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Barclays has £4.4bn of mortgage lending on payment holidays

Barclays has more than £4bn of mortgage lending subject to payment holidays, its trading update for the third quarter shows.

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Barclays’ Q3 results published today (23 October) show the lender’s impairment charge during Q3 was £4.3bn, rising from £1.4bn at the same time last year. The results also show the bank has provided 640,000 payment holidays across various products to customers.

 

According to the results, the number of customers who remain on payment holidays granted during the pandemic continues to fall. However, for Barclays as at 30 September 2020, around £4.4bn of UK mortgage accounts and £100m of UK credit card lending remained on payment holidays.

 

Referencing this and other support, chief executive Jes Staley said: “We have now delivered some £25bn through the government support measures to UK businesses. This includes 296,000 Bounce Back Loans totalling £9.2bn, and around £3bn under the Coronarivus Business Interruption Loan Scheme."

 

Credit impairment charges for Barclays UK specifically, increased to £1.3bn (compared to £522m for Q3 last year), reflecting forecasted deterioration in macroeconomic variables in Covid-19 scenarios.

 

Profit before tax specifically for Barclays UK, excluding litigation and conduct, was £300m.

 

Arrears

According to the results 30-day arrears rates in UK cards were 1.7% for Q3, which is the same for the same period in 2019. The 90-day arrears rates were 0.8%, which was also unchanged from the same period last year.

 

Impairment allowances for Barclays UK (stages under IFRS 9)

Stage 1

Stage 2

Stage 3

Total

£329m

£1.56bn

£1.15bn

£3bn

 

Gross credit risk exposure for Barclays

 

Less than 30 days in arrears

Over 30 days in arrears

Stage 3

Home loans

£1.8bn

£969m

£2.2bn

Credit cards, loans and other retail lending

£483m

£273m

£3.3bn

 

While the table shows Barclays gross exposures of types of loans overdue, the results also show Barclays total net exposure on home loans, across stage two and three, is £4.6bn and £1.3bn, again on stage two and three, on credit cards and other retail lending.

 

The Barclays results statement said: “As a result of government and Barclays support measures to support customers and clients, significant credit deterioration has not yet occurred.

 

“This support is causing a timing difference between economic drivers such as GDP and unemployment rates, and the resultant impairment defaults. This is expected to delay the effects of distress and therefore increases uncertainty on the timing of the stress and the realisation of defaults.”

 

Debt sale

The results show Barclays UK had lower planned debt sales, which was as a result of Barclaycard Consumer UK income decreasing 20% to just over £1.1bn. Reduced borrowing and spend levels by customers also resulted in a lower level of interest-earning lending balances.

 

Group impairments

Across the group, the results showed an over 200% increase on group credit impairment charges on the same period in 2019.

 

Barclays explained that provided macroeconomic assumptions remain consistent with expectations, it expects the H2 2020 impairment charge to be materially below that of H1 this year, and it is likely that the full year 2021 impairment charge will be below that of 2020.

 

Barclays will be speaking at FSE-Week, one of the events during the Credit Festival, which will be held from 9-11 November.

 

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