Barclays linked the rise in its full-year income to a solid performance in its corporate and investment sectors which overshadowed a low performance from its retail business.
Barclays Bank (LON: BARC) has announced its annual profit took a hit and plans to resume dividend payouts after pressing pause on it due to the COVID-19 pandemic.
The UK banking giant on February 21 revealed a full-year profit of £3.1billion ($4 billion) on the income of £21.8 billion ($30.39 billion), slightly up from what analysts expected which had been £2.8bn on the income of £21.6bn before tax and a fourth-quarter net loss of £44.88 million
Barclays Bank stated that its revenue recorded a slight increment but took a 38% hit on its full-year profit before tax (£3.1 billion), down from £4.4 billion in 2019. Barclays stock fell 1.5% following the announcement but plans to resume dividend payout and a share buyback of up to £700 million (one pence per share) after The Bank of England ordered last year that lenders in the United Kingdom suspend payouts to shareholders. Lenders were subsequently requested to build reserves to cover potential losses.
The UK Bank linked the rise in its full-year income to a solid performance in its corporate and investment bank which overshadowed a low performance from its retail bank and a drop in impairment charges (£4.8 billion, against £1.9 billion in 2019) a result of the shrinking economy due to the global pandemic.
Barclays recorded a £220 million fourth-quarter net profit despite lockdown restrictions imposed by the UK government after the second wave of COVID-19 cases. The UK bank also revealed that its common equity tier one capital (CET1) ratio climbed to an all-time high of 15.1%, up from 14.6% at the end of the third quarter. Return on tangible equity (RoTE) took a hit from 5.1% the previous quarter to 3.2%.
Barclays raised £1.5 trillion, attributable to its corporate clients from global capital markets last year as the pandemic intensified. Jes Staley, CEO of Barclays speaking after the announcement stated the UK economy is a time bomb that will explore later in the year.
“The U.K. consumer in the face of the pandemic has clearly significantly dropped spending, but by the same token, has invested in strengthening the individuals’ balance sheets, notably by growing their deposits, and we feel that on our balance sheet,” Staley said. “You do have to believe that once the pandemic is behind us, those deposits represent pent up spending, and we will see that in economic activity hopefully in the second half of this year,” he added.
Staley also revealed that the bank thinks the time is right to resume capital distribution, given the strength of their business and expects to further comment on capital distributions in an appropriate time.
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