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Barclays share price: dividends are back as profit smashes expectations

Barclays Share Price

Barclays (LON:BARC) topped the FTSE100 on Wednesday after its quarterly numbers sounded the right notes with news on dividends, share buybacks and a greater than expected release of provisions set aside to cover any potential loan losses relating to Covid. During the afternoon the Barclays share price is up by 3.74%, bringing it into the green over the past month. 

Following a hot start to 2021 for the bank, the Barclays share price plateaued from the middle of March onwards. However, with today’s news, investors will be hoping now is a turning point for the Barclays share price to regain momentum.

Dividend

Firstly, a key reason for today’s jump is Barclays confirming it will be resuming its dividend payout, in addition to announcing a £500m share buyback. 

After the Bank of England gave the green light for payouts to resume back in July, Barclays confirmed its shareholders will receive an interim dividend of 2p per share.

The FTSE 100 bank will also buy back £500m of its own shares. This is on its expectation that impairments will remain below historical levels on the improved outlook of the UK economy.

Profits

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Secondly, Barclays is able to commit to a shareholder payout as its profit levels far exceeded its own expectations. 

Barclays’ profit before tax increased by 52% to £1.6bn, well ahead of estimates of £1.2bn. Its profits came about thanks largely to its investment banking arm, which thrived during the pandemic. First half feed rose by 27% to £1.7bn on merger and acquisitions and stock market flotations.

UK Outlook

The improving outlook of the UK economy helped the Barclays share price. As restrictions are mostly lifted, while cases are set to fall for the seventh consecutive day, the banking giant was able to release £1bn in bad debt provisions. It had initially set the money aside to cover pandemic-induced defaults. 

However, the bank warned: “the outlook remains uncertain and subject to change depending on the evolution and persistence of the Covid-19 pandemic”. 

While the results smashed expectations, which was reflected by the jump in the Barclays share price, investors may not yet be in the clear.

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