Barclays Bank Posts Better than Expected Net Profit in Q3 2022

British multinational banking giant Barclays PLC (LON: BARC) has posted a better-than-expected net income following the release of its performance report for the third quarter (Q3). Despite the currently harsh economic climate and the political instability in the United Kingdom, Barclays posted a net profit attributable to shareholders of £1.512 billion ($1.73 billion).

The posted net profit was better than the consensus estimate from analysts which came in at £1.152 billion and also higher than the £1.374 billion it recorded in the same period of last year. Barclays reported that its Common equity tier one capital (CET1) ratio was 13.8%, compared to 15.4% at the end of the third quarter of 2021 and 13.6% in the previous quarter.

Barclays said its group income from the over-issuance of securities came in at £6 billion, up from £5.5 billion when compared to the year-ago period. This over-issuance of securities in the United States has particularly caused a notable setback for the bank in the United States as the litigation charges associated with the error have led to the payment of £996 million.

“We delivered another quarter of strong returns, and achieved income growth in each of our three businesses, with a 17% increase in Group income to £6.4 billion,” Barclays CEO C.S. Venkatakrishnan said in a statement. “Our performance in FICC (fixed income, currencies, and commodities trading) was particularly strong and we continued to build momentum in our consumer businesses in the UK and US.”

Barclays comes off as one of the best performers in the banking ecosystem in the UK and amongst its peers in Europe. The firm said its largest contribution came from the FICC which added 93% or £1.546 billion when compared on a quarter-on-quarter basis.

Barclays Q3 2022 Income: a Testament of Business Diversity

Barclays’ resilient performance in Q3 is a testament to the bank’s highly diversified business model and income streams despite notable economic headwinds that played out.

“Looking ahead, the uncertain economic backdrop will likely put a brake on some of Barclays markets, particularly at its credit cards and investment banking divisions, with the outlook for corporate action – such as capital raises – more difficult,” said John Moore, senior investment manager at RBC Brewin Dolphin, “Despite previous errors still plaguing its results, Barclays remains the best positioned of the major UK banks with a more diversified income stream – but there are still challenges ahead.”

The diversity in its model has made it stronger than its peers according to Sophie Lund-Yates, the lead equity analyst at Hargreaves Lansdown. With the bank paying dearly for its over-issuance of securities mistake, She noted that another costly mistake may raise questions that Barclays may find hard to recover from in the long term.

The shares of the company were down 1.04% at the time of writing to GBX148.66.