BCS Barclays PLC

By Margot Patrick 

Barclays PLC said it cut 3,000 jobs in the second quarter and is planning to reduce costs further as net profit slid 19%, hurt by weaker business conditions.

Chief Executive Jes Staley is trying to convince investors that the bank's strategic mix of consumer, business and investment banking can produce stable returns and provide resilience in downturns. But its shares have fallen 17% in a year and an activist shareholder, Sherborne Investors, has asked for a strategic review.

The decline in share price accelerated last month as worries have risen over a potential no-deal Brexit. The bank is one of the U.K.'s largest lenders to companies and households. Mr. Staley on Thursday said the bank is "totally prepared" for a no-deal exit from the European Union.

On Thursday, shares rose 3% by midday, supported by a rise in the bank's first-half dividend to 3 pence from 2.5 pence.

Net profit in the second quarter fell to GBP1.03 billion from GBP1.28 billion, reflecting a rise in bad loans and higher operating costs from a year earlier. But the bank said on Thursday it is on track to make a 9% return on tangible equity for the year, a key performance pledge by Mr. Staley.

Bad loans were up 70% in the quarter, at GBP480 million from GBP283 million, while operating costs rose 6% to GBP3.5 billion. Barclays said the rise in impaired loans was because there wasn't a repeat of last year's stronger conditions in the period, which included the release of earlier provisions.

In Barclays' international division, which includes its corporate and investment bank, revenue was up 5%, mainly because of a gain from selling shares in a business it partially owned. Without that extra boost, revenue in its markets business was down 5%. Banking fees fell 1%.

On Thursday, Mr. Staley said the bank will cut costs below a previous targeted range, to less than GBP13.6 billion for the full year. The bank has been leaving jobs unfilled when employees depart as one cost-saving measure. Finance Director Tushar Morzaria said the 3,000 job cuts have been "across the board," and not concentrated in one particular area of the bank.

New York-based Sherborne, headed by Edward Bramson, called for Barclays to move capital away from its investment bank earlier this year. After Mr. Bramson lost a shareholder vote for a board seat in May, he said his firm would give the bank "a quarter or two" and see what happens before mounting any fresh campaign for change.

Write to Margot Patrick at margot.patrick@wsj.com

(END) Dow Jones Newswires

August 01, 2019 07:34 ET (11:34 GMT)

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