Barclays Plc said it would buy back a further £750 million ($972 million) of its shares after a short-lived boost from rising interest rates in its domestic business and a slight miss for its investment bank.
Second-quarter attributable profit rose 24% to £1.33 billion, beating estimates of £1.28 billion by six analysts compiled by Bloomberg.
Trading revenue fell 41% on a year ago to £1.75 billion, falling slightly short of expectations. Revenue from the bank’s flagship fixed-income trading division fell 22% to £1.2 billion while equities trading revenue fell 60% to £563 million.
While the UK business reported a 14% rise in total income compared to a year ago, Barclays reduced its net interest margin outlook for the year to 3.15%, down from 3.2%, reflecting “product dynamics including the trajectory of deposit balances and further macroeconomic developments.”
“We have positioned Barclays carefully for this mixed macroeconomic environment and delivered a consistent performance in the second quarter,” Chief Executive Officer C.S. Venkatakrishnan said in a statement.
The latest share buyback is larger than analysts were expecting and follows on from a £500 million program that concluded in April. The company’s leadership had signaled moves to buy back its depressed stock earlier this year.
Barclays is the third major European investment bank posting results after Deutsche Bank AG posted a smaller-than-feared decline in trading gains on Wednesday and BNP Paribas earlier Thursday. Wall Street banks have already reported an aggregate 13% drop in fixed income revenue from a year earlier as the volatility stirred by last year’s invasion of Ukraine trailed off.
Revenue from advising on corporate deals and capital issuance also plunged 15%, in line with the broader market. Barclays has recently announced a flurry of senior banker hires after an exodus of managing directors in the US and parts of Europe.
The Bank of England has raised rates 13 times in a bid to tackle inflation that’s been stuck above its target for almost two years. As lenders earn more on money they hold with the central bank, they have come under increasing pressure from politicians and regulators to pass more of this windfall to their customers.
Barclays recently hired consulting firm Boston Consulting Group to look at ways to improve its share price performance and has also started the sale of its German consumer finance business, which could pave the way for further disposals.
Author: Jan-Henrik Förster
