Barclays has reported a heavy loss for the second quarter, hit by the one-off costs of a big disposal in Africa and a further knock from mis-selling payment protection insurance to UK customers.
Missing analysts’ expectations, overall revenues decreased 15 per cent to £5.06bn, while the bank slid to an attributable loss of £1.4bn, compared to a profit of £677m in the year-ago period. Analysts had on average expected revenues of £5.28bn and profits of £727m.
The bank reported a mixed performance at its large investment bank, where revenues fell 10 per cent and profits were down 30 per cent.
Its fixed income trading revenues declined 14.6 per cent, while equities trading revenues rose 12 per cent and banking revenues from advising clients on deals and capital raisings was flat.
Barclays slightly beat the average 17 per cent fall in fixed-income trading across the big US banks, which reported earnings last week. Its performance in equities was better than the collective 2 per cent rise across the big US banks.
The results add to the impression that European investment banks are failing to regain lost ground on their US rivals after Deutsche Bank unveiled another disappointing showing on Thursday.
Barclays’ separate UK operations generated a 6.3 per cent fall in revenues and slid to a loss of £285m, hurt by the £700m hit from the extra PPI provision.
Jes Staley, Barclays chief executive, 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.”
Since taking charge of Barclays in December 2015, Mr Staley has shrunk the bank to focus on its two core markets of the UK and US, while selling most of its century-old presence in Africa to boost its flagging capital position.
The bank’s common equity tier one ratio, a key indicator of capital strength, was 13.1 per cent at the end of June, up from 12.5 per cent in March. That is above analysts expectations of 12.8 per cent and in line with its own 13 per cent target.
The Barclays boss now hopes to put the group back on the front foot after many years of job cuts and asset sales. On Friday the bank said it had shut down its non-core after it offloaded most of the £400bn of toxic assets assigned to it three years ago.
The bank’s return on tangible equity fell slightly to 4.6 per cent in the quarter, far below its cost of capital.
Barclays recorded a £2.5bn hit from selling a 33 per cent stake in its African operations, which it achieved with a placement to institutional investors two months ago in a deal designed to boost capital.
The extra £700m provision for PPI mis-selling is a further sign that even though the regulator has set an August 2019 deadline for customer claims the scandal continues to haunt the big banks.
Barclays has now put aside a total of £9.1bn to cover the cost of compensating customers who bought PPI. On Thursday, Lloyds put aside another £1.1bn for PPI redress. The total cost for UK banks is now close to £40bn.
Get alerts on Barclays PLC when a new story is published