- 2024 revenue and earnings beat
- 2025 outlook in line with forecasts
- £1 billion also meets estimates
As the first bank to report earnings, there was a great deal of focus on what Barclays (BARC) would say about 2024 and the outlook for 2025, and although it more or less met market forecasts for last year, the lack of upgrades to current-year forecasts left investors feeling flat.
The shares, which had enjoyed a 15% run up since the start of January, having doubled last year, dropped 15p or 5% to 293p in mid-morning trade.
NO SURPRISES
For the year to last December, the bank posted better-than-expected revenue of £26.8 billion, against market forecasts of £26.3 billion, and slightly better-than-hoped pre-tax profit of £8.1 billion against a forecast of £8.07 billion.
Net interest income of £11.2 billion was in line with the bank’s guidance of ‘over £11 billion’, while the cost-to-income ratio of 62% was also in line with the target of ‘around 63%’ for the year.
Profit from Barclays UK, Barclays US and the investment banking business was ahead of estimates, while Corporate and Head Office costs were higher than anticipated, and provisions for expected credit losses were low, as predicted.
Return on tangible equity of 10.5% was again in line with expectations, as was the news of a new £1 billion share buyback, but EPS (earnings per share) of 36p and the final dividend of 5.5p per share were slightly short of estimates.
Also mildly disappointing was the outlook for 2025 pre-tax profit of £8.85 billion, which implies little or no change to the current consensus, and the 11% return on tangible equity target which again was in line with market forecasts.
NOT A SURPRISE TO SEE PROFIT TAKING
Shore Capital’s Gary Greenwood sees further upside potential in the shares ‘based on continued delivery in line with management guidance’ and said he expected to raise his fair value target from 345p to ‘at least 360p’ which would imply just under 23% upside from today’s price.
Russ Mould, investment director at AJ Bell, commented: ‘While there was nothing too alarming in Barclays’ full-year results, a lack of upgrades after a period of strong performance saw the shares knocked off their perch.
‘The buyback was widely expected and earnings and dividends per share came in below expectations. Investors were also disappointed guidance wasn’t upgraded. In the context of the stock having more than doubled in value over the last 12 months, it’s not a surprise to see a degree of profit taking.’
Disclaimer: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Ian Conway) and the editor (James Crux) own shares in AJ Bell.
