Reports
Profits Dip At Barclays Wealth As Firm Invests In Growth; Targets Hold In Sight - CEO
Profits fell slightly at Barclays Wealth as strong income was offset by investment to build out the business. Underlying performance was strong in the half-year period, the UK firm said.
Barclays Wealth, part of UK-listed banking giant Barclays, said its pre-tax profits fell 7 per cent in the six months to 30 June to £88 million (around $143 million) compared with the same period a year ago. The parent firm logged a rise in adjusted profits.
A strong rise in income growth was offset by the cost of rising investment to develop the business, the firm said in a statement today. Income increased 12 per cent year-on-year to £848 million from “strong growth in both net interest income, and fee and commission income”, it said. Operating expenses increased by 17 per cent, reflecting investment spend and related restructuring to support the wealth investment programme including Project Gamma spending of £44 million (2010: £33 million).
Total client assets increased 3 per cent from the end of 2010 to £169.5 billion.
“We are 18 months into our five-year Gamma plan and we remain exactly on track to deliver against our commitments. To remind you the plan sets out how we will build a differentiated proposition through a step change improvement in the client experience and a significant increase in productive capacity. We have delivered against both of these in last 18 months through £156 million of investment targeted at improvements to infrastructure and hiring top talent. This is evidenced by the strong H1 growth in the franchise, with revenues up 12 per cent and client assets up 10 per cent versus H1 2010," Tom Kalaris, CEO of Barclays Wealth, said in a statement.
"By 2013 we have committed to delivering a business with net revenues of £2.3 billion, a cost income ratio of less than 80 per cent and a return on equity of 17-18 per cent - we remain on track to deliver," he added.
Across the entire wealth and investment management segment, Barclays said its wealth and investment management division logged an adjusted pre-tax profit of £139 million, up from £126 million.
The entire Barclays group made an adjusted pre-tax profit of £3.678 billion in the half-year period to 30 June, up from £2.963 billion. Barclays said it had to make a £1.0 billion provision for redress under the payment protection insurance (PPI) issue. This refers to compensation set aside related to complaints about sales of PPI products.
In contrast to the announcement yesterday by HSBC that it will be cutting a total of 30,000 jobs, or around 10 per cent of its total workforce (5,000 cuts had already been announced), there was no mention in the Barclays results statement of job cuts.
“Our universal banking model provides diversification by business line, product, geography and funding source, and has again been a source of strength in volatile financial markets,” Bob Diamond, chief executive, said in a statement.
Later, media reported Diamond as saying that Barclays has cut 1,400 jobs so far in the first half and this trend may continue for the rest of 2011.
When broken down by region, the UK accounted for 41 per cent of all bank income, while Asia accounted for just 4 per cent; Europe 15 per cent, Americas 24 per cent, and the Middle East and Africa, 16 per cent.
At the end of June, Barclays had a Tier 1 capital ratio of 11 per cent, up from 10.8 per cent at the end of 2010.
