The Courier & Advertiser (Perth and Perthshire Edition)
Sale of Africa arm pushes Barclays to half-year loss
Compensation costs also take toll on lender as it sinks to £1.2bn deficit
Barclays has signalled the end of a group-wide restructure, but plunged to a half-year loss after booking extra compensation costs and a £2.5 billion hit from the sale of its Africa arm.
The sell-down of Barclays Africa Group (BAGL) drove the lender to an attributable loss of £1.2bn over the six-month period, down from a £1.1 billion profit the year before.
Barclays, which has been shedding hinterland businesses to focus on core UK and US operations, suffered a £1.4bn loss on the sale of 33.7% of BAGL and also faced a £1.1bn charge linked to the disposal.
It came as the bank set aside another £700 million to meet compensation claims for mis-selling payment protection insurance (PPI), bringing Barclays total PPI bill to £9.1bn.
Despite the financial blows, group pre-tax profits jumped 13% to £2.34bn as chief executive Jes Staley hailed the end of his structural overhaul.
He said: “Our business is now radically simplified, the restructuring is complete, our capital ratio is within our end-state target range, and, while we are also working to put conduct issues behind us, we can now focus on what matters most to our shareholders: improving group returns.”
The second quarter marked a milestone for Barclays as it completed “two critically important planks” of its strategy to offload unwanted businesses.
The banking giant said it had driven down its majority shareholding in BAGL to the extent where it can now apply for regulatory deconsolidation.
Barclays expects to complete this process next year, but plans to maintain a smaller 15% stake in the business.
It has also run down its non-core unit ahead of schedule to below £25bn in risk-weighted assets, meaning it could close the operation six months early.
Mr Staley added: “Accomplishing both of these milestones marks an end to the restructuring of the Barclays Group, and brings forward the date when our shareholders can benefit from the full earnings power of this business.”
Total income slipped 1% to £10.9bn, with shares dropping just shy of 1% in early afternoon trading on the London Stock Exchange.
The lender’s investment bank saw pre-tax profit rise 7% to £1.7 billion, with an 18% jump in credit trading offsetting a 5% drop in the markets operation.
Looking forward, the bank said it expects to boost its performance over the next two years thanks to a £1bn drop in costs.
The results come after a testing first half for Mr Staley, who is facing a regulatory investigation into his conduct after he tried to identify a whistleblower.