Barclays (BARC.L) reported a 14% drop in annual profits, having been hit by the costs of a US trading blunder and more money being put aside for a potential jump in defaults by borrowers.
The FTSE 100-listed bank said it intends to launch an up to £500m share buyback, falling short of analysts’ expectations of £675m. Still, it will bring the total buybacks announced in relation to 2022 to £1bn.
The UK lender reported a pretax profit for 2022 of £7bn ($8.5bn/€7.89bn), down from £8.2bn the year before. It has also put aside £1.2bn to cover expected loan losses amid rising mortgage rates.
The downturn was partly driven by lower fees generated from the group's investment banking arm.
Credit impairment charges came in at £1.22bn, against a net release of £653m, reflecting "macroeconomic deterioration and a gradual increase in delinquencies".
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The bank also felt the knock-on effects of a £1.6bn hit from dealing with a US trading blunder last year. Barclays announced early last year that it had sold $15.2bn more in US investment products – known as structured notes – than it was permitted to.
Last September the bank and an affiliate agreed to pay $361m to settle US Securities and Exchange Commission charges.
Fourth-quarter attributable profit was £1.04bn, above analyst projections of £833.29m but down 4% from the £1.08bn posted in the fourth quarter of 2021.
CS Venkatakrishnan, Barclays group chief executive, said: “Barclays performed strongly in 2022. Each business delivered income growth, with group income up 14%.
“We are cautious about global economic conditions, but continue to see growth opportunities across our businesses through 2023.”
Barclays revealed that Venkatakrishnan, known within the group as Venkat, took home £5.2m in cash and bonuses last year, and is set to see his fixed pay jump by 3.4% this year.
The group’s finance director, Anna Cross, earned £2.1m during the year and will enjoy a 4.3% increase in fixed pay this year.
Barclays shares fell as much as 8% after missing analyst estimates.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown said: “Barclays has bitterly disappointed the market with its full year numbers.”
“Profits have been stunted partly because of a big increase in litigation costs relating to the over-issuance of US securities. This costly mistake has been known about for some time, but these are now the hard consequences biting the bottom line.”
“Barclays is more than able to stomach this financially, the wider-reaching difficulties come from reputational damage. The tolerance margin for a similar mistake is now very thin,” she added.
Barclays has lifted the full-year dividend to 7.25p a share from 6p.