Barclays unveils shareholder payouts as profit beats forecasts

The FTSE 100 lender said it would pay an annual dividend of 1p per share for 2020 and that including the buyback the shareholder payout would be 5p per share. Analysts had on average forecast a payout of 3.5p per share.

Pretax profit for the year to the end of December fell 30% to £3.1bn from a year earlier as income rose 1% to £21.8bn. Analysts had on average expected £2.8bn annual profit. Fourth-quarter pretax profit dropped to £0.6bn from £1.1bn compared with a 2020 consensus forecast of £285m.

The bank set aside £500m for credit impairments in the fourth quarter, less than the £689m forecast by analysts and down 19% from the previous quarter. Annual impairment charges jumped to £4.8bn from £1.9bn as the bank set aside more money for bad debts during the Covid-19 crisis and the worst recession in living memory.

Barclays’ businesses had mixed results during economic and market disruption. Corporate and investment banking (CIB) income jumped 14% to £2.6bn in the fourth quarter as consumer lending revenue dropped 25% to £0.8bn. UK commercial banking income fell 17% to £1.6bn.

The bank said its common equity tier 1 ratio was strong at 15.1% but that it faced capital "headwinds" in 2021. Barclays said CIB was well positioned but that the outlook for income at Barclays UK and consumer lending income was less clear.

Barclays' shares fell 2% to 151.2p at 09:08 GMT and were the third biggest fallers in the FTSE 100. Before Thursday's results the shares had almost doubled in value from 80p in April.

Russ Mould, investment director at AJ Bell, said: "Shareholders seem a little underwhelmed. The headline profit figures were better than expected and the balance sheet looks robust … but the outlook statement is cautious and understandably packed with caveats.

"This may be why Barclays is taking baby steps when it comes to dividends and leaning towards a buyback. Starting or reining in a buyback programme is a much less dramatic statement of intent than increasing or cutting a dividend."

The Bank of England blocked Barclays and other UK banks from paying out money to shareholders early in the crisis but said in December they could restart payments within limits. Barclays is the first of Britain's banks to report 2020 results.

Chief Executive Jes Staley said: “2020 demonstrated the value of our diversified banking model, delivering resilient group results even in a difficult macroeconomic period, driven by the performance of our CIB.

"Given the strength of our business, we have decided the time is right to resume capital distributions. We expect that our resilient and diversified business model will deliver a meaningful improvement in returns in 2021."

Staley stressed the importance of Barclays’ investment bank, which has boomed during the crisis as clients have increased trading and companies have raised funds. Activist investor Edward Bramson has put pressure on the bank to strip back the investment bank to increase shareholder returns.