en     ru     jp
 
 
private banking
private banking
private banking
private banking
private banking
private banking
private banking
    LOGIN HERE!  
Add privatebanking.com as a search provider to your browser  
 
Advanced Search  
Private Banking & Wealth Management search tool 
     
  Search entity  
 
 
Home
       
 
Back
 
Barclays profits plunge as it puts aside £1.6bn for Covid-19 defaults Jul 30, 2020
 

Santander sets aside £2.8bn after being pushed to the first loss in its 163-year history

Barclays’ pre-tax profits plunged by 75% in the second quarter of 2020 after the bank put aside another £1.6bn to cover bad debts in preparation for a wave of defaults caused by the coronavirus crisis.

The second-quarter provision was more than the £1.4bn analysts had expected and brings its total credit impairment charges to £3.7bn for the six months to June. It is also three times the £480m charge it logged last year.

Meanwhile, the Spanish lender Santander put aside €3.1bn (£2.8bn) to cover potential Covid-19 loan losses, including £145m relating to the UK. It also slashed €6.1bn from the value of its UK business as part of a €12.6bn impairment charge. This pushed the bank to an €11bn loss in the second quarter – the first loss in its 163-year history.

Barclays said its latest provision reflected a forecast deterioration in some parts of the economy, including a prolonged period of higher unemployment in the US and UK. However, this has been partially offset by the impact of government and central bank stimulus measures.

The bank’s group financial director, Tushar Morzaria, said economic models were pointing to a relatively shallow recovery. “We’re not assuming a very sharp snapback.”

He said the bank had “quite significantly” increased provisions for potential defaults in high-risk sectors such as airlines, retail, hospitality and transport, which have been hit hard by the pandemic and subsequent travel restrictions. Barclays said its total exposure to those sectors was £20.7bn.

The total loan loss provision pushed pre-tax profits down by 75% to £359m for the three months to June, compared with £1.5bn in the same period last year. Analysts had been expecting profits of £491m, according to consensus estimates.

Barclays’ net interest income – which measures how much the bank earns from loans minus what it pays on deposits – tumbled by 20% to £1.9bn after the Bank of England slashed interest rates to record lows of 0.1% in March.

However, a strong performance by Barclays’ investment bank helped prevent a sharp fall in total income, which was down 4% year on year to £5.3bn.

While Barclays said it expected lower loan loss provisions in the second half of the year, it warned that the next six months would be difficult. “Given the uncertain economic outlook and low-interest-rate environment, the second half of the year is expected to continue to be challenging,” the bank said.

Barclays said its capital buffers – which ensure the bank can absorb major losses – were strong, but its chief executive, Jes Staley, struck a cautious tone. “Though we will remain well capitalised and ahead of our minimum requirements, we may experience stronger capital headwinds in the second half of the year,” he said.

However, Staley said the bank’s risk and exposure levels were very different from those during the 2008 financial crisis, and meant it could play a very different role in the recovery.

“Our hope is to be a firewall in the economy recovery and in dealing with the Covid-19 pandemic; it’s much different than what happened with the banks some 10 years ago,” he said.



Read full article
 
Source: www.theguardian.com
 
  print  
  email to friend  


 
 
Back
 
 
private banking
private banking
private banking
private banking
private banking
private banking
private banking

 
Home News Library Newsletters Event Calendar Advertise About Contact FAQ
Privacy Policy     Terms of Service
 

©