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Share price performance in 2017 wasdisappointing, with the share price fallingfrom 223p to 203p over the calendar year. Weare working to reverse this in 2018. Deliveringquality earnings above the cost of equity aswell as returning to higher dividend levels, arenecessary to generate a meaningful recoveryin the share price. This is the priority for 2018and beyond.So, while a number of challenges remain, thelaunch of the ring-fenced bank Barclays UKexpected at the beginning of April thisyear largely draws a line on large-scalerestructuring. We look forward to a moretraditional business pattern, including thereturn to a more normal dividend pattern,planned to begin with the 2018 financial year.As shareholders are aware, during 2017Barclays disclosed a whistleblowing incidentinvolving allegations made in connection withthe hiring of a senior management teammember. After an internal investigation, theBoard determined that CEO Jes Staleybelieved, mistakenly but in good faith, that itwas permissible to identify the author. Adetailed announcement on the issue wasmade in April and the matter is now thesubject of an external investigation.The ultimate resolution of legacy conduct andlitigation issues will allow underlying profitto fall to the bottom line to the benefit ofshareholders. This, together with theresolution of the whistleblowing issue, willalso help remove some uncertainty which isovershadowing the Company.home.barclays/annualreport Accordingly, the focus of management andthe Board’s attention is on performance,particularly that of the Corporate andInvestment Bank in Barclays International.There, performance in Markets, and inparticular Macro and Equities, was weak, drivenby difficult market conditions. There have beensignificant management changes and action isbeing taken to improve profitability in this area.Barclays Consumer, Cards and Payments sawprofits decline by 22% but still produced arespectable 16.7% return on tangible equity.Barclays UK’s profits were marginally up onthe previous year generating 9.8% return ontangible equity.Shareholder informationAs part of our structural reform requirementsa Group Service Company has beensuccessfully established which provides awide range of operations, technology andfunctional services to the Group as a whole.John McFarlaneChairmanFinancial statements2017 also saw us make significant progress interms of creating the new ring-fenced bank asrequired by UK legislation. This has been anenormous undertaking as we are in effectcreating a new bank comprising some24 million customers. We remain on track toset up this bank in the second quarter of 2018.Fortunately, the losses we experienced lastyear from Non-Core, as well as the costs ofstructural reform, are unlikely to be repeatedgoing forward, and this, together with theprofit improvement programme in the corebusiness, should contribute towardsimproving returns.Finally, I would thank shareholders for theirpatience, and believe it will be rewarded. Thesituation is more complex and difficult thanwe had envisaged, and is taking longer thanwe hoped, but shareholders can rest assuredthat we will continue to strive to deliver theperformance and value creation that theirpatience deserves.Financial reviewWe also implemented the difficult decision tosell down our shareholding in Barclays Africain 2017. The changing regulatory requirementsfor global banks resulted in higher hurdles,making the ownership of the profitableAfrican business uneconomic. Therefore,we successfully sold down 33.7% of ourremaining Barclays Africa Group Limited(BAGL) shareholding in the first half of theyear. We now own a residual 14.9% of theissued share capital, consistent withregulatory commitments.Despite the very significant achievements andmilestones passed during the year, ourfinancial performance in 2017 highlights thatfurther progress is required to deliveracceptable returns to our shareholders. Profitbefore tax was 3.5bn, and although this wasa 10% increase on prior year, return ontangible equity was a negative 3.6% on astatutory basis. Excluding litigation andconduct, the loss on sale of our BAGL stakeand a remeasurement of DTAs, largely fromUS tax reform, return on tangible equitywas 5.6%.The past few years have been a really toughperiod for the Board and management, andbottom line results can obscure the realunderlying progress that is being made. Iwould therefore like to thank the Board, themanagement team and all our staff for theenormous efforts they are making to secureour recovery.Risk reviewTurning to the 2017 financial year itself, thiswas another critical year for Barclays. Goodprogress was made on a