Half Year 2025 Barclays Bank PLC Earnings Call

Operator: I will now hand over to C.

Speaker: S.

Venkatakrishnan: Venkatakrishnan, Group Chief Executive, before I hand over to Anna Cross, Group Finance Director. Good morning, everyone. Thank you for joining Barclays' second quarter 2025 results call. I am very pleased to announce very strong results for this quarter. Income grew by 14% year-on-year to £7.2 billion. Profit before taxes grew by 28% to £2.5 billion. And earnings per share grew by 41% to £11.7 billion. Return on Tangible Equity was 13.2% in the first half of the year and 12.3% in the quarter. This compares to 11.1% in the first half of 2024 and 9.9% in the second quarter of last year.

Welcome to Barclays' half-year 2025 results analyst and investor conference call. I will now hand over to CS Venkatakrishnan, Group Chief Executive, before I hand over to Anna Cross, Group Finance Director.

Good morning, everyone. Thank you for joining Barclays for the second quarter 2025 results.

I'm very pleased to announce very strong results for this quarter.

Income grew by 14% year on year to £7.2 billion. Profit before taxes grew by 28% to £2.5 billion, and earnings per share grew by 41% to £11.7.

Venkatakrishnan: Cost-income ratio at 59% in the second quarter is a 4.0 percentage point improvement versus last year. This performance drove an 8th consecutive quarter of growth in tangible book value per share, now to 384%. and it has driven strong capital generation with a CET1 ratio of 14%. As a result, we are announcing a one billion pound buyback today up from 750 million pounds in the first half of 2024, and we expect to initiate this in the coming days. And we are also announcing a dividend per share of three-tenths. This total of 1.4 billion pounds of shareholder distributions for the first half of 2025 is up 21% year-on-year.

Return on Tangible Equity was 13.2% in the first half of the year and 12.3% in the quarter. This compares to 11.1% in the first half of 2024 and 9.9% in the second quarter of last year.

The cost-income ratio at 59% in the second quarter represents a 4 percentage point improvement versus last year.

This performance drove an 8.

Consecutive quarters of growth in tangible book value per share, now at 384 p. This has driven strong capital generation, with the CET1 ratio at 14%.

As a result, we are announcing a £1 billion buyback today, up from £750 million in the first half of 2024, and we expect to initiate this in the coming days.

And we are also announcing a dividend per share of 3 pence.

Venkatakrishnan: And we expect our distributions to continue to build progressively, supported by increasing capital generation.

This total of £1.4 billion in shareholder distributions for the first half of 2025 is up 21% year on year.

And we expect our distributions to continue to build progressively, supported by increasing capital generation.

Venkatakrishnan: These strong results mark the midpoint of our three-year plan to deliver a better run, more highly performing, and higher returning box. I'm very pleased with the group's operational and financial progress so far. We remain committed to and confident in achieving the full objectives of this plan, and this includes a return on tangible equity. of circa 11% in 2025 and more than 12% in 2020.

These strong results marked the midpoint of our three-year plan to deliver a better run, more highly performing, and higher returning power.

Financial progress so far.

We remain committed to and confident in achieving the full objectives of this plan. This includes a return on tangible equity.

of Circle 11% in 2025 and more than 12% in 2026.

Venkatakrishnan: By design, our plan is delivering operational improvements across each of our divisions to drive structurally higher and more consistent group returns in 2026 and beyond. In the second quarter we achieved a further 200 million pounds of growth efficiency savings or 350 million for the first half of 2025. This is good progress against our target of circa 500 million for the year. All of our divisions generated a double-digit ROTE in the second quarter. This includes a 2.6 percentage point year-on-year improvement in the investment bank's ROTE to 12.2 percent and a 1 percent improvement in the U.S.

By design, our plan is delivering operational improvements across each of our divisions to drive, structurally, higher and more consistent group returns in 2026 and beyond.

In the second quarter, we achieved a further £200 million of growth efficiency savings.

Or $350 million for the first half of 2025.

This is a good progress against our target of $500 million for the year.

All of our divisions generated a double-digit ROTE in the second quarter.

Venkatakrishnan: consumer bank ROTE to 10.2 percent.

Venkatakrishnan: Before handing over to Anna to take you through the results in more detail, let me share a few reflections on our progress at the midpoint of our plan. I'm very pleased with what we have achieved so far. Our three-year plan set out in February 2024 outlined a road map to produce higher and more balanced We have seen the value of clearly articulating our targets and capital framework, the value of providing transparency for shareholders, and the value of driving accountability and disciplined execution internally. I would stress that our 2026 targets were never intended to be a resting place, and nor do they represent the extent of our ambition for ROTC capital distributions, nor the proportion of group capital allocated to the investment bank.

This includes a 2.6 percentage point year-on-year improvement in the investment bank's return on equity (ROTE) to 12.2% and a 1% improvement. In the US, consumer bank ROTE increased to 10.2%.

Before handing over to Anna to take you through the results in more detail, let me share a few reflections on our progress at the midpoint of our plan.

I'm very pleased with what we have achieved so far.

Oh, a 3-year plan set out in February 2024 outlined a road map to produce higher and more balanced returns.

We have seen the value of clearly articulating our targets and capital framework, the value of providing transparency for shareholders, and the value of driving accountability and disciplined execution internally.

Venkatakrishnan: We are executing against our plan, as we said we would, resulting in higher shareholder returns. And the momentum which we are seeing across the group positions us well to deliver our ROTE guidance and targets by continuing to drive income growth, by increasing operating leverage and with our business mix changes. Since 2023, we have deployed £17 billion of business growth risk-weighted assets into our UK-biz-focused businesses, Barclays UK, the UK Corporate Bank and Private Bank and Wealth Management. This includes £10 billion from organic growth. This organic progress and the acquisition of Tesco Bank means that we have now deployed more than half of the planned £30 billion by 2026.

I would stress that our 2026 targets were never intended to be a resting place and nor do they represent the extent of our ambition for rote capital distributions, nor the proportion of group capital allocated to the Investment Bank.

We are executing against our plan, as we said we would, resulting in higher shareholder returns.

And the momentum we are seeing across the group positions as well to deliver our route guidance and targets by continuing to drive income growth by increasing operating leverage. And with our business exchanges,

Since 2023, we have deployed 17 billion pounds of business. Growth risk created assets into our UK bis focused. Businesses sparkly is UK the UK corporate bank and private bank and wealth management. This includes 10 billion pounds from organic growth.

This organic progress and the acquisition of Tesco Bank means that we have now deployed more than half of the planned £30 billion by 2026.

Venkatakrishnan: Within the investment bank, we have intentionally kept RWA stable for three and a half years. This is driving efficiency and productivity. and to ensure that the division is a consistent source of capital generation for the group. I'm very pleased with the performance halfway through the plan, with annualized income growth of 9% since 2023, in line with the division's high single-digit growth target.

Within the Investment Bank, we have intentionally kept RWA stable for three and a half years. This is driving efficiency and productivity.

and to ensure that the division is a consistent source of capital generation for the group.

Venkatakrishnan: I think about the investment bank's performance through two lenses, structural and cyclical. Structural improvements in the business are driving broader and deeper client relationships and they are supporting income in a range of environments. A good example of this progress is now market strength. where we now rank top five with 60 of the top 100 clients in the business. This is well on our way to our target of 70 by 2026, up from 49 in 2023. By strengthening our institutional client franchise, we have increased market share in our three focus businesses by more than one percentage point during 2024 and with good momentum since.

I am very pleased with the, uh, performance halfway through the plan, with annualized income growth of 9% since 2023, in line with the division's high single-digit growth target.

I think about the investment bank's performance through two lenses: structural and cyclical.

Structural improvements in the business are driving broader and deeper client relationships, and they're supporting income in a range of environments.

A good example of this program is in our markets franchise, where we now rank in the top 5 with 60 of the top 100 clients in the business. This is well on our way to our target of 70 by 2026.

Up from 49 in 2023.

By strengthening our institutional client franchise, we have increased market share in our three focus businesses by more than 1 percentage point during 2024, and with good momentum since then.

Venkatakrishnan: and in financing. Good momentum of client onboarding and balanced growth contributed to a 23% year-on-year increase in income in U.S. dollar terms in the second quarter, with particular strength in prime. So stable income streams now account for 40% of the investment bank's income in the past year, up from 29% in 2021. From this structurally stronger base, the investment bank is also better positioned to monetize cyclical market activity by helping clients to manage volatility. as we demonstrated in the early part of the second quarter of this year. This cyclical activity is included in traditional areas of strength for us, such as credit and macro, and also in new areas of strength, such as equity derivatives and prime.

and in financing,

Good momentum of client onboarding and balanced growth contributed to a 23% year-on-year increase in income in US dollar terms. In the second quarter, we saw particular strength in Prime.

Stable income streams now account for 40% of the investment bank's income in the past year, up from 29% in 2021.

From this structurally stronger base, the Investment Bank is also better positioned to monetize cyclical market activity by helping clients to manage volatility.

As we demonstrated in the early part of the second quarter of this year,

This cyclical activity is included in traditional areas of transfer us.

Such as credit and macro, and also new areas of strength such as equity, derivatives, and prime.

Venkatakrishnan: Our work is not finished. With the ongoing execution of our plan, we will continue to produce structurally higher and more consistent returns for our shareholders.

Going forward, we will continue to produce structurally higher and more consistent returns for our shareholders.

Anna Cross: And with that, over to Tana to take us through the second.

And with that, over to Tana to take us through Q2.

Anna Cross: Thank you Venkat and good morning everyone. Slide 5 summarises the financial highlights for the second quarter and first half of 2025. Before going into the detail, I would remind you how our results are affected by FX rates. The year-on-year performance in Q2 was impacted by a weaker U.S. dollar, which decreased our reported income, costs, and impairments. I'll call out these effects where appropriate. The group delivered a Q2 ROTI of 12.3% against the previous year's 9.9%. Excluding the effect of last year's business disposal losses, income rose 9% with growth across all divisions, while our efficiency actions led to another quarter of positive journals of 4%.

Thank you, Xena, and good morning, everyone.

Slide 5 summarizes the financial highlights for the second quarter and first half of 2025.

Before going into the detail, I would remind you how our results are affected by FX rates.

The year-on-year performance in Q2 was impacted by a weaker U.S. dollar, which decreased our reported income costs and impairments.

I'll call out these effects where appropriate.

The Greek delivers a cutie Roti of 12.3% against the previous year's 9.9%.

Excluding the effect of last year's business, disposal losses, and income rose 9%, with growth across all divisions. While our efficiency actions led to another quarter of positive jaws of 4%.

Anna Cross: Profit before tax increased by 28% year-on-year to $2.5 billion and our earnings per share grew 41%, supported by the effect of share buybacks. As ever, I am focused on four aspects of performance, income stability with an emphasis on growth, credit performance and a robust capital position. By focusing on these four building blocks, we are now driving higher returns on a sustainable, predictable and consistent basis. And from this strong foundation, I am now looking for signs of increasing momentum across our businesses, which I'll call out as we go, starting on slide seven. Income in Q2 increased 14% year-on-year to $7.2 billion.

Profit before tax increased by 28% year-on-year to $2.5 billion, and our earnings per share grew 41%, supported by the effect of share buybacks.

As ever, I am focused on four aspects of performance: income stability, with an emphasis on growth.

Cost discipline and progress on efficiency savings.

Credit performance and a robust capital position.

By focusing on these four building blocks, we are now driving higher returns on a sustainable, predictable, and consistent basis.

And from this strong foundation, I am now looking for signs of increasing momentum across our businesses, which I'll call out as we go, starting on slide 7.

Anna Cross: We grew stable income streams by 13% year-on-year, supported by sustained retail and corporate NII growth, and 15% growth of financing income within markets. elsewhere in the investment bank, our multi-year investment meant we were well positioned to help clients navigate volatility in April and throughout the quarter. Group net interest income increased 12% year-on-year in Q2 to $3.1 billion. Stable deposits for the group supported continued reinvestment of the structural hedge alongside lending momentum. Within this, we have consistently taken market share in UK corporate bank deposits and lending since 2023 and year to date. And in Barclays, UK, we maintained our share in current accounts and chose to remain disciplined on term deposit pricing in the quarter amid strong competition.

Income in Q2 increased 14% year-on-year, to $7.2 billion.

We grew stable income streams by 13% year-on-year, supported by sustained retail and corporate NII growth and 15% growth of financing income within markets.

Elsewhere in the Investment Bank, there are multi-year investments. We were well positioned to help clients navigate volatility in April and throughout the quarter.

Group net interest income increased 12% year on year in Q2 to $3.1 billion.

Stable deposits for the group supported continued reinvestment of the structural hedge alongside lending momentum.

Within this, we have consistently taken market share in the UK corporate bank, deposits, and lending since 2023 and year-to-date.

And in Barclays UK, we maintained our share in current accounts and chose to remain disciplined on term deposit pricing in the quarter amid strong competition.

Anna Cross: The overall stability of deposits will support growth of the structural hedge income as we show on slide 9. Income from the structural hedge is material and predictable and underpins our confidence in delivering NII guidance for the Group and Barclays UK in 2025. And beyond 2026, we currently expect the Structural Hedge to deliver multi-year NII growth. We have now locked in £11.1 billion of gross structural hedge income in 2025 and 2026, up from £10.2 billion last quarter. As we said in April, our plan assumes that we reinvest 90% of maturing hedges at a 3.5% yield. In each case, the Q2 outcome was more favourable than these assumptions.

