Stocks

Barclays PLC Stock Falls On Lower Annual Adjusted Income

The shares of Barclays are trading lower at the New York Stock Exchange (NYSE) after reporting that its adjusted net income declined in 2014.

The stock price of Barclays declined more than 2% to $15.62 per share at the time of this writing, around 12:28 P.M. in New York.

Barclays PLC Stock Falls On Lower Annual Adjusted Income

Barclays’ annual financial results

Barclays reported that its adjusted net income declined 8% from £27.89 billion to £25.7 billion in 2015. Its cost impairment dropped 29% from £3.07 billion to £2.1 billion due to a £732 million reduction in Non-Core business and 8% reduction in Core business.

The British bank said its adjusted profit before tax increased by 12% to 5.5 billion driven by the continued growth of Personal and Corporate Banking (PCB) and Barclaycard, which was partly offset by reduced income in its Investment Bank.

Barclays said its adjusted profit attributable to shareholders was £2.8 billion or  17.3 pence per share.

Barclays reported that its total adjusted operating expenses dropped 9% to £18.06 million due to savings from Transform programs including a 5% net reduction in headcount.

Barclays is a stronger business with better prospects today

In a statement, Barclays Group CEO Anthony Jenkins said the bank today is a “stronger business with better prospects than at any time since the financial crisis.” He added that they made progress on the bank’s Transform 2016 targets particularly on cost, capital, and leverage thus, providing further proof that its strategy is working.

Furthermore, Jenkin emphasized that Barclays made significant progress in strengthening its capital position in 2014. The bank’s fully loaded CET1 improved to 10.5% while its leverage ratio increased to 3.7%. “This means we are now well-positioned to achieve the Transform 2016 targets of greater than 11% and 4%, respectively,” said Jenkins.

Barclays declared a cash dividend of 6.5 pence for 2014. The management of the bank is increasingly confident in its capital position, and continues to target a 40% to 50% payout ratio.

Barclays is expected to continue to offer positive momentum

Jefferies analyst Joseph Dickerson believed that Barclays is a name that would continue to offer positive momentum and low election-related risks.

Commenting on the financial performance of the Barclays for the fourth quarter, Dickerson noted that its revenues were 2% lower due to the weak performance of its Non-Core business while its costs were 1% worse due to its Core business. However, Dickerson said, “This looked like cumulative marginal misses across each segment as opposed to broader message.”