Barclays says regulation to hit returns; profit up

Barclays says regulation to hit returns; profit up

London: British bank Barclays said it plans to streamline operations to boost profitability as it grapples with tougher regulations which it says will lower its returns.

The warning came as the bank reported a forcast-beating 32% rise in annual earnings on Tuesday, beating expectations.

Bob Diamond, the American investment banker who took over as chief executive at the start of the year, on said tougher regulations will result in lower returns and he is now targeting a 13% return on equity.

He said he had instigated a “disciplined, rigorous and continuous review" of its portfolio to achieve that, after RoE sagged to just 7.2% last year.

Barclays said staff costs for 2010 rose by a fifth to £11.9 billion but bonuses fell by 7%, including a 12% fall at its Barclays Capital investment banking unit.

Barclays reported a pretax profit of £6.1 billion ($9.8 billion) for 2010, up from underlying profit of 4.6 billion in 2009 and ahead of the average forecast of £5.7 billion, according to Reuters Estimates.

The rise was mainly thanks to reduced losses from bad debts, which fell 30% to £5.7 billion.

Revenues for BarCap were £3.4 billion in the fourth quarter, up 20% from the third quarter and recovering from several quarters of decline, faring better than rivals.

Diamond said the bank had a good start to 2011, with group income and profit in January ahead of the 2010 average monthly run rates.

The bank confirmed changes to the way it pays bonuses, saying that in future performance awards would be deferred over three years and would only be made if the group’s key core Tier 1 measure of capital strength was at least 7%.

The bank will not reveal the details of pay to individual board members and its top performers until the publication of its annual report.