Barclays announces £750m share buyback despite half-year profits fall

Banking giant Barclays has revealed an 8% drop in half-year profits, but increased its full-year outlook for a key performance measure and unveiled more returns for shareholders.

The lender reported pre-tax profits of £4.2 billion for the first six months of 2024, down from £4.6 billion a year earlier, but the result was better than expected thanks to a strong performance in its investment bank.

In the second quarter, it saw profits fall 1% to £1.9 billion.

But the group raised its net interest income outlook for the full year to around £11 billion, up from the previous guidance for about £10.7 billion, partly on the back of a higher than expected UK interest rate outlook, with fewer cuts now pencilled in.

Barclays said that as at the end of June, expectations were for just one UK rate cut in 2024, although forecasts now suggested two reductions by the end of the year.

It also confirmed plans to buy back another £750 million in shares in the third quarter and boosted half-year dividends.

Group chief executive CS Venkatakrishnan, who is also known as Venkat, said the bank was “making good progress on our three-year plan”.

“We announced a half year dividend of 2.9p per share alongside a share buyback of up to £750 million, with total capital distributions to shareholders of £1.2 billion in respect of the the first half of 2024.”

It set aside another £897 million for bad debts in the first half, up from £896 million a year ago, after putting by £400 million in during the second quarter.

The group said UK borrowers were so far proving resilient despite interest rates having been hiked to the 16-year high of 5.25%.

Barclays said it was on track to slash costs by around £1 billion this year, after trimming another £400 million in the first half.

Group finance director Anna Cross said some jobs had gone as a result of the cost savings, but declined to give numbers and insisted the bank was hiring across divisions such as the corporate bank, private bank and wealth businesses.

Venkat added: “We are adding talent all over the UK.”

The results showed net interest income – a key measure for retail lenders – fell 4% to £3.1 billion in its UK banking arm over the half-year as higher interest rates saw mortgage lending drop and customers switch deposits to higher paying deposit accounts.

But its investment bank saw income rise 7% in the first half on the back of a 25% surge in its equities business.