View the article online at http://citywire.co.uk/money/article/a584848
Barclays’ profits hit by extra £300 million PPI bill
Overall, however, Barclays said its first-quarter results were 'an encouraging start to the year’.
The banking giant (BARC.L) had originally put aside £1 billion to cover the cost of paying compensation to customers who had been mis-sold the controversial insurance policy, but said an increase in claims in the past couple of months meant the bank had to increase its provision accordingly.
This puts Barclays’ total payment protection insurance (PPI) bill at £1.3 billion – with banks expected to pay out more than £6 billion in total.
Barclays' main explanation for the dip in profits, which compare with a £1.65 billion profit in the same period last year, however, was a ‘£2,620 million credit reversal’ – an accounting measure which shows the impact on Barclays’ profits if it had to buy back all of its debt now.
Barclays’ adjusted profit before tax – which ignores the additional PPI provision and accounting measure – increased 22% to £2.445 billion, which the bank said was driven by strong performances in both retail and business banking and corporate and investment banking.
Bob Diamond, chief executive of Barclays, said the first-quarter results were ‘an encouraging start to the year’, but he stressed that the banking environment remains unpredictable.
Looking forward, Barclays said: ‘The continued challenging market conditions mean it is too early to establish trend for the year’.
Barclays' credit card business, Barclaycard, meanwhile, reported a strong first quarter, with profits up 18% to £349 million from £296 million in the same quarter in 2011.
Barclays' share price was up 0.94% or 2p, to 213p after the results.
News sponsored by:
Here at BlackRock, we help investors make more out of commodities with a range of innovative, flexible and resilient investment strategies.
From Brazil and Mexico, to Vietnam and Nigeria, the rapidly developing economies of Latin American and frontier markets, which are some of the smaller, less developed economies in the world, provides investors with a wealth of potential opportunities. Discover why BlackRock's investment trust range is well placed to help you make more of these exciting regions.
In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.
More about this:
Look up the shares
More from us
- PPI scandal continues to fuel bank complaints
- Chart of The Day: PPI victims paid £2 billion but owed billions more
What others are saying
Tools from Citywire Money
From the Forums
Weekly email from The Lolly
Get simple, easy ways to make more from your money. Just enter your email address below
An error occured while subscribing your email. Please try again later.
Thank you for registering for your weekly newsletter from The Lolly.
Keep an eye out for us in your inbox, and please add firstname.lastname@example.org to your safe senders list so we don't get junked.