Credit turmoil takes its toll on Barclays’ profit
Barclays Group yesterday reported a 3.4 per cent drop in profit in 2007 compared with 2006, and further losses due to credit market turmoil.
The company reported a net profit of £4.42 billion (Dh32bn) for the year, compared with £4.57bn in 2006, in line with market expectations.
Barclays “appears to have weathered a very difficult year well,” said NCB stockbrokers, but its share price fell in a market shaken by Credit Suisse’s announcement of further big losses.
Britain’s third-largest banking group by market capitalisation said its losses from credit market turmoil in the wake of the sub-prime mortgage crisis in the United States totalled £1.6bn.
That was up from the £1.3bn write-down the company reported in November. The company raised its dividend by 9.7 per cent compared with 2006 to 34 pence. Richard .
Hunter, analyst at Hargreaves Lansdown Stockbrokers, said Barclays shares were in line with market expectations but the share price had been hit by nervousness about the banking sector.
“The separate announcement of a further $1bn (Dh3.67bn) write-down from Credit Suisse has been particularly unhelpful, and has cast fresh doubt over the sector at a time when figures such as these from Barclays could have begun to rebuild some confidence,” said Hunter.
Group Chief Executive John Varley said the company’s write-down had been “prudently marked” but he could not rule out further losses due to the credit market crisis.
“We’ve been able to absorb write-downs of £1.6bn and still generate profit in 2007 in Barclays Capital, ahead of the record profit of 2006,” he added.
Pretax profits in the Barclays Capital unit rose five per cent to £2.33bn.
Group impairment charges and other credit provisions were up 30 per cent to £2.8bn – three-quarters of that amount related to US sub-prime loans and other credit market exposure.
Barclays’ UK banking pretax profit rose four per cent to £2.66bn, and Barclaycard’s pretax profit rose 18 per cent to £540m. (AP)
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