By Margot Patrick
LONDON-- Barclays PLC on Wednesday scrapped its dividend target
to retain capital as part of a fresh effort by Executive Chairman
John McFarlane to reshape the beleaguered British bank.
The move came as the lender reported a sharp rise in
second-quarter net profit to GBP1.15 billion ($1.8 billion) from
GBP161 million in the same period last year.
The second-quarter net profit figure was helped by a one-time,
GBP496 million gain on Barclays's acquisition of parts of Lehman
Brothers in 2008, while the second quarter last year was held back
by higher operating and restructuring costs.
In an anticipated strategy shift, Mr. McFarlane also said
Barclays would move faster in plans to shed noncore assets, but
held off for now from any major changes at its investment bank,
saying he was "personally pleased" by the division's recent
progress.
Second-quarter revenue at Barclays's investment bank was flat at
GBP2.15 billion but lower restructuring costs helped drive a 35%
rise in the unit's pretax profit in the period.
In retail and corporate banking, Barclays posted a 9% fall in
adjusted profit before tax, to GBP709 million from GBP780 million,
as operating costs rose. The number strips out a new, GBP850
million provision in the second quarter to compensate U.K.
customers for missold products including payment protection
insurance on loans.
Shares in the bank rose 1.9% in early trading in London.
Mr. McFarlane, who fired Antony Jenkins as chief executive
earlier this month and is temporarily running the bank, said the
lender would maintain a 6.5 pence a share dividend this year to
help keep its capital strength up. He abandoned earlier payout
targets of 40% to 50% of earnings, saying the bank "will aim to
maintain a sustainable and progressive dividend policy."
The strategic plans announced Wednesday were made three years
into a prolonged period of transition at Barclays after an era of
high returns from its once-huge investment bank was ended by rising
capital requirements and the exit of former CEO Bob Diamond.
Mr. Jenkins proved to be a stopgap CEO, helping the bank improve
its culture and standards but never fully convincing shareholders
or analysts that Barclays had figured out how to adapt to a changed
banking industry. He was fired on July 8, with Mr. McFarlane saying
Barclays "urgently required" a different person running the
bank.
Write to Margot Patrick at margot.patrick@wsj.com
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