Barclays reports sluggish second quarter after £700m PPI hit
Barclays reported significant losses for the second quarter, hit by a £700m PPI mis-selling charge and one-off costs associated with the disposal of African assets.
It missed analyst expectations, with an overall decline in revenues of 15% to £5.06bn. The bank reported a loss of £1.4bn, compared with profits of £677m for the same period a year ago. In the UK, profit before tax fell 41% to £634m primarily due to the PPI charge. It also saw a loss of income following its disposal of Visa Europe. The group said the base rate reduction in 2016 following the Brexit vote had also played a part in its poor results.
However, the bank left its dividend in tact. It declared a dividend of 1p per share and reaffirmed its commitment to paying a dividend of 3p per share for the full year.
The bank said it had closed 36 branches in the first half of 2017, but increased its mobile banking customers from 5.1m to 5.9m over the period. This is part of a wider restructuring programme that has seen it shed 60,000 jobs and a number of its assets.
There was also a weaker performance from its large investment bank, where revenues fell 10% and profits by 30%.
Ian Forrest, investment research analyst at The Share Centre, said: “Overall these results confirm that Barclays is making progress with its restructuring but there are clearly legacy issues still to be resolved, including PPI and the US investigation into the sale of mortgage-backed securities. All of that is reflected in the underperformance of the shares so far this year.
“As a result, we continue to recommend Barclays as a ‘hold’ for medium risk investors. For those interested in the banking sector, our preference remains HSBC as it has a much higher dividend yield, in the sector.”