Barclays on Thursday reported an annual profit of £ 1.53 billion ($ 2.11 billion) for 2020, which is 38% lower than 2019, but exceeds analysts’ expectations.
The UK credit provider attributed a fourth-quarter net profit to shareholders of £ 220m, despite the UK following new nationwide lock-in measures amid the Covid-19 revival.
Strong performance in the corporate and investment bank, which boosted revenue for the full year by 22% to £ 12.5bn, offset a sharp drop in impairment costs due to the weakening economic outlook brought about by the pandemic.
Analysts surveyed by Refinitiv expected a net loss of £ 44.88 million in the fourth quarter to make a net profit of 1.22 billion for the full year.
Barclays CEO Jes Staley told CNBC’s Squawk Box Europe on Thursday that demand in the UK economy would be sharpened to unlock later in the year.
“The British consumer in the face of the pandemic has clearly reduced spending significantly, but in the same way he has invested in strengthening individuals’ balance sheets, especially by increasing their deposits, and we feel it is on our balance sheet, said Staley.
“You have to believe that once the pandemic is over, those deposits are a limited expense, and we will hopefully see it in economic activity in the second half of this year.”
The final earnings report of 2020 follows a surprisingly strong third quarter in which the bank recorded a net profit of £ 611 million.
The annual profit in the previous year amounted to £ 2.46 billion with a profit in the fourth quarter of 2019 of £ 681 million.
Other highlights:
- Common Equity Tier 1 capital ratio (CET1) reaches a high of 15.1%, compared to 14.6% at the end of the third quarter.
- The return on tangible equity (RoTE) was 3.2%, compared to 5.1% in the previous quarter.
- The net interest margin (NIM) was 2.61%, down from 3.09% at the end of 2019.
- Full-year credit impairment expenses reached £ 4.8 billion, compared to £ 1.9 billion in 2019.
- Profit for the full year before tax was £ 3.1 billion, compared to £ 4.4 billion in 2019.
Dividend payments
Barclays has also announced that it will resume dividend payments at one cent per share to shareholders and make a repurchase of £ 700 million. The Bank of England last year requested that British lenders suspend payments to shareholders.
Staley said the bank was able to remain profitable in each quarter of 2020 because of the diversified business model implemented five years ago, with the investment bank responding differently to the consumer banking division.
‘While our consumer bank struggled and its profitability declined, mainly because we incurred significant depreciation costs to build a reserve, the investment bank actually had a return on capital in the year of more than 13%, which kept the bank profitable every quarter, ‘he said.