Barclays swings to £1.9bn loss, investment bank profits tumble

Scott Eells | Bloomberg | Getty Images

Scott Eells | Bloomberg | Getty Images

Barclays declared its intention to more than double dividend payouts in 2018 to 6.5p per share after lower costs helped lift profits past year - though they were still slightly short of analyst's forecasts.

Numerous banks have seen tax write-downs in the billions in their fourth quarter results due to the Republican-led tax overhaul passed in December of previous year, though the losses are expected to be one-offs. But all this assumes, on a projected cost-to-income ratio of below 60%, revenue of at least £23 billion - a 10% rise on 2017. PPI provisions were £300m lower year-on-year at £0.7bn, which was unchanged from the third quarter.

CFO Tushar Morzaria said Barclays had gained market share, with business down in dollar terms by 10% compared with 20% at its biggest US rivals. Excluding material one-off items, the RoTE was 5.6%, which management want to increasing to at least 9% in 2019 and 10% in 2020.

Barclays Plc Chief Executive Officer Jes Staley received less than half his expected bonus as the whistle-blowing scandal casts a shadow on his tenure. We have already started to see some of the benefits of our work in 2017.

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Laith Khalaf, senior analyst at Hargreaves Lansdown, commented: "Arnold Schwarzenegger and Donald Trump don't always see eye to eye, but they have double-teamed Barclays, with the bank's full year profits dragged down by USA tax reform and a PPI campaign fronted by everyone's favourite bodybuilder". Assuming flattish impairments of £2.7 billion and a 30% tax rate, it would generate net income of £4.6 billion or around 26 pence per share.

"The tax charge is a one-off, and actually lower U.S. taxes should be positive for Barclays in the longer term. On balance, we expect this statement to be taken positively".

Barclays pay committee will keep Staley's 2016 "variable remuneration under review pending the outcome of the investigation relating to his involvement in a whistle-blowing matter", it said. "Clearly management and investors are pretty relaxed that it won't go that far, but there is no room for complacency". Total revenues of more than £21bn were broadly flat year-on-year, though there were heavy falls at the bank's key trading division.

He said there was "a bit of ground to make up" if the bank is to achieve its RoTE targets.

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