Barclays bank profit tumbles on pandemic fallout

LONDON: British bank Barclays on Thursday announced a 38-percent slump in net profit for 2020 and said expenses related to the coronavirus pandemic were set to stay high this year.

Profit after tax fell to £1.53 billion ($2.12 billion, 1.76 billion euros), Barclays said in a statement.

Group credit impairment charges shot up to £4.8 billion from £1.9 billion owing "to the deterioration in the economic outlook driven by the Covid-19 pandemic", the bank said.

Despite the tough year, "Barclays remains well capitalised, well provisioned for impairments... with a strong balance sheet, and competitive market positions across the group", chief executive Jes Staley said in the statement.

"We expect that our resilient and diversified business model will deliver a meaningful improvement in returns in 2021," he added.

As well as offering a dividend to shareholders, Barclays said it would buy back shares at a cost of up to £700 million.

The bonus pool for 2020 stood at around £1.6 billion, up six percent.

At the same time, the bank said that "Covid-19 related expenses are likely to remain elevated in 2021".

Barclays has kicked off the annual earnings round from Britain's major banks, with NatWest -- formerly Royal Bank of Scotland -- reporting Friday, before updates from HSBC and Lloyds next week.

Barclays' "results are far from perfect, but in opening the reporting season it has set the bar high for its rivals", said Richard Hunter, head of markets at trading group Interactive Investor.

"The announced share buyback of £700 million should lend some support to the share price (going forward) and is indicative of management confidence in prospects."

In initial reaction to the earnings update however, Barclays' share price was down 1.5 percent at 152 pence on London's benchmark FTSE 100 index, which was flat.

The bank said that group income edged up 1.0 percent last year to £21.8 billion, as a hefty drop in consumer payments offset a strong performance by its investment bank division.

Stock markets have surged in recent months on economic recovery hopes following the production of Covid-19 vaccines that governments worldwide are starting to roll out.

Staley said he was looking forward to welcoming staff back to the bank's offices later in the year.

"Right now there is no plan to make a major real estate move" regarding Barclays' headquarters in London, he said, amid expectations that office staff in general could continue working from home even after vaccination.

Staley noted that Barclays had moved some staff to its European headquarters in Dublin following Brexit.

He insisted however that "the EU will want to stay connected to the capital markets in London" after Britain's formal divorce from the bloc at the start of 2021.

Staley earlier this month said London's post-Brexit financial services industry must compete more with New York and Singapore rather than with leading EU centres such as Frankfurt and Paris.

Britain's departure from the European Union was finalised on January 1.

The nation's long-awaited Brexit trade deal with the EU, agreed over Christmas, did not include the finance sector.

Brussels and London are aiming to seal a memorandum of understanding about financial services by March.