Barclays increases car finance provision but announces £500m share buyback

Barclays (BARK.L) increased the amount set aside to cover costs related to the car finance scandal to £325 million, but also announced a £500 million commitment. share repurchase and raised its forecast for the year.

The bank and its subsidiary Clydesdale Financial Services, trading as Barclays Partner Finance, said on Wednesday they had increased their provisions from £90m to £325m after the Financial Conduct Authority (FCA) published a consultation paper on its proposed industry redress scheme. auto financing.

Earlier in October, the financial regulator announced that people who were victims of car sales scams could receive payouts averaging £700.

Barclays' announcement came alongside third-quarter results on Wednesday, in which the bank announced a £500m share buyback and said it planned to move to quarterly buyback announcements.

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It comes after Barclays achieved a return on equity (RoTE) of 10.6% in the third quarter and 12.3% year-to-date.

As a result, Barclays CEO CS Venkatakrishnan, known as Venkat, said the bank was raising its RoTE forecast for this year to more than 11%.

“This is driven by stronger earnings sustainability prospects and the achievement of efficiency savings earlier than planned,” Venkat said. “Furthermore, this occurs despite the additional cost of auto finance damages.”

Barclays also raised its forecast for group net interest income (the difference between what the bank pays to savers and receives from borrowers in interest) to more than £12.6 billion from more than £12.5 billion.

Barclays reported total revenue of £7.17 billion in the third quarter, beating estimates of £7.04 billion, according to consensus forecasts provided by the bank.

Group net interest income, excluding Barclays Investment Bank and head office, was £3.3 billion, up 16% year-on-year.

Pre-tax profits of £2.08bn for the third quarter were down 7% year-on-year and slightly below the consensus forecast of £2.12bn.

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