Yahoo Finance Barclays to return £10bn to shareholders despite profit drop
FTSE 100 lender reveals revival plan to woo investors
Barclays (BARC.L) has pledged to hand £10bn ($12.59bn) back to shareholders by 2026 despite a drop in its full-year earnings.
The FTSE 100 (^FTSE) lender is also launching a £2bn cost-cutting drive across the business over the next two years as the British bank vowed to boost profits.
Barclays reported a 6% decline in annual pre-tax profits to £6.6bn. Over the fourth quarter, its profit plunged by 92% from £1.3bn the previous year to £110m.
It came as the bank revealed £927m worth of structural cost actions in the final quarter, including £300m related to staff.
Chief executive CS Venkatakrishnan, known as Venkat, said the bank’s new three-year plan will improve performance.
"Our new three-year plan.... is designed to further improve Barclays' operational and financial performance, driving higher returns, and predictable, attractive shareholder distributions," he said in a statement.
Venkat was awarded £4.6m in pay and bonuses for 2023, including a £1.4m annual bonus. His total pay package was down from £5.2m in 2022.
The group has also awarded the top boss and chief financial officer Anna Cross a 2.5% annual salary rise to £2.9m and £1.8m respectively from 1 March.
Bonuses for 2023 fell 3% to £1.2bn, down from £1.24bn in 2022. There was only a slight change in deferred bonuses, with the total falling to £543m from £549m a year ago.
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The lender said in its report: “The risk and conduct adjustments to the 2023 incentive pool are materially less than those for 2022, so the incentive pool before risk adjustments each year fell by around 15% from 2023 to 2022.”
Barclays said it cut headcount by around 5,000 full-time equivalent roles in 2023 but that moving forward there is no headcount target.
Analysts predict that Barclays needs to cut 20% of jobs to cut costs by £2bn over the next two years.
Max Georgiou, analyst at investment research firm Third Bridge, said: "Barclays now plans to reduce costs in the CIB by £2bn by 2026, our experts believe a 20% reduction in headcount is needed and would not impact day-to-day operations.
"Previous cost reduction programmes have not been executed effectively, in some part due to its political culture. A coherent strategy is needed for future success but is an uphill battle."
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Higher interest rates pushed up earnings at Barclays UK, where income rose 5% to £7.6bn thanks to growth in net interest income. Income was £25.4bn, up slightly from the £25bn recorded in 2022.
Income at the Corporate and Investment Bank (CIB) fell by 4% to £12.6bn, driven by lower client activity in both Global Markets and Investment Banking.
Barclays has also announced it is reorganising the bank to focus on five divisions as part of a major three-year plan to improve its financial performance and focus on the UK division.
Vim Maru will become the chief executive of the UK bank, replacing Matt Hammerstein, who will move to head up the UK’s corporate bank as part of the reorganisation.
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