 billion GBP to 16.3 billion GBP. The important thing to remember, about the way in which we look at our interest rate risk is that, of course, we have the income, but we also have, again, a long, mature, and pretty systematic and programmatic structural hedge program. And what that structural hedge program does is that when it modulates or moderates the impact of both rising rates and of falling rates. Mm-hmm. So when rates rise, our income grows, but less slowly than if we didn't have the program. And when rates fall, our income falls, but less slowly than if we didn't have this program. So that is going to modulate the effect of falling interest rates, and that provides, if you like, a ballast to our NII. So on top of that, as we reported in the second quarter earnings, we have seen stability in deposits after the initial rise in rates. So you take all of that together is what led us to upgrade our NII and to be fairly confident that even though we are seeing a modest decline in interest rates, the structural hedge program will continue to provide us income protection. Thank you. You are targeting 30 billion GBP growth in UK risk-weighted assets over the next three years. You mentioned earlier today, 8 billion is from Tesco Bank acquisition. The rest will be organic. Given the UK, the Barclays UK balance sheet reduced in Q2 and the slow, low single-digit growth in UK, how are you optimistic to reach this target? Yeah. The first thing, and I speak of this as a risk manager, the first thing for you to know is that we start from this with a position where actually we are underweight that risk, right? So we are underweight that risk because of actions which we took post-Brexit and during COVID, to reduce both our risk primarily in unsecured. We've always been at current levels or higher in mortgages. We are seeing the growth. We've seen an increase in our mortgage market share. We see that both in traditional mortgages as well as specialized mortgages. We bought a specialist mortgage company called Kensington, and we've been originating high LTV and more specialized mortgages through them. Now, you have seen a net reduction because although we grew on the asset side, there have also been a large amount of refinancings in the mortgage side, but I think that will modulate. Then on credit cards, we are beginning to see growth as well. We have just piloted and launched a co-branding program in the U.K. with Amazon. Now, in the U.S., we are fairly experienced in co-brand, so it will be a co-branded program as well. So we expect to see that organic growth starting, as I said, from a position of sort of lower risk weight. I also think even though the U.K., and I'm sure we're gonna come and talk about U.K. growth. U.K. growth is modest. There is an important opportunity here for large, well-run financial institutions to price their debt and credit offerings well and take advantage of the flexibility that that offers in this marketplace, and we are building that capability with Tesco. We're building that capability with Kensington, and we expect to use that muscle. Very good. I mean, one of the most popular questions we get at the moment on the UK banks, as you can imagine, is how the upcoming budget could impact the banking sector in the UK, and positively or negatively. Mm-hmm. So we're really keen to get your views on this. ...Yeah, I mean, this is, as you say, it's an important question. It's also sort of real, you know, twenty-four/seven live, because the Chancellor has been speaking about this. She spoke about it yesterday at the Labour Party conference. So we'll have to wait for the details of the budget, but what is the mood music? The mood music from this government since day one, actually, day before they even came into office, has been that, A, it is focused on UK economic growth, B, that it is business-friendly. You know, broadly across all industries, it sees the business as an important element of that growth and also with the financial sector and the financial industry. So those are two important pillars or planks with which to begin. The next thing about growth is the Chancellor spoke yesterday about investment and the need to have investment, and there's going to be an investment summit in the UK on the fourteenth of October, so the constraints the government operates under are obviously, if you need greater investment, where is that investment going to be? That's an objective, and the constraint is where are you gonna find the money, okay? With debt to GDP at around 98% and sterling no longer the reserve currency of the world, and the experience of two years ago, obviously, you've got to be careful about how much you borrow and where you borrow. So the government is looking at that, and then I think there may be some capacity that's found in accounting and other aspects of the way, you know, either measuring the net stock of the public sector, the value of the public sector stock, so it's not just an asset liability question, as well as certain accounting measures related to losses from the Bank of England's treasury portfolio. So they may give a little bit of accounting fiscal room. But the really important part then is private investment, which is why industry is important, which is why we, the financial sector, are important, both to channel domestic private investment and international private investment, and that's where that summit comes in. Now, the next question is: where does this money go? So it looks like it might go in two or three areas. First of all, you know, related to climate technology, sustainability, and just generally industry and pharma. That's good. It's industrial growth, and then the second thing is housing, and that's really important for banks because, A, we will finance the housing, or we will be needed to finance the housing. And second is, you know, housing in the UK is a relatively large part of an individual's or a family's expenditure, more so proportionately than in many industrialized countries. And so if that part of the budget for individuals can grow at a lower rate or inflate less, then that provides room for consumer spending. So I expect investment to