British finance giant Barclays records a 66% drop in half year profits due to COVID-19

GLOBAL – British multinational commercial bank Barclays has suffered a 66% drop in its half year profits due to the unrelenting COVID-19 pandemic which has slowed activities in almost all sectors of the global economy.

Barclays said that its profits after taxation dropped to £695 million in the six months ending June 30 from a high of £2.07 billion in the same portion of 2019.

The bank’s net profit plunged a further 91 percent to just £90 million in the second quarter after the financial institution suffered a £1.6-billion loss from the pandemic turmoil.

The British financial behemoth revealed that it has set aside £3.7 billion ($4.7 billion, 4.0 billion euros) to deal with coronavirus fallout.

Earlier in April, Barclays had announced a £2.1-billion charge on the impact of coronavirus for the first quarter.

“The COVID-19 pandemic has caused disruption to the Barclays Bank UK Group’s customers, suppliers and staff,” the Bank noted in a statement.

The bank warned that despite contingency plans to deal with COVID-19, unavailability of staff due to illness or failure of third-parties to supply services adversely affect the Bank’s business.

Some of the effects that Barclays projects includes significant customer detriment, costs to reimburse losses incurred by the Barclays Bank UK Group’s customers, potential litigation costs and reputational damage.

However, Barclays trading division performed relatively better as it posted a 60% jump in trading revenues in foreign-exchange, rates, and credit trading.

The Bank’s markets division also performed impressively, posting a 49% rise in revenue to £2 billion ($2.6 billion).

Given an uncertain outlook and low-interest rate environment, Barclays says that it expects the second half of the year to continue to be just as challenging as the first.

The Bank anticipates impairment charges to remain above levels experienced in recent years, but below the first-half level of £3.7 billion.

Barclays noted that the severe restrictions on the movement of people that have been implemented by the UK, Scottish and Welsh governments, continue to have a significant impact on economic activity.

The Banks further noted that it remains unclear how the economic environment will evolve through 2020.

It said that it closely monitoring how the pandemic progresses including whether there will be subsequent waves of the virus and whether and in what manner previously lifted restrictions will be re-imposed.

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