Barclays posts 35% jump in profit

Bloomberg

Barclays Plc said profit rose 35 percent in the third quarter as revenue from fixed-income trading surged to the highest in more than two years.
Barclays Plc said profit rose 35 percent in the third quarter as revenue from fixed-income trading surged to the highest in more than two years.
The results may help Chief Executive Officer Jes Staley convince investors of the advantage of keeping an investment bank even after it posted lower returns than the lender’s other businesses in recent years. Staley has said calls to spin off the unit are “shortsighted” because it serves as a counterweight to the retail divisions, which analysts forecast will be hit by a slowdown in the U.K. economy after the Brexit vote.
Damping investor sentiment was the bank’s common equity Tier 1 ratio, a measure of its capital strength, which remained static at 11.6 percent. This was largely because the bank’s pension plan swung to a 1.1 billion-pound deficit from a 800 million-pound surplus, trimming 0.3 percentage points from the key capital ratio. The bank also took a further 600 million-pound provision to compensate customers for improperly sold payment-protection insurance.

Trading Revenue
Fixed-income revenue climbed 40 percent from a year earlier to 947 million pounds. Analysts had expected 876 million pounds in revenue from the business, according to the average of six estimates.
The surge echoed the performance of the five major U.S. investment banks, which collectively posted a 49 percent jump in revenue from that business. Bond-market volatility has been spurred by the surprise Brexit vote, divergent views on the direction of central-bank rates and changes in money-market regulations. Investment-banking fees jumped 29 percent, while equity-trading revenue climbed 11% to 461 million pounds.

Barclays takes £600mn hit over insurance mis-sell
British bank Barclays said it had set aside an extra £600 million to compensate customers mis-sold insurance, a day after rival Lloyds gave a similar update. Barclays said the additional funds needed to cover costs linked to the long-running payment protection insurance (PPI) scandal contributed to it posting almost flat net profit of £414 million for the third quarter.
In 2011, British banks lost a high court appeal against tighter regulation of PPI, which provides insurance for consumers should they fail to meet repayments on a credit product such as consumer loans, mortgages or payment cards.
PPI became controversial after it was revealed that many customers had been sold it without understanding that the cost was being added to their loan repayments. British authorities subsequently banned simultaneous sales of PPI and credit products.
To date, British lenders have been forced to set aside around £31 billion to cover PPI compensation costs.
The worst affected bank is Lloyds, which on Wednesday said it was setting aside another £1.0 billion for PPI claims and bringing its total cost alone to £17 billion, far higher than any other bank.