Jonathan Young

Jonathan Young from Jefferies asked for qualitative details on the upcoming 2027-2028 targets, beyond just numbers, including expectations for ROTE, distribution amounts and mix, and CET1 ratio targets. He also inquired about the structural hedge, specifically how the extended weighted average life to three and a half years would impact the size of maturities in 2027 and 2028, and if the maturity yield for 2028 could be provided.

Answer

Anna Cross, Group Finance Director, Barclays, indicated that the February update for 2026-2028 targets would focus on pushing ROTE higher across the group and specific business areas, emphasizing stable revenue, gross efficiency savings, and disciplined capital management. For the structural hedge, she explained that extending the duration due to deposit stability would slightly lower maturity levels further out. She provided the 2027 maturing yield at 2.1% (compared to 1.5% for 2025-2026) but stated the 2028 yield would be provided in February, noting a mix of tenors, including seven-year hedges, influencing the yield.

Jonathan Young asked for qualitative insights into the upcoming 2027-2028 targets, inquiring about the level of detail expected beyond ROTE, distribution, and CET1 targets. He also sought clarification on the structural hedge, specifically the expected size of maturities in 2027 and 2028, and the maturity yield for 2028, given the extended weighted average life.

Answer

Anna Cross, Group Finance Director, Barclays, indicated that the February 2025 update on targets for 2026-2028 will be a focused update, emphasizing pushing ROTE higher across the group and specific businesses. The strategy will continue to focus on higher, more stable revenue, gross efficiency savings for investment capacity, and disciplined capital management. Regarding the structural hedge, Ms. Cross explained that the extended duration reflects deposit stability, which will slightly lower maturities further out. She provided the 2027 maturing yield at 2.1% (compared to 1.5% for 2025/2026) but stated that the 2028 yield would be disclosed in February, noting a mix of tenors, including a 7-year portion, influencing the yield.

Jonathan Young asked for an update on core medical trends within the insurance business, comparing new versus existing member cohorts, and inquired about Part D out-of-pocket maximum trends. He also questioned the progress of the Counterpart Health go-to-market strategy and its potential timeline for financial contribution.

Answer

CFO Peter Kuipers responded that overall cost trends, for both new and returning member cohorts, are performing as expected. CEO Andrew Toy added that while the company remains excited about Counterpart Health, the immediate focus is on improving profitability in the core insurance segment, with further updates on Counterpart to be provided later in the year.

Jonathan Young of Cantor Fitzgerald inquired about the early performance of the Annual Enrollment Period (AEP) for 2025, the impact of the improved STARS rating on member attraction, the nature of planned Q4 investments, and the size of the Prior Period Development (PPD) benefit.

Answer

CEO Andrew Toy explained that the company is well-positioned for AEP due to its new four-star rating and maintained product richness, especially as competitors retreat. CFO Peter Kuipers added that Q4 investments are focused on marketing and quality initiatives. He also clarified that while the specific PPD benefit isn't disclosed, its impact was smaller than in previous quarters.