shares pressured by risk-tendency statement By Sarah Turner,
MarketWatch Last Update: 7:24 AM ET May 26, 2005 LONDON
(MarketWatch) U.K. bank Barclays PLC
warned Thursday that consumers weren't paying off their credit card
debt. Barclays said that, based on current trends, it now
expects impairment losses for 2005 to be somewhat higher than in its
last published risk-tendency statement.
pressured shares in Barclays which were last trading down 5.3% at 521
pence in a declining London market. "The trading statement
has disappointed the market this morning," said analysts at bank
Insinger de Beaufort. "This is due to higher-than-anticipated
impairment charges and rising consumer bad debts at the Barclaycard
consumer lending unit."
Merrill Lynch analysts
noted that provisions are now expected to be ahead of the 1.4 billion
risk tendency last published. "We believe that the market
will react negatively to these figures due to disappointment both with
the higher than anticipated impairment charges and a mix of earnings
which continues to rely heavily (though not exclusively) on the
performance of Barclays Capital for growth," said analysts at Credit
Suisse First Boston.
Barclays said the slowdown
across the U.K. consumer credit sector sparked a rise in potential
credit-risk loans and a consequent increase in impairment losses. The
increase in delinquencies was most noticeable in credit cards, Barclays
said. U.K. banking performed well in the first quarter and is making
progress towards its 2005 productivity target, the bank said.
Finance Director Naguib Kheraj said that first-half cost growth is
likely to be a little higher than income growth. But, "We're
not expecting the same sort of acceleration in cost growth in the
second half of this year as we had last year, so we're comfortable with
our guidance for the full year," he added.
said it continues to target double-digit income growth for 2005, with
expense growth seen broadly in line with income growth. On first-half
profits, Kheraj said: "Whilst our underlying profit for the first half
is likely to be similar to last year, we expect the headline
performance in U.K. retail to be lower."
banking is on track to reduce its cost-to-income ratio by at least 2%
this year, he said, adding: "We'll show some progress in the first half
and we expect this to accelerate in the second half."