The overall stability of deposits will support the growth of the structural hedge income, as we show on slide 9.

Income from the structural hedge is material and predictable, underpinning our confidence in delivering guidance for the group and Barclays UK in 2025.

And beyond 2026, we currently expect the structural hedge to deliver multi-year NII growth.

We have now locked in $11.1 billion of growth. Structural hedge income in 2025 and 2026 is up from $10.2 billion last quarter.

As we said in April, our plan assumes that we reinvest 90% of maturing hedges at a 3.5% yield.

Anna Cross: On rates we locked in hedges at a higher rate at circa 3.7% and we kept hedge balances flat as you can see on slide 35 in the appendix reflecting the continued stability of hedgeable deposits.

In each case, the Q2 outcome was more favorable than these assumptions.

Anna Cross: Moving on to costs. The Group Cost-to-Income Ratio was 59% in Q2, down 4 percentage points year-on-year. Total costs increased by $219 million year-on-year, or 5%, which includes a circa $100 million increase in investment costs, mainly from the acquisition of Tesco Bank and associated integration costs. The effects of business growth, inflation and other investments on the cost base were largely offset by gross efficiency savings. Structural cost actions in the first half were around $100 million, down slightly versus H1-24. Looking ahead, we expect structural cost actions to be skewed towards the second half of the year, and to be towards the top of the $200 million to $300 million normal annual range.

On rates, we locked in hedges at a higher rate at circa 3.7%, and we kept hedge balances flat. As you can see on slide 35 in the appendix reflecting the continued stability of hedge deposits.

Moving on to costs.

The group cost-to-income ratio was 59% in Q2, down 4 percentage points year-on-year.

Position of Tesco Bank and associated integration costs.

The effects of business growth, inflation, and other investments on the cost base will largely be offset by gross efficiency savings.

Anna Cross: Inclusive of these costs, we remain well positioned to deliver a circa 61% cost-income ratio in 2025, in line with guidance, and a high 50s target in 2026.

Structural cost actions in the first half were around $100 million, down slightly versus H1 2024. Looking ahead, we expect structural cost actions to be skewed towards the second half of the year and to be towards the top of the $200 million to $300 million normal annual range.

Inclusive of these costs.

Anna Cross: Turning now to impairment. The Q2 group impairment charge of $469 million equated to a loan loss rate of 44 basis points. The UK credit picture remains benign, with low and stable delinquencies in our consumer books and wholesale loan loss rates below our through-the-cycle expectations. The Barclays UK charge was £79 million in Q2, resulting in a loan loss rate of 14 bits. The improvement versus Q1 reflected a release of credit card provisions and diminishing post-acquisition stage migration effects for Tesco Bank balances. The U.S. Consumer Bank impairment charge of $312 million was stable year-on-year, and down 22% versus last quarter.

We remain well positioned to deliver a 61% cost-income ratio in 2025, in line with guidance, and the high 50s target in 2026.

Turning now to impairments.

The Q2 group impairment charge of $469 million equated to a loan loss rate of 44 basis points.

The UK credit picture remains benign, with low and stable delinquencies, and our consumer books and wholesale loan loss rates below U.S. through-the-cycle expectations.

The Barker's UK charge was £79 million in Q2, resulting in a loan loss rate of 14 basis points.

The improvement versus Q1 reflected a release of credit card provisions and diminishing post-acquisition stage migration effects for Tesco Bank balances.

The U.S. consumer bank impairment charge of $312 million was stable year-on-year and down 22% versus last quarter.

Anna Cross: The acquisition of General Motors' card balancers is expected to lead to a circa 100 million day one charge in Q3 and a post-acquisition stage migration charge of circa 50 million for the next few quarters from Q4. Including this charge, we continue to expect a group loan loss rate within the through-the-cycle guidance of 50 to 60 basis points for FY 2025.

The acquisition of General Motors Card balances is expected to lead to a circa $100 million Day 1 charging in Q3 and a post-acquisition stage migration charge of circa $50 million for the next few quarters from Q4.

Including this charge, we continue to expect a group loan loss rate within the through-the-cycle guidance of 50 to 60 basis points for FY 2025.

Anna Cross: Focusing on the U.S. Consumer Bank, 90-day delinquencies were stable in the quarter, whilst 30-day delinquencies fell 20 basis points to 2.8%, consistent with normal seasonal trends. The loan loss rate of 456 basis points increased by 18 basis points year-on-year, reflecting modestly higher write-offs. Consumer behaviour remains resilient, with payment rates in our book above pre-COVID levels and consistent with Q1, and a stable mix of new account acquisitions, as can be seen on slide 39 in the appendix.

Focusing on the US consumer bank, 90-day delinquencies remained stable in the quarter. While 30-day delinquency increased 20 basis points to 2.8%, this is consistent with normal seasonal trends.

The low loss rate of 456 basis points increased by 18 basis points year on year, reflecting modestly higher write-offs.

Anna Cross: I said I would highlight signs of increasing momentum which we are seeing, so turning to our UK businesses on slide 13. We are on track to deploy $30 billion of business growth RWAs in the UK by 2026, having achieved $17 billion so far, including $10 billion organically. During 2024, the three UK businesses delivered circa £1.5 billion of organic business RWA growth per quarter on average. This has accelerated to circa £2 billion per quarter in half one 2025. Given the momentum that you can see on the slide, we expect this growth to continue. Mortgage balances have grown for the past four quarters and strong purchase activity continues to support resilient demand.

Consumer behavior remains resilient, with payment rates in our book above pre-COVID levels and consistent with Q1, along with a stable mix of new account acquisitions. As can be seen on slide 39 in the appendix.

I said I would highlight signs of increasing momentum, which we are seeing.

So, turning to our UK businesses on slide 13.

We are on track to deploy $30 billion of business growth RWAs in the UK by 2026, having achieved $17 billion so far, including $10 billion organically.

During 2024, the 3 UK businesses delivered circa $1.5 billion of organic business RWA growth for the quarter on average.

This has accelerated to circa $2 billion for the quarter in the first half of 2025.

Given the momentum that you can see on the slide, we expect this growth to continue.

Anna Cross: This includes stronger demand for higher LTV products, including through Kensington, where application margins are around four times higher than comparable Barclays-branded mainstream mortgages. In credit cards, the organic acquisition of 1.6 million customers in the past 18 months has supported consistent balance growth. and we expect this to lead to higher interest earning lending from half to 2025 as promotional balances mature. Core business banking lending has started to inflect, with a headwind from Covid-era loan repayments diminishing. This growth has been supported by £1.6 billion of loans provided to UK business banking customers in half one, up 50% year on year.

Mortgage balances have grown for the past four quarters, and strong purchase activity continues to support resilient demand.

This includes stronger demand for higher LTV products, including through Kensington, where application margins are around four times higher than comparable Barclays-branded mainstream mortgages.

The organic acquisition of 1.6 million customers in the past 18 months has supported consistent, balanced growth.

And we expect this to lead to higher interest, earning lending from H1 to 2025 as promotional balances mature.

Core business banking lending has started to inflect, with a headwind from COVID-era loan repayments diminishing.

This growth has been supported by £1.6 billion of loans provided to UK banking customers, up 50% year-on-year.

Anna Cross: and UK corporate bank lending has grown for the past three quarters as clients continue to draw down lending facilities. Given momentum across these products, we remain confident in achieving the $30 billion target in 2026. This implies a little over $2 billion of growth per quarter, modestly above the recent run rate.

And UK Corporate Bank lending has grown for the past three quarters as clients continue to draw down lending facilities.

Target in 2026.

This implies a little over $2 billion of growth per quarter, modestly above the recent run rate.

Anna Cross: Turning now to Barclays UK in more detail. You can see financial highlights on slide 14, but I will talk to slide 15. ROTI was 19.7% in the quarter. NII of $1.9 billion increased 16% year-on-year and 2% quarter-on-quarter with NIN stable versus Q1. We remain confident in our guidance for NII to exceed $7.6 billion in 2025, which in turn means more than $3.9 billion in the second half of the year. Reinvestment of the structural hedge will continue to support material and predictable NII growth alongside sustained lending momentum. In addition, we expect a neutral or positive contribution from the product margin in Q3 and Q4.

Turning now to Barker's UK in more detail.

You can see financial highlights on slide 14, but I will talk about slide 15.

Rosie was 19.7% in the quarter. NII of $1.9 billion increased 16% year-on-year and 2% quarter-on-quarter, with NIM stable versus Q1.

We remain confident in our guidance for NII to exceed $7.6 billion in 2025, which in turn means more than $3.9 billion in the second half of the year.

Reinvestment of the structural hedge will continue to support material and predictable loan growth alongside sustained lending momentum.

Anna Cross: This partly reflects the benefit of promotional card balances translating into higher interest earning lending in half too. In addition, as an accounting matter, the phasing of some historic swap maturities suppressed product margin in half once. This was known when we upgraded our guidance for NIR last quarter and will not repeat in future as these swaps expire. We would therefore encourage you to look at H2 2025 as a reasonable baseline for NII dynamics beyond 2025, noting that NII is expected to build in Q3 and Q4. non-NII of $264 million raised modestly versus Q1 and we continue to expect a quarterly run rate above $250 million.

In addition, we expect a neutral or positive contribution from the product margin in Q3 and Q4.

This partly reflects a benefit of promotional cards, with balances translating into higher interest, earning lending, and half 2.

In addition, as an accounting matter, the phasing of some historic swap maturities suppresses product margin in H1.

This was known when we upgraded our guidance for the knee last quarter, and will not repeat in the future as these swaps expire.

We would therefore encourage you to look at H2 2025 as a reasonable baseline for our dynamics beyond 2025, noting that we expect improvement to build in Q3 and Q4.

Anna Cross: Cost growth of 14% reflected the acquisition and subsequent ongoing integration of Tesco Bank. As a reminder, we expect the cost-income ratio for Barclays UK to increase this year from 52% in 2024 before falling to circa 50% in 2026.

Non-NII of $264 million rose modestly versus Q1, and we continue to expect a quarterly run rate above $250 million.

Cost growth of 14% reflected the acquisition and subsequent ongoing integration of Pesco Bank.

Anna Cross: Moving on to the Barclays UK balance sheet. Deposit balances fell by £1.8 billion in the quarter, as customers took advantage of favourable term deposit rates around the new ISO season. We were disciplined around pricing for term deposits, which was competitive in the first half of the quarter. This dynamic moderated later in the quarter, and our market share in current counts has remained stable. Lending once again grew by $1.6 billion quarter-on-quarter, driven by mortgages and credit cards. Mortgage redemptions will increase in half two versus H1, but our recent retention experience and the momentum that we are seeing underpin our confidence in sustained loan growth.

As a reminder, we expect the cost-income ratio for Barker's UK to increase this year from 52% in 2024, before falling to circa 50% in 2026.

Moving on to the Barclays UK balance sheet.

Deposit balances fell by $1.8 billion in the quarter, as customers took advantage of favorable term deposit rates around the new ISO season.

We were disciplined around pricing for term deposits, which was competitive in the first half of the quarter.

This dynamic moderated later in the quarter, and our market share and current counts have remained stable.

Lending once again grew by $1.6 billion quarter on quarter, driven by mortgages and credit cards.

Anna Cross: Moving on to UK Corporate Bank on slide 18. Q2 ROTI was 16.6%, inclusive of a £39 million litigation and conduct charge. This chart was in relation to a historic issue and drove a 19% year-on-year increase in costs in this business. Excluding this, costs increased by 2% while income grew 17%. NII was up 21% year-on-year, reflecting deposit and lending growth and the benefits from structural hedge reinvestment. Operationally, investments into our digital and lending propositions have helped to attract around 330 new clients during H1 2025 and circa 880 new clients in the first half of the three-year plan.

Mortgage redemptions will increase in H2 versus H1, but our recent retention experience and the momentum that we are seeing underpin our confidence in sustained loan growth.

Moving on to UK Corporate Bank, on slide 18.

Q2 Rosie was 16.6% inclusive of a $39 million litigation and conduct charge. This charge was in relation to a historic issue and drove a 19% year-on-year increase in costs in this business.

Excluding this, costs increased by 2%, while income grew by 17%.

NII was up 21% year-on-year, reflecting deposit and lending growth and the benefits from structural hedge reinvestments.

Anna Cross: Turning now to private bank and wealth management. Q2 ROTI was 31.9%. Net new assets under management of $0.9 billion helped support 8% year-on-year growth in client assets and liabilities despite a weaker U.S. dollar. An annualized growth of 11% since 2023 is in line with our double-digit growth target. Within the quarter, growth of assets under supervision offset a reduction in short-term deposits held at the end of Q1. income growth of 9% matched cost growth of 9% resulting in a broadly stable cost to income ratio. As previously guided we are continuing to invest in this business underpinning sustained growth and a high 60s cost to income ratio in 2026.

Operationally, investments into our digital and lending propositions have helped to attract around 330 new clients during H1 2025 and circa 880 new clients in the first half of the 3-year plan.

Turning now to private bank and wealth management.

Due to ROI of 31.9% net, new assets under management of $0.9 billion helped support 8% year-on-year growth in client assets and liabilities despite a weaker U.S. dollar.

An annualized growth of 11% since 2023 is in line with our double-digit growth target.

