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Barclays boasts capital boost as legal costs loom

Thursday, February 23, 2017 - 01:51

Barclays reports a surprise increase in its core capital ratio, as the bank takes advantage of its rising profits to put money aside for expected demands on its cash from legal issues and worsening global market conditions. David Pollard reports.

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Strong headwinds for Europe's banks - but some of Britain's better able to deal with them. After bumper profits from Lloyds this week, Barclays now surprising with an unexpected jump in its core capital ratio - a measure of the bank's financial strength that fell short in recent stress tests. With that now at 12.4 per cent, its boss says there's no reason to raise capital. While for fans of London's financial district - there was even a strong message on Brexit. SOUNDBITE (English) BARCLAYS CEO, JES STALEY, SAYING: "I continue to believe that London will be the financial centre for Europe, even without the single market, and we're committed to the UK." Pretax profit, though below forecasts, was at 3.2 billion pounds also up - by nearly three times 2015's result. The bank flagging faster-than-expected progress on selling-off unwanted assets outside the UK. (SOUNDBITE) (English) WILSON KING INVESTMENT MANAGEMENT, HEAD OF RESEARCH, RICHARD HUNTER, SAYING: "In terms of its non-core unit, the bank is actually pledging to cut that six months ahead of schedule. So the shares were up two to three per cent in early trade, which caps off a pretty good performance if you look back over the last year, when the shares were up 49 per cent." But there were also strong numbers from its investment banking division. Credit trading up 44 percent - and in line with big US rivals .... (SOUNDBITE) (English) WILSON KING INVESTMENT MANAGEMENT, HEAD OF RESEARCH, RICHARD HUNTER, SAYING: "They're obviously lagging behind the top five or so banks in the US, but nonetheless, that made a contribution. We've also got the situation, of course, where Barclaycard continues to fire on all cylinders." But at 2.2 billion pounds, credit provisions for late payments by in particular US customers saw an increase of 35 per cent. And it still faces US lawsuits over selling mortgage-backed securities. Barclays alone among the bigger banks in choosing to contest a case where others have settled. One headwind at least still blowing.