INVESTORS reacted positively yesterday despite Barclays unveiling quarterly pre-tax profits of £1.27bn (excluding own credit), a 28 per cent drop on last year. Including own credit losses – the effect of mark-to-market write-downs – profit plunged 76 per cent to £327m.
Barclays stock climbed by over three per cent throughout the day in part due to an unexpectedly speedy improvement in impairments, which fell 31 per cent.
Basic earnings per share were down seven per cent to 21.3p, but the bank decided to re-issue a quarterly dividend of 1p. It reported that it has set aside £1.6bn for bonuses as outgoing CEO John Varley called the results “resilient despite a subdued economic environment and moderate volumes”.
Varley is to be replaced by current Barclays Capital chief Bob Diamond, whose division was the biggest drag on profits. Pre-tax profit was wiped out, dropping 149 per cent to record a £182m loss. The bank blamed the figures on mark-to-market write-downs combined with a generally difficult climate for investment banks.
There was good news on the bank’s capital ratio. It reported a core tier one ratio of 10 per cent, no change from last quarter. The bank said it estimated the costs of complying with Basel III would be £150bn, with £50bn to be absorbed by management decisions.