Barclays reports first quarter loss of £236m after £1.4bn US settlement
Barclays has reported a loss of £236m for the first quarter of the year after facing a hit from litigation and conduct charges.
The bank's boss looked to keep investors on side, saying it remains Barclays' intention to pay a dividend for 2018 of 6.5p, and will look to return "an increasing amount of capital to shareholders" – through the annual dividend, and "via other means of return, such as buybacks".
Read more: Activist investor Bramson ups stake in Barclays
The figures
The bank swung to a loss for the first quarter of 2018, after reporting a profit of £1.68bn this time last year.
Barclays said that excluding the litigation and conduct charges of £1bn – principally relating to a £1.4bn settlement with the US Department of Justice, profit before tax had risen by one per cent to £1.72bn.
That was driven by a 45 per cent improvement in credit impairment charges.
There were double digit returns in both the corporate and investment bank, with profit before tax up by 49 per cent, and consumer, cards and payments.
Barclays said it intends to pay a dividend for 2018 of 6.5p.
Why it's interesting
Last month, it was announced that Barclayshad agreed to pay $2bn (£1.4bn) in civil penalties to resolve claims for fraud in the sale of residential mortgage-backed securities. The US had alleged that Barclays caused "billions of dollars in losses to investors" by selling the deals in the lead up to the financial crisis.
That agreement settles a civil action filed in December 2016 in which the US sought civil penalties for alleged conduct related to Barclays' underwriting and issuance of residential mortgage-backed securities (RMBS) between 2005 and 2007.
Today Barclays showed the impact of that charge, but said that while the penalty was substantial, it marked a "major milestone" for the bank to move past a decade-old legacy matter.
The bank also had the news this month that Barclays boss Jes Staleywill be fined after an investigation into his attempts to identify a whistleblower, but he would not face further sanctions.
What the company said
Chief executive Jes Staley said: “This has been a significant quarter for Barclays, one in which we have shown that our new operating model and our portfolio of diversified, profitable businesses are capable of producing improved returns for shareholders."
This quarter we also reached an agreement with the US Department of Justice to resolve issues related to the sale of Residential Mortgage-Backed Securities between 2005 and 2007.
While the penalty was substantial, this settlement represents a major milestone for Barclays, putting behind us a significant decade-old legacy matter.
The settlement with the US Department of Justice, together with additional charges relating to PPI, reduced our CET1 ratio by around 60bps to 12.7 per cent, but given the earnings power of the group, and our strong record in capital management, we are confident that we will get back to around 13 per cent in good time.
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