Stellar growth should silence sceptics

YESTERDAY’S full year results should silence the doubters once and for all. Little over a year after the bank was forced to write to shareholders insisting it was not seeking new capital, and would post better-than-expected profits for 2008, the bank has triumphed again. Group pre-tax profit for 2009 almost doubled to £11.6bn compared to 2008. Yes, this 92 per cent jump had a lot to do with the £6.3bn it got for the sale of Barclays Global Investors, excluding which total group profit was actually 13 per cent lower at £5.3bn. But it still beat consensus expectations, and the other numbers confirm that Barclays is a bank on the up. Core tier one ratio is 10 per cent, from 5.6 per cent a year ago. Its group liquidity pool, a cushion to meet cash outflows in stressed circumstances, has tripled – now £127bn from £43bn. Impairment charges were £8bn, lower than the £9bn Barclays itself predicted, and it expects bad debts to fall from here on. Meanwhile, sceptics that doubted its investment banking division Barcap could maintain its performance for the fourth quarter given the weaker performance of rivals, were proved wrong. It produced revenue of £3.6bn – near identical to the previous three months, with daily trading revenues in 2009 of £71m, and just five negative trading days. Of course, a 0.5 per cent base interest rate, and government induced liquidity has boosted its profit recovery. But Barclays, which in 2008 eschewed the direct government assistance grabbed by rivals RBS and Lloyds Banking Group, is now in a position to capitalise on their weakness. As Exane BNP Paribas analyst Ian Gordon put it, these results are a “full vindication” for chief executive John Varley. “The phoney war against Barclays in relation to its capital position should stop,” he said.