Barclays Plc, Britain's third biggest bank by market value, said on Thursday its first-quarter financial performance was well ahead of the same period last year as its chairman survived a protest vote against his re-election. Barclays said 16.3 percent of shareholders who voted were against the re-election of Marcus Agius as chairman. Including abstentions, the protest vote was just over 17 percent.
Investors slammed Agius last November for a controversial 7 billion pound ($10.19 billion) fundraising by the bank, which side-stepped their traditional pre-emption rights and offered more favourable investment terms to two big Middle East investors. Agius acknowledged the fundraising has strained relations with shareholders, and expressed "sincere regret" for losses incurred by investors during the past year.
A sharp rally by Barclays shares in recent weeks took the sting out of the investor backlash, however. All other board members were comfortably re-elected at the annual shareholder meeting and 95 percent of investors approved the bank's remuneration report. Barclays Chief Executive John Varley told investors the bank, which bought Lehman Brothers' US operations last year, had had a strong start to the year.
That backed up broadly positive quarterly results from US and European peers, including Credit Suisse which posted a $1.7 billion net profit on Thursday, beating expectations. "In the first quarter of 2009 our financial performance is well ahead of the prior year period, meaning that we've made good profits, and generated equity as a result," Varley said.
The bank said it intends to resume paying dividends early next year, covering the final quarter of 2009. It cancelled its final dividend for 2008 in order to conserve capital as the global banking crisis unfolded. The financial industry was past the mid-point of the crisis, said Bob Diamond, president of the bank and head of investment bank arm Barclays Capital.
"I think we're past the worst, but we'll be in a period of recovery for 9 to 18 months," he told reporters after the AGM. BarCap had benefited from higher market share and volume and improved spreads in rates, foreign exchange and commodities, Diamond said, but declined to provide specifics ahead of a detailed quarterly results due out on May 7. Varley said 2009 will remain difficult and warned payouts to shareholders would be "significantly lower" than the 50 percent of profits typically handed over in recent years.
Barclays also said it planned to increase lending to UK businesses and consumers by 11 billion pounds in 2009, an increase of 6 percent on last year. The new lending will be evenly divided between mortgage and business loans. Barclays shares were down 0.5 percent at 217 pence by 1515 GMT, in line with a slightly lower FTSE 100 share index. "On current trading, to say Q1 was well ahead on last year is a positive," Fox-Pitt, Kelton analyst Leigh Goodwin said.
The bank's shares crashed to a 22-year low of 47.3 pence in January, but have since soared as regulators said its capital position was adequate and it improved trading prompted a rethink among investors. Over 1,000 shareholders attended the meeting, requiring the bank to use an overflow room.
Some voiced anger about November's fundraising, but most supported management for avoiding selling a stake to the UK government, unlike rivals Royal Bank of Scotland and Lloyds Banking Group. "I don't think existing shareholders were that keen on taking shares last autumn, whereas the Middle Eastern investors were," said small shareholder James Boston. "I think the board has done very much better than the other banks," he said.
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