Now, let me tell you more about the business. So the US Consumer Bank has been part of Barclays for 20 years, and we’re principally focused on providing credit cards to US consumers. We operate in what we call partnership cards, which is essentially a business-to-business to consumer model, where we partner with global corporations. Partners choose us to help them drive increased sales and customer loyalty through the co-brand or reward cards that we provide. Focusing on partnership cards is a conscious choice that we made, which plays to our strengths in a market where we would otherwise have to invest significantly to build brand awareness. The strategy has worked well for us. We’ve grown significantly and are now the ninth largest issuer in the US and a leading partnership issuer.
We have approximately 20 million customers across 20 partnerships and [Technical Difficulty] Yes, thank you. Okay, so starting back with Slide 92. As you can see on this slide, we partner with 20 leading U.S. brands across multiple industries. And I already mentioned a few of them by name. A key point here, very strong relationships, many of whom have been with us for more than a decade and our historical renewal rate is about 90%. And importantly, this portfolio is very balanced by size without undue concentration risk. That said, the current portfolio mix is heavily weighted to airlines. So we are diversifying our sector exposure. The addition of GAAP in a partner in 2022 was a noteworthy first step, which I’ll talk more about later. So Slide 93 and now turning to financial performance from 2021 to 2023.
First point, first I’ll point out that the 4% road he delivered in 2023 is clearly below our target level. I will explain the drivers of this performance shortly. But it’s important to state that this level of return is not representative of the strong underlying performance of the business. We’ve grown net receivables by $10 billion, or 45% over the last two years to $32 billion. We’ve achieved that through a balanced mix of strong organic growth post-COVID and strong inorganic growth from the acquisition of the AARP and GAAP portfolios, with combined balances of close to $4 billion at acquisition. Alongside balanced growth, we have also seen significant growth in income and an improvement in NIM to 10.9%, driven by the benefits of a higher interest rate environment, the addition of the GAAP portfolio, and normalizing revolve rates from COVID lows, and a steadily improving cost-to-income ratio, in part reflecting benefits of beginning to scale the business.
But offsetting these, the loan loss rate increased to 500 basis points as we built reserves for the expected rise in write-offs, which were coming off of historic lows consistent with those seen across the industry. In addition, new accounts were down significantly due to less travel during COVID, which otherwise would have matured and added to profitability in 2023. This, along with a large allowance build, resulted in a lower-than-normal RoTE of 4%. Now, switching to the next slide, Slide 94, I’d like to use the remainder of this presentation to articulate why we are confident that we can deliver returns in line with the group target by 2026, even in the face of regulatory headwinds in the form of IRB and late fee legislation, and also give some color on the impairment outlook and why we think it will revert towards our historic long-term average in the future.
Now moving to Slide 95. We have a very clear path to deliver RoTE in line with the group target by 2026, which incorporates three elements. The first is the stabilization of consumer credit performance. Second, the specific actions we’re taking, which will improve performance by scaling the business, driving improved operational efficiency, and expanding margins, each of which I’ll talk about in more detail shortly. And third, it considers regulatory headwinds that we are actively working to mitigate. But first, it’s important to understand USCB’s track record, which gives us confidence that we can deliver on this plan. If you move to Slide 96, please. As you can see from this slide, the business has a long track record of growth, returns, and prudent risk management.
In the nine years before COVID, the business delivered an average RoTE of 16%, helping the group achieve its return targets over that time. The RoTE performance since 2020 has been uneven, reflecting impacts from COVID, but given the recent balance recovery and normalization of customer behavior, we expect future performance to return to the more consistent pattern delivered between 2011 and 2019. It’s also worth noting that we are making very deliberate investments to scale of business. New account originations incurred J-curve effect, principally driven by upfront marketing and day one impairment build, which dampens in year RoTE. That said, these annual new account vintages mature to RoTEs of greater than 20% over time. This is one of the key reasons why scaling the business is so important.
This J-curve effect will decrease significantly at greater scale with a mature higher returning back book becomes a larger percentage of the total portfolio. Additionally, greater scale has the added benefit of reducing volatility when we add new partners in the future. Now moving to slide 97. We’re back up. Okay. Now building on the theme of USCB’s strong track record. What we wanted to highlight on this next page is how the business compared to other top 10 US issuers over the last 10 years, using delinquency rates as a proxy for credit quality. And as you can see from the chart, we have consistently maintained our position within the peer group during the period. Even in the early and mid-2010s, when our average FICO score was a bit lower than it is today.
And being positioned in the middle of the peer group is consistent with our partnership-focused model, where we balance the need to deliver resilient risk-adjusted margins for shareholders with trying to say, yes, to as many of our partners’ customers as we can. While we’ve seen a recent uptick in 30-day delinquencies, this is expected as we are coming off historic lows during COVID, and as you can see, very much in line with industry trends. We believe this 10-year period demonstrates two things: first, that we have demonstrated strong credit discipline over time; and second, that we have not taken on outsized risk to grow the portfolio at the rate we have. Now let’s take a closer look at the drivers of impairment over the last few years. As previously mentioned, the recent normalization of delinquencies was expected and is largely a reflection of customer activity catching up from COVID lows.
While write-offs have been broadly stable, you can see that we’ve rebuilt loan loss reserves to cover the write-offs we expect in the future following the normalization of delinquency rates. While this positions us well for the future, the in-year impact in 2023 was significant. Now looking ahead, we expect delinquencies to continue to tick up in the first half of 2024 and then to stabilize. The result is that we expect the 24 and 25 impairment charges to be below 23 levels and for our loan loss rates during those periods to be closer to our long-term average rate of around 400 basis points. Importantly, we remain well-provisioned as evidenced by a strong total coverage ratio of 10.2%. As you can see, we’ve also provided our US legal entity CECL coverage rate of 8.2%, which is in line with US peers.
