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Barclays sets aside further £600m for PPI redress

Written by: Hannah Uttley
Barclays has been forced to reserve an extra £600m in customer payouts for Payment Protection Insurance misselling during the third quarter, bringing the total redress to £1bn in 2016 so far.

In its results announcement for Q3 2016, Barclays said it would continue to review “the adequacy of the provision levels” in light of proposals by the Financial Conduct Authority to impose a June 2019 deadline on new PPI complaints. See the guide to claiming PPI.

Impairment costs at Barclays totalled £789m from the period July to September 2016, soaring by 84% since the third quarter of 2015.

Net operating income for the first nine months of 2016 dropped by 10% to £14.7bn compared to a year earlier, while the bank’s cost to income ratio during Q3 totalled 79%.

Despite the costs, profit before tax at the bank increased by 35% to £837m on the same quarter last year. Jes Staley, group CEO, said the bank achieved £5.4bn of mortgage completions during the third quarter, up slightly on a year earlier.

Staley said among the bank’s main priorities was to continue strengthening its core business while closing its non-core business “as fast as possible”. Barclays announced plans to create a ‘bad bank’ for its non-core assets last year as it focused its efforts on restoring its investment business.

“Taken together, the picture in the third quarter is one of strong progress against this agenda. Our core businesses are performing well, non-core rundown is approaching the final lap toward closure, we are on top of costs, and our capital position is resilient with strong reasons for confidence in meeting our end state target,” Staley said.

“The growing momentum in attaining our strategic goals means we can feel optimistic about our prospects in completing the restructuring of Barclays – a restructuring to a simplified transatlantic, consumer, corporate and investment bank with the capacity to deliver sustainable high quality returns for shareholders. This quarter has seen us take another important stride toward that state.”

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