Barclays sees 76% fall in derivatives income

Derivatives income declined a significant 76% as pre-tax profit decreased 8% in 2015.

Barclays announced a 76% decline in derivatives income to a loss of £296 million, as the bank suffered an overall 8% pre-tax profit loss in 2015.

Derivatives income for Barclays in the fourth quarter made a loss of £123 million, as its annual income in the business reduced by 76%, “to an expense of £296 million, reflecting the active rundown of the portfolios and funding costs.”

The bank’s derivative financial instrument assets and liabilities decreased 25% to £114.3bn and 24% to £122.2bn respectively, “due to net trade reduction and increases in major interest rate forward curves.”

Its equities income also decreased 2% to over £2 billion, driven by lower client activity in EMEA in equity derivatives.

In early February, Barclays announced it would be selling off its non-core derivatives business unit to JP Morgan.

The execution of the deal is targeted to be completed throughout the year, according to a statement from Barclays, and as it looks to reduce its capital requirements.

“The transaction continues the strong progress being made with the rundown of non-core, in line with Barclays’ strategy of reallocating its resources where better returns can be generated and unlocking value for its shareholders,” the bank said in a statement.

Barclays suffered an 8% decline in pre-tax profits with revenues reaching just over £2.07 billion in 2015 compared to £2.56 billion in 2014.

The bank also announced intentions to sell down its stake in Barclays Africa Group Limited (BAGL), “to a level which permits accounting and regulatory deconsolidation over the next two to three years.”

Commenting on the annual results, Jes Staley, group chief executive officer said, “Barclays is fundamentally on the right path, and is, at its core, a very good business.

“There is of course more we need to do and areas where I believe we can move much faster to deliver the high performing Group that Barclays can and should be. 2016 will consequently be a year of accelerated delivery from a good base.”