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Barclays sees buy-to-let growth in 2017 – results

  • 22/02/2018
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Barclays sees buy-to-let growth in 2017 – results
Barclays saw its mortgage loan book grow £4.1bn in 2017 “driven by controlled growth in targeted customer segments”.

However, like Lloyds Banking Group yesterday, Barclays has not published its actual gross mortgage lending total for 2017.

The bank said that total UK gross lending, including mortgages, consumer lending and business banking, was £30bn.

It did note mortgage growth in the second half of 2017, which it said was partly responsible for a 10% increase in loans and advances to customers over the year.

Overall the bank reported a £1.9bn loss in 2017, despite registering a 10% increase in pre-tax profits to £3.54bn.

It took a major hit with £1.2bn of charges applied for litigation and poor conduct, including £700m towards payment protection insurance mis-selling, £2.5bn relating to the sell-off of its Africa business and a £900m US tax charge.


Buy-to-let increase

According to its results, buy-to-let (BTL) home loans comprised 11% of total balances, up from 9% in December 2016.

Meanwhile, owner-occupied interest-only home loans reduced to comprise 28% of total balances compared to 31% in December 2016.

Overall the average loan-to-value (LTV) of new mortgage lending was up slightly to 64% (from 63%) but the average LTV of the mortgage portfolio remained steady at 48%.

Barclays Group CEO James (Jes) Staley said 2017 was a year of considerable strategic progress for the bank.

“While we still have a number of legacy conduct issues to address, I am confident in the capacity of this business to generate excess capital going forward, and it remains our intention over time to return a greater proportion of that excess capital to shareholders through dividends, and other means of capital distribution, including share buybacks,” he added.

Its share price rose on early trading following the publication of the results.


£9.2bn PPI hit

Hargreaves Lansdown senior analyst Laith Khalaf noted that the tax charge was a one-off and actually lower US taxes should be positive for Barclays in the longer term.

“Barclays also thinks it has now done enough on PPI to get through to the 2019 claims deadline, after taking another £700m hit in 2017 and lifting its total bill to £9.2bn,” he said.

“However, claims activity may yet confound expectations, so we could get further incremental changes to the bank’s provisions in the next eighteen months.”

Khalaf also highlighted that while a promise to double the dividend this year had excited traders, revenues at the UK bank had flatlined while the International division was flagging.

“In particular the investment bank looks like a casino where the house isn’t winning. Revenues fell despite an appreciation in the dollar last year, which doesn’t bode well for the weaker dollar environment we now find ourselves in,” he continued.

“Barclays does say trading has been better so far this year, no doubt thanks to a return of some volatility in markets, but it’s clearly early days.”

Khalaf added that progress has been made but it will be hoping top line growth is not so elusive in the coming year.


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