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Barclays cites ‘mortgage margin pressure’ in falling UK income

  • 25/10/2019
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Barclays cites ‘mortgage margin pressure’ in falling UK income
Barclays has said the ongoing mortgage market competition is partly to blame for a fall in income in its UK personal banking operation.


The lender added this was partially offset by mortgage and deposit balance growth, but it still recorded a two per cent fall to £2.9bn in the third quarter of 2019.

This was driven by a fall of 14 basis points on its net interest margin to 3.1 per cent, “reflecting increased refinancing activity by mortgage customers” among other several reasons.

Barclays did not release its gross mortgage lending figure up to September, but said its mortgage book had grown to £138.3bn at the end of June, up from £134.4bn in June 2018.

It noted that 29 per cent of its mortgage switching originated through digital channels, barely changed from the 30 per cent at the end of 2018.

And it said it was focused on growing its mortgage book within its risk appetite, with current mortgage book having an average loan to value of around 50 per cent.

Buy-to-let mortgages represent only 13 per cent of the book, it added.


PPI and capital requirements

Barclays was also hit by a £1.4bn charge for payment protection insurance (PPI) mis-selling after the deadline for claims closed in August.

And regulators increased its capital requirements to 13.5 per cent in line with other UK institutions, which the bank said it expects to reach by the end of the year.

Barclays UK profit before tax was £0.4bn in the nine months to September, down from £1.6bn at the same period last year as a result of the PPI impairment.

Group CEO James Staley acknowledged that the outlook for next year was “unquestionably more challenging now than it appeared a year ago, in particular given the uncertainty around the UK economy and the interest rate environment.”


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