Barclays Unveils £10bn Shareholder Payout Plan

Barclays (BARC.L) has revealed its ambitious plan to return £10 billion ($12.59 billion) to shareholders by 2026, despite a decline in its full-year earnings. The FTSE 100 lender also aims to implement a £2 billion cost-cutting initiative over the next two years as part of its strategy to enhance profitability.

The bank reported a 6% decrease in annual pre-tax profits to £6.6 billion, with a significant plunge in fourth-quarter profits by 92% from £1.3 billion the previous year to £110 million. The final quarter saw £927 million worth of structural cost actions, including £300 million related to staff expenses.

Chief Executive CS Venkatakrishnan, also known as Venkat, expressed confidence in the bank’s new three-year plan, designed to bolster operational and financial performance. He stated, “Our new three-year plan… is designed to further improve Barclays’ operational and financial performance, driving higher returns, and predictable, attractive shareholder distributions.”

Venkat’s total pay package for 2023 amounted to £4.6 million, including a £1.4 million annual bonus, slightly lower than the £5.2 million received in 2022. Additionally, the bank announced salary increases for top executives, with Venkat and Chief Financial Officer Anna Cross receiving 2.5% raises effective from March 1st.

In its report, Barclays noted a 3% decrease in bonuses for 2023, amounting to £1.2 billion compared to £1.24 billion in 2022. The bank emphasised reduced risk and conduct adjustments to the incentive pool compared to the previous year.

Barclays disclosed a reduction of approximately 5,000 full-time equivalent roles in 2023, but it refrained from setting specific headcount targets for the future. Analysts suggest that a 20% reduction in jobs may be necessary to achieve the £2 billion cost-cutting target over the next two years.

Higher interest rates contributed to increased earnings in Barclays UK, where income rose by 5% to £7.6 billion, driven by growth in net interest income. However, income at the Corporate and Investment Bank (CIB) fell by 4% to £12.6 billion, attributed to lower client activity in both Global Markets and Investment Banking.

As part of a major reorganisation, Barclays announced the formation of five divisions to streamline operations and improve financial performance. Vim Maru will assume the role of Chief Executive of the UK bank, succeeding Matt Hammerstein, who will lead the UK’s corporate bank under the new structure.