Barclays reported a year-on-year profit of £ 1.53 billion ($ 2.11 billion) for 2020 on Thursday, down 38% from 2019, but exceeding analysts’ expectations.
The British lender posted a fourth-quarter net profit attributable to shareholders of £ 220 million, despite the UK navigating new nationwide lock-in measures amid the revival of Covid-19.
The strong performance of the corporate and investment bank, which saw year-on-year growth of 22% to 12.5 billion pounds, offset a sharp decline in impairment costs as a result of the deteriorating economic outlook. of the pandemic.
Analysts surveyed by Refinitiv expected a net loss in the fourth quarter of 44.88 million pounds, to bring a net profit for the whole year of 1.22 billion pounds.
Barclays chief executive Jes Staley told CNBC’s Squawk Box Europe on Thursday that there would be renewed demand in the UK economy to be released later this year.
“Consumers in the UK, in the face of the pandemic, have significantly reduced spending, but at the same time invested in strengthening individual balance sheets, especially by increasing deposits, and we feel this in our balance sheet,” Staley said.
“You have to believe that once the pandemic is behind us, those deposits represent accumulated expenditures and we will see that, in economic activity, we hope in the second half of this year.”
The final earnings report for 2020 followed a surprisingly strong third quarter, in which the bank posted a net profit of £ 611 million.
Full-year profit in the previous year was 2.46 billion pounds, with a profit in the fourth quarter of 2019 of 681 million pounds.
Other attractions:
- The ratio of tier 1 capital to common equity (CET1) reached an all-time high of 15.1%, up from 14.6% at the end of the third quarter.
- The return on tangible capital (RoTE) was 3.2%, down from 5.1% in the previous quarter.
- The net interest margin (NIM) was 2.61%, down from 3.09% at the end of 2019.
- Expenditure on credit impairment for the full year reached GBP 4.8 billion, compared to GBP 1.9 billion in 2019.
- Full-year profit before tax was £ 3.1 billion, down from £ 4.4 billion in 2019.
Dividend payments
Barclays has also announced that it will resume dividend payments to shareholders with a pence per share and will launch a £ 700 million share buyback. The Bank of England last year demanded that British lenders suspend payments to shareholders.
Addressing the decline in RoTE, Staley said the bank has managed to remain profitable in each quarter of 2020, thanks to the diversified business model implemented five years ago, with the investment bank reacting differently to the consumer banking division.
“While our consumer bank struggled and lowered this return, largely because we took significant depreciation expenses to build a reserve, the investment bank actually had a return on capital in the year of over 13%. , which kept the bank profitable every quarter, “he said.