Barclays sees half-year profits surge 82%, but costs still to be cut
Banking giant Barclays has cheered its highest half-year profits for nearly a decade, but warned costs will need to be slashed over 2019.
The lender reported an 82% surge in statutory pre-tax profits to £3.01 billion for the six months to June 30 as it put hefty mis-selling charges and settlements behind it.
This compares with £1.7 billion a year earlier, when it was hit by costs of the payment protection insurance (PPI) scandal and a £1.4 billion settlement with US authorities over its sale of mortgage-backed securities in the lead up to the financial crisis.
On an underlying basis, interim pre-tax profits fell 15% to £3.1 billion.
The lender reiterated warnings that keeping a tight lid on costs is a “priority” and said they will need to be reduced over the year to below £13.6 billion as it battles against a “challenging income environment”.
It did not put any further money aside for PPI mis-selling claims, in contrast to its rival Lloyds Banking Group on Wednesday, which revealed another £550 million hit.
Barclays said it still had £360 million left in PPI cash set aside, but admitted there was increased “uncertainty associated with future claims levels” amid a late surge ahead of the August 29 deadline.
Jes Staley, group chief executive of Barclays, said it was “another resilient quarter of performance”.
He added: “Management focus on cost control remains a priority, and we expect to reduce expenses to below £13.6 billion for 2019.
“This all puts us in a position to continue to increase the return of capital to shareholders by declaring a half-year dividend of 3p.”
Its statutory results showed £114 million in litigation and conduct costs, down from £2 billion a year earlier.
The pressure on income was felt in its UK retail bank, which saw income fall 2% to £3.5 billion as profit margins were knocked amid fierce competition, although this was partially offset by growth in mortgages and customer deposits.
Underlying pre-tax profits fell 11% to £1.1 billion in the retail bank.
Its corporate and investment bank saw pre-tax profits fall 15% to £1.7 billion in the first half as equities income tumbled 17%.
The figures come after a year that has been dominated by a battle between the Barclays board and US activist investor Edward Bramson.
His bid to gain a seat on the board was defeated in a May shareholder vote, but he has said he will continue to push for cuts to the investment banking arm amid concerns over its performance.