Barclays is the latest major bank to report a significant drop in first quarter earnings because of coronavirus, as it sets aside $2.6 billion to cover anticipated bad loans.
- First quarter profits for Barclays fell 38% in the first three months of the year, to $1.1 billion (£913 million).
- The bank has also set aside a $2.6 billion (£2.1 billion) credit impairment charge, in part to cover loans which customers can no longer repay, joining rival HSBC and the “big four” banks in the U.S. in preparing for the coronavirus hit.
- Group CEO Jes Staley said the impact of COVID-19 “came late in what was until that point a good quarter.”
- Staley added the bank expects to “remain resilient” through the pandemic and the economic turmoil it has caused: “The strength of Barclays lies in our diversification by business, geography and currency,” he said.
- The bank has also cancelled its 2019 dividend payments, in line with calls from U.K. financial regulator PRA to suspend the payments, as well as bonuses, until the end of 2020.
How much banks are setting aside for bad loans has become a key feature of the first earnings reports during the pandemic Banks are being forced to provisions for defaults on loans with businesses shuttered and borrowers facing job losses and smaller paychecks.
The pandemic also threatens to derail Jes Staley's turnaround of Barclays. The hotshot executive won his battle with an activism investor over his plans to expand Barclays investment banking arm as many Europeans rivals retreated in the face of competition from Wall Street banks. Staley also has the shadow of a probe from the U.K.'s financial watchdog over his relationship with the child sex abuser and financier Jeffery Epstein.