Barclays defies profit expectations despite forking out a £600 million bill for misselling PPI
This is despite taking a huge hit from paying compensation for those it missold payment protection insurance (PPI).
Barclays confirmed in its third quarter interim results that it took a £600 million hit related to PPI misselling.
PPI was a form of insurance intended to pay out if consumers failed to make payments on their loans. Many consumers were duped into buying it, or did not know how it worked.
PPI was wrongly sold alongside loans, credit cards and mortgages and banks have been forced to pay out to customers who were wrongly sold the coverage.
Over the nine months though, pre-tax profit actually dropped by 10% to £2.9 billion. However, James "Jes" Staley, CEO of Barclays said in a statement that it is on track in selling Barclays Africa and is focusing on cost cutting to keep the bank more nimble by restructuring:
"Our strategic priorities remain: strengthening our Core businesses; closing Barclays Non-Core as fast as possible; progressing the sell down of our stake in Barclays Africa to a point where we can achieve regulatory deconsolidation; eliminating costs in both Core and Non-Core; dealing with legacy issues; and meeting our end state capital requirements.
"Taken together, the picture in the third quarter is one of strong progress against this agenda. Our Core businesses are performing well, Non-Core rundown is approaching the final lap toward closure, we are on top of costs, and our capital position is resilient with strong reasons for confidence in meeting our end state target.
"The growing momentum in attaining our strategic goals means we can feel optimistic of our prospects of completing the restructuring of Barclays - a restructuring to a simplified transatlantic, consumer, corporate and investment bank with the capacity to deliver sustainable high quality returns for shareholders. This quarter has seen us take another important stride toward that state."
The results come only a day after the bank agreed to settle a lawsuit in the US over Libor fixing.
While the terms were not disclosed, Reuters reported that that the case was settled after a class action lawsuit claimed that Barclays and 15 other banks "artificially low returns on more than $500 billion of dollar-denominated debt whose interest payouts were linked to Libor."
This story is breaking and is in the process of being updated.