Banking giant Barclays unveils £1.6bn bonus pool despite profit slump

Banking major Barclays has seen annual profits almost halve after it set aside a hefty £4.8 billion for loan losses due to the pandemic, but shareholders will still pocket a dividend.

Barclays has a large presence in Scotland where it is building a super-campus in Glasgow. Picture: John Devlin

The group, which was reporting its annual figures a day ahead of rival NatWest Group – owner of Royal Bank of Scotland – revealed a 48 per cent slide in underlying pre-tax profits, excluding litigation and conduct charges, to £3.2bn for 2020. Statutory profits were down 30 per cent at £3.1bn.

Despite that, Barclays unveiled a shareholder dividend payout as well as a £1.6bn bonus pool for staff and £1.4 million in annual bonuses and incentive shares for chief executive Jes Staley.

The bank’s results revealed a further £492m set aside for expected borrower defaults due to the coronavirus crisis in the final three months of the year, though this was down nearly a fifth on the previous quarter.

Barclays warned that costs related to the pandemic will remain high throughout 2021, but that it expects loan loss charges to be “materially below” last year’s £4.8bn hit.

It added that investment banking trading offset the impact on its retail arm, with its “best ever year” for markets and banking income helping keep the group in profit every quarter.

Staley told investors: “Given the strength of our business, we have decided the time is right to resume capital distributions.

“We have today announced a total payout equivalent to 5p per share, comprising a 1p 2020 full year dividend and the intention to initiate a share buyback of up to £700m.”

He added: “We expect that our resilient and diversified business model will deliver a meaningful improvement in returns in 2021.”

In its annual report published alongside the results, Barclays revealed the staff bonus pool was 6 per cent higher than the £1.5bn shared out in 2019.

It said this represented a “relatively modest increase across the investment banking businesses, reductions for all other businesses and appropriate recognition for the contributions of our more junior colleagues”.

Staley’s annual bonus awards took his total pay to £4.01m for 2020, though this was down on the £5.9m paid out in 2019.

John Moore, senior investment manager at Brewin Dolphin, said: “Barclays’ resumption of its dividend – and a supporting share buyback programme – will be a welcome boost for existing investors and may help attract the attention of others.

“Perhaps ironically for activists who had targeted a sale of Barclays’ investment banking division, it is firing on all cylinders and posted record income. The corporate banking operation performed similarly, no doubt benefiting from increased M&A activity at the tail end of 2020.

“At a time when the retail side of Barclays has seen a significant fall in income, the experience of the past 12 months validates the bank’s argument that it should have both retail and investment banking arms.”

Dividends and bonuses are in sharp focus for this year’s bank results season, with handouts set to stoke controversy coming against a backdrop of economic carnage caused by the pandemic. Lenders last year scrapped dividends after pressure from the Bank of England.

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