Barclays PLC (LSE:BARC) reported a fall in annual pre-tax profits hit by litigation charges relating to the over-issuance of securities.
The high street lender booked litigation charges of £1.59bn for the 12 months to 31 December 2022 (2021: £397mln) which took pre-tax profits for the year to £7.01bn, down 14% from £8.19bn in 2021 and below the City consensus of £7.2bn.
Net income totalled £24.96bn, up 14% from £21.94bn a year ago with fourth-quarter net income of £5.8bn, up 12%, from £5.16bn in 2021. Earnings per share were 30.8p compared to 36.5p in 2021.
The FTSE 100-listed bank reported momentum across all business areas and benefited from favourable forex movements, notably the stronger dollar against the pound.
Credit impairment charges soared to £1.22bn compared to a release of £653mln in 2021, reflecting the deteriorating macroeconomic conditions.
Returns on equity booked by the international unit which houses Barclays' transatlantic investment bank fell to 10.2% from 14.4% a year earlier, as fees from advising on deals, particularly in debt and equity capital markets, plunged by almost two-fifths year on year.
The Tier 1 ratio deteriorated to 13.9% in the year, down 120bps from December 2021, and Barclays expects to operate within a ratio range of 13-14%.
Despite the fall in profits, shareholders were rewarded with a 21% increase in the dividend to 7.25p, while the lender also announced plans for a new £0.5bn share buy-back.
In 2023, Barclays UK net interest margin is expected to be greater than 3.20%, while it is targeting a return on total equity of greater than 10%.
Barclays said its diversified income streams continue to position the group well for the current economic and market environment including higher interest rates.
Chief executive CS Venkatakrishnan commented: “"Barclays performed strongly in 2022. Each business delivered income growth, with group income up 14%.
“We achieved our RoTE target of over 10%, maintained a strong common equity Tier 1 (CET1) capital ratio of 13.9%, and returned capital to shareholders. We are cautious about global economic conditions, but continue to see growth opportunities across our businesses through 2023."