On Thursday, April 25, Barclays shares rose in price by 4% after this financial institution, based in London, published information on net income attributable to shareholders for the first quarter of the current year.
The mentioned figure for January-March 2024 amounted to 1.55 billion pounds ($1.93 billion). This indicator exceeded preliminary expectations. Also, against the background of the dynamic of the income attributable to shareholders, over the past quarter, the financial institution was able to restore confidence, which significantly weakened amid actions on a large-scale reorganization of Barclays. Analysts interviewed by the media expected the specified figure to be 1.29 billion pounds.
On Thursday morning, the share price of the financial institution rose by 4.1%.
The bank’s pre-tax profit for January-March of the current year was fixed at 2.28 billion pounds. This indicator showed a drop of 12% compared to the result for the same period in 2023. In part, the mentioned figure is related to the large-scale plans of the financial institution for modernization. This result will be a factor of disappointment for investors who expected an improvement in the result of Barclays’ investment bank against the background of high-profit levels of Wall Street competitors, including, for example, Goldman Sachs.
The bank’s revenue for the first quarter of 2024 amounted to 6.95 billion pounds. This indicator shrank by 4% compared to the result for the same period last year.
The charges of a financial institution for credit impairment in the first quarter of 2024 amounted to 513 million pounds. A similar figure for the same period last year was recorded at around 524 million pounds.
The common equity tier one (CET1) capital ratio, which is an indicator of the financial strength of the lender, amounted to 13.5% in the first quarter of 2024. In the last quarter of 2023, this figure was fixed at 13.8%.
Barclays’ annual return on tangible equity (RoTE) for the first three months of 2024 was 12.3%.
The total operating expenses of the financial institution for the last quarter were fixed at 4.2 billion pounds. This indicator showed an increase of 2% year-on-year.
Barclays reported that loans and advances to customers for the first quarter of 2024 fell by 1% compared to a year ago figure. This result is a reflection of subdued mortgage lending amid declining market demand. It is worth noting that since the Bank of England raised interest rates to 5.25%, financial institutions have been able to charge more for loans and mortgages.
Barclays’ net loss for the last quarter of 2023 was recorded at around 111 million pounds. This result is due to the implementation of decisions related to the reorganization of the bank’s operating activities aimed at reducing costs and improving efficiency.
C.S. Venkatakrishnan, CEO of Barclays, said that the financial institution’s performance in the first quarter of 2024 is evidence that the bank is committed to materializing overhaul plans. As part of the related efforts, the lender is investing in consumer businesses in the United Kingdom and intends to implement the deal to acquire Tesco Bank, which is expected to be completed in the fourth quarter of 2024.
C.S. Venkatakrishnan stated that the bank is focused on the disciplined implementation of the plan, which was presented in an update for investors released in February.
Barclays’ revamp plans include a £900 million hit. To achieve the corresponding goals, structural measures are envisaged, which, as the financial institution expects, will provide gross cost savings of approximately 500 million pounds in 2024. The expected payback period, in this case, is less than two years.
As part of the overhaul, the financial institution’s business was reorganized into five operating units. As a result of these actions, the corporate and investment banks were separated: Barclays U.K., Barclays U.K. Corporate Bank, Barclays Private Bank and Wealth Management, Barclays Investment Bank, and Barclays U.S. Consumer Bank.
The financial institution has promised to return 10 billion pounds to shareholders between 2024 and 2026 through share buybacks and dividends.
Will Howlett, financial analyst at Quilter Cheviot, says that Barclays’ results for the first quarter of the current year are a promising start. The expert also noted that the bank adheres to the financial roadmap outlined in the lender’s final report for 2023. Will Howlett said that after a successful start to 2024, Barclays is ready to reshape its valuation narrative and deliver on its promises to shareholders. Moreover, the expert says that the confirmation of profitability targets aimed at achieving RoTE at more than 10% in the current year and more than 12% in 2026 is a reflection of the persistence of the bank’s ambitions, despite the failures observed recently.
Optimistic forecasts regarding the future dynamic of the economy of the United Kingdom allowed Barclays to put aside 58 million pounds in case of a possible default. Last year, the corresponding figure was 113 million pounds.
Barclays’ chief financial officer Anna Cross says consumer behavior in the United Kingdom continues to be very robust. According to her, currently, the bank’s clients manage their expenses wisely. She also noted that customers still adhere to a strategy of conservative behavior. According to her, for the mentioned reason, clients continue to strive for higher savings rates and are interested in getting mortgage financing early.
The media reports that Barclays intends to continue implementing measures to shrink the workforce in 2024. Between October and December last year, the bank laid off 5,000 employees. What plans the financial institution has to shrink its workforce for the current year have not yet been announced. Currently, the number of employees of the bank worldwide is 94,000.
As we have reported earlier, Barclays Invests 3 Million Pounds in Trade Ledger.
