Barclays beats market expectations with £2bn profits for the third quarter

Banking giant Barclays has beaten market expectations and reported pre-tax profits of £2 billion for the third quarter.

Its profits jumped 6% on last year’s £1.9 billion and beat the consensus of £1.8 billion for the period.

The uplift has largely been a result of a fixed income boom, which surged by 63% to £4.7 billion for its international division, as its clients upped trading during the recent period of market volatility.

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Nevertheless, the group set aside £381 million in credit impairment charges, more than triple the £120 million in charges it reported a year ago.

This has been driven by the declining economic forecast with the bank acknowledging that customers in the UK are more vulnerable to high inflation and rising interest rates.

But Barclays assured investors that “delinquencies remain below historical levels”, meaning that it has not reported a notable increase in people falling behind on loan repayments despite the worsening cost-of-living crisis.

It also revealed that expected credit losses (ECL) – which refers to the amount that banks must set aside in reserves against losses – had only been slightly raised.

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Its total ECL for home loans is £347 million, up just 2.4%, and rising to £432 million based on its worst-case scenario.

Banking giant Barclays has overtaken market expectations and reported pre-tax profits of £2 billion for the third quarter.Banking giant Barclays has overtaken market expectations and reported pre-tax profits of £2 billion for the third quarter.
Banking giant Barclays has overtaken market expectations and reported pre-tax profits of £2 billion for the third quarter.

Anna Cross, Barclays’ group finance director, said: “We are not observing any worrying signs of stress in the book across any of our portfolios.

“Having said that, we are managing our book very prudently. In the context of impairments, we have been cautious and we believe we are well covered and well provided.”

Ms Cross explained that while consumer confidence has dipped, it is likely to play out in positive ways in terms of money management.

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She said: “Consumers are being quite cautious with their financials so they are remortgaging quickly, they are paying their credit cards off at high levels compared to historic norms, and we are seeing customers seeking more attractive savings rates.

“At this stage we see no change in behaviour and no increase in stress across any portfolio.”

Furthermore, Barclays said that income from its personal banking in the UK surged 14% to £3.3 billion, driven by rising interest rates which has made it more costly for people to borrow.

Its net interest margin – a key measure for banks of the returns they make on loans – grew to 3% in the third quarter, up from 2.5% a year earlier, indicating that, like other lenders, Barclays has profited from higher rates.

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Barclays also reported that the ongoing repercussions of a US paperwork blunder took a £37 million bite out of its profits in the latest quarter.

In July, it revealed a mammoth £1.5 billion estimated cost impact from the debacle.

Barclay’s group chief executive, CS Venkatakrishnan, emphasised that the bank’s income has soared on last year.

He said: “We delivered another quarter of strong returns, and achieved income growth in each of our three businesses, with a 17% increase in group income to £6.4 billion.

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“We are ready to provide support for customers and clients facing an uncertain economic environment and higher cost pressures.

“Whether helping retail customers to manage their finances or corporate clients navigate markets volatility, we will continue to be focused on meeting their needs.”

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