Yahoo Finance Barclays to buy back £1bn of shares and raise dividend as profit soars
Barclays (BARC.L) profits more than doubled to a record £8.4bn ($11.4bn) for 2021, with the bonus pool jumping 23% to £1.9bn as the lender revealed plans for a £1bn share buyback.
The high street bank reported a profit before tax for 2021 of £804bn, up from £3.1bn the year, helped by lower bad loans and good performance from its investment arm.
Barclays said it would buy back £1bn of its own shares and increased its full-year dividend to 4 pence per share.
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The bank increased its staff bonus pool by £365m to £1.9bn, with over £667m being paid as deferred bonuses. It is a 23% from the £1.5bn paid the previous year, amid the COVID pandemic.
"We feel entirely able to attract and retain very strong talent across the enterprise,” C. S. Venkatakrishnan, group chief executive, told reporters.
Barclays separately confirmed that Jes Staley, who was its chief executive until he was abruptly replaced by CS Venkatakrishnan, known as Venkat, in November, was paid £2.1m last year, down from £4.2m in 2020. He did not receive any bonuses for the year.
Share awards currently worth around £19m to Staley have been frozen, as he contests findings by the Financial Conduct Authority and Prudential Regulation Authority over the way he represented his relationship with Epstein to the bank.
He still receives his contractual entitlement to £2.4m in cash and shares – the equivalent of 12 months in fixed pay – as well as a pension allowance and other undisclosed benefits.
The bank is paying £190,000 for his accommodation in London as he relocates from the US. On Staley, Venkat said: “I cannot and will not comment on those questions.”
The London-based bank said in an earnings statement on Wednesday that it finished the year with 666 branches, 193 less than the year before, as mobile banking active customers increased to 9.7 million.
Barclays also announced its first female finance director, appointing deputy group finance director Anna Cross to the role from April.
She will succeed Tushar Morzaria, who is retiring after more than eight years in the post, and becomes the first woman to hold one of the top three boardroom jobs at the bank.
The better-than-expected results also showed that the group’s corporate and investment banking division recorded its highest-ever pre-tax profits of £5.8bn over the year, up from £4bn in 2020.
Despite the improved performance, the lender warned that soaring inflation in its markets would impact its finances.
“Barclays demonstrated a clear and sustainable path to growth over the course of 2021, delivering double-digit RoTE across our operating businesses, and returning £2.51bn of excess capital," Venkat said.
"Our strategic priorities will continue to develop the diversified business model that we have established, investing in advanced technology capabilities in our consumer businesses, delivering sustainable growth across our global corporate and investment bank, and reinforcing our commitment to aiding the transition to a low-carbon economy,” he added.
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The group added it had “limited” trading exposure to Russia as the crisis with Ukraine continues to mount, having exited the country many years ago.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: “The ex-CEO’s reward freeze will be a welcome token for those disheartened by the ongoing probe into his conduct.
“However, shareholders are facing no such freeze, with a further £1 billion buyback announced, as the improved macro-economic outlook allowed for an enormous reversal in impairment charges.”
Will Howlett, equity analyst at Quilter Cheviot, added: “Barclays delivered a broad based profit beat for the final quarter of 2021, which we would expect to support earnings upgrades.
"The bank is announcing a further £1bn share buyback, which should been seen as particularly which we see as particularly attractive with the shares trading at a significant discount to tangible book value. Barclays has reiterated its target of delivering a return on tangible equity of greater than 10%, and after delivering 13.4% in the financial year 2021, albeit flattered by net provision writebacks, the shares offer significant potential for re-rating, in our view.”
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