Barclays (BARC) Q3 2024 Earnings

LONDON – British bank Barclays on Thursday reported a net profit of 1.6 billion pounds ($2 billion) attributable to shareholders for the third quarter, beating expectations.

The result compared with the £1.17bn net profit forecast in a survey of LSEG analysts and was 23% higher than the same period in 2023.

Revenue for the period came to £6.5 billion, slightly above a forecast of £6.39 billion.

Barclays shares rose as much as 5% at one point, hitting their highest level since October 2015, according to LSEG data, before closing up 4.2%.

The lender’s return on tangible equity rose to 12.3% from 9.9% in the second quarter, while its CET1 ratio – a measure of solvency – rose to 13.8% from 13.6%.

Earlier this year, Barclays announced a strategic overhaul in an effort to reduce costs, increase shareholder returns and stabilize its long-term financial performance, putting more focus on internal lending while reducing costs across its unit. investment banking, more volatile. That strategy has included the acquisition of UK retail banking business Tesco Bank.

In the second quarter, Barclays’ net profit fell slightly year-on-year amid lower revenue at its UK consumer bank and corporate bank, while net profit rose 10% at its investment bank.

Those gaps closed in the third quarter, with domestic banks’ revenue rising 4%, and the lender raising its annual forecast for UK retail net interest income to £6.5bn from £6. .3 billion pounds. Corporate banking revenue increased 1% due to an increase in average deposit balances, while investment banking revenue increased 6%.

Amid declines, revenue at Barclays’ US private consumer bank fell 2% year-on-year while its wealth management unit fell 3%.

Barclays Chief Executive CS Venkatakrishnan told CNBC on Thursday that the results showed the bank was on track to meet the targets it had set in February.

“We are aiming up on our net interest income, and we have had two continuous quarters of NII expansion in our UK business. So we are aiming up, both for the UK business and for the bank as a whole. together, and then we see the costs very under control.

The bank now forecasts the NII group to exceed £11 billion by the full year 2024, from a previous outlook of £11 billion.

Citi analysts called it a “good set of results”, especially for the domestic business, highlighting the UK’s improved NII guidance.

“We see high single-digit improvements through consensus 2024 [earnings per share] “post these strong Q3 results and see low single-digit improvements in consensus EPS to 2025+, primarily thanks to stronger UK NII,” they said in a note on Thursday.

Barclays shares have soared 55% so far this year after falling in 2023.

Several banks have announced plans to restructure, streamline operations and cut costs as they face potential weakening net interest margins as interest rates fall. HSBC Earlier this week it said it would consolidate its operations into four business units.

“What I would say about interest rates is that Barclays has had a very disciplined approach to managing interest rates, so we have something called structural hedging, which is a way of smoothing out the effects of interest rates. in our revenues, and that is part of what is causing our NII expansion in recent quarters, so we are quite well protected against changes in interest rates in the near term,” Venkatakrishnan said.

“Despite past disappointments, the recent strategy update has positively changed Barclays’ investment narrative, with clear objectives across all divisions and a focus on higher profitability areas,” financial analyst Will Howlett said in a note. by Quilter Cheviot.

German Bank kicked off the third-quarter reporting season on Wednesday, posting higher-than-expected net profits as revenue in both its investment banking and asset management divisions rose 11% year-over-year.