James Edward Staley - Barclays Plc Tushar Morzaria - Barclays Plc

Claire Kane - Credit Suisse Securities (Europe) Ltd. Joseph Dickerson - Jefferies International Ltd. Jonathan Pierce - Exane Ltd. Michael Helsby - Bank of America Merrill Lynch Andrew P. Coombs - Citigroup Global Markets Ltd. Martin Leitgeb - Goldman Sachs International Jason Napier - UBS Ltd. Edward Firth - Keefe, Bruyette & Woods, Inc. Christopher Cant - Autonomous Research LLP Robin Down - HSBC Bank Plc Tom Rayner - Exane BNP Paribas

Welcome to the Barclays' Q1 2018 Results Analysts Investor Conference Call. I now hand you over to Jes Staley, Group Chief Executive and Tushar Morzaria, Group Finance Director. James Edward Staley - Barclays Plc: Good morning, everyone, and thank you for joining this first quarter earnings call. 2018 is the first year in the last five, where Barclays began with a clean operating model. Our strategy is focused on improving profitability and increasing cash returns to our shareholders over time. And the performance we have reported today shows another quarter of successful execution against that strategy. Excluding litigation expenses, our transatlantic wholesale and consumer bank produced in the first quarter a group return on tangible equity of 11%. Within that trend, both of our operating businesses delivered double-digit returns, with Barclays UK at over 15% and Barclays International at over 13%. Barclays UK's underlying performance has been solid in this quarter. We grew our mortgage book by nearly £1 billion and had a strong (1:16) season with flows up around 35% year-on-year. Income is down, however, driven by non-repeating items including the Visa gain recognized in the first quarter of 2017 and the remediation charge which was booked in this quarter. We chose to increase investment in our leading position as a digital bank including in core technology enhancements and customer journey optimization, as well as expenditures on our branch closures. On the asset side of the business the mortgages is exposed to margin pressure, our NIM held up very well in the quarter at 327 basis points. And our strong position in deposit should benefit us as interest rates rise. We were also delighted to be the first of our peers to successfully stand up our ring-fenced bank on the 1st of April. So, nine months ahead of the regulatory deadline to do so. This was an enormous undertaking, effectively creating the largest de novo bank in this country's history and the thousands of colleagues who made that a reality deserves great credit. Both businesses within Barclays International, Consumer, Cards, and Payments and Corporate & Investment Bank produced double-digit returns in the first quarter. Specifically, the Corporate & Investment Bank had a return on tangible equity of 13% and this offset somewhat weakened profitability in the U.S. Cards business in the quarter, which was a result of prior year one-offs and planned increased marketing spend. Within at CIB, our markets business delivered a particularly strong performance, gaining market share for the second quarter running. This performance in markets is not just a product of market volatility, it's also a result of new management now in place, the technology investments that we are making, and the operating leverage that we have driven now evident in two consecutive quarters. Those improved returns are also in large part due to the success of our redeployment of low returning corporate lending risk-weighted assets to do better returning clients and products. In the second half of last year, we reallocated some £10 billion of risk-weighted assets from parts of the corporate loan book where it was earning single-digit returns through our markets business across credit, macro, and equity financing. And all of these businesses and markets produce returns comfortably above our cost of capital. In aggregate then, the story of this quarter is one which clearly demonstrates both the powerful earnings potential of the bank post restructuring and the benefits of the diversified model we have built. It shows that momentum is built and reinforces our confidence in meeting our group RoTE targets of greater than 9% in 2019 and greater than 10% in 2020, based on a CET1 ratio of around 13% and excluding litigation and conduct. Of course, the first quarter is seasonally strong, but I am encouraged that we are seeing progress in the areas which will bridge the gap to sustainably deliver those targets in 2019 and 2020. As I've said before, half of the improvement on our full year 2017 performance to reach our 2019 target will come from cost reduction, the decrease in legacy non-core drag and better balance sheet efficiencies as funding costs improve as we retire expenses legacy debt. The other half is expected to come from additional top line growth, spread roughly evenly between our consumer and wholesale businesses. On the consumer side, we expect U.S. Cards to continue to do well. JetBlue customer balances have more than doubled in size in the two years since we acquired that portfolio. In our American Airlines partnership, balances also continue to grow well. Initial take-up of the Uber Card since its November launch is encouraging. Over the next few years, we are projecting annual growth in total receivables of around 10% across co-brand and our own brand cards in the U.S. and we are investing in the business to capture that opportunity. Barclays UK will also target growth organically and particularly in mortgages, but we will remain focused on driving attractive returns rather than chasing market share. We will continue to enhance our leading position in digital banking to further enhance returns. And you have seen that yesterday, we announced a ground-breaking partnership with PayPal both here and in the U.S., which will see their technology integrated with our award-winning mobile banking app and other digital assets. Finally, modest improvement in our wholesale business is expected to be the last piece of the puzzle. We now have the leadership in place and technology investment underway to drive performance in our corporate and investment bank, and we are reallocating capital and balance sheet more productively. This has self-evidently been a good quarter for the investment bank. And what is important now is to ensure the sustainability of the improvement we're seeing and we're confident that we can. Reinforcing all of this, we are also benefiting from two significant tailwinds: the higher interest rate environment and U.S. corporate tax cuts. As I said, we have a clear path in our mind for how we get to our RoTE target and this quarter represents a positive step down that path. Another very significant piece of progress in the quarter was the agreement we reached with the U.S. Department of Justice to resolve issues related to the sale of residential mortgage-backed securities between 2005 and 2007. While the penalty was substantial, the settlement represents a major milestone for Barclays, putting a huge matter behind us which has hung over the bank for years. The fine we paid together with the PPI provision did impact capital by some 60 basis points. And combined with seasonally higher risk-weighted assets, this means that we have present a CET1 ratio of 12.7% for the quarter. However, given the earnings power of the group and our strong track record in capital management, we are confident that we can be back at around 13% in good time. Crucially, it remains our intentions to pay a dividend in 2018 of £0.065 and we look forward to returning an increasing amount of capital to shareholders, both through the annual buyback and by other means such as stock buyback. It's been a challenging few years for Barclays. We've had to actively make some difficult choices and engage in some formidable restructuring. Through non-core, we eliminated some £95 billion of risk-weighted assets, mostly in the investment bank, disposed of more than 20 businesses and exited operations in a dozen countries. And we have reduced costs since 2013 by some £6 billion. Today, we have a portfolio of diversified, profitable businesses, a clean operating model, a good capital position and we have eliminated most of our major historic litigation issue. Barclays UK and Barclays International have both produced attractive double-digit returns. And excluding litigation and conduct, this has actually been the highest quarterly return on tangible equity for Barclays in over four years. I'm therefore feeling positive about where we are today and for our prospects of continuing to execute successfully on the strategy we set out in March of 2016. Now, let me pass to Tushar to take you through today's results. Tushar Morzaria - Barclays Plc: Thanks, Jes. Our Q1 results represented a major step forward, achieving our objective of double-digit returns for the group as we reported an 11% group RoTE excluding litigation and conduct. Importantly during the quarter, we resolved a very significant outstanding conduct matter, the DoJ RMBS investigation. This resulted in a provision of £1.4 billion in the Q1 result. And we also took a further provision of PPI of £400 million, taking the remaining provision to £1.7 billion. In order to help you better understand the trends, we've included a slide in the appendix with these material items and other items of interest which I'll reference as I go through the results. In income, there was some negative effect from the non-recurrence of the one-offs of £290 million highlighted in Q1 last year, mostly in BI, while in cost, we had a reduction of around £50 million in SRP spend and a small positive effect from the compensation changes introduced in late 2016. The statutory attributable loss for the quarter included litigation and conduct provisions totaling £2 billion, which are largely non-tax deductible. So, the attributable profit excluding these was £1.2 billion, generating earnings per share of £0.071. The RoTE was in double-digits for BI and also for BUK, excluding litigation and conduct, and I would note that the CIB reported a 13% RoTE. Despite the head office drag, overall group returns were also in double-digits excluding conduct. Q1 does tend to be seasonally strong but the benefits of our diversification are showing through in the group returns. Income was down 8% overall, principally reflecting the non-recurrence of those one-offs in Q1 last year and the effect of the weaker dollar. Impairment was down 45%, reflecting single name recoveries in corporate lending and the effect of improved consensus economic forecasts principally in the U.S. where we see underlying credit