Barclays full year profit falls 6%, unveils overhaul to boost shares

Barclays reported a 6 per cent fall in annual profit on Tuesday, in line with expectations as chief executive C.S. Venkatakrishnan set out a welter of plans including bumper buy-backs, an overhaul of its operations, cost cuts and asset sales to improve performance and lift shares.

Barclays will reorganise its business divisions, return £10 billion pounds (€11.16 billion) to shareholders between 2024 and 2026, and restructure its payments business, Venkatakrishnan said alongside the bank’s full-year results for 2023.

The lender's first strategy update in almost a decade marks an inflection point for the CEO known internally as Venkat, as he tries to improve returns after a period of management turmoil, self-inflicted wounds and underwhelming results.

Investors in Barclays, which has one of the lowest valuations among its European peers, have grown impatient with its wilting share price and some favour de-risking the lender by simplifying its investment bank, Reuters reported earlier this month.

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The bank reported a pretax profit of £6.6 billion, down from £7 billion the year before and in line with the £6.7 billion average of analysts’ forecasts as compiled by the bank.

Barclays said it would return a total of £3 billion to shareholders for 2023 – up 37 per cent on the previous year – including a fresh share buyback of £1 billion and a 5.3 pence per share final dividend.

Barclays said it would reorganise its business into five operating divisions.

The bank said the “resegmentation” will provide an enhanced and more granular disclosure of the performance of each operating division, and greater accountability from an operational and management standpoint.

It said it would target a return on tangible equity – a key measure of performance – greater than 10 per cent in 2024, with targets rising to in excess of 12 per cent in 2026.

Despite fending off a three-year campaign by activist investor Edward Bramson to shrink its investment bank, Barclays still faces scrutiny over the unit which delivers fluctuating returns while consuming nearly two thirds of group capital.

Corporate and investment bank income decreased 4 per cent to £12 billion in 2023, Barclays said as client activity fell in both the markets and investment banking advisory businesses. – Reuters