Within the quarter, growth of assets under supervision offset a reduction in short-term deposits held at the end of Q1.

Income growth of 9% matched cost growth of 9%, resulting in a broadly stable cost-to-income ratio.

Anna Cross: Turning now to the Investment Bank. ROTI was 12.2% in Q2 and 14.2% in Q1. Total income was up 10% year-on-year, which, coupled with broadly stable RWAs now for three and a half years, drove an 80 basis point improvement in income over average RWAs to 6.7%. We continue to be similarly disciplined on costs, which rose 2%, resulting in another quarter of positive draws and a cost-to-income ratio of 59%. Using the U.S. dollar figures to help comparisons to U.S. peers, market income was up 34% year-on-year. As Venkat mentioned, the growing breadth and depth of our client relationships are supporting structurally higher income, while better positioning the investment bank to monetize cyclical activity.

Sustained growth and a high 60s cost-to-income ratio in 2026.

Turning now to the Investment Bank.

Rosie was 12.2% in Q2 and 14.2% in Q1.

Total income was up 10% year-on-year, which, coupled with broadly stable RWAs, drove an 80 basis point improvement in income over average RWAs to 6.7% for three and a half years.

We continue to be similarly disciplined on costs, which rose 2%, resulting in another quarter of positive jaws and a cost-to-income ratio of 59%.

Anna Cross: Our performance in Q2 helps to demonstrate this. In April, for instance, we monetized cyclical market activity by supporting clients through the period of volatility. While in May and June, structural improvements in the business enabled a higher daily income run rate in markets versus last year, despite more normalized volatility. This was supported by momentum of more stable financing income, which grew 23% year-on-year in US dollar terms. This occurred across financing products with particular strength in prime, supported by growth in balances and wider spread. We also delivered this performance whilst managing risk well, maintaining stable VAR and incurring two trading book loss days, one in April and one in May, in line with the average since 2019.

Using the U.S. dollar figures to help comparisons to users, market income was up 34% year on year. As Benat mentioned, the growing breadth and depth of our client relationships are supporting structurally higher income, while better positioning the Investment Bank to monetize cyclical activity.

Our performance in Q2 helps to demonstrate this.

In April, for instance, we monetize cyclical market activity by supporting clients through the period of volatility.

But in May and June, structural improvements in the business enabled a higher daily income run rate in markets versus last year, despite more normalized volatility. This was supported by the momentum of more stable financing income, which grew 23% year on year in U.S. dollar terms.

This occurred across financing products, with particular strength in Prime, supported by growth imbalances and wider spreads.

We also delivered this performance while managing risk, maintaining stable VaR and incurring two trading book loss days: one in April and one in May, in line with the average since 2019.

Anna Cross: Looking at our income by product, FIC rose 35%, reflecting growth across the credit and macro franchises and in financing. The mix of our macro business, weighted towards rate and FX, was well suited to activity in the quarter. Equity's income was up 34%, driven by strengths in cash, prime and equity derivatives. In banking, the environment was quiet in April, but improved in May and June, and our half-won market share was stable at 3.4%. Banking income fell 10% in the quarter, reflecting the year-on-year effect of a large ECM transaction in Q2 2024. Looking through this effect, ECM activity gained momentum towards the end of Q2, with Barclays acting as bookrunner on 7 of the top 12 US IPOs in the quarter.

Looking at our income by product.

Growth of 35% reflects growth across the credit and macro franchises and in financing.

The mix of our macro business, weighted towards rate and FX, was well-suited to activity in the quarter.

Equities income was up 34%, driven by strength in Cash Prime and Equity Derivatives.

In banking, the environment was quite stable in April, but improved in May and June. Our first-half market share remained stable at 3.4%.

Banking income fell 10% in the quarter, reflecting the year-on-year effect of a large ECM transaction in Q2 2024.

Looking through this effect, ECM activity gains momentum towards the end of Q2, with Barclays acting as bookrunner on 7 of the top 12 U.S. IPOs in the quarter.

Anna Cross: In DCM, we grew market share in all products and activity picked up as the quarter progressed, particularly in investment grade, and the pipeline to leverage finance is encouraging. And whilst advisory activity has been subdued, our announced volumes are up nearly 40% year-on-year, which we expect to support stronger completed market share in the future. In transaction banking, income increased 4% while corporate lending income was impacted by fair value losses on lending positions.

In DCM, we grew market share in all products and activity. Pickup occurred as the quarter progressed, particularly in investment grade, and the pipeline for leveraged finance is encouraging.

And whilst advisory activity has been subdued, our announced volumes are up nearly 40% year-on-year, which we expect to support stronger completed market share in the future.

In transaction banking, income increased by 4%, while corporate lending income was impacted by fair value losses on lending positions.

Anna Cross: Turning now to the U.S. Consumer Bank. ROTI was 10.2% in the quarter, up from 9.2% in Q2 2024. The business performed as we expected it to in the quarter, with operational improvements supporting our confidence in delivering a ROTI of greater than 12% in 2026. Total income increased 7% year-on-year in U.S. dollar terms, reflecting end-net receivables growth of 5% to $33.9 billion on a managed basis. NIM expanded to 10.8% and we expect continued momentum towards our greater than 12% target in 2026, reflecting three effects. First, asset repricing actions taken last year are supporting margins and will continue to feed through in the coming quarters.

Turning now to the U.S. Consumer Bank.

Rosie was 10.2% in the quarter, up from 9.2% in Q2 2024. The business performed as we expected it to in the quarter, with operational improvements supporting our confidence in delivering a RoTI of greater than 12% in 2026.

Total income increased 7% year-on-year in U.S. dollar terms, reflecting net receivables growth of 5% to $33.9 billion on a managed basis.

NIM expanded to 10.8%, and we expect continued momentum towards our greater than 12% target in 2026, reflecting three effects.

Anna Cross: Second, we are growing higher margin retail balances as a percentage of net receivables from around 15% currently to circa 20% by 2026. Third, we are improving our funding mix, with retail deposits growing by $0.7bn quarter on quarter, or 27% year on year, increasing the share of funding from core deposits to 73%. The acquisition of General Motors cars receivables is also expected to enhance Rocey from Q4 2025 despite the 50 million stage migration charge in the quarter that I mentioned earlier. We continue to complement income growth with efficiency, driving a 2% improvement in the cost-to-income ratio to 48%, on track for our mid-40s target by 2026.

First, asset repricing actions taken last year are supporting margins and will continue to feed through in the coming quarters.

15% currently to circa 20% by 2026.

Third, we are improving our funding mix with retail deposits, growing by $0.7 billion quarter on quarter, or 27% year on year, increasing the share of funding from core deposits to 73%.

The acquisition of General Motors car receivables is also expected to enhance return from Q4 2025, despite the $50 million stage migration charge in the quarter that I mentioned earlier.

Anna Cross: moving to capital. We ended the quarter in the upper half of the 13-14% target range with a CET1 ratio of 14%. This is a deliberate consequence of the strategy, which was designed to drive higher and more consistent returns, improved capital generation and higher shareholder distributions. We generated around 100 basis points of capital from attributable profits in H1 and expect around 170 basis points this year aligned to our circa 11% ROTI target. This enabled us to increase distributions by 21% year-on-year and half one to 1.4 billion in line with our guidance to deliver a progressive increase in total distributions in 2025 versus 2024.

We continue to complement income growth with efficiency, driving a 2-percentage point improvement in the cost-to-income ratio to 48%, on track for our mid-40s target by 2026.

Moving to Capital.

We ended the quarter in the upper half of the 13-day target range with a CET1 ratio of 14%. This is a deliberate consequence of the strategy, which was designed to drive higher and more consistent returns, improved capital generation, and higher shareholder distributions.

We generated around 100 basis points of capital from attributable profits in H1 and expect around 170 basis points this year, aligned to our circa 11% ROI target.

Anna Cross: This included. and announced 1 billion share buybacks, which will reduce the reported ratio by circa 30 bits to 13.7%. RWAs were broadly flat at $353bn, net of a $5.8bn reduction due to FX. and the UK Corporate Bank saw a combined RWA increase of £2.2 billion. Given our continued discipline, Investment Bank RWAs remained broadly in line with the Q1 level and represented 56% of the overall group RWAs.

This enabled us to increase distributions by 21% year-on-year, from $1 billion to $1.4 billion, in line with our guidance to deliver a progressive increase in total distributions in 2025 versus 2024.

This included.

An announced $1 billion share buyback, which will reduce the reported ratio by circa 30 basis points to 13.7%.

RWAs were broadly flat at $353 billion, net of...

A $5.8 billion reduction due to FX.

Spark is UK and the UK Corporate Bank. Saw a combined RWA increase of $2.2 billion.

Anna Cross: Looking ahead, we note that some European banks have recently provided detail on the effect of output flaws which, for Barclays, are not expected to be binding at any point. This reflects our business mix and applies at both the group and the ring fence level.

Given our continued disciplined investment, Bank RWAs remained broadly in line with the Q1 level and represented 56% of the overall group RWAs.

Looking ahead.

We note that some European banks have recently provided detail on the effect of output flaws, which for Barclays are not expected to be binding at any point.

This reflects our business mix and applies at both the group and the ring-fence level.

Anna Cross: As usual, a word on our overall liquidity and funding on slide 28. We have strong and diverse funding, including a 74% loan-to-deposit ratio and a net stable funding ratio of 136%. and we are highly liquid across currencies, with an average LCR of 178%, incorporating the initial effect of methodology changes introduced in June. Although these changes will utilise some of the Group's £135 billion surplus funding position, we expect the LCAR to remain broadly within levels reported in recent years. These measures reflect purposeful and prudent management of our balance sheet and risk, delivering resilience and capacity to support customers in a range of economic environments.

As usual, a word on our overall liquidity and funding on slide 28.

We have strong and diverse funding, including a 74% loan-to-deposit ratio and a net stable funding ratio of 136%.

And we are highly liquid across currencies, with an average LCR of 178% incorporating. The initial effect of methodology changes introduced in June,

Although these changes will utilize some of the Group's $135 billion surplus funding positions, we expect the LCR to remain broadly within levels reported in recent years.

These measures reflect purposeful and prudent management of our balance sheet and risk.

Delivering resilience and capacity to support customers in a range of economic environments.

Anna Cross: Tina, for share, increased £0.12 in the quarter and £0.44 year-on-year to £384. Attributable profit added 10 pence per share during Q2 and the unwind of the cash flow hedge reserve added 9 pence. We expect the majority of the remaining cash flow and hedge reserve to unwind by the end of 2026. This unwind, combined with earnings growth and buybacks, give us confidence that TNAB will continue to grow consistently, as it has done for the last eight quarters.

The share price increased by 12 pence in the quarter and 44 pence year on year to 384 pence.

Attributable profit added 10 pence per share during Q2, and the unwind of the cash flow hedge reserve added 9 pence.

We expect the majority of the remaining cash flow hedge reserve to unwind by the end of 2026.

This unwind, combined with earnings growth and buybacks, gives us confidence that TINA will continue to grow consistently, as it has done for the last eight quarters.

Anna Cross: So, to summarise, we are pleased with the strong performance of the bank in the first half of the year, which sets us up well to deliver on all our 2025 guidance and 2026 targets.

Kat: Over to you then Kat for concluding remarks.

We are pleased with the strong performance of the bank in the first half of the year, which sets us up well to deliver on all our 2025 guidance and 2026 targets.

Over to you, Venat, for concluding remarks.

Kat: Thank you, Anna. So halfway into the three-year plan, as you can see, we remain firmly on track to deliver our goals. We are working hard to deliver sustainable operational and financial improvements across our businesses. And this, in turn, will drive higher group returns and shareholder distributions. And as we have said, 2026 is a point in time for us and we have ambition beyond. By making structural improvements, we are improving the profit signature of the bank to drive higher returns in the years to follow.

Thank you, Anna.

We are working hard to deliver sustainable operational and financial improvements across our businesses. This, in turn, will drive higher group returns and shareholder distributions.

And as we have said, 2026 is a point in time for us, and we have ambition beyond that.

Operator: I will now open for questions and answers. If you wish to ask a question, please press star followed by 1 on your telephone keypad. If you change your mind and wish to remove your question, please press star followed by 2.

By making structural improvements, we are improving the prophet signature of the bank to drive higher returns in the years to follow.

I will now open for questions and answers.

If you wish to ask a question, please press star, followed by 1 on your telephone keypad. If you change your mind and wish to remove your question, please press star, followed by 2.

Alvaro Serrano: Our first question today comes from the line of Alvaro Serrano from Morgan Stanley, please go ahead your line is now open. Hi, good morning. A couple of questions, please.

Our first question today comes from the line of Alvaro Sirano from Morgan Stanley. Please go ahead. Your line is now open.

Anna Cross: First of all, on capital and then one on the investment bank. On capital, you're $13.7. Obviously, after the buyback, that's pretty comfortable position, given your 13-14 FRTP being delayed. When you think about your capital position versus the over $10 billion distribution and obviously M&A options that you've appeared on the press contemplating, how do you see upside to distribution versus additional firepower for M&A, whether that's a buffer in the U.S. or something else, if you can maybe walk us through your thinking.

Hi, uh, good morning, uh, a couple of questions, please. Uh, first of all on, on, on, on, on Capitol and, and, and then 1 on on the Investment Bank on on Capital, you're 13.7.

