e-mail Paul LewisDear Listener
Barclays is the second of the big five banks to reveal its 2011 figures. Press comment is concentrating on profits (down a smidge) and bonuses (down by a third). But how much is the bank making from its customers? Some interesting nuggets.
First, it has set aside (we knew this) 1 billion to pay redress to customers who were mis-sold payment protection insurance. That amount is split 400 million off its retail banking profits and 600 million off its Barclaycard profits. And those provisions hit the bottom line hard.
Retail banking (including small business banking) made a profit of 1020 million, a 3% rise on last year. But if the 400 million is added back then the increase is more like 60%. Overall return on capital improved from 9.9% to 14.9%. Barclays has closed 33 branches in the year and makes roughly 67 per customer (assuming there is a total of 15 million of them).
Barclaycard, which is mainly in the UK though it has USA and South Africa bits as well, saw its profits fall by 29% to 561 million. But if that 600m PPI provision is added back they rose by 53% to 1208 million (the arithmetic also takes off the value of loss of goodwill).
That rise came from a 2% increase in earnings from interest, a 3% rise in late payment and other fees, and a fall in debts written off. The result is that return on capital grew from 12.5% in 2010 to 17.4% in 2011. Profits work out at 51 per Barclaycard customer, most of whom are in the UK.
RBS, Lloyds, and HSBC report later in the month.
***IN MONEY BOX THIS WEEK***
Are pensioners the collateral damage in the war against recession? This week the Bank of England announced it will magic another 50 billion out of thin air to bring the total of created cash to 325 billion. It's called Quantitative Easing. It keeps interest rates low, forces down the pension annuities, and pushes up inflation. So the price is paid by those relying on savings, the newly retired, and people on low incomes whose money buys less. And is this policy working anyway?
About 30% of current mortgages are interest only. But try and get one now and you will find it is much tougher. Santander is the latest bank to squeeze the flow of interest only loans still tighter. Are they ever a good idea?
Nearly two and half years after the Office of Fair Trading launched an enquiry into charges levied on retirement home owners it has still come to no conclusions and cannot say when it will. We talk to a recent victim whose mother died in 2010. She has had to pay more than 2000 a year for her mother's empty and unsaleable flat and another 1400 if she lets it out.
Halifax says its 'life-long' pet insurance does not cover the pet for as long as it lives. It has now scrapped the product sold as 'life-long cover' leaving an estimated 50,000 owners trying to reinsure pets which are now older and in some cases have become uninsurable.
No fifth item so we should have time to do those four thoroughly Saturday at midday, repeated Sunday at 9pm, and anytime online www.bbc.co.uk/podcasts/series/moneybox. Remember you can put in a regular order for the top audio business podcast (ours) through iTunes. It's free.
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Investing is the topic on Money Box Live with Vincent Duggleby (it's my month off) on Wednesday at 3pm. Call with your question after 1pm on Wednesday 15th February on 03700 100 444 or email through the website when the programme page is up later today. Or of course just listen.
Best wishes,
Paul
PS. I will be on Breakfast on BBC One around 0845 on Saturday with a programme trail and back on Breakfast later in the week, probably on Thursday and usually around 0640 and 0820 talking about a money story and answering emails and tweets. But the time, and occasionally the day, can vary.
e-mail Paul Lewis