By
Godfrey Benjamin
November 15th, 2023
At the time of writing, Barclays (BARC) shares are down 5%. On a year-to-date basis, the stock is up about 31%.
British multinational investment bank and financial services company, Barclays Plc (LON: BARC) has released its first-quarter (Q1) earnings results with net profit surpassing analysts’ expectations. As reported by CNBC, the banking giant’s net profit for the quarter came in at £1.7 billion ($2.37 billion) as against the £1.3 billion polled by analysts according to Refinitiv.
For the quarter, Barclays revenue came in at £5.9 billion, down from £6.3 billion in the year-ago period. Operating expenses increased from £3.3 billion in the same quarter in 2020 to £3.5 billion this current quarter. CET 1 ratio, a measure of bank solvency, came in at 14.6%, a fall from 15.1% last quarter.
According to the report, the impact of the coronavirus and the bank’s recovery efforts weighed down revenues from loan impairment charges. These fees which dropped “significantly” according to the bank plunged from £2.1 billion in the first quarter of 2020 to just 55 million pounds for the first three in 2021.
“While momentum in the consumer businesses, particularly card balances, will take time to build, Barclays secured significant new growth opportunities in Q1 (first quarter),” Jes Staley, CEO of Barclays said in a statement.
Despite the operating expenses appearing to be on the high side due to the rising cost of real estate amongst other factors, Staley said the bank is doing all it can to stay conservative as it relates to spendings.
“While evidence of recovery is encouraging, we have continued to take a cautious view of the impact of the pandemic on the business. We remain disciplined on costs, with a cost to income ratio of 61% this quarter,” He said.
At the time of writing, Barclays shares are down 5% to 179 Pounds. On a year-to-date basis, the stock is up about 31%.
Barclays Q1 Result Boosted by Its Equity Trading
Barclays’ strong Corporate and Investment Banking (CIB) business has been highlighted as one of the reasons for the bank’s impressive performance. While the Total Income at the Investment Banking unit dropped by 1% to £3.6 billion, Barclays reported a 65% jump in its equities trading on a per quarter basis.
Additionally, the company’s banking advisory business came out strong, turning in 859 million pounds from fees charged on equity fundraising.
Overall, Sudeepto Mukherjee, Senior Vice President at Consultancy Publicis Sapient commended Barclays’ performance for the quarter.
“This is largely thanks to their robust business model and strong CIB (Corporate and Investment Banking) performance. However, their consumer business still faces the headwinds of the Covid-19 pandemic which will likely continue throughout 2021,” he said in a note.
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