Barclays profits rise as trading volumes recover

Barclays’ profits beat expectations in the third quarter, with the banking giant taking advantage of a rebound in transaction volume.

The lender’s pre-tax profits rose 18 per cent year-on-year to £2.2bn in the three months to September, beating analysts’ forecasts of £2bn.

Its revenue rose 5 per cent to £6.5 billion, mainly as investment banking fees rose 6 per cent to £2.85 billion thanks to higher debt underwriting and significant merger and acquisition activity.

Growth also benefited from lower credit impairment charges, stable operating costs and higher structural hedging revenues from its UK subsidiary in a context of moderate interest rates.

Barclays said this offset the impact of mortgage margin pressure and “adverse product dynamics” on its deposits from customers seeking better rates elsewhere.

Structural hedging is a strategy that banks employ to minimize the effects of changes in interest rates on their profits.

So, while the Bank of England has recently cut the UK base rate and mortgage borrowing costs have fallen, Barclays increased the net interest margin of its UK business by 0.3 percentage points to 3.34 percent. hundred.

Net interest margin refers to the difference between what banks pay savers and what they charge borrowers.

Following the result, Barclays is now targeting revenue, excluding its investment bank, of more than £11bn this year, of which around £6.5bn will come from the UK division.

CS Venkatakrishnan, chief executive of Barclays, said: “We remain focused on the disciplined execution of our three-year plan and are encouraged by the progress made to date.”

Between 2024 and 2026, the company aims to reduce costs by £2bn and restructure its business into five main divisions, while delivering at least £10bn to shareholders.

So far this year it has saved around £700m in costs and kept its cost-to-income ratio steady at 61 per cent.

Barclays’ results come a day after Lloyds Banking Group also said it exceeded third-quarter profit estimates thanks in part to structural hedging gains.

The owner of the Bank of Scotland posted pre-tax profits of £1.8bn, compared to the £1.6bn expected by analysts.

John Moore, senior investment manager at RBC Brewin Dolphin, said: “After years of managing to shake defeat from the jaws of victory, Barclays appears to have turned a corner and is returning consistently good numbers.”

“The acquisition of Tesco Bank should strengthen its position in the UK and points to a simplified and more focused direction of travel for the coming years.”

barclays stock They rose 2.8 per cent to 244.9 pence on Thursday morning, taking their gains to about 59 per cent since the start of the year.