Barclays Pretax Profit Falls 17 Percent, Shares Plunge

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Barclays PLC (NYSE:BCS) (LON:BARC) released its second quarter earnings early this morning, reporting a significant decline in profits year over year. For the quarter, the bank’s basic earnings per share were 5.3 pence. Net income was £671 million. Adjusted pretax profit fell to £3.59 billion from £11.06 billion in the same quarter a year ago.

Analysts were expecting the bank to report pretax profits of £3.7 billion in the second quarter. Shares of Barclays PLC (NYSE:BCS) (LON:BARC) fell to their lowest levels since late February at the London Stock Exchange, losing as much as 6 percent of their value. The stock fell 8 percent at the New York Stock Exchange as well.

Barclays’ numbers broken down

Barclays PLC (NYSE:BCS) (LON:BARC) reported that its Investment Bank income remained stable at £6.473 million. It attributed the stability to increases in Equities and Prime Services and Investment Banking, although the results were offset by a decline in Fixed Income, Currency and Commodities income.

Credit impairment charges declined 5 percent as Corporate Banking and Africa RBB posted strong results, although they were partially offset by increases in Barclaycard, UK RBB, Wealth and Investment Management, and Europe RBB.

Adjusted operating expenses rose 3 percent to £261 million as the bank tried to achieve its transform target of £640 million. The bank said its Europe RBB and Investment Bank sustained restructuring costs.

Barclays PLC (NYSE:BCS) (LON:BARC) also said it would pay a second interim dividend of 1 pence per share on Sept. 13.

Barclays releases leverage plan

As expected, Barclays PLC (NYSE:BCS) (LON:BARC) also announced its plans to issue more Tier 1 securities and aim to achieve the new 3 percent leverage ratio now required by the Prudential Regulation Authority. The bank revealed that its balance sheet had a £12.8 billion gap.

The bank said it plans to raise about £5.8 billion net expenses through a rights issue of one new share for every four existing shares for 185 pence per new share. The price is a 40 percent discount to the closing price of Barclays PLC (NYSE:BCS) (LON:BARC) shares on the London Stock Exchange on Monday. The bank also plans to reduce its balance sheet and issue £2 billion in contingent convertible debt.

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