Updated From 9:16 a.m ET, with late-morning market action and comment from several analysts.
Investors were clearly unhappy with the bank's results, sending American Depositary Receipts of Barclays down 3.8% in late morning trading on the New York Stock Exchange, to $17.52.
Most of the bank's fourth-quarter earnings were wiped out by regulatory fines, legal expenses and costs associated with "Transform," program, which is Barclays' strategic review designed to lower the company's annual expenses by 1.7 billion pounds to 16.8 billion pounds, by 2016.
During the fourth quarter, the bank's adjusted profit before tax was 191 million pounds before tax, down from 1.385 billion pounds in the third quarter and 1.395 billion pounds during the fourth quarter of 2012. Barclays reported a fourth-quarter statutory loss after tax of 514 million pounds, compared to an after-tax statutory profit of 728 million pounds the previous quarter and an after-tax statutory loss of 364 million pounds a year earlier.
For all of 2013, Barclays reported adjusted profit before tax of 5.167 billion pounds, down 32% from 7.599 pounds in 2012. Statutory profit before tax rose to 2.868 billion pounds in 2013 from 797 million pounds in 2012, while statutory profit after tax for 2013 rose to 1.297 billion pounds from 181 million pounds a year earlier.
Excluding non-controlling interests, attributable profit for 2013 was 540 million pounds, compared to a loss of 624 million pounds during 2012.
The year-over-year decline in adjusted profit before tax mainly reflected 1.209 billion in costs associated with "Transform."
The bank's adjusted operating expenses totaled 19.893 billion pounds during 2013, increasing from 18.562 during 2012. In addition to "Transform," the higher expenses also reflected 220 million in provisions for litigations and regulatory penalties during the fourth quarter.
In prepared text released by the company ahead of its earnings conference call, Barclays CEO Antony Jenkins said he was confident the company would meet its cost-cutting goals laid out earlier in 2013.
"For example, in the courts of the next month some 220 Managing Directors cross Barclays will leave, as well as 600 Directors. I have also introduced strict criteria on new hires at either of these levels. This action will have the twin benefits of taking cost out and contribute to streamlining and delayering the organization," Jenkins said.
The company laid-off 3,700 workers during 2013.
The company also made strides in improving its capital position, raising 5.8 billion pounds in common equity through a rights issue in October. Barclays reported a core Tier 1 capital ratio of 13.2% as of Dec. 31, increasing from 10.8% a year earlier. The bank said its "fully loaded" Basel III Tier 1 common equity ratio was 9.3% as of Dec. 31, and that it was "on track" to bring the ratio up to 10.5% during 2015.
Revenue was down 4% during 2013, with Barclaycard a notable exception, as the division's revenue rose 10% year-over-year to 4.786 billion pounds. Corporate Banking revenue rose 2% to 3.115 billion pounds, while Wealth and Investment Management revenue was up 1% to 1.839 billion pounds during 2013.
Revenue for the Investment Bank was down 9% year-over-year to 10.733 billion pounds during 2013, as a 14% decline in fixed income trading to 6.610 billion pounds was partially offset by a 7% increase in equity underwriting fees and commissions to 3.236 billion pounds.
Investors can expect continued volatility in earnings during 2014 from the Transform program and from litigation and regulatory matters, including the multiple regulatory investigations of Barclays and many other global banks over possible manipulation of foreign exchange trading.It's too early to say what order of firestorm the company may face from customers and regulators over the huge theft of detailed customer information that was reported over the weekend.
Despite the negative reaction in the market, these sell-side analysts were upbeat following the earnings release:
- JPMorgan analyst Raul Sinha rates Barclays a "buy," and in a note to clients wrote that the bank had addressed concerns over its capital strength "decisively," and that "leverage concerns should fade, bringing the stock's relatively attractive valuation of 7.3x 2015 PE and 0.8x P/TNAV in focus."
- Bank of America Merrill Lynch analyst michael Helsby rates Barclays a "buy." In a client note, Helsby wrote, "Barclays has announced a leverage plan to cut exposure by £60bn. The surprise this morning is that it has already completed £196bn of asset reduction in 2H13 taking the total planned reduction to +£260bn, in line with our estimate, but a lot higher than the markets £150bn expectations."