Barclays jumps 5% after announcing major strategic overhaul

LONDON — Barclays on Tuesday reported a fourth-quarter net loss of £111 million ($139.8 million) as the British lender announced an extensive strategic overhaul, boosting its shares more than 5% in early trade.

Analysts polled by Reuters had expected net profit attributable to shareholders of £60.95 million for the quarter, according to LSEG data, as Barclays embarks on a major restructuring program in a bid to reverse declining profits.

For the full year, net attributable profit came to £4.27 billion, down from £5.023 billion in 2022 and below a consensus forecast of £4.59 billion.

The bank also announced an additional share buyback of £1 billion, and will set out a new three-year plan designed to further improve operational and financial performance, CEO C.S. Venkatakrishnan said in a statement.

Barclays took a £900 million hit in the fourth quarter from structural cost-cutting measures, which are expected to result in gross cost savings of around £500 million this year, with an expected payback period of less than two years.

Here are some other highlights:

• Fourth-quarter group revenue was £5.6 billion, down 3% from the same period last year.
• Credit impairment charges were £552 million, up from £498 million in the fourth quarter of 2022.
• Common equity tier one (CET1) capital ratio, a measure of bank’s financial strength was 13.8%, down from 14% the previous quarter.
• Full-year return on tangible equity (RoTE) was 10.6% excluding fourth-quarter restructuring costs. Fourth-quarter RoTE was 5.1%, down from 8.9% in the final quarter of 2022.
• Quarterly total operating expenses were roughly unchanged year-on-year at £4 billion.

Momentum in Barclays’ traditionally strong corporate and investment bank (CIB) — particularly in its fixed income, currency and commodities trading division — waned in 2023, as market volatility moderated.

On Tuesday, the bank announced a huge operational overhaul, including substantial cost cuts, asset sales and a reorganization of its business divisions, while promising to return £10 billion to shareholders between 2024 and 2026 through dividends and share buybacks.

The business will now be divided into five operating divisions, separating the corporate and investment bank to form: Barclays U.K., Barclays U.K. Corporate Bank, Barclays Private Bank and Wealth Management, Barclays Investment Bank and Barclays U.S. Consumer Bank.

“This resegmentation will provide an enhanced and more granular disclosure of the performance of each of these operating divisions, alongside more accountability from an operational and management standpoint,” the bank said in its report.

Barclays is targeting total gross cost savings of £2 billion and an RoTE of greater than 12% by 2026.

This is a breaking news story and will be updated shortly.