Barclays will resume dividend payments

Barclays announced a 68% loss in Q4 net profit following the company’s decision to set aside funds as an insurance for bad loans. 

This offset strong results from the bank’s investment banking arm during the coronavirus pandemic. 

Barclays’ profits dropped from £618m in the fourth quarter of 2019 to £220m a year on, however, the results exceeded analyst expectations of  a small loss. 

Overall, Barclays announced a 30% dip in pre-tax profits to £3.1bn for the year, down from £4.3bn in 2019.

The bank held back £4.8bn as it anticipated loans not being repaid due to the coronavirus pandemic. 

Barclays’ balance sheet was supported by its investment banking department which recorded robust revenues from its equities and fixed income businesses as customers rushed to the markets in 2020. 

The fixed income, commodities and currencies entity confirmed a 53% rise in income, while equities saw a 31% increase. Barclays’ banking fees rose by 8% 

Despite the fall in profits, Barclays confirmed it would be resuming dividend payments, as well as offering to buy investors’ shares back. 

Barclays will pay a full-year dividend of 1p per share and will buy back £700m worth. The bank’s previous dividend payments were 3p, 2.5p and 1p in December of 2019, 2018 and 2017 respectively. 

Russ Mould, investment director at AJ Bell, said a low dividend level was to be expected as the regulator has “stipulated that any dividends for 2021 have to be accrued rather than doled out”.

“There may also have been some disappointment at the pretty nominal nature of the dividend – though anyone who thought payouts were going straight back to pre-pandemic levels in a hurry wasn’t paying attention,” said Mould.

This comes following the Bank of England’s announcement at the end of last year that banks may again payout dividends. 

Barclays’ share price is down by 1% to 152.78p during morning trading, following a year of sideways movement in the bank’s share price. 

James Staley, Barclays’ chief executive, reflected on the bank’s performance in 2020.

“In a year in which the COVID-19 pandemic affected people across the globe, 2020 demonstrated our strengths, our values, and our resilience,” Staley said.

“Throughout the pandemic we have focussed on preserving the financial and operational integrity of the firm so that we can maximise our support for clients and customers, for colleagues, and for the communities in which we live and work.”