Barclays has announced that it will make £2bn worth of cuts over the next two years, leading to speculation over future job losses.

Pre-tax profits at the bank dropped by 6% year-on-year to £6.6bn in 2023, dropping slightly lower than analysts’ expectations of £6.7bn.

The results come after a £900m charge, as chief executive, C S Venkatakrishnan, revealed restructuring plans that would involve growing its higher returning corporate and consumer business, while cutting the size and costs of the investment banking division.

Venkatakrishnan said: "Our new three-year plan, which we will be announcing at the Investor Update today, is designed to further improve Barclays' operational and financial performance, driving higher returns, and predictable, attractive shareholder distributions."

The charge was designed to jump start an "efficiency" programme that will save the bank £2bn by 2026.

The largest cuts will come from investment bank and UK retail bank, with the firm planning to strip £700m from both divisions by 2026.

Job cuts are expected, despite the bank cutting 5,000 roles since October 2023.

Investment director at AJ Bell, Russ Mould, said: “There is a common theme among companies: increase dividends and cut costs to keep shareholders happy. Staff might not appreciate this strategy as it means they may have to do additional work for the same pay, but running a leaner machine is the playbook for corporates when there is an uncertain economic outlook.

"The news has gone down well with the market and has helped Barclays’ share price burst back to life after a long period in the doldrums."

Mould added: "Today’s announcement doesn’t instil confidence as it’s tinkering at the edges, not making radical changes."

Barclays, which saw its total income in Q4 drop to £5.6bn by 6%, announced that it plans to return at least £10bn of capital to shareholders between 2024 and 2026 through dividends and share buybacks.

The directors have announced that it expects a share buyback of £1bn in the first quarter of 2024.

Equity analyst at Hargreaves Lansdown, Matt Britzman, said: "There’s a shake-up at Barclays. It’ll now report through five distinct operating divisions with accountability as a key focus. Investors will hear more later today when the company dives into details.

"Fourth quarter performance was a little worse than expected, largely because of higher costs associated with the restructure. There was some concern that this could impact the buyback, but Barclays has put that to bed with a £1bn plan, ahead of expectations.

"Medium-term guidance was positive and points to around 54% of today’s market cap being returned to investors by 2026. But there may be some who question whether it’s a little optimistic, especially relating to growth expected from the investment bank. Barclays’ huge presence in the investment banking world is an attractive proposition. But conditions are still poor and low activity in the capital markets continues to weigh on performance."

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