Barclays said that strong performance in equities had offset losses in fixed income, currencies and commodities (FICC), as it reported a 37% fall in profits before tax at its investment banking operations in the UK bank’s full-year results statement for 2013.
Overall investment banking income fell 9% to £10.7 billion, with profit before tax for the business falling to £2.52 billion in 2013 from £3.99 billion in 2012. A 17% (£1.14 billion) reduction in FICC income was partially offset by a 22% (£489 million) increase in equities and prime services income to 2.67%, while investment banking income rose £63 million to £2.20 billion.
Speaking on an investor call following the release of the results statement, group chief executive Anthony Jenkins acknowledged that US banks had coped better than European counterparts in handling lower FICC revenues, but said that Barclays stood “in the middle of the pack” in terms of European bank performance in the sector. Jenkins added that he did expect FICC income to pick up, adding that “recovery may not be limited to 2014”.
Group finance director Tushar Mozaria said Barclays’ positions in flow rates and credit and FX would stand it in good stead in the longer term, noting that the firm’s less capital-intensive equity and investment banking franchises gave the firm “a diversity we did not have pre-crisis”. Mozaria said Barclays’ equity capital markets business had seen significant growth, highlighting the bank’s strong performance in the IPO market. Mozaria said January FICC income was “materially stronger” than Q4 2013, but said it was “too early to call” the quarter.
In its results statement, Barclays said income from macro and credit products fell 23% and 9% respectively during 2013, reflecting market uncertainty over the tapering of central banks’ quantitative easing programmes, while higher equities and prime brokerage income compared with 2012 was driven by higher commission income and increased client volumes. However, the bank added that Q4 2013 income was down 23% versus the previous quarter in equities and prime services as cash and equity derivatives were hit by lower market volume and moderate volatility.
Adjusted return on equity for investment banking slipped to 8.2% in 2013 from 12.7%.
Group profit before tax fell 32% to £5.17 billion in 2013. Adjusted return on average shareholder equity fell to 4.5% from 9% in 2012.
As part of ongoing cost-cutting measures, Barclays announced that 220 managing director and 600 director positions would be cut over the next six months, while up to 12,000 job cuts would be made across the bank globally.