Profits and salaries on the rise at Barclays
All eyes were on Barclays on Tuesday as the banking giant unveiled expectation-beating full-year pre-tax profit of £6.07 billion.
The 32% increase on last year meant the group flew past analysts' forecasts of around £5.5 billion.
This time last year, Barclays reported profits of £11.6 billion for 2009, but that figure was inflated by the sale of its BGI fund management arm to US firm BlackRock.
Bad debts fell by 30% to £5.7 billion, with a sharp decrease in impairment charges at its investment banking arm, Barclays Capital (BarCap), partially offset by a significant increase in Barclays Corporate impairment in Spain.
Total group revenues came in at £31.44 billion.
BarCap made pre-tax profit of £4.78 billion - up 2% excluding the effect of own credit. Its global retail ranking arm notched up only a small rise in profit before tax from £1.82 billion to £1.83 billion.
Barclays Corporate made a loss before tax of £631 million (2009: profit of £157 million) reflecting hefty bad debt charges in Spain. The charge in Spain was nearly £900 million.
Barclays said it cut its staff bonuses by 7% in the year, despite the profit increase.
It paid out £3.4 billion in performance awards, but bonuses at BarCap were down 12%. The FTSE 100 giant said it has also introduced a Contingent Capital Plan (CoCo) as a part of deferred compensation arrangements for all senior staff, which will defer payment for three years.
The bank said that, in line with new regulations, bonus payments would be deferred over three years and would not be paid unless the bank had sufficient capital in reserve.
"We are committed to demonstrating that we are both responsible in our compensation decisions and practices and that we take our regulatory obligations and UK government commitments seriously," said Bob Diamond, Barclays's chief executive.
He added that bonus payments had been directly influenced by Project Merlin, a deal agreed with the government last week where the UK's top banks agreed to curb bonuses and lend more to small and medium-sized businesses.
However, what staff lost on bonus pay was made up for with bumper salary increases, which are pensionable.
The bank revealed that total pay, including salaries, pensions and bonuses for the 24,800 bankers working at BarCap averaged £236,000 compared to £196,000 in 2009.
Lending in the UK was almost unchanged at £36 billion compared with £35 billion in 2009, although this figure does not include the £7.5 billion in loans arising from the acquisition of Standard Life Bank.
Its final dividend of 2.5p per share makes 5.5p for the year - compared to the 2.5p payment in 2009.
A market-weighted index of the 100 biggest companies by market capitalisation listed on the London Stock Exchange. It is often referred to as “The Footsie”. The index began on 3 January 1984 with a base level of 1000; the highest value reached to date is 6950.6, on 30 December 1999. The index is “weighted” by how the movements of each of the 100 constituents affect the index, so larger companies make more of a difference to the index than smaller ones. To ensure it is a true and accurate representation of the most highly capitalised companies in the UK, just like football’s Premier League, every three months the FTSE 100 “relegates” the bottom three companies in the 100 whose market capitalisation has fallen and “promotes” to the index the three companies whose market capitalisation has grown sufficiently to warrant inclusion. Around 80% of the companies listed on the London Stock Exchange are included in the FTSE 100.
If you own shares in a company, you’re entitled to a slice of the profits and these are paid as dividends on top of any capital growth in the shares’ value. The amount of the dividend is down to the board of directors (who can decide not to pay a dividend and reinvest any profits in the company) and they will be paid twice yearly (announced at the AGM and six months later as an interim). Dividends are always declared as a sum of money rather than a percentage of the share’s price. Although dividends automatically receive a 10% tax credit from HM Revenue & Customs (HMRC), which takes the company having already paid corporation tax on its profits into account. Dividends are classed as income and, as such, are liable for personal taxation and so shareholders have to declare them to HMRC.