Barclays (BARC.L) announced a resumption of its dividend, plans for a share buyback, and raised bonuses on Thursday as it beat forecasts with full-year numbers.
The bank reported a full-year profit of £3bn ($4bn) on income of £21.8bn. Analysts had been expecting pre-tax profits of £2.8bn on income of £21.6bn. Full year profit was down 30% compared with 2019 but revenue grew slightly.
The bank was propped up by the best year on record for its corporate and investment bank, where income rose 22% and profits rose 35%. Barclays helped corporate clients raise £1.5tn from global capital markets last year as the pandemic raged.
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Strength in the corporate and investment bank offset weakness at Barclays' credit card business and its retail bank, where low interest rates and a downturn in consumer borrowing meant pre-tax profits slumped by 78%.
Chief executive Jes Staley said 2020 "demonstrated the value of our diversified banking model" and pointed out that Barclays "remained profitable in every quarter, including generating profit before tax of £646m in the fourth quarter."
Barclays announced capital distributions worth 5p per shares, made up of a full-year dividend of 1p per share and a share buyback programme worth up to £700m. It comes after the Bank of England lifted its ban on shareholder distributions in December.
“Given the strength of our business, we have decided the time is right to resume capital distributions," Staley said in a statement. "We expect to comment further on capital distributions when appropriate."
The Bank of England blocked banks from payouts to investors or excessive bonuses last year as the COVID-19 pandemic struck, telling lenders to build reserves to cover potential losses instead. The central bank lifted the ban at the end of last year.
Barclays also raised bonuses for staff, increasing the bonus pool by 6% to £1.6m. Staley said the increase was justified by the resilient performance of the bank in the face of the pandemic.
"In a year in which the COVID-19 pandemic affected people across the globe, 2020 demonstrated our strengths, our values, and our resilience," Staley said in a statement.
“Throughout the pandemic we have focussed on preserving the financial and operational integrity of the firm so that we can maximise our support for clients and customers, for colleagues, and for the communities in which we live and work."
Staley earned £4m running the bank last year, filings showed. That was down 30% on its take home pay a year earlier.
Shares in Barclays fell over 3% in London.
“On the face of it you might have expected a round of applause for Barclays fourth quarter results which were significantly better than forecast and came with the extra cherry of a reinstated dividend, bolstered by a share buyback," said Russ Mould, investment director at stockbroker AJ Bell said.
“Instead the company got the cold shoulder from the market as attention was drawn by large provisions on Covid-related bad debt and a warning of a continuing impact through the course of 2021."
The bank set aside another £492m to cover potential losses in the final quarter of 2020, taking total provisions for the year to £4.8bn. The loss coverage pot was lower than analysts had forecast, with provisions falling 19% quarter-on-quarter.
Barclays's fourth quarter profit was more than double than analysts had expected at £646m. Income in the quarter was £4.9bn.
“Barclays remains well capitalised, well provisioned for impairments, highly liquid, with a strong balance sheet, and competitive market positions across the Group," Staley said. "We expect that our resilient and diversified business model will deliver a meaningful improvement in returns in 2021.”
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