conditions as broadly stable. After excluding conduct, we're down 6%, largely reflecting reduced costs from former non-core and the currency effects. More importantly, we are continuing to drive cost efficiencies, creating capacity for reinvestment. The group's cost/income ratio excluding conduct was 63%. The role of the (11:22), which we have named Barclays Execution Services or BX is critical in driving these efficiencies. A key step in our ring-fencing was completed on the 1st of April with the transfer of assets and liabilities into Barclays Bank UK PLC. PBT excluding conduct was up 1% despite the currency headwind. Effective tax rate reflected a reduction in U.S. rates implemented at the start of this year. And in addition, the group return benefited from a couple of small one-offs mainly in head office, but we are still guiding to a mid-20s ETR for the year overall. At the end of 2017, we reached a CET1 ratio of 13.3% and said that we intended to maintain the ratio above 13% pending resolution of key outstanding conduct issues. The resolution of RMBS has now taken the ratio to below 13% temporarily but we remain confident in our capital generation and intend to pay a £0.065 dividend for 2018 subject to regulatory approval as we focus on increasing capital returns to shareholders over time. Looking at the individual businesses now, starting with Barclays UK. BUK reported an RoTE excluding conduct of 15.7% for Q1. Income decreased 3%, reflecting two one-offs: non-recurrence of £24 million of the Visa gain from last year and remediation charges. Excluding these, income was broadly flat. NIM for the quarter was 327 basis points, down year-on-year due to the inclusion of ESHLA loan, but only slightly down on Q3 and Q4 and within our guidance range. We continue to exercise pricing discipline while growing our mortgage book, earning close to £1 billion of net balances, at margins which still earn attractive RoTE, adding to the £3.4 billion in the second half of last year. This growth is not just about pricing nor a shift in risk appetite. We continue to focus on our key processes such as our time to offer for residential mortgages which now averages 10 days across all channels with significantly lower figures for non-broker mortgages. Our guidance for full year NIM remains in the 3.20s and where we land within that range will depend on whether we see further rate rises before the backend of the year, as well as the competitive environment. Digital engagement among customers continues to take record levels with over 10 million digitally active customers, up 6% year-on-year and around 15% growth in active users of mobile banking, and we're very excited about the PayPal deal that Jes mentioned. Impairment increased by £23 million. This included a single name in business banking where we view underlying credit metrics as broadly stable. For example, in cards, 30-day and 90-day delinquencies were flat year-on-year at 2% and 0.9%. We continue to spend on the implementation of the UK ring-fence, but that will drop off following the launch of the ring-fenced bank on the 1st of April. We remain focused on cost efficiency, allowing reinvestment in areas critical to the evolution of the business, notably cyber resilience and digital. Overall costs, excluding conduct, were up 5% year-on-year, resulting in a cost/income ratio of 56%. But our aim remains to take the BUK cost/income ratio to below 50% over time as ring-fencing costs drop away and further cost efficiencies, including our ongoing investment in digital come through. Overall, BUK continues to have strong market positions across most products and we are able to exercise pricing discipline and prudent risk appetite while still delivering attractive returns. Turning now to Barclays International. BI delivered a Q1 RoTE of 13.6%, excluding conduct, with both CIB and CC&P contributing double-digit returns. With around half of BI businesses being U.S. dollar-denominated, the 12% year-on-year decline in the dollar was a significant headwind to profits and income and a tailwind to cost and impairment. I won't keep repeating this, but please bear in mind, income adjusted for the non-recurrence of the one-off gains which benefited Q1 last year was down 2%. Excluding the FX headwind, income was up 5%. Impairment decreased significantly with write-backs and improved economic forecasts, principally in the U.S., while costs were down by 6%. The PBT increase of 4% was a good performance given the FX headwind. Looking now in more detail at the BI businesses. The CIB delivered an RoTE of 13%. Although Q1 is typically a seasonally strong quarter, this was a very encouraging performance. Total income for CIB was up 1% to £2.8 billion with markets the standout performer. The markets income benefited by just £30 million from the legacy funding cost now reported in head office. And even allowing for this, we achieved solid income growth in sterling despite the dollar headwind. I'll (15:55) the dollar comparisons for each of the business lines through the comparison with U.S. peers. Markets income in U.S. dollars was up 21%, which reflected a very strong performance in equity of 43% on Q1 2017 and good performance in fixed, which is up 10%. As we flagged at full year with the combined credit and macro to give a fixed number in line with peers. Equity has improved performance significantly in Equity Flow Derivatives and Equity Financing in particular where additional leverage capacity was used productively. Within fixed, FX performed particularly well. Rates and credit experienced lower buying activities, but we were able to improve revenue share in a number of areas as Jes mentioned. Fixed income financing continues to be fiercely competitive, but our franchise is developing well, building on our top three global rankings of full year 2017 and returns remains attractive. Although the banking performance reflects the lower levels of issuance year-on-year, we gained global fee share in Q1 compared to Q4 to reach 4.5% and reported our second-highest quarter for banking fee income in sterling. Corporate lending income was down as lending balances reduced, reflecting the reallocation of RWAs within CIB. Our transaction banking was slightly up. Impairment was a net release of £159 million compared to a charge of £51 million last year. Just under half reflected a number of single name write-back and the rest was largely the result of improved economic forecast principally for the U.S., which informed our IFRS 9 impairment. After the further economics – after the further improvement in the economic forecast, I wouldn't necessarily expect those factors to repeat. Comps were down 8% principally reflecting the FX tailwind reduction in SRP costs and the reduced effect of the change on deferred compensation introduce at the end of 2016. We continue to create capacity to invest in the businesses and targeted areas and with the reallocation of RWAs in the corporate loan book into higher returning areas. Of course, the RoTE of 13% benefited from the net release of £159 million in the impairment line but the RoTE would still be double-digits without this. Moving on to CC&P, net receivables in U.S. costs grew by 10% year-on-year in dollar terms. American Airlines and JetBlue portfolios in particular have been growing well over the last few quarters and we have renewed a number of partnership agreements over the last year so that are around 70% of the partnership book is covered by agreement and last through to 2022. The usual seasonal dip in Q1 marked the underlying growth. The income decline was 7% excluding non-recurrence of the £266 million of one-off gains last year, which reflected the currency headwind and the effects on income and disposal of a subprime portfolio in Q1 last year. Excluding these factors, income grew 6% year-on-year. We saw a 10% increase in volumes of payments processed in the merchant acquiring business and secured a major contract with HMRC, which is expected to bring in significant volumes in the future. Impairment charge is down 15% reflecting the improvement in economic forecasts mainly in the U.S. offset by balanced growth and a modest increase in delinquencies. Despite this increase, we are comfortable with our estimate and particularly following last year's repositioning towards a lower risk balances. Cost increased by 4% seems to be reflecting business growth and investments, partly offset by currency tailwind and RoTE for the quarter was 15.6%. Turning now to Head Office. The Head Office results continues to be influenced by lumpy items some of which are hard to predict but are not significant for our long-term profitability. We mentioned that full year that we reflect some of the cost of legacy capital instruments in Head Office, which accounts for around £90 million of the negative income in Q1 and this will continue while these instruments remain outstanding. There's also technical charge from hedge accounting. This should come out in the range of £100 million to £200 million a year but only for the next couple of years. There are other treasury items that are unpredictable quarter-by-quarter, but in summary, I would expect negative income in the remaining quarters of the year but not at the level we have seen in Q1 and a reduction over time of legacy instruments are redeemed and hedges unwind. Costs in Head Office excluding litigation and conduct were £59 million. Although, the attributable loss of £192 million excluding conduct is a drag on group returns, the level of equity allocated to Head Office has been reduced significantly to £3 billion at the end of the quarter as we are now allocating to the businesses based on a 13% CET1 ratio. They will remain a drag but should be lower than this quarter and of course, it is the overall group returns that are our primary focus. Next, I want to make a few comments on impairment and the effects of IFRS 9, in particular. We knew in advance that because of the way IFRS 9 works, we will see some volatility in impairment charges particularly as some sense of economic forecast changed. While we have had little change in the UK forecast, we have had improvements in other regions notably for the U.S., affecting our International Cards and CIB businesses. It'll take a number of reporting periods to illustrate how these sensitivities and other effects of IFRS 9 see through, but we will try and help the market by giving a qualitative commentary. The overall impairment charge was down by £239 million. This is despite steady underlying delinquency performance across most portfolios. BUK charge was up 13% partly due to a single name