Barclays profits hit by drop in investment banking fees
Barclays’ profit fell 4% in the fourth quarter as a sharp drop in fee income at the investment bank offset its strong consumer lending business, which was boosted by rising interest rates.
Net income fell to £1.04 billion from £1.08 billion in the same period last year, beating analyst expectations of £919 million, the bank of England said on Wednesday. Revenue rose 12 per cent to £5.8 billion, but this was lower than the average estimate of £6.1 billion.
Barclays The UK, the barrier-to-bank consumer lender, posted 13% higher profits year-on-year in 2021. That was driven by an increase in revenue from personal and corporate banking. industry when the Bank of England raised interest rates, this month has touched the 15-year level. 4% high.
At investment banking, fixed-income trading rose 79 percent, but this didn’t offset the 50 percent drop in advisory fees and capital markets, in line with trends seen during the quarter on Wall Street. As a result, revenue at the division fell 2% to £2.6 billion.
The bank also added £500 million in credit loss charges for the quarter, which it said reflects “worsening macroeconomic forecasts”.
For the full year, net income fell 19% to £5 billion in 2022, well above analyst expectations of £4.9 billion.
The decline reflects an embarrassment transaction error resulted in the bank inadvertently selling $17.7 billion in structured financial products that they weren’t authorized to. It had to pay $361 million to the US Securities and Exchange Commission and set aside £450 million to compensate investors.
Revenue rose 14% to £24.9 billion, slightly below the £25.2 billion that analysts had estimated. The bank posted a return on tangible equity – a key profitability measure – of 10.4% for the year, down from 13.1% in 2021.