Barclays raises bonus payout despite drop in earnings

PUBLISHED : Tuesday, 11 February, 2014, 3:58pm
UPDATED : Wednesday, 12 February, 2014, 5:01pm

Barclays said it paid out £2.4 billion (HK$30.5 billion) in incentive awards for last year after raising bonuses in its investment bank by 13 per cent despite a slump in profits in the business.

The British bank said it increased its bonuses and other incentive awards to staff across the bank by 10 per cent and paid out £1.57 billion in bonuses across the investment bank, up from £1.39 billion in 2012.

That, coupled with a fall in income in the business, lifted its compensation to income ratio to 43.2 per cent last year from 40 per cent in 2012. The bank said it continues to target a compensation ratio in the “mid-30s”.

Barclays had already released headline results showing its earnings dropped to £5.2 billion last year, down 32 per cent from 2012, falling short of analysts’ forecasts as investment bank revenue slumped in the fourth quarter.

Profits at the investment bank slumped 37 per cent to £2.5 billion as income fell 9 per cent on the year to £10.7 billion, largely due to a decrease in fixed income.

Barclays said it expects to improve its leverage ratio to at least 3.5 per cent by the end of next year as it reduces the size of its balance sheet.

Its leverage ratio improved to just under 3 per cent by the end of the year, from 2.2 per cent at the end of June. The British regulator forced Barclays to raise £6 billion from investors in October to improve that leverage ratio.

The bank said it remained committed to paying out 40-50 per cent of its adjusted earnings in dividends.