Barclay's Earnings Q3 2023

Barclay's Earnings Q3 2023

 Barclay's Stock Slump after Murky Outlook and Decline in its Net Income


Barclay's for Q3Fy23 reported a Return on Tangible Equity (RoTE) of 11.0% and Q323 YTD of 12.5% as compared to 10.9% Q3FY22 YTD. The pre-tax profit of £1.9 billion experienced a marginal decrease of 4% compared to the previous year's corresponding period. This decline was attributed to concerns about a potential increase in customer defaults and a slowdown in corporate transactions that impacted the investment bank's earnings. (Source: Barclays)

The London-based bank reported a net profit of £1.27 billion, marking a 16% year-on-year decline however the bank’s consumer and credit card businesses helped to offset weakening investment bank revenues. (Source: Barclays)

The bank reported revenue of £3.1 billion. In particular, corporate and investment banking saw a 6% decline in income and payments saw a 9% increase, reaching £1.4 billion. This increase can be attributed to higher balances on U.S. cards. This increase can be attributed to higher balances on U.S. cards. Additionally, the business unit received a boost from the inclusion of Wealth Management & Investments from Barclays UK. Excluding this transfer, Barclays UK's income increased by 1%. This growth was driven by an expansion in net interest income due to higher interest rates, including the ongoing benefits from structural hedge income. However, these positive factors were partially counterbalanced by changes in product dynamics related to deposits and mortgages. (Source: Barclays)

The CET1 ratio, which serves as an indicator of a bank's financial strength, increased to 14% from the previous quarter's 13.8% maintaining a strong capital position. (Source: Barclays)

Barclay's delivered Net interest income (NIM) of £4.86 billion rose by 13% YoY. Also, NIM stood at 3.15% as compared to Q322 YTD of 2.78%. Moreover, Personal Banking income rose by 11% to £3.66 billion YoY. The increase can be attributed to the rise in interest rates, although this positive effect was partially mitigated by the compression of mortgage margins and a decrease in current account deposit volumes, which align with broader market trends and the economic pressures related to the cost of living. (Source: Barclays)

The bank has said that it will outline its capital allocation priorities and revised financial objectives in an investor update, along with its full-year earnings. (Source: Barclays)

Barclay's has further warned the investors of alluded to significant cost-cutting measures that will be disclosed later in the year. In its earnings report, the bank mentioned that it is currently assessing strategies to decrease structural costs, with the goal of enhancing future returns. This evaluation may lead to notable additional charges in the Q4FY23. (Source: Barclays)

The bank has lowered its net interest margin projection for the U.K. bank to a new range of 3.05% to 3.1%, a decrease from the previous guidance of approximately 3.15%. (Source: Barclays)

Barclay's shares plunged by 6.5% by 09:16 a.m. on LSE flagged pressure on its margins from competition for savers. (Source: CNBC)


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