24th Oct 2018 07:50
LONDON (Alliance News) - Barclays PLC on Wednesday reported a drop in profit for the first nine months of 2018 on increased litigation costs owing to a conduct charge paid to the US Department of Justice and payment protection insurance claim provisions.
The FTSE 100-listed lender's pretax profit for the period ended September decreased 9.6% to GBP3.12 billion from GBP3.45 billion a year before.
Barclay's total income was flat at GBP16.06 billion with net operating income up 6.6% to GBP15.24 billion from GBP14.29 billion.
The retail, commercial and investment bank said its results were "encouraging". With total income being driven by Barclays UK and Barclays International increasing profits.
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 quarter.
Excluding these litigation and conduct charges, Barclays pretax profit increased 53% to GBP5.27 billion from GBP3.45 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.
The bank's operating expenses, excluding litigation and conduct, decreased 2.5% to GBP10.00 billion from GBP10.26 billion.
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 pretax profit 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 consumer and business banking segments.
Barclays International increased its pretax profit 8.7% to GBP3.56 billion from GBP3.27 billion, driven by a 73% decrease in credit impairment charges.
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.
Chief Executive Officer James Staley said: "In spite of macro-economic uncertainty, and particularly concerns over Brexit which weigh heavily on market sentiment, 2018 is proving to be a year of delivery on our strategy at Barclays. We remain focussed on generating improved returns, and on distributing a greater proportion of excess capital to shareholders over time."
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