significant number offronts. The closure of the Non-Core businessfrom the start of July marked a significantmilestone. This business was formed in 2014in order to deliver the divestment of ournon-strategic assets and businesses, releasingcapital to support strategic growth in our Corebusiness and to strengthen the Group’s capitalposition. At its peak, the business comprisedapproximately 121bn of risk weighted assets(RWAs), representing 28% of the Group’s totalat the time and it has been a significantachievement to reduce this to just c. 23bn bythe time of its closure.GovernanceWe continued with our Brexit preparations toensure that Barclays can preserve our accessto the EU markets for our customers andclients. Barclays Bank Ireland, where we have abanking license and have operated for nearly40 years, will provide us with a natural basefrom which we can continue to provideproducts and services which require an EUpresence.Strategic reportWhile the bulk of our historical challenges arebehind us, we do continue to face someresidual challenges. These include thehistorical residential mortgage backedsecurities matter in the US, the Serious FraudOffice prosecution in the UK as well as theconsequence of Brexit. This said, dependingon their scale and pacing, we believe we havethe capacity to deal with them over time.Barclays PLC Annual Report 201703

Chief Executive’s reviewWe have strong foundations in place for delivering tostakeholders and society Two years ago, we laid out our plan to build a Barclaysthat is fit for the future. To recast our business as a transatlanticconsumer and wholesale bank, with global reach.I am pleased to report that the significant task ofrestructuring this great institution was completed in 2017.The spirit, energy and professionalism that mycolleagues from across Barclays have broughtto this endeavour gives me great confidencein our future, both as Group CEO and as ashareholder. While there is still work to bedone, the story of Barclays in 2017 has beenone of considerable strategic progress.The Barclays of today is almostunrecognisable, compared with just a fewyears ago. The momentum we have built insuccessfully delivering on our plans so far,leaves me with a sense of confidence aboutour next task: delivering acceptable Groupreturns for you, our shareholders.On the 1st of June, we completed the sell downof our shareholding in Barclays Africa. At astroke, this single act permitted accountingdeconsolidation and regulatory proportionalconsolidation, reduced both cost andcomplexity, and improved our capital strength.Our financial performance in 2017 shows thatwe are on our way to doing this. Our Groupprofit before tax is up by 10%, year on year,largely driven by a reduction in Non-Corelosses. Group return on tangible equity,excluding litigation and conduct charges, thelosses related to the sell down of BAGL and aone-off adverse impact from US tax reform,stood at 5.6% in 2017.Our Group profit before taxis up by 10%, year on year.In September, we stood up the Group ServiceCompany, where around 42,000 of our 80,000employees now work. Operational andtechnological strength is a key competitiveadvantage for any global bank today. The costefficiencies and improvements in effectivenessrealised from this strategic decision are alreadybeing felt right across the Group – and that ismaking a real and positive difference to ourcustomers and clients’ lives, every day.Our two businesses, Barclays UK and BarclaysInternational, performed fairly well in the yeardespite challenging market conditions, andthe Group is benefiting from the balance thatthe diversity of product, currency, geography,and business mix, gives us. In Barclays UKprofitability held up, with good progress inmortgages, deposit growth, and mobilebanking. Profits were down in BarclaysInternational versus 2016, due to a poorperformance in the Markets business of ourCorporate and Investment Bank in difficulttrading conditions for the industry. Wehave strong plans in place to address thatunderperformance in 2018. Our Consumer,Cards and Payments business continues toproduce excellent levels of income, whilemanaging risk effectively.By December, we had largely completed thework to build our UK ring-fenced bank, whichwe expect will be fully up and running by thetime we meet at the Annual General Meeting(AGM).Perhaps most importantly of all, we enter2018 in a strong capital position. By the endof 2017, we were at a Common Equity Tier 1(CET1) ratio of 13.3%, within our end-statetarget range.In July, we closed Barclays’ Non-Core unit,six months ahead of plan. In doing so, weeliminated some 95bn of risk weightedassets, sold more than 20 businesses, exitedoperations in a dozen countries, and reducedcosts by over 2bn – all in just three years.04 Barclays PLC Annual Report 2017 home.barclays/annualreport

