On Tuesday, Barclays disclosed a fourth-quarter net loss of £111 million ($139.8 million) as the British bank revealed an extensive strategic overhaul, sparking a more than 6% surge in its shares during early trading.
According to LSEG data, analysts had anticipated a net profit attributable to shareholders of £60.95 million for the quarter. This announcement comes as Barclays initiates a significant restructuring initiative aimed at reversing declining profits.
For the full year, net attributable profit amounted to £4.27 billion, a decline from £5.023 billion in 2022 and falling short of a consensus forecast of £4.59 billion.
CEO C.S. Venkatakrishnan stated in a release that the bank would execute an additional share buyback of £1 billion and reveal a new three-year plan aimed at enhancing operational and financial performance.
Barclays incurred a £900 million charge in the fourth quarter from structural cost-cutting measures, anticipated to generate gross cost savings of approximately £500 million this year, with an expected payback period of under two years.
Barclays witnessed a slowdown in momentum within its traditionally robust corporate and investment bank (CIB), particularly in its fixed income, currency, and commodities trading division, amid moderated market volatility in 2023.
The bank’s significant operational overhaul announced on Tuesday includes substantial cost reductions, asset divestments, and a restructuring of its business segments, with plans to return £10 billion to shareholders between 2024 and 2026 through dividends and share buybacks.
The business will be segmented into five operating divisions, with the corporate and investment bank split to form Barclays U.K., Barclays U.K. Corporate Bank, Barclays Private Bank and Wealth Management, Barclays Investment Bank, and Barclays U.S. Consumer Bank.
“This segmentation will provide an enhanced and more granular disclosure of the performance of each of these operating divisions, alongside more accountability from an operational and management standpoint,” the bank stated in its report.
Barclays aims to achieve total gross cost savings of £2 billion and a RoTE exceeding 12% by 2026.
