PLC plans more cost cuts to offset challenging business conditions, after net profit slid 19% in the second quarter.
Chief Executive Jes Staleyis trying to convince investors that the bank’s strategic mix of consumer, business and investment banking can produce stable returns and provide resilience in downturns. But its shares have fallen 20% in a year and an activist shareholder, Sherborne Investors, has asked for a strategic review.
The decline in share price has accelerated this month as worries have risen over a potential no-deal Brexit. The bank is one of the U.K.’s largest lenders to companies and households.
Net profit in the second quarter fell to £1.03 billion from £1.28 billion, reflecting a rise in bad loans and higher operating costs from a year earlier. But the bank said on Thursday it is on track to make a 9% return on tangible equity for the year, a key performance pledge by Mr. Staley.
Bad loans were up 70% in the quarter, at £480 million from £283 million, while operating costs rose 6% to £3.5 billion. Barclays said the rise in impaired loans was because there wasn’t a repeat of last year’s stronger conditions in the period, which included the release of earlier provisions.
In Barclays’ international division, which includes its corporate and investment bank, revenue was up 5%, mainly because of a gain from selling shares in a business it partially owned. Without that extra boost, revenue in its markets business was down 5%. Banking fees fell 1%.
On Thursday, Mr. Staley said the bank will cut costs below a previous targeted range, to less than £13.6 billion for the full year. The bank has been leaving jobs unfilled when employees depart as one cost saving measure.
New York-based Sherborne, headed by Edward Bramson, called for Barclays to move capital away from its investment bank earlier this year. After Mr. Bramson lost a shareholder vote for a board seat in May, he said his firm would give the bank “a quarter or two” and see what happens before mounting any fresh campaign for change.
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