Barclays reported an annual profit of £ 1.53 billion ($ 2.11 billion) for 2020 on Thursday, down 38% from 2019 but exceeding analyst expectations.
The UK lender posted a net profit attributable to shareholders of £ 220 million in the fourth quarter, despite the UK enacting new nationwide lockdown measures amid a revival of Covid-19.
Strong performance at the corporate and investment bank, which saw full-year revenues increase by 22% to £ 12.5 billion, offset a sharp increase in impairment charges due to the deteriorating economic outlook due to the pandemic .
Analysts polled by Refinitiv had expected a fourth quarter net loss of £ 44.88 million, yielding a full year net profit of £ 1.22 billion.
Barclays CEO Jes Staley told CNBC’s “Squawk Box Europe” on Thursday that there would be pent-up demand in the UK economy to unlock later this year.
“The UK consumer has clearly decreased significantly in their spending in the face of the pandemic, but in the same way they have invested in strengthening individuals’ balance sheets, particularly by growing their deposits, and we find that on our balance, ”said Staley.
“You have to believe that once the pandemic is over, those deposits represent accumulated expenditure, and we will hopefully see that in economic activity in the second half of this year.”
The final 2020 earnings report followed a surprisingly strong third quarter in which the bank posted net profit of £ 611 million.
Full year profit in the prior year was £ 2.46 billion with fourth quarter 2019 profit of £ 681 million.
Other highlights:
- Common equity tier one capital (CET1) ratio reached a record high of 15.1, up 14.6% at the end of the third quarter.
- Return on tangible equity (RoTE) was 3.2%, compared to 5.1% in the previous quarter.
- The net interest margin (NIM) was 2.61%, compared to 3.09% at the end of 2019.
- Loan impairment charges for the full year were £ 4.8 billion, up from £ 1.9 billion in 2019.
- Full year profit before tax was £ 3.1 billion, down from £ 4.4 billion in 2019.
Dividend payments
Barclays also announced that it would resume dividend payments to shareholders of one pence per share and begin a £ 700 million share buyback. The Bank of England last year requested UK lenders to suspend payouts to shareholders.
To address the decline in RoTE, Staley said the bank could remain profitable in each quarter of 2020 thanks to the diversified business model implemented five years ago, with the investment bank reacting differently to the consumer banking division.
“ While our consumer bank struggled and brought that profitability down, largely because we took significant impairments to build up a reserve, the investment bank had a return on capital of over 13% in the year, so that kept the bank profitable. . quarterly, ”he said.