13th Feb 2025 08:42
(Alliance News) - Barclays PLC on Thursday set out plans for growth, and a further share buyback, as it delivered better-than-expected annual results led by its Investment Banking division.
It wasn't enough to drive the stock price higher, however. Shares in the London-based lender were 5.0% lower at 292.28 pence each in London on Thursday morning.
"Overall a solid set of results, but little new to get excited about either. This, plus the strong run up in the share price over the past year, may temper any initial reaction," explained analysts at Citi.
Shares in the bank have more than doubled in the last 12 months.
Pretax profit in 2024 totalled GBP8.11 billion, rising 24% from GBP6.56 billion in 2023. Total income rose 5.6% to GBP26.79 billion from GBP25.38 billion. Pretax profit beat company-compiled consensus of GBP8.07 billion, while total income was ahead of a GBP26.53 billion forecast.
The Barclays Investment Bank was a standout division, achieving total income of GBP11.81 billion, a 7.0% rise on-year, beating consensus of GBP11.67 billion. Barclays UK division revenue rose 9.1% to GBP8.27 billion last year. The unit includes its ring-fenced UK retail banking division.
Operating costs rose 3% to GBP16.19 billion from GBP16.71 billion, although the overall cost-income ratio dropped to 62% from 67%. Impairment charges rose to GBP1.98 billion from GBP1.88 billion.
The CET1 capital ratio eased to 13.6% from 13.8%. The net interest margin rose to 3.29% from 3.13%.
"In 2024 we met our financial targets, delivering for our customers and clients, with operational and financial performance improvement driven by disciplined execution of the three-year plan. This delivered a group [return on tangible equity] of 10.5% for the year and GBP3.0 billion of capital distributions, including the GBP1.0 billion buyback announced today," Chief Executive CS Venkatakrishnan said.
Loans and advances to customers increased by GBP4.9 billion to GBP207.7 billion, primarily driven by an around GBP8 billion increase from the acquisition of Tesco Bank and growth in unsecured lending and mortgage lending.
Customer deposits increased by GBP3.1 billion to GBP244.2 billion, driven by a GBP7 billion increase from the acquisition of Tesco Bank, partially offset by a reduction in Business Banking and retail current account balances. The loan deposit ratio remained stable at 92%.
In the fourth quarter, pretax profit ballooned to GBP1.66 billion from GBP110 million. Total income increased to GBP6.96 billion from GBP5.60 billion, while operating costs fell 10% to GBP4.24 billion from GBP4.74 billion.
Looking ahead, Barclays expects a return on tangible equity of around 11% in 2025, rising from 10.5% in 2024.
Group net interest income, excluding the investment bank and head office, of GBP12.2 billion is expected, rising from GBP11.2 billion in 2024. Its aim for 2024 was "greater than GBP11.0 billion". This was, however, lower than the GBP12.3 billion consensus, cited by RBC Capital Markets.
For 2025, it targets Barclays UK net interest income of around GBP7.4 billion, rising from GBP6.5 billion in 2024.
The lender is also targeting a group cost-income ratio of around 61%, including total gross efficiency savings of GBP0.5 billion in 2025.
It plans to return at least GBP10 billion of capital to shareholders between 2024 and 2026, through dividends and share buybacks, with a continued preference for buybacks.
For 2026, it eyes a return on tangible equity of greater than 12% and total income of more than GBP30 billion.
The target range for the CET1 ratio is 13% to 14%, and it sees the cost-income ratio in the high 50s percentage. Cost target includes total gross efficiency savings of around GBP2 billion by 2026.
Barclays said its total dividend for 2024 was lifted 5.0% to 8.4 pence per share from 8.0p.
The lender also intends to start a new GBP1 billion share buyback. In 2024, total share buybacks were GBP1.8 billion.
By Jeremy Cutler, Alliance News reporter
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