Barclays Pushed to Loss by Africa Write-Down -- Update

By Max Colchester 

LONDON -- Barclays PLC on Friday said it swung to a second-quarter net loss as it took a hit on the disposal of its Africa operations and higher provisions for conduct costs.

The British bank reported a net loss of GBP1.4 billion ($1.83 billion) for the quarter, compared with a profit in the same period last year. Excluding one-offs, profit before tax rose to GBP659 million but still came in below analysts expectations. Total income was flat at GBP5 billion.

Overall the bank's results were mixed. Revenue at its investment bank fell on the back of muted trading, while its retail division posted broadly flat sales. Impairments increased at its credit-card division and the bank took a GBP700 million charge to compensate customers who were sold insurance products they didn't need.

Barclays is largely finished with the first stage of Chief Executive Jes Staley's strategy revamp. The bank has completed a retreat from Africa, retrenched it investment bank and closed its noncore division, which held billions of unwanted assets.

However, shares have fallen in the last three months as investors fret whether the new-look Barclays can produce returns. Dividend rises are still over the horizon, although the bank said it would update investors at its full-year results in February.

The bank said Friday it now targets a greater than 10% group return on tangible equity "over time." The group's second quarter tangible equity was minus 11%.

Over the past year the focus has been shoring up Barclays's balance sheet. Cutting its stake in its Africa division has helped push the bank's capital ratio up to 13.1%.

Barclays's closely watched investment bank reported another fall in revenues. Sales at its bond-trading division fell 8% in the second quarter, which was better than some analysts were expecting. Equities-trading revenue was down 11%. Analysts at Jefferies said that the investment bank returns were "reasonable given peers' performance."

There are also a series of regulatory issues hanging over the bank. Barclays is being sued by the Justice Department over its role in the packaging and sale of toxic-backed mortgages. Mr. Staley is himself being probed by U.K. regulators after trying to unmask a whistleblower.

Write to Max Colchester at [e-mail]

(END) Dow Jones Newswires

July 28, 2017 03:56 ET (07:56 GMT)

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