Barclays PLC (LON:BARC) said on Tuesday that it intends to increase returns to shareholders by improving profitability but needs to deliver further cost reductions and resolve remaining legacy issues.
In the bank’s annual general meeting statement, chief executive Jes Staley said plans to raise the 2018 dividend was “an important first step” but represents a “fairly modest proportion” of projected earnings as Barclays focuses on delivering its strategy.
Barclays left its 2017 dividend unchanged at 3p in 2017 but expects to raise this to 6.5p in 2018.
“It is our firm intent, over time, to increase returns to shareholders,” Staley said in the lender's AGM statement.
“Of course the key to returning more excess capital to you our shareholders is through improving group profitability.”
Misconduct issues largely behind Barclays
Litigation and conduct costs have continued to provide a drag on the bank’s performance.
In April, Barclays revealed it had swung to a loss in the first quarter after taking a £2bn hit from litigation and conduct charges.
READ: Barclays posts loss after taking hit from PPI claims and settlement over US fraud case
Litigation and conduct charges included a £1.4bn settlement with the US Department of Justice over the sale of mortgage-backed securities in the lead up to the 2008-09 financial crisis.
It also included an extra £400mln charge to cover claims for payment protection insurance (PPI) mis-selling.
Staley said the penalty paid to the DoJ marked the conclusion of one of the last major legacy conduct issues for the bank.
Barclays to adjust CEO's pay package over whistleblowing saga
Last month, UK regulators proposed Staley pay an undisclosed fine for trying to unmask a whistleblower.
Barclays chairman John McFarlane said once regulators have made a final decision on the issue, the board will determine “what adjustment to Mr. Staley's remuneration is appropriate”.
“The regulators are not alleging that he acted with a lack of integrity, or that he lacks the necessary fitness and propriety to continue to perform his role,” he said.
“That is also the position we have taken. Accordingly, the board unanimously supports Jes' re-election as a director.”
Barclays 'must never be complacent', says chairman
With the bulk of its legacy issues behind it, McFarlane believes Barclays has moved into “a new phase” but must “never be complacent”.
He said the bank still needs to secure revenue growth in line with its strategic plans, improve its online services and deliver further costs reductions and lift productivity.
“We also need to resolve the residual legacy matters and continue to build a compliant culture,” he said.
Brexit contingency plan
McFarlane acknowledged the uncertainty facing the economy as Britain’s withdrawal from the European Union looms.
He confirmed the bank has a contingency plan in place to move a portion of activities from the UK to Ireland, depending on the outcome of the final Brexit deal.
Barclays has picked Dublin to become its European hub after Brexit to protect its access to the EU.