Barclays has today announced a surprise £500m share buyback and upgraded its performance target for the year as it struck an upbeat tone about its prospects, despite one-off charges weighing on its third-quarter profit.
The British bank set aside another £235m to cover a motor finance mis-selling scandal and said it had taken a £110m charge on the collapse of US firm Tricolor, one of several bankruptcies that triggered wider concerns about banks' exposure to private credit markets.
The bank said it would move to quarterly buyback announcements and now aimed to make a return on equity of more than 11% this year, thanks to better than expected income and faster implementation of cost savings plans.
That allowed it to bring forward plans to distribute excess capital to shareholders, CEO CS Venkatakrishnan said in the update.
"We have been robustly and consistently generating capital for our shareholders consecutively over the last nine quarters," he said.
Barclays reported a 7% drop in third-quarter pretax profit to £2.1 billion, in line with analysts' average forecast.
"Barclays' latest results show a bank quietly outperforming despite headline noise," said Matt Britzman, senior equity analyst, Hargreaves Lansdown. If the motor finance provision was stripped out, profits were 13% ahead of expectations, he noted.
Barclays' investment bank, however, had a mixed three months.
Income at the unit grew 8% year-on-year, with its global markets business rising 15%. But fees from deals fell 2%, contrasting with Wall Street rivals that showed double-digit gains as corporate confidence rebounded, driving mergers and fundraising.
In a media call, Venkatakrishnan said the underperformance was not because Barclays was investing too little capital in the unit, but because the quarter "was dominated by a few large deals that we were not fortunate enough to be on".
Concerns are growing about weakening lending standards including in the private credit market, a less regulated industry where companies have borrowed heavily in recent years, after a number of US firms collapsed.
Venkatakrishnan said Barclays had no exposure to First Brands, an auto parts maker that filed for bankruptcy, and had turned down doing business with it because of concerns about its financial projections.
Barclays said exposure to private credit accounted for £20 billion, or 6%, of its overall loans, with 70% of that exposure in the US.
The CEO also said banks in Britain were "more richly taxed" than elsewhere when asked about the possibility of further tax rises in the UK in next month's government budget.
