Barclays reports 17% profit rise on strong equities trading

[LONDON] Barclays on Tuesday (Jul 28) reported a first-half profit rise of 17 per cent, beating analysts’ forecasts, as it followed Wall Street peers in reaping bumper equities trading revenues and deal fees this year.

The British bank reported profit before tax for the January to June period of £6.1 billion (US$8.1 billion), just above analysts’ expectations of about £5.94 billion.

It also announced a fresh share buyback of £1 billion, above forecasts for £831 million, and dividends worth £800 million as it returns excess capital to shareholders.

Barclays slightly upgraded its income guidance for the year from £31 billion to £31.5 billion and said that it was on track to meet its performance goals for 2026, in the latest sign that British lenders’ are sustaining a recent run of robust profits even amid falling interest rates and an uncertain economic backdrop.

Barclays’ investment bank, which has remained one of the group’s main earnings engines and a differentiator from domestic-focused UK rivals such as Lloyds and NatWest, delivered total income of £4 billion in the second quarter of the year compared with analysts’ forecasts for £3.7 billion.

The British bank reported revenues from equities rose 45 per cent in the quarter compared with the same period last year. That lagged those of Wall Street rivals which were up an average 69 per cent in equities for the period, aided by the huge SpaceX initial public offering that helped supercharge earnings.

Volatility in financial markets triggered by the Iran war has driven a trading frenzy that has boosted banks’ revenues, while blockbuster M&A deals and IPOs have fuelled investment banking fees.

Barclays, like many European banks, has seen its profits climb sharply in recent years, boosted by higher rates, a benign backdrop for lending and demand for services from its corporate customers.

Shares in the London-based bank are up close to 50 per cent in the past year, trading at levels last seen at the height of the 2007-2008 global financial crisis.

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Barclays is the first big British bank to report earnings this week, as the country’s lenders warily eye newly installed Prime Minister Andy Burnham, the country’s seventh leader in the last 10 years.

Having reaped record profits in recent years, lenders have been concerned the left-leaning Burnham might hike taxes on the sector. Banks, however, received a boost on Friday when Reuters reported the Burnham administration is likely to preserve the previous administration’s pro-growth approach to financial services.

Investor attention will now shift to how resilient lending margins will remain in the face of the Bank of England’s rate-cutting cycle, as well as credit quality concerns amid a weak economic backdrop. REUTERS