The stock fell 3.1% to 228p despite the bank reporting profits of nearly three times the level recorded the previous year.
“As usual with Barclays results, it takes some digging to get to the underlying trends but our overall conclusion is positive, with the clean, headline number comfortably exceeding analysts’ forecasts,” said Rob James, OMGI’s senior UK equities analyst.
“The all-important capital ratio is far higher than forecast at 12.4%, versus analysts’ expectations of 11.8%,” he said. “This, in addition to the fact that Barclays received a reduction in its GSIB requirement of 0.5%.” Another positive factor is that the running down of the non-core business division (BNC) is progressing well, and this will likely be closed at the half year, six months ahead of schedule. Although the non-core division lost £0.5bn, it managed to release £1.3bn of capital back to the group.”
James added that the way the bank has started to treat accrued bonuses and deferred pay is notable. “Going forward, these will effectively be ‘smoothed out’, so as to reduce the cyclical element of when these are actually booked to the profit and loss account. While 2016 has seen a charge of £400mn, smaller charges will be incurred in the future.”
“One niggle during the subsequent call with management was over the triennial pension review currently taking place with the trustees,” he continued. “The scheme itself has moved from a deficit to a small surplus under international accounting standards. Under the former agreement the bank had to make a contribution of £1.5bn this year.”
