Barclays shareholders to receive £800m as Covid payout curbs scrapped
Bank’s pre-tax profits rise to £2.6m in second quarter after lifting of most UK lockdown restrictions
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Last modified on Wed 28 Jul 2021 04.44 EDT
Barclays shareholders are in line for a payout of more than £800m from dividends and share buybacks after a rise in profits as the UK economy recovers from the coronavirus pandemic.
Barclays is the first major UK bank to hand money back to investors since the Bank of England scrapped the remaining Covid restrictions on shareholder payouts, which were introduced by the central bank at the start of the pandemic last year.
It follows a strong second quarter, with Barclays’ pre-tax profits rising to £2.6bn over the three months to the end of June, up from £359m a year earlier. It also beat consensus forecasts for £1.7bn in profits for the period.
The bank benefited from an improving economic outlook following the lifting of most UK Covid restrictions, which meant it was able to release £1bn in bad debt provisions that it had put aside to cover potential defaults related to the pandemic. Barclays, which was forced to put aside £1.6bn during the same period last year, had been expected by City analysts to release £55m.
Despite the improvement in the economy over recent months, the bank warned “the outlook remains uncertain and subject to change depending on the evolution and persistence of the Covid-19 pandemic”.
However, the bank still announced plans to buy back up to £500m worth of shares from its investors, and pay shareholders a half-year dividend of 2p a share. It means shareholders who were blocked from receiving payouts for most of 2020 due to Bank of England Covid restrictions are now in line for more than £800m in returns. Threadneedle Street had ordered banks not to pay any cash bonuses to senior bankers and to suspend dividend payments due to the role banks play in supporting the British economy.
“Our profitability, strong capital position and balance sheet have enabled us to increase capital distributions to shareholders,” Barclays’ chief executive, Jes Staley, said.
Barclays shares were up nearly 4% at 176p in early morning trading.
The lender’s corporate and investment banking arm also contributed to rising profits performance, with the division reporting a 52% rise in profits to £1.6bn in the second quarter, thanks in part to a rise in merger and takeover activity. That was despite a 10% drop in income over the same period, as trading returned to normal levels after volatile period in markets last year.
The rival investment banks JP Morgan and Goldman Sachs reported bumper second quarter profits this month, thanks to a surge in merger and acquisitions activity, which broke records for the second straight quarter in the three months to June, according to Refinitiv data.
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