Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Okay, let's talk about Barclays outward numbers this morning. Group
Speaker 2: pre tax profit two point zero eight billion, that slightly
Speaker 2: beats estimates. This morning, the bank is setting a sign
Speaker 2: three hundred and twenty five million in terms of compensating
Speaker 2: customers impacted by the UK motor finance scandal. It looks
Speaker 2: like there's going to be some pushback there. The bank
Speaker 2: is going to launch a five one hundred million stock
Speaker 2: repurchase scheme. So let's talk about the details and exactly
Speaker 2: what has happened here. Cs fencaategch Christian and CEO of
Speaker 2: Barclays joins us. Now, thank that great to see you.
Speaker 2: Thanks for the time. We always appreciate it. In terms
Speaker 2: of what stands out here, what are we looking at.
Speaker 2: I'm looking at trading being fairly mixed, I'm looking at
Speaker 2: a pushback when it comes to the motor finance story,
Speaker 2: and I'm looking at a raising of the net interest
Speaker 2: story going forward. Which one of those three things do
Speaker 2: you think investors should be focusing on this morning?
Speaker 3: Well, I think they should be focusing on the broad
Speaker 3: performance of Barclays. We had a top line beat of
Speaker 3: eleven percent growth year over year to seven point two billion.
Speaker 3: On the top line, we've had nine percent consecutive quarters
Speaker 3: of tangible net asset value growth. Importantly, as you said,
Speaker 3: we've increased our guidance for ANII from twelve point five
Speaker 3: to greater than twelve point six billion pounds, increased our
Speaker 3: rote estimates to twenty twenty five to greater than eleven percent.
Speaker 3: We're accelerating uh our ship share buyback program by announcing
Speaker 3: five hundred million pounds this quarter and moving to a
Speaker 3: quarterly cadence. And then importantly, you know, we we continue
Speaker 3: we we've announced that we're going to come back to
Speaker 3: our shareholders one year ahead of schedule and then give
Speaker 3: them and talk about our new set of financial targets
Speaker 3: UH in February from twenty six through twenty eight. So
Speaker 3: I think it represents the broad good performance we've had
Speaker 3: for many many quarters.
Speaker 2: Now, yep, okay, let'stick into the details of what is
Speaker 2: happening here and talk about what's happening with trading. Fake
Speaker 2: looks pretty solid and certainly ahead of estimates. But I'm
Speaker 2: understanding I think reading my notes that the estimates were
Speaker 2: maybe a little low for what people realistically thought you
Speaker 2: guys could deliver so fick our performance, but equities not
Speaker 2: what happened in equities Venka.
Speaker 3: Yeah, So I'm very broadly happy with what the Investment
Speaker 3: Bank has been doing over seven quarters. And you know
Speaker 3: we've had six quarters in a row of top line growth,
Speaker 3: of earnings leverage by having what we call positive jaws
Speaker 3: and improving profitability. You know, the Investment Bank produced greater
Speaker 3: than ten percent rot as did all our divisions. Now
Speaker 3: within that, I've always said we're running our own race,
Speaker 3: and we're running our own race and producing the numbers
Speaker 3: we wanted to. Quarter by quarter, some things will do
Speaker 3: better and something's worse. We're obviously pleased with our fake
Speaker 3: performance and we'd like to understand better how we can
Speaker 3: improve inequities. But I view this over many quarters, and
Speaker 3: so you know we're taking a long run, but you
Speaker 3: know we will look to do better in every segment
Speaker 3: every quarter.
Speaker 2: What do you think the answer is in equities? If
Speaker 2: that's the question you're asking, what do you think the
Speaker 2: answer could be?
Speaker 3: I think we need to continue to deepen our client franchise.
Speaker 3: We've been working on it, and improve the breath of
Speaker 3: our products. We've been at it. We're going to continue
Speaker 3: and we will see the results as we've seen in
Speaker 3: every other part of this bank.
Speaker 4: Ben Catt, It's creedy in London. Think of your time
Speaker 4: this morning was pivot from the equity picture to the
Speaker 4: credit picture if we can. There's been lots of warnings
Speaker 4: coming from the big US banks around cracks and private
Speaker 4: credit that could ultimately have broader effects. You have been
Speaker 4: in multiple seats at Barkley's, certainly as the chief risk officer.
Speaker 4: What are you seeing is are those worries warranted?
Speaker 3: Look, credit is something that you do over the cycle.
Speaker 3: I think you have to be extremely careful at all
Speaker 3: points in the cycle about you know who your client is,
Speaker 3: your client selection, the terms under you lend your concentrations,
Speaker 3: how much you lend industry sectors. We take this very seriously.
Speaker 3: We take this over the cycle. I mean, we had
Speaker 3: an exposure to try color. I'm obviously not happy about it.
Speaker 3: We're looking at what lessons we learned, and we have
Speaker 3: looked at it and applied it across our portfolio. But
Speaker 3: I think credit is one of those things that you
Speaker 3: take seriously. Doesn't matter whether it's so called private or credit,
Speaker 3: and who the lender is it is a full time,
Speaker 3: specialized job day in and day out.
Speaker 4: But then kat is it a systematic risk or is
Speaker 4: it still isolated? How should we be thinking about investments
Speaker 4: in private credit when firms like the one you just
Speaker 4: mentioned go bankrupt?
