Barclays Swings to Profit as Restructuring Nears End -- Update

By Max Colchester 

LONDON-- Barclays PLC swung to a full-year net profit of GBP1.6 billion ($1.99 billion), as the bank's management said it was just months away from finishing a restructuring program.

The British bank on Thursday said total income was down 3% over the year to GBP21.5 billion, as the bank continued to exit businesses. However, the bottom line was helped by a surge in revenue at Barclays's investment bank, in particular bond trading, and a steep fall in litigation costs.

Shares in the bank, which reported a loss of GBP394 million for 2015, gained about 3% in early trading.

Barclays Chief Executive Jes Staley said the sweeping overhaul he launched at the bank last year is drawing to a close. "We are now just months away from completing the restructuring of Barclays," he said in a statement.

On the American banker's watch Barclays has pared back its presence in Africa and Asia, and is now more focused on its U.K. and U.S. operations.

In the latest sign of progress, the bank said it expects to close its "noncore" unit in June this year, six months earlier than expected, after selling down businesses from France to Egypt. The amount of unwanted assets folded back into the bank will be GBP25 billion, slightly larger than what most analysts had expected.

Barclays also said it was "on track" to deconsolidate its African business from its accounts. It has agreed on a GBP765 million separation agreement with its African business, which must now be approved by South African regulators.

When he launched his strategy Mr. Staley decided to bet on Barclays struggling investment bank. The unit has since pumped up Barclays's bottom line. Barclays's corporate and investment bank revenue increased 6% to GBP10.5 billion, driven by bond trading and favorable exchange rates. Investment banks across the U.S. have benefited from market volatility caused by the election of U.S. President Donald Trump, the U.K.'s vote to the leave the European Union and the prospect of rising interest rates. However, revenue at Barclays's investment bank sagged in the fourth quarter.

Revenue at its U.K. retail business ticked up 2% for the year.

Overall bad loans grew 38% over the year, mainly because of the bank's credit-card business outside the U.K.

Barclays also Thursday disclosed pay metrics, which showed total bonuses fell 1% to GBP1.53 billion for the year.

Write to Max Colchester at [e-mail]

(END) Dow Jones Newswires

February 23, 2017 03:45 ET (08:45 GMT)

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