Strategic Shareholder Climate and Risk Financial Financial Barclays PLC 379 report information sustainability report Governance review review statements Annual Report 2022 Key performance indicators In assessing the financial performance of the Group, management uses a range of KPIs which focus on the Group’s financial strength, the delivery of sustainable returns and cost management. Barclays continues to target return on tangible equity ( RoTE) of greater than 10% over the medium-term. Cost discipline remains a priority and management continues to target a cost: income ratio below 60%. Non-IFRS performance measures The Group’s management believes that the non-IFRS performance measures included in this document provide valuable information to the readers of the financial statements as they enable the reader to identify a more consistent basis for comparing the businesses’ performance between financial periods, and provide more detail concerning the elements of performance which the managers of these businesses are most directly able to influence or are relevant for an assessment of the Group. They also reflect an important aspect of the way in which operating targets are defined and performance is monitored by management. However, any non-IFRS performance measures in this document are not a substitute for IFRS measures and readers should consider the IFRS measures as well. Refer to the non-IFRS performance measures section for further information and calculations of non-IFRS performance measures included throughout this section and the most directly comparable IFRS measures. Definition Why is it important and how the Group performed a CET1 ratio The Group’s capital management objective is to maximise Common Equity Tier 1 (CET1) shareholder value by prudently managing the level and mix of ratio its capital to: ensure the Group and all of its subsidiaries are 13.9% Capital requirements are part of the appropriately capitalised relative to their regulatory minimum regulatory framework governing how banks 2021: 15.1% and stressed capital requirements, support the Group’s risk and depository institutions are supervised. 2020: 15.1% appetite, growth and strategic options, while seeking to Capital ratios express a bank’s capital as a maintain a robust credit proposition for the Group and its percentage of its Risk Weighted Assets subsidiaries. (RWAs) as defined by the PRA. The CET1 ratio decreased to 13.9% (2021: 15.1%) as £5.0bn CET1 ratio is a measure of capital as of attributable profit was offset by returns to shareholders, defined within the Definition of Capital impacts of regulatory change from 1 January 2022, pension section of the PRA's Prudential and deficit contribution payments and decreases in the fair value of Resolution Policy - Banking Index. the bond portfolio through other comprehensive income and other capital deductions. Increases in RWAs, largely as a result of foreign exchange movements, were broadly offset by an increase in the currency translation reserve within CET1. Group target: a CET1 ratio in the range of 13-14%. a This measure indicates the return generated by the Group RoTE Return on average tangible management of the business based on ordinary shareholders’ equity shareholders’ tangible equity. Achieving a target RoTE 10.4% RoTE is calculated as profit after tax demonstrates the organisation’s ability to execute its attributable to ordinary shareholders, as a 2021: 13.1% strategy and align management’s interests with the proportion of average shareholders’ equity 2020: 3.2% shareholders’. RoTE lies at the heart of the Group’s capital excluding non-controlling interests and allocation and performance management process. other equity instruments adjusted for the RoTE was 10.4% (2021: 13.1%) from the normalisation of deduction of intangible assets and goodwill. credit impairment charges and higher litigation and conduct costs, partially offset by income growth across all operating divisions. Group target: RoTE of greater than 10%.