Of Special Interest

1st November 2011

Barclays profits YTD UP on corporate and DVA

Barclays reported net attributable of £2,651m (€3,015m $4,269m ¥323.5bn Y27,150m) for the 9 months of the year, up 7%. Charges and asset value changes came close to cancelling out. The bank benefited on debt value adjustment (DVA) by almost £3bn, balanced by a £1.8bn fall in the stake it has within BlackRock, a £1bn provision for Payment Protection Insurance settlements and a £120m loss on adjustments for acquisitions and disposals.

Barclays is on track to meet its 'Project Merlin' targets. This is the commitment for lending to SMEs set by each of the four largest UK banks with the government. Earlier in the year banks were falling a long way short of these targets. Given that overall lending to SMEs has fallen significantly this would suggest other banks have underperformed on this commitment significantly, (Barclays being the first of the four to report).

Profits were higher than consensus forecast mainly due to the significantly better than expected performance of Barclays Corporate. Some forecasts whilst correctly identifying the downsides may have underestimated the boost from DVA also. Barclays stock was trading down around 1% late morning on the day of the announcement. It was a day when most large banks stock price fell by larger amounts.

Sovereign exposure to the PIIGS (Portugal, Ireland, Italy, Greece and Spain) countries is reduced to stand at £8bn. Barclays has a retail banking operation in Spain which may leave it exposed to other impairment. Barclays believes the latter to be manageable and there are reports that it is considering further acquisitions in Spain at a time these assets are cheap.

Nine Month key figures
Profit Before Tax by Business 30.09.11 30.09.10
£m £m
UK RBB 798 734
Europe RBB -109 -34
Africa RBB 624 554
Barclaycard 302 561
Retail and Business Banking 1,615 1,815
Barclays Capital 5,669 3,218
Barclays Corporate 42 -414
Corporate and Investment Banking 5,711 2,804
Barclays Wealth 153 122
Investment Management -1,778 55
Head Office Functions and Other Operations -635 -522
Group profit before tax 5,066 4,274
Tax 1,717 1,068
PROFIT AFTER TAX 3,349 3,206
Attributable to minorities 698 726

Income by Geographic Segment*
UK 9,476 9,395
Europe 3,566 3,443
Americas 4,637 5,639
Africa and the Middle East 3,784 3,614
Asia 779 877
Total income net of insurance claims and
excluding own credit 22,242 22,968

*Based on counterparty location.