Barclays posts 38% slide in net profit for 2020 as provisions for bad loans offset strong investment banking performance
- Barclays reported a 38% drop in full-year net profit due to higher reserves to cover potential bad loans.
- The UK lender posted a 45% rise in markets revenue for the year.
- The bank will resume dividend payouts and commence a £700 million share buyback within weeks.
Barclays on Thursday posted a 38% drop in full-year net profit for 2020 as larger reserves to cover against bad loans from the pandemic hurt its robust investment banking performance.
The British bank said it would resume paying dividends of 1 pence ($0.01) per share and commence a £700 million ($971 million) share buyback within weeks, after having to suspend payouts at the request of the Bank of England last year.
Full-year net profit fell to £1.53 billion ($2.1 billion), down 38% from the year-ago period. That was still better than the full-year net profit estimate of £1.22 billion ($1.6 billion) expected by analysts polled by Refinitiv.
Barclays posted a better-than-expected 45% rise in markets revenue for the year.
Below are the key numbers for the bank's fourth-quarter of 2020:
- Corporate and investment bank revenue: £2.6 billion ($3.6 billion) versus £2.5 billion ($3.4 billion) expected
- Adjusted pretax profit: £693 million ($963 million) versus £386.4 million ($537 million) expected
- EPS: 8.8 pence versus 14.3 pence last year
Barclays said in a statement: "Headwinds to income in Barclays U.K. are expected to persist in 2021 and the medium-term. The bank took a £492 million ($684 million) charge to anticipate loan defaults due to the pandemic, bringing the total for the year to £4.8 billion ($6.6 billion).
It's a good sign that the UK lender has resumed dividend payments, said Adam Vettese, an analyst at multi-asset investment platform eToro. But if the economy falters again then bad debts could become a problem not just for Barclays but the UK banking sector as a whole, he said.
Shares in Barclays fell 0.8% in early European trading.