translate into spending, and I expect consumer spending to go up. All of that should be positive. There are questions of how it's going to be done, but I view it as positive. On sense of risks, what do you see? The risks are: how do you operate under these constraints, these budgetary constraints, which is where are you going to get the money? How are you going to borrow, and how do you channel the private investment? And as in all of these things, you know, how do you keep the focus on what you have to do? Thank you very much. So now we move to the US Consumer Bank. So you've started to deliver improved returns, but there are regulatory headwinds in the form of the IRB model and the late fees on the horizon. So what's the latest on those? And how will they affect your path to profitability? And are you still on track to deliver the both 12% return in line with the group by 2026? Yeah. So the answer is yes, we are on track. We started the year with about a 4% ROTE in that business. At the end of the second quarter, we reported around 9% ROTE, so we're on that track. We made allowances in our plan for AIRB and for late fees, both in the quantum. What's happened since then is that AIRB has been, we think, will be implemented in the first quarter of 2025, not in the fourth quarter of 2024. And then the late fees is stuck in court, and so that may take some time in 2025, I think. But it's a question of timing. And obviously, the longer it takes, the easier the return path in the interim, but we've made adjustments for that, and so we don't view those as particular problems. And so, yeah, the return track of that business is as we specified it would be. Thank you. Maybe it's time to open the floor to questions, if there are any. There's one. Is there, please? Yes, this gentleman here. Yes, Mark. Yeah. Hi, Mark from BDL. A couple of weeks ago at your conference, we had some sort of, I guess you could call them scary or concerning headlines on consumer credit, and perhaps you can give us some color on what's happening in the U.S., card book, what you're seeing in delinquencies, how your book differs from maybe some of the more worrying trends we've seen at the likes of Ally, for example. Yes, I remember that, and... But, you know, I think one of the things to note in our conference was some people, like the name you mentioned, spoke about worrying consumer trends, others did not. The way I would say it is we expect normalized impairments of around 400 basis points in our credit card book. We provided at levels slightly higher than that coming into the year because our models were anticipating higher unemployment, and we're worried a little about growth and interest rates. So we provided, and since then our impairments have been coming down, realized impairments, and so we expect it to be at that 400-ish level. We are not seeing trends in that impairment in the actual default behavior that would lead us to suspect anything worse than that. So. If you're staying on the asset quality topic, while they're in the group, what are the areas where you could see some stress in your books? I mean, already talking pockets here. Yeah. I mean, commercial real estate, some other, Yeah Buy-to-let. I mean, what's the area that? So I should begin overall in the book by saying that in the U.K., at the end of the second quarter, in Barclays UK, you know, our loan loss rate was one basis point. Now, there's only one way it goes from there, and that's up, right? But the big thing, both in the U.K. and the U.S., is inflation is slowly coming under control. Obviously, the stock of prices is higher than it used to be three or four years ago, but employment has held firm. And as many people said at our conference in New York, and I've said also, what we see is people economizing and managing their budgets. Then when you go to the wholesale side, we use our risk transfer program quite effectively, you know, up to 30-40%, sometimes of our book is risk hedged. We have been very careful on the commercial real estate side for many, many years. And then on the investment bank, you know, again, it's sort of single name issues, prudent but isolated. Okay, very good. So you've talked about your plans to improve the capital efficiency in the US cards. Could you help us understand a little bit more on where else in the group you could use this risk transfer to improve capital efficiency? You mentioned earlier, actually across the different books. The wholesale book in loans and corporate credit is where we've used it for years and years. That is the biggest program we have, it's called Colonnade. We have started using it in U.S. cards, and we did the first trade of about $2 billion, as I said a few months ago. We'd look to continue to do some of that. In the UK, we've done it periodically, we've done a couple of mortgage trades. We did one large trade when we got out of the motor loan, motor finance business in 2019. We'd look to continue to do some in mortgages. I think the important part about this is, in my opinion, it's a, it's a good tool for capital management, it's a good tool for risk management, but it's got to be evergreen. You know, you can't stop and start. You can't say today, "Oh, well, I want to keep these assets on my book, so I'm not going to do a trade for the next three years," because the market has to see that. So you'll see us do it in greater or lesser sizes, but across our credit portfolio. Still on capital, you received the U.K. Basel rules recently. I guess you're still going through those. What can you tell us already in terms of now, I think you have better visibility on impacts? Then we'll talk later about the implication on the U.S. rules as well. Yeah. So we stand by the guidance which we gave at the start of the year, which is about a 5-10% total impact on Basel. We also said we'll absorb this within the investment bank. And so everything we've seen so far keeps us in that range. The thing, of course, we have to see are the details, and we've had two important concerns, which I think the U.K. will be addressing. One is that we would want the quantum of the rules to be roughly similar in the jurisdictions which are of