Signage reflecting Barclays’ headquarters in Canary Wharf, London, UK shines through a window
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LONDON – Shares in Barclays rose almost 7% on Thursday after the bank reported net profit attributable to shareholders of 1.55 billion kilos ($1.93 billion) in the primary quarter. They exceeded expectations and brought the British lender back into the black as a part of a comprehensive strategic overhaul.
Analysts polled by Reuters had expected net profit attributable to shareholders of 1.29 billion kilos for the quarter, in line with LSEG data.
The bank’s shares ended the trading session up 6.7%.
However, profit before tax fell 12% to 2.28 billion kilos ($2.6 billion last yr) because the bank prepares to implement its extensive turnaround plans.
Here are another highlights:
- Group revenue was £6.95 billion in the primary quarter, down 4% from the identical period last yr.
- Loan impairments stood at £513 million, in comparison with £524 million in the primary quarter of 2023.
- The common equity Tier 1 capital ratio (CET1), a measure of the bank’s financial strength, was 13.5%, down from 13.8% within the previous quarter.
- The full-year return on tangible equity (RoTE) was 12.3%.
- Quarterly total operating costs rose 2% year-on-year to £4.2 billion.
Barclays reported a net lack of £111 million within the fourth quarter of 2023 as a consequence of an operational restructuring to chop costs and increase efficiency.
CEO CS Venkatakrishnan said the bank’s first quarter results showed it was committed to implementing its turnaround plans, including through further investment in its UK consumer business and thru its Takeover of Tesco Bankwhich is anticipated to be accomplished within the fourth quarter of this yr.
“We are focused on the disciplined execution of the plan we presented at our investor update on February 20,” he said in a press release.
The turnaround plans included a £900m hit as a consequence of structural cost-cutting measures, which the bank said are expected to lead to gross cost savings of around £500m in 2024, with an expected payback period of lower than two years.
The overhaul saw the business restructured into five operating divisions, with the company and investment banks separated to form: Barclays UK, Barclays UK Corporate Bank, Barclays Private Bank and Wealth Management, Barclays Investment Bank and Barclays US Consumer Bank.
The bank also pledged to return £10 billion to shareholders through dividends and share buybacks between 2024 and 2026.
Will Howlett, financial analyst at Quilter Cheviot, said in a note Thursday that first-quarter results were a “promising start,” suggesting the bank is sticking to the financial roadmap set out in its full-year 2023 results.
“With a solid start to the year, Barclays is poised to reshape its valuation narrative and deliver on its promises to shareholders,” Howlett said.
“Reaffirming profitability targets targeting a return on tangible equity (RoTE) of over 10% in 2024 and over 12% in 2026 reflects the resilience of Barclays’ ambitions despite previous setbacks.”
—CNBC’s Elliot Smith contributed to this report.
