Despite reductions in fees and commissions stemming from the effects of the Credit Card Accountability, Responsibility and Disclosure Act, executives at Barclays PLC remain positive about the future performance of it Barclaycard US subsidiary and other units.
For the six-month period ended June 20, Barclaycard reported net income of £1.07 million (US$1.71 or 1.29 million euros), down 1.8% from £1.09 million during the same period last year.
“Most of this reduction was the impact of the U.S. Credit CARD Act, which had a significant effect on all U.S. card issuers. But we have made adjustments to our business in order to mitigate the impact,” Chris Lucas, Barclays group finance director, told analysts during an Aug. 5 conference call discuss midyear earnings.
Net fee and commission income decreased 8.2%, to £569 million from £620 million, which Barclays attributes to the impact of the Credit CARD Act’s requirements limiting late and over-limit fees in the U.S.
The number of Barclaycard customers globally increased since December by 1.9%, to 21.6 million from 21.2 million, while total outstandings declined 1.4%, to £20.4 million from £20.7 million a year ago, as “many consumers pay down unsecured debt in the current environment,” John Varley, Barclays chief executive, noted in a news release.
Barclays’ Western European Retail Banking segment reported a profit (before tax) of £10 million, which includes a £29 million gain from the acquisition of an Italian cards business from Citigroup, Lucas said.
“We are pleased with continued diversification by both product and geography as we now have solid and material card platforms in the U.S., Germany, Scandinavia and South Africa,” Varley said.
As a company, Barclays Group PLC reported a net income of £13.5 million, up 25% from £10.8 million last year.
Company expenses increased 6%, reflecting an increase in staffing costs and an investment in marketing, which includes the launch of Barclaycard Freedom, Lucas said. Barclaycard Freedom is a merchant-funded rewards program that enables consumers to earn rewards at participating retail outlets throughout the United Kingdom (
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