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Speaker 1: I am delighted to be joined by the Barclays chief

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Speaker 1: executive officers.

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Speaker 2: Then, Kat, thank you for joining us.

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Speaker 1: First of all, congratulations a pretty strong set of results.

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Speaker 1: A lot of it has to do with fake What

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Speaker 1: do you see in terms of main drivers going forward?

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Speaker 3: Yeah, thank you frand Scene. Great to be here with you.

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Speaker 3: And yes, it was a very nice set of results

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Speaker 3: this morning that we were privileged to publish. What I

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Speaker 3: liked about the results friand Scene is not just the numbers,

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Speaker 3: but the composition of it. And Fink was an important part,

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Speaker 3: but not the only part. So if you look at

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Speaker 3: the numbers, top line, uh, you know, two point six

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Speaker 3: billion of profit before tax and sterling, it's about up

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Speaker 3: sixteen percent, Revenues up around eleven percent, seven point two

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Speaker 3: billion pounds, an excellent rote of fifteen percent across the

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Speaker 3: group capital ending where we would like it to be.

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Speaker 3: One of the you know, a record quota of performance

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Speaker 3: for the bank and the second biggest for the corporate

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Speaker 3: and investment bank. So all very good. Now what drives it?

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Speaker 3: And that's the important part, and for us, it's actually

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Speaker 3: been the workings of many, many quarters of building this.

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Speaker 3: And there are two parts I'd like to highlight.

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Speaker 4: The first is.

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Speaker 3: The investments which we've made in our business, whether it's

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Speaker 3: in our credit card portfolios in the US where we

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Speaker 3: acquired a gap portfolio of ten million customers, and whether

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Speaker 3: it is in our market's business where not just investment

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Speaker 3: in technology and people in fixed income, but also in

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Speaker 3: our trading systems, but also in financing, both in fixed

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Speaker 3: income and in equities prime, which continue to help us

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Speaker 3: in this environment.

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Speaker 1: So if you look at FIG Trading, are you expecting

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Speaker 1: this momentum to go into the second quarter?

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Speaker 3: So we hope to keep the market share that we

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Speaker 3: have gained with our clients over a number of years.

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Speaker 3: To persist, we've broadened and deepened relationships. The actual dollar

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Speaker 3: amount of revenues, of course, goes up and down with

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Speaker 3: volatility in the markets, and that's much much harder to predict.

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Speaker 3: But what we try to do is to have that capability.

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Speaker 1: So is this a kind of diversification for the rest

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Speaker 1: when you look at your main drivers going forward.

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Speaker 3: Well, what we hope is that we have a lot

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Speaker 3: of drivers and that at the right times in the market,

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Speaker 3: that they all are there and they click. So, you know,

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Speaker 3: the first quarter of this year was a lot about

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Speaker 3: the bond markets. Interest rates went up and down with

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Speaker 3: the stuff in banking that happened in the US, and

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Speaker 3: I'm sure we'll talk about that. The first quarter a

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Speaker 3: year ago was about equity ball single stocks, and then

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Speaker 3: our equity business was ready to capture that. So that's

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Speaker 3: how we try to do it. I have a full

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Speaker 3: fledged capability.

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Speaker 2: So when you look at marked was pretty incredible.

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Speaker 1: When you look at the banks starting with the SVB

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Speaker 1: and then CREDI, sweez. Does that mean that you had

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Speaker 1: deposits that people come to you because they were afraid

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Speaker 1: of other banks.

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Speaker 3: So the UK has been more insulated from that deposit

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Speaker 3: flight across banks then certainly the US has been between

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Speaker 3: the regionals and the big.

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Speaker 4: Money center banks.

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Speaker 3: Having said that, our deposit franchise grew by about ten

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Speaker 3: billion pounds during the quarter, and a lot of that

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Speaker 3: was actually people corporates putting deposits with us. On the

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Speaker 3: consumer side, it dropped a little, but that seasonality we

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Speaker 3: expect as people pay their income tax bills and draw

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Speaker 3: money from their accounts to do that. So the deposit

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Speaker 3: franchise has behaved extremely well and predictably.

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Speaker 4: But it's also for US.

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Speaker 3: It's a deposit franchise that we've built over decades, right,

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Speaker 3: with a very nice mixture of individuals of corporates, small businesses.

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Speaker 1: But do you expect the worst of the banking turmoil

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Speaker 1: to be over?

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Speaker 2: It's unclear.

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Speaker 1: So some people think that there was a banking turmoil

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Speaker 1: in March. Others say, look, it's two specific cases for

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Speaker 1: two specific reasons.

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Speaker 2: How do you see it going forward?

