Barclays PLC (LSE:BARC) saw bad debt provisions almost double in the second quarter but still reported strong growth in profitability, boosted by rising interest rates, and announced a big hike to the dividend and a bumper share buyback.
In the three months to 30 June 2023, the high street lender reported pretax profit of £2.0bn compared to £1.5bn the year prior but income fell 6% to £6.29bn from £6.71bn, hit by falls in investment banking.
Bad debt provisions nearly doubled to £372mln from £200mln, taking charges for the half-year to £896mln, up from £341mln last year.
CS Venkatakrishnan, chief executive, commented: “We have positioned Barclays carefully for this mixed macroeconomic environment and delivered a consistent performance in the second quarter.”
Barclays UK income increased 14% to £2.0bn, primarily driven by net interest income growth from higher rates, but Corporate and Investment Bank income decreased 3% to £3.2bn, reflecting lower client activity in global markets and investment banking fees.
Consumer, Cards and Payments income increased 18% to £1.3bn reflecting higher balances in US cards.
Looking ahead, Barclays expects its UK net interest margin to be less than 3.20% in 2023, with a current view of around 3.15% while it is targeting a return on total equity greater than 10% in 2023, consistent with its medium-term target.
Shareholders were rewarded with a 20% hike to the dividend to 2.7p from 2.25p while the bank also announced a £750mln share buyback.