Proactive Investors - Barclays PLC (LON:BARC) beat profit forecasts in the third quarter driven by a strong performance at its credit card business but the bank said further actions may be needed to tackle costs.
Revenue in the corporate and investment bank operation missed expectations and Barclays reduced its outlook for net interest margin (NIM) this year to between 3.05% and 3.1%, having already cut this guidance in July.
The FTSE 100-listed lender said pre-tax profit in the three months ended September fell 4% to £1.89 billion from £1.97 billion the year before, although this was ahead of the £1.77 billion consensus forecast.
Income rose 5% to £6.26 billion from £5.95 billion, basic EPS fell to 8.3p from 9.4p while the return on total equity (RoTE) slipped to 11.0% from 12.5%.
CS Venkatakrishnan, chief executive, said: “We delivered an 11.0% RoTE in Q3, against a mixed market backdrop, as we continued to manage credit well, remained disciplined on costs and maintained a strong capital position, with a Common Equity Tier 1 ratio of 14.0%.
“We see further opportunities to enhance returns for shareholders through cost efficiencies and disciplined capital allocation across the group.”
Corporate and Investment Bank income decreased 6% to £3.08 billion from £2.82 billion the year before, below forecasts of £3.24 billion, reflecting lower client activity in both Global Markets and Investment Banking fees.
Barclays UK income decreased 2% to £1.87 billion, driven by the impact from the transfer of Wealth Management & Investments to Consumer, Cards and Payments where income climbed 9% to £1.36 billion from £1.24 billion.
Group total operating expenses decreased 4% year on year to £3.9 billion as inflation, business growth and investments were more than offset by efficiency savings and lower litigation and conduct charges, Barclays said.
Bad debt provision ticked up to £433 million from £381 million while the Tier 1 Capital Ratio improved to 14.0% from 13.9%.
Looking ahead, Barclays said it is targeting a cost: income ratio percentage in the low 60s in 2023 and is looking at actions to reduce structural costs which may result in material additional charges in the fourth quarter.
It is targeting a RoTE of greater than 10% in 2023 and expects the UK NIM to be in the range of 3.05%-3.10% in 2023.
The NIM was 3.04% in the third quarter compared to 3.01% last year.