Chief executive John Varley highlights "resilient performance" as Barclays reports pre-tax profits of £7 billion.
The high street bank’s profits were broadly flat on the previous year despite a £782 million hit from exposure to the U.S. subprime market.
Barclays Plc, the UK’s third largest bank, posted profits of £7.08 billion last year, down one percent against the £7.14 billion record haul seen in 2006, despite a £1.64 billion hit from the credit crunch. The high street bank was forced to make hefty write-downs amid the U.S. subprime mortgage market and subsequent credit squeeze.
Barclays also revealed it had set aside £2.8 billion in bad debt charges and impairment provisions, a rise of 30 percent on the year before. The increase was largely down to a £782 million hit from exposure to the US high risk home loan defaults and the credit turmoil, the group said.
Arrears and defaults within its retail banking and Barclaycard arm "significantly" improved, down seven percent to £2.01 billion.
Credit turbulence
Barclays is the first of the "big five" UK banks to report annual results.
John Varley, Barclays’ group chief executive, said: "Barclays delivered a resilient performance in 2007 in a year of contrasting market conditions" but added that the group was "not immune from the impact of the credit market turbulence" in the second half.
Mr. Varley cautioned that Barclays would "will have to be disciplined in our risk management and rigorous in our approach to lending" as the economic slowdown took hold.
February 19, 2008