LONDON (AP) — British banking firm Barclays is resuming dividend payouts despite reporting a big drop in profits last year after it set aside 4.8 billion pounds ($6.7 billion) to account for loan losses during the coronavirus pandemic.
The group said Thursday that its net profit over the year fell by 27% to 2.5 billion pounds and that it anticipated costs relating to the pandemic will remain high throughout 2021, though “materially below” last year’s hit.
“We expect that our resilient and diversified business model will deliver a meaningful improvement in returns in 2021," Chief Executive Jes Staley said.
The bank said investment banking trading helped offset the impact on its retail arm. The markets division, which trades bonds, stocks and other financial instruments enjoyed its “best ever year." The stock market volatility during the pandemic helped drive a 45% surge in the division's revenues to 7.6 billion pounds.
Having contained a large part of the pandemic's costs, the bank said it was resuming dividends after putting payouts on hold last year following pressure from the Bank of England. It said shareholders will be rewarded with a dividend worth 5 pence a share.
“Given the strength of our business, we have decided the time is right to resume capital distributions," Staley said.
In addition, the bank said Staley will receive an extra 1.4 million pounds in annual bonuses and incentive shares, taking his total pay to 4 million pounds for 2020. This was down on the 5.9 million pounds paid out in 2019.
In its annual report published alongside the results, Barclays also revealed the staff bonus pool would rise by 6% to 1.6 billion pounds.
It said this represented a “relatively modest increase across the investment banking businesses, reductions for all other businesses and appropriate recognition for the contributions of our more junior colleagues”.
Dividends and bonuses are in focus during this year’s banking earnings season, with big handouts potentially drawing ire at a time when much of the British economy is reeling from lockdown.
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