Barclays sets aside £500m for FX “investigations” as profits rise 5%

30th October 2014

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Barclays has put aside £500m to cover any potential fines over foreign exchange rate rigging.

In its interim results published this morning the bank reported that group adjusted profit before tax increased 5% to £4.9bn in the first nine months of the year.

In its accompanying statement it said a £500m provision has been recognised relating to “ongoing investigations into Foreign Exchange with certain regulatory authorities”.

Barclays has also earmarked an additional £170m to deal with compensation for customers mis-sold Payment Protection Insurance (PPI) and decreased its provision for those mis-sold interest rate hedging products by £160m.

Group chief executive Antony Jenkins said the results “show further steady progress” and demonstrated how its decision to rebalance Barclays has created greater resilience in the Group.

However he described the investment bank’s performance as disappointing where third-quarter pre-tax profit dropped markedly from £465m to £284m.

He added: “Our Core businesses – the future of Barclays – have delivered an ROE of 10.5%, driven by our powerhouse Personal and Corporate Banking business and continued strong growth in Barclaycard. The strength of our Africa Banking franchise is clearly visible despite currency headwinds. The Investment Bank’s performance in the quarter was disappointing, but we have been able to offset that within the rebalanced Group and still deliver good Core performance.

“In aggregate, this is a good performance from the Group, our strategy is working, and we expect to see continued progress as we go forward.”

Commenting on the results, Graham Spooner, investment research analyst at The Share Centre said: “Investors will be pleased to hear management remains on track with its restructuring path as it moves away from dependence on investment banking and continues to cut costs. The promise of increased dividends in the future is something for long suffering investors to focus on; however the bank has reported the dividend this quarter will be kept at 3p.

“As the sector is still under a cloud and the shares have underperformed this year we continue to recommend no more than a ‘hold’ on Barclays for the time being.”

Following the news, shares in the bank were up 1%, or 2.4p to 222.9 by 09:18.

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