Barclays reports 38% drop in net profit for 2020 as bad debt provisions offsetting strong investment banking performance
The UK bank said it would resume paying dividends of 1 pence ($ 0.01) per share and start a £ 700million ($ 971million) share buyback in a few weeks, after due suspend payments at the request of the Bank of England last year.
Net profit for the year fell to 1.53 billion pounds sterling ($ 2.1 billion), down 38% from the previous year. This was even better than the full-year net profit estimate of £ 1.22 billion ($ 1.6 billion) expected by analysts polled by Refinitiv.
Barclays posted an increase of 45% above expectations in market revenues for the year.
Here are the bank’s key figures for the fourth quarter of 2020:
- Corporate and investment banking turnover: £ 2.6bn ($ 3.6bn) vs. £ 2.5bn ($ 3.4bn) expected
- Adjusted pre-tax profit: £ 693m ($ 963m) vs. £ 386.4m ($ 537m) expected
- EPS: 8.8 pence against 14.3 pence last year
Barclays said in a statement: “Headwinds to Barclays UK revenue are expected to persist into 2021 and into the medium term. The bank has taken a charge of £ 492m ($ 684m) to anticipate defaults due pandemic, bringing the total for the year to 4.8 billion pounds ($ 6.6 billion).
It’s a good sign that the UK lender has resumed dividend payments, said Adam Vettese, analyst at eToro, a multi-asset investment platform. But if the economy weakens again, bad debt could become a problem not only for Barclays but for the UK banking sector as a whole, he said.
Barclays shares fell 0.8% at the start of European trading.