Uh, we're sort of obviously after the buyback.

Um, that's, uh, a pretty comfortable position. Giving you a 13 to 14, FRTB has been delayed.

Alvaro Serrano: And second, on the investment bank, obviously, trading, you've explained, Anna, very strong, clearly doing better than U.S. peers, and that's worked very well, but investment banking fees not so well. So, in a world where we seem to be heading, famous last words, to low volatility environment, Anna, you've touched on it at the end of the quarter, but if you can elaborate if that low volatility banking fees picking up thesis has held at the later part of the quarter, and as we look in the rest of the year, can we still expect sort of decent growth in that low volatility environment, i.e., banking fees making up for whatever sort of normalization of global markets we might see?

Um, when you think about the, the your Capital position versus the over 10 billion distribution, um, and and, and, uh, obviously m&a options that you've appeared on the Press, uh, contemplating. How do you, how do you see, uh, um, upside to distribution versus additional Firepower to to m&a whether that support in the US or something else? Uh, if you can maybe, um, sort of walk us through your thinking and second on the Investment Bank, obviously trading you've, um, explained on a very, very strong clearly doing better than than, than us peers. Um,

Alvaro Serrano: Thank you.

And and that's worked very well. But Investment Banking fees. Not so well. So, um, if in a, in a world where we seem to be heading, um, famous last words to to lower volatility environment and know you've touched on it in the end of the quarter. But I, I just, um, sort of, if you can elaborate, uh, if if, if that load volatility banking fee is picking up a thesis, uh, has held at the later part of the quarter. And, and as we look in the rest of the year, can we still expect um, sort of um, decent growth in in that in a low voltage environment? IE banking fees making up uh uh for whatever sort of normalization of global markets. We might see. Thank you.

Anna Cross: Okay, good morning Alvaro. Thank you very much for kicking off the call for us. I'll take the first question and then I'm going to hand to Venkat. So look, our capital position just reflects the execution of the strategy. The strategy is designed to create higher, more consistent returns, which in turn allows us to return more to shareholders and indeed invest in the business. And that's really what you're seeing here. It's exactly what we expected. So as you call out 13.7% post the buyback, we indicated at the beginning of the year that actually we expected to operate towards the upper half of our capital range just because of the pillar two that we're carrying in advance of the US model being implemented.

Venkatakrishnan: So we're exactly where we expected to be. And the broader aspects of your question, I would say The capital hierarchy remains completely intact. So, we're generating higher levels of capital from more consistent and higher returns. And our priorities are, number one, of course, regulatory. Number two, distributions. Those distributions are up 21% year-on-year. The buyback is up 33% year-on-year. And we said that the distributions should be progressive in 2025. That's what you're seeing. And, of course, our guidance and target for the three years is at least 10. So, that all remains intact. And then, finally, you know, continuing to invest in the UK businesses.

Okay. Good morning, Alvaro. Thank you very much for picking up the call for us. Um, I'll take the first question and then I'm going to hand it to Venka. So look, our capital position just reflects the execution of the strategy. The strategy is designed to create higher and more consistent returns, which in turn allows us to return more to shareholders and indeed invest in the business. And that's really what you're seeing here. It's exactly what we expected. So as you call out, 13.7%, post the buyback, we indicated at the beginning of the year that actually we expected to operate towards the upper half of our capital range, just because of the Pillar 2 that we're carrying in advance of the US model being implemented. So we're exactly where we expected to be. And, you know, the broader aspects of your question, I would say,

The capital hierarchy remains completely intact.

Uh, so we're generating higher levels of capital from more consistent and higher returns, and our priorities are, number one, of course, regulatory; number two, distributions. Those distributions are up 21% year-on-year. The buyback is up 33% year-on-year. Um, we said that the distributions should be progressive in 2025; that's what you're seeing. And of course, our guidance and targets for the three years is at least 10.

Venkatakrishnan: We do believe our plan is an organic one. And you can see at the halfway point, we put down 17 billion of the 30 billion RWAs that we are planning to. So, that's how we feel about capital, really no change, just the execution of the strategy.

Venkatakrishnan: Venkat? Yeah. Hey, thanks for the question, Alvaro. On the investment bank, so let me give you a longer-term view, and then I'll come to your very specific question. So, on the investment bank, over the last six quarters, in fact, since before then, we've been obviously investing in our structural capabilities. What you see in the results... in the investment bank is a combination of deep structural improvements, which we think are sustainable over the long run, and then cyclical aspects, which benefited the trading business and may have been a headwind for the banking business, and then I'll come to that.

So that all remains intact, and then finally, you know, continuing to invest in the UK businesses, we do believe our plan is an organic one. You can see at the halfway point, we put down £17 billion of the £30 billion risk-weighted assets (RWAs) that we are planning to. So, that's how we feel about capital really: no change, just the execution of the strategy.

Thank up. Yeah. Hey thanks for the question, Alberto uh on the Investment Bank. Uh so let me give you a longer term View and then I'll come to your very specific question. So on the Investment Bank, uh, over the last 6 quarters and in fact, since before then we've been obviously investing in our structural capabilities. What you see in the results

Venkatakrishnan: So, on the structural side, Basically, you're seeing deeper client engagement. You know, one of the statistics we put out was we're number six investment bank, so of our top 100 clients, who are we in the top five with? That number was 49 before the plan started. Our target is 70. We're at 60 now. You can see it in the market shares, which we have in global markets. Financing is up 23% year-on-year in US dollars. Our three focus areas are up by one percentage point, 24 versus 23. And that's the latest data we have. And then I mentioned the top five clients.

Of deep structural improvements, which we think are sustainable over the long run, and then cyclical aspects which benefited the trading business and may have been a headwind for the banking business. Now I'll come to that. So, on the structural side,

Venkatakrishnan: And then when you look at the overall, and then when you look at banking, capital discipline has really taken root. Return on risk-weighted assets is improving. And market share has improved, although a little slower this year. So that is the structural benefit that we see, and you can see it in the results when you look at the investment bank's performance versus consensus. Six quarters now we've beaten consensus, and the size of that beat has been growing to about 300-odd million pounds this quarter. So I think what you're seeing is the combination there of both structural and cyclical.

Basically you're seeing deeper client engagement, you know, 1 of the statistics we put out was we're number 6 investigates that number was 49 before. The plan started? Our Target is 70. We are at 60. Now you can see it in the market shares, which we have in global markets. Financing is up. 23% year-on-year, in US Dollars are 3, Focus areas. Um, are off by 1 percentage Point, 24, versus 23 and that's the latest data we have. And then I mentioned the top 5 times, and then when you look at the overall, and then, when you look at banking, uh, Capital discipline has really taken root return on risk, created assets as improving, uh, and market share has improved, although a little slower this year,

So that is a structural benefit that we see, and you can see it in the results when you look at the investment banks' performance versus consensus. The six quarters now, we've beaten consensus, and the size of that beat has been growing to about £300 million this quarter.

Venkatakrishnan: Let me come to. Cyclical in the markets business has been helped obviously by volatility, and that's been a tailwind. And in banking, as you point out, as decision-making has slowed, that volatility has been a bit of a headwind. Now, looking forward, we are seeing that headwind in banking dissipating as there is more deal activity, and we expect that to continue. As for markets, I think a lot of the positioning that's taken place in the last six months has been in reaction to immediate volatility, so what I would call shorter-term risk management, and that has obviously delayed longer-term decision-making, which drives banking.

So, I think what you're seeing is the combination there of both structural and cyclical. So let me come to cyclical.

Cyclical in the markets business has been helped, obviously, by volatility, and that's been a tailwind. And in banking, as you point out, as decision-making has slowed, that volatility has been a bit of a headwind.

Now looking forward, we are seeing that headwind and banking dissipating, as there is more deal activity, and we expect that to continue.

Venkatakrishnan: Now, though, in the market side, you could see more longer-term positioning and decision-making as people take a clearer view on different asset classes and within asset classes rotation. I hope and expect, given all the structural improvements I outlined, that we will benefit from that. Thank you, Alvaro.

As for markets, I think a lot of the positioning that's taken place in the last 6 months has been in reaction to immediate volatility. So, what I would call shorter term risk management, and that is obviously delayed longer term decision making, which drives banking. Now, though, in the market side, you could see more longer term positioning and decision-making. As people take. Take a clearer view on different asset classes and within asset classes rotation. I hope and expect given all the structural improvements. I outlined that we will benefit from that.

Operator: Perhaps we can go to the next question, please, Operator.

Right. Thank you. Thank you, Alvaro. Um, perhaps we can go to the next question. Please, operator.

Guy Stebbings: The next question comes from Guy Stebbings from BNP Paribas, please go ahead, your line is now open. Hi, morning there. Two questions, if I may. The first one was on Barclays UK. I was wondering if you could expand on this historic swap maturity impact that landed in H1 that comes out in H2 and should support expansion in the product margin in the second half. I don't know if you can sort of frame the size of that, perhaps. And then attached to that, looking at your full year guide and talk to quarter on quarter growth, it looks like we're getting to a sort of exit quarterly run rate of about 8 billion or so on the NIR for Barclays UK, consensus at 8.3 for next year.

The next question comes from Guy. Stepping from BNB Paribas, please go ahead. Your line is now open.

Guy Stebbings: It doesn't feel overly challenging versus that sort of exit rate. So can we infer that you're comfortable with market expectations next year, perhaps even some upside despite the miss in the second quarter? And then the second question was on the US consumer business on the impairment side, encouraging to see that step down impairments in Q2 and the lower 30-day delinquencies. Perhaps I can invite you to comment on how you're thinking about impairments in the second half and beyond on that book. I mean, there had been some skepticism that the 2026 impairment guide could be challenging to get to that sort of 400 base points long run.

Hi morning there. Um, 2 questions. If I may, um, the first 1 was on Barclays, UK, um, wondering if you could expand on this historic swap maturity impact that Landon H1, uh, that comes out in H2 and, and should support expansion of the product margin in the second half. I don't know if you can sort of frame the size of that perhaps, uh, and then attached to that. Um, looking at your, for your guide and and talk to a quarter on quarter growth, it looks like we're getting to a sort of exit, uh, quarterly run rate of about 8 billion or so on the knee for B, UK for consensus, at 8.3 for, for next year, it doesn't feel overly challenging but that sort of exit rate. So, can we infer that you're comfortable with Market expectations next year, perhaps even some upside despite the Miss in the second quarter? Um and then the second question was on the US consumer business. Um, on the impairment side, encouraging to see that step down impairments in Q2 and and the lower 30-day delinquencies. Uh, perhaps I can invite you to comment on how you're thinking about impairments and the second half and Beyond on that book. I mean there had been some skepticism that the 2026 impairment guide could be challenging.

Anna Cross: So are you sort of more confident on delivery there today than perhaps three, four months ago? Thank you. Okay, thanks Guy.

To get to that sort of 400 basis points long run, I'm much more confident in delivery there today than perhaps 3 or 4 months ago. Thank you.

Anna Cross: Why don't I take both of those and I'm sure Venkat may add on the second. So let me start with BUK NII in totality. So we are confident in the greater than 7.6 billion and when we gave you that guidance we were clearly aware of the swap matter that you're and therefore that means by definition we're expecting income to be in excess of 3.9 billion in the second half of the year and within that I would just add for Q4 to be higher than Q3 and I'll come back to the second part of your question in a minute.

Okay. Uh, thanks Guy. Why don't I uh, take both of those? And I'm I'm sure van got me out on the second. Um, so let me start with um, beuk nii in totality. So we are confident in the greater than 7.6 billion. And when we gave you that guidance, uh, we were clearly aware of the swap, um, the swap matter that you're talking about here. So the phasing is panning out as we expected it to and therefore, that means by definition. We're expecting income to be in excess of 3.9 billion in the second half of the year and within that, I would just add for Q4 to be higher than Q3 and I'll I'll come back to the second part of your question in a minute.

Anna Cross: So what really drives that? Well, there's clearly the things we've talked about, which is the structural hedge, loan growth. So you can see the momentum in BUK. The other thing I would just call out as a product margin matter, Guy, is not just this swap effect, but it's also the fact we expect to see maturing cards balances, maturing promotional cards balances in the second half of the year. And obviously we expect to see deposit trends to continue to mitigate. But this swap point, it's a historic matter, and it's an accounting point, and it's accounting timing.

About which is the structural hedge loan growth. So you can see the momentum in B, UK. The other thing I would just call out is a product margin matter. Uh, guys, it's not just this swap effect, but it's also the fact we expect to see maturing card balances, maturing promotional card balances in the second half of the year. And obviously, we expect to see deposit trends continue to mitigate.

Anna Cross: And it basically relates to the maturity profile of historic swaps versus how we recognize swaps against products internally. It's purely timing. To try and put some quantum around it, what I would say is it's probably most of the consensus myths in Q2, and it was relatively similar across Q1 and Q2. So it's a half one versus half two point. It's now behind us. It's not operational, purely accounting timing. And from 22 onwards, we're now booking our swaps in a different way, so I'm not expecting this will recur. So in terms of the jumping off point, as I said in my prepared remarks, please use half two as a jumping off point for NII next year.

