But we expect downward pressure on the balance sheet coming from both deposits and mortgages. And we’d expect to start growing the balance sheet again really towards the back end of the year, particularly, for example, through organic card growth in the second half of 2024. And of course, none of that includes Tesco, and we’ll update you when we know the completion date. Okay. Where next? Rohith?
Rohith Chandra-Rajan: Thanks. Good morning. Rohith Chandra-Rajan, Bank of America. Thanks for the color on FICC. Just in markets, the equities business, looks like it’s been struggling with market share for about the last 18 months or so. So I was wondering, if you could give us a little bit more color about if there are particular product areas that have been more challenging relative to the peer group. And then secondly, just on — back on capital. You seem very confident that it’s just US cards where we’ve got model updates. Why do you not expect them anywhere else, because that’s already been completed? Or you think the risk weightings on the other models are in the right place?
Anna Cross: So on equities, actually, performance is fine in the fourth quarter. Nothing I’d specifically call out. Adeel is going to talk later on about a couple of specific product areas, where we want to do — where we have a bit more focus on going. So I’ll let him pick that up then. But there’s nothing — there’s nothing stand out. There’s nothing particular that I would call out for Q4. On the capital point, as I said before, it’s a requirement for IRB banks to get to 85%. The eagle-eyed amongst you, if you look in the Pillar 3, I forgot which table, but it might be 28, you’ll be able to see that actually post-US cards, we get to around 67%. The step between here and full compliance is largely around the wholesale models.
And actually under standardized, the wholesale models do a pretty good job of having the right weights against counterparties to reflect what would otherwise be an advanced treatment. So on wholesale, which is our only remaining big movement to make, we are not anticipating a significant movement in RWAs. And of course, outside of cards, you’d expect a movement from standardized to advance to actually reduce the RWAs. It just doesn’t in particular with cards. And our UK cards book is already IRB-compliant. So this brings the US cards book up in alignment with that. Okay, Andy. I think, Andy, you might be our last question in the interest of time.
Andrew Coombs: Good morning. It’s Andrew Coombs from Citi. Two questions, please. First, on the UK, we talked about the net interest income, which came in notably ahead of consensus, of course. So in the UK, net interest income, we’ve already talked about and came in notably ahead of consensus expectations. But on the flip side, the non-net interest income came in below expectations. I know there is the transfer of [indiscernible] there. Are there any other one-offs you’d like to call out in the non-NII in the UK? And my second question, a similar vein. The corporate revenues in CIB, again slightly lower in the quarter, anything you’d like to call out there in terms of leveraged finance, marks or hedges or anything else in that line item? Thank you.
Anna Cross: Okay. Thank you, Andy. So on the non-NII in UK, as you pointed out, it has changed structure because we moved UK Wealth into Private Banking and Wealth, and we did that in Q2 of 2023. The other thing just to call out is, previously, we’ve seen relatively lumpy debt sales go through that line in the past. Don’t expect that going forward. We’ve got a forward flow arrangements. So it drips through the P&L in a much more gradual way. In terms of the one-offs across Q3 being positive and Q4 being negative, they’re all too small really. There’s nothing I would specifically call out, which is why we’re trying to be helpful here and give you some guidance to help you model it going forward and saying that we expect it to be above 250.
And on the corporate lending line, clearly, that does include the costs of our SRT and it does include the cost of the portfolio hedges. But really, the only significant point in the current quarter is £85 million of leveraged loan marks that we took in the quarter. I wouldn’t call anything else out specifically. I’d say that underlying corporate lending income is broadly stable from where it’s been over the last few quarters. Okay. And with that, I will close the full year part and invite Venkat to pick up the strategy update.
C.S. Venkatakrishnan: Thank you, Anna. Right. So now we come to the strategy update part. It’s been 10 years since our last Investor Day. A lot has changed in the world since then. A lot has changed at Barclays. So today, what we do is we present our vision for the future. It’s a vision of a better run, more strongly performing, higher returning bank. It’s a vision of a Barclays, which encompasses a potent collection of businesses and capabilities. Each is strong by itself. And together, they are mutually beneficial and reinforcing. It’s a Barclays, which is appropriate to a changing and multipolar world, one which values a UK based bank. Equally, it is a Barclays, which seeks to deepen and broaden its role in the UK even as it engages with the world from London.
As I say, we are very bullish on the UK as a place in which to do business and from which to do business. Importantly, it is a vision for Barclays that is committed to generating strong financial returns and distributing them to shareholders. In my two years as CEO, I have worked very closely with my colleagues and the Executive Committee, outside of it and with the Board, examining the path on which we have been, the direction we need to take forward. And what you will see in here today are the results of that work. We are creating a simpler, a better, a more balanced bank, words, which I will come back to later. It’s dedicated to higher returns for its investors, and how we do that is equally important. It’s a vision anchored in ambition — measured ambitions, I call it, and it’s driven by disciplined delivery.
