Perlie Mong

Perlie Mong from Bank of America asked about the decision to move to quarterly share buybacks, the rationale behind this cadence, and whether Barclays is considering increasing dividends given the closer proximity to price-to-book. She also inquired about the expectation for structural cost actions to run at the top end of the £200-£300 million range in 2025 and if this level is expected to continue into 2026, referencing previous upfront cost-to-achieve figures.

Answer

Anna Cross, Group Finance Director, Barclays, explained that the quarterly buyback reflects confidence in consistent capital generation and accelerates a portion of full-year distributions to shareholders, aligning with capital priorities. Future plans for balance and cadence will be covered in February. Regarding costs, Ms. Cross stated that the primary objective is driving efficiencies through structural cost actions. She noted that despite the motor finance provision, Barclays is on track for a circa 61% cost-income ratio in 2025 and high 50s in 2026. The £200-£300 million annual range for structural cost actions is normal, with 2025 potentially at the top end, all encapsulated within existing guidance.

Perlie Mong welcomed the move to quarterly share buybacks and asked about the rationale behind this decision, whether a monthly rolling number is being considered, and if Barclays is contemplating increasing dividends given its closer price to book. She also questioned if the expected structural cost actions for 2025, at the top end of the GBP 200-300 million range, would continue at that level in 2026, and if any large upfront 'cost to achieve' is anticipated for the new strategy update.

Answer

Anna Cross, Group Finance Director, Barclays, explained that the quarterly buyback reflects confidence in consistent capital generation and is an acceleration of a portion of full-year distributions to shareholders, aligning with capital priorities. Further details on distribution balance and cadence will be provided in February. On costs, Ms. Cross reiterated the primary objective of driving efficiencies through structural cost actions. She noted that early delivery of gross efficiencies and NII momentum would have allowed for a cost-income ratio upgrade to 60%, but the motor finance provision led to reiterating 61% for 2025, with high 50s expected for 2026. The GBP 200-300 million annual range for structural cost actions is typical, with 2025 expected at the top end, already encapsulated in guidance, with no significant change to cost expectations.

Perlie Mong asked if Barclays has a 'Plan B,' such as acquisitions, to meet its UK RWA deployment target if the macro environment weakens, and how that would impact shareholder distributions. She also sought confirmation on the timing for group costs to decline, referencing previous guidance.

Answer

Group Finance Director Anna Cross reiterated that the UK growth plan has always been organic and that the bank will not compromise on lending quality or returns to meet a target, with shareholder distributions remaining a higher priority in the capital hierarchy. She also clarified that the plan is for the group cost base to come down in 2026, not 2027, and confirmed the bank is on track to meet its 2025 cost-to-income ratio guidance of circa 61%.

Asked if the large scale of the structural hedge makes Barclays more sensitive to long-term rates. She also questioned if it matters whether maturing hedges are reinvested or simply allowed to roll off, since both actions seem positive for NII.

Answer

The executive stated that the hedge tenor (2-7 years) does not make them more sensitive to the long end of the curve than others. They explained that while letting hedges roll off is currently beneficial, the key purpose of the programmatic hedge is to provide certainty and stability for future NII, which is why they actively manage it to lock in future income.

Perlie Mong asked how the 'higher for longer' rate outlook informs the bank's medium-term RoTE trajectory. She also inquired about the impact of higher U.S. rates on emerging market activity, capital flows, and specifically on China's trade dynamics.

Answer

Georges Elhedery, Group CFO, recognized higher rates as a tailwind but deferred longer-term guidance updates, reminding that the ~$1 billion NII from Argentina will be removed post-sale. Both he and Noel Quinn, Group CEO, highlighted resilient business activity, with Noel emphasizing that outbound investment from China to the rest of the world is picking up at a significant pace, which HSBC is well-positioned to capture.