Barclays Profit Dented by Costs -- 3rd Update
27 October 2016 - 10:08PM
Dow Jones News
By Max Colchester
LONDON-- Barclays PLC said Thursday that third-quarter net
profit slipped as it put aside funds to cover bad debts and
restructuring costs continued to weigh on its bottom line.
The results were buoyed by a strong performance from Barclays's
investment bank, helped in particular by resurgent bond-trading
revenue and a favorable exchange rate. This helped offset lower
profit at its U.K. retail arm and higher bad-debt charges at its
credit-card business.
The British bank said revenue totaled GBP5.5 billion ($6.72
billion), broadly flat compared with a year earlier. Net profit was
GBP414 million in the quarter, down from GBP417 million. Shares
rose 1.4% in morning trading, as analysts cautiously welcomed the
results which beat profit expectations.
Since the start of the year, Chief Executive Jes Staley has
accelerated a plan to reshape the bank around its U.K. and U.S.
businesses. Peeling off unwanted assets has proved expensive but
the bank said it remained on track to cleanse its balance sheet of
unwanted assets in 2017.
Mr. Staley on Thursday played down any immediate changes to the
bank's structure following Britain's vote to leave the European
Union, saying there were no "imminent" moves planned.
Like its U.S. peers, Barclays benefited from market volatility
in the wake of the Brexit vote, which spurred a boom in bond
trading. Total revenue at the investment bank was up 29%, with
fixed-income revenue ticking up. Sterling's fall against the dollar
after the Brexit vote helped. Most of Barclays' investment banking
returns are generated in New York. The bank's executives ruled out
pumping in more capital to expand the investment bank on the back
of the better-than-expected returns.
Lower rates took their toll elsewhere. Barclays's U.K. retail
arm slumped to a loss as expenses rose. Income at its credit-card
business--the bank's profit engine--continued to grow but the
lender took a one-off GBP320 million charge to cover rising
impairments.
Barclays also put aside GBP600 million to compensate customers
who were sold insurance products they didn't need.
Over the past few months, the bank has pushed ahead with
shrinking its global footprint, exiting businesses in countries
ranging from Egypt to Italy. The cost of closing businesses weighed
on the bank's bottom line. It also took a GBP150 million charge to
shut down some international office space. Barclays said it would
deconsolidate its Barclays Africa unit within two to three years
subject to negotiations with regulators. "It will take a little bit
longer to get that done," said Mr. Staley.
Write to Max Colchester at max.colchester@wsj.com
(END) Dow Jones Newswires
October 27, 2016 06:53 ET (10:53 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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