Speaker 3: So in that particular case, there seems to have been fraud.
Speaker 3: Now I should say that Barclay's had no exposure to
Speaker 3: First Frands, although we were approached multiple times by them.
Speaker 3: The thing about fraud is you wonder whether it is
Speaker 3: one bad actor or it is some effect of circumstances
Speaker 3: that are stretching the company's finances and making them take
Speaker 3: risks that they otherwise should or would not do. That's
Speaker 3: the kind of thing we look for, and that's what
Speaker 3: I think investors should be looking for over the next
Speaker 3: you know, months and quarters.
Speaker 1: Thank you, good morning. It's Annah sticking with this theme
Speaker 1: and channeling in some of the thoughts that we got
Speaker 1: from Andrew Bailey the Bank of England just yesterday. He
Speaker 1: and his team say that they're worried that the market
Speaker 1: is slicing and dicing loan structures like it's pre GFC,
Speaker 1: pre Financial crisis. Do you see similarities?
Speaker 3: Look, I think securitization technology has been with us for decades. Obviously,
Speaker 3: the governor and the central bank have a view of
Speaker 3: you know where and how much, And they're talking about
Speaker 3: a broader review, which is I think a good and
Speaker 3: prudent thing for any central bank to do.
Speaker 1: And they talk about alarm bells ringing. It doesn't sound
Speaker 1: like you're hearing alarm bells, Vanka.
Speaker 3: Look, as I said, we pay attention to credit with
Speaker 3: what we hope is the same amount of dedication all
Speaker 3: through the cycle. And when you do that, you try
Speaker 3: to be very disciplined about it.
Speaker 2: Okay, but how easy is it to be disciplined at
Speaker 2: the moments ces you talk about the fact that that
Speaker 2: Barclays is delivering on that. But this is a this
Speaker 2: is an industry wide issue, and we've learnt in the
Speaker 2: past that there can be problems in strange parts of
Speaker 2: markets that are hard to determine and that they can
Speaker 2: have significant ripple effects into into more mainstream banking. Are
Speaker 2: you being extra diligent right now? We've had years in
Speaker 2: which liquidity has been easy, We've had years in which
Speaker 2: underwriting standards have come down. Are you paying more attention?
Speaker 2: Are you looking at what you're doing more carefully now
Speaker 2: as we come to the end of this process, how
Speaker 2: much due diligence are you doing?
Speaker 3: So we do a lot of due diligence at all
Speaker 3: points in the cycle. And I think I would separate
Speaker 3: two things. Every time you make a lending decision, and
Speaker 3: you monitor those loans, whether it's in a good time
Speaker 3: in a cycle or a bad time in a cycle,
Speaker 3: assuming you knew it, you would always apply similar standards.
Speaker 3: So I think the important thing is to maintain standards
Speaker 3: through a cycle. And then if there are periods when
Speaker 3: you're worried more, then you may increase the frequency of
Speaker 3: your diligence and start looking at signs that you might
Speaker 3: otherwise have thought were normal. And so, as I said,
Speaker 3: what you're looking for at this point is our business
Speaker 3: model stretched. And you know what are the quality of
Speaker 3: financial controls and companies and the independence of financial controls.
Speaker 3: These are the things you worry about all the time
Speaker 3: and you pay extra attention to in periods of heightened concern.
Speaker 4: Let's sayin kin, I feel like every time we have
Speaker 4: you on the program, we always have to ask you
Speaker 4: about the IPO market in London. I'll do it again
Speaker 4: this time, but perhaps with a little bit of a
Speaker 4: twist connecting it to the private credit space. We're seeing
Speaker 4: deal making, We're seeing m and a activity start to
Speaker 4: pick up in the States. We're not seeing that same
Speaker 4: enthusiasm on this side of the pond, but we are
Speaker 4: seeing more mobilization when it come to private credit because
Speaker 4: it feels like the IPO route isn't one that's available
Speaker 4: to everyone. Does that make Europe more vulnerable to a
Speaker 4: risk in the private space than the public one.
Speaker 3: Well, I think the amount of private credit is of
Speaker 3: course much creator in the United States because it's a
Speaker 3: more advanced industry and developed there. But I want to
Speaker 3: sort of not talk about private versus credit. Public credit
Speaker 3: is credit is credit. I think as far as the
Speaker 3: IPO market goes, we on this desk behind us took
Speaker 3: part in an IPO yesterday of a UK bank Showbrook.
Speaker 3: I think you've seen some signs. It's obviously not as
Speaker 3: strong as it is in the US, and I do
Speaker 3: think in Europe as in the UK, and in fact
Speaker 3: the Governor mentioned this yesterday in the House of Lords,
Speaker 3: there has to be a continued growth in the equity
Speaker 3: risk culture of the country and hopefully with that you'll
Speaker 3: see more IPOs.
Speaker 1: Thank you very much. Thank you for joining us the
Speaker 1: Buntley CEOCSN categoration and with us to talk about the
Speaker 1: numbers and the credit market. Yes, really interesting to get
Speaker 1: his take on things we've heard from the US banking sector,
Speaker 1: an Indy from the Bank of England governor, his concerns
Speaker 1: around AI of course, and certainly yesterday talking about credit markets.