Friday 16 November 2018

Barclays upbeat on Trump tax changes despite €1bn hit

Barclays expects its future US after-tax earnings to be positively affected by the changes announced by US President Donald Trump
Barclays expects its future US after-tax earnings to be positively affected by the changes announced by US President Donald Trump

Stefania Spezzati

Barclays will take a charge of about £1bn (€1.19bn) this year as a result of the recent US corporate tax overhaul driven by President Donald Trump.

However, the British lender expects its future US after-tax earnings to be positively affected by the changes, it said yesterday.

The one-off charge in the financial year ended this December will reduce its CET1 capital ratio by about 20 basis points, it said. "The ultimate impact is subject to the effect of other complex provisions," which Barclays is currently reviewing, the company added.

The lowering of the US corporate tax rate from 35pc to 21pc will benefit most companies but it also requires them to recalculate deferred tax assets that have accumulated on their balance sheets.

Bank of America will take a $3bn (€2.5bn) charge, while Credit Suisse is at risk of posting a third consecutive annual loss after predicting it will take a 2.3bn Swiss francs (€1.95bn) hit.

Barclays' shares, which are down 9pc this year, were little changed after the news.

"It looks likely the provisions for base erosion and anti-abuse tax will reduce much of the benefit of the US tax cut," said Edward Firth, an analyst at Keefe, Bruyette & Woods.

"Near-term, any positive earnings revisions are likely to be very modest." (Bloomberg)

Irish Independent

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