Shares in Barclays (LON:BARC) have fallen into the red as the bank posted a loss for the first quarter of the year. The group’s performance was hit by misconduct and litigation charges during the quarter, most notably, the lender’s settlement with the US Department of Justice over mis-sold mortgage-backed securities in the run-up to the financial crisis.
As of 09:28 BST, Barclays’ share price had given up 0.52 percent to 211.90p, underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.02 percent lower at 7,377.57 points. The group’s shares have given up more than five percent of their value over the past year, as compared with about a 1.2-percent rise in the Footsie.
Barclays swings to Q1 loss
Barclays reported in a statement this morning that it had generated a loss before tax of £263 million in the first quarter of the year, as compared with a profit of £1.68 billion in the prior-year period. The lender explained that its performance had been dragged down by litigation and conduct charges of £2 billion, principally relating to the company’s £1.4-billion settlement with the DoJ, as well as additional charges of £400 million over payment protection insurance. Excluding those charges, Barclays made an attributable profit of £1.2 billion.
“The settlement with the US Department of Justice, together with additional charges relating to PPI, reduced our CET1 ratio by around 60bps to 12.7%,” Barclays’ chief executive Jes Staley commented in the statement, adding, however, that the bank was confident that it would get back to around 13 percent ‘in good time’ and that it still intended to pay a dividend of 6.5p for the current year.
Analysts weigh in on results
“The investment bank performance was far better than expected,” Joseph Dickerson, an analyst at Jefferies Group LLC, told Bloomberg. However, “we expect much weeping & gnashing of teeth around capital” after the charges.
Barclays’ results follow Lloyds (LON:LLOY) update yesterday, while part government-owned RBS (LON:RBS) reports tomorrow.