3rd March 2015
Barclays has posted a 21% fall in profits and set aside more money to cover potential fines, while its boss was paid his first bonus as chief executive.
The bank’s pre-tax profits dropped to £2.26bn in 2014, while it increased provision against costs relating to the investigation into foreign exchange rates rigging by £750m to £1.25bn.
Chief executive Antony Jenkins was awarded a £1.1m bonus, bringing his total pay to £5.5m for 2014. But the total allocation for staff bonuses was reduced by 22% to £1.7bn.
Barclays made a further £200m provision for payment protection insurance mis-selling bringing the year’s total to £1.1bn and took a £935m hit for the way loans for education, social housing and local authorities are valued.
Stripping out these figures, adjusted profits rose 12% to £5.5bn.
The fall in staff bonuses was partly to keep within an EU bonus cap, as the bank used other types of allowances to incentivise workers. The cap restricts bonuses to one times salary or up to two times with shareholder agreement.
The bank has already announced plans to axe 19,000 jobs and cut back its investment division.
Antony Jenkins told BBC Radio 4’s Today programme that “On this occasion I judged it was right for me to take my bonus.”
He added: “Barclays today is a stronger business, with better prospects, than at any time since the financial crisis. We remain focused on addressing outstanding conduct issues, including those relating to foreign exchange trading.
“I regard the behaviour at the centre of these investigations as wholly incompatible with our values, and I share the frustration of colleagues and shareholders that matters like these continue to cast a shadow over our business. But resolving these issues is an important part of our plan for Barclays and, although it may be difficult, I expect that we will make significant progress in this area in 2015.”
Graham Spooner, investment research analyst at The Share Centre, explained what its results means for investors.
He said: “This morning, Barclays announced results slightly above market expectations, however the banks fines have grabbed the headlines. News of further PPI provisions of £200m and an additional £750m set aside for an investigation into foreign exchange markets will disappoint investors.
“Barclays is continuing to restructure and the CEO has shrunk Barclays investment arm in order to move away from its dependence on investment banking. The bank is also continuing to make progress to achieve its 2016 targets, however investors should note progress is likely to be slow.
Spooner added: “We currently list Barclays as a ‘hold’ for investors favourable of the banking sector. Long suffering investors will focus on the CEOs ongoing restructuring, however the sector is still under a cloud and with the uncertainty over the investment banking division we would recommend that there are potentially better opportunities elsewhere.”