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(Alliance News) - Lender Barclays PLC on Thursday resumed paying dividends and said it will start a GBP700 million share buyback programme despite profit falling by almost a third in 2020.
The FTSE 100-listed bank said it delivered a resilient performance in 2020 against challenges posed by the coronavirus pandemic.
For 2020, Barclays posted net income of GBP21.77 billion, up 1% from GBP21.63 billion in 2019, as net interest income fell 14% to GBP8.12 billion from GBP9.41 billion.
Barclays booked GBP4.84 billion in credit impairments in 2020, more than doubled from GBP1.91 billion in 2019.
Pretax profit sank 30% to GBP3.07 billion from GBP4.36 billion. However, the figure beat company-compiled consensus which forecast pretax profit of GBP2.81 billion.
The bank's operating expenses were GBP13.7 billion up 1% versus prior year, reflecting structural cost actions mainly taken in the final quarter of the year and additional Covid-19 related costs.
Common equity tier 1 ratio - a key measure of a bank's financial strength - was 15.1% in 2020, up from 13.8% in 2019. The figure beat market consensus of 14.7%.
The Corporate & Investment Bank unit's income was GBP12.5 billion, with both Markets and Banking achieving "their best ever income performance", the lender said.
Consumer, Cards & Payments income totalled GBP3.4 billion, down 22% on the prior year, hurt by lower credit card balances, margin compression and reduced payments activity.
Barclays declared a dividend of 1.0 pence for 2020, down from 3.0p paid in 2019.
In addition, Barclays said it intends to initiate a share buyback of up to GBP700 million, which is expected to commence in the first quarter of 2021.
Chief Executive Officer Jes Staley said: "Given the strength of our business, we have decided the time is right to resume capital distributions. We have today announced a total payout equivalent to 5p per share, comprising a 1p full year dividend and the intention to initiate a share buyback of up to GBP700 million. We expect to comment further on capital distributions when appropriate.
"Barclays remains well capitalised, well provisioned for impairments, highly liquid, with a strong balance sheet, and competitive market positions across the group. We expect that our resilient and diversified business model will deliver a meaningful improvement in returns in 2021."
Looking ahead, Barclays said it remains committed to its medium term targets, including CET1 ratio in the range of 13% to 14%.
However, the company noted that it expects headwinds to income in Barclays UK to persist in 2021 and the medium-term, including the subdued demand for unsecured lending and the low interest rate environment.
Barclays UK income for 2020 totalled GBP6.3 billion, down 14% versus prior year reflecting lower unsecured lending balances and interest rates, and Covid-19 customer support actions.
Barclays International income, in contrast, was GBP15.9 billion, up 8% versus the prior year.
The stock was trading 0.8% lower in London early on Thursday at 153.12p a share.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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