Barclays sets bar for big banks as profits boosted by global deal-making: reaction

Barclays has notched up its best-ever nine-month performance after surging trading in its investment banking arm helped it to a better-than-expected third-quarter profit haul.

The lender, which recently took the wraps off its new Glasgow super campus, reported a £2 billion pre-tax profit for the three months to the end of September - nearly double the £1.1bn seen a year ago, but down from £2.6bn in the previous three months.

This brought the banking major's year-to-date profits to a record £6.9bn.

Most analysts had been expecting third-quarter profits in the region of £1.6bn.

Barclays recently opened its new state-of-the-art campus next to the Clyde River in Glasgow. Picture: Michael McGurk/Barclays

But the group also signalled further cost-cutting in its branch-based retail banking arm amid a drive for further efficiencies in its franchises and "planned structural cost actions" over the fourth quarter, including in Barclays UK.

The solid financial performance comes after profits in the investment banking division jumped 49 per cent to £4.8bn in the first nine months of the year, following a 51 per cent increase in the third quarter to £1.5bn.

Barclays followed the lead of investment banking rivals on Wall Street, which have benefited from a leap in trading as markets have remained buoyant with the global economy rebounding from the worst effects of the pandemic.

The bank's figures were also boosted as it released £622 million in the year to date of cash set aside to cover expected defaults amid the pandemic. It booked net charges of £120m in the third quarter after a £797m release in the previous three months, but said impairments are returning to their normal rate.

Chief executive Jes Staley said: "On top of a good first half, a strong third-quarter performance means Barclays has delivered its highest third-quarter year-to-date pre-tax profit on record in 2021."

He said the investment banking business "continues to be an area of strength for the group".

Staley added: "We are also seeing evidence of a consumer recovery and the early signs of a more favourable rate environment. Against that backdrop, we are focused on balancing cost efficiencies with further investment into high-returning growth opportunities."

Zoe Gillespie, investment manager at wealth management firm Brewin Dolphin, said: “A record profit for Barclays in the third quarter is illustrative of the turnaround in fortunes the UK’s major banks have had compared to where they were this time last year.

“Barclays has delivered a strong set of numbers and is striking a good balance between reinvesting in its businesses and delivering returns to shareholders.”

Richard Hunter, head of markets at investment platform Interactive Investor, noted: “Barclays has again set the bar high for its peers to follow, even if there are some niggles within the numbers. In the Barclaycard unit, the figures are feeling the effect of reduced borrowing and increased repayment by customers.”

He added: “With an upbeat outlook going into the fourth quarter despite the economic challenges which are currently in evidence, Barclays is set fair to continue its impressive advance.

“Over the last year the shares are up by 90 per cent, as compared to a gain of 25 per cent for the wider FTSE100, while the market consensus of a strong buy reaffirms the bank’s position as the preferred play in the sector.”

A message from the Editor:

Thank you for reading this article. We’re more reliant on your support than ever as the shift in consumer habits brought about by coronavirus impacts our advertisers. If you haven’t already, please consider supporting our trusted, fact-checked journalism by taking out a digital subscription: www.scotsman.com/subscriptions