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Speaker 3: So I think I think the Credit SUEEE was a

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Speaker 3: very specific case, while I think Silicon Valley Bank was

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Speaker 3: a specific case in terms of its circumstances. It has

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Speaker 3: highlighted an issue with some of the regional banks in

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Speaker 3: the US and that we will see continuing to play out,

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Speaker 3: maybe in a small number of names. And we've seen

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Speaker 3: First Republic over the last couple of days, so I

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Speaker 3: expect that we will see over a small number of names.

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Speaker 3: It's not going to be systemic in any way, but

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Speaker 3: there will be repercussions.

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Speaker 1: And it hasn't changed the way in which Barclay's behaves all.

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Speaker 1: As you said, the UK was pretty immune to that.

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Speaker 1: Or are you looking, for example, at possibly buying c

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Speaker 1: forrety sweet assets?

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Speaker 3: So the UK has been immune from the deposit franchise. Obviously,

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Speaker 3: what's happened in the US and with Credit Suite affected

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Speaker 3: market volatility, especially in interest rates, and that our trading

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Speaker 3: businesses engage in the coming back to assets. Look, we

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Speaker 3: have built up our business over quarters and years. We

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Speaker 3: have you know, we when Credit Suee got out of

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Speaker 3: the prime business, we hired a few of their people

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Speaker 3: and some of their clients chose to work with us,

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Speaker 3: so we were about that. I think a lot of

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Speaker 3: the assets shifting happened before this period.

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Speaker 1: When you look forward into what the banking you know,

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Speaker 1: the banking world looks like, are you expecting more regulation

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Speaker 1: or are you expecting also consumer behavior as would possibly

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Speaker 1: go into a downturn.

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Speaker 3: So on the banking world, I think regulation will with

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Speaker 3: some delay and with some benefit of perspective. Look at

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Speaker 3: what happened in March, and whether it's thinking about liquidity,

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Speaker 3: whether it's thinking about you know, the digital nature of liquidity,

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Speaker 3: how fast people can withdraw. I'm sure they're going to

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Speaker 3: look at it. They're also probably going to look at

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Speaker 3: how they supervise big banks versus smaller banks. So I imagine

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Speaker 3: there's there's going to be some of that and I

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Speaker 3: think we'll see the first installment in the US when

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Speaker 3: the FED is giving its own report, I think on

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Speaker 3: the first of May.

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Speaker 2: But do you see distress in the market.

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Speaker 1: It's pretty incredible to me to look at interest rates

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Speaker 1: going from one to five percent without you know, that

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Speaker 1: much breaking.

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Speaker 3: Yeah, so I do think that you're seeing an impact

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Speaker 3: on consumers. That impact has been really really cushioned by

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Speaker 3: the starting conditions because people had more wealth, and by

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Speaker 3: employment continuing to hold so people have jobs. So, for instance,

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Speaker 3: if you look at the UK, two things we expect

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Speaker 3: for the median too, family household with a median house

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Speaker 3: that compared to spending about twenty percent of their income

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Speaker 3: on mortgages on mortgage payments in the decade twenty ten

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Speaker 3: to nineteen, by the time this year ends, it will

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Speaker 3: be about twenty eight percent.

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Speaker 4: So that's a reasonably big number.

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Speaker 3: We've also seen that when in March, when we look

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Speaker 3: at the spending data of our customers debit card and

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Speaker 3: credit card customers, what we've seen is that while inflation

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Speaker 3: year over year was called it nine percent, their expenses

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Speaker 3: went up about four or five percent. So they're economizing.

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Speaker 3: They're either buying items that cost less or they're spending

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Speaker 3: less normally, and I think so people are managing their

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Speaker 3: balance sheet. What we have not seen is signs of

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Speaker 3: distress among customers, which is a good thing, which is

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Speaker 3: a great thing. Which is a great thing, which I think.

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Speaker 3: People are economizing. They have jobs, which is great. That's

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Speaker 3: why it's important to have economic growth.

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Speaker 1: So we heard it from the chief Economists of the

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Speaker 1: Bank of England saying, look, people should accept in the

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Speaker 1: UK that they will be poor.

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Speaker 2: Is that what you're seeing?

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Speaker 1: I mean, is that kind of the pattern that you

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Speaker 1: could see in terms of consumer spending.

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Speaker 3: So yeah, I saw the choice of words and I'm

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Speaker 3: not going to dispute the Bank of England here.

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Speaker 4: Here's what I would say.

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Speaker 3: People are shifting their consumers spending I think from more

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Speaker 3: expensive to less expensive, and they're choosing what they spend

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Speaker 3: on sometimes that might just be better, right, But it's

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Speaker 3: obviously happening because of inflation pressures.

