Barclays half-year profits have fallen by a third following a major US settlement and mis-selling provisions but the banking group cheered a turnaround in the final months after dodging further charges.
The high street lender reported a 29% fall in pre-tax profit to £1.7bn for the six months to 30 June, while total income for the period was flat at £10.9bn.
Profits were knocked by a £400m PPI charge and a £1.4bn settlement with US authorities over its sale of mortgage-backed securities in the lead-up to the financial crisis – both of which were logged in the first quarter of the year.
When stripped of litigation and conduct costs, half-year pre-tax profits rose 20% to £3.7bn.
The bank cheered its second-quarter performance, during which it logged no major legal costs or further PPI provisions.
Its chief executive, Jes Staley, said: “It was the first quarter for some time with no significant litigation or conduct charges, restructuring costs or other exceptional expenses which hit our profitability.
“In effect then, it is the first clear sight of the statutory performance of the business which we have re-engineered over the past two-and-a-half years – Barclays’ transatlantic consumer and wholesale bank – and it is a positive sight.”
Statutory pre-tax profits for the second quarter came in at £1.9bn, up from just £659m during the same period last year. Total group income for the second quarter rose 10% to £5.6bn, while costs fell 3%.
Staley said the first-half performance overall showed the bank was starting to “demonstrate its true potential and value”.
“The numbers we have posted strengthen our confidence that Barclays can deliver attractive and sustainable profits, and in our ability to return a greater proportion of those profits to shareholders over time.”
Its corporate and investment bank (CIB) – which has faced scrutiny after activist investor Edward Bramson took a 5% stake in the lender – reported a 17% rise in pre-tax profits for the half-year to £2bn. Total income from the division rose just 1% to £5.4bn.
Bramson, the New York financier who disclosed a surprise 5% stake in Barclays in February, has argued that the lender should pare back parts of the investment bank that do not directly serve corporate clients.
“We are in conversations with Bramson, I have met him and we look forward to meeting him post these results but he has not outlined what his strategy is to us,” Staley told reporters.
Barclays said it was “too early to provide comments on expected performance” for the group for the second half of the year.
The bank has forecast that income from Barclays UK – its retail operations – will “remain steady despite margin pressures”. However, income its international division will depend on investment banking market conditions, as the bank notes that volatility was low in July.
Barclays shares closed down 2.7% at 186.5p.