Wednesday, April 27, 2011

BARCAP brings BARCLAYS down

One of UK's biggest Banking group, Barclays, announced their 2011 Q1 results today, but the results are below forecasts of many analysts, for the reason being a hit on their own debt products and dip in their investment banking arm Barcap profits.

So here are the financial highlights for the Group. It should be noted that all these amounts include barclays own credit transactions details.
  • Group Profits were down 9% to £1.7 billion from £1.9 billion pounds a year before. 
  • Income was down 8% to £7.4 billion from £8 billion pounds last year.
  • Profits after tax are down 5% to £1.2 billion from £1.3 billion last year.
  • Basic EPS being 8.5p from 9.3p, a decline of 9% as well, while the dividends are same at1.0p
  • Return on Shareholder Equity including own credit is 8.1% which is also down from 2010 Q1 quarter of 8.7%
  • Barclays Capital top-line income of £3,278m down 15% (2010: £3,845m), reflecting a decline of 22% in Fixed Income, Currency and Commodities and increases of 11% in Equities and Prime Services and 10% in Investment Banking
  • Impairment of £921m improved 39% (2010: £1,508m) giving a year-to-date annualised loan loss rate of 76bps (2010:112bps) including a £190m release of the impairment allowance relating to the loan to Protium
In order to reshape the banking assets and performance stars, New chief executive Bob Diamond is planning to sell assets boost profitability. The bank was on track to achieve 500 million pounds ($823 million) of cost savings this year. 


But with the results, there has also been some controversies regarding the idea that Barclays hasn;t disclosed all its bonus package details, which might amount to £1.4 billion, WSJ stated.
The Pensions & Investment Research Consultants said that after poring through Barclays 2010 annual report "there appears to be £1.4 billion of bonuses awarded and the tax thereon that has not been put through the profit and loss account."
CEO Bob Diamond
 After taking over as CEO in January, Diamond's salary was lifted to £1.35 million, 23% more than that of his predecessor John Varley.. Where there also reports that he might be entitled to a £6.35 billion as well, and other share purchase bonuses. Anyhow, in a statement, Bob Diamond outlined the challening market conditions Barclays was exposed to .
".........challenging external environment" and the bank had increased gross new lending to UK households and businesses with £9.9bn being offered compared with £9bn at the start of 2010. We continue to engage actively with governments and regulatory bodies in the UK and internationally on banking reform. We are committed to assisting the process of change and are aligned with the objectives of reducing the risk of failure of financial institutions. We believe that resolution plans will play a vital role in allowing a bank to fail while ensuring that essential banking services remain operable. We are proactively engaged with the UK Financial Services Authority, the Financial Stability Board and at a G20 level to help develop and put in place such plans on a cross-border basis."
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