That is why in 2017 we set ourselvesambitious but attainable targets for Groupreturns of greater than 9% in 2019, and ofgreater than 10% in 2020, excluding litigationand conduct, and based on a CET1 ratio ofaround 13%.Nevertheless, it is our intention to prioritisethe return of capital to shareholders,beginning this year. We plan to pay a dividendfor 2018 of six and a half pence, which is morethan double the amount paid in 2016 and2017, and restores it to the level paid in 2015.Supporting the ambitions of customers,clients, and communities is not just the rightway to act, it also makes commercial sense.When the societies where we operatesucceed, Barclays succeeds. That is why, forover three centuries, this great institution hasrisen to the challenges that our communitiesface, and played our part in meeting them.It is the talent, ingenuity and dedication of ourpeople, and the progress we have made in thepast year, which gives me great confidence forour future. I look forward to discussing thisfuture with you when we meet at our AGMin May.James E. StaleyGroup Chief ExecutiveRisk reviewThis is an important first step, but is still afairly modest proportion of our anticipatedearnings for Barclays. It is our firm intent, overtime, to return a greater proportion of ourearnings to shareholders, both through theannual dividend and in other ways. Forexample, it has been some 20 years sinceBarclays last used share buybacks as a meansof returning value to investors, but we expectthese to be an important part of the capitalreturn mix going forward.In 2017, we celebrated the 20th anniversary ofthe Barclays Citizenship Awards – a year whichsaw over half of our colleagues take partin volunteering, fundraising or givingprogrammes. Among many examples of greatcontributions to the communities in which weoperate, I was particularly proud of the workwe have done to increase digital safety andto prevent the growing threat of fraud. Oureducation and awareness campaign has seenover 4.8 million people take action to protectthemselves as a result.In 2017, over half of ourcolleagues took part involunteering, fundraisingor giving programmes.GovernanceA small number of significant legacy conductissues remain, and we will need to resolvethem in due course.I have worked in banking for some 38 years, andI can say with conviction that the way Barclaysdoes business, constantly seeking to earn thetrust of every customer, client and communitywe serve, is truly extraordinary.Strategic reportThis shows that Barclays can sustainablygenerate profits at a healthy rate, and ourcapacity to do so should increase over timeas we grow our businesses.This is particularly true as our home country,the United Kingdom, faces an uncertain futureas negotiations to leave the European Unionunfold. Whatever may come, Barclays is here tostay, and here to help the 24 million customersand almost one million UK businesses, who puttheir trust in us, every day.Financial reviewBarclays Citizenship AwardsBeing a contributor is a very important part of the culture of Barclays.It says the right things about who we are. Barclays is a business builton our people and we are proud of the contributions that ourextraordinary people make to further our Citizenship ambitions.Financial statementsGoing the extra mile to benefit society and Barclays is what ourShared Growth Ambition is all about. Our Citizenship Awardscelebrate the extraordinary Barclays colleagues who do just that andplay a positive role in society.2017 marked the 20th anniversary of the awards and there werealmost 500 nominations, celebrating the outstanding contributionsof our employees to driving economic, environmental andsocial prosperity.The awards were split into five categories that encompass Citizenshipand our Shared Growth Ambition: access to financing, access tofinancial and digital empowerment, access to employment, colleaguesin the community and the way we do business.home.barclays/annualreport Shareholder informationWhether it’s creating commercial products with a positive societalimpact, empowering customers with better financial and digital skills,helping people get into the world of work, improving the way we dobusiness, or colleagues giving their time and skills to the causesthey’re passionate about, there is a huge variety of ways in whichBarclays colleagues contributed to society in 2017.Barclays PLC Annual Report 201705

