By Steve Goldstein
Barclays shares led a downturn for the U.K. banks on Thursday after an underwhelming reaction to financial results.
Barclays /zigman2/quotes/208409333/delayed UK:BARC +1.76% /zigman2/quotes/206581728/composite BCS +2.31% shares fell as much as 5%, as the U.K. bank said fourth-quarter pretax profit fell by 45% to £693 million, reflecting both lower revenue and higher costs. While the results comfortably beat forecasts of £285 million, and Barclays also announced a new £700 million stock buyback, it took a £500 million charge for bad debt and declared a dividend of just 1 pence per share.
Headwinds to income in Barclays U.K. are expected to persist in 2021 and the medium term, including the subdued demand for unsecured lending and the low interest rate environment, Barclays said.
Rivals Lloyds Banking Group /zigman2/quotes/202285510/delayed UK:LLOY +1.39% , NatWest Group /zigman2/quotes/209265718/delayed UK:NWG +1.92% and HSBC Holdings /zigman2/quotes/203901799/delayed UK:HSBA +1.92% also fell.
“The boardrooms of Barclays’ rivals may be feeling a bit more nervous as they prepare to unveil their own fourth-quarter numbers as it feels like the first big name out the door has set a fairly high bar and still received a knock back from investors,” said Russ Mould, investment director at AJ Bell.
The pressure from the banks weighed on the FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.37% , which dropped despite gains for the mining sector on strong copper prices /zigman2/quotes/210054311/delayed HG00 +1.93% .
Smith & Nephew /zigman2/quotes/207176500/delayed UK:SN +0.24% , the medical equipment maker, fell 5% as the company said its profit margins for 2021 will be worse than 2019, due to reduced production volumes, increased research and development investments, acquisitions and foreign-exchange moves.