By
Chimamanda U. Martha
April 15th, 2024
Due to a strong quarter, Barclays “remains on track to deliver its 2023 targets, with all performance metrics in line with or ahead of guidance.”
British multinational investment bank Barclays PLC (LON: BARC) has released its performance results for Q1 2023. The bank’s net profit of £1.8 billion (or $2.2 billion) beat the experts’ expectations by about £400 million and surpassed the income from the same period last year by as much as 27%.
Speaking in more detail about Barclays’ separate units that generated profit, Barclays UK income rose by 19%, driven by net interest income growth from higher rates and continued structural hedge income momentum, which resulted in a net interest margin (NIM) of 3.18%. Further, Corporate and Investment Bank (CIB) generated as much as £4.0 billion, which is a record first-quarter income performance in its history ever. As far as Consumer, Cards, and Payments (CC&P) income is considered, it rose by 47% due to the growth in US card balances, the increase in client assets and liabilities in the Private Bank, as well as the higher rate environment.
Barclays CEO C.S. Venkatakrishnan commented:
“All three businesses have performed well with high-quality income growth and double-digit returns. The momentum allows us to maintain a robust capital position and deliver attractive returns to shareholders.”
Due to a strong quarter, Barclays “remains on track to deliver its 2023 targets, with all performance metrics in line with or ahead of guidance.”
Looking forward, with more promising numbers than last year, Barclays’ basic earnings per share (EPS) are expected to rise in 2023. Therefore, Barclays shares seem to offer excellent value in terms of income. Barclays is forecasted to grow earnings and revenue by 2.3% and 4.4% per annum respectively. EPS and ROE are also expected to grow by 6.3% and 9.0% per year respectively. As a result, analysts consider Barclays stock as good.
Yesterday, following the Q1 2023 revenue report, Barclays shares closed the trading session at $7.61, or 2.56% up. In the pre-market trade, Barclays stock is priced at $8.00 per share. The company’s market cap has totaled $29.2 billion.
Banking Crisis in the UK
The numbers posted by London-based Barclays demonstrate that despite the banking crisis, the bank is doing good. Within five days in March 2023, three small- to mid-size US banks failed, triggering a sharp decline in global bank stock prices and a swift response by regulators to prevent potential global contagion. Meanwhile, in the UK, the governor of the Bank of England (BoE), Andrew Bailey, has played down the risks of a system-wide banking crisis, paving the way for further interest rate increases to combat the UK’s high inflation levels. As we have reported, UK inflation maintained double digits in March at 10.1%, which means UK households are still struggling with high food prices and energy bills.
Concerns have also been raised over Swiss multinational financial services giant Credit Suisse Group AG (SWX: CSGN) which had operations in the UK as well and recorded a major default in its accounting process. The bank collapsed in March 2023 and was bought by rival UBS for 3 billion CHF (about $3.3 billion).
The United Kingdom is the only major economy that the International Monetary Fund forecasts will contract this year. However, while the prospects for the UK economy look brighter than in the fall of 2022, the sudden collapse of major banks could weigh on the economic growth in the near term.