Barclays shares tumble after annual profits fall

Barclays has reported a 14% slide in profits as it set aside £1.2 billion to cover loan losses, but revealed it handed its boss more than £5 million in pay and bonuses last year.

The banking giant said its pre-tax profits totalled £7 billion in 2022, down from £8 billion in 2021, sending its shares tumbling by 10% in Wednesday morning trading.

The lender said it put aside £1.2 billion in loan provisions over the year to guard it against an increase in borrower defaults as rising interest rates put pressure on households and businesses already under strain from the cost-of-living crisis.

The group’s bottom line also took a £1.6 billion hit from the fallout of a US trading blunder, during which it oversold securities and was left with hefty litigation and conduct charges.

But the bank revealed in its annual report that its group chief executive took home £5.2 million over 2022, including an annual bonus of nearly £2 million.

We are cautious about global economic conditions, but continue to see growth opportunities across our businesses through 2023.

CS Venkatakrishnan, known within the bank as Venkat, is currently undergoing treatment at a cancer centre in the US for non-Hodgkin lymphoma, but remains actively engaged in managing the bank.

Venkat is set to see a 3.4% rise in his fixed pay, which is given in cash and shares, this year.

He said of the group’s results: “Barclays performed strongly in 2022. Each business delivered income growth, with group income up 14%.

“We are cautious about global economic conditions, but continue to see growth opportunities across our businesses through 2023.”

Barclays said it cut its bonus pool for bankers to £1.79 billion, down 8% from £1.94 billion the previous year, amid shrinking profits.

In particular, the impact of risk and control issues associated with the US trading debacle led to a reduction in the bonus pool of about £500 million.

“This level of incentive pool funding has enabled us to recognise the strong performance that has been achieved and to reward the teams and individuals responsible for that performance”, Barclays said in its annual report.

“It has also allowed us to continue to manage the challenges of the competitive global market, to attract and retain the talent required to deliver against our objectives.”

The number of bankers earning more than one million euros was 698, largely in line with the 700 high earners the previous year.

And so-called “material risk takers” in Barclays’ investment bank took home about £1.6 billion in pay last year, split between 1,573 staff.

This is despite a 23% plunge in pre-tax profits to £4.3 billion at its investment bank, which Venkat said was more “subdued” throughout the year amid waning investor confidence and volatility in the markets.

Across its international corporate and investment bank, pre-tax profits fell by nearly a quarter compared with the previous year.

Barclays has a sizeable investment banking business, which is being hit by lower fees, due to a natural fall out from tough market conditions.

Anna Cross, Barclays’ group finance director, said there is a strong pipeline in investment banking but stressed that “we need to see a period of economic stability”.

Ms Cross earned £2.1 million during the year and will enjoy a 4.3% increase in fixed pay this year.

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: “Barclays has bitterly disappointed the market with its full-year numbers.

“Profits have been stunted partly because of a big increase in litigation costs relating to the over-issuance of US securities.

“The challenges don’t stop there. Barclays has a sizeable investment banking business, which is being hit by lower fees, due to a natural fall out from tough market conditions.

“Some £1.2 billion has also been squirrelled away to help prepare for an increase in bad debt as the macro-economic environment remains shaky and question marks remain about consumer spending, or rather repayment, power.”