A dramatic step-up in litigation and conduct charges at Barclays (BARC) during the first half – resulting from the £1.4bn settlement with the US Department of Justice over sales of mortgage-backed securities – may have depressed pre-tax profits, but much of that damage had been pre-flagged. Strip that out and pre-tax profits rose a fifth to £3.7bn, driven by a consensus-beating reduction in impairment charges, which almost halved to £571m.
Barclays International was responsible for that decline, with credit impairment charges dropping three-quarters to £161m. That was largely due to the consumer, cards and payments business, which benefited from improved macroeconomic forecasts, higher repayments and repositioning the cards portfolio towards a lower risk mix in the US. The corporate and investment operations also rebounded, with pre-tax profits driven 17 per cent higher by a step-up in equities trading income. The return on average allocated equity for the international business rose 20 basis points to 12.6 per cent.
At Barclays UK, payment protection insurance charges reduced to £400m, from £700m the same time last year, pushing pre-tax profits up almost a third. That was despite a marginal reduction in total income, reflecting the non-recurrence of benefits associated with last year’s acquisition of Visa Europe.
Analysts at Investec expect adjusted net tangible assets of 264.9p a share at December 2018, from 276.2p the same time the prior year.
| BARCLAYS (BARC) | ||||
| ORD PRICE: | 187.5p | MARKET VALUE: | £32.1bn | |
| TOUCH: | 187.4-187.5p | 12-MONTH HIGH: | 220p | LOW: 177p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 357p | LEVERAGE: | 20.6 | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 10.88 | 2.34 | -6.6 | 1.0 |
| 2018 | 10.93 | 1.66 | 3.3 | 2.5 |
| % change | +0.5 | -29 | - | +150 |
| Ex-div: | 9 Aug | |||
| Payment: | 17 Sep |
