Wednesday, February 16, 2005
Barclays Could Use New Profit Engines
The Times of London
February 10, 2005
Barclays profits soar despite hiring spree
By Mike Verdin, Times Online
Barclays has announced a 20 per cent rise in profits despite a lacklustre UK high street performance and a hiring spree that undermined growth at its investment banking unit.
Barclays, the UK’s third-largest bank, said that pre-tax profits hit £4.60 billion last year as its wealth management business staged a "strong recovery" and earnings at the Barclays Capital investment banking unit rose by one-quarter to pass £1 billion.
"Barclays had a record year with strong profit growth across the group," John Varley, the Barclays chief executive, said.
"Looking back at it, growth was what 2004 was all about."
However, he said it that Barclays needed to "lift the performance" of its UK retail banking operation, where profits fell by 1 per cent. Net mortgage lending fell by £100 million to £1.9 billion despite a record year for the home loans market.
He also admitted the role played, amid a low interest rate environment, by reduced levels of bad debt which allowed provisions to be cut by 19 per cent to £1.09 billion.
"We must acknowledge that 2004 was a very benign year for provisions," Mr Varley said, adding that the charge was "lower than it would be reasonable to expect in 2005".
Analysts took further caution in Barclays’ reliance on hiring and pay rises to support investment banking profits. While the unit’s income rose by 24 per cent, bonuses and an extra 2,000 staff took running costs 37 per cent higher.
"They have beaten expectations, but they have done it through the provisions line. Normally people like expectations to be beaten on the revenue line," Bruce Packard, an analyst with ING, told Reuters.
Barclays shares stood 7p lower at 587p in afternoon trade.
February 10, 2005
Barclays profits soar despite hiring spree
By Mike Verdin, Times Online
Barclays has announced a 20 per cent rise in profits despite a lacklustre UK high street performance and a hiring spree that undermined growth at its investment banking unit.
Barclays, the UK’s third-largest bank, said that pre-tax profits hit £4.60 billion last year as its wealth management business staged a "strong recovery" and earnings at the Barclays Capital investment banking unit rose by one-quarter to pass £1 billion.
"Barclays had a record year with strong profit growth across the group," John Varley, the Barclays chief executive, said.
"Looking back at it, growth was what 2004 was all about."
However, he said it that Barclays needed to "lift the performance" of its UK retail banking operation, where profits fell by 1 per cent. Net mortgage lending fell by £100 million to £1.9 billion despite a record year for the home loans market.
He also admitted the role played, amid a low interest rate environment, by reduced levels of bad debt which allowed provisions to be cut by 19 per cent to £1.09 billion.
"We must acknowledge that 2004 was a very benign year for provisions," Mr Varley said, adding that the charge was "lower than it would be reasonable to expect in 2005".
Analysts took further caution in Barclays’ reliance on hiring and pay rises to support investment banking profits. While the unit’s income rose by 24 per cent, bonuses and an extra 2,000 staff took running costs 37 per cent higher.
"They have beaten expectations, but they have done it through the provisions line. Normally people like expectations to be beaten on the revenue line," Bruce Packard, an analyst with ING, told Reuters.
Barclays shares stood 7p lower at 587p in afternoon trade.
# posted by Tom @ 5:34 PM 