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Speaker 1: But it's readjusting your You're not seeing something worrisome and loans.

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Speaker 1: I know there was an impairment actually in your numbers,

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Speaker 1: you know, what are the details on that. There's nothing

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Speaker 1: something impending that can actually really be worry.

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Speaker 3: Some we're not seeing except in the very fine margins

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Speaker 3: of very low rates, some increase in stress. We're not

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Speaker 3: seeing that at all. The impairment you're seeing. Our impairment

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Speaker 3: number was around five hundred million pounds compared to about

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Speaker 3: one hundred and fifty a year ago. Most of that

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Speaker 3: is the build up of the balances in our us

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Speaker 3: Cord's portfolio, where it's sort of automatic. We build up balances,

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Speaker 3: we create impairment.

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Speaker 1: When you look at the world, what worries you in

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Speaker 1: terms of regions, term of spending and how does that

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Speaker 1: impact your strategy. I know India, for example, is increasing

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Speaker 1: its wealth quite significantly. Do you have a strategy specifically

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Speaker 1: for India?

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Speaker 3: Yeah, I mean India is a very good question. We

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Speaker 3: have long had a very strong investment banking presence in

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Speaker 3: India and it has contributed well to US and in

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Speaker 3: fact we participant in many transactions last year. So I

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Speaker 3: think we will continue to invest in people in our

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Speaker 3: capability in India. You know other parts of the world,

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Speaker 3: I mean, we have generally outside we've concentrated on Europe,

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Speaker 3: the UK, and the US. We've got a footprint in Asia,

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Speaker 3: which is India, Singapore, Hong Kong and Tokyo, and we

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Speaker 3: expect to keep that footprint.

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Speaker 1: Did the Imbani saga change anything in how people invest

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Speaker 1: in India?

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Speaker 4: I don't think so. I don't think so.

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Speaker 3: It seemed particular to that company, and that company seems

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Speaker 3: to have taken quite a lot of steps to improve

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Speaker 3: its own financial position, So that's good.

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Speaker 1: Is there anything in liquidity that you worry when you

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Speaker 1: look at the functioning of the markets.

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Speaker 3: It's much better now than it was six months ago,

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Speaker 3: particularly in gelts. So let's begin here at home in London.

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Speaker 3: The guilt market, as you remember from September October was

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Speaker 3: quite something, was quite something. That market has the strains

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Speaker 3: in that market have considerably improved, and you can see

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Speaker 3: it in the improved quality of Sterling. I mean Sterling

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Speaker 3: is eking its way back up, So that market has improved.

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Speaker 3: I think in the US markets there have been spots

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Speaker 3: of illiquidity in treasuries and even in corporates. And you know,

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Speaker 3: we have the debt ceiling issue ahead of us, so

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Speaker 3: we have to watch what does the debt I mean worst.

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Speaker 1: Case scenario for the dead ceiling. And I don't know

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Speaker 1: whether you actually model this worst and best case scenario.

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Speaker 1: So best case scenario, nothing really happens. Worst case scenario,

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Speaker 1: could we actually see a US default?

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Speaker 4: I very much doubt it. I very much doubt it.

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Speaker 3: I think we've gone through this before and solutions always prevail.

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Speaker 3: And people in Washington are beginning to talk, and there

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Speaker 3: are proposals on both sides of the island Washington. So

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Speaker 3: I think it's all of us have to prepare for

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Speaker 3: these eventualities. But I doubt this eventuality will come.

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Speaker 2: We're here in Canary Wharf.

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Speaker 1: You are the most beautiful actually if you I think

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Speaker 1: of all of London. Are you committed to Canary Wharf

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Speaker 1: and London?

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Speaker 3: Yeah, well, we've just built four new wonderful trading flows

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Speaker 3: in this building, and so we have invested in this building.

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Speaker 3: We've invested in Canary Wharf and in London, you know,

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Speaker 3: and across the UK. You know, we've built wonderful campus

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Speaker 3: in Glasgow, so we do like to have a presence

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Speaker 3: across the UK.

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Speaker 1: You've also come back after you know, a tough year. Yes,

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Speaker 1: what's it been like coming back?

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Speaker 4: Thank you? It's actually been wonderful to come back.

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Speaker 3: You know, I was sick and I worked for a

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Speaker 3: few months through my treatment, but I worked at home

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Speaker 3: and sort of to reflect on that and reflect on

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Speaker 3: the hybrid situation. What I can say is personally, I

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Speaker 3: have experienced the joy of being back in the office,

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Speaker 3: of being able to interact more casually with colleagues, and

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Speaker 3: I think it's improved my productivity and it's improved my

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Speaker 3: frame of mind.

