LONDON (Reuters) – Barclays said on Wednesday its annual profit fell 14% as costs of buying back U.S. structured products mistakenly sold compounded a lackluster performance at its investment banking division.
The British bank reported a profit before tax of 7 billion pounds (7.91 billion euros) for the financial year, against 8.2 billion pounds the previous year, which is below expectations analysts, who expected an average of 7.2 billion pounds.
Returns on equity recorded by the international unit that houses Barclays’ transatlantic investment bank fell to 10.2% from 14.4% a year earlier, as investment costs, particularly on debt and equity markets, fell by almost two-fifths in one year.
The division’s pre-tax profit also fell 23% to around £5 billion.
The bank paid an annual dividend of 7.25p per share, as expected, and also announced a further £500m share buyback to bring the total for 2022 to £1bn.
Barclays recorded litigation costs for the year of £1.6 billion, including fines and damages to clients for exceeding US structured product issuance limits, resulting in a loss reimbursement to investors.
Barclays also said it cut senior executive pay by £1million to account for regulatory missteps.
Barclays’ results were further marred by £1.2bn of credit impairment charges as the UK economy continues to slow.
The British bank said it would meet its target of achieving a double-digit return on tangible equity next year, having previously described it as a “medium-term” target.
(Reporting Lawrence White and Iain Withers; Lina Golovnya, editing by Kate Entringer)
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