Barclays Bank in troubled waters as pandemic shrinks First Qtr Profits down from £1.5bn and a peek at Banks’ new normal in a Post pandemic
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Barclays safeguarded its vault by setting aside 2.1 billion pounds to mitigate loan defaults by customers as the strain of COVID-19 pandemic buckles their cash flow.
Barclays has been plummeted by COVID-19 as the British bank booked first-quarter pretax profits of 923 million pounds, a far cry of 1.5 Billion pounds recorded last year.
Barclays saw its revenue on thin ice as the coronavirus hit late in the First Qtr meanwhile, Standard Chartered is knee-deep in troubled waters reporting a 12% dip in profit for the period on Wednesday.
'Given the uncertainty around the developing economic downturn and low-interest-rate environment, 2020 is expected to be challenging,' Chief Executive Jes Staley said.
The Economic downturn and the Crisis in the Energy sector puts Barclays Credit at risk
Barclays set aside 1.2 billion pounds to cushion bad loans and a 405 million pounds debit from wholesale loan charges which compounded in the revenue slump in their first Qtr.
Transatlantic Investments set a different tone as group income peaked by 20% to 6.3 billion pounds, boosted by a surge in activity in its transatlantic investment bank where pretax profits leaped by 42% to 1.2 billion pounds.
Barclays said group income rose by 20% to 6.3 billion pounds, boosted by a surge in activity in its transatlantic investment bank where pretax profits leaped by 42% to 1.2 billion pounds
A rise in income to 1.9 billion pounds (an increase of 106%) was a combination of fixed income, currencies, and commodities division taking advantage of sharp global market swings in robust economies over the quarter.
Barclays is one leg out of the woods as its prediction on tangible equity target of greater than 10% remained appropriate over time.
It delivered a group ROTE of 5.1% over the first quarter, while the investment bank peaked 12.1%.
Incidentally, HSBC yesterday revealed its first-quarter pre-tax profits almost halved as it was battered by the global coronavirus pandemic. The banking giant reported pre-tax profits of £2.6billion, down 48 percent from 4.9billion in the same period in 2019.
HSBC cited credit losses from clients struck by the economic slowdown and an increase in bad debt as a major cause.
What is Banking going to Look like in a Post-Pandemic era?
Flexible working will become the new normal
The chief executives of Barclays and WPP are predicting an end to crowded city centre offices and rush hours as flexible working becomes the new normal to keep the workforce healthy amid the Covid-19 crisis.
Jes Staley, the chief executive of Barclays, said the bank would look at a more de-centralised approach to staff working, including the prospect of local branches becoming satellite offices for more employees.
Branches will become alternatives as Social distancing trends on post-pandemic
The scars of COVID19 will linger on and the health of the workforce will be imperative and as a result, adherence to Social distancing will be upheld.
Jes Staley hits the bull's eye on this second point, the COVID 19 pandemic will result in people becoming claustrophobic.
“I think the notion of putting 7,000 people in a building may be a thing of the past, and we will find ways to operate with more distancing over a much longer period of time,” he said.
“You’re going to find we use much more significantly our branches as alternative sites for investment bankers and call centre workers and people in the corporate bank,” he explained.