Barclays books first-half profit fall

Pre-tax profits at Barclays fell sharply in the first half of the year as the lender also warned that Brexit could have a negative impact on the bank.

Barclays HQ building (LEON NEAL/AFP/Getty Images)

It said the increased risk of recession with lower growth, higher unemployment and falling UK house prices “would likely negatively impact a number of Barclays’ portfolios”, most notably some of its mortgage offerings.

The lender also warned that if Brexit negotiations end with the UK’s financial sector losing “passporting” rights, it would require the bank to make “alternative licensing arrangements in EU jurisdictions” where it operates.

“The result of the referendum means that the long-term nature of the UK’s relationship with the EU is unclear and there is uncertainty as to the nature and timing of any agreement with the EU.

“There is a risk of uncertainty for both the UK and the EU, which could adversely affect the economy of the UK and the other economies in which we operate,” the bank said.

Industry concerns following the Brexit vote have centred around the UK’s membership of the single market and whether it will continue to have access to the bank passporting system.

Banks and financial firms wanting to trade with a country in the European Economic Area must apply for a passport, which allows them to sell their products to any country within the zone.

However, the European Central Bank has warned that Britain would not be able to access the passporting system without remaining a member of the single market and abiding by its rules, which includes the free movement of people.

In the first half of the year pre-tax profits tumbled 21 per cent to £2.06 billion.

Barclays also booked a £400 million charge for payment protection insurance (PPI) in the second quarter, taking its total provisions to £7.8bn. Total income was down 9 per cent to £11bn in the six months to June. Net profit for the second quarter came in at £803m compared with £1.2bn last year.

On Thursday, Lloyds said it is to slash 3,000 jobs and shut 200 branches as the lender braces itself for a cut in interest rates.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “Unlike Lloyds, Barclays hasn’t announced any further job losses or branch closures. If Barclays had followed suit, it would have looked like the banks were looking to cut costs in the face of the economic uncertainty caused by Brexit.”