21st Oct 2021 09:04
(Alliance News) - Barclays PLC on Thursday reported a surge in profit in the third quarter, leading to record profits for the year-to-date, with the lender's investment banking fees and Equities business performing strongly.
Shares in Barclays were 1.0% lower in London on Thursday morning at 196.46 pence each.
In the three months to September 30, the blue chip lender recorded pretax profit of GBP1.96 billion, up 70% from GBP1.15 billion the year before.
Barclays booked a credit impairment charge of GBP120 million in the quarter, sharply lower from GBP608 million the year before. For the first nine months of the year, it benefited from a GBP622 million credit impairment release, as opposed to being hit by a charge of GBP4.35 billion a year ago.
"The net release [in the nine months] included a reversal of GBP1.1 billion in non-default charges, primarily reflecting the improved macroeconomic outlook," the bank explained. It expects the impairment run rate to stay below historical levels in coming quarters.
Total income in the third quarter increased 5.0% to GBP5.47 billion from GBP5.20 billion. Net interest income slipped to GBP1.94 billion from GBP2.06 billion, but net fee, commission & other income increased to GBP3.53 billion from GBP3.15 billion.
Barclays' cost-to-income ratio improved to 64% from 67%.
"On top of a good first half, a strong third quarter performance means Barclays has delivered its highest third quarter year-to-date pre-tax profit on record in 2021, demonstrating the benefits of our diversified business model," Chief Executive Jes Staley said.
In the first nine months of 2021, Barclays recorded pretax profit of GBP6.94 billion, surging from GBP2.42 billion. Total income slipped to GBP16.78 billion from GBP16.83 billion, as a 7% drop in net interest income offset a 4% rise in net fee income.
Staley continued: "We continue to support our customers and clients through the Covid-19 pandemic, have achieved a double-digit return on tangible equity in every quarter year to date, and expect to deliver a full year RoTE above 10%. While the Corporate & Investment Bank performance continues to be an area of strength for the group, we are also seeing evidence of a consumer recovery and the early signs of a more favourable rate environment."
Within units, Barclays UK's third quarter pretax profit surged to GBP451 million from GBP196 million, with total income rising to GBP1.64 billion from GBP1.55 billion. The performance was driven by Personal Banking, which saw income growing 19%.
Personal Banking income reflected "strong growth in mortgages alongside improved margins, balance growth in deposits and the non-recurrence of Covid-19 customer support actions," Barclays said.
The unit's net interest margin weakened to 2.49% from 2.51%.
Barclays International profit jumped 42% to GBP1.66 billion from GBP1.17 billion, with total income up 4.2% to GBP3.94 billion from GBP3.78 billion. The unit was also aided by a GBP18 million credit release compared to a GBP370 million charge the year before.
Within Barclays International, the lender's Corporate & Investment Bank saw profit surge to GBP1.51 billion from GBP1.00 billion as total income grew 7.6% to GBP3.13 billion from GBP2.91 billion.
The investment bank saw Global Markets income drop 7.7% to GBP1.56 billion, with Fixed Income, Currencies & Commodities falling 20% but Equities up 9.6%. The unit was was saved by Investment Banking fees rising 59% to GBP971 million from GBP610 million.
In the other half of Barclays International, Consumer, Cards & Payments profit dropped 9.7% to GBP149 million from GBP165 million, while total income fell 7.8% to GBP808 million from GBP876 million.
Barclays ended the quarter with a group CET1 ratio of 15.4%, up from 14.6% at the same point the year before.
The bank ended the quarter with a loan book of GBP353.0 billion, up from GBP342.6 billion at the start of the year and up from GBP344.4 billion at the same point the year before.
Staley added: "Against that backdrop, we are focused on balancing cost efficiencies with further investment into high-returning growth opportunities. Our CET1 ratio of 15.4% means we are also in a strong position to balance this growth with a key priority of returning excess capital to shareholders."
Barclays continues to target a cost-to-income ratio below 60% and a return on tangible equity above 10%.
By Paul McGowan; [email protected]
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