Barclays profit falls short of estimates

A customer at a Barclays Bank PLC, Pakistan, bank branch holds her general banking debit card for a photograph in Karachi, Pakistan on Thursday 15 Aug 2013. Photographer: Asim Hafeez

A customer at a Barclays Bank PLC, Pakistan, bank branch holds her general banking debit card for a photograph in Karachi, Pakistan on Thursday 15 Aug 2013. Photographer: Asim Hafeez

Published Feb 11, 2014

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Howard Mustoe London

Barclays reported full-year profit yesterday that missed analysts’ estimates as litigation and compensation charges complicated chief executive Antony Jenkins’ overhaul of Britain’s second-biggest bank.

Adjusted pretax profit for last year was £5.2 billion (R95bn), Barclays said yesterday. That is 26 percent down from £7.05bn in 2012 and missed the £5.4bn consensus analyst estimate compiled by the bank. Barclays did not provide further details in the statement, released a day before it was scheduled to publish full-year results.

The banking group raised about £5.8bn from investors in a rights offering last year to appease regulators’ concerns about the bank’s capital strength. Jenkins is cutting jobs, including hundreds of positions at the investment banking operation, to remove £1.7bn of costs by next year.

“It’s difficult to say because of a lack of detail, but if the miss is because of costs to achieve [Jenkins’s overhaul plan], then we will take that as a positive,” said Vivek Raja, a banking analyst at Oriel Securities in London. “Barclays would be accelerating the programme and that should quell concerns about capital and the balance sheet.”

The stock rose 1.6 percent to £2.76 as of 12.08pm in London trading yesterday, for a market value of about £44.5bn. The shares are up about 1.4 percent this year.

“Any marginal disappointment against wider sell-side expectations will have come within Barclays Capital,” the investment banking unit, wrote Ian Gordon, an analyst at Investec with a buy rating on the stock.

The unit probably caused the bulk of a “cost overrun” in the fourth quarter, he wrote in a note to investors.

Jenkins, who is struggling to restore trust in the bank following a series of scandals, said last month it would take a £330 million charge relating to penalties and lawsuits in the fourth quarter.

Yesterday’s release of earnings comes a day after the banking group said it was in talks with regulators about a possible criminal leak of client account information.

As many as 27 000 customer files containing personal and financial information were taken, the Mail on Sunday reported on Sunday, citing an unidentified whistle-blower.

It was unclear how the files were stolen, the newspaper said, adding that data was sold to brokers to be used for “investment scams”.

Barclays has also said it was being probed by regulators over whether it properly disclosed £322m of payments to Qatar’s sovereign wealth fund as part of a £7bn fundraising during the financial crisis, a move that helped the bank avoid a government bailout.

The UK markets regulator said last year that it might fine the bank £50m. Barclays said in October that it was still contesting the findings.

Statutory pretax profit rose to £2.9bn, the company said. That is up from £246m in the year-earlier period.

The bank released the data after the Financial Times reported the figures earlier yesterday. – Bloomberg

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