charge. Delinquencies were roughly stable and there were no material changes in consensus forecasts. As I mentioned, the CIB reported a net impairment release of £159 million compared to the charge of £51 million in Q1 2017. This reflected some significant single name write-backs, which we would not necessarily expect to repeat. There was also the effect of improvements in economic forecast, notably in the U.S. Absent further changes in the economic forecast, we would expect CIB to return to modest levels of impairment, driven by single main charges of recoveries. In CC&P, there was also some benefit from improved forecast, this outweighed the effect of some underlying deterioration in delinquency trends and we are feeling comfortable with our risk mix in the U.S. Cards book. So while I'm not going to guide on the overall impairment charge, we would expect some of the one-off benefits reflected in Q1 to drop out. After clear improvement in economic forecast, we wouldn't expect impairment build for the rest of the year to be at Q1 run rate. If the forecast deteriorates, of course, IFRS 9 is designed to pick up such deterioration earlier in previous accounting. Before I finish with capital, I just want to add a few words on our cost trajectory. As shown on this slide, 6% reduction on Q1 cost base, excluding litigation and conduct. Cost efficiencies are providing the capacity to invest in growth areas, and you can see that clearly in CC&P, in particular. We continue to guide the 2019 costs, excluding litigation and conduct, in the range of £13.6 billion to £13.9 billion which is expected to deliver a group cost/income ratio below 60%. We haven't given guidance for 2018, but we clearly expect a level below the 2017 outcome. Moving on to our capital position. During Q1, we reached settlement with the DoJ and RMBS, which results in major uncertainty overhanging our capital position. We also made a further £400 million provision for PPI. For this quarter, litigation and conduct took a total of 61 basis points of our CET1 ratio, more than offsetting our capital ratio generation of 42 basis points from profits pre-dividends. We also increased RWAs by £4.9 billion in the quarter and saw a 10-basis-point headwind from the share awards that occur annually in the first quarter. As a result, the CET1 ratio reduced from 13.3% to 12.7%. It is below our end-plate target of around 13%, given our capital generation from profits, we expect to return the capital ratio to around 13% over time. We remain comfortable that our capital flight path from here will satisfy our regulatory requirements and generate capacity for attractive return to shareholders. We've reiterated our intention to increase the 2018 dividend of £0.065 subject to the usual regulatory approval and stress test outcome. Our spot UK leverage ratio ended the quarter at 4.8%, well above our required level. Finally, a quick word on TNAV. Of course, the RMBS settlement and PPI provision reduced TNAV in the quarter. TNAV was also reduced by the full initial effect of IFRS 9 of £0.13 as we flagged at full year and the reduction in the cash flow head reserve, which is excluded from CET1. The currency translation reserve also decreased before we hedged our capital ratio for currency moves. We've seen a more significant TNAV reduction in Q1 than in capital. However, with these issues and the major restructuring of the group behind us, we can now focus on accreting TNAV through our profit generation, net of the return of excess capital to shareholders over time. And I would stress that we expect to achieve our returns target on a TNAV level that's clearly higher than today's level. Now, to recap, we reported an 11% RoTE for the group excluding conduct and litigation in both BUK and BI contributing returns well above 10%. Although, Q1 is pleasingly strong, this puts us in a good position to deliver on our 2019 and 2020 RoTE target of greater than 9% and 10% respectively based on a CET1 ratio of 13%. We reached a settlement with the DoJ on RMBS removing a significant uncertainty that was overhanging the group. Despite the capital ratio moving temporarily below 13%, we are confident that the outlook of our capital flight path will allow us to satisfy capital requirement and deliver attractive return of capital to shareholders over time. We have reiterated our intention to pay a dividend of £0.065 for 2018 subject to the usual approvals. Thank you. And now we're happy to answer your questions. But I ask that you limit yourself to two questions each so that we get a chance to get around to as many of you as we can. Thank you.

Thank you, gentlemen. Our first question today, gentlemen, comes from Claire Kane of Credit Suisse. James Edward Staley - Barclays Plc: Hi, Claire. Tushar Morzaria - Barclays Plc: Hi, Claire. Claire Kane - Credit Suisse Securities (Europe) Ltd.: Hi. Good morning. So, my two questions. Firstly, on costs. So, you haven't changed the 2019 cost target given the FX tailwind you have and given you are running down 6% year-on-year already. And that target versus 2017 is only minus 2% to minus 4%. Now, just – I guess I can appreciate the FX benefit will fade, but just really could you give us some sense of – are you going to be much at the lower end of that range? And also, what's the likelihood that you could actually come within that range for this year for 2018? That's my first question. The second question is on the consumer cards and payments business. How should we think about the revenue margins going forward? Would we expect your revenue growth to lag your 10% balance growth and for that to be compensated through lower cost of risk? And also, could you update us really on what your broader plans are in the U.S. payment space given the announcement with PayPal? Thanks. Tushar Morzaria - Barclays Plc: Yeah. Thanks, Claire. Why don't I take the cost and touch on CC&P and Jes may want to add on some of the – what we're doing around payments. With cost, we're pleased with our cost performance. Obviously, we are benefiting from – on the cost line, I guess, a stronger sterling of course, as you guys are all aware. Unfortunately, a stronger sterling is less helpful to profit. So, I wouldn't necessarily take that in of itself as a positive and must prefer a weaker sterling. I think like as we've done in the past, Claire, we've only given specific guidance for 2019 as we get into 2019 and we see what currency rates prevailing then, we will moderate the objective accordingly. We've deliberately given a range of cost outcomes for 2019 just struck at the (28:25) historical rates. And the reason for that is I think is maybe just sort of your question if performance in our top line isn't as robust as we would like then we would, obviously, have the opportunity to drive cost lower. But we are keen on ensuring that we keep a healthy level of reinvestment back into the company and you can see that across all of our businesses. Jes will talk a little bit more about sort of payments and PayPal, but you can see that in some of the consumer-facing businesses that we have with card acquisitions. We talk about the automated processes that we have around mortgage approvals. On average we're approving mortgages within 10 days now and for a non-broker originated mortgages, it's substantially lower than that. We've put some productive investments into some of our re-trading platforms. So, we are keen on reinvesting back into the company, but doing that ensuring that our cost base is appropriately sized and certainly, intending to have a cost/income ratio of below 60% next year. In terms of CC&P very briefly, yeah, as the J curve for that business evolves, you would expect revenue growth slightly to lag receivable growth, but the businesses that are growing well for example some of the airline accounts whether it's JetBlue, Frontier, Hawaiian, American, these are really, really good accounts. And like JetBlue, I think, stumbled over the last couple of years. So, you will see those J curves, if you like, complete and go back into more if you like consistent or in fact revenue growth even outstripping them receivable growth, but it'd be a little while to come here. Jes, do you want to add any points on... James Edward Staley - Barclays Plc: I'm just going to give you an anecdote around the J curve. We started the American Airlines co-brand in the first quarter of 2017. You spend money in terms of advertising on inside the airline. You spend money in terms of having very attractive sign-on reward programs. In the first quarter of 2017 as we started we acquired 30,000 new consumer credit card clients through American Airlines. By the fourth quarter of 2017, that was up to 120,000 in that quarter. So, that's the growth rate that you can get, but it does require a marketing spend upfront and that's what gives you the J curve. So, it will be some time before revenues catch up with that 10% year-on-year growth rate in receivables. But I used to expect that that catch up to accelerate as we go through the end of 2018 beginning of 2019. Obviously, we're very pleased with the announcement with respect to PayPal, particularly here in the UK where we're connecting their payments platform into our banking app, which is I think perhaps the strongest banking app across the UK, connecting it to our mobile banking as well. We think this will be immensely beneficial to both PayPal and to Barclays, given the breadth of our 24 million consumers across United Kingdom. And given, I think there are significant market shares in the payment space. So, I think that's reflective of a new approach across technology, which is partnering, and we like this partnership with PayPal. In terms of the U.S., we are – we have been incrementally increasing our digital bank. As you know, we gathered a lot of retail deposits in the United States and bringing a relationship with PayPal, I think opens up opportunities for us in the United States as we want to grow that consumer footprint. Tushar Morzaria - Barclays Plc: Yeah. Just one other point before we go into the next question that was just pointing out on your question around CC&P and revenue growth. The other thing we look at very closely is just how jaws are performing as we grow that business. In Q4, jaws were broadly neutral and I'm referencing here, obviously, local currency because FX rate moves can cloud that a little bit. And jaws in Q1 were really only very slightly negative. So, we're again being very cautious in ensuring that we can grow that business but without experiencing at those jaws. I hope that's helpful. Can we take the next question, please, operator?

