BCS Barclays PLC

By Max Colchester 

LONDON -- Barclays PLC Chief Executive Jes Staley pledged Thursday to more than double dividends at the loss-making British bank, as the U.S. executive looks to appease disgruntled shareholders.

The move came as the bank reported a GBP1.9 billion ($2.64 billion) net loss for 2017, compared with a GBP1.6 billion profit the previous year, hit by a charge related to U.S. tax reform and poor returns at its investment bank's trading unit.

However, Mr. Staley said his turnaround plan is about to payoff and that the return of volatility to markets was helping boost trading revenue at Barclays's investment bank. "For the first time in five years the bank begins 2018 with a clear operating model," he said.

Barclays said it would raise its dividend from 3 pence a share to 6.5 pence a share this year, back to the level it was at two years ago when it was cut to fund a restructuring at the group.

Shares rose more than 5% in morning trading in London.

The results come as Barclays is at a crossroads. After more than two years of restructuring, Mr. Staley has now completed his reshaping of the lender into a universal bank with major operations in the U.S. and U.K.

However, Barclays was one of the worst performing European bank stocks last year, with shareholders questioning Mr. Staley's decision continue backing the bank's battered trading unit.

Investors now want to see how the 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.

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.

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 there 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 prompted increased client activity. Falling tax rates in the U.S. are expected to help bolster returns the bank said. Barclays previously disclosed it was taking a $1.3 billion write-down on its 2017 accounts following U.S. corporate tax cuts.

Going into 2018 Barclays still faces several legal hurdles, including a criminal investigation into an 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. 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.

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

(END) Dow Jones Newswires

February 22, 2018 05:06 ET (10:06 GMT)

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