Bank review

Barclays profits slip 6% as it unveils restructuring

Barclays Glasgow campus
Barclays has a huge campus in Glasgow

Barclays has posted a 6% fall in annual profits as it unveiled a £2 billion cost-cutting plan and radical restructure designed to beef up its balance sheet.

Its corporate structure will now comprise five divisions as it reshapes the business and raise its cost-income ratio.

The bank reported a pretax profit of £6.6bn for 2023, slightly below analysts’ estimates of £6.7bn and down from £7bn in the previous year.

Barclays said it proposes to return a total of £3 billion to shareholders for 2023 – up 37% on the previous year – including a fresh share buyback of £1 billion and a 5.3p per share final dividend.

It posted a net interest income – the difference between what a bank pays out to savers and receives in interest from loans – of £12.7bn for 2023, up 20% from £10.6bn in 2022.

The bank has a big investment banking division which suffered a slump in the M&A market, dragging down its full-year earnings. The business posted a 12% decline in fees year-on-year in the fourth quarter at £2bn.

Total income from Barclays’ Corporate and Investment Bank division came in at £2.4bn in 2023, down from £2.6bn the year before.

The bank has already axed 5,000 jobs from its 84,000-strong workforce and chief executive CS Venkatakrishnan is due to reveal more details on the bank’s new strategy in a four-and-a-half-hour presentation later today.

Earlier this month Barclays announced that it had agreed a deal with Tesco to buy most of the supermarket’s Edinburgh-based retail banking operations for £600m and take on about 2,800 staff.

It was reported last week that Barclays was exploring a bid for Societe Generale’s UK private bank as part of efforts to grow its position within the wealth management sector

Market reaction

John Moore, senior investment manager at RBC Brewin Dolphin, said: “Barclays has a habit of delivering mixed news – and today’s results are no different. While the bank’s results for last year are more or less in line with expectations, they are still behind 2022.

“Plans to make cost reductions and revise its corporate structure should help drive improved profitability in the next few years, underpinning shareholder returns of £10 billion.

“The acquisition of Tesco Bank also looks like a good, low-risk deal in terms of overlap, cost savings, and gaining some market share. Barclays is in a reasonable position and appears to be cautiously optimistic about the future, but execution of the plan set out today will be key to its performance.”

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