And it's an accounting point, and it's accounting timing.

and it basically relates to, um, the

The maturity profile of historic swaps versus how we recognize swaps against products internally is purely timing. To try and put some quantum around it, what I would say is, it's probably most of the consensus myths in Q2 and it was relatively similar across Q1 and Q2. So it's a half 1 versus half 2 point. It's now behind us. It's not operational; it's purely accounting timing. And from 2022 onwards, we're now booking our swaps in a different way. So I'm not expecting this will recur.

Anna Cross: And within that note, the Q3, Q4 momentum. It's a bit too early to talk about explicit numbers or consensus for next year. But just please note from this, I guess our confidence in terms of that building NII momentum, not just in meeting 25 guidance, but underpinning ROTI in 2026 and having momentum even beyond that point.

So, in terms of the jumping off point, as I said in my prepared remarks please use half 2 as a jumping off, point for knee next year. Uh, and within that note, the Q3 Q4 momentum. Um, it's a bit too early to talk about explicit numbers or consensus for next year. But just please note from this, I guess, our confidence, in terms of that building nii momentum, not just in meeting 25 Gardens but underpinning Roti in 2026 and having momentum, even Beyond, uh, beyond that point.

Anna Cross: So, let me now come to U.S. consumer impairment. Look, it's fallen queue on queue as we would have expected it to seasonally, and you can see that 30-day delinquencies are down 20 basis points, so it's performing well. Interestingly, within that, the lowest three FICO bands are also down year on year in delinquency, which I see as encouraging. What we expect in the second half is obviously normal seasonal trends. You tend to see a build towards the back end of the year, just as holiday spending picks up. The only other notable thing I would call out is obviously in Q3, we onboard the General Motors back book.

Um, so let me now come to U.S. consumer impairment. Look, it's fallen to you on cue as we would have expected it to seasonally. And you can see that 30-day delinquencies are down 20 basis points. So, it’s performing well. Interestingly, within that, the lowest three FICO bands are also down year on year in delinquency, which I see as encouraging.

Anna Cross: You should expect to see a hundred pound day one charge then, and then you're going to see some migration effects, probably about 50 pounds per quarter for a few quarters just because we onboard things at stage one, but overall, I think within the context of the group guidance of 50 to 60 basis points, we're very comfortable. I'll just add at a broader macroeconomic level, it has been remarkable, really, how resilient the U.S. economy has been, and indeed the U.K. economy, to everything that's going on in tariffs. Obviously, there is inflationary pressure, but employment remains very strong, and, you know, I mean, the Fed is having a meeting tomorrow, but it's not cut once so far this year.

Um, what we expect in the second half is obviously normal seasonal trends. You tend to see a build towards the back end of the year, just as holiday spending picks up. The only other notable thing I would call out is that obviously in Q3 we onboard the General Motors back book. You should expect to see a £100 day one charge.

Then, and then you're going to see some migration effects.

Uh, probably about 50 pounds per quarter for a few quarters, just because we onboard things at Stage 1. Um, but overall, I think, within the context of the group guidance of 50 to 60 basis points, we were very comfortable.

Anna Cross: So I think we have to see how that plays out. But I would say at a macroeconomic level, there is room for hope in the strength of the economy, especially as the frequency of tariff announcements and the amplitude of tariff changes reduce, both frequency and amplitude reduce.

Yeah. Look, I'll just add at a broader macroeconomic level. It has been a remarkable really quite how resilient the US economy has been. Um and and the the UK economy to everything that's going on in tariffs. Uh, obviously there is inflationary pressure but employment remains very strong and uh, and you know I mean the FED is having having the meeting tomorrow but it's not cut once so far this year. So I think we have to see how that plays out. But I would say at a macroeconomic level, uh,

There is room for hope in the strength of the economy, especially as the frequency of tariff announcements and the amplitude of tariff changes produced, both frequency and amplitude, reduced.

Operator: Okay, thank you, operator.

Okay, thank you. Operator, next question, please.

Jason Napier: The next question today comes from the line of Jason Napier from UBS, please go ahead your line is now open. Good morning Venkat and Anna. Thanks for taking my questions. Two, please. The first, just focusing on the retained targets for 2026. I guess at the halfway point for the strategic plan, the bank's doing better than expected. As Venkat you mentioned, you've beaten in the IB six quarters in a row and consensus is pretty close to your $30 billion revenue target for next year, but the market is... well over a billion below your expectations for the investment bank.

The next question today comes from the line of Jason Napia from UBS. Please go ahead. Your line is now open.

Uh, good morning, Van Cat, and thanks for taking my questions. Um, to please the first, just focusing on the retain targets for 2026.

I guess at the halfway point for the strategic plan.

Um, the bank's doing better than expected, right? As Ven Cat mentioned, you've beaten in IB6, quarters in a row.

Uh, and consensus is pretty close to your $30 billion revenue target for next year. But the market is...

Jason Napier: So I wanted to invite you to sort of give us your thinking on that 30 billion guide. Is it still that number because you're not in the habit of refreshing it every quarter? Is it the cyclical tailwinds in the IB that you've enjoyed so far you think are really the headwind from here? Because if we put in your IB number, if we add that to consensus, you're a 13-ratio company, not the sort of more than 12 at which we seem to be a little bit stuck.

Well, over $1 billion below your expectations for the investment bank. So I wanted to invite you to sort of...

Um, you know, is it the cyclical tailwind in the IB that you've enjoyed so far? Do you think you're rid of a headwind from here? Because if we put in your IB number, if we add that to consensus, you're a 13% ROTI company.

Jason Napier: And then secondly, perhaps just as a follow-on. are consensus beyond Trade 26. got the bank growing revenues by 3% and costs by 2%. I wonder whether, just at a footprint level, you think that makes sense. Are the markets in which you're playing growing that little? in the next few years. Thanks very much. Okay, thanks. Thanks, Jason.

Not the sort of more than 12 at which we seem to be a little bit stuck. And then secondly, perhaps, um, just as a follow-on.

uh,

consent was beyond 2026.

Has the bank grown revenues by 3% and costs by 2%?

I wonder whether, just at a footprint level, ...

Do you think that makes sense? Are the markets in which you're playing?

growing, that little

In the next few years. Thanks very much.

Anna Cross: I'm going to start and then hand to Venkat. So, we've retained and indeed repeated our targets for 2025 and for 2026. And when we step back, we're clearly on a strong platform here. So, at the end of the first half of this year, we're sitting on a 13% ROTE. And we clearly got momentum across all five of the businesses. And really, this is what the strategy is about. So, we're not surprised by these results. Our objective was to drive income momentum and income stability whilst holding costs and capital discipline. And that's exactly what we're doing here.

Okay, thanks. Thanks, Jason. I'm going to start, and then...

To then cut. So we've retained, um, and indeed repeated, our targets for 2025, um, and for 2026. And when we step back, we clearly have a strong platform here. Um, so at the end of the first half of this year, we're sitting on a 13% ROTE, um, and we clearly have momentum across all five of the businesses, and really, this is what the strategy is about. So, you know, we are not surprised by these results. Our objective was to drive income momentum and income stability, whilst holding costs.

Anna Cross: And you can see that in the results. So clearly what it does is it gives us, obviously, confidence for the current year. But even more than that, it gives us confidence for 2026 and beyond as a roti matter. And income wise, you know, that being a specific part of your question. You know, what you're seeing here is clear NIR momentum, as I covered in the previous conversation. Loan growth will underpin that. You're going to see, you know, the maturation of cards balances that will underpin that. You can see the structural hedge underpinning that. And then elsewhere in the bank, you can see the progress that we are making structurally in the IB, both as a revenue matter and in terms of a roti matter.

And capital discipline. And that's exactly what we're doing here. And you can see that in the results.

So clearly what it does.

Is it giving us obvious confidence for the current year?

But even more than that, it gives us confidence for 2026 and beyond, both as a ROI matter and income-wise. You know, that being the specific part of your question.

You know what you're seeing here is, is clear, knee, momentum. As I covered in the, in the previous conversation, uh, loan growth will underpin that, um, you're going to see, you know, the maturation of cards. Balances, that will underpin that

Anna Cross: So, you know, we believe that with each passing quarter, clearly we're more confident and hopefully the market becomes so in that delivery. sort of beyond 2025 and 2026. So hopefully, you're starting to see a pattern here. The strategy is not hard. As I said, it's about driving income and momentum and stability, keeping costs controlled, and being really disciplined about where we allocate our capital. We're not going to suddenly stop doing that at the end of 2026. So from our perspective, we expect to continue to driving that level of momentum.

Uh, you can see the structural hedge and the pinning that, and then elsewhere in the bank, you can see the progress that we are making, um, structurally in the IB. Both of us are revenue matters and in terms of a rating matter. So, you know, we believe that with each passing quarter, clearly, we're more confident, and hopefully the market becomes so in that delivery.

But beyond 2020, 2025, and 2026, hopefully, you're starting to see a pattern here: the strategy is not hard. As I've said, it's about driving income, momentum, and stability, keeping costs controlled, and being really disciplined about where we allocate our capital. We're not going to suddenly...

Venkatakrishnan: Venkat, you may want to add. Yeah. Look, Jason, you asked a question or two questions which really hit at the heart of what our strategy and our strategic plan is. So one is. you know, what is the, how well are the businesses performing and how are you getting that better performance? As Anna just said, there's an important part that is structural. We're just trying to run the place much better and with deeper client engagement, greater efficiency in cost, greater revenue growth, strong risk control. And we're very happy with the numbers we've seen over the first six quarters.

Li stopped doing that at the end of 2026. So, from our perspective, we expect to continue driving that level of momentum.

Then you may want to add.

Yeah.

Jason, you've asked a question. You have two questions, which really hit at the heart of what our strategy and our strategic plan is. So, one is...

Venkatakrishnan: We think the structural underpinnings, as Anna said, give us expectations to carry that forward, not just into the next six quarters, but beyond that. So one part is running the bank better.

You know, what is the how, well, are the businesses performing? And how are you getting that better performance? And then I just said, there's an important part that is structural. We're just trying to run the place much better and with deeper client engagement, greater efficiency and cost, greater revenue growth, strong risk controls. And, you know, we're very happy with the numbers we've seen over the first six quarters. We think the structural underpinnings, as Anna said, give us expectations to carry that forward. Not just into the next quarters but beyond that.

Venkatakrishnan: The second part comes to the footprint as you. which is, what are the businesses and where are they? Now, a large at-scale bank like us should grow at top line, roughly at the nominal rate of the economies in which we are. And both in the U.K. and in the U.S., that nominal rate, you know, the U.S. is running a 1% GDP growth, real Q4, 25 to 24. It's probably going to be 2% next year, but, you know, with inflation is around 4-ish percent, call it a 5%, 4.5% to 5% nominal growth, similar in the U.K.

So, one part is running the bank better. The second part comes to the footprint, as you put it, which is: what are the businesses and where are they now? A large-scale bank like us should grow at the topline roughly at the nominal rate of the economies in which we are. Both in the UK and in the US, that nominal rate— you know, the US is running at 1% GDP growth in real terms. Q4 2025 to 2024 is probably going to be 2% next year, but you know, with inflation.

Jason Napier: So you would expect us... Absent of capturing market share to grow at roughly that level is what I would think in the long run a good bank should do That's not a target. That's not a forecast That's but it's just saying to you that when you think about how our footprint is, right? That's a reasonable assumption Okay, thank you Jason.

Is around 4%, call it a 5%, 4 and a half to 5% nominal growth similar in the UK? So you would expect us.

Absent of capturing market share to grow at roughly that level is what I would think in the long run a good bank should do. Uh, that's not a target. That's not a forecast, but it's just saying to you that when you think about how our footprint is, right, that's a reasonable assumption to stop at.

Operator: Perhaps we can go to the next question please, operator.

Okay, thanks. Thank you, Jason. Um, perhaps we can go to the next question. Please, operator.

Rob Noble: The next question today comes from the line of Rob Noble from Deutsche Bank. Please go ahead, your line is now open. Hi, thanks for taking my questions.

Your next question today comes from the line of Rob Noble from Deutsche Bank. Please go ahead. Your line is now open.

Rob Noble: Can I just ask on the promotional card, aren't they booked at effective interest rates? So why would you get a pickup in H2 from there? And if you could just elaborate on the size of the balances on promotional, how much is rolling, what the EIR rate is.

Rob Noble: Secondly, I think there's been sort of one quarter's growth in the last eight in the UK deposit book. And I presume a couple of years ago, that wasn't the plan. So what's not working there? What's going, what could be improved to turn the deposit to give you the confidence for it to be stable going forward?

Hi. Thanks for taking my questions. Um, can I just ask on the promotional card? Aren't they booked at effective interest rates? So why would you get a pickup in H2 from there? And if you could just elaborate on the size of the balances on promotional, how much is rolling? What the EI rate is? Um, secondly, I think there's been sort of one quarter's growth in the last eight in the UK deposit book, um, and I presume a couple of years ago, that wasn't the plan. So what's not working there? What's going on?

Anna Cross: And then lastly, how big is the Kensington book now? What's it growing at? And who are you taking share from in that? Okay. Thanks, Rob. I will take those. I'm not going to go into the details of EIR assumptions, but what I would say is that when we do reflect effective interest rates across our cards books, we do so conservatively, as we do across all of our businesses. And typically, what we're doing there is we're spreading the upfront fee, but we're also reflecting a bit of post-promotional balances. But actually, what we're seeing is the 24 cohorts maturing nicely, and that's really what we're calling out here.

