LONDON – British bank Barclays on Thursday reported a net profit of £1.6 billion ($2 billion) attributable to shareholders in the third quarter, beating expectations.
The result was 23% higher than the same period in 2023, compared with a net profit forecast of £1.17 billion in an LSEG poll of analysts.
Revenue for the period came in at £6.5bn, slightly ahead of forecasts of £6.39bn.
Barclays shares opened 2% higher in London.
The lender’s return on fixed equity rose to 12.3% from 9.9% in the second quarter as its CET1 ratio – leveraged ratio – rose to 13.8% from 13.6%.
Earlier this year, Barclays announced a strategic shift to cut costs, increase shareholder returns and stabilize its long-term financial performance, focusing more on domestic lending while cutting costs in its highly volatile investment banking division. That strategy is contained Acquisition of UK retail banking business Tesco Bank.
In the second quarter, Barclays net profit fell slightly year-on-year due to lower income in its UK consumer bank and corporate bank, while net profit rose 10% in its investment bank.
Those gaps closed in the third quarter, with domestic bank income up 4% and the lender raising its annual forecast for UK retail net interest income to £6.5 billion from £6.3 billion. Corporate banking income was 1% higher due to an increase in average deposit balances, while investment banking income gained 6%.
Amid the declines, revenue at Barclays’ private U.S. consumer bank fell 2% year-on-year, while its wealth management unit fell 3%.
Barclays CEO CS Venkatakrishnan told CNBC on Thursday that the results show the bank is on track to meet the targets set by the bank in February.
“We’re guiding upward in our net interest income and we’ve had two consecutive quarters of NII expansion in our business in the UK, so we’re guiding the UK business and the bank as a whole. We see costs very much under control.”
The bank now sees Group NII at over £11 billion for the full year to 2024.
Barclays shares are up 55% year to date after collapsing in 2023.
Many banks have announced plans to restructure, streamline operations and cut costs as interest rates fall and net interest margins weaken. HSBC It said earlier this week it would consolidate its operations into four business units.
“What I would say about interest rates is that Barclays has a very disciplined approach to interest rate management, so we’ve got this thing called a structural hedge as a way to soften the effects of interest rates on our earnings, which is part of what has driven our NII expansion over the last two quarters.
Deutsche Bank It kicked off the third-quarter reporting season on Wednesday, posting a higher-than-expected net profit as revenue from its investment banking and asset management divisions rose 11% year over year.
