Barclays swings to first quarter loss as settlement hits profit
BARCLAYS SWUNG to a loss in the first quarter as further payment protection insurance (PPI) charges and a £1.4bn settlement with the US Department of Justice knocked profits.
The UK bank reported a pretax loss of £236m for the three months to March 31, compared to £1.68bn profit during the same period last year.
Stripped of litigation and conduct charges, pre-tax profits rose one per cent to £1.7bn.
The bank was hit by a 2 billion US dollar (£1.4bn) settlement reached with the US Department of Justice (DOJ) earlier this month, related to the sale of mortgage-backed securities in the lead-up to the financial crisis.
Chief executive Jes Staley said: “While the penalty was substantial, this settlement represents a major milestone for Barclays, putting behind us a significant, decade-old legacy matter.”
Barclays booked an extra £400m to cover PPI charges after seeing a higher number of complaints over the quarter.
While the charges affected Barclays’ CET1 levels – referring to the capital cushion that underpins a bank’s loans – Mr Staley said he was confident in the lender’s position.
“This has been a significant quarter for Barclays, one in which we have shown that our new operating model and our portfolio of diversified, profitable businesses are capable of producing improved returns for shareholders.”
Barclays shares initially slumped 1.5 per cent at the start of trading but recovered to around 1.2 per cent.