Barclays Beats Profit Expectations, Warns Of Tough Times Ahead

Marco Green
October 25, 2020

Barclays reported net income of £ 611 million ($ 797.7 million) on Friday. for the third quarter as the United Kingdom lender tries to plan a recovery from the coronavirus pandemic.

Provisions for bad loans at £607 million were also way below analyst expectation and 63% down on the previous quarter.

This time around, the cash earmarked for bad loans was only £ 608 million, well below the expected £ 1 billion.

Barclays shares rose 4.6% at the start of trading on Friday.

"In the first half of this year we took very strong deficit fees and our deficit reserves, so our reserves for debt losses are now north of $ 9 billion", Barclays CEO Jess Staley told CNBC's Squaw Box Europe.

"This is the highest reserve level we have ever had".

The common equity layer one capital (CET1) ratio was 14.6%, which was 14.2% at the end of the first half. However, last year's third quarter included litigation and conduct charges - mostly for mis-sold Payment Protection Insurance (PPI) - of £1.57 billion, so on a "clean" basis earnings were significantly lower than a year ago.

Return on tangible fairness (RoTE) was 5.1%, up from 0.7% the earlier quarter and -2.4% for the third quarter of 2019.

The net interest margin (NIM) was 2.51% and barely changed from 2.48% in the previous quarter.

However, he pointed out that United Kingdom customers have benefited from over £100 million of waived overdraft fees and charges since the start of the pandemic and that his job was ultimately to "maintain Barclays" financial integrity', leaving the door open for the bank to introduce account charges.

"This support is somewhat possible because we have a flexible and diversified business model, which means we are profitable in the face of this crisis".

There was another strong performance from its corporate and investment bank, with income of £2.9bn up 11% on previous year although down 12% on the second quarter.

Staley has said he regrets having had any relationship with Epstein.

The markets division, which has benefited from frenzied trading by the bank's clients amid volatile markets worldwide, increased revenue by 29% year-on-year to 1.69 billion pounds, with equities up 40% to 691 million pounds and fixed income, currencies and commodities up 23% to 1 billion pounds. Increased to ten thousand pounds. quarter.

Barclays reported profit before tax of 1.1 billion pounds ($1.44 billion) for the July-September period, double the 507 million pounds average of analysts' forecasts.

Main lenders have usually stunned to the upside thus far this earnings season, with UBS easily surpassing expectations earlier this week to submit a web revenue to $2.1 billion.

Barclays stock has fallen more than 42% since the turnaround this year.

Other reports by Click Lancashire

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