Barclays shares were down 1.9% to 154.5p in late morning trading on Thursday after profits missed management expectations at a pre-tax profit of £3.7 billion in HY1 2022.
The accidental over-issuance of US securities earlier this year continued to drag the company down, with an attributable profit of £2.5 billion after absorbing charges net of tax of £600 million linked to the incident.
Barclays reported an estimated £1.5 billion total impact of rescission offer losses connected to the event, along with the associated estimated monetary penalty from the SEC.
“Barclays’ numbers were scarred by further damage caused by the structured products debacle in the US,” said AJ Bell investment director Russ Mould.
“The market is pretty unforgiving of banks at the moment. Investors are wary of their exposure to a weakening economic backdrop, despite any benefit they might be getting from rising interest rates. So the last thing banks can afford is self-inflicted damage of the kind Barclays is enduring.”
“The sums involved are large, though far from crippling for a company of Barclays’ size. However, it is the hurt it does to management credibility and the concern it creates over governance standards which are most relevant.”
Barclays reported an income rise of 17% to £13.2 billion compared to the last year, alongside a RoTE of 10.1%.
In addition, the company confirmed growth across all three operating businesses, carried on from Q1 2022.
“The broad-based income growth that we achieved in the first quarter continued across all three operating businesses into the second quarter,” said Barclays CEO C.S. Venkatakrishnan.
“Our performance in the first half shows the resilience and advantage that diversification at all levels brings, both across the bank and within our businesses.”
“It also underlines the value of investment into our three strategic priorities in next generation consumer finance, sustainable growth across the Corporate and Investment Bank (CIB), and the transition to a low-carbon economy.”
Share buyback and dividend
The banking giant announced a 2.25p per share dividend in HY1 2022, and noted its intention to initiate a share buyback of £500 million as a result of its optimistic outlook.
Barclays commented its diversified income streams placed the firm in a decent position for the current economic and market environment, alongside rising interest rates.
“We are alert to the pressure that the rising cost of living will have on our customers and colleagues,” said Venkatakrishnan.
“We have a range of measures in place to help and are looking to do more. With our resilient income growth and balance sheet strength, we can provide that support while distributing excess capital, having announced a half year dividend of 2.25p per share and an intention to initiate a further share buyback of £500m.”