Barclays on Thursday reported a full-year profit of £ 1.53 billion ($ 2.111 billion) for 2020, 38% less than in 2019, but exceeds analysts ’expectations.
The British lender posted a fourth-quarter net profit attributable to shareholders of £ 220 million, although the UK explored new closure measures nationwide amid the resurgence of Covid-19.
The strong performance of the corporate and investment bank, which increased its full-year revenue by 22% to £ 12.5 billion, offset the sharp decline in impairment charges as a result of the deteriorating economic outlook. by the pandemic.
Analysts polled by Refinitiv expected a fourth-quarter net loss of £ 44.88 million, which would result in a net profit of £ 1.222 billion for the full year.
Barclays CEO Jes Staley told CNBC’s “Squawk Box Europe” on Thursday that there will be accumulated demand in the UK economy to unlock it later in the year.
“The British consumer in the face of the pandemic has clearly reduced spending significantly, but for the same reason it has invested in strengthening people’s balance sheets, especially by increasing their deposits, and we feel that on our balance sheet,” Staley said. .
“You have to believe that once the pandemic is over, these deposits represent a cumulative expense, and we will see that in economic activity we expect that in the second half of this year.”
The final earnings report for 2020 followed a surprisingly strong third quarter in which the bank made a net profit of £ 611 million.
The full-year profit was £ 2.462 billion with a fourth-quarter 2019 profit of £ 681 million.
Other highlights:
- The Tier 1 capital ratio of common capital (CET1) reached an all-time high of 15.1%, compared to 14.6% at the end of the third quarter.
- The return on tangible assets (RoTE) was 3.2%, compared to 5.1% in the previous quarter.
- The net interest margin (NIM) was 2.61%, compared to 3.09% at the end of 2019.
- Charges for year-over-year credit impairment amounted to £ 4.8 billion, up from £ 1.9 billion in 2019.
- Full-year pre-tax profit was £ 3.1 billion, down from 2019’s £ 4.4 billion.
Dividend payments
Barclays also announced that it would resume dividend payments to shareholders of one dollar per share and undertake a repurchase of shares of £ 700 million. The Bank of England last year requested that British lenders suspend payments to shareholders.
Addressing the fall in RoTE, Staley said the bank was able to remain profitable in each quarter of 2020 due to the diversified business model implemented five years ago, with a different reaction from the investment bank to the banking division. consumption.
“Although our consumer bank struggled and reduced this profitability, largely because we assumed significant impairment costs to build a reserve, the investment bank had a return on capital of more than 13% on the year, so it has kept the bank profitable every quarter, ”he said.