For the year, Barclays drove every financial metric higher. Total income was up 25%, profit before tax rose 35%, and earnings per diluted share were up 33% to 69.8p ($1.33). This performance allowed the company to earn a 25% return on equity and boost its dividend by 17%, to 31p ($0.59) per share.
The standout performers in the company's business continued to be the capital, global investors, wealth management, international retail, and commercial banking businesses; profit before tax was up 28% or more at each division. The company's retail banking business, which has traditionally been a bit of a laggard, posted a 17% gain on profit before tax, which is not at all shabby by any standards.
The blemish on the performance was the company's credit card business, which posted a 40% decline in profit before tax. This is largely because of impaired accounts that had to be charged off, and is a continuation of the struggles in this business. However, it is still a large business for Barclays and a strong franchise for the company in the U.K. The company has seen delinquent accounts decline and believes that the second half of 2006 marked the bottom for this business.
Like its peer Lloyds TSB Group
(Side note: I can see no reason Barclays would be interested in tying up with Bank of America, but I can see why Bank of America would be interested.)
Like my colleague, Will Frankenhoff, I am slightly in awe of how well Barclays has performed. But I also think there is likely to be more good news to come from Barclays in the future, simply because it has so many strong franchises with years of potential growth in front of them. That's not to say there won't be some bumps in the road along the way, because the shares have had quite a run, but long-term, things look very good for Barclays.
At the time of publication, Nathan Parmelee had no financial interest in any of the companies mentioned. Bank of America is a Motley Fool Income Investor selection, and Lloyds TSB is a Motley Fool Inside Value pick. The Motley Fool has an ironclad disclosure policy.