LONDON: Net profits nearly quadrupled at British bank Barclays in the first half of the year on reduced litigation costs, helping compensate for difficult conditions in retail and investment banking.
Net profit of 2.1 billion pounds was a stellar improvement but when heavy legal costs it suffered in the same period last year are stripped out, earnings actually slid 15 percent.
Last year Barclays was hit by a huge $2 billion fine to resolve a US fraud case involving mortgage derivatives sold in the run-up to the 2008 global financial crisis, as well as the costs of settling claims of mis-selling consumer credit insurance in the UK.
Chief executive Jes Staley described the bank’s performance as resilient in what Barclays acknowledged was a difficult market environment and pointed to the fact it increased its half-year dividend.
“This increase in ordinary dividend reflects the confidence that the Board and management have in the sustainable earnings generation of our business,” he said.
But Barclays also noted difficulties in the retail banking segment due to fierce competition in providing home mortgages, which has pushed down margins. Revenues from consumer credit cards also declined.
Credit impairment charges in the first half rose to 928 million pounds from 571 million in the same period last year. While it attributed the increase to a less favourable economic outlook, the loan loss rate ticked
higher.
The investment bank arm also suffered a poor second quarter, with net profits sliding 18 percent. Stock transactions fell but bonds rose.
The performance of the investment bank is under intense scrutiny by shareholders and analysts as activist investor Edward Bramson has been pushing for it to be restructured.
Barclays shares rose 2.0 percent in morning trade while London’s FTSE 100 index of blue chip stocks slid 0.3 percent. – AFP
