Barclays takes GBP3.7B coronavirus hit as profits slump

LONDON (AFP) – British bank Barclays said yesterday that first-half net profits tumbled by two thirds, as it set aside GBP3.7 billion to deal with coronavirus fallout, and warned over a possible second wave.

Profit after taxation dived to GBP695 million in the six months to the end of June, compared with GBP2.07 billion in the same portion of 2019, Barclays said in a results statement.

And net profit tanked 91 per cent to just GBP90 million in the second quarter, when it took a GBP1.6-billion hit from pandemic turmoil – on top of the GBP2.1 billion it had set aside for the first quarter.

The cash should help Barclays weather the increased risks that customers may not be able to repay bank loans on the back of the coronavirus-induced recession. The sharp economic downturn was sparked by the three-month nationwide lockdown on March 23 which was not relaxed until early June.

“This has been a period focussed on supporting our customers, clients and the United Kingdom (UK) economy through the COVID-19 pandemic – providing the people and businesses that we serve with a bridge to recovery in every way we can,” said Chief Executive Jes Staley.

“Credit impairment charges increased to GBP3.7 billion in the first half due to the forecast impact of COVID-19.” He added, “While the remainder of 2020 will be challenging, our diversified model means we can remain financially resilient and continue to support our customers and clients.”

Barclays, meanwhile, took the vast GBP3.7-billion charge despite assistance from the Bank of England and UK government to help lenders boost lending and keep businesses afloat.