Barclays sees uptick gathering pace as dividend is restored

Bloomberg

While Barclays Plc’s torrid 2017 ended on a mixed note, Jes Staley sees better things to come. Income from dealing stocks, bonds and currencies fell 18 percent, according to the bank’s fourth-quarter earnings report. That beat both the 26 percent decline estimated by UBS Group AG and the average 25 percent drop in markets revenue posted by Wall Street firms in the final three months of the year. The lender also said it will increase its dividend and consider buying back shares for the first time in more than 20 years.
“We are pleased with the start to the year, and in particular in the markets businesses,” where “income is tracking above the level for the corresponding period in 2017,” in both dollar and pound terms, Staley, the London-based bank’s chief executive officer, said in the earnings statement.
The shares rose. After three previous quarters of disappointing results, the fourth-quarter figures and 2018 trends are a welcome relief for the CEO, who has staked his reputation on turning around the securities unit. Even after years of restructuring, it’s still the firm’s worst-performing division and has been losing market share to rivals. There are “silver linings after noise” in the results, Joseph Dickerson, an analyst at Jefferies Group LLC, said in a note. “Investment bank revenues looked resilient versus peers.”

DIVIDEND CONFIDENCE
Barclays is still paying penalties for its past sins, taking another 240 million-pound ($333 million) charge for litigation related to foreign-exchange manipulation. Staley has also embroiled himself in a scandal over whistle-blowing last year, and the bank has been charged with fraud by UK regulators. Pretax profit, excluding litigation costs, rose slightly to 334 million pounds, missing the average 570-million-pound average estimate of 14 analysts compiled by the bank. Net operating income was about 4.45 billion pounds, almost unchanged from a year earlier.
The dividend boost, which will restore the payout that Staley cut in half in March 2016, is a sign executives are confident the bank’s slimmed-down balance sheet has enough capital to survive another crisis and pay its remaining misconduct fines. Staley had cut the payout to absorb losses from an accelerated run-down of a unit that housed toxic or unwanted assets.
“Hopefully our shareholders will take comfort from the fact that we are going to increase our dividend as planned in 2018, a significant amount,” Staley said in an interview on Bloomberg Television.
Additionally, the bank “is going to start to look at buybacks down the road,” because “we recognize that we have an obligation to begin to return excess returns in greater numbers to our shareholders.”
Finance Director Tushar Morzaria said the bank took a 127 million pound charge related to Carillion Plc, the UK construction company that collapsed earlier this year.