Barclays 2015 profits dip 2% to £5.4bn

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Barclays Group made a £5.4bn profit before tax in 2015, down 2 per cent on £5.5bn in 2014.

Barclay’s personal banking income dropped 3 per cent in 2015 to around £4bn, caused by mortgage margin pressure and a drop in fee income.

Total incentives, including bonuses, were £1.6bn in 2015, down 10 per cent from £1.8bn in 2014.

The bank paid £2.7bn in redress to UK customers in 2015, up from £1.1bn in 2014.

Around £2.2bn of the 2015 figure was paid to customers that had been mis-sold payment protection insurance.

Barclays says it had 1.6 million PPI claims by the end of 2015, down 9 per cent on 2014.

The bank set aside an additional £1.4bn against PPI in the final quarter of the year due to a slower than expected drop in claim volumes.

The £1.4bn figure also reflects the Financial Conduct Authority’s 2018 complaints deadline and possible new FCA rules following the 2014 Supreme Court ruling in Plevin v Paragon Personal Finance Ltd.

Barclays has declared a final dividend of 3.5p per share, making 6.5p in total for 2015.

The bank says it wants to pay a dividend of 3p per share in 2016 and 2017.

The Share Centre investment research analyst Graham Spooner says: “Investors will note that Barclays will pay a final dividend of 3.5 pence per share, giving a total of 6.5 pence per share for 2015 financial year. It expects to pay a dividend of 3 pence per share in 2016 and 2017.

“With the sector still under a cloud, the share price close to a three year low and the uncertainty over the investment banking division, we view the stock as no more than a hold for the time being.”

Hargreaves Lansdown senior analyst Laith Khalaf says: “Cleaning is very much still in progress at Barclays, as the group seeks to focus its business around its core strengths and mop up the grisly legacy bits that are still weighing the bank down.

“This philosophy is very much in vogue in the banking sector, where the sins of the past continue to loom large. To that end Barclays put aside £2.2 billion to cover PPI claims, and booked a £1.5 billion loss from the non-core businesses it is downsizing.

“The new boss Jes Staley is clearly taking a big broom to Barclays’ operations in a bid to dramatically simplify the group.

“When the dust has cleared, the bank should have two high quality financial services divisions, and the potential to offer investors a decent dividend, but it’s going to take some elbow grease to get there.”

Barclays also announced a new strategy to reduce its stake in Barclays Africa Group and to focus on Barclays UK and Barclays Corporate & International.

The bank says: “We are today announcing our intention to sell down our 62.3 per cent interest in our African business, BAGL, over the coming two to three years, to a level which will permit us to deconsolidate it from an accounting and regulatory perspective, subject to shareholder and regulatory approvals if and as required.”