What could be improved to turn the deposit to give you the confidence for it to be stable going forward? And then lastly, how big is the Kensington book now? What's it growing at and who are you taking share from in that business?

Okay. Uh,

Well I'm not going to go into the details of of uh, eir assumptions. Um, but what I would say is that, when when we do reflect effective interest rates across our cards books, we do, we do so conservatively. Um, as we do across all of our businesses, and typically, what we're doing there is, we're we're showing, uh, we're we're spreading The Upfront.

Anna Cross: In terms of UK deposits, we're broadly following the trends of our peers. Current accounts market share is being maintained, and you can see that we are not encountering anything unexpected simply because we're rolling 100% of the hedge. Our planning assumption is 90. We rolled 100% of it in the second quarter, so that tells you that things are broadly panning out. We continue to see some deposit migration, but that is, you know, the ISO season aside, that continues to just normalise. So nothing unexpected here.

See, um, but we're also, uh, reflecting a bit of post-promotional balances. But actually, what we're seeing is the 24th maturing nicely, and that's really what we're calling out here.

Anna Cross: And on Kensington, you know, we're seeing now high loan-to-value mortgages occupy about 25% of our flow. That's up from around 15% a couple of years back. I won't call out Kensington balances specifically, but they are being very, very helpful in helping us address the full scale, the full breadth of the mortgage market, which is why we are now taking gross share a little head of stock. Retention is very good. And of course, what's notable about Kensington is the margins are much richer. They're about, on equivalent products, they're about four times the scale of a normal BUK mortgage margin.

Um, in terms of UK, deposits were broadly following the trends of our peers. Um, current accounts market share is being, uh, maintained, um, and you can see that we are not. Um, encountering anything unexpected simply because we're rolling 100% of the Hedge. Um, you know, our planning assumption is 90, uh, we rolled 100% of it in the, in the second quarter. So that tells you that things are are broadly panning out. Um, we continue to see some deposit migration but that is, you know, the iso season aside, um, that continues to just normalize. So nothing unexpected here. And on Kensington, you know, we're seeing now High loan to value mortgages occupy about 25% of our flow, that's up from around. 15% a couple of years back. Um, I won't call out Kensington balances specifically, but they are being very, very helpful.

Anna Cross: So we're really pleased with its performance, and it's fully integrated now into the business. Thank you.

Helpful in helping us address the full scale, the full breadth of the mo mortgage Market, which is why we are now taking Gracia. A little head of stock, uh, retention is very good, um, and of course, what's notable about Kensington is, is the margins are much richer, they're about on equivalent products, they're about 4 times. Uh, the the scale of a, of, a, of a normal, B, UK, uh, mortgage margin. So we're really pleased with its performance, um, and it's fully integrated now into into the business.

Thank you. Okay, uh, thank you. Uh, perhaps we can go to the next question, please.

Chris Kant: The next question comes from Chris Kant from Autonomous, please go ahead, your line is now open.

The next question comes from Chris Kent from Autonomous. Please go ahead. Your line is now open.

Chris Kant: Good morning. Thanks for taking the questions. I have a couple on regulation. So firstly, thinking about what's happening in the U.S. If we get these ESLR changes and your U.S.

Good morning.

taking the

Questions. I had a couple on.

Chris Kant: competitors have effectively significantly more leveraged balance sheet capacity handed to them and they seek to deploy that in market, How should we think about the effect of that on the IB growth you've seen over the last five, six years, particularly around financing? Do you see that as a competitive threat? And what can you do about it if those peers now have more capacity to muscle in? And with regards to CCAR and the U.S. consumer business, the reasoning you've given for retaining that business in the past is partly because it helps your CCAR performance. Obviously, CCAR is getting more benign.

Um, so firstly thinking about what's happening in the U.S. Um, if we get these yes LR changes and your U.S. competitors have effectively significantly more leverage, balance sheet capacity handed to them and they seek to deploy that in markets, um, how should we think about the effect of that on the IB growth? You've seen over the last 5, 6 years, particularly around financing. Do you see that as a um, competitive threat?

And what can you do about it? If those peers now have more capacity to muscle in,

Chris Kant: Do you now feel less compelled to retain that business?

And with regards to car and and the US consumer business. Um, you know, the, the reasoning you've given for retaining that business in the past is partly because it helps your car performance. Obviously car is is getting more benign. Um,

Chris Kant: What is the argument for keeping?

Anna Cross: On the UK side of the fence, if I could just invite you to comment on what, if any, outcomes we might expect from the current UK capital framework review that's happening in the background. Are you expecting that to be a positive? And Venkat, I know you've expressed some views contrary to your peers at other banks around the ring fencing regime. What are your updated thoughts given the changes we may see there? Thank you. Thanks, Chris.

Do you now feel less compelled to to retain that business? What is the what is the argument for for keeping that?

Um, are you expecting that to be a positive? And then I know you've expressed some views, contrary to your peers, regarding the ring-fencing regime. Um, what are your updated thoughts given the changes we may see there? Thank you.

Venkatakrishnan: So I will start on the first two of those, and then I'll hand to Venkat for the third point on the UK capital framework. Look, on SLR, we note peer comments. We're confident in our ability to continue to grow our prime business, and indeed our fixed income financing business. We're seeing that continue, you know, good balance growth, good spread, and actually expanding a bit into Asia, which is relatively new for us. They're very much open for business and confident in our ability to grow. And really what's underpinning that is a couple of things. Firstly, as we look at our US peers, it looks like the, you know, leverage is not binding for all right now.

Uh,

thanks Chris.

Anna Cross: So this may or may not make a significant amount of business, of difference rather. And secondly, we look forward to what the FPC might do in the UK that looks at the framework more holistically, as you point out. So no specific concerns. On CCAR, look, Barclays in the US typically has a good CCAR result, and has exactly the same this year. You know, a low point of 10.8%, a draw, a stress buffer of 3.3%. And, you know, we still see that diversified banks across that CCAR stack get a better result. And that is very, very clear.

So Hunter to venat for the third point. On the UK Capital framework look on SLR. We note peer comments. Um, we're confident in our ability to continue to grow our Prime business. And in these are fixed income financing business, we're seeing that continue, you know, good balanced growth, good spreads, um, and actually expanding a bit into Asia, which is relatively new for us. So very much open for business and confident, in our ability to grow and really, what's underpinning that is a couple of things. Firstly, as we look at our us peers, it looks like that. The, you know, Leverage is not finding for all right now. So this may or may not make a significant amount of business, uh, of of difference, rather, um, and, and secondly, we look forward to, to what the FPC might do in, in the UK, that looks at the framework, more holistically as you point out. So no specific concerns.

Anna Cross: There were some aspects of this year's CCAR stress test where the market shock component was a little lower than we might have previously seen. We can't always anticipate that that will be the case. So important that we don't react to one stress test in isolation. And just stepping back, you know, this is a business that we believe we can improve the returns on. You can see that we believe we can get the returns not just to be in line with the group, but more towards mid-teens. And it offers, you know, income and geographic diversification, as well as the particular capital efficiency point.

On car look. Uh, Barkley is in the US, typically has a good car results. Um, has exactly the same this year, you know, a low point of 10.8%, a draw uh uh, stress buffer of 3.3% and, you know, we still see that Diversified Banks across that Sea Car stack, get a better result. Um, and that is very, very clear. Um, there were some aspects of this year's uh, car stress test where the market shock component was a little lower than we might have. Uh, previously seen, we can't always anticipate that that will be the case so important that we don't react to 1 stress test in isolation and just stepping back, you know, this is a business that we believe we can improve the Returns on. You can see that. We believe we can get the returns not just to be in line with the group but more towards mid teens.

Venkatakrishnan: So that's how we feel about CARs.

Venkatakrishnan: Venkat, do you want to? Yeah. Moving to the UK. You know, first of all, I welcome the broader capital framework review that was announced recently, and I think I welcome it in two ways. One is it's an important topic, and the second is it's looking at the entirety of it, which is not just capital rules itself, but stress testing and everything that goes into the final number. And the way I think about it is that Capital and capital regulation is an important part of a healthy banking system and of growth. And so it is what you do to run a robust banking system.

And it offers, you know, income and geographic diversification, as well as the particular capital efficiency point. So that's how we feel about cars; been cats? Do you want to? Yeah, uh, moving to the UK.

You know, first of all, I welcome the broader Capital Framework review that was announced recently, and I think I welcome it in two ways. One is, it's an important topic. And the second is, it's looking at the entirety of it, which is not just Capital rules themselves, but stress testing and everything that goes into the final number.

And the way I think about it is that

Capital and capital regulation are important parts of a healthy banking system and of growth.

Venkatakrishnan: Ring fencing is an important, it's a bedrock of depositor protection. And what it helps is with the so-called gone concern. It's a will. It is if a bank has a problem like Icelandic banks did in 2007-8, then how do you make sure that depositors get their deposits back over and above the protection scheme? And what can you do in terms of the assets that are attached to those deposits? You know, the governor of the Bank of England a few weeks ago spoke at the Treasury Select Committee and he made a point that about 99% of assets from ring fence banks are deployed within the UK and 32% of the corresponding assets from non-ring fence banks are deployed in the UK.

And so it is what you do to run a robust banking system. Ring sensing.

Is an important, uh, it's a Bedrock of deposit of protection. And what it helps is with the so-called gone concern, it's a will it is if a bank has a problem like Icelandic Banks did in 20078, then how do you make sure that depositors get their deposits back over and above the protection scheme and what can you do in terms of uh, of the assets uh, that are attached to those deposits? You know, the governor of the bank of England, a few weeks ago, spoke with the treasury select committee and he made a point that about

Uh, 99% of assets from ring-fence banks are deployed within the UK.

Venkatakrishnan: That's the illustration of the problem. So that's why I continue to believe strongly in the maintenance and sustenance of that ring fence as it is structured.

And 32% of the corresponding assets from non-ring-fence banks are deployed in the UK. That's the illustration of the problem.

Venkatakrishnan: I mean, let's see what comes out of the government review, but that's my view certainly. And then on capital, as I said, that is part of growing the economy and growing the banking. Now, the governor made another point last week at the Treasury Select Committee where he said there's no tradeoff between financial stability and growth. He's absolutely right. Financial stability is a sine qua non, it's a necessity. But not all regulation necessarily contributes to financial stability, and that's where the debate is to be had. You know, which regulation is excessive superflows gilding the lady in the whole capital framework, and can you relax some of that regulation and improve growth?

So that's why I continue to believe strongly in the maintenance and sustenance of that ring fence. As it is structured, I mean, let's see what comes out of the Government Review, but that's my view, certainly. And then, on capital, as I said, that is part of growing.

Chris Kant: I'm optimistic for those. Thank you. Thank you, Chris.

Building the Lady in the Whole Capital framework, can you relax some of that regulation and improve growth? I'm optimistic for those outcomes.

Operator: Perhaps we can go to our next question, please, operator.

Thank you. Uh, thank you, Chris. Perhaps we can go to our next question. Please, operator.

Jonathan Pearce: The next question comes from Jonathan Pearce from Jefferies, please go ahead, your line is now open. Hello both. Two questions, please. The first is on these additional structural hedge tailwinds that you... alluded to post-2026. The yield on the hedge at the moment is about 2.5%, so if you take your guidance over the next 18 months, we're probably exiting next year at about 3.2%. If you're assuming a reinvestment rate of 3.5%, where's the extra tailwind coming from into 2027 and beyond? Is it just an averaging effect of the 2026 maturities, or is there something a bit more material going on?

The next question comes from Jonathan Pierce from Jefferies. Please go ahead. Your line is now open.

Hello, both um, 2 questions please. That the first is on these uh, additional structural hedge Tailwind that you've, uh, alluded to post 2026.

Um, the yield on the hedge, at the moment, is about 2.5%. If you take your guidance, over the next 18 months, we would probably be exiting next year at about 3.2%.

Um If you're receiving a reinvestment rate of 3 and a half where where's the, where's the extra Tailwind coming from into 2027 and Beyond? Was it just a

An averaging effect of the 2026 maturities, or is there something a bit more?

Jonathan Pearce: That's the first question.

Jonathan Pearce: The second question, you can try again on capital if that's okay. At the moment, I understand you want to operate in the upper half of your 13% to 14% HCT or one target range. Consensus, though, is... still a bit above 14% by the end of 2027. So how are you thinking? sort of pans out. I note your comments on pillar 2a dropping with US IRB and Basel 3.1 and I suppose you have into the medium term, would it be unreasonable to assume that you could operate towards the lower end? at the 13 to 14 percent range, because obviously the delta there versus consensus would be worth about four billion quid, which is not immaterial.

Material going on. Um, that's the first question. The second question, you can try again on capital is that it's okay at the moment. Understand, you want to operate in the upper half of your.

13% to 14% at 1 target range.

Um, consensus though is still a bit above 14% by the end of 2027. So how are you thinking?

This sort of pans out. I know your comments on Pillar 2A dropping with us IRB and Basel 3.1, and I suppose.

You know, 1 for 1, that would reduce your exit requirement by maybe 50 basis points.

Then you've got this point on the FBC, having a look, and maybe something happens. There, elsewhere in the capital stack into the medium term. Would it be unreasonable to assume that you could operate towards the lower end of the 13% to 14% range? Because obviously the delta there versus consensus would be worth about £4 billion, which is not immaterial.

Thank you.

Anna Cross: Thanks, Jonathan.

