LONDON (Alliance News) - Barclays PLC on Thursday reported a sharp decrease in its first half profit, owed to a conduct charge paid to the US Department of Justice and payment protection insurance claim provisions.
The FTSE 100-listed lender's pretax profit for the six months ended June decreased 29% to GBP1.66 billion from GBP2.34 billion a year before.
Barclays total income increased 0.5% to GBP10.93 billion from GBP10.88 billion year-on-year.
The retail, commercial and investment bank attributed its dramatic decline in profit to its GBP1.42 billion settlement to resolve the civil complaint brought by the US Department of Justice in December 2016 regarding residential mortgage-backed securities sold by the lender between 2005 and 2007.
Barclays had additional charges in the first half of GBP400 million relating to PPI provisions, down from GBP700 million the year before.
Excluding these litigation and conduct charges, Barclays pretax profit increased 20% to GBP3.70 billion from GBP3.08 billion the year before.
The FTSE 100 lender attributed this to a 46% reduction in credit impairment charges to GBP571 million from GBP1.05 billion and a 5% reduction in operating expenses to GBP6.67 billion from GBP6.99 billion.
The company's total operating expenses increased 13% to GBP8.72 billion from GBP7.73 billion.
Barclays said its CET1 ratio decreased to 13.0% from 13.3% in December.
According to the bank, the GBP6.3 billion increase in risk-weighted assets to GBP319.3 billion and GBP200 million decrease in CET1 capital to GBP41.4 billion are to blame for the slip in the ratio.
Barclays UK pretax profit increased 30% to GBP826 million from GBP634 million year-on-year. Total income for Barclays UK operations decreased 1% to GBP 3.62 billion from GBP3.66 billion.
The profit increase was driven by good performances in the personal banking and business banking segments.
Barclays International increased its pretax profit to GBP2.71 billion from GBP2.62 billion, owed to a 74% decrease in credit impairment charges.
The company proposed an increase in its interim dividend to 2.5 pence from 1.0 pence the year before. Barclays reiterated its intention to pay a total dividend of 6.5 pence.
Looking ahead, Barclays said it is "confident" in its strategy and believes it remains on track to achieve return on tangible equity targets of greater than 9% in 2019 and greater than 10% in 2020.
Barclays did say, however, that it feels it is too early to comment on its expected performance for the second half of financial year 2018, although it expects its UK income to remain steady.
Chief Executive Officer Jess Staley said: "The first half of 2018 has been characterised by strong financial performance and increased profitability.
"Our group return on tangible equity was 11.6% and profit before tax was GBP3.7bn, excluding litigation and conduct.
"The second quarter, where we generated a group return on tangible equity of 12.3%, underlines the growing pace of delivery at Barclays. This is a business which is performing well, having addressed the challenges of the last decade.
"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."
Shares in Barclays were down 0.6% early Thursday morning at 190.50 pence each.
Barclays (BARC)