1. ITV Report

Barclays warns of Brexit impact as profits dive 21% to £2.06bn

Barclays recorded net profit for the second quarter of £803m. Credit: PA

Barclays warned Britain's decision to quit the European Union could have a detrimental effect on the bank, as it revealed pre-tax profits for the first half of the year have fallen 21% to £2.06bn.

The lender booked a £400 million charge for payment protection insurance (PPI) in the second quarter, taking its total provisions to £7.8 billion.

It said the increased risk of recession with lower growth, higher unemployment and falling UK house prices "would likely negatively impact a number of Barclays' portfolios", most notably its mortgage offering.

Net profit during the second quarter in 2015
Net profit during the second quarter in 2016

Total income at Barclays was down 9% to £11 billion in the six months to June. Net profit for the second quarter came in at £803 million compared with £1.2 billion last year.

"The result of the referendum means that the long-term nature of the UK's relationship with the EU is unclear and there is uncertainty as to the nature and timing of any agreement with the EU," the bank said.

It added: "In the interim, there is a risk of uncertainty for both the UK and the EU, which could adversely affect the economy of the UK and the other economies in which we operate."

  • 'Passporting rights'

Barclays also warned that should the UK's financial sector lose "passporting" rights following Brexit negotiations, it would need to make "alternative licensing arrangements in EU jurisdictions" where it operates.

The passporting system allows banks and financial firms to sell their products to any country within in the European Economic Area (EEA).

The European Central Bank (ECB) has warned that Britain would not be able to access the passporting system without remaining a member of the single market and abiding by its rules, which includes the free movement of people.