Friday, April 27, 2012

Barclays reports first quarter net loss due to insurance charges, debt

LONDON -- British bank Barclays reported Thursday a net loss of £337 million ($545 million) for the first quarter of 2012, hit by additional provisions on payment protection insurance and an accounting loss related to its own debt.

Barclays said total revenue fell 25 percent to £5.52 billion from £7.34 billion a year before. In the year-ago period, the group recorded a net profit of £1.24 billion.

The group took an additional provision of £300 million for compensation related to the mis-selling of Payment Protection Insurance (PPI), a hit other UK banks have also been taking in recent quarters.

The quarter also included a charge of £2.62 billion on the value of its outstanding debt. The accounting charge reflects the rising value of the bank's debt in the market, as it theoretically would cost more for it to buy back that debt.

Excluding the loss on its own credit and the effects of the PPI provision, Barclays said that its profit before tax was up 22 percent to £2.45 billion.

"We achieved an adjusted return on equity that exceeded 12 percent, driven by strong results in UK RBB, Barclaycard, and Wealth and Investment Management and improved performances in Corporate and Investment Banking," CEO Bob Diamond said in a statement.

Diamond highlighted the strong performance of Barclays' growth engine, with investment bank revenue at £3.46 billion, up three percent from the first quarter of 2011. Impairment charges slipped 16 percent to £778 million for the quarter.

The results come as Barclays looks to quell growing shareholder dissatisfaction over the company's profitability and executive pay packets. At its full year results Barclays delayed its target of hitting a return on equity of 13 percent. The lender said it aims to cut £2 billion in costs by 2013.

Shares in Barclays rose nearly one percent in early trade.

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Nypost.com

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