BCS Barclays PLC

By Max Colchester 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (February 23, 2018).

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 prior year, hit by a charge related to the U.S. tax overhaul and poor returns at its investment bank's trading unit.

However, Mr. Staley said his turnaround plan is about to pay off and that the return of volatility to markets was helping boost trading revenue at the 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 where it was two years ago when it was cut to fund a restructuring at the group. Its shares rose 4.4% 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 to 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 ways off. The bank said on Thursday that it would meet its cost of equity, around 10%, only 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 sliding 17% in the last quarter from 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 rising.

The first few months of the year, however, provided some hope 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. Barclays has said it wants to settle the allegations but only at the right price. Mr. Staley and the bank are being probed over attempts to reveal the identity of a whistleblower that critiqued a hire made by the executive. 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 23, 2018 02:47 ET (07:47 GMT)

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