LONDON (Reuters) – Barclays reported a lower than forecast attributable profit of 3.5 trillion pounds for 2018, as it set aside cash to cushion against Brexit and its trading business weathered a difficult fourth quarter.
FILE PHOTO – The logo of Barclays bank is seen at its office in the Canary Wharf business district of London April 1, 2013. REUTERS / Chris Helgren / File Photo
Barclays did show signs of progress in its under-pressure investment bank, where profit for the full year increased 15 percent to 2.6 billion pounds as its equities trading unit saw income rise 25 percent.
The bank's shares were up 4.3 percent at 0820 GMT.
Jes Staley, Chief Executive of Barclays, is locked in a high-profile interjection over the bank's strategy with activist investor Edward Bramson, who believes in raising his investment bank and focus on other risky parts of his business. .
Bramson on Feb. 5 sought to ratchet up the pressure on the bank by tabling a resolution that would see him gain a seat, bid which investors said was unlikely to succeed but which has sharpened focus on the performance of the investment bank.
The results gave ammunition to both sides in the debate. Staley could point to the investment bank's return on tangible equity – a key measure of profitability – rising from 2 percent to 7 percent in 2018, close to the overall target of 9 percent for the group in 2019.
The bank's fixed income, currencies and commodities trading business weathered the volatile markets of the fourth quarter better than its Wall Street rivals with revenue down 6 percent compared to double digit falls at Goldman Sachs, Citi and JPMorgan.
For critics of the investment banking led strategy, however, 3 percent were in the Barclays UK division.
The bank also saw a 20 percent decrease in corporate lending income, which it attributed to resources being deployed to higher-return business elsewhere.
Barclays' 150 million pound Brexit commission followed similar moves by HSBC and Royal Bank of Scotland in recent days.
Barclays said the commission reflected the lesser of two downside economic scenarios, which growth would slow to 0.3 percent and the country's unemployment rise to 5.7 percent.
Barclays paid a dividend of 6.5 pence per share and signed intentions to return more capital via dividends and buybacks when it was practical to do so.
The bank, however, reported its core capital ratio fell to 13.2 percent from 13.3 percent a year ago, which is likely to renew a debate on its ability to return more to shareholders at a time when rivals Lloyds Banking Group and RBS are ramping up payouts.
Staley's total pay package for 2018 falls to 3.36 million pounds, down from 3.87 million pounds the previous year. He was the lowest paid among the four biggest British bank bosses.
Including conduct and litigation charges, the bank's profit of 1.4 billion pounds against a 1.9 billion pounds loss in 2017.
Barclays' International division, which houses its investment bank, reported a profit before tax or 3.9 billion pounds, in line with analysts' expectations of 3.95 billion pounds.
Reporting By Lawrence White and Iain Withers; Editing by Sinead Cruise / Keith Weir