Barclays has reported a slide in pre-tax profits for the first half of the year.
Profits before tax at the banking giant plunged to £2.1bn, down 21 per cent on £2.6bn the year before, and attributable profits dropped to £1.1bn, down 31 per cent from £1.6bn for the six months ending June 2015.
Net operating income figures were only marginally better, falling 11 per cent to £10.1bn, down from £11.3bn. Total income net of insurance claims also fell for the half year to £11bn, down nine per cent from £12.1bn.
On a quarterly basis, the bank reported profits before tax of £1.3bn, down from £1.5bn for the same quarter in 2015, net operating income of £5.5bn, down from £6.1bn the year before, and total income net of insurance claims of just shy of £6bn, compared with £6.5bn the year before.
Shares in the company are trading up five per cent at 153.75p at time of writing. That's impressive, but still some way off the 284.6p the shares were priced at a year ago.
Why it's important
Like all banks at the moment, Barclays is trying to battle its way though a lower for longer interest rate environment, effectively hampering how much income it can hope to earn.
On top of that, the Brexit vote last month caused such a degree of uncertainty, both in the run up to and in the aftermath, that it's left many clients unable to stomach big decisions.
However, Barclays is pretty well prepared for this, having previously announced it would be winding down its non-core business to focus on its more critical activities. The company confirmed today that "closing Barclays non-core as fast as possible" would remain a key focus.
What Barclays said
James 'Jes' Staley, group chief executive, said:
Taken together, the picture in the second quarter is one of strong and accelerating progress against our strategy. We remain confident that it is the right plan for Barclays, and see no reason to adjust it, or the pace of delivery, in light of the vote by the UK last month to exit the EU.
Given the inherent diversification of our business model, coupled with a longstanding conservative approach to risk, Barclays is well positioned to weather any potential economic consequences of that decision. We are very much open for business, and fully committed to supporting our customers and clients, and the real economy, through this period of uncertainty.
What analysts said
"Unlike Lloyds, Barclays hasn’t announced any further job losses or branch closures," pointed out Laith Khalaf, senior analyst at Hargreaves Lansdown. "That lends credence to Lloyds’ assertion that the changes were a strategic response to changing customer trends, in particular a move to digital banking.
"If Barclays had followed suit, it would have looked like the banks were looking to cut costs in the face of the economic uncertainty caused by Brexit"
Ken Odeluga, market analyst at City Index, added: "Slight dizziness among investors from the mental gymnastics required to decide if Barclays truly 'won' in the first half, or not, would be understandable. Once it wears off, today's stock jump, which still leaves the shares 50 per cent lower than prices in early August 2015, will moderate, because whilst the core performance has protected an – already reduced – dividend outlook this time, a slower pace of core growth is all but assured for the full-year, and quarters beyond."