BCS Barclays PLC

By Max Colchester 

LONDON-- Barclays PLC said it would more than double its dividend next year even as the bank swung to a full-year loss, hit by a weak performance at its investment bank and a charge related to U.S. tax reforms.

The British bank said Thursday it would aim pay a dividend of 6.5 pence a share in 2018. The move raises the payout back to the level it was at two years ago when it was cut to fund a restructuring at the group.

Shares in the lender opened 5% higher Thursday morning.

The proposed higher payout comes despite Barclays falling to a GBP1.9 billion ($2.64 billion) net loss in 2017, compared with a GBP1.6 billion profit the previous year. Total income fell 2% on the year to GBP21.1 billion as the bank shed operations.

The investment bank continued to drag on results, with markets revenue slumping 17% in the last quarter compared with the year before.

However, Chief Executive Jes Staley said that the investment bank had performed strongly so far this year as volatility returns to markets. "We are pleased with the start to the year, and in particular in the markets businesses in CIB, where income is tracking above the level for the corresponding period in 2017 in dollars," he said in a statement.

The results come as Barclays is at a crossroads. Mr. Staley has spent more than two years reshaping the lender into a U.S. to U.K. universal bank. Investors now want to see how the diverse businesses--stretching from credit cards to equity derivatives--click together. Sustained profits still look a way off. The bank said on Thursday that it would only meet its cost of equity, around 10%, by 2020.

Mr. Staley has been dealt a tough hand, analysts say. The investment bank's trading business has struggled with record low levels of volatility. The Brexit vote has spooked investors, worried that the U.K. economy could suffer dragging Barclays's sizable retail business with it. And analysts fret that the bank's red hot growth in U.S. credit cards could see the bank burned if the economic cycle cools. Barclays on Thursday warned that delinquencies on card payments in the U.S. were on the rise.

The first few months of the year, however, provided a bit of light at the end of the tunnel for the investment bank, as choppy markets saw clients come back into the market and increase hedging.

The bank still faces several legal hurdles, including a criminal investigation into emergency fundraising during the financial crisis. The U.S. Justice Department is suing Barclays, alleging it fraudulently sold more than $30 billion of mortgage-linked securities that helped fuel the financial crisis. The bank says it is seeking to dismiss the suit. Mr. Staley and the bank are being probed over attempts to reveal the identity of a whistleblower that critiqued a hire the executive made. The bank put aside GBP240 million to cover a foreign exchange matter in the last quarter of the year.

The bank had previously disclosed it was taking a $1.3 billion write-down on its 2017 accounts following U.S. corporate tax cuts. The bank said that the U.S. Base Erosion and Anti Abuse Tax should wouldn't cause the group's tax rate to exceed mid-20 percent.

Write to Max Colchester at max.colchester@wsj.com

(END) Dow Jones Newswires

February 22, 2018 03:32 ET (08:32 GMT)

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