And as I said, it’s harnessed to our home here in the UK. So we’ve embraced this plan of measured ambition, measured confidence. We start actually with very strong foundations. Over 20 million UK retail customers, and that is before Tesco, and we bank a one-fourth of UK corporates. In the US, our credit card business has a further 20 million customers. In our Investment Bank, we’ve built leading global markets and banking businesses, which are at scale today. I repeat, at scale today, delivering for our clients at a time when many competitors have pulled back and, in fact, some still continue to do so. For a long time, fixed income has been the calling card of Barclays. We are number three in credit and joined first fixed income financing. Our investment bank has led landmark transactions.
And importantly to me, we were the top UK investment bank in 2023. This is a title to which I feel we all always must aspire. I said that we did an investor update 10 years ago, and Barclays has changed since that time, in fact, changed substantially for the better. We’ve strengthened the back financially, improved its capitalization and are now leaner. We reduced our headcount by about one-third over this period and our footprint more than 50 countries then to 38 today. We’ve exited non-priority businesses in Africa, in Asia, in European retail banking as well as commodities, and there are two more in advanced stages of discussion. We’ve reduced our RWAs by about 20% in this period, strengthened our CET1 ratio by 4.5 percentage points to 13.8% at year end, as we just spoke about.
And at the same time, unfortunately, we have incurred about £16 billion on litigation and conduct issues and costs. To me, this is a very, very disappointing number. And it is a stark and serious reminder as to why it is so important to run a bank well. And at the heart of running a bank well is what I call running it in a consistently excellent way. It is the surest way we have to preserve our reputation, protect our bank and all our shareholders. Over the same period, we have reset our financial performance, particularly in the last three years, delivering return on tangible equity above 10% since 2021 and distributing £7.7 billion to shareholders in that period, which is 35% higher than the prior seven years put together. And while this has been an improvement, it is not enough.
And indeed, our shareholder experience needs to be better. We have listened, we have heard and we will do even better. So how will we do even better? At one level, I want Barclays to be renowned for excellent operational performance. To me, operational performance and financial success are two sides of the same coin. Operationally, we have worked to what I call this new standard of consistent excellence for over 1.5 years, looking to reduce complexity, harnessing technology, promoting strong risk and controls and aiming to deliver a better customer experience. We need to continue to do this. Financially, we need to drive towards higher returns from our businesses while improving our efficiency. As I will talk about, we will invest RWAs in our higher return in consumer and corporate businesses while maintaining the RWAs and the investment bank broadly stable at their current absolute level.
As you will hear, the Investment Bank RWAs will shrink in real terms as they will have to self absorb the impact of Basel 3.1. Crucially, we are targeting higher, more predictable shareholder distributions. And lastly, we will have clearer financial reporting, which will allow you and us to mark our progress more easily. So what will this plan deliver? First of all, improvement in RoTE from 9% statutorily in 2023 to 12% and above — to greater than 12% in 2026. Second, we plan to distribute at least £10 billion to shareholders between 2024 and 2026, and this is about 50% of our current market capitalization. Third, we are putting a cap on the RWAs in our Investment Bank, reducing its share of RWAs from 63% in our current CIB construct to around 50% by 2026.
And to me, these are the three important parameters and numbers that we’re focused on. How will we do this? Over the next three years, we aim to make the bank simpler, run it better and make it more balanced. What does simpler mean? It means, first of all, a simpler business structure and then one that is organized and operated in a simpler way. I’ll spend some time on this slide. From today, we will run Barclays through a business structure that, as I said, delivers greater accountability and transparency in reporting to investors. And there are three messages I’d like to bring out on this slide. One, why is this a simpler structure; two, why do we have each of these five businesses; and three, why do they fit together, okay? The structure is simpler because even though we go from three units to five, this reflects the way in which we serve our customers and clients and it increases the transparency on our performance.
We will no longer report either consumer cards and payments or the corporate and investment bank in their current construct. Instead first, we bring private banking and wealth management at Barclays into one unit and we report this separately from the US Consumer Bank, which contains our specialty credit card partnership business in the US. From the old CIB, we have created the UK Corporate Bank, which serves midsized corporates in the UK. And this will be managed and reported separately from the Investment Bank, which now comprises global markets and investment banking. The investment banking part also includes our international corporate bank, which serves multinational corporate and institutional clients under one roof. As part of our effort to become a simpler business, we’ve also considered the strengths and weak opportunities within our portfolio.
