LONDON – Bank of Great Britain Barclays on Thursday reported net profit attributable to shareholders of £1.6 billion ($2 billion) in the third quarter, beating expectations.
The result was 23% higher than in the same period in 2023, compared with net profits of £1.17 billion forecast in a survey of LSEG analysts.
Revenue for the period was £6.5bn, ahead of forecasts of £6.39bn.
Barclays shares were up 4.3% by 09:30am 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%.
At the beginning of the year, Barclays a strategic renewal in an effort to cut costs, boost shareholder returns and stabilize its long-term financial performance by focusing more on home loans while cutting costs in its more volatile investment banking unit. This strategy has included Buying UK retail banking business Tesco Bank.
In the second quarterBarclays’ net profit fell slightly year-on-year due to lower income in its UK consumer bank and corporate bank, while net profit rose 10% in its investment bank.
Those gaps closed in the third quarter, with domestic banking income up 4%, with the lender raising its annual forecast for UK retail net interest income to £6.5bn from £6.3bn. Corporate banking revenues were 1% higher due to higher average deposit balances, while investment banking revenues were up 6%.
Among the decliners, revenue at Barclays’ US 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 showed the bank was on track to meet targets set in February.
“Our net interest income is growing, and we’ve had two consecutive quarters of NII expansion in the UK business. So we’re growing, both for the UK business and for the bank as a whole, and then we see costs very much under control.”
The bank now sees an NII group of more than £11bn for the full year 2024, up from a previous forecast of £11bn.
Analysts at Citi called it a “good set of results”, particularly for the domestic business, highlighting the UK’s revised NII guidance.
“We see large single-digit improvements to 2024 consensus (earnings per share) following the release of these strong Q3 results and single-digit improvements to 2025+ consensus EPS, particularly on stronger UK NII,” they said in a note on Thursday.
Barclays shares are up 55% year-to-date after falling in 2023.
Several banks have announced plans to restructure, streamline operations and cut costs as they grapple with weakening net interest margins as interest rates fall. HSBC earlier this week he said he 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 interest rate management, so we have this thing called structural hedging, which is a way of softening the effects of interest rates on our income. , and that’s part of what drives our NII spread, so we’re relatively protected from interest rate swings in the short term,” Venkatakrishnan said.
“Despite past disappointments, the latest strategy update has positively changed Barclays’ investment narrative, with clear divisional objectives and a focus on areas of higher profitability,” Will Howlett, financial analyst at Quilter Cheviot, said in a statement.
Deutsche Bank The third quarter reporting season began on Wednesday, with the publication of net profit higher than expected in fact, revenues from the investment banking and asset management divisions increased by 11% year-on-year.
