BCS Review

To review BCS Annual report. Appears to be undervalued based on statistical valuation history
Diversified income with 50% from UK and remaining from international. Well prepared for Brexit with Barclays Ireland up and running and can take over anytime. diversified funding sources with 60% from deposit and 7% from shareholder equity, 10% from government, remaining from debt. Income sources comes from a variety of business such as tradtional banking, credit cards, bank fees. Investment incomes make up ~10% only. So its business is tied closely to general economy and not trading. The capital structure is sound and tier 1 ratio is much higher than the minimum regulatory requirement and the stress test limit. Dividend payment is not excessive and well cover by its profit. At current price level the dividend yield is ~4.5% which is not too shabby. Company has progressive dividend policy based on profit level. Current price is depressed for a bank that is pretty sound and has move on from the 2008 GFC. Price depressed due to 2 reasons:

1) BREXIT uncertainty
2) Pounds dropping.

Item 1) and 2) are related. Once the Brexit is over, uncertainty will be gone whether UK is in EU or not. With uncertainty gone, pound will increase in value. Share price will rerate and dividend payout in terms of USD will improve also. Good entry price now.

Tier-1 ratio is inline with US peers of 13% and better than european peers of 12%
Leverage ratio is 5% versus regulatory requirement of 3.9% and stress test limit of 3.6%.
Prudently managed and trading at half of book value.