Barclays Takes $1.3 Billion One-Time Hit From U.S. Tax Bill

Updated on
  • Lender says measures positive in future for U.S. earnings
  • Barclays says ultimate impact of changes still under review
Bloomberg’s Matt Townsend takes a look at the winners and losers in the new U.S. tax law.

Barclays Plc will take a charge of about 1 billion pounds ($1.3 billion) this year as a result of the recent U.S. corporate tax overhaul driven by President Donald Trump.

However, the British lender expects its future U.S. after tax earnings to be positively impacted by the changes, it said in a statement on Wednesday. The one-off charge in the financial year ended Dec. 31 will reduce its CET1 capital ratio by about 20 basis points, it said.

“The ultimate impact is subject to the effect of other complex provisions,” which Barclays is currently reviewing, the company said in the statement.

The lowering of the U.S. corporate tax rate from 35 percent to 21 percent will benefit most companies but it also requires them to recalculate deferred tax assets that have accumulated on their balance sheets. Bank of America Corp. will take a $3 billion charge, while Credit Suisse Group AG is at risk of posting a third consecutive annual loss after predicting it will take a 2.3 billion-francs ($2.33 billion) hit.

Barclays’ shares, which are down 9 percent this year, were little changed after the lender’s announcement, trading at 202.80 pence at 12:10 p.m. in London.

“It looks likely the provisions for base erosion and anti-abuse tax will reduce much of the benefit of the U.S. tax cut,” said Edward Firth, a London-based analyst at Keefe, Bruyette & Woods. “Near term, any positive earnings revisions are likely to be very modest.”

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