Bad loans squeeze the Barclays 2020 profits to £3.1bn

Photo: EPA

UK Barclays reported a profit before tax for 2020 of 3.1 billion pounds. That stands for a 30% fall in profits for 2020, down from 4.3bn pounds in 2019. Barclays noted it was forced to set aside some 4.8bn pounds to cover loans unlikely to be paid back amid the economic fallout of Covid-19 pandemic, BBC reported.

The financial results were well above the average estimate of 1.96 billion pounds from analysts’ forecasts compiled by the bank. Barclays’ profit however was bolstered by a stellar year for its investment bank, which in common with US peers reported strong revenues from its equities and fixed income businesses as customers traded frantically in volatile markets in 2020, Reuters elaborated. The fixed income, currencies and commodities unit reported a 53% increase in income, as swings in global interest rates and prices of commodities such as oil drove activity. The lender’s consumer, cards and payments division reported a loss for the year of 1.1 billion pounds, mainly due to pandemic-linked provisions.

Barclays announced it would resume dividend payments of 1p per share to shareholders. It is also set to return cash to investors via a share buyback of up to £700m.

In December, UK banks were told they could start paying shareholders dividends again. They had ceased making dividend payments in March last year in order to keep hold of capital and absorb bigger shocks from potential loan losses amid the Covid pandemic.

Wall Street banks such as Goldman Sachs and Morgan Stanley also saw fourth-quarter profits sail past analysts’ estimates, as Covid-19 induced volatility coupled with the impact of the US elections boosted trading.

Similar articles

  • DB, J.P Morgan, Coutts face a multi-billion trial in Malaysia

    DB, J.P Morgan, Coutts face a multi-billion trial in Malaysia

    Large-scale corruption probe in Malaysia dragged Deutsche Bank, J.P Morgan and Coutts in court to face charges totaling billions of dollars, Reuters reported. The collapsed state fund 1MDB is suing the Malaysian unit of DB for $1.11 billion, and the Swiss units of J.P. Morgan and Coutts for $800m and 1.03bn. The claims are for alleged losses from a corruption scandal at the fund, court documents showed.

    60
  • Commerzbank paves the way for 10,000 job cuts

    Commerzbank paves the way for 10,000 job cuts

    Germany’s Commerzbank announced it had reached an agreement with representatives of employees over planned job cuts aimed to reduce operating costs, Reuters reported. The Verdi labour union confirmed the information and elaborated that the issue concerned some 10,000 worldwide. The agreement is central to Chief Executive Officer Manfred Knof's plans to restructure and spur the nation's second-biggest listed lender and return it to profitability.

    67