Barclays (BCS) 09′ Net Profit Doubles, 2010 Starts Well
LONDON -(Dow Jones)- Barclays PLC (BCS) said Tuesday that its net profit for 2009 more than doubled, helped by a GBP6.33 billion gain from an asset sale and profits from Barclays Capital, but bad-debt charges weighed on the results, which still beat analysts expectations.
Barclays said 2010 started strongly, with profit before tax “well ahead of first half and full year 2009 run rates.” It also said its planning assumption is for a “moderate” decline in impairment in 2010.
“These numbers are further proof that Barclays has skillfully woven its way through the recessionary minefield,” Richard Hunter, head of U.K. equities at Hargreaves Lansdown Stockbrokers, said. “With or without the [asset sale], the figures are extremely impressive.
At 1103 GMT, Barclays shares were up 18 pence, or 6.4%, at 293 pence.
On the hot topic of bonuses, the bank said it awarded staff GBP2.7 billion for 2009 performance, but said Chief Executive Officer John Varley and President Robert Diamond waived awards they would have received for their contributions to the bank’s strong results.
Most banks have been lowering payouts amid the public outcry, and Barclays said the ratio of investment banking remuneration to BarCap’s revenue was cut to 38% last year from 44% in 2008.
“To be clear, our objective in the area of remuneration is to pay the minimum consistent with competitiveness,” Varley told a conference call.
Barclays reported a net profit for the year ended Dec. 31 of GBP9.39 billion, up from GBP4.38 billion a year ago.
It reported a GBP6.33 billion gain in the last quarter from the sale of Barclays Global Investors to BlackRock Inc. (BLK), which was closed in December.
Fourth-quarter net profit rose to GBP6.66 billion from GBP557 million a year earlier, according to Dow Jones calculations.
Also contributing to the bottom line was a GBP2.5 billion gain from so-called structural hedges, designed to reduce the impact of the volatility of short-term interest-rate movements on positions with the balance sheet. The bank said it expects to continue being protected by such hedges.
Meanwhile, Barclays said impairment charges for the year jumped 49% to GBP8.07 billion from GBP5.42 billion. The figure, however, was below the GBP9 billion estimate the bank gave late last year.
Varley said the worst of charges is “behind us,” although the company expects them to rise in certain books, particularly in its commercial lending portfolios.
The bank said impairment charges in Spain more than doubled to GBP455 million for the year, of which GBP270 million related to corporate and small- to midsize-enterprise portfolios.
The country, along with Greece and Portugal, has been closely watched by analysts on fears of rising sovereign debt.
On a pretax-profit level, results beat the GBP11.31 billion estimated by a poll of five analysts. It reported a pretax profit of GBP11.64 billion for the year, up from GBP6.08 billion in 2008, when it posted a GBP2.41 billion gain on acquisitions.
Breaking it down by division, profit before tax at Barclays Capital rose 89% in 2009 to GBP2.46 billion “as a result of very strong performances in the U.K., Europe and the U.S., partially offset by a charge of GBP1.82 billion relating to own credit,” the bank said.
BarCap’s performance so far this year has been strong, following a slight fall in income in the fourth quarter compared with the third, the business head, Bob Diamond, said.
Meanwhile, pretax profit for the U.K. retail banking business fell 55% to GBP612 million as economic conditions remained challenging. Pretax profit at Barclays commercial bank also fell, down 41% to GBP749 million.
The bank said performance of its global retail and commercial banking division was hurt by margin compression on deposit income as a result of low interest rates.
Nonetheless, the business reported a 7% increase in income to GBP16.1 billion.
Total income rose 34% to GBP30.99 billion.
“We have strengthened our financial position considerably over the year in the areas of capital, liquidity and leverage and are well positioned to manage further changes that may be required of us by our regulators,” Barclays said in a statement.
Its Core Tier 1 ratio stood at 10% at December, up from 5.6% a year ago.
The bank declared a final dividend of 1.5 pence a share, giving a total of 2.5 pence a share for the year.
patricia.kowsmann@dowjones.com