Barclays Reports Strong First-Quarter Earnings, Outperforming Expectations

Shares of Barclays went up by 4% on Thursday following the bank’s report of its earnings for the first quarter. They said they made a net profit of £1.55 billion ($1.93 billion), which was better than what experts thought, and this put the British bank back in profit after making some big changes.

Experts who were asked by Reuters thought the bank would make a profit of £1.29 billion for the quarter.

At 9:50 a.m. London time, the bank’s shares were up by 4.1%.

However, before taxes, the bank made 12% less profit compared to the same time last year, bringing in £2.28 billion. This is because the bank is preparing to put its big changes into action.

Pre-tax profits were down 12% to £2.28 billion due to extensive revamp plans.

Here are some other important points:

  •  The bank made £6.95 billion in revenue in the first quarter, which is 4% less than last year.
  • They set aside £513 million for possible future losses, which is less than the £524 million they set aside last year.
  •  The bank’s financial strength called the common equity tier one (CET1) capital ratio, was 13.5%, which is slightly less than the previous quarter.
  •  They made a return on tangible equity (RoTE) of 12.3% for the whole year.
  •  They spent 2% more money in the first quarter compared to last year, totaling £4.2 billion.
  •  In the last quarter of 2023, the bank lost £111 million because they were making changes to their operations to save money and work better.

The CEO, C.S. Venkatakrishnan, said the bank’s results for the first quarter show they are serious about making the changes they talked about. They plan to invest more in their business in the UK and they’re buying Tesco Bank, which they hope to finish buying by the end of this year.

First-quarter revenue fell 4% to £6.95 billion; credit impairment charges decreased to £513 million.

“We are focused on doing what we said we would do in our plan,” he said.

The changes they’re making are expected to cost £900 million, but they hope to save around £500 million in 2024 because of them, and they expect to make back the money they spent in less than two years.

The bank is splitting its business into five parts and promising to give £10 billion back to its shareholders between 2024 and 2026 through dividends and buying back shares.

Common equity tier one capital ratio was 13.5%; full-year return on equity was 12.3%.

A financial analyst named Will Howlett said in a note on Thursday that the bank’s results for the first quarter are a “good start,” and they seem to be doing what they promised in their full-year results for 2023.

According to a CNBC report, “With a good start to the year, Barclays is getting ready to change how people think about its value and keep its promises to shareholders,” Howlett said.

“The bank’s promise to make a profit of over 10% in 2024 and over 12% in 2026 shows they’re serious about what they want to achieve, even though they’ve had some problems before.”

Sajda Parveen
Sajda Parveen
Sajda Praveen is a market expert. She has over 6 years of experience in the field and she shares her expertise with readers. You can reach out to her at [email protected]
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