Barclays earnings Q3 2002

A sign hangs above the entrance to a branch of Barclays Plc bank in London, England

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LONDON — barclays On Wednesday, it reported an unexpected boost in third-quarter earnings after strong trade revenues, despite continued drag from a costly US trade error.

The British lender has net profit attributable to shareholders of £1.512bn ($1.73bn), above analyst’s consensus expectations of £1.152bn, an increase of £1.374bn restated for the same period last year.

“We delivered another quarter of stronger returns and revenue growth in each of our three businesses, reaching £6.4 billion, a 17% increase in Group revenue,” Barclays CEO CS Venkatakrishnan said in a statement. Said.

“Our performance in FICC (fixed income, currencies and commodities trading) was particularly strong and we continued to gain momentum in our consumer business in the UK and US.”

The group continued to be hit by excessive issuance of securities, which has resulted in £996m in lawsuits and enforcement charges so far this year in the US.

The biggest upside contribution to the bank’s performance came from FICC (fixed income, currencies and commodities) trading, where revenue was up 93% year-on-year to £1.546 billion.

The bank also benefited from the increase in the net interest margin—the difference between the interest a bank earns on loans and what it pays on deposits; this increased from 2.53% to 2.78% as the group benefited from higher interest rates.

• The common equity first-tier capital (CET1) ratio was 13.8 percent, compared to 15.4 percent at the end of the third quarter of 2021 and 13.6 percent in the previous quarter.
• Group revenue, including the impact from the over-issuance of securities, increased from £5.5 billion to £6 billion compared to the same period last year.
• Return on tangible equity (RoTE) was 12.5% ​​compared to 11.4% in the third quarter of 2021.
• Loan impairment charges rose from £120m to £381m last year, with the bank citing a “worsening macroeconomic outlook”.

Barclays shares will start Wednesday’s trading session down almost 20% year-on-year.

Strong results, but be careful

Despite its strong performance, John Moore, senior investment manager at RBC Brewin Dolphin, said that “today’s statement was cautious and there is little risk,” as Barclays benefited from solid fixed-income trading and market volatility and an increase in net interest income. It’s the way of the news in terms of returns for shareholders – perhaps in response to the possibility of an unexpected tax falling on banks that has been discussed recently.”

“Looking ahead, the uncertain economic backdrop will curb some Barclays markets, particularly in the credit cards and investment banking divisions, and the outlook for corporate actions such as raising capital will be more difficult,” Moore said.

“Despite previous failures impacting the results, Barclays remains the best positioned bank among the UK’s leading banks with a more diversified revenue stream – but there are still challenges ahead.”

Sophie Lund-Yates, chief equity analyst at Hargreaves Lansdown, noted that Barclays’ diversified revenue stream has made it more resilient than many of its peers during times of economic downturn, but suggested a “gray cloud” of management concerns still hung over the bank.

“The recent over-issuing of US securities has only raised questions about the increased risk due to the latest blunder and weak oversight at the firm,” he said.

“One thing is for sure, Barclays cannot tolerate another mistake without the questions and concerns leading to a more substantial decline.”

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