Proactive Investors - Barclays tops expectations
Barclays PLC (LON:BARC) reported better than expected first quarter pre-tax profit supported by strong growth in its UK business which offset a flat performance in its investment banking arm.
The high street lender said pre-tax profit in the three months to March 31 reached £2.60bn, up 16% from £2.23bn a year ago, and above the company compiled consensus of £2.2bn.
Group income was £7.2bn, up 11% year-on-year, while EPS rose to 11.3p from 8.4p.
Barclays UK income increased 19% primarily driven by net interest income growth from higher rates and continued structural hedge income momentum, delivering a net interest margin (NIM) of 3.18%.
The FTSE 100-listed lender expects NIM to be greater than 3.2% in 2023, in line with previous guidance.
But Corporate and Investment Bank income only increased 1% to £4.0bn, although this was still a record first quarter income performance.
Drivers included a strong performance in Transaction banking and Global Markets, against a record prior year comparative, with lower Investment Banking income due to a reduced industry fee pool.
Consumer, Cards and Payments income increased 47% from growth in US cards balances while group operating expenses were £4.1bn, in line with prior year, including the non-repeat of certain litigation and conduct items.
Credit impairment charges were £0.5bn, with a loan loss rate (LLR) of 52bps, within the guided range of 50-60bps, reflecting higher US cards balances and the continuing normalisation anticipated in US cards delinquencies.
The CET1 ratio dipped to 13.6% from 13.9% at the end of 2022 while tangible net asset value per share of 301p, increased 6p since December 2022.
The bank is targeting a return on total equity of greater than 10% in 2023 and said its diversified income streams continue to position it well for the current economic and market environment including higher interest rates.
FTSE set for a weak open
The FTSE 100 is expected to open lower as worries over economic growth pulled blue chips stocks lower on Wall Street although strong results from Meta Platforms (NASDAQ:META) may lift the mood.
Spread betting companies are calling London’s lead index down by around 20 points.
On Wall Street, tech stocks advanced following well-received results from Microsoft (NASDAQ:MSFT) while after the closing bell Meta also jumped 12% after better-than-expected first-quarter revenue.
But blue chips fell back as banks fell with First Republic (NYSE:FRC) tumbling once more.
The Dow closed Wednesday down 229 points, 0.7%, at 33,302, while the Nasdaq added 55 points, 0.5%, to 11,854, and the S&P 500 shed 16 points, 0.4%, to 4,056.
Investors will also be eyeing the weekly unemployment claims report and GDP data in the US this afternoon.
In Asia, the Nikkei 225 index was flat. In China, the Shanghai Composite was up 0.4%, while the Hang Seng index in Hong Kong was up 0.2%.
Back in London and the early focus will be trading updates from AstraZeneca (LON:AZN), Taylor Wimpey (LON:TW), Unilever (LON:ULVR), WPP (LON:WPP), and Barclays.