Barclays has taken a further £1.6 billion hit from the coronavirus crisis in the second quarter of the year even as the investment arm of the bank managed to keep it in profit.
The bank said it would see a pre-tax profit of £1.27 billion in the first half of the financial year, down from £3 billion the year before. It came on revenue of £11.62 billion in the first half of 2020.
Analysts had been expecting the impairment charge to reach a little over £1.4 billion as the company prepared for a slew of bad loans.
Earlier this year Barclays revealed a £2.1 billion hit in its first quarter, citing the impact of coronavirus. It takes the total impairment for the first half to £3.7 billion.
However, while the retail arm of the bank saw a major hit from the coronavirus, the bank’s corporate investment arm saw a 31% jump in income to £6.9 billion.
It helped keep Barclays in the black during the first half, and will be seen as a win for chief executive Jes Staley’s “diversified model” – one that he highlighted on Wednesday.
“Credit impairment charges increased to £3.7 billion in the first half due to the forecast impact of Covid-19. However, our improved pre-impairment performance ensured that we still delivered £1.3 billion profit before tax for the first half of 2020, post impairment,” he said.
“While the remainder of 2020 will be challenging, our diversified model means we can remain financially resilient and continue to support our customers and clients.”
The bank has been a major lender in schemes to help small businesses through the coronavirus crisis.
On Wednesday it revealed that coronavirus loans worth £10.2 billion had been given to Barclays customers under three government-backed schemes.
The schemes – Bounce Back Loans, Coronavirus Business Interruption Loans (CBILS) and the CLBILS scheme for bigger firms – were in part backed by the Treasury which promises to shoulder some of the interest and other burdens.
Mr Staley said: “This has been a period focused on supporting our customers, clients and the UK economy through the Covid-19 pandemic – providing the people and businesses that we serve with a bridge to recovery in every way we can.
“To help consumers with their short-term household finances, more than 600,000 payment holidays have been provided, along with other fee waivers and support measures.”