Barclays posts forecast-beating results, but cautions on 2020 targets

Disclosures about the probe into Barclays boss Jes Staley’s links with Jeffrey Epstein overshadowed a better-than-expected set of results for 2019, though the bank cautioned 2020 targets would be “challenging”.

Barclays reported a 25% hike in statutory pre-tax profits to £4.4 billion in 2019, despite a hefty £1.4 billion bill for payment protection insurance (PPI) after a last-minute rush before the claims deadline.

On an underlying basis and with charges and litigation costs stripped out, pre-tax profits were 9% higher at £6.2 billion, against expectations for £6 billion, with its preferred measure of “return on tangible equity” (RoTE) also up 9%.

While it will continue to aim for 10% RoTE, Barclays warned it has become “more challenging” to achieve this in 2020.

The bank’s annual report, published alongside the results, also shone a light on mammoth hikes in executive pay, with Mr Staley’s total remuneration package soaring 76% to £5.93 million.

This marks the highest chief executive pay since Bob Diamond’s controversial £11.1 million pay deal in 2011.

On the results, AJ Bell investment director Russ Mould said the “real shocker” was the bank’s admission it may not meet 2020 RoTE targets.

He said: “The longer that interest rates and bond yields stay low, the harder it will be for Barclays to make a return on its loan book and meet the 10% (adjusted) return on tangible equity target.

“The failure to reach that level leaves Barclays shares bereft of a catalyst.”

The results showed its investment banking business had a resurgent year, with income up 5% at £10.2 billion and pre-tax profits ahead 14% at £3 billion.

It comes after Barclays faced pressure from activist investor Edward Bramson last year to spin off its investment banking arm, claiming it was weighing on the wider group.

But Mr Staley fended off the calls, though a “fresh intervention” from Mr Bramson still remains a possibility, according to Mr Mould.

The US-based activist, who runs Sherborne Investors, recently extended the duration of his stake in the bank to July 2022 through a complicated loan deal.

In the Barclays annual report, pay details showed the better 2019 performance saw Mr Staley pick up £3.1 million in bonuses and long-term share incentives to add to his £2.8 million in fixed pay.

He could also land potential maximum total pay of £9.85 million in 2020, if he exceeds all performance targets.

His pay last year was 140 times higher than that of the average Barclays worker, according to the report.

But the lender has a raft of high earners, with the report also revealing 399 employees earned more than £1 million in total pay last year – with 13 taking home more than £5 million.

Of the £1 million plus earners, 56% are based in the US, 36% in the UK and 8% in the rest of the world, Barclays said.