importance to us, the U.K. and the U.S., for performing portfolios, and also implementation time to be roughly at the same time. The U.K. has come out, we have to see the details of the U.S. rules. In the U.S., the question of timing is more important. And while the US changes have been far more substantial because of the initial starting point a year ago was far more severe, we just again have to see the details, and we have to know what it, what it means. So I have to reserve comment on that, but I'm hopeful, and I remain hopeful, that quantum will be roughly similar and timing will be roughly, you know, consistent. Just to follow up on this, I mean, in the last few years, and I've witnessed that with some CIB business for French banks, for example, in continental Europe, how really was difficult this different playing level field in the CIB business from banks that's been required slightly less capital than others in terms of pricing competition? Just to understand what would be the upside now that we could have generally similar rules. So I think, you know, in my experience of doing this over about a dozen years, if you can be reasonably competitive in a business, you know, your ROTE may be a couple of points better or worse than somebody else's, but if you're reasonably in that range, then you can compete. Because it's not just that one product, it's a broader relationship with the client. If the rules are such that it becomes very onerous to compete, then you're probably best off not being in that product. You know, an example, which many of us had in the early part of the last decade was, once some of the credit risk charges came in, you know, the so-called incremental risk charge, IRC or CRM, many of us got out of some of the more bespoke credit trading tranches and so on. So there are times when you, certain asset classes, which acquire a lot of capital, you will not be as involved in. But generally, if it is reasonably comparable, then I think you can be competitive. Okay. And, how, I mean, specifically now, the Brexit has impacted your CIB business when it concerns in Europe? Yeah. Did you lose ground because of this, or do you think you're still competitive? We didn't lose ground from a client point of view. We didn't lose ground at all. In fact, we've gained because of the focus we've put in Europe. You know, our bank is headquartered in Ireland, but we've got teams all over continental Europe, and as you can imagine, a fairly heavy trading operation in Paris. So that has given us a greater focus and brought us closer to clients. We, like all other banks, have to go through the regulatory process of going through the European stress test, European capitalization, understanding, you know, go through the joint supervision mechanism of the ECB. And that's a work in progress. You know, every year we make, we grow better at this, and it will stabilize in its own way. And if there's been a quote-unquote cost, it's been that. But you know, we think, again, I've always said this: it is important for the banking system to be well-regulated, highly liquid, and well-capitalized, and that is as true in Europe as it is for us in the U.K., as it is for us in the U.S. So we want absolutely to be a constructive part of that system in Europe, an important part of that system in Europe, and therefore to be well-capitalized, liquid, and profitable there. Thank you. Cost efficiency is also core to your strategy. You target GBP 2 billion savings by 2026. But on different pattern of investment during investment per spend, can you take us through what's the areas you are working on, and actually what investments doing? So we said GBP 2 billion in the three-year period. We said at the end of the second quarter, we've already done GBP 400 million so far this year and are on track to complete GBP 1 billion for 2024, and so there's GBP 1 billion left for 2025 and 2026. So all that remains on track. As far as spending itself goes, we have been investing in our investment bank, especially in the markets business, especially in technology, fairly heavily over the last number of years. We will continue to invest, but at a slightly slower pace there. The greater investments are coming where we are also putting in our RWAs, which is in the corporate side and in the retail. That's where we expect to invest in RWAs and proportionately invest more in technology and in our wealth business. Thank you. Moving back to capital and distribution, investors welcome the focus on the share buyback. But how do you evaluate organic growth and M&A, and maybe we can follow up on your potential ambitions for more consolidations in the U.K.? Yeah. First of all, we've been very clear that we've got a hierarchy on capital. So all generated capital, and we've been very capital generative in the last couple of years and this year. The generation of capital first goes to keep the bank well capitalized. So we target a CET1 of 13%-14%. At the end of the saecond quarter, if I remember, we were 13.6%, and so that's where we want to be, in that range of 13%-14%, and that's the first goal. The second objective is capital return. That's the greater than GBP 10 billion that we said we would do over the next three years, and GBP 1.25 billion that we've done in the first half of this year. After that, what's left over can go into investment in the business, either organic investment or potentially inorganic, but that's the hierarchy of capital use. If we look at the inorganic side, we have three criteria. It should either expand our capability in the way Kensington Mortgages did for non-traditional mortgage assets or underwriting of non-traditional mortgages, or it should expand our scale in the way Tesco has done. So it either gives capability or scale, and it is of a size that is manageable, and that we can manage both from the capital use in item number three in our waterfall, and also as a management matter, which we feel comfortable dealing with. So those are the criteria. You asked about the UK. Yes. Obviously, you have seen some small and medium-sized financial entities under pressure in the U.K. I think it's normal to expect that at turning points