Our next question, Tushar, is from Joseph Dickerson of Jefferies. Joseph Dickerson - Jefferies International Ltd.: Hi. Good morning, guys. On my two questions, I guess the first one is on the hedge accounting that you've called out in the Head Office. And it seems like the second quarter in a row where the Head Office negative income has been quite material and your guiding to further negative income in that unit. I guess can you please explain in detail what precisely this hedge accounting drag is? And also, is it something new that cropped up, because it hasn't been flagged before? So, some detail there would be very helpful to think about in particular the trend going forward. And then, secondly on the iBank. So, there is a 64% cost/income ratio in the quarter in the investment bank, and, obviously, Q4 there are some Q4 inflation related to the UK. Is there a number we can think about going forward, obviously, subject to the environment remaining fairly, okay? And on that how much of the investment bank performance around that cost/income ratio both on the cost side and the income side relates to some of the specific actions you've taken around the balance sheet and committing capital to clients and how much of it would you say is – I know it's always difficult to do, but, obviously, you've spent a lot of time committing capital to customers over the past couple of quarters. How much of the move in the investment bank is specific to Barclays and how much is market? That will be very helpful for us. Thanks. Tushar Morzaria - Barclays Plc: Yeah. Thanks, Joseph. Why don't I cover the hedge accounting and just briefly touch on IB costs and then Jes can perhaps give you a bit more color on some of the drivers of our performance balance sheet versus market share, et cetera. What may be helpful for you is in terms of this year, as you are thinking about where Head Office may look over a full year, I'd say there's only two items on the top line that I would call out there, one of which you've probably already had in your models somewhere, but that's the legacy funding instrument that we've reported now in Head Office. That'll run as we called out about £90 million a quarter while those instruments are outstanding. Obviously, if we were to retire those instruments then that just drops out of the top line. The other component is hedge accounting, which I know will be new to many of you. I mean, in simplest terms, hedge accounting is all to do with the relationships we have between fair value hedges and our consumer or banking book businesses where we take the benefit of hedge accounting to show our P&L on a matched basis. When you break those hedge relationships, those built-up cash flow hedge reserves need to amortize back into P&L over time. And that's quite a technical accounting determination. On occasion, depending on exactly how those hedge relationships are broken, you'd recycle that P&L immediately, and under other occasions where you're portfolio hedging, you have to recycle that P&L back over the life of the original hedge, and that's what we're seeing here. The reason why you may not have seen it in the past is that I guess we've got less and less in Head Office, so the puts and takes that you would otherwise have are just fewer and really, it's only those two items that are essentially going through Head Office. I think for our full year, we've guided to somewhere between £100 million to £200 million for this year and possibly a similar quantum next year. Now, again, the path of this, they will reduce as obviously those hedges themselves unwind, but I would say that for modeling purpose think about that £90 million a quarter and think on a full year basis somewhere between £100 million and £200 million for those hedges for this year, and possibly again next year, but we'll try and do our best to keep you posted as to what to expect in the future. Beyond that at Head Office, there's really not much left. That's the very small remnants of non-core but nothing that we feel is significant enough to call out. The other point I would make then, of course, is that although Head Office of course is therefore a negative in terms of P&L and a drag on returns, we're very much focused on managing the group returns, and the double-digit return that we posted in the first quarter is something that we're very, very focused on. And a final comment on Head Office that maybe helpful for you on modeling purposes. As so far as capital goes, we are allocating capital to the businesses at a full 13%. So, we've got a slightly unusual scenario. We're running at 12.7% CET1 ratio for the group. So, we feel like we've over allocated capital relative to the group position, but we're very comfortable with that and sure (37:40) to make the appropriate returns assessment and marginal returns. Why don't I stop there and I hand over to Jes who can comment on the iBank one. Joseph Dickerson - Jefferies International Ltd.: Tushar. Tushar Morzaria - Barclays Plc: Yeah. Joseph Dickerson - Jefferies International Ltd.: Tushar, can I just ask, where was this £90 million impact from the legacy capital instruments booked before? Why is that being flagged now? You've been paying the 14% on those instruments for some time. Tushar Morzaria - Barclays Plc: Yeah. We haven't decided it just now. We talked about this at the full year results so that hopefully you had a chance to anticipate this that we would be reporting here. Where it was allocated, £30 million of it, we've called out, it was allocated to the markets business. The rest was proportionally allocated to the rest of the bank. The reason why we're sort of highlighting it now or sort of reporting it now is that these are instruments that are not really indicative of our marginal funding costs. We're not really paying anything like these levels to generate new funding. And, therefore, when businesses are making marginal decisions or just potentially make an incorrect decision – and we would be expected – you know the RCI that you're familiar with will come for a call next year. We've got the dollar pressing (39:06) there which of course we have a quarterly call feature in. So, these are probably transient in nature as well, and, therefore, it sort of gives you a sense of knowing when they drop out and what the effect of them may – effect they have. Joseph Dickerson - Jefferies International Ltd.: Excellent. Thanks. James Edward Staley - Barclays Plc: And Joseph, vis-à-vis the cost/income ratio, we stand – are very confident behind our target of getting that cost/income ratio below 60% in 2019. Obviously, with our mix of businesses, we have different contributors to that cost/income ratio. Our consumer bank we would expect to be in the low 50s, if not below that, and we were on our way to getting there. With respect to the Corporate and Investment Bank at 64%, you would expect a corporate and investment bank to run at a higher cost/income ratio than a retail bank. At 64%, we are very competitive with The Street. I think that underscores the fact that we have the scale to produce the revenues they want to and at a competitive profitability. In terms of your questions about the growth in markets and where it's coming from, the first thing is there has been a gain on our side of market share both the fourth quarter and the first quarter that our dollar revenues in the markets business was up 21%, whereas the U.S. banks on average were around 10%, and the European banks I'm sure you've seen. So, that was a strong performance on a relative basis. In terms of (40:31), where would you attribute that improvement from, as we've talked about, both Tim Throsby and myself, it's a function of people, technology and reallocation of risk-weighted assets and balance sheet. I think the people factor has been very important starting with Tim himself and the team that he's put together below him. Technology, we're about halfway through the re-engineering of our electronic trading platforms. The initial rollout was in the fall of last year around vanilla interest rate swaps and you can see in our Tradeweb market share presence around package trade and interest (41:12) swaps, our market share has grown 4x since we launched that electronic trading platform, and we have more to go as we go through 2018, but tech has clearly had an impact for us. And in terms of reallocating capital, what we talked about is in the second half of last year, we took £10 billion of risk-weighted assets that were in our corporate loan book that were generating in terms of those overall relationships RoTEs in the low single-digit, reallocated that £10 billion to our markets business between credit, equity financing and macro where we were generating at the marginal rate high teens, low 20% returns on tangible equity and you can do the calculation backing in of how does that improve our profitability. So, I would say overall that most of our performance in the first quarter was driven by the investment we've made in people, technology and better allocation of our risk-weighted assets. But obviously, everyone in the market benefited from improved conditions and this is a market that will show volatility, but we like the progress that we're making. Joseph Dickerson - Jefferies International Ltd.: Thanks. Tushar Morzaria - Barclays Plc: Thanks. Can we have the next question please, operator?

