Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Barclays beats profit forecasts as CEO Staley aims to stay on

Published 23/10/2020, 07:03
Updated 23/10/2020, 10:25
© Reuters. FILE PHOTO: A Barclays sign is seen outside a branch of the bank in London

© Reuters. FILE PHOTO: A Barclays sign is seen outside a branch of the bank in London

By Lawrence White and Iain Withers

LONDON (Reuters) - Barclays (L:BARC) on Friday reported stronger than expected third-quarter results thanks to a return to profit for the bank's consumer businesses and Chief Executive Jes Staley said he aimed to stay on for two more years.

There has been speculation over Staley's future since Barclays disclosed in February that British regulators had launched an investigation into Staley's past connections to the late financier and convicted sex offender Jeffrey Epstein, which is yet to conclude.

British media reports around the same time said the bank's board had appointed a headhunter to search for a successor and that Staley himself had indicated internally that he would leave by 2021.

Staley, who was appointed CEO in 2015, has said he regrets having had any relationship with Epstein.

"I think we'll be here for another couple of years," Staley told reporters on a conference call on Friday.

Barclays is the first major British bank to publish third- quarter earnings and analysts and investors are watching results for any signs of an expected wave of bad loans due to the fallout from COVID-19 pandemic.

Barclays reported profit before tax of 1.1 billion pounds for the three months to the end of September, almost double the 507 million pounds analysts had forecast.

The bank's shares jumped following its results and were up nearly 7% at 0855 GMT, the strongest performer in the benchmark FTSE 100 index (FTSE).

“While these results aren’t exactly pretty, they’re far less ugly than we had feared they might be," Nicholas Hyett, equity analyst at Hargreaves Lansdown (LON:HRGV), said.

The bank booked 608 million pounds in provisions for bad loans and other charges, down 63% from the previous quarter and well below the 1 billion pounds analysts had expected.

However, Barclays said it was considering further cost-cutting measures, which could result in more charges.

Staley said these could include reductions in office space and other such overheads as the bank learns lessons from employees' ability to work from home or at branches during the coronavirus pandemic.

The bank's consumer, cards and payments business made a profit of 165 million pounds in the quarter after a loss in the second quarter as U.S. credit card spending recovered.

The stronger-than-expected results boosted the bank's core capital ratio, a key measure of its financial strength, to 14.6%, which was also above forecasts for 14%.

INVESTMENT BANK SHINES

The lender's investment bank supported its results, as it has done in recent quarters, in a fillip for Staley who has staked much of his credibility on the business at a time when some shareholders want it cut back.

Revenue from its markets division, which has benefited from frenzied trading amid volatile markets worldwide, rose 29% from a year earlier to 1.69 billion pounds. Equities trading jumped 40% to 691 million pounds while fixed income, currencies and commodities rose 23% to 1 billion pounds.

Like its rivals, Barclays has halted dividend payments at the request of Britain's regulators. It said it would give an update on its payout policy when it reports full-year results.

Barclays downgraded its baseline economic forecast for the United Kingdom this year as local lockdowns kick in to control a second wave of COVID-19 heading into the winter months.

The bank now expects gross domestic product to fall 10.3% this year, versus its June forecast of an 8.7% drop, but it said there had been no significant rise in bad loans so far due to government financial support for jobs and companies.

U.S. banks, which reported earnings earlier this month, gave a muddied picture of what to expect, with balance sheets looking healthier than expected but executives forecasting a gloomy outlook for losses from loans.

Barclays' British rivals all report earnings next week, with HSBC (L:HSBA) on Tuesday, Standard Chartered (L:STAN) and Lloyds Banking Group (L:LLOY) on Thursday and NatWest Group (L:NWG) on Friday.

© Reuters. FILE PHOTO:  Barclays' CEO Jes Staley arrives at 10 Downing Street in London

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.