Barclays trebles profits driven by lower litigation charges

Barclays saw its profit almost treble, driven by strong trading at its credit card business and lower litigation charges.

It said annual pre-tax profit jumped to £3.2bn compared to a year ago, buoyed by its credit card business where sales leapt 21% to £4bn. Last year the group turned in a £1.1bn pre-tax profit.

It added operating costs fell 12% to £16.3bn "reflecting lower litigation and conduct charges. Total conduct and litigation costs at the group plunged by 69% to £1.36bn.

The retail and investment bank said that its pension protection payment (PPI) mis-selling charges also dropped sharply to £1bn, from £2.8bn a year ago.

Chief executive Jes Staley, who took the helm just over a year ago, said: "A year ago we laid out our intention to accelerate the restructuring of Barclays and refocus our business as a transatlantic, consumer, corporate and investment bank, anchored in London and New York.

"We have made strong progress against this agenda in 2016."

Staley has focused on boosting the investment bank and concentrated on the bank's US and UK operations, while selling its large African operations and cutting the dividend in half.

The bank added it expects to close its "noncore" unit in June this year, six months earlier than expected, after selling a range of other businesses from France to Egypt.

Just months away

Staley added: "We are now just months away from completing the restructuring of Barclays, and I am more optimistic than ever for our prospects in 2017, and beyond."

The increase in profits led to a surprise increase in its core capital ratio – the key measure of a bank's strength and ability to withstand financial shocks. This ratio lifted 1% to 12.4%.

However, the City had expected to turn in a full-year pre-tax profit of £3.9bn. Shore Capital analyst Gary Greenwood said the results "show better than expected capital generation but with adjusted profits weaker than anticipated".

Greenwood added: "Barclays' shares have increased by 85% since reaching a post EU referendum low of 127p as the UK economy has held up better than expected in the aftermath of the Brexit referendum while, more recently, optimism around the outlook for US economic growth and regulatory risk has improved following Donald Trump's victory in the US election."

Shares in Barclays rose 2% in early trading to 239.5p.