11th May 2016 05:55
LONDON (Alliance News) - Barclays PLC saw its credit ratings affirmed by Moody's Investors Service late Tuesday, as the ratings agency said several "sound credit factors" helped to mitigate weak profitability and high earnings volatility caused by the bank's restructuring and run-down of its non-core unit of unwanted assets, exposure to litigation, and the high proportion of revenue still generated by its investment bank.
Alessandro Roccati, lead analyst for Barclays at Moody's, said the FTSE 100 company has come a long way in its effort to become a "simpler and more focused" bank. He warned, however, that Barclays will continue to face "significant profitability headwinds" over the next 18 months, as Chief Executive Jes Staley looks to accelerate the rundown of non-core assets. Litigation risks are another concern.
Moody's expects Barclays' weak profitability to improve once the bank has further shrunk its non-core division and "successfully refocused" its investment banking division. The ratings agency thinks such steps would lead to improved profitability, providing more stable internal capital generation, a benefit for bondholders.
"The affirmation of all ratings reflects the group's strong franchises in UK retail and business banking and in global credit cards, a track record of moderate asset risk, improved regulatory capital and leverage ratios (now in line with peers'), and adequate funding and liquidity profiles," Roccati said in a statement.
Moody's reaffirmed several ratings on Barclays, giving the parent company a long-term issuer rating of Baa3 with a stable outlook.
By Samuel Agini; [email protected]; @samuelagini
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