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Speaker 4: So I'm very happy to be back.

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Speaker 1: Has it changed the way you see actually the working

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Speaker 1: model at all for your employees.

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Speaker 3: It's made something that was in my mind intellectual more tangible,

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Speaker 3: which is I always knew that there was a benefit

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Speaker 3: of being in person and being around the office, and

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Speaker 3: now I've experienced it. Because it's one thing when you're

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Speaker 3: in COVID and everybody is away. It's another thing when

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Speaker 3: you're sick and you're alone, but everybody's in the office,

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Speaker 3: not all the time.

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Speaker 4: Now, there are.

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Speaker 3: Many benefits that have come from hybrid working which we

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Speaker 3: should all use and we should we should capitalize on

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Speaker 3: the flexibility and the acceptance of flexibility, which is I

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Speaker 3: think the most important thing, and so we want to

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Speaker 3: keep that. We don't want to dispel it. I'm very

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Speaker 3: happy to say we were very satisfied, you know, Barclay's UK.

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Speaker 3: In the UK, we've been named for the third year

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Speaker 3: in a row as the LinkedIn Employer of the Year,

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Speaker 3: so we hope that we are trying to get that

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Speaker 3: mixed correct.

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Speaker 1: How do you view AI, that's the big question. Yeah,

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Speaker 1: we don't have an hour unfortunately to talk about it.

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Speaker 3: So the most important thing for me in that is

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Speaker 3: to try to educate myself on it. From everything I

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Speaker 3: understand and what I have seen, it is and can

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Speaker 3: represent a remarkable improvement in productivity and find ways to

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Speaker 3: do certain tasks better by being able to map relationships

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Speaker 3: as opposed to just a listing of facts. So I

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Speaker 3: think the potential is enormous and I think it behooves

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Speaker 3: all of us and organizations to try to understand what

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Speaker 3: it is. I'm sure it will always be more than

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Speaker 3: what we thought and less than what people, you know,

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Speaker 3: the people who are the greatest enthusiasts believe.

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Speaker 1: So what does that look like at Barclay So you're

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Speaker 1: deploying and I don't know whether this goes back to costs.

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Speaker 1: Maybe costs we're a little bit disappointing, but you also

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Speaker 1: have to grow and invest it. Is there a parallel

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Speaker 1: to what you could achieve with a or new technology.

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Speaker 3: So it's a very good question. I think there is.

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Speaker 3: I think in the end, efficiency will come.

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Speaker 4: From technology and digitization.

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Speaker 3: And the question for us, for instance, in AI is

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Speaker 3: when you're looking at patterns and you're looking at relationships.

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Speaker 3: You know, one of the areas where we see a

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Speaker 3: lot of it is in financial crime aml kyic relationships

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Speaker 3: between transactions. Is there a way to do this better

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Speaker 3: that brings efficiency and brings actually better performance, you know,

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Speaker 3: our own costs this quarter? Coming back to that question,

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Speaker 3: we have invested in our businesses. We continue to invest

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Speaker 3: and those investments have been profitable, and we take it

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Speaker 3: very carefully and deliberately and over many quarters. And what

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Speaker 3: you've seen in this first quarter is what I think

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Speaker 3: would be the peak of our investment for this year.

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Speaker 1: Anything that worries you actually in the next two to

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Speaker 1: three years, I mean today was a strong day. Yeah,

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Speaker 1: I think we're also looking at you know, fake and

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Speaker 1: the only bank that did as well as you was

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Speaker 1: probably Bank of America. How hard are the next twelve months.

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Speaker 2: Going to be?

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Speaker 3: So I think there's a part of there are three

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Speaker 3: parts to that. One part of hard is how's the

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Speaker 3: environment going to be and I think that's a little

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Speaker 3: hard to predict. I mean, we've been very cautious for

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Speaker 3: the last number of quarters. But if you told me

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Speaker 3: on the first of January of this year that in

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Speaker 3: the first quarter the sector that would be in crisis

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Speaker 3: as banks, I.

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Speaker 4: Wouldn't have believed you. So the thing is we don't know.

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Speaker 3: So I think that volatility alone, while it brings opportunities

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Speaker 3: in certain businesses, for us, is something that gives us caution.

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Speaker 3: Right the investment banking landscape, now we did well in

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Speaker 3: investment banking.

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Speaker 4: We actually had very.

