Barclays’ profit drops 8% to £1.3 billion as fixed income traders fall short 

A FLURRY of volatility in the final three months of the year wasn’t enough for Barclays’ traders, who missed estimates in both fixed income and equities to send the bank’s shares sharply down. 

Fixed-income trading revenue rose to £976 million (S$1.57 billion), short of expectations. Equities trading revenue of £440 million also disappointed.

The bank also said that it would start a fresh buyback of as much as £500 million of shares, roughly in line with consensus at a time when some European rivals have announced a jump in payouts alongside earnings.

The worse-than-expected results weighed on profit before tax, which dropped 8 per cent to £1.3 billion, below the £1.44 billion analysts in a Bloomberg survey were expecting.

Shares fell 8.2 per cent at 8.23 am on Wednesday (Feb 15) in London, erasing about half of its 2023 gain so far.

“We are cautious about global economic conditions, but continue to see growth opportunities across our businesses through 2023,” chief executive officer CS Venkatakrishnan said.

The bank’s dealmakers also missed estimates amid an industry-wide slump with investment banking fees falling to £480 million in the final three months of the year. Still, Venkatakrishnan – who is currently undergoing treatment for a form of cancer – said in a pre-recorded message to journalists that the bank was still committed to investing in dealmaking talent.

In the corporate bank, the lending business had another tough quarter after recording fair value losses on leveraged lending that pulled it to a loss of £128 million for the period. The bank said in a presentation that its leveraged lending commitments were down 50 per cent compared with the first half of the year.

Chief finance officer Anna Cross said on a media call with journalists that the leveraged loan writedowns are broadly in line with peers.

SEE ALSO

UK regulator probes Barclays over anti-money laundering systems

Transaction banking profits rose 78 per cent year-on-year to £808 million for the quarter. Overall, the corporate and investment bank’s revenue of £2.58 billion was behind expectations.

The results capped a year in which Barclays faced a litany of charges tied to litigation and conduct, partly to cover buying back US investment products it mistakenly oversold as well as a settlement for a long-running probe into staffers’ usage of unapproved messaging channels. Such risk and control issues resulted in a reduction of about £500 million in the size of its 2022 bonus pool, according to the firm’s annual report.

The British bank had warned higher litigation and conduct charges would add to expenses this year. Total costs rose 6 per cent to £4 billion for the final three months of the year.

At Barclays UK, net interest margin – a key measure of profitability that measures the difference between what a bank pays for deposits and collects on loans – rose to 3.1 per cent. Meanwhile, the bank’s consumer, cards and payments business, which counts JetBlue Airways and Gap as partners, saw revenue surge 46 per cent to £1.3 billion, in line with the average of analyst estimates compiled by Bloomberg.

The lender joined rivals in setting aside more money to cover potentially souring loans on its books. The firm’s impairment charge for the quarter rose to £498 million, slightly above the £466 million analysts were expecting. BLOOMBERG