Business World

Monday 28 May 2018

Barclays swings to first-quarter loss as US settlement and PPI hit profits

Barclays
Barclays

Kalyeena Makortoff

Barclays swung to a loss in the first quarter as further payment protection insurance (PPI) charges and a £1.4bn settlement with the US Department of Justice knocked profits.

The UK bank reported a pre-tax loss of £236m for the three months to March 31, having reported profits of £1.68bn in the same period last year.

Stripped of litigation and conduct charges, Barclays said its attributable profit was £1.2bn.

The bank was hit by a $2bn settlement reached with the US Department of Justice (DOJ) earlier this month, related to the sale of mortgage-backed securities in the lead-up to the financial crisis.

Chief executive Jes Staley said: "While the penalty was substantial, this settlement represents a major milestone for Barclays, putting behind us a significant, decade-old legacy matter."

Barclays booked an extra £400m to cover PPI charges after seeing a higher number of complaints over the quarter.

While the charges affected Barclays' CET1 levels - referring to the capital cushion that underpins a bank's loans - Mr Staley said he was confident in the lender's position.

"This has been a significant quarter for Barclays, one in which we have shown that our new operating model and our portfolio of diversified, profitable businesses are capable of producing improved returns for shareholders."

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