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Speaker 3: Strong results, but we were the least negative, right, So

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Speaker 3: that business itself is smaller for across the street because

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Speaker 3: fewer deals are getting done, IPOs are scarce. So we

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Speaker 3: think those are all things that weigh against it. I

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Speaker 3: think on the consumer side, while the consumer is still

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Speaker 3: holding up, if the pressure continues for longer and longer

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Speaker 3: and longer, we have to worry. So I think it

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Speaker 3: behooves us to be cautious.

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Speaker 1: When are you expecting all of the you know, the

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Speaker 1: pipeline of deals to come back to normalize.

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Speaker 3: I think you've got to see the end or the

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Speaker 3: science of the end of the interest rate cycle. When

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Speaker 3: you and I last spoke in October, I had said

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Speaker 3: I thought it would be in the middle of this year.

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Speaker 3: I still think, give or take, it could be. It

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Speaker 3: could be the third quarter. I think what's happened with

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Speaker 3: banks is probably and the worries about, especially in the US,

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Speaker 3: how much credit might be extended into the economy from

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Speaker 3: the region or might not be because of the issues

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Speaker 3: with the regional banks could postpone that point.

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Speaker 4: So we have to see.

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Speaker 3: But it's probably closer to the end of the year

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Speaker 3: in the middle part.

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Speaker 2: So this is basically montary policy transmission, right.

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Speaker 1: The fact that it could take up to eighteen months

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Speaker 1: or I mean everyone or the market is expecting cuts

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Speaker 1: from the Fed.

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Speaker 2: Yeah, is that your base case?

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Speaker 4: No?

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Speaker 3: I think first we have to see the stop. We

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Speaker 3: have to see interest rate rises stop, and then I

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Speaker 3: think there will be a holding period, a.

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Speaker 1: Holding period so where we have higher interest rates for

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Speaker 1: much longer.

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Speaker 2: Is this a new.

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Speaker 3: Normal, Well, it could be an old normal. I mean

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Speaker 3: thirty years ago, this is what it was. Right when

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Speaker 3: I joined this industry, the FED funds rate was around

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Speaker 3: five percent. So the question is whether what we've seen

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Speaker 3: in the last twenty twenty five years was an abnormal

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Speaker 3: period of low interest rates, and what we are going

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Speaker 3: back to is actually what it should have been over

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Speaker 3: the much longer period of time.

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Speaker 1: Is that how you see it, that this is normalizing

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Speaker 1: instead of the new normal?

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Speaker 3: I think I see it personally as normalizing, but that

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Speaker 3: may reflect my age more than anything else.

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Speaker 1: But it changes I mean, I guess it also changes

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Speaker 1: trade or you know, psychology and market psychology.

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Speaker 2: If this is going to.

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Speaker 1: Be for the foreseeable future where we are.

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Speaker 4: It does it does?

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Speaker 3: I mean, first of all, if the risk free rate

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Speaker 3: has now become five percent instead of zero, then it

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Speaker 3: changes the hurdle for a whole host of investments, which

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Speaker 3: is what you're seeing right, what you're seeing in the market.

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Speaker 4: The second is the transition from zero to five.

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Speaker 3: While it is well telegraphed, not very many people have

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Speaker 3: lived through it, and you are seeing that again in

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Speaker 3: the way in which certain acid portfolios have reacted to

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Speaker 3: rising rates. We have tried to position ourselves carefully for it,

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Speaker 3: but nobody gets this perfectly. And then once you stay

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Speaker 3: at that higher level of rates, we've got to look

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Speaker 3: at what volatility there will be and how business models evolve,

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Speaker 3: and you're right, that's going to be new and different.

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Speaker 1: You also have a former shareholder activist of Barclays that

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Speaker 1: says there should be a probe into you direct ties

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Speaker 1: with Jeffrey Epstein, Like, what's your response to that.

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Speaker 3: Well, so two things I think. First of all, there

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Speaker 3: are new allegations. Our board has spoken about these new allegations.

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Speaker 3: They're serious. We are in no position to comment. I'm

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Speaker 3: in no position to comment. They are being adjudicated in

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Speaker 3: New York and we are not party to that, so

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Speaker 3: I have no view on that.

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Speaker 4: I know our board well. They're very thoughtful, deliberate people.

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Speaker 3: Deliberative people, and while I was not a member of

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Speaker 3: the board, I know individually and collectively that they employ

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Speaker 3: very careful and.

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Speaker 4: Detailed processes to reach their decisions.

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Speaker 1: Kat, thank you so much. That was, of course a

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Speaker 1: Barclays chief executive officer. And I also dicorrect myself because

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Speaker 1: I think I meant a dining instead of umbona, So

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Speaker 1: that was my fault.

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Speaker 4: That's okay.

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Speaker 2: Thank you so much for your time with us today.