Barclays has today announced a new £750m share buyback and upgraded its longer term earnings guidance, driven in part by an upswing in trading income that offset a 9% profit fall over the first half of 2024.
The British bank now expects to make a return on tangible equity (ROTE) greater than 12% by 2026, compared with a 10%-plus target in 2024, and to generate annual income of £30 billion in 2026.
Its stock has surged 54% so far this year, after CEO CS Venkatakrishnan unveiled a major strategy reboot in February to grow the bank's core UK lending businesses at the expense of its higher-risk investment bank.
But despite heavy investment in corporate and retail banking, results in Barclays' investment bank still stood out.
A 10% rise in income over the second quarter, driven by the equities business, helped Barclays echo thebumper returns from trading reported last month by Wall Street rivals.
Barclays said second-quarter equities income rose 24%, beating the 18% increase at Morgan Stanley, the 7% gain seen at Goldman Sachs and JPMorgan's 21% rise.
Shareholder Richard Marwood, head of income at Royal London Asset Management, described Barclays results as "pretty solid", saying it was one of the few major banks still trading at a discount to its book value.
The bank's strong performance in equities has been partly fuelled by market share gains in the lucrative world of prime brokerage, Reuters reported last week.
Barclays also reported fixed income, currencies and commodities (FICC) revenues fell 3%, while investment banking income from deals rose 44%.
Tthe Bank of England is broadly expected to announce a 0.25% base rate cut later today, a move that many cash-strapped homeowners and borrowers hope will lower their debt costs but could also dent interest income for banks.
Most banks have planned ahead to mitigate the impact of falling rates with special hedging arrangements aimed at smoothing out the potential hit.
Barclays actually lifted its forecast for 2024 net interest income to £11 billion over the year, from £10.7 billion.
But returns remain under scrutiny.
The return on tangible equity (ROTE) at the bank's UK corporate bank tumbled to 16.6% compared with 27.3% a year ago. The unit's pretax profit sank 36% and expenses jumped 15% compared with the first half of 2023.
Barclays also reported revenues fell 4% in its UK retail bank, as competition to lend intensified.
"Among the culprits for the lower numbers were mortgage margin pressure and adverse deposit dynamics as customers sought higher rates elsewhere," said Richard Hunter, Head of Markets at interactive investor.
Barclays is paring European businesses where it lacks scale, and said it remains in discussions to sell its remaining non-performing and Swiss-Franc linked Italian retail mortgage portfolios.
The bank on July 4 said it will sell its German consumer finance business to Austrian bank BAWAG Group for a small premium to net assets.
