Barclays shares down 8% as profits slump

Barclays CEO: Focus on core business
Barclays CEO: Focus on core business
Barclays comfortable with energy exposure: CEO
Barclays comfortable with energy exposure: CEO
Policy environment is complicated: Barclays CEO
Policy environment is complicated: Barclays CEO

Shares of U.K. bank Barclays fell Tuesday after it announced further restructuring, a dividend cut and an 8 percent fall in statutory pre-tax profit last year to £2.1 billion ($2.9 billion).

As part of its full-year results, Barclays announced that it will be simplifying its business structure to two sibling divisions: Barclays U.K. – which will become a U.K. ring-fenced bank – and Barclays Corporate and International. As part of the restructure, Barclays is looking to sell down its 62.3 percent holding in its African business.

"The challenge we need to do is wind down our non-core assets as we simplify Barclays business model," chief executive Jess Staley told CNBC Tuesday. He added that the bank also needed to "put our conduct and litigation issues behind us."

The bank also issued a full-year dividend of 6.5 pence per share for 2015 but announced it was cutting the dividend to 3 pence a share in 2016. London-listed shares of the bank fell 9 percent on Tuesday and were briefly halted during the morning session.

Staley said closing the bank's non-core business was a key to success and defended the dividend cut.

"We've got plenty of capital and like our capital position. We are cutting the dividend for a very simple reason – we need to accelerate the closure of our non-core business."

"Clearly cutting the dividend was a very painful decision...but it was necessary to make sure we were unfettered in getting that non-core business down in 2016," he said.

Barclays has seen its share price fall over 30 percent over the last two years amid a tumultuous period of changing leadership and restructuring. Staley said the size of the bank's non-core assets and the expense of getting out of them had dented investor confidence.

"If we can convince the market that we're done with non-core and there's true visibility to the earnings power of Barclays, the stock will recover and we'll be in a very good position," Staley said,

Barclays set to exit African business
Barclays posts 'messy' full-year loss as shares fall

The lender added in its results statement that it did not expect as strong a performance for the first quarter in its investment banking division.

A year ago, Barclays posted a net loss of £174 million for 2014 and set aside more money for potential fines related to its foreign exchange operations.

The lender's 2015 core equity tier 1 ratio, a key measure of a bank's ability to take economic shocks, now stands at 11.4 percent and its risk-weighted assets are down by £28 billion to £47 billion.

Asked whether the bank's exposure to the oil and gas sector due to the loans it had made the industry, which is struggling due to the sharp decline in oil prices, put it at risk, Staley was not concerned.

"Barclays has been very prudent in the management of its credit risk but our exposure is primarily to the large majors, to investment grade companies, we're very comfortable with our oil and gas exposure. Given our presence in that space I feel great about where we are and we're not worried about any significant impairment issues in 2016," he said.

'Unchartered waters'

Staley took to the helm of the bank in December, taking over from interim leader John McFarlane, who had replaced Antony Jenkins.

The appointment of a banker who had spent 34 years at JPMorgan, and following that three years at U.S. hedge fund Blue Mountain Capital, was largely seen as a sign that Barclays was going to shift its focus to its investment banking operations which had seen massive job cuts under retail banker Jenkins.

Staley said on Tuesday that the bank was going to continue to reduce its headcount "at a measured pace." "We're on target to get our headcount number to a number that is manageable," he said, saying that there had been a headcount freeze since he took over his role as CEO.

However, in January one of Staley's first moves was to cut a further 1,200 jobs in the bank's worldwide investment bank with most of the losses in Asia. On Tuesday, the bank announced that it was to sell down its 62 percent stake in Barclays Africa in the next two to three years in order to focus on its U.K. and U.S. operations.

Staley added that the global economy was navigating "uncharted waters" while it deals with current market turmoil and negative interest rates introduced by central banks in a bid to stimulate growth.

"This is a very complicated environment in terms of monetary policy, we are for sure in uncharted waters. Central banks around the world have done extraordinary things and I think there's a deep desire to be back on track," he said.

"Managing with very low interest rates or negative interest rates is a challenge for the financial sector but we're going to do our part to help the global economy…hopefully we can get back to a monetary policy which is more normal somewhere down the road."

Clarification: Barclays reported 8 percent fall in statutory pre-tax profit in 2015 to £2.1 billion ($2.9 billion) and a 3 percent rise in core pre-tax profit in 2015 to £6.9 billion.

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