Our next question, Tushar, is from Jonathan Pierce of Exane. Jonathan Pierce - Exane Ltd.: Hi there, chaps. Two questions. The first is on the return on equity guidance. The second on the U.S. Card book. On the RoE, when you put the RoE guidance in place, the TNAV was £2.81 and you explicitly told us for planning purposes that was going up. Now since then, the TNAV's down 11% and I accept there's some acceleration of TNAV headwinds in the last few months, but it still looks like it's going to struggle to get back to £2.80 anytime soon. And then, of course, we've had the change in the U.S. tax rates. So I can understand why at full year you were reluctant to increase the RoE targets at that point, but why are we not seeing an increase in RoE guidance now? I mean, what has changed to maybe dampen your enthusiasm a little bit since Q3 on the numerator in this whole RoE equation? That's the first question, please. Tushar Morzaria - Barclays Plc: Yeah. Do you want to give us both of them, Jonathan, and we'll try and cover... Jonathan Pierce - Exane Ltd.: Yeah. Sure. The second question is on the U.S. Card book. I mean, I can see that delinquencies are flat in the first quarter and, clearly, U.S. books tend to be a bit more seasonal and assisted in Q1. But the formation of new NPLs in your U.S. book is clearly picking up I think, and I'm really wondering at what point would you stand back from your growth target for balances of 10% compound a year over the next few years. And I guess just a supplementary on that, you mentioned economic forecast changes in the U.S. and this is the first set of numbers we've seen where at least sort of changes in IFRS 9 having some impact. Can you give us a sense of the scale of what those change in the forecasts, the impact of that on the impairment charge in Q1 in the U.S. Card Book was, please? Tushar Morzaria - Barclays Plc: Yes. Sure. Thanks, Jonathan. So, let me take them in the order you gave them. I think in terms of a return on tangible equity guidance, if anything, we're more enthusiastic about our profit objectives than we were when we set those targets. You mentioned a couple of things that are beneficial, obviously, U.S. taxes are, of course, extremely helpful to us and what we've guided you to a lower tax rate, and you've probably flown that through. The rate environment looks still helpful. Currency rates are probably less helpful than we would like, but they'll be what they'll be. So, I think I certainly wouldn't make any suggestion or leave you with any sense that we're any less enthusiastic about our profit objectives. Now, how that translates into a return on tangible equity obviously is where tangible book will be. Now, you're right to call out that the two one-time effects, IFRS 9 and now conduct and litigation and stuff, we have some a sense of and as well as you do. Tangible book, absent those two things, it would have grown £0.07 just from profit redemption. But again, then, we've got two items that are very hard for us to forecast, the currency translation reserve and the cash flow head reserve. Of course, the cash flow head reserve is an interesting sort of item for us because it puts downward pressure on tangible book as rates back up, and of course that helps EPS. As rates back up, you can see how rate-sensitive we are. Asset movements in those sort of reserve items, we don't have the crystal ball on the currencies and rate levels in the future. Tangible book should grow from here principally from profit redemption net of any distributions out to shareholders. And hopefully, you'll see that on most people's numbers over this year and next year, tangible book appreciates very significantly. Now, to the extent that for whatever reason tangible book is lower than we anticipated – of course, if it's driven by interest rates and interest rates backing up, of course, that will help absolute profitability and certainly help absolute returns. And one of the things we're very keen on stressing rather than sort of updating the returns target so that every quarter for this kind of move is the stress that we are targeting greater than 9% and greater than 10% respectively on a higher tangible book. So, look, I hope that's helpful to sort of give you some sense of how we're feeling about the potential profitability of the company and really focused on driving that up. In terms of U.S. Cards, yeah, at the moment, we actually feel pretty comfortable with sort of credit conditions in the U.S. Delinquencies are up slightly, but relatively small increases on relatively low numbers and very much consistent with where we're seeing sort of peers in the U.S. Cards business operates. And you're right to point out that on the sort of the new accounting framework, we have seen a benefit to the U.S. economic environment. The two areas that sort of improved and it's really off the back of U.S. tax rates where there was structural revision. Particularly actually in HPI where there was some improvements there and some very modest improvements to GDP. And the thing that you'll get sort of more used to is you see further reporting period. It's only the baseline forecast scenario that you have to look at. You also look at the upside and downside scenarios. And actually, in the U.S., it was probably slightly more beneficial to the downside scenarios actually rather than the baseline and upside. And that's what resulted in a revision to our sort of expected life of impairment. So, at the moment, we feel pretty good with that. We feel that we're being paid very well on the risk, and the bulk of our partnership was of course, is sort of clustered around some of the bigger airlines, and they tend to be relatively high FICO scores. So, hopefully that helps you there as well. Is there anything you want to add, Jes, on that? James Edward Staley - Barclays Plc: No, I'm fine. Tushar Morzaria - Barclays Plc: Yeah. Okay. Thanks. Thanks, Jonathan. Should we take the next question, please, operator.

The next question, Tushar, is from Michael Helsby of Bank of America Merrill Lynch. Michael, please go ahead. Michael Helsby - Bank of America Merrill Lynch: Thank you. I've got two questions. But just before I ask my question, I just want to clarify a point that you made before on that centre. So obviously, there was negative £258 million in the first quarter. You've told us that £90 million of that was funding and you're guiding to £100 million to £200 million of hedge in effectiveness for the full year. So, it kind of implies that there's another big negative in the first quarter unless you're saying the actual hedging effectiveness is extremely small in the remaining quarters. So just to clarify, is that what you're saying or if it's not what you're saying, can you tell us what the other big negative was in Q1? So, it's more of a clarification. And then, my actual questions are on just back to the U.S. card book. I think delinquencies in credit card books are a little bit misleading given the pace of the charge-off that you typically follow. So, I was wondering if you could tell us what the charge off rates were in the U.S. Card book and how that actually changed quarter-on-quarter and year-on-year? And just linking into your PayPal deal, what's the economics of that? How should we think about it, and what's in it for you? And then, it'd be really helpful if you could just give us a comment on the momentum in the CIB as you've gone into Q2? Thank you. Tushar Morzaria - Barclays Plc: Yes. Thanks, Michael. I've probably not seen more than a couple of questions but that's okay. That's okay. Our Head Office clarification, yeah, it's important that we get this clear for you, guys. So, to your point, Michael, guiding to £90 million a quarter on legacy funding instruments, guiding to £100 million to £200 million for the full year in hedge accounting, and you're right to imply that that leaves a further negative in Q1, which I wouldn't expect to reoccur. That negative in Q1 is really a combination of two things and sometimes it will be positive, sometimes it will be negative. One is actual hedge ineffectiveness which is – there is no sort of predictability around that. We've had positive quarters. We've got negative quarters. But it will be translated to zero. And the net result from treasury operation which, again, we've had positive quarters and negative quarters and net-net translates, it will be zero. So, hopefully, that clarifies for you. Michael Helsby - Bank of America Merrill Lynch: Okay. Thank you. Tushar Morzaria - Barclays Plc: On the U.S. Cards, I'll just cover that briefly and then I'll hand over to Jes on CIB. And he may want to say something on PayPal. On US. .Cards, the charge-offs quarter-on-quarter, now, I don't think we've disclosed this for Q1, but it won't look that different from full year results. And I haven't got the annual report in front of me, so I'll get someone to refer you back to credit risk losses as we disclose them. But, essentially, it's fairly unchanged, I would say, and still feels a very attractive credit environment for us, but I take your point. I think as we go further, particularly in an IFRS 9 world, we may be more frequent in disclosing net charge-off rates. But in terms of year-on-year and sort of sequential quarter, Michael, it looks fairly well behaved and consistent with the risk appetite that we have when we thought we didn't quite well paid on that risk. Michael Helsby - Bank of America Merrill Lynch: Okay. Thank you. Tushar Morzaria - Barclays Plc: Jes, do you want to comment? James Edward Staley - Barclays Plc: Yeah. So, on the PayPal, we haven't set out actual economic numbers for The Street yet. But what I would say is given the market share that PayPal has in the UK and the sort of last mile of Payments Plus, we have 10 million consumers in the UK that bank with us electronically and we take our mobile app connected to PayPal, it just has enormous potential for us. So, I think as we work on the partnership going forward, we'll obviously start to give The Street some economic numbers as to the implication. Vis-à-vis the CIB, the comment I'd make there is we had pretty good performance across all three months in the first quarter. So, it was not a quarter made of one month and I'll sort of leave it at that as you think about that business going forward. Michael Helsby - Bank of America Merrill Lynch: Thank you. James Edward Staley - Barclays Plc: Thanks, Michael. Michael Helsby - Bank of America Merrill Lynch: So, just to push you on this PayPal, Jes, enormous is a very big word in more ways than one but, obviously, you're leading this as quite a material new relationship for the group. Is that how we should think about it? James Edward Staley - Barclays Plc: Yeah. I think it's important, yeah, given the scale of PayPal in the UK and given our scale, I think it's important. I don't want to get ahead of myself. And so, more to come. Michael Helsby - Bank of America Merrill Lynch: Okay. Thank you. Tushar Morzaria - Barclays Plc: Thanks, Michael. Can we have the next question please, operator?

The next question, Tushar, is from Andrew Coombs of Citigroup. Andrew, please go ahead. Andrew P. Coombs - Citigroup Global Markets Ltd.: Good morning. Firstly, I just want to come back to the CC&P business. I have a question and request on that one and then a second question. On CC&P, if I look at the provisions Q-on-Q, ever so slight dip, £259 million to £252 million, that's despite favorable effects on that line, you've had the positive U.S. model adjustment that you refer to. So, it does seem like the underlying trend is heading up, which would fit with some of the arrears and delinquency data that you've shown. So, can you just give us a feel of what the underlying increases in that book Q-on-Q. And my request would be, would it be possible to split out NII and fees for CC&P. Currently, you only played it for international. But given you're changing the business mix in that business to a lower risk approach, it would be very helpful for us to see the risk adjusted margin there. My second question is then on CIB, particularly the equity strength. You draw out financing in derivatives. Previously, you said during I think second half of last year, U.S. equity flow derivatives had been weak. You'd lost personnel, you'd replaced them. So, can you just give us an idea of how much of the improvement in equities is because that's come back online versus how much is some of the strategic initiatives underway like the electronic platforms and also, the corporate equity derivatives build that you've got underway. Thank you. Tushar Morzaria - Barclays Plc: Thanks, Andrew. So why don't I take the CC&P questions and I'll ask Jes to cover the equities point. On your request for splitting NII and fees, lets – fair point and we'll take it onboard and we'll have to think about that, but I understand why that request is there, so leave that with us. On the impairment trends, I think Michael might have touched on this as well and I probably didn't get around to answering it. The impairment build – and we haven't sort of broken out the, if you like, the effects of revisions to economic forecast and the sort of like-for-like, if you like, impairment build. I would say though, there wasn't anything unusual in this quarter. So, I think if you sort of go back onto, if you like, the old accounting standard it would be as you probably would have expected, there was nothing unusual that we'd call out. The delinquency trend which I appreciate somewhat can be a lagging indicators, as much as a predictive indicator were relatively very small pick-ups on a very stable sort of base. And that's how sort of underlying impairment would have looked as well. The book is growing but of course there's a seasoning effect before you get the impairments build on the book. And that seasoning effect, of course, comes with revenues as well. So, hopefully that sort of helps give you some context, and, Jes, do you want to cover CIB? James Edward Staley - Barclays Plc: Yeah. I wouldn't underestimate the impact when you bring new management team in like Tim, like Steve, et cetera. And there is a demonstrable commitment to the business. And then you couple that with the reallocation of risk-weighted assets that we talked about with providing some additional balance sheet. In terms of the electronic trading platforms around equity, that's actually more to come. We focus first on the rates and the currency side. Your comment about activity with corporates is very correct. And we also not only engaged with our traditional buyside clients, but also we're reengaging with our corporate clients and there are a couple of important transactions for us during the course of the first quarter. But I would say overall a lot has to do with our commitment to that business and we're feeling the results of that. Tushar Morzaria - Barclays Plc: Thanks, Andrew. Andrew P. Coombs - Citigroup Global Markets Ltd.: Thank you. Tushar Morzaria - Barclays Plc: Can we have – thanks, yes. Can we have the next question please, operator?

