𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

Barclays has revealed lower earnings after saying it was setting aside an extra £235 million to cover the cost of compensating historic car loan customers.

The banking group made a pre-tax profit of £2.1 billion for the third quarter, between July and September, down 7% on the prior year.

This took into account the impact of it needing a higher provision for the motor finance issue.

Having reviewed the Financial Conduct Authority’s (FCA) proposed redress scheme, Barclays said it did not think its previous £90 million reserve would be enough to cover the costs.

The additional £235 million brings the group’s total provision to £325 million, which it said reflected a reasonable estimate of the cost of compensation.

However, like other lenders including Lloyds, Barclays challenged the regulator’s proposals, saying it did not think the conditions “accurately address actual loss (if any) suffered by customers and do not achieve a proportionate or appropriate outcome”.

The bank said its pre-tax profit rose by 4% year-on-year excluding the impact of the car finance provision.

It reported a 16% jump in income across its UK bank over recent months after acquiring Tesco Bank last year.

Its corporate and investment banking divisions were also boosted, while income from its consumer bank in the US soared by 19% in the third quarter.

CS Venkatakrishnan, Barclays’ group chief executive, said: “I continue to be pleased with the ongoing momentum of Barclays’ financial performance over the last seven quarters.

“This is driven by a stronger outlook for stable income and an earlier than planned delivery of efficiency savings.

“Moreover, it comes despite an additional charge for motor finance redress.”