Barclays Beats July-September Profit Forecasts As CEO Jes Staley Aims To Stay On

Barclays is the primary main British financial institution to publish third-quarter earnings


Barclays on Friday reported stronger than anticipated third-quarter outcomes because of a return to revenue for the financial institution’s client companies and chief government Jes Staley mentioned he aimed to remain on for 2 extra years.

There has been hypothesis over Staley’s future since Barclays disclosed in February that British regulators had launched an investigation into Staley’s previous connections to the late financier and convicted intercourse offender Jeffrey Epstein, which is but to conclude.

British media experiences across the identical time mentioned the financial institution’s board had appointed a headhunter to seek for a successor and that Staley himself had indicated internally that he would depart by 2021.

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

“I think we’ll be here for another couple of years,” Staley advised reporters on a convention name on Friday.

Barclays is the primary main British financial institution to publish third-quarter earnings and analysts and traders are watching outcomes for any indicators of an anticipated wave of unhealthy loans because of the fallout from COVID-19 pandemic.

Barclays reported revenue earlier than tax of 1.1 billion kilos ($1.4 billion) for the three months to the top of September, nearly double the 507 million kilos analysts had forecast.

The financial institution’s shares jumped following its outcomes and have been up almost 7 per cent at 0855 GMT (2:25 pm in India), the strongest performer within the benchmark FTSE 100 index.

“While these outcomes aren’t precisely fairly, they’re far much less ugly than we had feared they may be,” mentioned Nicholas Hyett, fairness analyst at Hargreaves Lansdown.

The financial institution booked 608 million kilos in provisions for unhealthy loans and different expenses, down 63 per cent from the earlier quarter and effectively under the 1 billion kilos analysts had anticipated.

However, Barclays mentioned it was contemplating additional cost-cutting measures, which may end in extra expenses.

Staley mentioned these may embrace reductions in workplace area and different such overheads because the financial institution learns classes from workers’ skill to do business from home or at branches in the course of the coronavirus pandemic.

The financial institution’s client, playing cards and funds enterprise made a revenue of 165 million kilos within the quarter after a loss within the second quarter as U.S. bank card spending recovered.

The stronger-than-expected outcomes boosted the financial institution’s core capital ratio, a key measure of its monetary power, to 14.6 per cent, which was additionally above forecasts for 14 per cent.

Investment Bank Shines

The lender’s funding financial institution supported its outcomes, because it has carried out in latest quarters, in a fillip for Staley who has staked a lot of his credibility on the enterprise at a time when some shareholders need it reduce.

Revenue from its markets division, which has benefited from frenzied buying and selling amid unstable markets worldwide, rose 29 per cent from a yr earlier to 1.69 billion kilos. Equities buying and selling jumped 40 per cent to 691 million kilos whereas mounted earnings, currencies and commodities rose 23 per cent to 1 billion kilos.

Like its rivals, Barclays has halted dividend funds on the request of Britain’s regulators. It mentioned it could give an replace on its payout coverage when it experiences full-year outcomes.

Barclays downgraded its baseline financial forecast for the United Kingdom this yr as native lockdowns kick in to manage a second wave of COVID-19 heading into the winter months.

The financial institution now expects gross home product to fall 10.3 per cent this yr, versus its June forecast of an 8.7 per cent drop, but it surely mentioned there had been no vital rise in unhealthy loans thus far because of authorities monetary assist for jobs and firms.

US banks, which reported earnings earlier this month, gave a muddied image of what to anticipate, with steadiness sheets wanting more healthy than anticipated however executives forecasting a dark outlook for losses from loans.

Barclays’ British rivals all report earnings subsequent week, with HSBC on Tuesday, Standard Chartered and Lloyds Banking Group on Thursday and NatWest Group on Friday.

($1 = 0.7656 kilos)

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