Finally, it’s important to note that we continue to feel encouraged by the health of the US consumer. Unemployment levels remain near historic lows, moderation in inflation is contributing to real wage growth. There are still healthy levels of excess savings and strong spend and repayment levels persist. Now in line with the group, our plan to improve returns can be viewed through the lens of simpler, better and more balanced. And I’ll speak to these individually in a moment. But to summarize, we are looking to improve operating efficiency, scale and diversify the business, improve margins and optimize the use of our balance sheet. Now, starting with simpler. As you can see from the charts, recent investment in the business has improved operational efficiency, but we recognize there’s more to do.
We’ve invested to digitize the business and built the retail platform as part of the Gap acquisition, which will enable us to add new partners more efficiently in the future. This increased investment onboard Gap, combined with lower card balances and subdued income post-COVID, drove our cost-to-income ratio in 2021 to 60%, significantly higher than our long-term average. Since then, though, these investments have helped reduce the cost per average active account by 15% and contributed to a reduction in cost income ratio to 51% in 2023. Now looking forward, as we continue digitizing, automating and scanning the business, we expect a further reduction in cost per average active account, contributing alongside margin improvements to a cost-to-income ratio in the mid-40s by 2026, broadly in line with our historic average.
On the left-hand side of the slide, we provide a few examples of what we mean when we say we can become more efficient and improve customer experience by digitizing and automating key customer journeys. Transaction dispute or rewards are two great examples of common points of customer friction, which today too often result in customers reaching out to our call centers. We can simplify processes like these that customers can self-serve through the device of their choice without ever picking up the phone. That’s simpler for our customers and more efficient for us. And we have similar opportunities on the colleague front and so are investing significantly to upgrade colleague tools and are leveraging automation to eliminate manual time-consuming activities.
Now, moving to better and more balance. We will also look to scale and diversify our business, targeting $40 billion in net receivables by 2026. That strong track record of growth since 2011, where we’ve grown receivables at an 8.5% CAGR versus a 5% industry average, gives us confidence that we can achieve this through a combination of organic and inorganic growth. We see a large opportunity to grow in the retail vertical, and we expect the retail portion of the portfolio to increase from around 15% today to around 20% by 2026. And this will also help us rebalance our FICO mix to improve risk-adjusted returns. We also plan to recalibrate our risk-based pricing in response to industry-wide lead fee reductions. We expect that over time, this and other actions will fully offset any headwinds from these changes.
Now on the liability side, today, we’re about 60% funded by core deposits, which is a great low-cost way of funding our card assets. We are investing in new capabilities for our deposit platform, including targeted marketing to our partners and a tier-based pricing strategy, which should result in around 75% of funding coming from core deposits by 2026. Overall, we expect these actions to drive more than 100 basis points of NIM expansion by 2026. Now turning to the shift to IRB capital requirements, which you heard Anna speak about earlier. The first point, I’d like to make is to reiterate that this is a PRA driven adjustment that is industry-wide and not US CV specific. There is no underlying credit problem that is driving this increase in RWAs. We expect US card issuers to also see an increase in 2025 under proposed Basel rules.
But as you can see, the capital treatment for us under IRB is significantly more conservative than the current standardized model. This will impact us in the second half of this year with an expected RWA increase of around £16 billion or our risk weighted density equivalent increase of around 60%. While this will have an adverse impact on returns, we’ve been focused on a series of actions that will reduce the impact and help deliver returns in line with the group target by 2026 and mid-teens returns over the long run. These actions include: re-optimizing credit line strategies and leveraging strategic risk transfer agreements to reduce capital requirements, enabling USA need to continue to grow but at a less capital-intensive rate. So, to summarize, the US partnership market is very attractive with solid economics, ample room for growth, and require specialized capabilities and expertise that we have developed over the last 20 years.
We have a proven track record of winning and growing partnerships, producing strong outcomes for our partners and customers and delivering strong value return for shareholders. Although there remains some uncertainty with regard to the macroeconomic environment, we are well positioned. We have extensive experience managing credit through multiple cycles and are also well equipped to manage regulatory change. As you can see, we are outlining key targets for the business that underpin our commitment to deliver returns in line with the group target by 2026. First, we will continue to scale the business and grow receivables to £40 billion. We will deliver a net interest margin of more than 12%, which represents more than 100 basis points of growth.
We will drive cost-to-income ratio down to the 51% we saw in 2023 to the mid-40s, reflecting our long-term average. We will continue to manage credit risk prudently, and we will manage loan loss rate to around 400 basis points, also consistent with our long-term average. On RWAs, we are taking action and expect 2026 RWAs to be around £45 billion, which represents an RWA density of around 145%. As we deliver upon these targets, we will be building momentum in the business that not only will deliver returns in line with the group target in 2026, but will generate increased confidence in our ability to achieve our long-term goal to deliver mid-teen roadies on a sustainable basis. Thank you for your time today. I look forward to future opportunities to discuss the business deal.
I will now hand over to Vim Maru, CEO of Barclays UK.
Vim Maru: Good morning, everyone. I’m Vim Maru, the new CEO of Barclays UK. I know many of you here today through my 20 years in financial services, and I look forward to getting to know you again in my new capacity. So let me take you through how Barclays UK or BUK, as we call it, is going to support the ambitions and targets that Venkat and Anna just set out. As you know, BUK is our ring-fenced bank. It serves retail customers and small business clients across the UK. Barclays 330-year heritage helps to build deep customer trust and a strong brand position. Whilst our history gives us those foundations, our focus is on positioning the business for the future as a growing high-returning business, which delivers good customer outcomes.
