BARCLAYS SETS ANOTHER £600MILLION ASIDE FOR PPI CLAIMS BRINGING TOTAL TO A STAGGERING £8.4BILLLION
Barclays has set aside an extra £600m to meet claims for mis-selling of payment protection insurance (PPI). It brings the bank’s total provision for PPI claims to £8.4bn.
One reason for the increase is the extended deadline for PPI claims, which can now be made until June 2019. On Wednesday, Lloyds announced it was putting aside an extra £1bn
Barclays also reported a 35% rise in third-quarter profits, boosted by its investment banking business. For the three months to the end of September, pre-tax profits were £837m.
Barclays’ investment banking profits were up 40% compared with the same time last year. US investment banks generally, including Morgan Stanley and Goldman Sachs, have been reporting strong figures as they benefited from an increase in bond trading.
Barclays also earns most of its investment banking revenues in the US and they have been boosted by the weaker pound.
However, profits for the first nine months of the year fell 10% to £2.9bn, driven by the disposal of “non-core” businesses.
Barclays has been selling off non-core businesses, including operations in Africa, European retail banks and some Asian banking operations. Costs associated with that and losing revenue from those businesses have acted as a drag on profits.
The withdrawal from those businesses is expected to be completed next year.
Barclays chief executive Jes Staley said: “Our core businesses are performing well, non-core rundown is approaching the final lap toward closure, we are on top of costs and our capital position is resilient with strong reasons for confidence in meeting our end state target.”
Commenting on the results, Laith Khalaf, senior analyst with Hargreaves Lansdown, said: “Barclays continues to pull the old good bank, bad bank routine, though soon it’s going to need to find a different tack, because the bad bank is being consigned to the history books.
“Barclays expect to close this side of the business next year, which will be a big step for the bank, and will allow it to fully focus on its core activities.
“Barclays still has work to do, but there’s an increasing amount of light at the end of the tunnel. However despite the bank’s international exposure, it is still vulnerable to poor economic conditions in the UK, so if we do get a Brexit-induced slowdown, Barclays will feel the burn.”