Signage reflecting the 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 pounds ($1.93 billion) in the first quarter. They exceeded expectations and brought the British lender back into the black as part of a comprehensive strategic overhaul.
Analysts polled by Reuters had expected net profit attributable to shareholders of 1.29 billion pounds for the quarter, according to LSEG data.
The bank’s shares ended the trading session up 6.7%.
However, profit before tax fell 12% to 2.28 billion pounds ($2.6 billion last year) as the bank prepares to implement its extensive turnaround plans.
Here are some other highlights:
- Group revenue was £6.95 billion in the first quarter, down 4% from the same period last year.
- Loan impairments stood at £513 million, compared to £524 million in the first 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% in 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 loss of £111 million in the fourth quarter of 2023 due to an operational restructuring to cut costs and increase efficiency.
CEO CS Venkatakrishnan said first quarter results showed the bank was committed to implementing its turnaround plans, including through further investment in its UK consumer business and through the acquisition of Tesco Bank, which is expected to be completed in the fourth quarter of this year.
“We are focused on the disciplined execution of the plan we presented at our investor update on February 20,” he said in a statement.
The turnaround plans included a £900m hit due to structural cost-cutting measures, which the bank said are expected to result in gross cost savings of around £500m in 2024, with an expected payback period of less than two years.
The overhaul saw the business restructured into five operating divisions, with the corporate 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.
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2024-04-25 16:00:11
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