Barclays profits plunge 66% for the first half of 2020 as it sets aside $4.7 billion to brace for pandemic pain

• Barclays reported a 66% plunge in profits for the first six months of the year, hurt by declining business in its UK group.
• Profits attributable to shareholders dropped to $899 million in the first half, down from $2.6 billion last year.
• The British bank set aside £3.7 billion ($4.7 billion) in anticipation of bad loans related to the crisis period, with a £1.6 billion ($2 billion) charge in the second quarter alone.
• However, Barclays trading division performed relatively better as it posted a 60% jump in trading revenues in foreign-exchange, rates, and credit trading.
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Barclays on Wednesday posted a 66% drop in profits for the first half of the year as the pandemic disrupted services to the bank's UK customers.

Profits attributable to shareholders dropped to £695 million ($899 million) for the first six months of the year, down from £2 billion ($2.6 billion) a year ago.

The British bank set aside £3.7 billion ($4.7 billion) in anticipation of bad loans related to the crisis period, with a £1.6 billion ($2 billion) charge in the second quarter.

Barclays shares were down 3.5% in early trading.

Below are the key numbers for the bank's first half of 2020:

Profit attributable to shareholders: £695 million ($901 million) versus £2.07 billion ($2.68 billion) last year.

EPS: 4.1 pence ($0.05) versus 12.1 pence ($0.16) last year.

Profit after tax: £1.3 billion ($1.5 billion) versus £3 billion ($3.8 billion) last year.

"The COVID-19 pandemic has caused disruption to the Barclays Bank UK Group's customers, suppliers and staff," the bank said in a statement.

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"In the UK severe restrictions on the movement of people have been implemented by the UK, Scottish and Welsh governments, with a resultant significant impact on economic activity."

For its UK business, the bank warned that despite contingency plans to deal with COVID-19, unavailability of staff due to illness or failure of third-parties to supply services could lead to "significant customer detriment, costs to reimburse losses incurred by the Barclays Bank UK Group's customers, potential litigation costs (including regulatory fines, penalties and other sanctions), and reputational damage."

However, Barclays trading division performed relatively better as it posted a 60% jump in trading revenues in foreign-exchange, rates, and credit trading. The markets division showed a 49% rise in revenue to £2 billion ($2.6 billion).

Given an uncertain outlook and low-interest rate environment, the bank expects the second half of the year to continue to be challenging.

Barclays anticipates impairment charges to remain above levels experienced in recent years, but below the first-half level of £3.7 billion.

The board will decide on future dividends and capital returns policy by the end of fiscal 2020, the bank said.

"Although we will remain well capitalized and ahead of our minimum requirements, we may experience stronger capital headwinds in the second half of the year," CEO Jes Staley said.

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