Barclays has issued a warning about the cost of the pandemic in its latest financial results, which saw that pre-tax profits fell to £913 million amid Covid-19 crisis.
The company says it could be forced to take a £4.5 billion charge to cover bad debts in 2020 as a result of the coronavirus pandemic. The bank made a provision of £2.1 billion to cover bad debts with a large percentage being set aside for credit card risks in Q1.
Driven by potential losses linked to COVID-19. The lender forecasts a near-8% fall in UK economic growth for the full year. Barclays has seen a 38% slip in pre-tax profits, which hit £913 million in Q1.
Its core UK bank saw profits slip 66% to £200 million, while its Barclaycard consumer lending and credit cards unit saw losses in the latest quarter of £291 million and Barclays International, the corporate and investment banking division, saw profits fall 28% to £822m.
Barclays Chief Executive Jes Staley said “Despite all the challenges we face as a consequence of COVID-19, I am confident Barclays will emerge from this pandemic well placed to continue to serve our customers and clients, the communities and economies in which we operate, and our shareholders.”
“Given the uncertainty around the developing economic downturn and low interest rate environment, 2020 is expected to be challenging.”
Pre-tax profits crashed from £1.5 billion in the first quarter last year to £900 million, and the bank warned that the covid impact only came late into that period.
Barclays revealed that it has lent £737 million to companies as part of the government-backed coronavirus business interruption loan scheme.
The bank has also approved more than 238,000 mortgage and loan payment holidays, and six million customers are not paying charges on personal or business overdrafts.