Our next question, Tushar, is from Martin Leitgeb of Goldman Sachs. Martin, please go ahead. Martin Leitgeb - Goldman Sachs International: Yes. Good morning. I have two questions and a very brief clarification, if I may. And my first question is on the Investment Bank. And this morning, one of your main competitors, Deutsche Bank, announced they are pulling back out of certain products. And I was wondering if you're seeing further scope for market share gain on the back of this? Is the investment bank currently the size you want it to be? Is this the new steady state going forward, or do you see further opportunities to invest on top what you have earmarked already and to deploy more capital into the Investment Bank? My second question is on London and London property and some of the recent data shows a weakening property market. And I think what's coming out of the postcode lending data is that Barclays is in particular exposed to the performance of the London housing market. Could you share what your expectations are in terms of the London property markets from here and how your book could cope in such a scenario? And, finally, the very brief clarification on PayPal, is this a brand-new agreement for PayPal, or is essentially PayPal switching from one bank to Barclays? Thank you. James Edward Staley - Barclays Plc: So, I'll take the IB question and pass the property question and PayPal one to Tushar. On the IB side, we are very comfortable that the capital that we have allocated to the Corporate and Investment Bank is sufficient for us to be the scale player that we are seeking to be and to deliver the services to our customers that we wanted to. I recently, in an interview, highlighted the CVS transaction and that, given our scale, we were able to write an underwriting check of $20 billion for that deal. The only three banks that have written a $20 billion underwriting check JPMorgan. I think your firm Goldman Sachs and Barclays. So, we have the capital allocated. With additional capital that this bank creates now what we want to do first and foremost is find areas in our consumer business which have the levels of profitability that we find attractive on a risk return basis. As you see we're doing today in the UK around our corporate bank and as we're doing today around our high-quality FICO score, co-brand cards in the U.S. So, we want to put additional capital into those consumer businesses. But perhaps even beyond that what we want to do as we generate excess capital is return it to our shareholders. And that's the real, I think, step function that we have to make. Increase the amount of capital that is flowing back to our shareholders. Tushar Morzaria - Barclays Plc: And Martin, on London real estate prices, residential real estate. Yeah, you're right, the postcode data shows a fairly, I guess a broad spread of postcode that are showing some declining in-house prices. I mean, for us, our loan-to-value stock is, I think, probably in the very low 60s. And the new production that we do tends to be again towards the slightly lower end of loan-to-value. Now our sweet spot is probably in the 80-ish percent or so. And it's something we pay a lot of attention to. We look at it very closely. We haven't changed really our risk appetite for a number of years. And most of the mortgage activity we have as we've said in the past, a lot of it is re-mortgage business. And that comes through broker channel. So, that's very helpful. And I think interestingly for London when you look at our stock of mortgages I talked about the overall loan to value of being in sort of the low 60s. For London, specifically, actually it's below 50%. So, we feel very well-positioned and still like that business and still prudently write new business. But as you can see from our loan to value stats, we're towards the cautious end of that spectrum. Regards to the PayPal, it's not rotating one bank to another one. This is a brand-new relationship with Barclays. It's transatlantic, as it's in the UK and the U.S. Early days, but PayPal are obviously a very serious player in global payments, we're obviously a very serious player in the UK in payments and increasingly so in the U.S., we're very excited about this tie-up. And I think there's going to be some very interesting business opportunities that we'll be talking about in the future that derives from this. Martin Leitgeb - Goldman Sachs International: Perfect. Thank you. Very much. Tushar Morzaria - Barclays Plc: Thanks, Martin. Can we have the next question please, operator?

Our next question Tushar is from Jason Napier of UBS. Jason, please go ahead. Jason Napier - UBS Ltd.: Good morning. Thank you. So, the first question was about CIB and I guess, we will come to our own views on where market revenues may well be in the second quarter. But in terms of two of the businesses that I guess notionally ought to be more stable, corporate lending and transactional banking, corporate lending looks to be perhaps suffering a little bit on the FX front and the reallocation of capital. And transactional banking is certainly stronger than I had expected. Could you give a sense as to whether you think the kind of first quarter run rates are dependable for those two items in terms of gearing to FX and to the changes in RWA allocation that you have previously flagged? And then secondly, just to try and be a little bit more explicit on mortgage pricing in the UK. I appreciate you've put on £1 billion in balances in the first quarter, but that looks considerably slower than what you managed in the fourth quarter or the third. Just wonder whether you could talk to whether that is down to flow pricing, whether as confirmed by the likes of Virgin, Lloyds and Royal Bank you are interested in having the market price higher to have a greater volume appetite at least as far as you're concerned. Thank you. Tushar Morzaria - Barclays Plc: Yeah. Thanks, Jason. In terms of the corporate lending and transactional banking lines, there's actually less foreign exchange exposure there. It's predominantly sterling based, it's really mostly UK clients and we're probably, if not the largest, certainly one of the largest corporate banks for UK businesses, those that are headquartered overseas that need access to sterling markets if it's a (65:25) corporate banking matter as well as domestic funds. The corporate lending line, you're right, has somewhat come down, principally because of rotating capital that's earning a very low return into other parts of the CIB where returns are more attractive. And we've made good progress on there but there's still a little bit more to go. So, there may be a little bit more downward pressure on that corporate lending interest line. Of course, if interest rates back up, there will be some sort of meeting effect there. Transactional banking is a good business for us. One of the things we like when we're talking to these large multinational corporations who – or we've got capital committed out to them we really want to earn a better return is could they give us more transactional banking business whether that's foreign exchange, trade finance, cash management, liquidity management, et cetera. And so, hopefully that business at least stays where it is and begins to tick up over time as well and somewhat driven, of course, by just general corporate activity, but not so much on foreign exchange. In terms of mortgage pricing, I think the key point to point out there is discipline for us. We're not going to chase pricing. We like the mortgages that we do. We like the returns that we do, but we're not going to chase pricing down. And I think £1 billion of net production – a touch lower, there's some seasonal aspects of that, as you'd imagine – we feel pretty good with. We have seen some margin pressure ease somewhat (67:02) from obviously swap rates easing up as well. But also, there's a lot of sort of discussion around with the term funding scheme coming to an end, will that have an impact on asset margin, and that may be driving a bit of it. And, of course, as we see asset margins stabilize or even improve, our returns for new business will continue to tick up and, of course, that'll be very exciting for us. The other thing I'd mention on the term funding scheme, of course, our loan-to-deposit ratio is a touch lower than some of our competitors. So, we probably won't be as – I won't use the word sort of squeezed or so, but perhaps we have a little bit more flexibility around liability pricing, and that may be of some advantage to us as well. Jason Napier - UBS Ltd.: Thank you. Tushar Morzaria - Barclays Plc: Thanks, Jason. Could we have the next question, please, operator?

