Compensation and £2.5bn hit from Africa arm sale push Barclays to half-year loss
Barclays has signalled the end of a group-wide restructure, but plunged to a half-year loss after booking extra compensation costs and a £2.5 billion hit from the sale of its Africa arm.
The sell-down of Barclays Africa Group (BAGL) drove the lender to an attributable loss of £1.2 billion over the six-month period , down from a £1.1 billion profit the year before.
Barclays , which has been shedding hinterland businesses to focus on core UK and US operations, suffered a £1.4 billion loss on the sale of 33.7% of BAGL and also faced a £1.1 billion charge linked to the disposal.
It came as the bank set aside another £700 million to meet compensation claims for mis-selling payment protection insurance (PPI), bringing Barclays total PPI bill to £9.1 billion.
Despite the financial blows, group pre-tax profits jumped 13% to £2.34 billion as chief executive Jes Staley hailed the end of his structural overhaul.
He said: "Our business is now radically simplified, the restructuring is complete, our capital ratio is within our end-state target range, and, while we are also working to put conduct issues behind us, we can now focus on what matters most to our shareholders: improving group returns."
The second quarter marked a milestone for Barclays as it completed "two critically important planks" of its strategy to offload unwanted businesses.
The banking giant said it had driven down its majority shareholding in BAGL to the extent where it can now apply for regulatory deconsolidation.
Barclays expects to complete this process next year, but plans to maintain a smaller 15% stake in the business.
It has also run down its non-core unit ahead of schedule to below £25 billion in risk-weighted assets, meaning it could close the operation six months early.
Mr Staley added: "Accomplishing both of these milestones marks an end to the restructuring of the Barclays Group, and brings forward the date when our shareholders can benefit from the full earnings power of this business."
Total income slipped 1% to £10.9 billion, with shares dropping just shy of 1% in early afternoon trading on the London Stock Exchange.
The lender's investment bank saw pre-tax profit rise 7% to £1.7 billion, with an 18% jump in credit trading offsetting a 5% drop in the markets operation.
Looking forward, the bank said it expects to boost its performance over the next two years thanks to a £1 billion drop in costs.
Group finance director Tushar Morzaria said the savings would be made "by not having to do much at all", as restructuring costs fade and it finishes spending money on setting up the ring-fenced bank.
The results come after a testing first half for Mr Staley, who is facing a regulatory investigation into his conduct after he attempted to identify a whistleblower.
He would not comment on the whistleblowing investigation, but noted that the board and the shareholders had been "very supportive".
On Brexit, Mr Staley said he had taken part in a meeting with Brexit Secretary David Davis and felt the Government was "reaching out to the business community".
He said: "The Brexit negotiations are going to be very complex and we are going to be living with uncertainty for at least the next couple of years.
"Given that uncertainty, I think a lot of companies and businesses around the United Kingdom will have to start contingency plans early".
Barclays is bulking up its operation in Dublin to help counter any Brexit disruption, with the lender understood to be adding an extra 150 staff.
Mr Staley added that the bank was still "open for business" despite the Bank of England flagging the potential risks to the UK economy from a rapid rise in consumer credit.
He said Barclays was more uneasy about a recent dip in consumer confidence rather than lending levels, adding that the "impairment numbers we are seeing are not a concern at this point".