24th Oct 2018 10:02
LONDON (Alliance News) - Barclays PLC on Wednesday reported a rise in third quarter profit but year-to-date profit remained lower, dragged by litigation costs and conducts charges experienced earlier in the year.
Shares in the FTSE 100-listed lender were up 0.6% at 166.76 pence each.
For the three months ended September, Barclays pretax profit increased sharply to GBP1.46 billion from GBP1.11 billion in the third quarter of 2017.
The bank's third-quarter profit represented a 23% decrease compared to the second quarter, however, when Barclays posted a profit of GBP1.90 billion.
Barclays UK third-quarter pretax profit increased 12% to GBP740 million from GBP661 million on higher income and lower credit impairment charges from its Personal Banking and Barclaycard Consumer UK segments.
Barclays International recorded a pretax profit increase of 30% to GBP850 million from GBP652 million.
The oft-maligned investment bank division within Barclays International saw its fixed income, currencies & commodities segment increase income by 9.7% to GBP688 million and its equities segment by 34% to GBP471 million.
Barclays's total income in the third quarter was flat at GBP5.13 billion compared with the year before.
The bank's net interest income in the quarter decreased 3.6% to GBP2.39 billion from GBP2.48 billion.
Barclays operating expenses in the three months ended September increased 2.1% to GBP3.43 billion from GBP3.36 billion.
Barclays pretax profit for the first nine months of 2018 decreased 9.6% to GBP3.12 billion from GBP3.45 billion a year before.
Barclays had exceptional charges in the first nine months of GBP2.15 billion, up from GBP824 million the year before.
These include litigation and conduct charges related to the lender's GBP1.4 billion settlement with the US Department of Justice over residential mortgage-backed securities and GBP400 million of charges for payment protection insurance in the first half.
Excluding these litigation and conduct charges, Barclays's nine-month pretax profit increased 23% to GBP5.27 billion from GBP4.27 billion the year before.
The FTSE 100 lender attributed this to an improvement in credit impairment charges, portfolio adjustments on a new accounting method, and a reduction in operating expenses.
In particular, the 5% depreciation of the average rate of the dollar versus sterling hurt profits and income but positively impacted credit impairment charges and operating expenses.
Barclays total income was flat at GBP16.06 billion in the first nine months of the year, with net operating income up 6.6% to GBP15.24 billion from GBP14.29 billion. Barclays income was hurt by a drop in Barclays International's income and the bank's Head Office representing an expense of GBP262 million compared to a gain of GBP8 million the year before.
The retail, commercial and investment bank said its results were "encouraging".
The bank's operating expenses, excluding litigation and conduct, decreased 2.5% to GBP10.00 billion from GBP10.26 billion. This represented the bank's Non-Core division reducing costs.
Total operating expenses increased 9.6% to GBP12.15 billion from GBP11.09 billion in the first nine months of 2017.
Barclays credit impairment charges decreased 53% to GBP825 million from GBP1.76 billion the year before. Barclays UK and Barclays International's corporate & investment bank saw its credit impairment reduced in the first nine months of the year.
Barclays UK pretax profit in the year-to-date increased 21% to GBP1.57 billion from GB1.30 billion year-on-year. Total income for Barclays UK operations was flat at GBP5.52 billion.
The profit increase was driven by good performances in the Barclaycard Consumer UK and Business Banking segments.
Barclays International increased its pretax profit 8.7% in the nine months to GBP3.56 billion from GBP3.27 billion, driven by a 73% decrease in credit impairment charges.
The International division's Equities investment banking segment's income is up 31% in the year-to-date to GBP1.67 billion - leading the investment bank's 8.7% increase in profit to GBP2.51 billion.
Barclays said its CET1 ratio at the end of the third quarter edged down to 13.2% from 13.3% from December.
According to the bank, the slight decrease reflected the litigation and conduct charges coupled with a jump in dividend payouts.
Barclays on Wednesday proposed an increase in its interim dividend for the third quarter to 2.5 pence from 1.0p the year before. Barclays reiterated its intention to pay a total dividend of 6.5p for 2018.
Excluding litigation and conduct charges, Barclays's return on tangible equity in the first nine months was 11.1%, up from 0.8% the year before.
Including the charges, the FTSE 100-listed lender's return on tangible equity was 4.9%, following a decline of 1.4% the previous year.
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