- Income and profit top expectations
- Full-year income target increased
- Shares hit highest level since 2017
Investors in Barclays (BARC) were treated to a triple helping of good news this morning as the bank beat estimates with its third-quarter results, raised its full-year net interest guidance slightly and its shares touched a new multi-year high.
As of mid-morning, the shares were up 9.5p or 4% to 247.6p, their highest level since at least 2017, taking their gains for 2024 to 60% in total.
TOP AND BOTTOM LINE BEAT
For the three months to September, group net interest income was £6.54 billion, an increase of 5% on the same period last year and slightly ahead of the consensus forecast of £6.46 billion.
The ‘beat’ was driven mainly by the investment bank, where income rose 6% to £2.85 billion, and Barclays UK where income rose just over 4% to £1.95 billion, ahead of forecasts, thanks to an increase in the net interest margin.
On the other hand, income at the Private Banking and Wealth Management business and the US Banking unit fell by low single digits.
Operating costs were broadly stable at £3.96 billion, while impairments for bad loans dropped from £433 million to £374 million, although for the nine-month period they were roughly flat at around £1.3 billion as the bank expects a higher level of ‘delinquencies’ in US credit cards.
Profit before tax for the quarter was £2.23 billion, up 18% and ahead of analysts’ forecasts of just under £2 billion.
BETTER OUTLOOK
For the year to December, Barclays now sees group net interest income excluding contributions from the investment bank and head office of ‘greater than £11 billion’ as opposed to ‘around £11 billion’ previously, and within this Barclays UK net interest income is seen around £6.5 billion against earlier projections of £6.3 billion.
The inclusion of Tesco Bank from the beginning of November should broadly offset the losses on disposals from the Italian retail mortgage portfolios and the German consumer finance business, leaving return on tangible equity around 10.5% for the year.
Between 2024 and 2026, the bank is aiming to return ‘at least £10 billion’ of capital to investors either through dividends or buybacks, ‘with a preference for buybacks’, which means in absolute terms the total amount of dividends will stay at the 2023 level but dividends per share will rise due to a lower share count.
