Profits and salaries on the rise at Barclays

15 February 2011

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.

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