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Barclays has set aside £ 90m to cover possible costs regarding an investigation into possible sale of historical car funding loans, as a British court last year calls some illegal deals.
Analysts have estimated that the issue could cost lenders in the UK billions of pounds, withdrawing comparison with the wrong sale of securing payment protection, which resulted in claims of more than £ 50BN throughout the industry.
Notifying the provision of £ 90m on Thursday, Barclays acknowledged that the assumptions under which it had estimated that the potential costs were subject to “significant uncertainty” and that financial impact could “change materially”.
The update comes as the Financial Behavior Authority continues to investigate discretionary commissions for car funding agreements, a practice that was banned in 2021 and for which the supervisor said he had given traders an incentive to load customers a higher interest rate .
The potential impact on lenders deteriorated last year, when the Court of Appeal ruled that it was illegal for banks to pay any kind of commission for car traders without the customer’s informed consent.
Barclays, who secured loans through her Clydesdale Financial Services subsidiary, said she had left the market in 2019. Shares fell 4.7 percent in the early trade in London.
The close brothers said Wednesday that he was waiting to reserve a provision of £ 165m in his semi-year results for the same purpose.
Barclays announced the provision in its fourth quarter results, which has been a year since the chief executive CS Venkatakrishnan revealed his three-year plan to rebuild the British Bank.
Net profit increased to £ 1 billion in the fourth quarter, significantly from the same period a year earlier when Barclays posted a net loss of £ 11m that was largely in reducing the structural cost. Group income increased 24 percent to £ 7 billion, compared to 6.7bn -projected analysts.
Barclays put forward a plan in February 2024 to ensure £ 10 billion growth and return to shareholders by focusing on the UK market and limiting the amount of capital consumed by its investment bank.
The division, however, has provided a benefit for Barclays revenue as capital and fixed income traders benefited from market instability in the US before the elections.
Stock trading revenues increased 40 percent year by year to £ 604m, while income from fixed revenue trading increased 29 percent to £ 934m. Barclays also reported an increase of 22 percent of investment banking tariffs while its debt capital business remained with 9 percent revenue.
Performance falls widely in accordance with the strategy set by Taylor Wright and Cathal Dease co-executors in October to focus more on advisors and ECM and become less dependent on debt signature.
Barclays reported fees for lending to 700 million, with approximately 17 percent from last year and slightly higher than expected.
“We see the Barclays stock price in” Travel and Achievement “mode taking into account its 15 percent performance (year to date) with the results influenced by the highest levels of restructuring cost compared to consensus,” wrote Kian Abouhossein, an analyst in JPMORGAN, in a note.
Barclays’ shares have doubled since Venkatakrishnan discovered his restructuring plan last year, which promised £ 10 billion for three years and a commitment to expand his home market significantly.
Venkatakrishnan and Finance Chief Anna Cross came up with the idea that the bank would offer Santander UK business. Financial Times previously reported that the Spanish lender last year rejected a “low ball” offer for its retail business in the UK from Barclays.
The bank also revealed in its annual report that Mayor Nigel Higgins received a three-year extension and a salary increase to £ 925,000.
“In general, a strong set of results, but a little young to get excited for him,” wrote Andrew Coombs, Citibank analyst. “This, plus the strong result in the price of stock over the past year, can endure any initial reaction.”
