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| Barclays profits plunge as bank warns of challenging year ahead | Barclays profits plunge as bank warns of challenging year ahead |
| (about 1 hour later) | |
| Barclays has reported a fall in profits of more than 80% in the third quarter as its chief executive, Jes Staley, warned of the impact of the UK economic uncertainty on the year ahead. | Barclays has reported a fall in profits of more than 80% in the third quarter as its chief executive, Jes Staley, warned of the impact of the UK economic uncertainty on the year ahead. |
| “We acknowledge that the outlook for next year is unquestionably more challenging now than it appeared a year ago, in particular given the uncertainty around the UK economy and the interest rate environment,” Staley said. | “We acknowledge that the outlook for next year is unquestionably more challenging now than it appeared a year ago, in particular given the uncertainty around the UK economy and the interest rate environment,” Staley said. |
| The chief executive said there was a “level of caution” among banking customers, who have been keeping more money in their accounts. Business clients were also holding back from big decisions on mergers, acquisitions and stock market flotations. “There clearly is an economic impact of the uncertainty we have around Brexit,” Staley said. | The chief executive said there was a “level of caution” among banking customers, who have been keeping more money in their accounts. Business clients were also holding back from big decisions on mergers, acquisitions and stock market flotations. “There clearly is an economic impact of the uncertainty we have around Brexit,” Staley said. |
| Barclays U-turns over ban on Post Office cash withdrawals | Barclays U-turns over ban on Post Office cash withdrawals |
| The bank set aside a further £1.4bn for payment protection insurance after a flood of compensation claims in the run-up to the August deadline. This takes its bill for the mis-selling scandal to £11bn and to more than £46bn for the industry as a whole. | The bank set aside a further £1.4bn for payment protection insurance after a flood of compensation claims in the run-up to the August deadline. This takes its bill for the mis-selling scandal to £11bn and to more than £46bn for the industry as a whole. |
| Pre-tax profits in the three months to September plunged from £1.5bn to £246m after the PPI charge. The bank had already warned that the last-minute surge in claims would result in an extra provision of between £1.2bn and £1.6bn. | Pre-tax profits in the three months to September plunged from £1.5bn to £246m after the PPI charge. The bank had already warned that the last-minute surge in claims would result in an extra provision of between £1.2bn and £1.6bn. |
| Staley said the “avalanche” of PPI complaints was disappointing and that the bank had otherwise performed well in recent months. | Staley said the “avalanche” of PPI complaints was disappointing and that the bank had otherwise performed well in recent months. |
| “We were not expecting a provision of close to £1.5bn to settle the final PPI claims and imagine our capital position if we hadn’t had that litigation and conduct charge … I think we’d be having a very different discussion,” he said. | “We were not expecting a provision of close to £1.5bn to settle the final PPI claims and imagine our capital position if we hadn’t had that litigation and conduct charge … I think we’d be having a very different discussion,” he said. |
| “We hope this is the last of the major litigation and conduct charges we have to face – we’ve worked our way through Libor and foreign exchange and Qatar and all these other issues. It was disappointing, the surge in PPI, but we’re doing what we’re obligated to do to make sure we fully investigate the claims and pay on them.” | “We hope this is the last of the major litigation and conduct charges we have to face – we’ve worked our way through Libor and foreign exchange and Qatar and all these other issues. It was disappointing, the surge in PPI, but we’re doing what we’re obligated to do to make sure we fully investigate the claims and pay on them.” |
| Barclays’ latest provision trumps the extra £900m put aside by RBS on Thursday, although rival Lloyds could reveal a £1.8bn charge when it releases its third-quarter results next week. | |
| Staley praised the performance of the investment banking division, which made pre-tax profits of £882m in the third quarter, up 77% on the same period in 2018. | |
| Barclays has been under pressure from the activist investor Edward Bramson to scale back its investment banking division, which critics say has sucked up too much cash while offering little financial return for shareholders. | Barclays has been under pressure from the activist investor Edward Bramson to scale back its investment banking division, which critics say has sucked up too much cash while offering little financial return for shareholders. |
| However, the surge in investment banking profits will likely strengthen Staley’s argument for protecting the business, taking some of the wind out of Bramson’s sails. The activist investor suffered a setback when he lost a contentious bid for a seat on the board in May but Bramson pledged to continue his battle after giving the new Barclays chairman, Nigel Higgins, a chance to settle in. | |
| Barclays’ shares rose to their highest level since November 2018, up more than 2% to 171p, in morning trading. | |
| Nicholas Hyett, an equity analyst at Hargreaves Lansdown, said: “It’s just one quarter but this is exactly the picture CEO Jes Staley wants to paint – even if the final round of PPI compensation is muddying the water. | Nicholas Hyett, an equity analyst at Hargreaves Lansdown, said: “It’s just one quarter but this is exactly the picture CEO Jes Staley wants to paint – even if the final round of PPI compensation is muddying the water. |
| “A resilient UK bank is cutting costs and keeping bad loans to a minimum, generating a reliable income stream. Meanwhile, the corporate and investment bank is putting the icing on the cake with lower capital-intensity fee income and increasing corporate loans. The combination is generating a healthy return on shareholders’ capital. | “A resilient UK bank is cutting costs and keeping bad loans to a minimum, generating a reliable income stream. Meanwhile, the corporate and investment bank is putting the icing on the cake with lower capital-intensity fee income and increasing corporate loans. The combination is generating a healthy return on shareholders’ capital. |
| “Unfortunately, Barclays could be approaching a ‘steady state’ just as conditions turn. The bank’s stuck to its existing targets on profitability this time out but warned they’re becoming increasingly ambitious given the economic backdrop.” | “Unfortunately, Barclays could be approaching a ‘steady state’ just as conditions turn. The bank’s stuck to its existing targets on profitability this time out but warned they’re becoming increasingly ambitious given the economic backdrop.” |
| On Thursday Barclays bowed to public pressure and scrapped a decision to stop its customers from withdrawing cash at post offices after a barrage of criticism. | On Thursday Barclays bowed to public pressure and scrapped a decision to stop its customers from withdrawing cash at post offices after a barrage of criticism. |
| The bank’s U-turn came after it emerged that Barclays bosses would be questioned about the decision by a committee of MPs who had labelled it “a petty, penny-pinching move” and were hours away from publishing a highly critical report on the controversy. | The bank’s U-turn came after it emerged that Barclays bosses would be questioned about the decision by a committee of MPs who had labelled it “a petty, penny-pinching move” and were hours away from publishing a highly critical report on the controversy. |
| Barclays said it had been “persuaded to rethink” its decision and would keep the cash withdrawal facility after all. | Barclays said it had been “persuaded to rethink” its decision and would keep the cash withdrawal facility after all. |
| “Obviously, we believed that we were making the correct decision when we made it,” Staley said, but he added that talks with the UK government, MPs and consumer support groups had changed its mind. | |
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