The UK-listed lender saw a fall in adjusted and pre-tax profit in 2015, and is selling down a stake in an Africa-focused bank.

Barclays today announced further restructuring, a sell-down of its stake in an African business and a dividend cut. It also reported adjusted profit attributable to shareholders of £2.696 billion ($3.77 billion) in 2015, a 3 per cent year-on-year decrease.

The UK-listed bank is cutting its stake in Africa-based BAGL. Over time, it will have a “non-controlling, non-consolidated investment” in that operation, it said. As previously reported, Barclays has been rumoured to be contemplating an exit from Africa, a market in which it has been involved for decades.

Total income, net of insurance claims, was £24.528 billion on an adjusted basis, down 5 per cent; pre-tax profit, adjusted, was £5.403 billion in 2015, down by 2 per cent. The total cost/income ratio was 69 per cent at the end of last year, down from 70 per cent in 2014.

Shares in the lender sold off sharply; at 10:20 GMT the price was 155.80 pence per share, down more than 9.4 per cent from the open. 

"With the sector still under a cloud, the share price close to a three year low and the uncertainty over the investment banking division, we view the stock as no more than a hold for the time being," Graham Spooner, analyst at The Share Centre, said of Barclays.

For the past year, Barclays’ wealth and investment management arm, while remaining as a discrete business unit, no longer discloses separate profit/loss, assets and costs figures. In the personal and corporate banking results, containing the wealth unit, Barclays did say that income in its “wealth” segment was £918 million, a fall year-on-year of 15 per cent. The fall was mainly caused by the sale last year of the US wealth business to US-based Stifel Financial.

Africa
“We continue to optimise our geographic footprint as we pursue improved returns, while strengthening our capital ratios still further. Barclays recently announced that the investment bank is closing offices in nine countries, and we are now announcing our intention to move to a non-controlling, non-consolidated investment in BAGL over time, subject to regulatory and shareholder approvals if and as required,” the statement said.

“We are today announcing our intention to sell down our 62.3 per cent interest in our African business, BAGL, over the coming two to three years, to a level which will permit us to deconsolidate it from an accounting and regulatory perspective, subject to shareholder and regulatory approvals if and as required,” it continued.

Barclays said BAGL is a well-diversified business and a high-quality franchise but the stake causes a number of costs, such as the amount of capital Barclays must hold, the international reach of the UK government’s bank levy, and other regulatory requirements.

“BAGL is today reporting a 17 per cent return on equity for 2015 in its standalone local currency results versus the 8.7 per cent return reported for Africa banking in Barclays' results,” it said.

Non-core, dividends
Barclays said that in its non-core banking arm, it has more than halved the size of this area, by cutting risk-weighted assets to £47 billion compared with its starting point in 2013.

The bank announced a full year 2015 dividend of 6.5 pence per share with an intention to pay 3.0 pence for 2016 and 2017.

“We expect to set appropriate dividends as core and group earnings become aligned through non-core run down and reduction of legacy headwinds, and we expect to pay out a significant proportion of earnings in dividends to shareholders over time. We will pay dividends semi-annually from 2016 rather than quarterly,” it said.

“We expect the combination of this dividend reduction and the BAGL sell-down will contribute at least 100 basis points of proforma accretion to the group's CET1 ratio over the next two to three years, supplementing organic capital ratio accretion,” the bank added.