in interest rates, and I think what you've got right now is three things coming together. One is obviously higher interest rates, I mean, before the recent cut in August by the Bank of England, but generally higher interest rates than were there for the last number of years. The second thing you've had is the maturing of the consumer regime with Consumer Duty. And the third thing you've had, of course, is the maturing of the capital regime with Basel 3.1. So entities have to evaluate how they will operate in that circumstance. Everybody from the biggest bank to the smallest financial institution has to do it. Some will feel greater pressure than others. I think generally the big banks are well capitalized and well run, and I think some of the smaller entities, especially if they're focused on specialist areas which are more vulnerable to particularly, to peculiarities of these rules, may find themselves more vulnerable. Very clear. Is there any question in the floor? There's one here, please. If I could just ask thoughts on the sort of continued growth of private markets and the opportunities that presents for Barclays? I guess we spoke to SRT, but also maybe the risks, given that seems to be a particular focus for the Bank of England on the regulatory side. Is that Fiona? It is. So, lights are bright. So what we call private credit or what is termed broadly private credit, is something that banks have been doing since their existence, right? It is issuing loans to individuals, corporations, and so on, and keeping it on their books. What you've had now in the last number of years is non-bank entities venturing into this market. And so these are loans which are not securitized. These are not corporate debt instruments, but these are loans held onto balance sheet. They are large, and they have capital to deploy. The second is that they run under a different regulatory regime than the banks do. So it is, if you like, less punitive on some, at some level. Third is there are many sophisticated players who can be very discriminating in what they offer, and they're serving a need for their own clients to get access to this asset class, so that's all on the plus side. On the other side, the relationship that companies have with whoever finances them is not just a financing relationship, but an operational relationship, so with a bank, not only do you come to us for loans, but we also, you know, manage your accounts, we do your payments for you, we provide foreign exchange, et cetera, et cetera. That totality of the relationship is very difficult to supplant, and nor do I think these private entities are looking to supplant. So I think if you, if I were a corporate, right, I would have to look at all providers of capital, but also understand the importance of the relationship of the bank, which is more than just lending. And in fact, we talk about different parts of our businesses, where some places we have much more of an operational relationship and we're trying to grow the lending relationship, and in other places we have more lending relationship and we try to grow the operational relationship. But we always look at it as an entirety. The second thing, and so that I think is a risk not for the system, but for the company. It has to look at the entirety of its relationship. Then if you come to the system, which is your point about the Bank of England, the system has to ask basically a couple of questions: Are the people who are providing this private credit, the non-bank people, are they sophisticated enough and will able to do discriminating enough credit selection so that they're not affected at a negative point in the cycle? I have no doubt that the large entities are very sophisticated. There are lots of smaller entities who have come in, we shall see. The second thing is, what are the bank's own exposures to these funds in terms of providing leverage? Well, all the banks do this, and I think it's important for us to be, again, sophisticated and careful, in how we provide leverage, where and in what quantity. Those are the systemic risks that the prudential regulator would have to concern themselves with. Answer your question? Thanks. Any more questions on the floor? There's one there, please. Thanks very much. Politicians in both the U.K. and U.S. have been talking about significant increases in tax burdens on people with higher incomes and higher asset positions. And in the U.K. in particular, you've had changes in the non-dom proposals. How do these affect your ability to hire the right people in the right places? And in particular, could you comment on its... If there are changes to the non-dom environment, does it affect your ability to have the right staff on board here in London? That's a good question. I think broadly for us, it will not. And that's probably because we both have a very different staff mix and than certain private entities, let's put it that way, and different compensation structures from the private entities. Because for the private entities, it's not just dom and non-dom, it's also whatever happens to carried interest, right? For us, that's not the case. I'll tell you, when we look at our staffing, you do get senior people who move, say, from the U.S. to the U.K., and there the non-dom may come into play. Not if you're coming from the U.S., because the U.S., as you know, taxes all its citizens globally, but if you come from other jurisdictions like Asia. So there's a small number of people who may be affected. The other attractive thing about the U.K., incidentally, is that for very qualified younger people, the visa regime is much more attractive, and you're able to hire qualified young people and get them on visas, working visas, ultimately on a path to residency and citizenship, much faster in the U.K. than you are in the U.S., and that's a great attraction for us in getting talent from around the world and even talent from the U.S. In fact, we have time for one last question from the audience, if there's any. Okay, if not, we'll end it here, last call. No. If everybody end it here. Thank you very much. Thank you. For your time. It was a pleasure to have you. Perfect. Thank you.