Troubled banking group Barclays (LSE: BARC) rose by 5% in early trade today, despite the group reporting a loss of almost £2bn for 2017.
The bank's full-year figures made for mixed reading. But one number that jumped out for me was news that the dividend will return to 6.5p per share in 2018 -- a level last seen in 2015.
A £2bn loss
Barclays' failure to increase its dividend since 2015 has symbolised its misfiring recovery. One of the overwhelming problems for the group has been misconduct charges. These remain an issue. Conduct and litigation costs wiped £1.2bn from the group's pre-tax profit in 2017, reducing it from £4.7bn to £3.5bn.
Compounding this problem were a £0.9bn US tax charge and a £2.5bn loss relating to the sale of its Africa division. The overall result was a loss of £1.9bn for 2017, reversing the £1.6bn profit reported in 2016.
Although Barclays has now settled many of the misconduct issues it's been facing, the bank was recently charged by the Serious Fraud Office in connection with its 2008 fundraising in Qatar. It could eventually face a hefty fine.
Chief executive Jes Staley is also under investigation by the US and UK regulators in relation to his attempts to identify a whistleblower at the bank.
There was some good news
Despite all of this bad news, the bank's underlying performance was reasonably good last year.
Barclays' UK division delivered a pre-tax profit of £1,747m, up from £1,738m in 2016. Although income fell by 2%, bad debts were 13% lower and the group's cost: income ratio was stable at 66%, even after a £700m PPI charge.
The other strand of the bank's strategy is its UK-US investment bank. Performance here was weaker and pre-tax profit fell by 22% to £3,275m. Poor market conditions hampered the investment bank's performance, and bad debt charges rose by 11%. However, Mr Staley commented that market share improved in a weak market, so this could bode well for the future.
Is now the time to buy?
In order to decide whether to invest in this ongoing turnaround story, I think we need to try and look beyond all the one-off charges and misconduct-related costs.
On this basis, the bank's earnings were 16.2p per share last year, while its return on tangible equity -- a key measure of profitability -- was 5.4%.
These aren't outstanding figures, but even before today's results City brokers were forecasting a stronger performance in 2018. Adjusted earnings are expected to rise to 20.1p per share, while today's dividend guidance for 6.5p per share gives the stock a forecast yield of 3.1%.
Barclays has underperformed the FTSE 100 and some of its banking rivals over the last year. This bank still wouldn't be my top choice in this sector, but having looked at today's figures I would be comfortable holding the shares.
I don't think things will get much worse, and I believe there's a good chance that 2018 will turn out to be the turning point for the bank. My verdict? Hold.
Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.