Barclays, the UK-based financial giant, has reported worse-than-expected 2022 financial results, as regulatory fines and a slide in dealmaking fees negatively affected overall revenues. The lender set aside £1.2 billion to cover potential loan losses.

Barclays 2022 Report below Expectations

According to the financial statement published on Wednesday, one of the biggest UK lenders' profit came in at £7 billion in 2022, falling significantly by 14% year-over-year (YoY), despite rising interest rates and good performance of the fixed-income trading department.

However, Barclays was hit hard by the reduction in dealmaking fees, which fell 39% YoY to £2.2 billion. Although it was one of the most minor declines compared to rival banks in Europe and Wall Street, it still negatively impacted the final results, which came in below analysts' consensus.

"Barclays performed strongly in 2022. Each business delivered income growth, with Group income up 14%. We achieved our RoTE target of over 10%, maintained a strong Common Equity Tier 1 (CET1) capital ratio of 13.9%, and returned capital to shareholders. We are cautious about global economic conditions, but continue to see growth opportunities across our businesses through 2023," C. S. Venkatakrishnan, the Group Chief Executive, commented.

While Barclays' CEO believes that 2022 was a strong year for the Group, investors in the London stock market have a completely different view.

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Barclays Falls 9% on LSE

Wednesday's session for Barclays shares on the London Stock Exchange (LSE:BARC) began with a sharp downward gap. At the time of writing, shares in the lending giant are losing 9.4% and trading at £169.8, which is the lowest in a month.

If the session closes at current levels, it could be the worst trading day for Barclays since April 2020, almost three years ago. The bank's shares have rebounded from their October lows at £132 by nearly 50%, reaching a one-year peak in early February. However, they have depreciated slightly since then, with financial results drastically exacerbating the sell-off.

Although, not every financial metric in Barclays' report looks negative. The aforementioned fixed income department, which additionally includes currencies and commodities (FICC), increased profits by 65%, performing far better than rival Goldman Sachs and Morgan Stanley, which reported growth in FICC trading of 38% and 20% YoY, respectively, in 2022.

£1.6 Billion in Charges for Barclays

The investment bank had to pay £1.6bn in penalties and restitution to clients this year in relation to the over-selling of securities in the US. The firm has decided to reduce the remuneration of top executives by a total of £1m due to regulatory failings.

In September 2022, the Securities and Exchange Commission (SEC ) announced that 15 broker-dealers and one affiliated investment adviser have agreed to pay combined penalties of over $1.1 billion for their recordkeeping failures. The charged firms included Barclays, Bank of America, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley and UBS. Barclays agreed to pay a penalty of $125 million.