Barclays profits jump awaiting new CEO

29th July 2015, Comments 0 comments

Barclays increased net profits by 43 percent in the first half as cost-cutting and higher revenue offset provisions for settling a series of scandals, the troubled British bank announced Wednesday.

Barclays, which earlier this month sacked chief executive Antony Jenkins, said profit after tax increased to £1.611 billion ($2.512 billion, 2.275 billion euros) in the six months to the end of June from £1.126 billion in the first half of 2014.

Pre-tax profits jumped by a quarter to £3.11 billion, said the bank, which has been mired in a series of market-rigging scandals.

"The results reported today represent continued good progress for the business," said John McFarlane, who, in the role of executive chairman, has replaced Jenkins on an interim basis awaiting the appointment of a new chief executive officer.

"I am personally pleased with recent progress in the Investment Bank. It has generated a double-digit return," he said in Wednesday's earnings statement.

Barclays reported an overall group revenue rise of 4.0 percent in the first half to £13.88 billion, while operating expenses dropped by a tenth.

It meanwhile increased by 77 percent to £1.966 billion the amount set aside to meet costs and fines linked to market-rigging, as well as to the mis-selling of insurance products.

Jenkins had vowed to bring a new culture of decency to Barclays, and oversaw drastic restructuring that shrank its investment bank.

But in early July, Barclays surprised markets by announcing that "new leadership" was required to accelerate an overhaul of the beleaguered group, leading to Jenkins' dismissal with immediate effect.

Jenkins had replaced Bob Diamond in July 2012 -- who himself was forced to resign after the damaging Libor interest-rate fixing scandal that engulfed Barclays.

Jenkins however struggled to restore the group's damaged reputation which was tarnished also by the rigging of foreign exchange at the bank.

"We need to be much more customer and client orientated in our approach, to streamline and eliminate unnecessary and cumbersome bureaucracy, and to embed direct accountability for activities within our businesses," McFarlane said in Wednesday's statement.

"Crucially we must do this in a way which is consistent with our values, and with strong controls in place, so that we build this business in the right way."

- Job cuts -

Under Jenkins, Barclays slashed more than 19,000 jobs and recent reports suggested that it plans to axe thousands more staff across the group.

"With or without a new chief executive, Barclays appears eager to press ahead with the increased pace of restructuring within the group," Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said in reaction to the earnings update.

In May, Barclays was slapped with a $2.4-billion fine by US and UK regulators for manipulation of foreign exchange trading. Five other global banks have been fined over the affair.

"The legacy and fresh provisions for past misdemeanours remain a drag on overall performance, as Barclays attempts once and for all to consign those issues to history," said Hunter.

In early trading, shares in Barclays climbed 2.70 percent to 287.15 pence on London's benchmark FTSE 100 index, which was up 0.65-percent at 6,597.78 points compared with Tuesday's close.


© 2015 AFP

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