Yahoo Finance Barclays profits tumble 29% due to legal costs and PPI claims
Barclays has reported a 29 per cent drop in profits for the first six months of the year, blaming costs relating to legal issues in the US and PPI claims charges.
The lender reported a pre-tax profit of £1.66bn, down from £2.34bn in the first half of 2017.
The bank said this was “principally related” to a £1.4bn settlement with the US department of justice, which was linked to the mis-selling of residential mortgage-backed securities in the run-up to the financial crisis. Barclays said profits were also impacted by charges of £400m due to PPI.
However, stripping out litigation and other costs, pre-tax profits were up 20 per cent compared with last year.
Analysts hailed a strong set of results, with Naeem Aslam at ThinkMarkets commenting that the bank’s “terrific earnings” had taken the pressure of chief executive Jes Staley.
“The most welcoming news for Barclays investors is in the company's key metrics, the dramatic drop in the conduct charges,” he added.
“At last, the management has started to do what it is supposed to do and this has added a strong boost to the bottom line in the quarter.”
Mr Staley said: “The first half of 2018 has been characterised by strong financial performance and increased profitability. This is a business which is performing well, having addressed the challenges of the last decade.”
He highlighted the second quarter of the year as “the first quarter for some time with no significant litigation or conduct charges, restructuring costs, or other exceptional expenses which hit our profitability” and said it was a “positive sight”.
“This first half performance shows a bank beginning to demonstrate its true potential and value. The numbers we have posted strengthen our confidence that Barclays can deliver attractive and sustainable profits, and in our ability to return a greater proportion of those profits to shareholders over time,” Mr Staley added.
