Barclays has reported its results, indicating a combination of ups and downs. In the third quarter, the bank surpassed profit expectations, primarily due to its credit card sector’s robust performance. However, they hinted at the possibility of future measures to manage costs.
The bank’s corporate and investment branches didn’t meet revenue anticipations. Barclays has also adjusted its net interest margin forecast for the year to a range of 3.05%-3.1%, following a previous reduction in guidance during July.
For the three months concluding in September, the FTSE 100 listed bank disclosed a 4% decrease in pre-tax profit to £1.89 billion, down from £1.97 billion the prior year. Nonetheless, this figure was higher than the predicted £1.77 billion.
There was a 5% increase in income, reaching £6.26 billion from the previous £5.95 billion. However, the basic EPS dropped to 8.3p from 9.4p, and the return on total equity declined from 12.5% to 11.0%.
CS Venkatakrishnan, the CEO, remarked, “Despite a diverse market environment, we achieved an 11.0% RoTE in Q3. Our credit management was effective, we kept a handle on costs, and our capital position remained robust, with a Common Equity Tier 1 ratio at 14.0%.”
He further expressed optimism about enhancing shareholder returns via cost efficiencies and judicious capital allocation.
Income from the Corporate and Investment Bank fell by 6% to £3.08 billion, down from £2.82 billion last year, signifying reduced client involvement in Global Markets and Investment Banking. Barclays UK’s income dipped 2% to £1.87 billion, influenced by the transfer of Wealth Management and investments to Consumer, Cards, and Payments, where the income surged by 9% to £1.36 billion from £1.24 billion.
Overall, the group’s operating costs dropped 4% year-on-year to £3.9 billion, as growth, inflation, and investments were counterbalanced by efficiency gains and reduced litigation and conduct expenses.
There was a slight rise in bad debt provisions to £433 million, up from £381 million, while the Teri 1 Capital Ratio enhanced to 14.0% from 13.9%.
Barclays is aiming for a cost-to-income ratio percentage in the early 60s by 2023 and is considering measures to trim structural costs, potentially leading to significant changes in Q4. The bank has set a goal for a RoTE over 10% in 2023 and expects the UK’s net interest margin (NIM) to lie between 3.05%-3.10% in 2023. The NIM for Q3 stood at 3.04%, up from 3.01% the preceding year.
