According to the group’s final results to 31 December 2013, the division now has client assets of £204.8bn, up from £186bn for the previous year.
Both its total and net operating income figures were largely flat, with a 4% decline in net operating income, to just more than £1.7bn.
Total operating expenses were 21% higher than in 2012, with £158m allocated to “costs to achieve Transform” and a 50% increase in its UK bank levy.
Transformation ongoing
The statement said: “In 2013, the business incurred significant costs to achieve Transform. A significant portion of these costs were the direct result of initiatives taken to drive greater efficiency, to de-risk in an increasingly complex regulatory environment, to streamline target markets and to consolidate client propositions.”
Against this backdrop, pre-tax profits of £274m last year fell to £98m of losses before tax, however after the removal of the £79m goodwill impairment the 2013 figure was adjusted to £19m of losses.
Overall, Barclays posted a 42% decline in pre-tax profits, and adjusted return on average shareholders’ equity was down by half, from 9% to 4.5%, which was said to reflect the fall in profits. It also blamed a writedown of deferred tax assets relating to Spain and the £5.8bn of equity raised from the rights issue in Q4 2013.
Group chief executive Antony Jenkins said while there was further work to be done to make Barclays the ‘Go-To’ bank, he felt they were beginning 2014 “in a better position than we have been for many years.”
He added: “We have also started to make important progress in repositioning our African, European and Wealth businesses to improve returns. This performance has translated into income of £28.2bn in the year, and adjusted profit before tax of £5.2bn.
“However, profits have been impacted by the restructuring and de-risking activity we completed during the year. This included withdrawing from certain lines of business, investing to transform our operations and resolving legacy conduct and litigation issues. The cost of these actions suppressed statutory profits to £2.9bn in the year but was in the long term interest of our shareholders.”
Still a comfortable buy
Hargreaves Lansdown head of equities Richard Hunter said underlying performance was mixed.
“The drop in overall profit is attributable to a number of factors. Within Investment Banking and, as largely expected, the contribution from the fixed income business was poor, even if offset by a reasonable equity and IB showing. The return on equity halved, with last year’s rights issue being a major contributor, whilst operating expenses rose, not least due to the restructuring programme, litigation and regulatory penalties, where it remains unclear whether there are yet more to come.
“More positively, the capital cushion is now looking robust, the credit impairment position has improved further, the bank continues to pay a dividend unlike some of its rivals and certain pockets of the business such as UK Retail made a robust contribution.”
Hunter added the share price has been volatile over the last year, having lost 0.3% against the FTSE 100’s rise of 5%.
"The general market view remains supportive of Barclays as a diversified beneficiary of the general economic recovery, with the consensus continuing to come in at a comfortable buy," he said.
