Pre-tax profits were hit by the cost of the Transform programme to boost long-term performance, the bank said today.

The wealth and investment arm of Barclays logged adjusted income in 2013 of £1.839 billion ($3.01 billion), up one per cent from 2012. Pre-tax profits were hit by the cost of the Transform programme to boost long-term performance.

There was a pre-tax loss at this arm of the bank of £19 million last year, against a pre-tax profit of £274 million. The cost/income ratio rose to 95 per cent at the end of last year from 83 per cent at the end of 2012.

“Wealth and investment management continued to implement its strategic programme to build on its strengths, focus on target markets and simplify how it operates. The purpose of this transformation is to put wealth and investment management on a solid trajectory to deliver sustainable returns over the long term. In 2013, the business incurred significant costs to achieve Transform. A significant portion of these costs were the direct result of initiatives taken to drive greater efficiency, to de-risk in an increasingly complex regulatory environment, to streamline target markets and to consolidate client propositions,” the bank said.

Barclays, as previously reported, has embarked on a wide ranging restructuring programme of its business; it has cut wealth management services to individuals with less than £500,000 in investible assets, rationalised booking centres and staffing levels in certain areas.

Total client assets in wealth and investment management stood at £204.8 billion, a rise from £186. billion, driven by growth in the high net worth business and rise in equity markets; the total number of employees (full-time equivalent) was 8,300 at end-2013, unchanged from the end of 2012.

Among other details, it said that credit impairment charges increased £83 million to £121 million, largely reflecting the impact of deterioration in recovery values from property held as security, primarily in Europe. Q213 results included a charge of £15 million relating to secured lending on Spanish property, the bank said. Adjusted operating expenses increased £241 million to £1.750 billion largely reflecting costs to achieve Transform of £158 million and a £23 million customer remediation provision.

Statutory operating expenses increased £320 million to £1.829 billion including goodwill impairment of £79 million (2012: nil).

Group results
Barclays reported that for the whole of 2013, its adjusted profit before tax fell 32 per cent to £5.167 billion due to costs to achieve the Transform restructuring and development plans, and also due to a 4 per cent fall in income over the 12-month period. For the fourth quarter, adjusted profit before tax dropped by £1.194 billion against the previous three months to £191 billion, a drop that takes account of the effect of £331 million of charges for litigation and regulatory penalties in the Investment Bank, UK bank levy of £504 million (no charge in Q3) and £468 million of costs to achieve Transform (Q313: £101 million), the bank said.

Today’s results come shortly after the Mail on Sunday reported that Barclays had suffered a leak of client data affecting thousands of client accounts. The data is from 2008, or earlier. Barclays is in discussions with clients and UK authorities about the matter, which has highlighted issues of account security.