Major bank Barclays has announced an 8 percent decline in profits in the first half of the year, but at the same time raised its annual forecast for a key performance indicator and announced higher returns for shareholders.
The lender reported pre-tax profit of £4.2 billion for the first six months of 2024, down from £4.6 billion a year earlier, but the result was better than expected thanks to a strong performance from its investment banking division.
In the second quarter, profits fell 1 percent to £1.9 billion.
However, the group raised its full-year net interest income forecast to around £11 billion from £10.7 billion, partly due to the higher-than-expected UK interest rate forecast, with fewer cuts now planned.
Barclays said at the end of June it had only expected one interest rate cut in the UK in 2024, but forecasts now predicted two cuts by the end of the year.
In addition, the company confirmed plans to buy back another £750 million worth of shares in the third quarter and increased its half-year dividend.
Group chairman CS Venkatakrishnan, also known as Venkat, said the bank was making “good progress on our three-year plan”.
“We have announced a half-yearly dividend of 2.9 pence per share and a share buyback of up to £750 million, with total capital distributions to shareholders of £1.2 billion for the first half of 2024.”
In the first half of the year, a further £897 million was set aside for bad debts, compared to £896 million in the previous year, after the company had already set aside £400 million in the second quarter.
The group said British borrowers had so far proved resilient despite interest rates being raised to their highest level in 16 years at 5.25 percent.
Barclays said it was on track to cut costs by around £1 billion this year, after cutting a further £400 million in the first half of the year.
Anna Cross, group finance director, said some job cuts had been made as a result of cost savings, but declined to give figures, stressing that the bank was hiring across all business areas, including corporate banking, retail banking and wealth management.
Venkat added: “We are looking for talent across the UK.”
The results showed that net interest income – a key metric for retail lenders – at the bank’s UK arm fell 4% year-on-year to £3.1 billion as mortgage lending declined due to higher interest rates and customers shifted their deposits to higher-yielding deposit accounts.
But the investment bank’s revenues rose 7% in the first half, driven by a 25% increase in equities.