Anna Cross: So the comment on the structural hedge tailwinds is this, and it's just to help people sort of think beyond, I guess, the targets that we've already given you for 2026 and to understand how we feel about NII growth through 2026 and beyond. But the average yield on the there's nothing funny or quirky or anything in the kind of 2026 maturities. It's literally that simple. That's what we're drawing out there. I think the other point that we are drawing out this time that's perhaps a little bit different is the locked-in level of that hedge. So remember that this year, and you can see it on the structural hedge slide on slide nine, the locked-in amount for this year is 97%.

Thanks Jonathan. Um, the so the the comment on the on the structural hedge Tailwind is is this, um, and it it's just to help people sort of think Beyond I guess the targets that we've already given you for for 2026 and to understand how we feel about knee uh growth through 2026 and and Beyond. But the the average yield on the structural hedge in 2027, will still be below 3 and a half percent simplistically. That is what we're saying, there's not, there's nothing funny or quirky or anything in the in the kind of 26 maturities. It's it's literally that's

Anna Cross: And, you know, a bit lower than that next year, but you can see us really getting good lines of sight of that 80%.

Simple, uh, that, that's what we're drawing out there. I think the other point that we are drawing out this time, that's perhaps a little bit different is the locked in level of that hedge. So, remember that that this year and you can see it on the, the structural hedge slide on slide 9. The locked in amount for this year is 97%. And, and, you know, uh,

Anna Cross: So, to your second question... Look, from our perspective, we still think 13% to 14% is the right target range for us. We plan across multiple, multiple years when it comes to capital. There are a few regulatory moving parts out there, whether that be what the FPC is doing. Obviously, we don't know what is happening yet on Basel III in terms of Pillar 2A. We also don't know what's happening in terms of international alignment. So there's a lot on the regulatory front that is still uncertain. What's important to us is that we're delivering on our distributions as we currently set them out, so at least $10 billion.

A bit lower than that next year. But you can see us really getting good lines of sight, um, of that. 80%.

so, to your second question,

um,

Anna Cross: And you can see that prioritization that we're doing there. But fundamentally, the plan was designed to create a higher returning bank. And importantly, what you're seeing now is a bank with higher returns and higher capital. That is really, really important for the consistency, not only of shareholder distributions, but our ability to invest in the businesses longer term. So, you know, we are happy with the range that we've got and we'll just await regulatory clarity when it comes.

look from our perspective, we still think 13 to 14% is the right target range for us. We plan across multiple multiple years when it comes to Capital. Uh, there are a few regulatory moving Parts out there whether that be what the FPC is doing. Obviously, we don't know what is happening yet on Basel 3, um, in terms of, uh, pillar 2A. We also don't know what's happening in terms of sort of international alignments. So there's a lot on the regulatory front that is still uncertain. What's important to us is that we're delivering on our distributions as we currently set them out. So at least, uh, 10 billion, and you can see that prioritization, that, that we're doing there. Um, but fundamentally

The plan was designed to create a higher returning bank. Importantly, what you're seeing now is about higher returns and higher capital.

Um, that is really, really important for the consistency, not only of shareholder distributions, but our ability to invest in the businesses longer term. So, you know, we are happy with the range that we've got, and we'll just await regulatory clarity when it comes.

Anna Cross: Understood. I don't suppose any chance you could tell us what the maturity yield on the hedge is in 2020. Uh... not off the top of my head, you know, that the average is about about 3, but we'll come back to you if there's anything that we can help you on the details. Okay, sorry that's three years average rather than the specific maturing yield, but we'll come back.

Understood. I don't think there's any chance you could tell us what the maturity yield on the hedge is in 2027.

Uh, not off the top.

Head, um, you know, uh, that the average is about.

3, but we'll come back to you if there's anything that we can help you on in detail.

Okay, thank you. Okay.

Anna Cross: Okay, right.

Operator: Next question, please.

Sorry, that was a 3-year average rather than the specific maturing yield. Um, but we'll come, we'll come back to you, okay? Alright, next question, please.

Chris Hallam: The next question comes from the line of Chris Hallam from Goldman Sachs, please go ahead your line is now open.

Chris Hallam: Good morning, everybody. Two questions on RWAs and the investment bank. I guess the dynamics here in Q2 feel similar to what we saw in Q3 last year, so US dollar depreciation Q on Q. Last year, you let that feed through to lower headline RWAs. This quarter, that hasn't been the case. So I guess, what's changed there? This quarter, without reinvesting the FX tailwind, you would have obviously seen a step down in RWAs as a percentage of group towards the target. You would have seen the CET1 tailwind, but then you also, I guess, would have missed out on some commercial opportunities.

Anna Cross: And I suppose being there for clients on the financing side continues to be an important part of the rankings improvements you flagged. So how are you thinking about juggling those priorities, given that they may be, at the margin, a little bit mutually exclusive? And do you feel comfortable saying 56% is peak and it trends down from here? And then secondly, just a confirmation I think on RWA productivity, there was a tick down in the second quarter. Obviously, Q1 was quite a high number. And I think you want to call out in the quarter, maybe it's the ICB one-offs Q on Q.

The next question comes from the line of Chris hallum from Goldman Sachs, please go ahead. Your line is now open. Yeah, morning everybody, uh, 2 questions on rwas in the investment bank. I guess the Dynamics here in Q2 feels similar to what we saw in Q3 last year, so US Dollars appreciation, Q on Q. Um, last year, you let that feed through to lower headline rwas this quarter that hasn't been the case. So, I guess, you know what's changed there, uh, this quarter without reinvesting, the FX Tailwind. You would have obviously seen a step down in rwas as a potentially of group towards the target. You would have seen the C1 Tailwind, but then you also, I guess would have missed out on some commercial opportunities. Um, and I suppose being there for clients on the financing side continues to be an important part of the rankings improvements. You flagged. So how are you thinking about juggling? Those priorities given that they may be um at the margin a little bit mutually exclusive and do you feel comfortable saying 56% is is peak and it turns down from here

Anna Cross: And it feels like that level of RWA productivity is a level that would support the RRT target for next year. So I just wanted to check that you agree with that.

Anna Cross: Thank you. OK, thanks, Chris.

And then secondly, just a confirmation on RWA productivity. There was a tick down in the second quarter; obviously Q1 was quite a high number. Is there anything you want to call out in the quarter? Maybe it's the ICB one-off, Q1 to Q2, and it feels like that level of RWA productivity is a level that would support the ROE target for next year. So I just wanted to check that you agree with that. Thank you.

Okay. Thanks Chris. Um,

Anna Cross: Step back for a minute. The RWAs in the IB have been broadly flat for three and a half years. That is our clear strategic intent and what we keep coming back to quarter after quarter after quarter. It's a key part of the plan and the capital discipline that we talked about. What you might see in any particular quarter is either higher or lower levels of client activity as we pass the quarter end, and it's honestly nothing more than that. You can see that we are very disciplined in the way that we manage our risk. You can see that in the FAR and in the lost days.

but,

Step back for a minute. The RWA is in the RBA have been broadly flat for 3.5 years. That is our clear strategic intent. Uh, and what we keep coming back to quarter after quarter after quarter is a key part of the plan and the capital discipline that we talked about. What you might see in any particular quarter is either higher or lower levels of client activity. As we pass the quarter-end, and it's honestly nothing more than that.

Anna Cross: If you look at the distribution of trading income, that's all on page 37. We deployed more RWAs to support clients, not really in taking materially more risk. That's what you should expect us to do. We really don't feel that RWA discipline and growth in the IB are mutually exclusive. Since the beginning of the plan, the IB RWAs, as I said, more than the plan for two years before the plan started, have been flat. We've got an income cargo of 9%. That's what we're trying to do here. I think you're seeing that flow through into the second part of your question, which is really about ROT productivity.

Uh, you can see that we are very disciplined in the way that we manage our risk. You can see that in the bar and in the last days. So, if you look at the distribution of trading income,

Uh, that's all on page 37. So we deployed more RWAs to support clients. Not really in taking material in more risk. That's what you should expect us to do. And we really don't feel that RWA discipline and growth in the IB are mutually exclusive. So since the beginning of the plan, the IB RWAs, as I said, well more than the plan for Q2.

Venkatakrishnan: There's a clear seasonality to the IB. Generally, higher in Q1, higher in Q2 than Q3 and Q4, typically. You're seeing nothing more than a seasonal change year on year. It's up meaningfully, I think, 80 basis points year on year. What we're doing here, which is driving capital discipline in banking and driving our focus businesses in markets, is working. What's really important to us, and it's probably the most important part of the plan for me, is not just the return in the IB, but the consistency of those returns. That's really important. You're going to see that, hopefully, in the coming quarter.

Years before the plan started have been flat, and we've got an income category of 9%. That's what we're trying to do here, and I think you're seeing that flow through into the second part of your question, which is really about RoE productivity.

There's a clear seasonality to the IB.

Generally hiring q1 hiring Q2 then Q3 and Q4 typically. Um and and so you're seeing nothing more than a seasonal change change year on year. It's that meaningfully I think 80 basis points, uh, year on year. So you know what we're doing here? Which is driving um Capital discipline in banking and driving our Focus businesses in markets is is working. Um and what's really important to us? And it is probably the most important plan for part of the plan for me is not just the returns in the IB, but the consistency of those returns. Uh, that's really important. So you're going to see that um, you know, hopefully in the, in the coming quarters,

Venkatakrishnan: I'll just add not just consistency but quality. So the consistency and quality go together, right? As we do more in financing revenue, as we do more in corporate banking revenue, you get the consistency, but you're also getting more predictable high-quality revenues. So I endorse everything Anna just said also.

I'll just, uh, notice consistency with quality. So the consistency and quality go together, right? As we do more in financing revenue, as we do more in corporate banking revenue, you get the consistency, but you're also getting more predictable, high-quality, uh, revenues. So, uh, endorse everything, and I just set up.

Chris Hallam: Okay, thank you. Thank you very much Chris.

Operator: Perhaps we can go to the next question please operator.

Okay, thank you. Thank you very much. Chris, perhaps we can go to the next question. Please, operator.

Andrew Coombs: The next question comes from Andrew Coombs from Citigroup, please go ahead, your line is now open. Good morning. Thanks for taking my questions, one on the U.K. and one on the U.S. please. On the U.K., I just wanted to come back to the deposit trends. You talked about being disciplined on term deposit pricing against very tough competition. If I took back over a longer period of time, your deposit balance has contracted in four of the five of the last quarters. Perhaps you could just elaborate on how you think about margins versus volumes on that U.K.

The next question comes from Andrew Kums from Citigroup. Please go ahead. Your line is now open.

Andrew Coombs: deposit book, what it would take for you to re-engage in terms of pricing dynamics more broadly across the space.

Andrew Coombs: Secondly, on U.S. consumer, I wanted to ask about mix-shift and what it means for your targets. If I look at your NIM in U.S. consumer, impressive Q on Q improvement up 30 basis points. At the same time, you're talking about a 50 million additional charge over the next few quarters from Q4 on post-acquisition to stage migration from general motors. just given that makeshift that you've seen with AA coming out, General Motors coming on. What does it mean for your targets, the 40 billion receivables, the greater than 12% NIM, the 400 basis points cost of risk in that division, and they're all now subject to slight change?

Your deposit balance is contracted in 4 of the 5 of The Last quarters. Um, so you probably could just elaborate on how you think about margins versus volumes, uh, on that UK deposit book. Uh, what it would take for you to re-engage, uh, in terms of pricing Dynamics, uh, more broadly across the space.

Um, and and then, secondly, on us consumer. Um, I wanted to ask about makeshift and what it means for your targets. Uh, if I look at your Nim in US consumer the impressive, q and Q, Improvement up, 30 basis points. Uh, at the same time, you're talking about uh a 50 million additional charge over the next few quarters. From Q4 on, post acquisition to Stage, migration from General Motors. Just given that mix shift that you've seen with AA coming out. General Motors coming on, um,

What does it mean for your targets, the $40 billion receivables, the greater than 12%? Nim, the 400 basis points cost of risk in that division, and they are all now subject to slight change. Thank you.

Anna Cross: Thanks, Andy.

Anna Cross: I'll take both of those. So, look, we had a similar question on deposit trends earlier in the call. There's nothing specific going on here. We feel like we're broadly following our peers in terms of market shares, particularly in current accounts, and you can see that, as I said, in the roll of the head. Let me specifically speak about fixed-term deposits and the ISO season, which I think is probably what's underpinning your question. The ISO season was very, very different this year. We can all, I guess, have a view about why that might be the case.

Thanks Andy. I'll take

Oh, we had a similar question on the profit trends earlier in the call. There's nothing specific going on here. We feel like we're broadly following our peers in terms of market share, particularly in current accounts, and you can see that, as I said in the role of the hedge.

Let me specifically speak about fixed-term deposits and the ICCs, which I think is probably what's underpinning your question. So, look, the ICC...

Anna Cross: But it was bigger and earlier than we've ever seen before and if you look at the quantum of flows during the early part of April. I think the second week of April, the flows on those products were around $6 billion, not for us, but for the market. Then if you look at the average of May and June, that's more like $1 billion a week. So that gives you an idea of the scale of flows. The pricing we felt was not economic, and therefore we stepped back from fixed-term pricing in that ISA season and remained disciplined.

It's very different this year. We can all, I guess, have a view about why that might be the case.

