LONDON – British bank Barclays on Thursday reported third-quarter net shareholder profit of 1.6 billion pounds ($2 billion), beating expectations.
The result compared with a net profit forecast of 1.17 billion pounds in a London Stock Exchange Group analyst survey and was 23% higher than the same period in 2023.
Revenue for the period was £6.5bn, slightly above forecasts of £6.39bn.
Barclays shares were up 3.5% as of 8:45 a.m. in London, reaching their highest level since October 2015, according to London Stock Exchange Group data.
The bank’s return on tangible equity rose to 12.3% from 9.9% in the second quarter, and its CET1 ratio, a measure of solvency, rose to 13.8% from 13.6%.
Earlier this year, Barclays announced strategic changes to cut costs, boost shareholder returns and stabilize its long-term financial performance, putting more emphasis on domestic lending while reducing costs in its volatile investment banking unit. The strategy includes Acquisition of UK retail banking business Tesco Bank.
In the second quarter, Barclays’ net profit fell slightly year-on-year due to lower revenue at its UK consumer bank and corporate bank, while its investment bank net profit rose 10%.
Those gaps narrowed in the third quarter, with domestic bank revenue rising 4% and the bank raising its annual forecast for UK retail net interest income to £6.5 billion from £6.3 billion. Corporate banking revenue grew 1% due to higher average deposit balances, while investment banking revenue grew 6%.
Amid the economic downturn, revenue at Barclays’ U.S. private consumer bank fell 2% annually, while revenue at its wealth management unit fell 3%.
Barclays Chief Executive CS Venkatakrishnan told CNBC on Thursday that the results showed the bank expected to hit the target set in February.
“We are revising our net interest income upwards, and our UK business has had two consecutive quarters of NII expansion, so we are revising our net interest income upwards across the UK business and across the bank, and then we see costs well under control. .
The bank now expects full-year 2024 group NII to exceed £11bn, compared with its previous forecast of £11bn.
Barclays shares have soared 55% so far this year after falling in 2023.
Several banks have announced plans to restructure, streamline operations and cut costs as they face the potential for weakening net interest margins as interest rates fall. HSBC Earlier this week, the company said it would consolidate its operations into four business units.
“What I will say about interest rates is that Barclays takes a very disciplined approach to interest rate management, so we have something called structural hedging, which is a way of removing the impact of interest rates on our revenue, which It’s also part of the reason that our NII has expanded over the past few quarters, so we’re well positioned to withstand interest rate changes in the short term.
Deutsche Bank Wednesday kicked off the third-quarter earnings season, with net profit higher than expected and revenue from the investment banking and asset management divisions rising 11% year-over-year.
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