Investing.com -- Barclays (NYSE:BCS) reported strong results for the year ending December 31, 2024 on Thursday, with key indicators reflecting solid growth across its retail banking, credit card, and mortgage operations.
The bank’s profit before tax increased by 25% to £3.58 billion, up from £2.87 billion the previous year. This improvement was driven primarily by higher net interest income and a one-time gain from the acquisition of Tesco (OTC:TSCDY) Bank.
Total (EPA:TTEF) income rose 9% to £8.27 billion, compared to £7.59 billion in 2023. However, when excluding the £556 million gain associated with the Tesco acquisition, the increase was a more moderate 2%, reflecting stable but competitive conditions in the UK banking sector.
Net interest income grew by 3% to £6.63 billion, aided by an increase in mortgage lending and structural hedge momentum, though partially offset by deposit dynamics and mortgage margin compression.
Consumer banking remained central to Barclays’ growth. Personal Banking income surged 13% to £5.33 billion, largely fueled by the Tesco acquisition.
Without this impact, revenue remained steady at £4.78 billion, as higher mortgage lending and new customer growth balanced out competitive pressure on margins.
Meanwhile, income from Barclaycard Consumer UK declined by 3% to £937 million, reflecting lower interest earnings on credit card balances despite steady customer spending.
The mortgage business was a key area of stability, with UK mortgage balances holding steady at £163.1 billion, slightly down from £163.5 billion in 2023.
Mortgage gross lending increased by 5% to £23.9 billion, suggesting continued demand despite interest rate fluctuations.
The average loan-to-value of new mortgage lending rose to 66%, up from 63% the previous year, indicating a shift toward higher-value borrowing.
Customer behavior trends also pointed to an increasing shift toward digital banking, with the number of digitally active customers rising to 13.4 million from 12.7 million.
At the same time, Barclays continued to scale back its physical presence, reducing its number of branches from 306 to 221.
On the cost side, Barclays managed to cut total operating expenses by 2%, reducing them to £4.33 billion from £4.41 billion.
The cost-to-income ratio improved significantly, dropping from 58% to 52%, reflecting better efficiency across operations. Credit impairment charges rose to £365 million from £304 million, largely due to higher provisions in personal banking and credit cards, though the overall loan loss rate remained low at 16 basis points.
Going forward, Barclays’ emphasis on digital transformation and consumer lending strategically positions it within the changing financial sector.
The Tesco Bank deal has already substantially increased earnings, and continued investments in technology and customer engagement are expected to drive further growth.
Nevertheless, Barclays faces challenges, such as pressure on mortgage margins and shifting consumer spending patterns due to high interest rates.