Barclays Lifts Case for Investment Banking After Fallouts

In the third quarter, Barclays has reported a decrease in profits of more than 80%.

Moreover, its chief executive, Jes Staley, cautioned the impact of the UK economic uncertainty on the year ahead.

Staley indicated, “We recognized that the prospect for next year is unquestionably more challenging now than it appeared on the previous year, in particular given the uncertainty around the UK economy and the interest rate environment.”

The chief executive also stated there was a “level of caution” among banking customers. These customers are the ones who have possessed more money in their accounts.

Business clients were halting from making huge decisions on mergers, acquisitions, and stock market flotation.

“There is an economic impact of the uncertainty we have around Brexit,” Staley stated.

The bank reserved an additional 1.4 billion for payment protection insurance after a flood of reimbursement claims in the run-up to the August time limit.

Declining Pre-tax Profits

Pre-tax profits after three months to September declined from £1.5bn to £246m after the PPI charge.

The bank had already cautioned that the last-minute flow in claims would affect an additional provision of between £1.2bn and £1.6bn.

Staley stated the “avalanche” of PPI complaints was unacceptable and that the bank had otherwise performed well in recent months.

In addition, “We were not anticipating a provision of close to £1.5bn to settle the definite PPI claims our capital position if we hadn’t had that litigation and conduct charge. I think we’d be having a very different discussion,” he said.

Barclays’ latest provision outperforms the extra £900m put aside by RBS last Thursday. This is although their opponent, Lloyds, could disclose a £1.8bn charge when it issues its third-quarter results next week.

Meanwhile, Staley applauded the performance of the investment banking division. This made all pre-tax profits of £882m in the third quarter, up 77% in the same period in 2018.