LONDON, Jan 26 – British bank Barclays said Monday it expected a 2008 pre-tax profit of more than the £5.3bn despite write-downs of £8bn due to the financial crisis.
Barclays chairman Marcus Agius and chief executive John Varley said in a statement they would bring forward the announcement of the 2008 results by one week to February 9 because of market pressures in recent days which saw the bank\’s share price more than halved.
Agius and Varley said Barclays would report a pre-tax profit "clearly above" the £5.3bn anticipated by analysts, with the results including all costs and write-downs.
The announcement came as US Federal Reserve having cut interest rates to near zero, looked for new ways to ease a global credit crunch.
The Fed meets Tuesday and Wednesday to consider further actions to get credit flowing again and battle the worst economic crisis in decades.
The two-day meeting of the Federal Open Market Committee is being held just six weeks after the central bank slashed its base lending rate to a range of zero to 0.25 percent and predicted "exceptionally low" rates to persist "for some time."
Despite the so-called zero interest rate policy, Fed chairman Ben Bernanke and others have repeatedly said the central bank is not out of ammunition to fight the crisis.
Bernanke said earlier this month the Fed still has "powerful tools" at its disposal to counter a crisis that began with a US real estate meltdown and spread to the global financial sector, resulting in a credit squeeze and slump that has affected consumer spending, manufacturing and the broad economy.
The Fed "has already done a lot and will continue to do a lot" in addition to moving on interest rates, said Nariman Behravesh, chief economist at IHS Global Insight.
The central bank has already offered exceptional aid to banks and other firms, and has been buying up mortgage-backed bonds and commercial paper to help unfreeze credit in those areas.
Analysts say this has helped somewhat but that credit markets remain under stress, with lenders and consumers skittish about taking on new risks.
"The big thing they could do is so-called quantitative easing, which would be directly going in and buying government bonds. The reason they would do that would be to lower mortgage rates," Behravesh said. "I will look for some kind of signal on this."
Adolfo Laurenti, senior economist at Mesirow Financial, said the Fed has to walk a fine line in communicating its policy moves and its economic outlook.
Laurenti said he does not expect the Fed to acknowledge the use of quantitative easing, a move used by Japan that focused on the quantity of money in the financial system.
"I think part of the problem is that if you look back at what Japan did in the 1990s it did not work very well," Laurenti said.
"The Fed wants to mark a difference between what Japan did and what they want to accomplish."
Laurenti said the Fed will make a major effort to shore up confidence, helping the nation weather what appears to be a deep recession that may ease in the second half of 2009.
He said the gross domestic product figures set to be released later in the week will show a fourth-quarter economic picture "that will look awful" with a decline at a pace of as much as six percent. The outlook remains grim for the first and second quarters.
"I think they need to acknowledge the fact that the economy is weak and will continue to deteriorate until the second half and at the same time they need to manage expectations," he said.
"How to prepare expectations without sounding alarmist is a very tough balance. They will be parsing every single word, to make the point without contributing to the depressed climate."
He said Fed officials "cannot be too emphatic in claiming any improvement" but added that there have been signs of thaw in some frozen credit markets.
"There are very minimal improvements but there are some," he said.