£5bn of virus loans may be written off says Barclays boss
BARCLAYS has been forced to set aside close to £5billion to cover loans that it fears may go bad due to the pandemic.
The bank said it lent around £27billion to support British businesses in 2020 to help them survive the economic effects of coronavirus. It also waived £100million of fees and interest charges and provided over 680,000 payment holidays to customers.
With businesses, consumers and the wider economy showing increased signs of stress, it more than doubled the amount allocated to potentially problem loans to £4.8billion.
Despite the 152.3 per cent increase in loan loss provisions, Barclays still saw a profit in every quarter. It made a £3.1billion pre-tax profit for 2020, a 30 per cent reduction on the previous year. Revenues were up 1 per cent at £21.8billion.
Announcing annual results yesterday, chief executive Jes Staley said that given its robust performance and financial strength, it will hand £875million back to shareholders. It will do that by paying a 1p per share dividend and spend £700million on buying back its shares, a move that should push them higher.
When the pandemic started, the full year dividend was cancelled but Staley said: “Given the strength of our business, we have decided the time is right to resume capital distributions.”
Some shareholders had been keen on shrinking the investment bank arm, something Staley has pushed against.
His faith has been rewarded as the corporate and investment section saw its income rise 22 per cent to £12.5billion. It helped to offset earnings downturns at its credit cards and payments divisions and its high street arm.
Consumer, cards and payments income was down 22 per cent to £3.4billion, while its UK bank saw earnings fall 14 per cent to £6.3 billion.
Staley added: “2020 demonstrated the value of our diversified banking model.”