Barclays Posts Q4 Loss, Plans GBP 2 Bln Cost Actions, To Return GBP 10 Bln; Stock Up

(RTTNews) - Shares of Barclays Plc were gaining more than 6 percent on London stock exchange as well as around 8 percent in pre-market activity on the NYSE after the British lender announced a new 2 billion pounds, three-year cost efficiency savings plan, as well as its plan to return 10 billion pounds of capital to shareholders. Meanwhile, the company reported sharply lower pre-tax profit in its fourth quarter, while it slipped to a loss on an after tax basis with weak income.

Venkatakrishnan, Group Chief Executive, said, "In 2023 Barclays delivered solid performance against a mixed macroeconomic backdrop, meeting its financial targets. ….Our new three-year plan, which we will be announcing at the Investor Update today, is designed to further improve Barclays' operational and financial performance, driving higher returns, and predictable, attractive shareholder distributions."

The company announced a 2 billion pounds cost efficiency savings by 2026 including initiatives across people, property and infrastructure. In this, Barclays UK and Corporate and Investment Bank each will take around 700 million pounds savings.

Further efficiency savings are expected post 2026.

To help drive future returns, Barclays has taken 900 million pounds of structural cost actions in its fourth quarter, which are expected to result in gross cost savings of around 500 million pounds in 2024, with an expected payback period of less than 2 years.

Further, Barclays' plan is to return at least 10 billion pounds of capital to shareholders between 2024 and 2026, through dividends and share buybacks, with a continued preference for buybacks.

In addition, the company announced total capital distributions of 3 billion pounds in relation to 2023, up around 37 percent on 2022, reflecting a total dividend of 8.0p and total share buybacks of 1.75 billion pounds for 2023. This includes the firm's intention to initiate a further share buyback of up to 1.0 billion pounds.

Looking ahead for fiscal 2024, Barclays targets Group net interest income or NII excluding Barclays Investment Bank and Head Office of around 10.7 billion pounds. In this, Barclays UK NII is expected to be 6.1 billion pounds.

The company also targets Group total income of around 30 billion pounds in 2026.

In fiscal 2023, total income increased 5 percent from last year to 7.59 billion pounds, and NII increased 9 percent to 6.43 billion pounds. Barclays UK NII was 6.4 billion pounds.

In its fourth quarter, profit before tax plunged 92 percent to 110 million pounds from last year's 1.31 billion pounds. Attributable loss was 111 million pounds, compared to profit of 1.04 billion pounds a year ago. Basic loss per share was 0.7 pence, compared to profit of 6.5 pence last year.

Excluding the impacts of structural cost actions, adjusted profit before tax was 1.04 billion pounds, compared to last year's 1.31 billion pounds.

Adjusted attributable profit was 628 million pounds, compared to 1.04 billion pounds a year ago.

Total income dropped 3 percent to 5.60 billion pounds from 5.80 billion pounds in the prior year.

Barclays UK income fell 9 percent to 1.79 billion pounds, and the drop was 7 percent in Corporate and Investment Bank and 3 percent in Barclays International. However, Consumer, Cards and Payments income grew 6 percent.

In London, Barclays shares were trading at 157.96 pence, up 6.01 percent.

In pre-market activity on the NYSE, the shares were trading at $8.05, up 7.8 percent.

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