Jes Staley finally has the Barclays he wants. But it cost him.
The lender posted a net loss in the second quarter, driven by costs to sell down its Africa unit and an unexpected charge for the payment protection insurance scandal. The bank said it now aims to earn a return on tangible equity of more than 10 percent as it moves past the issues that have weighed on profitability.
Barclays sold most of its stake in the Africa unit and closed the non-core division last quarter, leaving Mr Staley with the UK and US-focused lender that the chief executive officer pitched as his vision for the bank. While the consumer and cards businesses produce healthy returns, the investment bank uses the bulk of the firm’s capital and still must show it can consistently reach Mr Staley’s profitability targets.
“Our business is now radically simplified, the restructuring is complete,” Mr Staley said in the statement. “We can now focus on what matters most to our shareholders:
improving group returns.”
Barclays had a loss attributable to shareholders of £1.4 billion, its first quarterly loss since 2015. Excluding the one-time costs, Barclays posted adjusted pre-tax profit of £1.4 billion pounds. Analysts had expected adjusted profit of £1.2bn, according to the average of six estimates compiled by Bloomberg News. Revenue was £5.06bn, falling short of expectations.
The bank’s shares fell 1.7 percent to 205.1 pence at 8:02 a.m. in London.
The unexpected item was a £700 million charge for PPI customer compensation, the same amount Lloyds Banking Group set aside Thursday.
“We view this as the last quarter for sizeable restructuring-related charges and expect cleaner earnings ahead,” said Raul Sinha, an analyst at JPMorgan Chase & Co. with an overweight rating on the stock.
The chief executive has repeatedly said he wants to keep a “bulge- bracket” investment bank capable of competing with the best on Wall Street and brought in his former JPMorgan Chase & Co
colleague Tim Throsby to lead it. The unit performed better than expected in most areas in the quarter and posted a return on tangible equity above 10 per cent for the first time under Mr Staley.
Equity and credit trading each jumped more than 10 pe rcent, while banking fees climbed 8.4 per cent. Rates and foreign exchange trading, known as macro, fell 25 percent, the second quarter it has disappointed executives and dragged down the results of the trading unit.
“In rates and currencies, we are still not happy with where we are. Tim Throsby and I will get that corrected, but overall the investment bank had a good quarter,” Mr Staley said in a Bloomberg Television interview. “We will continue to invest in our investment bank. We like the business, and we think it’s important to our strategy.”
Barclays closed the non-core unit after risk-weighted assets at the division dropped below 25 billion pounds. Staley last year cut the dividend in half to help fund a faster disposal of unwanted businesses from the unit, which had £110bn of risk-weighted assets in 2013. The bank also reduced its stake in Barclays Africa Group from 51 per cent to 15 per cent through a share sale, which will allow the UK firm to deconsolidate the business and free up capital.
*Bloomberg
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Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
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Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
Our family matters legal consultant
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At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
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HIV on the rise in the region
A 2019 United Nations special analysis on Aids reveals 37 per cent of new HIV infections in the Mena region are from people injecting drugs.
New HIV infections have also risen by 29 per cent in western Europe and Asia, and by 7 per cent in Latin America, but declined elsewhere.
Egypt has shown the highest increase in recorded cases of HIV since 2010, up by 196 per cent.
Access to HIV testing, treatment and care in the region is well below the global average.
Few statistics have been published on the number of cases in the UAE, although a UNAIDS report said 1.5 per cent of the prison population has the virus.
Super Rugby play-offs
Quarter-finals
- Hurricanes 35, ACT 16
- Crusaders 17, Highlanders 0
- Lions 23, Sharks 21
- Chiefs 17, Stormers 11
Semi-finals
Saturday, July 29
- Crusaders v Chiefs, 12.35pm (UAE)
- Lions v Hurricanes, 4.30pm
PFA Team of the Year: David de Gea, Kyle Walker, Jan Vertonghen, Nicolas Otamendi, Marcos Alonso, David Silva, Kevin De Bruyne, Christian Eriksen, Harry Kane, Mohamed Salah, Sergio Aguero
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The biog
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Favourite film: “I love watching documentaries, and am fascinated by nature, animals, human anatomy. I love watching to learn!”
Best spot in the UAE: “I fell in love with Fujairah and anywhere outside the big cities, where I can get some peace and get a break from the busy lifestyle”
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AT4 Ultimate, as tested
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Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
The specs: 2019 Haval H6
Price, base: Dh69,900
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Test
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Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
