Barclays Full Year Pre-tax Profit Drops On Provisions

(RTTNews) - Lender Barclays Plc. (BARC.L, BCS) Tuesday said full-year profit before tax declined 21 percent from last year, hit by items. The company noted that its Personal and Corporate Banking or PCB and Barclaycard businesses continued to thrive and grow, while Africa Banking did well despite currency headwinds. The company saw encouraging performance in several areas of Investment Bank.

Profit before tax fell to 2.256 billion pounds ($3.47 billion) from 2.868 billion pounds reported last year.

Barclays recognized a provision of 1.250 billion pounds in the second half of the year for investigations and litigation relating to Foreign Exchange. This included an additional provision of 750 million pounds recognized in the fourth quarter of 2014.

Also, an additional payment protection insurance or PPI redress provision of 200 million pounds was also recognized in the quarter, based on an updated best estimate of future redress and associated costs. This led to a full year net charge of 1.11 billion pounds in relation to PPI and interest rate hedging redress.

Additionally, a valuation revision of 935 million pounds was recognized in the fourth quarter against the Education, Social Housing, and Local Authority or ESHLA loan portfolio held at fair value in Barclays Non-Core.

Adjusted profit before tax increased 12 percent to 5.502 billion pounds, driven by improvements in PCB, Barclaycard and Non-Core. Core profit before tax grew 3 percent to 6.682 billion pounds amid cost saving initiatives.

Attributable loss was 174 million pounds or 0.7 pence per share, compared to profit of 540 million pounds or 3.7 pence per share last year.

Total income declined to 25.768 billion pounds from 28.444 billion pounds in the previous year. Total income net of insurance claims dropped 9 percent to 25.288 billion pounds.

Net operating income was 7 percent lower at 23.120 billion pounds, and credit impairment charges fell 29 percent to 2.168 billion pounds.

In PCB, net operating income advanced 3 percent to 8.346 billion pounds and pre-tax profit jumped 29 percent from last year, driven by 3 percent growth in Personal income, lower impairment due to the improving economic environment in the UK, and the continued reduction in operating expenses due to progress on the Transform strategy.

Barclaycard reported net operating income increase of 6 percent at 3.17 billion pounds, driven by volume growth; and profit before tax increased 13 percent from last year.

In Africa Banking, net operating income in constant currency increased 9 percent to 3.315 billion pounds, primarily driven by higher average loans and advances to customers in CIB and growth in customer deposits in RBB in South Africa. Profit before tax improved 13 percent year-over-year.

Meanwhile, pre-tax profit fell 32 percent in the Investment Bank division, and net operating income dropped 12 percent from last year.

Operating expenses decreased 7 percent to 19.26 billion pounds, driven by savings from Transform programmes, including a 5 percent net reduction in headcount.

The company's fully loaded CET1 ratio improved to 10.5 percent from 9.1 percent a year ago, considering the effect of the disposal of the Spanish business completed on January 2, 2015 and a further provision in the fourth quarter for investigations and litigation relating to Foreign Exchange.

Barclays said a final dividend for 2014 of 3.5 pence per share would be paid on April 2, resulting in a total 6.5 pence dividend per share for the year.

Looking ahead, for the group overall, the lender plans to build on the positive underlying momentum seen within its businesses, towards achievement of the 2016 Transform targets.

Antony Jenkins, Group Chief Executive, said, "... despite our real progress in 2014, we still have more work to do. We are determined to build on the momentum across the Group, to continue to improve returns across our businesses, and to accelerate execution of our plans. 2015 will be a year of continued delivery for Barclays." The stock fell 1.6 percent in early trade to 258.55 pence.