Barclays traders, investment bankers had challenging end to 2023
BARCLAYS said the final three months of the year were challenging for its traders and investment bankers, joining rivals across Wall Street in lamenting a continued slump in revenue from dealmaking and markets.
In the fourth quarter, the British firm’s trading division was facing a tough comparison to a year earlier, when revenue hit a record, Marina Shchukina, head of investor relations, said at an event hosted by Berenberg Capital Markets. Bankers, meanwhile, have been stung by the continued drought of dealmaking and capital markets activity, with many corporates on the sidelines amid central bank activity around the globe.
“It’s been similar to what we experienced in Q2 and Q3 – not quite enough volatility for markets, but a little too much for banking,” Shchukina said. “We hope the recovery will be forthcoming in 2024.”
The comments come after Jefferies Financial Group’s fourth-quarter profit and revenue dropped as the firm’s investment bankers continued to grapple with a deal slump. Citigroup has warned that fixed-income and equities trading revenue in the fourth quarter could drop as much as 20 per cent compared to the third quarter.
Barclays is planning to unveil a series of new targets for returns, expenses and shareholder distributions when it announces fourth-quarter results next month, Shchukina said. The company has already warned that it plans to incur charges for the fourth quarter tied to a number of “structural cost actions” it is taking to improve profitability, with a reduction of about 5,000 jobs during last year.
“To make it absolutely clear, we’re not embarking on a multi-year restructuring here, that is not our intention,” she said. “We are talking about specific actions that relate to three things: 1) people 2) property and 3) infrastructure.”
The company, which trades at a paltry price-to-book ratio of 0.41, continues to see buybacks as an attractive way to return capital to shareholders, she added.
Shchukina acknowledged that there’s been debate among investors over whether Barclays should shrink its investment banking arm, which consumes vast amounts of capital. The firm is one of the leading providers in the debt capital markets business and has grown its presence in financing and prime in recent years.
“We feel that that business is now of appropriate size and scale to compete effectively with our US banking peers and generate good returns,” Shchukina said, noting the company would give “further colour” about the business next month. BLOOMBERG
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