Barclays has reported an increase in their annual pretax profits after making “strong progress” in reorganization.
The bank reported an adjusted pretax profit of £3.2bn for 2016, which is up from £1.1bn the year before, although this was lower than original forecasted figure of £3.97bn.
However, Barclays has been fortunate where it has benefitted from a steep depreciation of the pound against the dollar following the EU referendum, and that its investment bank revenues have also steered its upward performance.
Investment bank revenues were up by 21% compared to the year earlier after a robust performance in the second half of 2016. The bank has also benefitted from a decreased amount of litigation and misconduct charges in 2016, dropping to £1.3bn from £4.4bn the previous year.
However, the bank isn’t out of the water just yet. The bank faces a lawsuit from the US Department of Justice on civil rights charges of fraud in the sale of mortgaged back securities in the run-up to the 2008-9 financial downturn.
In a statement responding to the litigation charges, Barclays Chief Executive Jes Staley said: “We are well positioned to absorb headwinds over the next few years. Certain legacy conduct issues remain and we intend to make further progress on them.”
The reorganization of Barclays includes selling off its African business as well as its other “non-core” assets.
Barclays has come to an agreement with Barclays Africa to pay 12.8bn rand (£790m) to fund investments required to separate the African unit from the main Barclays business. Barclays Africa will use this funding to invest in rebranding, technology and other projects relation to the separation. The agreement will allow Barclays to decrease its stake in the African business to lower than 50% as part of a strategy to prioritise on the US and the UK.
Staley stated that the bank was “committed” to the UK post-Brexit, even if Britain leaves the single market.
“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 Chief Executive added.
However, the Barclays Chief Executive has outlined that the bank will err on the side of caution, and so is preparing to add hundreds of staff to offices in Dublin, Frankfurt and Milan to counter any potential Brexit risks to its European business.
While he expects the majority of staff will remain in London, adjustments to the bank’s legal structure, including making Dublin the headquarters of its European business might be necessary post-Brexit.