With Barclays share price at three-year highs leading into today’s Q3 numbers, expectations were high given the fairly decent results from US banks last week.
Barclays share price down, despite strong Q3
Barclays reported an expectation-beating, pre-tax profit of £2bn in the three months to the end of September, double the £1.1bn it posted in the year-ago period, while revenue came in at £5.5bn. However, Barclays' share price slipped back a touch, possibly due to some light profit taking on recent gains.
Barclays' results were similar to those reported by US banks last week, with outperformance in equities trading and underperformance in fixed income, and remained broadly in keeping with the British bank's Q2 performance.
Income from fixed income, currencies and commodities (FICC) fell 20% to £803m, down from £1bn a year ago, although some of this was offset by income from the equities division which grew 10% to £757m, up from £691m in the year-ago period.
Banking fees also came in better than expected, rising to £971m from £610m. This helped lift total income at the corporate and investment bank to £3.1bn, up from £2.9bn.
Consumers and businesses remain cautious
On the retail side there was a steady increase in credit and debit card spending through the quarter, although it was notable that on the credit card side borrowing fell to £8.6bn, as consumers appeared reluctant to add to their liabilities.
This also helps explain why customer deposits grew quarter-on-quarter for the seventh consecutive quarter, rising to £193.3bn, up from £173.2bn a year ago, while business loans fell to £35.4bn – their lowest level since Q1 2020.
On the personal banking side, lending rose by £8.9bn, with mortgages accounting for a good proportion of that number.
Profits were also boosted by Barclays' release of another £622m from reserves, adding to the £724m released in Q2.
So, as suspected, the investment bank has done well, with the exception of FICC, while on the domestic front UK businesses and consumers have remained somewhat cautious in their spending patterns.
As for the near-term outlook, Barclays remained cautious as government support mechanisms are withdrawn, with the bank saying that it views higher interest rates as broadly positive. The bank added that it expects full-year costs to come in at £12bn and affirmed its full-year guidance.
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