Profits Down At Barclays PLC As Investment Banking Slumps

Barclays PLC (LON: BARC) sees profits impaired by business transformation and poor performance.

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barclaysThe share price of Barclays (LSE: BARC) (NYSE: BCS.US) dropped 5p to 270p during early trading this morning, after the bank said its full year adjusted profits were down almost a third, worsening as revenue from its investment bank sagged. The stock has declined nearly 9% over the last 12 months.

The FTSE 100 member said adjusted profits had fallen to £5.1m from £7.6m in 2012, which was partially attributed to a string of cost-cutting and restructuring measures implemented to improve a return on capital. The retail bank alone incurred £175m in costs relating to store closures and staff redundancies.

Performance was also hampered by a dive in investment-banking profits — down 37% to £2.5bn. Despite the fall in profits, the average value of incentives paid to investment bank employees will increase to £60,000 from £55,000 in 2012. In total the amount of money set aside for bonuses increased nearly 10% to £2.4bn.

The chief executive, Antony Jenkins, commented:

“2013 has been a year of considerable change for Barclays. I am pleased with the progress we made in starting to rebuild trust, defining and implementing a common culture, repositioning the business for the future, and strengthening our balance sheet.”

“A year on from launching our plan to transform Barclays into the Go-To bank for all our stakeholders, we are in a significantly better position and I feel confident about our prospects.”

“Despite challenging conditions, our underlying performance has been resilient and momentum is building, as evidenced by the results we are reporting this morning.”

Barclays reported earnings per share of 17p, which will fund a 7p per share dividend. After this morning’s price reaction the shares may trade on a P/E of 8 and offer an income of a little under 3%

The decision to ‘buy’ — based on those ratings, today’s results and the wider prospects for the banking sector — is, of course, entirely your decision.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

> Mark does not own shares in Barclays.

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