Barclays posts £3.1bn profit but hit by £1bn redress bill

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Barclays’ profits rose 25 per cent in the first half of the year to £3.1bn as the bank set aside a further £1bn in total for customer redress.

The bank’s interim results show pre-tax profits are up from £2.5bn in the same period last year.

A total of £1.03bn has been set aside for customer redress, including an extra £750m relating to redress and associated costs of missold payment protection insurance. Barclays says the rate of decline in claims has been slower than anticipated.

The bank adds it is in “active dialogue” with the FCA and the Financial Ombudsman Service to determine the impact of a 2014 UK Supreme Court decision that could add to PPI costs.

It says: “Due to this uncertainty it is not currently practicable to provide an estimate of the financial impact the Plevin decision could have and there can be no assurance that the outcome of this matter will not be material.”

A further £250m has been set aside for complaints relating to packaged bank accounts.

It is the first time the bank has made provision specifically for claims on the products, which it stopped selling in 2012, although it has been paying redress for several years.

A spokesman says the decision to set aside cash was based on a growing number of enquires from claims firms in recent months.

Barclays paid £1.61bn between April and June in settlements relating to foreign exchange and benchmark fixing.

A total of 98 branches have been closed since last year, amid reports the bank plans to cut 30,000 jobs across the group taking staff numbers below 100,000.

Earlier this month chief executive Anthony Jenkins was forced to step down, with a replacement yet to be found. Jenkins will continue to be paid his £1.1m salary, £950,000 in Barclays shares, £363,000 pension allowance and other benefits until July 2016.

Executive chairman John McFarlane says: “Barclays today has a good portfolio of businesses. However, we need to accelerate the execution of the strategy. There is more that can be done to deliver better returns for shareholders, faster, and that work has begun under three group priorities which I have established since becoming executive chairman earlier this month.”