Barclays announced a second-quarter net profit attributable to shareholders of £1.2 billion, which was slightly lower than the previous year. Analysts had anticipated a net profit of £1.03 billion, as per LSEG data. The revenue for the latest quarter was reported to be £6.3 billion, surpassing the forecast of £6.25 billion. Additionally, the company unveiled a share buyback program of up to £750 million.
Income and Performance
Net interest income at Barclays’ consumer bank dropped 4% year-on-year to £3.15 billion, with the net interest margin decreasing from 3.2% to 3.15%. The income at the corporate bank also fell by 6% due to lower liquidity pool income offsetting the higher interest rate environment. On the other hand, the investment bank saw a 10% increase in income, reaching £3.02 billion for the second quarter.
Max Georgiou, an analyst at research firm Third Bridge, highlighted that the investment banking revenue had exceeded expectations, which is a positive aspect for the bank’s mid-term goals. Georgiou emphasized the importance of regrowing market share in the U.S. as part of their continued strategy.
Barclays raised its full-year net interest income target for the group to around £11 billion, excluding certain divisions. The credit impairment charges remained stable year-on-year at £400 million. The Common Equity Tier One (CET1) capital ratio, a measure of the bank’s financial strength, stood at 13.6%, slightly lower than the previous year.
Restructuring and Progress
Barclays initiated a major restructuring plan aimed at enhancing efficiencies and increasing profits, resulting in a significant boost in share price for the year. Despite facing a net loss in the fourth quarter of 2023, the bank returned to profitability in the first quarter. The Group Chief Executive, C. S. Venkatakrishnan, mentioned that the three-year plan is progressing well, with a return on tangible equity of 11.1% meeting the annual target of above 10%.
Future Outlook
Venkatakrishnan highlighted key milestones achieved during the restructuring process, including the sale of the Italian mortgage book and the impending acquisition of Tesco Bank. The lender’s restructure involved splitting the corporate and investment bank into various divisions aimed at streamlining operations and driving growth.
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