British lender Barclays reported a 42.8% YoY decline in consolidated net profits to £1.3bn ($1.5bn) for Q2 on higher operating expenses. Its total income rose 23.9% YoY to £6.7bn ($8.2bn) driven by Net fee, commission, and other income growth of 27.5% YoY to £4.3bn ($5.2bn). Net interest income increased 18% YoY to £2.4bn ($2.9bn). For the quarter, credit impairment charges stood at £200mn ($243.5mn) vs. a release of £797mn ($970.25mn) last year. Litigation and conduct costs surged to £1.6bn ($2bn) in the first half of 2022, which includes £1.3bn ($1.6bn) from the estimated impact of rescission offer losses related to the over-issuance of securities. The charge includes £165mn ($200mn) for the estimated penalty from the SEC.
Thus cost-to-income ratio rose by 600bp to 75% as of June 2022. For the full year, Barclays revised up total operating expenses to ~£16.7bn ($20.3bn) vs. previous estimates of £15bn ($18.2bn) on £1.3bn ($1.6bn) of litigation and conduct charges in Q2 and the appreciation of the dollar against the sterling. Barclays also announced a half-year dividend of 2.25p/share ($0.027) and expects to initiate a further share buyback of £500mn ($608mn). The lender continues to target RoTE (return on tangible equity) of greater than 10% in 2022. The group’s CET1 ratio stood at 13.6%, down 20bp QoQ and 140bp YoY.
Barclays’ dollar bonds were up with its 7.75% Perp gained 0.44 points at 100.38, yielding 7.39%.