The next question, Tushar, is from the line of Ed Firth of KBW. Ed, please go ahead. Edward Firth - Keefe, Bruyette & Woods, Inc.: Yeah. Good morning, all. Tushar Morzaria - Barclays Plc: Hi, Ed. Edward Firth - Keefe, Bruyette & Woods, Inc.: I just had two questions. One was just a quick one in terms of detail. I just wondered if you could give us the credit risk loan position for Q1. Unless I've missed it, I don't think that's in the announcement. So, that was question number one. And then question number two, I just wanted to ask you about the mix of business because – and how comfortable you are or whether you feel we should see the sort of similar levels going forward, because I think if our numbers are right, I guess around, what, 75% of your profits now come from the investment banking operation, which is up markedly on last year. And I guess sort of related to that, if I look at the business ex the investment bank, that has performed pretty poorly. I mean, I think earnings are down about 30%, something like that. I get what you say about the hedge, but I assume that is – a lot of that is going to be related to the banking operation. And you've now got a cost/income ratio in the investment bank which is below the rest of the group, which I would have thought is almost unique in banking. So, I just wondered if you could give us some kind of idea of how we should look at the sort of non-investment banking piece and how we should see that going forward. Tushar Morzaria - Barclays Plc: Thanks, Ed. On the CRL, credit risk loan, we haven't put them into the Q1 release. We tend to give price-sensitive disclosures at the full year and the half year. Obviously, with CRLs that will be accompanied by some more information around IFRS 9, probably staging and et cetera. You've seen some of that in our transition document. So, you won't find it in this quarter's release, but I think that using the annual report for now will still be a pretty good reference point and you'll get it again at the interims. Edward Firth - Keefe, Bruyette & Woods, Inc.: So, cover ratios, you – so just to be clear. So, cover ratios you think are broadly flat on the quarter. Tushar Morzaria - Barclays Plc: Yes, that's right. I mean, we – yeah. Edward Firth - Keefe, Bruyette & Woods, Inc.: Okay. Tushar Morzaria - Barclays Plc: There's nothing I would call out that's a significant change, yeah. Edward Firth - Keefe, Bruyette & Woods, Inc.: Great. Tushar Morzaria - Barclays Plc: And your second question around business mix, profit mix, cost/income ratio. Look, I'd say a few comments on that. One is, of course a business like the CIB has tremendous operating leverage. So, as you know, banking is a scale business in most regards, whether it's consumer banking or wholesale banking. And certainly within wholesale banking you can have quite powerful revenue generation over a shorter timeframe that provides very powerful positive operating leverage. I think you've seen that in the first quarter. With regards to the consumer businesses, I think profits are probably on a reported basis down, but I would just – I mean, they're obviously down, but there are some factors there that I wouldn't sort of point to being indicators of where the long-term profitability of those businesses are. So, if you take our UK bank, for example, top line was down but really it was down because we had a gain last year in the sale of the Visa preference shares, that's obviously non-recurring. And we had a remediation item that's actually negative income this quarter. So, underlying income is actually broadly stable and we're pleased with our performance given the asset margin compression that we're seeing year-on-year that I know looks like you guys track very closely. And our Consumer, Cards & Payments business, of course, you've got some fairly meaningful top line reductions, one driven from the one-off factors and the sale of the subprime portfolio as well as the income loss from the sale of that subprime portfolio, although the impairments, of course, would be very high as well there, as well as currency rates that bring that top line down. Underlying income actually in CC&P (71:41) base is actually up 6%, and of course we're growing that business. So, I think I wouldn't sort of just take this quarter and extrapolate out. I think there's a different balance to the group when you look into some of these effects. And the other thing I would say, we are growing the consumer business. There is new capital going into both the UK business and the CC&P business and that's something we're really keen on developing over time. So, (72:30)... Edward Firth - Keefe, Bruyette & Woods, Inc.: If I look at the – sorry, if I look at the non-CIB business, you made, what, £600 million in the first quarter last year and this quarter you made £400 million. And I'm just trying to get a sense as to whether we should – is that the sort of reduction that we should expect for the rest of the year? Tushar Morzaria - Barclays Plc: Yeah. Look, Ed, I'm not going to give you a profit forecast obviously. Edward Firth - Keefe, Bruyette & Woods, Inc.: Sure. Tushar Morzaria - Barclays Plc: And you probably weren't asking for that anyway. But I'd just encourage you to look through how we think NIM will develop, look through how we see the growth of CC&P develop, look through how we see the balance sheet of the UK business develop, the rate environment (72:50). So, I guess what I'm saying is we're actually quite optimistic about that business. I'm not going to give you profit guidance on that and I know that's not what you're looking for. But, hopefully, you're getting a sense from us that we like our positions in those businesses and we're looking forward to growing those businesses over time. Edward Firth - Keefe, Bruyette & Woods, Inc.: Sure. James Edward Staley - Barclays Plc: The only thing that I would add, Ed, is going back to March of 2016, the foundation of the strategy is to have a diversified business model and we want to have a balance between our consumer business and our wholesale business. We think that is the safest platform with which to run a scale bank like Barclays. And we want to deploy our capital in a way that gives us the proper balance. And any one quarter might swing one way to another, but the overall objective is to be balanced between our consumer and wholesale businesses. Edward Firth - Keefe, Bruyette & Woods, Inc.: And so, I know it's just the first quarter. So, Jes, would you feel that the sort of 74% coming from CIB is perhaps sort of overweighted this quarter – it normally is, I guess, in the first quarter towards the CIB, and we would expect a more balanced look through the rest of the year? Is that a fair assumption? James Edward Staley - Barclays Plc: I think it's fair to repeat what I said before which is that in terms of new capital allocation to businesses, right now, we would be putting that new capital into the UK and U.S. consumer businesses. Edward Firth - Keefe, Bruyette & Woods, Inc.: Right. Thanks very much. Tushar Morzaria - Barclays Plc: Thanks, Ed. Can we have the next question please, operator?

Of course, Tushar. The next question is from Christopher Cant of Autonomous. Christopher, please go ahead. Christopher Cant - Autonomous Research LLP: Hi. Thanks for the call. Two, please. If I could just push you on the earlier question on P&L per share coming down. You target 13% CET1 and you're at 12.7%. So, 30 bps of CET1 on your current RWAs will be about £1 billion of extra TNAV about £0.05 per share. That would get you to £2.56 per share. Even allowing for the unwind of the IFRS 9 transitioning which might be about another £1 billion over time, I just don't see how you would get anywhere near the old greater than to £2.81 per share guidance given your CET1 target unless you're planning to run meaningfully above 13% on CET1. And I understand that rates for driving cash flow hedge impacts which are hard to forecast quarter-to-quarter, but you were anticipating rate moves when setting your targets back in 3Q, you were expecting some rate rise benefits to come through. So, it feels like there is some offsetting negative on the numerator in terms of just reiterating rather than improving your RoTE guidance. And I get that you're stressing the more than 10% for 2020, which gives you scope to do better. So, it would still be the correct target, but why is it not also more than 10% in 2019 given the tax rate benefit from the roughly 10% decline in TNAV? What's your expectation at the 3Q stage? Tushar Morzaria - Barclays Plc: Yeah, Chris. A couple of points there. I think on the rate wise, it's actually the long-end of the curve that really affects the cash flow hedge reserve rather than sort of short rate. And that's obviously trickier to forecast. And yeah, we don't have – probably no one have the crystal ball on that. And as we said before, we like rates backing up generally if it's a good economy because that's more profitable for us. In terms of capital ratios, you sort of landed precisely on 13%. We've always said around 13% and we'll keep you updated as to what that level needs to be. Obviously if it's – we don't need to run any more capital than we need to, but I wouldn't necessarily just leave it at 13%. Although, I take your point that that's where the returns guidance was struck off (76:25). To the extent we generate additional capital over and above that we need to maintain our reg ratios. I think what we do with that capital that could also be accretive to both earnings and tangible book value. For example, if we were to repurchase shares that, obviously, would change TNAV as well. The point I really wanted to make at those when we talk of sort of step back if you just look at consensus generation of profits from here and not my number sort of just published consensus for the rest of the year and next year net of sort of, if you like, preannounced distribution. You get a much higher tangible book value than we have today. And that's how we think about where we believe the profit generation potential of the company is. And you're right to point out that we have some good tailwinds from U.S. tax rates possibly from interest rates. And we'll see where FX rates go. So, rather than trying to be too precise on modeling the sort of quarter in, quarter out, I think it gives you a sense of where our ambitions and profit objectives are for ourselves. Christopher Cant - Autonomous Research LLP: In terms of the consensus TNAV building, I mean know you didn't publish a consensus TNAV with the most recent consensus, but you did publish capital and consensus as you're building capital of 13.9% for 2020, which is obviously a long way above the circa 13%. I think that would be stretching the bounds of circa 13%. So, that doesn't really seem to square off with what you're telling us in terms of how you're calibrating your RoTE target. Tushar Morzaria - Barclays Plc: You're right. 13.9% is I wouldn't call that around 13%. It could be more like around 14%. But I guess I'd go back to, Chris, what do we do without excess capital if we were to reduce share count. Obviously, TNAV will change but – and if we have a lower TNAV, then we had when we were striking our target, we don't have any changing view about profit potential. If anything, a higher degree of confidence, given things that you mention for example U.S. tax rates, we expect returns to be better. But hopefully that gives you the context. Christopher Cant - Autonomous Research LLP: Okay. Thank you. And as a second one, could you please give us a sense of how much of the current £1 trillion of leverage exposure relates to the CIB please? And an update on how much would be the additional £50 billion of leverage capacity has now being deployed? Tushar Morzaria - Barclays Plc: Yeah. On the first one, let me put that in the request bucket. I understand why you've loved to see that and we'll consider that point. The £50 billion of leverage is largely deployed unlike risk weighted assets that are quite a great think to put to work. Okay? Christopher Cant - Autonomous Research LLP: On the CIB leverage though, I mean, if I think about your sort of relates the tangible equity point, you're reporting at 13% RoTE for the CIB today and that's based on about £30 billion or £20-something billion of allocated capital. If I think about what you said on leverage in the past that, at the Analyst Breakfast post-4Q, you said you expect the group to run with about 5% leverage ratio, that sort of ballpark. If we say that the CIB is about £800 billion of leverage capacity which, given the total assets for BBPLC are about £900 billion per slide 43, it feels like a right sort of ballpark. I appreciate I might not be getting that quite right, but the right sort of ballpark. I would imply much higher level of allocated capital for CIB on the leverage basis than you're using to your 13% RoTE statement. Tushar Morzaria - Barclays Plc: Yeah. So, we think of leverage, Chris, as I've mentioned in the past, very much, much as a backstop, not a frontstop. We will run the company and to be constrained on CET1 and that will be our primary measure of sort of bringing allocation of capital that's why we've sort of allocated enough, like 13% CET1. We have a diversified set of businesses in Barclays International, the legal entity and that allows us to optimize leverage capacity accordingly. Obviously, we have some consumer businesses which are very underleveraged but actually have a very high risk-weighted assets density and a bunch of wholesale businesses which obviously consume more leverage but generally lower risk-weighted assets density. We tend to use leverage in the aggregate as a backstop measure and CET1 is a frontstop measure. So pretty comfortable with the way we're allocating capital and therefore striking our returns. And the BI entity as a whole – yeah, Chris, the BI entity as a whole obviously on that measure add a comfortable double-digit return. Hey, Chris, just a bit conscious of trying to get others on the call as well. So, I know we're meeting later on. So, I appreciate your questions and we'll definitely spend more time with you when we have the usual breakfast with the analysts if that's okay. Christopher Cant - Autonomous Research LLP: Thanks. Tushar Morzaria - Barclays Plc: Thanks. Could we take the next question please, operator?

