24 October 2024
If you are covering Barclays’ latest financial results, please find below a comment from Will Howlett, financials analyst at Quilter Cheviot:
"Barclays’ Q3 results demonstrate continued progress towards its ambitious FY26 targets, including a Return on Tangible Equity (RoTE) of over 12%, capping the investment bank’s contribution to 50% of Risk-Weighted Assets (RWA), and returning at least £10 billion to shareholders over three years.
“Despite past disappointments, the recent strategy update has positively shifted the investment narrative for Barclays, with clear targets across divisions and a focus on higher profitability areas.
“These Q3 results exceeded expectations, with profits 13% ahead of consensus, driven by better-than-expected income and costs, and lower loan losses. Revenues increased by 5% year-on-year, with Barclays UK and Head Office outperforming, while the US Consumer segment was weaker due to the dollar’s decline. Notably, the investment bank’s revenues rose by 6%, with a significant recovery in investment banking fees and a 3% increase in trading.
“Barclays has raised its FY24 net interest income (NII) guidance to over £11.0 billion, reflecting fewer anticipated rate cuts.
“Barclays reiterated its long-term financial targets, aiming for a better balance across divisions, ambitious profit targets, and significant capital returns. The investment bank’s contribution to the group will reduce, with growth in other areas. Barclays targets £30 billion in revenue by 2026, with costs at £17 billion and a loan loss ratio of 50-60 basis points.
“On a valuation basis, Barclays trades at around 6x next twelve months EPS, below the five-year average, despite an improved outlook, and with the new narrative now firmly in place, Barclays provides a compelling case for investors.”
