Banking giant Barclays has seen annual profits almost halve after setting aside a mammoth £4.8 billion for loan losses due to the pandemic.
The group reported a 48% plunge in underlying pre-tax profits, excluding litigation and conduct charges, to £3.2 billion for 2020.
Statutory profits fell 30% to £3.1 billion.
But Barclays unveiled a shareholder dividend payout despite the profits hit, as well as a £1.6 billion bonus pool for staff and £1.4 million in annual bonuses and incentive shares for boss Jes Staley.
Its results revealed another £492 million set aside for expected borrower defaults due to the Covid-19 crisis in the final three months of the year, though this was down nearly a fifth on the previous quarter.
Barclays warned that costs related to the pandemic will remain high throughout 2021, but that it expects loan loss charges to be “materially below” last year’s £4.8 billion hit.
It added that investment banking trading offset the impact on its retail arm, with its “best ever year” for markets and banking income helping keep the group in profit every quarter.
Staff bonus pool
Mr Staley said: “Given the strength of our business, we have decided the time is right to resume capital distributions.
“We have today announced a total payout equivalent to 5p per share, comprising a 1p 2020 full year dividend and the intention to initiate a share buyback of up to £700 million.”
He added: “We expect that our resilient and diversified business model will deliver a meaningful improvement in returns in 2021.”
In its annual report published alongside the results, Barclays revealed the staff bonus pool was 6 per cent higher than the £1.5 billion shared out in 2019.
It said this represented a “relatively modest increase across the investment banking businesses, reductions for all other businesses and appropriate recognition for the contributions of our more junior colleagues”.
Mr Staley’s annual bonus awards took his total pay to £4.01 million for 2020, though this was down on the £5.9 million paid out in 2019.
Dividends and bonuses are in sharp focus for this year’s bank results season, with handouts set to stoke controversy coming against a backdrop of economic carnage caused by the pandemic.
Lenders last year scrapped dividends after pressure from the Bank of England.
But the Prudential Regulation Authority (PRA) recently allowed lenders to resume paying divis, giving Barclays and its rivals the green light to resume shareholder payouts.
Mr Staley said despite the eye-watering loan losses that impacted figures, “2020 demonstrated the value of our diversified banking model”.
Stock market volatility since the start of the pandemic helped drive a 45% surge in revenues to £7.6 billion for its markets unit, which trades fixed-income securities, equities and derivatives.
But its consumer, cards and payments division slumped to a £388 million loss in 2020 due to the loan losses and wider economic woes.