Barclays sets aside another £750m for forex probes as profits jump and costs fall

 
Lynsey Barber
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Barclays (Source: Getty)

The figures

Barclays' full-year adjusted pre-tax profits soared 12 per cent to £5.5bn, well ahead of the £5.3bn analysts expected for 2014.

An additional £750m has been set aside for forex settlements, bringing the total to £1.25bn. Chief executive Anthony Jenkins said the bank expected to "make significant progress in this area" in 2015.

A further £200m provision has also been made for PPI claims.

Taking into account these and other provisions, statutory pre-tax profit fell 21 per cent to £2.3bn.

Operating costs fell nine per cent as a result of cost-cutting measures, which included a five per cent reduction in staff.

On the retail side, profits grew 29 per cent for personal and corporate banking to £2.9bn, 13 per cent for Barclaycard to £1.2bn.

At its investment arm, profit slipped 32 per cent to £1.4bn, down from £2bn a year earlier.

Barclays has more capital, increasing its leverage ratio to 3.7 per cent, from 3.5 per cent back in September.

The will pay out a final dividend of 3.5 pence per share.

Why it's interesting

Ever the rollercoaster ride with banks, under boss Anthony Jenkins, Barclays has entered the dawn from its darkest Bob Diamond hours. It's not basking in the sunlight yet, though, and Jenkins still has work to do.

The bank is being forced to split its retail and investment arms as a result of new rules from the Vickers Report and Jenkins has been pruning back the bank's reliance on investment banking.

Barclays hasn’t agreed a settlement with regulators for forex fines like the rest of the major banks and investors will want a price tag for provisions over the £500m it already has earmarked in the coffers.

The introduction of new leverage ratios for UK banks has weighed less onerously since it was revealed they would not be as high as expected and Jenkins has improved the bank's capital strength.

Chairman Sir David Walker’s imminent departure is making the way for Aviva’s John McFarlane who will appreciate Jenkins' efforts to place Barclays in a better position than rivals.

What Barclays said

Steady progress towards our Transform targets. Higher Group and Core profit before tax were driven by focused cost saving initiatives. Significant non-core run down throughout the year contributed to strengthening of Group capital and leverage ratios

In short

Jenkins' cost-cutting measures at Barclays are paying off, but there's still a way to go.

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