Barclays on Thursday, August 1, published the results of its operations for the second quarter of the current year.
The revenue of the mentioned financial institution, based in London, for April-June 2024 was fixed at 6.3 billion pounds ($8.05 billion). It is worth noting that analysts interviewed by the media predicted that the corresponding figure would be fixed at around 6.25 billion pounds.
Also on Thursday, the financial institution announced a share buyback program worth up to 750 million pounds.
The bank’s net profit attributable to shareholders for April-June 2024 amounted to 1.2 billion pounds. This indicator has deteriorated compared to the result of a year ago, but its change in the negative direction is moderate and does not belong to the category of what can be described as a kind of critical drop. The corresponding result is because the net interest income of the lender’s core units in the domestic British market showed a decrease.
Analysts interviewed by the media predicted that Barclays’ attributable net profit for the second quarter of 2024 would be 1.03 billion pounds. It is worth noting that for the same period last year, this figure was fixed at around 1.3 billion pounds.
On Thursday morning, the value of the shares of the financial institution showed an increase of 2%.
The net interest income of Barclays’s consumer bank for the first half of the current year was fixed at around 3.15 billion pounds. This indicator showed a decrease of 4% compared to the result for the same period in 2023. The income of Barclays corporate bank fell by 6%. This result, according to media reports, is because a decrease in income from the liquidity pool is offset by an increase in interest rates.
The performance of Barclays’ investment bank turned out to be more positive. In this case, the income for April-June of the current year was fixed at 3.02 billion pounds. The mentioned indicator increased by 10% compared to the result for the second quarter of 2023.
Max Georgiou, analyst at research company Third Bridge, says that the revenue of Barclays’ investment bank exceeded expectations. According to the expert, this fact is a factor of positive impact on the medium-term goals of a financial institution. Max Georgiou expects that to continue implementing the current strategy, the bank will continue to focus on restoring its market share in the United States.
Also on Thursday, Barclays raised its net interest income target for 2024 to about 11 billion pounds from 10.7 billion pounds. It is worth noting that this indicator does not apply to the head office and units of the investment bank.
Barclays’ credit impairment charges in the second quarter of the current year were fixed at 400 million pounds. It is worth noting that this indicator showed no changes compared to the data for the same period in 2023.
The common equity tier one (CET1) capital ratio, a measure of the bank’s financial strength, was fixed at 13.6% in the second quarter of 2024. In December 2023, this figure was 13.8%.
In the current year, the financial institution began a large-scale restructuring. This set of actions of the bank is aimed at improving efficiency and boosting profit. Against the background of the implementation of a large-scale restructuring, the value of shares of a financial institution has increased by 52% since the beginning of the current year. At the same time, the launch of the relevant program caused that the bank to record a net loss of 111 million pounds in the fourth quarter of 2023. In the first quarter of 2024, the financial institution returned to profitability, although revenue fell year-on-year.
Barclays Chief Executive Officer C. S. Venkatakrishnan said on Thursday that good progress had been made in implementing the bank’s three-year development plan. In the context of the relevant thesis, he noted that the bank’s return on tangible equity for the first half of 2024 was fixed at 11.1%, while the target is more than 10% per year.
C. S. Venkatakrishnan also said that the lender has completed the sale of the performing Italian mortgage portfolio, announced the sale of the German consumer finance business, and is on track to the final stage of the deal to acquire Tesco Bank, which is expected in November of the current year.
The restructuring process of the financial institution split the corporate and investment bank across Barclays UK, Barclays UK Corporate Bank, Barclays Private Bank and Wealth Management, Barclays Investment Bank, and Barclays US Consumer Bank.
Richard Hunter, Head of Markets at Interactive Investor, says that the reasons for the decline in the lender’s performance were factors such as pressure on mortgage margins and the unfavorable dynamic of deposits, as customers sought higher rates from other banks.
Currently, in Europe, Barclays is facing what can be described as a lack of scale. The sale of the German consumer finance business and the Italian mortgage portfolio are a kind of result of the corresponding state of affairs.
As we have reported earlier, Barclays Invests in Promotion on Private Credit Market.
