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* 2020 pretax profit 3.1 bln stg
* Bank resumes 1p dividend, 700 mln buyback
* Investment bank records stellar returns
(Adds reaction, details, share price)
By Lawrence White and Iain Withers
LONDON, Feb 18 (Reuters) - Barclays has resumed
modest shareholder payouts after a year-long hiatus due to the
COVID-19 pandemic, setting expectations other British lenders
will follow suit when they report 2020 earnings in the next few
days.
Barclays said on Thursday it would pay a full-year dividend
of 1 pence per share and buy back 700 million pounds ($969.4
million) worth of stock, a vote of confidence in its balance
sheet after regulators in December gave the green light for
payouts.
The resumption came as Barclays' profit fell by half, much
less than forecast as a strong performance by its investment
bank offset provisions against bad loans from the economic
fallout of the COVID-19 pandemic.
Barclays reported a profit before tax for 2020 of 3.1
billion pounds ($4.29 billion), well above the average estimate
of 1.96 billion pounds from analysts' forecasts compiled by the
bank.
Barclays shares fell 2% in early trading before recovering
to trade broadly flat, after the payout plans and a vague
outlook set out with no profit targets left analysts
underwhelmed.
The bank said its returns are likely to improve
'meaningfully', without giving any numbers, and that the outlook
for its loss-making consumer business remains 'uncertain'.
"Overall a good set of numbers, but the focus is likely to
be on the 2021 outlook statement which is very light on detail
and so could lead to some disappointment," analysts at Citigroup
said.
Barclays' investment bank had a stellar year, which in
common with U.S. peers reported strong revenues from its
equities and fixed income businesses as customers traded
frantically in volatile markets in 2020.
The fixed income, currencies and commodities unit reported a
53% increase in income, as swings in global interest rates and
prices of commodities such as oil drove trading.
Equities saw a 31% rise in income while banking fees rose by
8%.
That performance drove the bank's bonus pool up 6% for the
year, although CEO Jes Staley's pay fell from 5.9 million to 4
million pounds as the bank failed to hit its overall profit goal
for the year.
Wall Street banks such as Goldman Sachs and Morgan
Stanley also saw fourth-quarter profits sail past
analysts' estimates, as coronavirus-induced volatility coupled
with the impact of the U.S. elections boosted trading.
Barclays' European rival Credit Suisse meanwhile reported a
comparatively weaker performance from its investment bank on
Thursday.
Barclays saw impairments from bad loan provisions related to
the pandemic dip to 492 million pounds in the fourth quarter,
giving a full year total of 4.8 billion pounds.
The lender's consumer, cards and payments division reported
a loss for the year of 1.1 billion pounds, mainly due to
pandemic-linked provisions.
DIVIDENDS RETURN
The decision by Barclays to resume payouts will raise
expectations that its peers will follow suit when they report
earnings in the coming days.
Natwest is due to report on Friday, while HSBC
, Lloyds Banking Group and Standard Chartered
follow next week.
The Bank of England (BoE) had told Britain's seven biggest
lenders in March to suspend dividends and share buy-backs until
the end of 2020, to help them maintain capital buffers against
the expected hit to their loan books from the pandemic.
The BoE said in December that banks looked strong enough to
resume payouts, albeit within temporary "guardrails" that capped
dividends at 0.2% of a bank's risk-weighted assets at the end of
2020, or 25% of cumulative profits over 2019.
Barclays gave no update on a probe by Britain's financial
regulators into links between Staley and U.S. financier Jeffrey
Epstein, who killed himself while awaiting trial on sex
trafficking charges.
Staley said at the time he regretted his links to Epstein,
which began in 2000 while he was employed by JPMorgan.
($1 = 0.7221 pounds)
(Reporting By Lawrence White and Iain Withers;
Editing by Rachel Armstrong and Emelia Sithole-Matarise)