Um, but it was bigger and earlier than we've ever seen before, and if you look at the quantum,

Of flows during the early part of April. I think the second week of April, the flows on those products were around $6 billion, not for us, but for the market. Then, if you look at the average of May and June, that's more like $1 billion a week, so that gives you an idea of the scale of flows.

Anna Cross: We did, however, grow our ISA balances year-on-year and feel like we had a good season. So where we think it's important for the relationship, we do step into pricing, and you can see there's a divergence between our core pricing and our relationship pricing, and over time you might see that, you know, you've seen it widening, particularly through Q2, so it is important to us, but, you know, we're not going to price uneconomically in the market. whilst we have a stable underlying base.

The pricing, we felt, was not economic, and therefore we stepped back from fixed-term. Pricing in that is the season and remained disciplined.

We did, however, grow our ISO balances year on year and feel like we had a good season.

So where we think it's important for the relationship, we do step into pricing and you can see there's a Divergence between our core pricing and our relationship pricing. And over time you might see that, you know, you've seen it widening particularly through Q2, so it is important to us but um, you know, we're not going to price uh, on economically in, in the market.

Anna Cross: Just moving to U.S. consumer, look, we've said a number of times it's a plan in many parts. It's about Nim. You're seeing Nim going up. Why is it going up? It's because we repriced the book last year and that's feeding through. It's also because U.S. deposits are up 27% in that business. The cost-to-income ratio is now 48% and it's headed downwards and risk is well controlled. So we are controlling everything that we can within that business and driving the operational discipline as we said we would in the plan. We clearly still have ambition to grow in the business, and we're looking for a balance, you might recall, of being roughly 15% in retail at the moment and moving much more towards 20% in retail.

Whilst we have a stable underlying base.

Just moving to U.S. consumer. Um, look, we’ve said a number of times, it’s a plan of many parts.

Uh, it's about Nim. You're seeing Nim going up. Why is it going up? It's because we re-priced the book last year, and that's feeding through. It's also because...

U.S. deposits are up 27% in that business. The cost-to-income ratio is now 48% and is headed downwards, with risk also well-controlled. We are managing everything that we can within that business and driving the operational discipline, as we stated we would in the plan.

Anna Cross: And actually, GM will fulfill a large part of that move for us. That will clearly flow into NIN and will give us a better risk-adjusted return, which is what we are trying to do. So we do want to grow this business. We've gained one partner in GM. We've retained four. But ROTI is the North Star, we're not going to grow it to meet a target and compromise ROTI and indeed that's true of every single business across all five divisions.

We clearly still have ambition to grow in the business, and we're looking for a balance. You might recall being roughly 15% in retail at the moment and moving much more towards 20% in retail. Actually, GM will fulfill a large part of that move for us. That will clearly flow into NIN and will give us a better risk-adjusted return, which is what we are trying to do. So we do want to grow this business. We've gained one partner in GM, and we've retained four.

Um, but Roti is the North Star. We're not going to grow it. Um, you know, to me, to target and compromise Roti. And indeed, that's true of every single business across all 5 divisions.

Andrew Coombs: Okay. Thank you, Andy.

Operator: Perhaps we can go to the next question, please, operator.

Amit Gol: Our next question comes from Amit Gol from Mediobanker.

Okay, uh, thank you, Andy. Perhaps we can go to the next question. Please, operator.

Amit Gol: Please go ahead, your line is now open. Hi, thank you. So, two questions. One, again, just to follow up on the product mark. I just want to check what you're thinking is in terms of 2026, given there are a few more parts to it, versus 2025. Would you expect a positive contribution then? I guess I'm just thinking that... In terms of the broader guide, so there's the 7.6% of NII in 2025 and there's two-thirds of roughly a billion hedge benefit in 2026, so that by itself gets you to the 8.3% consent and managing that cost piece if revenues continue to be strong.

Our next question comes from Medio Banker. Please go ahead; your line is now open.

that, um,

You know, in terms of the broader guide, so there's the 7.6 and of NII in 25. There's 2/3 of roughly a billion hedge benefits in 26. So, you know, that by itself gets you to kind of the 8.3 consensus NII. There's potentially a little bit of volume growth. So then the product margin is the...

Is kind of the the, the Delta then. Um, and then the second question, um, just on the IB I mean I think you know, it's obviously a very strong performance in markets. Um, costs were were, well contained, um, Jew, just curious, how you're thinking about investment, then also into that business um, and managing that that cost piece if, um, you know, for companies continue to be strong. Thank you.

Anna Cross: Okay, thank you.

Anna Cross: I'll take the first and then hand to Venkat for the second. As I said, it's a bit too early to talk about 2026 NII or particularly the product margin. And I just call out a couple of things, one on the numerator and one on the denominator. So on the denominator, we do intend to continue to originate assets. And you can see that coming through not only in our strong mortgage growth, so we've had four consecutive quarters of mortgage growth on a net basis. And, you know, cards continue to grow. Now, clearly, more mortgages in the mix will slightly dilute your margin, but only on a mixed basis, higher NII, of course.

Okay. Thank you. Thank you, Emma. I'll take the first one and then hand it over to the bank for the second. Look, as I said, it's a bit ...

It's too early to talk about 2026, knee, or particularly the product margin. Um, I just want to call out a couple of things: one on the numerator and one on the denominator. Um, so on the denominator, we do intend to continue to originate assets, and you can see that coming through not only in our strong mortgage growth. We've had four consecutive quarters of mortgage growth on a net basis. Um, you know, cars continue to grow. Um, now clearly more mortgages are in the mix.

Anna Cross: So think growth in assets, but I would call out this maturity of the cards and promotional cards balances. We said it would start in 2025. Actually, the longer maturities, which is that the larger part of the promotional balance mix, really start to mature in 2026 and beyond. So you're going to see a bit more from there. So I think you've got a numerator and a denominator impact, Amit, which is why I'm not going to be drawn on the product margin specifically.

So, slightly dilute your margin, um, but only on a mixed basis. Higher NII, of course, so think growth in assets. But I would call out this maturity of the cards and promotional card balances. Um, we said it would start in 2025.

Venkatakrishnan: Venkat? Venkat Mishra Yeah, Amit, when we announced our plan six quarters ago, one of the things we said about the investment bank is that in markets, we had been doing a lot of investment in technology over the past few years, and that we would expect to see the benefits of that investment coming through during the period of this plan. And that's what we're seeing. And then in banking, we said that we'd identified important segments of the market, including tech and healthcare, M&A, and also capabilities in the which we were investing in. We've been doing so, and I think we've seen the results of that.

Actually the longer and maturities, which is that the the larger part of the promotional balance? Mix really starts to mature in 26 and Beyond. So you're going to see a bit more from there. So I think you've got a numerator and a denominator impact Amit, which is, which is why I'm not going to be drawn on on the product margin specifically. Um, V. Yeah. And it, when we announced our plan, uh, 6 quarters ago, 1 of the things we said about the Investment Bank is that in markets. We had been doing a lot of investment in technology over the past few years and that if you would expect to see the benefits of that investment coming through in the 4 During the period of this plan, and that's what we're seeing. And then in banking, we said that we'd identified important segments of the market, uh, including Tech and Healthcare m&a. And also capabilities in the corporate and transaction bank, which we were investing in. We've been doing so and I think we think

Amit Gol: So expectations should be that we continue to operate according to the plan we laid out. Okay. Thank you very much, Amit.

The results of that. So

Expectations should be that we continue to operate according to the plan we laid out.

Operator: Perhaps we can go to the next question, please, operator, noting that that last question, that is the last question of the call. Thank you.

Pernie Mong: Our final question today comes from Pernie Mong from Bank of America. Please go ahead. Your line is now open.

Pernie Mong: Hi, Anna. Hi, Micah. Thank you for taking my question. Just a couple of quick ones. So, the UK noted that very clearly, they've done $10 billion of organic auditory allocation to the business. I guess there is...

Okay. Um, thanks. Thank you very much, Amit. Perhaps we can go to the next question, please. Operator noting that, that was the last question of the call. Thank you. Yeah, of course. Our final question today comes from Penny Hmong from Bank of America. Please go ahead, your line is now open.

D, $10 billion of organic. Um,

Anna Cross: case that confidence drops off and maybe activity comes down and you find it more difficult to allocate the remaining RDBs in the UK business, do you have a plan B? Would you do acquisition to top it up and make sure you hit 30 billion? And if that's the case, how would you think about that in the context of the 10 billion distribution? So I guess that's number one.

Audible allocation to the business. I guess there is, um, a little bit of nervousness about the UK macro from here. Um, certainly, there is some nervousness around what the Autumn Budget might have. So, in the case that confidence drops off and maybe activity comes down, and you find it more difficult to allocate the remaining assets in the UK business, do you have...?

Anna Cross: Number two, quickly touching on cost. OK. Thank you, Perley. So, you know, we're pleased with the 10 billion organic growth in the UK. And you can see from slide 13 that that momentum is picking up not just in the UK, in the areas that we've talked about before, which is, you know, cards and mortgages, we talk about a lot, but also in UK corporate. So we've had three successive quarters of growth in UK corporate. And you can actually see the UK business banking now starting to turn. And when we set our plan, we focused that plan on areas where we were either underweight, or we felt we had opportunities to grow because we'd lost market share.

A plan B like would would you do acquisition um to top it up to make sure you hit 30 billion. And if that's the case, how would you think about that in the context of the 10 billion distribution? So I guess that's number 1. Um, number 2 will quickly touching on cost. Um, uh, so I think, previously you've said that you would expect cost to come down in 2027. Uh, I guess it looks like uh, the efficiency savings are coming through as expected all on track and um,

And, uh, if anything, the ethics should be a little bit of help as well. So, is that still what you would expect, um, that uh, that $17 billion sort of maybe closer to $17 billion next year?

Three successive quarters of growth in UK corporate, and you can actually see good business banking now starting to turn. When we set our plan, we focused that plan on areas where we were either underweight.

Anna Cross: So, that's true of, for example, high loan-to-value mortgages or corporate and business banking, where we have had a much higher loan-to-deposit ratio than our peers in the past. So, we remain confident that we can deploy that, you know, noting that we're at a run rate of around $2 billion per quarter in 2025. And, you know, we're $17 billion at the halfway point. We've got six quarters to go. You can do the math, particularly given that that momentum appears to be picking up. So it is and always has been an organic plan and our capital hierarchy, as I said before, remains intact.

Or we felt we had opportunities to grow because we had lost market share.

So that's true or for example, High loan to value mortgages or corporate. And business banking, where we have had a much higher loan to deposit ratio than our peers in the past.

So we remain confident that we can deploy that, noting that we're on a run rate of around $2 billion per quarter in 2025. Um, you know, we're at $17 billion at the halfway point. We've got 6 quarters to go; you can do the math, particularly given that that momentum appears to be picking up.

Anna Cross: Number one, regulation. Number two, at least 10 billion. Number three, deploy capital into the UK. So we're not going to compromise on the quality or the returns of that lending in order to meet a target. We're very disciplined.

Anna Cross: And then on the second question, actually, we said it was 2026 when costs would come down. That's still our plan. Our cost income ratio guidance for the full year of this year is 61%. You can see that we've got a strong platform for that from the first half. I just note a couple of things. Firstly, income's a bit seasonal. And secondly, the fact that we did say that we would expect to skew our and structural cost actions into the second half of the year. So we've done about 100 million so far. Expect us to be at the top end of the two to 300 million.

So it is and always has been an organic plan, and our capital hierarchy, as I said before, remains intact: number 1, regulation; number 2, at least $10 billion; number 3, deploy capital into the UK. So we're not going to compromise on the quality or the returns of that lending in order to meet a target with very disciplined.

Anna Cross: All of that is contained in the 61% guidance that we've given you for the cost income ratio. And, you know, at this point, we're 1.35 billion through a 2 billion target. So we feel like we've got real momentum. I wouldn't change how we feel about the 2026 cost position. It's a really, really key part of the plan and delivering higher returns, more consistent returns.

Um, and then on the second question, actually, we said it was 2026 when costs would come down, that's still our plan, our cost income ratio uh guidance uh for the full year, um of this year is is 61%. You can see that we got a strong platform for that from the first half. I just know, a couple of things, firstly, income's a bit seasonal and second layer. The fact that we did say that we would expect to skew our um, uh, structural cost actions into the second half of the year. So we've done about 100 million so far expect us to be at the top end of the 2 to 300 million or

61% guidance that we've given you for the cost income ratio. Um, and, you know, at this point we're 1.35 billion through a 2 billion. Uh, Target. So we feel like we've got real momentum apparently. So I wouldn't change how we feel about the 2026 cost position. It's a really, really key part of the plan and delivering higher returns more consistent returns.

Anna Cross: So with that, we will close the call. I'd like to thank you for all of your questions today. We look forward to seeing many of you either on the road over the next few days or indeed on the analyst call next Monday.

Anna Cross: And if we don't see you, then have a good summer break when it comes. Thank you for that. Thank you.

So, uh, with that, we will close the call. I'd like to thank you for all of your questions today. We look forward to seeing, uh, many of you either on the road over the next few days or indeed on the analysts' call next Monday. And if we don't see you then, have a good summer break when it comes.

Thank you for that. Thank you.

Operator: That concludes today's conference call. You may now disconnect.

Thank you. That concludes today's conference call. You may now disconnect.