One burning question kept coming up on the Barclays earnings call - and it's a sign pressure is mounting on a high-stakes bet made by CEO Jes Staley

Thomson Reuters

Chief executive officer of Barclays, Jes Staley

• On a conference call after first-quarter results, Barclays research analysts seized on a metric, - a wonky measurement called "return on tangible equity" - asking how their expectations were so off with the CEO's.
• The mismatch highlights the pressure Staley is under to deliver, and how much, including perhaps his job, is at stake.
• "Could I just encourage you to please give us a steer" on what is wrong with consensus, an analyst asked.

Barclays CEO Jes Staley is sticking with a key performance metric for the bank in 2019 that has been called "irreconcilable," "sacrosanct," and "hard to do."

On the executive conference call after the bank reported a first-quarter earnings that disappointed investors, research analysts seized on the metric, - a wonky measurement called "return on tangible equity" - asking how their expectations for the bank were so off with Staley's own.

The mismatch highlights the pressure Staley is under to deliver, and how much, including perhaps his job, is at stake. Barclays aims to reach at ROTE of more than 9% this year, and generate more than 10% in 2020. Bank of America has said that Barclays would need to slash costs by 7% to achieve those targets, "which looks hard to do even if investment spend is delayed."

Robin Down, an analyst at HSBC, asked on the call:

"You're still sticking with the target of 9% plus ROE for this year. I think the published consensus were 8.2%. Is there anything that you, when you look at the sort of consensus P&L, is there anything that you look at, and you think that stands out that - that was materially different to what you would expect?"

"I mean, what's out to you, that gap between consensus and where you think you'll turn out?"

CEO Staley replied:

"The main difference in the 9 and the 8.2% is our belief that we can more align expenses with revenues and obviously, we view the first quarter investment banking fee to be not a new normal. So expect a recovery there. But then we will align expenses with revenue and be quite comfortable still with our 9% or better target."

Barclays on Thursday said it would cut costs below its previous guidance if the quarter's "challenging" environment remained. Barclays is already engulfed in other challenges: an activist investor who wants big reductions in the investment bank, and a management reorganization following the departure of key executives including the CEO of the international unit, Tim Throsby.

Another question, this time from an analyst at Autonomous Research:

"Following up on an earlier question, I just wanted to come back to you on this commitment or conviction the 9% royalty and what that implies for consensus... Are you really telling us that consensus is 10% too low?"

CFO Tushar Morzaria responded:

"We obviously have a conviction and confidence that we can make a 9% return and kind of the consensus doesn't have the same conviction that we as a management team do, and that's okay, you'll have your own views on the various line items. We've got enough diversification and enough parts that we should be able to navigate through, but we have a degree of confidence that we should be able to get to 9% return. We are prepared to flex costs where appropriate."

"So I guess, yeah we have that degree of confidence, we understand the consensus is there and that stuff that's okay, we won't always the same outlook."

Staley added:

"The gap between the expectation and what we believe that we can deliver should be shrinking, given the trend line of the last couple of years."

The analyst didn't budge:

"What is it that you think is wrong in consensus? We are a one quarter into 2019, you're talking about challenging revenue environment and flexing costs, to offset your guidance would imply that consensus is 10% wrong, at least that's based on the 9% number, not more than 9% number you're targeting. So, could I just encourage you to please give us a steer on what it is?"

The CFO didn't either:

"I don't want to get into this line item in consensus is different or anything like that. I think you guys can take your own view based on all that sort of commentary, and have your own outlook and that's okay."

Investors overall weren't pleased with earnings, which were especially hurt by the investment bank unit where income performance slumped 10%. The stock declined more than 3.5% in London trading.

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