Barclays profits fall after US trading horror show

Barclays reported a fall in pre-tax profits due to a £1.9bn charge to cover the cost of buying back securities it sold in error and a £300m impairment provision for bad debts amid the cost of living crisis.

The bank on Thursday said pre-tax profits fell 24% to £3.7bn. Group income was £13.2bn, up 17% year-on-year, including £800m from hedging arrangements related to the over-issuance of securities.

Credit impairment charges were £300m compared with a £700m release of cash last year that had been set aside for debts expected during the Covid pandemic.

Barclays revealed this week it had been forced to buy back $17.6bn of securities that it sold by mistake after discovering that an error at its structured products business was bigger than bosses had thought.

On Thursday it said it had set aside £600m for the impact comprised of £400m in post-tax expected net impact of the rescission offer losses, driven by £1.3bn of costs as a result of market movements and interest.

There was also £200m in of costs relating to an estimated monetary penalty from the US Securities and Exchange Commission.

Barclays’ chief executive, CS Venkatakrishnan, said on Thursday he had commissioned an external review of the trading blunder that would be handed to the board shortly.

“We will consider all these findings carefully and take appropriate action in response,” he said, adding that the bank “continued to engage positively” with the SEC.

Barclays said it expected impairment charges linked to potential defaults to remain below pre-pandemic levels, in part due to high repayment rates on credit cards, more prudent spending by customers and savings built up during the pandemic.

Reporting by Frank Prenesti at Sharecast.com