Robin Down

Robin Down from HSBC questioned the outlook for mortgage lending, suggesting underlying demand might be stronger than implied by a stamp duty pull-forward. He also asked about the outlook for deposit growth and whether the structural hedge was likely to grow.

Answer

Executive Paul Thwaite agreed that mortgage application levels remained robust post-stamp duty changes. CFO Katie Murray stated that deposit growth is expected to track the market. Regarding the structural hedge, she guided for it to remain stable for the year, explaining that the 12-month lookback methodology means recent growth in eligible balances will take time to be reflected in the hedge's size.

Robin Down of HSBC requested more detail on the drivers of volatility within the Group Center's results. He asked if the movements were primarily due to FX swaps linked to the U.S./U.K. interest rate differential and sought clarity on when this trend might reverse.

Answer

CFO Katie Murray explained that while FX swaps are a component of the Group Center's volatility, hedge accounting classifications also play a role, making it difficult to guide on a quarterly basis. She reiterated that analysts should model the center's total income impact as roughly zero over time, as profits and losses are generally allocated out to the business segments.

Robin Down requested more granular disclosure for the structural hedge benefit, to one decimal point, to better model NII progression. He also asked if there were any specific factors that could cause 'lumpiness' or deviation from a straightforward NII progression in Q2.

Answer

William Leon Chalmers, an executive, acknowledged the request for more detail but indicated the current disclosure is likely sufficient. He confirmed the structural hedge's contribution will ebb and flow quarterly due to varying maturity volumes and yields, noting the contribution might be slightly less in Q2 but strong again at year-end, while reiterating confidence in the full-year NII guidance.

Robin Down from HSBC asked about the apparent lack of revenue growth in Barclaycard UK despite high customer acquisition, questioning the timing. He also sought clarification on the structural hedge's 90% reinvestment rate versus comments on its notional stability.

Answer

Executive Angela Cross confirmed a lead-lag effect in Barclaycard UK revenues, with new customers taking over 12 months to mature into significant interest-earning balances, with the bulk of the impact expected in 2026. On the hedge, she clarified that 'circa 90%' is a planning assumption, while the expected outcome, based on strong deposit trends, is a broadly stable notional.

Focused on BUK interest income, calculating a 2025 starting base of £7.3 billion by annualizing the implied Q4 run-rate and adding Tesco's contribution. He asked why income wouldn't be materially above the £7.1 billion consensus, questioning if there was a missing negative drag.

Answer

The executive declined to comment on 2025 consensus or the analyst's specific numbers but reiterated the fundamental guidance for mid-single-digit NII growth for BUK over the plan period (including Tesco). They acknowledged the 2024 guidance was upgraded due to a better rate outlook and earlier balance sheet stabilization, and confirmed they expect BUK NII to grow in 2025.

Robin Down sought confirmation that the Barclays UK NII guidance was set before the BOE levy changes and questioned the path to the 2024 RoTE target of over 10%, highlighting a disconnect with consensus revenue forecasts.

Answer

Group Finance Director Angela Cross confirmed the NII guidance was pre-levy changes. Regarding the RoTE target, she stated Q1's 12.3% performance was exactly as planned, driven by stable income, cost discipline, and good credit conditions. She explained the full-year path differs from 2023's shape due to factors like impairment timing and the Q1 levy impact, expressing confidence in achieving the >10% target.