Barclays posts pre-tax loss of £236m as settlement and PPI costs rise

Stripping out these conduct and litigation charges, profit before tax increased 1% to £1,725 million, driven by an improvement in credit impairments and a 6% reduction in operating expenses. However these gains were largely offset by an 8% decline in income.

James Staley, Group CEO, said: "While the penalty was substantial, this settlement represents a major milestone for Barclays, putting behind us a significant decade-old legacy matter."

Laith Khalaf, senior analyst at Hargreaves Lansdown, commented: "There’s a lot not to like about Barclay’s latest results, although many of the factors hampering the bank are one-off items which don’t speak for the future prospects of the business. Stripping out these setbacks, performance has been a disappointment rather than a disaster, which the headline figures by themselves might suggest.

"Litigation is the big swing factor which has pushed Barclays into the red, with a hefty additional PPI charge which shows the FCA awareness campaign is really starting to bite. This probably won’t be the last big chunk of money sunk into the PPI pit by the UK banking sector, as nothing motivates consumer action quite like a deadline, and the compensation claims window closes next August.

"A £1.4 billion settlement with the US Department of Justice meanwhile has inflicted a great deal of financial pain on Barclays this quarter, but it’s actually positive for the bank this is now resolved and in the rear view mirror.

"Recent conduct matters haven’t all been negative for Barclays, after all its CEO Jes Staley has been deemed fit and proper to run the business, despite his interference in a whistleblowing case. However 2019 promises to be a difficult year on the litigation front, with a criminal case pertaining to Barclays’ dealings with Qatari investors waiting to kick off, and a civil lawsuit pending thereafter.

"Beyond litigation matters, Barclays’ results were also hampered by a weaker dollar and one-off gains in the first quarter of 2017, making a year-on-year comparison unflattering."