Rising bad debt provisions hit Barclays’ profit

Barclays sets aside £897 million for bad loans in the U.S., contributing to profit decline.

• Eastern Eye
• 01 August, 2024

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By: Eastern Eye

BRITISH banking group Barclays reported a decline in first-half profit on Thursday (1), attributing the drop to lower revenue and increased provisions for bad debts in the United States.

It fared better than expected, however, owing to strong performance by its investment division, while it highlighted progress on slashing costs.

Profit after tax dropped 10 per cent to almost £2.8 billion ($3.6 billion) in the six months to the end of June from a year earlier, Barclays said in a statement.

Pre-tax profit was down by a similar proportion at £4.2 billion but this beat market expectations. Revenue dropped two percent to £13.3 billion in the first half.

The London-listed lender also confirmed plans for £750 million in share buybacks.

At the same time, it set aside £897 million for soured loans in the first half, which was slightly higher than one year ago.

Barclays in February outlined plans to slash £2 billion in costs over the coming years, having axed 5,000 jobs in 2023.

The bank has sought this year to focus on core activities with the sale of its Italian mortgage book and German consumer finance business.

It recently bought the banking arm of British supermarket giant Tesco, in a deal due to complete in November. “We are making good progress on our three-year plan,” Barclays chief executive CS Venkatakrishnan said in Thursday’s earnings statement.

The group’s share price rose around one percent following the update.

The bank hit the headlines in June when it suspended its sponsorship of several leading UK music festivals, after an artists-led backlash at the lender’s provision of financial services to defence companies supplying Israel. (AFP)