Our next question, Tushar, is from Robin Down of HSBC. Robin, please go ahead. Robin Down - HSBC Bank Plc: Good morning. Obviously people have been exploring the TNAV development, but can I just explore the Core Tier 1 development from here? I guess on the numerator side, are there any sort of one-offs or things that we need to be aware of going forward? I guess you'd probably take a hit if you call the preference shares, you'll still have (81:55) prefs in a few weeks but anything beyond that. And then, on the RWA side, my expectation was that BarCap RWAs would be kept broadly static with reinvestment out of the last corporate book and into the market business but obviously, the RWAs are moving up, I think the market RWAs were up reasonably noticeably within Q1. Can you give us some color about how you see that developing? Is that the function of sort of volatility we had in Q1? Will some of that come back or do you expect further growth from here? Thank you. Tushar Morzaria - Barclays Plc: Yeah. Thanks, Robin. On the uses of capital, yeah, where we to retire the U.S. dollar preference shares, we'd have to pay for that from capital as we've done it the past. So, we may or may not choose to do that as well as any other sort of perhaps a fair liability step that we take actions those that we do periodically. Not so much on the numerator, but once again, we've got the deconsolidation of Africa. That will be accretive to the ratio. In terms of other negative adjustments, though, I don't think too much on the horizon apart from discretionary uses of capital around things like LME. You mentioned BarCap for RWA. Just to remind folks, we don't really have a BarCap... Robin Down - HSBC Bank Plc: Sorry. Tushar Morzaria - Barclays Plc: (83:25) it's CIB... Robin Down - HSBC Bank Plc: I'm stuck in the past. Tushar Morzaria - Barclays Plc: Yesteryear. It's funny how names stick.. But, yeah, I know you mean the CIB. Think of CIB RWA, if you look at it year-on-year, Q1 2017 to Q1 2018, they're actually about flat. But if you look on sequential quarter, typically, we use more RWAs in the first quarter. It's just a busier timing market, and it's seasonally quieter timing market towards the end of the year. So, yeah, Jes just mentioned a number of times, CIB, RWA, and capital will stay where it is. But do expect the consumer businesses to be ticking up over time. Robin Down - HSBC Bank Plc: So... Tushar Morzaria - Barclays Plc: I know it's been going for... Robin Down - HSBC Bank Plc: ...should we expect the RWAs... Tushar Morzaria - Barclays Plc: Yeah. Sorry. Go on, Robin. Robin Down - HSBC Bank Plc: All right. Should we expect the RWAs to come back then a touch in the markets business in Q2? Tushar Morzaria - Barclays Plc: Yeah, look, I don't want to give quarter-by-quarter guidance but broadly stable on a year basis, definitely no net growth as we look on a trend basis. Robin Down - HSBC Bank Plc: Great. Thank you. Tushar Morzaria - Barclays Plc: I know we're coming up to about an hour and a half. So, shall we – and I think we've had a change to go around most people – should we make this the last question please, operator?

Our final question this morning, gentlemen, is from Tom Rayner of Exane. Tom, please go ahead. Tom Rayner - Exane BNP Paribas: Thank you. Thank you very much. It was an honor to be last. I just wanted to come back really to the CIB and comments, Jes, you made about the cost-income ratio at 64% leaves you competitive, gives you the scale to generate the sort of returns you need to make. Clearly Q1 is a strong revenue quarter certainly for the IB part of CIB and there is very much a mix if we – if you actually disclose the costs, I think we'd be able to see quite a difference between the cost/income between the Corporate and the IB or as Robin likes to say, the BarCap part of the business. I'm just trying to get a sense about how happy you are with the progress you've made in dealing with the costs and controlling the costs within what was the stand-alone investment bank part of the business? And then just as a supplementary just on the revenue. I mean, looking through your commentary, it looks as if the main positive versus perhaps expectations in Q1 was the equity derivatives driven by better sort of higher volatility and I think other investment banks have suggested that that was really a January-February phenomenon. By March some of that have already unwound. And I just wondered if that was something that you also saw that the real driver there had tailed away by the end of Q1. Thank you. James Edward Staley - Barclays Plc: Yes. So let me make a couple of comments. One thing that we sort of feel very good about is we took a quite a significant economic charge at the end of 2016 in order that we could align our comp accrual with our revenues. And I think given the volatility of CIB, having the ability to move your accrual – compensation with your accrual of revenues, I think, is very important, and we did that in the first quarter. So, we had a very nice revenue print in the CIB and we reflected that in the cost line. And I think that reinforces our comfort with the cost-to-income ratio that we see in that business. The other thing I would add is, we also stood up in the first quarter our service company that we call now Barclays Execution Services. The 82,000 employees of the bank – now, 55,000 are in that service company where we run processes through what we call transaction cycles across the entire bank. So, how we manage data is managed in that – in Barclays Execution Services across the consumer bank, the card business, the private bank, the wealth business, the corporate bank, and the investment bank. And running your core processes across the bank in a single entity allows you to extract very significant efficiencies and we look to extract those efficiencies now and in the next couple of years. So, it is what in fact is driving to that cost target of £13.6 billion to £13.9 billion in 2019. So, we've got greater correlation between comp and revenue. We also have efficiencies coming out of that service company, which we think is a unique organizational model amongst major banks. And I'd leave it at that. Tushar Morzaria - Barclays Plc: Thanks, Tom. And thank you... Tom Rayner - Exane BNP Paribas: And – sorry, Tushar, just on the revenue and driver of the equity derivatives volatility issue. Tushar Morzaria - Barclays Plc: Oh, right. Yeah. Yeah. So, I think as Jes mentioned earlier in the call, obviously, there was more volt in markets in February, and that's helpful to our business. But, I mean, Jes has mentioned earlier in the call that we sort of had a sort of steady performance across all three months rather than sort of one month making the quarter. And I hope that gives you the context. It's obviously not talking about Q2 trading. Tom Rayner - Exane BNP Paribas: No. Tushar Morzaria - Barclays Plc: I won't say any more than that, but hopefully that's helpful. Tom Rayner - Exane BNP Paribas: Okay. Yes. That'll be it. Thank you. Tushar Morzaria - Barclays Plc: Okay. Thanks, Tom. Tushar Morzaria - Barclays Plc: And thanks, everybody, and so many of you, hopefully, we'll see on the road over the next couple of weeks. Thank you.

Thank you. That concludes today's conference.