Barclays puts by £150m for Brexit uncertainty as profits edge lower

Posted: 21 Feb 2019

Banking giant Barclays has revealed a £150 million hit to cover Brexit uncertainty as it said annual profits edged 1% lower to £3.49 billion.

The group said it had set aside the Brexit charge in the final three months of 2018 to cover the "anticipated economic uncertainty in the UK", which is set to impact its UK credit card and corporate loans businesses.

Barclays said its bottom-line profits were dragged lower by £2.2 billion of conduct and litigation charges, including a £1.4 billion settlement with US authorities over its sale of mortgage-backed securities in the lead-up to the financial crisis and £400 million for payment protection insurance (PPI) mis-selling.

With these excluded but including the £150 million Brexit charge, underlying pre-tax profits lifted 20% to £5.7 billion.

Shares rose 3% after the results.

Jes Staley, chief executive of Barclays, said: "2018 represented a very significant period for Barclays.

"In the course of the year, having resolved major legacy issues and reduced the drag from low returning businesses, we started to see the earnings potential of the bank, as the strategy we have implemented began to deliver."

Barclays' results showed an after-tax profit of £1.4 billion, compared with a £1.9 billion loss in 2017 when it was weighed down by charges and the £2.5 billion in losses on the sale of Barclays Africa Group.

The figures showed income from the group's corporate and investment bank fell 1% to £9.77 billion, which Barclays said was due to a fall in banking fees.

Investment banks suffered a difficult fourth quarter of 2018, with turbulent markets causing many players to see a sharp fall in bond and currency trading revenues.

But Barclays said it weathered the tough end to the year, with fourth quarter equities revenues up 4% and fixed income down by a better-than-feared 6%.

It comes as Barclays faces pressure from the threat of activist investor Edward Bramson muscling his way on to the board, ramping up calls for the lender to curtail its investment arm and increase returns for investors.

Mr Bramson's investment vehicle Sherborne Investors - through which the New York-based investor has built a 5.5% stake - has submitted a resolution to Barclays to be considered at the annual general meeting (AGM) on May 2 to appoint him to the board of directors.

Mr Staley said the results are "supportive of the bank's strategy" and stressed the bank wants to hold constructive talks with Mr Bramson, but is opposed to him having a seat on the board.

He said: "The board will recommend unanimously to our shareholders that a seat not be offered to Bramson at the AGM.

"We don't believe that he needs a seat to engage with management."

In the bank's annual report published alongside the results, it revealed Mr Staley was paid a total of £3.4 million for 2018 down from £3.9 million in 2017 after seeing £500,000 of previous bonuses clawed back following an investigation into his attempt to uncover a whistleblower.

But he still received an annual bonus of £1.1 million for 2018.

The report also showed 430 employees earned over £1 million in 2018, including six who took home more than £6 million.

Overall, the bank shared out a £1.6 billion bonus pool among staff, up from £1.5 billion in 2017.

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