Barclays share price: HY profit before tax drops to £2bn
Barclays (LON:BARC) has updated investors on its interim performance this morning. The update comes after the UK voted to leave the European Union in last month’s referendum, putting the bank’s shares under pressure.
**Highlights from the company statement:**
Group profit before tax of £2,063m (H115: £2,602m) reflected an increased Core profit before tax of £3,967m (H115: £3,347m) and Non-Core losses before tax of £1,904m (H115: £745m). Excluding notable items and an impairment of £372m in respect of the French retail, and wealth and investment management businesses, Group profit before tax was £2,037m (H115: £3,128m)
Group return on average tangible equity (RoTE) of 4.8% (H115: 6.9%) reflected attributable profit in Core of £2,444m (H115: £2,000m) and the attributable loss in Non-Core of £1,490m (H115: £582m)
Core profit before tax increased 19% to £3,967m including a gain of £615m on the disposal of Barclays’ share of Visa Europe Limited and an additional provision of £400m relating to UK customer redress. Core RoTE was 12.5% (H115: 11.3%) on an increased average tangible equity base of £40bn (H115: £36bn). Core basic earnings per share contribution was 14.8p (H115: 12.1p)
Non-Core loss before tax was £1,904m (H115: £745m) reflecting the continued execution of our strategy. The loss included the impairment of £372m in respect of the assets of the French retail, and wealth and investment management businesses that are held for sale
Barclays UK delivered a strong underlying RoTE of 19.4% (H115: 21.9%). Underlying profit before tax decreased 4% to £1,329m driven by lower interchange fee income in Barclaycard Consumer UK and an increase in impairment. Net interest margin increased 2bps to 3.59%
Barclays Corporate & International delivered an underlying RoTE of 10.7% (H115: 12.4%). Underlying income remained in line with strong growth in Consumer, Cards and Payments and whilst income decreased in Corporate & Investment Bank (CIB), it was resilient in challenging market conditions
Momentum in the execution of the Non-Core strategy continued with good progress on business sales and the rundown of the derivative portfolio during the period. Period end allocated tangible equity in Non-Core reduced to £8bn (December 2015: £9bn), with risk weighted assets (RWAs) decreasing by a further £8bn to £46.7bn in H116, despite adverse market movements
Common equity tier 1 (CET1) ratio increased to 11.6% (December 2015: 11.4%). CET1 capital increased £1.6bn to £42.4bn primarily through profits generated in the period of £1.3bn. Group RWAs continue to be actively managed with the increase of £8bn to £366bn being principally due to the appreciation of USD and EUR against GBP
The leverage ratio decreased to 4.2% (December 2015: 4.5%), with leverage exposure increasing by £127bn to £1,155bn primarily due to higher cash and settlement balances, following increased client activity, and the appreciation of USD and EUR against GBP
Tangible net asset value per share increased to 289p (December 2015: 275p) driven by profit generated in the period and net favourable reserve movements
**More to follow…**
As of 07:07 BST, Friday, 29 July, Barclays share price is 146.50p.