Barclays Pre-Tax Profits Rise 13%

Barclays Plc, parent of Barclays Bank and investment bank BZW, on Tuesday said its 1996 pre-tax profits rose by 13 per cent to 2.356 billion ($3.8billion).

Barclays said it would return 500 million of excess capital to shareholders. It has already performed over one billion of share repurchases in the last 18 months.

Barclays said BZW saw a 29 per cent fall in profits in 1996to 204 million from 289 million in 1995 affected by underperformance in both fixed income and foreign exchange trading.

In 1995, Barclays made a profit of 2.083 billion. The 1996 figure includes a 70 million exceptional gain from business disposals. The bank said it would a pay total dividend of 31.5p per share compared to 26p in 1995 and raised its earnings per share to 104.2p from 83.6.

We have made significant progress throughout the group over the last few years in improving the nature and mix of our business, said Barclays chief executive Martin Taylor in a statement. The continued high level and quality of our earnings are testimony to this progress.

Meanwhile, Barclays results disappointed the stock market.

Barclays shares fell sharply on news that pre-tax profits at the bank rose 13 per cent to 2.36 billion ($3.82 billion).

This was at the lower end of forecasts and included a 29 per cent fall in operating profits at the groups investment banking arm BZW, to 204 million pounds.

The results were very disappointing and there will be some downgrades as a result, said one head of equity sales. The trials and tribulations at the investment banking arm look as if they will probably be continuing into the next year.

The company, which has already performed over one billion pounds of share repurchases in the last 18 months, said it would return 500 million to shareholders in the next twelve months, and raised its dividend by 21 per cent to 31.5 pence, in line with forecasts. But Barclays shares fell 40 pence to 1,159-1/2 after touching a low of 1,131.

Banking analysts had been looking for group pre-tax profits to come somewhere between 2.33 billion to 2.45 billion. Barclays admitted underperformance by BZW in fixed income bond markets, with the exception of sterling, and in foreign exchange areas. Chief executive Martin Taylor, however, defended the high level of costs at BZW.