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LONDON – November 5, 2020: Fog hangs over the Canary Wharf business district, home to global financial institutions Citigroup Inc., State Street Corp., Barclays Plc, HSBC Holdings Plc and commercial office block No. 1 Canada Square.
Dan Kitwood | Getty Images News | getty images
London – barclays The British lender reported a fourth-quarter net loss of £111 million ($139.8 million) on Tuesday as it announced a sweeping strategic overhaul, sending its shares up more than 6% in early trading.
Analysts polled by Reuters had expected net profit attributable to shareholders for the quarter of £60.95 million, according to LSEG data, as Barclays launches a major restructuring program to reverse declining profits.
For the full year, net attributable profit came to £4.27 billion, down from £5.023 billion in 2022 and below the consensus forecast of £4.59 billion.
The bank also announced an additional share buyback of £1 billion, and a new three-year plan will be drawn up to further improve operational and financial performance, CEO CS Venkatakrishnan said in a statement.
Barclays avoided a £900 million loss in the fourth quarter from structural cost-cutting measures, which are expected to result in gross cost savings of around £500 million this year, with an expected payback period of less than two years.
Here are some other highlights:
- Group revenue in the fourth quarter was £5.6 billion, down 3% from the same period last year.
- Credit impairment charges were £552 million, up from £498 million in Q4 2022.
- The common equity tier one (CET1) capital ratio, a measure of the bank’s financial strength, was 13.8%, down from 14% in the previous quarter.
- Full-year return on tangible equity (ROTE) excluding fourth-quarter restructuring costs was 10.6%. Fourth quarter RoTE was 5.1%, down from 8.9% in the last quarter of 2022.
- Quarterly total operating expenses were almost unchanged year-on-year at £4 billion.
Momentum at Barclays’ traditionally strong corporate and investment bank (CIB) – particularly in its fixed income, currency and commodity trading divisions – slowed in 2023 as market volatility eased.
On Tuesday, the bank announced a major operational overhaul, including substantial cost cuts, asset sales and restructuring of its trading divisions, while returning £10 billion to shareholders between 2024 and 2026 through dividends and share buybacks. Has been promised to do.
The business will now be divided into five operating divisions separating the corporate and investment banks: Barclays UK, Barclays UK Corporate Bank, Barclays Private Bank and Wealth Management, Barclays Investment Bank and Barclays US Consumer Bank.
“This realignment will provide greater accountability from an operational and management perspective, as well as an enhanced and more detailed disclosure of the performance of each of these operating divisions,” the bank said in its report.
Barclays is targeting total gross cost savings of £2bn by 2026 and RoTE of over 12%.
This is a breaking news story and will be updated soon.
