Barclays has announced its 2008 pre-tax profit will exceed £5.3 billion, despite writedowns of £8 billion. The British group, which will not take state cash, saw its share price soar by nearly 40 percent after the announcement.
AFP - British bank Barclays said Monday it expected a 2008 pre-tax profit of more than 5.3 billion pounds (5.6 billion euros, 7.1 billion dollars) despite credit-crunch writedowns of eight billion pounds.
In reaction, Barclays' share price soared by nearly 40 percent as investors were reassured by a statement which also said that the group would not take state cash because it was adequately funded.
The stock had almost halved last week on concern that it could turn to the government for extra cash -- like rivals Royal Bank of Scotland and Lloyds Banking Group which are both now majority state-owned.
"We are not seeking subscription for further capital -- either from the private sector or from the UK government," Barclays chairman Marcus Agius and chief executive John Varley said in an open letter ahead of the market open.
Barclays added that it would report annual pretax profit "clearly above" the 5.3 billion pounds anticipated by analysts.
The results would include total writedowns of eight billion pounds after losses on credit markets, with full details to be given on February 9.
Barclays surged 37.11 percent to 70.20 pence on London's FTSE 100 index of leading shares, which was 1.44 percent higher.
Agius and Varley said in the letter that they would bring forward the bank's 2008 results announcement by one week to February 9 because of recent market pressures.
"In view of the events in the banking sector last week, we have decided to communicate now with employees, customers, clients and shareholders in this open letter in order to address the principal causes of concern which we are hearing," the pair said.
"Writing in this way ahead of the release of results is unusual, of course, but the turn of events is also unusual."
The figures showed that despite being badly affected by the credit crisis, the bank was still able to generate record revenues in 2008, allowing it to offset the damage and report solid results, the group said.
The bank had "confidence that our capital resources are sufficient to manage Barclays safely and prudently even in these difficult markets.
"Our starting point is that Barclays has 36 billion pounds of committed equity capital and reserves; we are well-funded, and we are profitable."
Barclays continued to have adequate capital levels, at some 17 billion pounds above the minimum required, and accordingly it would not be seeking to raise fresh funds, neither from the market nor the government.
Last week, the government announced a second massive bailout programme costing billions and which has seen it take large holdings in several banks, including Royal Bank of Scotland and Lloyds Banking Group.
Barclays said Monday that 2009 had got off to a good start, with high levels of business reported, especially at its Barclays Capital unit, which last year took over the North American operations of failed US investment banking giant Lehman Brothers.
Britain's banks have been hit hard as a result of the international financial crisis, which has plunged the economy into a recession and sparked massive government rescue packages for the banking sector.
However, Barclays has spurned state cash, opting instead to sell around one third of its stock last year to oil-rich Middle Eastern investors from Abu Dhabi and Qatar.
Date created : 2009-01-26