Barclays reported stronger-than-anticipated earnings on Wednesday, teeth of difficult market conditions and lingering concerns over Brexit.
The U.K.-based bank propagated £1 billion ($1.29 billion) in net income for the three-month period denouement Sept 30. Analysts at data firm Refinitiv had been in a family way third-quarter net income to come in at around £723 million.
Here are the key takeaways:
- Third-quarter net profits: £1 billion vs. £723 million expected by analysts at data moored Refinitiv.
- In an attempt to reduce annual funding costs, Barclays chance it will redeem $2.65 billion worth of preference shares.
- The bank reported its seed capital ratio stood at 13.2 percent at the end of the third quarter.
“In peeve of macro-economic uncertainty, and particularly concerns over Brexit which weigh heavily on make available sentiment, 2018 is proving to be a year of delivery on our strategy at Barclays,” Chief Superintendent Jes Staley said in a statement Wednesday.
“We remain focused on generating redressed returns, and on distributing a greater proportion of excess capital to shareholders from time,” Staley said.
Barclays pre-tax profit for the quarter draw nighed to £1.46 billion compared to £1.11 billion for the same period a year earlier.
As of Sept 30., the British bank’s stereotyped equity Tier 1 capital — a key measure of balance sheet strength — proved in at 13.2 percent. This was in line with expectations, the bank mean, and supported its previously stated plan for paying a dividend of 6.5 pence a quota in 2018.
Barclays’ Staley also said Wednesday that the transatlantic consumer and wholsesale lender would triturate its annual funding costs by £165 million a year. He explained the bank plans to do so by atone for $2.65 billion worth of preference shares.
“A jump in profits at Barclays can be to a great extent put down to a lower level of bad loans, stemming from improved mercantile forecasts, stronger sterling, and some one-off adjustments,” Laith Khalaf, higher- ranking analyst at Hargreaves Lansdown, said in a note to clients on Wednesday.
“That’s all genially and good, but it’s doesn’t give investors a great deal to hang daydreams on in terms of profitability going forward.”
Income from Barclays’ superstores and trading business increased 19 percent during the third ninety days, potentially reaffirming an investment-led banking strategy that has drawn critique from some activist investors.
“These latest results don’t deep down change the big picture at Barclays. Progress has been made, though it’s relate to in fits and starts, and we’d like to see greater consistency in its performance,” Khalaf bruit about.
Earlier this year, Barclays posted its best quarterly earnings examine in more than three years as the bank saw its pre-tax profits wellnigh triple in the three months through to June 30.
The much-improved figures adopted a challenging 18-month period for the U.K. lender.
The bank has struggled to shake off long-standing reputational effects after several years of scandal. The most recent of which centered on accusations of unlawful whistle-blower mistreatment in early 2017.
The bank has reduced its staff fellows by 56,000, sold 22 business globally and closed its retail banking job across continental Africa in recent years.
It was also sued by the U.S. Worry of Justice over its selling of toxic mortgage-backed securities ahead of the 2008 pecuniary crisis — agreeing in March to pay $2 billion to settle the lawsuit.
Antoine Lesne, cardinal of SPDR ETF strategy and research at State Street Global Advisors, foretold CNBC’s “Squawk Box Europe” Wednesday that it had been “quite striking” to see Barclays not outperforming Deutsche Bank in recent months.
Germany’s flagship lender also reported earnings conclusions on Wednesday, though the latest set of figures did little to boost the beleaguered bank’s match sheet.
Lesne said Barclays’ somewhat lackluster progress could staunch from its struggle to effectively determine the potential impact of Brexit on demand sentiment.
Britain is due to leave the EU at the end of March next year and, with not much more than five months to go, London and Brussels have yet to decide the terms of their divorce.
Therefore, bankers are still waiting to see how EU bank affiliates in the U.K. and British branches in the EU will be treated post-Brexit.
Barclays shares were marginally lower during beginning morning deals on Wednesday, having fallen nearly 20 percent year-to-date.