Bad loans squeeze the Barclays 2020 profits to £3.1bnEuropost
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.