Barclays has seen little sign of distress in its UK commercial real estate loan book but has warned that the wider sector “remains under pressure” from various economic challenges.
In annual results published today, the bank said its exposure to UK commercial real estate stood at £9.7bn, largely stable compared to £10bn a year ago. Some 81% of that was classed as stage 1, meaning the credit risk has not increased significantly since initial recognition. Exposure at stage 3, where the asset is credit impaired, was 2%.
Despite noting that its loan portfolio was well collateralised, Barclays acknowledged stress in the wider market.
“The broader real estate sector remains under pressure due to pricing and affordability concerns, as well as construction input costs and supply chain issues adding to the uncertainty, in particular across non-investment grade exposures,” it said.
Across its businesses, the bank posted a full-year profit of £7bn on revenue of £25bn. That compares with an £8.2bn profit on £21.9bn in revenue for 2021. Group chief executive CS Venkatakrishnan said: “We are cautious about global economic conditions but continue to see growth opportunities across our businesses through 2023.”
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