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Interim Results

Barclays' improved profits driven by reduced non-core drag

28 July 2017 07:22

Barclays' first half group profit before tax increased 13% to £2,341m following materially lower losses in non-core of £647m (H116: £1,904m).

Core profit before tax fell by 25% to £2,988m impacted by charges for PPI of £700m (H116: £400m) and the non-recurrence of the £615m gain on disposal of Barclays' share of Visa Europe Limited in H116.

Other highlights:

- Barclays UK RoTE of 4.6% (H116: 13.6%) and cost: income ratio of 72% (H116: 61%) reflected charges for PPI of £700m (H116: £400m). Net interest margin (NIM) improved 10bps to 3.69%, with net interest income increasing 2% to £3,045m

- Barclays International RoTE of 12.4% (H116: 14.3%) reflected RoTE of 28.0% (H116: 50.9%) in Consumer, Cards and Payments and an improved RoTE of 9.7% (H116: 8.4%) in the Corporate and Investment Bank (CIB)

- Loss after tax in respect of discontinued operation of £2,195m included an impairment of Barclays' holding in BAGL of £1,090m and a loss on the sale of 33.7% of BAGL's issued share capital of £1,435m, primarily due to recycling of currency translation reserve losses to the income statement

- Group basic loss per share of (6.6p) (H116: earnings of 6.9p) with earnings per share in respect of continuing operations of 7.1p (H116: 6.0p). Excluding the loss on the sale of 33.7% of BAGL's issued share capital, the impairment of Barclays' holding in BAGL and charges for PPI of £700m, earnings per share were 11.8p

- Tangible net asset value per share decreased to 284p (December 2016: 290p) as profit from continuing operations was offset by decreases across reserves

Group chief executive James E Staley, said: "The second quarter saw us complete two critically important planks of our strategy; both of them ahead of schedule.

"First, we reduced our majority shareholding in Barclays Africa Group Limited to a level which allows us to apply for regulatory deconsolidation, and we expect to achieve that in 2018.

"We have permission to apply proportional consolidation to our reduced shareholding, which means that our CET1 ratio stands at 13.1% today, within our end-state target range.

"We will realise a further c.26bps uplift resulting from the sale.

"Second, we completed the accelerated rundown of our Non-Core unit to below our target of £25bn in Risk Weighted Assets, allowing us to close it 6 months early and incorporate the residual assets back into the Core.

"Accomplishing both of these milestones marks an end to the restructuring of the Barclays Group, and brings forward the date when our shareholders can benefit from the full earnings power of this business.

"That power is evident once again in the performance reported today. At the half year, Group profit before tax increased 13% to £2,341m. Our strong businesses, Barclays UK and Barclays International, posted attractive Returns on Tangible Equity of 20.4% - excluding the provision for PPI - and 12.4% respectively.

"Our business is now radically simplified, the restructuring is complete, our capital ratio is within our end-state target range, and while we are also working to put conduct issues behind us, we can now focus on what matters most to our shareholders: improving Group returns.

"We have accordingly established a new target today which is to achieve a greater than 10% Group Return on Tangible Equity over time." Finally we will, at the full year results early next year, provide investors with an updated capital management policy for the Group."

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