Barclays has revealed that bad debt losses at Barclaycard increased to £573m in the final quarter of 2014, due to extra forbearance cover.
Barclaycard’s impairment charges shot up £64m in the last three months of 2014 compared to the previous quarter, according to its full-year results statement published today.
For the whole of 2014, bad debt charges increased eight per cent to £1.18bn at Barclaycard, though delinquency rates remained stable.
The figures form part of a results statement showing a sound underlying group performance. But a looming regulatory fine and redress for mis-selling products has dented Barclays’ profits, as well as damaged its reputation even further.
The bank made an extra provision of £750m in the final quarter of 2014 to cover an anticipated fine by UK and US regulators for rigging the foreign exchange market.
In total, Barclays has been forced to make a provision of £1.25bn due to litigation and investigations relating to the scandal.
Competitors HSBC and Royal Bank of Scotland have already been fined for manipulating foreign exchange markets.
Barclays is yet to settle with the Financial Conduct Authority.
Chief executive Antony Jenkins said the bank is focussed on addressing these issues, adding: “I regard the behaviour at the centre of these investigations as wholly incompatible with our values.”
The group also set aside an extra £200m in the final quarter of 2014 to redress customers who were mis-sold payment protection insurance (PPI). This brings Barclays’ total PPI charge to just over £1bn for the year.
These regulatory and redress issues meant Barclays’ statutory pre-tax profit, which incorporates the impact of ‘one-off’ events, fell 21% to £2.26bn in 2014.
But the group’s adjusted pre-tax profit, which excludes one-off items, increased 12 per cent to £5.5bn.
Jenkins acknowledged the impact of widespread malpractice. He added: “I share the frustration of colleagues and shareholders that matters like these continue to cast a shadow over our business.
“But resolving these issues is an important part of our plan and, although it may be difficult, I expect we will make significant progress in this area in 2015.”
As for the group’s overall loans, bad debt charges for the whole company fell 29 per cent to £2.2bn.
In personal and corporate banking specifically, losses on non-performing loans fell 22 per cent to £482m.
Jenkins added: “Barclays today is a stronger business, with better prospects, than at any time since the financial crisis.”
By Marcel LeGouais