(Alliance News) - Barclays PLC on Wednesday kicked off the UK banking reporting season with a sharp profit hike as the lender's bottom line was boosted by a release of credit impairment provisions.
Barclays shares were 4.5% higher at 177.05 pence each in London on Wednesday morning, among the biggest blue-chip gainers and significantly outperforming the wider FTSE 100 index, which was up just 0.3%.
Barclays also announced plans for a GBP500 million buyback, adding to the GBP700 million it returned to shareholders through a share repurchase programme it completed in April.
Pretax profit in the six months to June 30 more than tripled to GBP4.98 billion from GBP1.27 billion a year earlier. Net operating income jumped 53% to GBP12.06 billion from GBP7.88 billion.
The bank benefited from a GBP742 million credit impairment release, compared to a charge of GBP3.74 billion a year earlier.
Chief Executive James Staley labelled it a "strong first half".
"We are starting to see the resurgence of activity across our businesses, with group income up on the same period last year when excluding the impact of FX movements. Our [Corporate & Investment Bank] business is well-positioned to benefit from continued growth in debt and equity capital markets, with Global Markets and Investment Banking fees income up 36% since 2019, and our strong retail businesses are poised to support and benefit from a consumer recovery," Staley added.
In subsidiary Barclays UK, total income rose 0.9% to GBP3.20 billion from GBP3.17 billion a year earlier. Net operating income soared 73% to GBP3.64 billion from GBP2.11 billion, helped by a GBP443 million credit impairment release. This contrasted with a GBP1.06 billion impairment charge for Barclays UK a year earlier.
Barclays UK includes the company's UK business and retail banking arms.
Barclays International posted a GBP508 million pretax profit, swinging from a GBP614 million loss. It saw a GBPP21 million credit impairment release, compared to a GBP1.30 billion charge a year earlier.
Net operating income in the unit rose to GBP1.67 billion from GBP422 million.
Barclays International includes the FTSE 100 lender's Consumer, Cards & Payments businesses, as well its Corporate & Investment Bank unit.
In the CIB business, first half total income fell 5.2% annually to GBP6.57 billion from GBP6.93 billion. However, factoring in a GBP272 million impairment release, compared to last year's GBP1.32 billion charge, net operating income was higher.
The CIB unit's net operating income rose 22% to GBP6.85 billion from GBP5.61 billion.
Barclays posted a CET1 ratio of 15.1%, up 50 basis points from 14.6% in the first quarter. Over the medium term, it expects a CET1 ratio in the range of 13% and 14%.
For 2021, it expects a return on tangible equity above 10%. In the first half, RoTE was 16.4%, up sharply from 2.9% a year earlier.
Barclays declared a 2.0 pence per share payout, having not paid one a year earlier. In addition, it plans to kick off a GBP500 million buyback in the third quarter. This is on top of the GBP700 buyback it completed in April.
Earlier in July, the Bank of England removed restrictions on large UK banks paying dividends. The central bank's Prudential Regulation Authority said the restrictions are "no longer necessary and have been removed with immediate effect".
By Eric Cunha; ericcunha@alliancenews.com
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