Relief as results at Barclays ‘ not as ugly as feared’

Barclays’ results were “not as ugly as feared”, analysts said as the bank revealed that it had handed out 640,000 payment holidays to customers hit by Covid restrictions and approved loans and support worth £ 25 billion.

The financial giant also said it had waived £ 100 million in interest and fees for UK cust o mers a n d p r ov i d e d t h e same amount in community aid packages.

News of the support came as Barclays revealed income at the bank increased 3 per cent in the nine months to September 30 to £ 16.8bn, with pre- tax profits of £ 2.4bn, including £ 1.1bn in the third quarter.

Profits increased in its investment division and high street lending over the three- month period as global economies recovered from the height of the global pandemic.

The group said its preferred measure – return on tangible equity, based on profits from cash invested with the bank – increased to 5.1 per cent in the three months to the end of September.

However, the rise was greater in its investment division – hitting 10.2 per cent – compared with its ring- fenced high street services, with a more modest 4.5 per cent. The UK division made a pre- tax profit of £ 196m.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, s ai d: “While t hese r esults aren’t exactly pretty, they’re far less ugly than we had feared they might be. “Bad loan provisions have risen, but it’s a modest increase compared to last quarter and is based on macro- economic forecasts rather than an unexpected spike in actual arrears.

“The bank believes government and i t s own suppor t is pushing some inevitable defaults out further into the future, so they will materialise eventually, but this is nonetheless better news on balance.”

He added: “While the future is uncertain we take comfort from the fact the bank is pretty well capitalised – with a significant surplus over the regulatory minimum. As a result the board seem to be toying with a return to paying dividends next year.”

Barclays said a total of 9,800 Coronavirus Business Interruption Loan Scheme ( CBILS) and Coronavirus Large Busin e s s I n t e r r u p t i o n L o a n Scheme ( CLBLS) payments were approved with a value of £ 3bn. The loans are 80 per cent backed by the UK government.

Some 296,000 bounceback loans for small businesses, worth £ 9.2bn, which are 100 per cent backed by the taxpayer, were also approved, alongside £ 12.4bn through the Covid Corporate Financing Facility ( CCFF), operated by the Bank of England.

Chief executive Jes Staley said: “In this historically challenging year for our customers and clients we have continued to provide huge support to help people through the social and economic impact of t he Covid- 19 pandemic. This remains a priority, alongside maintaining the financial integrity of the firm and keeping our colleagues safe.”

Richard Hunter, head of markets at Interactive Investor, noted: “Barclays has opened the quarterly reporting season in some style for the UK banks, with a marked improvement to many of its metrics.

“In terms of outlook, while t her e were s ome p os i t i ve noises on lower bad debt provisions, general economic prospects are uncertain and any downturn would inevitably hurt performance for the latter part of the year.”