Barclays has reported a 20 percent fall in pre-tax profits, driven in part by investment in new technology and processes to cut its future operating costs.
The bank spent a total of £741 million in the nine months to 30 September 2013 on its ‘Transform’ programme, according to its Q3 2013 interim management statement. This expenditure contributed to a fall in pre-tax profits to £4,976 million.
Despite the decline in profit, Barclays said it was positive about the future of the business, as it expects to see return on its investments from next year.
“[There is] clear evidence of growing momentum in the delivery of Transform, including the significant and early reduction of risk-weighted assets in our ‘Exit Quadrant’ portfolio, and in cost control, where our ‘cost to achieve’ investments this year will generate significant benefits as soon as 2014,” said Antony Jenkins, Barclay’s chief executive.
On 12 February 2013, Barclays announced its ‘Transform’ programme, which is designed to help the bank reduce its net operating expenditure by £1.7 billion by 2015. It said that the programme would include restructuring the business, redundancies and investment in technology and new ways of working to reduce future spend and enhance customer offerings.
The bank said that 87 percent (£643 million) of its spend on Transform to date was related to major restructuring initiatives, largely redundancies in its European retail and business banking operations and its investment bank operations in Europe and Asia.
This leaves £98 million, categorised by Barclays as ‘other transform costs’, which includes investment in technology “as well as many other things”, a spokesperson for the bank said.
In Barclay’s UK retail and business banking division, its redundancy costs were £16 million, with ‘other transform costs’ amounting to £40 million.
In terms of innovation spend, Barclays recently launched a cloud storage service to encourage customers to store important documents such as bills, statements and passport information online.
It also updated its Pingit app to expand its reach into mobile payments.
Last month, Barclays announced plans to close its wealth management services in 130 countries by 2016, which may lead to a loss of IT jobs.