Barclays profit falls sharply as coronavirus hurts borrowers
[LONDON] Barclays set aside £2.1 billion (S$3.7 billion) to cover a likely spike in loan losses as thousands of its corporate and consumer borrowers battle to cope with the financial fallout from the Covid-19 pandemic.
The British bank booked first-quarter pretax profits of £923 million, down 38 per cent from £1.5 billion in the first quarter of 2019 and shy of the £1.27 billion average of analysts' forecasts compiled by the bank.
Barclays said the impact of the coronavirus hit late in the first quarter and was likely to linger, striking a less positive tone than Standard Chartered which earlier on Wednesday reported a 12 per cent dip in profit for the period.
"Given the uncertainty around the developing economic downturn and low interest rate environment, 2020 is expected to be challenging," Barclays chief executive Jes Staley said.
The bank said the impairments number included a £405 million hit from single name wholesale loan charges, while £1.2 billion was set aside for expected bad loans due to the poorer economic outlook and lower oil prices.
Barclays said group income rose by 20 per cent to £6.3 billion, boosted by a surge in activity in its transatlantic investment bank where pretax profits leapt by 42 per cent to £1.2 billion.
GET BT IN YOUR INBOX DAILY
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
The fixed income, currencies and commodities division was the investment bank's strongest performer over the quarter, generating a 106 per cent rise in income to £1.9 billion as it cashed in on sharp global market swings in some of the world's largest economies.
Despite the tougher economic environment, Barclays said it still believed its return on tangible equity target of greater than 10 per cent remained appropriate over time. It delivered a group ROTE of 5.1 per cent over the first quarter, while the investment bank chalked up 12.1 per cent.
REUTERS
KEYWORDS IN THIS ARTICLE
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Banking & Finance
Great Eastern chairman appeals for patience as shareholders fume over share price ‘disaster’
S&P Global first-quarter profit beats estimates on strong product demand
Thai banks cut rate for some borrowers after push from PM
Money laundering accused who faces 22 charges to plead guilty on May 14
BNP Paribas beats estimates as lower costs offset trading slump
Japan brokerage Daiwa’s Q4 profit more than doubles as markets recover