Business Essentials for Professionals


Record Annual Profit Prompts Barclays To Increase Investor Payouts

Record Annual Profit Prompts Barclays To Increase Investor Payouts
Barclays declared a record annual profit for 2021 and returned 2.5 billion pounds to shareholders through dividends and share buybacks, as bad loan costs fell and its investment bank maintained its recent excellent performance.
The British lender announced a pretax profit of 8.4 billion pounds ($11.42 billion) on Wednesday, exceeding analyst projections and nearly tripling from 3.1 billion pounds a year ago. In early trade, the bank's stock jumped 4 per cent.
It follows a string of significantly improved results for British bankers, including HSBC's announcement on Tuesday that it had more than quadrupled its annual earnings.
When combined with previous distributions, Barclays said it will buy back 1 billion pounds of its own shares and pay a full-year dividend of 4 pence per share, for a total payout of 2.5 billion pounds for the year.
C.S. Venkatakrishnan, who took over as CEO after the surprise departure of Jes Staley in November, said in his first investor update that he will maintain his predecessor's focus on developing the investment bank.
Staley resigned following a disagreement with British finance regulators over how he represented his relationships with convicted sex offender Jeffrey Epstein.
In its annual report, Barclays stated that it had delayed all of Staley's incentive payouts awaiting the result of his dispute with regulators, which it said amounted to over 70 per cent of his variable compensation since joining the firm in 2015, including a long-term award that would have been paid out this year.
Staley was still paid 2.1 million pounds in fixed salary in 2021.
Venkatakrishnan, known as Venkat inside the bank and a former JPMorgan employee like Staley, stated following his selection as CEO that the lender's investment banking-focused approach is "the right one."
Barclays said its investment bank made its highest-ever profit of 5.8 billion pounds, mainly to a 34 per cent increase in fees from advising on transactions such as acquisitions and financing, which offset a 16% fall in market income.
Venkat stated that his other two objectives will be digital initiatives such as a "buy now, pay later" consumer financing product with Amazon in the United Kingdom and Germany, as well as working on the transition to a low-carbon economy.
Despite the improved results, the lender cautioned that rising inflation in its markets will have an impact on its finances.
Barclays predicted that its adjusted expenses will exceed 12 billion pounds this year, owing in part to greater compensation for its bankers. The lender's incentive pool for 2021 has grown by 23 per cent to 1.9 billion.
However, because of the improving economic outlook, it was able to discharge 700 million pounds of capital set aside for problematic loans, increasing earnings.
Tushar Morzaria, the bank's long-serving chief financial officer, has announced his retirement, with his deputy Anna Cross taking over in April. Cross is the first woman to hold one of the bank's top three positions.

Christopher J. Mitchell

Markets | Companies | M&A | Innovation | People | Management | Lifestyle | World | Misc