Barclays posts 19% slide in annual net profit after costly U.S. trading blunder; shares sink

LONDON — Barclays on Wednesday reported a full-year net profit of £5.023 billion ($6.07 billion) for 2022, beating consensus expectations of £4.95 billion but suffering a 19% fall from the previous year’s restated £6.2 billion in part due to a costly trading blunder in the U.S.

Fourth-quarter attributable profit was £1.04 billion, above analyst projections of £833.29 million but down 4% from the £1.08 billion posted in the fourth quarter of 2021.

Pretax profit for the fourth quarter came in at £1.31 billion, short of a consensus forecast of £1.5 billion, while full-year pretax profit fell 14% to £7 billion.

Barclays shares fell more than 9% during morning trade in London.

Here are the other financial highlights:

• Common equity tier one capital (CET1) ratio was 13.9%, compared to 13.8% in the previous quarter and 15.1% for the final quarter of 2021.
• Return on tangible equity (ROTE) was 8.9% for the fourth quarter, compared to 12.5% in the third quarter and 13.4% for the fourth quarter of 2021. ROTE for the full year was 10.4%.
• Net interest margin (NIM) was 2.86% for the full year, compared to 2.52% at the end of 2021.
• The bank booked £1.2 billion in credit impairment provisions, versus a £700 million charge in 2021.

The British lender took a substantial hit from an over-issuance of securities in the U.S., which resulted in litigation and conduct charges totaling £1.6 billion over the course of 2022.

The British bank announced early last year that it had sold $15.2 billion more in U.S. investment products — known as structured notes — than it was permitted to.

Barclays recognized a net attributable loss of around £600 million relating to the matter over the course of 2022, including a monetary penalty of $200 million following an investigation by the U.S. Securities and Exchange Commission.

On Wednesday, Barclays CEO C.S. Venkatakrishnan said the group performed “strongly” in 2022.

“Each business delivered income growth, with Group income up 14%. We achieved our RoTE target of over 10%, maintained a strong Common Equity Tier 1 (CET1) capital ratio of 13.9%, and returned capital to shareholders,” he said.

“We are cautious about global economic conditions, but continue to see growth opportunities across our businesses through 2023.”

The international unit, which includes Barclays’ investment bank, saw return on equity fall to 10.2% for the full year from 14.4% in 2021, and to 6.4% in the fourth quarter from 9.9% in the same quarter of the previous year. Profits also tumbled in the corporate and investment banking division.

“Deals are drying up with regards to mergers and acquisitions and stock market flotations, which means Barclays’ investment banking arm saw profits tumble. That will be bad news for all the bankers currently on the ski slopes expecting fat bonuses,” said Russ Mould, investment director at U.K. stockbroker AJ Bell.

“In a buoyant market, this part of Barclays would be charging hefty fees to help companies raise money. This type of work can be very lucrative, so a dearth of deals will be as painful to Barclays as having a tooth extracted with no anaesthetic.”

Barclays declared a total dividend for 2022 of 7.25 pence per share, up from 6 pence in 2021, including a 5 pence per share full-year dividend. The bank also intends to initiate a share buyback of £500 million, bringing the total buybacks announced in relation to 2022 to £1 billion, and total capital return equivalent to around 13.4 pence per share.