Barclays Pushed to Loss by Africa Write-Down -- 2nd Update
July 28 2017 - 5:06AM
Dow Jones News
By Max Colchester
LONDON -- Barclays PLC on Friday said it swung to a
second-quarter net loss as it took a hit on the disposal of its
Africa operations and higher provisions for conduct costs.
Overall the bank's results were mixed. Revenue fell on the back
of muted trading at its investment bank and lower sales at its
retail operations. But the investment bank performed better than
some analysts had expected.
Impairments increased at its credit-card division and the bank
took a GBP700 million charge to compensate customers who were sold
insurance products they didn't need. It also took a GBP2.5 billion
hit on the disposal of its African business, pushing the lender to
an overall net loss of GBP1.4 billion for the quarter, compared
with a GBP677 million profit in the same period last year.
The earnings come as Barclays is largely finished with the first
stage of Chief Executive Jes Staley's strategy revamp. The quarter
"essentially closed the restructuring of Barclays," he said.
The bank has completed a retreat from Africa, retrenched its
investment bank and closed its noncore division, which held
billions of unwanted assets.
However, shares have fallen in the last three months as
investors fret whether the new-look Barclays can produce returns.
Dividend rises are still over the horizon, although the bank said
it would update investors at its full-year results in February. It
said Friday it is now targeting a greater than 10% group return on
tangible equity "over time." The group's second-quarter tangible
equity was minus 11%.
The British bank said total income came in at GBP5 billion for
the quarter, compared with GBP5.97 billion a year ago. Excluding
one-offs, profit before tax was GBP659 million, which was below
analysts expectations. Shares inched up 0.6% in morning
trading.
Over the past year, the focus has been shoring up Barclays's
balance sheet. Cutting its stake in its Africa division has helped
push the bank's capital ratio up to 13.1%. Now the bank is focusing
on becoming more efficient, Mr. Staley said. The lender hopes GBP1
billion of costs will fall away in the next two years.
Barclays's closely watched investment bank reported another fall
in revenue, with its macro-trading division suffering another poor
quarter as sales fell heavily. However, sales at its bond-trading
and equities-trading divisions rose.
Analysts at Jefferies said returns at the investment bank were
"reasonable given peers' performance." Barclays is reallocating
capital within that division from its corporate loan book to its
markets business, in particular its prime-brokerage division.
A series of regulatory issues still hang over the bank. Barclays
is being sued by the Justice Department over its role in the
packaging and sale of toxic mortgage-backed securities. Mr. Staley
is himself being probed by U.K. regulators after trying to unmask a
whistleblower.
Write to Max Colchester at max.colchester@wsj.com
(END) Dow Jones Newswires
July 28, 2017 04:51 ET (08:51 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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