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barclays It has revealed lower earnings after saying it was setting aside an extra £235 million to cover the costs of compensating historic car loan customers.
The banking group made a pre-tax profit of £2.1 billion in the third quarter between July and September, down 7% on the previous year.
This took into account the impact of requiring higher provision for the motor finance issue.
After reviewing the Financial Conduct Authority’s (FCA) proposed resolution plan, Barclays said it did not believe its previous £90 million reserves would be enough to cover the costs.
The additional £235 million takes the Group’s total provision to £325 million, which represents a reasonable estimate of compensation costs.
However, like other lenders lloydsBarclays challenged the regulator’s proposals, saying it did not think the terms “accurately address the actual harm (if any) to clients and do not achieve a proportionate or appropriate outcome”.
The bank said its pre-tax profit, excluding the impact of car finance provision, rose 4% year-on-year.
Its UK bank reported a 16% rise in earnings in recent months following the acquisition tesco bank Last year.
Its corporate and investment banking divisions also got a boost, while income from its consumer bank in the US rose 19% in the third quarter.
CS Venkatakrishnan, group chief executive of Barclays, said: “I am pleased with the ongoing momentum of Barclays’ financial performance over the last seven quarters.
“This is driven by a strong outlook for stable earnings and ahead of the planned delivery of efficiency savings.
“Furthermore, this comes despite the additional charge for motor finance redress.”