Barclays profits slide but income boosted by higher interest rates

But Barclays said its net interest income surged by 13 per cent to £5.9bn as it profited from higher rates, and its group income was up by 14 per cent year-on-year to £25bn.

The lender said it expects its net interest margin – the difference between what it charges for loans and pay for savings – to rise above 3.2 per cent this year, taking it much higher than the mid-2020 lows of around 2.5 per cent.

It also said that activity in its investment banking business had been more subdued in 2022 amid waning investor confidence and a dearth in company deals.

CS Venkatakrishnan, Barclays group chief executive, said: “Barclays performed strongly in 2022. Each business delivered income growth, with group income up 14 per cent.

“We are cautious about global economic conditions, but continue to see growth opportunities across our businesses through 2023.”

Barclays revealed that Mr Venkatakrishnan, known within the group as Venkat, took home £5.2m in cash and bonuses last year, and is set to see his fixed pay jump by 3.4 per cent this year.

The group’s finance director, Anna Cross, earned £2.1m during the year and will enjoy a 4.3 per cent increase in fixed pay this year.

Richard Hunter, Head of Markets at interactive investor, commented “Barclays has been pulling the many levers under its control in order to lessen the impacts of further credit impairments and another year of heightened litigation and conduct costs.

" The group’s outlook comments seem prudent if unchallenging. Progress for the current year will include further targeting of the cost/income ratio, return on capital, Net Interest Margin and shareholder returns, while there is also the likelihood of further impairments in what could be a deteriorating economic environment on both sides of the pond, as inflationary pressures continue to bear down on consumers and companies alike.

He added: “In the meantime, a more recent spike of 19 per cent in the share price over the last three months could indicate changing fortunes for the bank, with some of the hits which it has had to take now moving towards the rear view mirror.

"However, over the last year the shares are down by 4 per cent, as compared to a gain of 4.5 per cent for the wider FTSE100, and the near profit misses against expectations in the fourth quarter may weigh on immediate prospects, as reflected by a weak opening price in early exchanges.

"Nonetheless, there is little doubting either the financial strength or the breadth of income streams which the bank has at its disposal, and the market consensus of the shares as a buy will likely remain intact as investors look through the current challenges to the prospects of tomorrow.”