LONDON – Bank of England Barclays on Thursday reported a 1.6 billion pound ($2 billion) net profit for shareholders in the third quarter, well ahead of expectations.
The result compares to a £1.17bn net profit forecast in a poll of LSEG analysts and is 23% higher than the same period in 2023.
Revenue for the period came in at £6.5 billion, slightly above forecasts of £6.39 billion.
Barclays shares rose 4.3% as of 9:30 a.m. in London, hitting their highest level since October 2015, according to LSEG data.
The lender’s return on tangible equity rose to 12.3% from 9.9% in the second quarter, as its CET1 ratio – a measure of solvency – rose to 13.8% from 13, 6%.
Earlier this year, Barclays announced one strategic overhaul in an effort to cut costs, increase shareholder returns and stabilize long-term financial performance, focusing more on domestic lending while reducing costs at the more volatile investment banking unit . That strategy is inclusive acquired British retail banking business Tesco Bank.
In the second quarterBarclays’ net profit fell slightly year-on-year amid lower earnings at its UK consumer and business banks, driven by a 10% rise in net profit at its investment bank.
Those gaps narrowed in the third quarter, with domestic bank earnings rising 4%, with the lender raising its annual forecast for UK retail net interest income to £6.5bn from £6.5bn. .3 billion pounds. Corporate banking income was 1% higher as average deposit balances increased, while investment banking income increased 6%.
Amid the slump, earnings at Barclays’ U.S. private consumer bank fell 2% year-on-year as its wealth management unit fell 3%.
Barclays CEO CS Venkatakrishnan told CNBC on Thursday that the results show the bank is on track to achieve the goals it set in February.
“We’re guiding our net interest income up, and we’ve had two consecutive quarters of NII expansion in our UK business. So we’re guiding for growth, for both the UK business and for the bank as a whole, and beyond.” We see costs very much under control.”
The bank now sees an NII pool of over £11bn for the full year 2024, compared with a previous outlook of £11bn.
Analysts at Citi called it a “strong set of results”, especially for the domestic business, highlighting the UK’s upgraded NII guidance.
“We see consensus upgrades in the high single digits for 2024 [earnings per share] post these strong Q3 results and see low-single-digit upgrades to consensus EPS from 2025 onwards, largely on the back of stronger UK NII,” they said in a note uncle on Thursday.
Barclays shares are up 55% year-to-date after falling in 2023.
Some banks have announced plans to restructure, streamline operations and cut costs when facing the risk of weakening net interest margins due to falling interest rates. HSBC earlier this week said he would consolidate its operations into four business units.
“What I would say about interest rates is, Barclays has had a very disciplined approach to managing interest rates, and so we have what’s called a structural hedge, which is a way to cushion the impact of interest rates on our earnings. , and that’s part of the reason our NII has increased over the past few quarters. So, we are pretty well protected against changes in interest rates going forward,” Venkatakrishnan said.
Will Howlett, financial analyst at Quilter Cheviot, said: “Despite past disappointments, the recent strategy update has positively changed Barclays’ investment story, with clear objectives between departments and focus on more profitable areas.
Deutsche Bank kicked off its third-quarter reporting season on Wednesday, posting Net profit was higher than expected as revenue in both the investment banking and asset management divisions increased 11% year-on-year.