Operating environment in a constantly evolving environment that createsopportunity and riskAs a transatlantic consumer and wholesale bank with operationsglobally, Barclays is impacted by a wide range of macroeconomic,political, regulatory, accounting, technological and socialdevelopments. The evolving operating environment presentsopportunities and risks which we continue to evaluate to ensurethat we appropriately adapt our strategy and its delivery.Global growth saw a modest recovery in 2017,principally driven by an upswing in Europe andAsia. However, the interest rate environmentremained low, albeit with indications of CentralBanks positioning for a tightening cycle. Notably,the Federal Reserve and the Bank of Englandcommenced tightening actions, with an increasein their key policy rate as well as initiation ofactions to wind-down quantitative easingprogrammes. The low interest rate environmentcombined with continued low market volatility,relatively weak consumer confidence and aslowing housing market in the UK continued toimpact banking sector performance by makingincome generation more challenging.The political environment remained uncertainglobally throughout 2017 with a notableincrease in geopolitical tensions. We remainvigilant to these risks and their potential impacton global trade and investment. In the UK, theGeneral Election resulted in a hung Parliamentwhile negotiations with the EU on post-Brexitarrangements continue, without full clarity onthe nature of the UK’s relationship with the EUimmediately following its exit. In July, in responseto the EU referendum outcome, Barclaysannounced its intention to use an existingsubsidiary in Ireland as its European licensedentity from which to passport financial servicesacross the EU, thereby continuing to serve itscustomers and clients in the EU post Brexit.06 Barclays PLC Annual Report 2017 The regulatory landscape impacting Barclaysevolved through 2017 and will continue to doso in 2018. The banking industry in the UK hascontinued implementation of measures tomeet structural reform requirements, whichinclude the requirement to ring-fence certainactivities. As part of these reforms, Barclayslaunched its Group Service Company inSeptember 2017. The implementation ofstructural reform and other regulatory changesrequires significant focus and we are seekingto minimise disruption to our customers andclients, while executing in accordance withregulatory timelines (as set out on page 204).Barclays’ ring-fenced bank will be operationalduring the first half of 2018, subject to courtand regulatory approvals.The banking industryin the UK has continuedimplementation of measuresto meet structural reformrequirements, which includethe requirement to ring-fencecertain activities.With effect from 1 January 2018, as part of theUS Tax Cuts and Jobs Act, the federal corporateincome tax rate has been reduced from 35%to 21%. Given the Group’s substantial USoperations, this tax rate cut materially impactedthe measurement of Barclays’ US deferred taxassets, however, it will also result in a materialreduction to the Group’s future effective taxrate. This Act also introduced the Base Erosionand Anti-Abuse Tax (BEAT) which involvescomplex provisions with currently uncertainpractical and technical application and whichmay reduce the future benefit of the lowerstatutory tax rate.Detailed analysis of our tax can befound in the Annual Report, or in theCountry by Country report, both found athome.barclays/annualreportIn addition, from 1 January 2018 theintroduction of IFRS 9, Financial Instruments,will see significant changes to the accountingfor impairment and measurement of expectedcredit losses which we discuss further, alongwith other significant accounting policies onpages 241 to 246.Our operating environment continues to beinfluenced by rapid technological change,significantly impacting customer expectationsand behaviour as well as leading to the ongoingreview of established banking operatingmodels. We are investing to position ourbusiness at the forefront of this evolvingenvironment. New technology is transformingthe way customers interact with their banksand continues to encourage new entrants intothe market. We expect to see these trendsaccelerating in 2018 with the implementationof the Second Payment Services Directive(PSD2) and Open Banking, which will have aprofound impact on the banking landscape byallowing customers to choose to enable thirdparties to access their data. Barclays is verysupportive of the opportunities that OpenBanking presents for those who design theirpropositions and experiences with customersat their heart. However, we are also aware ofpotential customer concerns regarding datasecurity and we continue to work hard toensure the safety of customer data.home.barclays/annualreport

