The Barclays chief executive, Jes Staley, has promised to return more money to shareholders in a bid to fend off the attentions of the activist investor Edward Bramson, as the bank reported flat profits for 2018.
Profits before tax of £3.5bn for 2018 were held back by litigation and conduct charges of £2.2bn for the year, while the bank also took a £150m charge to cover economic uncertainty over Brexit.
Staley has come under pressure in the past year after Bramson amassed a 5.5% stake in the bank and called for a major change of strategic direction. Bramson wants to cut back Barclays’ investment bank to free up capital for more profitable activities.
Bramson is also agitating for a seat on the Barclays board. The Barclays board on Thursday wrote a unanimous letter to shareholders saying that Bramson’s request should be denied.
Staley said the 6.5p dividend for 2018 represented “excellent progress but not sufficient”.
He said: “We will use the strong capital generation of the bank to return a greater proportion of [Barclays’] earnings to shareholders by way of dividends and to supplement those dividends with additional returns, including share buybacks. I am optimistic for our prospects to do more in 2019 and beyond.”
Barclays group profit before tax excluding costs for fines was £5.7bn, an increase of 20% compared to 2017. Those litigation and conduct costs were inflated by a £400m provision for compensation for payment protection insurance (PPI) and a £1.4bn US fine in March for mortgage securities mis-selling. However, the bank hopes that those costs will not recur.
Barclays’ £150m Brexit provision – in line with similar amounts set aside by HSBC and Royal Bank of Scotland – was made to be “cautious and prudent”, Staley said on Bloomberg TV. Barclays has already gained a banking licence for an Irish subsidiary in preparation for Brexit.
Staley noted that the bank has so far seen few signs of a deterioration in credit quality, although customers are hoarding more cash in their accounts.
“People are clearly being increasingly cautious as we come to the final weeks – and hopefully not much longer – of uncertainty over Brexit,” he said.
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