Thursday 14 November 2019

Profits rise at Barclays as bosses prepare to meet activist investor

Ed Bramson’s Sherborne group is pushing for higher investment banking returns and the division recorded an improved performance in the third quarter.

Barclays has reported a rise in third-quarter profit (Ian West/PA)
Barclays has reported a rise in third-quarter profit (Ian West/PA)

By Ravender Sembhy, Press Association City Editor

Barclays has reported a rise in third-quarter profits as the bank’s bosses prepare for another meeting with activist investor Ed Bramson.

The group’s pre-tax profits grew from £1.11 billion to £1.46 billion in the three months to September 30, the figures aided by the absence of misconduct charges.

Net profit came in at £1 billion on revenue of £5.13 billion, beating consensus forecasts.

Barclays’ investment banking arm had an improved performance with income in its markets division rising 19% to £1.15 billion in the period.

Macro income, which comprises fixed income, currencies and commodities, rose from £627 million to £688 million.

But the results come at a challenging time for the lender, with Mr Bramson’s Sherborne group pushing for higher investment banking returns and bigger payouts for shareholders.

Chief executive Jes Staley said he plans to meet Mr Bramson in the coming weeks.

“We have only met once with Ed Bramsom, we are going to meet him again in a few weeks.

“He’s not yet articulated to the bank what his strategy is,” the American said on a conference call.

Sherborne has been relatively tight-lipped about its intentions with its Barclays stake but it is thought the group also wishes to influence the bank’s succession plans for chairman John McFarlane.

Barclays shares were up 0.3% in morning trade at 166p.

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Barclays chief executive Jes Staley (Debra Hurford Brown/Barclays/PA)

The results show the corporate and investment bank booked a total income of £2.24 billion, down slightly compared with the same quarter last year.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “A jump in profits at Barclays can be largely put down to a lower level of bad loans, stemming from improved economic forecasts, stronger sterling and some one-off adjustments.

“The recent volatility we have seen in global markets should also help out a bit with trading income at the investment bank, though questions will still linger, not least as activist investor Edward Bramson reportedly wants to shrink this division.”

On Brexit, the lender confirmed it will use Barclays Bank Ireland as its EU hub to mitigate any potential disruption to business, boosting numbers in Ireland by up to 200 through a mixture of relocation and local hires.

Mr Staley added: “In spite of macroeconomic uncertainty, and particularly concerns over Brexit which weigh heavily on market sentiment, 2018 is proving to be a year of delivery on our strategy at Barclays.

“We remain focused on generating improved returns and on distributing a greater proportion of excess capital to shareholders over time.”

These latest results don’t really change the big picture at Barclays Hargreaves Lansdown senior analyst Laith Khalaf

The chief executive has come under fire this year after attempting to identify a whistleblower at Barclays, sparking a probe by the Financial Conduct Authority.

Mr Staley has also been overseeing an asset disposal programme in which Barclays has offloaded non-core businesses to focus on core UK and US operations.

The group has shed 60,000 jobs as part of the shake-up, which the chief executive said will allow Barclays to “focus on generating profitability”.

Mr Khalaf added: “These latest results don’t really change the big picture at Barclays.

“Progress has been made, though it’s come in fits and starts, and we’d like to see greater consistency in its performance.”

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