Developments in the external environmentpresent both opportunities and risks. Withoutactive risk management to address theseexternal factors, our long-term goals could beadversely impacted.Our approach to risk management andmaterial existing and emerging risks tothe Group’s future performance areoutlined in the Risk review section on page 121.Risk reviewWe continue to invest in our digital and mobilecapabilities to respond to these rapid changes,while maintaining a continued focus on therisks posed by fraud and social engineering andthe importance of network defence, cyber risk,IT security and the appropriate management ofour most valuable environments and high riskusers in the face of growing cyber threats. In2017, we launched #digisafe, a UK-wideconsumer engagement campaign to highlightthe importance of digital safety, helping peopleto be more aware of the risks that exist in thedigital world and how to be safer online.GovernanceFor further information on the changesin Supervision and Regulation of theGroup, please see page 197.During 2017 there was further activity toadvance the financial sector’s understanding ofthe potential financial, operational and strategicimplications of climate change. Recognition ofthe commercial, reputational and regulatoryimplications of climate change are shapingthe way businesses engage with the climatechange agenda. At Barclays, we want tofacilitate our stakeholders’ access to financingthat places green principles at its core. Pleasesee the Case Study below for examples of howwe are putting our beliefs into practice.Strategic reportOur Corporate and Investment Bank clients areanticipating enhanced electronic capabilities aswell as enhanced transparency through thenew Markets in Financial Instruments Directiveand Markets in Financial InstrumentsRegulation (collectively referred to as MiFID II),as part of their operating environment. Forexample, recent advances in tradingautomation continue to change the operatinglandscape through increased experimentationwith, and implementation of, solutions relyingon machine learning, natural-languageprocessing and predictive analytics.Financial reviewGreen bondsBarclays’ green bond is one of a number of innovative greenproducts, launched in 2017, which reinforce Barclays’ support for,and participation in, the transition to a sustainable and low carbonglobal economy, following the publication of Barclays’ Green BondFramework in September 2017.In November 2017, Barclays successfully priced and issued a 500mgreen bond. This was a milestone for the UK market, being the firstgreen bond issued by a UK bank using UK assets.Financial statementsGreen bonds are fixed income securities, designed to raise financefor assets that have positive environmental and climate benefits.The proceeds from Barclays’ green bond have been allocated to thefinancing and refinancing of Barclays’ residential mortgages onenvironmentally friendly homes in England and Wales.Barclays is a signatory to the Green Bond Principles and an activelead manager of green bond issuances across jurisdictions, issuersand currencies within our investment bank. Barclays remains firmlycommitted to contributing to the growth of the green bond market,and has committed to a green bond investment target of 2bn in itsLiquidity Portfolio.Shareholder informationhome.barclays/annualreport Barclays PLC Annual Report 201707

Business structureOur enhanced structure empowers our business model In 2017, Barclays made significant progressreorganising the business to enable a sharper focuson our strengths as a transatlantic consumer andwholesale bank with global reach.In March 2016, we announced our intentionto operate through two principal businessdivisions: Barclays UK and BarclaysInternational. As well as accelerating thedelivery of our strategy, this change helpedenable Barclays to fulfil the requirements ofour UK regulators in regard to ring-fencing.Ring-fencing of essential retail bankingservices is one of the reforms introduced bythe UK government to strengthen the UKfinancial system following the financial crisisthat began in 2007. It requires the larger UKhigh street banks, including Barclays, toseparate certain retail and smaller corporatebanking activity and products, like savingsaccounts, current accounts and payments,from more complex, wholesale andinvestment banking activity and from certainactivi

banking license and have operated for nearly 40 years, will provide us with a natural base from which we can continue to provide products and services which require an EU presence. As shareholders are aware, during 2017 Barclays disclosed a whistleblowing incident involving allegations made in connection with the hiring of a senior management team member. After an internal investigation, the .